# Response to Comment on Proposed Rule, "Action to Ensure Authority to
Issue Permits under the Prevention of Significant Deterioration Program to
Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and
SIP Call"

# Response to Comment on Proposed Rule, "Action to Ensure Authority to
Issue Permits under the Prevention of Significant Deterioration Program to
Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and
SIP Call"

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

December 2010i 

## Table of Contents

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

2.0 Legal Authority and Procedural Recommendations.................................................6 2.1 EPA's Legal Authority to Require States to Revise SIP.....................................6

2.2 Recommendations to Withdraw or Defer .........................................................14 2.3 Expedited Schedule...........................................................................................16 2.3.1 States that Agree to the 3-Week Deadline ............................................25 2.3.2 Adequacy of the 12-Month Schedule and Whether It Is a

“Reasonable Deadline” .........................................................................30 2.3.3 Effects of States Not Having PSD Permitting Authority After January 2, 2011, Due to Later SIP Revision Submittal ........................37 2.4 Does a Public Hearing Held on the State Level Meet CAA Requirements for a Public Hearing? ........................................................................................46 2.5 Do CAA Section 179 Sanctions Apply to States that Fail To Submit a Timely SIP Revision? .......................................................................................47 2.6 Title V Program Applicability Issues ...............................................................47

3.0 Classification of State SIPs.........................................................................................50 3.1 Presumptive Adequacy List ..............................................................................50 3.2 Presumptive SIP Call List.................................................................................51 3.3 Deadline Accepted by States for Submitting SIP Revision..............................52

4.0 Definition of “Regulated NSR Pollutant”.................................................................55 4.1 Does the Light-Duty Vehicle Rule Make GHGs a Regulated NSR

Pollutant? ..........................................................................................................55 4.2 May a State Adopt a Different Definition of GHG?.........................................55

5.0 State Regulatory Language – Does a General Authority Clause Allow Interpretation that the PSD Program Applies to GHGs?.......................................57

6.0 SIP Call ....................................................................................................................... .59

6.1 EPA Will Finalize SIP Call List Absent Further Information..........................59 6.2 States Encouraged to Specify that PSD Applies to “Regulated NSR

Pollutants”.........................................................................................................60 6.3 SIP Submittal and Approval Process ................................................................61

7.0 Information Requested from States on Presumptive Adequacy List.....................64 7.1 Confirm that PSD Program Applies to GHG Sources......................................64 7.2 Does the PSD Program Cite to Pollutants “Subject to Regulation”? ...............65

8.0 Other Comments.........................................................................................................66ii 

## Abbreviations List

BACT Best Available Control Technology

CAA Clean Air Act CAAAC Clean Air Act Advisory Committee

CFI Call for Information CFR Code of Federal Regulations

CO 2 Carbon dioxide

CO 2 e Carbon dioxide equivalent EPA United States Environmental Protection Agency Fed. Reg. Federal Register FIP Federal Implementation Plan FR Federal Register GHG Greenhouse gas LDVR Light-Duty Vehicle Rule NACAA National Association of Clean Air Agencies NAAQS National Ambient Air Quality Standards

NSR New Source Review NOx Nitrogen oxides PSD Prevention of Significant Deterioration RIN Regulatory Identification Number RTC Response to Comments SID Supplemental Information Document SIP State Implementation Plan SMAQMD Sacramento Metropolitan Air Quality Management District tpy Tons per year1 

## 1.0 Introduction

The U.S. Environmental Protection Agency (EPA) proposed to find that 13 states with EPA-approved state implementation plan (SIP) New Source Review Prevention of Significant Deterioration (PSD) programs are substantially inadequate to meet Clean Air Act (CAA) requirements because they do not appear to apply PSD requirements to GHG-emitting sources. 1
For each of these states, we proposed to require the state (through a “SIP call”) to revise its SIP as necessary to correct such inadequacies. 2 We proposed an expedited schedule for states tosubmit their corrective SIP revisions, in light of the fact that as of January 2, 2011, certain GHGemitting sources will become subject to the PSD requirements and may not be able to obtain a PSD permit in order to construct or modify.

For the rest of the states with approved SIP PSD programs, we solicited comment on whether their PSD programs do or do not apply to GHG-emitting sources. We proposed that if we concluded, on the basis of information receive d, that the SIP for such a state does not apply the PSD program to GHG-emitting sources, we would proceed to also issue a finding of substantial inadequacy and a SIP call for that state.

The public comment period ended on October 4, 2010. We received 50 comment letters (excluding duplicates and not including attachme nts). Table 1, “Comment Letters Received on Proposed SIP Call,” presents the list of comment letters (including duplicates) submitted to the docket for this rulemaking (Docket ID No. EPA-HQ-OAR-2010-0107, at http://www.regulations.gov) in response to the proposed rule, "Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call." We received approximately 23 comment letters from state and local air agencies, 19 comment letters from industry and industry associations, 1 comment letter from a state governor, 4 comment letters from environmental groups, 2 comment letters from individual private citizens, and 1 mass e-mail campaign comment letter (777 identical messages).

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

, beginning on page 53,892 (75 FR 53892).

