[Federal Register Volume 77, Number 46 (Thursday, March 8, 2012)]
[Proposed Rules]
[Pages 14226-14264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5431]



[[Page 14225]]

Vol. 77

Thursday,

No. 46

March 8, 2012

Part V





Environmental Protection Agency





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40 CFR Parts 51, 52, 70 and 71





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Prevention of Significant Deterioration and Title V Greenhouse Gas 
Tailoring Rule Step 3, GHG Plantwide Applicability Limitations and GHG 
Synthetic Minor Limitations; Proposed Rule

Federal Register / Vol. 77 , No. 46 / Thursday, March 8, 2012 / 
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70 and 71

[EPA-HQ-OAR-2009-0517; FRL-9643-8]
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.

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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 
(CO<INF>2</INF>e)-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 April 20, 2012.
    Public Hearing. One public hearing will be held on March 20, 2012. 
For additional instructions on the public hearing, go to the 
SUPPLEMENTARY INFORMATION section of this document.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2009-0517, by one of the following methods:
    <bullet> http://www.regulations.gov: Follow the online instructions 
for submitting comments.
    <bullet> Email: <a href="/cdn-cgi/l/email-protection#d5b4f8b4bbb1f8a7f8b1bab6beb0a195b0a5b4fbb2baa3"><span class="__cf_email__" data-cfemail="aacb87cbc4ce87d887cec5c9c1cfdeeacfdacb84cdc5dc">[email protected]</span></a>. Attention Docket ID No. 
EPA-HQ-OAR-2009-0517.
    <bullet> Fax: (202) 566-9744.
    <bullet> 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, DC 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, DC 20503.
    <bullet> Hand Delivery: Air and Radiation Docket and Information 
Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Avenue NW., 
Washington, DC 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 Web site 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 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, DC. 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: One public hearing will be held on this proposed 
rule. The hearing will be held on March 20, 2012, at the DoubleTree 
Hotel--Crystal City, 300 Army Navy Drive, Arlington, Virginia 22202; 
phone number (703) 416-4100. The public hearing will convene at 10 a.m. 
and continue until 7 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 are registered 
and arrive before 7 p.m. A lunch break is scheduled from 1 p.m. until 2 
p.m. and a thirty minute break is scheduled from 4:30 p.m. until 5 p.m. 
during the hearing. The EPA Web site for the rulemaking, which includes 
the proposal and information about the public hearing, 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: <a href="/cdn-cgi/l/email-protection#dcbeaeb3b3b7aff2b1b5bfb4bdb9b0af9cb9acbdf2bbb3aa"><span class="__cf_email__" data-cfemail="385a4a5757534b1655515b50595d544b785d4859165f574e">[email protected]</span></a>. The public hearing will provide 
interested parties the opportunity to present data, views, or arguments 
concerning these proposed rules. Persons interested in presenting oral 
testimony should notify Ms. Long at least 1 day in advance of the 
public hearing. To register to speak, attend or for information 
pertaining to the public hearing 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: <a href="/cdn-cgi/l/email-protection#24484b4a430a544549644154450a434b52"><span class="__cf_email__" data-cfemail="4b2724252c653b2a260b2e3b2a652c243d">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The information in this SUPPLEMENTARY

[[Page 14227]]

INFORMATION section of this preamble is organized as follows:

I. General Information
    A. Executive Summary
    1. Purpose of the Regulatory Action
    2. Summary of Major Provisions
    B. Does this action apply to me?
    C. Where can I get a copy of this document and other related 
information?
    D. What should I consider as I prepare my comments for the EPA?
    1. Submitting CBI
    2. Tips for Preparing Your Comments
    E. How can I find information about the public hearing?
    F. 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 does the Tailoring Rule address 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
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 CO<INF>2</INF>e 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 CO<INF>2</INF>e-based PAL once we issue final changes to the PAL 
rules?
    7. How would 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
    3. Redefining PTE and Source Category Specific PTE
    4. General Permits for GHGs
    5. Presumptive BACT for GHGs
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. Executive Summary

1. Purpose of the Regulatory Action
    The purpose of this ``Step 3'' rule is to continue the process of 
phasing in GHG permitting requirements under the PSD and title V 
programs begun in Steps 1 and 2 of the Tailoring Rule.\1\ As a result 
of actions to regulate GHGs under other Clean Air Act (CAA or ``the 
Act'') programs, GHGs are required to be addressed under the major 
source permitting requirements of the Act's PSD and title V programs. 
The Tailoring Rule is necessary because the statutory definitions that 
have been used for other air pollutants to determine which sources are 
``major sources'' subject to permitting under these programs are based 
on annual emission rates of 100 or 250 tpy which, if implemented 
immediately for GHGs, would bring so many sources into the programs as 
to overwhelm the capabilities of state permitting authorities to issue 
permits and potentially impede the ability of sources to construct or 
modify their facilities.
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    \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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    To prevent this outcome, the EPA promulgated the Tailoring Rule to 
create a higher major source threshold for GHGs. In the Tailoring Rule, 
we 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.
    Under Step 1 of the Tailoring Rule, which began on January 2, 2011, 
sources above the GHG threshold that are required to obtain a PSD or 
title V permit anyway due to emissions of other pollutants (referred to 
as ``anyway'' sources) are required also to address their GHG emissions 
in the permit. Under Step 2, which became effective on July 1, 2011, 
sources with

[[Page 14228]]

GHG emissions above the Tailoring Rule threshold also are required to 
obtain a PSD or title V permit, even if they would not be subject to 
these programs based on emissions of other pollutants.
    In the Tailoring Rule, the EPA also committed to this Step 3 
rulemaking. For this rulemaking we have evaluated whether it is now 
possible to lower the GHG major source threshold to bring additional 
sources into the CAA permitting programs without overwhelming state 
permitting authorities. In addition, we have continued our 
identification and evaluation of potential approaches to streamline 
permitting so as to enable permitting authorities to permit more GHG-
emitting sources without undue burden. The specific actions being 
proposed today are briefly described in the following paragraphs.
2. Summary of Major Provisions
    The EPA is proposing to leave the GHG major source thresholds 
unchanged from the Step 2 level at this time. We have found that the 
capabilities of the state permitting authorities have not improved to 
the extent necessary for additional sources to be brought into the 
system. This proposal is discussed further in section V of this 
preamble.
    We are also proposing to revise the PSD regulations to provide for 
GHG PALs. A PAL establishes a site-specific plantwide emission level 
for a pollutant that allows the source to make changes at the facility 
without a PSD permit, provided that emissions to not exceed the PAL 
level. Such PALs are already available under PSD for other pollutants, 
and we are proposing to create provisions to allow for GHG PALs as 
well. We believe that this action will streamline PSD permitting 
programs by allowing sources and permitting authorities to address GHGs 
one time for a source and avoid repeated subsequent permitting actions. 
This action is discussed further in section VI.A of this preamble.
    We are proposing regulatory provisions as well to allow for 
``synthetic minor'' permits for GHGs under the federal PSD program. 
Applicability under PSD and title V is triggered when a source ``emits, 
or has the potential to emit'' a pollutant at a level greater than the 
major source threshold. Under this system, there are some sources that 
have the potential to emit a pollutant above the threshold (e.g., if 
the source were to operate 24 hours per day, 7 days per week), but do 
not have actual emissions above the threshold, due to physical or 
operational limitations, and do not plan to ever have emissions that 
great. The EPA has long allowed for such sources to voluntarily accept 
enforceable limits on their emissions to keep them below the major 
source threshold; such sources are referred to as ``synthetic minor'' 
sources. However, synthetic minor permits are typically issued by 
states under their minor source NSR programs, and there is no generally 
applicable federal minor NSR program. To allow for issuance of 
synthetic minor permits for GHGs in all areas subject to the federal 
PSD program, we are proposing to add GHG synthetic minor provisions to 
the federal PSD program. We believe that permitting synthetic minor GHG 
sources under these provisions will reduce the number of sources 
subject to PSD and title V, reducing the burden on state permitting 
authorities and the sources. This action is discussed further in 
section VI.B of this preamble.

B. 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:

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          Industry group                                              NAICS \a\
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Agriculture, fishing, and hunting.  11
Mining............................  21
Utilities (electric, natural gas,   2211, 2212, 2213
 other systems).
Manufacturing (food, beverages,     311, 312, 313, 314, 315, 316
 tobacco, textiles, leather).
Wood product, paper manufacturing.  321, 322
Petroleum and coal products         32411, 32412, 32419
 manufacturing.
Chemical manufacturing............  3251, 3252, 3253, 3254, 3255, 3256, 3259
Rubber product manufacturing......  3261, 3262
Miscellaneous chemical products...  32552, 32592, 32591, 325182, 32551
Nonmetallic mineral product         3271, 3272, 3273, 3274, 3279
 manufacturing.
Primary and fabricated metal        3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 3327,
 manufacturing.                      3328, 3329
Machinery manufacturing...........  3331, 3332, 3333, 3334, 3335, 3336, 3339
Computer and electronic products    3341, 3342, 3343, 3344, 3345, 4446
 manufacturing.
Electrical equipment, appliance,    3351, 3352, 3353, 3359
 and component manufacturing.
Transportation equipment            3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369
 manufacturing.
Furniture and related product       3371, 3372, 3379
 manufacturing.
Miscellaneous manufacturing.......  3391, 3399
Waste management and remediation..  5622, 5629
Hospitals/Nursing and residential   6221, 6231, 6232, 6233, 6239
 care facilities.
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.
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\a\ North American Industry Classification System.

