Fw: EPA response to Interagency Comments on Biomass

Michael Ling 

to: 

Pam Long 

05/13/2010 11:03 AM 

Show Details 

OMB docket item 

 

Michael Ling 

Associate Director 

Air Quality Policy Division 

U.S. EPA - OAQPS 

(919) 541-4729 

-----Forwarded by Michael Ling/RTP/USEPA/US on 05/13/2010 11:03AM ----- 

To: "King, Heidi R." <Heidi_R._King@omb.eop.gov> 

From: Michael Ling/RTP/USEPA/US 

Date: 05/07/2010 05:19PM 

Subject: EPA response to Interagency Comments on Biomass 

Heidi: Attached is the EPA response to the interagency comments on biomass. It got confusing 

with all the versions of edits, so I sent a clean version that highlights the sections that have been 

under discussion. Folks should review that language. The main comment we could not accept is 

the time frame for the ANPR (though we can still agree to do one). A related comment we could 

not accept was to suspend our consideration of biomass issues in BACT pending completion of the

ANPR. I hope the rest of the edits reflect language acceptable to both sides. Let me know next 

steps. 

(See attached file: biomass edits - clean.doc)

Michael Ling 

Associate Director 

Air Quality Policy Division 

U.S. EPA - OAQPS 

(919) 541-4729 

Page 1 of 1

file://C:\Documents and Settings\plong\Local Settings\Temp\notesFCBCEE\~web6454.htm 5/13/2010
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

1

 6560-50-P 

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 51, 52, 70, and 71 

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

RIN 2060-AP86 

Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule 

AGENCY: Environmental Protection Agency (EPA). 

ACTION: Final Rule. 

SUMMARY: EPA is tailoring the applicability criteria that 

determine which stationary sources and modification projects 

become subject to permitting requirements for greenhouse gas 

(GHG) emissions under the Prevention of Significant 

Deterioration (PSD) and title V programs of the Clean Air Act 

(CAA or Act). This rulemaking is necessary because without it 

PSD and title V requirements would apply, as of January 2, 2011, 

at the 100 or 250 tons per year (tpy) levels provided under the 

CAA, greatly increasing the number of required permits, 

overwhelming the resources of permitting authorities, and 

severely impairing the functioning of the programs. EPA is 

relieving these resource burdens by phasing-in the applicability 

of these programs to GHG sources This rule establishes two 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

2

initial steps of the phase-in. Step 1 begins on January 2, 

2011, and covers only sources and modifications that would 

otherwise undergo PSD or title V permitting based on emissions 

of non-GHG pollutants. Step 2 begins on July 1, 2011, and 

covers large sources of GHG emissions that emit or have the 

potential to emit 100,000 tpy carbon dioxide equivalent (CO2e) or 

more, and modifications at those sources that increase net GHG 

emissions by 75,000 tpy CO2e or more, provided those sources or 

modifications also have GHG mass emissions that exceed the 

relevant mass-based applicability thresholds. This rule also 

requires EPA to promulgate by July 1, 2012, a step 3 rule that 

will consider phasing-in additional sources. EPA excludes from 

PSD and title V permitting for GHG emissions, until at least 

April 30, 2016, sources that are not already subject and that 

emit less than 50,000 tpy of CO2e, as well as modifications that 

do not increase net GHG emissions by 50,000 tpy CO2e, or more. 

EPA will use this time to streamline the programs for those 

sources and must complete a study by April 30, 2015, to assess 

improvements in administrability of the programs for such 

sources, and must complete a rule by April 30, 2016, addressing 

additional such sources based on this study. EPA’s legal basis 

for this tailoring rule is its interpretation of the PSD and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

3

title V applicability provisions under the familiar Chevron twostep framework for interpreting administrative statutes, taking 

account of the legal doctrines authorizing agencies to apply 

statutory requirements in way that avoids absurd results or 

administrative impossibility and authorizing agencies to 

implement statutory requirements a step at a time. 

DATES: This action is effective on [INSERT 60 DAY FROM DATE OF 

PUBLICATION]. 

ADDRESSES: EPA has established a docket for this rulemaking 

under Docket ID No. EPA-HQ-OAR-2009-0517. 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., Confidential Business Information or other information 

whose disclosure is restricted by statute. Certain other 

material, such as copyrighted material, is not placed on the 

Internet and 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 EPA 

Docket Center EPA/DC, EPA West, Room 3334, 1301 Constitution 

Avenue, Northwest, Washington, D.C. The Public Reading Room is 

open from 8:30 a.m. to 4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone number for the Public 

Comment [MLing1]: Deleted request 

for comment in this action. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

4

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

EPA Docket Center is (202) 566-1742. 

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Mangino, Air 

Quality Policy Division, Office of Air Quality Planning and 

Standards (C504-03), Environmental Protection Agency, Research 

Triangle Park, NC 27711; telephone number: (919) 541-9778; fax 

number: (919) 541-5509; e-mail address: mangino.joseph@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me? 

Entities affected by this action include sources in all 

sectors of the economy, including commercial and residential 

sources. Entities potentially affected by this action also 

include states, local permitting authorities, and tribal 

authorities. The majority of categories and entities 

potentially affected by this action are expected to be in the 

following groups: 

Industry Group NAICSa

Agriculture, fishing, 

and hunting............................ 11 

Mining.............................................

 21 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

5

Utilities (electric, 

natural gas, other 

systems)..........................................

.............. 2211, 2212, 2213 

Manufacturing (food, 

beverages, tobacco, 

textiles, 

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

Wood product, paper 

manufacturing...........................

.............. 321, 322 

Petroleum and coal 

products 

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

Chemical 

manufacturing........................... 3251, 3252, 3253,3254, 3255, 

3256,3259 

Rubber product 

manufacturing......................... 3261, 3262 

Miscellaneous chemical 

products..........................................

.............. 32552, 32592, 32591, 325182, 

32551 

Nonmetallic mineral 

product 

manufacturing......................... 3271, 3272, 3273, 3274, 3279 

Primary and fabricated 

metal manufacturing....... 3311, 3312, 3313, 3314, 3315, 

3321, 3322, 3323, 3324, 3325, 

3326, 3327, 3328, 3329 

Machinery 

manufacturing......................... 3331, 3332, 3333, 3334, 3335, 

3336, 3339 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

6

Computer and 

electronic products 

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

4446 

Electrical equipment, 

appliance, and 

component 

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

Transportation 

equipment 

manufacturing......................... 3361, 3362, 3363, 3364, 3365, 

3366, 3366, 3369 

Furniture and related 

product 

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

Miscellaneous 

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

Waste management and 

remediation.............................. . 5622, 5629 

Hospitals/Nursing and 

residential care 

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

Personal and laundry 

services........................................ 8122, 8123 

Residential/private 

households.................................. 8141 

Non-Residential 

(Commercial)............................ Not available. Codes only exist 

for private households, 

construction, and leasing/sales 

industries. a

 North American Industry Classification System. 

B. How is this preamble organized? 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

7

 The information presented in this preamble is organized as 

follows: 

Outline 

I. General Information 

A. Does this action apply to me? 

B. How is this preamble organized? 

C. Preamble Acronyms and Abbreviations 

II. Overview of the Final Rule 

III. Background 

A. What are greenhouse gases and their sources? 

B. Endangerment Finding and the Light-Duty Vehicle Rule 

1. Endangerment Finding 

2. Light-Duty Vehicle Rule 

C. What are the General Requirements of the PSD Program? 

1. Overview of the PSD Program 

2. General Requirements for PSD 

D. What are the general requirements of the title V 

operating permits program? 

1. Overview of Title V 

2. Title V Permit Requirements 

E. The Interpretive Memorandum 

IV. Summary of Final Actions 

A. How do you define the GHG pollutant for PSD and title V 

purposes? 

1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs 

2. What GWP values should be used for calculating CO2e? 

B. When will PSD and title V applicability begin for GHGs 

and emission sources? 

1. What are the Step 1 thresholds, timing and calculation 

methodology? 

2. What are the Step 2 thresholds, timing and calculation 

methodology? 

3. What about Step 3? 

4. What about the proposed 6 year exclusion for smaller 

sources? 

5. When and how will EPA take further action on smaller 

sources? 

C. How do state, local and tribal area programs adopt the 

final GHG applicability thresholds? 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

8

D. How do you treat GHGs for title V permit fees? 

E. Other Actions and Issues 

1. Timing for Permit Streamlining Techniques 

2. Guidance for Best Available Control Technology 

Determinations 

3. Requests for Higher Category-Specific Thresholds and 

Exemptions from Applicability 

4. Transitional Issues including Requests for 

Grandfathering 

V. What is the legal and policy rationale for the final actions? 

A. Rationale for our approach to calculating GHG emissions 

for PSD and title V applicability purposes 

1. Grouping of GHGs into a Single Pollutant 

2. Identifying Which GHGs are Included in the Group 

3. Determining What GWP Values are to be Used 

4. Use of Short Tons vs. Metric Tons 

B. Rationale for Thresholds and Timing for PSD and Title V 

Applicability to GHG Emissions Sources 

 1. Overview 

2. Data Concerning Costs to Sources and Administrative 

Burdens to Permitting Authorities 

3. Legal Doctrines: “Absurd Results,” “Administrative 

Necessity,” and “Step-at-a-Time” 

 4. The PSD and Title V programs 

5. Application of the “Absurd results” Doctrine for the 

PSD Program 

6. Application of the “Absurd Results” Doctrine for the 

Title V Program 

 7. Additional Rulemaking for the PSD and Title V Programs 

8. Rationale for the Phase-in Schedule for Applying PSD 

and Title V to GHG Sources 

9. “Administrative Necessity” Basis for PSD and Title V 

Requirements in Tailoring Rule 

 10. “Step-at-a-Time” Basis for Tailoring Rule 

C. Mechanisms for Implementing and Adopting the Tailoring 

Approach 

1. PSD Approach: Background and Proposal 

2. Rationale for Our Final Approach to Implementing PSD 

3. Other Mechanisms 

4. Codification of Interpretive Memo 

5. Delaying Limited Approvals and Request for Submission 

of Information from States Implementing a SIP-Approved PSD 

Program 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

9

6. Title V Programs 

D. Rationale for Treatment of GHGs for Title V Permit Fees 

E. Other Actions and Issues 

1. Permit Streamlining Techniques 

2. Guidance for Best Available Control Technology 

Determinations 

3. Requests for Higher Category-Specific Thresholds or 

Exemptions from Applicability 

4. Transitional Issues Including Requests for 

Grandfathering 

VI. What are the economic impacts of the final rule? 

A. What entities are affected by this final rule? 

B. What are the estimated annual benefits to sources due 

to regulatory relief from the statutory requirements? 

1. What are annual estimated benefits or avoided burden 

costs for title V permits? 

2. What are annual benefits or avoided costs associated 

with NSR permitting regulatory relief? 

 C. What are the economic impacts of this rulemaking? 

 D. What are the costs of the final rule for society? 

VII. Comments on Statutory and Executive Orders Reviews 

VIII. Statutory and Executive Orders Reviews 

XI. Statutory Language 

C. Preamble Acronyms and Abbreviations

 The following are abbreviations of terms used in the 

preamble. 

BACT Best Available Control Technology 

CAA or Act Clean Air Act 

CO2e Carbon Dioxide Equivalent 

GHG Greenhouse Gases 

PSD Prevention of Significant Deterioration 

SNPR Supplemental Notice of Proposed Rulemaking 

tpy Tons Per Year 

[COMPLETE LATER.] 

II. Overview of the Final Rule 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

10

EPA is relieving overwhelming permitting burdens that 

would, in the absence of this rule, fall on permitting 

authorities and sources. We accomplish this by tailoring the 

applicability criteria that determine which GHG emission sources 

become subject to the PSD and title V programs of the CAA. In 

particular, EPA is establishing with this rulemaking a phase-in 

approach for PSD and title V applicability, and is establishing 

the first two steps of the phase-in for the largest emitters of 

GHGs. We also commit to certain follow-up actions regarding 

future steps beyond the first two, discussed in more detail 

below. Our legal basis for this rule is our interpretation of 

the PSD and title V applicability provisions under the familiar 

Chevron two-step framework for interpreting administrative 

statutes, taking account of three legal doctrines, both 

separately and interdependently: they are what we will call (i) 

the “absurd results” doctrine, which authorizes agencies to 

apply statutory requirements in way that avoids absurd results, 

(ii) the “administrative necessity” doctrine, which authorizes 

agencies to apply statutory requirements in a way that avoids 

impossible administrative burdens; and (iii) the “step-at-atime” doctrine, which authorizes agencies to implement statutory 

requirements a step at a time. This legal basis justifies each 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

11

of the actions we take with this rule, both (i) as part of the 

overall tailoring approach and (ii) independently of the other 

actions. 

For the first step, which will begin on January 2, 2011, 

PSD or title V requirements will apply to sources’ GHG emissions 

only if the sources are subject to PSD or title V anyway due to 

their non-GHG conventional pollutants. Therefore, EPA will not 

require sources or modifications to evaluate whether they are 

subject to PSD or title V requirements solely on account of 

their GHG emissions. Specifically, for PSD, Step 1 requires 

that as of January 2, 2011, the applicable requirements of PSD, 

most notably, the best available control technology (BACT) 

requirement, will apply to projects that increase net GHG 

emissions by at least 75,000 tpy CO2e, but only if the project 

also significantly increases emissions of at least one non-GHG 

pollutant. For the title V program, only existing sources with, 

or new sources obtaining, title V permits for non-GHG pollutants 

will be required to address GHGs during this first step. 

The second step of the tailoring rule, beginning on July 1, 

2011, will phase-in additional large sources of GHG emissions. 

New sources as well as existing sources not already subject to 

title V that emit, or have the potential to emit, at least 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

12

100,000 tpy CO2e will become subject to the PSD and title V 

requirements. In addition, sources that emit or have the 

potential to emit at least 100,000 tpy CO2e and that undertake a 

modification that increases net emissions of GHGs by at least 

75,000 tpy CO2e will also be subject to PSD requirements. For 

both steps, we also note that if sources or modifications exceed 

these CO2e-adjusted GHG triggers, they are not covered by 

permitting requirements unless their GHG emissions also exceed 

the corresponding mass-based triggers (i.e., unadjusted for 

CO2e.) 

EPA believes that the costs to the sources and the 

administrative burdens to the permitting authorities of PSD and 

title V permitting will be manageable at the levels in these 

initial two steps, and that it would be administratively 

infeasible to subject additional sources to PSD and title V 

requirements at those times. However, we also intend to issue a 

supplemental notice of proposed rulemaking (SNPR) in 2011, in 

which we will propose or solicit comment on a third step of the 

phase-in that would include more sources, beginning by July 1, 

2013. In the same rulemaking, we may propose or solicit comment 

on a permanent exclusion from permitting for some category of 

sources, based on the doctrine of “absurd results,” within the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

13

Chevron framework. We are establishing an enforceable 

commitment that we will complete this rulemaking by July 1, 

2012, which will allow for 1 year's notice before step 3 would 

take effect. 

We are also including in this action a rule that no source 

with emissions below 50,000 tpy CO2e, and no modification 

resulting in net GHG increases of less than 50,000 tpy CO2e, will 

be subject to PSD or title V permitting before at least 6 years 

from now, April 30, 2016. This is because we are able to 

conclude at this time that the administrative burdens that would 

accompany permitting sources below this level will be so great 

that, absent significant streamlining actions that EPA will need 

time to develop and implement, or else absent significant 

resource constraints that the permitting authorities will need 

time to implement, it will be impossible to administer the 

permit programs for these sources until at least 2016. We 

commit to explore streamlining techniques that may well make the 

permitting programs much more efficient to administer for GHGs, 

and that therefore may allow their expansion to smaller sources, 

but we expect that those techniques will take several years to 

develop and implement. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

14

Further, we are establishing 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 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. 

This rulemaking is necessary because without it, PSD and 

title V would apply to all stationary sources that emit or have 

the potential to emit more than 100 or 250 tons of GHGs per year 

beginning on January 2, 2011. This is the date when EPA’s 

recently promulgated Light Duty Vehicle Rule (LDVR) takes 

effect, imposing control requirements for the first time on CO2

and other GHGs. If this January 2, 2011 date were to pass 

without this rule being in effect, PSD and title V requirements 

would apply at the 100/250 tpy applicability levels provided 

under a literal reading of the CAA as of that date. From that 

point forward, a source owner proposing to construct any new 

major source that emits at or higher than the applicability 

levels (and which therefore may be referred to as a “major” 

source) or modify any existing major source in a way that would 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

15

increase GHG emissions would need to obtain a permit under the 

PSD program that addresses these emissions before construction 

or modification could begin. Similarly, for title V, a new or 

existing source exceeding the 100 tpy applicability level in the 

Act would be required to get a title V permit, if it did not 

already have one. 

Under these circumstances, many small sources would be 

burdened by the costs of the individualized PSD control 

technology requirements and permit applications that the PSD 

provisions, absent streamlining, require. Additionally, state 

and local permitting authorities would be burdened by the 

extraordinary number of these permit applications, which are 

orders of magnitude greater than the current inventory of 

permits 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. 

These impacts – the costs to sources and administrative burdens 

to permitting authorities – that would result from application 

of the PSD and title V programs for GHG emissions at the 

statutory levels as of January 2, 2011 are so severe that they 

bring the judicial doctrines of “absurd results,” 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

16

“administrative necessity,” and “step-at-a-time” into the 

Chevron two-step analytical framework for statutes administered 

by agencies. Under Chevron, the agency must, at step 1, 

determine whether Congress’s intent as to the specific matter at 

issue is clear, and, if so, the agency must give effect to that 

intent. If congressional intent is not clear, then, at step 2, 

the agency has discretion to fashion an interpretation that is a 

reasonable construction of the statute. To determine 

congressional intent, the agency must first consider the words 

of the statutory requirements, and if their plain meaning 

answers the question at hand, then, in most cases, the agency 

must implement those requirements by their terms. However, 

under the “absurd results” doctrine, the plain meaning of 

statutory requirements should not be considered to indicate 

congressional intent if the plain meaning would produce a result 

that is senseless or that is otherwise inconsistent with -- and 

especially one that undermines -- underlying congressional 

purpose. In these cases, if congressional intent is clear, the 

agency should implement the statutory requirements not in 

accordance with their plain meaning, but rather in a manner that 

most closely effectuates congressional intent; and if 

congressional intent is not clear, then an agency may select an 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

17

interpretation that is reasonable under the statute. Similarly, 

under the “administrative necessity” doctrine, Congress is 

presumed, at Chevron step 1, not to have intended to have 

written statutory requirements that are impossible to 

administer, but rather to have intended that requirements be 

implemented in manner that is administrable. Therefore, under 

this doctrine, an agency may depart from statutory requirements 

that, by their terms, are impossible to administer, but the 

agency may depart no more than necessary to render the 

requirements administrable. Under the “step-at-a-time” 

doctrine, Congress is presumed at Chevron step 1 to have 

intended to allow the agency to administer the statutory 

requirements on a step-by-step basis, as appropriate, when the 

agency remains on track to iComplement the requirements as a 

whole. Each of these doctrines supports our action separately, 

but the three also are intertwined and support our action in a 

comprehensive manner. 

Here, we have determined, through analysis of burden and 

emissions data as well as consideration of extensive public 

comment, that the costs to sources and administrative burdens to 

permitting authorities that would result from application of the 

PSD and title V programs for GHG emissions at the statutory 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

18

levels as of January 2, 2011 should be considered “absurd 

results.” Therefore, we conclude that under the “absurd 

results” doctrine, Congress could not have intended that the 

statutory levels apply as of that date, and instead that 

Congress intended some type of ameliorative alternative. The 

“administrative necessity” doctrine supports our conclusion as 

well because the administrative burdens of attempting to comply 

with the statutory thresholds as of January 2, 2011 would be 

impossible to bear, and for this reason, too, Congress could not 

have intended that the statutory levels apply as of that date. 

Under these circumstances, congressional intent as to how 

to apply PSD and title V to GHG sources may be considered to be 

unclear. If so, EPA has authority to develop an interpretation 

that is reasonable under the statute, and the tailoring approach 

so qualifies. In the alternative, congressional intent may be 

considered to be clear – with the possible exceptions described 

below – that PSD and title V requirements should apply to GHG 

sources as closely to the statutory levels as possible, and as 

quickly as possible, while assuring that affected sources and 

permitting authorities can manage their permitting requirements. 

The tailoring rule is the approach that best effectuates this 

intent. As a result, the tailoring rule is valid under Chevron
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

19

step 1, as informed by the “absurd results,” “administrative 

necessity,” and “step-at-a-time” doctrines. Even so, we 

acknowledge that it may not be clear whether Congress would have 

intended that PSD and title V apply to the smallest GHG sources 

– those at or near the statutory levels -- and we intend to 

resolve this issue through future rulemaking. In addition, with 

respect to title V, we acknowledge that it may not be clear 

whether Congress intended that large numbers of GHG sources be 

required to hold permits that do not have applicable 

requirements – which we will call “empty permits” – and we 

intend to resolve this issue, too, in future rulemaking. 

The legal analysis just describes justifies each of the 

actions in this rule. The first two steps that we promulgate in 

this rule, which take effect on January 2, 2011 and July 1, 

2011, are constitute the most that permitting authorities can 

reasonably be expected to do by those times. Similarly, the 

50,000 tpy floor that we promulgate through at least April 30, 

2016 is reasonable because the information we have available now 

shows that it constitutes the most that permitting authorities 

can reasonably be expected to do by that date. Finally, the 

study and two additional rulemakings – to take effect by July 1, 

2013 and April 30, 2016 -- to which we commit in this rule 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

20

establish a track for acquiring additional information and for 

taking further steps to address the application of PSD and title 

V more closely to the literal statutory levels. We intend to 

apply them as closely to those levels as is consistent with 

congressional intent and administrative imperatives, in light of 

the “absurd results,” “administrative necessity,” and “step-ata-time” doctrines, although, as noted above, we may consider in 

future rulemaking whether to conclude that Congress did not 

intend that the programs apply to the smallest sources or, for 

title V, sources with empty permits. 

We are adopting regulatory language codifying our phase-in 

approach. As we will explain, many state, local and tribal area 

programs will likely be able to immediately implement our 

approach without rule or statutory changes for example, by, 

interpreting the term ”subject to regulation” that is part of 

the applicability provisions for PSD and title V. We ask 

permitting authorities to confirm that they will follow this 

implementation approach for their programs, and if they cannot, 

then we will ask them to notify us so that we can take 

appropriate follow-up action to narrow our federal approval of 

their programs before GHGs become subject to regulation for PSD 

and title V programs on January 2, 2011. This will ensure that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

21

our approvals do not federally obligate states to implement 

these programs for GHG until they demonstrate that they have 

adequate resources to do so by undertaking necessary 

programmatic, statutory, and/or regulatory changes at the state, 

local or tribal level. 

The thresholds we are establishing are based on CO2e for the 

aggregate sum of six greenhouse gases that constitute the 

pollutant that will be subject to regulation, which we refer to 

as GHGs.1

 These gases are: CO2, methane (CH4), nitrous oxide 

(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). Thus, in this rule, we provide that 

PSD and title V applicability is based on the quantity that 

results when the mass emissions of each of these gases is 

multiplied by the Global Warming Potential (GWP) of that gas, 

and then summed for all six gases. However, we further provide 

that in order for a source’s GHG emissions to trigger PSD or 

title V requirements, the quantity of the GHGs must exceed both 

the applicability thresholds established in this rulemaking on a 

CO2e basis and the statutory thresholds of 100 or 250 tpy on a 

 1

 The term “greenhouse gases” is commonly used to refer generally to gases that have 

heat-trapping properties. However, in this notice, unless noted otherwise, we use it to refer to 

specifically to the pollutant regulated in the LDVR. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

22

mass basis.2

 Similarly, in order for a source to be subject to 

the PSD modification requirements, the source’s net GHG 

emissions increase must exceed the applicable significance level 

on a CO2e basis and must also result in a net mass increase of 

the constituent gases combined. 

We are adopting this rule after careful consideration of 

numerous public comments. On October 27, 2009 (74 FR 55292), 

EPA proposed the GHG tailoring rule. EPA held two public 

hearings on the proposed rule, and received over 400,000 written 

public comments. The public comment period ended on December 

28, 2009. The comments have provided detailed information that 

has helped EPA understand better the issues and potential 

impacts of this rule, and the final rule described in this 

preamble incorporates many of the suggestions we received. We 

respond to many of these comments in explaining our rationale 

for the final rule, which is described in section V. The final 

rule adopts many elements of the proposal but differs from the 

proposal in several important respects. We proposed to apply 

PSD and title V to GHG sources that emit or have the potential 

to emit at least 25,000 tpy CO2e, and we proposed a PSD 

 2

 The relevant thresholds are 100 tpy for title V, and 250 tpy for PSD except for 28 

categories listed in EPA regulations for which the PSD threshold is 100 tpy. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

23

significance level in a range between 10,000 and 25,000 tpy CO2e, 

but based on consideration of the additional information we 

received and our further analysis, we are finalizing the 

threshold levels on the schedule described previously. In 

addition, the mechanism for state, local and tribal program 

implementation has been significantly changed to reflect the 

comments received that we needed to develop an implementation 

approach that states could adopt under state law more 

expeditiously. 

 The remainder of this notice describes our approach and 

rationale in more detail. Following this overview, section III 

of this preamble provides background information on the nature 

of GHG emissions, recent regulatory developments that affect 

when and how GHG emissions are subject to stationary source 

permitting, and the general requirements of the PSD and title V 

programs. Section IV describes in detail the summary of the key 

actions being taken in this rule, including the determination of 

emissions, the thresholds and timing for the phase-in, our 

approach to implementing the phase-in, and the additional future 

actions we will take. Section V provides a more detailed 

description of each action, explaining the policy and legal 

rationale and responding to comments received, beginning with 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

24

our decisions on how to calculate the mass-based and CO2e-based 

emissions used in the phase-in, followed by our legal and policy 

rationale for the first two steps of the phase-in, the 50,000 

tpy floor, and the subsequent study and rulemakings to determine 

whether and how smaller sources should be subject to permitting. 

This section then describes key implementation issues including 

the approach to state adoption. After describing our plans for 

follow-up on title V fee programs, the section concludes by 

describing permit streamlining techniques; guidance on BACT for 

the GHG sources that are affected under the first two steps of 

the tailoring rule phase-in; requests for exemptions; and 

transitional issues, including grandfathering. Finally, section 

VI describes the expected impacts that will result from the 

phase-in approach (i.e, the narrower application of PSD and 

title V requirements during the phase-in period) and section VII 

addresses administrative requirements. 

III. Background 

A. What are greenhouse gases and their sources?

GHGs trap the Earth’s heat that would otherwise escape from 

the atmosphere into space, and forms the greenhouse effect that 

helps keep the Earth warm enough for life. Greenhouse gases are 

naturally present in the atmosphere and are also emitted by 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

25

human activities. Human activities are intensifying the 

naturally occurring greenhouse effect by increasing the amount 

of GHGs in the atmosphere, which is changing the climate in a 

way that endangers human health, society, and the natural 

environment. 

Some GHGs such as CO2 are emitted to the atmosphere through 

natural processes as well as human activities. Other gases, 

such as fluorinated gases, are created and emitted solely 

through human activities. As previously noted, the well-mixed 

GHGs of concern directly emitted by human activities include CO2, 

CH4, N2O, HFCs, PFCs, and SF6. These six GHGs will, for the 

purposes of this final rule, be referred to collectively as "the 

six well-mixed GHGs,” or, simply, GHGs. and together constitute 

the “air pollutant” upon which the GHG thresholds in this action 

are based. These six gases remain in the atmosphere for decades 

to centuries where they become well-mixed globally in the 

atmosphere. When they are emitted more quickly than natural 

processes can remove them from the atmosphere, their 

concentrations increase, thus increasing the greenhouse effect. 

The heating effect caused by the human-induced buildup of GHGs 

in the atmosphere is very likely the cause of most of the 

observed global warming over the last 50 years. A detailed 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

26

explanation of greenhouse gases, climate change, and its impact 

on health, society, and the environment is included in EPA's 

technical support document for the endangerment finding final 

rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292). 

In the United States, the combustion of fossil fuels (e.g., 

coal, oil, gas) is the largest source of human-induced CO2

emissions and accounts for 80 percent of the total GHG 

emissions. Anthropogenic CO2 emissions released from a variety 

of sources, including through the use of fossil fuel combustion 

and cement production from geologically stored carbon (e.g., 

coal, oil, and natural gas) that is hundreds of millions of 

years old, as well as anthropogenic CO2 emissions from land-use 

changes such as deforestation, perturb the atmospheric 

concentration of CO2 and the distribution of carbon within 

different reservoirs readjusts. More than half of the energy 

related emissions come from large stationary sources such as 

power plants, while about a third come from transportation. Of 

the six well-mixed GHGs, four (CO2, CH4, N2O, and HFCs) are 

emitted by motor vehicles. In the United States industrial 

processes (such as the production of cement, steel, and 

aluminum), agriculture, forestry, other land use, and waste 

management are also important sources of GHGs. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

27

Different GHGs have different heat-trapping capacities. 

The concept of GWP was developed to compare the heat-trapping 

capacity and atmospheric lifetime of one GHG to another. The 

definition of a GWP for a particular GHG is the ratio of heat 

trapped by one unit mass of the GHG to that of one unit mass of 

CO2 over a specified time period. When quantities of the 

different GHGs are multiplied by their GWPs, the different GHGs 

can be summed and compared on a CO2e basis. For example, CH4 has 

a GWP of 21, meaning each ton of CH4 emissions would have 21 

times as much impact on global warming over a 100-year time 

horizon as 1 ton of CO2 emissions. Thus, on the basis of heattrapping capability, 1 ton of CH4 would equal 21 tons of CO2e. 

The GWPs of the non CO2 GHGs range from 21 (for CH4) up to 23,900 

(for SF6). Aggregating all GHGs on a CO2e basis at the source 

level allows a facility to evaluate its total GHG emissions 

contribution based on a single metric. 

B. Endangerment Finding and the Light-Duty Vehicle Rule

1. Endangerment Finding 

On April 2, 2007, the United States Supreme Court found 

that GHGs are air pollutants under CAA section 302(g). 

Massachusetts v. EPA, 549 U.S. 497 (2007). As a result, the 

Supreme Court found that EPA was required to determine, under 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

28

CAA section 202(a), whether (a) GHGs from new motor vehicles 

cause or contribute to air pollution which may reasonably be 

anticipated to endanger public health or welfare, or (b) the 

science is too uncertain to make a reasoned decision. After 

issuing a proposal and receiving comment, on December 7, 2009, 

the Administrator signed two distinct findings regarding GHGs 

under CAA section 202(a): 

• Endangerment Finding: The Administrator found that the 

current and projected atmospheric concentrations of the mix 

of six long-lived and directly emitted GHGs—CO2, CH4, N2O, 

HFCs, PFCs, and SF6 (referred to as “well-mixed greenhouse 

gases” in the endangerment finding)–are reasonably 

anticipated to endanger the public health and welfare of 

current and future generations. 

• Cause or Contribute Finding: The Administrator found that 

the emissions of the single air pollutant defined as the 

aggregate group of six well-mixed greenhouses gases from 

new motor vehicles and new motor vehicle engines contribute 

to the GHG air pollution that threatens public health and 

welfare. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

29

These findings, which were published December 15, 2009 (74 FR 

66496), do not themselves impose any requirements on industry or 

other entities. However, they were a prerequisite to finalizing 

the GHG standards for light-duty vehicles, described next. 

2. Light-Duty Vehicle Rule 

The light-duty vehicle rule, signed on April 1, 20103

 is a 

joint rule between EPA and the Department of Transportation’s 

National Highway Traffic Safety Administration (NHTSA) that 

establishes a national program consisting of new standards for 

light-duty vehicles that will reduce greenhouse gas emissions 

and improve fuel economy. EPA finalized the national GHG 

emissions standards under the Act, and NHTSA finalized Corporate 

Average Fuel Economy (CAFE) standards under the Energy Policy 

and Conservation Act, as amended. The new standards apply to 

new passenger cars, light-duty trucks, and medium-duty passenger 

vehicles, starting with model year 2012. The EPA GHG standards 

are projected to result in an estimated combined average 

emissions level of 250 grams of CO2 per mile for model year 2016 

vehicles. The standards begin with the 2012 model year, with 

 3

 This rule has not yet been published in the Federal Register. The signed version of the 

rule is available at http://epa.gov/otaq/climate/regulations.htm [update 

when published] 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

30

standards increasing in stringency through model year 2016. The 

standards are a fleet average for each manufacturer, based on a 

footprint attribute curve, meaning that the actual target for a 

vehicle will vary depending on the size of the vehicle. Under 

the footprint-based standards, each manufacturer will have a GHG 

standard unique to its fleet, depending on the footprints of the 

vehicle models produced by that manufacturer. A manufacturer 

will have separate footprint-based standards for cars and for 

trucks 

 The endangerment and contribution findings described above 

require EPA to issue standards under section 202 (a) “applicable 

to emission” of the air pollutant that EPA found causes or 

contributes to the air pollution that endangers public health 

and welfare. The final emissions standards satisfy this 

requirement for GHGs from light-duty vehicles. Under section 

202(a) the Administrator has significant discretion in how to 

structure the standards that apply to the emission of the air 

pollutant at issue here, the aggregate group of six GHGs. EPA 

has the discretion under section 202(a) to adopt separate 

standards for each gas, a single composite standard covering 

various gases, or any combination of these. In the LDVR, EPA 

finalized separate standards for nitrous oxide and methane, and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

31

a CO2 standard that provides for credits based on reductions of 

HFCs, as the appropriate way to issue standards applicable to 

emission of the single air pollutant, the aggregate group of six 

GHGs. EPA did not set any standards for PFCs or SF6, as they 

are not emitted by motor vehicles. 

C. What are the general requirements of the PSD program?

1. Overview of the PSD Program 

The PSD program is a preconstruction review and permitting 

program applicable to new major stationary sources and major 

modifications at existing major stationary sources. The PSD 

program applies in areas that are designated “attainment” or 

“unclassifiable” for a National Ambient Air Quality Standard 

(NAAQS). The PSD program is contained in part C of title I of 

the CAA. The "nonattainment new source review (NSR)" program 

applies in areas not in attainment for a NAAQS or in the Ozone 

Transport Region and is implemented under the requirements of 

part D of title I of the CAA. Collectively, we commonly refer 

to these two programs as the major NSR program. The governing 

EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, 

and part 51, appendices S and W. There is no NAAQS for CO2 or 

any of the other well-mixed GHGs, nor has EPA proposed any such 

NAAQS; therefore, unless and until we take further such action, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

32

we do not anticipate that the "nonattainment" major NSR program 

will apply to GHGs. 

The applicability of PSD to a particular source must be 

determined in advance of construction or modification and is 

pollutant-specific. The primary criterion in determining PSD 

applicability for a proposed source is whether the source is a 

“major emitting facility,”, based on its predicted potential 

emissions of regulated pollutants, within the meaning of CAA 

section 169(1) and either constructs or undertakes a 

modification. EPA has implemented these requirements in its 

regulations, which use somewhat different terminology for 

determining PSD applicability, which is whether the source is a 

“major stationary source” or whether the proposed project is a 

“major modification.” 

a. Major Stationary Source 

Under PSD, a "major stationary source" is any source 

belonging to a specified list of 28 source categories which 

emits or has a potential to emit (PTE) of 100 tpy or more of any 

pollutant subject to regulation under the CAA, or any other 

source type which emits or has the PTE such pollutants in 

amounts equal to or greater than 250 tpy. We refer to these 

levels as the 100/250-tpy thresholds. A new source with a PTE 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

33

at or above the applicable “major stationary source threshold" 

is subject to major source NSR. These limits originate from 

section 169 of the CAA, which applies PSD to any “major emitting 

facility” and defines the term to include any source that emits 

or has a PTE of 100 or 250 tpy, depending on the source 

category. Note that the major source definition incorporates 

the phrase “subject to regulation,” which, as described later, 

will begin to include GHGs on January 2, 2011, under our 

interpretation of that phrase discussed in the recent 

Interpretive Memo notice. 75 FR 17004. 

b. Major Modifications 

PSD also applies to existing sources that undertake a 

"major modification," which occurs: (1) when there is a 

physical change in, or change in the method of operation of, a 

"major stationary source;" (2) the change results in a 

"significant" emission increase of a pollutant subject to 

regulation (equal to or above the significance level that EPA 

has set for the pollutant in 40 CFR 52.21(b)(23)); and (3) there 

is a “significant net emissions increase” of a pollutant subject 

to regulation that is equal to or above the significance level 

(defined in 40 CFR 52.21(b)(23)). Significance levels, which 

EPA has promulgated for criteria pollutants and certain other 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

34

pollutants, represent a de minimis contribution to air quality 

problems. When EPA has not set a significance level for a 

regulated NSR pollutant, PSD applies to an increase of the 

pollutant in any amount (that is, in effect, the significance 

level is treated as zero). 

2. General Requirements for PSD 

This section provides a very brief summary of the main 

requirements of the PSD program. One principal requirement is 

that a new major source or major modification must apply BACT, 

which is determined on a case-by-case basis taking into account, 

among other factors, the cost effectiveness of the control and 

energy and environmental impacts. EPA has developed a “topdown” approach for BACT review, which involves a decision 

process that includes identification of all available control 

technologies, elimination of technically infeasible options, 

ranking of remaining options by control and cost effectiveness, 

and then selection of BACT. Under PSD, once a source is 

determined to be major for any regulated NSR pollutant, a BACT 

review is performed for each attainment pollutant that exceeds 

its PSD significance level as part of new construction or for 

modification projects at the source, where there is a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

35

significant increase and a significant net emissions increase of 

such pollutant4

. 

In addition to performing BACT, the source must analyze 

impacts on ambient air quality to assure that no violation of 

any NAAQS or PSD increments will result, and must analyze 

impacts on soil, vegetation, and visibility. In addition, 

sources or modifications that would impact Class I areas (e.g., 

national parks) may be subject to additional requirements to 

protect air quality related values (AQRVs) that have been 

identified for such areas. Under PSD, if a source proposes to 

locate within 100 kilometers of a Class I area, the Federal Land 

Manager is notified and is responsible for evaluating a source’s 

projected impact on the AQRV’s and recommending either approval 

or disapproval of the source’s permit application based on 

anticipated impacts. There are currently no NAAQS or PSD 

increments established for GHGs, and therefore these PSD 

requirements would not apply for GHGs, even when PSD is 

triggered for GHGs. However, if PSD is triggered for a GHG 

emissions source, all regulated NSR pollutants which the new 

 4

 We note that the PSD program has historically operated in this fashion for all pollutants 

– when new sources or modifications are “major”, PSD applies to all pollutants that are emitted 

in significant quantities from the source or project. This rule does not alter that for sources or 

modifications that are major due to their GHG emissions. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

36

source emits in significant amounts would be subject to PSD 

requirements. Therefore, if a facility triggers review for 

regulated NSR pollutants that are non-GHG pollutants for which 

there are established NAAQS or increments, the air quality, 

additional impacts, and Class I requirements would apply to 

those pollutants. 

The permitting authority must provide notice of its 

preliminary decision on a source's application for a PSD permit, 

and must provide an opportunity for comment by the public, 

industry, and other interested persons. After considering and 

responding to comments, the permitting authority must issue a 

final determination on the construction permit. Usually NSR 

permits are issued by state or local air pollution control 

agencies, which have their own permit programs approved by EPA 

in their SIP. In some cases, EPA has delegated its authority to 

issue PSD permits to the state or local agency. In other areas, 

EPA issues the permits under its own authority. 

D. What are the general requirements of the Title V Operating 

Permits Program?

1. Overview of Title V 

The operating permit requirements under title V are 

intended to improve sources' compliance with other CAA 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

37

requirements. The title V program is implemented through 

regulations promulgated by EPA, 40 CFR part 70, for programs 

implemented by state and local agencies and tribes, and 40 CFR 

part 71, for programs generally implemented by EPA. 

In summary, the title V program requires major sources 

(defined and interpreted by EPA to include sources that emit or 

have PTE of 100 tpy of any pollutant subject to regulation) and 

certain other sources to obtain operating permits. Under EPA’s 

long-standing interpretation, a pollutant, such as a GHG, is 

“subject to regulation” when it is subject to a CAA requirement 

establishing actual control of emissions. Title V generally 

does not add new pollution control requirements, but it does 

require that each permit contain all existing pollution control 

requirements or “applicable requirements” required by the CAA 

(e.g., New Source Performance Standard (NSPS), and State 

Implementation Plan (SIP) requirements, including PSD), and it 

requires that certain procedural requirements be followed, 

especially with respect to compliance with these requirements. 

"Applicable requirements" for title V purposes include 

stationary source requirements, but do not include mobile source 

requirements. Other procedural requirements include providing 

review of permits by EPA, states, and the public, and requiring 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

38

permit holders to track, report, and annually certify their 

compliance status with respect to their permit requirements. 

2. Title V Permit Requirements 

This section provides a brief summary of the requirements 

of the title V program that are most relevant to this action. A 

source generally must apply for a title V permit within 1 year 

of first becoming subject to permitting – for new sources, this 

is usually within 1 year of commencing operation. The 

application must include identifying information, a description 

of emissions and other information necessary to determine 

applicability of requirements and information concerning 

compliance with those requirements. The permitting authority 

uses this information to develop the source's operating permit. 

Title V permits generally contain the following elements: 

(1) emissions limitations and standards to assure compliance 

with all applicable requirements; (2) monitoring, recordkeeping, 

and reporting requirements, including submittal of a semiannual 

monitoring report and prompt reporting of deviations from permit 

terms; (3) fee payment; and (4) an annual certification of 

certification by a responsible official. The detailed 

requirements are set forth at 40 CFR 70.6. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

39

In addition to the permit content requirements, there are 

procedural requirements that must be followed in issuing title V 

permits, including (1) application completeness determination; 

(2) public notice and a 30-day public comment period, including 

an opportunity for a public hearing, on draft permits; (3) EPA 

and affected state review; and (4) a statement of the legal and 

factual basis of the draft permit. The permitting authority 

must take final action (issue or deny) on the permit 

applications within 18 months of receipt. EPA also has 45 days 

from receipt of a proposed permit to object to its issuance, and 

citizens have 60 days after that to petition EPA to object to a 

permit. Permits may also need to be revised or reopened if new 

requirements come into effect during the permit terms or if the 

source makes changes that conflict with, or necessitate changes 

to, the current permit. Permit revisions and re-openings follow 

procedural requirements which vary depending on the nature of 

the necessary change to the permit. 

E. The Interpretive Memorandum 

 On December 18, 2008, EPA issued a memorandum, "EPA's 

Interpretation of Regulations that Determine Pollutants Covered 

by Federal Prevention of Significant Deterioration (PSD) Permit 

Program" (known as the “Johnson Memo” or the “PSD Interpretive 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

40

Memo,” and referred to in this preamble as the “Interpretive 

Memo”) that set forth EPA’s interpretation regarding which EPA 

and state actions, with respect to a previously unregulated 

pollutant, cause that pollutant to become “subject to 

regulation” under the Act. Whether a pollutant is “subject to 

regulation” is important for the purposes of determining whether 

it is covered under the federal PSD and title V permitting 

programs. The Interpretive Memo established that a pollutant is 

“subject to regulation” only if it is subject to either a 

provision in the CAA or regulation adopted by EPA under the CAA 

that requires actual control of emissions of that pollutant 

(referred to as the “actual control interpretation”). On 

February 17, 2009, EPA granted a petition for reconsideration on 

the Interpretive Memo, and announced its intent to conduct a 

rulemaking to allow for public comment on the issues raised in 

the memorandum and on related issues. EPA also clarified that 

the Interpretive Memo would remain in effect pending 

reconsideration. 

On March 29, 2010, EPA published a notice conveying its 

decision to continue applying (with one limited refinement) the 

Interpretive Memo’s interpretation of “subject to regulation” 

(“Interpretation of Regulations that Determine Pollutants 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

41

Covered by Clean Air Act Permitting Programs“). See 75 FR 

17004. EPA concluded that the “actual control interpretation” 

is the most appropriate interpretation to apply given the policy 

implications. However, we refined our interpretation in one 

respect: we established that PSD permitting requirements apply 

to a newly regulated pollutant at the time a regulatory 

requirement to control emissions of that pollutant “takes 

effect” (rather than upon promulgation or the legal effective 

date of the regulation containing such a requirement). In 

addition, based on the anticipated promulgation of the LDVR, we 

stated that the GHG requirements of the vehicle rule would take 

effect on January 2, 2011, because that is the earliest date 

that a 2012 model year vehicle may be introduced into commerce. 

In other words, the compliance obligation under the LDVR does 

not occur until a manufacturer may introduce into commerce 

vehicles that are required to comply with GHG standards, which 

will begin with model year 2012 and will not occur before 

January 2, 2011. We also reiterated EPA’s interpretation that 

the 100 tpy major source threshold for title V is triggered only 

by pollutants “subject to regulation” under the Act, and we 

defined and applied that term for title V purposes in the same 

way that we did for PSD purposes. That is, we stated that a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

42

pollutant is “subject to regulation” if it is subject to a CAA 

requirement establishing “actual control of emissions;” that a 

pollutant is considered “subject to regulation” for title V 

purposes when such a requirement “takes effect.”;” and, based on 

the anticipated promulgation of the LDVR, that the GHG 

requirements of the vehicle rule would take effect on January 2, 

2011. 

On April 1, 2010, we finalized the LDVR as anticipated, 

confirming that manufacturer certification can occur no earlier 

than January 2, 2011. Thus, under the terms of the final notice 

for the Interpretive Memo, GHGs become subject to regulation on 

that date, and PSD and title V program requirements will also 

begin to apply upon that date. 

IV. Summary of Final Actions 

This section describes the specific actions we are taking 

in this final rule. It describes the overall tailoring approach 

for NSR and title V applicability, the steps we are taking to 

put it into place, and future actions that we commit to take. 

The next section, V, provides the legal and policy rationale for 

these actions. In that section, we provide a description of our 

rationale and response to comments for each action, presented in 

the same order as we describe the actions below. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

43

A. How do you define the GHG pollutant for PSD and title V 

purposes?

1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs 

We are identifying the air pollutant for purposes of PSD 

and title V applicability to be the pollutant subject to 

regulation, which is the air pollutant for GHGs identified in 

EPA’s LDVR, as well as EPA’s endangerment and contribution 

findings5

. In the LDVR, EPA set emissions standards under 

section 202(a) that were “applicable to emission” of a single 

air pollutant defined as the aggregate sum of six greenhouses 

gases. The six GHGs, which are well-mixed gases in the 

atmosphere, are: CO2, CH4, N2O, HFCs, PFCs, and SF6. Earlier, 

EPA made the contribution finding for this single air pollutant. 

Furthermore, as proposed, we are using an emissions 

threshold that allows all six constituent gases to be evaluated 

using a common metric – CO2e. Thus, to determine applicability, 

a source's GHG emissions are calculated on a CO2e basis by 

multiplying the mass emissions of any of the six GHGs that the 

source emits by that gas’s GWP and then summing the CO2e for each 

GHG emitted by the source. This sum, expressed in terms of tpy 

 5

See 74 FR 66496, 66499, 66536-7. December 15, 2009. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

44

CO2e, is then compared to the applicable CO2e-based permitting 

threshold to determine whether the source is subject to PSD and 

title V requirements. 

In addition, because we are implementing this phase-in 

through the term “subject to regulation” the rule is structured 

such that the statutory mass-based thresholds (i.e. 100/250 tpy)6

and 0 tpy for modifications at a major stationary source apply 

and stationary sources or modifications that do not meet these 

thresholds are not subject to permitting requirements. While 

technically evaluation of the mass-based thresholds is the 

second step in the applicability analysis, from a practical 

standpoint most source are likely to treat this as an initial 

screen and not evaluate emissions on a CO2 e basis if they would 

not trigger PSD on a mass basis and we have treated it as such 

in our descriptions below. As applicable, a source would 

evaluate these mass-based thresholds by summing each of the six 

GHGs it emits on a mass basis (i.e., before applying GWP). We 

expect that it will be very rare for a new stationary source or 

modification to trigger permitting based on CO2e and not also 

trigger based on mass alone. 

 6

 A source need not meet the 100/250 thresholds for GHGs if it is already a major 

stationary source as a result of emissions of another regulated NSR pollutant. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

45

 Determining permit program applicability for the GHG “air 

pollutant” by using the sum-of-six GHGs is based on EPA’s 

interpretation that the PSD and title V requirements apply to 

each “air pollutant” that is “subject to regulation” under 

another provision of the CAA. As discussed previously, the 

final LDVR for GHGs makes it clear that the emissions standards 

EPA adopted are standards applicable to emission of the single 

air pollutant defined as the aggregate mix of these six wellmixed greenhouse gases. See April 1, 2010 Preamble, II.A.2.c., 

pp 153-4., and 40 CFR §86.1818-12.7

 For reasons explained in 

more detail in section V, we have determined it is legally 

required, and preferable from a policy standpoint, for EPA to 

use the same definition of the air pollutant for permitting 

purposes as that used in the rule that establishes the control 

requirements for the pollutant. We also believe there are 

implementation advantages for applying PSD and title V in this 

way. Thus, this rule establishes that a stationary source will 

use the group of six constituent gases for permitting 

 

7

 §86.1818-12 (a) (“Applicability. This section contains 

standards and other regulations applicable to the emission of 

the air pollutant defined as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride”). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

46

applicability, rather than treating each gas individually. 

Similarly, you will include all six constituent gases because 

that is how the air pollutant is defined, even though motor 

vehicles only emit four of the six. 

2. What GWP values should be used for calculating CO2e? 

We are requiring that wherever you perform an emissions 

calculations involving CO2e for the purposes of determining the 

applicability of PSD or title V requirements, you use the GWP 

values codified in the EPA’s GHG mandatory reporting rule 

[Reference: Table A-1 to Subpart A of Part 98 – Global Warming 

Potentials, FR, Vol.74, No. 209, p. 56395]. This approach will 

assure consistency between the values required for calculations 

under the mandatory reporting rule and for PSD or title V. In 

addition, because any changes to Table A-1 of the mandatory GHG 

reporting rule regulatory text must go through a rulemaking, 

this approach will assure that the values used for the 

permitting programs will reflect the latest values adopted for 

usage by EPA after notice and comment. 

B. When will PSD and title V applicability begin for GHGs and 

emission sources?

Overview 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

47

 In this action, we establish the first two phases of our 

phase-in approach, which we refer to as steps 1 and 2. We also 

commit to a subsequent rulemaking in which we will propose or 

solicit comment on establishing a further phase-in, that is, a 

step 3, that would apply PSD and title V to additional sources, 

effective July 1, 2013, and on which we commit to take final 

action, as supported by the record,8

 by no later than July 1, 

2012. 

We also commit to undertaking an assessment of sources’ and 

permitting authorities’ progress in implementing PSD and title V 

for GHG sources, and to complete this assessment by 2015. We 

further commit to completing another round of rulemaking 

addressing smaller sources by April 30, 2016. Our action in 

that rulemaking would address permitting requirements for 

smaller sources, taking into account the remaining problems 

concerning costs to sources and burdens to permitting 

authorities. Finally, we determine in this action that we will 

apply PSD or title V requirements to sources that emit GHGs, or 

that conduct modifications that result in increases in emissions 

 8

 Although we commit to propose or solicit comment on lower thresholds and to take 

final action on that proposal by July 1, 2012, we cannot, at present, commit to promulgate lower 

thresholds. It will not be until the Step 3 rulemaking itself that we will gather and analyze data 

and receive comments that determine whether we have basis for promulgating lower thresholds. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

48

of GHGs, in amounts of less than 50,000 tpy CO2e any earlier than 

when we take the required further action to address smaller 

sources by April 30, 2016. 

Through this process, we will implement the phase-in 

approach by applying PSD and title V at threshold levels that 

are as close to the statutory levels as possible, and do so as 

quickly as possible. The level and timing of the thresholds 

that we promulgate in future actions will be based on our 

assessment of the resulting costs to sources and burdens to 

permitting authorities, and that, in turn, will depend on such 

variables as our progress in developing streamlining approaches 

and on permitting authorities’ progress in developing permitting 

expertise and acquiring more resources. At this time, we cannot 

foresee exactly when or in what manner those developments will 

occur. Therefore, we cannot promulgate more components of the 

tailoring approach beyond what we promulgate in this action. We 

can say only that we may continue the phase-in process with 

further rulemaking after 2016. Alternatively, we may make a 

definitive determination in one of the future rulemaking actions 

that, under the “absurd results” doctrine, PSD or title V 

applies only to certain GHG sources, and does not apply to the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

49

remaining GHG sources, and with that rulemaking, bring this 

tailoring process to a close. 

1. What are the Step 1 thresholds, timing and calculation 

methodology? 

a. PSD Permitting 

Step 1 of the tailoring rule phase-in will begin on January 

2, 2011. With respect to the PSD program, GHG sources 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, 

in which case they will be subject to the PSD requirements for 

GHG if they increase GHG emissions by 75,000 tpy CO2e or more. 

Under this step, only these sources, which we refer to as 

“anyway” PSD sources, will become subject to PSD; no sources 

will become major sources for PSD purposes or be treated as 

undertaking modifications that trigger PSD based solely on their 

GHG emissions. As a result, no additional PSD permitting 

actions will be necessary solely due to GHG emissions. However, 

existing or newly-constructed sources that are determined to be 

major sources based on non-GHG emissions are required to conduct 

a BACT review for their GHG emissions (from new construction) or 

emissions increases (from modifications), if they are subject to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

50

PSD due to their non-GHG emissions from construction or 

modification actions and each of the following conditions is 

met: 

1) The GHG emissions (or net emissions increase) due to 

the new construction (or modification) project, calculated as 

the sum of the six well-mixed GHGs on a mass basis (no GWPs 

applied) exceed a value of 0 tpy; and 

2) The GHG emissions (or net emissions increase) due to 

the new construction (or modification) project, calculated as 

the sum of the six well-mixed GHGs on a CO2e basis (GWPs applied) 

equal or exceed a value of 75,000 tpy CO2e. 

The purpose of the first condition is to determine whether 

the GHG emissions or net emissions increase has resulted in an 

“increase in the amount” of an air pollutant as required by the 

Act. Because EPA has not defined a mass-based regulatory 

significance level for GHGs, that level, in effect, is treated 

as zero. See 40 CFR §§ 52.21 (b)(23)(ii) and 51.166 

(b)(23)(ii). In practice, this means any amount of new 

emissions or an emission increase will exceed the mass-based 

limit. We are not, at this time, establishing a significance 

level based on mass emissions because we have established one 

based on CO2e that addresses permitting burdens. Thus, the mass-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

51

based step will be used only to exclude sources that have no 

mass increase of GHGs. At this time, we are not establishing a 

significance level on a mass emissions basis. 

b. Title V Permitting 

Under step 1, only sources required to have title V permits 

for non-GHG pollutants (i.e., “anyway” title V sources) will be 

required to address GHGs as part of their title V permitting. 

That is, no sources will become major for title V based solely 

on their GHG emissions. Note further, however, that the 75,000 

tpy CO2e limit does not apply to title V, so that anyway title V 

sources must apply any title V requirements to their GHG 

emissions regardless of the amount of those emissions. Sources 

with title V permits must address GHG requirements when they 

apply for, renew, or revise their permits. These requirements 

will include any GHG applicable requirements (e.g., GHG BACT 

requirements from a PSD process) and associated monitoring, 

record-keeping and reporting. When a permit application is 

otherwise required, they will also need to identify GHG 

emissions and other information in that application to the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

52

extent required under 40 CFR §§ 70.5(c) and 71.5(c), including 

information necessary to determine applicable requirements.9

2. What are the Step 2 thresholds, timing and calculation 

methodology? 

a. PSD Permitting 

Step 2 will begin July 1, 2011. Under step 2, anyway PSD 

sources - that is, sources already subject to PSD based on nonGHGs and covered under step 1 above - will remain subject to 

PSD. In addition, sources with the potential to emit 100,000 

tpy CO2e or more of GHG will be considered major sources for PSD 

permitting purposes (provided that they also emit GHGs or some 

other regulated NSR pollutant above the 100/250 tpy (mass based) 

statutory thresholds. Additionally, any physical change or 

change in the method of operation at a major source (including 

one that is only major due to GHGs) resulting in a net GHG 

emissions increase of 75,000 tpy CO2e or more will be subject to 

PSD review and requirements with respect to GHGs (provided that 

it also results in an increase of GHG emissions on a mass 

basis). 

 9

 EPA notes, however, that many sources subject to title V under steps 1 and 2 will also 

be subject to the GHG mandatory reporting rule. For these sources, the emissions description 

requirements in the title V regulations will generally be satisfied by referencing information 

provided under the reporting rule. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

53

 Specifically, for purposes of determining whether a GHG 

emission source undertaking construction is considered a major 

source under PSD, the following conditions must be met: 

1) The GHG emissions at a newly constructed source which 

is not major for another pollutant, calculated as the sum-ofsix well-mixed GHGs on a mass basis (no GWPs applied): 

- equal or exceed 100 tpy (in actual emissions or 

potential to emit) for sources in any of the 28 major 

emitting facility source categories listed under PSD, or 

- equal or exceed 250 tpy (in actual emissions or 

potential to emit) for any other stationary source. 

2) The GHG emissions at a newly constructed source, 

calculated as the sum-of-six well-mixed GHGs on a mass basis 

(GWPs applied) equal or exceed 100,000 tpy CO2e (on an actual or 

potential to emit basis). 

For determining whether a modification project at a major 

stationary source is subject to PSD review, the following 

conditions must be met: 

1) The net GHG emissions increase resulting from the 

project, calculated as the sum of-six well-mixed GHGs on a mass 

basis (no GWPs applied) equals or exceeds 0 tpy. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

54

2) The net GHG emissions increase resulting from the 

project, calculated as the sum-of-six well-mixed GHGs on a CO2e 

basis (GWPs applied) equals or exceeds 75,000 tpy CO2e. 

The purpose of the first condition in both determinations 

above is to confirm whether the GHG emissions or emissions 

increase have exceeded, on a mass-basis, the statutory major 

source thresholds (where the source is not otherwise major) and 

mass-based statutory significance level for GHGs, which, as 

noted above, is 0 tpy. See 40 CFR § 52.21 (b)(23)(ii) and 

51.166 (b)(23)(ii). 

As an example of how the mass-based test would apply, 

consider a modification project that results in a 5 tpy increase 

of GHG emissions on a mass basis, associated with a high-GWP GHG 

gas (for example, SF6, with a GWP value of 23,900), but also 

results in a 100 tpy reduction in CO2 emissions (assume no other 

contemporaneous increases or decreases of GHG). In this 

example, there would be a net decrease of GHG emissions on a 

mass basis (5 tpy – 100 tpy = -95 tpy). Because there is no 

mass-based increase of GHG, this project does not trigger PSD, 

despite the fact that the net GWP-adjusted emissions increase of 

SF6 in this example would equal 119,500 tpy of CO2e and the 

project would thus exceed 75,000 tpy CO2e. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

55

b. Title V Permitting 

Under step 2, “anyway” title V sources - that is, sources 

already subject to title V based on non-GHGs and that are 

covered under step 1 above - will continue to be subject to 

title V. In addition, GHG emission sources that equal or exceed 

the 100,000 tpy CO2e threshold will be required to obtain a title 

V permit if they do not already have one. It is important to 

note that the requirement to obtain a title V permit will not, 

by itself, result in the triggering of additional substantive 

requirements for control of GHG. Rather, these new title V 

permits will simply incorporate whatever applicable CAA 

requirements, if any, apply to the source being permitted. The 

following conditions need to be met in order for title V to 

apply under step 2 to a GHG emission source. 

For determining whether a GHG emission source is subject to 

permitting under title V: 

1) The GHG emissions at an existing or newly constructed 

source, calculated as the sum of the six well-mixed GHGs on a 

mass basis (no GWPs applied), equal or exceed 100 tpy (on an 

actual emission or PTE basis). 

2) The GHG emissions at an existing or newly constructed 

source, calculated as the sum of the six well-mixed GHGs on a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

56

mass basis (GWPs applied), equal or exceed a value of 100,000 

tpy CO2e (on an actual emission or PTE basis) 

3. What about Step 3? 

In this rule, EPA establishes an enforceable commitment to 

complete another rulemaking no later than July 1, 2012, in which 

we will propose or solicit comment on a step 3 of the phase-in 

and may also consider other approaches that may result in the 

permanent exclusion of a category of sources from PSD or title V 

requirements, under the Chevron framework, taking account of the 

“absurd results” doctrine. 

Consistent with our phase-in approach, it is important for 

us to consider whether, at some point during the implementation 

of step 2, it will become possible to administer GHG permitting 

programs for additional sources. For example, if EPA is able to 

promulgate measures that streamline programs to at least some 

extent, if permitting authorities increase their resources, or 

if implementation experience and more seasoned staff results in 

more effective use of scarce permitting resources, then we 

expect that we will be able to phase-in the application of PSD 

and title V to more sources by establishing step 3. We do not 

have enough information now to establish a final step 3, 

particularly because there will be significant transition 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

57

occurring in the GHG permitting programs during steps 1 and 2. 