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

2 Table 1. Comment Letters Received on Proposed SIP Call

Docket
Identification

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

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

0052 Comment submitted by Dave Freudenthal, Governor, Office of the Governor, State of Wyoming

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

Resource Council

0054 Comment and attachment submitted by Teresa Marks, Director, Arkansas Department of Environmental Quality (ADEQ)

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

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

0058 Comment and attachment submitted by Joseph Kahn, Director, Division of Air Resource Management and Thomas M. Beas on, General Counsel, Department of Environmental Protection, Florida Depa rtment of Environmental Protection

0059 Comment and attachment submitted by Cheryl Sonnier Nolan, Assistant Secretary, Louisiana Department of Environmental Quality (LDEQ)

0060 Comment and attachment submitted by Anne R. Gorbin, Chief, Bureau of Air Management, State of Connecticut Depa rtment of Environmental Protection

0061 Comment and attachment submitted by Larry Greene, Executive Director, and Kathrine Pittard, District Counsel, Sacramento Metropolitan Air Quality Management District (SMAQMD)

0062 Comment submitted by S. S. Sundbrug

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

0064 Comment and attachment submitted by Robert A. Wyman, Latham & Watkins LLP, on behalf of National Climate Coalition (NCC)

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

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

0068 Comment and attachment submitted by Bob Dinneen, President & Chief Executive Officer (CEO), Renewable Fuels Association (RFA)1 – Introduction

3 Docket
Identification

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

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

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

0071 Comment and attachment submitted by Norman W. Fichthorn, Counsel, Hunton & Williams LLP, Utility Air Regulatory Group (UARG)

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

0073 Comment and attachment submitted by Michael J. Nasi, Counsel, Jackson Walker L.L.P. on behalf of Gulf Coast Lignite Coalition (GCLC)

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

0075 Comment and attachment submitted by Paul Tourangeau, Director, Air Pollution Control Division, Colorado Department of Public Health & Environment

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

0077 Comment and attachment submitted by Russell Roberts for Lewis Wallenmeyer, Director, Clark County Department of Ai r Quality and Environmental Management (DAQEM)

0078 Comment and attachment submitted by Thomas W. Easterly, Commissioner, Indiana Department of Environmental Management (IDEM)

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

0080 Comment and attachment submitted by John S. Lyons, Director, Kentucky Department of Environmental Protection

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

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

0083 Comment and attachment submitted by Larry Hartig, Commissioner, Office of the Commissioner, Alaska Department of Environmental Conservation (ADEC)

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

0085 Comment and attachment submitted by Roderick Bremby, Kansas, Department of

Health and Environment1 – Introduction

4 Docket
Identification

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

0086 Comment and attachment submitted by Benjamin H. Grumbles, Director, Arizona Department of Environmental Quality (ADEQ)

0087 Comment and attachment submitted by Terry L. O'Clair, Director, Division of Air Quality, North Dakota Department of Health (ND DOH)

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

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

0089 Late comment and attachment submitted by Lauren Anderson, Executive Director, Louisville Metro Air Pollution Control District (APCD), Kentucky

0090 Comment and attachment submitted by Don Gabrielson, Director, Pinal County Air Quality Control District, Arizona (PCAQCD)

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

0095 Comment submitted by Michael J. Linder, Director, State of Nebraska Department of Environmental Quality

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

0101 Comment submitted by Dick Pedersen, Director, Oregon Department of Environmental Quality

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

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

0105 Comment submitted by Don Gabrielson, Director, Pinal County Air Quality (IDENTICAL TO 0090)

0106 Comment submitted by Cheryl Sonnier Nolan, Assistant Secretary, Louisiana Department of Environmental Quality (LDEQ) (IDENTICAL TO 0059)

0107 Comment submitted by Michael J. Nasi, Jackson Walker L.L.P, on behalf of Gulf Coast Lignite Coalition (GCLC) (IDENTICAL TO 0073)

0108 Comment and attachment submitted by Amey W. Marrella, Commissioner, Connecticut Department of Environmental Protection

0110 Late comment submitted by Bru ce Pendery, Wyoming Outdoor Council

0111 Late comment and attachment submitted by Lauren Anderson, Executive Director, Louisville Metro Air Pollution Control District (APCD), Kentucky

0112 Supplementary comment and attachment submitted October 21, 2010 via email by Martin Bauer, Administrator, Air Quality Division, Idaho Department of Environmental Quality1 – Introduction

5 Docket
Identification

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

0113 Late comment and attachment submitte d by Toni Hardesty, Director, Idaho Department of Environmental Quality

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

10/19/2010

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

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

0117 Mass Comment Campaign sponsored by Sierra Club (777)

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

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

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

In the remaining chapters of this Response to Comment document (RTC), we have summarized the public comments received on the SIP call proposal, and we provide responses to

those comments.6 

## 2.0 Legal Authority and Procedural Recommendations

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

Comment:

One state agency commenter (0084.2) and two industry commenters (0071.1/0102.1, 0103.1) argued that EPA is improperly using its SIP call authority under section 110(k)(5) of the Act when it should be following the procedures in 40 CFR 51.166 that are triggered when EPA calls on states to revise their SIPs “by reason of an amendment to [40 CFR 51.166].” Without explicitly stating that section 110(k) of the Act does not apply, another industry commenter (0070.1) similarly argued that the procedures fo r revising SIPs, including PSD programs in the SIPs, are set forth at section 110(a)(1) of the Act and 40 CFR 51.166(a)(6). The commenters noted that under 40 CFR 51.166(a)(6)(i), states are allowed up to 3 years to submit a SIP

revision.

One of the industry commenters (0071.1/0102.1) stated that the Tailoring Rule’s establishment of new minimum PSD SIP requirements, through that rule’s specific amendments and additions to definitions in 40 CFR 51.166(b), is the source of any arguable obligation on the part of states to revise their PSD SIPs to regulate GHG emissions and GHG-emitting sources.