C. 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) Web site, under Regulations & Standards, at http://www.epa.gov/nsr.

[[Page 14229]]

D. 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 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:
    <bullet> Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    <bullet> 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.
    <bullet> Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
    <bullet> Describe any assumptions and provide any technical 
information and/or data that you used.
    <bullet> If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    <bullet> Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    <bullet> Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
    <bullet> Make sure to submit your comments by the comment period 
deadline identified.

E. 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 <a href="/cdn-cgi/l/email-protection#670b0809004917060a2702170649000811"><span class="__cf_email__" data-cfemail="2f43404148015f4e426f4a5f4e01484059">[email protected]</span></a> at least 1 day in advance of 
the public hearing. Persons interested in attending the public hearing 
should also contact Ms. Long to verify the time, date and location of 
the hearing. The public hearing will provide interested parties the 
opportunity to present data, views or arguments concerning these 
proposed rules.

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

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

 
AFUE..........................  Annual Fuel Utilization Efficiency
BACT..........................  Best Available Control Technology
CAA or Act....................  Clean Air Act
CFR...........................  Code of Federal Regulations
CH4...........................  Methane
CO2...........................  Carbon Dioxide
CO2e..........................  Carbon Dioxide Equivalent
DOE...........................  U.S. Department of Energy
EPA...........................  U.S. Environmental Protection Agency
ECOS..........................  Environmental Council of the States
FIP...........................  Federal Implementation Plan
FR............................  Federal Register
GHG...........................  Greenhouse Gas
GP............................  General Permit
GWP...........................  Global Warming Potential
HFCs..........................  Hydrofluorocarbons
ICR...........................  Information Collection Request
LDVR..........................  Light-Duty Vehicle Rule
N2O...........................  Nitrous Oxide
NAAQS.........................  National Ambient Air Quality Standard
NACAA.........................  National Association of Clean Air
                                 Agencies
NRDC..........................  Natural Resources Defense Council
NSR...........................  New Source Review
NTTAA.........................  National Technology Transfer and
                                 Advancement Act
OMB...........................  Office of Management and Budget
PAL...........................  Plantwide Applicability Limitation
PFCs..........................  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

    In the Tailoring Rule, 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 CAA 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 are 
the first two steps in the Tailoring Rule's phase-in program for PSD 
and title V applicability--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 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 are 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

[[Page 14230]]

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.
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    \2\ 75 FR 31559.
---------------------------------------------------------------------------

    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 CO<INF>2</INF>e-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 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 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.
---------------------------------------------------------------------------

    \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). In the ``Endangerment 
Finding,'' which is governed by CAA section 202(a) in December 2009 
the Administrator exercised her judgment to conclude that ``six 
greenhouse gases taken in combination endanger both the public 
health and the public welfare of current and future generations.'' 
The Administrator also found ``that the combined emissions of these 
greenhouse gases from new motor vehicles and new motor vehicle 
engines contribute to the greenhouse gas air pollution that 
endangers public health and welfare under CAA section 202(a).'' 74 
FR 66496. This Endangerment Finding led directly to promulgation of 
what we call the ``Light-duty Vehicle Rule'' or the ``LDVR,'' also 
governed by CAA section 202(a), in which EPA set standards for the 
emission of greenhouse gases for new motor vehicles built for model 
years 2012-2016. The Johnson Memo Reconsideration provided EPA's 
interpretation of a pre-existing definition in its PSD regulations 
delineating the ``pollutants'' that are taken into account in 
determining whether a source must obtain a PSD permit and the 
pollutants each permit must control. Regarding the Vehicle Rule, the 
Johnson Memo Reconsideration stated that such regulations, when they 
take effect on January 2, 2011, will, by operation of the applicable 
CAA requirements, subject GHG-emitting sources to PSD requirements.
    \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).
---------------------------------------------------------------------------

A. Statutory and Regulatory Background for PSD and Title V

    Under the CAA, new major stationary sources of certain air 
pollutants, defined as ``regulated NSR pollutants,'' and major 
modifications to existing major sources are required to, among other 
things, obtain a PSD permit prior to construction or major 
modification. We refer to the set of requirements that determine which 
sources and modifications are subject to PSD as the ``applicability'' 
requirements. Once major sources become subject to PSD, these sources 
must, in order to obtain a PSD permit, meet the various PSD 
requirements. For example, they must apply BACT, demonstrate compliance 
with air quality related values and PSD increments, address impacts on 
special Class I areas (e.g., some national parks and wilderness areas), 
and assess impacts on soils, vegetation, and visibility. These PSD 
requirements are the subject of Sections III and IV of this document.
    In this section, we discuss how the CAA and relevant EPA 
regulations describe the PSD applicability requirements. The CAA 
applies the PSD requirements to any ``major emitting facility'' that 
constructs (if the facility is new) or undertakes a modification (if 
the facility is an existing source).\6\ The term ``major emitting 
facility'' is defined as a stationary source that emits, or has a PTE 
of, at least 100 TPY, if the source is in one of 28 listed source 
categories, or, if the source is not, then at least 250 TPY, of ``any 
air pollutant.'' 42 U.S.C. 7479(1). For existing facilities, the CAA 
adds a definition of modification, which, in general, is any physical 
or

[[Page 14231]]

operational change that ``increases the amount'' of any air pollutant 
emitted by the source.\7\
---------------------------------------------------------------------------

    \6\ 42 U.S.C. 7475(a), 7479(1).
    \7\ 42 U.S.C. 7479(1), 7411(a)(4).
---------------------------------------------------------------------------

    The EPA's regulations implement these PSD applicability 
requirements through use of different terminology, and, in the case of 
GHGs, with additional limitations. Specifically, the regulations apply 
the PSD requirements to any major stationary source that begins actual 
construction \8\ (if the source is new) or that undertakes a major 
modification (if the source is existing).\9\ The term major stationary 
source is defined as a stationary source that emits, or has a PTE of, 
at least 100 TPY if the source is in one of 28 listed source 
categories, or, if the source is not, then at least 250 TPY, of 
regulated NSR pollutants.\10\ We refer to these 100- or 250-TPY amounts 
as the major source limits or thresholds. A major modification is 
defined as ``any physical change in or change in the method of 
operation of a major stationary source that would result in: a 
significant emissions increase [ ] of a regulated NSR pollutant [ ]; 
and a significant net emissions increase of that pollutant from the 
major stationary source.'' \11\ EPA rules specify what amount of 
emissions increase is ``significant'' for listed regulated NSR 
pollutants (e.g., 40 TPY for sulfur dioxide, 100 TPY for carbon 
monoxide), but for any regulated NSR pollutant that is not listed in 
the regulations, any increase is significant.\12\
---------------------------------------------------------------------------

    \8\ 40 CFR 52.21(b)(11).
    \9\ 40 CFR 52.21(a)(2).
    \10\ 40 CFR 52.21(b)(1)(i).
    \11\ 40 CFR 52.21(b)(2)(i) and the term ``net emissions 
increase'' as defined at 40 CFR 52.21(b)(3).
    \12\ 40 CFR 52.21(b)(23)(i)-(ii).
---------------------------------------------------------------------------

    A pollutant is a ``regulated NSR pollutant'' if it meets at least 
one of four requirements, which are, in general, any pollutant for 
which EPA has promulgated a NAAQS or a new source performance standard 
(NSPS), certain ozone depleting substances, and ``[a]ny pollutant that 
otherwise is subject to regulation under the Act.'' \13\ PSD applies on 
a regulated-NSR-pollutant-by-regulated-NSR-pollutant basis. The PSD 
requirements do not apply to regulated NSR pollutants for which the 
area is designated as nonattainment. Further, some modifications are 
exempt from PSD review (e.g., routine maintenance, repair and 
replacement).\14\
---------------------------------------------------------------------------

    \13\ 40 CFR 52.21(b)(50).
    \14\ 40 CFR 52.21(b)(2)(iii).
---------------------------------------------------------------------------

    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.\15\ CAA Sec.  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.\16\ The title 
V regulations define a ``major source'' in 40 CFR 70.2.
---------------------------------------------------------------------------

    \15\ CAA Sec.  501(2).
    \16\ CAA Sec.  302(j).
---------------------------------------------------------------------------

    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 included 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 (as opposed to, 
for example, being subject only to monitoring requirements). 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 CO<INF>2</INF>e) 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 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 CO<INF>2</INF>e. For existing 
sources, Step 2 applies title V requirements to existing sources that 
emit, or have the potential to emit, 100,000 tpy CO<INF>2</INF>e 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 CO<INF>2</INF>e and undertake a modification that 
increases net emissions by at least 75,000 tpy CO<INF>2</INF>e. 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. In this manner, EPA 
identified several legal bases within the definitional previsions of 
the PSD regulations to support the phase-in approach.