However, we believe that it will be possible to develop a record 

on which to base step 3 sometime soon after we begin to 

implement step 2. 

Therefore, we plan to propose a rule in which we solicit 

comment on or propose lower thresholds for PSD and title V 

applicability, and we establish an enforceable commitment to 

finalize a rule in which we address those matters by July 1, 

2012. In order to provide a year for permitting authorities and 

sources to prepare for any additional GHG permitting action in 

Step 3, we will establish that Step 3 would take effect on July 

1, 2013. We also commit to explore between now and the step 3 

proposal, a wide range of streamlining options. In the 

proposal, we will take comment on streamlining approaches we 

think may be viable (except to the extent we will have already 

issued guidance documents concerning streamlining approaches), 

and we will address those options in the final rule. 

In addition, as part of the step 3 action, we may solicit 

comment on a permanent exclusion of certain sources from PSD, 

title V or both, based on an “absurd results” rationale. For 

example, we may make a final determination that under the 

“absurd results” doctrine, PSD and/or title V do not apply to a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

58

set of GHG sources that, although above the statutory thresholds 

for those programs, are too small and relatively inconsequential 

in terms of GHG contribution. Another type of such exclusion 

for the title V program could be for sources that would 

otherwise be required to obtain an “empty permit,” that is, one 

that would not contain any applicable requirements because there 

are none that apply to the source or any applicable GHG 

requirements, depending on the approach taken. It is possible 

that in promulgating such an exclusion, we may conclude that it 

brings into the PSD and title V programs the full set of sources 

that would be consistent with congressional intent, and, if so, 

we would find that such a rule brings the tailoring process to a 

close. The application of the “absurd results” rationale for a 

permanent exclusion is discussed in more detail in the next 

section. 

4. What about the proposed 6 year exclusion for smaller 

sources? 

The tailoring proposal contemplated at least a six-year 

exclusion from permitting for small sources. This proposed 

exclusion was based on the overwhelming numbers of permitting 

actions at small sources and the need for time for permitting 

authorities to secure resources, hire and train staff, and gain 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

59

experience with GHG permitting for new types of sources and 

technologies. It was also based on the time needed for EPA to 

develop, and for states to adopt, streamlining measures to 

reduce the permitting burden (e.g., concerning PTE, presumptive 

BACT, or general permits,). We therefore proposed such an 

exclusion, and proposed that it would last 6 years – 5 years to 

complete a required study evaluating permitting burden and 

assessing the effect of streamlining measures or techniques in 

reducing this burden, plus an additional year to complete a 

final rulemaking that would phase in additional sources as 

appropriate based on the study. 

 We are finalizing the six-year exclusion, and for reasons 

described below, are establishing that in no event will sources 

below 50,000 tpy CO2e be subject to PSD or title V permitting 

during the 6-year period, nor will modifications be subject to 

PSD unless they increase emissions by 50,000 tpy CO2e or more. 

The exclusion will last until we take the action described later 

to address smaller sources, which is required by April 30, 2016. 

The exclusion provides certainty that, before this date, EPA 

will not act to cover sources and modifications below these 

thresholds, including during the required step 3 rulemaking that 

will occur in 2012. In effect, this means that step 3 will 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

60

establish a major source threshold and significance level no 

lower than 50,000 tpy CO2e. This does not necessarily mean we 

will cover sources below this level on April 30, 2016. It 

simply means that the provision we are adopting would assure 

that EPA does not cover such sources any sooner than that. 

5. When and how will EPA take further action on smaller 

sources? 

As we proposed, we are establishing an enforceable 

commitment to act within 5 years to complete a study projecting 

the administrative burdens that remain for small sources after 

permitting authorities have had time to secure resources, hire 

and train staff, and gain experience with GHG permitting for new 

types of sources and technologies, and after EPA has had time to 

develop (and states have had time to adopt) streamlining 

measures to reduce the permitting burden for such sources. We 

will use this study to serve as the basis for an additional 

rulemaking that would take further action to address small 

sources. Similar to the enforceable commitment to act on step 

3, we are making an enforceable commitment to complete this 

rulemaking by April 30, 2016, 

We cannot predict at this time what form that final action 

will take. It could function as a step 4, bringing in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

61

additional sources based on, for example, streamlining actions, 

increased permitting authority resources, and experienced and 

more efficient permitting staff; and it could further indicate 

that we intend to follow-up with a step 5 to bring in more 

sources. Alternatively, it could also function as a final step 

excluding certain sources permanently based on our application 

of the Chevron framework, taking account of the “absurd results” 

doctrine, and subjecting the remaining sources to permitting. 

However, whatever final action we take would explain any 

necessary changes to the step 3 thresholds and would supersede 

the 6-year exclusion for sources and modifications below 50,000 

tpy CO2e. 

C. How do state, local and tribal area programs adopt the final 

GHG applicability thresholds?

We are finalizing our proposed approach to change the 

definition of “major stationary source” in the PSD implementing 

regulations, and the “major source” definition in the title V 

implementing regulations to tailor the application of these 

permitting programs to GHG emissions. We also finalize a 

significance level for GHG emissions for purposes of defining a 

major modification under the PSD program, and add an exclusion 

from PSD and title V permitting for GHG emissions, until we 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

62

complete a rulemaking required by April 30, 2016, for any 

sources that are not already subject to PSD and title V 

permitting and that emit less than 50,000 tpy of CO2e. 

 As explained earlier, we are adopting thresholds that phase 

in the applicability of GHG permitting over a specified time 

period. In adopting regulatory changes to implement these 

thresholds, we follow an approach that is substantively the same 

as the approach proposed, but takes a slightly different form. 

Specifically, we are explicitly codifying the phrase “subject to 

regulation” in our implementing regulations, instead of revising 

the “major stationary source” and “major source” definitions by 

incorporating the tailoring rules numerical thresholds directly 

into the definitions. Under this mechanism, we interpret the 

term “subject to regulation” so that GHG emissions from sources 

above the threshold are treated as subject to regulation, and 

therefore the sources that emit them are subject to PSD; while 

GHG emissions from sources below the threshold are not treated 

as subject to regulation, and therefore the sources that emit 

them are not subject to PSD. We are finalizing this alternative 

regulatory approach to facilitate rapid adoption and 

implementation of the final rules by states. These states would 

be able to establish their interpretation of “subject to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

63

regulation” by January 2, 2011, which is the date that the 

tailoring rule would take effect, and thereby, at that time, 

exempt sources below the threshold from PSD as a matter of both 

federal and state law. We are also finalizing this definition 

consistent with our statements in our recent action 

“Reconsideration of Interpretation of Regulations that Determine 

Pollutants Covered by Clean Air Act Permitting Programs” (75 FR 

17704) to better inform readers of our existing interpretation 

of this phrase as it applies to all air pollutants. States may 

not need to undertake a regulatory or legislative action before 

implementing the final rule. 

Because we finalize the rule in a manner that will allow 

most states to rapidly adopt and implement the final rule, and 

because our recent action on the Interpretive Memo allowed for a 

longer transition time than we anticipated at proposal, we are 

delaying final action on our proposal to issue limited approvals 

for SIP-approved PSD programs and part 70 operating permit 

programs.10 Instead, we are requesting that states submit 

information to the appropriate Regional Administrator by [INSERT 

DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER] so that 

 10 In the alternative, we also proposed to use our 

110(k)(6) error correction authority to revise SIP-approved PSD 

programs. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

64

we may determine whether it is still necessary to finalize any 

of our proposed limited approvals for any SIP-approved PSD and 

Part 70 title V state programs. In that letter, states should 

explain whether they will adopt EPA’s regulatory interpretation 

of the term “subject to regulation” in implementing both their 

PSD and part 70 title V permitting programs, and if so, whether 

the state intends to adopt the interpretation without 

undertaking a regulatory or legislative process. If a state 

must revise its statutes or regulations to implement the 

interpretation, we ask states to provide an estimate of the time 

to adopt final rules in its letter to the Regional 

Administrator. If a state chooses not to adopt our 

interpretation, the letter should address whether the state has 

alternative authority to implement the final rule’s tailoring 

approach or some other approach that is at least as stringent, 

but which also addresses the expected shortfalls in personnel 

and funding that would exist if the state carried out permitting 

at thresholds lower than those in the final rules. For any 

state that is unable or unwilling to adopt the permitting 

thresholds in the final rules, and otherwise is unable to 

demonstrate adequate personnel and funding, or alternate 

authority to permit GHG emissions sources consistent with the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

65

final rules, EPA will move forward with finalizing a limited 

approval of the state’s permitting program. By the same token, 

if we do not receive a letter from a state in response to this 

request by [date], we will be obliged to move forward with 

finalizing a narrowing of our approval of the existing SIP. 

We also ask any state that currently lacks authority to 

issue PSD or title V permits to any GHG emissions sources to 

notify the Regional Administrator by letter as to whether the 

state intends to undertake rulemaking to revise their rules 

consistent with these applicability thresholds. For any state 

that lacks the ability to issue PSD or title V permits for GHG 

emissions sources consistent with the final rule, we will 

undertake a separate action to call for revisions to these 

programs. We will also move quickly to impose a FIP for PSD 

through 40 CFR section 52.21, and use our federal title V 

authority to ensure that GHG sources will be permitted 

consistent with the final rules. Our request for information 

from states is discussed further in section V.C. 

D. How do you treat GHGs for title V permit fees?

We are not amending the title V regulations for fees at 

this time, including any of the provisions specifying the 

presumptive minimum fee. We are also not, at this time, calling 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

66

for each state, local or tribal program to submit new fee 

adequacy demonstrations as a result of increased GHG permitting 

workload during steps 1 and 2. However, as described in section 

VI.D the statutory and regulatory requirement to collect fees 

sufficient to cover all reasonable (direct and indirect) costs 

required to develop and administer title V programs still 

applies. Therefore we are recommending that each program review 

its resource needs for GHG-emitting sources and determine if the 

existing fee approaches will be adequate. If those approaches 

will not be adequate, we suggest that state, local and tribal 

agencies should be proactive in raising fees to cover the direct 

and indirect costs of the program or develop other alternative 

approaches to meet the shortfall. We will closely monitor 

approved title V programs during the first two steps of the 

Tailoring Rule to ensure that the added workload from 

incorporating GHGs into the permit program does not result in 

fee shortfalls that imperil operating permit program 

implementation and enforcement. In developing alternative 

approaches, we note the value of approaches that do not require 

a per-ton fee for GHG and therefore do not require a GHG 

inventory to develop. Finally we offer to work with permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

67

authorities that request our assistance with developing fee 

approaches, 

E. Other Actions and Issues 

This section describes other actions we intend to take in 

the future related to GHG permitting in addition to the actions 

that we are promulgating with this final rule. This section 

also responds to commenters’ suggestions that we undertake 

additional actions in this rule, which we decline to do. 

1. Timing for Permit Streamlining Techniques 

As described at proposal, we intend to develop a series of 

streamlining approaches as an integral part of our phase-in 

approach. The approaches we described at proposal included: 

(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 and permits-by-rule, (4) establishing procedures for 

electronic permitting, and (5) applying lean techniques to 

establish more efficient permitting processes. Taken as a 

whole, these techniques will obviate the applicability of PSD 

and title V requirements for some GHG-emitting sources; promote 

more efficient treatment of GHG-emitting sources that will 

already be subject to PSD and title V; and allow the expeditious 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

68

expansion of PSD and title V applicability to more GHG-emitting 

sources while protecting those sources and the permitting 

authorities from undue expenses. 

As a result, we fully intend to move forward expeditiously 

with these approaches. However, for reasons discussed in 

section VI.E, we do not expect to develop and implement any of 

these approaches before step 2 begins. Moreover, we generally 

expect that each of the first three – which are the most farreaching -- will take several years to implement because we will 

need to undertake notice and comment rulemaking to develop them, 

and then the permitting authorities will need to adopt them 

through the appropriate state or local processes. We commit to 

explore a wide range of possible approaches before the step 3 

rulemaking, and, in that rulemaking, to propose those that we 

think may be viable once we have had time to gather and review 

key supporting data, and once the states and we have key 

implementation experience that can inform our thinking. Because 

the streamlining approaches generally carry uncertainty - as 

demonstrated by comments we received raising legal and policy 

concerns, as discussed below, that we will have to address - we 

are not committing with this action to adopt streamlining 

actions on any particular schedule. However, we intend to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

69

pursue all streamlining options as expeditiously as possible, 

beginning immediately and proceeding throughout the phase-in 

period, and we encourage permitting authorities to do the same. 

2. Guidance for Best Available Control Technology 

Determinations 

Through this final rule we are not amending our regulations 

or issuing guidance on BACT for GHGs. As described in our 

proposal, we recognize the need to develop and issue technical 

and policy guidance for permitting of GHGs, and we plan to 

accomplish it through a separate effort that will involve 

stakeholder input. This effort is already underway; in addition 

to comments EPA received on the proposed Tailoring Rule related 

to GHG BACT guidance and information needs, EPA received a suite 

of recommendations from the Clean Air Act Advisory Committee 

(CAAAC) to which EPA is actively responding. This includes 

technical guidance and database tools that EPA anticipates 

issuing by June 2010, and policy guidance that will be issued by 

the end of 2010. Thus, this important information will be 

available to support permitting agencies in their BACT 

determinations at the time that the GHGs become a regulated NSR 

pollutant, once the light-duty vehicle rule takes effect in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

70

January 2011. EPA is confident that these measures will help 

support a smooth transition to permitting emissions of GHGs. 

3. Requests for Higher Category-Specific Thresholds and 

Exemptions from Applicability 

 EPA has decided not to provide exemptions from 

applicability determinations (major source and major 

modification) under title V and PSD for certain GHG emission 

sources, emission activities, or types of emissions at this 

time. Although not addressed in the proposal, commenters 

requested several applicability exemptions with respect to GHGs 

from, for example, agricultural sources, residential sources, 

small businesses, energy-intensive industrial processes (e.g., 

aluminum, steel, cement, glass, and pulp and paper 

manufacturers), lime production, semiconductor production, 

poultry production, solid waste landfills, biomass 

combustion/biogenic emissions, fugitive emissions, and pollution 

control projects. For reasons explained in section VI.E, we 

have decided to address the need for tailoring through a uniform 

threshold-based approach, rather than through a collection of 

various specific exclusions. However, we emphasize that by not 

adopting such exclusions here, we are not making a final 

determination that none of these exclusions may have merit. To 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

71

the contrary, as explained further in section V.E.3, we plan to 

seek further comment on at least one of the issues raised by 

commenters -- how to address emissions of biogenic carbon under 

the PSD and title V programs. 

4. Transitional Issues including Requests for Grandfathering 

For reasons explained in section V.E, EPA has determined 

that transitional issues for pending applications and permitted 

sources are adequately addressed by existing requirements and 

the amount of lead time provided before permitting requirements 

apply to GHGs under this rule and the April 2, 2010 final action 

regarding the Interpretive memo. This rule does not contain any 

additional exemptions or grandfathering provisions addressing 

the transition to PSD and title V permitting for GHGs. 

We are not promulgating an exemption for PSD permit 

applications that are pending when step 1 of the permitting 

phase-in begins for those sources that would otherwise need to 

obtain a PSD permit based on emissions of pollutants other than 

greenhouse gases. Any PSD permits issued to Phase 1 sources on 

or after January 2, 2010 will need to address GHGs. This action 

makes no change to the position we expressed on this issue on 

April 2, 2010. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

72

 Final PSD permits issued before January 2, 2011 need not be 

reopened or amended to incorporate requirements for GHGs that 

take effect after the permit is issued. A source that is 

authorized to construct under a PSD permit but has not yet begun 

actual construction on January 2, 2011 may begin actual 

construction after that date without having to amend the 

previously-issued PSD permit to incorporate GHG requirements, 

provided the permit has not expired. 

Sources that are not subject to PSD permitting requirements 

until Step 2 need not obtain a PSD permit addressing GHGs in 

order to continue any actual construction that begins before 

July 1, 2011, when such a source was not a major stationary 

source required to obtain a PSD permit. However, Phase 2 

sources that begin actual construction in phase 2 may do so only 

after obtaining a PSD permit. 

The title V permitting regulations already include a robust 

set of provisions to address the incorporation of new applicable 

requirements and other transitional considerations. A title V 

source applying for the first time must submit its permit 

application within 12 months after the source becomes subject to 

the operating permit program or an earlier time at the 

discretion of the permitting authority. Where a source is 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

73

required to obtain a PSD permit, the source must apply for a 

title V permit or permit revision within 12 months of commencing 

operation or on or before such earlier date as the permitting 

authority may establish. Where additional applicable 

requirements become applicable to a source after it submits its 

permit application, but prior to release of a draft permit, the 

source is obligated to supplement its application. In addition, 

where a source that already has a title V permit becomes subject 

to additional applicable requirements, the permitting authority 

is required to reopen the permit to add those applicable 

requirements if the permit term has three or more years 

remaining and the applicable requirements will be in effect 

prior to the date the permit is due to expire. 

V. What is the legal and policy rationale for the final 

actions? 

In this section, we describe the legal and policy rationale 

for our action, including our rationale for the following: (A) 

our approach to calculating GHG emissions for PSD and title V 

applicability purposes, (B) our approach to establishing the 

thresholds and timing of PSD and title V applicability to GHG 

emissions sources; (C) how state, local, and tribal area 

programs adopt the final GHG applicability thresholds; (D) 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

74

treatment of GHGs for title V permit fees; (E) future 

activities, including streamlining actions. We present the 

rationale description in five subsections below, corresponding 

to presentation of the approach in section V. 

A. Rationale for Our Approach to Calculating GHG Emissions for 

PSD and Title V Applicability Purposes

1. Grouping of GHGs into a Single Pollutant 

 In this section, we explain our treatment of the air 

pollutant at issue for purposes of PSD and title V, such that 

sources that emit that pollutant in the requisite quantities 

become subject to PSD and/or title V requirements. We explain 

our rationale for treating the GHG air pollutant as a combined 

group of six greenhouse gases instead of six separate air 

pollutants defined by each individual greenhouse gas, and our 

rationale for including all six of the GHGs in that group. We 

also define the GHG metric to use for comparison to the 

applicability thresholds. 

 We proposed to identify the air pollutant as the aggregate 

group of these six GHGs, and to use a GHG metric for the 

applicability thresholds based on CO2e. The summed CO2e 

emissions would then be compared to the applicable permitting 

threshold to determine whether the source is subject to PSD and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

75

title V requirements. Historically, the PSD and title V 

regulatory provisions do not, in the first instance, define the 

“air pollutant” to which they apply, but rather rely for the 

definition of the pollutant on a cross-reference to the 

regulatory provision under another part of the Act that 

establishes the emission standards or limits for that pollutant 

that in turn causes the pollutant to be subject to regulation 

under PSD and title V permitting. As an example, the pollutant 

‘total reduced sulfur’ (TRS) is a pollutant comprised of the sum 

of multiple compounds that was originally defined under the 

NSPS, Subpart BB, Standards of Performance for Kraft Pulp Mills, 

which then caused it to be subject to regulation under the PSD 

program. The actual compounds that define the pollutant TRS are 

identified in the NSPS. The PSD program regulations did not 

introduce its own independent definition of TRS, but instead 

relied on the definition as contained in the Kraft Pulp Mills 

NSPS. 

However, at the time of our proposal, the endangerment and 

cause or contribute findings had not been completed and the LDVR 

for GHGs, had not been finalized. Thus there was no final 

agency action defining how GHGs were to be considered “subject 

to regulation”. Absent a definition of “greenhouse gases” under 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

76

another regulatory provision that we could cross-reference, we 

proposed to define “greenhouse gases” for permitting purposes as 

“the single air pollutant that is comprised of the group of six 

GHGs, as proposed in the [CAA] section 202(a) endangerment and 

contribution findings.” 74 FR 55,329, col. 1. The six wellmixed GHGs identified in the proposed contribution finding were: 

CO2, CH4, N2O, SF6, HFCs, and PFCs. 

 In the proposal, we further recognized that the LDVR for 

GHGs, as it was proposed, would result in reductions of only 

four of the gases, not all six, because only four are emitted by 

vehicles. However, we concluded that if the LDVR were finalized 

as proposed, then the air pollutant for purposes of PSD and 

title V applicability would be a single air pollutant that is 

the aggregate mix of the group of six GHGs because – 

[t]hese six GHGs as a class comprise the air pollutant 

that is the subject of the endangerment finding and 

companion contribution finding and constitute the air 

pollutant that is regulated by the light-duty vehicle 

rule through measures that address the components of 

that air pollutant that are emitted from the mobile 

sources. Thus, although the CAA section 202(a) 

proposal establishes controls only with respect to 

four GHGs, as a legal matter, the proposal covers the 

entire set of GHGs that as a class are the single “air 

pollutant” in the proposed endangerment and 

contribution findings. 

74 FR 55,329 col. 1. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

77

 We also solicited comment on whether we should identify 

the GHG metric in a different way, such as addressing each GHG 

constituent compound individually or including (whether 

individually or as a group) only those four GHG constituent 

compounds for which reductions would occur through the emission 

standards or limits proposed in the LDVR. 

A majority of the proposal comments did not speak to or 

show a preference for or against grouping the six well-mixed 

GHGs for the purposes of determining applicability under the PSD 

and title V programs. Of those commenters that specifically 

support the combining of the individual GHGs as one pollutant 

for purposes of determining permitting applicability, they 

stated that it is not uncommon for EPA to recognize ‘collective’ 

air pollutants comprised of many individual compounds based upon 

shared threats to health and welfare, including such EPA-created 

group pollutants as sulfur oxides, nitrogen oxides, volatile 

organic compounds (VOCs), and particulate matter (PM). 

A smaller but significant number of commenters opposed the 

grouping of the individual GHGs into one metric. Some of these 

commenters argued that grouping GHGs is not appropriate because 

GHGs are not like other air pollutants that are comprised of 

numerous substances of concern (e.g., VOCs and PM), individual 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

78

GHGs do not interact or combine to create a pollutant of 

concern, and EPA has not established a ‘GHG’ NAAQS that supports 

the definition of the pollutant as a group. Some were concerned 

that regulating as a group would increase the likelihood that a 

source will trigger permitting requirements, adding that this is 

unnecessary and would conflict with the “absurd results” and 

“administrative necessity” doctrines because it would lead to 

larger numbers of sources subject to permitting. Some 

commenters opposing grouping suggested that we should explore 

regulating each of the GHG pollutants on an individual mass 

basis rather than collectively. One commenter added that, in 

their view, it is reasonable and feasible to regulate and 

control emissions of each of the listed pollutants, other than 

carbon dioxide, at the 100/250 tpy thresholds, or less if deemed 

necessary, in accordance with the established mechanisms of the 

Act. Finally, some commenters argued that disaggregating the 

pollutants would also allow for more appropriate technology 

review. 

 After considering these comments, and taking into account 

other related actions that have occurred since proposal, we have 

determined that PSD and title V permitting program requirements 

will apply, as proposed, to the “single air pollutant that is 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

79

comprised of the group of six GHGs.” 74 FR 55,329, col. 1. We 

believe that this approach is both compelled by the statute and 

reflects the preferable policy approach. As more fully 

discussed elsewhere in this package, under the plain language of 

section 169(1) PSD a major emitting facility is one that emits 

100 or 250 tons of “any air pollutant.” Through regulation we 

have reasonably limited the scope to this provision to those 

tonnages of any “regulated NSR pollutant,” which includes any 

pollutant that is “subject to regulation under the Act.” 40 CFR 

52.21(b)(50)(iv). This same limitation exists in the definition 

of major modification and BACT. See 52.21.(b)(2),( ). This 

regulatory limitation reflects the statutory directive that BACT 

is required for “each pollutant subject to regulation under this 

chapter.” 42 USC 7475 (a)(4). 

Based on these provisions, the sole question in determining 

what a BACT analysis must cover is what pollutant is “subject to 

regulation.” This phrase caries with it no suggestion that the 

Agency may subdivide or otherwise change a pollutant that is 

regulated elsewhere in the Act. Instead, it carries with it a 

dictate that BACT be applied to the air pollutant which the 

Administrator has determined elsewhere to regulate. As 

described below, this air pollutant, in the cases of GHGs, is 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

80

the aggregate mix of the six constituent gases identified in the 

contribution finding, which led to the promulgation of the LDVR, 

and is the air pollutant that the various LDVR emission 

standards address. This same logic regarding the definition of 

a pollutant “subject to regulation” applies to the determination 

of whether a source is a major stationary source of a “regulated 

NSR pollutant.” Thus, we also read the definition of major 

emitting facility at CAA 169 to be guided by the same 

requirement to defines the “regulated NSR pollutant” that is 

“otherwise subject to regulation” to be the same air pollutant 

that is actually regulated elsewhere under the Act. If, as 

here, that regulation considers the aggregate emissions of 

several compounds to be a single air pollutant, the same single 

air pollutant is a regulated NSR pollutant. As noted above, the 

statutory definition of major emitting facility covers “any 

pollutant.” As the LDVR and associated contribution finding 

have defined the aggregate group of the six greenhouse gases to 

be the single “air pollutant”, they must be considered as such 

in determining if “any pollutant” is emitted above the provided 

thresholds. 

Since the time of our proposal, both the contribution 

finding and the LDVR for GHGs have become final. The final LDVR 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

81

for GHGs specifies, in the rule’s applicability provisions, the 

air pollutant subject to control as the aggregate group of the 

six GHGs, including CO2, CH4, N2O, SF6, HFCs, and PFCs.11 The 

applicability provision in the LDVR now provides us a clear 

reference to the definition of the single pollutant comprised of 

the aggregate group of the six well-mixed GHGs and affirms that 

PSD and title V applicability should use sum-of-6 GHG construct 

for applicability. Based upon the previous analysis, we must 

follow this construct of the aggregate group of the six gases 

and do not have discretion to interpret the GHG ‘air pollutant’ 

differently for the purposes of PSD permitting. 

This construct of the pollutant as the aggregate group of 

the six gases is also consistent with the definition of the air 

pollutant in the final contribution finding for GHGs [see 74 FR 

66496, 66499, 66536-7 (December 15, 2009)]. In the final 

contribution finding the Administrator defined the air pollutant 

 11 See §86.1818-12(a) Greenhouse gas emission standards for 

light-duty vehicles, light-duty trucks, and medium-duty 

passenger vehicles. (“Applicability. This section contains 

standards and other regulations applicable to the emission of 

the air pollutant defined as the aggregate group of six 

greenhouse gases: carbon dioxide, nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, and sulfur 

hexafluoride.”). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

82

for contribution finding as the “aggregate group of the same 

six... greenhouse gases” (see specifically, 74 FR 66536). The 

well-mixed greenhouse gases are defined under the final 

contribution finding as these six greenhouse gases: CO2, CH4, 

N2O, SF6, HFCs, and PFCs. Again, these six GHGs as a class 

comprise the air pollutant that is the subject of the 

contribution finding and therefore are the single air pollutant 

that is regulated by the LDVR through measures that address the 

components of that air pollutant that are emitted from the 

mobile sources. For these reasons, the pollutant “subject to 

regulation” is the aggregate group of the six and we feel 

compelled to use this combined pollutant for purposes of 

regulation under the PSD program. 

Similarly, for title V, "major stationary source" status 

under CAA sections 501(2)(B) and 302(j) is triggered by the 

emissions of the requisite amount of "any air pollutant . . . . 

." Further, as discussed in more detail elsewhere in this 

rulemaking, EPA interprets this trigger to apply to any air 

pollutant "subject to regulation." See Johnson Memo 

Reconsideration. As noted above, EPA has treated the aggregate 

group of six greenhouse as the "air pollutant" regulated under 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

83

the Act. Thus, the aggregate group constitutes the "air 

pollutant" for title V applicability purposes. 

Moreover, even if we had discretion to approach the air 

pollutant differently in the permitting programs, we would 

choose not to, for the same reasons we adopted the single air 

pollutant approach in the contribution finding, and for 

additional considerations noted below specific to the permit 

programs. Congress provided EPA broad discretion to determine, 

as an initial matter, an appropriate combination of air 

pollutant agents that should be treated as a single air 

pollutant. As noted in the contribution findings, the important 

common attributes shared by the six greenhouse gases are that 

each (see 74 FR 66516-66518): 

• Is directly emitted (not formed by secondary processes in 

the atmosphere) 

• Is long-lived in the atmosphere after they are emitted 

• Is sufficiently long-lived the greenhouse gas that it 

becomes “well-mixed,” which means that its concentration is 

essentially uniform in the atmosphere (as opposed to having 

significant local/regional variation) 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

84

• Has well understood atmospheric properties (e.g., radiative 

forcing) 

In addition, grouping the six greenhouse gases is 

consistent with the focus of climate science—their effects are 

considered as a group in the Intergovernmental Panel on Climate 

Change (IPCC) reports (i.e., the IPCC reports assess the climate 

change effects on health, society, and the environment as a 

result of human-induced climate change driven by the group of 

GHGs). It is also consistent with the focus of climate policy—

the United Nations Framework Convention on Climate Change 

(UNFCCC) requires reporting of these six gases; the commitments 

under the UNFCCC and Kyoto Protocol are based on the combined 

emissions of these six gases. Finally, it is standard practice 

to compute the “carbon dioxide (CO2) equivalency” of aggregate 

emissions using GWPs. All of these common attributes and 

factors are relevant to the air pollution for which GHGs are 

agents—in other words, they are all related to increased 

atmospheric concentrations of the mix of six GHGs and climate 

change science and policy. Thus, they are a reasonable basis 

upon which to decide that it is appropriate to define the air 

pollutant as the combination of these six GHGs that share these 

attributes. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

85

We disagree with commenters who argued that grouping all six 

GHGs is not appropriate because GHGs are not like other air 

pollutants that are comprised of numerous substances of concern 

(e.g., VOCs and PM). First, as noted above, we are following 

the approach to a single air pollutant comprised of the 

aggregate of the six greenhouse gases initially adopted in the 

contribution finding and followed in the LDVR. Many of these 

same comments have already been addressed in the contribution 

finding and response to comments document, which is included in 

the RTC for this action, and those responses apply equally here. 

In addition to the reasons described in the endangerment 

and contribution findings, there are CAA permitting programmatic 

and policy advantages to using the GHG air pollutant for 

permitting applicability. We believe now, as we did at 

proposal, that the benefits in using the cumulative group of 

GHGs outweigh any implementation advantages to using an 

individual-GHG-based metric. We recognize a number of 

advantages in the use of aggregate construction of the GHG 

metric, including that it: (1) could allow significantly more 

flexibility to sources for designing and implementing control 

strategies that maximize reductions across multiple GHGs and 

would also likely align better with possible future regulations 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

86

that allow for such flexibility; (2) could more effectively 

support possible future offsets or trading mechanisms that 

involve different source categories and different compositions 

of GHG emissions; and (3) could better accommodate and 

harmonize with future regulations by having one pollutant class 

that includes any of the components of which may become subject 

to specific emission standards under future regulatory efforts. 

We disagree with commenters who believe that by aggregating 

the GHGs under one GHG metric for permitting applicability 

purposes would lead to an excessive amount of source permitting 

activity. This is because the phase-in approach addresses 

overwhelming permitting burdens associated with permitting of 

greenhouse gases. It does so by designing our applicability 

thresholds to allow for a manageable amount of new permitting 

actions based on the emissions from sources using the sum-of-6 

metric. If we based it on individual gases, (assuming we were 

not compelled to follow the LDVR), we would still need to 

determine what level of permitting is manageable and appropriate 

based on thresholds on an individual gas basis and would expect 

that the final rule would result in the same levels of remaining 

burden based on the administrative necessity and the absurd 

results concepts. Accordingly, unless the permitting program 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

87

were being implemented at the statutory thresholds, the effect 

of a decision to aggregate or not aggregate would not reduce 

workload; it would simply shift work from permitting facilities 

that trigger based on combined GHGs to those that trigger based 

on individual GHGs. Although we acknowledge that this would 

affect applicability for a particular source, we disagree with 

the commenter that doing so would conflict with the absurd 

results or administrative necessity doctrines. In light of 

limited resources, by using a consolidated and weighted 

measurement we are able to direct these limited resources to 

those new sources and modifications with the greatest impact on 

GHG emissions. 

We also believe that the additional flexibility resulting 

from the sum-of-six GHG metric will provide substantially more 

opportunities for sources to address emission increases of GHGs 

than they would have had under an individual gas based metric, 

possibly reducing their permitting burden through multi-gas 

mitigation strategies. We disagree with the comment that 

isolating control technology review on a single GHG leads to 

better results than a combined review for all six gases. To the 

contrary, given that Congress built in considerations of energy, 

environmental, and economic impacts into the BACT requirement, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

88

we think that allowing consideration of those factors across six 

gases will likely result in decisions that more appropriately 

account for those impacts at the source. 

2. Identifying Which GHGs are Included in the Group 

Most commenters did not raise any issues or propose 

alternatives to the use of the proposed GHG metric as it relates 

to inclusion of all six well-mixed GHGs. We did receive some 

comments that explicitly supported the inclusion of all six of 

the well-mixed GHGs identified in the GHG metric for determining 

applicability. Those in support of including all six of the 

well-mixed GHGs in the threshold metric cite the same reasons 

they provided in support of grouping the individual GHGs 

together: namely, the final contribution findings that identify 

the pollutant as “the combined mix of six key, directly emitted, 

long-lived and well-mixed greenhouse gases”. See 74 FR, 66496, 

66516, 66,536 (Dec. 15, 1990). They also emphasize that EPA, in 

order to protect the public, has to control all the greenhouse 

gases it has regulated and reduce the overall impact of the mix 

of six greenhouse gases. 

However, a substantial number of commenters, mainly from 

industry sectors who also disagreed with grouping the GHGs 

together, contend that only the constituent gases that are 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

89

actually subject to controls under the LDVR should be included 

in determining applicability under the Tailoring Rule. Some of 

these commenters believe that only the three compounds (CO2, CH4, 

N2O) for which the LDVR contains emissions standards or caps 

should be considered in the GHG metric for permitting, while 

others would also add HFCs (which are included in a credit 

flexibility arrangement under the LDVR) for a total of four 

GHGs. Such commenters argued that PSD is not triggered for all 

six GHGs by the LDVR because under the proposed PSD 

interpretation in “EPA’s Interpretation of Regulations that 

Determine Pollutants Covered by Federal Prevention of 

Significant Deterioration (PSD) Permit Program”, actual emission 

controls under the Act are required to trigger PSD obligations 

for a given pollutant. They also argued that including all six 

would conflict with the “absurd results” and “administrative 

necessity” doctrines because it would lead to larger numbers of 

sources subject to permitting, increasing the harm that EPA says 

it wants to avoid, and further asserted that the EPA cannot both 

widen the scope of the applicability to six GHGs at its 

discretion and rely on these judicial doctrines, which apply 

only where the EPA has availed itself of all reasonable 

discretion to minimize the harm 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

90

There were a few comments on whether to include specific 

gases as part of the sum-of-six grouping. Several commenters 

representing sectors that have significant SF6 usage specifically 

argue that SF6 should not be included as a GHG, at least at this 

time, because there are no known SF6 controls, it is not clear 

how PTE would be calculated from such facilities, and EPA has 

not addressed the economic burden that regulation of these 

facilities would create. A solid waste industry commenter 

asserts that the Tailoring Rule should confirm that CH4 and N2O 

will not be regulated under PSD or title V because these 

pollutants are only emitted in miniscule amounts from 

automobiles. 

 We disagree with commenters who suggest that the LDVR for 

GHGs constrains EPA’s authority to regulate only the four 

individual GHGs emitted by motor vehicles. The fact that the 

LDVR standard for the single air pollutant that is comprised of 

the aggregate of six greenhouse gases consists of individual 

standards for particular constituents of the single air 

pollutant -- emissions limits or caps for three GHGs (CO2, CH4, 

and N2O) and an emission crediting option for one GHG (HFCs) -- 

does not dictate that only those four compounds are subject to 

regulation for permitting purposes. Although the LDVR may 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

91

result in reductions only with respect to four specific GHGs, as 

a legal matter the LDVR standard covers the entire set of GHGs 

that as a class are the single “air pollutant” in the 

contribution finding. Similar to our rationale for addressing 

the group of six GHGs as one pollutant for PSD and title V 

applicability purposes, we must adhere to the definition of 

applicability, cited previously, in the final LDVR for GHGs and 

include CO2, CH4, N2O, SF6, HFCs, and PFCs. We do not have 

discretion to select only a subset of these gases in defining 

our GHG threshold metric for the permitting applicability 

purposes. Also, see discussion at III.B.2, and in EPA’s LDVR 

concerning its exercise of discretion under section 202(a) in 

setting emissions standards applicable to emission of the single 

air pollutant. [April 1, 2010 Preamble, II.A.2.c, pp 153-4.] 

For the same reasons we disagree that this approach is 

inconsistent with the Agency’s final action in “EPA’s 

Interpretation of Regulations that Determine Pollutants Covered 

by Federal Prevention of Significant Deterioration (PSD) Permit 

Program.” While it is the case, that only four constituent 

gasses are reduced by the LDVR, the pollutant that is 

controlled, and thus “subject to regulation” is the group of 

six. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

92

We also disagree with commenters that suggested including 

all six GHGs in determining permitting applicability would 

conflict with our “absurd results” and “administrative 

necessity” bases for the phase-in periods and applicability 

thresholds for GHGs. Even if we did have discretion to address 

a subset of the six well-mixed GHGs, we do not believe that the 

exclusion of some gases is necessary to address administrative 

necessity concerns or to avoid an absurd results scenario. For 

our final action, we are phasing-in applicability thresholds 

based on the sum of all six well-mixed GHGs that are fully 

consistent with both the administrative necessity and absurd 

results arguments that we base our tailoring action on. We have 

carefully developed these thresholds based on a consistent 

definition of the pollutant with the LDVR GHG and to avoid 

creating an overwhelming number of permitting actions that would 

be unmanageable for permitting authorities and sources. 

Moreover, the solution offered by commenters – regulating four 

rather than six gases – would make little difference in 

addressing overwhelming permitting burdens. The number of 

additional permitting actions and amount of additional 

permitting burden resulting from including all six GHGs, rather 

than four, in the definition is minimal. The administrative 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

93

burden of GHG permitting is dominated by CO2 and CH4 emission 

sources. For example, with a major source threshold set at 

100,000 tpy CO2e, the combined population of sources that would 

be major for N2O, HFCs, PFCs, and SF6 accounts for fewer than two 

percent of the GHG sources that would remain covered. 

For similar reasons, we disagree with commenters who 

specifically suggest SF6 emissions should not be included in the 

applicability metric for GHGs. As we have stated earlier in 

this section, our selection of the GHG metric is driven by the 

definition of the air pollutant as defined in the LDVR, and in 

consideration of the final GHG endangerment finding. SF6 is 

specifically included as one of the ‘well-mixed greenhouse 

gases” in the definition of air pollutant in the contribution 

finding, and is included in the definition of the air pollutant 

in the LDVR for which that rule is applicable. We cannot 

identify different subsets of individual GHGs for different 

source categories. Moreover, including SF6 emissions based on 

the thresholds finalized in this rulemaking does not add an 

excessive administrative burden for permitting authorities; 

based on our threshold evaluation study we estimate that less 

than 40 sources of SF6 nationwide would exceed the 100,000 tpy 

CO2e threshold. Furthermore, specifically with respect to high 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

94

GWP gases, as discussed elsewhere, we have included a mass-based 

trigger that will likely have the effect of further reducing 

this count. We believe that the inclusion of these SF6 sources 

is entirely consistent with the definition of the air pollutant 

subject to regulation, as based on the LDVR definition for 

applicability and described above, and there is no basis for 

exclusion of these sources due to administrative necessity 

concerns or absurd result arguments. Similarly, we disagree 

with the commenters who suggest we include black carbon and 

other short-lived climate forcers to the list of GHGs and those 

asking for an exclusion of CH4 and N2O. The definition of the 

air pollutant, as cited in the LDVR, includes CH4 and N2O and 

does not include black carbon or other short-lived gases. 

3. Determining What GWP Values are to be Used 

 Numerous commenters expressed concerns about the proposal 

to link the calculation of CO2e for GHGs to GWP values in (see, 

e.g., proposed 40 CFR 51.166(b)(58)) EPA’s “Inventory of U.S. 

Greenhouse Gas Emissions and Sinks” because that document may 

change from year to year. Representative comments include the 

following: 

• It is important to ensure that all permitting agencies are 

using the same calculations for the determination of CO2e 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

95

for GHGs. Use of EPA’s document, which is updated 

annually, should address this issue, provided this 

information is provided in annual guidelines for permitting 

agencies. 

• The EPA should follow the proper notice and comment 

procedures and the requirements of the Information Quality 

Act (IQA) for the relevant technical underpinnings of the 

proposal. The EPA relies upon the GWPs of the IPCC without 

providing the supporting data for review, and it is 

inappropriate to use this as a basis for this rule without 

first making all the raw data available for public 

inspection and comment. 

• The EPA cannot tie the definition of GWP to a nonregulatory document that may be changed without notice and 

comment rulemaking. Before EPA uses a new GWP, that GWP 

must be subject to notice and comment to comply with the 

requirements of CAA section 307 and the APA. 

• An annual update of GWP would create a moving target for 

sources conducting applicability determinations and 

assessing compliance with minor NSR and PSD emission 

limits. The EPA needs to ensure that applicability and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

96

compliance with limits continue to be based on the GWP that 

existed when the determination was made or the limit was 

established. 

• The EPA should freeze the GWP at the current values by 

incorporating those values into the regulation. The EPA 

could still revise the “NSR” GWP, but would have to revise 

the regulation to do so. 

We agree with commenters who suggested we should codify, 

either in the tailoring rule or through reference to codified 

values in another rulemaking, the GWP values to be used in 

permitting analyses so that there is certainty as to which GWP 

values need to be used and permitting authorities and sources 

can plan appropriately for possible changes in the GWP values. 

As mentioned in the comments, recommended GWP values from IPCC 

can change over time. While this is infrequent – the last such 

changes were in 2007—when it occurs, there are generally 

significant lag times in universal adoption of new values 

because of inconsistencies that could be created in national 

inventories and emission reporting mechanisms. In a regulatory 

setting, such as in the permitting programs, this could 

potentially create significant implementation issues, such as 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

97

when a GWP change occurs while a permit in progress.12 EPA also 

recognized similar potential implementation issues in developing 

its final mandatory reporting rule for GHGs, and codified in the 

regulatory text the GWPs values to be used in reporting GHGs as 

part of that final rulemaking. 

For this reason, we have decided to follow the approach in 

the mandatory reporting rule and require that for PSD and title 

V permitting requirements, wherever emissions calculations are 

performed, that permitting authorities and sources use GWP 

values that are codified in EPA rules. For consistency with the 

mandatory reporting rule, we will establish the GWP values for 

PSD and title V rules based on a cross-reference to the values 

that are codified in the EPA’s GHG mandatory reporting rule 

[Reference: Table A-1 to Subpart A of Part 98 – Global Warming 

Potentials, FR, Vol.74, No. 209, p. 56395]. Any changes to 

Table A-1 of the mandatory GHG reporting rule regulatory text 

must go through a proposal and comment regulatory process. In 

this manner, the values used for the permitting programs will 

reflect the latest values adopted for usage by EPA after a 

 12 We note that our approach does not entirely avoid the possibility that a GWP change 

can occur while a permit is in progress although it will ensure advance notice of such a change. 

In the event that we plan to propose a change to GWP values, we will work with permitting 

authorities as necessary to provide guidance to sources on transitional issues. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

98

formal regulatory process and will be consistent with those 

values used in the EPA’s GHG mandatory reporting rule. 

Furthermore, the lead time for adopting changes to that rule 

will provide a transition time to address implementation 

concerns raised by commenters. 

4. Use of Short Tons vs. Metric Tons 

 We proposed that the GHG metric would be expressed in terms 

of English (or short) tons, rather than metric (or long) tons. 

Among those who commented specifically on this topic, a few 

commenters support using short tons for this purpose, but others 

prefer the use of metric tons. Most of the latter commenters 

note that the GHG Reporting Rule is based on metric tons and 

believe that the Tailoring Rule should be consistent. These 

commenters believe that using different units in the two rules 

would be confusing and could result in sources that are not 

subject to the GHG Reporting Rule being subject to PSD. Some of 

the commenters add that various “cap and trade” legislative 

proposals also quantify GHGs in metric tons. A few other 

commenters recommend that EPA harmonize the applicability 

thresholds established under the Tailoring Rule and the GHG 

Reporting Rule without expressing a preference for short or 

metric tons. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

99

 Short tons are the standard unit of measure for both the 

PSD and title V permitting programs and the basis for the 

threshold evaluation to support this rulemaking. Calculation 

inputs for PSD are typically prepared in English units (e.g., 

lbs of fuel, MMBtu’s, etc.) which is the common convention for 

all PSD analyses and the units of the statutory thresholds under 

the Act. We do recognize that the GHG mandatory reporting rule 

uses metric tons. However, we note that this does not create an 

inconsistency between permitting programs and the reporting 

rule, because the two rules already use different applicability 

approaches. Although we originally proposed 25,000 tpy as the 

major source level for permitting programs, which was similar to 

the threshold in the reporting rule, we decided to adopt 

substantially higher thresholds in the final rule. Furthermore, 

even if the numbers were similar, the thresholds used for the 

permitting programs are based on actual emissions, while the PSD 

and title V programs are based on potential to emit. Therefore, 

we are less persuaded by arguments for consistency, and believe 

it is more important for ease of permit program implementation 

to ensure that GHG emissions calculations for PSD and title V 

will build on the same set of input variables used to develop 

short-ton based estimates for non-GHG pollutants. Thus, the use 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

100

of short tons should actually facilitate the development of the 

GHG emission estimate. It would likely be more confusing to 

require a multi-pollutant PSD applicability analysis to present 

emissions information using different units for different 

pollutants, as would be the case if we required metric tons for 

GHG but continue to use short tons for every other pollutant. 

Finally, we do not expect this choice to introduce additional 

complexity because the conversion between short tons and metric 

tons is a very simple calculation. Therefore, based on these 

considerations we are requiring that short tons be used as the 

basis for emission calculations used to meet PSD and title V 

permitting requirements. 

B. Rationale for Thresholds and Timing for PSD and Title V 

Applicability to GHG Emissions Sources

 In this subsection, we describe our legal and policy 

rationale for our determinations concerning PSD and title V 

applicability to GHG emissions sources, including the following 

parts: (1) an overview of our rationale; (2) data concerning 

costs to sources and administrative burdens to permitting 

authorities; (3) a review of the Chevron legal framework and the 

“absurd results,” “administrative necessity,” and “step-at-atime” doctrines, as well as a review of how those doctrines fit 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

101

into the Chevron framework; (4) an overview of the relevant 

features of the PSD and title V programs; (5) our application of 

the “absurd results” doctrine for tailoring the PSD 

requirements; (6) our application of the “absurd results” 

doctrine for tailoring the title V requirements; (7) our plans 

to issue further rulemaking that will address the “absurd 

results” basis for both PSD and title V requirements; (8) our 

rationale for the phase-in schedule for applying PSD and title V 

to GHG sources; (9) our application of the “administrative 

necessity” basis for tailoring the PSD and title V requirements; 

and (10) our application of the “step-at-a-time” basis for 

tailoring the PSD and title V requirements. 

1. Overview 

Under the familiar Chevron two-step approach to 

construction of agency-administered statutes, the agency must 

first, at step 1, determine whether Congress's intent in a 

particular provision on a specific question is clear; and if so, 

then the agency must follow that intent. If the intent of the 

provision is not clear, then the agency may, under step 2, 

fashion a reasonable interpretation of the provision. The best 

indicator of congressional intent is the plain meaning of the 

provision and generally, according to the caselaw, if the plain 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

102

meaning addresses the specific question, then the agency must 

follow the plain meaning. .. 

However, the courts have developed three doctrines relevant 

here that authorize departure from a literal application of 

statutory provisions. The first is the “absurd results” 

doctrine, which authorizes such a departure if it would produce 

a result that is inconsistent with congressional intent, and 

particularly if it would undermine congressional intent. The 

judicial doctrine of “administrative necessity” authorizes an 

agency to depart from statutory requirements if the agency can 

demonstrate that the statutory requirements, as written, are 

impossible to administer. The “step-at-a-time” doctrine 

authorizes an agency, under certain circumstances, to implement 

a statutory requirement through a phased approach. 

Each of the three doctrines fits into the Chevron framework 

for statutory construction because each of the three is designed 

to effectuate congressional intent. Moreover, each of the 

doctrines generally points to similar conclusions. For example, 

under the “absurd results” doctrine, the agency may vary from 

the statutory requirements only to the extent necessary, if 

congressional intent is clearly expressed, to adhere to that 

intent, or if congressional intent is not clearly expressed, to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

103

reasonably interpret the statute. In the case of the 

“administrative necessity” doctrine, the agency must first 

attempt to mitigate administrative problems through techniques 

consistent with the statutory requirements, and, if variance 

from the statutory requirements nevertheless is necessary to 

allow administrability, the variance must be limited as much as 

possible. 

To apply the statutory PSD and title V applicability 

thresholds to sources of GHG emissions would bring tens of 

thousands of small sources and modifications into the PSD 

program each year, and millions of small sources into the title 

V program. These extraordinary increases in the scope of the 

permitting programs, coupled with the resulting burdens on the 

small sources and on the permitting authorities, would be 

several hundred-fold more than what Congress contemplated in 

enacting the PSD and title V programs. Moreover, the great 

majority of additional sources brought into the PSD and title V 

programs would be small sources that Congress did not expect 

would need to undergo permitting. Further, the administrative 

strains would lead to multi-year backlogs in the issuance of PSD 

and title V permits, which would undermine the purposes of those 

programs. Sources of all types – whether they emit GHGs or not 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

104

– would face long delays in receiving PSD permits, which 

Congress intended to allow construction or expansion. 

Similarly, sources would face long delays in receiving title V 

permits, which Congress intended to promote enforceability. For 

both programs, the addition of enormous numbers of additional 

sources would provide little benefit. In the case of PSD, the 

large number of small sources that would be subject to control 

constitute a relatively small part of the environmental problem. 

In the case of title V, a great many of the sources that would 

be newly subject to permit requirements would have “empty” 

permits, that is, permits that do not include any applicable 

requirements, and that therefore serve little purpose. For 

these reasons, the “absurd results” doctrine applies to avoid a 

literal application of the thresholds. By the same token, the 

impossibility of administering the permit programs brings into 

play the “administrative necessity” doctrine. This doctrine 

also justifies EPA to avoid a literal application of the 

threshold provisions. 

The situation presented here is exactly the kind that the 

“absurd results,” “administrative necessity,” and “step-at-atime” doctrines have been developed to address. They authorize 

EPA to tailor the PSD and title V applicability provisions 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

105

through a phased program as set forth in this rule, and to use 

the initial period of phase-in to develop streamlining measures 

that would facilitate applying PSD and title V on a broader 

scale without overburdening sources and permitting authorities. 

In this manner, the phased approach reconciles the language of 

the statutory provisions with the results of their application 

and with congressional intent. 

2. Data Concerning Costs to Sources and Administrative Burdens 

to Permitting Authorities 

 This final action concerning applicability of PSD and title 

V to GHG-emitting sources, including the decisions on timing for 

the selected permitting thresholds, is based on our assessments 

of both the costs to the regulated sources to comply with PSD 

and title V permitting requirements and the administrative 

burdens to the permitting authorities to process PSD and title V 

permit actions for GHG-emitting sources. This section provides 

a summary of our cost and administrative burden assessments of 

permitting that would be required in the absence of any 

tailoring as well as under various tailoring options. 

Our estimates of costs to the sources and administrative 

burdens to the permitting authorities from PSD and title V 

applicability for GHG emissions are based on labor and cost 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

106

information from the existing Information Collection Requests 

(ICRs) for PSD and title V programs.13 We applied the same basic 

methodology used for the proposal, which incorporates 

information on numbers and types of affected sources and 

estimated permitting actions. We evaluate administrative 

burdens in terms of staffing needs, time for processing permits, 

and monetary costs, and we make some judgments about how those 

burdens would affect the permitting authorities’ ability to 

effectively manage and administer their programs with the 

addition of GHG emission sources. We present the administrative 

burden data for applying PSD and title V requirements at the 

literal statutory thresholds -- that is, the 100/250 tpy levels 

for PSD and the 100 tpy level for title V – as well as at other 

thresholds, which range from 25,000 tpy CO2e to 100,000 tpy CO2e. 

We have significantly revised upwards our assessments of costs 

to sources and administrative burdens since proposal, and we 

summarize below our reasons for doing so. We also present 

significant comments concerning administrative burdens, and our 

responses to those comments. 

 13 “Summary of ICR-based Data Used to Estimate Avoided Burden 

and Evaluate Resource Requirements at Alternative GHG Permitting 

Thresholds;” Prepared by EPA Staff; August 2009. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

107

 In the next section, concerning legal and policy rationale 

for our actions, we discuss how these data on costs to the 

sources and administrative burdens to the permitting authorities 

informed our decisions that PSD and title V requirements should 

not, at present, be applied to GHG-emitting sources under the 

literal terms of the statutory thresholds as well as our 

decisions concerning what thresholds to apply for Steps 1 and 2 

of the applicability phase-in approach and the applicability 

floor of 50,000 tpy CO2e. 

a. Costs to sources 

 As we did at proposal, we have estimated costs to the 

sources of complying with PSD and title V starting from the data 

in the ICR. We recognize that the sizes of the sources, as 

measured by their emissions, that would be swept into the PSD 

and title V programs would vary greatly, and that their 

permitting costs would vary as well. For example, their PSD 

permitting costs would depend on the amount and types of their 

emissions and their control requirements. Accordingly, we have 

determined average costs, as described below. 

For PSD, at proposal, we estimated that on average, an 

industrial source would incur costs of $84,500 to prepare the 

PSD application and receive the permit, and on average, a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

108

commercial or residential source would incur costs of 20 percent 

that amount, or $16,900. 74 FR at 55,337 col. 3 to 55,339 col. 

3. For this action, we retain the same burden estimates for an 

average industrial source: This type of source would need 866 

hours, which would cost $84,500, to prepare the application and 

the PSD permit. However, based on comments received, we have 

determined that a more accurate estimate for an average 

commercial or residential source is 70 percent of that amount of 

time that an industrial source would need, up from our proposal 

of 20 percent. Thus, an average commercial or residential 

source would need 606 hours, which would cost $59,000, to 

prepare the PSD application and receive the permit. We are 

increasing this time over what we proposed because we now 

recognize that virtually all commercial and residential will 

have no experience with the PSD permitting process, and 

therefore will face a significant learning curve that will 

entail more time to complete the application, develop control 

recommendations, and take the other required steps. We believe 

this learning period could extend from two to possibly four 

years or more from the date that the sources become subject to 

PSD requirements, depending on the type and actual number of new 

sources that come in for permitting. In addition, we expect 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

109

that in many cases, draft PSD permits for GHGs will receive 

comments from various stakeholders, from citizens groups to 

equipment vendors, who will seek to participate in the permit 

process, and that all this could add to the hours that the 

permittee will need to invest in the process.14 The actual costs 

to sources to install BACT controls, while still uncertain at 

this point, would likely add additional costs across a variety 

of sources in a sector not traditionally subject to such 

permitting requirements. 

For title V, at proposal, we estimated that on average, an 

industrial source would incur costs of approximately $46,400 to 

prepare the title V application and receive the permit, and on 

average, a commercial or residential source would incur costs of 

10 percent that amount, or almost $5,000. 74 FR at 55,338 col. 

1 to 55,339 col. 3. For this action, we retain the same burden 

estimates for an average industrial source: This type of source 

would need 350 hours, which would cost $46,400, to prepare the 

application and the title V permit. However, we have determined 

that a more accurate estimate for an average commercial or 

 14 Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

110

residential source is 50 percent of that amount of time that an 

industrial source would need, up from our proposal of 10%. 

Thus, an average commercial or residential source would need 

about 175 hours, which would cost $23,200, to prepare the title 

V application and receive the permit. This increase is due to 

the same reasons as with the PSD program just discussed: we now 

recognize that virtually all commercial and residential sources 

will have no experience with the title V permitting process, and 

therefore will face a significant learning curve that will 

entail more time to, for the first time, assess their GHG 

emissions (because such sources are not covered by EPA’s 

mandatory reporting rule) , complete the application, respond to 

permitting authority comments, meet other title V administrative 

requirements, and respond to interested stakeholders.15 

 b. Administrative Burdens to Permitting Authorities 

(1) Estimated Permitting Authority Burden at Proposal 

As at proposal, we estimated the administrative burdens to 

the permitting authorities at the various threshold levels for 

PSD or title V applicability as follows: First, for a 

 15 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

111

particular threshold level, we estimated the number of GHGemitting sources that would be subject to PSD requirements 

because they would undertake new construction or modification, 

and the number of existing sources that would be subject to 

title V requirements, Second, we estimated the average 

additional administrative burden and cost of each PSD permitting 

action and each title V permitting action for the GHG- emitting 

sources. Third, we multiplied those two estimates, and the 

product is the additional administrative burden at the 

particular threshold level. We employed the same methodology 

for this final rule, but, as discussed below, and described in 

more detail in our final burden analysis,16 we have updated 

several key assumptions since the proposal as a result of our 

consideration of comments received 

First, we present the administrative burdens at the 

statutory levels for PSD and title V applicability. At 

proposal, for the PSD program, we estimated the administrative 

burdens that would result from applying PSD at the 100/250 tpy 

major emitting facility threshold levels in two ways, as 

 16“Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

112

described in this section. We stated that at present, 280 

sources are subject to PSD each year, both for new construction 

and modifications. This figure served as the baseline from 

which to calculate increases in administrative burdens due to 

permitting GHG-emitting sources. 

The first method that we used to calculate the 

administrative burdens to the permitting authorities was in 

terms of workload hours, which we then converted to monetary 

costs. To make the workload calculation, we first estimated the 

number of GHG-emitting sources that would become subject to PSD 

through new construction and modification. Based on our GHG 

threshold data analysis, we estimated that almost 41,000 new and 

modified sources per year would become subject to PSD review. 

We first calculated the number of new sources that would become 

subject to PSD. To do this, we estimated growth rates for the 

various sectors, and then applied those growth rates to the 

numbers of sources in those sectors. We then calculated the 

number of modifications. To do this, we first assumed that each 

year, two percent of sources that meet or exceed the threshold 

levels for PSD applicability due to their conventional 

pollutants undertake modifications. We then calculated the 

number of sources that would meet or exceed the threshold levels 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

113

for PSD applicability due to their GHG emissions, and applied 

the same assumption that two percent of them would undertake 

modifications. In this manner, we estimated the number of 

modifications of GHG-emitting sources that would become subject 

to PSD. 

 We noted that currently, 280 PSD permits are issued each 

year, but that applying PSD to GHG-emitting sources at the 

100/250 tpy statutory threshold levels would cause an increase 

in permits of more than 140-fold. The reason for the 

extraordinary increase in PSD applicability lies simply in the 

fact that it takes a relatively large source to generate 

emissions of conventional pollutants in the amounts of 100/250 

tpy or more, but many sources combust fossil fuels for heat or 

electricity, and the combustion process for even small 

quantities of fossil fuel produces quantities of CO2 that are far 

in excess of the sources’ quantities of conventional pollutants 

and that, for even small sources, equals or exceeds the 100/250 

tpy levels. 

 Based on the 140-fold increase in permits, we then 

estimated the per-permit burden on permitting authorities. As 

we stated in the proposal: 

We estimated the number of workload hours and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

114

cost a permitting authority would expend on each new 

source and each modification. We based these 

estimates on the workload hours and cost for 

processing permits for new sources of non-GHG 

emissions, which we derived from labor and cost 

information from the existing [Information Collection 

Requests (“ICRs”)] for PSD programs. The ICRs show 

that permitting authorities expend 301 hours to permit 

a new or modified industrial source.... 

We then made assumptions for number of workload 

hours and costs for new sources of GHG emissions. We 

assumed that permitting new industrial GHG sources 

that emit in excess of the 250-tpy threshold would be 

of comparable complexity to permitting non-GHG 

emitting industrial sources that are subject to PSD. 

Thus, for these sources, we assumed that permitting 

authorities would expend the same number of workload 

hours and costs, on a per-permit basis, as they do for 

non-GHG emitting industrial sources. On the other 

hand, for commercial and residential GHG sources that 

emit GHGs above the 250-tpy threshold (and as a result 

would be subject to the requirements of the PSD 

permitting program at this threshold level), we 

assumed that the workload hours and cost for 

permitting these sources would be significantly less 

than—only 20 percent of—the hours and cost necessary 

to prepare and issue initial PSD permits or permit 

modifications for industrial GHG sources. This 20-

percent estimate amounts to 60 hours of permitting 

authority time per residential or commercial permit. 

Based on these assumptions, the additional annual 

permitting burden for permitting authorities, on a 

national basis, is estimated to be 3.3 million hours 

at a cost of $257 million to include all GHG emitters 

above the 250-tpy threshold. 

