# Response to Comment on Proposed Rule, "Action to Ensure Authority to
Issue Permits under the Prevention of Significant Deterioration Program to
Sources of Greenhouse Gas Emissions: Federal Implementation Plan"

# Response to Comment on Proposed Rule, "Action to Ensure Authority to
Issue Permits under the Prevention of Significant Deterioration Program to
Sources of Greenhouse Gas Emissions: Federal Implementation Plan"

U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Air Quality Policy Division New Source Review Group Research Triangle Park, NC

December 2010i 

## Table of Contents

1.0 Introduction................................................................................................................... 1

2.0 Legal Authority and Procedural Recommendations.................................................5 2.1 EPA's Legal Authority to Require States to Revise SIP.....................................5

2.2 Recommendations to Withdraw or Defer ...........................................................6 2.2 Timing of the FIP..............................................................................................10

3.0 FIP Provisions .............................................................................................................14

3.1 Can the EPA Issue a FIP Without Further Notice and Comment?...................14 3.2 FIP Timing and Procedures ..............................................................................17

3.3 EPA Will Act on GHG Portion of Permit and States Will Retain Responsibility for Remainder of Permit ...........................................................19 3.4 FIP Will Contain Regulatory Provisions of 40 CFR 52.21 with Applicability Limited to GHGs ........................................................................24

4.0 Other Comments.........................................................................................................25ii 

## Abbreviations List

BACT Best Available Control Technology

CAA Clean Air Act CAAAC Clean Air Act Advisory Committee CFR Code of Federal Regulations EPA United States Environmental Protection Agency FIP Federal Implementation Plan FR Federal Register GHG Greenhouse gas LDVR Light-Duty Vehicle Rule NAAQS National Ambient Air Quality Standards

NSR New Source Review PSD Prevention of Significant Deterioration RTC Response to Comments SIP State Implementation Plan1 

## 1.0 Introduction

The U.S. Environmental Protection Agency (EPA) proposed to find that 13 states with EPA-approved state implementation plan (SIP) New Source Review Prevention of Significant Deterioration (PSD) programs are substantially inadequate to meet Clean Air Act (CAA) requirements because they do not appear to apply PSD requirements to GHG-emitting sources. For each of these states, we proposed to require the state (through a “SIP call”) to revise its SIP as necessary to correct such inadequacies and establish a deadline for doing so. 1 At the same time, EPA proposed to issue a federal implementation plan for those states if and when those states missed their deadlines for submitting revised PSD SIPs. 2 Under the FIP, EPA would be the PSD permitting authority for GHG-emitting sources within a state. States could choose a deadline of as early as three weeks after rule signature in order to allow EPA to establish a FIP that would be effective by January 2, 2011. We proposed such an expedited schedule for states to submit their corrective SIP revisions, in light of the fact that as of January 2, 2011, certain GHG-emitting sources will become subject to the PSD requirements and may not be able to obtain a PSD permit in order to construct or modify. We also solicited comment on whether any other state programs fail to apply their PSD programs to GHG-emitting sources and proposed that any states so identified would also receive a finding of substantial inadequacy and a SIP call.

The public comment period for the proposed FIP ended on October 14, 2010. We received 29 comment letters (excluding duplicates and not including attachments). Table 1, “Comment Letters Received on the Proposed FIP,” presents the list of comment letters(including duplicates) submitted to the docket for this rulemaking (Docket ID No. EPA-HQOAR-2010-0107, at http://www.regulations.gov) in response to the proposed rule, "Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan." We received approximately 3 comment letters from state and local air agencies, 19 comment letters from industry and industry associations,
, 4 comment letters from environmental groups, 2 comment letters from individual private citizens, and 1 mass e-mail campaign comment letter (777 identical messages).

1 In this document, the terms "we" and "our" refer to EPA.

2 This action was proposed on September 2, 2010, in Volume 75 of the Federal Register

, beginning on page 53,883 (75 FR 53883).1 – Introduction

2 Table 1. Comment Letters Received on the Proposed FIP

Docket
Identification

Number(EPA-HQ-OAR2010-0107-) Commenter Name/Description/Affiliation

0048 Comment and attachment submitted by Dr. G. H. Holliday, Ph. D., P.E. BCEE. ASME Life Fellow, Holliday Environmental Services, Inc., Environmental Engineers and Regulatory Consultants

0053 Comment and attachment submitted by Shannon Anderson, Powder River Basin

Resource Council

0055 Comment and attachment submitted by Teresa Marks, Director, Arkansas Department of Environmental Quality (ADEQ)

0056 Comment and attachments submitted by Robert A. Hirsch, Director of Regulatory Affairs, Portland Cement Association (PCA)

0057 Comment and attachment submitted by Claire M. Olson, Senior Vice-President and General Counsel, Basin Electric Power Cooperative

0062 Comment submitted by S. S. Sundbrug

0063 Comment and attachment submitted by Robert A. Hirsch, Director, Regulatory Affairs, Portland Cement Association (PCA)

0065 Comment and attachment submitted by Matthew G. Paulson, Baker Botts, LLP on behalf of Texas Industry Project (TIP)

0066 Comment and attachment submitted by Matthew G. Paulson, Baker Botts, LLP on behalf of Texas Industry Project (TIP) (IDENTICAL TO 0065)

0068 Comment and attachment submitted by Bob Dinneen, President & Chief Executive Officer (CEO), Renewable Fuels Association (RFA)

0069 Comment and attachment submitted by National Association of Manufacturers (NAM), et al.

0070 Comment and attachment submitted by Leslie Sue Ritts, Counsel, National Environmental Development Association's Clean Air Project (NEDA/CAP)

0072 Comment and attachment submitted by Leslie Sue Ritts, Counsel, National Environmental Development Association's Clean Air Project (NEDA/CAP) (DUPLICATE of 0070)

0074 Comment and attachment submitted by Peter S. Glaser, Attorney, Troutman Sanders LLP on behalf of Peabody Energy Company

0076 Comment and attachment submitted by Craig Holt Segall, Environmental Law Fellow, Sierra Club, et al.

0079 Comment and attachment submitted by John V. Corra, Director, Wyoming Department of Environmental Quality (WY DEQ)1 – Introduction

3 Docket
Identification

Number(EPA-HQ-OAR2010-0107-) Commenter Name/Description/Affiliation

0081 Comment and attachment submitted by Bruce Watzman, Sr. Vice President, Regulatory Affairs, National Mining Association (NMA)

0082 Comment and attachment submitted by Mark Maslyn, Executive Director, Public Policy, American Farm Bureau Federation (AFBF)

0084 Comment and attachments submitted by Mark R. Vickery, Executive Director, Texas Commission on Environmental Quality (TCEQ)

0088 Comment and attachments submitted by Vinson & Elkins LLP and Holland & Hart

LLP on behalf of Coalition for Res ponsible Regulation, Inc. (CRR)

0093 Late comment and attachment submitted by Cyrus Reed, Conservation Director, Lone Star Chapter, Sierra Club

0096 Comment and attachment submitted by Robert A. Wyman of Latham & Watkins LLP, on behalf of the National Climate Coalition

0097 Comment and attachment submitted by Michael J. Nasi, Counsel, Jackson Walker LLP, on behalf of the Gulf Coast Lignite Coalition (GCLC)

0098 Comment and attachment submitted by Michael J. Nasi, Counsel, Jackson Walker LLP, on behalf of the Gulf Coast Lignite Coalition (GCLC) (DUPLICATE OF 0097)

0099 Comment submitted by American Farm Bureau Federation (AFBF)

0100 Comment and attachment submitted by R obert A. Hirsch, Director, Regulatory Affairs, Portland Cement Association (PCA)

0102 Comment submitted by Hunton & Williams LLP on behalf of Utility Air Regulatory Group

0103 Comment and attachment submitted by Jay Hudson, Manager, Santee Cooper Environmental Management

0104 Late comment and attachments submitted by Craig Segall, Environmental Law Fellow, Sierra Club Environmental Law Program, et al.