B. How does the Tailoring Rule address GHG emissions under PSD and 
Title V? \17\
---------------------------------------------------------------------------

    \17\ 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.
---------------------------------------------------------------------------

    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 
(CO<INF>2</INF>) 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 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 (including, for example, 
many commercial sources and small industrial sources) and to issue 
title V permits to millions of small sources (including, for example, 
many residential sources).

[[Page 14232]]

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 Step 2 thresholds, 
compared to the administrative burdens of the then-current PSD and 
title V programs (that is, before applicability to GHG-emitting 
sources):

Step 1:
    Number of sources subject to PSD and title V permitting: The same 
as prior to Step 1
    Additional workload hours PSD program: 34,000 at a cost of $3 
million
    Additional workload hours title V program: 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 after implementation of Steps 1 and 2 would, on an 
annual basis, mean a 42 percent increase in costs over the then-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 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 
CO<INF>2</INF>e 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.\18\ 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:
---------------------------------------------------------------------------

    \18\ 75 FR 31540 (Table V-1).
---------------------------------------------------------------------------

(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 world- information 
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 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

[[Page 14233]]

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 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 GHG-emitting 
sources, including progress in developing streamlining techniques; and 
(ii) complete further rulemaking (which we refer to as Step 4), 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 
CO<INF>2</INF>e, and no modification resulting in an increase and a net 
GHG increases of less than 50,000 tpy CO<INF>2</INF>e, 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 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 CO<INF>2</INF>e. 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.\19\ 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 CO<INF>2</INF>e and 50,000 tpy 
CO<INF>2</INF>e.
---------------------------------------------------------------------------

    \19\ 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.
---------------------------------------------------------------------------

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.

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

[[Page 14234]]

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.

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.\20\ This 
analysis built upon analysis the EPA included in the Tailoring Rule to 
support the threshold decisions in that action.\21\ In the Tailoring 
Rule analysis, the EPA evaluated eight different PTE thresholds between 
100 and 100,000 tpy CO<INF>2</INF>e, including 50,000 tons per year. 
For this Step 3 analysis, the EPA evaluated nine additional thresholds 
between 50,000 and 100,000 tpy CO<INF>2</INF>e in 5,000 tpy increments 
(that is, 55,000 through 95,000 tpy CO<INF>2</INF>e). The EPA 
considered stationary sources in the following sectors:
---------------------------------------------------------------------------

    \20\ See Technical Support Document ``Summary of Methodology and 
Data Used to Evaluate Resource Requirements at Alternative 
Greenhouse Gas (GHG) Permitting Thresholds'' (December 2011).
    \21\ See ``Technical Support Document for Greenhouse Gas 
Emissions Thresholds Evaluation,'' March 29, 2010, Docket No. EPA-
HQ-OAR-2009-0517-19158.
---------------------------------------------------------------------------

    <bullet> Electricity Generation (facilities with fossil fuel-fired 
electric generating units);
    <bullet> Industrial sources (14 subcategories of industries with 
process and combustion GHG emissions);
    <bullet> Energy (oil and gas extraction, transport, and processing; 
underground coal mining);
    <bullet> Waste Treatment (landfills and municipal solid waste 
incinerators);
    <bullet> Agriculture (stationary fuel combustion);
    <bullet> Commercial (stationary fuel combustion); and
    <bullet> 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 CO<INF>2</INF>e, approximately 4,650 additional sources would 
become major sources of GHGs (increasing from 5,326 at 100,000 tpy 
CO<INF>2</INF>e, 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, 
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 CO<INF>2</INF>e 
the number of commercial sources that become major sources of GHGs 
significantly increases (compared to 100,000 tpy CO<INF>2</INF>e) and 
at a threshold of 55,000 tpy CO<INF>2</INF>e, 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 
CO<INF>2</INF>e. Note that this analysis did not differentiate between 
sources that become major only because of the source's GHGs emissions 
from sources 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.\22\ Based on 
this analysis, we estimate that a reduction from the current Step 2 
threshold to 50,000 tpy CO<INF>2</INF>e would result in nearly 3,000 
sources becoming major sources due to their GHG emissions alone 
(increasing from 552 sources at 100,000 tpy CO<INF>2</INF>e, 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 CO<INF>2</INF>e versus the Step 2 thresholds of 
100,000/75,000 (increasing from 917 per year to 1,931).
---------------------------------------------------------------------------

    \22\ See ``Summary of Methodology and Data Used to Evaluate 
Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting 
Thresholds,'' December 2011.
---------------------------------------------------------------------------

    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.\23\ The EPA also 
determined the amount of GHG stationary source emissions associated 
with the sources potentially affected by the various thresholds.
---------------------------------------------------------------------------

    \23\ 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.
---------------------------------------------------------------------------

    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.\24\ 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

[[Page 14235]]

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

    \24\ 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 CO<INF>2</INF>e, as well as 
existing sources that emit or have the potential to emit at least 
100,000 tpy CO<INF>2</INF>e and that undertake a modification that 
increases net emissions of GHGs by at least 75,000 tpy 
CO<INF>2</INF>e.
---------------------------------------------------------------------------

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 \25\ and sources 
emitting GHGs at the 100,000/75,000 tpy CO<INF>2</INF>e 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.
---------------------------------------------------------------------------

    \25\ We refer to these sources as ``anyway'' sources because 
they will become subject to PSD for their GHG emissions if they 
undergo PSD permitting anyway, either for new construction or for 
modification projects, based on emissions of non-GHG pollutants; 
and, by the same token, the will become subject to title V for their 
GHG emissions if they are subject to title V anyway due to their 
non-GHG emissions.
---------------------------------------------------------------------------

    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, because of the limited amount of new 
construction and modifications that sources have undertaken in the past 
year, 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 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. As the volume of PSD permit applications increases, 
EPA expects that more permitting authorities will further develop the 
necessary specialized expertise required for case-by-case review of GHG 
permit applications, including the establishment of a robust GHG BACT 
record. 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 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. EPA estimates that the unexpected small number 
of permit applications to this point reflect the economic downturn, 
which has depressed new construction and modifications. The number of 
permit applications in a given year is based on individual business 
decisions which we believe are directly linked to the economic 
situation. The Agency expects that this situation will be short-lived, 
and that the pace of permitting will pick up as economic conditions 
improve and as GHG permitting becomes better established. 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

[[Page 14236]]

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) \26\ 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 applications for synthetic minor limits to sources who 
wish to avoid GHG permitting.
---------------------------------------------------------------------------

    \26\ S. Brown, A. Fishman, ``The Status of State Environmental 
Agency Budgets, 2009-2011,'' Steven Brown, Executive Director, and 
Adam Fishman, Intern.
---------------------------------------------------------------------------

    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.\27\ 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 
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.
---------------------------------------------------------------------------

    \27\ 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).
---------------------------------------------------------------------------

    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,\28\ 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.\29\ The NACAA letter indicates that 80 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.
---------------------------------------------------------------------------

    \28\ ``The Status of State Environmental Agency Budgets, 2009-
2011,'' p. 3.
    \29\ 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.
---------------------------------------------------------------------------

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.\30\ 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.
---------------------------------------------------------------------------

    \30\ 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.
---------------------------------------------------------------------------

    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 
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

[[Page 14237]]

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 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 number of additional sources that 
emit between the 100,000/75,000 and the 60,000/60,000 levels. Lowering 
the thresholds to 50,000/50,000 would bring within the ambit an 
additional 3 percent, above the 100,000/75,000 levels, of all GHG 
emissions from all stationary sources above the statutory thresholds. 
Please refer to the following Chart. Of course, in any year, only a 
fraction of those emissions would actually become subject to PSD 
controls, which would be the fraction emitted by sources that undertake 
modifications or new construction. Thus, the additional reductions in 
GHG emissions from lowering the thresholds in Step 3 would be small 
under any circumstances even if the thresholds were lowered to 50,000/
50,000. This small amount of environmental benefit is an additional 
factor that, along with the additional burden associated with 
permitting these sources supports not lowering the thresholds in Step 
3.