74 FR at 55,301 col. 2. Note that at the proposal, in 

calculating the PSD administrative burdens that would occur each 

year due to GHG emissions, we did not undertake separate 

calculations for the administrative burdens associated with 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

115

permitting obligations stemming from the GHG emissions of the 

280 sources already subject to PSD permitting requirements due 

to their conventional pollutants. In effect, we treated these 

280 sources are part of the over 40,000 sources that would 

become subject to PSD due to their GHG emissions. 

The second way that we evaluated the burden on permitting 

authorities was by reviewing a study conducted by state and 

local air permitting agencies. As we said in the preamble: 

In addition to conducting our burden analysis, we 

also reviewed summary information from state and local 

air permitting agencies regarding additional resources 

and burden considerations if GHG sources that emit 

above the 100/250-tpy thresholds were subjected to the 

PSD and title V programs. This information covered 43 

state and local permitting agencies, representing 

programs from different regions of the country and 

various permitting program sizes (in terms of 

geographic and source population coverage).... This 

information showed significant burdens projected by 

permitting agencies with adding sources of GHG 

emissions in terms of staffing, budget, and other 

associated resource needs. Importantly, the agencies 

based their analysis on the assumption that, for 

purposes of determining whether a source is major, its 

emissions would be calculated on an actual emissions 

("actuals") basis, and not on a PTE basis. On an 

actuals basis, the agencies estimated a 10-fold 

increase in the number of permits. 

Specifically, the agencies estimated that: 

• Assuming, again, that number of permits was 

to increase by 10-fold (based on actual 

emissions), the resulting workload would 

require an average of 12 more FTEs per 

permitting authority at an estimated cost of 

$1 million/year; 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

116

• Without the additional FTEs, the average 

processing time for a permit would increase 

to 3 years, which is three times the current 

average processing time; 

• Permitting authorities would need 2 years on 

average to add the necessary staff; 

• Permitting authorities would also need, on 

average, eight additional enforcement and 

judicial FTEs; 

• Ninety percent of the permitting agencies 

indicated that their staff would need 

training in all aspects of permitting for 

sources of GHG emissions. 

• A quarter of the permitting agencies reported 

that they were currently under a hiring freeze. 

 We went on to explain that this state survey 

significantly underestimated the administrative burdens: 

It is important to reiterate that the state and 

local permitting information on burden was based on 

the number of additional facilities subject to PSD 

because their emissions of GHGs exceed the 100/250-tpy 

thresholds at actual emissions rates, not PTE-based 

emissions rates. However, the PSD applicability 

requirements are based on PTE. By adjusting the 

increase in number of permits to account for GHG 

sources that exceed the 100/250-tpy applicability 

thresholds based on their PTE emissions, EPA estimated 

a 140-fold increase in numbers of PSD permits, much 

more than the 10-fold increase estimated by the states 

based on actual emissions. 

74 FR at 55,301 col. 2-3. 

In addition to PSD, we also estimated title V burdens at 

the statutory threshold. At proposal, for the title V program, 

we estimated the administrative burdens that would result from 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

117

applying title V requirements at the 100 tpy major source 

threshold level in the same two ways as for PSD, as follows: 

The first method was to calculate the administrative burdens in 

terms of workload hours, which we then converted to monetary 

costs. To make the workload calculation, we first estimated the 

number of existing GHG-emitting sources that would become 

subject to title V. Based on our GHG threshold data analysis, 

we estimated that approximately 6 million sources would become 

subject to title V. Compared to the 14,700 title V permits 

currently issued per year, this would be an increase in permits 

of more than 400-fold. We noted, in addition, that most of the 

14,700 sources already subject to title V also emit GHGs and may 

be affected as well. 

We then described the type of work that the permitting 

authorities would need to do for these GHG-emitting sources – 

the six million that would become newly subject to title V and 

most of the 14,700 that are already subject to title V – as 

follows. Note at the outset that the permitting authorities’ 

workload is greater for sources newly subject to title V than 

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

EPA noted in the preamble: 

[T]he[] permits [for the six million new sources] 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

118

would need to include any requirements for non-GHGs 

that may apply to the source, such as provisions of an 

applicable State Implementation Plan (SIP). For any 

such requirements, permitting authorities would also 

need to develop terms addressing the various 

compliance assurance requirements of title V, 

including monitoring, deviation reporting, six-month 

monitoring reports, and annual compliance 

certifications. 

Adding to the burden described above would be the 

burden to add GHG terms to the 14,700 existing title V 

permits. While, in general, existing title V permits 

would not immediately need to be revised or reopened 

to incorporate GHG (because as noted above, there are 

generally not applicable requirements for GHGs that 

apply to such sources), permitting authorities may 

face burdens to update existing title V permits for 

GHG under two possible scenarios: (1) EPA promulgates 

or approves any applicable requirements for GHGs that 

would apply to such a source, which would generally 

require a permit reopening or renewal application, or 

(2) the source makes a change that would result in an 

applicable requirement for GHGs to newly apply to the 

source, such as PSD review, which would generally 

require an application for a permit revision. 

Permitting authorities will also need to process 

permit renewal applications, generally on a five-year 

cycle, and such renewals would need to assure that the 

permit properly addresses GHG. Finally they would 

have to process title V applications for new sources 

(including all the PSD sources previously discussed). 

74 FR at 55,302 cols. 2-3. 

In light of those demands, we estimated the per-permit 

burden on permitting authorities as follows. Note, at the 

outset, that as with PSD, we based the workload hours on 

information in ICRs for industrial sources, and we then assumed 

that the workload for commercial and residential sources would 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

119

be the indicated percentage of the workload for industrial 

sources: 

As with PSD, we have quantified the extent of the 

administrative problem that would result in workload 

hours and cost on the basis of information concerning 

hours and costs for processing existing title V 

permits that is indicated on ICRs. However, we 

recognize that more than 97 percent of these new 

sources would be commercial and residential sources. 

We estimate that for permitting authorities, the 

average new commercial or residential permit would 

require 43 hours to process, which is 10 percent of 

the time needed for the average new industrial permit. 

For an average existing permit, which permitting 

authorities would need to process through procedures 

for significant revisions and permit renewals, adding 

GHG emissions to the permit would result in, we 

estimate, 9 additional hours of processing time, which 

is 10 percent of the amount of time currently 

necessary for processing existing permits. We 

estimate that the total nationwide additional burden 

for permitting authorities for title V permits from 

adding GHG emissions at the 100-tpy threshold would be 

340 million hours, which would cost over $15 billion. 

74 FR at 55,302 col. 3. 

As with PSD, the second way that we evaluated the burden on 

permitting authorities at the statutory threshold was by 

reviewing a study conducted by state and local air permitting 

agencies of the burden of applying title V to existing GHGemitting sources at the 100 tpy statutory threshold level. As 

we said in the preamble to the proposed rule: 

[W]e also reviewed summary information from state 

and local permitting agencies, which showed 

significant burdens associated with adding GHGs in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

120

their title V programs in terms of staffing, budget, 

and other associated resource needs.17 Again, note 

that the permitting agencies based their estimates on 

numbers of permits that would be required from sources 

subject to the 100-tpy title V applicability threshold 

on an actuals—not PTE—basis. Based on that level, the 

agencies assumed a 40-fold increase in numbers of 

permits, and estimated that: 

• The resulting workload would require an average 

of 57 more FTEs per permitting agency at an 

estimated cost of $4.6 million/year; 

• Without the additional FTEs, the average 

processing time for a permit would increase to 

almost 10 years, which is 20 times the current 

average permit processing time; 

• Permitting authorities would need 2 years on 

average to add the necessary staff; 

• On average, permitting authorities would need 29 

additional enforcement and judicial staff; 

• Eighty percent of the permitting authorities 

indicated that their staff would need training in 

all aspects of permitting for sources of GHG 

emission. 

• A quarter of the permitting agencies reported 

that they were currently under a hiring freeze. 

 As with PSD, we added that this state survey 

significantly underestimated the administrative burdens: 

It is important to reiterate that, as with PSD, 

the state and local information on projected 

permitting burden is based on the number of additional 

facilities subject to title V because their emissions 

of GHGs exceed the 100-tpy thresholds at actual 

emissions rates, not the PTE-based emissions rates. 

However, the title V applicability requirements are 

 17 “NACAA Summary on Permitting GHGs Under the Clean Air Act”; Memorandum 

from Mary Stewart Douglas, National Association of Clean Air Agencies to Juan Santiago, 

EPA/OAQPS, September 3, 2009. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

121

based on PTE. As noted elsewhere in this preamble, 

the state and local agencies estimated a 40-fold 

increase in numbers of title V permits based on the 

amount of GHG sources' actual emissions. By adjusting 

the summary estimates provided by the state and local 

agencies to account for GHG sources that exceed the 

100-tpy threshold based on their PTE emissions, EPA 

estimated that the average permitting authority would 

need 570 more FTEs to support its title V permitting 

program. 

74 FR at 55,302 col. 3 – 55,303 col. 1. 

(2) Revisions to Proposal Estimates of Permitting Authority 

Burden 

We received numerous comments from state and local 

authorities pointing out how EPA had underestimated the 

administrative burden on the permitting authorities in the 

proposal. State and local authorities stated that in 

particular, EPA underestimated the number of modifications and 

the amount of time it would take permitting authorities to 

process permits, particularly for commercial and residential 

sources. Based on the comments and additional analysis that we 

have conducted, we are revising in several respects our 

estimates of the administrative burdens for applying PSD and 

title V at the statutory threshold levels. 

First we present revisions to our analysis regarding the 

burdens at the statutory levels. Before we present those 

changes, we want to note a revision to our methodology that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

122

affected our estimate of the number of permits currently issued 

under existing programs. We are revising upwards the number of 

sources that are already subject to PSD permitting requirements 

anyway for their conventional pollutants (“anyway” sources). 

This revision has implications both for (i) the number of 

sources that would become subject to PSD due to their GHG 

emissions; and also (ii) the baseline number of sources already 

subject to PSD, which we use to compare the amount of increases 

in administrative burden due to permitting GHG sources. At 

proposal, we stated that 280 sources each year are subject to 

PSD due to their new construction or modifications. However, 

upon further analysis, we have realized that this figure is too 

low because it includes only sources that have emissions of one 

or more NAAQS pollutants at the 100/250 tpy thresholds and that 

are located in areas of the country that are designated 

attainment or unclassifiable for all of those pollutants, and 

thus are not designated nonattainment for any of those NAAQS 

pollutants. We estimate that another 520 sources have emissions 

of one or more NAAQS pollutants at the 100/250 tpy thresholds 

and are located in areas of the country that are nonattainment 

for at least one of those NAAQS pollutants. Some of these 520 

sources may also emit one or more pollutants at the 100/250 tpy 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

123

level for which their area is designated attainment or 

unclassifiable, and therefore may be subject to PSD for those 

pollutants. Accordingly, the correct number of “anyway” sources 

subject to PSD each year is the 280 sources that are located in 

areas that are attainment or unclassifiable for each pollutant 

that the sources emits at the 100/250 tpy level, plus at least 

some of the 520 sources that are located in areas that are 

nonattainment for at least one of the NAAQS pollutants that the 

sources emit at or above the 100/250 tpy threshold. In the 

absence of data on the number of nonattainment NSR permits that 

do not have a PSD component, and because we expect this to be a 

small number, we have assumed for purposes of this action, that 

each of the 520 sources is subject to PSD for at least one 

pollutant, so that we will consider all 800 sources as subject 

to PSD. Of this number, we estimate that 80 percent, or 688 

sources, would become subject to additional requirements due to 

their GHG emissions because those sources have combustionrelated activities that would likely emit GHGs in the requisite 

quantities. Our estimate of 80 percent of permitting activities 

significantly involving combustion activities is based on a 

review of a random sample of PSD permits. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

124

We should also note that in this rulemaking we are 

justifying our conclusions about permitting authority 

administrative burdens on the basis of their PSD and title V 

cost as calculated on both a separate basis and a combined 

basis. That is, we believe that the administrative burdens of 

the PSD program justify our tailoring approach for the PSD 

requirements, and the administrative burdens of the title V 

program justify our tailoring approach for the title V 

requirements, but addition, the administrative burdens of both 

programs on a combined basis justify the tailoring approaches. 

Viewing the administrative burdens on a combined basis provides 

a useful perspective because most permitting authorities have a 

single organizational unit that is responsible for both the PSD 

program and the title V program, and in many cases, the same 

employees work on both programs. In addition, in some 

jurisdictions, permitting authorities issue a single, merged 

permit that includes both PSD and title V requirements. For 

these reasons, considering administrative burdens on a combined 

PSD and title V basis, offers a more accurate picture of the 

issues these agencies will face in transitioning to GHG 

permitting. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

125

Turning to the revisions to our burden estimates that we 

made as a result of public comment, we begin by noting that many 

commenters believed that we significantly underestimated the 

administrative burdens associated with the proposed thresholds 

or that the administrative burden under the proposed thresholds 

would still overwhelm the states and result in significant 

permitting delays and uncertainty for sources. Many of these 

commenters indicate that our estimate of the number of sources 

that would be subject to permitting is too low, and some add 

that we have underestimated the per-permit effort required. 

(More detail on these comments is given elsewhere on the 

methodology used in the analysis.) Several state and local 

agencies provided estimates of the increased number of permits 

and/or staff that would be required under the thresholds we 

proposed that were higher than our original estimates. 

Specifically, commenters recommended that we increase the 

estimated administrative burdens for PSD permits from 100 

percent to over 2,000 percent; and that we increase the burdens 

for title V permits from 29 percent to 240 percent. Many 

commenters indicated that EPA has not adequately accounted for 

“synthetic minor” sources or modification projects, stating that 

many such sources and projects will not be able to keep GHGs 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

126

below the proposed thresholds, and those who could do so may not 

be able to establish enforceable synthetic minor limits. 

Numerous commenters also stated that the EPA has underestimated 

the rate of major modifications for GHGs under PSD. Some 

commenters assert that we underestimated the number of permits 

required for specific industry sectors, including the oil and 

gas production industry, the natural gas transmission industry, 

the semiconductor industry, the wood products industry, the 

brick industry, and landfills. Some of the state and local 

commenters also believe that we have overestimated their ability 

to hire and train sufficient staff to administer GHG permitting. 

We are persuaded by the data and arguments provided by the 

many commenters who believe EPA underestimated the number of 

permitting actions and the burdens of each action, and thus the 

overall administrative burdens associated with permitting GHG 

sources. Accordingly, we have reevaluated our assessment of 

these administrative burdens, for both the PSD and title V 

programs. In conducting this re-evaluation, we considered 

arguments made by the commenters, as well as any actual data 

they provided, and then we determined whether and how to modify 

various aspects of our detailed assessment of the burdens. 

Based on this consideration we have substantially revised 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

127

upwards our estimate of administrative burdens, based on the 

analysis included in the final docket for this rulemaking, 18 The 

revisions affect two elements of our analysis: (1) a 

substantial increase the number of PSD and title V permits that 

will occur at the statutory thresholds, and (2) an increase in 

the average burden estimate for each such permit. 

 Regarding the increase in our estimate of the number of 

projects that will occur, we estimated an increase in both PSD 

and title V permit actions, though the greatest changes were for 

PSD. At proposal, we estimated that, were PSD requirements to 

apply to GHG sources at the 100/250 tpy statutory levels, 40,496 

projects -- consisting of 3,299 projects at industrial sources 

and 37,197 projects at commercial or residential sources -- 

would need PSD permits each year. Some of these projects 

involve the construction of an entirely new source, but the 

majority of these are modifications. We now estimate that at 

the 100/250 tpy levels, 81,598 projects would become subject to 

PSD each year. These projects include 26,089 actions at 

industrial sources and 55,509 at commercial and residential 

 18 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

128

sources. We describe our calculation of this 81,598 amount in a 

technical support document.19 The great majority of these 81,598 

projects that would become subject to PSD are modifications. We 

base these estimates on the assumption that the significance 

levels would be 100 tpy regardless of category. 

Our estimate of the number of PSD modifications is where we 

made our most significant upward revisions from our proposal, 

based on comments. Our doubling of the estimated PSD permitting 

actions – from 40,496 at proposal to 81,598 -- results from 

three separate adjustments we made to our estimates at proposal 

of the number of permit actions that would result from applying 

PSD to GHG sources. Two of these increased the number of major 

modifications, and one of these increased the number of major 

sources and modifications. The most significant adjustment, and 

one that was raised by multiple commenters, was that we 

undercounted the number of major modification projects at 

existing major sources because we did not include the existing 

projects that avoid major PSD review by either taking “synthetic 

minor” limits or by netting out for conventional pollutants, but 

 19 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

129

that would not be able to avoid PSD through those mechanisms for 

GHGs. The ability and procedures for sources to achieve 

reductions, or minimize increases, due to GHGs through adoption 

of enforceable limits or through netting out have not be well 

established at this point. We believe that there will numerous 

instances, particularly for combustion-related projects, where 

it will not be possible for sources to achieve the same level of 

reductions for CO2 emissions as they do for NOx emissions, for 

example, simply because there are not as many proven control 

techniques that can reduce CO2 emissions to the same degree as 

NOx. Also, more research will be necessary in the type of 

emission units and processes resulting in GHG emissions, and how 

they operate over a wide range of utilization patterns at a 

variety of source categories, before permitting authorities will 

be able to establish procedures and rules for developing minor 

source permit limitations. Therefore, we adjusted our count of 

major modification permits under PSD upward to account for this. 

The second change to the number of permits concerns the 

general modification rate of 2 percent that we applied at 

proposal, based on historical experience across all pollutant 

types. Commenters provided information [should cite RTC 

document in the docket that shows comments regarding 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

130

modifications estimate)] that suggest that this 2 percent figure 

is an underestimate for GHG sources because their emissions of 

CO2 are high and accumulate quickly from various changes 

involving combustion units. Therefore, a greater percentage of 

their physical or operational changes will result in GHG 

emissions in excess of the significance levels that we 

identified at proposal. In light of these comments, we reviewed 

the source populations and pollutant mix within the various 

populations, and determined that we should revise our general 

modification rate to 4 percent for GHG sources. This 4% rate 

was obtained by dividing the current annual major NSR permit 

actions involving modifications by the 14,700 existing sources. 

We have revised our burden analysis accordingly. Again, the 

burden analysis in the docket describes our basis for these 

calculations in more detail. 

The third adjustment to the number of permits involves our 

estimate of the number of sources with potential to emit that is 

greater than the various thresholds considered. This affects 

the number of major sources at the statutory thresholds, which 

we used to estimate the number of PSD and title V major sources, 

but also has an effect on the number of major modifications 

because the number of modifications depends on the size of the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

131

population of major sources. Commenters provided evidence that 

our estimates of capacity utilization (which, as described 

above, we use for estimating potential-to-emit based on data for 

actual emissions) for the general manufacturing source category 

(referred to as “unspecified stationary combustion” in our 

analysis) and for the oil and gas industry were not accurate. 

In our proposal, our estimated range for capacity utilization 

for ‘unspecified stationary combustion” varied from 70 to 90 

percent depending on manufacturing category. For the oil and 

gas industry, our estimate was 90 percent. We received comments 

indicating that these utilization rates are higher than what is 

normally achieved in real-world conditions, particularly for 

smaller manufacturing type facilities. Accordingly, in this 

action, we are using a 50 percent capacity utilization rate for 

both of these source categories, which better reflects what can 

be deemed reasonable operation under normal conditions for 

facilities in these source categories. This adjustment 

increased the overall number of affected facilities at various 

threshold levels and we have revised our burden analysis 

accordingly. 

 A few commenters asserted that we underestimated the number 

of residential homes, commercial buildings, and retail stores 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

132

that would be subject to permitting requirements because these 

commenters believed the estimate in EPA’s TSD was based on 

actual emissions from space heating equipment rather than PTE. 

We wish to clarify that our threshold analysis estimates for the 

number of residential and commercial sources (as well as all 

other sources) did use a PTE basis. To calculate the PTE amount 

for these sources, we extrapolated from the actual emissions 

data for the residential and commercial sources. Specifically, 

we assumed that a typical residential facility operates its fuel 

combustion sources at only 10 percent of its capacity and a 

typical commercial facility operates at only 15 percent of its 

capacity. Based on these assumptions, we multiplied residential 

actual emissions by a factor of 10, and commercial actual 

emissions by a factor of 6.6 to obtain PTE-based estimates. 

There is very little information available on the capacity 

utilization rates of fuel combustion equipment at different 

types of residential and commercial facilities, but we believe 

our methodology was reasonable for these types of sources and we 

did not adjust it in response to this comment. Information on 

the development of these estimates is provided in our Technical 

Support Document for Greenhouse Gas Emissions Thresholds 

Evaluation. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

133

 The second source of upward revisions to our 

administrative burden estimate is that we are increasing the 

estimated average cost to permitting authorities of issuing each 

PSD and title V permit at the statutory thresholds. At 

proposal, we estimated that for PSD permits, permitting 

authorities would expend, on average, 301 hours to permit an 

industrial source of GHG emissions, and 20 percent of that time, 

or 60 hours to permit a commercial or residential source. After 

estimating that amount of workload, we went on to estimate the 

monetary cost to permitting authorities of that workload. 

Similarly, for title V permits, we estimated at proposal that 

permitting authorities would expend 10 percent of the number of 

hours needed to process an industrial permit in order to process 

a commercial or residential permit for GHG sources. 

We received comments from both permitting authorities and 

sources asserting that our methodology underestimated the 

administrative burden on grounds that (1) our methodology fails 

to recognize that when a source triggers PSD for conventional 

pollutants, additional labor hours would be required to issue 

BACT for GHGs; (2) our estimate of 60 hours (versus 301 hours) 

to issue PSD permits to commercial and residential sources of 

GHGs is unrealistically low; (3) our estimate failed to account 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

134

for the increase in the complexity of permits for criteria 

pollutants due to (i) increases in criteria pollutant emissions 

becoming newly subject to BACT at sources that are major only 

for GHGs, which will result in increased permitting and (ii) 

BACT controls for criteria pollutants (e.g., an oxidizer for 

VOC) may result in significant GHG emissions, triggering an 

additional BACT determination.; and (4) our methodology failed 

to account for the significant additional PSD and title V 

burdens due to sources that obtain federally enforceable permit 

limits on GHGs in order to become “synthetic minors” and thereby 

avoid PSD (and possibly also title V). 

 Based on these comments and our own reassessment of 

permitting actions created by the addition of GHGs, we have 

revised upwards in several ways our estimate of the additional 

per-permit costs of applying PSD and title V to GHG sources, 

including the following: First we have added an estimate of the 

additional permitting cost for adding a GHG component to 

“anyway” PSD and title V permitting actions for conventional 

pollutants. We estimated this burden based on information in 

the comments together with our own judgment about how to adjust 

the burden numbers contained in the current supporting 

statements for our approved permitting Information Collection 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

135

Requests (ICR’s). These adjustments are found in our revised 

burden estimate document 20

Second, we have raised the per-permit burden hours for 

commercial and residential sources for PSD and title V. At 

proposal, our estimates were based on the fact that many of 

these permits will be technically simpler due to such factors as 

a lower number of emissions points, simpler processes, and less 

required modeling. However, commenters pointed out that, until 

EPA streamlines its permitting procedures, there are many 

permitting activities that represent a fixed cost, such as 

public notice, hearing, and response to comment activities. In 

addition, we agree, as commenters pointed out, that many of 

these sources will need significantly more permitting-authority 

staff time to assist them in the permit application and 

preparation process because of their lack of experience with 

these requirements. In addition, permitting authorities will 

have little, if any, experience in permitting commercial and 

residential sources, and therefore will face a learning curve 

that will entail more time to take permitting action. In 

 20 “Summary of Methodology and Data Used to Estimate Burden Relief and Evaluate 

Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting Thresholds;” Prepared 

by EPA Staff; March 2010 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

136

addition, we expect that in many cases PSD and title V permit 

applications for GHGs will receive comments from various 

stakeholders, from citizens groups to equipment vendors, who 

will seek to participate in the permit process, and responding 

and revising permits accordingly will add to the hours that the 

permitting authority will spend. 

As a result, we raised the PSD per-permit hours for various 

steps in the permitting process, as described in the burden 

estimate document. While we continue to estimate that permitting 

authorities will expend, on average, 301 hours to issue a PSD 

permit to an industrial source, and that this would cost 

$23,243, we now recognize that a permitting authority would 

expend 70 percent of that time or 210 hours, to permit a 

commercial or residential source, which would cost $16,216. 

Similarly, for title V, while we continue to estimate that 

permitting authorities will expend, on average, 428 hours to 

issue a title V permit to an industrial source, and that this 

would cost $19,678, we now recognize that a permitting authority 

would expend 50 percent of the time, or 214 hours, to permit a 

commercial or residential source, which would cost $9,839. 

We disagree with commenters who suggested that by basing 

our estimates on the numbers of newly constructing and modifying 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

137

sources with high enough emissions to qualify as major emitting 

facilities, we failed to account for the costs of sources that 

seek “synthetic minor” permits to avoid PSD, and possibly title 

V, requirements. In fact, our methodology includes sources that 

might take such limits as newly-major sources for their GHG 

emissions; and therefore we count the full administrative burden 

associated with a PSD permit and a title V permit for those 

sources. In effect, we assume that such sources would go 

through PSD or title V permitting, rather than take “synthetic 

minor” limits. We take this approach because although we suspect 

that there may, in fact, be significant synthetic minor 

activity, we do not have data that would allow us to determine 

whether, and how many of, these sources will be able to adopt 

“synthetic minor” limits or restrict their operations to obtain 

minor source permitting status. Nor do we have data on the 

amount of the administrative burden that would fall on any 

particular permitting authority to establish a “synthetic minor” 

limit, except that we understand that the amount varies widely 

across states. As a result, we opted to include these sources 

in our analysis as sources receiving a PSD or title V permit. 

Therefore, to the extent that synthetic minor activity occurs, 

our estimate would already have included the burden for that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

138

activity. In fact, our estimate would have overestimated the 

burden to the extent that a permitting authority would have less 

administrative costs to issuing a “synthetic minor” permit, as 

compared to a PSD or title V permit. 

(3) Revised Burden Estimates at Statutory Thresholds 

Based on the revisions just described, we estimate that in 

all, if sources that emit GHGs become subject to PSD at the 

100/250 tpy levels, permitting authorities across the country 

would face over $1.5 billion in additional PSD permitting costs 

each year. This would represent an increase of 130 times the 

current annual burden hours under the NSR major source program 

for permitting authorities. The permitting authorities would 

need a total of almost 10,000 new full time employees (FTEs) to 

process PSD permits for GHG emissions. 

In addition, we estimate that in all, if sources that emit 

GHGs become subject to title V at the 100 tpy level, permitting 

authorities across the country would incur about 1.4 billion 

additional work hours, which would cost $63 billion. We 

estimate that most of this work would be done over a three year 

period, which would amount to 458 million in additional work 

hours, and $21 billion in additional costs, on an annual basis 

over that 3-year period. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

139

We also note that the survey of state and local permitting 

authorities described in the proposed rulemaking continues to 

shed light on the extent of the administrative burdens, 

including staffing, budget, and other associated resource needs, 

as projected by the permitting authorities. As noted above, 

that survey concluded that application of the PSD requirements 

to GHG-emitting sources at the level of 100/250 tpy or more of 

actual emissions would, without additional FTEs, increase the 

average processing time for a PSD permit from one to three 

years. The survey further concluded that application of the 

title V requirements to GHG-emitting sources at the level of 100 

tpy or more of actual emissions would, without additional FTEs, 

increase the average processing time for a title V permit from 

six months to 10 years. As we noted at proposal, this survey 

assumed a ten-fold increase in the number of PSD permits and a 

40-fold increase in the number of title V permits due to GHGemitting sources, but those assumptions were severely 

underestimated because based on actual emissions. At proposal, 

our calculations, which were based on potential emissions, 

indicated a 140-fold increase in PSD permits and a more than 

400-fold increase in title V permits. In this rulemaking, we 

recognize that even our estimates at proposal were severely 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

140

underestimated. We now recognize that the number of PSD permits 

will be about twice what we estimated at proposal, and the 

average processing time for both PSD and title V permits will be 

two or three times greater than what we estimated at proposal. 

The survey of state and local permitting authorities provided 

other useful information as well, including the fact that it 

would take the permitting authorities two years, on average, to 

hire the staff necessary to handle a ten-fold increase in PSD 

permits and a 40-fold increase in title V permits, and that 90 

percent of their staff would need additional training in all 

aspects of permitting for GHG sources. 

(4) Revised Estimates of Administrative Burdens at Various 

Threshold Levels 

In order to determine the appropriate PSD and title V 

applicability level for GHG sources, we not only estimated the 

burden at the statutory thresholds, as described above, but we 

also estimated the number of sources, number of permitting 

actions, and amount of administrative burden at various 

applicability levels for both PSD and title V, based on the 

revised methodology described above, that we used to estimate 

the administrative burdens of applying PSD and title V at the 

statutory levels. This information is summarized in Table VI.-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

141

1, below. Note that Table VI-1 also includes, in the last 

column, the administrative burdens, described above, associated 

with the 100/250 tpy thresholds.
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

142

Table 1 Coverage and Burden Information 

Curre

nt 

progr

am21

“Anyway

” 

Source 

Approac

h 75k 

Major 

Mod 

100k 

Major 

Sourc

e 

100k 

Major 

Mod. 

100k 

Major 

Sourc

e 

75k 

Major 

Mod 

100k 

Major 

Sourc

e 

50k 

Major 

Mod 

50k 

Major 

Sourc

e 

50 k 

Major 

Mod 

25k 

Major 

Source 

25k 

Major 

Mod 

100/ 

250 

Major, 

100 

 Mod 

Number of 

major 

sources 

15,00

0 

15,000 15,55

0 

15,55

0 

15,55

0 

18,50

0 

22,500 6,118,2

52 

Number of 

newly 

major GHG 

sources 

N/A 0 550 550 550 3,500 7,500 6,105,9

13 

Number of 

PSD new 

construct

ion

actions 

240 240 242 242 242 243 250 19,889 

Number of 

PSD 

modificat

ion

actions 

at 

covered 

major 

sources 

448 448 468 1,363 2,257 2,354 9,645 62,284 

Permittin

g 

Authority 

Cost to 

Run PSD 

programs 

$12M/

yr. 

$15M/yr

. 

$15M/

yr. 

$36M/

yr. 

$57M/

yr. 

$59M/

yr. 

$229M/y

r. 

$1.5B/y

r 

 21 As explained in the preamble, "current program" figures for PSD permits also reflect 

NSR permits in nonattainment areas that we assume include a PSD component for at least one 

pollutant. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

143

Permittin

g 

Authority 

Work 

Hours to 

Run PSD 

programs22

150,7

95 

185,195 192,0

55 

461,4

50 

730,5

44 

764,7

81 

2.97 M 19.7 M 

Permittin

g 

Authority 

Cost to 

Run Title 

V 

Programs 

$62M/

yr. 

$63M/yr

. 

$67M/

yr. 

$69M/

yr. 

$70M/

yr. 

$88M/

yr. 

$126M/y

r. 

$21 

B/yr 

Permittin

g 

Authority 

Work 

Hours to 

Run Title 

V 

Programs 

1.35 

M 

1.38 M 1.46 

M 

1.49 

M 

1.53 

M 

1.92 

M 

2.74 M 460 M 

Annual 

Total 

Cost to 

Run PSD 

and Title 

V 

Programs 

and % 

increase 

in cost 

over 

current 

program 

$74M/

yr. 

$78M/yr

. 

5% 

increas

e (once 

states 

adopt) 

$82M/

yr. 

11% 

incre

ase 

$105M

/yr 

42% 

incre

ase 

$127M

/yr 

 72% 

incre

ase 

$147M

/yr. 

 99% 

incre

ase 

$355M/y

r. 

380% 

increas

e 

$22.5 

B/yr 

28,278% 

increas

e 

% GHG 

emissions 

covered 

-0- 65% 67% 67% 67% 70% 75% 78% 

 22 Number of FTEs may be calculated as work hours divided by 2,000 hours. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

144

As described in the [cite to TSD], we considered several 

different major source/major modification threshold 

combinations. We chose the combinations to reflect 

representative, incremental steps along the possible range. 

Because it is time- and resource- intensive to develop estimates 

for a given step, we chose intervals that best reflect 

representative points within the range, given those time and 

resource constraints. Here, we discuss key observations about 

some of the combinations that we assessed. As the table 

indicates, under the current PSD and title V programs, 

approximately 15,000 sources qualify as major PSD sources for at 

least one pollutant and therefore meet the applicability 

thresholds. Of these, approximately 668 sources are subject to 

PSD requirements each year for at least one pollutant -- 240 

because they undertake new construction, and 448 because they 

undertake modifications. The permitting authorities’ 

administrative burdens for the NSR program are 153,795 work 

hours, and $12 million. For the title V program, the 15,000 

sources are, for the most part already permitted, and therefore 

need revised permits as required and renewal permits on a fiveyear schedule. The permitting authorities’ title V 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

145

administrative burdens on an annual basis are 1,349,659 work 

hours and $62 million. 

The first threshold Table 1 describes – and which, as 

discussed below, we are adopting for Step 1 – is the “anyway” 

source approach. Under this approach, (i) PSD applies to the 

GHG emissions from projects that are subject to PSD anyway as 

new sources or major modifications due to their emissions of 

non-GHG pollutants and that result in an increase (or, in the 

case of modifications, a net increase) of at least 75,000 tpy 

CO2e; and (ii) title V applies to what we will call “anyway” 

title V sources, that is, sources that are subject to title V 

anyway due to their emissions of non-GHG pollutants. Under this 

approach, the number of sources subject to PSD each year – 

including new construction and modifications -- is the same as 

under the current program, but the permitting authorities will 

need to address GHG emissions as part of those permitting 

actions each year and, to do so, will require, each year, 34,400 

additional workload hours costing an additional $3 million. For 

title V, we estimate that the number of title V sources that 

require permitting actions will, on average, be the same each 

year, but permitting authorities will need to address GHG 

requirements for some of them; as a result, permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

146

authorities will need, each year, 27,468 additional work hours 

costing $1 million in additional funding. 

 Another threshold described in Table VI-1 is the one we are 

adopting under Step 2, as described below, under which (i) 

sources will be subject to PSD on account of their GHG emissions 

if they newly construct and emit at least 100,000 tpy CO2e, or if 

they are existing sources that emit at least 100,000 tpy CO2e of 

GHGs and make a modification that results in a net emissions 

increase of at least 75,000 tpy CO2e; and (ii) existing sources 

will be subject to title V due to their GHG emissions if they 

emit 100,000 tpy CO2e in GHG emissions. Under this approach, 

which we will call the 100,000/75,000 approach, we estimate that 

each year, the permitting authorities will need to issue GHG 

permits to two additional sources that newly construct and 915 

that undertake modifications above current permitting levels. 

Doing so will require 310,655 additional workload hours costing 

an additional $24 million, compared to the current program. For 

title V, an additional 180 sources will require new title V 

permits each year, and the permitting authorities’ associated 

costs will be 160,572 work hours and $7 million more than the 

current program. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

147

The last approach we will describe here may be called the 

50,000/50,000 approach, which, as discussed below, we adopt as 

the floor for thresholds during the first 6 years after 

promulgation. Under this approach, (i) sources will be subject 

to PSD on account of their GHG emissions if they newly construct 

and emit at least 50,000 tpy CO2e, or if they are existing 

sources that emit at least 50,000 tpy CO2e of GHGs and make a 

modification that results in a net emissions increase of at 

least 50,000 tpy CO2e; and (ii) existing sources will be subject 

to title V on account of their GHG emissions if they emit 50,000 

tpy CO2e in GHG emissions. Under this approach, each year, the 

permitting authorities will need to issue GHG permits to 3 

additional sources that newly construct and 1,900 that undertake 

modifications above current permitting levels. Doing so will 

require 613,986 additional workload hours costing $47 million, 

compared to the current program. For title V, an additional 

1,189 sources will require new title V permits each year and the 

permitting authorities’ associated costs will be 568,017 work 

hours and $26 million more than the current program. 

We present the remaining entries in the table to illustrate 

how the cost and burden estimates vary with increasing or 

decreasing thresholds relative to those selected in this rule. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

148

These variations are important in understanding how alternative 

thresholds would compare to the ones selected. We also include 

entries reflecting the baseline (current program without GHG 

permitting) and the burdens if we immediately implemented the 

full statutory thresholds on January 2, 2011 without tailoring 

or streamlining. 

3. The Chevron framework and the “absurd results,” 

“administrative necessity,” and “step-at-a-time” legal doctrines 

a. Introduction and summary 

Having described the factual underpinnings of our action, 

which are the costs to sources and administrative burdens to 

permitting authorities, we now describe the legal underpinnings, 

which are Chevron framework, taking account of the “absurd 

results,” “administrative necessity,” and “step-at-a-time” 

doctrines. We believe that each of these doctrines provides 

independent support for our action, but in addition, the three 

doctrines are directly intertwined and can be considered in a 

comprehensive and interconnected manner. Moreover, although the 

three doctrines may pre-date Chevron U.S.A. Inc. v. NRDC, 467 

U.S. 837, 842-43 (1984), in which the U.S. Supreme Court 

established the framework for construing agency-administered 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

149

statutes, each of the three doctrines fits appropriately into 

the Chevron framework.23

To reiterate, for convenience, the statutory provisions at 

issue: Congress, through the definition of “major emitting 

facility,” applied the PSD program to include “any ... source[ 

that] emit[s], or ha[s] the potential to emit, one hundred [or, 

depending on the source category two hundred fifty] tons per 

year or more or more of any air pollutant.” CAA §§ 165(a), 

169(1). Similarly, Congress, through the definition of “major 

source,” specified that the title V program includes “any 

stationary facility or source of air pollutants which directly 

emits, or has the potential to emit, one hundred tons per year 

or more of any air pollutant.” CAA §§ 502(a), 501(2)(B), 

302(j). EPA, through long-established regulatory action, in the 

case of PSD, and long-established interpretation, in the case of 

title V, has narrowed these definitions so that they apply only 

with respect to air pollutants that are subject to regulation 

under the CAA. 

 23 Although we set out an analysis of how the three doctrines fit into the Chevron 

framework, we note that even if the doctrines are viewed independently of the Chevron 

framework, they support our action today. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

150

Applying these definitions by their terms, as narrowed by 

EPA, to greenhouse gas sources at the present time would mean 

that the PSD and title V programs would apply to an 

extraordinarily large number of small sources, the sources would 

incur unduly high compliance costs, and permitting authorities 

would face overwhelming administrative burdens. As a result, we 

decline to follow this literal reading, and instead, with this 

action, we chart a course for tailoring the applicability 

provisions of the PSD program and the title V program by phasing 

them in over time to the prescribed extent. 

For our authority to take this action, we rely on the 

“absurd results” doctrine, which applies because applying the 

PSD and title V requirements literally (as previously narrowed 

by EPA) would not only be inconsistent with congressional intent 

concerning the applicability of the PSD and title V programs, 

but in fact would severely undermine congressional purpose for 

those programs. We also rely on the “administrative necessity” 

doctrine, which applies because construing the PSD and title V 

requirements literally (as previously narrowed by EPA) would 

render it impossible for permitting authorities to administer 

the PSD provisions. The tailoring approach we promulgate in 

this action is consistent with both doctrines. It is also 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

151

consistent with a third doctrine, the “step-at-a-time” doctrine, 

which authorizes administrative agencies under certain 

circumstances to address mandates through phased action. 

 Our discussion of the legal bases for this rule is 

organized as follows: In this section V.B.3, we provide an 

overview of three doctrines and describe how they fit into the 

Chevron framework for statutory construction. In section V.B.4, 

we discuss the PSD and title V programs, including each 

program’s relevant statutory provisions, legislative history, 

and regulatory history. In sections V.B.5 and V.B.6 we discuss 

the “absurd results” approach for PSD and title V, respectively, 

that we are finalizing in our action. In section V.B.7, we 

discuss the legal and policy rationale for the phase-in schedule 

that we are adopting for applying PSD and title V to GHG 

sources. In section V.B.8 we discuss the “administrative 

necessity” approach for PSD and title V, respectively. In 

section V.B.9, we discuss the third legal basis for our action, 

the “step-at-a-time” doctrine. 

a. The “absurd results” Doctrine 

Turning first to the “absurd results” doctrine, we note at 

the outset that we discussed the doctrine at length in the 

notice of proposed rulemaking, and we incorporate by reference 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

152

that discussion. The starting point for EPA's interpretation of 

the PSD and title V applicability provisions and reliance on the 

“absurd results” doctrine is the familiar Chevron two-step 

analysis. We discuss this analysis in greater detail below, but 

in brief, in interpreting a statutory provision, an agency must, 

under Chevron step 1, determine whether Congress's intent on a 

particular question is clear; if so, then the agency must follow 

that intent. If the intent of the provision is not clear, then 

the agency may, under step 2, fashion a reasonable 

interpretation of the provision. Chevron U.S.A. Inc. v. NRDC, 

467 U.S. 837, 842-43 (1984). 

The courts consider the best indicator of congressional 

intent to be the plain meaning of the statute. However, the 

U.S. Supreme Court has held that the plain meaning of a 

statutory provision is not conclusive “in the ‘rare cases [in 

which] the literal application of a statute will produce a 

result demonstrably at odds with the intentions of the drafters’ 

... [in which case] the intention of the drafters, rather than the 

strict language, controls.” United States v. Ron Pair 

Enterprises, 489 U.S. 235, 242 (1989). This doctrine of 

statutory interpretation may be termed the “absurd results” 

doctrine. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

153

Although, as just noted, the U.S. Supreme Court has 

described the “absurd results” cases as “rare,” in that case the 

Court seemed to be referring to the small percentage of 

statutory-construction cases that are decided on the basis of 

the doctrine. The D.C. Circuit, in surveying the doctrine over 

more than a century of jurisprudence, characterized the body of 

law in absolute numbers as comprising “legions of court 

decisions.” In re Franklyn C. Nofziger, 925 F.2d 428, 434 

(D.C. Cir. 1991). Indeed, there are dozens of cases, dating 

from within the past several years to well into the 19th century, 

in which the U.S. Supreme Court has applied the “absurd results” 

doctrine to avoid the literal application of a statute, or if 

not so holding, has nevertheless clearly acknowledged the 

validity of the doctrine. Some of the more recent of these 

cases include: Logan v. United States, 552 U.S. 23, 36-37 

(2007) ( “[s]tatutory terms, we have held, may be interpreted 

against their literal meaning where the words ‘could not 

conceivably have been intended to apply’ to the case at hand 

[citation omitted]”); Nixon v. Missouri Municipal League, 541 

U.S. 125, 132-33 (2004) (“any entity” includes private but not 

public entities); Raygor v. Regents of Univ. of Minn., 534 U.S. 

533, 542-45 (2002) (“implying a narrow interpretation of ... ‘any 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

154

claim asserted’ so as to exclude certain claims dismissed on 

Eleventh Amendment grounds”); United States v. X-Citement Video, 

Inc., 513 U.S. 64, 69 (1994) (rejecting a literal interpretation 

of the statutory term “knowingly” on grounds that Congress could 

not have intended the “positively absurd” results that some 

applications of such an interpretation would produce, “[f]or 

instance, a retail druggist who returns an uninspected roll of 

developed film to a customer “knowingly distributes” a visual 

depiction and would be criminally liable if it were later 

discovered that the visual depiction contained images of 

children engaged in sexually explicit conduct”); and Rowland v. 

Cal. Men’s Colony, 506 U.S. 194, 200 (1993) (finding that an 

artificial entity such as an association is not a “person” under 

the statute, and describing the absurdity doctrine as a “common 

mandate of statutory construction”). Other cases are included, 

for reference, in section V.B.10. 

 The D.C. Circuit has also handed down numerous decisions 

that applied the absurd results doctrine to avoid a literal 

interpretation or application of statutory provisions, or that 

have acknowledged the doctrine. Some of the most recent ones 

include: Arkansas Dairy Cooperative Ass’n, Inc., v. U.S. Dep’t 

of Agriculture, 573 F.3d 815 (D.C. Cir. 2009) (rejecting the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

155

canon of construction that presumes that Congress is aware of 

existing law pertinent to the legislation that it enacts, when 

in this case, the presumption that Congress was aware of the 

Departments definition of “hearing” would lead to “the absurd 

result that Congress intended to impose a requirement with which 

the Secretary could not comply;” stating: “Courts, ‘in 

interpreting the words of a statute, [have] some scope for 

adopting a restricted rather than a literal or usual meaning of 

its words where acceptance of that meaning would lead to absurd 

results . . . or would thwart the obvious purpose of the statute 

. . . .’” (quoting In re Trans Alaska Pipeline Rate Cases, 436 

U.S. 631, (1978)); Buffalo Crushed Stone, Inc. v. Surface 

Transportation Board, 194 F.3d 125, 129-30 (D.C. Cir. 1999) 

(regulation of Surface Transportation Board providing that if a 

notice of exemption “contains false or misleading information, 

the use of the exemption is void ab initio” does not apply to a 

notice containing false information when declaring the notice 

void ab initio would undermine the goals of the governing 

statute; a conflict between the “literal application of 

statutory language” and maintaining the integrity of the 

regulatory scheme should be resolved by construing the text in 

accordance with its purpose); Mova Pharm. Corp. v. Shalala, 140 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

156

F.3d 1060, 1068 (D.C. Cir. 1998); U.S. v. Stewart, 104 F.3d 

1377, 1388 (D.C. Cir. 1997) Environmental Defense Fund v. EPA, 

82 F.3d 451, 468-69 (D.C. Cir. 1996) (although Act requires 

that a federal action conform to the state implementation plan 

that is currently in place, EPA may instead require conformity 

to a revised implementation plan that state commits to develop; 

“[t]his is one of those rare cases * ** [that] requires a more 

flexible, purpose-oriented interpretation if we are to avoid 

‘absurd or futile results.’”); American Water Works Ass’n v. 

EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994) (holding that EPA’s 

interpretation of the term “feasible” so as to require a 

treatment technique instead of an MCL for lead is reasonable; 

the court stated: “Indeed, where a literal reading of a 

statutory term would lead to absurd results, the term simply 

‘has no plain meaning . . . and is the proper subject of 

construction by the EPA and the courts.’ If the meaning of 

‘feasible’ suggested by the NRDC is indeed its plain meaning, 

then this is such a case; for it could lead to a result squarely 

at odds with the purpose of the Safe Drinking Water Act.”) 

(quoting Chem. Mfrs. Ass’n v. Natural Res. Def. Council, Inc., 

470 U.S. 116, 126 (1985)) (citation omitted); In re Nofziger, 

925 F.2d 428, 434-35 (D.C. Cir. 1991) (provision authorizing 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

157

payment of attorney fees to the subject of an investigation 

conducted by an independent counsel of the Department of Justice 

only if “no indictment is brought” against such individual does 

not preclude payment of attorney fees when an indictment is 

brought but is determined to be invalid). 

b. The “administrative necessity” doctrine 

In the proposed rulemaking, we also described in 

detail the “administrative necessity” doctrine, 74 FR 55311 

col. 3 to 55318 col. 3, and we incorporate that discussion 

by reference into this notice. Under this doctrine, if a 

statutory provision, however clear on its face, is 

impossible for the agency to administer, then the agency is 

not required to follow the literal requirements, and 

instead, the agency may adjust the requirements in as 

refined a manner as possible to assure that the 

requirements are administrable, while still achieving 

Congress's overall intent. The D.C. Circuit set out the 

doctrine of "administrative necessity" in a line of cases 

that most prominently includes Alabama Power v. Costle, 636 

F.2d 323 (D.C. Cir. 1980). The Court cited the doctrine 

most recently in New York v. EPA, 443 F.3d 880, 884, 888 

(D.C. Cir. 2006). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

158

In addition, as we stated in the proposed rulemaking, “We 

believe that the administrative necessity case law establishes a 

three-step process under which an administrative agency may, 

under the appropriate circumstances, in effect revise statutory 

requirements that the agency demonstrates are impossible to 

administer so that they are administrable.” 74 FR 55315 col. 1. 

Specifically: 

[T]he three steps are as follows: When an agency 

has identified what it believes may be insurmountable 

burdens in administering a statutory requirement, the 

first step the agency must take is to evaluate how it 

could streamline administration as much as possible, 

while remaining within the confines of the statutory 

requirements. The second step is that the agency must 

determine whether it can justifiably conclude that 

even after whatever streamlining of administration of 

statutory requirements (consistent with those 

statutory requirements) it conducts, the remaining 

administrative tasks are impossible for the agency 

because they are beyond its resources, e.g., beyond 

the capacities of its personnel and funding. If the 

agency concludes with justification that it would be 

impossible to administer the statutory requirements, 

as streamlined, then the agency may take the third 

step, which is to phase in or otherwise adjust the 

requirements so that they are administrable. However, 

the agency must do so in a manner that is as refined 

as possible so that the agency may continue to 

implement as fully as possible Congressional intent. 

74 FR 55315 cols. 1-2. 

 It should also be noted that we believe the administrative 

burdens encountered by the state and local permitting 

authorities are fully relevant under the “administrative 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

159

necessity” doctrine. Although the caselaw that discusses the 

doctrine focuses on federal agencies, see 74 FR 55312-14, under 

the CAA, state and local agencies are EPA’s partners in 

implementing provisions of the CAA, and have primary 

responsibility for implementing the PSD program. They generally 

adopt EPA’s PSD requirements in their SIPs, which EPA approves. 

They generally adopt EPA’s title V requirements in their title V 

programs, which EPA approves. They issue the PSD and title V 

permits and are responsible in the first instance for enforcing 

the terms of the permits. In all these respects, the law that 

the state and local permitting authorities administer is both 

federal and state law. Under certain circumstances, EPA may 

become responsible for permit issuance and enforcement in the 

first instance, but even then, EPA may, and frequently has, 

delegated those duties to a state, in which case, the state 

implements federal law directly. Thus, although the PSD and 

title V programs are federal requirements, for the most part, it 

is the states that implement those programs. For this reason, 

the administrative burdens that the states face in implementing 

the programs are relevant in determining the applicability of 

the “administrative necessity” doctrine. 

c. “Step-at-a-time” doctrine 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

160

In addition to the “absurd results” and “administrative 

necessity” doctrines, another judicial doctrine supports at 

least part of EPA’s tailoring rule, and that is the doctrine 

that agencies may implement statutory mandates one step at a 

time, which we will call the “step-at-a-time” doctrine. In the 

notice of proposed rulemaking, we also described this doctrine 

and recent case law that set it forth. 74 FR 55,319 col. 1-3. 

There, we noted that the U.S. Supreme Court recently described 

the doctrine in Massachusetts v. EPA, 549 U.S. 497, 524 (2007), 

as follows: “Agencies, like legislatures, do not generally 

resolve massive problems in one fell regulatory swoop;” and 

instead they may permissibly implement such regulatory programs 

over time, “refining their preferred approach as circumstances 

change and as they develop a more nuanced understanding of how 

best to proceed.” We also described two recent D.C. Circuit 

cases that upheld partial agency compliance with a statutory 

dictate “if [such partial compliance] were a first step towards 

a complete solution.” City of Las Vegas v. Nevada Dev. Comm’n, 

891 F.3d 927, 935 (D.C. Cir. 1989); see Grand Canyon Air Tour 

Coalition v. F.A.A., 154 F.3d 455, 477-78 (D.C. Cir. 1998) 

(statute required agency to develop plan to implement statutory 

requirements within 120 days after enactment, and report to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

161

Congress within two years after the date of the plan as to the 

plan’s success; Court upheld partial agency plan promulgated 10 

years after enactment when agency intended to develop rest of 

plan within another 10 years). 

d. Consistency with Chevron Framework 

Although the “absurd results,” “administrative necessity,” 

and “step-at-a-time” doctrines generally pre-date the Chevron

two-step analysis for construing statutes that Congress has 

authorized an agency to administer, we believe that the 

doctrines can be considered very much a part of that analysis. 

Under Chevron step 1, an agency must determine whether “Congress 

has directly spoken to the precise question at issue.” If so, 

“the court, as well as the agency, must give effect to the 

unambiguously expressed intent of Congress.” However, if “the 

statute is silent or ambiguous with respect to the specific 

issue, the question for the court is whether the agency’s answer 

is based on a permissible construction of the statute.” 

Chevron U.S.A. Inc. v.NRDC, 467 U.S. 837, 842-42 (1984). 

Thus, step 1 under Chevron is to determine congressional 

intent for the relevant statutory directive on the specific 

issue presented . To determine Congress’s intent, the agency 

must look first to the statutory terms in question, and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

162

generally interpret them according to their plain meaning, 

within the overall statutory context, and perhaps with reference 

to the legislative history. If the plain meaning of the 

statutory requirements is clear then, absent indications to the 

contrary, the agency must take it to indicate congressional 

intent and must implement it. Even if the plain meaning of the 

statutory requirements is not clear, if the agency can otherwise 

find indications of clear congressional intent, such as in the 

legislative history, then the agency must implement that 

congressional intent. 

The D.C. Circuit has indicated that the “absurd results” 

doctrine fits into the Chevron step 1 analysis in the following 

way: Recall that in the cases in which the courts have invoked 

this doctrine, the plain meaning of the statutory requirements 

has been clear, but has led to absurd results. This can occur 

when the plain meaning, when applied to the specific question, 

conflicts with other statutory provisions, contradicts 

congressional purpose as found in the legislative history – and, 

in particular, undermines congressional purpose – or otherwise 

produces results so illogical or otherwise contrary to sensible 

public policy as to be beyond anything Congress would reasonably 

have intended. See United States v. Ron Pair Enterprises, 489 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

163

U.S. 235, 242-43 (1989); Griffin v. Oceanic Contractors, Inc., 

458 U.S. 564, 571 (1982).

Under these circumstances, the agency must not take 

the plain meaning to indicate congressional intent. As the 

D.C. Circuit has explained, “where a literal reading of a 

statutory term would lead to absurd results, the term 

‘simply has no plain meaning . . . and is the proper 

subject of construction by the EPA and the court.’” 

American Water Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. 

Cir. 1994) (quoting Chemical Manufacturers’ Association v. 

NRDC, 470 U.S. 116, 126 (1985)). Under these 

circumstances, if the agency can find other indications of 

clear congressional intent, then the agency must implement 

that intent. See United States v. Ron Pair Enterprises, 

489 U.S. 235, 242-43 (1989). This may mean implementing 

the statutory terms, albeit not in accordance with their 

literal meaning, in a way that achieves a result that is as 

close as possible to congressional intent. As the D.C. 

Circuit said in Mova Pharm. Corp. v. Shalala, 140 F.3d 1060 

(D.C. Cir. 1998): 

The rule that statutes are to be read to 

avoid absurd results allows an agency to 

establish that seemingly clear statutory language 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

164

does not reflect the ‘unambiguously expressed 

intent of Congress,’ ... and thus to overcome the 

first step of the Chevron analysis. But the 

agency does not thereby obtain a license to 

rewrite the statute. When the agency concludes 

that a literal reading of a statute would thwart 

the purposes of Congress, it may deviate no 

further from the statute than is needed to 

protect congressional intent. . . . [T]he 

agency might be able to show that there are 

multiple ways of avoiding a statutory anomaly, 

all equally consistent with the intentions of the 

statute’s drafters . . . . In such a case, we 

would move to the second stage of the Chevron

analysis, and ask whether the agency’s choice 

between these options was ‘based on a permissible 

construction of the statute.’ Otherwise, 

however, our review of the agency’s deviation 

from the statutory text will occur under the 

first step of the Chevron analysis, in which we 

do not defer to the agency’s interpretation of 

the statute.” 

Id. at 1068 (quoting Chevron U.S.A. Inc. v. NRDC, 467 U.S. 

837, 842, 843 (1984) (citations omitted)). 

The “administrative necessity” doctrine is not as well 

developed as the “absurd results” doctrine, so that the courts 

have not had occasion to explicitly describe how the doctrine 

fits into the Chevron analytical framework. However, we think 

that a reasonable approach, in line with the D.C. Circuit’s 

approach to the “absurd results” doctrine as just described, is 

as follows: Recall that under the “administrative necessity” 

doctrine, a agency is not required to implement a statutory 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

165

provision in accordance with the literal requirements when doing 

so would be impossible, but the agency must nevertheless 

implement the provision as fully as possible. Placed in the 

context of the Chevron framework, we think that that the 

“administrative necessity” doctrine is based on the premise that 

inherent in the statutory design is the presumption that 

Congress does not intend to impose an impossible burden on an 

administrative agency. See Alabama Power v. Costle, 636 F.2d 

323, 357 (D.C. Cir. 1980) (describing the “administrative 

necessity” approach as one of the “limited grounds for the 

creation of exemptions [that] are inherent in the administrative 

process, and their unavailability under a statutory scheme 

should not be presumed, save in the face of the most unambiguous 

demonstration of congressional intent to foreclose them”). 

Therefore, if the plain meaning of a statutory directive 

would impose on an agency an impossible administrative burden, 

then either the statutory directive should not be considered to 

have that plain meaning, or that plain meaning should not be 

considered to be indicative of congressional intent. Rather, in 

this case, congressional intent should be considered to be to 

achieve as much of the statutory directive as possible. As a 

result, the agency must adopt an approach that implements the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

166

statutory directive as fully as possible. This is consistent 

with the D.C. Circuit’s holding in Mova Pharm. Corp that if 

congressional intent is clear, but the plain meaning of a 

statute does not express that intent, then the agency must, 

under Chevron step 1, select an interpretation that most closely 

approximates congressional intent. Mova Pharm. Corp, 140 F.3d 

at 1068.

 The “step-at-a-time” doctrine fits into the Chevron

framework in much the same manner that the “administrative 

necessity” doctrine does. That is, inherent in the statutory 

design is the presumption that Congress intended an agency to 

implement that statutory requirements in a step-at-a-time 

fashion, as long as the agency stays on a path towards full 

implementation. 

Under all of the circumstances described above, 

congressional intent is clear – whether it is indicated by the 

plain language or otherwise – and as a result, the agency must 

follow that intent under Chevron step 1. On the other hand, 

the agency may determine that congressional intent on the 

specific issue is not clear. In these cases, the agencies 

should proceed to Chevron step 2 and select an interpretation or 

an application that is a permissible construction of the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

167

statute. This situation generally occurs when the statutory 

provisions are ambiguous or silent as to the specific issue, and 

there are no other indications of clear congressional intent. 

Under these circumstances, the agency is authorized to develop 

and implement a construction of the statute that the courts will 

uphold as long as it is reasonable. 

As noted above, the D.C. Circuit, has pointed out that this 

situation may also occur when the plain language leads to an 

absurd result, and, in attempting to implement congressional 

intent, the agency is “able to show that there are multiple ways 

of avoiding a statutory anomaly, all equally consistent with the 

intentions of the statute’s drafters . . . . In such a case, we 

would move to the second stage of the Chevron analysis, and ask 

whether the agency’s choice between these options was ‘based on 

a permissible construction of the statute.’” Mova Pharm. Corp,

140 F.3d at 1068. As the U.S. Supreme Court has recently said, 

although in a context different than “absurd results,” “ In the 

end, the interpretation applied by EPA "governs if it is a 

reasonable interpretation of the statute -- not necessarily the 

only possible . . . interpretation, nor even the interpretation 

deemed most reasonable by the courts." Entergy Corp. v. 

Riverkeeper, Inc., 129 S.Ct. 1498. 1505 (2009). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

168

e. Interconnectedness of the Legal Doctrines 

Although we believe that each of the “absurd results,” 

“administrative necessity,” and “step-at-a-time” doctrine 

provides independent support for our action, we also believe 

that in this case, the three doctrines are intertwined and form 

a comprehensive basis for EPA’s tailoring approach. As just 

discussed, each of the three doctrines is tied into Chevron 

analytical framework because each is designed to give effect to 

underlying intent. Each of the three doctrines comes into play 

in this case because a literal reading of the PSD and title V 

applicability provisions results in insurmountable 

administrative burdens. Those administrative burdens -- along 

with the undue costs to sources -- must be considered “absurd 

results” that would undermine congressional purpose for the PSD 

and title V programs. Under the “absurd results” doctrine, EPA 

is authorized not to implement the applicability provisions 

literally, but instead to tailor them in a manner consistent 

with congressional intent. By the same token, the 

insurmountable administrative burdens bring into play the 

“administrative necessity” doctrine, which also supports the 

tailoring approach. Finally, the “step-at-a-time” doctrine 

provides further support for the tailoring approach. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

169

f. Application of Chevron approach 

The Chevron analytical approach, and the three legal 

doctrines at issue here, apply to this action in the following 

manner: To reiterate, for convenience, the statutory provisions 

at issue: Congress, through the definition of “major emitting 

facility,” applied the PSD program to include “any ... stationary 

sources of air pollutants which emit or have the potential to 

emit, one hundred tons per year or more or more of any air 

pollutant.... [or] any other source with the potential to emit two 

hundred fifty tons per year or more of any air pollutant.” CAA 

§§ 165(a), 169(1). Similarly, Congress, through the definition 

of “major source,” specified that the title V program includes 

“any stationary facility or source of air pollutants which 

directly emits, or has the potential to emit, one hundred tons 

per year or more of any air pollutant.” CAA §§ 502(a), 

501(2)(B), 302(j). EPA, through long-established regulatory 

action, in the case of PSD, and long-established interpretation, 

in the case of title V, has interpreted these definitions so 

that they apply only with respect to air pollutants that are 

subject to regulation under the CAA. 