0109 Comment and attachment submitted by Bruce Watzman, Sr. Vice President, Regulatory Affairs, National Mining Association (NMA)

0115 Comment and attachment submitted by R obert A. Hirsch, Director, Regulatory Affairs, Portland Cement Associati on (PCA) (Attachment to OAR-2010-0107-0100)

10/19/2010

0116 Late comment submitted by Shannon S. Broome, Counsel, Bingham McCutchen

LLP on behalf of the National Association of Manufacturers et al.

0117 Mass Comment Campaign sponsored by Sierra Club (777)

a Docket ID identifies comments found in Docket No. EPA-HQ-OAR-2010-0107 by document number.1 – Introduction

4 b Documents submitted to the docket together appear in the docket as multiple documents with the same

4-digit “root number” followed by a unique extension. For example, comments received via email are generally assigned two numbers. First, the ema il message itself is assigned the root number (e.g., 0088). Second, the attached comment document is assigned an extended number based on the root number (e.g., 0088.1). Additional attachments, if any, would follow the same pattern (e.g., 0088.2, 0088.3, etc.). For the purposes of this table, we list all related documents under the root number (e.g., 0088). In the text of the comment summary, we identify the source by the entire document number (e.g., 0088.1).

In the remaining chapters of this Response to Comment document (RTC), we have summarized the public comments received on the FIP proposal, and we provide responses to those comments. Several of the comments received address both the Proposed SIP Call and the Proposed FIP. Comments received on the Proposed SIP Call are addressed in the preamble and RTC for that rulemaking. EPA has attempted to address only the FIP issues in this RTC.5 

## 2.0 Legal Authority and Procedural Recommendations

2.1 EPA's Legal Authority to Require States to Revise SIP

Comment:

One industry commenter (0071.1/0102.1) states that when EPA promulgates new minimum requirements for SIPs pursuant to section 110(a), as the Agency has done in the Tailoring Rule’s amendments to 40 CFR 51.166, establishment of those new section 110(a) requirements itself automatically triggers an obligation by states to revise their SIPs to implement those new requirements, without the need for any administrative action by EPA pursuant to section 110(k)(5). Once the section 110(a) SIP revision process is triggered, EPA simply has no authority to order SIP revisions under section 110(k)(5) because section 110(a) has already mandated those revisions. At the same time, section 110(k)(5) cannot be construed

to authorize EPA to mandate SIP revisions on term s that are redundant or inconsistent with those governing SIP revisions under section 110(a). For all the same reasons, the commenter believes that the underlying premises for the proposed FIP rule ( i.e. , that states have an obligation at this time to revise their previously approved PSD SI Ps to regulate GHGs, and that EPA has authority to invoke the CAA’s SIP call provision (section 110(k)(5)) to require states to do so) are incorrect. On this basis, the commenter asserted that no legal basis exists for the proposed FIP

rule.

Another industry commenter (0103.1) stated that although CAA section 110(a)(1) allows EPA to specify a shorter period for SIP revisi ons, in 40 CFR 51.166(a)(6)(i) EPA has codified a 3-year schedule for PSD SIPs in 40 CFR 51.166(a)(6)(i) in 2002, as “a date analogous to the date for submission of new SIPs when a NAAQS is promulgated or revised” pursuant to section 110(a)(1) of the Act. The commenter asserted that the FIP proposal runs afoul of this binding provision in this legislative rule and is therefore unlawful.

Some industry (0065.1, 0069.1, 0074.1, 0081.1/0109.1) and state agency (0084.2) commenters noted that the FIP proposal is a c ontinuation of EPA’s coordinated program of regulating GHGs, and the commenters asserted that each of the prior building blocks is legally defective as shown in the commenters’ comments on each. Thus, the commenters contended that the FIP also is legally invalid.

Response:

We disagree with the commenters that the FIP is invalid. In addition, in this rule, we are not reopening the legal rationales for the other GHG rules, and as a result, the commenter's comment on the legal rationale for those rules is not germane to this rule. We laid out our analytical approach and legal rationales for the SIP call and for all our other GHG-related actions in those actions and we responded to comments in those actions. In particular, we responded to the commenter’s comments about the validity of the SIP call in that action.2 – Legal Authority and Procedural Recommendations

6 Comment:

An industry commenter (0103.1) stated that EP A’s proposal that states may change their interpretation of the term “subject to regulation” as currently used in approved, existing SIPs to match the Tailoring Rule is contrary to the requirements of section 110 of the Act. This

commenter contended that no revision to a SIP or a FIP may be applied to a source unless EPA or the state has first revised the plan in accordance with the requirements of section 110 of the Act, asserting that under section 110(i) the only way to change the plan is pursuant to the SIP revision procedures of section 110(a) or the FIP procedures of section 110(c).

Response:

The comments concerning the interpretation of “subject to regulation” are not relevant to the FIP rulemaking because that issue affect s only states with approved PSD programs that apply to GHG-emitting sources. CAA section 110(i) is not relevant to this rulemaking, but even if it were, it does not preclude EPA from promulgating a FIP under CAA section 110(c), as EPA

does here.



### 2.2 Recommendations to Withdraw or Defer

Comment:

Two state agency commenters (0084.2, 79.1) and numerous industry commenters 0056.2/0063.1/0100.1, 0065.1, 0064.1/0096.1, 0069.1, 0070.1, 0071.1/0102.1, 0074.1, 0081.1/0109.1, 0103.1) urged EPA to withdraw, defer, or stay the proposed SIP call and/or the proposed FIP for various reasons, including concerns about the uncertainty created by the lack of available guidance.

One industry commenter (0064.1/0096.1) noted that in addition to uncertainty about the states’ responses to the SIP and FIP proposals, affected sources and the states face significant regulatory uncertainty regarding the Tailoring Rule itself, given the multitude of cases that have been filed to challenge many of EPA’s GHG-related actions and the fact that multiple motions to consolidate these cases and stay application of the rules remain pending before the D.C Circuit Court. The commenter added that affected sources and states are still waiting for EPA’s pending GHG BACT guidance, which the commenter believes should be subject to public hearing and comment before going into effect. To avoid further regulatory uncertainty and chilling investment, the commenter urged EPA to voluntarily stay the effective date of the Tailoring Rule to the latter of (1) the date that all 50 states receive approved corrected SIP revisions or become subject to a FIP, or (2) the D.C. Circuit ruling on the motions for stay of EPA’s Endangerment Finding, Light-Duty Vehicle Rule, Tailoring Rule, and PSD Interpretive Rule.2 – Legal Authority and Procedural Recommendations

7 Another industry commenter (0081.1/0109.1) stated that the fundamental problem that EPA faces in trying to commence GHG regulation on January 2, 2011 is that many states are not ready to implement the PSD and Title V regulations. The commenter indicated that the SIP call will not solve this problem and is legally problematic, and that the proposed FIP does not cure this problem but instead exacerbates the uncertainty that the impending GHG regulations have created throughout the economy. According to the commenter, the only way to avoid potentially severe economic consequences and assure that states remain in place as the PSD permitting entity is for EPA to defer regulation until states are ready to implement it.