[[Page 14238]]

[GRAPHIC] [TIFF OMITTED] TP08MR12.025

F. Conclusion

    In the Tailoring Rule, we recognized that the Step 1 and 2 
thresholds we promulgated would 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, because, as noted above, permit activity is linked to 
macro-economic conditions, we consider the relative lull in permit 
activity due largely to the recent economic downturn to be temporary, 
and we expect that the pace of permit applications will increase. In 
fact, because of the link to macro-economic conditions, 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 CO<INF>2</INF>e.
    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, which we describe 
above, 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 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

[[Page 14239]]

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. As explained more fully below, the 
first regulation expands the existing PAL provisions to allow reviewing 
authorities to establish GHG PALs on either a mass-basis (tpy) or a 
CO<INF>2</INF>e-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. As discussed 
below, 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, which would allow certain sources or projects that might otherwise 
be required to obtain a GHG PSD permit to obtain a permit with an 
emissions limitation that would restrict the source's GHG emissions 
below the GHG PSD permitting threshold.
    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 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 CO<INF>2</INF>e 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 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 permitting 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 stationary 
sources on either a mass-basis or a CO<INF>2</INF>e 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 sources \31\; (2) 
issue either a mass-based (tpy) or a CO<INF>2</INF>e-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 regulation \32\ for 
GHGs. We believe these changes are appropriate to enable the use of 
PALs for GHG, given the unique

[[Page 14240]]

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.
---------------------------------------------------------------------------

    \31\ 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 CO<INF>2</INF>e 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.
    \32\ For an explanation of ``subject to regulation,'' see the 
background section in the Tailoring Rule at 75 FR 31516.
---------------------------------------------------------------------------

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.\33\ 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 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.
---------------------------------------------------------------------------

    \33\ 40 CFR 52.21(aa)(2)(v).
---------------------------------------------------------------------------

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. We 
interpret our current regulations to restrict sources that can obtain 
GHG PALs to existing major stationary sources, \34\ and to not allow 
sources to rely on the PALs emissions limitation in determining whether 
GHG emissions are ``subject to regulation.''
---------------------------------------------------------------------------

    \34\ 40 CFR 52.21(aa)(1).
---------------------------------------------------------------------------

     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.\35\ 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 CO<INF>2</INF>e 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.\36\ 
Regardless of the amount of GHGs currently emitted, a GHG-only source 
is a minor source for purposes of PSD, and only becomes major for PSD 
when it proposes to undertake a change that increases GHG emissions by 
at least 75,000 tpy CO<INF>2</INF>e. Currently, reviewing authorities 
using the federal PAL provisions \37\ can only issue a PAL to a GHG-
only source when the source proposes to undertake such a change, thus 
becoming a major stationary source.\38\ 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.\39\
---------------------------------------------------------------------------

    \35\ 40 CFR 52.21(b)(1)(i)(a)-(b).
    \36\ For the purpose of this rule, we term such sources ``GHG-
only sources.''
    \37\ There can be alternative state PAL provisions or they may 
simply adopt EPA's regulations.
    \38\ 40 CFR 52.21(b)(49)(v)(b).
    \39\ 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).
---------------------------------------------------------------------------

    Moreover, under current regulations any EPA-issued PAL can only be 
mass-based. This requirement is due to the fact that PALs are an 
alternative for NSR, which is triggered by mass-based changes in 
emissions. Consequently, GHG sources use tpy CO<INF>2</INF>e to 
determine whether a change causes GHG emissions to be subject to 
regulation, but tpy of mass emissions of the pollutant 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 mass-based 
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 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.
    A significant rate is a threshold for applying NSR to 
modifications. Only emissions rate increases above the significant rate 
trigger major NSR requirements. Currently, a reviewing authority may 
establish the PAL level for a pollutant by adding its significant rate 
to baseline actual emissions. Unless a significant emissions rate has 
been established, the significant rate is effectively zero, i.e., any 
increase in emissions would trigger NSR.
    The EPA did not promulgate a mass-based significant emissions rate 
for GHG emissions in the final Tailoring Rule. 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 CO<INF>2</INF>e-based PAL using the 
75,000 tpy CO<INF>2</INF>e applicability threshold for GHGs. A 
reviewing authority could add the 75,000 tpy CO<INF>2</INF>e to a 
source's CO<INF>2</INF>e baseline actual emissions to establish the PAL 
level, because the Tailoring Rule established 75,000 tpy 
CO<INF>2</INF>e as the appropriate rate of emissions increase for the 
GHG applicability threshold for existing sources. Changing the 
regulations will also have the effect of streamlining future major NSR 
applicability determinations for sources that choose a CO<INF>2</INF>e 
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 
CO<INF>2</INF>e PAL, because a CO<INF>2</INF>e PAL can function to 
assure both that GHG emissions are not subject to regulation, and that 
a change does not trigger a major modification.

[[Page 14241]]

    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; \40\ (2) 
issue either a mass-based (tpy) or a CO<INF>2</INF>e-based PAL to a 
particular source; (3) allow CO<INF>2</INF>e-based PALs to include the 
75,000 tpy CO<INF>2</INF>e 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.
---------------------------------------------------------------------------

    \40\ 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 CO<INF>2</INF>e 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.
---------------------------------------------------------------------------

    In the Tailoring Rule the EPA amended the definition of ``subject 
to regulation'' to establish a threshold level of GHG emissions that a 
source must meet, on both a source and project basis, before GHGs to be 
considered an NSR regulated pollutant for PSD permitting purposes. 
However, the EPA also made clear that its action had the same 
substantive effect, and should be treated as if the EPA had revised 
other components of the definition of ``major stationary source'' to 
achieve the same effect. Thus, in addressing PALs for GHGs in this rule 
the EPA is continuing to focus on the thresholds incorporated into the 
``subject to regulation'' provision, 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, and thus receive 
PALs for GHGs and any other pollutant emitted by the source. 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 CO<INF>2</INF>e emissions at 
the source by at least 75,000 tpy CO<INF>2</INF>e.
    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. A reviewing authority 
could issue GHG PALs to the GHG-only sources without requiring the 
source to become an existing major stationary source, and thus could 
not include PAL limits for non-GHG pollutants.
    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 CO<INF>2</INF>e) 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 a significant net emissions increase of any regulated 
NSR pollutant.
    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, 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 (generally 10 years 
after issuance). 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

[[Page 14242]]

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 non-
GHG pollutant. As with the current PAL regulations, the ultimate 
decision to issue a PAL remains with the reviewing authority, and 
individual permitting authorities will have to determine whether they 
will issue PALs for non-GHG pollutants also emitted from a source that 
receives a GHG PAL through the Major Source Opt-in Approach.
    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 short-term 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 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 CO<INF>2</INF>e 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 stationary sources to 
undertake a major modification applicability analysis to determine 
whether a change triggers PSD review.\41\ 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 CO<INF>2</INF>e 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.
---------------------------------------------------------------------------

    \41\ 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.
---------------------------------------------------------------------------

    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 and could not 
include PAL limits for non-GHG pollutants emitted in amounts below the 
major source levels. 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 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 CO<INF>2</INF>e 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 CO<INF>2</INF>e basis. More specifically, we propose 
to allow reviewing authorities to establish a CO<INF>2</INF>e-based GHG 
PAL by adding up to an amount equal to the emissions increase contained 
in the ``subject to regulation'' applicability threshold (e.g., 75,000 
CO<INF>2</INF>e) to the source's baseline actual emissions. We also 
propose to allow GHG PALs, either on a mass basis or a CO<INF>2</INF>e 
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)

[[Page 14243]]

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 without the 
changes EPA is proposing, sources would still be required to monitor 
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. The determination of whether GHGs are ``subject 
to regulation'' uses procedures that rely on an emissions-unit-by-
emissions-unit analysis, and a shorter contemporaneous period to 
measure emissions changes, neither of which are required under 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 
CO<INF>2</INF>e. We also proposed to establish a CO<INF>2</INF>e-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 CO<INF>2</INF>e-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 CO<INF>2</INF>e 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 
CO<INF>2</INF>e-based GHG PAL can be established by adding up to an 
amount equal to 75,000 CO<INF>2</INF>e to the source's baseline actual 
emissions as this is the appropriate applicability threshold for 
CO<INF>2</INF>e tpy GHG.
     In our proposed Tailoring Rule, we noted that, in rare instances, 
there may be an exception to this general principle, if a source emits 
very small amounts of a particular non-CO<INF>2</INF> 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 CO<INF>2</INF>e-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.
    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 CO<INF>2</INF>e 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 
CO<INF>2</INF>e-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 
CO<INF>2</INF>e-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 source that has a mass-based GHG PAL 
to convert to a CO<INF>2</INF>e-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 
CO<INF>2</INF>e-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 CO<INF>2</INF>e-based PAL. 
Instead, a source could transition to a CO<INF>2</INF>e-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 CO<INF>2</INF>e-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 CO<INF>2</INF>e-based PAL permit for 
public comment. The reviewing authority would establish the new 
CO<INF>2</INF>e-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 
CO<INF>2</INF>e-based PAL permit is issued, the permitting authority 
may also finalize its proposed action to dissolve the mass-based 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