This commenter (0071.1/0102.1) also made the poi nt that states may adopt SIP revisions that implement the Tailoring Rule’s inclusion of GHG emissions in the PSD program, but such regulation of GHG emissions may be implemented in PSD SIPs only in a prospective way. The proposed SIP call rule’s schedule for SIP submissions is flatly contrary to the existing regulatory provisions governing PSD SIP revisions, which, in 40 CFR 51.166(a)(6), establishes a 3-year schedule for those revisions. Only upon expiration of that 3-year period (which in this case extends to June 3, 2013) would EPA even arguably have authority to find, under CAA section 110(c), that SIPs are deficient because of their failure to include PSD provisions to address GHG emissions. For this reason, the commenter asserted that there is no lawful basis for EPA’s proposed SIP call.

Further, this commenter (0071.1/0102.1) stated that there are two distinct, and mutually exclusive, statutory mechanisms by which EPA can initiate SIP revisions. First, under CAA section 110(a), SIP revisions are triggered, as a matter of law, by EPA's establishing new SIP requirements. Second, where it applies, section 110(k)(5) of the Act authorizes EPA to issue a SIP call requiring SIP revisions when an approved SIP becomes “substantially inadequate” to satisfy the requirements that applied when EPA approved the SIP. Section 110(k)(5) does not apply when EPA revises its 40 CFR part 51 rules (i.e., the EPA rules that set out requirements, including PSD requirements, that SIPs must meet) to establish new minimum requirements that SIPs are to incorporate prospectively.2 – Legal Authority and Procedural Recommendations

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

Another of the industry commenters (0103.1) stated that EPA established the 3-year schedule in 40 CFR 51.166(a)(6)(i) in 2002 to establish “a date analogous to the date for submission of new SIPs when a NAAQS is promulgated or revised” pursuant to section 110(a)(1) of the Act. The commenter added that although CAA section 110(a)(1) allows EPA to specify a shorter period for SIP re visions, in 40 CFR 51.166(a)(6)(i) EPA has not provided for a shorter period but instead has codifi ed the 3-year period. The commenter asserted that the SIP call proposal runs afoul of this binding provision in this legislative rule and is

therefore unlawful.

The third industry commenter (0070.1) argued th at the procedures for revising SIPs are set forth at section 110(a)(1) of the Act and 40 CFR 51.166(a)(6), and that section 110(l) of the Act specifically requires that “each SIP revision sh all be adopted by such State after reasonable notice and public hearing.” Based on these provisions, the commenter asserted that EPA has misconstrued and misrepresented its authority under the Act in states with EPA-approved PSD programs because in such states, the approved program is federal law and GHGs are not required to be permitted while the states amend their PSD program to included GHGs. The commenter contended that EPA lacks the authority to issue the proposed findings of substantial inadequacy for 13 states and has no authority to issue a SIP call as the basis for implementing a FIP to replace existing SIP-approved PSD programs. The commenter believes that the proposed finding of SIP inadequacy for the 13 states i gnores the procedures put into place by Congress and EPA for an orderly adoption of new air perm it requirements and, therefore, EPA must allow states that lack authority for regulating GHGs and the Tailoring Rule 3 years from June 3, 2010, to adopt such regulations and submit them to EPA for review. The commenter added that EPA also should allow other states and Air Management Districts the time that is provided by the Act to revise their SIPs by implementing the Tailoring Rule.

One industry commenter (0071.1/0102.1) stat ed that the provisions of CAA section 110(a), and not CAA section 110(k)(5), govern for purposes of this SIP call rulemaking. Section 110(k)(5) gives EPA no authority to issue a SIP call to states to incorporate new PSD requirements into previously approved SIPs wh en CAA section 110(a) already calls for those2 – Legal Authority and Procedural Recommendations

8 SIP revisions. In these circumstances, the provi sions of section 110(a) control, and EPA lacks authority to issue a SIP call under section 110(k)(5).

Response:

EPA addressed commenters’ arguments in the preamble. See section IV.B.1.a(ii)(II)(B) of the preamble to the final rule.

Commenters’ premise for this argument is that the affected states are under a CAA section 110(a) obligation to submit SIP revisions. This is incorrect. The SIPs for the affected states have fully approved PSD programs that have a substantial inadequacy because they do not apply PSD to GHG-emitting sources. For most of the SIPs, the root of this substantial inadequacy is that the SIPs’ PSD programs do not automatically update to include pollutants newly subject to regulation, and as a result, now that GHGs will become subject to regulation on January 2, 2011, the SIPs fail to apply PSD to GHG-emitting sources. Even so, the fact remains that in the past, EPA fully approved the states’ PSD programs. Accordingly, the affected states are not currently under any CAA section 110(a) ob ligation to submit a SIP revision that would affect the SIP PSD programs’ applicability to GHG-emitting sources.

It is true that if EPA did not promulgate a SIP call, many, if not almost all of the affected states could be expected to submit SIP revisions under CAA section 110(l) to apply their PSD programs to GHG-emitting sources. But, again, absent the SIP call, these states would not be under any obligation to do so.

Accordingly, commenters’ premise—that the affected states are under a CAA section 110(a) obligation to submit SIP revisions—is incorrect, and as a result, their argument that section 110(a) controls, so that EPA lacks authority under CAA section 110(k)(5) to issue a SIP call, is invalid.

In addition, the commenters have misstated the source of the requirement that PSD applies to GHG-emitting sources. Contrary to what the commenters state, the Tailoring Rule

and associated revisions to 40 CFR 51.166 did not establish the requirement that PSD apply to GHG-emitting sources. This requirement was es tablished by operation of the applicable CAA provisions, in conjunction with the Light-Duty Ve hicle Rule (LDVR), in automatic fashion. EPA regulations have long codified this automatically updating aspect of the CAA PSD requirements. Thus, the requirements the commenters cite under 40 CFR 51.166(a)(6)(i) are not applicable.