One state agency commenter (Wyoming) (0079.1) stated that as EPA proceeds with expedited SIP approval and FIP implementation, his state cannot ascertain at this time the job

loss and cost to the state and her citizens of these rules. The commenter also indicated that it is difficult to determine the potential impacts of the rules on small entities in each state without a clear understanding of the BACT requirements, EPA’s permitting guidance, and the actual content of a FIP. The commenter expressed di sappointment that his agency must comment well ahead of knowing what EPA’s BACT guidance will entail.

Another state agency commenter (Texas) (84.2) expressed a lack of confidence that the FIP would resolve the issue of PSD permitting uncertainty because EPA has not yet issued BACT guidance for GHG sources which, according to the commenter, EPA assured in the Tailoring Rule was forthcoming, would undergo no tice and comment, and would “culminate in training courses for state, local and tribal permitting authorities” (citing 75 FR 31589, June 3, 2010). The commenter noted that its agency has participated in the CAAAC GHG BACT workgroup and that consensus on the definition and scope of BACT for GHGs does not exist. Thus, the commenter believes, it is unlikely that EPA will be able to finalize guidance that takes into account all the diverse concerns raised during the workgroup, and if guidance is available by January 2, 2011, the only certainty for state- or EPA-issued permits will be challenges disputing the BACT determination. The commenter added that any forthcoming guidance will be of limited usefulness until the control technology is proven. According to the commenter, on January 2, 2011, applicants may know where to submit their applications but will not know what controls to propose as BACT.

Response:

EPA has received several requests for an administrative stay or reconsideration of the GHG rules, including the Tailoring Rule. EPA has al ready responded to some of those requests, and intends to respond to other of, those requests, separately. EPA’s response to the motions for stay, the court’s orders, and other relevant documents are available in the docket for this rulemaking. None of the other rules, including the Tailoring Rule, have been reopened in this FIP rulemaking. In the preamble to this final rule, EPA describes at length its reasons for finalizing the FIP at this time for the seven affected states, which are to assure the availability of a permitting authority to allow sources to proceed with plans to construct or modify . In2 – Legal Authority and Procedural Recommendations

8 addition, several of the commenters and other petitioners filed motions to stay the GHG rules, including the Tailoring Rule, in the litigation in the D.C. Circuit challenging the GHG rules, 3 in part of grounds that the GHG rules caused irreparable harm by creating uncertainty,and EPA responded by opposing those motions. 4 EPA’s response explains EPA’s reasons for opposing a judicial stay of the Tailoring Rule and the other GHG rules, including explaining why the GHG rules did not cause the alleged uncertainty or the alleged irreparable harm. By Order dated December 10, 2010, the D.C. Circuit denied the motions to stay based on the movants’ failure to demonstrate irreparable harm. EPA's response to the motions for stay, the court's orders, and other relevant docuements are included in the docket for this rulemaking.

EPA has recently published BACT guidance, including several white papers for specific types of sources. 5 and expects that this guidance will assist states and sources in implementing PSD requirements. In addition, the RACT/BACT/LAER Clearinghouse has been updated to include information about GHG control options. EPA remains committed to working with states as they gain experience with these types of BACT determinations. The BACT guidance was not available before the close of the comment period on this rulemaking and was not a subject of this rulemaking.

EPA recognizes the challenges and resource demands that this state and other states may face in implementing PSD for GHG-emitting sources. EPA addressed this issue at length in the Tailoring Rule and concluded that on a nationwid e basis, states would be able to manage the additional burdens resulting from PSD applicability to GHG-emitting sources at the phased-in Tailoring Rule thresholds. Moreover, in a declaration recently filed in EPA’s response to stay motions in the D.C. Circuit challenges to the GHG rules, EPA reported the results of its survey of state permitting authorities and concluded that in almost all the states, a permitting authority would be available and ready to implement GHG permitting as of January 2, 2011. In this FIP rulemaking, EPA is not reopening that aspect of the Tailoring Rule and, in any event, this

3 Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases) (D.C. Cir. 2010), Coalition for Responsible Regulation v. EPA , No. 09-1073 (and consolidated cases) (D.C. Cir. 2010), Coalition for Responsible Regulation v. EPA , No. 09-1092 (and consolidated cases) (D.C. Cir. 2010), Coalition for Responsible Regulation v. EPA , No. 09-1131 (and consolidated cases) (D.C. Cir. 2010) (hereafter, Coalition for Responsible Regulation v. EPA, No. 09-1322 (and consolidated cases)).

4 “EPA’s Response To Motions To Stay,” Coalition for Responsible Regulation v. EPA , No. 09- 1322 (and consolidated cases).

5 EPA recently made this guidance document, titled "PSD and Title V Permitting Guidance for Greenhouse Gases," available for public comment. See http://www.ep a.gov/nsr/ghgpermitting.html/ for more information on this document and on EPA's other permitting guidance for GHGs.2 – Legal Authority and Procedural Recommendations

9 commenter's comments were general and were not sufficiently specific to point out any meaningful errors in the Tailoring Rule record.

Wyoming expressed concern that it did not have available to it, during the comment period, the actual contents of the FIP, but EPA proposed the FIP and described it in sufficient detail – including its scope and timing – to allow meaningful comment.

Comment:

One industry commenter (0056.2/0063.1/0100.1) stat ed that when EPA initiated the SIP call and FIP rulemakings, the prior LDVR and Johnson Memo Reconsideration rulemakings became joined with this docket and their legal merits and application to the proposals placed into issue in this proceeding, where they must be addressed by EPA independently from the legal challenges pending in court. The commenter went on to argue that EPA’s failure to consider the full impact of the two prior rulemakings on states and stationary sources was arbitrary, and that EPA must consider those impacts in the current rulemakings. According to the commenter, EPA must not limit its inquiry to whether states have the authority to regulate GHGs under PSD, but must also address the states’ ability and practical means to implement such regulation. The commenter believes that after engaging in a meaningful analysis of the states’ and its own staffing and other resources, EPA will realize that it erred when it chose January 2, 2011 as the effective date for PSD permitting. The commenter urged EPA to stay implementation.

Response:

We disagree with this comment, and we are not reopening any of the issues addressed in the LDVR and Johnson Memo Reconsideration actions. It is frequently the case that an agency conducts a rulemaking that is based to one degree or another on actions or interpretations of the agency in a prior rulemaking, but that does not mean that the later rulemaking necessarily reopens the issues in the prior rulemaking or is unreasonable if it does not do so. If that were the case, then many issues addressed by agencies would remain unresolved for lengthy periods of time Therefore, EPA was not obliged to, in effect, reconsider the LDVR and Johnson Memo Reconsideration in this action. By the same token, EPA was not required to consider any impacts of the prior actions on states and stationary sources. In any event, the results of EPA’s recent survey of state permitting authorities indicates that in all or virtually all the states, a permitting authority is expected to be available and prepared to process GHG permit applications as of January 2, 2011. 6

6 Declaration of Regina McCarthy, Coalition for Responsible Regulation v. EPA , D.C. Cir. No. 09-1322 (and consolidated cases) (McCarthy Declaration), which can be found in the docket for this rulemaking.2 – Legal Authority and Procedural Recommendations

10 

### 2.2 Timing of the FIP

Comment:

Several industry (0064.1/0096.1, 0071.1/0102.1, 0073.1, 0081.1/0109.1) and state agency (0054.1/0055.1, 0084.2) commenters raised issues rela ted to the proposed voluntary 3-week SIP

deadline. The comments are summarized below.