[[Page 14244]]

actual emissions period the reviewing 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 
CO<INF>2</INF>e-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 CO<INF>2</INF>e-based PAL in 2014, and elects 
to use the expired, mass-based GHG PALs baseline actual emissions 
years, then the CO<INF>2</INF>e-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 CO<INF>2</INF>e-based 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 CO<INF>2</INF>e-
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 CO<INF>2</INF>e-
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 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 at 40 CFR 52.21(b)(1) 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 GHG-only sources.
    In addition, under the Major Source Opt-in Approach, we propose to 
revise the PAL Permit Application Requirements provisions at 40 CFR 
52.21(aa)(3) and (4) and Contents of the PAL Permit provisions at 40 
CFR 52.21(aa)(7) 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 to 40 CFR 52.21(aa) for converting from a mass-
based PAL to a CO<INF>2</INF>e-based PAL including revisions to the PAL 
expiration provisions; (2) add a paragraph to the ``subject to 
regulation'' definition at 40 CFR 52.21(b)(49) and the PAL 
applicability section at 40 CFR 52.21(aa)(1) to indicate that a source 
that complies with a GHG PAL is not subject to regulation for GHG 
emissions; (3) revise the PAL rules at 40 CFR 52.21(aa)(6) to allow 
CO<INF>2</INF>e-based PALs to include the 75,000 tpy CO<INF>2</INF>e 
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 at 40 CFR 52.21(aa)(2)(v) and (x) 
to include CO<INF>2</INF>e 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 CO<INF>2</INF>e 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 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 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

[[Page 14245]]

requirements.\42\ 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.
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    \42\ See, e.g., Guidance on Limiting Potential to Emit in New 
Source Permitting (June 13, 1989); Guidance and Enforceability 
Requirements for Limiting Potential to Emit through SIP and Sec.  
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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    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 
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 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.\43\ 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.
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    \43\ 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.
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    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.\44\
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    \44\ 40 CFR 52.21(b)(4). Following two court decisions, National 
Mining Association v. EPA, 59 F.3d 1351 (DC Cir.1995) and Chemical 
Manufacturers Ass'n v. EPA, No. 89-1514 (DC 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).

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.\45\ 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 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.
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    \45\ 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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    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

[[Page 14246]]

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 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 CO<INF>2</INF>e-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 CO<INF>2</INF>e 
basis--that make GHGs ``subject to regulation,'' \46\ 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 
CO<INF>2</INF>e. 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.
---------------------------------------------------------------------------

    \46\ Previously in this preamble we refer to the two-step phase-
in thresholds 75 FR 31516.
---------------------------------------------------------------------------

    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 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.\47\
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    \47\ 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).
---------------------------------------------------------------------------

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.\48\ The EPA is now the 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.\49\ 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

[[Page 14247]]

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.
---------------------------------------------------------------------------

    \48\ See 76 FR 38748 (2011) (promulgating Tribal minor source 
rule).
    \49\ 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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    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 
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.\50\ 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.
---------------------------------------------------------------------------

    \50\ See FN 33 above.
---------------------------------------------------------------------------

    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 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. 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 choose 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 CO<INF>2</INF>e-
based synthetic minor permits to sources whose potential emissions are 
above the statutory major source

[[Page 14248]]

threshold (i.e., 100 or 250 tpy GHG) on a mass basis or the subject to 
regulation thresholds on a CO<INF>2</INF>e 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 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 section 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 section 165 
authorizes the EPA to issue these 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 section 165 may be read to authorize it. 
CAA section 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 Sec.  52.21(dd) to the existing PSD regulations. The proposed 
regulatory provisions are similar to the requirements we established in 
Indian country in 40 CFR Part 49, most particularly at 40 CFR 49.158. 
The proposed provisions address permit application and permit content 
requirements, as well as requirements for monitoring, recordkeeping and 
reporting, and public participation. We request comment on any 
additional provisions that may be needed to establish a GHG synthetic 
minor permitting program in 40 CFR 52.21, and on any additional changes 
to the proposed regulatory text that might be required. In addition, we 
request comment on a number of specific provisions of the proposed 
regulatory language relating to the definition and use of an emissions 
limitation (using the phrase ``which has the effect of limiting'' 
instead of the terms limit(s) or limitation(s) in proposed provisions 
52.21(dd)(2)(i), (5)(ii)(b), and (5)(v)(a)); two options for addressing 
the determination of application completeness (see different deadlines 
and processes for finding completeness in proposed provisions 
52.21(dd)(4)(ii) and (iii)); and the appropriate procedures, if any, to 
include for administrative review (see proposed provisions 
52.21(dd)(4)(vii) and (7)(iv)). 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 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

[[Page 14249]]

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, 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 CO<INF>2</INF>e, 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 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 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?
    We also request comment on mechanisms the rule should provide to 
ensure that the source does not exceed any limitation on hours of 
operations

[[Page 14250]]

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 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 DC 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 (DC 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 (NJDEP) has developed a general permit program 
(GP-017) \51\ 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 7:27-8.3 \52\ for a permit and 
certificate.
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    \51\ http://www.state.nj.us/dep/aqpp/downloads/gp17.pdf.
    \52\ 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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    Ohio's Division of Air Pollution Control (DAPC) also has developed 
model general permits-to-intall 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 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

[[Page 14251]]

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 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.
    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 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.

[[Page 14252]]

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.

CAA section 169(3).

     Performing case-by-case BACT determinations can be complicated, 
resource-intensive and time-consuming. 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 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,\53\ and some state permitting authorities 
have adopted similar approaches.\54\ 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.
---------------------------------------------------------------------------

    \53\ 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).
    \54\ 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).
---------------------------------------------------------------------------

     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 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

[[Page 14253]]

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 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. Whatever mechanism the EPA may ultimately choose to implement 
presumptive BACT, if any, the critical and essential component of a 
successful BACT analysis will continue to be a strong record supporting 
the decisions reached by the permitting authority, as explained in the 
PSD and Title V Permitting Guidance for Greenhouse Gases (March 2011).
     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 case-by-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 DC Circuit, in the Alabama Power 
case previously discussed, stated that courts ``frequently uphold 
streamlined agency [regulatory] approaches or procedures where the 
conventional course, typically case-by-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 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 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

[[Page 14254]]

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 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 case-by-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 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, promulgates 
energy efficiency standards for industrial and commercial boilers.\55\ 
These periodically-updated 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 energy-efficient 
products. Commercial and residential products can earn the ENERGY STAR 
label by meeting the energy efficiency requirements set forth in ENERGY 
STAR product specifications.
---------------------------------------------------------------------------

    \55\ http://www1.eere.energy.gov/buildings/appliance_standards/residential/furnaces_boilers.html.
---------------------------------------------------------------------------

     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.\56\ This compares 
with DOE boiler energy efficiency standards established in 2007 that 
range from 80 to 83 percent.\57\
---------------------------------------------------------------------------

    \56\ http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup&pgw_code=BO.
    \57\ http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/furnaces_boilers/furnaces_fr_111907.pdf.
---------------------------------------------------------------------------

     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 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

[[Page 14255]]

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'' (which are, as noted, permits issued to a source that 
is not subject to any applicable requirement for any pollutant) 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.'' \58\ 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 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.
---------------------------------------------------------------------------

    \58\ 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.
---------------------------------------------------------------------------

    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 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.\59\ We are simply proposing action and soliciting 
comment on Step 3 of the phase-in approach.
---------------------------------------------------------------------------

    \59\ Although the Tailoring Rule has been challenged in the U.S. 
Court of Appeals for the DC Circuit, no party has challenged this 
methodology.
---------------------------------------------------------------------------

2. Call for Additional Information Concerning State Burdens
    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 (SO<INF>2</INF>, NO<INF>2</INF>, etc)
    iii. Budget cuts
    iv. Lack of personnel
    v. Other (please specify)
    2. If permitting activity were to increase to levels closer to 
those

[[Page 14256]]

originally anticipated in the Tailoring Rule,\60\ would your state have 
the necessary resources to manage the increased workload?
---------------------------------------------------------------------------

    \60\ See 75 FR 31540.
---------------------------------------------------------------------------

    a. If not, please estimate the level of additional resources 
(funding and staff) your state would require to handle the increased 
burden.
    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).
    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?
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, 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.

[[Page 14257]]

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
    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 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, if in the context of the final rule we 
determine that the provisions for PALs and synthetic minors impose new 
information collection burden, we will adjust the information 
collection requirements accordingly. 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 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.

[[Page 14258]]

    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 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 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

     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 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.

[[Page 14259]]

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    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).

List of Subjects

40 CFR Part 49

    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 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.