For each of these two applicability provisions, the 

approach under Chevron is as follows: Under Chevron step 1, we 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

170

must determine whether Congress expressed an intention on the 

specific question, which is whether the PSD or T-V applicability 

provisions apply to GHG sources. Said differently, the specific 

question is whether, in the case of PSD, Congress intended that 

the definition of major emitting facility applies to GHG sources 

that emit at least 250 CO2e; and, in the case of title V, 

whether, the definition of “major source” applies to GHG 

sources that emit at least 100 tpy or more CO2e. 

To determine intent, we must first examine the terms of the 

statute in light of their plain meaning. Here, the plain 

reading of each provision covers GHG sources. For PSD, a GHG 

source that emits at least 250 tpy CO2e plainly qualifies as 

“any ... other source with the potential to emit two hundred fifty 

tons per year or more of any air pollutant [subject to 

regulation under the CAA].” CAA § 169(1). Similarly, for title 

V, a GHG source that emits at least 100 tpy CO2e plainly 

qualifies as “any stationary facility or source of air 

pollutants which directly emits, or has the potential to emit, 

one hundred tons per year or more of any air pollutant [subject 

to regulation under the CAA].” CAA §§ 502(a), 501(2)(B), 

302(j). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

171

However, applying each definition in accordance with its 

plain meaning to GHG sources at the specified levels of 

emissions and at the present time (i) would produce absurd 

results, that is, results that are not consistent with other 

provisions of the PSD and title V requirements and that are 

inconsistent with – and, indeed, undermine – congressional 

purposes for the PSD and title V provisions; and (ii) would 

create impossible administrative burdens for the permitting 

authorities. Accordingly, under the “absurd results” doctrine, 

neither the PSD nor the title V definitions of “major emitting 

facility” or “major source,” should be considered to have a 

plain meaning with respect to their application to GHG sources. 

In parsing the provisions of each definition more closely, 

we believe that each has three terms, any one of which could be 

considered not to have its plain meaning, in this respect. 

Specifically, each provision includes (i) the term “any ... 

source,” and that term could be considered not to refer 

literally to all of the GHG sources; (ii) the term “two hundred 

fifty tons per year” or “100 tons per year,” and those terms 

could be considered not to refer literally to the tonnage amount 

of emissions from all of the GHG sources; and (iii) the term 

“any air pollutant [subject to regulation under the CAA],” and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

172

that term could be considered not to refer literally to the 

emissions from all of the GHG sources. As long as any one of 

those three terms should be considered not to have its plain 

meaning as applied to GHG sources, then the definition as a 

whole – again, for PSD, the term “major emitting facility,” and 

for title V, the term “major source” – cannot be considered to 

apply to GHG sources. Because we read the terms together, as 

integral parts of each definition as a whole, we do not think 

that the choice of which of those three terms within each 

definition cannot be considered to apply literally to GHG 

sources has substantive legal effect. In other words, we 

believe that any one of the three terms, or all three together 

as part of each definition as a whole, should be considered not 

to apply literally in the case of GHG sources. 

Having determined that each definition does not have a 

plain meaning on the specific question of whether PSD or title V 

applies to GHG sources, we must next inquire as to whether 

Congress has nevertheless expressed an intent on that question 

through other means. We believe that there are two possible 

views about congressional intent. The first is that Congress 

did express an intent, and that was that if a type of source – 

such as GHG sources – cannot be included in the PSD program or 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

173

title V program in accordance with the literal terms of the 

applicability provisions, then, nevertheless, as many of those 

sources should be included in the programs at as close to the 

statutory thresholds as possible, and as quickly as possible. 

This view about congressional intent could be considered to be a 

logical inference from the fact that Congress wrote the 

applicability provisions broadly. 

Under this first view, EPA would be required at Chevron

step 1 to adopt the Tailoring Rule because it most closely gives 

effect to Congress’s intent that PSD and title V each apply to 

GHG sources at emission levels as close to the statutory 

thresholds as possible and as quickly as possible. Even so, EPA 

is authorized to exercise its expert judgment as to the best 

approach for phasing in the application of PSD and title V to 

GHG sources. In addition, even under this view, we believe 

there may be uncertainty as to whether congressional intent to 

apply PSD and title V to GHG sources extends to very small GHG 

sources, that is, those at or near the statutory thresholds or 

whether congressional intent to apply title V to GHG sources 

extends to GHG sources that would have empty permits. 

The second possible view is that Congress did not express 

an intent as to the applicability of PSD and title V to GHG 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

174

sources. The lack of plain meaning in the definitional 

provisions, and silence elsewhere in the statutory provisions 

and legislative history, could be considered to support this 

conclusion. Under this second view, EPA has the discretion at 

Chevron step 2 to adopt the Tailoring Rule because it is a 

reasonable interpretation of the statutory requirements. Here, 

too, EPA is authorized to exercise its expert judgment as to the 

best approach for phasing in the application of PSD and title V 

to GHG sources. 

We do not believe it necessary to choose between these two 

differing views as to congressional intent. Although each leads 

to a different analytical approach under Chevron, each also 

supports the Tailoring Rule. It should also be noted that 

although EPA has concluded that applying the PSD and title V 

applicability provisions literally in the case of GHG sources 

would produce “absurd results” and therefore is not required, 

this conclusion has no relevance for applying other CAA 

requirements – such as the requirements concerning endangerment 

and contribution findings under CAA section 202(a) (1) or 

emission standards for new motor vehicles or new motor vehicle 

engines under CAA section 202 -- to GHGs or GHG sources. EPA’s 

conclusions with respect to the PSD and title V applicability 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

175

requirements are based on the specific terms of those 

requirements, other relevant PSD and title V provisions, and the 

legislative history of the PSD and title V programs. 

Within the context of the Chevron framework, the 

“administrative necessity” doctrine applies as follows: Under 

the doctrine, Congress is presumed to intend that the PSD and 

title V applicability requirements be administrable. Here, 

those applicability requirements, if applied to GHG sources in 

accordance with their plain meaning, would be impossible to 

administer. Accordingly, under Chevron step 1, it is consistent 

with congressional intent that EPA and the permitting 

authorities be authorized to implement the applicability 

requirements in a manner that is administrable, that is, through 

the tailoring approach. The “step-at-a-time” doctrine applies 

within the Chevron framework in much the same manner as the 

“administrative necessity” doctrine. That is, Congress is 

presumed to intend that EPA and the permitting authorities may 

administer the PSD and title V applicability requirements to GHG 

sources on a step-by-step basis, as appropriate. . 

4. The PSD and Title V programs 

Having discussed both the factual underpinnings and, 

immediately above, the legal underpinnings for our tailoring 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

176

approach, we now discuss the PSD and title V programs 

themselves, including, for each program, the key statutory 

provisions, their legislative history, and the relevant 

regulations and guidance documents through which EPA has 

implemented the provisions. We start with the PSD program. 

a. The PSD program 

(1) PSD provisions 

Several PSD provisions are relevant for present purposes 

because of the specific requirements that they establish and the 

window that they provide into congressional intent. These 

provisions start with the applicability provisions, found in CAA 

sections 165(a) and 169(1), which identify the new sources 

subject to PSD, and CAA §111(a)(4), which describes the 

modifications of existing sources that are subject to PSD. CAA 

§165(a) provides: 

 No major emitting facility on which construction 

is commenced after August 7, 1977, may be constructed 

in any area to which this part applies unless— 

 (1) a permit has been issued for such proposed 

facility in accordance with this part setting forth 

emission limitations for such facility which conform 

to the requirements of this part; 

 (2) the proposed permit has been subject to a 

review in accordance with this section * * *, and a 

public hearing has been held with opportunity for 

interested persons including representatives of the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

177

Administrator to appear and submit written or oral 

presentations on the air quality impact of such 

source, alternatives thereto, control technology 

requirements, and other appropriate considerations; 

* * * 

 (4) the proposed facility is subject to the best 

available control technology for each pollutant 

subject to regulation under this chapter emitted from, 

or which results from, such facility * * * *. 

The term "major emitting facility" is defined, under CAA 

§169(1) to include: 

* * * stationary sources of air pollutants which emit, 

or have the potential to emit, one hundred tons per 

year or more of any air pollutant from [28 listed] 

types of stationary sources. * * * Such term also 

includes any other source with the potential to emit 

two hundred and fifty tons per year or more of any air 

pollutant. This term shall not include new or 

modified facilities which are nonprofit health or 

education institutions which have been exempted by the 

State. 

As for modification of existing sources, CAA section 

169(1)(C) provides that the term "construction," as used in CAA 

section 165(a) (the PSD applicability section) "includes the 

modification (as defined in section 111(a)(4)) of any source or 

facility." Section 111(a)(4), in turn, provides: 

The term "modification" means any physical change in, or 

change in the method of operation of, a stationary source 

which increases the amount of any air pollutant emitted by 

such source or which results in the emission of any air 

pollutant not previously emitted. 

As interpreted by EPA regulations, these provisions, taken 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

178

together, provide that new stationary sources are subject to PSD 

if they emit at the 100/250-tpy thresholds air pollutants that 

are subject to EPA regulation, and that existing stationary 

sources that emit such air pollutants at the 100/250-tpy 

thresholds are subject to PSD if they undertake a physical or 

operational change that increases their emissions of such air 

pollutants by any amount. 

Other provisions of particular relevance are the 

requirements for timely issuance of permits. The permitting 

authority must “grant[] or den[y] [any completed permit 

application] not later than one year after the date of filing of 

such completed application.” CAA §165(c). 

In addition, the PSD provisions articulate ‘the purposes of 

[the PSD program],” which are to balance environmental 

protection and growth. CAA §160. One of the purposes, in 

subsection (1), is specifically “to protect public health and 

welfare,” and another, in subsection (3), is “to insure that 

economic growth will occur in a manner consistent with the 

preservations of existing clean air resources.” 

The PSD provisions also include detailed procedures for 

implementation. Most relevant for sources of GHG are the 

provisions that the proposed permit for each source must be the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

179

subject of a public hearing with opportunity for interested 

persons to comment, CAA §165(a)(2), and each source must be 

subject to best available control technology, as determined by 

the permitting authority on a source-by-source basis, CAA 

§165(a)(4), 169(3). 

(2) PSD legislative history 

The legislative history of the PSD provisions, enacted in 

the 1977 Clean Air Act Amendments, makes clear that Congress was 

focused on sources of criteria pollutants: primarily sulfur 

dioxide (SO2), particulate matter, nitrogen oxides (NOx), and 

carbon monoxide (CO). This focus stems from the basic purpose 

of the PSD program, which is to safeguard maintenance of the 

national ambient air quality standards (NAAQS), combined with 

the limited awareness at that time of the problem of climate 

change. See S 95-127 (95th Cong., 1st Sess.), at 27. 

 Congress designed the PSD provisions to impose significant 

regulatory requirements, on a source-by-source basis, to 

identify and implement BACT and, for criteria pollutant, to also 

undertake certain studies. Congress was well aware that because 

these requirements are individualized to the source, they are 

expensive. Accordingly, Congress designed the applicability 

provisions to apply these requirements to industrial sources of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

180

a certain type and a certain size – sources within 28 specified 

source categories and that emit at least 100 tpy -- as well as 

all other sources that emit at least 250 tpy, and, by the same 

token, to exempt other sources from these requirements. 

 Although Congress required that CAA requirements generally 

apply to “major emitting facilities,” defined as any source that 

emits or has the potential to emit 100 tpy of any pollutant, 

Congress applied PSD to only sources at 100 tpy or higher in 28 

specified industrial source categories, and at 250 tpy or more 

in all other source categories. This distinction was 

deliberate: According to Sen. McClure, Congress selected the 28 

source categories after reviewing an EPA study describing 190 

industrial source categories. 122 Cong. Rec. 24521 (July 29, 

1976) (statement by Sen. McClure). 

 Congress also relied on an EPA memorandum that identified 

the range of industrial categories that EPA regulated under its 

regulations that constituted the precursor to the statutory PSD 

program, and listed both the estimated number of new sources 

constructing each year and the amount of pollution emitted by 

the “typical plant” in the category. The memorandum was 

prepared by B.J. Steigerwald, Director of the Office of Air 

Quality Planning and Standards and Roger Strelow, EPA’s 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

181

Assistant Administrator for Air and Waste Management 

(“Steigerwald-Strelow memorandum). The Steigerwald-Strelow 

memorandum makes clear that the 100 tpy cut-off for the 28 

listed sources categories, and the 250 tpy cut-off for all other 

sources, was meaningful; that is, there were a large number of 

sources below those cut-offs that Congress explicitly 

contemplated would not be included in PSD. Id. at 24548-50. 

Consistent with this, the legislative history on the Senate 

side also specifically identified certain source categories that 

Senators believed should not be covered by PSD. The Senate bill 

language limited PSD to sources of 100 tpy or more in 28 listed 

source categories, and to any other categories that the 

Administrator might add. Sen. Muskie stated that the Senate 

bill excluded “houses, dairies, farms, highways, hospitals, 

schools, grocery stores, and other such sources.” 123 Cong. 

Rec. 18021 (June 8, 1977) (statement of Sen. Muskie). Sen. 

McLure’s list of excluded source categories were ”[a] small 

gasoline jobber, or a heating plant at a community college, 

[which] could have the potential to emit 100 tons pf pollution 

annually.” 122 Cong. Rec. 24548-49 (July 29, 1976) (statement 

of Sen. McClure). The Senate Committee Report included a 

comparable list, and in describing it, concisely articulated the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

182

cost-conscious basis for the line-drawing: “[the PSD] procedure 

... must include an effective review-and-permit process. Such a 

process is reasonable and necessary for very large sources, such 

as new electrical generating plants or new steel mills. But the 

procedure would prove costly and potentially unreasonable if 

imposed on construction of storage facilities for a small 

gasoline jobber or on the construction of a new heating plant at 

a junior college, each of which may have the potential to emit 

100 tons of pollution annually.” S. Rpt. 95-127 at 96-97. 

The enacted legislation differs from the Senate bill by 

replacing the authorization to EPA to include by regulation 

source categories in addition to the listed 28 source categories 

with an inclusion of all other sources if they exceed 250 tpy, 

and with an authorization for the states to exempt hospitals and 

educational institutions. But Congress’s overall intention 

remains clear, as the D.C. Circuit described in Alabama Power:. 

"Congress's intention was to identify facilities which, due to 

their size, are financially able to bear the substantial 

regulatory costs imposed by the PSD provisions and which, as a 

group, are primarily responsible for emissions of the 

deleterious pollutants that befoul our nation's air....[With 

respect to] the heating plant operating in a large high school 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

183

or in a small community college . . . [w]e have no reason to 

believe that Congress intended to define such obviously minor 

sources as 'major' for the purposes of the PSD provision."24 636 

F.2d at 353-54. 

 A particularly important indication of congressional intent 

to limit PSD to larger sources comes in considering the 

emissions profile of the small-sized boilers. Congress focused 

closely on identifying which sources with emissions in excess of 

100 tpy should not be subject to PSD even though they are 

subject to Clean Air Act requirements generally. But Congress 

viewed a large set of sources as emitting below 100 tpy and 

therefore not included in the PSD program and, indeed, not even 

subject to debate as to whether they should be included in the 

PSD program. Chief among these sources, in terms of absolute 

numbers of sources, were small boilers. The Steigerwald-Strelow 

memorandum identified two categories of these boilers, 

differentiated by size. The first ranges in size from 10 to 250 

x 106

 Btu/hr, and has a “typical plant” size of 107 Btu/hr, with 

“BACT emissions from typical plant” of 53 tpy, and a total of 

 24 Note that although Congress specifically authorized the states to exempt "nonprofit 

health or education institutions" from the definition of "major emitting facility," this statement by 

the D.C. Circuit should be taken as the Court's view that Congress did not design PSD to cover 

sources of the small size described. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

184

1,446 sources in the category. The second category ranges in 

size from 0.3 to 10 x 106

 Btu/hr, and has a “typical plant” size 

of 1.3 x x 106

 Btu/hr, with “BACT emissions from typical plant” 

of 2 tpy, and a total of 11,215 sources in the category. The 

memorandum discusses these two categories in the context of 

explaining which source categories exceed a size of 100 tpy -- 

and therefore would be subject to PSD if a 100 tpy threshold 

were set -- by stating, “Fortunately, most truly small boilers 

and typical space heating operations would not be covered.” 122 

Cong. Rec. 24549 (July 29, 1976). 

 The legislative history also provides a window into the 

scope of the program that Congress anticipated and related 

administrability concerns. According to the Steigerwald-Strelow 

memorandum, the number of new sources each year whose “BACT 

emissions from typical plant” exceed 100 for the 28 listed 

source categories and 250 for all other source categories is 

less than 100 per year. Although the Steigerwald-Strelow 

memorandum does not attempt to estimate the number of 

modifications, it appears that based on this information, 

Congress had reason to expect the total size of the PSD program 

to be measured in the hundreds of permits each year. A program 

of this size would be manageable by EPA and the permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

185

authorities. 

 For convenience, the Steigerwald-Strelow memorandum is 

included in the docket as docket number ______. 

(3) PSD regulatory history: Regulations concerning the 

definition of “major stationary source” 

EPA’s initial rulemaking implementing the PSD program was 

proposed and finalized in 1977-1978, immediately after enactment 

of the PSD program. This rulemaking made explicit that the 

entire PSD program – including the permitting component (with 

air quality review) – applied to only pollutants regulated under 

the Act.25 EPA accomplished this by requiring each “major 

stationary source” to obtain a PSD permit, and by defining a 

“major stationary source” as a source that is included in a 

specified source category or that is of a specified size and 

that emits at least a specified amount of “any air pollutant 

 

25 The initial PSD program that EPA established in 1973-74, and which EPA built on in 

promulgating the PSD program necessary to implement the 1977 CAA Amendments had an even 

narrower focus. In that initial program, in response to a court order to ensure that state 

implementation plans (SIPs) prevent significant deterioration of air quality, EPA imposed both a 

technology-based requirement and an air-quality-review requirement, which, in keeping with the 

focus on SIPs, were both limited to national ambient air quality standards (NAAQS) pollutants. 

This program did not cover hazardous air pollutants that were regulated under CAA section 112, 

much less air pollutants not regulated under any CAA provision. See 38 FR 18,986 (July 16, 

1973) (proposed rule), 39 FR 31,000 (Aug. 27, 1974) (proposed rule), 39 FR 42,510 (Dec. 5, 

1974) (final rule). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

186

regulated under the Clean Air Act.” 43 FR 26,380, 26,403/3, 

26,406 (June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i) ). 

See 42 FR 57,479, 57,480, 57,483 (Nov. 3, 1977) (proposing 40 

CFR 51.21(b)(1)(i)). Similarly, the regulations required each 

“major stationary source” to apply “best available control 

technology” for “each pollutant subject to regulation under the 

act.” 43 FR at 26,406 (promulgating 40 CFR 51.21(j), 

52.21(b)(10)). EPA acknowledged that for regulatory purposes, 

it was replacing the term that appears in the statute – “major 

emitting facility,” CAA § 169(l) – with the term “major 

stationary source,” and explained that it was doing so in order 

“to reflect current EPA terminology.” 42 FR at 57,480 (Nov. 3, 

1977). EPA did not discuss that the statutory term “major 

emitting facility” – which refers to “any air pollutant” – 

differs from EPA’s regulatory term “major stationary source” – 

which refers more narrowly to “any air pollutant regulated under 

the [CAA].” In the preamble to the final rule, EPA did not 

indicate that it had received any comments on the issue. See 43 

FR 26,388 (June 19, 1978). 

In 1979-1980, EPA revised the PSD program to conform to 

Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1980). 44 FR 

51,924 (Sept. 5, 1979) (proposed rule); 45 FR 52,676 (Aug. 7, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

187

1980) (final rule). In this rulemaking, EPA did not disturb the 

pre-existing provisions (including the definitions of “major 

stationary source” and BACT) that limited the applicability of 

the PSD program to regulated air pollutants. In addition, EPA 

did not discuss – or indicate that commenters had raised – any 

issues concerning the difference between the narrower definition 

of “major stationary source” in the regulations and the 

statutory definition that could be broader under a literal 

reading.26

In 1996 EPA proposed, and in 2002 finalized, a set of 

amendments to the PSD (and nonattainment NSR) provisions that 

included revisions to conform with the 1990 Act Amendments, 

which, in relevant part, exempted hazardous air pollutants from 

PSD, under CAA § 112(b)(6). See 61 FR 38,250 (July 23, 1996), 

67 FR 80,186 (Dec. 31, 2002). In the preamble to the final 

 26 As noted elsewhere in today’s notice, in Alabama Power, the D.C. Circuit noted that 

the definition of “major emitting facility” under CAA section 169(1) could apply to air pollutants 

not regulated under other provisions of the Act, and discussed the contrast of this broad 

definition to the narrower application of the BACT provisions. 636 F.2d at 352-53 & n. 60. In 

its rulemaking notices responding to Alabama Power, EPA discussed at length certain issues, 

such as the applicability of NSR to pollutants emitted below the “major” thresholds, that are 

based on the reference in “major emitting facility” to “any air pollutant.” However, throughout 

its discussion, EPA interpreted that reference as “any regulated air pollutant,” again without 

specifically acknowledging the difference or without acknowledging the above-noted statements 

in Alabama Power. See 45 FR at 52,710 – 52,711. EPA did not indicate that it had received 

comments on this issue. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

188

rule, EPA noted that based on a request from a commenter, EPA 

was amending the regulations to “clarify which pollutants are 

covered under the PSD program.” EPA accomplished this by 

promulgating a definition for “regulated NSR pollutant,” which 

listed categories of pollutants regulated under the Act, and by 

substituting that defined term for the phrase “pollutants 

regulated under the Act” that was previously used in various 

parts of the PSD regulations. 67 FR at 80,240. The 

definition of “regulated NSR pollutant” includes several 

categories of pollutants (including, in general, NAAQS 

pollutants and precursors, pollutants regulated under CAA §111 

new source performance standards, Class I or II substances 

regulated under CAA title VI) and a catch-all category, “[a]ny 

pollutant that otherwise is subject to regulation under the 

Act.” E.g., 40 CFR 52.21(b)(50). EPA again did not address the 

difference between the definition of “major emitting facility” 

and its regulatory approach or indicate that it had received 

comments on this issue. 

b. Title V program 

Having reviewed the key statutory provisions, their 

legislative history, and the relevant administrative 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

189

interpretations for the PSD program, we now do the same for the 

title V program. 

i. Title V provisions 

The key title V provisions for present purposes start with 

the applicability provisions, which are found in CAA §§502(a), 

501(2)(B), and 302(j). These provisions provide that it is 

unlawful for any person to operate a "major source" without a 

title V permit, §502(a), and define a "major source" to include 

"any major stationary facility or source of air pollutants which 

directly emits, or has the potential to emit, one hundred tons 

per year or more of any air pollutant." CAA §501(2)(B) and 

§302(j). As noted elsewhere, these provisions, taken together 

and as interpreted by EPA, provide that stationary sources are 

subject to title V if they emit at the 100-tpy threshold air 

pollutants that are subject to EPA regulation. 

In addition, although title V does not have a set of 

provisions describing its purpose, it is clear from its 

provisions and its legislative history, discussed below, that 

its key goal is to gather into one permitting mechanism the 

Clean Air Act requirements applicable to a source and impose 

conditions necessary to assure compliance with such 

requirements, and thereby promote the enforceability of CAA 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

190

requirements applicable to the covered sources. CAA §503(b)(1) 

requires that the source’s permit application contain a 

compliance plan describing how the source will ”comply with all 

applicable requirements” of the CAA, and §504(a) requires that 

“[e]ach permit issued under [title V] shall include * * * such 

* * * conditions as are necessary to assure compliance with 

applicable requirements of [the Clean Air Act].” See H.R. Rep. 

No. 101–490, at 351 (1990) (‘‘It should be emphasized that the 

operating permit to be issued under this title is intended by 

the Administration to be the single document or source of all of 

the requirements under the Act applicable to the source.’’). 

Importantly, title V is replete with provisions designed to 

make the permitting process as efficient and smooth-running as 

possible, including the expeditious processing of permit 

applications and the timely issuance of permits. CAA §503(c) 

requires that “the permitting authority shall approve or 

disapprove a completed application * * * and shall issue or deny 

the permit, within 18 months after the date of receipt thereof * 

* * *” CAA §502(b)(6) requires the permitting authority to 

develop “adequate, streamlined, and reasonable procedures for 

expeditiously determining when applications are complete, for 

processing such applications, for public notice * * * and for 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

191

expeditious review of permit actions, including * * * judicial 

review in State court of the final permit action by [specified 

persons].” CAA §502(b)(7) 

includes a “hammer” provision designed to reinforce timely 

permit issuance, which is that the permitting authority’s 

program must include: 

To ensure against unreasonable delay by the permitting 

authority, adequate authority and procedures to 

provide that a failure of such permitting authority to 

act on a permit application or permit renewal 

application (in accordance with the time periods 

specified in [CAA §503] * * *) shall be treated as a 

final permit action solely for purposes of obtaining 

judicial review in State court of an action brought by 

any person referred to in paragraph (6) to require 

that action be taken by the permitting authority on 

such application without additional delay. 

CAA §502(b)(8) requires the permit program to include 

“[a]uthority and reasonable procedures consistent with the need 

for expeditious action by the permitting authority on permit 

applications and related matters, to make available to the 

public [certain permit-related documents]”. CAA §502(b)(9) 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

192

requires a permit revision to incorporate requirements 

promulgated after issuance of the permit, but only if the permit 

is for a major source and has a term of three or more years 

remaining. In addition, the revision must occur “as 

expeditiously as practicable.” CAA §502(b)(10) requires the 

permit program to include operational flexibility provisions 

that “allow changes within a permitted facility . . . without 

requiring a permit revision, if the changes are not 

modifications . . . and . . . do not exceed the emissions 

allowable under the permit. . . .” 

In addition, title V includes a comprehensive and finely 

detailed implementation schedule that mandates timely issuance 

of permits while building in EPA and affected state review, 

public participation, and timely compliance by the source with 

reporting requirements. Following the date that sources become 

subject to title V, they have one year to submit their permit 

applications. CAA §503(c). As noted above, the permitting 

authority then has 18 months to issue or deny the permit. CAA 

§503(c). Permitting authorities must provide an opportunity for 

public comment and a hearing. CAA §502(b)(6). If the 

permitting authority proposes to issue the permit, the 

permitting authority must submit the permit to EPA, and notify 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

193

affected states, for review. CAA §505(a)(1). EPA then has 45 

days to review the permit and, if EPA deems it appropriate, to 

object to the permit. CAA §505(b)(1). If EPA does object, then 

the permitting authority must, within 90 days, revise it to meet 

the objections, or else EPA becomes required to issue or deny 

the permit. CAA §505(c). If EPA does not object, then, within 

60 days of the close of the 45-day review period, any person may 

petition EPA to object, and EPA must grant or deny the petition 

within 60 days. CAA §505(b)(2). If a permit is issued, it must 

include a permit compliance plan, under which the permittee must 

“submit progress reports to the permitting authority no less 

frequently than every 6 months,” and must “periodically (but no 

less frequently than annually) certify that the facility is in 

compliance with any applicable requirements of the permit, and 

[] promptly report any deviations from permit requirements to 

the permitting authority.” CAA §503(b). 

ii.. Title V legislative history 

(I). Scope of title V 

The legislative history of title V, enacted by Congress in 

the 1990 CAA Amendments, indicates the scope of the program that 

Congress expected: Congress expected the program to cover some 

tens of thousands of sources, which would approximate the scope 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

194

of the permit program under the Clean Water Act. The Senate 

Committee on Environment and Public Works stated: 

EPA estimates that the new permit requirements will 

cover about 8,200 major sources that emit 100 tons per 

year or more of criteria pollutants (which are 

regulated under SIPs). In addition, many smaller 

sources are (or, as EPA promulgates additional 

regulations, will be) covered by new source 

performance standards under section 111 of the Act, 

hazardous air pollutant standards under section 112 of 

Act, and nonattainment provisions of this legislation. 

By comparison, under the Clean Water Act, some 70,000 

sources receive permits, including more than 16,000 

major sources. Although many air pollution sources 

have more emission points than water pollution 

sources, the additional workload in managing the air 

pollution permit system is estimated to be roughly 

comparable to the burden that States and EPA have 

successfully managed under the Clean Water Act. 

S. Rep. 101–228, at 353 (1990). 27 Sen. Mitchell, the Senate 

Majority Leader, stated that he expected “over 10,000 permits 

[to] . . . be issued under this program.” 136 Cong. Rec. S3233-

03 (March 27, 1990). Others in Congress had similar estimates. 

See, e.g., 136 Cong. Rec. S3162-04 (“thousands and thousands of 

permit applications ... will be required to be submitted”) 

(statement of Sen. Nickles).. 

Furthermore, the legislative history indicates that 

 27 The House Committee on Energy and Commerce acknowledged that it was “uncertain 

about the magnitude of permit applications likely to be submitted under the bill initially and 

thereafter in each State or to EPA,” H. Rep. 101-490 p. 346.
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

195

Congress did not contemplate that large numbers of very small 

sources would be subject to title V’s requirements. This 

becomes clear by reviewing the legislative history of a 

companion piece of legislation to the operating permits 

provisions that Congress enacted into CAA section 507, which is 

the “Small business stationary source technical and 

environmental compliance assistance program.” CAA section 507. 

Under this provision, sources that, among other things, “are not 

[] major stationary source[s]” and that emit less than 50 tpy of 

any regulated pollutant, as well as less than 75 tpy or all 

regulated pollutants, are eligible for assistance under CAA 

section 507. CAA section 507(c)(1). The House Committee Report 

described this provision – including what types of sources it 

expected this provision to benefit -- as follows: 

New section [507] is a small source/small 

business provision added by the Committee. It seeks to 

help small businesses to comply with the problems that 

are likely to occur under the Act as amended by this 

bill. For purposes of this section, small businesses 

or small emitters are defined as sources that are 

emitting 100 tons or less per year and that have a 

number of employees that would qualify them for 

assistance from the Small Business Administration 

(SBA). As we look to the future of environmental 

protection under the Act, we take special steps here 

to ensure that it is possible for these small 

businesses to comply with minimum hassle and in 

recognition of the problems that are unique to them. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

196

Such small businesses include printers, furniture 

makers, dry cleaners, and millions of other small 

businesses in this country. 

House Committee Report, H.R. 101-590, at 354. In this 

manner, the House Committee Report made clear that it expected 

“millions of ... small businesses” -- including “furniture makers, 

dry cleaners” and many others -- to benefit from the CAA section 

507 small source/small business program, but Congress did not 

expect them to become subject to the operating permit 

requirements of title V because their emissions fell below 100 

tpy, which is, in general, the threshold for title V 

applicability. 

The legislative history of title V confirms that Congress 

viewed a principal purpose of title V as providing a vehicle to 

compile the requirements applicable to the source. As the 

report of the House Committee on Energy and Commerce (“House 

Committee Report”) stated, ‘‘It should be emphasized that the 

operating permit to be issued under this title is intended by 

the Administration to be the single document or source of all of 

the requirements under the Act applicable to the source.” H.R. 

Rep. No. 101–490, at 351 (1990). Combined with the source’s 

reporting requirements, this compilation of applicable 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

197

requirements would facilitate public awareness of a source’s 

obligations and compliance and would facilitate compliance and 

enforcement. 

On the Senate side, Sen. Chafee, one of the floor managers 

of the bill, made a similar point: 

The permits will serve the very useful function 

of gathering and reciting in one place -- the permit 

document itself -- all of the duties imposed by the 

Clean Air Act upon the source that holds the permit. 

This would clearly be an improvement over the present 

system, where both the source and EPA must search 

through numerous provisions of state implementation 

plans and regulations to assemble a complete list of 

requirements that apply to any particular plant.... 

Once these permits are in place, plant managers 

will be better able to understand and to follow the 

requirements of the Clean Air Act. At the same time, 

EPA will be better able to monitor how well each plant 

is complying with those requirements. This is a highly 

sensible approach for all concerned. 

136 Cong. Rec. S2030-02 (March 5, 1990) (statement of Sen. 

Chafee). Sen. Lieberman made a similar statement. 136 Cong. 

Rec. 3162-04 (March 26, 1990) (statement of Sen. Lieberman). 

Thus, a central purpose of the title V permit program is to 

compile all the requirements applicable to the source into a 

single place, the permit. Implicit in this purpose is that the 

sources subject to title V will have applicable requirements to 

be compiled. As Sen. Chafee directly stated, “[T]he vast 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

198

majority of these permit applications will ... , in all 

likelihood, only codify the existing requirements of the 

applicable State implementation plan.” 136 Cong. Rec. S2715-04 

(March 20, 1990) (statement of Sen. Chafee). 

More broadly, the legislative history also indicates 

congressional concern about the costs of permitting for small 

businesses, and a determination to minimize those costs to the 

extent possible. This concern is reflected in several 

provisions of title V. For example, section 502(a) authorizes 

EPA to exempt all or part of a source category – except for any 

major source -- from the title V permit program if EPA “finds 

that compliance with [title V] requirements is impracticable, 

infeasible, or unnecessarily burdensome on such categories.” 

Similarly, the permit fee provisions include a presumptive 

minimum fee amount, but authorize an exemption from that 

presumptive amount upon a showing that a lesser amount will meet 

overall fee requirements, CAA section 502(b)(3)(B)(iv). One of 

the drafters of this provision, Rep. Wyden, explained that its 

purpose was to preserve the flexibility of states to impose 

lower fees of small businesses: 

I note that the provision on fees allows 

reductions for small sources where appropriate. The 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

199

state has some flexibility, under the general permit 

fee provisions, to adjust fee levels for any source so 

long as the average fee charged meets the statutory 

minimum. 

136 Cong. Rec. H12883 (Oct. 26, 1990) (statement of Rep. 

Wyden). See e.g., 136 Cong. Rec. H2511-02 (May 212, 1990) 

(statement of Rep. Wyden) (discussing need to “help small 

businesses through the air permit labyrinth”). 

 The legislative history also indicates that Congress was 

deeply concerned both about the need not to burden sources with 

undue costs and to assure the administrability of the title V 

program, and as a result, was determined to make the program as 

smooth-running as possible. These goals are reflected in many 

of the title V requirements, as discussed above. See, e.g., 

CAA §502(b)(6) (requiring “adequate, streamlined, and reasonable 

procedures for expeditiously determining when applications are 

complete, for processing such applications, for public notice * 

* * and for expeditious review of permit actions); CAA 

§502(b)(7) (includes a “hammer” provision designed to reinforce 

timely permit issuance); CAA §502(b)(9)-(10) (limiting 

circumstances under which permit revision is required; requiring 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

200

revision to occur “as expeditiously as practicable;” including 

operational flexibility provisions). 

The legislative history confirms that these provisions were 

designed to reduce costs to sources and promote 

administrability. The “Chafee-Baucus Statement of Senate 

Managers” for the bill explained the purpose of the CAA section 

502(b)(6) requirement for “[a]dequate, streamlined, and 

reasonable procedures for expeditious[]” permit actions as 

follows: 

[M]uch concern has been expressed that this new 

permitting process will unduly delay the proper 

functioning of many sources, and we intend to mitigate 

any delay by directing that the process be 

expeditious. 

 In addition to this general directive for expeditious 

processing, we mandate in new section 503 that 

permitting authorities approve or reject permit 

applications within certain specified time periods 

following filing. In this fashion, we have taken 

explicit steps to protect against undue delays. 

136 Cong. Rec. S16895-01 [S16938?] (statement of Sen. Chafee). 

The same statement explained that the permit revision procedures 

of CAA section 502(b)(9) reflect a – 

careful effort to ensure that the permit program works 

effectively and efficiently. Succinctly, this 

provision accommodates two competing concerns. On the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

201

one hand, it is important to ensure that permit 

requirements remain up-to-date as the provisions of 

the Clean Air Act are developed and new requirements 

are imposed. On the other hand, it also is important 

to be sure that we do not reduce the permit program to 

a shambles by requiring sources to engage in a 

continuous process of revising their permits as these 

new requirements are imposed. 

136 Cong. Rec. 16895-01 (Oct. 27, 1990) (Chafee-Baucus 

statement of Senate Managers) (statement of Sen. Chafee). 

 In addition, these concerns were at the bottom of the 

following statement by Sen. Chafee, in which he described how 

the bill’s drafters had revised it in response to a concern by 

industry that an earlier version of the bill would have put 

undue costs on industry: 

We have also heard concerns from industry that S. 

1630 would burden sources unduly by requiring them to 

submit-along with their permit applications-plans 

explaining how they intend to comply with all 

requirements of the Clean Air Act that apply to them. 

But, Mr. President, we emphatically do not intend 

to burden industry with preparation and submission of 

unnecessary compliance plans. The substitute clarifies 

that any compliance plans would address only those 

matters by which the sources would comply with new 

requirements imposed by this act as it is finally 

signed into law. These plans would not need to address 

compliance with any existing Clean Air Act 

requirements, unless the source is in violation of 

those requirements. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

202

136 Cong. Rec. S2030-02 (March 5, 1990) (statement of Sen. 

Chafee). 

As another indication of congressional concern over 

administrability, Congress recognized that at the beginning of 

the program, large numbers of permit applications might 

overwhelm the permitting authorities. To protect against this, 

Congress included in CAA section 503(c) a phase-in schedule for 

permitting authorities to act on the initial set of permit 

applications. Under 503(c), permitting authorities were not 

required to act on the initial set of permit applications within 

18 months after it received the application, but rather could 

act on one-third of them on an annual basis over a three-year 

period. Sen. Chafee, in describing an early version of this 

provision – which would have allowed permitting authorities to 

phase-in the submission of permit applications – explained that 

its purpose was “to avoid a logjam of permit applications[,] ... 

ensure that [regulatory] gridlock can be avoided, and [ensure] 

that the permitting process will work with a minimum of 

disruption and delay.” 136 Cong. Rec.,S2106 (March 5, 1990) 

(statement of Sen. Chafee). 

 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

203

(3) Title V regulatory history 

 Congress enacted title V as part of the 1990 Clean Air Act 

Amendments. Under its applicability provisions, as discussed 

above, title V applies to any “major source,” defined, as 

relevant here, under CAA sections 501(2)(B) and 302(j), as “any 

stationary facility or source of air pollutants which directly 

emits, or has the potential to emit, one hundred tons per year 

or more of any air pollutant....” 

 EPA’s regulations mirror the CAA definitional provisions. 

The regulations provide that a title V program must provide for 

permitting “[a]ny major source,” 40 CFR 70.3(a), defined, as 

relevant here, as “[a] major stationary source of air 

pollutants, as defined in section 302 of the Act, that directly 

emits or has the potential to emit, 100 tpy or more of any air 

pollutant....” 40 CFR 70.2. 

 However, since 1993, EPA has interpreted the applicability 

provisions more narrowly. At that time, shortly after title V 

was enacted, EPA issued a guidance document making clear that it 

interprets this requirement to apply to sources of pollutants 

“subject to regulation” under the Act. EPA previously 

articulated its interpretation that this title V permitting 

requirement applies to “pollutants subject to regulation” in a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

204

1993 memorandum from EPA’s air program. Memorandum from Lydia 

N. Wegman, Deputy Director, Office of Air Quality Planning and 

Standards, U.S. EPA, “Definition of Regulated Air Pollutant for 

Purposes of Title V” (Apr. 26, 1993) (Wegman Memorandum). The 

interpretation in this memorandum was based on: (1) EPA’s 

reading of the definitional chain for “major source” under title 

V, including the definition of “air pollutant” under section 

302(g) and the definition of “major source” under 302(j); (2) 

the view that Congress did not intend to require a variety of 

sources to obtain title V permits if they are not otherwise 

regulated under the Act (see also CAA section 504(a), providing 

that title V permits are to include and assure compliance with 

applicable requirements under the Act); and (3) consistency with 

the approach under the PSD program. 

While the specific narrow interpretation in the Wegman 

Memorandum of the definition of “air pollutant” in CAA section 

302(g) is in question in light of the holding in the 

Massachusetts case (finding this definition to be “sweeping”), 

EPA believes the core rationale for its interpretation of the 

applicability of title V remains sound. EPA continues to 

maintain its interpretation, consistent with CAA sections 

302(j), 501, 502 and 504(a), that the provisions governing title 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

205

V applicability for “a major stationary source” can only be 

triggered by emissions of pollutants subject to regulation. 

This interpretation is based primarily on the purpose of title V 

to collect all regulatory requirements applicable to a source 

and to assure compliance with such requirements, see, e.g., CAA 

section 504(a), and on the desire to promote consistency with 

the approach under the PSD program. 

 In the Tailoring Rule notice of proposed rulemaking, EPA 

acknowledged the Wegman Memorandum and affirmed the memorandum’s 

continued viability, stating that “EPA continues to maintain 

this interpretation.” 74 Fed. Reg. 55,300, col. 3, fn. 8; see 

also 75 Fed. Reg. at 17022-23 (Interpretive Memorandum 

Reconsideration). 

5. Application of the “absurd results” doctrine for the PSD 

program 

Having reviewed the factual background, legal doctrines, 

and the key components of the PSD and title V programs, we now 

turn towards interpreting the PSD and title V requirements in 

accordance with the Chevron framework, accounting for the 

applicable legal doctrines. We begin with the “absurd results” 

doctrine, and apply it first to the PSD requirements. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

206

In this action, we finalize, with some refinements, the 

“absurd results” basis we proposed. Specifically, we are 

revising our regulations to limit PSD applicability to GHG 

emitting sources by revising the regulatory term, “major 

stationary source,” and although our revised regulations do not 

accord with a literal reading of the statutory provisions for 

PSD applicability, which are incorporated into the definition of 

“major emitting facility,” we have concluded that based on the 

“absurd results” doctrine, a literal adherence to the terms of 

this definition is not required. A literal adherence would not 

reflect congressional intent for PSD applicability. Instead, we 

may limit PSD applicability for GHG emitting sources through the 

tailoring approach because that either best reflects or at least 

reasonably reflects congressional intent. 

a. Congressional Intent for PSD Program 

To reiterate, for convenience, CAA §169(1) defines a “major 

emitting facility” to include “any ... source[] [that] emit[s], or 

ha[s] the potential to emit, [depending on the source category], 

one hundred [or two hundred fifty] tons per year or more or more 

of any air pollutant.” CAA § 169(1). We also reiterate that, 

as discussed above, beginning with our initial rulemaking in 

1977-1978 to implement the PSD program we have narrowed this 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

207

definition by reading into it the limitation that a source is 

subject to PSD only if the air pollutants in question are 

subject to regulation under another Clean Air Act provision. We 

have maintained this approach to the present time through 

several additional rulemaking actions, albeit with refinements 

not here relevant, and in all the various rulemakings, our 

approach has never been seriously questioned by stakeholders. 

As the U.S. Supreme Court recently stated in upholding an EPA 

approach in another context: “While not conclusive, it surely 

tends to show that the EPA’s current practice is a reasonable 

and hence legitimate exercise of its discretion . . . that the 

agency has been proceeding in essentially this fashion for over 

30 years.” Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498, 

1509 (2009) (citations omitted). Under the current regulations, 

PSD applies to a “major stationary source” (a term that EPA 

employed as the regulatory implementation of the statutory 

term, “major emitting facility”), which is defined as a source 

that, in general “emits, or has the potential to emit, 

[depending on the source category], 100 [or 250] tons per year 

or more of any regulated NSR pollutant,” 51.166(b)(1)(i)(a)-(b); 

and the term “regulated NSR pollutant” includes, in general, 

pollutants regulated under the NAAQS, the NSPS, and title VI, as 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

208

well as “[a]ny pollutant that is ... subject to regulation under 

the Act.” 51.166(b)(49)(iv). EPA is not re-opening this 

regulation or its interpretation in this action. 

Under the current interpretation of the PSD applicability 

provision, EPA’s recent promulgation of the light-duty vehicle 

rule will trigger the applicability of PSD for GHG sources at 

the 100/250 tpy threshold levels as of January 2, 2011. This is 

because PSD applicability hinges on the definition of “major 

emitting facility,” which, under EPA’s long-standing narrowing 

interpretation, but absent further tailoring, applies PSD to 

sources of any air pollutant subject that is subject to 

regulation under another provision of the CAA.28 EPA’s 

promulgation of the light-duty vehicle rule means that GHGs will 

become subject to regulation on the date that the rule takes 

effect, which will be January 2, 2011. 

But absent tailoring, the January 2, 2011 trigger date for 

GHG PSD applicability will subject an extraordinarily large 

number of sources, more than 81,000, to PSD each year, an 

increase of almost 300-fold. And the great majority of these 

 

28 That GHG will become subject to regulation moots, so far as GHGs are concerned, any issue 

as to the validity of EPA’s narrowing the term “any air pollutant” in the definition of “major 

emitting facility” by reading into the term “subject to regulation under the Clean Air Act.” 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

209

new sources will be small commercial or residential sources. We 

believe that for many reasons, this result is anathema to 

congressional intent for the PSD program, and in fact would 

severely undermine what Congress sought to accomplish with the 

program. As a result, under our Chevron analysis, accounting 

for the “absurd results” doctrine, the statutory definition for 

“major emitting facility” (as narrowed to include “subject to 

regulation”) should not be read to apply to all GHG sources at 

or above the 100/250 tpy threshold as of the January 2, 2011 

date. Rather, the definition of “major emitting facility” 

should be tailored so that it applies to GHG sources on a 

phased-in basis, with the largest sources first, as we describe 

in this rule. 

As explained above, Chevron step 1 calls for a 

determination of congressional intent, and the courts consider 

the best indicator of congressional intent to be the plain 

meaning of the statute. However, the U.S. Supreme Court has 

held that the plain meaning of a statutory provision is not 

conclusive “in the ‘rare cases [in which] the literal 

application of a statute will produce a result demonstrably at 

odds with the intentions of the drafters’ ... [in which case] the 

intention of the drafters, rather than the strict language, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

210

controls.” United States v. Ron Pair Enterprises, 489 U.S. 235, 

242 (1989). To determine whether “the intentions of the . . . 

drafters” differ from the result produced from “literal 

application” of the statutory provisions in question, the courts 

may examine the overall context of the statutory provisions, 

including whether there are related statutory provisions that 

either conflict or are consistent with that interpretation, and 

including whether there is legislative history that exposes what 

the legislature meant by the terms in question. In addition, 

the courts may examine whether a literal application of the 

provisions produces a result that the courts characterize 

variously as absurd, futile, strange, or indeterminate, and 

therefore so illogical or otherwise contrary to sensible public 

policy as to be beyond anything Congress would reasonably have 

intended. In such cases, the literal languge cannot be said to 

reflect the intention of the drafters, and therefore does not 

control. See United States v. Ron Pair Enterprises, 489 U.S. 

235, 242-43 (1989); Griffin v. Oceanic Contractors, Inc., 458 

U.S. 564, 571 (1982). 

 Here, applying the definition of “major emitting 

facility” without tailoring – that is, applying PSD to GHG 

sources at the 100/250 tpy level without tailoring -- would be 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

211

contrary to congressional intent as found in the statutory 

provisions and legislative history, especially as those 

provisions and history are viewed in light of the results that 

would occur from applying PSD to those sources. Congress 

established the PSD program in large measure because it was 

concerned that around the country, industrial development, which 

was confronting barriers locating in nonattainment areas (that 

is, areas that do not meet the NAAQS), would attempt to locate 

in clean air areas (that is, attainment areas or unclassifiable 

areas), but that as a consequence, the clean air areas would see 

their air quality deteriorate to the point where they, too, 

would no longer meet the NAAQS. The end result would be the 

spread of environmental and health problems to those formerly 

clean air areas, as well as more barriers to further industrial 

development. With these concerns in mind, Congress designed the 

PSD program to have a primary focus of requiring newly 

constructing or modifying sources in areas with air quality that 

meets the NAAQS (or that is unclassifiable) to analyze their 

emissions of NAAQS pollutants and to implement controls as 

needed to assure that those emissions do not significantly 

deteriorate air quality. Many of the PSD requirements, and much 

of the discussion in the legislative history, reflect these 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

212

aspects of the PSD program. E.g., CAA sections 162, 163, 164, 

165(a)(3), 165(d)(2), 165(e), 166; see generally H. Rep. 95-294, 

95th Cong., 1st Sess. (1977) 103-78. 

Congress also designed the PSD program to impose controls 

on non-NAAQS pollutants, through the requirement under CAA 

section 165(a)(4) that the source be “subject to the best 

available control technology [(“BACT”)]for each pollutant 

subject to regulation under this chapter emitted from, or which 

results from, such facility.” For example, when Congress 

enacted the PSD provisions in 1977, sources emitting hazardous 

air pollutants (“HAPs”) were required to implement BACT for 

those pollutants, although in the 1990 Clean Air Act Amendments, 

Congress redesigned CAA section 112, which includes the 

requirements for HAPs, and excluded HAPs from PSD. CAA § 

112(b)(6). 

Congress was keenly aware that the PSD program needed to 

serve two purposes: protect the environment and promote 

economic growth. Congress explicitly identified these two goals 

in the “purposes” section of the PSD provision, CAA § 160, and 

various PSD requirements clearly reflect them. For example, to 

protect economic growth, the PSD program includes a one-year 

limitation on the time that the permitting authority has act on 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

213

permit applications. To protect the environment, in addition 

including many provisions that focus on NAAQS pollutants, the 

PSD program requires that the preconstruction permit impose 

emission limits that reflect best available control technology 

(“BACT”) for each pollutant subject to regulation under another 

CAA provision implement. CAA section 165(a)(4). This BACT 

provision also makes clear, by its terms, that although Congress 

designed the PSD program primarily with NAAQS pollutants in 

mind, Congress also intended that sources subject to PSD to 

control the emissions of their other pollutants. The D.C. 

Circuit has recognized the twin goals of environmental 

protection and economic development that underlie PSD, and has 

upheld EPA interpretations of the PSD program that reflect a 

balancing of those goals. See, e.g., New York v. EPA, 413 F.3d 

3, 27 (D.C. Cir.), rehearing en banc den. 2005 U.S. App. LEXIS 

27103, (2005). 

Congress was also keenly aware that the PSD analyses and 

controls that it was mandating had to be implemented on a 

source-by-source basis, and that this process would be expensive 

for sources. As a result, Congress intended to limit the PSD 

program to large industrial sources because it was those sources 

that were the primary cause of the pollution problems in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

214

question and because those sources would have the resources to 

comply with the PSD requirements. Congress’s mechanism for 

limiting PSD was the 100/250 tpy threshold limitations. Focused 

as it was primarily on NAAQS pollutants, Congress considered 

sources that emit NAAQS pollutants in those quantities generally 

to be the large industrial sources to which it intended PSD be 

limited. 

That Congress paid careful attention to the types and sizes 

of sources that would be subject to the PSD program and designed 

the thresholds deliberately to limit the program’s scope is 

evident from the legislative history. The Senate side saw floor 

statements and discussion on several occasions, as well as 

discussion in the Committee Report, all of which were clear in 

their insistence that PSD should apply to small sources, 

particularly commercial and residential sources: As discussed 

below, Congress scrutinized information that EPA provided as to 

types and sizes of sources, found largely in the SteigerwaldStrelow memorandum. Sen. Muskie stated that the Senate bill 

excluded “houses, dairies, farms, highways, hospitals, schools, 

grocery stores, and other such sources.” 123 Cong. Rec. 18021 

(June 8, 1977) (statement of Sen. Muskie). Sen. McLure stated 

that PSD shuld be limited to “industrial plants of significant 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

215

impact,” and should exclude ”[a] small gasoline jobber, or a 

heating plant at a community college, [which] could have the 

potential to emit 100 tons pf pollution annually.” 122 Cong. 

Rec. 24548-49 (July 29, 1976) (statement of Sen. McClure). The 

Senate Committee Report mirrored Sen. McClure’s statement, and 

concisely articulated the cost-conscious basis for the linedrawing: “[the PSD] procedure ... must include an effective 

review-and-permit process. Such a process is reasonable and 

necessary for very large sources, such as new electrical 

generating plants or new steel mills. But the procedure would 

prove costly and potentially unreasonable if imposed on 

construction of storage facilities for a small gasoline jobber 

or on the construction of a new heating plant at a junior 

college, each of which may have the potential to emit 100 tons 

of pollution annually.” S. Rpt. 95-127 at 96-97. 

The D.C. Circuit had occasion, in Alabama Power, to 

acknowledge this legislative history: "Congress's intention was 

to identify facilities which, due to their size, are financially 

able to bear the substantial regulatory costs imposed by the PSD 

provisions and which, as a group, are primarily responsible for 

emissions of the deleterious pollutants that befoul our nation's 

air." Alabama Power, 636 F.2d at 353. The Court added, “Though 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

216

the costs of compliance with [the PSD] requirements are 

substantial, they can reasonably be borne by facilities that 

actually emit, or would actually emit when operating at full 

capacity, the large tonnage thresholds specified in section 

169(1).”. Id. at 354. 

It is not too much to say that applying PSD requirements to 

GHG sources without tailoring the definition of “major emitting 

facility” would result in a program that would have been 

unrecognizable to the Congress that designed PSD. Congress 

intended that PSD be limited to a relatively small number of 

large industrial sources. Without tailoring – that is, without 

phasing in PSD and title V applicability to GHG sources so as to 

allow the development of streamlining methods and increases in 

permitting authority resources -- the PSD program would expand 

by January 2, 2011 from the current 280 sources per year to 

almost 82,000 sources, all of which would be smaller than the 

sources currently in the PSD program and most of which would be 

small commercial and residential sources. Until EPA could 

develop streamlining methods, all of the sources that would 

become newly subject to PSD – whether larger or smaller sources, 

whether industrial or commercial/residential sources -- would 

have to undergo source-specific BACT determinations for their 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

217

GHG emissions, as well as their emissions of conventional 

pollutants in amounts in excess of the significance levels. We 

estimate that the commercial and residential sources would 

incur, on average, almost $60,000 in PSD permitting expenses. 

This result would be anathema to Congress’s careful efforts to 

confine PSD to large industrial sources. 

 A closer look at the legislative history confirms the view 

that sweeping in large numbers of small commercial and 

residential sources is precisely what Congress thought it was 

avoiding by establishing the 100/250 tpy thresholds. As noted 

above, Congress relied on an EPA memorandum – the SteigerwaldStrelow memorandum -- that identified the range of industrial 

categories that EPA regulated under its program that constituted 

the precursor to the statutory PSD program, and listed both the 

estimated number of new sources constructing each year and the 

amount of pollution emitted by the “typical plant” in the 

category. The Steigerwald-Strelow memorandum makes clear that 

the 100 tpy cut-off for the 28 listed sources categories, and 

the 250 tpy cut-off for all other sources, would exclude from 

PSD a large number of sources. 122 Cong. Rec. 24548-50 (July 

29, 1976). However, virtually all of these sources in the 28 

source categories emit carbon dioxide in quantities that equal 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

218

or exceed the 100/250 tpy thresholds, and therefore would be 

swept into PSD through application of the “major emitting 

facility” definition, without tailoring. For example, we 

estimate that over 700,000 commercial facilities and 180,000 

residential facilities would exceed a PTE emission level for CO2 

of 250 tpy. 

Most telling, in this regard, is the small-sized boilers. 

The Steigerwald-Strelow memorandum identified two categories of 

these boilers, differentiated by size. The first ranges in size 

from 10 to 250 x 106

 Btu/hr, and has a “typical plant” size of 

107

 Btu/hr, with “BACT emissions from typical plant” of 53 tpy, 

and a total of 1,446 sources in the category. The second 

category ranges in size from 0.3 to 10 x 106

 Btu/hr, and has a 

“typical plant” size of 1.3 x x 106

 Btu/hr, with “BACT emissions 

from typical plant” of 2 tpy, and a total of 11,215 sources in 

the category. The memorandum discusses these two categories in 

the context of explaining which source categories exceed a size 

of 100 tpy -- and therefore would be subject to PSD if a 100 tpy 

threshold were set -- by stating, “Fortunately, most truly small 

boilers and typical space heating operations would not be 

covered.” 122 Cong. Rec. 24549 (July 29, 1976). However, these 

data and conclusions were all based on emissions of NAAQS 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

219

pollutants, the amounts of which placed these boilers well below 

the PSD threshold limitations. In general, most boilers of 

these small sizes are fired with natural gas, and a natural gas 

boiler greater than 0.5 x 106

 Btu/hr emits at least 250 tpy CO2. 

If the CO2 emissions of these small boilers are considered – as 

would occur by applying the definition of “major emitting 

facility” without tailoring -- then most of them would in fact 

be subject to PSD. Again, this result would directly contravene 

Congress’s intention to limit PSD to “industrial plants of 

significant impact.” 122 Cong. Rec. 24548-49 (statement of Sen. 

McClure). Industry raised significant concerns about the cost 

of PSD permitting if the statutory threshold were to apply for 

GHG emissions. One commenter estimated a cost of over $5 

billion and the dedication of over 17,000 FTEs to this effort. 

 Perhaps the most compelling reason why applying the PSD 

program to GHG sources without tailoring, and before the 

development of streamlining methods, would be inconsistent with 

congressional intent, is that the resulting program would prove 

unadministrable. Although the legislative history of the PSD 

program does not reveal explicit congressional concern about 

administrability issues, the Steigerwald-Strelow Memorandum, 

which identifies the source categories and numbers of sources 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

220

that were before Congress as it considered PSD, suggests that 

the program that Congress fashioned could be expected to cover 

at most a few thousand sources each year. Moreover, the Alabama 

Power court acknowledged the importance of administrability 

concerns: The Court based its holding that potential-to-emit 

for purposes of the applicability thresholds should be defined 

as emissions at full capacity with implementation of control 

equipment, in part on its view that with this definition, the 

number of sources subject to PSD would be manageable: 

Though the costs of compliance with section 165 

requirements are substantial, they can reasonably be 

borne by facilities that actually emit, or would 

actually emit when operating at full capacity, the 

large tonnage thresholds specified in section 169(1). 

The numbers of sources that meet these criteria, as we 

delineate them, are reasonably in line with EPA’s 

administrative capability. 

Alabama Power, 636 F.2d at 354. 

 However, applying PSD to GHG sources without tailoring 

would increase the size of the PSD program at least an order of 

magnitude beyond what Congress could have had any reason to 

expect, which would have been far beyond the “administrative 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

221

capability” that Alabama Power described EPA as having. 

Beyond this disconnect with congressional expectations, 

what is most important is that the extraordinarily large number 

of permit applications would overwhelm permitting authorities 

and slow their ability to process permit applications to a 

crawl. Our best estimate at present is that permitting 

authorities would need to process almost 82,000 permit 

applications per year, compared to, at most, 800 in the current 

PSD program. The total additional workload, in workhours, for 

PSD permits would be more than 19.5 million more work hours, 

compared to 150,795 work hours for the current PSD program, and 

the total additional costs for would be over $1.5 billion, 

compared with $12 million for the current PSD program. 

At proposal, we noted that the states had estimated that 

the influx of permit applications that would result from 

applying the 250 tpy threshold at actual emissions would, 

without additional resources, result in permitting delays of 

three years. In fact, as we noted at proposal, a literal 

reading of the PSD requirements would require their application 

at the 250 potential to emit level, which would result in ten 

times more permit applications than were assumed when the States 

made the three-year estimate. Further, our current estimates of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

222

the numbers of sources that would be subject to PSD requirements 

are about twice what we estimated at proposal, as described 

elsewhere. Moreover, our estimate of the number of hours that 

permitting authorities would need to process a permit 

application from a source in the commercial or residential 

sector – which is, by far, the largest single sector – is three 

and one-half times as long as we estimated at proposal. And 

under a literal reading of the statutory provisions, the 

permitting authorities would be required to implement a program 

of this size beginning on January 2, 2011, less than nine months 

from now. 

In light of these burdens, it is difficult to overstate the 

impact that applying PSD requirements literally to GHG sources 

as of January 2, 2011, without tailoring, would have on 

permitting authorities, on the PSD program, and, more broadly, 

on economic development. The number of permits that would be 

required from such an approach is so far beyond what has ever 

been seen that it is difficult to develop a meaningful picture 

of what the permitting program would look like, except to say 

that throughout the country, PSD permit issuance would be unable 

to keep up with the flood of incoming applications, resulting in 

delays that would only grow worse over time, as far into the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

223

future as the eye can see. Because PSD is a preconstruction 

program, during this time, tens of thousands of sources each 

year would be prevented from constructing or modifying. In 

fact, it is reasonable to assume that many of those sources will 

be forced altogether to abandon plans to construct or modify. 

This can be expected to be true for virtually all PSD 

applicants, from the small commercial and residential sources to 

the large industrial sources. As a result, a literal 

application of the PSD applicability provisions to GHG sources 

would have the effect of a virtual nationwide construction ban 

extending for years, with all of the adverse effects that this 

would have on economic development. 

The only possible remedies for this dismal scenario would 

be for permitting authorities to increase their PSD funding by 

over 100-fold, from $12 million to over $1.5 billion, or the 

development by EPA and the permitting authorities of 

streamlining techniques. But it is simply inconceivable that 

permitting authorities could increase their funding to those 

levels or anything close to them in the foreseeable future, 

partly because of the sheer magnitude of those levels and partly 

because of the financial challenges that States currently face. 