One industry commenter (0073.1) requested that EPA revisit its timelines for SIP revisions so as to preserve primacy of the SIP process with the states. The commenter stated that EPA's proposed timeline is so expedited that it is unlikely that a state will be able to promulgate regulations covering GHGs and submit a SIP re vision for EPA approval, while holding public hearings during these 3 weeks, and then recei ve EPA SIP approval within about 3 months (January 2, 2011). The commenter questioned how the timelines are feasible or reasonable for states in the midst of the regulatory revisions, with overlapping comment timelines and applicability. The commenter believes that the highly expedited timelines seem to only set the stage for EPA to apply the GHG FIP to these 13 states.

Another industry commenter (0071.1/0102.1) believes that EPA’s suggestion that some states may wish to acquiesce to a radically more truncated SIP revision schedule is inconsistent with section 110(k)(5), as well as the entirety of the SIP revision, review, and approval process established in CAA section 110. In the context of raising the specter of the construction moratorium, EPA effectively invites states to “advise[]” EPA that they “would not object to a shorter period, as short as 3 weeks from the date of signature of the final rule.” 75 FR 53901. EPA contends that the purpose of establishing this shorter deadline period is that it would “accommodate states that wish to ensure that a FIP is available as, in effect, a backstop to ensure that there is no gap in PSD permitting” and, thus, no (purported) construction moratorium. Id.

According to the commenter (0071.1/0102.1), in this way EPA implicitly encourages states to surrender their sovereign position as responsible regulators under the dual federal-state system established by the Act’s PSD provisions, by subjecting themselves and their citizens to a facially unreasonable deadline they cannot reasonably expect to meet without short-circuiting required public processes and thereby facilitate the nearly immediate imposition of a FIP. EPA’s suggestion that states may wish to proceed in this wholly unprecedented fashion is perhaps the most egregious example of the Agency using the phantom threat of a construction ban to intimidate states into immediately accepting GHG regulation as provided by the Tailoring Rule, while abetting the abrogation of meaningful public participation rights in the SIP revision process. Even assuming that section 110(k)(5) applies here, this EPA invitation to states is a circumvention of the letter and spirit of section 110(k)(5)’s directive that states be subject to a “reasonable” period of time to develop SIP revisions and to allow the public to participate in a meaningful way.2 – Legal Authority and Procedural Recommendations

11 Another industry commenter (0081.1/0109.1) argued that, in reality, states only have a year in which to make and obtain EPA approval of their SIP revisions if they are willing to accept a construction moratorium. EPA tells states that they can avoid this "Hobson's choice" by voluntarily accepting immediate imposition of the FIP, but there is no real choice at all. According to the commenter, states have the right under the Act to implement the PSD provisions of the statute as long as they comply with applicable requirements; EPA has no authority to place states in the position where, unless they make law changes and obtain EPA approval in an unrealistic timeframe, they must either give up their rights to operate their PSD programs or suffer grave economic consequences. The commenter asserted that it was EPA’s choice to regulate GHGs under PSD and title V, and EPA must now give states a “reasonable” time to comply free from onerous consequences if the states do not act within 1 month.

A state agency commenter (0084.2) argued that accepting an earlier deadline so that a FIP can be imposed by EPA would put the state (Texas) on a significantly earlier clock to implement a GHG PSD program that the state does not believe is legal under the Act.

One industry commenter (0064.1/0096.1) opposed EPA’s proposed timeframe for implementing the GHG PSD permitting requirements, noting that in states with inadequate SIPs that do not expressly volunteer to accept a deadline of 3 weeks to submit corrective SIP revisions—which in practical effect means accepting the FIP—affected sources would not lawfully be able to undergo construction or modification until EPA approves a state’s SIP submittal or promulgates a FIP, which could be up to a year from signature of the final rule. The

commenter asserts that such an outcome would create an unlevel playing field among the states and has the potential to chill and/or divert significant economic investment at a time when unemployment remains at historic highs and the economy is desperately struggling to recover

from the recession.

An industry commenter (0081.1/0109.1) stated that EPA's imposition of a FIP does not alter the fact that the regulatory timetable is likely to result in a permitting gap and therefore a construction moratorium in some states. The commenter stated that because EPA cannot impose the FIP unless the states fail to comply with the SIP call and since EPA has provided states with 1 year to comply, there will still be an 11-month regulatory gap in states that are not able to change their laws and regulations within 1 year after the December 1, 2010, SIP call (assuming the SIP call is finalized on December 1; if the SIP call is delayed, the gap will be longer).

Response:

These timing comments have to do with the deadline that EPA established in the SIP call for submission of the corrective SIP revision. EPA’s FIP obligation is triggered only after a state does not meet its deadline. EPA responded to these comments in the SIP call preamble and RTC. These comments are not relevant to this FIP rulemaking.2 – Legal Authority and Procedural Recommendations

12 Comment:

A state agency commenter (0084.2) stated that industry should be particularly concerned by EPA's lack of resources and experience to issue GHG permits (which the commenter believes is made apparent by EPA's request for states to take delegation of the FIP), because even under the FIP it is unlikely that any construction of new major GHG sources or major modifications

will commence in the foreseeable future.

An industry commenter (0081.1/0109.1) stated that even for states that accept accelerated imposition of a FIP, it is not clear that EPA is prepared to mobilize sufficient resources at the regional level to take over state permitting programs effective January 2, 2011. The commenter believes that it is highly unlikely that EPA could act in time to avert at least a de facto construction moratorium on sources with potential emissions of GHGs above the Tailoring Rule thresholds. The commenter pointed out that the final SIP call list is not yet known, and therefore it is not known which EPA Regional Offices might have to mobilize additional resources and

when.

Response:

EPA's encouraging states to accept delegation of FIP authority is not an indication that EPA does not have the resources to implement a FIP; rather it is a recognition that states may wish to retain control over the permitting process even when EPA promulgates a FIP. In any event, EPA does have the resources to meet its permitting obligations under FIPs. McCarthy Declaration, ¶61, p. 13

.

Comment:

An industry commenter (0081.1/0109.1) concluded that EPA has not been successful in its attempt to commence GHG regulation on January 2, 2011. According to the commenter, while EPA admits the result will be damage to the economy, EPA has still not done any regulatory analysis of the costs and benefits of regulating GHGs and does not know how much damage the economy will suffer or what benefits will accrue. The commenter urged EPA to defer GHG regulation beyond January 2, 2011, until both EPA and the states are ready to regulate and until EPA has done an analysis of the costs and benefits of regulation.

Response:

For the reasons discussed elsewhere, EPA’s information is that in almost all cases, the states and EPA will be ready to implement PSD for GHG-emitting sources as of January 2, 2011, at the Tailoring Rule thresholds. The costs and benefits of regulating GHGs are not an issue in this rulemaking. If those costs and benefits were at issue in another other GHG rulemaking, then EPA, in responding to this comment, is not reopening that issue for those rules. EPA has undertaken all required analyses for this rule. It should be noted that applying PSD to2 – Legal Authority and Procedural Recommendations

13 GHGs does have significant benefits, which EPA described in its response to motions to stay the GHG rules, in the litigation over the GHG rules, and we incorporate by reference that response

here. 7

Comment:

An environmental group commenter (0104.1) asserted that the proposed SIP call and FIP are both appropriate and required under the Act. The environmental group commenter (0104.1) believes that these provisions of the Act provide an interlocking system of state and federal implementation plans that maintains state primacy while protecting the public from unlawful pollution and ensuring that businesses can readily secure necessary permits even as additional pollutants become subject to regulation under the Act. The commenter noted that the timetables in section 110(k) (for submission and appr oval or disapproval of SIP revisions) and section 110(c)(1) (for imposition of a FIP) set maximum time limits. The commenter believes that nothing prevents EPA from acting more quickly when circumstances warrant, which the commenter asserted is the case in this situation (as discussed further in section 2.3.2 of this RTC). The commenter noted that once EPA finds th at a state has either failed to make a required submission or has made an incomplete submission, or EPA disapproves a submission, it must act under section 110(c)(1) of the Act to fill the gap with a FIP.