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: February 24, 2012.
Lisa P. Jackson,
Administrator.
    For the reasons stated in the preamble, title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 52--[AMENDED]

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

Subpart A--[Amended]

    2. In Sec.  52.21, add paragraph (dd) to read as follows:


Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (dd) Synthetic minor permits. The provisions in paragraphs (dd)(1) 
through (dd)(7) of this section govern issuance of, and compliance 
with, synthetic minor permits that the Administrator may issue to 
owners or operators of GHG-emitting sources.
    (1) Authority to issue GHG synthetic minor permits. (i) The 
Administrator may issue a GHG synthetic minor permit, when requested by 
the owner or operator of a GHG-emitting source that contains one or 
more emissions limitations that have the effect of reducing the 
potential to emit GHGs to:
    (a) Below a level of GHG emissions (expressed as CO<INF>2</INF>e 
and computed in accordance with paragraph (b)(49)(ii) of this section) 
specified in the ``subject to regulation'' definition contained in 
paragraph (b)(49)(iv) of this section;
    (b) Below the major stationary source applicability thresholds 
contained in paragraph (b)(1) of this section; and/or
    (c) Below the significant rate contained in paragraph (b)(23)(i) of 
this section, or when no significant rate for GHG is contained in that 
paragraph, to a level of no net emissions increase as specified in 
paragraph (b)(23)(ii) of this section.
    (ii) The Administrator may issue a GHG synthetic minor permit for 
purposes of:
    (a) Allowing the GHG-emitting source to avoid applicability of 
paragraphs (j) through (r)(5) of this section, for that source's GHG 
emissions, or
    (b) Establishing a creditable GHG emissions reduction on either a 
tpy mass basis, or on a CO<INF>2</INF>e basis (as computed in 
accordance with paragraph (b)(49)(ii) of this section).
    (iii) Such permits shall contain restrictions that are legally 
enforceable and enforceable as practical matter.
    (iv) Nothing in this paragraph relieves an owner or operator of a 
GHG-emitting source from complying with any federal or state 
requirements that otherwise apply to the source.
    (2) Definitions. For purposes of paragraph (dd) of this section, 
the definitions in paragraphs (dd)(2)(i) through (iv) of this section 
apply. When a term is not defined in these paragraphs, it shall have 
the meaning given in paragraph (b) of this section or in the Act.
    (i) Emissions limitation means a requirement established by the 
Administrator which limits the quantity, rate, or concentration of GHG 
emissions on a continuous basis, including any requirement relating to 
the operation or maintenance of one or

[[Page 14260]]

more emissions units to assure continuous emissions reduction, and any 
design standard, equipment standard, work practice, operational 
standard, or pollution prevention technique when the Administrator can 
compute the effect of such requirements on the potential to emit GHGs 
of the emission unit(s)o and such requirement is legally enforceable 
and enforceable as a practical matter.
    (ii) GHG-emitting source means any stationary source that emits or 
has the potential to emit GHGs in amounts that are at or above the 
major stationary source thresholds contained in paragraph (b)(1) of 
this section, and is also:
    (a) A major stationary source for any other regulated NSR 
pollutant;
    (b) A new major stationary that will emit or have the potential to 
emit 100,000 tpy CO<INF>2</INF>e; or
    (c) A stationary source that emits or has the potential to emit 
100,000 tpy CO<INF>2</INF>e.
    (iii) GHG synthetic minor permit means a permit that the 
Administrator issues to a GHG-emitting source that contains one or more 
emissions limitations that allows the source to become a GHG synthetic 
minor source; reduces potential to emit GHGs to a level below the 
significant rate contained in paragraph (b)(23) of this paragraph; 
reduces potential to emit GHGs to a level that assures that there is no 
net emissions increase from the GHG-emitting source, and/or creates a 
creditable emissions reduction for GHGs under paragraph (b)(3) of this 
section.
    (iv) GHG synthetic minor source means a GHG-emitting source that, 
in absence of the Administrator's issuance of a synthetic minor permit, 
would have the potential to emit GHGs in amounts that are at or above 
the subject to regulation thresholds contained in paragraph (b)(49) of 
this section, and the major stationary source thresholds contained in 
paragraph (b)(1) of this section, but has obtained a synthetic minor 
permit to limit the potential to emit GHGs to below either of these 
amounts.
    (3) Permit application requirements. As part of a permit 
application requesting a GHG synthetic minor permit, the owner or 
operator of a GHG-emitting source shall submit the following 
information to the Administrator for approval:
    (i) Identifying information, including the name and address of the 
owner or operator (and plant name and address if different), and the 
name and telephone number of the plant manager/contact.
    (ii) A description of any ongoing or future planned construction 
activity that involves or affects emission units identified in 
paragraph (dd)(3)(iii) of this section, or involves construction of new 
emissions unit(s); and the commencement date of construction, the 
anticipated completion date, and the anticipated date each emissions 
unit will resume or begin regular operations.
    (iii) A list of all emissions units that are located at the GHG-
emitting source that emit GHGs; and any new emissions units identified 
in paragraph (dd)(3)(ii) of this section.
    (iv) For each emissions unit identified in paragraph (dd)(3)(iii) 
of this section, the unit's potential to emit GHGs along with 
supporting calculations.
    (a) For purposes of this application, the potential to emit of each 
emissions unit shall be computed without considering any emissions 
limitations that might be established through the Administrator's 
issuance of a GHG synthetic minor permit.
    (b) Such calculations shall include fugitive emissions, to the 
extent that they are quantifiable, if the emissions unit or GHG-
emitting source belongs to one of the source categories listed in 
paragraph (b)(1)(iii) of this section.
    (v) An identification of each emissions unit for which the permit 
applicant requests that the Administrator establish an emissions 
limitation, along with the following information:
    (a) The proposed emissions limitation for each emissions unit and a 
description of its effect on the potential to emit of the emissions 
unit. The proposed emission limitations must be expressed over the 
shortest practicable time period, taking into consideration the 
operation of the source and the methods to be used for demonstrating 
compliance.
    (b) Proposed testing, monitoring, recordkeeping, and reporting 
requirements to be used to demonstrate and assure compliance with the 
proposed emissions limitation.
    (c) A description of the production processes.
    (d) Identification of the emissions units.
    (e) Type and quantity of fuels and/or raw materials used, if 
applicable.
    (f) Description and estimated efficiency of air pollution control 
equipment under present and anticipated operating conditions.
    (g) Estimates of the current actual emissions, including all 
calculations for the estimates.
    (h) Estimates of the potential to emit that would result from 
compliance with the proposed emissions limitation, including all 
calculations for the estimates.
    (i) An identification of other federal requirements with which the 
emissions unit must comply.
    (vi) Any other information specifically requested by the 
Administrator.
    (4) Procedures for obtaining a synthetic minor permit. (i) The 
owner or operator of the GHG-emitting source must submit a permit 
application to the Administrator. The application must contain the 
information specified in paragraph (dd)(3) of this section.
Option 1 for paragraphs (dd)(4)(ii) and (iii):
    (ii) Within 60 days after receipt of an application, the 
Administrator will determine if it contains the information specified 
in paragraph (dd)(3) of this section.
    (iii) If the Administrator determines that the application is not 
complete, the Administrator will request additional information from 
the owner or operator as necessary to process the application. If the 
Administrator determines that the application is complete, the 
Administrator will notify the owner or operator in writing. The 
Administrator should postmark the completeness determination or request 
for additional information within 60 days of receipt of the permit 
application. The application is deemed complete if the Administrator 
does not request additional information, or send a notice of complete 
application postmarked within 60 days of receipt of the permit 
application.
Option 2 for paragraphs (dd)(4)(ii) and (iii):
    (ii) Within 30 days after receipt of an application, the 
Administrator will determine if it contains the information specified 
in paragraph (dd)(3) of this section.
    (iii) If the Administrator determines that the application is not 
complete, the Administrator will request additional information from 
the owner or operator as necessary to process the application. If the 
Administrator determines that the application is complete, the 
Administrator will notify owner or operator in writing. The 
Administrator should postmark the completeness determination or request 
for additional information within 30 days of receipt of the permit 
application by the Administrator.
    (iv) The Administrator will prepare a draft synthetic minor permit 
that describes the proposed emissions limitation(s) and the effect of 
such emissions limitation(s) on the potential emissions from any 
projects identified in paragraph (dd)(3)(ii) of this section, and the 
potential to emit GHGs of both