In any event, as discussed in the preamble to the final rule, CAA section 110(k)(5) by its terms provides EPA with discretion as to the timing of making a finding of substantial inadequacy (the prerequisite for issuing a SIP call). Nothing in CAA section 110(k)(5) limits EPA’s discretion to make a finding of substan tial inadequacy based on any CAA section 110(a) obligations, and, by the same token, nothing in CAA section 110(a) provides that it overrides the applicability of CAA section 110(k)(5).2 – Legal Authority and Procedural Recommendations

9 Comment:

One industry commenter (0064.1/0096.1) requested th at in the final rules, EPA not refer broadly to the “PSD program” when describing the obligations imposed by the Tailoring Rule. The commenter indicated that the only portions of the PSD program that are applicable to qualifying sources of GHGs relate to the permitting requirements. Accordingly, the commenter believes that the final rule should avoid overbroad phrasing and use terminology that reflects only the obligations imposed under the Tailoring Rule.

Response:

We appreciate the comment. By referring to the “PSD program,” we mean the applicable requirements of the PSD progr am, including, e.g., the BACT requirement.

Comment:

A state agency commenter (0086.1) asserted that EPA has incorrectly presumed that the lack of a state requirement that certain GHG-emitting sources obtain PSD permits under its SIP constitutes a “substantial inadequacy” under section 110(k)(5) of the Act.

The state agency commenter (0086.1) believes that his state’s (Arizona’s) PSD program is and will continue to be adequate to meet all requirements of the Act authorized by Congress, which do not include regulation of GHGs.

Based on their reading of the provisions of section 110(k)(5), the three industry commenters (0065.1, 0068.1, 0069.1) believe that it is inappropriate for EPA to make a finding of substantial inadequacy in this case because (1) there is no NAAQS for GHGs; (2) the ability to attain the NAAQS for any other pollutant will not be affected by the failure to require a PSD permit or impose BACT for GHGs (including through interstate transport); and (3) no state has failed to comply with any applicable requirement to date. Two of the commenters (0065.1, 0069.1) pointed out that on January 2, 2011, only the “anyway” sources might become subject to BACT requirements under PSD. Based on EPA’s statement that fewer than 300 PSD permits currently are issued each year nationwide (an average of 6 per state), the commenters concluded that very few permits in any state are likely to be affected and that it cannot be considered a “substantial SIP inadequacy” when one or two permits will be issued with appropriate BACT limits for all pollutants except GHGs, with no effect on the state’s ability to attain any NAAQS. The commenters indicated that the even after July 1, 2011, the small number of affected permits cannot reasonably be considered to convert a SIP’ s status from adequate to meeting the Act’s requirements to “substantially inadequate.”

An environmental group commenter (0104.1) asserted that the proposed SIP call is both appropriate and required under the Act. The environmental group commenter (0104.1) believes2 – Legal Authority and Procedural Recommendations

10 that these provisions of the Act provide an interlocking system of state and federal implementation plans that maintains state primacy while protecting the public from unlawful pollution and ensuring that businesses can readily secure necessary permits even as additional pollutants become subject to regulation under the Act. The commenter noted that the timetables in section 110(k) (for submission and appr oval or disapproval of SIP revisions) and section 110(c)(1) (for imposition of a FIP) set maximum time limits. The commenter believes that nothing prevents EPA from acting more quickly when circumstances warrant, which the commenter asserted is the case in this situation (as discussed further in section 2.3.2 of this RTC).

To counter the argument made by some commenters that SIPs that do not address GHGs are not substantially inadequate because a small number of facilities will require such permits, the environmental group commenter (0104.1) stated that no provision in the Act would allow a SIP to stand solely because only some facilities under the SIP will not be able to comply with the law. The commenter also pointed out that the relevant facilities are the largest GHG sources and opined that if they are not controlled, the SIP is patently inadequate.

Response:

We discussed many of the issues raised in these comments in the preamble to the final rule, in section IV.B.1.a(ii)(I). We agree with the commenter who indicated that a SIP that does not provide for PSD permitting of sources of GHG emissions is substantially inadequate under CAA section 110(k)(5) and disagree with those who argued to the contrary. While not reopening the issue of whether PSD can be triggered only by pollutants subject to the NAAQS, on which we did not solicit comment, we note that we addressed this issue at length in the Tailoring Rule, and we concluded that as a matter of Chevron Step 1, PSD applies to non-NAAQS pollutants, including GHGs. While not reopening the issue of how many sources will be subject to PSD permits that must address GHGs, we believe t hat the commenters have understated the number of permitting actions that will involve GHG controls, and we agree with the commenter who observes that the large amount of GHG emissions from the relevant facilities supports the conclusion that a SIP that fails to apply PSD to those facilities is substantially inadequate to comply with CAA requirements. Finally, regar ding the fact that some approved SIPs do not permit non-criteria pollutants under PSD, we note that an agency's failure to take certain action at one point in time does not indicate a lack of authority to take that action, nor is the agency required to explain its earlier inaction in order to justify subsequent action.

As noted above, we believe that significantly more permitting actions than suggested by some commenters will involve GHG controls. However, in using this argument to bolster our finding of substantial inadequacy in this case, we are not concluding that there is necessarily a minimum number of permits that must be affected in order to justify a finding of substantial inadequacy. We believe that the argument made by one commenter that a SIP that is required2 – Legal Authority and Procedural Recommendations

11 to, under the CAA, but fails to, apply to only a few facilities is not in compliance with the CAA. In this case, the estimated number of affected permits is clearly significant.