Response:

We agree with the commenter that the timelines set out in CAA sections 110(k) and 110(c)(1) represent maximum time limits and that nothing prevents EPA from acting more quickly when circumstances warrant. The issue of timing under these provisions of the Act is discussed more fully in Section III B of the preamble to the final rule.

7 “EPA’s Response To Motions To Stay,” Coalition for Responsible Regulation v. EPA , D.C. Cir. No. 09-1322 (and consolidated cases), 93-97.14 

## 3.0 FIP Provisions

3.1 Can the EPA Issue a FIP Without Further Notice and Comment?

Comment:

One industry commenter (102.1) believes that, even assuming that the governing premises for the proposed SIP call rule and proposed FIP were correct (which the commenter contended is not the case – see section 2.1 of this document), EPA may propose a FIP only after a state has submitted a SIP revision (or failed to do so) and EPA has determined that the SIP revision is deficient. The commenter stated that only then may EPA determine what planrevisions are needed to cure the deficiencies for each state and conduct state-specific notice-andcomment rulemaking to put a FIP in place.

Furthermore, this commenter (102.1) noted th at “the promulgation or revision of an implementation plan by the Administrator” under CAA section 110(c) is among the actions identified under CAA section 307(d) for which EPA must satisfy certain rulemaking requirements established in the Act before the Agency may propose and promulgate a FIP (see CAA section 307(d)(1)(B) and 75 FR 53891). Speci fically, the commenter pointed out that CAA section 307(d)(3) requires that the statement of basis and purpose that must accompany each proposed FIP rule must include, among other things, a summary of “the factual data on which the proposed rule is based” and “the major legal interpretations and policy considerations underlying the proposed rule” and that “[a]ll data, information, and documents . . . on which the proposed rule relies shall be included in the docket on the date of publication of the proposed

rule.” The commenter asserted that EPA has admitted in this case that it lacks at this time – and thus is unable to provide to the public for comment, as required by section 307(d)(3) – information that is essential to determining whether a FIP for a given state is even appropriate and justifiable. The commenter listed the information requested from each state on the Presumptive SIP Call List and on the Presumptive Adequacy List and opined that the fact that EPA still needs to gather and consider that information (which may include extensive information regarding complex matters of state law and interpretation of that law) before it can promulgate a SIP call rule for any given state underscores that the approach EPA is taking in the FIP rulemaking is inconsistent with its obligations under CAA section 307(d). The commenter believes that only after EPA has received such information, and then taken the necessary time to evaluate the information and to make judgments as to whether or not a given state has authority under its SIP and other elements of state law to regulate GHGs under the PSD program – i.e., the steps EPA would have to take under CAA section 307(d)(3) to provide to the public a meaningful “summary” of “the factual data on which the proposed rule is based” and “the major3 – FIP Provisions

15 legal interpretations and policy considerations underlying the proposed rule” – may EPA propose a FIP for any state that has been determined to lack that authority.

Three other industry commenters (0065.1, 0068.1, 0069.1) similarly asserted that EPA’s plan to create the record for the proposed SIP call and FIP during the public comment period is impermissible because it deprives the commenter of the opportunity to comment on the basis of

EPA’s action. The commenters stated that th is significant departure from the rulemaking process is not permissible under the Act because it is inconsistent with both section 307(d) procedures and the Administrative Procedure Act. The commenters pointed out that section 307(d)(3) requires that the notice of proposed rulemaking be accompanied by a statement of its basis and purpose, which shall include a summary of the factual data on which the proposed rule is based; the methodology used in obtaining the data and in analyzing the data; and the major legal interpretations and policy considerations underlying the proposed rule. According to the commenters, it is clear in this case that the proposed rule does not contain the section 307(d)-required information on which EPA would normally base a FIP, as evidenced by EPA’s extensive requests for information from states that would typically be in the record for the FIP (to show why it is necessary) obtained before the opening of the public comment period. Two of the commenters (0065.1, 0069.1) added that EPA is not saved by the fact that the SIP call is not subject to section 307(d) because EPA is relying on the information it obtains through the SIP call proposal to provide the basis for its final FIP action (as shown by EPA’s references to that information in the proposed FIP).

Response:

We respond to these comments in the preamble of the final FIP rulemaking, in section III.B. In addition, we note here that the comment that EPA did not fully identify its basis for its action in the proposal, as made evident (according to the commenter) by EPA’s solicitation of information concerning state law, is not relevant to this rulemaking for the FIP. As EPA noted in section III.B. of the preamble for this FIP rulemaking, the preamble for the proposed FIP did provide an adequate statement of basis and purpose. The information that EPA solicited concerning state laws was relevant for the SIP call, as evidenced by the fact that it was in the preamble for the proposed SIP call that EPA solicited that information, not the preamble for the proposed FIP. See 75 FR 53889/2 (in the proposed FIP, EPA notes that it solicited this information in the proposed SIP call). Specifically, EPA’s solicitation of information concerning state law was relevant to EPA’s finding as to wh ether the state law resulted in the SIP being substantially inadequate to meet CAA requirements, which, again, was relevant for the SIP call. Once EPA made the finding that a particular stat e’s SIP was substantially inadequate, required a corrective SIP revision, and established a date for SIP submittal – all of which actions EPA took in the SIP call rulemaking – then the basis for the FIP depending on whether the state submitted the required SIP revision by that deadline, not whether the SIP was substantially inadequate. In any event, EPA’s solicitation of information did not mean that EPA did not3 – FIP Provisions

16 provide an adequate basis and purpose, for the reasons explained in the record for EPA’s SIP call final rule.

Comment:

Two of these commenters (0065.1, 0069.1) stated that commenters will not be able to comment fully on EPA’s FIP promulgation for states with “substantially inadequate” SIPs unless and until EPA promulgates the final SIP call with the actual list of state SIPs that are “substantially inadequate.” Because of this, the commenters believe that EPA should promulgate each FIP for a particular state in a separate rulemaking process subject to typical notice-and-comment procedures. The commenters added that EPA has not explained why such an action would not be subject to the Act’s noti ce-and-comment procedures, and pointed out that since the APA is not applicable to section 307(d) rules, promulgating a FIP would not qualify for the APA’s “good cause” exception to notice-and-comment procedures. The commenters indicated that although EPA has previously invoked this exception in the context of SIPs, those situations involved non-substantive findings (such as that a state has failed to submit its required SIP revisions by the announced deadline), while the promulgation of a FIP for GHGs requires EPA to make significant, substantive judgments, which should be guided by the input of commenters who are aware of whether EPA has actually found the 13 states’ SIPs to be “substantially inadequate.” The commenters believe that this is particularly true given that each state’s rules are different, and the substance of the FIP action will therefore necessarily differ

from state to state.

The third of these commenters (0068.1) stated that any changes to the FIP and SIP call proposals must be subject to notice and comment or else be in violation of the Act. Given the significant implications of EPA’s findings, the commenter believes that any changes to the list of jurisdictions, and thus changes to their requirements, cannot be considered a “logical outgrowth” of the proposal. The commenter concluded that the public must be able to review and assess the support for EPA’s final determination.

Response:

EPA responded to these comments in section III.B. of the preamble for the final FIP rulemaking.