[[Page 14261]]

the emissions units identified in paragraph (dd)(3)(iii) of this 
section and the GHG-emitting source.
    (v) The Administrator must provide an opportunity for public 
comment and public participation on the draft synthetic minor permit as 
set out in paragraphs (dd)(6) of this section.
    (vi) After the close of the public comment period, the 
Administrator will review all comments received and either prepare a 
final synthetic minor permit or a written explanation of the reasons 
for a decision to deny the application for the synthetic minor permit.
    (vii) The final synthetic minor permit is subject to administrative 
and judicial review as set out in paragraph (dd)(7) of this section.
    (5) Permit Content. The permit must include the requirements in 
paragraphs (dd)(5)(i) through (vii) of this section.
    (i) General Requirements. The following elements must be included 
in the permit:
    (a) The effective date of the permit, and an effective date for any 
terms and conditions of the permit, if such date differs from the 
effective date of the permit; and
    (b) An identification of the emissions units subject to the permit 
and each emissions unit's associated emissions limitations.
    (ii) Emissions limitations. The permit must contain one or more 
emissions limitations. Each emissions limitation must meet the 
requirements of paragraphs (dd)(5)(ii)(a) through (d) of this section.
    (a) To effectively reduce the potential to emit of one or more 
emissions units at the GHG-emitting source, the permit must include an 
emissions limitation that is legally enforceable and enforceable as a 
practical matter, and is expressed over the shortest practicable time 
period, generally not to exceed a 12-month rolling total.
    (b) Such emissions limitation must consist of one or more numerical 
limitations on the quantity, rate, or concentration of GHG emissions on 
either a mass or CO<INF>2</INF>e basis that is expressed over the 
shortest practical time period and that is legally enforceable and 
enforceable as a practical matter. If it is impracticable to impose a 
numerical limitation, then the Administrator may establish pollution 
prevention requirements, design standards, equipment standards, work 
practices, operational standards, or maintenance standards, when the 
Administrator can compute the effect of such restrictions on the 
emissions unit's or GHG-emitting source's potential to emit GHG and the 
requirements are legally enforceable and enforceable as a practical 
matter. The Administrator may also establish any combination of the 
above requirements.
    (c) A statement that the emissions limitation applies at all times 
including startup, shutdown, and malfunction unless a separate 
emissions limitation applies to these emissions, and such emissions are 
expressly excluded from an emissions limitations, or the Administrator 
directs otherwise in the permit.
    (d) The calculation procedure the owner or operator will use to 
convert the monitoring system data to emissions data to demonstrate 
compliance with the emissions limitation.
    (iii) Monitoring requirements. The permit must include monitoring 
requirements sufficient to assure compliance with the emissions 
limitations. The Administrator must require, as appropriate, any of the 
requirements in paragraphs (dd)(5)(iii)(a) and (b) of this section.
    (a) A requirement to monitor, including analysis procedures, test 
methods, periodic testing, instrumental monitoring, and non-
instrumental monitoring. Such monitoring requirements shall assure use 
of test methods, units, averaging periods, and other statistical 
conventions consistent with the required emissions limitations.
    (b) As necessary, requirements concerning the use, maintenance, and 
installation of monitoring equipment or methods.
    (iv) Recordkeeping requirements. The permit must include 
recordkeeping requirements sufficient to assure compliance with the 
emissions limitations and monitoring requirements, and must require the 
elements in paragraphs (dd)(5)(iv)(a) through (c) of this section.
    (a) Records of required monitoring information that include the 
information in paragraphs (dd)(5)(iv)(a)(1) through (6) of this 
section, as appropriate.
    (1) The location, date, and time of sampling or measurements.
    (2) The date(s) analyses were performed.
    (3) The company or entity, and the name of the specific individuals 
that performed the analyses.
    (4) The analytical techniques or methods used.
    (5) The results of such analyses.
    (6) The operating conditions existing at the time of sampling or 
measurement.
    (b) Retention for 5 years of records of all required monitoring 
data and support information for the monitoring sample, measurement, 
report, or application. Support information may include all calibration 
and maintenance records, all original strip-chart recordings or digital 
records for continuous monitoring instrumentation, and copies of all 
reports required by the permit.
    (c) A copy of the synthetic minor permit application and any 
additional information requested by the Administrator to support the 
application.
    (v) Reporting requirements. The permit must include the reporting 
requirements in paragraphs (dd)(5)(v)(a) through (d) of this section.
    (a) Annual submittal of total GHG emissions and calculations for 
each emissions unit subject to an emissions limitation in the synthetic 
minor permit. Such calculations shall be based on the terms and 
conditions in the permit that limit GHG emissions. Where necessary for 
a calculation of annual GHG emissions, the permit must require 
reporting of actual hours of operation, material used, and other 
relevant metrics.
    (b) Prompt reporting of deviations from permit requirements, 
including those attributable to upset conditions as defined in the 
permit, the probable cause of such deviations, and any corrective 
actions or preventive measures taken. Within the permit, the 
Administrator must define ``prompt'' in relation to the degree and type 
of deviation likely to occur and the applicable emissions limitations.
    (c) For each requirement in the permit, an annual submission of a 
compliance certification signed by the owner or operator, attesting to 
the GHG-emitting source's compliance with such requirement, or a 
statement that the GHG-emitting source failed to comply with the 
requirement and an explanation of such non-compliance. For purposes of 
complying with this reporting requirement, the owner or operator may 
concurrently attest to all requirements with which it complied, but 
must address each requirement with which it failed to comply 
separately.
    (d) A requirement to notify the Administrator in writing within 30 
days from the date the operator begins actual construction, and any 
construction activity completes, and when regular operations begin, for 
any project involving or affecting any emissions unit that is subject 
to a requirement in the synthetic minor permit.
    (e) A requirement to provide all reports electronically, unless the 
Administrator has not provided a system for such electronic reporting.
    (1) For projects involving or affecting multiple emissions units, 
the notification must be submitted within

[[Page 14262]]

30 days from when such activities first occur for any emissions unit.
    (2) If such activity was not already described in the permit 
application as required by paragraph (dd)(3) of this section, the 
notification shall identify the emissions units involved in or affected 
by the project, and describe the nature of the construction activity 
and any affect such activity will have on the potential to emit of an 
emissions unit, or on the GHG-emitting source, otherwise the 
notification should reference the permit application.
    (vi) Severability clause. A statement stating that the provisions 
of this synthetic minor permit are severable, and if any provision of 
the permit is held invalid, the remainder of the permit shall not be 
affected.
    (vii) Additional provisions. The permit must also contain 
provisions stating the requirements in paragraphs (dd)(5)(vii)(a) 
through (g) of this section.
    (a) You, as the permittee, must comply with all conditions of your 
permit, including emissions limitations that apply to the emissions 
units at your source. Noncompliance with any permit term or condition 
is a violation of the permit and may constitute a violation of the Act 
and is grounds for enforcement action and for a permit termination or 
revocation.
    (b) It is not a defense for you, as the permittee, in an 
enforcement action that it would have been necessary to halt or reduce 
the permitted activity in order to maintain compliance with the 
conditions of this permit.
    (c) The Administrator may reopen, revise, terminate or revoke the 
permit. The filing of a request by you, as the permittee, for a permit 
revision, revocation, or termination, or of a notification of planned 
changes or anticipated noncompliance does not stay any permit 
condition.
    (d) The permit does not relieve the permittee from complying with 
any federal or state requirements that otherwise apply to the source.
    (e) The permit does not convey any property rights of any sort or 
any exclusive privilege.
    (f) You, as the permittee, shall furnish to the Administrator, 
within a reasonable time, any information that the Administrator may 
request in writing to determine whether cause exists for reopening, 
revising, revoking, or terminating the permit or to determine 
compliance with the permit. For any such information claimed to be 
confidential, you must also submit a claim of confidentiality in 
accordance with part 2, subpart B of this chapter.
    (g) You, as the permittee, must allow a representative of the 
Administrator (who must comply with the safety requirements of the 
permittee) to:
    (1) Enter upon your premises where the source is located or 
emissions-related activity is conducted, or where records are required 
to be kept under the conditions of the permit;
    (2) Have access to and copy, at reasonable times, any records that 
are required to be kept under the conditions of the permit;
    (3) Inspect, during normal business hours or while the source is in 
operation, any facilities, equipment (including monitoring and air 
pollution control equipment), practices, or operations regulated or 
required under the permit;
    (4) Sample or monitor, at reasonable times, substances or 
parameters for the purpose of determining compliance with the permit or 
other applicable requirements; and
    (5) Record any inspection by use of written, electronic, magnetic, 
and photographic media.
    (6) Public participation requirements. This paragraph applies to 
the issuance of synthetic minor permits.
    (i) Public availability of documents. With the exception of any 
confidential information as defined in part 2, subpart B of this 
chapter, the Administrator must make available for public inspection 
the documents listed in paragraphs (dd)(6)(i)(a) through (d) of this 
section. The Administrator must make such information available for 
public inspection at the appropriate EPA Regional Office.
    (a) All information submitted as part of an application for a 
permit.
    (b) Any additional information requested by the Administrator.
    (c) The Administrator's analysis of the application and any 
relevant, additional information submitted by the source.
    (d) A copy of the draft permit or the decision to deny the permit 
with the justification for denial.
    (ii) Public notice requirements. (a) Before issuing a synthetic 
minor permit, the Administrator must prepare a draft permit and must 
provide adequate public notice to ensure that the area affected has 
reasonable access to the application and draft permit information, as 
set out in paragraphs (dd)(6)(ii)(a)(1) and (2) of this section. The 
public notice must provide an opportunity for public comment, and may 
provide notice of a public hearing on the draft permit.
    (1) The Administrator must mail a copy of the notice to the GHG-
emitting source, and the state, and local air pollution authorities 
having jurisdiction in the area in which the GHG-emitting source is 
located.
    (2) The Administrator will use appropriate means of notification, 
depending on such factors as the nature and size of your source, local 
air quality considerations, and the characteristics of the population 
in the affected area. Appropriate means include those listed in 
paragraphs (dd)(6)(ii)(a)(2)(i) through (v) of this section.
    (i) The Administrator may mail or email a copy of the notice to 
persons on a mailing list developed by the Administrator consisting of 
those persons who have requested to be placed on such a mailing list.
    (ii) The Administrator may post the notice on its Web site.
    (iii) The Administrator may publish the notice in a newspaper of 
general circulation in the area affected by the source.
    (iv) The Administrator may provide copies of the notice for posting 
at one or more locations in the area affected by the source, such as 
post offices, trading posts, libraries, tribal environmental offices, 
community centers, or other gathering places in the community.
    (v) The Administrator may employ other means of notification as 
appropriate.
    (b) The notice required pursuant to paragraph (dd)(6)(ii)(a) of 
this section must include the following information at a minimum:
    (1) Identifying information, including the name and address of the 
owner and operator of the GHG-emitting source (and plant name and 
address if different) and the name and telephone number of the plant 
manager/contact;
    (2) The name and address of the reviewing authority processing the 
permit action;
    (3) An explanation of any emissions changes that will result from 
the permit action;
    (4) A description of the proposed emissions limitation(s) and its 
effect on the potential to emit of a project, one or more emissions 
units, or the GHG-emitting source;
    (5) Instructions for requesting a public hearing;
    (6) The name, address, and telephone number of a contact person in 
the reviewing authority's office from whom additional information may 
be obtained;
    (7) Locations and times of availability of the information (listed 
in paragraph (dd)(6)(i) of this section) for public inspection; and
    (8) A statement that any person may submit written comments, a 
written request for a public hearing, or both, on the draft permit 
action and the time frames by which any person must take such 
action(s).