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

this RTC.

Comment:

Four industry commenters (0065.1, 0068.1, 0069.1, 0070.1) believe that because there is no NAAQS for GHGs, it is inappropriate for EPA under provisions of section 110(k)(5) to make findings of substantial inadequacy with respect to GHGs. According to two industry commenters (0065.1, 0069.1), PSD can only be triggere d by pollutants for which EPA has issued a NAAQS, and only in attainment (or unclassifiable) areas for such pollutants. Thus, the commenters asserted that GHGs cannot trigger PSD and, as such, EPA’s proposed rules rely on the fundamentally flawed premise that states must interpret their rules such that certain levels of GHG emissions trigger PSD permitting. A third industry commenter (0068.1) indicated that

EPA should reconsider its “flawed” determina tion that non-NAAQS pollutants can trigger PSD, and a fourth industry commenter (0070.1) also maintained that PSD is only properly applied to pollutants for which for which EPA has issued a NAAQS.

Another industry commenter (0057.1) believes that section 166 of the Act sets forth a measured, orderly, and scientifically based means of implementing new PSD standards for regulated pollutants, which includes the necessary first step of establishing NAAQS for CO 2 and other GHGs under section 109 of the Act before proceeding to establish PSD standards and BACT requirements under sections 166 and 169. The commenter added that there is no exception set forth in the Act for CO 2 and other GHGs from following these scientifically based regulatory steps.

One state agency commenter (0080.1) expressed concern with the regulatory approach EPA has provided in the Tailoring Rule, as well as with the current proposals. Specifically, the commenter is concerned that EPA is mandating that GHGs be treated as a criteria pollutant under PSD without first listing GHGs as a criteria pollutant under section 109 of the Act. The commenter indicated that in the absence of GHGs' being declared a criteria pollutant with the appropriate attainment area classifications made pursuant to section 107 of the Act, GHGs must be treated like any other non-criteria regulated NSR pollutant, such as fluorides, sulfuric acid mist, or hydrogen sulfide.

Another state agency commenter (0084.2) stated that PSD is intended to safeguard the NAAQS, and because there is no NAAQS for GHGs, PSD should not apply to GHGs. The2 – Legal Authority and Procedural Recommendations

12 commenter also believes that it is clear that Congress did not intend for GHGs to be covered under the Act as evidenced by the statutory major source thresholds, which are set at levels that make permitting such sources for GHGs infeasible, and that EPA cannot legally set different thresholds for GHGs than those set in the Act. Further, the commenter indicated that SIP control strategies and permitting programs are structured to address pollutants that affect a localized and discrete area, not pollutants such as GHGs that have uniform concentrations throughout the

environment.

Response:

We find the commenters' arguments unpersuasive for several reasons, as we explain in section IV.B.1 of the preamble to the final rule. As discussed in the preamble, EPA’s position is that PSD does not apply only to criteria pollutant s. Accordingly, EPA, in taking the position that PSD applies to GHGs, is not attempting to mandate that GHGs be treated as a criteria pollutant without first listing GHGs as a criteria pollutant under CAA section 109.

Comment:

One industry commenter (0069.1) opined that EP A’s own actions reveal the flaw in its analysis. The commenter noted that EPA finds th at Pinal County, Arizona is subject to the SIP call because it defines the pollutants subject to PSD as “conventional pollutants” which are further defined as being limited to “criteria pollutants,” and EPA relies on this finding to support its view that the SIP is substantially inadequate as it relates to GHGs. According to the commenter, if this inadequacy was in fact substantial, EPA would have issued a SIP call for thiscounty many years ago because this county is not authorized to issue PSD permits for any noncriteria pollutants and has never been authorized to do so. The commenter stated that the same is true for Clark County, Nevada, which has always only regulated criteria pollutants under PSD.

Another industry commenter (0068.1) similarly i ndicated that if EPA is correct that PSD requirements are triggered with respect to non-criteria pollutants and that failure to include such pollutants renders a SIP substantially inadequate, EPA cannot explain why some SIPs that have only regulated criteria pollutants have not previously been subject to such a finding.

Response:

We responded to these comments in the preamble to the final rule and earlier in this RTC. We add here the observation that, as discussed in the SID, the SIP for Pinal County, Arizona, applies PSD to any air pollutant, not ju st NAAQS pollutants, although that SIP goes on to apply BACT to only criteria pollutants.

Comment:2 – Legal Authority and Procedural Recommendations

13 An environmental group commenter (0104.1) voiced a contrasting view: that the proposed SIP call is both appropriate and required under the Act. The commenter reasoned as

follows:

• Greenhouse gases are air pollutants under the Act. Massachusetts v. EPA , 549 U.S. 497 (2007).

• The PSD program requires any major source to receive a preconstruction permit certifying that it will meet BACT emissions limits for “each pollutant subject to regulation under this Act.” CAA section 165(a)(4).

• The EPA’s CAA controls for GHG emitted by mobile sources render these gases subject to regulation under the Act. 75 FR 17004.

• Because these regulations become effective at the latest on January 2, 2011, states must be able to issue permits containing BACT emissions limits for GHG by that date.

• Section 110(k)(5) of the Act states that “[w]henever the Administrator finds that the applicable [SIP] is substantially inadequate . . . to comply with any requirements of this Act, the Administrator shall require the State to revise the plan as necessary to correct such inadequacies.”