And, for the reasons discussed below, streamlining offers 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

224

genuine promise to improve the manageability of the PSD 

workload, but not in the very near term and not to an extent 

that has yet come into focus. 

So clear are at least the broad outlines of this picture 

that EPA did not receive any substantive comments arguing that 

permitting authorities could in fact administer the PSD program 

with the applicability requirements applied literally to GHG 

sources beginning in the very near future.29 Every permitting 

authority that addressed this issue in their comments on the 

proposed GHG Tailoring Rule stated unequivocally that it could 

not administer the PSD program at the statutory levels. For 

example, NACAA, which represents air pollution control agencies 

in 53 states and territories, provided comments on the proposed 

GHG tailoring rule that stated it “...agrees with the EPA that 

immediately attempting to implement the PSD and title V programs 

using the statutory thresholds meets the test for invoking the 

administrative necessity and absurd results doctrines.” 

Similarly, the California Air Resources Board in their comments 

on the proposed tailoring rule stated that it “...concurs with 

the U.S. EPA that if more appropriate applicability thresholds 

 29 EPA did receive comments that asserted in conclusory fashion that permitting 

authorities could administer the 100/250 tpy levels. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

225

[as opposed to the statutory thresholds] are not set for GHG it 

will not be administratively possible to implement these [the 

PSD and tile V] permitting programs”. All other state and 

local permitting agencies that commented on the proposed 

tailoring provided similar comments that they would not have the 

adequate staff capacity or resources to be able to successively 

administer their permitting programs with the addition of GHG 

emission sources at the statutory thresholds for PSD and title 

V. 

It is the many-year delays in permit issuance and the 

consequent chilling of economic development that provide perhaps 

the clearest indication that applying the PSD applicability 

provisions to GHG sources without tailoring produces absurd 

results. These effects would undermine one of Congress’s 

central purposes in establishing the PSD program, which was to 

promote development in clean air areas by large industrial 

sources (as long as they included environmental safeguards). As 

discussed above, this goal is manifest in the structure of the 

PSD provisions, and Congress even went so far as to make this 

goal explicit in the purposes section of the PSD provisions. 

But even if Congress had not been so clear, it is simply 

inconceivable that Congress could have intended the PSD program 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

226

to be applied in a way that would cause such damage to the 

national economy. 

Moreover, at the present time, there is little 

environmental benefit in subjecting large numbers of small GHG 

sources to PSD permitting requirements. They represent a 

relatively small share of the GHG inventory and the control 

options available to them, at present, are limited. As a 

result, approaches other than source-by-source permitting 

presently offer more promise for generating emissions reductions 

in an efficient manner. These approaches, which ,may be 

developed through both Federal and State efforts, include 

requirements, incentives, and educational outreach to promote 

efficiency improvements to boilers and furnaces and energy 

efficient operations, including, for example, weatherization 

programs. 

 For all these reasons, interpreting the definition of 

“major emitting facility” literally -- that is, as EPA has 

narrowed it, but without tailoring – would produce results that 

are not be consonant with, and, in fact, would severely 

undermine, congressional intent for the PSD program. These 

results may fairly be characterized as the type of absurd 

results that supports our view that the literal terms of the PSD 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

227

applicability provisions do not indicate congressional intent 

for how those provisions should applied to GHG sources. 

b. EPA’s reconciliation of applicability provisions with 

congressional intent 

EPA may tailor the definition of “major emitting facility” 

as applied to GHG sources because doing so best effectuates 

congressional intent, or at least, constitutes a reasonable 

construct of the statutory provisions.30 This tailoring will 

allow a window of time for EPA and the permitting authorities to 

develop methods to streamline PSD requirements and to ramp up 

permitting authority resources, which will allow for an orderly 

expansion of the PSD program to cover more GHG sources over time 

in a way that is manageable for both source and permitting 

authority. 

(1) Congressional intent as applied to PSD applicability to GHG 

sources 

To determine how the PSD program should apply to GHG 

sources, it is important first to ascertain what would be 

congressional intent for applying the program to GHG sources. 

 30 This tailoring, which is the subject of today’s rulemaking, is in effect a further 

narrowing of the definition, as applied to GHG sources, beyond what EPA accomplished in 

promulgating the regulatory definition that includes the “subject to regulation” limitation. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

228

Congress wrote the applicability provisions broadly,31 so that by 

their terms they would sweep in sources of many types of 

pollutants, but most of the PSD provisions and the legislative 

history indicate that Congress was primarily focused on NAAQS 

pollutants. Even so, nothing in statutory provisions provide 

conclusively that GHG emissions -- or other non-NAAQS pollutants 

– when emitted in the appropriate quantity may never trigger PSD 

applicability, and nothing in the legislative history indicates 

that Congress intended such a result. In addition, it is clear 

that Congress expected PSD to be limited to large industrial 

sources – which are the sources whose emissions are most 

important for air quality purposes -- but no provision 

explicitly imposes that limitation. Congress’s reasoning was 

that large industrial sources are best suited to handle the 

resource-intensive analyses required by the PSD program, but it 

is conceivable that under certain circumstances, other sources 

could manage the PSD requirements as well. Finally, it is 

reasonable to read into Congress’s intent that the PSD program 

be limited to a size that permitting authorities would be able 

to administer, but the permitting authorities could take certain 

 31 Indeed, as discussed elsewhere, by not limiting the applicability provisions to 

pollutants subject to regulation, Congress wrote them overly broadly. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

229

steps – including adoption of streamlining measures and ramping 

up resources – that would allow them to handle a higher volume 

of permitting. 

Accordingly, at present, we believe that congressional 

intent may be characterized as applying PSD to sources of any 

pollutants that are subject to regulation as long as those 

sources can reasonably be expected to manage PSD’s requirements 

and as long as the resulting numbers of permits can be 

reasonably accommodated by permitting authorities. As a result, 

for reasons described above, we believe that it is not consonant 

with congressional intent to apply the PSD program to GHG 

sources at the 100/250 tpy level as soon as January 2, 2011, 

when GHGs become subject to regulation through the light-duty 

vehicle rule. However, it is consonant with congressional 

intent to apply the PSD program to GHG sources on a schedule 

that begins with the largest GHG sources and gradually includes 

smaller sources over time. Thus, under this view, the tailoring 

approach is justified under Chevron step 1. However, even under 

this view of congressional intent, we are not certain at present 

whether congressional intent can be said to be clear that the 

smallest of the GHG sources – those emitting at or near the 

statutory thresholds – should be included in the PSD program. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

230

As noted elsewhere, we may explore this issue further in 

subsequent rulemaking. 

On the other hand, we recognize that it may also be 

concluded that congressional intent with respect to applying PSD 

to the entire universe of GHG sources is unclear. Under these 

circumstances, the tailoring approach is justifiable under 

Chevron step 2 as a reasonable interpretation of the statutory 

requirments. 

(2) Criteria for establishing phase-in schedule 

The phase-in schedule 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 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

231

and the permitting authorities’ ability to process permits in a 

timely fashion. That information will be based on the realworld 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, and we will gather real world- information 

about the GHG permitting process; and based on all that, we will 

expand the PSD program in a step-by-step fashion to include more 

sources over time. We intend to follow this process to 

establish both the PSD applicability thresholds and, as we 

describe next, the significance levels. 

(3) Criteria for establishing significance levels 

 The criteria for establishing the significance levels are 

the same as for establishing the major emitting facility 

thresholds. As noted above, under the applicable CAA sections, 

any physical or operational change at a stationary source that 

“increases the amount of any air pollutant emitted by such 

source” or that results in the emission of a new pollutant is 

treated as a “modification” that is subject to PSD requirements. 

Although the CAA, by its terms, treats as an “increase[]” any 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

232

amount of emissions that is greater than zero, the D.C. Circuit 

held in Alabama Power v. Costle that EPA may establish a 

threshold – called the significance level – on de minimis 

grounds for the amount of any particular pollutant that may be 

increased. 636 F.2d at 400. EPA has established significance 

levels for various pollutants and has generally established a de 

minimis basis for them. See, e.g., 45 Fed. Reg. 52,676, 52,705 

– 52,710 (August 7, 1980) In addition, the Court in Alabama 

Power authorized EPA to use an “administrative necessity” basis 

for establishing significance levels. 636 F.2d. at 400. 

To this point, we have not attempted to determine de 

minimis levels for GHGs. Instead, in today’s rulemaking, EPA is 

establishing a phase-in schedule for significance levels based 

on the “absurd results” doctrine or, alternatively, as discussed 

below, the “administrative necessity” doctrine. It is not 

necessary to establish a permanent de minimis level in today’s 

rulemaking, and attempting to do so would give rise to 

administrability problems. This is because we are considering 

establishing the major emitting facility threshold for step 3 as 

low as the 50,000 tpy CO2e level, as discussed elsewhere, and of 

course, we could eventually establish a lower level. Our 

present view is that we do not have the authority to establish 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

233

the de minimis level higher than the major emitting facility 

threshold. Accordingly, at present if we were to establish a 

permanent significance level on a de minimis basis,that level 

would be relatively low and would result in too many small 

sources submitting permit applications while the phase-in is 

occurring. This would give rise to the same problems concerning 

undue costs to the sources and administrative burdens for the 

permitting authorities for which we are fashioning a remedy. 

Accordingly, the significance levels we establish with this 

action are the lowest levels that sources and permitting 

authorities can reasonably be expected to implement at the 

present time in light of the costs to the sources and the 

administrative burdens to the permitting authorities. 

Our rationale for the implementation schedule is based on 

the combined burdens for both PSD and Title permitting purposes. 

As a result, we discuss our rationale below, after first 

describing the “absurd results” basis for our action concerning 

title V applicability to GHG sources. 

c. Other possible approaches to reconciling literal reading of 

PSD applicability provisions and congressional intent 

In addition, we recognize that commenters have suggested 

other approaches to reconciling the inconsistency between the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

234

definition of “major emitting facility” and congressional 

intent. For example, some commenters urged that the “major 

emitting facility” definition should be applied so that only 

sources that emit NAAQS pollutants in the requisite quantities 

would be subject to PSD, and sources would not be subject to PSD 

based solely on their emissions of non-NAAQS pollutants. Some 

commenters argue that this approach is mandated by several of 

the PSD provisions, read together, or at least that the relevant 

statutory provisions are ambiguous and that this approach is a 

reasonable reading of them. Under this approach, we would not 

need to phase in the application of PSD by lowering the 

applicability threshold for GHG emitters. 

Specifically, many commenters questioned whether EPA has 

the authority to regulate GHGs under the PSD provisions. 

Although the specific lines of reasoning varied somewhat from 

one commenter to another, in general, they based their arguments 

largely on CAA sections 161 and 165(a)32. Under CAA section 161: 

In accordance with the policy of section 101(b)(1), 

each applicable implementation plan shall contain 

emission limitations and such other measures as may be 

necessary, as determined under regulations promulgated 

 32 Commenters raise additional arguments, including that PSD is limited to pollutants (1) 

that cause only local effects, or (2) for which a source has been subject to an NSPS. We address 

these arguments in the RTC. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

235

under this part, to prevent significant deterioration 

of air quality in each region (or portion thereof) 

designated pursuant to section 107 as attainment or 

unclassifiable. 

Commenters point out that section 107 applies only to NAAQS 

pollutants and directs that areas be designated as attainment, 

nonattainment, or unclassifiable on a pollutant-by-pollutant 

basis. 

Under CAA section 165(a), a “major emitting facility” cannot be 

constructed “in any area to which this part applies” unless it 

meets certain requirements. According to some commenters, these 

provisions, read together, limit PSD to being triggered only for 

NAAQS pollutants that are emitted from sources in areas that are 

designated attainment or unclassifiable for those pollutants. 

Some commenters go on to take the position that NAAQS 

pollutants for which the area is designated attainment or 

unclassifiable are the only pollutants that can be regulated 

under any provision of PSD; while others take the position that 

once PSD is triggered for a source, then other, non-NAAQS, 

pollutants may be regulated under other PSD provisions, in 

particular, the BACT provision under CAA section 165(a)(4). 

These commenters agree, however, that emissions of GHGs, by 

themselves, cannot trigger PSD applicability. Finally, some 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

236

commenters state that even if the PSD provisions cannot be read 

by their terms to preclude GHGs from triggering PSD, then they 

can be read to authorize EPA to determine that GHG emissions 

should not trigger PSD. 

We recognize, as we have said elsewhere, that a primary 

purpose of the PSD provisions is to regulate emissions of NAAQS 

pollutants in an area that is designated attainment or 

unclassifiable for those pollutants. However, we do not read 

CAA sections 161 and 165(a), read in context with the PSD 

applicability provisions, as limiting PSD applicability to those 

pollutants. The key PSD applicability provision is found in 

section 165(a), which states, “No major emitting facility on 

which construction is commenced after August 7, 1977, may be 

constructed in any area to which this part applies unless 

[certain requirements are met]. A “major emitting facility” is 

defined, under CAA section 169()(1), as “any ... stationary 

source[] which emit[s], or ha[s] the potential to emit, one 

hundred [or, depending on the source category, 250] tons per 

year or more of any air pollutant.” As discussed elsewhere, EPA 

has long interpreted the term “any air pollutant” to refer to 

“any air pollutant subject to regulation under the CAA,” and for 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

237

present purposes, will continue to read the “subject to 

regulation” phrase into that term. 

Although section 165(a) makes clear that the PSD 

requirements apply only to sources located in areas designated 

attainment or unclassifiable, it does not, by its terms, state 

that the PSD requirements apply only to pollutants for which the 

area is designated attainment or unclassifiable. Rather, 165(a) 

applies, by its terms, more broadly to any pollutant that is 

subject to regulation. Moreover, two other requirements in CAA 

section 165(a) apply to pollutants broadly. Under CAA section 

165(a)(3), one of the requirements for securing a 

preconstruction permit is to demonstrate that the source’s 

emissions “will not cause, or contribute to, air pollution in 

excess of any (A) [NAAQS increment to which the PSD requirements 

apply], (B) [NAAQS] in any air quality control region, or (C) 

any other applicable emission standard or standard of 

performance under this chapter.” Subparagraph (B), by its 

terms, applies to NAAQS pollutants for which the area is 

designated nonattainment, and therefore are outside of the PSD 

program. Most importantly, subparagraph (C), by its terms and 

its differentiation from NAAQS pollutants under subparagraph 

(C), clearly applies to non-NAAQS pollutants. For example, by 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

238

its terms this provision requires a demonstration that a 

landfill seeking a PSD permit will comply with emission 

limitations for “municipal solid waste landfill emissions.” 

In addition, CAA section 163(a)(4) includes as a PSD 

requirement that “the proposed facility is subject to the best 

available control technology for each pollutant subject to 

regulation under this chapter emitted from, or which results 

from, such facility. Section 163(a)(4)’s broad reference to 

“each pollutant subject to regulation under this chapter” 

strongly indicates that it applies to non-NAAQS pollutants, as 

long as they are regulated under other provisions of the Act.33 

Indeed, the very existence of this provision makes clear that 

Congress knew how to limited the scope of “any air pollutant” 

when it intended to do so. 

To return to sections 161 and 165(a), which commenters rely 

on as the cornerstone of their argument, commenters in effect 

take the position that Congress intended the geographic 

references in these provisions – that is, the references to 

 33 We find no support for the proposition raised by some commenters that this provision 

is limited to “NAAQs” pollutants. To the contrary, “under this chapter” unambiguous signals an 

intent to cover any pollutant regulated under the Act. Had Congress intended a narrower focus, 

they would have specified “any NAAQs pollutant” or any pollutant subject to regulation under 

this Part (PSD)” 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

239

areas designated as attainment or unclassifiable – to limit the 

scope of the permitting provisions. We think it unpersuasive 

that Congress would have taken such an indirect, and silently 

implied, route to limit the scope of the permitting provisions, 

which, as noted above, apply broadly by their terms. Had 

Congress intended to limit PSD permitting in the manner urged by 

commenters, it certainly could have done so directly, such as by 

limiting PSD permitting to “any pollutant for which an area is 

designated attainment or unclassifiable.” Indeed, in other 

sections of the CAA, Congress did directly limit the scope of 

pollutant applicability by specifiying which pollutants are or 

are not subject to the provision. See, e.g., 111(d) 

(performance standards for existing sources apply only to 

pollutants other than NAAQs or hazardous air pollutants), 

112(a)(1) (applying air toxics requirements in section 112 to 

sources that emit above the specified tonnage thresholds of 

“hazardous air pollutants”). 

In addition, although section 161 requires that SIPs 

contain emission limitations and other measures as necessary to 

prevent significant deterioration in areas designated as 

attainment or unclassifiable, it does not limit SIPs to only 

those measures. Moreover, section 161 should be read in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

240

conjunction with section 110(a)(2)(C), which establishes the 

basic requirement that SIPs include PSD requirements. Section 

110(a)(2)(C) provides that each SIP shall -- 

Include a program to provide for the enforcement of 

the measures described in subparagraph (A), and 

regulation of the modification and construction of any 

stationary source within the areas covered by the plan 

as necessary to assure that [NAAQS] are achieve, 

including a permit program as required in parts C and 

D of this subchapter. 

Subparagraph (A), in turn, requires SIPs to include 

“enforceable emission limitations and other control measures, 

means, or techniques ... as may be necessary or appropriate to 

meet the applicable requirements of this chapter”. It is clear 

from subparagraph (C) of section 110(a)(2), read in conjunction 

with subparagraph (A), that SIPs may contain provisions to meet 

requirements other than those related to the NAAQS (that is, 

subparagraph (A) requires control measures “to meet the 

applicable requirements of this chapter”), and that SIPs must 

include “a permit program as required in part[] C.” That permit 

program, in turn, must include the requirements in section 

165(a)(3)(C) and (4) that, by their terms, apply to non-NAAQS 

pollutants. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

241

A further indication that the PSD requirements apply to 

non-NAAQS pollutants may be found in Congress’s addition in the 

1990 CAA Amendments of the limitation in section 112(b)(6) that 

“The provisions of part C of this subchapter (prevention of 

significant deterioration) shall not apply to pollutants listed 

under this section,” that is, hazardous air pollutants. By 

adding this provision, Congress clearly recognized that 

hazardous air pollutants had been subject to the PSD provisions. 

The D.C. Circuit, in Alabama Power v. Costle, 636 F.2d 323, 361 

n.90 (D.C. Cir. 1980) indicated that PSD applies to hazardous 

air pollutants. 

In addition, it should not be overlooked that we have 

applied PSD to non-NAAQS pollutants since the inception of the 

program over 30 years ago. For example, prior to the 1990 CAA 

Amendments, PSD applied to hazardous air pollutants regulated 

under CAA section 112; and over the years, EPA has established 

significance levels for fluorides, sulfuric acid mist, hydrogen 

sulfide, total reduced sulfur, reduced sulfur compounds, 

municipal waste combustor organics, municipal waste combustor 

metals, municipal waste combustor acid gases, and municipal 

solid waste landfill emissions, see 40 CFR 51.166(b)(23)(i); and 

EPA has proposed a significance level for ozone depleting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

242

substances. See 61 Fed. Reg. 38,307/2 (July 23, 1996). Of 

course, the basis for all these actions is PSD’s applicability 

to these non-NAAQS air pollutants. We are not aware that EPA’s 

actions in establishing significance levels for these pollutants 

gave rise to challenges on grounds that the PSD provisions do 

not apply to them. 

Accordingly, we reject the argument that section 165 must 

be, or may reasonably be, limited in scope to pollutants for 

which an area has been designated as attainment or 

unclassifiable. Rather, the PSD applicability provision – the 

definition of “major emitting facility” in CAA section 169(1) – 

applies by its terms (as we have narrowed them through 

regulation) to sources emitting any air pollutant subject to 

regulation, and is not limited to any NAAQS air pollutant. Our 

research has not disclosed any explicit statements in the 

legislative history that Congress intended to limit PSD 

applicability to sources of NAAQS pollutants. 

We recognize, as we discuss at length elsewhere in today’s 

notice, that applying the PSD applicability provisions literally 

to GHG sources is not consistent with, and in fact would 

undermine, congressional intent. We further believe that the 

tailoring approach we adopt in this rulemaking most closely 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

243

gives effect to congressional intent and therefore best 

reconciles the statutory provisions with congressional intent. 

In any event, we did not include the NAAQS approach as 

advocated by commenters in our notice of proposed rulemaking, 

and so we could not proceed to adopt it in today’s final action. 

However, we are not inclined to reject the possibility that some 

approach other than the phase-in approach that we adopt today 

could merit further exploration under the “absurd results” 

doctrine. Therefore, while we will proceed to implement the 

approach described in today’s rulemaking, we intend to publish a 

supplemental notice of proposed rulemaking in the near future, 

in which we solicit additional comment on whether we have 

authority to adopt some other approach under the “absurd 

results” doctrine on grounds of consistency with congressional 

intent. If we decide to change our approach, that could have 

important ramifications for whether we will promulgate lower 

thresholds in step 3 or subsequently. 

6. Application of the “absurd results” doctrine for the title V 

program 

 Having discussed the application of the Chevron framework, 

taking account of the “absurd results” doctrine, for the PSD 

applicability requirements, we now turn towards applying the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

244

same approach to the title V applicability requirements. 

Because of the parallels between the PSD and Title applicability 

provisions, much of the discussion below parallels the 

discussion above of PSD. As with PSD, we finalize, with some 

refinements, the “absurd results” basis we proposed. 

Specifically, we are revising our regulations to limit title V 

applicability to GHG emitting sources by revising the regulatory 

term, “major source,” and although our revised regulations do 

not accord with a literal reading of the statutory provisions 

for title V applicability, which are incorporated into the 

statutory definition of “major source,” we have concluded that 

based on the “absurd results” doctrine, a literal adherence to 

the terms of this definition is not required. A literal 

adherence would not reflect congressional intent for title V 

applicability. Instead, we may limit title V applicability for 

GHG emitting sources in a way that is reasonably reflective of 

congressional intent. 

 To reiterate, for convenience, the title V applicability 

provisions provide that after the effective date of a title V 

program, it is unlawful for any person to operate a "major 

source" without a title V permit, §502(a), and define a "major 

source" to include "any major stationary facility or source of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

245

air pollutants which directly emits, or has the potential to 

emit, one hundred tons per year or more of any air pollutant." 

CAA §501(2)(B) and §302(j). 

Under the current interpretation of the title V 

applicability provision, EPA’s recent promulgation of the lightduty vehicle rule will trigger the applicability of title V for 

GHG sources at the 100 tpy threshold levels as of Jan. 2, 2011. 

This is because title V applicability hinges on the definition 

of “major source,” which, under EPA’s long-standing narrowing 

interpretation, but absent further tailoring, applies title V to 

sources of any air pollutant that is subject to regulation under 

another provision of the CAA.34 EPA’s promulgation of the lightduty vehicle rule means that GHGs will become subject to 

regulation on the date that the rule takes effect, which will be 

January 2, 2011. 

But absent tailoring, the January 2, 2011 trigger date for 

GHG PSD applicability will see an extraordinarily large number 

of sources -- some 6.1 million -- become subject to title V, an 

increase of over 400-fold over the 14,700 sources that currently 

 

34 That GHG will become subject to regulation moots, so far as GHGs are concerned, any issue 

as to the validity of EPA’s narrowing the term “any air pollutant” in the definition of “major 

source” by reading into the term “subject to regulation” under the Clean Air Act. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

246

are subject to title V each year. The great majority of these 

new sources will be small commercial or residential sources. 

We believe that for many reasons, this result is anathema 

to congressional intent for the title V program, and in fact 

would severely undermine what Congress sought to accomplish with 

the program. As a result, under Chevron, accounting for the 

“absurd results” doctrine, the statutory definition for “major 

source” (as EPA has already narrowed it to refer to any air 

pollutant “subject to regulation”) should not be read to apply 

to all GHG sources at or above the 100 tpy threshold as of the 

January 2, 2011 date. Rather, the definition of “major source” 

should be tailored so that it applies to GHG sources on a 

phased-in basis, with the largest sources first, as we describe 

in today’s rule. 

a. Congressional Intent for Title V Program 

Applying the definition of “major source” without tailoring 

– that is, applying title V to GHG sources at the 100 tpy level 

without tailoring -- would be contrary to congressional intent 

as found in the statutory provisions and legislative history, 

especially as those provisions and history are viewed in light 

of the results that would occur from applying title V to those 

sources. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

247

As we said, above, in a similar circumstance involving the 

PSD program, applying title V requirements to GHG sources 

without tailoring the definition of “major source” – and, as 

discussed below, without streamlining the title V requirements 

or allowing for time for permitting authorities to ramp up 

resources -- would result in a program unrecognizable to the 

program that Congress intended, and one that would be flatly 

unadministrable. Without tailoring, the PSD program would 

expand from the current 14,700 sources to some 6.1 million, with 

the great majority of the sources being small commercial and 

residential sources that not only have never been permitted 

before, but that in many cases have no applicable requirements 

under the Clean Air Act to include in the permit. In the next 

several sections, we will walk through some of the specific ways 

that this literal application of title V would not only differ 

from, but would undermine, congressional intent. But the big 

picture is readily drawn: The influx of millions of permit 

applications would do nothing less than overwhelm the program 

Congress finely crafted for thousands of sources, with its 

multi-step deadlines measured in days and months, its multiple 

mandates for expeditious permit processing, its nuanced 

limitations on the need for permit revisions, its efforts to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

248

save smaller sources permit fees. Regulatory gridlock, 

precisely what Congress strove to avoid, would result. 

 Most visibly, interpreting the applicability provisions 

literally to include GHG sources at the 100/250 tpy levels would 

revise the program from what Congress envisioned in three major 

ways, each of which was discussed above: 

• It would expand the program to cover several-hundredfold more sources than Congress anticipated 

• It would expand the program to cover very small 

sources that Congress expected would not be included 

in the program 

• It would expand the program so that the large majority 

of sources have empty permits, that is, permits 

without applicable requirements. 

Revising the program in this way through a literal 

interpretation of the applicability 

provisions – without tailoring the applicability requirements 

and without streamlining of program requirements -- is clearly 

inconsistent with Congress’s conception of the program’s scope, 

and these inconsistencies are nothing less than foundational. 

Most importantly, the program that would result would be unduly 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

249

costly to sources and impossible for permitting authorities to 

implement, and therefore would frustrate the purposes that 

Congress intended to achieve with the program that it did 

design. 

As discussed above, Congress was fully aware that with the 

title V program, it was subjecting sources and permitting 

authorities to additional costs and administrative burdens, and 

it was fully aware of concerns that absent careful design, the 

program could become a formula for regulatory gridlock. 

Determined to make the program workable, Congress crafted the 

provisions to be efficient and workable. 

However, if title V were to apply to GHG sources at the 100 

tpy level, until EPA could develop streamlining methods, all of 

these sources newly subject to title V would need to apply for 

permits. We estimate that the commercial and residential 

sources would incur, on average, expenses of $23,370, while an 

industrial source would incur expenses of $46,350, to prepare a 

permit application and receive a permit. The great majority of 

these sources would be small commercial and residential sources 

of the type that Congress did not expect would be included in 

title V, and we estimate that the great majority of them would 

not have applicable Clean Air Act requirements to include in 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

250

their permits. The overall cost to all 6.1 million sources 

would be a staggering $49 billion. Imposing burdens of this 

magnitude on these sources – individually and in total – would 

of course be contrary to Congress’s efforts to minimize the 

expenses of title V, especially to small sources. The magnitude 

of the costs is, in a sense, heightened because a great many of 

these sources will not have applicable requirements to include 

in their permits; therefore, much of the costs will produce 

little benefit. 

 Yet, the most important reason why applying the title V 

program to GHG sources without tailoring, and before the 

development of streamlining methods, would be inconsistent with 

congressional intent, is that the resulting program would prove 

unadministrable. Adding some 6.1 million permit applications to 

the 14,700 that permitting authorities now handle would 

completely overwhelm permitting authorities, and for all 

practical purposes, bring the title V permitting process to a 

standstill. 

 The costs to permitting authorities of this multi-millionsource program would again be staggering. On average, and 

without streamlining, a permitting authority would expend 214 

hours, which would cost $9,844, to issue a permit to a 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

251

commercial or residential source; and 428 hours, which would 

cost $19,688, to issue a permit to an industrial source. In 

all, permitting authorities would face over $21 billion in 

additional permitting costs each year due to GHGs, compared to 

the current program cost of $62 million each year. 

Beyond this disconnect with congressional expectations as 

to scope of the program, what is most important is that the 

extraordinarily large number of permit applications would 

overwhelm permitting authorities and slow their ability to 

process permit applications to a crawl. As described at 

proposal, the survey of permitting authorities found that a 

literal application of the title V applicability provisions to 

GHG sources would result in permitting delays of some ten years. 

However, as we further noted at proposal, this estimate was 

based on the assumption that the applicability threshold would 

be 100 tpy actual emissions; in fact, the applicability 

threshold would be 100 tpy in potential to emit, which would 

sweep in many more sources. Moreover, as stated elsewhere, we 

currently estimate the amount of per-permit work hours for 

permitting authorities in processing title V permit applications 

to be several times higher than what we estimated at proposal. 

As with PSD, such a program is so far beyond anything within our 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

252

experience that it is difficult to give a meaningful estimate 

for how long the permitting process would take for each permit 

on average, but it is clear that the period would be many years. 

More specifically, applying title V to GHG sources without 

tailoring would be in tension with a specific CAA requirement, 

that of CAA § 503(c), which imposes a time limit of 18 months 

from the date of receipt of the completed permit application for 

the permitting authority to issue or deny the permit. It would 

be flatly impossible for permitting authorities to meet this 

statutory requirement if their workload increases from some 

14,700 permits to 6.1 million. Instead, as just noted, permit 

applications would face multi-year delays in obtaining their 

permits. 

Moreover, these delays would undermine the overall 

statutory design that promotes the smooth-running of the 

permitting process, and the very purpose of the title V program 

itself. As noted elsewhere, Congress intended through title V 

to facilitate compliance by establishing an operating permit 

program that requires the source to combine all of its CAA 

requirements, and explain how it will assure compliance with 

such requirements. Congress established a comprehensive process 

to implement the operating permit program. Through this process, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

253

following the date that sources become subject to title V, they 

have one year to submit their permit applications. CAA §503(c). 

As noted, the permitting authority then has 18 months to issue 

or deny the permit. CAA §503(c). Permitting authorities must 

provide an opportunity for public comment and a hearing. CAA 

§502(b)(6). If the permitting authority proposes to issue the 

permit, the permitting authority must submit the permit to EPA, 

and notify affected states, for review. CAA §505(a)(1). EPA 

then has 45 days to review the permit and, if EPA deems it 

appropriate, to object to the permit. CAA §503(b)(1). If EPA 

does object, then the permitting authority must, within 90 days, 

revise it to meet the objections, or else EPA becomes required 

to issue or deny the permit. CAA §503(c). If EPA does not 

object, then, within 60 days of the close of the 45-day review 

period, any person may petition EPA to object, and EPA must 

grant or deny the petition within 60 days. CAA §505(b)(2). This 

set of applicant, permitting authority, and EPA actions and 

deadlines establishes the process for the prompt and efficient 

issuance of operating permits for the appropriate universe of 

sources. 

In addition, only a small fraction of these millions of 

sources will be subject to any CAA requirements due to their GHG 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

254

emissions, and we suspect that the majority will not be subject 

to any CAA requirements at all, so that although they would need 

to apply for and receive a permit, there would be no applicable 

requirements to include in the permit and thus the exercise 

would not improve compliance. But at least for an initial 

period, until resources could be ramped up and streamlining 

methods could be developed, the extraordinary numbers of these 

sources would sweep aside Congress’s carefully constructed 

program, and instead, backlog the permit authorities. The large 

numbers involved mean that this initial period would last for 

many years because it would take that long to raise the 

requisite funds and hire and train the necessary employees, as 

well as, as discussed elsewhere, develop and apply streamlining 

measures. Therefore, multi-year delays in issuance of all 

permits would ensue, for both the sources that have applicable 

requirements and that Congress clearly intended the program to 

cover, and for the millions of sources that may not be subject 

to any applicable requirements. Thus, a literal interpretation 

of the title V threshold provisions would apply title V to 

millions of sources that Congress did not intend be covered, and 

the ensuing administrative burdens – at least initially -- would 

impede the issuance of permits to the thousands of sources that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

255

Congress did intend be covered. This result is the type of 

“absurd results” from a literal application of statutory 

provisions that the courts have held should be avoided. And 

even beyond all that, the sheer magnitude of the numbers 

involved– millions of permits requiring thousands of FTEs at a 

cost to the permitting authorities of billions of dollars, all 

occurring at the time that GHGs become subject to regulation – 

makes clear that this, the result of a literal application of 

the PSD provisions to GHG sources is not what Congress in fact 

intended or could conceivably have intended. 

b. EPA’s reconciliation of applicability provisions with 

congressional intent 

EPA has concluded that the impacts of applying the literal 

definition of “major source” to GHG sources are inconsistent 

with, and in fact undermine, congressional intent for the 

applicability of the title V program. Therefore, under the 

Chevron framework, accounting for the “absurd results” doctrine, 

EPA may tailor the definition of the program to be more 

consistent with congressional intent. This section explains the 

principles and approach EPA is using to accomplish that 

tailoring so as to be consistent with congressional intent and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

256

to respond to other approaches to reconciling that were 

suggested by commenters. 

This final rule reconciles the definition of “major source” 

– as narrowed through EPA interpretation -- with congressional 

intent by applying the definition to include as many of the 

sources that would be included under the terms of the definition 

as promptly as possible, consistent with the intent of the 

statute as illuminated by the legislative history. This means 

that we intend to phase in title V applicability to sources, 

based on their size, over time. The specific schedule will 

depend on information we have as to 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, coupled 

with the size of their resources. In addition, we intend to 

vigorously pursue streamlining methods, so as to make title V 

more accessible for more sources moving down the size scale. 

Thus, under our present approach, we will gather 

information about the permitting authorities’ ability to process 

permits, and we will develop streamlining techniques, and, based 

on that information, expand the title V program in a step-by-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

257

step fashion to include more sources over time. Each step will 

be based on our assessment of the permitting authorities’ and 

sources’ ability to comply with their respective obligations 

under the title V program. 

 We recognize that the availability of permit fees to 

support title V permit actions creates a potentially important 

source of resources, and that this has implications for the 

permitting authorities’ ability to implement the title V program 

for sources of GHGs. At least in theory, permitting authorities 

could assess and collect sufficient fees to support hiring and 

training sufficient personnel so that they could expand their 

programs to match the expansion in the number of sources covered 

by the program. 

Even so, title V fees cannot be considered a panacea that 

will resolve all resource problems that permitting authorities 

will have, for several reasons. Permitting authorities will 

likely be constrained as to the rate in which they can increase 

fees in light of the costs to sources. As indicated elsewhere, 

at least at the outset of the program before streamlining 

techniques have been developed, a literal application of the 

title V applicability provisions to GHG sources would, on 

average, cost each industrial source $46,400 and each commercial 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

258

or residential source $23,200 to complete the permit application 

and take other associated actions, and it would cost each 

permitting authority, on average, $19,678 to process the 

industrial source permit and $9,839 to process the commercial or 

residential source permit. Particularly in light of the high 

costs to sources of applying for a permit, it is not likely that 

permitting authorities would be able to pass on to the sources 

in the form of fees the permitting authorities’ own high costs 

for processing those permits, at least not right away. Even if 

it were possible to raise permit fees, permitting authorities 

would have to undergo a process to assess and impose those 

fees, then collection of those fees, and then the hiring and 

training of personnel. The survey from the state and local 

agencies described above forecast a two-year period for hiring 

and training, without counting time for the process of assessing 

and imposing fees. For these reasons, we do not believe that 

the authorization for fees will allow the permitting authorities 

either to accelerate Steps 1 or 2 of the tailoring schedule or 

to permit a larger number of sources at those steps. Step 1 

will take effect on January 2, 2011, step 2 will take effect on 

July 1, 2011, and the process for determining and collecting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

259

fees, and then hiring and training personnel will take at least 

several years after July 1, 2011. 

Moreover, we do not believe that the authorization for fees 

means that permitting authorities can reasonably be expected to 

permit title V sources at levels below 50,000 tpy CO2e before 

2016. The next level below 50,000 tpy CO2e for which we have 

data is 25,000 tpy CO2e, and the costs to permitting authorities 

to run their programs at that level ($126 million) is more than 

double their current costs ($62 million). We do not consider it 

reasonable to expect permitting authorities to more than double 

their program within the first six years of title V 

applicability to GHG sources. That it is not reasonable to 

expect that is made even clearer when the permitting 

authorities’ burdens in implementing their PSD programs are 

considered. The ability of permitting authorities to impose 

fees may have more important implications for subsequent steps, 

and as we address those subsequent steps, we will consider the 

fees. EPA’s approach to fees in this rulemaking is discussed 

elsewhere. 

c. Other possible approaches to reconciling literal reading of 

title V applicability provisions and congressional intent 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

260

Having described how the Chevron framework, accounting for 

the ”absurd results” doctrine applies to title V requirements in 

this case and why it supports this tailoring rule -- under which 

we expect to apply title V to more sources, in a step-by-step 

fashion, over time -- we turn to the last part of our discussion 

of this doctrine. Here, we address other possible approaches 

that commenters have suggested for reconciling the inconsistency 

between a literal reading of the applicability provisions and 

congressional intent. 

In particular, commenters have argued that 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 (i.e., permits issued to a source that is 

not subject to any applicable requirement for any pollutant). 

To the extent that commenters argue that the statute requires 

EPA to adopt a “no-empty –permits” theory, we disagree. We 

believe that although various provisions of title V indicate 

that one of title V’s purposes is to gather a source’s 

applicable requirements into a single permit, see CAA §§ 

503(b)(1), 504(a), we do not read those provisions as expressly 

limiting title V to sources with applicable requirements. We 

also note that to date, we have issued permits to sources 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

261

without applicable requirements, albeit on rare occasions. We 

believe that the tailoring approach we adopt in this rulemaking 

best reconciles the statutory provisions with congressional 

intent. 

7. Additional rulemaking for the PSD and title V programs 

 The previous sections 5 and 6 discussed our application of 

the Chevron framework, accounting for the the “absurd results” 

doctrine, to the PSD and title V applicability requirements, 

respectively. As another point in this regard, which is 

relevant for both PSD and title V purposes, we also commit to 

subsequent rulemakings in which we may further address the 

“absurd results” doctrine. 

Specifically, we will propose or solicit comment on 

establishing a further phase-in, that is, a step 3, that would 

apply PSD and title V to additional sources, effective July 1, 

2013, and on which we commit to take final action, as supported 

by the record, by no later than July 1, 2012. 

We further commit to completing another round of rulemaking 

addressing smaller sources by April 30, 2016. Our action in 

that rulemaking would address permitting requirements for 

smaller sources, taking into account the severity of the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

262

remaining problems associated with permitting authority burden 

and source costs. 

While committing to future action, we do not decide in this 

rule when the phase-in process will ultimately end, or at what 

threshold level, because all that depends on uncertain variables 

such as our progress in developing streamlining approaches and 

on permitting authorities’ progress in developing permitting 

expertise and acquiring more resources. . We may continue the 

phase-in process with further rulemaking(s) after 2016. 

Alternatively, we may make a final determination through future 

rulemaking that, under the “absurd results” doctrine, PSD and/or 

title V do not apply to GHG sources that, while small and 

relatively inconsequential in terms of GHG contribution, are 

above the statutory tonnage thresholds for these programs., and 

thereby end the phase-in process. In addition, we may consider 

whether to limit title V applicability to GHG sources in order 

to minimize the number of GHG sources with “empty” permits. 

8. Rationale for the phase-in schedule for applying PSD and 

Title V to GHG sources. 

 Having discussed in sections V.B.5, V.B.6, and V.B.7 above 

the compelling reasons for tailoring the PSD and title V 

programs, we now describe our rationale for selecting the phase-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

263

in schedule in today’s rule for applying PSD and title V to GHGemitting sources. To reiterate for convenience, under Step 1 

of this schedule, which begins on January 2, 2011, (i) PSD 

applies to the GHG emissions of “anyway” PSD sources, that is, 

sources that are subject to PSD anyway due to their emissions of 

conventional pollutants and that undertake a modification that 

results in an increase of at least 75,000 tpy CO2e; and (ii) 

title V applies to “anyway” title V sources, that is, sources 

that are subject to title V anyway due to their emissions of 

conventional pollutants. Under Step 2, which begins on July 1, 

2011, (a) sources will be subject to PSD on account of their GHG 

emissions if they newly construct and emit at least 100,000 tpy 

CO2e, or if they are existing sources that emit at least 100,000 

tpy CO2e of GHGs and make a modification that results in the 

emission of at least 75,000 tpy CO2e; and (b) existing and new 

sources will be subject to title V on account of their GHG 

emissions if they emit 100,000 tpy CO2e in GHG emissions. In 

addition, EPA intends to begin another round of rulemaking – 

Step 3 – in 2011 and commits to complete it by July 1, 2012. In 

that rulemaking, we will propose or solicit comment on a further 

phase-in of GHG sources for PSD and title V applicability, and 

we may propose or solicit comment on another application of the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

264

“absurd results” doctrine that excludes categories of sources 

from PSD or title V. However, under today’s rule, in no event 

will EPA apply PSD or title V to sources below the 50,000 tpy 

CO2e levels in step 3, or any other step we might promulgate 

prior to April 2016. In addition, EPA commits to conduct a 

study, to be concluded by April 30, 2015, evaluating the status 

of PSD and title V applicability to GHG sources, and, based on 

the study, complete a rulemaking by April 30, 2016 that 

promulgates another round of a phase-in. 

a. Rationale for Step 1 

 In Step 1 of our tailoring approach, which begins on 

January 2, 2011, PSD and title V requirements will apply to only 

those sources that are subject to PSD or title V requirements 

anyway due to their conventional pollutants (“anyway” sources) 

and that, in the case of PSD, make modifications that result in 

an increase in GHG emissions of at least 75,000 tpy CO2e. No 

sources would become major for PSD or title V under this step 

based on their GHG emissions alone. This section describes our 

proposal, comments on the proposal and our response to those 

comments, and our rationale for Step 1. 

(1) Proposal 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

265

In our proposal, we proposed (i) the application of PSD and 

title V requirements to sources that emit at least 25,000 tpy 

CO2e, (ii) a PSD significance level of between 10,000 and 25,000 

tpy CO2e, and (iii) a commitment to undertake a study to be 

following by further rulemaking after six years. In addition we 

solicited comment on the alternative of limiting PSD and title V 

applicability to “anyway” sources for at least the first six 

years. Under this approach, PSD and title V applicability would 

be determined based on non-GHG pollutants without regard to 

GHGs, but those sources subject to PSD would also be subject to 

BACT requirements for GHGs if their GHG emissions exceeded the 

significance level established in the final rule, and those 

sources subject to title V would be required to include any 

applicable requirements for GHGs in their permits. 

(2) Comments 

Many commenters supported this “anyway”-source approach, 

and offered a variety of reasons: According to the commenters, 

(i) this approach is a better reading of Congress’s intent in 

the Act and is consistent with Alabama Power v. Costle, .636 

F.2d 323 (D.C. Cir. 1980): (ii) this approach would reduce the 

permitting workload on sources currently considered minor and 

focus PSD and title V requirements on large sources of non-GHG 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

266

pollutants, as intended by Congress; (iii) it is appropriate to 

base PSD and title V applicability on non-GHG emissions until 

data on GHG emissions are available from the GHG Reporting Rule; 

(iv) in the initial phase, this approach would be more 

straightforward to administer, would provide a more predictable 

permitting workload, and would prevent a flood of newly 

regulated sources from overburdening state agencies; (v) this 

approach would provide permitting agencies time to develop 

experience handling GHG sources and requirements under the PSD 

and title V programs; (vi) this approach would provide EPA and 

the permitting agencies the time needed to develop streamlining 

techniques; (vii) this approach is consistent with the “absurd 

results” and “administrative necessity” doctrines because the 

scope of the permitting programs would remain consistent with 

both Congressional intent and current administrative practice, 

but EPA and State agencies would still be allowed to begin 

regulating GHG emissions from existing PSD and title V sources; 

and (viii) sources already required to obtain PSD permits are 

best equipped to work through BACT issues with permitting 

authorities. 

Commenters added that if BACT is applied for GHG due to 

permit actions involving non-GHG pollutants, EPA would need to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

267

set a significance threshold for the application of BACT, 

without which BACT could apply to very small (e.g., 1 ton) GHG 

increases associated with project that otherwise triggered PSD 

for increases of non-GHG. 

(3) Determination as to Step 1, PSD and title V applicability 

and PSD significance level 

After considering the administrative burdens from increased 

permitting actions and the need for permitting authorities to 

have sufficient time to develop necessary expertise and staffing 

resources to address that burden, we have decided in this final 

action to establish the “anyway” source approach as Step 1. 

Beginning on January 2, 2011, sources subject to PSD 

requirements for their conventional pollutants anyway will be 

required to apply BACT to their GHG emissions if they construct 

or modify and in so doing, emit at least 75,000 tpy CO2e in GHGs. 

Similarly, sources subject to title V requirements anyway due to 

their conventional pollutants will be required to meet certain 

requirements for their GHGs, as described elsewhere. These 

requirements at Step 1 for PSD and title V will not expire. On 

July 1, 2011, a further phase-in of PSD and title V 

applicability – Step 2 – will kick in. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

268

The “anyway” source approach has particular appeal during 

this, the first step of the phase-in approach because it begins 

to apply key PSD and title V program requirements as soon as 

January 2, 2011 to large sources of emissions, but because it 

applies only to sources that are already regulated under the CAA 

for other pollutants, it can be implemented efficiently and with 

an administrative burden that is manageable in the next eight 

months. Under this approach, the sources and permitting 

authorities will still face substantial additional work due to 

the GHG emissions. In addition to the activities discussed 

elsewhere, there are significant and complex policy questions 

about how BACT will be implemented for GHGs that must be 

resolved. These issues include how to determine BACT for GHGs, 

how to do netting, and other similar issues. Even with EPA 

guidance, many case-specific policy issues arise and must be 

resolved by the permitting authority in the context of a 

specific permit application. Nevertheless, with the “anyway” 

source approach, this work will be manageable because the 

associated permitting burden will be limited to adding a GHG 

component to each existing permit action for which it will be 

required, and will avoid the significantly greater burdens 

associated with large numbers of new permit actions that would 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

269

be required for sources and modifications that would be subject 

to PSD for the first time. Instead, this approach allows 

permitting authorities sufficient time to develop necessary 

expertise and staffing resources to address GHG BACT. 

We agree with commenters that the establishment of a 

significance level – which, in effect, is a BACT threshold -- is 

appropriate, and we have decided to establish this level at 

75,000 tpy CO2e because, for reasons discussed below, that is the 

level that will apply during step 2. At this level, the 

administrative burdens, described below, will be manageable. 

Importantly, we believe a consistent significance level between 

Steps 1 and 2, as opposed to a lower significance level in Step 

1, will provide for a smoother transition and avoid the problems 

that would arise if PSD applied to modifications during Step 1 

that PSD would not apply to in Step 2. Otherwise, we would 

create a perverse incentive for companies to delay such projects 

until Step 2 to avoid BACT. 

We estimate that Step 1 will result in a 23% increase in 

permitting authority work hours and a $3 million increase – 

which amounts to a 25% increase from the current program cost of 

$12 million -- in their annual costs for running PSD programs. 

This is primarily due to the BACT review requirements. For 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

270

title V programs, we estimate a 2% increase in permitting 

authority work hours and a $1 million increase in the title V 

annual program costs for permitting authorities under Step 1 as 

compared to the current program cost of $62 million for the 

title V program. These work hours and costs will be needed 

primarily to review GHG emissions information, add any GHGrelated requirements to title V revisions and renewal actions 

that would otherwise be occurring, respond to comments and 

petitions from the public, as well as develop fee requirements 

and make fee determinations associated with issuing new or 

revised title V permits that add GHG-related information. For 

both the PSD and title V programs on a combined basis, the 

additional costs for Step 1 will be $4 million, which amounts to 

a 5% increase in the current combined program cost of $74 

million. 

During Step 1, in addition to these workload and monetary 

costs, permitting authorities will confront additional burdens 

before and during Step 1 and that we have not attempted to 

quantify. One of the most significant of these is training 

staff in the PSD-related areas of GHG emissions calculations and 

BACT evaluations. In addition, permitting staff will need to 

build staff expertise and capacity for addressing GHG 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

271

requirements in preparation for Step 2, which will begin only 

six months after Step 1; and in communicating and providing 

outreach to sources addressing GHG emissions for the first time. 

Based on comments we received on the proposal from permitting 

authorities, we believe these additional training and outreach 

requirements – for both the PSD and title V programs -- will add 

significantly to the permitting authorities’ burden during the 

initial six-month period under Step 1. 

 We believe that these administrative burdens are 

substantial but manageable. Following today’s action, 

permitting authorities will have only eight months to prepare 

for Step 1, when they will need to increase their resources by 

5% for both the PSD and title V programs combined, and be able 

to implement BACT requirements for GHG sources. During Step 1, 

they will need to prepare for Step 2, when, as discussed below, 

they will need to process over 900 additional PSD permits each 

year and begin to process over 2,600 additional title V permit 

actions. 

We have decided to limit Step 1 to the “anyway” source 

approach, and not apply PSD or title V to sources based on their 

GHG emissions, for several reasons. First, we believe that the 

administrative burdens described above are the most that the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

272

permitting authorities can reasonably be expected to manage 

before and during Step 1. Tighter PSD and title V applicability 

requirements would mean greater administrative burdens. 

Second, we believe that the costs of GHG permitting to the 

sources, as described above, are substantial and as a result, 

necessitate that we wait for the permitting authorities to 

develop the PSD and title V programs for GHG sources during the 

first six months of 2011 before subjecting sources to PSD and 

title V requirements on account of their GHG emissions. By July 

1, 2011, when Step 2 takes effect, the PSD and title V programs 

will be better developed. For example, the permitting 

authorities will have more experience making BACT 

determinations. In addition, by that time, sources will have 

had more time to prepare for the permitting processes. In 

addition, as suggested by one commenter, the additional time 

will allow sources and permitting authorities to address the 

current uncertainty surrounding how to measure high-GWP gases. 

Third, we estimate that “anyway” sources account for 

approximately 65 percent of total national stationary source GHG 

emissions. As a result, limiting Step 1 to these sources will 

still capture a large portion of the GHG inventory. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

273

A large number of commenters urged us to leave this 

“anyway” source approach in place until such time as we complete 

an assessment and conduct further rulemaking, which we proposed 

would be six years from now. We are not taking this action; 

rather, for the reasons discussed next, we believe it is 

reasonable to use GHG thresholds to begin to phase in PSD and 

title V applicability to additional sources in Step 2. 

b. Rationale for Step 2 

(1) Proposal 

We proposed to establish the applicability level for PSD 

and title V to GHG sources at 25,000 tpy CO2e, and we proposed a 

PSD significance level in the range of 10,000 to 25,000 tpy CO2e. 

Our burden estimates at proposal led us to conclude that at 

those threshold levels, for the PSD program, “approximately 400 

additional new or modified facilities would be subject to PSD 

review in a given year. These include approximately 130 new 

facilities and approximately 270 modifications....” 74 FR 55,331, 

col. 1. We estimated that processing these numbers of 

additional permits, along with doing the additional work 

associated with GHG emissions from sources subject to PSD anyway 

due to their conventional emissions, would increase permitting 

authority burdens by “approximately 112,000 staff hours at an 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

274

additional cost of approximately $8 million. This workload 

amount represents an increase of about 1.3 times, or 32 percent, 

in the current burden for permitting authorities on a nationwide 

basis.” Id. col. 3. We concluded that “this additional burden 

is manageable,” but that “any threshold lower than 25,000 tpy 

CO2e, would create undue administrative burdens.” Id. 

 For the title V program, we estimated at a 25,000-tpy CO2e 

permitting threshold, “about 13,600 existing facilities” would 

become subject to title V, and that to manage the additional 

workload associated with permitting those sources and with the 

other permit revisions and modifications that would result from 

the 25,000 tpy CO2e threshold, permitting authorities would 

require an additional 492 FTEs, which would be an estimated 50 

percent increase over current title V staffing levels. 74 Fed. 

Reg. 55,335, cols. 1-2. 

(2) Comments 

We received a significant number of comments from both 

permitting authorities and industry representatives that our 

proposed GHG threshold of 25,000 tpy CO2e for major source 

applicability was too low and would result in an unmanageable 

amount of permitting actions in the near term. Many offered 

evidence that we severely underestimated both the number of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

275

permitting actions and the per-permit administrative burden, for 

both PSD and title V programs. 

 Commenters also asserted that the proposed 25,000 tpy 

threshold is too low because it will subject small sources 

(including many small businesses) to PSD and title V, which is 

not in keeping with Congress’s intent to limit PSD and title V 

to large sources when Congress set the 100/250 tpy thresholds 

for the permitting programs. EPA, in collaboration with the 

Small Business Administration (SBA), conducted an outreach 

meeting designed to exchange information with small entities 

that may be interested in these regulations. The EPA took this 

small business outreach effort into account when finalizing this 

rule. Many commenters from this outreach effort said that there 

were many more small businesses that would subject to PSD and 

title V due to the proposed permitting thresholds than EPA 

estimated at proposal. 

Many commenters recommended specific major source 

thresholds for PSD and title V, including levels of 25,000 (as 

proposed), 40,000, 50,000, 100,000, 150,000, 250,000, and 

1,000,000 tpy CO2e. A majority of the commenters recommended 

major source thresholds of 100,000 tpy CO2e, including both 

industry and state agency commenters. However, several state 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

276

agency commenters recommended thresholds of 50,000 tpy CO2e. 

Other commenters recommended sector-specific thresholds. For 

example, solid waste industry commenters suggested thresholds of 

820,000 tpy CO2e for PSD (which they calculate to be equivalent 

to the existing PSD threshold for “municipal solid waste 

landfill emissions,” i.e., 250 tpy NMOC) and 320,000 tpy CO2e for 

title V (calculated to be equivalent to the existing major 

source applicability threshold of 100 tpy NMOC). Other 

commenters urged EPA to set the GHG thresholds at levels that 

correspond to emissions of conventional pollutants at the 

100/250 tpy level. 

Many of the commenters that recommended increasing the 

thresholds cited EPA’s estimates that a particular threshold 

would significantly reduce the number of sources subject to the 

rule while causing only a slight reduction in the percentage of 

GHGs captured. Several of these commenters noted that Table 

VIII-2 in the proposal preamble indicates that shifting the 

major source threshold for PSD from 25,000 to 100,000 tpy CO2e 

would reduce the number of major sources from 13,661 to 4,850 

while reducing the coverage of U.S. stationary source GHG 

emissions by only about 4 percent. Other commenters referred to 

the RIA for the GHG Reporting Rule to conclude that raising the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

277

threshold from 25,000 to 100,000 tpy CO2e would exclude thousands 

of entities that, on a combined basis, emit only one percent of 

the nation’s GHG emissions. See the Response to Comments 

document for this final rulemaking for more detailed description 

of comments received on our proposed burden assessment. 

 Many commenters also recommended specific PSD GHG 

significance thresholds, including levels of 10,000 (as 

proposed), 15,000 (within the proposed range), 25,000 (also as 

proposed), 40,000, 50,000, and 100,000, and 150,000 tpy CO2e, as 

well as suggesting sector-specific thresholds. These 

recommendations were based on the view that we had 

underestimated the number of modifications and that the burden 

of permitting at the proposed levels would therefore be much 

worse than we projected. A number of the commenters argued that 

the significance threshold should be no less than the major 

source threshold, at whatever level that is set. The largest 

number of commenters recommended a PSD significance threshold of 

100,000 tpy CO2e, although significant numbers also support 

25,000 and 50,000 tpy CO2e. 

iii. Rationale for step 2 

 Based on these comments, we reassessed our original burden 

estimates from our proposal. This reassessment is discussed at 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

278

the beginning of this section. We decided that, once this 

adjustment is taken into account, the burdens at the proposed 

25,000 threshold and the proposed 10,000-25,000 significance 

levels would be unmanageable. We therefore evaluated higher 

thresholds ranging from a 25,000 tpy CO2e major source 

applicability level for PSD and title V to a 50,000, 75,000, or 

100,000 tpy CO2e level, with associated PSD GHG significance 

levels of equal or lesser magnitude; and we selected the 

100,000/75,000 tpy CO2e level. Central to our decision to 

promulgate higher thresholds than what we proposed is our 

recognition, based on comments and further analysis, that 

applying PSD to GHG sources at the statutory or any other 

threshold level or significance level that we have considered 

would result in (i) a greater number of sources, and 

significantly greater number of modifications than we first 

estimated becoming subject to those programs; and (ii) a greater 

per-permit cost than we first estimated to the permitting 

authority of processing those permit actions. We discussed our 

revised estimates and reasoning at the beginning of this 

section. 

We now estimate that the 25,000/25,000 tpy level would 

result in 250 additional PSD permit actions for new construction 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

279

(either for GHG-only sources or additions to otherwise occurring 

permits) and an additional 9,200 PSD permits for modifications 

each year (compared to our estimate at proposal of 130 for new 

construction and 270 for modifications). This level of 

permitting would require an additional 2,815,927 work hours, or 

1,400 FTEs (compared to our estimate at proposal of 112,000 

[additional?] work hours, or 57 FTEs); and would cost an 

additional $217 million each year (compared to our estimate at 

proposal of an additional $8 million). See 74 FR 55,331 

(proposal). This $217 amount represents approximately a 1,800% 

increase over current permitting authority annual cost of $12 

million for the major NSR programs 

 For title V, under our final burden analysis at a 25,000 

tpy CO2e threshold, we estimate a $64 million annual increase in 

program costs to permitting authorities to add GHG emission 

sources, which reflects a greater than 100% increase over 

current programs costs of $62 million. We estimate that this 

increased burden would result in the need for almost 700 new 

FTEs nationwide at permitting authorities (compared to our 

estimate at proposal of 492 additional FTEs, or about a 50% 

increase in existing program size). This increase in burden is 

due to an estimated annual increase of 2,500 new title V 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

280

permits, over 9,500 permit revisions, and over 2,500 permit 

renewal actions due to GHG emission sources. These additional 

title V actions compare to current annual program actions of 

approximately 50 new title V permits, 1,394 significant 

revisions, and 3,267 permit renewals. 

 Based on this information, we have decided not to finalize 

our proposal to apply a 25,000 tpy CO2e applicability threshold 

to GHG sources at the time that PSD and title V take effect. At 

that level, too many sources – many more than we thought at 

proposal – would be subject to high permitting costs. In 

addition, permitting at that level and at that time would not be 

administratively feasible. The resulting increase in the number 

of PSD and title V permitting actions and workload would create 

insurmountable resource demands for permitting agencies in the 

near term, which would jeopardize the functioning of these 

permitting programs. We are mindful that not only would the 

permitting programs have to bear the costs that our estimates 

are able to monetize, but they would also incur burdens 

associated with hiring and training staff to make and implement 

GHG BACT determinations, GHG emissions evaluations, and other 

evaluations required under the PSD program for a wide variety of 

formerly unpermitted sources, including significant numbers and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

281

types of small manufacturing and commercial or residential 

establishments. They would also incur burdens associated with 

reviewing applications, citizen comment and petitions, and the 

need to communicate and provide outreach to new categories of 

sources, including, again, significant numbers and types of 

small manufacturing and commercial or residential sources. 

Thus, the increased administrative burdens at the 25,000/25,000 

tpy CO2e levels are so great that we have concluded that they 

would not be consistent with the goals of avoiding absurd 

results that contravene Congressional intent or avoiding a 

permitting burden that would overwhelm the capacity of 

permitting authorities to effectively implement their programs. 

Based on our revised burden analysis, in today’s final 

action, we have decided to establish a multi-step, phase-in 

approach that contains a significantly higher initial threshold 

level: We have determined that a 100,000 tpy CO2e major source 

threshold level for PSD and title V purposes, and a 75,000 tpy 

CO2 significance level, produce a level of permitting activity 

that would certainly be an increase over current workload, but 

that would be administratively feasible by July 1, 2011. As a 

result, we have decided to finalize these thresholds as Step 2. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

282

In reaching this conclusion, we needed to consider the 

permitting authorities’ capacity to address newly-major sources 

as expeditiously as possible. Note that our Step 1 approach 

does not cover newly-major sources, so the step 2 threshold and 

timing has to be established in a way that takes into account 

permitting authority challenges in addressing many sources and 

categories that would be subject to major source permitting for 

the first time. 

 We considered the various PSD and title V threshold 

applicability and significance level options in our final burden 

analysis, summarized in Table VI-1, including levels at 50,000 

CO2e, and 100,000 CO2e. As Table VI-1 indicates, we estimate 

that a 100,000 tpy CO2e major source applicability threshold 

would result in approximately 550 sources becoming newly 

classified as major sources for PSD based on their GHG 

emissions, while a 50,000 tpy CO2e threshold would result in 

3,500 newly classified major sources. 

 We then considered the impact on both PSD and title V 

programs of different PSD significance level options for GHGs. 