Comment:

Another industry commenter (0088.1) also stat ed that even assuming EPA could issue a SIP call with 30 days of announcing new SIP approva l criteria, the Act contemplates a period of

time after failure to meet a reasonable deadline in that SIP call before a FIP can be issued. The commenter believes that with its simultaneously proposed SIP call and FIP, EPA is not establishing a reasonable deadline for responding to the SIP call, identifying specific shortcomings in the response, and then promulgating a FIP specific to each state’s supposed3 – FIP Provisions

17 failures and allowing the state the opportunity to comment on the alleged SIP shortcomings and the suitability of the FIP to resolve them.

Response:

EPA disagrees with this comment. The fact that EPA proposed the SIP call and FIP simultaneously does not have meaningful implications for whether in the final SIP call rulemaking EPA provided a reasonable deadline for the state to submit its required SIP revision before imposing the FIP. For reasons explained in the SIP call final rule, EPA’s deadline for SIP submittals was reasonable. Because the basis for the FIP is the fact that the state does not submit its SIP by its deadline, there is no need for EPA to identify specific shortcomings for the state’s response or promulgate a FIP specific to each state’s supposed failures or allow the state the opportunity to comment on the alleged SIP shortcomings and suitability of the FIP to resolve them. Those factors could perhaps be relevant if the basis for the FIP was a submitted SIP that EPA disapproves, under paragraph (B) of CAA section 110(c)(1). But here, the basis for the FIP is that the state did not make the required SIP submittal by its deadline, under paragraph (A) of CAA section 110(c)(1). That is, in the SIP call rule, EPA identified the SIP’s substantial inadequacy to meet CAA requirements, required a corrective SIP submittal, and established a deadline for the state to make the submittal; the state did not meet that deadline; and as a result of that, EPA promulgated the FIP. Contrary to the commenter’s apparent premise, there are no shortcomings to identify or need to promulgate a FIP specific to the state’s supposed failure. The only thing EPA needs to do to promulgate the FIP is to determine whether the state met its deadline for the SIP submittal.



### 3.2 FIP Timing and Procedures

Comment:

One industry commenter (0071.1/0102.1) stated that, even assuming that the governing premises for the proposed SIP call rule and proposed FIP were correct (which the commenter contended is not the case – see section 2.1 of this document), EPA would still lack any authority to propose the FIP rule at this time. The commenter believes that EPA’s proposal of a FIP rule at this time is contrary to the letter and the spirit of CAA section 110(c)(1), which provides that EPA “shall promulgate a [FIP] at any time within 2 years after” EPA “finds that a State has failed to make a required [SIP] submission . . . or disapproves a [SIP] submission in whole or in part, unless the State corrects the deficiency” and EPA “approves the plan or plan revision, before [EPA] promulgates” the FIP. The comme nter asserts that EPA’s reliance on the language in CAA section 110(c)(1) that provides for EPA to promulgate a FIP “at any time within 2 years” is misplaced because it ignores the statutory context. According to the commenter, EPA incorrectly reads this language to conclude that, in anticipation of one or more potential future “failures” by one or more states, or potential future EPA “disapprovals” with respect to one or more SIP submissions, the Agency is authorized to propose a preemptive rulemaking to impose FIPs under section 110(c) because of the possibility that state defaults or SIP3 – FIP Provisions

18 disapprovals may occur in the future; but that is not how CAA section 110 works or how Congress intended it to work.

The commenter (0071.1/0102.1) noted that states – not EPA – have the authority in the first instance to implement requirements established by or under the Act (citing, e.g., Train v. Natural Res. Def. Council , 421 U.S. 60, 79 (1975)). The commenter contended that in enacting CAA section 110(c)(1), Congress viewed a FIP rulemaking as a last resort after a state has been given a reasonable opportunity to develop its own plan to meet new CAA requirements. Thus, the commenter asserted that only after a state has submitted a SIP revision (or has failed to do so after an applicable period as specified in the CAA or EPA regulations), and after EPA has made a determination that the SIP revision is deficient in one or more respects, may the Agency step in to propose a FIP rule; and only after taking that step could EPA then proceed – following noticeand-comment rulemaking and based on the comments and other relevant information submitted in the rulemaking on the proposed FIP and EPA’s responses to those comments and that information – either to adopt, with or without revi sions, or else not adopt the FIP in final form. The commenter believes that the fact that the Act affords EPA up to 2 full years in which to complete the cooperative task of considering whether a FIP is needed and how such a plan should be fashioned, and the corollary fact that the Act does not mandate any federal takeover in

less than 2 years, militate against EPA’s approach to FIP rulemaking in this case. In particular, the commenter contended that those facts undermine EPA’s assumption that it need not take the time to develop a proposed plan specifically dir ected at remedying identified deficiencies in a given state submission, and to give states and the regulated community a meaningful opportunity to comment on a proposed FIP that has been specifically developed to address the individual

needs and circumstances of such a state.

Three other industry commenters (0065.1, 0068.1, 0069.1) similarly noted that section 110(c)(1)(A) provides that EPA shall promulgate a FIP at any time within 2 years after the Administrator finds that a state has failed to make a required submission under the Act, such as a response to a SIP call, or that its submittal is not complete. The commenters also noted that the FIP requirement does not apply if a state provides a complete submission on which EPA can act—the Act does not require that the SIP submi ssion actually be approvable. Because of this, the commenters expressed surprise that EPA would rush to issue a FIP when, as the commenters interpret it, the Act clearly contemplates an allowance for states to act consistent with their own administrative procedures and for the public to be given an adequate opportunity to participate in the process.

Response:

We responded to these comments in section III.B. of the preamble for the final FIP rulemaking. We add here that the process that the commenters describe may be authorized by CAA section 110(c)(1), but it is certainly not mandated by that provision, and the commenters do not assert that it is mandated by that provision. CAA section 110(c)(1) is silent on the date that3 – FIP Provisions

19 EPA may propose a FIP. The provision does require, by its terms, EPA to promulgate a FIP within the two-year period following either a stat e not meeting its deadline for submittal of a SIP revision or EPA disapproving that SIP revision. But there is nothing in CAA section 110(c)(1) by its terms that precludes EPA from the course it took here, which was to propose the SIP call and FIP simultaneously, finalize the SIP call first, in that rule set the deadline for the SIP submittal, and then finalize the FIP immediately after the state does not meet its deadline.

Not only is EPA’s course of action consistent with the broadly phrased terms of CAA section 110(c)(1), that course of action is sensible in light of the circumstances presented. For each affected state, the SIP call first identified the SIP’s substantial inadequacy to meet CAA requirements and then addressed that inadequacy by requiring a corrective SIP submittal by a reasonable deadline. It was sensible and efficient for EPA to develop the remedial FIP by proposing and receiving comment on it concurrently with the SIP call proposal. The state and all other parties had a full opportunity to comment on the FIP at that time and as a result, EPA had a full opportunity to design the FIP to meets its purpose of addressing the substantial inadequacy in the SIP. As a result, as soon as the state’s deadline passed without the state making its required SIP submittal, EPA was able to promulgate the FIP. Because, again, the FIP was designed to address the SIP’s substantial inadequacy – which was known well before the state did not meet its deadline - and would be implemented if the state did not submit its SIP revision by the requisite date, under paragraph (A) of CAA section 110(c)(1), it is sensible for EPA to implement the FIP immediately after the deadline passes. EPA has no need to wait until after the deadline passes to begin developing the FIP through a proposal. On the other hand, if the state were to make a SIP submittal and EPA were to disapprove it, and thereby trigger the FIP through subparagraph (B) of CAA section 110(c)(1), then EPA may find it necessary first to propose a FIP that is designed to address the flaws in the disapproved SIP revision.