• Because SIPs must contain a permit program as required in part C (per CAA section 110(a)(2)(C)) and must meet the applicable requirements of part C (per section 110(a)(2)(J)), a SIP that cannot accommodate preconstruction permitting of major new and modified stationary sources for GHG is substantially inadequate.

• When EPA identifies these inadequacies, it must act under section 110(k) of the Act to enable the state to issue preconstruction permits that satisfy CAA requirements and adequately protect public health and the environment.

• Once EPA finds that a state has either failed to make a required submission or has made an incomplete submission, or EPA disapproves a submission, it must act under section 110(c)(1) of the Act to fill the gap with a FIP.

Response:

We appreciate this comment. As indicated in the preamble to the final rule, we generally agree with the commenter's analytical approach.

Comment:

Three industry commenters (0065.1, 0068.1, 0069.1) argued that even if EPA could support a finding of substantial inadequacy (see above), no such inadequacy can exist prior to January 2, 2011. The commenters stated that section 110(k)(5) of the Act does not describe the event of a “substantial inadequacy” prospectively, instead stating that EPA may issue a SIP call to any state with a SIP that “ is substantially inadequate” to comply with CAA requirements; the Act does not provide a basis for proposing that EPA can issue a SIP call because the Agency presumes to find that some states’ SIPs will become substantially inadequate at some later date.2 – Legal Authority and Procedural Recommendations

14 The commenters believe that the approach of deciding whether a SIP is substantially inadequate based on current CAA requirements is consistent with EPA’s prior SIP calls, such as the 1998

NO

x SIP call.

Response:

Consistent with one of the purposes of PSD, which is to promote economic growth without damaging the environment, we interpret CAA section 110(k)(5) to authorize a finding at this time that the affected SIPs are substantially inadequate to comply with CAA requirements. See section IV.B.1.a(ii)(III) of the preamble to th e final rule for an in-depth discussion of this

issue.

Comment:

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

Response:

We disagree with the commenters that the SIP call is invalid. In addition, in this rule, we are not reopening the legal rationales for the other GHG rules, and as a result, the commenter's comment on the legal rationale for those rules is not germane to this rule. We laid out our analytical approach and legal rationales for all our GHG-related actions in those actions.



### 2.2 Recommendations to Withdraw or Defer

Comment:

One state agency commenter (0084.2) urged EPA to withdraw the proposed SIP call and FIP for reasons detailed elsewhere in this RTC, and another state government commenter (0052) requested that EPA reconsider both the Tailoring Rule and the timeline for its implementation.

Numerous industry commenters (0056.2/0063.1/0100.1, 0065.1, 0068.1, 0064.1/0096.1, 0069.1, 0070.1, 0071.1/0102.1, 0074.1, 0081.1/0109.1, 0103.1) urged EPA to withdraw, defer, or stay the proposed SIP call and/or the proposed FIP for reasons detailed elsewhere in this RTC.

According to one industry commenter (0056.2/0063.1/0100.1), EPA cannot limit its inquiry to whether states have the authority to regulate GHGs under PSD but must also address the states’ ability and practical means to implement such regulation. The commenter believes that after engaging in a meaningful analysis of the states’ and its own staffing and other2 – Legal Authority and Procedural Recommendations

15 resources, EPA will realize that it erred when it chose January 2, 2011, as the effective date for PSD permitting. The commenter urged EPA to stay implementation.

One of the industry commenters (0070.1) believes that EPA should issue an emergency stay of the permit requirements that apply on January 2, 2011. Alternatively, the commenter suggested that EPA could ask the federal Court of Appeals now considering the validity of the rules to order a stay of the regulations to avoid injury to numerous state CAA programs and consequent injury to institutions and businesses that would be affected by a construction moratorium on permitting. According to the commenter, another alternative may be to allow Governors to temporarily suspend on an emergency basis these requirements under section 110(f)B of the Act.

Response:

EPA has received several requests for an administrative stay or reconsideration of the GHG rules, including the Tailoring Rule. EPA intends to respond to those requests separately. In the preamble to this final rule, EPA explained the timing of its various actions. In addition, several of the commenters and other persons filed motions to stay the GHG rules, including the Tailoring Rule, in the litigation in the D.C. Circuit challenging the GHG rules, 3 and EPA responded by opposing those motions. 4 EPA’s response is included in the docket for the SIP call action, and it explains EPA’s reasons for opposing a judicial stay of the Tailoring Rule and the

other GHG rules.

We believe the commenter intended to refer to CAA section 110(f)(1), which concerns temporary suspensions of Acid Rain penalties in case of energy emergencies. CAA section 110(f)(1) authorizes Governors to petition the President to “determine that a national or regional energy emergency of such severity exists [that] a temporary emergency suspension of any part of an applicable implementation plan ... by the State may be issued by the Governor...." This provision further provides that this authority is not delegable by the President. This provision has no relevance to the present action, for several reasons: The present action concerns the failure of certain states to have SIP provisions that apply PSD to GHG-emitting sources, so that there are no relevant provisions for which to seek a suspension. In addition, this

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

4 “EPA’s Response To Motions To Stay,” Coalition for Responsible Regulation v. EPA , No. 09- 1322 (and consolidated cases).2 – Legal Authority and Procedural Recommendations

16 provision authorizes petitions from a Governor to the President, which is not relevant to the present regulatory action by EPA.