The choice of a PSD significance level has a direct impact on 

title V burdens because PSD permit requirements resulting from 

modification activities will result in a required title V permit 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

283

revisions. We developed PSD and title V burden estimates based 

on significance levels of 50,000 tpy, 75, 000 tpy and 100,000 

tpy CO2e, combined with a major source applicability level of 

100,000 tpy CO2e. At a 50,000 tpy CO2e significance level, we 

estimated an annual increase of approximately 1,800 PSD 

permitting actions and almost 2,000 additional title V 

permitting actions, as compared to Step 1. At a 75,000 tpy CO2e 

significance level, we estimated an annual increase of 

approximately 900 PSD permitting actions and just over 1,000 

additional title V permitting actions as compared to Step 1. At 

a 100,000 tpy CO2e significance level we estimated an annual 

increase of approximately 25 PSD permitting actions and 210 

additional title V permitting actions as compared to Step 1. 

For title V, under these different scenarios, the major source 

applicability level of 100,000 tpy CO2e results in approximately 

200 new permits annually, but, as noted, the choice of 

significance levels affects the number of required permit 

revisions. 

 Based on this information, we have decided to set our final 

Step 2 thresholds at 100,000 tpy CO2e for major source 

applicability under PSD and title V and at a 75,000 tpy CO2 

significance level for PSD. Overall, we estimate that the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

284

almost 900 additional PSD permitting actions (virtually all of 

which would be modifications) per year at these levels will 

result in an approximately $21 million increase (from Step 1) in 

states’ annual costs for running PSD programs. In addition, we 

estimate that the 1,000 additional title V permit actions will 

cause the total title V burden for permitting authorities to 

increase by $6 million annually from Step 1. This total 

increase in permit program burdens of $27 million represents a 

34% increase over the $78 million in total cost of PSD and title 

V programs at Step 1. We consider this a substantial increase, 

particularly because Step 2’s start date of July 1, 2011 is only 

six months after Step 1’s start date of January 2, 2011. What’s 

more, Step 1 will entail a substantial increase in permitting 

authority obligations, so that adding the costs of Step 1 and 

Step 2 together -- $31 million – means that permitting 

authorities will be required to increase their permitting 

resources by approximately 42% between now and Step 2. In 

addition to the administrative burdens we have been able to 

monetize, we must be mindful that permitting authorities will 

incur other burdens, including the significant support and 

outreach activities by permitting staff for the many newly 

permitted sources. We believe that any lower thresholds in this 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

285

timeframe, whether in the PSD and title V applicability levels 

or in the significance level, would give rise to administrative 

burdens that are not manageable by the permitting authorities. 

Although the burdens at the 100,000 tpy CO2e/75,000 tpy CO2e 

levels are steep, we consider them manageable Step 2 permitting 

for GHGs will mostly involve source categories in which some 

sources have traditionally been subject to permitting, which 

should render applying even the new GHG requirements more 

manageable. These source categories include fossil fuel-fired 

power plants, petroleum refineries, cement plants, iron and 

steel plants, and petroleum refineries, in addition to other 

large industrial type source categories. A full description of 

the type of sources that we expect will have GHG emissions that 

exceed the 100,000 tpy CO2 threshold is provided in the 

“Technical Support Document for Greenhouse Gas Emissions 

Thresholds Evaluation” located in the public docket for this 

rulemaking. In addition, because Step 2 does not begin until 

July 1, 2011, permitting authorities have about 14 months to 

prepare for it. 

 In addition, we believe that the sources that will become 

subject to PSD and title V requirements at the 100,000/75,000 

tpy CO2 levels will be able to accommodate the additional costs 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

286

of permitting. For the most part, these sources will be of a 

comparable size and activity level as those sources that are 

already subject to those requirements. 

 Because the administrative burdens at the 100,000/75,000 

level are as heavy as the permitting authorities can reasonably 

be expected to carry, adopting these threshold levels is 

consistent with our legal basis under the “absurd results” 

doctrine. Under this basis, we are reconciling the statutory 

levels with congressional intent by requiring that the PSD and 

title V requirements be applied to GHG sources at levels as 

close as possible to the statutory thresholds, and as quickly as 

possible, in light of costs to sources and administrative 

burdens. 

 Because the administrative burdens at the 100,000/75,000 

level are manageable, we do not believe that higher threshold 

levels are justifiable for Step 2. Specifically, at the 

100,000/100,000 level – which would entail a 100,000 tpy CO2e 

significance level, rather than a 75,000 tpy CO2e level – 

permitting sources would need to handle only 20 additional 

modifications beyond current levels, and thus would not incur 

substantial additional costs. By the same token, we disagree 

with commenters who suggested that we needed to set permanent 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

287

GHG permitting thresholds for major sources at a rate equivalent 

to the amount of GHG that would be emitted by conventional 

pollutants at the 100 and 250 tpy level in order to meet the 

legal bases of the “absurd results” and “administrative 

necessity” doctrines. These levels would likely be well above 

300,000 tpy CO2e, depending on fuel types and assumptions 

regarding the relative emissions of GHGs compared to the 

conventional pollutants. Our data show that none of the levels 

above 100,000/75,000 would result in significant increases in 

administrative burdens. As a result, establishing these levels 

would not apply PSD or title V requirements to GHG sources as 

quickly as possible, and thus would not be consistent with the 

“absurd results” doctrine. 

We estimate that facilities meeting the Step 2 major source 

applicability thresholds account for approximately 67 percent of 

total national stationary source GHG emissions. Many commenters 

felt that this should be an important basis for our selection of 

a threshold, stating that there is no significant loss in GHG 

emissions coverage of source categories at the 100,000 tpy CO2 

threshold, and in some cases arguing that as a result, we should 

set the level even higher. We agree that it is important that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

288

the coverage in step 2 represents 86 percent of the coverage at 

full implementation of the statutory 100/250 thresholds. 

c. Rationale for EPA’s plan beyond Step 2 

 EPA commits that after Step 2, EPA will begin another 

rulemaking in 2011 and complete it by July 1, 2012, and in that 

rulemaking take comment on a further phase-in of GHG sources for 

PSD and title V applicability (Step 3). However, under today’s 

rule, in no event will EPA apply PSD or title V to sources below 

the 50,000 tpy CO2e levels prior to 2016. In addition, EPA 

commits to conduct a study, to be concluded by April 30, 2015, 

evaluating the status of PSD and title V applicability to GHG 

sources, and, based on the study, complete a rulemaking by April 

30, 2016 that promulgates another round of a phase-in. 

(1) Proposal 

In our proposal, we noted that following implementation of 

the first phase of PSD and title V applicability to GHG sources, 

generally at the 25,000 tpy CO2e threshold, additional action 

would be required over time to assure full compliance with the 

statute. We did not establish more steps in the schedule, but 

we did commit to conduct a study, to be completed by five years 

after promulgation, evaluating the status of PSD and title V 

applicability to GHG sources, and, based on the study, complete 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

289

a rulemaking by six years after promulgation that established an 

additional step of the phase-in. 

(2) Comments 

 A number of commenters supported the proposal’s overall 

approach to phase in the permitting of GHGs, mainly because this 

approach will allow permitting of the largest sources of GHGs 

immediately while collecting more information about smaller 

sources and more fully considering streamlining options for 

subsequent phases. Many of these commenters made clear that 

they do not support implementation of the statutory 100/250 tpy 

thresholds, even through a phase-in approach. On the other hand, 

one commenter asserted that EPA has failed to demonstrate that 

it needs six years to study and implement NSR and title V for 

sources emitting less than 25,000 tpy. The commenter contends 

that EPA has not analyzed, among other things, what combined 

effect the full implementation of its streamlining proposals in 

the 15 months before the due-date for title V permit 

applications would do to reduce the cost, complexity, and number 

of title V permit applications that would have to be submitted. 

(3) Rationale for further steps 

We agree with commenters who support a phased-in approach 

to the GHG tailoring rule. Our final action reflects a multi-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

290

step process that we believe will create a manageable expansion 

of PSD and title V applicability to GHG-emitting sources. In 

our final action, we have established the initial two steps of a 

multi-step phase-in of lower threshold applicability with a 

commitment to take further regulatory activity to consider 

adopting lower thresholds. We believe this process will provide 

substantial opportunity for permitting authorities and sources 

to establish enough experience and information, and to provide 

significant real-world feedback to EPA, so as to better inform 

decisions on future phase-in steps. 

With this overall phase-in approach in mind, in today’s 

final rule, EPA includes an enforceable commitment to undertake 

a notice-and-comment rulemaking that would begin with a 

supplemental notice of proposed rulemaking that we expect to be 

issued in 2011 and that we commit will be finalized in 2012. 

The notice will propose or solicit comment on further reductions 

in the applicability levels. This rulemaking will take effect 

by July 1, 2013 and therefore, in effect, constitute Step 3. In 

today’s action, we are committing to a rulemaking for Step 3, 

but are not promulgating Step 3, is because it is important to 

allow EPA and the permitting authorities to gain experience 

permitting sources under Steps 1 and 2, and to allow time to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

291

develop streamlining methods, before attempting to determine 

what would be the next phase-in levels for PSD and title V 

applicability. While committing to future action, we do not 

decide in this rule when the phase-in process will ultimately 

end, or at what threshold level, because all that depends on 

uncertain variables such as our progress in developing 

streamlining approaches and on permitting authorities’ progress 

in developing permitting expertise and acquiring more resources. 

. We may continue the phase-in process with further 

rulemaking(s) after 2016. Alternatively, we may make a final 

determination through future rulemaking that, under the “absurd 

results” doctrine, PSD and/or title V do not apply to GHG 

sources that, while small and relatively inconsequential in 

terms of GHG contribution, are above the statutory tonnage 

thresholds for these programs., and thereby end the phase-in 

process. 

In addition, in today’s action, we are determining that in 

no event – whether through Step 3 or a subsequent step – will we 

apply PSD or title V to sources at the 50,000/50,000 level or 

lower prior to May 1, 2016. We have several reasons for making 

this determination at this time. Most importantly, our 

examination of the expected burdens to the permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

292

authorities of applying PSD and title V to GHG sources convinces 

us that extending the permitting programs to sources at or below 

the 50,000/50,000 level within six years of promulgation would 

result in prohibitively heavy burdens. This threshold option 

would result in close to 2,000 additional annual PSD permitting 

actions per year over the current program and more than 1,000 

over Step 2, including both new construction and modifications. 

For title V, we estimated an increase of over 1,000 new title V 

permits (all newly permitted sources because of GHG emissions) 

and over 2,000 permit revisions per year over the current 

program, and about 980 new title V permits and 900 permit 

revisions more than the Step 2 amounts. 

These increases, which could occur between 2013 and 2016 

under our approach depending on the outcome of the step 3 

rulemaking, represent very substantial additions to the 

permitting program. In terms of cost, we estimate that these 

additional actions would result in a $73 million per year 

increase in joint PSD and title V program costs over the current 

programs – which is almost a doubling of costs – and $42 million 

annual cost increase over Step 2 for the current programs. We 

believe that it would take permitting authorities some time to 

adjust to this workload. This is particularly true because at 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

293

the 50,000/50,000 tpy CO2e level, smaller sources – including 

ones not previously subject to permitting requirements – will 

become subject to PSD and title V. It will take some time for 

both the permitting authorities and the sources to absorb these 

new obligations. 

Importantly, the next lower cut-off – below 50,000 for the 

major threshold level – is the 25,000/25,000 level. For the 

reasons discussed above, this level is clearly not manageable 

within the first six years after today’s action. This 

applicability level would bring in over 7,000 sources that would 

be newly subject to title V permitting and result in close to 

10,000 new PSD permitting actions. This would result in a 380% 

increase over current program costs for PSD and title V to run 

these programs. Based on comments we received from state and 

local permitting agencies on our proposed tailoring rule, these 

levels of permitting activities would far exceed the 

administrative capabilities of the permitting agencies for at 

least the near future. Thus, the six year exclusion is 

necessary to provide these agencies and their permittees 

certainty that this will not occur. 

We recognize that at present, we do not have data that 

would allow us to compile administrative burden estimates for 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

294

specific levels between the 50,000/50,000 and 25,000/25,000 tpy 

CO2e levels we assessed. However, it is clear that the burdens 

begin to rise sharply below the 50,000/50,000 level. To 

reiterate, the combined PSD and title V administrative burdens 

at the 50,000/50,000 tpy CO2e level cost almost twice as much as 

the current programs, but the burdens at the 25,000/25,000 level 

cost almost four times as much as the current programs. As a 

result, we conclude that dropping the level below 50,000/50,000 

too soon would quickly expose the permitting authorities to 

unacceptably high burdens. 

As a further reason for concluding that we will not reduce 

thresholds beyond 50,000/50,000 tpy CO2e during the first six 

years, we recognize that the PSD permitting process in 

particular is a high stakes endeavor for the permitting 

authorities and the affected sources, and we wish to tread 

cautiously as a result. If we have underestimated the 

permitting burden or the ability of states to respond to their 

additional workload, then permitting backlogs will result, and 

PSD permit issuance will be delayed. Because PSD is a 

preconstruction program, during this time sources seeking a PSD 

permit could not construct or modify. If this were to happen on 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

295

a large enough scale, it could have potentially serious 

consequences for the national economy. 

Moreover, we need to be mindful that the best information 

we currently have as to permitting authority burdens represents 

a national average, as described above. Our information at the 

individual state and level, which is where the hard work of 

permitting occurs, is not as robust. Accordingly, we recognize 

that a particular State may encounter permitting costs that are 

higher than average, and this may result in permitting backlogs 

in that State, with the consequence that sources in that State 

will face long delays in constructing or modifying. Similarly, 

even if a particular State’s costs are in line with the national 

average, that State may not be able to find the additional 

resources to cover those costs as readily as other States. For 

this reason, too, sources in that State could face long delays 

in constructing or modifying. 

Beyond the administrative burdens to permitting 

authorities, we recognize that the costs of PSD and title V 

permitting to sources may be high, and we are not inclined to 

impose them at this time on sources smaller than the 

50,000/50,000 tpy CO2e threshold. At that level, the permitting 

programs will apply to a significant number of newly permitted 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

296

sources, including a variety of small manufacturing, commercial 

and residential categories. The next level that we have 

analyzed is the 25,000/25,00 tpy CO2e threshold. At that level, 

more than 7,000 more sources would become subject to PSD each 

year – almost all due to modifications – and another 4,000 

sources would become subject to title V each year. These 

sources would be even smaller than those that already will have 

become subject to PSD and title V due to their GHG emissions. 

We do not think it reasonable to subject more of those types of 

sources, and smaller ones, to permitting costs within the next 

six years. 

Finally, we note that moving from a 50,000 tpy CO2e 

threshold to 25,000 tpy CO2e will increase the emissions coverage 

of GHG stationary sources from 70% to 75% nationwide, which we 

consider to be a relatively small amount. 

 We recognize that our progress in developing streamlining 

methods will be a key determinant to the ability of permitting 

authorities to administer, and sources to comply with, PSD and 

title V at GHG emission levels below 50,000/50,000. Although we 

commit to pursue streamlining, we cannot predict our progress. 

This uncertainty may be problematic for stakeholders, primarily 

permitting authorities and industry. That is, permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

297

authorities will face uncertainty in planning the scope of their 

programs over the next few years, and industry will face 

uncertainty as to what new construction projects and 

modifications will be subject to PSD for GHGs. By determining 

now that for the next six years we will not impose PSD 

requirements below a floor at the 50,000/50,000 level, we add a 

measure of needed certainty. 

We also recognize that selecting a level that is too low or 

keeping a level for too long means that some sources may 

construct or modify without implementing BACT level controls, 

and this could result in additional emissions of GHGs. We need 

to be vigilant and to protect against this outcome. Even so, 

all things considered, we believe that our determination not to 

apply the PSD or title V permitting requirements to sources 

below the 50,000/50,000 tpy CO2e level for the first six years 

also represents a reasonable balancing of protection of the 

environment with promotion of economic development. This type 

of balancing is consistent with our authority under the PSD 

provisions. 

We also raised the issue of “hollow” or “empty” permits in 

discussing our rationale for why it may make sense to delay 

title V permitting under our proposal. We were concerned that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

298

many title V permits for GHG sources would contain no applicable 

requirements, and their issuance would therefore be of little 

value and would not be the best use of scarce resources. 

Several commenters agreed that implementing title V for GHG 

will, at least initially, require empty permits to be issued to 

GHG sources because such sources will not be subject to 

“substantive” requirements, and that this would not be the best 

use of scarce resources. 

 In the proposal, we noted that the ”absurd results” 

doctrine does not directly consider whether the statutory 

requirements lead to actions that agencies or commenters may 

consider wasteful. However, we do believe that the amount of 

resources that would be spent and the limited value that would 

result does warrant consideration under an absurd results 

rationale. Therefore, we are still actively considering the 

role of empty permits as we apply the absurd results rationale 

to GHG permitting in future steps. However we believe it has 

limited relevance to the first two steps of the phase in that we 

are promulgating today. During step 1, permitting for GHGs is 

only required if the source is otherwise subject to permitting 

for its emissions of non-GHGs, meaning that those sources will 

be subject to existing substantive applicable requirements for 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

299

non-GHG (e.g., NSPS, MACT, and SIP requirements, including PSD). 

Thus, there should be few, if any, empty permits, at least with 

respect to applicable requirements for non-GHG during step 1. 

For step 2, it is possible that sources that become subject to 

title V requirements for GHG emissions may not be subject to 

other requirements, but our assessment suggests that this will 

be rare. We estimate that virtually all of the 550 newly-major 

sources in step 2 will be subject to applicable requirements 

under the CAA because they are from categories that have been 

traditionally subject to regulations, such as smaller industrial 

sources from already regulated categories, large landfills, and 

oil/gas/coal production. Even the approximately 50 newlysubject commercial sources in step 2, which we estimate to be 

comprised of very large hospitals, are likely to be covered by 

standards for medical waste incinerators. Thus, we project few, 

if any, empty permits during step 2. 

In later stages of implementation (e.g., prospective step 

3) or in the event that we permit smaller, non-traditional 

sources of GHGs that have never otherwise been subject to major 

source permitting, there would be a greater potential for empty 

permits to be issued under title V. Cognizant of this, we 

intend to further explore in the SNPR empty permit theories 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

300

under the absurd results rationale that may serve to permanently 

narrow the scope of title V to exclude sources that would 

potentially be required to obtain an empty permit due to GHG 

emissions. 

In today’s action, EPA is also finalizing its proposal to 

commit to conduct an assessment of the threshold levels – to be 

completed in 2015, five years after today’s action -- that will 

examine the permitting authorities’ progress in implementing the 

PSD and title V programs for GHG sources as well as EPA’s and 

the permitting authorities’ progress in developing streamlining 

methods. We further commit to undertake another round of 

rulemaking -- beginning after the assessment is done, and to be 

completed by April 30, 2016 – to address smaller sources. 

We disagree with the commenter who asserted that we do not 

need six years to study and implement NSR and title V for 

smaller sources. As we discussed in the proposal, and reiterate 

in this final action, we do not have sufficient information at 

this time to determine the applicability and effectiveness of 

the various permitting streamlining techniques. For reasons 

discussed in more detail in section V.E.1 regarding 

streamlining, we are not now able to determine how such 

techniques will be implemented or whether they will prove viable 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

301

or effective. We agree with the commenter that these measures 

may reduce the scope, cost, and complexity of these programs, 

but there is considerable uncertainty as to the extent of this 

effect. We do commit in this action to fully investigate, 

propose, and evaluate these permit streamlining techniques to 

determine where they may have applications, how they would be 

applied, and whether they can withstand legal challenge. Even 

for those techniques that may ultimately deemed viable there is 

a significant time period necessary for rulemaking on these 

techniques and state adoption, which could take up to three 

years or more. We also note that we will be required to complete 

our study of the effectiveness of these techniques within 5 

years, meaning that, in order to complete it in time, we will 

essentially need to begin the study as soon as relevant data are 

starting to become available. Finally, the sixth year, in which 

EPA must complete rulemaking, requires proposal and promulgation 

of a rule within one year, which is an ambitious schedule. 

Therefore we believe that 6 years is an ambitious schedule, and 

appropriate for this type of effort. We also have received a 

substantial numbers of comments from permitting authorities that 

agreed with our 5-year timeframe, or a greater timeframe, to get 

more prepared for permitting smaller sources. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

302

d. Other comments on “absurd results” doctrine. 

 We received other comments on our application of the 

“absurd results” doctrine, which we respond to in the Response 

to Comments document. One comment was overarching, and so we 

respond to it here: Some commenters argued that the “absurd 

results” doctrine could not be applied because EPA had other 

approaches for resolving the problems raised by applying PSD to 

GHG sources. In particular, the commenters insisted that we 

were not obligated to issue the light-duty vehicle rule, and had 

we not done so, we would not have triggered PSD; or at the 

least, we could have delayed issuing the light-duty vehicle rule 

for some period of time, during which we could develop 

streamlining measures and permitting authorities could ramp up 

resources and thereby minimize the need for tailoring when we 

did promulgate the light-duty vehicle rule. 

 These commenters also commented during the light-duty 

vehicle rulemaking that we were not obligated to conduct that 

rulemaking, or to conduct it at the time that we did. We 

believe that our response there suffices for here, as well: 

 Some of the comments relating to the stationary 

source permitting issues suggested that EPA should 

defer setting GHG standards for new motor vehicles to 

avoid ... [adverse] stationary source permitting 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

303

impacts. EPA is issuing these final GHG standards for 

light-duty vehicles as part of its efforts to 

expeditiously respond to the Supreme Court’s nearly 

three year old ruling in Massachusetts v. EPA, 549 

U.S. 497 (2007). In that case, the Court held that 

greenhouse gases fit within the definition of air 

pollutant in the Clean Air Act, and that EPA is 

therefore compelled to respond to the rulemaking 

petition under section 202(a) by determining whether 

or not emissions from new motor vehicles cause or 

contribute to air pollution which may reasonably be 

anticipated to endanger public health or welfare, or 

whether the science is too uncertain to make a 

reasoned decision. 

 The Court further ruled that, in making these 

decisions, the EPA Administrator is required to follow 

the language of section 202(a) of the CAA. The Court 

stated that under section 202(a), "[i]f EPA makes [the 

endangerment and cause or contribute findings], the 

Clean Air Act requires the agency to regulate 

emissions of the deleterious pollutant." 549 U.S. at 

534. As discussed above, EPA has made the two findings 

on contribution and endangerment. 74 FR 66496 

(December 15, 2009). Thus, EPA is required to issue 

standards applicable to emissions of this air 

pollutant from new motor vehicles. 

 The Court properly noted that EPA retained 

"significant latitude" as to the "timing ... and 

coordination of its regulations with those of other 

agencies" (id.). However it has now been nearly three 

years since the Court issued its opinion, and the time 

for delay has passed. In the absence of these final 

standards, there would be three separate federal and 

state regimes independently regulating light-duty 

vehicles to increase fuel economy and reduce GHG 

emissions: NHTSA’s CAFE standards, EPA’s GHG 

standards, and the GHG standards applicable in 

California and other states adopting the California 

standards. This joint EPA-NHTSA program will allow 

automakers to meet all of these requirements with a 

single national fleet because California has indicated 

that it will accept compliance with EPA’s GHG 

standards as compliance with California's GHG 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

304

standards. 74 FR at 49460. California has not 

indicated that it would accept NHTSA’s CAFE standards 

by themselves. Without EPA’s vehicle GHG standards, 

the states will not offer the federal program as an 

alternative compliance option to automakers and the 

benefits of a harmonized national program will be 

lost. California and several other states have 

expressed strong concern that, without comparable 

federal vehicle GHG standards, the states will not 

offer the federal program as an alternative compliance 

option to automakers. Letter dated February 23, 2010 

from Commissioners of California, Maine, New Mexico, 

Oregon and Washington to Senators Harry Reid and Mitch 

McConnell (Docket EPA-HQ-OAR-2009-0472-11400). The 

automobile industry also strongly supports issuance of 

these rules to allow implementation of the national 

program and avoid “a myriad of problems for the auto 

industry in terms of product planning, vehicle 

distribution, adverse economic impacts and, most 

importantly, adverse consequences for their dealers 

and customers.” Letter dated March 17, 2010 from 

Alliance of Automobile Manufacturers to Senators Harry 

Reid and Mitch McConnell, and Representatives Nancy 

Pelosi and John Boehner (Docket EPA-HQ-OAR-2009-0472-

11368). Thus, without EPA’s GHG standards as part of a 

federal harmonized program, important GHG reductions 

as well as benefits to the automakers and to consumers 

would be lost.165 In addition, delaying the rule would 

impose significant burdens and uncertainty on 

automakers, who are already well into planning for 

production of MY 2012 vehicles, relying on the ability 

to produce a single national fleet. Delaying the 

issuance of this final rule would very seriously 

disrupt the industry’s plans 

Instead of delaying the LDV rule and losing the 

benefits of this rule and the harmonized national 

program, EPA is directly addressing concerns about 

stationary source permitting in other actions that EPA 

is taking with regard to such permitting. That is the 

proper approach to address the issue of stationary 

source permitting, as compared to delaying the 

issuance of this rule for some undefined, indefinite 

time period. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

305

75 FR____ (April__, 2010) (footnote omitted). 

9. “Administrative necessity” basis for PSD and Title V 

requirements in Tailoring Rule 

EPA believes that the “administrative necessity” doctrine, 

within the Chevron framework, also justifies today’s 

rulemaking. Applying the applicability requirements of the PSD 

and title V programs according to a literal reading of their 

terms (as EPA has narrowed them in the past through 

interpretation) to GHG sources beginning on the January 2, 2011 

date that regulation of GHGs takes effect would sweep so many 

sources into those programs as to render the programs impossible 

for the permitting authorities to administer. Although 

streamlining the PSD and title V programs offers some promise to 

improve the administrability of the programs, given the time 

needed to implement such streamlining, the step-by-step 

expansion of PSD and title V requirements to GHG sources that we 

are promulgating today is the most that the permitting 

authorities can reasonably be expected to administer. 

This section discusses the application of the 

“administrative necessity” doctrine. Our views concerning this 

doctrine remain similar to what we said at proposal, with 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

306

adjustments for the new analysis we have conducted and 

information we have received since proposal, as well as the 

revisions we made to the tailoring approach. This analysis and 

information have already been presented above, in the discussion 

of the “absurd results” basis. It is not necessary to reiterate 

the lengthy discussion of the doctrine that we included in the 

proposal or the factual data presented above; as a result, this 

section is briefer and highlights the conclusions we have 

reached about the application of this doctrine.. 

 As noted above, under the current interpretation of the PSD 

applicability provision, EPA’s recent promulgation of the lightduty vehicle rule will trigger the applicability of PSD for GHG 

sources at the 100/250 tpy threshold levels as of January 2, 

2011. This is because PSD applicability hinges on the 

definition of “major emitting facility,” which, under EPA’s 

long-standing narrowing interpretation, and absent further 

tailoring, applies PSD to sources of any air pollutant that is 

subject to regulation under another provision of the CAA. EPA’s 

promulgation of the light-duty vehicle rule means that GHGs will 

become subject to regulation on the date that the rule takes 

effect, which will be January 2, 2011. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

307

 Absent tailoring, the January 2, 2011 trigger date for GHG 

PSD applicability will see an extraordinarily large number of 

PSD permitting actions – we estimate more than 81,000 per year – 

representing an increase of almost 300-fold over the current 280 

PSD permitting actions each year. In addition, over 6 million 

sources will become subject to title V, an increase of more than 

400-fold over the 14,700 sources that currently are subject to 

title V. 

 Under the three-step approach that we read the caselaw to 

establish for implementing the “administrative necessity” 

doctrine, as described above, see 74 Fed. Reg. 55,315 col. 1 to 

55,316 col. 3, an agency is not required to adhere to literal 

statutory requirements if the agency, as the first step, makes 

every effort to adjust the requirements within the statutory 

constraints, but concludes with justification – at the second 

step – that it would be impossible to comply with the literal 

reading of the statute. Under those circumstances, the agency 

may – at the third step – develop what is in effect a compliance 

schedule with the statutory requirements, under which the agency 

will implement the statute as much as administratively possible 

and as quickly as administratively possible. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

308

a. First step of the “administrative necessity” analysis: 

streamlining 

 In the proposed rulemaking, EPA discussed at length the 

prospect of streamlining both PSD and title V. EPA described 

“several potentially useful tools available in the streamlining 

toolbox for the PSD permitting threshold level, the PSD 

significance level, and the title V permitting threshold,” 

specifically – 

For the PSD permitting threshold level and 

significance level, there are at least three such 

tools: The first is interpreting the definition of 

"potential to emit" so that the amount of a source's 

emissions that counts in determining whether it 

qualifies as a major source and therefore is above the 

permitting threshold requirements is closer to the 

amount of its emissions when it is in actual 

operation, rather than the amount of emissions that 

the source would emit if it were operating 

continuously. Narrowing the definition of PTE is a 

potentially extremely important tool in this context 

because identifying the amount of a source's emissions 

as closer to its actual emissions in this manner would 

mean that very large numbers of residential and 

commercial sources would have significantly lower 

emissions and would fall below the statutory threshold 

requirements for triggering PSD. Second, EPA believes 

it may be able to develop programs involving general 

permits, under which large numbers of similarly 

situated sources would each be covered by essentially 

the same permit established through a regulatory 

action by the permitting authority. This approach 

could achieve economies of scale and thereby reduce 

administrative burden. Third, EPA believes it may be 

able to streamline the single most time-consuming 

element of the PSD permit program, which is the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

309

determination of BACT as required under CAA 

§165(a)(4), by establishing presumptive BACT levels 

for certain source categories that comprise large 

numbers of sources. As for title V, as discussed 

below in detail, EPA believes that defining "potential 

to emit" to reflect more closely a source's actual 

operation and developing a program of general permits 

could streamline the administration of title V 

permits. 

74 FR 55,315 col. 2-3. 

 At proposal we stated that we would, and we still commit 

to, vigorously pursue development of these streamlining 

measures, and, as indicated in our discussion of streamlining 

methods in section V.E.1 and in response to comments, we have 

already begun developing those measures. For example, as 

described elsewhere, we have done much work – both with 

stakeholders and in-house -- to begin to develop recommendations 

for what controls would qualify as BACT for various industries. 

This work is important as a foundation for developing 

presumptive BACT, which is a potentially quite efficient 

streamlining measure. 

 However, it is not possible for us or the State and local 

permitting authorities to develop and implement streamlining 

techniques by the time that PSD and title V are triggered for 

sources emitting GHGs – January 2, 2011 -- or shortly 

thereafter. Developing streamlining methods would entail 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

310

acquiring more information about the affected industry, may 

entail rulemaking, and would likely entail some type of public 

review of proposals for streamlining even if not done through 

rulemaking. As discussed in section VI.E, we do not expect that 

we could complete all those steps for meaningful streamlining 

measures within two years. 

b. Second step of the “administrative necessity” analysis: 

demonstration of administrative impossibility. 

 With no streamlining measures available at the time that 

PSD and title V would apply to sources of GHGs or shortly 

thereafter, under the second step of the “administrative 

necessity” analysis, we must determine whether implementation of 

the statutory requirements at that time would be 

administratively impossible for the permitting authorities. We 

are mindful that the D.C. Circuit has cautioned that this 

showing is a high hurdle, and that in none of the 

“administrative necessity” decisions was an administrative 

agency successful in making such a showing, as we recognized in 

the proposal. See 74 Fed. Reg. at __. 

 Even so, we believe there is no question that a literal 

application of the PSD and title V programs to GHG sources as of 

January 2, 2011 would be flatly impossible for the State and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

311

local permitting authorities to administer for at least an 

initial period of time.35 The key facts have been recounted 

above, and no more than a brief recitation is necessary here. 

Although the PSD and title V programs are best seen as a joint 

program, it is useful to separate them to show how stark the 

administrative problems are: On the PSD side, annual permit 

applications would increase by over 300-fold, from 280 to 

80,000; costs to the permitting authorities would increase more 

than 100-fold, from $12 million to $1.5 billion; and the 

permitting authorities would need to hire, train, and manage 

9,772 FTEs . For title V, total permit applications would 

increase by over 400-fold, from 14,700 to 6.1 million; costs to 

the permitting authorities would increase by about the same 

amount, from $62 million to $21 billion; and the permitting 

authorities would need to hire, train, and manage 229,118 FTEs. 

 We have elaborated upon these burdens elsewhere in today’s 

notice. It is clear that they justify our conclusion that they 

bespeak an impossible administrative task. It is not hyperbole 

 35 We recognize that in a few states, we are the permitting authority. We do not think 

that this changes the calculation of administrative burdens. We do not believe that we could 

reasonably be expected to adjust our budget to accommodate the large new permitting burdens, 

and even if we could, the administrative burdens would remain in most of the rest of the nation 

where it is the state or local agencies that bear permitting responsibility. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

312

to say that if these administrative responsibilities are not 

considered impossible within the meaning of the “administrative 

necessity” doctrine, then it is difficult to imagine what would 

be considered impossible. 

c. Third step of the “administrative necessity” analysis: 

tailoring 

 Under the third step of the “administrative necessity” 

analysis, we must demonstrate that the steps we intend to take 

towards implementation of the statutory requirements are the 

most that can be done during the indicated time frames, in light 

of administrative resources. See 74 FR ___. This amounts to 

establishing a schedule for phasing in PSD and title V 

applicability to GHG sources. 

 Because this step is based on the administrative resources 

of the permitting authorities, our analysis is similar, and 

leads to the same conclusions, as we described under the “absurd 

results” basis. 

10. “Step-at-a-time” basis for tailoring rule 

 In addition to the “absurd results” and “administrative 

necessity” doctrines, the “step-at-a-time” judicial doctrine, 

within the Chevron framework, supports at least part of EPA’s 

tailoring rule. The caselaw, described above, indicates that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

313

courts will accept an initial step towards full compliance with 

a statutory mandate, as long as the agency is headed towards 

full compliance, and we believe that the doctrine is applicable 

here. EPA intends to require full compliance with the CAA 

applicability provisions of the PSD and title V programs, but we 

believe that in the case of GHG-emitting sources, by application 

of the “absurd results” doctrine or the “administrative 

necessity” doctrine, full compliance with the applicability 

provisions does not necessarily mean full compliance with the 

literal terms of those provisions.36 Rather, as we have 

explained elsewhere, in the case of GHG sources, full compliance 

may mean compliance with higher levels that are consistent with 

congressional intent, under the “absurd results” doctrine, or 

that are within the reach of permitting authorities in light of 

their administrative constraints, under the “administrative 

necessity” doctrine. Today’s rulemaking constitutes a package 

of initial steps towards that full compliance, and, seen in that 

light, is supported by the “step-at-a-time” doctrine. 

 36 For reasons explained elsewhere, our reference to the literal terms of the applicability 

provisions means the literal terms of the definition of “major emitting facility” for PSD and 

“major source” for title V, as EPA has narrowed those definitions to refer to “any pollutant” that 

is subject to regulation under the CAA. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

314

 Even if the doctrine were found to apply only when an 

agency is committed to fully implementing statutory requirements 

according to their literal terms, we believe that the steps we 

promulgate today would be considered valid under the step-at-atime doctrine. This is because even if we are incorrect about 

the applicability of the “absurd results” and “administrative 

necessity” doctrines, so that GHG sources are required to comply 

with the literal terms of the PSD and title V applicability 

provisions, the “step-at-a-time” doctrine would allow PSD and 

title V applicability to be phased in, and the steps we 

promulgate today would be upheld as reasonable initial steps 

toward full compliance with the literal terms of the CAA. As we 

have described elsewhere, there is little question but that 

sources and permitting authorities cannot reasonably be expected 

to comply with or implement PSD and title V applicability 

requirements in the near term – by January 2, 2011 and July 1, 

2011 -- except to the limited extent described under steps 1 and 

2. Nor is applicability of the PSD and title V requirements at 

levels below 50,000 tpy CO2e reasonable before six years from 

promulgation of today’s rule, as discussed elsewhere. If 

further steps resulting in full compliance with the literal 

terms of the applicability provisions of PSD and title V were 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

315

required, it would be reasonable for those steps to occur in the 

future, as part of the rulemaking to be completed by the sixth 

year after promulgation, to which EPA commits itself as part of 

today’s action, or as part of subsequent actions. See id.

(upholding agency action as a step towards full compliance with 

statutory mandate when the agency expected full compliance to 

occur some 20 years after the deadline in the statute). 

C. Mechanisms for implementing and adopting the tailoring 

approach 

In this section, we discuss three issues related to 

adoption of the tailoring approach within our regulations and by 

permitting agencies. The first is the regulatory mechanism for 

implementing the tailoring approach, and our rationale for the 

specific way we are revising the PSD and title V applicability 

provisions to incorporate the tailoring approach. The second is 

the process by which state or local permitting authorities may 

incorporate the tailoring approach into their PSD SIP and title 

V permit programs. Finally, we discuss our reasons for delaying 

action on our limited approval of both SIP-approved PSD programs 

and titleV programs, and request further information from States 

on both programs. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

316

In brief, we proposed to exempt sources emitting GHGs below 

certain threshold levels from the definition of “major 

stationary source” and “major modification” in PSD programs and 

the definition of “major source” in title V programs. We further 

proposed to effectuate this change in SIP-approved PSD programs 

and Part 70 title V programs by limiting our prior approval of 

those programs to the revised applicability thresholds for 

GHGs.37 While these changes would have the effect of putting the 

lower thresholds in place in states as a matter of federal law, 

state commenters expressed concern that they would not be able 

to adopt the tailoring rule under state laws on an expeditious 

basis. To address this, our final action differs from our 

proposed rule in the way we incorporate the limitations 

promulgated in this tailoring rule into the “major stationary 

source,” “major modification” and “major source” definitions. 

This approach relies on further defining the term “subject to 

regulation” and is not substantively different in effect from 

the proposed rule, but this mechanism will facilitate more rapid 

adoption and implementation of the limitations in this final 

 37 In the alternative, we also proposed to use our 110(k)(6) error correction authority to revise SIPapproved PSD program. We are also delaying action on this proposal.
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

317

rule by states through interpretation of language in existing 

state regulations. We are also delaying action on our proposed 

limited approval of SIP-approved PSDprograms and Part 70 title 

programs to determine how each State will implement the final 

rules. 

1. PSD Approach: Background and Proposal 

Under CAA §165(a), no “major emitting facility” may 

construct or modify unless it receives a preconstruction permit 

that meets the requirements of the PSD program. CAA §169(1) 

defines a major emitting facility as “any ... source[]” in one of 

28 specified source categories that “emit[s], or ha[s] the 

potential to emit, one hundred tons per year or more of any air 

pollutant;” or “any other source with the potential to emit two 

hundred and fifty tons per year or more of any air pollutant.” 

EPA’s regulations replace the term “major emitting facility” 

with the term “major stationary source,” and defines the term as 

“[a]ny of ... [28 types of] stationary sources of air pollutants 

which emits, or has the potential to emit, 100 tons per year or 

more of any regulated NSR pollutant” or “any stationary source 

which emits, or has the potential to emit 250 tons per year or 

more of a regulated NSR pollutant.” 40 CFR 51.166(b)(1)(i)(a)-

(b). The term “regulated NSR pollutant” is defined to include, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

318

among other things, “any ... air pollutant that otherwise is 

subject to regulation under the Clean Air Act.” 40 CFR 

51.166(b)(50). Note that the regulatory definition in effect 

narrows the statutory definition to read “one hundred tons per 

year or more” or “two hundred and fifty tons per year or more of 

any air pollutant subject to regulation under the Clean Air Act” 

(emphasis added). 

Similarly, under the statute, a modification occurs if 

there is a physical change or change in the method of operation 

“which increases the amount of any air pollutant emitted . . .” 

Section 111(a)(4). As with the major stationary source 

definition, we have limited coverage of the modification 

provision to physical changes or changes in the method of 

operation that result in a significant increase, and a 

significant net emissions increase of a “regulated NSR 

pollutant.” 40 CFR 51.166(b)(2)(i). 

Our proposed rule revised the definition of “major 

stationary source to 1) exempt GHG from the regulated NSR 

pollutants that, if emitted by a source in the 100 or 250 tpy 

quantities, would cause the source to qualify as a “major 

stationary source;” and 2) add a specific threshold at which a 

source that emits a specified quantity of GHGs (at proposal, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

319

that quantity was 25,000 tpy CO2e) would qualify as a “major 

stationary source.” 74 FR 55,351, proposed 40 CFR 

51.166(b)(1)(i)(a), (b), (d). We also proposed a significance 

threshold, the amount of an increase needed to trigger PSD for a 

modifications or require BACT for a new source, of 25,000 tpy 

CO2e. 74 FR 55351 40 C.F.R 51.166(b)(23)(i). Additionally, we 

recognized that it may take some time before States could change 

their SIP-approved PSD programs and that, absent additional 

action on our part, GHG-emitting sources would remain subject to 

the 100 or 250 tpy thresholds, and subject to a zero 

significance threshold for major modifications as a matter of 

Federal law. To address this issue, we proposed to narrow our 

previous approval of those SIPs, under the authority of the 

Administrative Procedures Act and the general authority of CAA 

section 301. Our limited approval would revise existing SIPapproved programs to authorize permitting under the Clean Air 

Act only for GHG sources at the appropriate levels. 

In response to our proposed approach, we received numerous 

comments from State and local permitting agencies expressing 

concern that our proposed approach in the Tailoring Rule could 

meet its objectives to avoid applying PSD requirements to small 

sources under federal law, but would not succeed in avoiding the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

320

application of PSD requirements to those small sources under 

state law. The commenters explained that, although EPA was 

changing federal PSD applicability thresholds for GHG-emitting 

sources to incorporate the tailoring approach, and limiting the 

scope of SIPs consistent with these thresholds state rules 

containing the originally- approved SIP thresholds would 

continue to apply as a matter of state law. As a result, states 

would be faced with the same administrative difficulties 

recognized in the proposed rule in implementing existing State 

law. Rather, as commenters explained, for the most part, the 

laws and regulations states adopt to implement federal PSD 

programs mirror EPA’s regulations, so that the state laws, in 

addition to the federally approved SIPs, apply PSD to sources 

that emit air pollutants subject to regulation at the 100/250 

tpy threshold. Commenters reasoned that, until the States can 

change their state laws, the 100/250 tpy thresholds will 

continue to apply as a matter of state law, even though the 

higher thresholds apply as a matter of federal law. 

Importantly, these commenters emphasized that their State 

process requires that they incorporate the higher thresholds for 

GHG sources in their SIPs only through a rulemaking or, in some 

cases, through a legislative change. These processes would 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

321

require many months and in some cases as long as two years. As 

a result, sources that emit GHGs below the federally established 

levels in the final rule, but above the 100/250 tpy levels in 

state laws and rules, would still be required to obtain PSD 

permits under state law. Commenters emphasized that this 

situation was untenable. 

In addition to the State comments just described, we 

received comments that took issue with our description of our 

legal mechanism as an application of the numerical thresholds. 

They asserted that in fact, our mechanism consisted of 

interpreting the term “any source” to exclude small GHG-emitting 

sources. Other commenters objected to our proposed mechanism of 

narrowing our previous SIP approval, arguing that this mechanism 

was without legal basis. 

2. Rationale for Our Final Approach to Implementing PSD 

In response to these concerns, we are adding another 

mechanism to implement the tailoring approach for PSD by 

interpreting the phrase “subject to regulation” that is used 

within the phrase “any regulated NSR pollutant ” that is part of 

the definitions of “major stationary source” and “major 

modification.” To implement this mechanism, we are codifying an 

interpretation of “subject to regulation” so that the GHGs 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

322

emitted by sources that fall below the thresholds or scope 

established in Steps 1 and 2 are not treated as “subject to 

regulation,” and therefore do not trigger PSD for the sources 

that emit them. . 

To understand this approach, it is useful to return to the 

definition of “major stationary source,” which, again, is 

central to PSD applicability. The definition, quoted above, 

employs the term “regulated NSR pollutant,” which is a defined 

term. The definition incorporates many other elements as well 

(e.g., the 100/250 threshold requirements), but for convenience, 

we shorthand it as follows: a “major stationary source” is 

“[a]ny ... source[] of air pollutants, which emits, or has the 

potential to emit, [depending on the source category, either] 

100 [or 250] tons per year or more of any air pollutant that is 

subject to regulation under the Clean Air Act.” A similar 

construct exists for the “major modification” definition. 

Returning to our shorthand above and applying our definition of 

“subject to regulation, the definition would now read A “major 

stationary source” is “[a]ny ... source[] of air pollutants, which 

emits, or has the potential to emit, [depending on the source 

category, either] 100 [or 250] tons per year or more of any air 

pollutant subject to regulation under the Clean Air Act, [but 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

323

GHGs are not subject to regulation under the Clean Air Act if 

emitted by sources below the thresholds established in steps 1 

and 2 .]” Similarly, major modification now means “any 

physical change or change in the method of operation that would 

result in: a significant emissions increase . . . . of a 

regulated NSR pollutant . . but GHG are not subject to 

regulation under the Clean Air Act if emitted by sources below 

the thresholds established in steps 1 and 2 and result in an 

increase less than the amounts specified therein.” 

Although EPA is codifying its interpretation of “subject to 

regulation”, states may be able to follow EPA’s approach to 

tailoring for GHG permitting without having to undertake a 

rulemaking action to revise regulations that are included in 

their SIPs or without requiring an act of the State legislature. 

EPA believes this can be accomplished through interpretation by 

the states if the state has taken the position, or determines 

now, that the state’s definition of “subject to regulation,” 

“regulated NSR pollutant” and/or “major stationary source” is 

intended to be interpreted in a way that tracks the meanings 

that EPA has assigned to these phrases. As a result, these 

States can adopt the meaning of subject to regulation 

established by EPA and apply it by interpretation before January 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

324

2, 2011, and thereby avoid the situation in which, as a matter 

of State law, GHG-emitting sources above the 100 or 250 tpy 

thresholds become subject to PSD by that date. We believe that 

States can adopt this regulatory approach through an 

interpretation, rather than by a rulemaking action or state 

legislative process, because we view the phrase “regulated NSR 

pollutant” as open-ended, and therefore subject to 

interpretation, as the following discussion demonstrates. 

On December 18, 2008, EPA issued an interpretive memorandum 

establishing EPA’s interpretation of the definition “regulated 

NSR pollutant” found at 40 C.F.R. 52.21(b)(50)).. Id. EPA 

intended this memo to resolve any ambiguity in subpart (vi) of 

this definition which includes “any pollutant that otherwise is 

subject to regulation under the Act.” Specifically, the memo 

stated that EPA will interpret the definition of “regulated NSR 

pollutant” to exclude pollutants for which EPA regulations only 

require monitoring or reporting but to include each pollutant 

subject to either a provision in the Clean Air Act or regulation 

adopted by EPA under the Clean Air Act that requires actual 

control of emissions of that pollutant. 

 After reconsidering this interpretation through a formal 

notice and comment process, EPA refined its interpretation to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

325

establish that the PSD permitting requirements will not apply to 

a newly regulated pollutant until a regulatory requirement to 

control emissions of that pollutant “takes effect.” 75 FR 17704. 

Importantly, as stated above, since the term “regulated NSR 

pollutant” is embedded within the definition of “major 

stationary source” this interpretation effectively defines which 

major stationary sources are subject to PSD permitting. As a 

result, for example, EPA explained that PSD and title V 

permitting requirements for GHGs will not apply to GHGs until at 

least January 2, 2011 - following the anticipated promulgation 

of EPA regulations requiring control of GHG emissions under 

Title II of the CAA. Id. Nonetheless, because this final rule 

tailors the application of GHG permitting, GHG emissions at 

certain thresholds will not be “subject to regulation” as we 

interpret that term within the “regulated NSR pollutant” 

definition. 

 In the Response to Comment document for EPA’s 

reconsideration of the PSD interpretative memorandum, we stated 

that, 

Absent a unique requirement of state law, EPA believes that 

state laws that use the same language that is contained in 

EPA’s PSD program regulations at 52.21(b)(50) and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

326

51.166(b)(50) are sufficiently open-ended to incorporate 

greenhouse gases as a regulated NSR pollutant at the 

appropriate time consistent with EPA’s interpretation of 

these regulations (cite docket #). 

 Historically, EPA has interpreted certain state approvedSIP programs as sufficiently open-ended such that the rules 

provide for the “automatic assumption for the responsibility for 

review” of new pollutants before the general deadline for states 

to revise their PSD programs. See e.g. 52 FR at 24682. 

Conversely, we have also read federal rules and state SIPs to 

provide for the automatic removal of a pollutant when such 

pollutant is no longer “subject to regulation.” For example, 

the 1990 CAA amendments exempted hazardous air pollutants listed 

in Section 112(b)(1) from the PSD requirements. See CAA Section 

112(b)(6). Following passage of the amendments, EPA issued “New 

Source Review (NSR) Program Transitional Guidance“,, a 

memorandum from John S. Seitz, Director Office of Air Quality 

Planning and Standards to Regional Air Division Directors on 

March 11, 1991. In that guidance, EPA interpreted its 

regulations to automatically cease to apply to listed HAPs (with 

some noted exceptions.), and implicitly stated that a State with 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

327

an open-ended SIP-approved rule could also automatically cease 

to regulate HAPs. 

 After reviewing these past practices in the PSD permitting 

program, and EPA’s prior statements regarding pollutants subject 

to the PSD program, we conclude that State rules that contain 

the same language as used in the 40 C.F.R. Section 52.21(b)(50) 

or 40 C.F.R. Section 51.166(b)(49), or who otherwise have 

sufficiently open-ended NSR regulations, would be able to 

implement our tailoring rule approach to permitting of GHG 

sources without the need for a SIP revision if they establish 

that the state intended to apply the same meaning as EPA when it 

incorporated the term “subject to regulation” in its PSD program 

regulations. If states adopt this reading of their regulations, 

GHG sources falling below the specified cutoffs would not be 

emitting pollutants “subject to regulation” within the 

definition of “regulated NSR pollutant” and therefore would not 

be subject to PSD permitting as a major stationary source. 

During our consideration of this action, we participated in 

teleconferences with several permitting authorities (6 states 

and 1 local agency) to discuss this issue of whether they could 

implement the proposed rule without the need for state law or 

regulations changes or a revision of the provisions of state law 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

328

that are a part of the SIP. [Placeholder: docket # for meeting 

summary] We specifically discussed whether defining the phrase 

“subject to regulation” would better facilitate state 

incorporation of the limitations in this final rule. The state 

and local agencies participating in the calls generally agreed 

that defining the phrase “subject to regulation” that is used 

within the definition of “regulated NSR pollutant” would, 

compared to our proposed approach, better facilitate state 

incorporation of the limitations in the final rule in states 

with regulations that mirror the existing federal rules, or in 

states whose rules are otherwise sufficiently open-ended to 

incorporate the limitations in the final rule by interpretation. 

Participants from each agency also indicated that it is likely 

that their rules were sufficiently open-ended to do so because 

they contain the term “subject to regulation” and that term has 

not been previously interpreted in ways that would preclude 

adoption of EPA’s meaning of the term by interpretation 

(although some indicated they may elect to pursue rulemaking in 

addition to interpretation). Accordingly, we selected the 

“subject to regulation” regulatory approach as the mechanism for 

codifying the final rule. 

3. Other mechanisms 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

329

The mechanism for implementing the terms of this tailoring 

rule described above has the same substantive effect as the 

mechanism we considered in the proposed rule. Defining the term 

“subject to regulation”, has the effect of modifying the meaning 

of the regulatory terms “major stationary source” and “major 

modification” – again, the keys to PSD applicability – to 

exclude GHG-emitting sources below the thresholds established in 

Steps 1 and 2, and our action should be interpreted to rely on 

any of several legal mechanisms to accomplish this 

interpretation. The thrust of this rulemaking is to apply the 

PSD definition of “major stationary source” – which embodies the 

statutory term, “major emitting facility” -- to GHG sources by 

treating only GHG sources that emit at levels above the steps 1 

and 2 thresholds as meeting that definition. Our action may 

reasonably be construed to have the effect of revising the 

meaning of several terms in these definitions, including: (i) 

the numerical thresholds, as we proposed; (ii) the term, “any 

source,” which some commenters identified as the most relevant 

term for purposes of our proposal; or (iii) the term, “subject 

to regulation,” which, as discussed above, our regulations 

attach to the definition of “major stationary source” and “major 

modification.” The specific choice of which term constitutes 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

330

the mechanism does not have a substantive legal effect because 

each mechanism involves one or another of the components of the 

regulatory term “major stationary source” and it is that term 

that we are defining to exclude the indicated GHG-emitting 

sources. Thus, while the “subject to regulation” mechanism 

facilitates expeditious implementation by states, and we are 

therefore revising our regulations to adopt this approach, there 

is no substantive difference in effect between the alternative 

mechanisms we may use to finalize the proposed rule.38 

Similarly, with respect to “major modification” although 

our final action revises our regulations to incorporate the 

“subject to regulation” mechanism, we believe that our final 

action should be construed as interpreting the definition of the 

regulatory term “major modification”—which embodies the 

statutory term “modification”--– to exclude GHG-emitting sources 

below the thresholds established in Steps 1 and 2, and that our 

action should be interpreted to rely on any of the several 

 38 We also think that this approach better clarifies our long standing practice of 

interpreting open-ended SIP regulations to automatically adjust for changes in the regulatory 

status of an air pollutant, because it appropriately assures that the tailoring rule applies to both 

the definition of “major stationary source” and “regulated NSR pollutant.” 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

331

mechanisms noted above to accomplish this interpretation. 

Further, we believe that our action may reasonably be construed 

to revise any of several terms in that definition, – including 

(i) the numerical thresholds (zero for modifications under the 

statute), as we proposed; (ii) the term, “a stationary source,” 

which parallels the “any source” theory identified by commenters 

with respect to “major stationary source”; or (iii) the term, 

“subject to regulation,” which, as discussed above, that our 

regulations attach to the definition of “major modification.” 

We believe that the specific choice of which term constitutes 

the mechanism does not have a substantive legal effect because 

each mechanism involves one or another of the components of the 

regulatory term “major modification” and it is that term that we 

are interpreting to exclude the indicated GHG-emitting sources. 

Thus, while the “subject to regulation” mechanism facilitates 

expeditious implementation by states, and we are therefore 

revising our regulations to adopt this approach, we otherwise 

find no substantive difference between the alternative 

mechanisms we may use to finalize the proposed rule.39 

 39 We also think that this approach better clarifies our long standing practice of 

interpreting open-ended SIP regulations to automatically adjust for changes in the regulatory 

status of an air pollutant, because it appropriately assures that the tailoring rule applies to both 

the definition of “major stationary source” and “regulated NSR pollutant.” 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

332

4. Codification of Interpretive Memo 

Notably, we recently affirmed our interpretation of the 

term “subject to regulation” as it applies broadly to the PSD 

program through a formal notice and comment process. 

[placeholder cite Johnson}. In the response to comments for 

that action, we indicated that we may opt to codify our 

interpretation of the term in the GHG final tailoring rule. 

Accordingly, our final rule adopts this interpretation to bring 

additional clarity to our rules. Specifically, we add a new 

paragraph to the definitions “subject to regulation” that 

contains our existing interpretation of that term. We also 

moved existing exceptions (e.g. Section 112 hazardous air 

pollutants) to a new paragraph with in the definition of 

"subject to regulation". Movement of these regulations is not 

intended to effect any change in how those regulations are 

implemented, but merely simplify the regulations clearly 

delineating different terms and concepts. 

We do not believe that codification of this interpretation 

from the Interpretive Memo is necessary to continue the 

effectiveness of the interpretation, nor do we believe that our 

action disturbs States’ existing authority to adopt the 

definition through interpretation of their existing rules. Our 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

333

decision to codify our existing interpretation is based solely 

on a desire to better inform readers of the existing 

interpretation. 

 

5. Delaying Limited Approvals and Request for Submission of 

Information from States implementing a SIP-approved PSD program 

Because we now anticipate that many states will be able to 

implement the final rules through interpretation without the 

need to revise their SIPs, we are delaying further action on our 

proposal to limit approved SIPs until we better understand how 

permitting authorities will implement our final rule. For this 

purpose, we ask each State to submit a letter to the appropriate 

Regional Administrator no later than [insert date 60 days after 

promulgation]. In that letter, states should explain whether 

they will apply EPA’s meaning of the term “subject to 

regulation” and if so, whether the state intends to incorporate 

that meaning of the term without undertaking a regulatory or 

legislative process. If a State must revise its regulations to 

apply EPA’s meaning of the term “subject to regulation” we ask 

States to provide an estimate of the time to adopt final rules 

in its letter to the Regional Administrator. If a state chooses 

not to adopt EPA’s meaning by interpretation, the letter should 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

334

address whether the State has alternative authority to implement 

today’s phase-in approach or some other approach that is at 

least as stringent, but which also addresses the expected 

shortfalls in personnel and funding that would exist if the 

state to carried out PSD permitting under its existing program 

thresholds. 

For any State that is unable or unwilling to adopt the 

limitations in the final rules by January 2, 2011, and who 

otherwise are unable to demonstrate adequate personnel and 

funding, EPA will move forward with finalizing a limited 

approval of the existing SIP. Although we received comments 

questioning EPA’s authority to undertake a limited approval 

using our general rulemaking and 110(k)(6) authorities, we are 

not responding to those comments at this time. We will address 

these comments in any final action we take to implement a 

limited approval. 

In our proposed rule, we also noted that a handful of EPAapproved SIPs fail to include provisions that would subject GHG 

emissions to their PSD requirements when regulations that EPA 

promulgates to regulate GHGs take effect and thereby trigger the 

applicability of PSD for sources that remain covered under 

today’s rule. This is generally because these SIPs specifically 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

335

list the pollutants subject to the SIP program requirements, 

rather than including a definition of NSR regulated pollutant 

that mirrors the federal rule, or because a state otherwise 

interprets its regulations to limit which pollutants the state 

may regulate. At proposal, we indicated that we intended to 

take separate action to identify these SIPs, and to take 

regulatory action to correct this SIP deficiency. We ask any 

state or local permitting agency that does not believe its 

existing SIP provides authority to issue PSD permits to GHG 

sources consistent with the final rule to notify the Regional 

Administrator by letter (which should be done no later than the 

previously described letter regarding adoption of the tailoring 

rule). This letter should inform the Regional Administrator 

whether the state intends to undertake rulemaking to revise 

their rules to the handle GHG sources that will be covered under 

the applicability thresholds in this rulemaking, or 

alternatively, whether the state believes it has adequate 

authority through other means to issue federally-enforceable PSD 

permits to GHG sources consistent with the final rule. For any 

State that lacks the ability to issue PSD permits for GHGs 

consistent with the final rule, we will undertake a separate 

action to call the SIP. As appropriate, we will also move 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

336

quickly to impose a FIP through 40 C.F.R. Section 52.21 to 

ensure that GHG sources will be regulated consistent with the 

final rule. 

6. Title V programs 

 Our final action also differs from the proposal in the 

specific regulatory mechanism by which we tailor the definition 

of “major source” for title V permit programs, but is a logical 

outgrowth of our proposed rule. EPA proposed to implement 

tailoring for GHGs under title V by excluding sources of GHGs 

from the general definition of “major source” under 40 C.F.R. 

sections 70.2 and 71.2, and adding a separate definition of 

“major source” with tailored thresholds for sources of GHGs. In 

response to comments, particularly from states concerned with 

implementation of the proposed approach under state law, EPA is 

adopting an approach in the final rule that 1) amends the 

definition of “major source” by codifying EPA’s long-standing 

interpretation that applicability for a “major stationary 

source” under CAA sections 501(2)(B), and 302(j) and 40 C.F.R. 

section 70.2 and 71.2 is triggered by sources of pollutants 

“subject to regulation,” and 2) adding a definition of “subject 

to regulation.” Further, we are delaying our action to move 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

337

forward with a limited approval of existing state Part 70 

programs. 

 We finalize this alternative approach to address concerns 

similar to those we received with respect to State 

implementation of SIP-approved PSD programs. Specifically, we 

received comments that the mechanism we proposed would not 

address the significant administrative and programmatic 

considerations associated with permitting GHGs under title V, 

because the 100 tpy threshold would continue to apply as a 

matter of State law. Commenters stated that states would need 

to undertake a regulatory and/or legislative process to change 

the threshold in their state laws which they could not complete 

before the laws would otherwise require issuance of operating 

permits to GHGs sources. After considering the commenters’ 

concerns, we are finalizing an approach designed to address the 

state law concerns for states, and also now find that it may be 

unnecessary to move forward with our proposed approach to limit 

approval of existing Part 70 programs in many States. 

 EPA’s approach involves the interrelationship of terms 

within the Part 70 definition of “major source” in title V and 

EPA’s implementing regulations, and EPA’s historical practice of 

interpreting the term “any air pollutant” in the “major 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

338

stationary source” component of that definition. EPA believes 

the approach in the final rule will allow many states to adopt 

the final rule through interpretation of existing state laws. 

Specifically, paragraph (3) within the definition of “major 

source” found in 40 CFR sections 70.2 and 71.2 defines a major 

source as a “a major stationary source of air pollutants, as 

defined in section 302 of the Act, that directly emits or has 

the potential to emit, 100 tpy or more of any air pollutant...” 