### 3.3 EPA Will Act on GHG Portion of Permit and States Will Retain Responsibility for Remainder of Permit

Comment:

One industry commenter (0082.1/0099) indicated that there is an issue as to whether issuance of a FIP would give EPA jurisdiction over the entire permitting program, or only over GHG permitting. The commenter believes that from a conceptual standpoint, it is difficult to justify EPA taking over an entire permitting program when only one part is not in compliance, but from a practical standpoint, it is difficu lt to bifurcate regulation of GHG from other pollutants because any PSD permit will include all regulated pollutants. The commenter stated that it is not practical to have two separate agencies work on every PSD permit and that even if EPA were to exercise authority only over the GHG aspect of the program and the state were to retain authority over other regulated substances, EPA will still potentially exert significant influence on the state program by virtue of its actions on the GHG aspect of the permits.3 – FIP Provisions

20 One industry commenter (0082.1) stated that from a conceptual standpoint it would be difficult to justify EPA's taking over an entire permitting program when only one part [GHG] is not in compliance. From a practical standpoi nt, it is difficult to bifurcate GHG and other pollutants, the commenter stated, because any NSR/PSD permit will include all regulated pollutants. It is not workable to have two separate agencies work on every NSR/PSD permit. Even if EPA were only to exercise authority over the GHG aspect of the program and the state retaining authority over the other substances, EPA will still potentially exert significant influence on the state program by virtue of its actions on the GHG aspect of the permits.

Two state agency commenters (0054.1/0055.1, 0079.1) agreed that under the FIP, EPA should be responsible for the GHG portion of the PSD permit only, and non-GHG permitting and minor source permitting should remain with the state permitting authority. One of the commenters (0079.1) indicated that to proceed w ith any other arrangement would nullify a longstanding agreement between EPA and the state, which is unacceptable to the state. This commenter also expressed support for any “narrowing of authority” on the part of EPA because it would give states and source more time to understand the true magnitude of the new rules as well as limit the degree of federal involvement in states’ Title V permitting processes. The other commenter (0054.1/0055.1) believes this is a good opportunity for the state agency and EPA to develop stronger methods of coordination and cooperation, and that coordination with EPA on permits must occur in a timely manner to avoid the delays in construction and modification EPA seeks to avoid by implementation of the FIP.

An environmental group commenter (0104.1) also agreed that state should retain as much discretion as possible to run their permitting programs and appreciated EPA’s plan to implement a narrowly tailored FIP where states require assistance. The commenter indicated that to minimize any confusion, EPA should ensure that th e logistics are as clear as possible, adding that covered facilities, states, and members of the public will benefit from a final rule that carefully sets out each step of this collaborative process.

Response:

This issue of split permit authority is discussed in the preamble to the final rule at Section III C. We do not attempt to set out the details of how we will collaborate with each of the affected states in this final rule, but, as noted in the preamble, split permitting has occurred before and continues to occur, we intend to develop procedures to maximize efficiency and we encourage the affected states to accept delegation of authority to issue the GHG component of the permits.

The comments concerning narrowing of EPA authority and title V are outside the scope of this rulemaking.3 – FIP Provisions

21 Comment:

One environmental group commenter (0104.1) emphasized that EPA must ensure that the public is centrally involved in the permit process under the FIP, however it is implemented, pointing out that section 160(5) of the Act stat es that one purpose of the PSD program is “to assure that any decision to permit increased air pollution in any area to which this section applies is made only after . . . adequate procedural opportunities for informed public participation in the decisionmaking process.” The commenter noted that the PSD rules (40 CFR 51.166(q) for state programs; 40 CFR 52.21(q) and 124.10 – 124.17 for the federal program) provide that permits may be issued only after public notice and comment, and a public hearing if one is requested. Based on these requirements, the commenter asserted that EPA must assure that any permits issued under joint federal/state authority are subject to thorough public review:

• The public must have the opportunity to consider and comment upon draft GHG permit terms, 40 CFR 124.11.

• The public must have the opportunity for a public hearing whenever there is “significant public interest,” 40 CFR 124.12.

• Members of the public are entitled to a substantive response to their comments, 40

CFR 124.17.

The environmental group commenter (0104.1) also stated that EPA must provide members of the public and permitted facilities with clear permit review procedures. The commenter indicated that as an initial matter, EPA should make clear that “any person who filed comments on [a] draft permit or participated in the public hearing may petition the Environmental Appeals Board to review any condition of the permit decision” (citing 40 CFR 124.19(a)). Although the EAB has been clear that it may hear appeals only of federally issued permit terms, the commenter believes that EPA should make clear that the EAB retains jurisdiction over the federal terms of the permit, because all permit terms must be reviewable for the permit to be valid (citing In re Seminole Electric Cooperative, Inc. , 14 E.A.D. _, PSD Appeal No. 08-09 (September 22, 2009) at 19-20).

Response:

We appreciate these comments. We are required to follow all procedures and requirements applicable to permitting by EPA under the applicable provisions of CAA section 52,21 and 124. We have not, in this rulemaking, reopened or solicited comment on any of those procedures or requirements.

Comment:

A state agency commenter (0079.1) urged EPA to have its FIP procedures in place and ready to go on January 1, 2011. The commenter stated that any FIP process in his state3 – FIP Provisions

22 (Wyoming) must have a firm deadline for permit review completion that is no later than the date that the state would be ready to approve or issue a standard PSD permit to ensure that new construction is not unnecessarily delayed. The commenter conveyed a strong desire to work with EPA in the way the FIP will be applied to the state’s sources, which could take the form of concurrent permitting by the state and EPA so that the two PSD permits can be issued together to ensure that the criteria pollutants and GHGs are included. The commenter believes that close coordination between the state and EPA permitting staffs is absolutely necessary and urged planning meetings well before January 2, 2011 to assure a smooth transition.

Response:

We appreciate this comment and we are prepared to work closely with the state, including addressing mutually acceptable procedures for concurrent streamlined permitting and deadlines for completing permit review.

Comment:

One industry commenter (0096.1) expressed concern about the lack of specific information on how EPA proposes to implement the FIP, particularly the split permitting approach that EPA proposes for states that do not accept delegation of authority to implementthe FIP. The commenter pointed out that in making BACT determinations, there may be tradeoffs between the optimal approaches for controlling criteria pollutants (which would be under state permitting authority) and GHGs (which would be under federal permitting authority), and that this could lead to a scenario where the two reviewing authorities struggle to come to agreement on what constitutes BACT. The commenter also expressed concern that such a dual approach would increase the time and money that a source spends on the BACT process. Accordingly, the commenter urged EPA to provide more detail on split permitting in its final FIP and to address how and on what timeframe conflicts between federal and state reviewing

authorities would be resolved.

Three other industry commenters (0065.1, 0068.1, 0069.1) similarly expressed concern that EPA’s proposed approach creates the potential for conflicting and overlapping compliance provisions and BACT determinations. The commenters noted that controls for certain criteria pollutants affect efficiency, therefore affecti ng what is achievable for purposes of a BACT determination for GHGs and vice versa. The commenters asserted that the reviewing authoritymust be able to take into account these competing factors, make desired and/or necessary tradeoffs among controls on criteria pollutants versus GHG emission reductions, and arrive at a single comprehensive BACT determination for a facility. The commenters expressed concern that with two reviewing authorities, a source could be faced with conflicting requirements and the need to mediate among the permit engineers making BACT determinations. Another industry commenter (0081.1/0109.1) also made the point that BACT for GHGs and non-GHGs are interrelated, and added that EPA has not addre ssed what would happen if EPA and the state3 – FIP Provisions

23 agency could not agree. This commenter believes that at a minimum, significant uncertainty and delay would be introduced into the process of administering PSD permits.