### 2.3 Expedited Schedule

Comment:

Numerous commenters objected to the 3-week-to-12-month SIP submittal schedule that EPA proposed. For the most part, EPA responded to these comments in the preamble to the final rule. To that response, EPA adds here that, as discussed in the preamble to the final rule, the failure of the states to apply PSD to GHG-emitting sources is rooted in the failure of the states' PSD programs to automatically update. As a result, following promulgation of the LDVR by notice published May 7, 2010, which meant that GHG-emitting sources would become subject to PSD on January 2, 2011, these states faced a relatively short period of time to take appropriate action to assure that a PSD authority will be available by that date to process PSD permit applications from their GHG-emitting sources.

One state government commenter (0052), two state agency commenters (0079.1, 0080.1), and six industry commenters (0057.1, 0064.1/0096.1, 0074.1, 0081.1/0109.1, 0082.1/0099, 0103.1) expressed serious concerns about EPA’s proposed implementation timelines for GHG permitting. In contrast, two environmental group commenters (0053.1, 0110) believe that GHG permitting should begin as soon as possible. The comments are discussed in detail below.

The state government commenter (0052) indicat ed that, given that there are dozens of petitions concerning not only the Tailoring Rule but also the foundation for that rule, there is a high likelihood that any permitting strategy imposed on the states at this juncture is premature.

Another state agency commenter (0080.1) st ated that since EPA has not shown any environmental harm that would result from following the established, reasonable SIP call process, EPA should follow the normal SIP call pr ocess. The commenter indicated that EPA’s suggestion that a 3-week deadline is a reasonable is presumptuous and drastically deviates from the normal process. The commenter asserted that a January 2, 2011, effective date is impossibly aggressive for many agencies, that the need to complete the rulemaking on such an expedited schedule is due solely to EPA’s circumvention of the normal SIP call process, and that EPA, states, and the regulated community would be better served by setting a later date to allow states the ability to properly and adequately prepare to implement the new standard as has been done with SIP calls in the past. The commenter ( 0080.1) also pointed out that EPA has not published BACT guidance, and stated that this guidance should be made available prior to the effective date of GHGs becoming a regulated NSR pollutant. The commenter noted that the current legal challenges to the Tailoring Rule and associated rulemakings call into question the long-term stability of the rule and suggested that EPA should delay further processing of these rules until after litigation has been completed. The commenter added that quick implementation of this rule2 – Legal Authority and Procedural Recommendations

17 will place a very heavy burden on his agency at a time when it is facing many critical issues and it is straining under unprecedented budgetary and staffing shortages.

Response:

EPA has recently published BACT guidance 5 and expects that this guidance will assist states and sources in implementing PSD requirements. As noted above, EPA has not taken action on the administrative requests for a stay of the GHG rules and has opposed the motions for a stay in the litigation. EPA recognizes the challenges and resource demands that this state and other states may face in implementing PSD for GHG-emitting sources. EPA addressed this issue at length in the Tailoring Rule and conclude d that on a nationwide basis, states would be able to manage the additional burdens resulting from PSD applicability to GHG-emitting sources at the phased-in Tailoring Rule thresholds. In this SIP call rulemaking, EPA is not reopening that aspect of the Tailoring Rule and, in any event, this commenter's comments were general and were not sufficiently specific to point out any meaningful errors in the Tailoring

Rule record.

Comment:

Another industry commenter (0082.1/0099) believes that states and EPA are not ready to prescribe GHG permit conditions. The commenter stated that because there is no developed or approved BACT for GHG, regulated entities will not know what BACT they must install, and states and EPA do not know at this time what BACT they can approve. The commenter stated that until such time as GHG BACT is determined, no permits will be available regardless whether EPA or the states are responsible for issuing the permits.

Response:

This comment is not germane to this SIP call action. For reasons noted in the preamble to the final rule and elsewhere in this RTC, under CAA section 110(k)(5), EPA is justified in finding that the affected states’ SIPs are s ubstantially inadequate to meet CAA requirements because they do not apply PSD to GHG-emitting sources; as a result, EPA is justified in issuing a SIP call to require a corrective SIP revision; and EPA is justified in establishing the deadline that it has established for submittal of this corrective SIP revision. All this remains true even if states and sources confront difficulties in ascertaining GHG BACT.

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

18 In any event, it is EPA's expectation that the need to determine GHG BACT will not result in undue delays in PSD permit issuance in light of the fact that BACT is well-established, permitting authorities have extensive experience in determining BACT for many types of industries, and EPA has recently provided extensive guidance on determining BACT for various types of GHG-emitting industries in particular.

In addition, EPA is working closely with permitting authorities to assure that on January 2, 2011, sources needing a permit for GHG emissions will be able to get one. This provides sources with certainty in planning for new construction as well as expansion projects. EPA and most of the states have a mechanism in place to ensure that permitting can occur without interruption. For states not ready to permit for GHGs, EPA will continue to work with them to find a clear path forward to ensure that permits can be issued in a timely way. States are best-suited to issue permits to sources of GHG emissions. They have longstanding experience working together with industrial facilities under their jurisdiction to process PSD permit applications. EPA will continue to provide guidance and act as a resource for the states as they make the various required permitting decisions for GHG emissions.

Even if states do encounter difficulties in determining BACT, that cannot delay the applicability of PSD and the BACT requirement. As EPA stated in responding to comments in

the Johnson Memo Reconsideration:

Once the Agency has made a determination that a pollutant should be controlled using one or more of the regulatory tools provided in the CAA and those controls take effect, EPA agrees that a BACT analysis must then be completed based on available information. ... [T]he BACT process is designed to determine the most effective control strategies achievable in each instance, considering energy, environmental, and economic impacts. Thus, EPA agrees that the onset of the BACT requirement should not be delayed in order for technology or control strategies to be developed. Furthermore, EPA agrees ... that delaying the application of BACT to enable development of guidance on control strategies is not necessarily consistent with the BACT requirement. The BACT provisions clearly contemplate that the permitting authority will develop control strategies on a case-by-case basis.