The EPA previously articulated the Agency’s interpretation that 

the regulatory and statutory definitions of “major source” under 

title V, including the term “any air pollutant, applies to 

pollutants “subject to regulation.” Memorandum from Lydia 

N.Wegman, Deputy Director, Office of Air Quality Planning and 

Standards, U.S. EPA, to Air Division Directors, “Definition of 

Regulated Air Pollutant for Purposes of Title V” (Apr.26, 

1993)(Wegman Memo). EPA recently re-affirmed this position in 

EPA’s Reconsideration of Interpretation of Regulations that 

Determine Pollutants Covered by Clean Air Act Permitting 

Programs. 75 FR 17704, 17022-23 (April 2, 2010)(Interpretive 

Memorandum Reconsideration Final Action). 

 Accordingly, under our long-established policy, States 

historically have interpreted the term “any air pollutant” under 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

339

the title V definition of “major source,” to mean any pollutant 

“subject to regulation” under the Act. Thus, as a matter of 

established interpretation, EPA and States effectively read the 

definition of “major source” under title V to include a source 

“...that directly emits or has the potential to emit, 100 tpy or 

more of any air pollutant subject to regulation under the Act.” 

[emphasis added].By amending our regulations to expressly 

include and define “subject to regulation” to implement our 

tailoring for GHGs under title V, we are seeking to enable 

States to adopt and implement this approach through a continued 

interpretation of the phrase “any air pollutant” within the 

“major source” definition, without the need for changes to state 

regulations or statutes. States may be able to track EPA’s 

approach to tailoring for GHG permitting without regulatory or 

statutory changes, for example, where a state has taken the 

position, or determines now, that the state’s interpretation of 

“major source,” “subject to regulation” and/or “any air 

pollutant” is intended to track EPA’s interpretation. 

 Thus, EPA is adding the phrase “subject to regulation” to 

the definition of “major source” under 40 C.F.R section 70.2 and 

71.2. EPA is also adding to these regulations a definition of 

“subject to regulation.” Under the part 70 and part 71 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

340

regulatory changes adopted today, the term “subject to 

regulation,” for purposes of the definition of “major source,” 

has two components. The first component codifies the general 

approach EPA recently articulated in the “Reconsideration of 

Interpretation of Regulations That Determine Pollutants Covered 

by Clean Air Act Permitting.” 75 FR 17704. Under this first 

component, a pollutant “subject to regulation” is defined to 

mean a pollutant subject to either a provision in the CAA or 

regulation adopted by EPA under the CAA that requires actual 

control of emissions of that pollutant and that has taken effect 

under the CAA. See id. at 17022-23; Wegman Memo at 4-5. To 

address tailoring for GHGs, EPA includes a second component of 

the definition of “subject to regulation,” specifying that GHGs, 

are not subject to regulation for purposes of defining a major 

source, unless as of July 1, 2011, the emissions of GHGs are 

from a source emitting or having the potential to emit 100,000 

tpy of GHGs on a CO2e basis. 

 As explained above, we find no substantive difference 

between the alternative mechanisms for implementing GHG 

tailoring in the final rule. Whether we add GHG thresholds 

directly to the definition of “major source,” (as we proposed), 

or alternatively, expressly add and define the term “subject to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

341

regulation,” both approaches revise the definition of “major 

source” to implement the GHG tailoring rule. Accordingly, we 

adopt the later approach to facilitate State implementation of 

the final rule through an interpretation of existing State Part 

70 programs. Similar to our explanation above for PSD, while we 

adopt the “subject to regulation” mechanism for implementing GHG 

tailoring in the final rule, the thrust of our rulemaking today 

is to apply the title V definition of “major source” – which 

includes the statutory term, “major stationary source” -- to GHG 

sources by treating only GHG sources that emit at levels above 

the steps 1 and 2 thresholds as meeting that definition. 

Further, we believe that our action may reasonably be construed 

to revise any of several terms in that definition, including (i) 

the numerical thresholds, as we proposed; (ii) the term “any air 

pollutant,” or (iii) the term “subject to regulation,” which, as 

discussed above, our regulations graft into the definition of 

“major source.” We believe that the specific choice of which 

term constitutes the legal mechanism does not have a substantive 

legal effect because each mechanism involves one of the 

components of the regulatory term “major source,” and it is that 

term that we are interpreting to tailor title V applicability 

for GHG-emitting sources. Thus, while the “subject to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

342

regulation” mechanism facilitates expeditious implementation by 

states, and we are therefore revising our regulations to adopt 

this approach, we otherwise find no substantive difference 

between the alternative mechanisms we may use to finalize the 

proposed rule. 

Further, similar to our revised approach for addressing 

State SIP-approved PSD programs, we are delaying our action to 

issue limited approvals for State part 70 operating permit 

programs. In our proposed rule, we explained our concern that 

states lack adequate personnel and resources to carry out part 

70 operating permit programs for GHG sources that emit or have 

the potential to emit 100 tpy of GHGs. Accordingly, we 

proposed to use our general rulemaking authority under Section 

301(a) of the CAA and APA section 553 to limit our prior 

approval of State operating permit programs. This limited 

approval action would have had the effect of applying Clean Air 

Act permitting requirements only to sources that exceed the 

permitting thresholds established in this rule for the phase in, 

because only those sources would be covered by the federally 

approved part 70 programs. 74 FR at 55345. As discussed above, 

we are proceeding with a slightly revised approach to address 

concerns similar to those raised with our proposed approach for 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

343

addressing SIP-approved PSD permit programs. Because we now 

recognize that, like the PSD program, many States will be able 

to implement the final rules without the need to revise their 

existing Part 70 operating permit programs, we are delaying 

further action on our proposal to limit approval of existing 

Part 70 programs until we better understand how permitting 

authorities will implement our final rule. In addition to the 

information requested above on SIP-approved PSD permit programs, 

we ask each State to submit a letter to the appropriate Regional 

Administrator no later than [insert date 60 days after 

promulgation] detailing the state’s plan for permitting of GHG 

sources under the state’s part 70 program. In that letter, 

states should explain whether they will adopt an interpretation 

of the terms “major source,” “any air pollutant” or “subject to 

regulation” that is consistent with EPA’s regulatory 

interpretation of the these terms as codified at 40 C.F.R. 

section 70.2, and whether the State intends to adopt the 

interpretation without undertaking a regulatory or legislative 

process. This approach may be available, for example, where a 

state has taken the position, or determines now, that the 

state’s interpretation of “major source,” “subject to 

regulation” and/or “any air pollutant” is intended to track 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

344

EPA’s interpretation, resulting in title V permitting for 

sources of GHGs as described in EPA’s regulations adopted today. 

If a State must revise its title V regulations or statutes to 

implement the interpretation, we ask States to provide an 

estimate of the time to adopt final rules or statutes in its 

letter to the Regional Administrator. If a State chooses not to 

(or cannot) adopt our interpretation, the letter should address 

whether the State has alternative authority to implement the GHG 

tailoring approach or some other approach that is at least as 

stringent, but which also addresses the expected shortfalls in 

personnel and funding that would exist if the state to carried 

out permitting under Part 70 program thresholds lower than those 

adopted by EPA in this final rule. For any State that is unable 

or unwilling to adopt the permitting thresholds in the final 

rules, and otherwise is unable to demonstrate adequate personnel 

and funding, EPA will move forward with finalizing a limited 

approval of the state’s existing part 70 program. 

In our proposed rule, we also noted that a handful of Part 

70 operating permit programs may include provisions that would 

not require operating permits for any source of GHG emissions 

because, for example, the programs may apply only to pollutants 

specifically identified in the program provisions. States may 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

345

be unable to interpret their regulatory provisions to interpret 

the term “any pollutant” to include pollutants “subject to 

regulation.” We indicated that we intended to take separate 

action to identify these programs, and to take regulatory action 

to correct this deficiency. Accordingly, we ask any State or 

local permitting agency that does not believe its existing part 

70 regulations convey authority to issue title V permits to GHG 

sources consistent with the final rule to notify the Regional 

Administrator by letter as to whether the state intends to 

undertake rulemaking to revise their rules consistent with 

today’s applicability thresholds. This notification should be 

done no later than the previously described letter regarding 

adoption of the tailoring rule, and could be combined with 

similar notifications we request regarding the PSD program. We 

will undertake a separate regulatory action to address part 70 

programs that lack the ability to issue operating permits for 

GHG sources consistent with the final rule. We will use our 

federal title V authority to ensure that GHG sources will be 

permitted consistent with the final rule. 

D. Rationale for Treatment of GHGs for Title V Permit Fees 

The title V program requires permitting authorities to 

collect fees “sufficient to cover all reasonable (direct and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

346

indirect) costs required to develop and administer [title V] 

programs.” 40 To meet this requirement, permitting authorities 

either collect an amount not less than a minimum amount 

specified in our rules (known as the “presumptive minimum”), or 

may collect a different amount (usually less than the 

presumptive minimum). We did not propose to change the title V 

fee regulations in our notice of proposed rulemaking for this 

action, nor did we propose to require new fee demonstrations 

when title V programs begin to address GHGs. However, we did 

recommend that each state, local or tribal program review its 

resource needs for GHG and determine if the existing fee 

approaches will be adequate. If those approaches will not be 

adequate, we suggested that states should be proactive in 

raising fees to cover the direct and indirect costs of the 

program or develop other alternative approaches to meet the 

shortfall. We are retaining this proposed approach, and are not 

changing our fee regulations as part of today’s final action 

establishing steps 1 and 2 of the phase-in. However, we are 

offering some additional clarification of our fee approach 

during these steps in response to comments we received on this 

 40 The fee provisions are set forth in CAA Section 502(b)(3) and in our regulations at 40 

CFR 70.9 and 71.9 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

347

issue. Additional discussion of fees will be included as part 

of subsequent actions establishing step 3 and beyond. 

A few state commenters suggested that EPA should modify 

part 70 to adopt a presumptive minimum fee (or range for such 

fee) for GHGs, some of whom suggested that current fees may be 

insufficient to cover the costs of their program. It is 

important to clarify that altering the presumptive minimum would 

only affect those states that chose to charge the presumptive 

minimum fee to sources. Most states – including some of the 

commenters asking EPA to raise the presumptive minimum -- 

collect a lower amount that is not based on the presumptive 

minimum, but rather, relies on another fee schedule that it 

developed and EPA approved as adequate to cover costs. 

Therefore, it is useful to first discuss our approach to 

programs that have fee schedules resulting in a different amount 

before discussing our approach to the presumptive minimum. 

Because of the added GHG title V permitting workload 

described elsewhere in this notice, any state that will not, 

under its current fee structure, collect fees adequate to fund 

the permitting of GHG sources must alter its fee structure in 

order to meet the requirement that fees be adequate to cover 

costs. Changes may not be required in every instance; 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

348

circumstances will vary from state to state. For example a 

state may see increases in revenue from newly-covered sources 

(based on emissions of pollutants already subject to fees) that 

fully cover the state’s increased costs, or a state may be overcollecting fees now and could use the surplus to offset the 

increased costs. Nonetheless, in many cases, we think states 

will need to adjust their fee structures to cover the costs of 

GHG permitting in order to meet the requirements of the Act and 

our regulations. 

For this reason, although we are not calling for new fee 

demonstrations at this time, we plan to closely monitor state 

title V programs during the first two steps of the Tailoring 

Rule to ensure that the added workload from incorporating GHGs 

into the permit program does not result in fee shortfalls that 

imperil operating permit program implementation and enforcement, 

whatever the basis of the states’ fee schedule. As described in 

the proposal, such fee oversight by EPA may involve fee audits 

under the authority of §70.9(b)(5) to ensure that adequate fees 

are collected in the aggregate to cover program costs, with 

emphasis on whether the additional GHG workload is being 

appropriately funded. Also, EPA retains the ability to initiate 

a program revision under §70.4(i)(3) or issue a notice of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

349

deficiency under the process described in §70.10(b) to address 

fee adequacy issues, which may be uncovered during a fee audit. 

By relying on existing oversight measures, we are ensuring that 

the fee requirements are met with a minimum of disruption to 

existing programs at a time when they will already be facing 

significant challenges related to GHG permitting. 

Turning to the minority of states that do use the 

presumptive minimum, we did not propose to change the 

presumptive minimum calculation method to account for GHG. 

Currently under the statute and our rules, the presumptive 

minimum is based on a subset of air pollutants (i.e., VOC, NAAQS 

pollutants except for CO, and pollutants regulated under the 

NSPS and MACT standards promulgated under sections 111 and 112 

of the Act, respectively) that does not include GHGs. The 

amount is specified on a per-ton basis and changes with 

inflation (it is currently set at $43.75/ton), but does not 

apply to emissions over 4,000 tpy of a given pollutant from a 

given source. We noted several difficulties in applying the 

presumptive minimum to GHG, including the large amounts of GHG 

emissions relative to other pollutants and the need for better 

data to establish a GHG-specific amount. Noting that GHGs are 

not currently included in the Act’s list of pollutants to which 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

350

the presumptive fee applies, we also invited comment on whether 

we should raise the fee for listed pollutants to cover the added 

cost of GHG permitting. 

A few state commenters asked us to set a presumptive fee 

for GHGs, which we take to mean we should add GHGs to the list 

of pollutants to which a presumptive fee would apply. However, 

many commenters noted that the current presumptive minimum fee 

is unreasonable for GHGs because GHGs are emitted in greater 

quantities than the pollutants currently subject to presumptive 

fees, which would result in excessive fees. These commenters 

believe that EPA needs to limit the fees that states can charge 

for GHGs. Moreover, one commenter read the statute to prohibit 

us from listing GHGs in the presumptive fee calculation in the 

first place. Several commenters disagreed with the idea of 

instead increasing the presumptive fee for other pollutants to 

cover the cost of regulating GHGs, some of whom believed that 

this would unfairly punish existing sources or would bring in no 

new revenue from sources triggering title V for the first time. 

After considering these comments, we remain disinclined, as 

we were at proposal, to change the presumptive fee calculation 

regulations. While there is some support for changing the 

regulations, the comments confirm the challenges in doing so. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

351

While we expressly rejected charging the full presumptive cost 

per ton amount for GHG, we also did not propose language to 

establish a different amount just for GHG, to establish whether 

a different tpy cap would apply, or to assess whether GHGs could 

even be added to the list. Thus, many commenters were very 

concerned about whether the full $43.75 or the 4000 tpy cap 

would apply to GHG if we listed it as a regulated pollutant for 

fee purposes. Furthermore, we noted at proposal, and commenters 

did not disagree, that more data would be needed to establish 

the appropriate basis for the GHG presumptive minimum. We are 

not taking a final position today on whether the statute is 

amenable to including GHG in the presumptive fee calculation 

currently, but these comments illustrate some of the 

difficulties of such an approach. 

At the same time, we are not increasing the presumptive 

minimum for other pollutants already included in the fee 

calculation. We disagree with the commenter who said such an 

approach would bring in no new revenue from newly-subject 

sources. Many of the newly subject sources would emit alreadyincluded pollutants. If new revenue from these pollutants were 

insufficient, and because the Act does not specify how the 

shortfall must be addressed, the amount of any projected 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

352

shortfall could be made up by increasing fees on these 

pollutants. In fact, the projected shortfall could be addressed 

without having to inventory GHG emissions from title V sources, 

since the emissions of already-included pollutants are wellknown. We also note that, although some commenters are 

concerned that failing to assess fees for GHGs directly would be 

unfair, the statute does not provide that the presumptive fee be 

proportional to each type of pollutant or be proportionally 

allocated to all sources. Rather, the presumptive fee approach 

provides a backstop for states that do not wish to adopt a more 

tailored approach. Nonetheless, we have decided not to increase 

the presumptive fee amounts for other pollutants because we lack 

information about the extent to which shortfalls exist due to 

GHG permitting, and which mix of sources and fees is appropriate 

for addressing any such shortfall in a state. This approach also 

provides greater flexibility to states and minimizes disruption 

to existing programs. 

We note that, contrary to the statements of some 

commenters, the CAA provisions allowing for a presumptive fee 

calculation do not override the basic requirement that fees be 

adequate to cover costs. As noted above, we expect states to see 

a revenue increase from emissions of listed pollutants at newly-
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

353

major sources for GHG, and it is also possible that the 

presumptive minimum may currently be resulting in overcollection of fees in a state. Thus, a state continuing to use 

the presumptive minimum may not have a shortfall. However, if 

states using the presumptive minimum approach do have a revenue 

shortfall due to GHG permitting, the statute requires the 

shortfall to be addressed. The EPA has had, and will continue 

to have, the ability to require states that use the presumptive 

minimum to increase their fees if the presumptive minimum 

results in a revenue shortfall that imperils operating permit 

program implementation and enforcement. Thus, although we are 

not changing the presumptive minimum in our regulations, we plan 

to follow the same oversight approach for states using the 

presumptive minimum as for those collecting less based on a 

resource demonstration. As described above, this approach may 

involve fee audits with emphasis on whether the additional GHG 

workload is being appropriately funded, and other appropriate 

follow-up. 

Consistent with our proposal, EPA is not modifying its own 

part 71 fee structure (which closely mirrors the presumptive 

minimum) in order to charge an additional fee for GHG. EPA must 

revise its fee schedule if the schedule does not reflect the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

354

costs of program administration. We have not determined that 

the existing fee structure will be inadequate to fund the part 

71 programs costs during the first two phases of permitting GHGs 

as set forth in this action. However, we are required to review 

the fee schedule every two years, and make changes to the fee 

schedule as necessary to reflect permit program costs. 40 CFR 

section 71.9(n)(2). Thus we will continue to examine the 

increases in part 71 burden due to GHG permitting, the current 

revenue collection, and the increases in revenue from newlysubject part 71 sources, and will adjust the part 71 fee 

approach accordingly. 

Finally, several state and industry commenters asked EPA to 

provide guidance and recommendations for an appropriate GHG fee 

structure. We note that title V grants permitting authorities 

considerable discretion in charging fees to sources for title V 

purposes and does not require or prohibit fees specifically for 

GHGs, provided the states collect fees in the aggregate that are 

sufficient to cover all the direct and indirect program costs. 

In responding to requests for guidance, we do not wish to limit 

state discretion. For example, some commenters suggest that EPA 

prohibit emissions-based fees for GHG or cap the amount that can 

be collected, while others suggest we provide a range of 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

355

acceptable fees. We are concerned that, given the wide variety 

of fee approaches that states now take, providing specific 

guidance may be disruptive, rather than helpful, to states. 

On the other hand, we recognize that it will initially be 

difficult for states to establish an appropriate emissions fee 

for GHG. As noted above, there are currently limited data 

available for establishing such a fee, and, due to the large 

quantities of GHG emissions, such a fee may only amount to a few 

cents per ton. At the same time, as noted in the proposal, a 

number similar to that used for other pollutants (e.g., the 

presumptive minimum of $45/ton of GHG) would be inappropriate 

because it would likely result in huge over-collection. Because 

of this challenge, we note that §70.9(b)(3) allows the state to 

charge fees to individual sources on any basis (e.g., emission 

fee, application fee, service-based fees, or others, in any 

combination). While most states use emissions-based fees, there 

is merit to considering all the available fee bases to address 

increased GHG workload, including approaches that do not require 

a GHG emissions inventory for fee purposes. For example, where 

it is possible to estimate a revenue shortfall as a percentage 

of fee revenue, it may be appropriate to simply attach a 

percentage-based surcharge to each source’s fee to match that 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

356

shortfall. Similarly, where the shortfall could be estimated as 

a total dollar amount, a flat surcharge could be added to each 

source’s fee to address the shortfall. 

These suggestions should not be read to indicate that EPA 

prefers any particular approach, or that EPA rejects a cost per 

ton approach. Rather, they illustrate that it is possible to 

address a revenue shortfall without establishing a GHG per-ton 

fee. While the EPA is declining to recommend specific 

approaches in this preamble, we are committed to assisting 

states in implementing the fee requirements for GHG. Therefore, 

we will work with any state that requests assistance from EPA in 

developing a workable fee approach. 

E. Other Actions and Issues 

1. Permit Streamlining Techniques 

In our proposal, we stated that while we were phasing-in 

permitting requirements, we would make a concerted effort to 

assess and implement streamlining options, tools, and guidance 

to reduce the costs to sources and permitting authorities of GHG 

permitting. We recognized that the development and 

implementation of these techniques should be an integral part of 

our strategy during the phase-in period, and we stated that we 

would undertake as many of these streamlining actions as 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

357

possible as quickly as possible. We discussed several 

streamlining techniques in particular, including (1) defining 

potential to emit (“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 and permits-by-rule, (4) establishing 

procedures for electronic permitting, and (5) establishing 

“lean” techniques for permit process improvements. The first 

three of these approaches have the potential to have the 

greatest impact in reducing the numbers of sources subject to 

PSD or title V (the definition of PTE) or of reducing permitting 

costs (presumptive BACT and general permits or permits-by-rule). 

In our proposal, we also described the timing for 

development and implementation of these streamlining techniques. 

We explained that each of the first three techniques would 

generally take 3-4 years to develop and implement, and therefore 

would be of limited use in the near-term. This time frame is 

necessary because EPA will first need to collect and analyze 

small source data that we do not currently have – because these 

are sources that EPA has not traditionally regulated -- in 

order to assess which of these techniques are viable or 

effective for such sources. In general, EPA will then need to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

358

conduct notice-and-comment rulemaking to establish the 

approaches, and that rulemaking will need to address various 

legal and policy aspects of these approaches. After that, the 

permitting authorities will need some time to adopt the 

streamlining techniques as part of their permitting programs. 

We received several comments on streamlining techniques. 

In general, the comments indicate widespread support for our 

pursuit of streamlining approaches, but some commenters were 

concerned that one or more of EPA’s identified streamlining 

options were complex, vague, ineffective, and questionable 

legally. Noting our proposal to phase-in permitting, in part 

to allow more time to develop streamlining options for smaller 

sources, some commenters suggested that we should delay 

permitting for larger sources for the same reasons. We 

disagree. Such a delay is not justified under the legal 

doctrines of “absurd results” and “administrative necessity.” 

While implementation of steps 1 and 2 – which will cover larger 

sources -- will pose implementation challenges, and some of the 

streamlining tools could assist with meeting these challenges, 

we have assessed the burdens associated with GHG permitting and 

have established a phase-in schedule that represents a 

manageable workload, even in the absence of streamlining 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

359

techniques. On the other hand, we do agree with these 

commenters that, absent streamlining, applying PSD and title V 

requirements to the much large number of small sources would 

lead to absurd results and administrative impossibility. The 

sources for whom the phase-in delays applicability are precisely 

the sources that have the greatest need for streamlining 

measures, and thus the greatest need for a deferral while we 

develop and implement streamlining options. 

In addition, commenters generally echoed many of our 

concerns about why it will take time to put these measures in 

place, and no commenter presented any information to suggest 

that our 3-4 year estimate for the PTE, presumptive BACT, and 

general permit measures was invalid. 

For these three techniques, we continue to believe that as we 

noted at proposal, we will require collection of significant 

category-specific data for source and emission unit types that 

have heretofore generally not been regulated by the CAA (e.g., 

furnaces, water heaters, etc.), which could take up to one year. 

Moreover, commenters had differences of opinion as to whether 

and how we should move forward on these approaches, and some 

raised policy and legal issues that we would likely want to 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

360

explore through a notice and comment process.41 Even if a 

rulemaking were done expeditiously, it would likely require one 

year. Finally, unlike lean and electronic permitting, these 

approaches, once finalized by EPA, will likely require 

additional time of up to two years for states to adopt. Thus, 

it is clear that these approaches will not be in place in time 

to ease any burden prior to the planned rulemaking for step 3. 

Some commenters did observe that the fourth and fifth 

techniques, lean and electronic permitting, could, at least 

theoretically, become available sooner. However, these 

commenters also noted that successful design and implementation 

of these approaches will require implementation experience with 

GHG permitting that is not now available. We expect that for 

the lean and electronic permitting techniques, at least one year 

of implementation experience (of the type that we will gain 

starting in 2011) would be required, plus at least an additional 

year to extrapolate that experience to small sources and put 

these approaches into effect for small source permitting. Thus, 

 41 We do not attempt to address or resolve the various opinions about what legal or 

policy direction we must take regarding any of these streamlining options. The proper forum for 

doing that will be in the action(s) where we apply a given option. Nonetheless, our response to 

comments document provides additional detail about the options we described and what 

commenters said about our proposed options. In addition, the comments themselves can be 

accessed in the docket for this action. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

361

we do not think the lean and electronic permitting would be in 

place before the beginning of 2013. Moreover, a handful of 

commenters questioned whether lean and/or electronic permitting 

would alleviate significant burden. Thus we are not able, at 

this time, to presume that these approaches will ease any burden 

prior to the planned rulemaking for step 3. 

 It is also important to note that, as a practical matter, 

while these efforts to streamline the program for small sources 

are underway, EPA and states will also be devoting a significant 

amount of their permitting resources and expertise to 

implementing the PSD and title V programs for the GHG-emitting 

sources covered under Steps 1 and 2. We have established these 

steps in a manner that they will be feasible for EPA and 

state/local/tribal authorities, but even so, they will not only 

consume current permitting authority resources, but they will 

also require substantial additional resources. As a result, the 

efforts to develop and implement streamlining techniques will 

have to compete with the work necessary to administer existing 

programs. For example, during the remainder of 2010, as 

described elsewhere in this notice, EPA permitting program 

resources will, in addition to continuing to administer programs 

for non-GHG pollutants, be used to conduct at least the 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

362

following GHG-related activities in addition to streamlining: 

(1) develop BACT and other information and guidance for 

implementing programs for sources covered by Step 1, followed by 

additional guidance and information for sources covered by Step 

2; (2) review and act on information we receive regarding state 

adoption of GHG permitting requirements, which may entail 

narrowing of previous SIP approvals or processing of other 

programmatic revisions; and (3) propose and finalize measures to 

address programs with deficiencies in GHG coverage. As the 

beginning of step 2 nears, we will also begin to receive and 

process the first applications for permits that will incorporate 

GHG requirements (i.e., those that will be issued after January 

2, 2011). States seeking to implement streamlining approaches 

will face similar competition for permitting resources. 

 These time frames and resource considerations for 

streamlining confirm the approach to phase-in that we are taking 

in today’s rule. First and foremost, they make clear that it 

will not be possible to have streamlining measures in place in 

time for either Step 1 or Step 2. Therefore our selection of 

threshold for those steps is not built on assumptions that 

streamlining will remove some or all of the burden during those 

steps. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

363

 Second, they make clear that, while no significant 

streamlining can be in place by the time we must begin to 

develop the step 3 rule (i.e., latter half of 2011, to 

promulgate by July 2012, effective July 2013), it is likely that 

by that time EPA and states will have had an opportunity to gain 

implementation experience that could serve as the basis for 

beginning to implement streamlining techniques that do not 

require rulemaking or state adoption (e.g., lean and electronic 

permitting). It is also likely that we will have had an 

opportunity to gather technical information – which we have 

already begun to gather --for certain source and emissions unit 

categories that would be necessary to support proposal of PTE or 

presumptive BACT approaches for those categories. We expect 

that the step 3 rulemaking will provide an opportunity for us to 

use that experience and data to begin to propose streamlining 

approaches that need notice and comment rulemaking. We can also 

begin to take into account any burden reductions from possible 

early streamlining efforts – that is, through lean and 

electronic permitting -- in the establishment of step 3. 

 Third, it is clear that the potential availability of 

streamlining measures does not call into question our decision 

today that in no event will we broaden PSD and title V 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

364

applicability to cover GHG-emitting sources below the 50,000 tpy 

CO2e level prior to July 2016, as discussed elsewhere. EPA 

cannot now predict the resources that will be required to 

implement PSD and title V programs for GHG-emitting sources once 

various streamlining techniques are ultimately completed. This 

is uncertain not only because we need data and implementation 

experience with GHG permitting during steps 1, 2, and 3 that we 

can apply to estimates for small sources, but also because, as 

comments indicate, there is a broad range of legal and policy 

issues to consider in crafting the streamlining approaches we 

ultimately adopt. We have presented an initial assessment of 

options and obtained views of commenters both supporting and 

opposing them, and it is the result of these future actions, 

whose outcomes are uncertain at this time, that will ultimately 

determine the extent to which streamlining approaches will allow 

for the administration of PSD and title V programs for numerous 

small sources. Thus, while we are optimistic that we can craft 

workable, common-sense solutions, we nonetheless, believe it is 

important to preserve our small source exclusion until we have 

not only had time to put the streamlining approaches in place, 

but also have had time to assess the burdens that remain, before 

we bring in additional sources below the 50,000 tpy levels. We 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

365

believe that the six-year timeframe will require a sustained 

intensive effort by EPA and states to develop, adopt, and 

implement streamlining techniques, and will require EPA to then 

evaluate those techniques and complete a rulemaking concerning 

PSD and title V applicability to small-sources based on that 

evaluation. In this manner, the six-year period will give us 

the necessary time to make the best decisions about the actions 

we should take beyond step 3. 

While comments make clear that there are issues to be 

addressed, nothing in the comments has persuaded us that we 

should abandon our streamlining efforts. To the contrary, the 

strong support for these efforts shown by many commenters 

reinforces our intention, as stated at proposal, to move forward 

with these approaches as an integral part of our phase-in 

approach. Moreover, notwithstanding the competition for GHG 

permitting resources and expertise, we believe it is critical 

that we move forward expeditiously. As noted above, we are 

already taking a first step by initiating permitting for larger 

sources, beginning January 2011, that will begin to provide 

valuable implementation experience. This experience can be 

useful in allowing states to begin implementing early 

streamlining measures, like lean and electronic permitting, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

366

which do not require EPA action. We have also already begun, 

and will continue, developing data necessary to support 

rulemakings addressing approaches such as PTE, presumptive BACT, 

and general permits. We expect to be able to use these data to 

support rulemakings on these topics, as appropriate, at about 

the same time as our step 3 rulemaking. Because of the 

uncertainty surrounding such approaches, we are not today 

committing to finalize rules on any particular approach, but we 

do plan to pursue all streamlining options as expeditiously as 

possible, beginning immediately and proceeding throughout the 

phase-in period, and we encourage permitting authorities to do 

the same. We commit to consider a wide array of possible 

streamlining measures, and we commit to propose and take comment 

on, in the step 3 rulemaking, a set of those measures that we 

determine are viable to pursue further. 

2. Guidance for Best Available Control Technology 

Determinations 

The CAA requires that a PSD permit contain, among other 

things, emissions limits based on the best available control 

technology (BACT) for each pollutant subject to regulation under 

the Act emitted from the source that triggers PSD. 42 U.S.C. § 

7475(a)(4); 42 U.S.C. § 7479(3). BACT is defined as follows: 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

367

(3) The term "best available control technology" 

means 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 pollutants which will exceed the 

emissions allowed by any applicable standard 

established pursuant to section 111 or 112 of 

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. 

42 U.S.C. § 7479(3). 

Thus, the BACT process is designed to determine the most 

effective control strategies achievable in each instance, 

considering energy, environmental, and economic impacts. 

However, the case-by-case nature of BACT, together with the 

range of factors and technologies that must be considered, 

presents a challenge in determining BACT for newly regulated 

pollutants. When a new pollutant is regulated, the first permit 

applicants and permitting authorities that are faced with 

determining BACT for a new pollutant will likely need to invest 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

368

more time and resources in gathering and analyzing information 

necessary to make an assessment of BACT under the statutory 

criteria. Once the PSD permitting program matures with respect 

to the new pollutant, successive BACT analyses will establish 

precedents that can inform subsequent BACT determinations. 

While the BACT provisions clearly contemplate that the 

permitting authority evaluate control strategies on a case-bycase basis, EPA recognizes the need to develop and share policy 

guidance and technical information for sources and permitting 

authorities as they begin to permit sources for newly regulated 

pollutants, such as of GHGs. When applied in a practical 

manner, this additional EPA guidance and technical information 

should reduce time and resource needs when evaluating BACT for 

newly regulated pollutants. 

As described in the proposed GHG Tailoring Rule, EPA 

intends to compile and make available technical and background 

information on GHG emission factors, control technologies and 

measures, and measurement and monitoring methodologies for key 

GHG source categories. We expressed our intent to work closely 

with stakeholders in developing this supporting information and 

to ensure this information is available in sufficient time to 

assist permitting agencies in their BACT determinations. The 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

369

proposal took comment on what other types of support or 

assistance EPA can provide to initially help air pollution 

control agencies with the permitting of GHGs. 

Commenters on the proposed GHG Tailoring Rule generally 

supported EPA providing technical information and policy 

guidance for sources of GHGs. Several commenters specifically 

requested guidance to clarify GHG-related issues, such as how to 

compute CO2eq emissions, how to evaluate emissions of CO2 from 

biomass fuel, and whether an air quality analysis will be 

required for GHGs. Additionally, commenters requested that EPA 

issue “white papers” and other tools that would provide 

information on a range of control technologies and measures for 

major stationary source categories, such as power plants, cement 

kilns, glass furnaces, and other sources. Many of these 

commenters further requested that EPA provide an opportunity for 

stakeholder input on the guidance, and a few commenters insisted 

that permitting for sources of GHGs should not begin prior to 

issuing final guidance. 

Consistent with our commitment at proposal to involve all 

stakeholders in our guidance development, EPA called upon the 

CAAAC in September 2009, to provide assistance and 

recommendations for what types of guidance and technical 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

370

information would be helpful.42 Specifically, our charge to the 

CAAAC was “... to discuss and identify the major issues and 

potential barriers to implementing the PSD Program under the CAA 

for greenhouse gases ... [and] focus initially on the BACT 

requirement, including information and guidance that would be 

useful for EPA to provide concerning the technical, economic, 

and environmental performance characteristics of potential BACT 

options.” This charge also requested the CAAAC to “identify and 

discuss approaches to enable state and local permitting 

authorities to apply the BACT criteria in a consistent, 

practical and efficient manner.” 

At its October 6, 2009, meeting, the CAAAC established a 

Climate Change Work Group, made up of 35 representatives from a 

variety of industries, state and local governments, and 

environmental and public health non-profit organizations, 

organized under CAAAC’s Permits, New Source Review and Toxics 

 42 The CAAAC is a senior-level policy committee established in 1990 to advise the U.S. 

EPA on issues related to implementing the Clean Air Act Amendments of 1990. The committee 

is chartered under the Federal Advisory Committee Act and has been renewed every two years 

since its creation. The membership is approximately 40 members and experts representing state 

and local government, environmental and public interest groups, academic institutions, unions, 

trade associations, utilities, industry, and other experts. The CAAAC meets three times a year, 

normally in Washington, D.C. It provides advice and counsel to EPA on a variety of important 

air quality policy issues. The committee has formed several subcommittees to provide more 

detailed discussion and advice on many technical issues. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

371

Subcommittee. The Work Group initially focused its attention on 

the procedure for evaluating BACT and decided that the process 

and criteria for determining BACT for criteria pollutants 

represented a workable and acceptable framework for GHGs. The 

Work Group also recommended a second phase, in which the Work 

Group would consider member proposals regarding possible 

alternative or supplementary approaches to applying the PSD 

program to GHG sources. 

In February 2010, the CAAAC completed work on the first 

phase of their effort and sent EPA a list of recommendations 

that highlighted areas of the BACT determination process that 

are in need of technical and policy guidance. For more 

information, see the Interim Phase I Report on Issues related to 

Best Available Control Technology (BACT) for Greenhouse Gases 

(GHGs), February 3, 2010 that is located in the public docket 

for this rulemaking and at 

http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport

.pdf. In response we are working on a number of fronts to 

develop technical information, guidance and training to assist 

states in permitting large stationary sources of GHGs, including 

identifying GHG control measures for different industries. EPA 

is currently working with States on technical information and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

372

data needs related to BACT determinations for GHGs. This 

includes developing the EPA Office of Research and Development 

GHG Mitigation Strategies Database, enhancing the RACT/BACT/LAER 

Clearinghouse to include GHG-specific fields, and preparing 

technical information on sector-based GHG control measures. 

Also, EPA is actively developing BACT policy guidance for GHGs 

that will undergo notice and comment and will culminate in 

training courses for State, local and tribal permitting 

authorities. The results of all of these efforts will roll out 

over the remainder of 2010. EPA currently awaits the Work 

Group’s recommendations from its second phase of deliberations, 

which is underway as of the date of this notice. 

EPA does not agree with some commenters’ suggestion that 

EPA should delay permitting any sources until final BACT 

guidance is issued. As discussed in the final action on 

reconsideration of the Interpretive Memo, delaying the 

application of BACT to enable the development of guidance or 

control strategies is not consistent with the BACT requirements. 

63 FR at 17008. Furthermore, as just described, EPA expects 

such a delay to be unnecessary because EPA will soon begin 

providing technical information to inform BACT decisions, and 

will continue to provide additional guidance prior to the date 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

373

that GHG permitting begins. However, even in the absence of 

such guidance, a delay would not be justified under the legal 

doctrines of absurd results and administrative necessity. While 

implementation of the BACT requirement during steps 1 and 2 will 

pose implementation challenges, EPA has assessed the burden 

associated with GHG permitting with consideration given to these 

challenges, and has established a phase-in schedule that 

represents a manageable workload. 

Thus, while BACT will remain a case-by-case assessment, as 

it always has been under the PSD program, EPA is confident that 

this guidance development effort will help support a smooth 

transition to permitting emissions of GHGs. Furthermore, EPA 

will continue to work to provide the most updated information 

and support tools to allow permitting authorities to share and 

access the most updated information on GHG BACT determinations 

as they are made once permitting of GHGs begins. EPA remains 

committed to involving stakeholders in the upcoming efforts to 

develop guidance to help to permitting authorities in making 

BACT determinations for sources of GHGs. 

3. Requests for Higher Category-Specific Thresholds or 

Exemptions from Applicability 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

374

Although we did not propose any categorical exemptions, 

many commenters requested exemptions from major source and major 

modification applicability determinations under title V and PSD 

for certain types of GHG-emitting sources or certain types of 

GHG emissions as follows: 

Source Categories. Many also commenters requested various 

exemptions or exclusions from source applicability for GHGs 

under both PSD and title V permitting, either during the phasein period or permanently, citing anticipated burdens, societal 

costs, and differences in emission characteristics. Many nontraditional sources or source categories (sources that have not 

historically been required to get permits) requested exemptions 

from permitting based on GHG emissions, including agricultural, 

residential, and small businesses. In general, these nontraditional sources sometimes, but not always cited absurd 

results and administrative necessity arguments in their 

exemption requests. 

Several commenters from sectors that consume a great deal 

of energy in their industrial processes and that are subject to 

international competitiveness, such as aluminum, steel, cement, 

glass, pulp and paper, and other manufacturers, requested that 

they be exempt from permitting under this final rule. These 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

375

commenters opine that EPA has not carefully considered the 

environmental and economic consequences of this action because 

if we had, we would have exempted them for several reasons, 

including that other countries typically exempt similar sources 

from GHG cap and trade programs because the industries are 

making significant energy efficiency improvements absent GHG 

regulation, and because permitting such sources may cause many 

facilities to move to countries that have less regulation or no 

regulation for GHGs. 

Other industry groups cited unique characteristics of their 

emissions, or the quantities in which they are emitted, that 

they argued should justify exclusion or unique thresholds. 

Semiconductor production facilities asked for exemptions, 

arguing that combustion-related GHG emissions are different from 

their GHG emissions, which result from the use of high-GWP 

industrial gases, such as PFCs, with higher GWP values that are 

more likely to trigger permitting requirements at relatively low 

tpy values. One lime production commenter stated that EPA could 

encourage energy efficiency projects at their plants by 

excluding calcination and other process emissions, arguing that 

these emissions are a relatively small portion of the national 

inventory that will have no material effect on air quality and 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

376

global warming. Another commenter requested that EPA exclude 

emissions from poultry production (natural bird respiration) 

from permitting consideration because the IPCC excludes them 

from their GHG emission estimates. Representatives of the 

landfill industry pointed to the relationship between current 

statutory thresholds that apply to their regulated emissions, 

primarily non-methane organic emissions (NMOC), and the 

equivalent amount of GHG emissions this corresponds to. They 

argued for a source-category specific threshold that is at least 

equivalent to their current NMOC threshold, or roughly 750,000 

tpy CO2e according to their estimate. 

Although the proposal for the tailoring rule did generally 

discuss how the statutory requirements for major source 

applicability (100/250 thresholds) could be phased-in in ways 

that would offer relief to traditional and non-traditional 

sources, such as residences, farms, small business, and 

semiconductor manufacturers, it did so through the proposed 

establishment of relatively high CO2e thresholds during the early 

implementation period and lowering the thresholds over time as 

streamlining mechanisms become available to reduce 

administrative burdens. We did not propose any permanent 

exemptions of any kind. Also note that the proposal discussed 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

377

energy efficiency, process efficiency improvements, recovery and 

beneficial use of process gasses, and certain raw material and 

product changes in the context of short-term, low-cost means of 

achieving GHG emission reductions for small-scale stationary 

sources, but not in the context of exemptions. 

As discussed above, we are still considering whether 

permanent exemptions from the statute are justified for GHG 

permitting based on an absurd results theory. However, similar 

to our conclusion for the suggested biomass exclusion below, we 

have determined that we do not have sufficient basis to create 

any of the suggested exclusions. We did not propose any sort of 

permanent exclusion based on an interpretation of the statutory 

provisions of PSD or title V. Regardless of any arguments about 

the legality and advisability from a policy or economic 

standpoint of such exclusions, we would need to propose a PSD 

and/or title V specific legal and policy rationale that fits 

within the Clean Air Act, to specify details regarding our 

implementation approach, and to provide an opportunity for 

public comment before adopting any such exclusion. Therefore we 

are not doing so here. We note, however, that nothing in 

today’s rule forecloses the opportunities we may have to explore 

such options in the future. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

378

The remaining option for creating such exclusions in this 

rule is to find that such an exclusion is necessary to avoid 

administrative necessity or absurd results. We did solicit 

comment on alternative approaches to the proposed phase-in for 

permitting. Some commenters suggested that the administrative 

necessity or absurd results rationale could be used to create at 

least temporary exclusions that would allow more sources to 

escape permitting than would already be excluded under step 1, 

step 2, and the small source exclusion until 2016. We 

considered each of these requests in the context of the 

overwhelming permitting burdens and the options for reducing 

such burdens, and ultimately decided that, given our thresholdbased approach to the phase in, it is not appropriate to also 

adopt such exclusions to address the same burdens. We have 

finalized steps 1 and 2 using the threshold-based approach, 

which applies administrative necessity and absurd results 

arguments in a way that effectively exempts all small sources 

during this part of the phase-in. The suggested exclusions 

alone would not address the overwhelming permitting burdens, and 

the threshold-based approach would still be necessary. 

Moreover, once the threshold approach is applied as described, 

we do not see that the remaining burdens would be so 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

379

overwhelming as to lead to absurd results or administrative 

impossibility. While we could have crafted specific exemptions 

of the kind suggested as an alternative means of tailoring the 

programs, our approach achieves the same result and does so in a 

way that will be simpler to administer. Furthermore, 

specifically with respect to high GWP, gases as discussed above, 

we have included a mass-based trigger that addresses comments 

regarding the inclusion of those gases. Therefore, we are not 

finalizing any such exclusions in today’s rule. 

Concerning the comment that we did not take appropriate 

economic and environmental considerations into account for this 

rulemaking action, we disagree. The approach we finalize today 

for steps 1 and 2 minimizes economic burdens by limiting 

permitting to the largest GHG emission sources. We further note 

that the PSD program as applied to the sources that are covered 

in steps 1 and 2 contains an express requirement to take energy, 

environmental, and economic considerations into account when 

making control technology (i.e., BACT) decisions and accordingly 

many of the concerns about control costs will be able to be 

accounted for in that analysis. 

Biomass Combustion/Biogenic Emissions. Several commenters 

request that EPA exempt emissions from biogenic activities or 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

380

biomass combustion or oxidation activities, including solid 

waste landfills, waste-to-energy projects, fermentation 

processes, combustion of renewable fuels, ethanol manufacturing, 

biodiesel production, and other alternative energy production 

that use biomass feedstocks (e.g., crops, or trees). For 

example, commenters urged that EPA exclude emissions from 

biomass combustion in determining the applicability of PSD to 

GHGs based on the notion that such combustion is “carbon 

neutral” (i.e., that combustion or oxidation of such materials 

would cause no net increase in GHG emissions on a lifecycle 

basis). Some commenters oppose the exemption of 

biogenic/biomass activities, claiming the lack of a valid 

scientific basis for treating these GHG emissions differently 

than other GHG emissions and expressing concern that we should 

not assume all biomass combustion were carbon neutral. 

The proposed Tailoring Rule did not address this issue of 

exemptions for biomass combustion or biogenic emissions. We are 

mindful of the role that biomass or biogenic fuels and 

feedstocks can play in reducing anthropogenic GHG emissions, and 

we do not dispute the commenters’ observations that many state, 

federal, and international rules and policies treat biogenic and 

fossil sources of CO2 emissions differently. We note that EPA's 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

381

technical support document for the endangerment finding final 

rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292) states that 

“carbon dioxide has a very different life cycle compared to the 

other GHGs, which have well-defined lifetimes. Instead, unlike 

the other gases, CO2 is not destroyed by chemical, photolytic, 

or other reaction mechanisms, but rather the carbon in CO2 

cycles between different reservoirs in the atmosphere, ocean, 

land vegetation, soils, and sediments. There are large exchanges 

between these reservoirs, which are approximately balanced such 

that the net source or sink is near zero.” 

Nevertheless, we have determined that our application of 

the absurd results, administrative necessity, and one-step-at-atime legal rationales that support this rule, which are based on 

the overwhelming permitting burdens described previously, do not 

provide sufficient basis to exclude emissions of CO2 from 

biogenic sources in determining permitting applicability 

provisions at this time. This is because such an exclusion 

alone, while reducing burdens for some sources, would not 

address the overwhelming permitting burdens described above, and 

a threshold-based approach would still be needed. As noted 

above, we have not examined burdens with respect to specific 

categories and thus we have not analyzed the administrative 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

382

burden of permitting projects that specifically involve biogenic 

CO2 emissions taking account of the threshold-based approach, nor 

did the commenters provide information to demonstrate that an 

overwhelming permitting burden would still exist, justifying a 

temporary exclusion for biomass sources. 

At the same time, the decision not to provide this type of 

an exclusion at this time does not foreclose EPA’s ability to 

either (1) provide this type of an exclusion at a later time 

when we have additional information about overwhelming 

permitting burdens due to biomass sources, or (2) provide 

another type of exclusion or other treatment based on some other 

rationale. Although we do not take a final position here, we 

believe that some commenters’ observations about a different 

treatment of biomass combustion warrant further exploration as a 

possible rationale. Therefore, although we did not propose any 

sort of permanent exclusion from PSD or title V applicability 

based on lifecycle considerations of biogenic CO2, we plan to 

seek further comment on how we might address emissions of 

biogenic carbon dioxide under the PSD and title V programs 

through a future action, such as a separate Advance Notice of 

Proposed Rule Making (ANPR). This action would seek comment on 

Comment [MLing2]: We could not 

accept the insertion of a 60-90 day time 

frame. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

383

how to address biogenic carbon under PSD and title V, the legal 

and policy issues raised by options regarding implementation. 

We will provide an opportunity for public comment before 

adopting any final approach. 

We further note that, while we are not promulgating an 

applicability exclusion for biogenic emissions and biomass fuels 

or feedstocks at this time, there is flexibility to apply the 

existing regulations and policies regarding BACT in ways that 

take into account their lifecycle effects on GHG concentrations. 

This topic has already been explored by the CAAAC workgroup on 

BACT issues related to GHGs that recently provided 

recommendations to EPA [DAVE S. provide a reference to report 

and docket it] While that group was unable to come to a 

consensus on how biomass-based emissions should be treated, it 

provided us with information that we will consider as we issue 

guidance on BACT. As previously discussed, we plan to issue 

BACT guidance later this year, but are not doing so as part of 

this rulemaking. We believe the treatment of biomass warrants 

further exploration in the BACT context as well, and we plan to 

fully explore it and take action as appropriate. 

Fugitive Emissions. Numerous commenters believe that 

fugitive GHG emissions should be excluded from major source 

Comment [MLing3]: We do not think 

it is advisable to suspend evaluation of 

the biomass issue in BACT guidance as 

an option. We think it is advisable to get 

started on this right away. We deleted 

language that suggested we would put it 

on hold pending the request for comment 

on the exclusion. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

384

determinations, citing difficulties in measuring or estimating 

such emissions. Others believe EPA did not address fugitive 

emissions in the proposal and they ask for clarification of the 

treatment of fugitive GHGs in applicability determinations under 

PSD and title V. Some of these commenters state that EPA has 

not undertaken a rulemaking under section 302(j) for any source 

category of fugitive GHGs, so they should not be included. 

Several commenters representing the solid waste disposal 

industry requested exemptions for fugitive emissions for 

landfills and waste-to-energy projects, pointing out that 

current practice under PSD is for fugitive emissions from 

certain landfills to not be counted toward major source 

determinations. 

In the proposal, EPA did not offer any specific guidance or 

discuss exemptions for fugitive emissions of GHGs. Commenters 

did not suggest that a fugitive exemption would address the 

overwhelming permitting burdens described above, or that it was 

necessary to specifically tailor GHG applicability through the 

use of a fugitive emissions exclusion for categories that would 

otherwise be required to include them. We do agree with 

commenters' stating that we should clarify how to count 

fugitives in determining applicability under this rule. In 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

385

response, we note that we are not finalizing any special rules 

for fugitive emissions related to GHG. Thus, EPA's rules 

related to the treatment of fugitives would apply. Regarding the 

comment that a 302(j) rulemaking is required before fugitive 

emissions may be counted, we disagree. As we read 302(j), once 

EPA has established by rule that fugitive emissions are to be 

counted for a specific source category, nothing in section 

302(j) requires EPA to conduct new rulemaking to allow for the 

counting of additional pollutants from that category. We read 

302(j) as imposing an obligation to determine if fugitive 

emission generally should be counted from a source or source 

category and not requiring that EPA list both source categories 

and relevant pollutants. Indeed, our practice in listing 

categories has not been to limit the pollutants to which the 

listing applies. Therefore, we are applying our existing rules 

and policies for fugitive emissions for GHG as we would any 

other pollutant. 

Pollution Control Projects. Other commenters request 

exemptions for pollution control projects from PSD major 

modification requirements, particularly projects that increase 

the efficiency or thermal performance of a unit or facility, 

resulting in emission reductions on a pounds/megawatt-hour or 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

386

production basis. The current PSD rules do not exclude 

pollution control projects from being considered a physical 

change or change in the method of operation that would – if it 

resulted in a significant net emissions increase -- constitute a 

major modification, nor does case law suggest that we could 

adopt a permanent exclusion in the future43. We also do not 

believe we should adopt an exclusion for pollution control 

projects that relies solely on absurd results or administrative 

necessity for reasons similar to those described above for other 

requested exclusions. Although such an exclusion may have 

positive features, it would not address the overwhelming 

permitting burdens that justify the tailoring approach. 

4. Transitional Issues including Requests for Grandfathering 

In the tailoring rule proposal, we did not discuss or 

specifically ask for comment on any provisions to address the 

transition from a permitting regime that does not incorporate 

greenhouse gases to one that does, such as “grandfathering” 

 43 On June 24, 2005, the United States Court of Appeals for the District of Columbia 

Circuit vacated the portions of the 2002 and 1992 NSR rules that pertained to PCP, 

among other provisions. In response to this Court action, on June 5, 2007, EPA 

removed these provisions from the NSR regulations. (See 72 FR 32526). These 

provisions were added as part of EPA’s NSR improvement rule that was issued on 

December 31, 2002. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

387

provisions or similar approaches that would exempt previously 

issued permits or pending applications from having to 

incorporate requirements for greenhouse gases. We nonetheless 

received several public comments that addressed a variety of 

transitional issues. One group of comments addresses 

situations prior to permit issuance where a PSD or title V 

application is either administratively complete or more 

generally being processed prior to the trigger date for GHG 

permitting (“in process” applications). Another group of 

comments addresses situations where a PSD or title V permit is 

issued prior to the GHG trigger date and the commenters request 

that the application and/or permit be exempt from any 

requirements for updates related to GHGs after permit issuance. 

With respect to PSD, many commenters requested that we 

adopt a “grandfathering” approach to applicability to exempt 

projects that have administratively complete PSD or minor NSR 

permit applications pending when the GHG permitting requirements 

go into effect. Several commenters urged us to promulgate 

transition provisions (without specifically using the term 

“grandfathering”), pointing out that we have provided transition 

periods for revising pending PSD permits, in the past, when new 

PSD rules were issued (e.g., in late 1970s and 1980). These 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

388

commenters assert that GHG requirements will cause more 

disruption than those previous rule changes. Several commenters 

asked that PSD applications be evaluated on the basis of the PSD 

requirements effective when the application is submitted and if 

submitted prior to the trigger date, then the application and 

permit would not need to address GHGs. Several commenters also 

asked that PSD sources with a valid permit that commences 

construction within 18 months of the trigger date not be 

required to seek a revised PSD permit for GHGs. Similarly, 

several commenters asked that PSD permits issued prior to the 

GHG trigger date not be required to be reopened only for the 

purpose of addressing GHG emissions. Additional commenters asked 

that we clarify that sources or projects not be required to 

obtain PSD permits if they obtained a determination that PSD did 

not apply (a “non-applicability” determination) prior to the GHG 

trigger date. Finally, many commenters also requested 

“grandfathering” for title V so that existing title V 

applications and permits do not need to be amended, revised, or 

resubmitted to address GHGs after they become “subject to 

regulation”. Other commenters asked that transition provisions 

for title V be provided in the final action that would be 

similar to those requested for PSD. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

389

 We partially addressed transitional issues for PSD 

permitting in our April 2, 2010 final action on reconsideration 

of the Interpretive Memo. 75 Fed. Reg. at 17021. This action 

addressed the applicability of PSD permitting requirements for 

greenhouse gases to pending PSD permit applications that were 

(or will be) submitted prior to January 2, 2011 based on 

emissions of pollutants other than greenhouse gases. However, 

we have not yet addressed the questions raised by public 

comments concerning sources that obtain PSD permits, minor NSR 

permits, or determinations that no such permits are needed prior 

to the step 1 period set forth in this rule. We have also not 

yet addressed questions about the applicability of PSD 

permitting requirements for sources that are not currently 

required to submit an application for a PSD permit but that 

could be required to do so in step 2 of the phase-in established 

in this action. In addition, our April 2, 2010 action did not 

address transitional issues concerning the application of the 

title V provisions to greenhouse gases. 

a. Transition for PSD Permit Applications Pending When Step 1 

Begins 

In its action on April 2, 2010, EPA explained that the 

Agency did not see grounds to establish a transition provision 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

390

for pending PSD permit applications because we had determined 

that PSD permitting requirements would not apply the greenhouse 

gases for another nine months. We explained that permit 

applications submitted prior to April 2, 2010 should in most 

cases be issued prior to January 2, 2011 and, thus, effectively 

have a transition period of nine months to complete processing 

before PSD requirements become applicable to greenhouse gases. 

We also observed that, in the case of any PSD permit application 

review that cannot otherwise be completed within the next nine 

months based on the requirements for pollutants other than GHGs, 

it should be feasible for permitting authorities to begin 

incorporating GHG considerations into permit reviews in parallel 

with the completion of work on other pollutants without adding 

delay to permit processing. Additional discussion of EPA’s 

reasons for not developing transition provisions for PSD permit 

applications that are pending on January 2, 2011 are provided in 

the April 2, 2010 notice. 75 FR 17021-22. 

For these same reasons, we continue to feel that a 

transition period is not warranted to incorporate GHG 

requirements into any PSD permit applications that are pending 

when step 1 of the permitting phase-in begins for those sources 

that would otherwise need to obtain a PSD permit based on 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

391

emissions of pollutants other than greenhouse gases. Thus, 

this action makes no change to the position we expressed on this 

particular issue in the April 2, 2010 notice. In this final 

rule on tailoring the PSD program to address GHGs, we have 

determined that the additional burden of incorporating GHG 

requirements into PSD permits for the sources already required 

to obtain such permits is manageable in the step 1 period. 

Thus, this rule has added no additional requirements or 

limitations that would justify deferring the establishment of 

pollution controls for this category of GHG sources once PSD 

permitting requirements are initially triggered for GHGs. 

b. PSD Permits Issued Prior to Step 1 

EPA has not historically required PSD permits to be updated 

or reopened after they are issued in the absence of an action by 

the applicant to change the physical or operational 

characteristics of the source described in the permit 

application. EPA’s PSD permitting regulations contain no 

provisions that address the modification or amendment of a PSD 

permit or require a PSD permit to be reopened or modified on the 

basis of new PSD permitting requirements that take effect after 

the final permit is issued. Since PSD permits are construction 

permits, EPA has not required updates to PSD permits in the same 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

392

manner as is typically required for operating permits that 

incorporate a variety of applicable requirements (such as title 

V permits and NDPES permits under the Clean Water Act). In 

addition, unlike operating permits, PSD permits are not required 

to be renewed. However, if construction under a PSD permit is 

not commenced in a timely manner or is discontinued for an 

extended period, a PSD permit may expire if an extension is not 

requested or justified. See, 40 C.F.R. 52.21(r)(2); 40 C.F.R. 

124.5(g) 

With respect to the application of PSD permitting 

requirements for GHGs beginning on January 2, 2011, we do not 

see any cause to deviate from our historical practice of not 

requiring PSD permits to be reopened or amended to incorporate 

requirements that take effect after the permit is issued. 

Thus, we are not promulgating any new rules or requirements 

pertaining to PSD permits issued prior to Step 1 of the phase-in 

described in this rule. There is no mandatory requirement to 

reopen a previously issued PSD permit to incorporate GHG 

requirements that were not applicable at the time the permit was 

issued. 

A major source that obtains a PSD permit prior to January 

2, 2011 will not be required under EPA regulations to reopen or 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

393

revise the PSD permit to address greenhouse gases in order for 

such a source to begin or continue construction authorized under 

the permit. Our current PSD permitting regulations provide 

that “[n]o new major stationary source or major modification to 

which the requirements of paragraphs (j) through (r)(5) of this 

section apply shall begin actual construction without a permit 

that states the major stationary source or major modification 

will meet those requirements.” 40 C.F.R. § 51.166(a)(7)(iii); 

40 C.F.R. § 52.21(a)(2)(iii). The term “begin actual 

construction” generally means “initiation of physical onsite 

construction activities on an emissions unit which are of a 

permanent nature” and includes activities such as “installation 

of building supports and foundations, laying underground 

pipework and construction of permanent storage structures.” 40 

C.F.R. § 51.166(b)(11); 40 C.F.R. § 52.21(b)(11). A source 

that begins actual construction authorized under a PSD permit 

prior to January 2, 2011 will not be in violation of the 

prohibition described above if it continues construction after 

that date. This portion of the regulation precludes only 

beginning construction without the appropriate preconstruction 

permit and does not require a permit to be updated to continue 

actual construction that has already begun. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

394

Furthermore, a source that is authorized to construct under 

a PSD permit but has not yet begun actual construction on 

January 2, 2011 may still begin actual construction after that 

date without having to amend the previously-issued PSD permit to 

incorporate GHG requirements. Sections 51.166(a)(7)(iii) and 

52.21(a)(2)(iii) require “a permit that states the major 

stationary source or major modification will meet those 

requirement,” which refers to the “requirements in paragraphs 

(j) through (r)(5)” referenced earlier in those provisions. 

EPA construes this language to describe a permit that meets the 

requirements of paragraph (j) through (r)(5) that are in effect 

at the time the permit is issued. Permitting and licensing 

decisions of regulatory agencies must generally reflect the law 

in effect at the time the agency makes a final determination on 

a pending application. See Ziffrin v. United States, 318 U.S. 

73, 78 (1943); State of Alabama v. EPA, 557 F.2d 1101, 1110 (5th

Cir. 1977); In re: Dominion Energy Brayton Point, LLC, 12 E.A.D. 

490, 614-616 (EAB 2006); In re Phelps Dodge Corp., 10 E.A.D. 

460, 478 n. 10 (EAB 2002). 

 Thus, a source may begin actual construction on or after 

January 2, 2011 under a PSD permit that authorized construction 

to begin prior to January 2, 2011 because such a permit states 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

395

that the source will meet the requirements of paragraphs (j) 

through (r)(5) of these regulations (or state equivalents) that 

were in effect at the time the permit was issued. However, 

this would not be the case if the permit has expired because the 

applicant has discontinued construction or failed to commence 

construction by the necessary date. See, 40 C.F.R. 

52.21(r)(2). 