[[Page 14263]]

    (iii) Public comment. (a) The Administrator must provide at least 
30 days from the date of public notice provided under paragraph 
(dd)(6)(ii) of this section for the public to submit comments on the 
draft permit. The Administrator may extend this period if he or she 
determines it is appropriate to do so.
    (b) Any person may submit written comments on the draft permit 
during the public comment period. These comments must raise any 
reasonably ascertainable issue with supporting arguments by the close 
of the public comment period.
    (c) The public comment period under paragraph (dd)(6)(iii)(a) of 
this section will not close before the date of any public hearing held 
in accordance with paragraph (dd)(6)(iv) of this section. The hearing 
officer may also extend the comment period by so stating at the 
hearing.
    (iv) Public Hearing. (a) Any person may request a public hearing on 
a permit, but such request must be submitted to the Administrator, in 
writing, and must state the nature of the issues proposed to be raised 
at the hearing, and must be postmarked no later than 15 days after the 
Administrator provides public notice of the draft permit under 
paragraph (dd)(6)(ii) of this section.
    (b) The Administrator must hold a hearing whenever there is, on the 
basis of requests and the issues raised therein, a significant degree 
of public interest in a draft permit. The Administrator may also hold a 
public hearing at the Administrator's discretion whenever, for 
instance, such a hearing might clarify one or more issues involved in 
the permit decision.
    (c) The Administrator must provide notice, consistent with the 
requirements in paragraph (dd)(6)(ii) of this section, that the 
Administrator will hold a public hearing. Such notice must be provided 
at least 15 days before the date of the hearing. Public notice of the 
hearing may be concurrent with that of the draft permit, and the two 
notices may be combined.
    (d) The Administrator may set reasonable limits on the time allowed 
for oral statements at the hearing.
     (e) The Administrator must make a tape recording or written 
transcript of any hearing available to the public as part of the final 
administrative record for the permit under paragraph (dd)(7)(iii) of 
this section.
    (7) Final permit issuance and administrative and judicial review--
(i) Notification of the final permit decision. The Administrator must 
notify the GHG-emitting source of the final permit decision, in 
writing, and if the permit is denied, of the reasons for such denial. 
The Administrator must also provide adequate public notice of the final 
permit decision, consistent with the provisions in paragraph 
(dd)(6)(ii) of this section.
    (ii) Effective date of the permit. A final permit becomes effective 
30 days after the Administrator issues the permit, unless:
    (a) A later effective date is specified in the permit; or
    (b) Review of the final permit is request under paragraph 
(dd)(7)(iv), in which case the effective date of the permit is stayed 
until the Administrator issues a notice of final agency action under 
paragraph (dd)(7)(iv)(b), unless the Administrator notifies the 
Environmental Appeals Board, and the applicant, and all of the 
interested parties, that the permit contains uncontested and severable 
conditions, in which case, these conditions shall become fully 
effective enforceable obligations of the permit as specified in 
paragraph (dd)(7)(ii)(a) of this section, but the remainder of the 
permit conditions will be stayed as specified in this paragraph; or
    (c) The Administrator may make the permit effective immediately 
upon issuance if no comments requested a significant change in the 
draft permit or provided a technical justification for why the 
Administrator should deny the permit.
    (iii) Administrative record. (a) The Administrator must base final 
permit decisions on an administrative record consisting of:
    (1) The application and any supporting data furnished by the 
applicant;
    (2) The draft permit or notice of intent to deny the application;
    (3) Other documents in the supporting files for the draft permit 
that the Administrator considered in the decisionmaking;
    (4) All significant comments received during the public comment 
period;
    (5) The tape or transcript or other electronic record of any 
hearing(s) held;
    (6) Any written material submitted at such hearing(s);
    (7) Any new materials placed in the record as a result of the 
Administrator's evaluation of public comments;
    (8) The final permit; and
    (9) Other documents in the supporting files for the final permit 
that the Administrator considered in the final decisionmaking.
    (b) The Administrator must add the additional documents required 
under paragraph (dd)(7)(iii)(a) of this paragraph to the record as soon 
as possible after their receipt or preparation by the Administrator. 
The record is complete on the date the Administrator issues the final 
permit.
    (c) Material readily available or published materials that are 
generally available and that are included in the administrative record 
under the standards of paragraph (dd)(7)(iii)(a) of this paragraph need 
not be physically included in the same file as the rest of the record 
as long as it is specifically referred to in the that file.
    (iv) Appealing a permit decision. Permit decisions may be appealed 
according to the following provisions:
    (a) The Administrator delegates authority to the Environmental 
Appeals Board (the Board) to issue final decisions in permit appeals 
filed under this program. An appeal directed to the Administrator, 
rather than to the Board, will be forwarded to the Board for 
consideration. This delegation does not preclude the Board from 
referring an appeal or a motion under this program to the Administrator 
when the Board, in its discretion, deems it appropriate to do so. When 
an appeal or motion is referred to the Administrator by the Board, all 
parties shall be so notified and the provisions of this program 
referring to the Board shall be interpreted as referring to the 
Administrator.
    (b) Any person seeking to appeal a permit decision must follow the 
provisions for PSD permits in Sec.  124.19 of this chapter.
    (c) The final synthetic minor permit is subject to administrative 
and judicial review as set out in Sec.  124.19 of this chapter.
    (v) Permit Revisions. (a) The Administrator may reopen, revise, 
terminate, or revoke requirements within the synthetic minor permit, or 
may take such action on the entirety of the synthetic minor permit. 
Such actions may be taken by the Administrator for cause on its own 
initiative, or at the request of the permittee.
    (b) Except for administrative permit revisions identified in 
paragraph (dd)(7)(vi) of this section, the Administrator shall follow 
all of the public participation requirements in paragraphs (dd)(6) of 
this section before revising, revoking, or terminating requirements in 
the synthetic minor permit.
    (c) All changes to a permit are subject to the effective date, and 
administrative review requirements contained in paragraph (dd)(7)(i) 
through (iv) of this section.

[[Page 14264]]

    (vi) Administrative permit revision. The following provisions 
govern administrative permit revisions.
    (a) An administrative permit revision is a permit revision that 
makes any of the following changes:
    (1) Corrects typographical, calculation or other errors.
    (2) Identifies a change in the name, address, or phone number of 
any person identified in the permit, or provides a similar minor 
administrative change at the source.
    (3) Requires more frequent monitoring or reporting by the 
permittee.
    (4) Allows for a change in ownership or operational control of a 
GHG-emitting source when the Administrator determines that no other 
change in the permit is necessary, provided that a written agreement 
containing a specific date for transfer of permit responsibility, 
coverage, and liability between the current and new permittee has been 
submitted to the Administrator.
    (5) Incorporates any other type of change that the Administrator 
determines is similar to those in paragraphs (dd)(7)(vi)(a)(1) through 
(5) of this section.
    (b) An administrative permit revision is not subject to the permit 
application, issuance, public participation or administrative 
requirements of this program.

[FR Doc. 2012-5431 Filed 3-7-12; 8:45 am]
BILLING CODE 6560-50-P


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