One environmental group commenter (0104.1) also noted that GHG BACT emissions limits and BACT emissions limits for other pollutants may influence each other, making it necessary for the reviewing authority setting GHG BACT limits to work closely with the reviewing authority in setting emissions limits for other air pollutants. The commenter believes that the best way to ensure this collaboration goes smoothly is for the state to take delegation of the GHG FIP, which will allow the permit to be prepared by just one authority. The commenter expressed the expectation that where states opt not to take delegation, EPA will work closely with them to build a unified and protective set of permit conditions.

Response:

We respond to these comments in section III.C. of the preamble. As noted in the preamble, in many instances in the past, EPA was the PSD permitting authority but the state accepted a delegation for parts of the PSD program, so that a source had to go to both the state and EPA for its permit. Other examples of some form of split permitting include issuance of permits for PM2.5 in the state of Washington, a partially delegated state, in which the state issues the permit but EPA co-signs it. There have been other instances in which EPA’s regions issued a PSD permit for a project, while the state issued its own permit for the same project and for the same pollutants. In addition, as noted in the preamble, there have been, and currently are, instances in which, in the same area (e.g ., San Joaquin Valley Unified APCD and, in the past, New York State), EPA is the PSD permitting authority, and the state is the nonattainment NSR permitting authority, and a source needs a PSD permit from EPA for some of its pollutants and a nonattainment NSR permit from the state for other of its pollutants. In these cases, EPA and the state must coordinate concerning, among other things, enforcement conditions in the permit. We recognize the risk of delays and inefficiencies, but believe that communication and cooperation between the permitting authorities will make the process manageable.

Comment:

One environmental group commenter (0053.1) stated that everyone in her state (Wyoming)—utilities, citizens, and state agencies—have a keen interest in keeping permitting authority within the state. The commenter urged the state agency to work to ensure that sources do not have to receive a separate permit from EPA for GHGs.

Response:

We appreciate this comment, and do not need to respond to it.3 – FIP Provisions

24 

### 3.4 FIP Will Contain Regulatory Provisions of 40 CFR 52.21 with Applicability Limited to GHGs

Comment:

One state agency commenter (0054.1/0055.1) supports the proposal to include in the FIP an applicability provision that limits the FIP only to the permitting of GHG pollutants. To retain permitting authority and to lessen confusion, the commenter recommends that when EPA issues her state (Arkansas) its SIP call, EPA only find inadequate the portions of the SIP pertinent to the permitting of GHG sources.

Response:

We appreciate this comment. The scope of the FIP is discussed in the preamble. The scope of the SIP call finding of substantial inadequacy is discussed in the record for the SIP call, and is not relevant to this rulemaking.

Comment:

One environmental group commenter (0104.1) responded to the issue raised in the FIP proposal (citing 75 FR 53890) that some states th at lack authority to regulate GHGs under PSD may determine that they also lack authority to regulate non-GHG pollutants when the PSD program is triggered entirely by GHGs, but other pollutants are emitted in significant amounts and require BACT once the program has been triggered. The commenter suggested that EPA add a term to its proposed FIP providing that it will apply to non-GHG pollutants as well, but only where the state determines that it lacks legal authority to control those pollutants. The commenter added that EPA might then allow the state to take delegation of this expanded program, keeping authority with the state permit writer to the maximum extent possible.

Response:

EPA has addressed these comments in detail in Section III.C. of the preamble to the final

rule.25 

## 4.0 Other Comments

Comment:

One industry commenter (0070.1) asserted that EPA must amend the definition of “regulated NSR pollutant” in the PSD regulations and the proposed FIP so that the future promulgation of an NSPS covering GHGs does not re verse the effects of the Tailoring Rule. The commenter indicated that under the existing language of 40 CFR 51.166(b)(2)(49) and 52.21(b)(2)(50), GHGs will become a PSD pollutant under paragraph (ii) when an NSPS covering GHGs is promulgated under section 111 of the Act, and the Tailoring Rule, which defines “subject to regulation” under paragraph (iv) will have no applicability. In order to avoid the inadvertent reversal of the Tailoring Rule, the commenter suggested that paragraph (ii) should be amended as follows: “(ii) Any pollutant other than GHG that is subject to any standard promulgated under section 111 of the Act.”

Response:

We appreciate this comment. The comment is not relevant to this rulemaking. We intend to address the PSD implications of any NSPS that we may promulgate at that time.

Comment:

Two industry commenters (0056.2/0063.1/0100.1, 0073.1) stated that EPA should

consolidate comments submitted for the GHG SIP call and the GHG FIP under the same rulemaking record. While the two rulemakings have a common docket, the commenters indicated that it is unclear whether the EPA will consider comments collectively or separately

under each RIN.

One of the industry commenters (0056.2/0063.1/0100.1) went on to say that it is not clear how EPA intends to handle the comments it receives for the purposes of assigning comments and developing and/or limiting the specific record for each proposed rule or, more importantly, what will constitute the official rulemaking record that a court would consider should judicial review of either rule become necessary. The commenter (0056.2/0063.1/0100.1) recommended that both rulemaking records be the aggregate of all comments submitted and all other supporting documents regardless of RIN number.

The same industry commenter (0056.2/0063.1/0100.1) expressed concern that in spite of the interdependence of the two actions, EPA may a ssert that the two final rules are two separate and independent proceedings with two separate and unrelated rulemaking records. The commenter stated that EPA’s segmentation of earlier GHG rulemakings into discrete and unrelated proceedings denied the regulated community and states the opportunity to engage fully4 – Other Comments

26 in the rulemaking process. The commenter urged EPA to agree that the two proposals should be treated as a single rulemaking with one rulemaking record.

Response:

EPA asserts that the GHG SIP call and GHG FIP rulemakings, while proposed as companion rulemakings, are two separate proceedings with two separate rulemaking records. Expecting that comments on the two rulemakings would be interrelated, we established a common docket for the rulemakings. We are considering the comments relevant to the FIP in this action, and we considered the comments relevant to the SIP call in the SIP call action. Commenters have had a full opportunity to comment on each rule; the creation of separate rulemaking records does not limit their ability to comment. We note when EPA issued the endangerment finding and the cause or contri bute finding regarding GHGs in 2009, those two distinct findings also shared a docket.

Comment:

An industry commenter (0056.2/0063.1/0100.1) requested that EPA include in the docket for the SIP call and FIP rulemakings the state comments on the Tailoring Rule concerning the administrative and staffing resources and capabilities of the states to issue timely permits and provided a list of the relevant documents. The commenter noted that EPA has refused a request from Senator Inhofe to include these comments in the docket for these rulemakings and called EPA’s rejection of the request and decision to instead post the comments on the EPA web site unreasonable and arbitrary.

The commenter (0056.2/0063.1/0100.1) asserted that information in these state comments regarding their capability to implement PSD for GHG sources must be considered by EPA in the current rulemakings. The commenter believes, however, that in their attempts to quantify the staffing and other resources that they would need for the Tailoring Rule, the states were forced to underestimate the necessary staffing and resources because they did not have EPA’s relevant GHG BACT guidance available to them at the time they made the estimates. The commenter also stated that the record should include information on the EPA Regional Offices’ administrative and staffing resources and capabilities to take over for a state if the proposed FIP is adopted.

Response:

Comments on the Tailoring Rule and the state’s capacity to implement the Tailoring Rule are not germane to this rulemaking. State responses to this rulemaking, the FIP, and to the SIP call rulemaking, have been included in this docket. As noted above, EPA does have the resources to implement the FIP in those states in which it is required to do so.