This approach is consistent with EPA’s practice when the 

preconstruction permitting requirements change by virtue of the 

designation of an area as a nonattainment area after a PSD 

permit is in issued. In transitional guidance issued by EPA in 

1991, EPA explained that “the area designation in effect on the 

date of permit issuance by the reviewing agency determines which 

regulations (Part C or D) apply to that permit.” Memorandum 

from John S. Seitz, Director OAQPS, New Source Review (NSR) 

Program Transitional Guidance, page 6 (Mar. 11, 1991). This 

memorandum explained further that “where a source receives a PSD 

or other permit prior to the date the area is designated as 

nonattainment, the permit remains in effect” as long as the 

sources meets the conditions necessary to prevent the permit 

from expiring. Id. at 6. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

396

 This approach does not apply if the source engages in a 

major modification after January 2, 2011 that is not authorized 

by the previously issued permit. Once step 1 of the phase-in 

begins, if the PSD requirements for GHGs are applicable to a 

previously-permitted source that engages in a major modification 

not covered by the permit, such a source will need obtain a new 

PSD permit to authorize the modification and that permit may 

need to include GHG requirements depending on the level of 

increase in GHGs that results from the modification. 

c. Additional Sources for Which PSD Applies in Step 2 

In light of the terms of existing PSD regulations and the 

lead time provided in this action for sources that will first 

become subject to PSD permitting in Step 2, we do not believe 

there is presently a need to establish transition provisions for 

sources that will be required to obtain PSD permits for the 

first time in Step 2 of the phase-in. As described above, 

under our current PSD permitting regulations, a new major 

stationary source or major modification may not begin actual 

construction without a PSD permit that meets the applicable 

preconstruction permitting requirements. 40 C.F.R. § 

51.166(a)(7)(iii); 40 C.F.R. § 52.21(a)(2)(iii). 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

397

Since a permit must be obtained before a major source may 

begin actual construction, the major source preconstruction 

permitting requirements in sections 51.166 and 52.21 of the 

regulation do not generally apply to sources that begins actual 

construction at a time when it was not a major source required 

to obtain a PSD permit. One exception, however, is the unique 

circumstance when a source becomes a major source solely by 

virtue of the relaxation of an enforceable limitation on the 

source’s potential to emit. 40 C.F.R. §51.166(r)(2); 40 C.F.R. 

§ 52.21(r)(4). But absent these circumstances, PSD 

preconstruction permitting requirements do not generally 

preclude a source from continuing actual construction that began 

before the source was a source required to obtain a PSD permit. 

Thus, a source that began actual construction under the 

authorization of any previously required minor source or state 

construction permit is not required to meet any PSD 

preconstruction permitting requirement that becomes applicable 

after actual construction begins unless the source engages in a 

major modification after PSD permitting requirements are 

applicable. Likewise, a PSD permit is not required after a 

source begins actual construction based on a valid determination 

(by the source or the permitting authority) that the source need 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

398

not obtain either a major PSD permitting requirements or and 

minor NSR permit. Based on these provisions in existing 

regulations, EPA will not require any sources to which PSD 

permitting requirements begin to apply in step 2 to obtain a PSD 

permit to continue construction that actually begins before step 

2 begins. 

However, we will expect Phase 2 sources that begin actual 

construction in phase 2 (i.e., beginning July 1, 2011) to do so 

only after obtaining a PSD permit in accordance with sections 

52.21, 51.166, or any applicable state regulation that meets the 

requirements of section 51.166. We recognize the potential for 

the triggering of step 2 to result in a change in status where a 

project may legally have begun actual construction before step 2 

but did not do so and would then need a PSD permit. However we 

also note that we are providing over a year of lead time before 

PSD permitting requirements become applicable to step 2 sources. 

If projects would be adversely affected by this change in 

status, this lead time affords an opportunity for sources 

planning such projects to secure appropriate minor NSR permits 

(which generally take less than a year to issue), nonapplicability determinations, etc in time to avoid such a 

change in status. If a new or modified source that would become 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

399

newly subject to PSD in step 2 plans to begin actual 

construction before step 2, it has more than a year to obtain 

the applicable preconstruction approvals and begin actual 

construction. Likewise, a step 2 source that does not 

anticipate the ability to begin actual construction before step 

2 begins should have enough lead time to submit a PSD permit 

application and obtain the necessary permit without 

significantly delaying the project further. Therefore, we do 

not think it is necessary or appropriate to promulgate a 

transition provision that would exempt step 2 sources from PSD 

permitting requirements that will apply based on construction 

that begins after step 2 takes effect. 

This approach for Step 2 sources that have obtained a minor 

source construction permit or non-applicability determination 

differs from the approach described above for source that 

obtained a PSD permit prior to Step 1. As described above, a 

Step 1 source that is authorized to begin actual construction 

before January 2, 2011 under a previously-issued PSD permit may 

begin actual construction under that permit after January 2, 

2011 without modifying the PSD permit to address GHGs. 

However, a Step 2 source that was not required to obtain a PSD 

permit before Step 2 begins would need to obtain a PSD permit 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

400

addressing GHGs if it has not yet begun actual construction 

prior to Step 2, even if the source had obtained any 

preconstruction approvals that were necessary to authorize 

construction prior to Step 2. This is because such a Step 2 

source that begins actual construction after Step 2 would likely 

be doing so without having any permit meeting the requirements 

of paragraphs (j) through (r)(5) of section 52.21, 51.166, or a 

state equivalent. A source that has obtained only a minor 

source permit prior to Step 2 but that begins actual 

construction after July 1, 2011 would violate the requirements 

of section 52.21(a)(2)(iii), 51.166(a)(7)(iii), or a state 

equivalent ,unless the source took care to ensure that it was 

authorized to construct under a PSD permit or could demonstrate 

that the source’s minor source construction permit makes clear 

that requirement of paragraphs (j) through (r)(5) of sections 

52.21, 51.166, or a state equivalent would be met by the source 

even though such a permit was not nominally a PSD permit. This 

difference in approach for non-PSD sources is driven by the 

terms of sections 52.21(a)(2)(iii) and 51.166(a)(7)(iii). Since 

we have not provided any prior notice that we might be 

considering revisions to sections 52.21 and 51.166 to address 

this topic, we are unable to revise the regulations in this 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

401

action to achieve the same result for non-PSD sources as for PSD 

sources. Furthermore, this difference in approach is not 

unreasonable since non-PSD sources will not trigger permitting 

for GHG until step 2 (only anyway PSD source trigger in step 

1). Thus sources will have until July 1, 2010, an additional 6 

months of lead time, to prepare for the transition described 

here. 

EPA has previously promulgated exemptions that have 

authorized some sources that were not previously subject to the 

PSD regulations to commence construction on the basis of minor 

source permits after the date new PSD requirements have took 

effect in 1978 and 1980. See e.g. 40 C.F.R. 52.21(i)(1)(iv)-

(v). There is a notable distinction between these provisions, 

which use the term “commence construction,” and the terms of 

sections 52.21(a)(2)(iii) and 51.166(a)(7)(iii), which use the 

term “begin actual construction.’ Commerce construction is 

defined more broadly than begin actual construction to include 

obtaining all necessarily preconstruction approvals and either 

beginning actual on-site construction or entering into binding 

contracts to undertake a program of actual construction. 40 

C.F.R. 52.21(b)(9); 40 C.F.R. 51.166(b)(9). The term commence 

construction is also defined in the Clean Air Act. 42 U.S.C. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

402

7479(2)(A). Among other purposes, the term “commence 

construction” is generally used in the Act and EPA regulations 

to distinguish construction activities that are exempt from new 

PSD permitting requirements from those that are not. See e.g. 

42 U.S.C. 7475(a); 40 C.F.R. 52.21(i)(1)(i)-(v). In the 

absence an explicit exemption in the Clean Air Act or the PSD 

regulations that uses the term “commence construction,” we do 

not believe we can use the date a source “commences 

construction” under a minor source construction permit approval 

as a demarcation point for Step 2 sources that may continue 

ongoing construction activities without having to obtain a PSD 

permit based on emissions of GHGs. Since we did not provide 

prior notice of an intention to adopt transition provisions 

applicable to this situation, we are unable to adopt such an 

exemption in this action that applies the term commence 

construction in this context. Consequently, the approach 

described above applies the term “begin actual construction” 

based on the language in sections 52.21(a)(2)(iii) and 

51.166(a)(7)(iii). 

d. Transitional Issues for Title V Permitting 

Since the title V permitting regulations already include a 

robust set of provisions to address the incorporation of new 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

403

applicable requirements and other transitional considerations, 

we do not see grounds to establish unique transition or 

grandfathering provisions for GHGs in this action. Furthermore, 

since the purpose of title V is to collect all regulatory 

requirements applicable to a source and ensure compliance, we do 

not believe special exemptions for GHG requirements are likely 

to be justified. The existing title V rules do not provide any 

exemptions that relieve the obligation to incorporate all 

applicable requirements into a title V permit. However, the 

title V regulations contain numerous provisions that allow a 

reasonable period of time for incorporating new applicable 

requirements or applying for a title V permit that was not 

previously required. Transitional issues for incorporation of 

GHG requirements into title V permitting generally involve 

questions in the following categories: (1) permit application 

requirements for sources not previously subject to title V that 

will become subject to title V requirements in step 2 of the 

phase-in; (2) the need for updates or amendments to title V 

permit applications that are pending when GHGs become subject to 

regulation in Step 1 of the phase-in; and (3) the incorporation 

of new applicable requirements for GHGs into existing permits 

for sources currently subject to title V. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

404

With respect to the first category, a title V source 

applying for the first time must submit its permit application 

within 12 months after the source “becomes subject to the 

[operating] permit program” or such earlier time that the 

permitting authority may require (see §70.5(a)(1)). Sources not 

otherwise subject to title V can become major sources subject to 

title V due to emissions of GHG no sooner than July 1, 2011. If 

a source becomes “subject to the [operating] permit program” on 

July 1, 2011, then its permit application under the title V 

operating permit program would typically have to be submitted no 

later than July 1, 2012. 

There are also existing regulations relevant for the second 

category of GHG transition issues, where sources currently 

subject to title V have title V permit applications pending with 

a permitting authority as of January 2, 2011. Where additional 

applicable requirements become applicable to a source after it 

submits its application, but prior to release of a draft permit, 

the source is obligated to supplement its permit application. 

See 40 CFR §§ 70.5(b); 71.5(b). Furthermore, title V permits 

are generally required to contain provisions to assure 

compliance with all applicable requirements at the time of 

permit issuance. See CAA section 504(a); 40 CFR §§ 70.6(a)(1); 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

405

71.6(a)(1). If a permitting authority determines that 

additional information is necessary to evaluate or take final 

action on an application (e.g. because of uncertainty over 

whether a draft permit assures compliance with all applicable 

requirements), it may, and should, request additional 

information from the source in writing and set a reasonable 

deadline for a response. See 40 CFR §§ 70.5(a)(2); 71.5(a)(2). 

Likewise, the existing title V regulations provide 

sufficient transition for the third category of issues, where a 

source has additional GHG-related applicable requirements (such 

as the terms of a PSD permit) that must be incorporated into its 

existing title V permit. Where a source is required to obtain a 

PSD permit, the source must apply for a title V permit or permit 

revision within 12 months of commencing operation or on or 

before such earlier date as the permitting authority may 

establish (or prior to commencing operation if an existing title 

V permit would prohibit the construction or change in 

operation). See 40 C.F.R. §§ 70.5(a)(1)(ii); 71.5(a)(1)(ii); 

see also §§70.7(d) and (e); 71.7(d) and (e) (permit 

modifications). In addition, where a source becomes subject to 

additional applicable requirements, the permitting authority is 

required to reopen the permit to add those applicable 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

406

requirements if the permit term has three or more years 

remaining and the applicable requirements will be in effect 

prior to the date the permit is due to expire. See 40 C.F.R. 

§§ 70.7(f)(1)(i); 71.7(f)(1)(i). 

Finally, EPA notes that the existing title V regulations 

require sources to furnish permitting authorities, within a 

reasonable time, any information the permitting authority may 

request in writing to determine whether cause exists for 

modifying, revoking, and reissuing, or terminating the permit, 

and for other reasons, and further provide that permitting 

authorities shall reopen and revise permits if EPA or the 

permitting authority determine that the permit must be revised 

or revoked to assure compliance with applicable requirements. 

See §§70.6(a)(6)(v);71.6(a)(6)(v) and §§ 70.7(f)(1)(iv); 

71.7(f)(1)(iv). 

Thus, EPA believes that the existing title V regulations 

provide an adequate regulatory framework for managing the 

transition to incorporating GHG requirements in title V permits 

and additional specific exemptions or transition rules for title 

V are not currently warranted. 

VI. What are the economic impacts of the final rule? 

This section of the preamble examines the economic impacts 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

407

of the final rule including the expected benefits and costs for 

affected sources and permitting authorities. The final rule 

uses a stepped phased-in approach for sources of GHG emissions 

to comply with title V operating permit and PSD statutory 

requirements, essentially lifting this burden for a period of at 

least six years for a large number of smaller sources of GHG. 

Thus, this rule provides regulatory relief rather than 

regulatory requirements for these smaller GHG sources. For 

larger sources of GHG that will be required to obtain title V 

permits and/or comply on PSD requirements, there are no direct 

economic burdens or costs as a result of this final rule, 

because these requirements are not imposed as a result of this 

rulemaking. Statutory requirements to obtain a title V 

operating permit or to adhere to PSD requirements are already 

mandated by the CAA and by existing rules, not by this rule. 

Similarly, this rule will impose costs to society in the form of 

foregone environmental benefits resulting from GHG emission 

reductions that, absent this rule, might otherwise have occurred 

at sources deferred from permitting during the phase-in period. 

The regulatory impact analysis (RIA) conducted for this 

final rule provides details of the benefits or regulatory relief 

that smaller GHG sources will experience in terms of costs 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

408

avoided as a result of this final rule and the potential for 

social costs in terms of foregone environmental benefits during 

this 6-year period. Complete details of the regulatory impact 

analysis conducted for this final rule may be found in the 

document "Regulatory Impact Analysis for the Final Greenhouse 

Gas Tailoring Rule," in the docket for this rulemaking. 

This rulemaking provides permitting thresholds for sources 

of GHG that exceed levels contained in the CAA and these levels 

are phased in steps based upon application of the administrative 

necessity and absurd results doctrines as explained in section 

V.B. For step 1 that is effective from January 2, 2011 through 

June 30, 2011, only sources required to undergo title V or PSD 

permitting based upon non-GHG air pollutants are required to 

obtain an operating permit or PSD permit to include GHG 

emissions. Step 2, effective from July 1, 2011 until such time 

as EPA acts on a rule to amend it (which for reasons described 

above, we assume is June 30, 2013 for the purposes of this 

analysis), requires larger sources emitting GHG above 100,000 

CO2e tpy to obtain a title V permit (if they do not already have 

one) and to comply with PSD requirements when they are newly 

constructed or modify in a way that increases emissions by more 

than a 75,000 CO2e tpy significance level. Thereafter, EPA 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

409

makes an enforceable commitment to consider a possible step 3 to 

further lower thresholds below 100,000 CO2e tpy and/or 

permanently exclude some sources from the program(s), but only 

after a regulatory process is conducted addressing 

administrative necessity and absurd results considerations based 

upon the actual permitting experiences in the first two steps of 

the phase-in. In addition, EPA provides a deferral of permitting 

until we take required action in April 2016 for sources and 

modifications that emit below 50,000 CO2e tpy. The deferral will 

end when a required study is conducted of the permitting process 

for sources of GHG and EPA acts, based on the study, to 

promulgate a rule that describes the additional GHG permitting 

requirements beyond 2016. In the 6 years following promulgation 

of this rule, the EPA estimates that compared to baseline 

estimates that do not include the effects of this rule, over six 

million sources of GHG emissions in total will be allowed to 

continue to operate without a title V operating permit. During 

this period, tens of thousands of new sources or modifying 

sources each year will not be subject to PSD requirements for 

GHG. For this large number of smaller sources, this rule 

alleviates the regulatory burden associated with obtaining an 

operating or PSD permit or complying with NSR BACT requirements. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

410

Therefore, this final action may be considered beneficial to 

these small sources because it provides relief from regulation 

that would otherwise be required. 

This decision does potentially have environmental 

consequences in the form of higher emissions during the 6-year 

period of time (generally because emissions increases would have 

been lower if BACT were applied). These consequences are 

limited due to the fact that sources between 100/250 and 100,000 

CO2e tpy account for an estimated 11 percent of the six directly 

emitted GHG nationally from industrial, commercial, and 

residential source categories, while representing over 95 

percent of the total number of sources potentially requiring an 

operating or PSD permit for GHG under current permitting 

thresholds in the CAA. Moreover, requiring such a large number 

of small sources to obtain permits for the first time would 

overtax the permitting authorities' abilities to process new 

permits and would therefore interfere with any such benefits 

actually being achieved. Moreover, reductions from these small 

sources will still be occurring, notwithstanding the fact that 

permitting requirements would not apply to them. These smaller 

sources of GHG will be the focus of voluntary emission reduction 

programs and energy efficiency measures that lead to reductions 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

411

in GHG. We will also reevaluate this decision after a 6-year 

period and complete a study of the implications for those 

sources and permitting authorities of permitting smaller GHG 

sources beyond 2016. 

In reaching the preceding decisions for this final rule, we 

carefully considered comments received on the tailoring rule 

proposal. We received several comments specifically on our 

description of the impacts of this rule. Most of these comments 

disagreed with our assertion that the rule is a “relief” rule. 

Others assert that we should have prepared a more comprehensive 

RIA than prepared for the rule proposal. Those commenting 

contend: (1) we understated the burdens of the rule while 

overstating its relief at proposal; (2) we erroneously omitted 

the impacts for “larger sources” of GHG from the proposal RIA 

and should have recognized the burden to “larger sources” due to 

other GHG actions; (3) the economic impacts the rule will have 

on industry and the U.S. economy society in general will be 

burdensome, especially given the current state of the economy; 

and (4) we need to propose a full RIA or a complete estimation 

of impacts to comply with CAA section 307(d) and the 

Administrative Procedure Act. 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

412

 EPA has carefully considered the comments addressing the 

issue of whether the tailoring rule is a regulatory “relief 

rule”, and we are not persuaded that we erred in concluding that 

the effect of the tailoring rule is to provide regulatory relief 

to a large number of sources of GHG for a period of up to six 

years. This final rule will provide relief from title V 

permitting to over 6 million sources of GHG in this country. 

Likewise tens of thousands of sources potentially subject to PSD 

permitting requirements annually for GHG will have regulation 

postponed for a period of up to 6 years under this rule, 

followed by an additional required rule addressing the period 

beyond 6 years. While larger sources of GHG may be required to 

obtain title V permits or modify existing permits and to comply 

with PSD requirements, these burdens result not from the 

tailoring rule but rather from the CAA requirement to apply PSD 

to each pollutant subject to regulation, which is triggered when 

the LDVR takes effect. To clearly illustrate this, consider 

what would occur if EPA did not complete the tailoring rule. 

Sources would not be relieved of the requirement to obtain 

permits addressing each pollutant subject to regulation when 

they construct or modify, nor would they be relieved of their 

obligation to obtain title V permits. Instead, these 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

413

requirements would simply apply to a much larger population of 

sources and modifications, and would lead to the absurd results 

and severe impairment to program implementation that this rule 

is designed to address. 

In response to comments asserting that the RIA completed 

for proposal of this rulemaking: (1) understated the burdens of 

the rule and overstated the benefits, (2) did not fully 

recognize the rule will be burdensome, especially given the 

current state of the economy; and (3) does not consider a 

complete estimation of impacts to comply with the Administrative 

Procedure Act and CAA section 307(d) and needs to correct flawed 

or erroneous assumptions, EPA did make improvements and 

modifications to the RIA completed for this final rule. Based 

upon comments, EPA modified estimates of the number of sources 

affected at various threshold levels upward. EPA also improved 

the burden estimates associated with obtaining permits for 

sources and permitting authorities. After consideration of the 

burden imposed by the proposed rule with these improved 

estimates for affected sources, the EPA modified the steps of 

the phase-in period to include two initial steps, described in 

section V, that are higher, and therefore cover fewer sources 

and are less burdensome than the proposal threshold of 25,000 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

414

CO2e tpy emissions. EPA also increased the threshold below which 

permitting would not apply for six years from 25,000 to 50,000 

tpy CO2e. After the initial two step period, EPA has committed 

to consider lower thresholds but only down to 50,000 tpy CO2e, 

and only after a regulatory process that uses information 

gathered on actual permitting activity during the first two 

steps of the phase-in period. The RIA conducted for the final 

rule also incorporates improvements in our estimates of the 

number of sources affected at alternative thresholds and 

improved estimates of the costs of obtaining permits by sources 

and processing permits by permitting authorities. The EPA 

acknowledges that the regulatory relief associated with the 

control costs due to BACT requirements for PSD new and modifying 

sources is not included in the RIA for the final rule due to the 

lack of sufficient data about the nature of those requirements. 

However, it is the case that, as it relates to burden, those 

estimates would simply increase the amount of regulatory relief 

associated with this final rule. 

Finally, with regard to comments that the RIA should have 

been a more comprehensive analysis to include the larger sources 

of GHG that will be required to obtain permits when GHG are 

regulated, the EPA maintains as previously explained that there 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

415

are no direct economic burdens or costs as a result of this rule 

for these sources. Requirements for larger GHG sources to obtain 

title V or PSD permits are already mandated by the Act and by 

existing rules and are not imposed as a result of the tailoring 

rule. Thus the economic impacts for larger sources of GHG do 

not occur because of this tailoring rule. To include these 

larger sources in the RIA would actually be an inaccurate 

assessment of how this rule affects sources and would ignore the 

fact that this rule is regulatory relief. 

A. What entities are affected by this final rule? 

As previously stated, this final rule does not itself 

result in the application of permitting requirements to any 

industrial, commercial, or residential entities. Entities 

affected by this rule are those who experience regulatory relief 

due to the higher thresholds and deferred applicability set 

forth in this rule. This action increases the threshold to 

obtain a title V and PSD permitting from statutory CAA levels 

using a phased-in step process as previously discussed. As table 

VI-1 shows, this action lifts permitting requirements for over 

six million potential title V sources in total and tens of 

thousands of potential PSD new sources annually that would be 

otherwise required by the CAA to obtain permits. Under step 1, 
Interagency Working Comments under EO 12866 Review                                                      

Subject to Further Policy Review

416

over six million title V sources in total and approximately 20 

thousand new PSD sources per year will not be required to obtain 

permits. Under step 2, requiring sources over a 100,000 tpy CO2e 

to obtain a permit, over six million title V sources in total 

and approximately 19.9 thousand new PSD sources per year will 

obtain regulatory relief. While the threshold approach differs 

for steps 1 and 2 of the phase-in plan, the estimated number of 

sources affected does not differ greatly as shown in Table VI-1. 

Sectors experiencing this regulatory relief include electricity, 

industrial, energy, waste treatment, agriculture, commercial and 

residential.
 

Table VI-1. Estimated Number of Affected Sources Experiencing 

Regulatory Relief1,2

Number of Sources Experiencing Regulatory 

Relief 

Non-GHG Based <100,000 tpy

Sector Title V New PSD Title V New PSD 

Electricity 285 93 285 33 

Industrial 170,910 604 170,654 599 

Energy 2,588 48 2,536 44 

Waste Treatment 3,358 2 3,165 1 

Agriculture 37,351 299 37,351 299 

Commercial 1,355,921 12,041 1,355,870 12,039 

Residential 4,535,500 6,915 4,535,500 6,915 

Totals 6,105,913 20,002 6,105,361 19,930 

% Emissions Covered3 13% 11% 

Notes: (1) Number of sources is determined on a potential to 

emit basis. Estimates for title V are the total number of 

sources expected to experience regulatory relief. PSD sources 

are annual estimates of newly constructed facilities and do not 

include modifications at existing facilities that may also be 

subject to PSD requirements. (2) See Appendices to ‘Regulatory 

Impact Analysis of the Final Greenhouse Gas Tailoring Rule’ for 

more details of how thresholds and sources affected are 

developed. (3) Percentage of emissions covered represent 

estimated actual emissions from sources expected to experience 

regulatory relief as a percentage of total stationary source GHG 

emissions. 

B. What are the estimated annual benefits to sources due to 

regulatory relief from the statutory requirements? 

EPA estimated the annual benefits (avoided costs) to 

sources of GHG emissions and permitting authorities anticipated 
from this final rule. In addition, an accounting of the 

benefits from this action as measured by avoided permit 

processing costs for state, local, and tribal permitting 

authorities is provided. These benefits or avoided costs relate 

specifically to information collection costs or burden costs 

postponed for smaller sources of GHG emissions otherwise 

required to obtain an operating permit under title V or required 

to modify an existing permit to address GHG emissions. Avoided 

costs shown also include information collection requirements for 

additional PSD permits postponed for new or modifying smaller 

sources of GHG, as well as the avoided costs to state, local and 

tribal permitting authorities. These estimates do not consider 

avoided emission control costs associated with PSD requirements 

for potential BACT requirements. Estimates for BACT are 

unavailable at this time because of the difficulty predicting 

the results of the BACT process as it would be applied to new 

pollutants and classes of sources for which there is no previous 

BACT experience on which to rely. 

1. What are annual estimated benefits or avoided burden costs 

for title V permits? 

Table VI-2 shows that the estimated annual title V benefits 

to sources and to permitting authorities in terms of avoided 

information collection cost resulting from this final action to 

be approximately $70,524.3 million under step 1 of the phase-in, 
the non-GHG based requirements threshold. These avoided costs 

become $70,517.1 million annually under step 2 of the phase-in 

where permitting is required for sources at or above the 100,000 

tpy CO2e threshold. Under the non-GHG based phase-in step 1, 

approximately $49,457.3 million in regulatory relief will accrue 

to sources and approximately $21,067 million to permitting 

authorities annually in the form of avoided permit processing 

costs. With the <100,000 tpy CO2e threshold for phase-in step 2, 

these annual regulatory relief benefits are expected to be quite 

similar at $49,455.4 million for sources of GHG emissions and 

$21,061.7 million for permitting authorities. Industrial 

sources permitting costs are estimated to be $46.4 thousand per 

permit for a new permit and $1.7 thousand for a permit revision. 

The EPA estimates that over tens of thousands of industrial 

sources per year will avoid incurring these permitting costs 

under steps 1 and 2 of the phase-in period. The cost for a 

permit for new commercial and residential sources is estimated 

to be $23.2 thousand per permit with approximately 2 million of 

these permits avoided annually. 

State, local, and tribal permitting authorities will also 

benefit in terms of avoided permitting administrative costs of 

over $21 billion as a result of the decisions final in this 

action. For industrial sources, the cost for permitting 

authorities to process a new industrial title V 
Table VI-2. Annual Title V Regulatory Relief for Sources and 

Permitting Authorities1, 2 

 

Step One 

Non-GHG Based

Step Two 

<100,000 tpy CO2e

Activity 

Cost 

per 

Permit 

(2007$) 

Number of 

Permits 

Avoided 

Costs 

(millions 

2007$) 

Number of 

Permits 

Avoided 

Costs 

(millions 

2007$) 

Sources 

New Industrial $46,350 71,829 $3,329.3 71,829 $3,329.3

New 

Commercial/Residential $23,175 1,985,948 $46,024.3 1,985,930 $46,023.9

Permit revisions due to 

GHG $1,677 61,836 $103.7 60,921 $102.2

Source Total 2,119,613 $49,457.3 2,118,508 $49,455.4

Permitting Authority 

New Industrial $19,678 71,829 $1,413.5 71,829 $1,410.1

New 

Commercial/Residential $9,839 1,985,948 $19,539.7 1,985,930 $19,539.6

Permit revisions due to 

GHG $1,840 61,836 $113.8 60,921 $112.1

Permitting Authority 

Total 2,119,613 $21,067.0 2,118,508 $21,061.7

 

Total Title V Regulatory Relief $70,524.3 $70,517.1

Note (1) Annual title V avoided costs estimates represent 

information collection costs for one third of the total number 

of title V sources obtaining regulatory relief shown in Table 

VI-1 potentially requiring permits or permit revisions for GHG. 

 (2) More details on these estimated regulatory relief benefits 

are available in the Appendices to the “Regulatory Impact 

Analysis for the Final Greenhouse Gas Tailoring Rule”. 

permit is approximately $19.7 thousand per permit and $1.8 

thousand for a permit revision. Similar permitting authority 

avoided permit processing costs are approximately $9.8 thousand 

per permit for a new commercial or residential title V permit. 

All estimates are stated in 2007 dollars. 
2. What are annual benefits or avoided costs associated with 

NSR permitting regulatory relief? 

Table VI-3 summarizes the estimated annual information 

collection costs avoided by sources and permitting authorities 

for PSD permitting due to this tailoring rule. The benefits 

associated with avoided cost of compliance for BACT for these 

sources is not included in these estimates due to a lack of 

available data. The estimated avoided burden or reporting and 

recordkeeping cost that would occur absent this rule for new 

industrial sources to obtain permits is estimated to be $84.5 

thousand for a modifying PSD industrial source and $59.2 

thousand for a modifying commercial or multi-family residential 

source. New PSD sources will also be required to obtain a title 

V permit increasing these costs to $130.9 thousand per permit 

for new industrial sources and to $82.3 thousand per permit for 

new commercial or multi-family residential sources. (Note the 

title V costs for these new PSD sources have been included in 

title V estimates shown in Table VI-2.) New and modifying 

sources avoid approximately $5.5 billion annually in PSD 

permitting costs with this rule under the phase-in step 1, nonGHG based threshold. Under the phase-in step 2, <100,000 CO2e 

tpy threshold and <75,000 tpy CO2e significance level, this 

avoided PSD permitting cost estimate becomes $5.4 billion 

annually. State, local, and tribal permitting authorities are 
expected to avoid about $1.51 billion annually in administrative 

expenditures associated with postponing PSD program requirements 

for these GHG sources under step 1 and $1.49 billion under step 

2. All estimates are shown in 2007 dollars. 

Table VI-3. Annual PSD Regulatory Relief for Sources and 

Permitting Authorities1,2

 

Step One

Non-GHG Based

Step Two

<100,000 tpy 

Threshold, <75,000 

Significance Level

Activity 

Cost 

per 

Permit 

(2007$) 

Number 

of 

Permits 

Avoided 

Costs 

(millions 

2007$) 

Number 

of 

Permits 

Avoided 

Costs 

(millions 

2007$) 

Sources 

New Industrial $84,530 26,089 $2,205.3 25174 $2,128.0 

New 

Commercial/Residential $59,152 55,509 $3,283.5 55505 $3,283.2 

Source Total 81,598 $5,488.8 80679 $5,411.2 

Permitting Authority 0 

New Industrial $23,243 26,089 $606.4 25174 $585.1 

New 

Commercial/Residential $16,216 55,509 $900.1 55505 $900.1 

Permitting Authority 

Total 81,598 $1,506.5 80679 $1,485.2 

 

Total Title V Regulatory Relief $6,995.3 $6,896.4 

Note: (1) All estimates are based upon potential to emit. 

Regulatory relief shown represents annual estimates of PSD 

permitting costs avoided under steps 1 and 2 of the phase-in 

period. 
(2) More details on these estimated regulatory relief benefits 

are available in the Appendices to the “Regulatory Impact 

Analysis for the Final Greenhouse Gas Tailoring Rule”. 

C. What are the economic impacts of this rulemaking? 

This final rulemaking does not impose economic burdens or 

costs on any sources or permitting authorities, but should be 

viewed as regulatory relief for smaller GHG emission sources and 

for permitting authorities. Although sources above the 

thresholds set in this rule will become subject to permitting on 

January 2, 2011, those impacts are not attributable to the 

present rulemaking. Rather they are mandated by the CAA and 

existing regulations and automatically take effect independent 

of this action. 

In addition to considering the regulatory relief expected 

for affected entities as a result of this final rule, the EPA 

considered the impact of this rulemaking to small entities 

(small businesses, governments and non-profit organizations) as 

required by RFA and SBREFA. For informational purposes, the RIA 

includes the Small Business Administration (SBA) definition of 

small entities by industry categories for stationary sources of 

GHG and potential regulatory relief from title V and NSR 

permitting programs for small sources of GHG. Since this rule 

does not impose regulatory requirements but rather lessens the 

regulatory burden of the CAA requirements to smaller sources of 
GHG, no economic costs are imposed upon small sources of GHG as 

a result of this final rule. Rather this action provides 

regulatory relief for small sources. These avoided costs or 

benefits accrue because small sources of GHG are not required to 

obtain a title V permit and new or modifying small sources of 

GHG are not required to meet PSD requirements. Some of the 

small sources benefitting from this action are small entities, 

and these entities will benefit from the regulatory relief 

finalized by this rule. For discussion of comments received and 

EPA responses regarding small entities impacts, see section 

VIII. of this preamble. 

D. What are the costs of the final rule for society? 

EPA examined the social costs of this final rule. These 

social costs represent the foregone environmental benefits that 

will occur as a result of the regulatory relief offered to 

sources of GHG emissions. This action is one of regulatory 

relief since it increases the emissions thresholds for the title 

V and PSD programs, as they apply to sources of GHG emissions, 

to levels above those in the CAA. In this preamble section, the 

benefits or avoided regulatory costs of such relief are 

discussed, but there is also a social cost imposed by such 

relief, because this rule may forego some of the possible 

benefits associated with title V and PSD programs for sources of 

GHG emissions below the permitting thresholds established. 
These benefits are those attributed to title V and PSD 

permitting programs in general. These benefits are based upon 

the relevance of these programs to policymaking, transparency 

issues, and market efficiency, and therefore are very difficult 

to quantify and monetize. For title V, they include the 

benefits of improved compliance with CAA requirements that stem 

from (1) improved clarity regarding applicability of 

requirements, (2) discovery and required correction of 

noncompliance prior to receiving a permit, (3) improving 

monitoring, recordkeeping, and reporting concerning compliance 

status, (4) self-certification of compliance with applicable 

requirements initially and annually, and prompt reporting of 

deviations from permit requirements, (5) enhanced opportunity 

for the public to understand and monitor sources’ compliance 

obligations, and (6) improved ability of EPA, permitting 

authorities, and the public to enforce CAA requirements. 

However, it is important to remember that a title V permit does 

not add new requirements for pollution control itself, but 

rather collects all of a facility’s applicable requirements 

under the CAA in one permit. Therefore, the compliance benefits 

above are less when title V permits contains few or no CAA 

applicable requirements. During the initial steps of the phasein plan established under this action, we expect that the vast 

majority of sources excluded from title V would be sources that 
have no CAA applicable requirements for GHG emissions and few or 

no requirements for other pollutants because their emissions of 

those pollutants are so small. For this reason while it is 

extremely difficult to measure the degree of improved 

compliance, if any, that would be foregone, or to quantify the 

social costs that would be imposed, we expect that they would be 

negligible. 

 For PSD, the primary social cost imposed by the tailoring 

rule stems from the foregone benefit of applying BACT to the 

tens of thousands of small new sources and modifications that 

will be below our final thresholds during the first steps of the 

phase-in. This social cost potentially weighs against the cost 

savings described above that stem (in part) from avoiding the 

administrative and control costs of applying BACT to these 

sources. The BACT requirement assures that new and modified 

sources, when they increase their emissions are using state-ofthe-art emission controls and affords the public an opportunity 

to comment on the control decision. It does not prohibit 

increases but it assures that such controls are applied. 

Delaying the BACT requirement for numerous small sources during 

the first steps of the phase-in for this final rule could allow 

increases from these smaller sources that are greater than they 

would be if BACT were applied. A detailed analysis of this 

difference is beyond the scope of this rule, because we do not 
have detailed information on the universe of these tens of 

thousands of small PSD actions, the candidate BACT technologies 

for each of them, how permitting authorities would make the BACT 

decisions, and how the BACT limit would compare to what would 

otherwise be installed absent BACT. 

It is not possible at this time to quantify the social 

costs of avoided BACT. However we note that the universe of 

possible emissions that would be regulated by sources excluded 

under the tailoring rule is small compared to those that would 

remain subject to PSD. The sources excluded in these first two 

steps of the phase-in plan of this action comprise only 11 

percent of total stationary source GHG emissions, while 67 

percent remain subject to regulation. Furthermore, we expect 

the emissions differences due to BACT controls for such sources 

to be relatively small due to the lack of available capture and 

control technologies for GHG at such sources that are akin to 

those that exist for conventional pollutants and sources, as 

well as the likelihood that even in the absence of BACT such 

sources would already be installing relatively efficient GHG 

technologies to save on fuel costs. Thus, while potential 

benefits would be foregone by excluding smaller sources from the 

permitting programs, these benefits are likely to be small. 

Under the tailoring rule, we will be working during the 6-year 

period to greatly improve our understanding of both the 
administrative costs of regulating and the social costs of not 

regulating smaller sources under PSD and title V, and we will be 

relying on that information to support our future threshold 

analyses called for under the action. 

In reaching the decisions for this GHG tailoring rule, the 

EPA recognizes that GHG emissions can remain in the atmosphere 

for decades to centuries, meaning that their concentrations 

become well-mixed throughout the global atmosphere regardless of 

emission origin, and their effects on climate are long lasting 

and significant. A detailed explanation of climate change and 

its impact on health, society, and the environment is included 

in EPA's technical support document for the endangerment finding 

action (Docket ID No. EPA-HQ-OAR-2009-0171). The EPA recognizes 

the importance of reducing climate change emissions for all 

sources of GHG emissions including those sources afforded 

regulatory relief in this rule and plans to address potential 

emission reductions from these small sources using voluntary and 

energy efficiency approaches. Elsewhere, we have discussed 

EPA's interest in continuing to use regulatory and/or nonregulatory tools for reducing emissions from smaller GHG sources 

because we believe that these tools will likely result in more 

efficient and cost-effective regulation than would case-by-case 

permitting. 
VII. Comments on Statutory and Executive Orders Reviews 

A. Comments and Response on Statutory and Executive Orders 

Section in the Proposed Rule 

In this section, we provide responses to comments we 

received for various Executive Orders. 

A. Comments on Executive Order 12866 - Regulatory Planning and 

Review 

At proposal, EPA prepared an analysis of the potential 

costs and benefits associated with EPA’s tailoring rule proposal 

in an RIA. Several commenters state that EPA’s failure to 

estimate the full costs of the effects of its interpretation of 

PSD applicability in the proposed Tailoring Rule violates EO 

12866. Some of these commenters maintain that EO 12866 directs 

EPA to submit to OMB new significant regulations under 

consideration by the EPA. These commenters assert that, in the 

section 202 rule, EPA failed to analyze the effect on stationary 

sources in the cost benefit analysis and there is no indication 

that EPA included these impacts in its submission to OMB. 

According to the commenters, in EPA’s proposal for this 

rulemaking, EPA has similarly failed to analyze the costs and 

benefits of triggering PSD for stationary sources. The 

commenters assert that without this key information, OMB could 

not fully review the impacts of the proposed rule. The 

commenters believe that EPA’s failure to account for known costs 
that will occur as a direct result of the promulgation of the 

proposed rule in conjunction with the section 202 rule violates 

several applicable requirements of EO 12866, including sections 

6(B)(ii) and 6(C)(iii), which require assessments of the 

potential costs and benefits of the regulatory action and 

“reasonably feasible alternatives to the planned regulation, 

identified by the Agencies or the public . . .” thereby 

violating both the Administrative Procedures Act and CAA section 

307(d) because they deprive businesses and permitting 

authorities alike of a meaningful opportunity to comment on the 

rule. 

 The EPA has prepared a revised RIA assessing the benefits 

and costs of the final tailoring rule to support this rulemaking 

in accordance with E.O. 12866 as was done with the proposal for 

this rulemaking. Similarly the RIA completed for this action is 

subject to review by an Inter-agency review panel that includes 

the President’s Office of Management and Budget as was the case 

with the proposal RIA. Further, the RIA completed for this 

final rule fully assesses the known benefits and costs 

associated with the tailoring rulemaking. This final rule is 

one of regulatory relief from statutory requirements in which a 

large number of sources of GHGs will be relieved of the burden 

of title V and PSD permitting for a period of at least six 

years. This final rule will provide relief from title V 
permitting to over 6 million sources of GHG in this country. 

Likewise tens of thousands of sources potentially subject to PSD 

permitting requirements for GHGs will have regulation postponed 

for a period of at least 6 years. While larger sources of GHG 

may still be required to obtain title V permits or modify 

existing permits and to comply with PSD requirements, these 

burdens result from existing statutory requirements, not from 

this final tailoring rule. 

B. Comments on Paperwork Reduction Act 

At proposal, we stated in the preamble that we did not 

believe that the proposal would impose any new information 

collection burden. We concluded that the proposed action would 

reduce costs incurred by sources and permitting authorities 

relative to the costs that would be incurred if EPA did not 

revise the rule and provided estimates of those reduced costs. 

Further, we stated that, despite our estimated burden 

reductions, it was unnecessary for us to submit a new ICR to the 

OMB because the ICR contained in the existing regulations for 

PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 70 

and 71) had already been approved under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned 

OMB control number 2060–0003 and OMB control number 2060–0336, 

respectively. 
However, several commenters disagree that it was 

unnecessary for us to submit a new ICR for the proposed action. 

These commenters believe that (1) prior approval of an ICR for 

the PSD and title V programs ignores the fact that there would 

be an increase in the paperwork burden as a result of applying 

PSD and title V permitting requirements; and (2) unless EPA 

resubmits the information collection approval request to OMB 

with a proper and fully-inclusive analysis, EPA will lack 

authority to collect information from stationary sources for PSD 

and title V GHG emissions permitting. 

As we stated in the proposal, this is a burden relief rule 

and as such it does not impose any new requirements for the NSR 

or title V programs that are not currently required. For that 

reason, we concluded that for purposes of this rule it was 

unnecessary for us to submit a new ICR to the OMB and that the 

ICR contained in the existing regulations for PSD (see, e.g., 40 

CFR 52.21) and title V (see 40 CFR parts 70 and 71) that had 

already been approved under the provisions of the Paperwork 

Reduction Act, 44 U.S.C. 3501 et seq. and was assigned OMB 

control number 2060–0003 and OMB control number 2060–0336, 

respectively, still applies. 

Nevertheless, we understand that once GHGs are regulated 

under the PSD and title V programs, there might be an increase 

in the paperwork burden and EPA will have to access this 
possible burden. We plan to do so once the 3 year review period 

of the current ICR expires, which will be in early 2011. 

C. Comments on Regulatory Flexibility Act 

At proposal, EPA certified that the proposed rule would not 

have a significant impact on a substantial number of small 

entities and therefore we are not obligated to convene a formal 

Small Business Advocacy Review (SBAR) panel. This certification 

was based upon the fact that the proposed action would relieve 

the regulatory burden associated with the major PSD and title V 

operating permits programs for new or modified major sources 

that emit GHGs, including small businesses. Nevertheless, EPA 

was aware at proposal that many small entities would be 

interested in the various GHG rulemakings currently under 

development and might have concerns about the potential impacts 

of the statutory imposition of PSD requirements that may occur 

as a result of the group of EPA actions, notwithstanding the 

relief provided to small businesses by the tailoring rule. For 

these reasons, and in collaboration with the Small Business 

Administration (SBA), EPA conducted an outreach meeting designed 

to exchange information with small entities that may be 

interested in these regulations. The outreach effort was 

organized and led by representatives from EPA’s Office of Air 

Quality Planning and Standards within the Office of Air and 

Radiation, EPA’s Office of Policy Economics and Innovation, the 
Office of Information and Regulatory Affairs within the Office 

of Management and Budget (OMB), and the Office of Advocacy of 

the Small Business Administration. This meeting was conducted 

on November 17, 2009 in Arlington, VA and documentation of this 

meeting, which includes a summary of the advice and 

recommendations received from the small entity representatives 

(SERs) identified for the purposes of this process, can be 

obtained in the docket for this rulemaking. (See Docket No. 

EPA-HQ-OAR-2009-0517-19130). 

During the comment period, several commenters alleged that 

EPA inappropriately limited its RIA and RFA/SBREFA analysis, and 

that had we done a comprehensive analysis, we would not have 

been able to certify that any of the proposed rules will not 

have a significant economic impact on a “substantial number of 

small entities.” Thus they conclude that EPA failed to prepare 

and publicize an initial regulatory flexibility analysis (IRFA). 

Additional commenters stated that EPA’s failure to conduct an 

IRFA to assess the full costs of the effects of its 

interpretation of PSD applicability in the Proposed Tailoring 

Rule violates a host of statutes and Executive Orders requiring 

analysis and public review of regulatory burdens. These 

commenters conclude that EPA should have convened one or more 

Small Business Advocacy Review (SBAR) Panels. 

 EPA is not persuaded that EPA should have taken into 
account effects beyond those caused by the tailoring rule when 

we made our certification of no significant economic impact on a 

substantial number of small entities for this rule. No 

permitting requirements are imposed by this final tailoring 

rule. Instead, this final tailoring rule offers regulatory 

relief to over an estimated six million sources of GHG emissions 

that would otherwise be required to obtain a title V permit and 

tens of thousands of sources of GHG emissions subject to PSD 

permitting requirements that would otherwise be required 

statutorily to obtain permit. The RFA does not require that an 

agency complete a regulatory flexibility analysis or conduct an 

SBAR panel where the rule does not have any negative impact on 

small entities. For more discussion of RFA issues, please see 

the RTC document. 

The EPA completed an RIA to assess the economic benefits of 

regulatory relief and the environmental benefits afforded by 

this final rule. The EPA believes that the RIA completed for 

this final rule adequately addresses economic issues associated 

with this tailoring rule. 

D. Comments on Unfunded Mandates Reform Act 

At proposal, EPA asserted that the tailoring rule does not 

impose unfunded mandates on any entities including sources and 

permitting authorities. Since the proposed tailoring rule is 

one of regulatory relief, it alleviates the burden of adhering 
to statutorily required permitting thresholds and does not 

impose regulatory requirements. 

Some commenters on the proposed rule assert that EPA has 

failed to comply with the requirements of UMRA, pursuant to 

which EPA must assess the effects of the Proposed Rule on state, 

local, and tribal governments and the private sector. 

Specifically, these commenters state that section 202 of the 

UMRA requires EPA to prepare a written statement, including a 

cost-benefit analysis, for proposed rules with “federal 

mandates” that may result in expenditures to state, local, and 

tribal governments, in the aggregate, or to the private sector, 

of $100 million or more in any one year. According to the 

commenters, in concluding that “the revisions would ultimately 

reduce the PSD and title V program administrative burden that 

would otherwise occur in the absence of this rulemaking,” EPA 

did not account for the billions of dollars that permitting 

authorities and stationary sources will soon be required to 

spend once PSD is triggered for GHGs. Additionally, a few 

commenters contend that the EPA underestimated the impacts to 

public utilities which are owned/operated by local governments 

and also to state regulatory agencies. 

The EPA has carefully considered the comments on unfunded 

mandates expressed by commenters to the proposed rule. The EPA 

did complete a RIA for the final rule assessing the benefits and 
costs of the tailoring rule, including any unfunded mandates. As 

previously discussed, the tailoring rule is one of regulatory 

relief because it increases the GHG emissions threshold for NSR 

and title V permitting substantially above otherwise statutory 

requirements. As such, the EPA asserts this tailoring rule does 

not impose unfunded mandates on any entities. This RIA of the 

final rule incorporates the extensive changes made in this final 

rule, including increased threshold levels for title V and PSD 

above those contained in the proposed rule. While we also 

incorporated improved estimates of the costs for sources to 

obtain permits and for permitting authorities to process 

permits, they do not change our conclusion that this final rule 

does not impose unfunded mandates on any entities. 

E. Comments on Executive Order 13132 – Federalism 

Some comments received on the proposed rule assert that 

federalism concerns were ignored, in violation of Executive 

Order No. 13132. According to the commenters, EPA cannot 

maintain that the Tailoring Rule "will not have a substantial 

direct effect on the states, on the relationship between the 

national government and the states, or on the distribution of 

power and responsibilities between various levels of 

government," such that Executive Order No. 13132 does not apply. 

Some of these commenters assert that the proposed rulemaking 

would require radical changes in state laws, interjects GHGs 
into permit programs never once conceived for that purpose (any 

more than was EPA's), requires massive staff hiring at state 

agencies, and rewrites SIPs in place for years or even decades. 

As we stated previously, this is a burden relief rule and 

as such it does not impose any requirements for the NSR or title 

V programs that are not currently required. In addition, this 

action does not interject GHGs into the permit programs, nor 

does it change state laws or SIPs to impose any new permitting 

requirements. Instead, this action will significantly reduce 

the burden and costs incurred by sources and permitting 

authorities relative to the burden and costs that would be 

incurred if EPA did not revise the permitting provisions to 

account for higher applicability thresholds for GHG emissions. 

However, since this rule finalizes burden reducing 

thresholds that will not otherwise apply to the PSD and title V 

programs, we are aware that a few states will have to amend 

their SIPs to incorporate these new thresholds. These states 

will be the ones whose permitting authorities do not implement 

the Federal PSD and title V rules by reference in their SIPs. 

F. Comments on Executive Order 13175 - Consultation and 

Coordination with Indian Tribal Governments 

The National Tribal Air Association (NTAA) supports EPA’s 

proposed rule but requests that tribal air grant funding be 

increased to reflect the air quality-related needs of tribes 
across the nation, and to allow these tribes the opportunity to 

implement the CAA’s PSD and title V programs. The NTAA states 

that, not only are Tribes eligible for section 103 grant funding 

to conduct air quality monitoring, emissions inventories, and 

other studies and assessments, but they may also obtain section 

105 grant funding to implement CAA regulatory programs. 

According to the NTAA, Tribes are facing many of the same airrelated issues that neighboring state and local jurisdictions 

are facing, but are significantly underfunded to address such 

issues. 

 The Agency is aware and concerned about the resource needs 

for the Tribal air program and we are working to see how grant 

funding might be increased in the future. Nevertheless and for 

the purpose of the permitting programs, we want to clarify that 

tribes that develop Tribal Implementation Plans (TIPs) can 

charge for permits and Tribes with delegation can develop permit 

fee programs under their authority (e.g., Navajo’s permit fee 

program for their delegated title V permit program)to fund both 

the NSR and title V programs. For these reasons, there are a 

number of ways we would like to work to address the funding 

concern, includingencouraging delegation of permitting programs 

and having model codes available for Tribes that want to do TIPs 

for NSR and title V permitting. 
G. Executive Order 13211 - Actions That Significantly Affect 

Energy Supply, Distribution, or Use 

Other commenters assert that EPA’s analysis under Executive 

Order 13211 is insufficient because it addresses only smaller 

sources. These commenters contend that EPA has not meaningfully 

examined the energy implications of its proposed actions and 

interpretations of the CAA. The commenters disagree with EPA’s 

conclusion that the imposition of costly PSD obligations on 

power plants would have no impact on power supply, distribution, 

or use, when those plants will have had no time to prepare for 

compliance and no idea what BACT may be for GHG emissions. 

Other commenters opine that the adoption of BACT for some 

industries newly-subject to PSD permitting requirements for GHGs 

could involve fuel-switching, and increased energy costs (due to 

the need for a source to convert from coal to natural gas to 

meet BACT). 

Again, this action is a burden relief rule and as such it 

does not create any new requirements for sources in the energy 

supply, distribution, or use sectors. For the purpose of the 

BACT determinations for GHGs, the long-standing top-down BACT 

selection process still applies. Under the CAA and EPA’s 

implementing regulations, BACT is still an emission limitation 

based on the maximum degree of emission reduction achievable 

through application of production processes and available 
methods, systems, and techniques that considers energy, 

environmental, and economic impacts. In other words, BACT 

determinations for GHGs will still have to consider energy, 

environmental and economic feasibility for the various control 

technologies under consideration before selecting a particular 

technology as BACT for a particular source. For that reason, 

what BACT may be for GHG emissions will vary by source, and the 

technology that is ultimately selected has to be one that is 

feasible based on the current energy, environmental and economic 

impacts that the planned technology might have. Thus, we do not 

believe that this action is likely to have a significant adverse 

effect on the supply, distribution, or use of energy. 

VIII. Statutory and Executive Orders Reviews 

A. Executive Order 12866 - Regulatory Planning and Review 

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 

1993), this action is a "significant regulatory action" because 

it raises novel legal or policy issues. Accordingly, EPA 

submitted this action to the Office of Management and Budget 

(OMB) for review under EO 12866 and any changes made in response 

to OMB recommendations have been documented in the docket for 

this action. 

In addition, EPA prepared an analysis of the potential 

costs and benefits associated with this action. This analysis 

is contained in the RIA for this final rule. A copy of the 
analysis is available in the docket for this action and the 

analysis is briefly summarized in section VIII of this preamble. 

B. Paperwork Reduction Act 

 This action does not impose any new information collection 

burden. Instead, this action will significantly reduce costs 

incurred by sources and permitting authorities relative to the 

costs that would be incurred if EPA did not revise the rule. 

Based on our revised GHG threshold data analysis, we estimate 

that over 80,000 new and modified facilities per year would be 

subject to PSD review based on applying a GHG emissions 

threshold of 100/250 tpy using a CO2e metric. This is compared 

to 280 PSD permits currently issued per year, which is an 

increase of more than 280-fold. Similarly, for title V, we 

estimate that over six million new sources would be affected at 

the 100-tpy threshold for GHGs using the CO2e metric. By 

increasing the volume of permits by over 400 times, the 

administrative burden would be unmanageable without this rule. 

 However, OMB has previously approved the information 

collection requirements contained in the existing regulations 

for PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 

70 and 71) under the provisions of the Paperwork Reduction Act, 

44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-

0003 and OMB control number 2060-0336. 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 (APA) 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 final 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 final rule 

on small entities, I certify that this final 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 analyses is to identify and address regulatory 

alternatives “which minimize any significant economic impact of 

the rule on small entities.” 5 USC 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. 

We have therefore concluded that this final rule will 

relieve the regulatory burden for most affected small entities 

associated with the major PSD and title V operating permits 

programs for new or modified major sources that emit GHGs, 

including small businesses. This is because this rule raises 

the major source applicability thresholds for these programs for 

the sources that emit GHGs. As a result, the program changes 

provided in this rule are not expected to result in a 

significant economic impact on a substantial number of small 

entities. 

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. Only those few states whose permitting 
authorities do not implement the Federal PSD and title V rules 

by reference in their SIPs will have a small increase in burden. 

These states will have to amend their corresponding SIPs to 

incorporate the new applicability thresholds, since the burden 

reducing thresholds that we are finalizing with this rule will 

not otherwise apply to the PSD and title V programs. 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 discussed earlier, this rule is expected to 

result in cost savings and an administrative burden reduction 

for all permitting authorities and permittees, including small 

governments. 

E. Executive Order 13132 – Federalism 

This action does not have federalism implications. It will 

not have substantial direct effects on the states, on 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. These final amendments will ultimately simplify and 

reduce the burden on state and local agencies associated with 

implementing the PSD and title V operating permits programs, by 
providing that a source whose GHG emissions are below the 

proposed levels will not have to obtain a PSD permit or title V 

permit. Thus, Executive Order 13132 does not apply to this 

action. 

In the spirit of Executive Order 13132, and consistent with 

EPA policy to promote communications between EPA and state and 

local governments, EPA specifically solicited comment on the 

proposed rule from state and local officials. 

F. Executive Order 13175 - Consultation and Coordination with 

Indian Tribal Governments 

Subject to the Executive Order 13175 (65 FR 67249, November 

9, 2000) EPA may not issue a regulation that has tribal 

implications, that imposes substantial direct compliance costs, 

and that is not required by statute, unless the federal 

government provides the funds necessary to pay the direct 

compliance costs incurred by tribal governments, or EPA consults 

with tribal officials early in the process of developing the 

proposed regulation and develops a tribal summary impact 

statement. 

EPA has concluded that this action may have tribal 

implications. However, it will neither impose substantial 

direct compliance costs on tribal governments, nor preempt 

Tribal law. There are no tribal authorities currently issuing 
major NSR permits; therefore, it will not currently impose 

direct compliance costs on tribal governments. 

EPA consulted with tribal officials early in the process of 

developing this regulation to permit them to have meaningful and 

timely input into its development by publishing an ANPR that 

included PSD GHG tailoring options for regulating GHGs under the 

CAA. (73 FR 44354, July 30, 2008) As a result of the ANPR, EPA 

received several comments from tribal officials on differing PSD 

GHG tailoring options presented in the ANPR which were 

considered in the proposal and this final rule. Additionally, 

we also specifically solicited comment from tribal officials on 

the proposed rule (74 FR 55292, October 27, 2009). 

As required by section 7(a) of Executive Order 13175, EPA’s 

Tribal Consultation Official has certified that the requirements 

of the Executive Order have been met in a meaningful and timely 

manner. A copy of the certification is included in the docket 

for this action. 

G. Executive Order 13045 - Protection of Children from 

Environmental Health and Safety Risks 

 EPA interprets EO 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 EO has the potential to 

influence the regulation. This action is not subject to EO 
13045 because it does not establish an environmental 

standard intended to mitigate health or safety risks. 

H. Executive Order 13211 - Actions That Significantly Affect 

Energy Supply, Distribution, or Use 

This action is not a “significant energy action” as defined 

in Executive Order 13211(66 FR 28355 (May 22, 2001)), because it 

is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. Further, we have 

concluded that this rule is not likely to have any adverse 

energy effects because this action would not create any new 

requirements for sources in the energy supply, distribution, or 

use sectors. 

I. National Technology Transfer and Advancement Act 

Section 12(d) of the National Technology Transfer and 

Advancement Act of 1995 ("NTTAA"), Public Law No. 104-113, 12(d) 

(15 U.S.C. 272 note) directs 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 EPA to provide 

Congress, through OMB, explanations when the Agency decides not 

to use available and applicable voluntary consensus standards. 
This action does not involve technical standards. 

Therefore, EPA did not consider the use of any voluntary 

consensus standards. 

J. Executive Order 12898 – Federal Actions to Address 

Environmental Justice in Minority Populations and Low-Income 

Populations 

 Executive Order 12898 (59 FR 7629 (Feb. 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. 

 EPA has determined that this final rule will not have 

disproportionately high and adverse human health or 

environmental effects on minority or low-income populations 

because it increases the level of environmental protection for 

all affected populations without having any disproportionately 

high and adverse human health or environmental effects on any 

population, including any minority or low-income population. Any 

impact that this final rule will have will be global in nature 
and will increase the level of protection provided to all human 

health and the environment. 

K. Congressional Review Act 

The Congressional Review Act, 5 U.S.C. 801 et seq., as 

added by the Small Business Regulatory Enforcement Fairness Act 

of 1996, generally provides that before a rule may take effect, 

the agency promulgating the rule must submit a rule report, 

which includes a copy of the rule, to each House of the Congress 

and to the Comptroller General of the United States. EPA will 

submit a report containing this rule and other required 

information to the U.S. Senate, the U.S. House of 

Representatives, and the Comptroller General of the United 

States prior to publication of the rule in the Federal Register. 

A Major rule cannot take effect until 60 days after it is 

published in the Federal Register. This action is a “major 

rule” as defined by 5 U.S.C. 804(2). This rule will be effective

[INSERT DATE 60 DAYS FROM PUBLICATION IN THE FEDERAL REGISTER].

L. Judicial Review 

Under section 307(b)(1) of the Act, petitions for judicial 

review of this action must be filed in the United States Court 

of Appeals for the District of Columbia Circuit by [INSERT DATE 

60 DAYS FROM DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Any 

such judicial review is limited to only those objections that 

are raised with reasonable specificity in timely comments. 
Filing a petition for reconsideration by the Administrator of 

this final rule does not affect the finality of this rule for 

the purposes of judicial review nor does it extend the time 

within which a petition for judicial review may be filed, and 

shall not postpone the effectiveness of such rule or action. 

Under section 307(b)(2) of the Act, the requirements of this 

final action may not be challenged later in civil or criminal 

proceedings brought by us to enforce these requirements. 

Pursuant to section 307(d)(1)(V) of the Act, the Administrator 

determines that this action is subject 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.” This action finalizes some, but 

not all, elements of a previous proposed action – the Prevention 

of Significant Deterioration and Title V Greenhouse Gas 

Tailoring Rule Proposed Rule (74 FR 55292, October 27, 2009). 

IX. Statutory Authority 

The statutory authority for this action is provided by 

sections 307(d)(7)(B), 101, 111, 114, 116, and 301 of the CAA as 

amended (42 U.S.C. 7401, 7411, 7414, 7416, and 7601). This 

action is also subject to section 307(d) of the CAA (42 U.S.C. 

7407(d)). 

List of Subjects 

40 CFR Part 51 
Administrative practice and procedure, Air pollution 

control, Carbon dioxide, Carbon dioxide equivalents, 

Environmental protection, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride. 

40 CFR Part 52 

Administrative practice and procedure, Air pollution 

control, Carbon dioxide, Carbon dioxide equivalents, 

Environmental protection, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride. 

40 CFR Part 70 

Administrative practice and procedure, Air pollution 

control, Carbon dioxide, Carbon dioxide equivalents, 

Environmental protection, Greenhouse gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, Nitrous oxide, 

Perfluorocarbons, Reporting and recordkeeping requirements, 

Sulfur hexafluoride. 
40 CFR Part 71 

Administrative practice and procedure, Air pollution 

control, Carbon dioxide, Carbon dioxide equivalents, 

Environmental protection, Greenhouse gases, Hydrofluorocarbons, 

Methane, Nitrous oxide, Perfluorocarbons, Reporting and 

recordkeeping requirements, Sulfur hexafluoride. 

___________________________________________ 

Dated: 

___________________________________________ 

Lisa P. Jackson, 

Administrator.