75 Fed. Reg. at 17008/3

In the “PSD and Title V Permitting Guidance for Greenhouse Gases” (November 2010), EPA elaborated on the point that BACT is inheren tly a case-by-case determination (p. 21):2 – Legal Authority and Procedural Recommendations

19 It is important to recognize that this document does not provide any final determination of BACT for a particular source, since such determinations can only be made by individual permitting authorities on a case-by-case basis after consideration of the record in each case. Upon considering the record in an individual case, if a permitting authority has a reasoned basis to address particular issues discussed in this document in a different manner than EPA recommends here, permitting authorities (including EPA) have the discretion to do so in decisions on individual permit applications consistent with the relevant requirements in the CAA and regulations. Thus, depending on the relevant facts and circumstances, permitting authorities have the discretion to establish BACT limitations that are more or less stringent than levels that might appear to result if one were to follow the recommendations in this guidance.

Because it is not possible to determine BACT in advance for sources in general or any particular source, it is not appropriate to delay BACT applicability until such a BACT determination is

made.

Comment:

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

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

Response:

We appreciate the commenter’s information, but as discussed elsewhere, under CAA section 110(k)(5), EPA has a legal basis for finding that the SIP is substantially inadequate to meet CAA requirements, to issue a SIP call re quiring a corrective SIP revision, and to establish a SIP deadline, and the commenter has not explained how the internal state processes that the commenter identifies are germane to these actions.

Comment:

An industry (state-owned utility) commenter (0103.1) believes that even states that can obtain the authority to regulate GHGs under PSD in conformance with the Tailoring Rule thresholds by January 2, 2011, will need additional time to revise their laws and regulations, to get legislative or agency commitments of necessary resources, to hire additional permit and enforcement staff, to properly train them, and to acquire sufficient information and expertise regarding sources of GHG emissions, GHG cont rol technologies, and their costs. The2 – Legal Authority and Procedural Recommendations

20 commenter asserted that EPA has not addressed these administrative and economic concerns raised by states, and that states should not be expected, nor required, to regulate GHGs under approved SIPs by January 2, 2011.

One utility industry commenter (0057.1) believes that EPA is advancing the unrealistic timelines to implement the Tailoring Rule and other GHG regulations, expressing support for Wyoming Governor Dave Freudenthal’s comment letter (0052). The commenter asserted that EPA’s “premature rush” to take action will result in massive regulatory confusion and prolonged litigation over points of statutory, regulatory, and ad ministrative law. The commenter stated that EPA’s proposed action will trigger an extreme adverse economic consequence at a time of economic crisis and urged EPA to reconsider what the commenter believes is an unworkable time schedule. While objecting to the EPA's GHG timelines, the commenter (0057.1) noted that the commenter's company has been proactive in addressing the challenges of increasing levels of GHGs in the atmosphere. The commenter detailed the carbon sequestration and renewable energy projects that the commenter’s company operates or has planned. The commenter provided information on the amount of coal-based generation the commenter’s company owns and operates, and the commenter noted that this generation provides affordable power to farmers, ranchers, and other agriculture-related industries in the Upper Great Plains as well as much of the power needed to mine or recover the coal, natural gas, and oil in the area.

Response:

As acknowledged elsewhere in our responses, EPA recognizes the challenges and resource demands that states may face in implementing PSD for GHG-emitting sources, but it is useful to keep in mind that the timeframe for this particular action, which is all that is at issue in this rulemaking, is driven by the fact that PSD will apply to GHG sources as of January 2, 2011. In any event, EPA addressed this issue at length in the Tailoring Rule and concluded that on a nationwide basis, states would be able to manage the additional burdens resulting from PSD applicability to GHG-emitting sources at the phased-in Tailoring Rule thresholds. In this SIP call rulemaking, EPA is not reopening that aspect of the Tailoring Rule EPA's response to these

comments.

Comment:

One industry commenter (0064.1/0096.1), while believing that EPA is generally on the right track in its approach, asserted that the timeframe that EPA has given the states to promulgate appropriate state laws is inadequa te and must be adjusted. Quoting from a September 15, 2010, NACAA report, the commenter stated that even if EPA is able to finalize its SIP and FIP proposals by December 1, 2010, approximately 19 states and localities are likely to be unable to complete the necessary state processes in time for EPA to approve their revised SIPs by January 2, 2011, the date that PSD permitting obligations would apply to “otherwise sources” under the Tailoring Rule, and approximately 10 of these states and localities may be2 – Legal Authority and Procedural Recommendations

21 unable to revise and receive EPA approval of their SIPs by the July 1, 2011, date that PSD permitting obligations would apply to sources based solely on emissions of GHGs. Unless each of these states expressly volunteers to accept a deadline of 3 weeks to submit corrective SIP revisions – which in practical effect means accepti ng the FIP – affected sources in these states would not lawfully be able to undergo construc tion or modification until EPA approves a state’s SIP submittal or promulgates a FIP.

Response:

Many of the states described by the commenter are not relevant to this action because their SIP PSD programs have authority to apply PSD to GHG-emitting sources, and this SIP call action concerns states whose SIP PSD programs do not apply to GHG-emitting sources. In any event, as noted in the preamble, EPA recently conducted an extensive survey of each of the states to gauge their progress in implementing PSD for GHG-emitting sources, including the Tailoring Rule thresholds. Considering all of the states and other permitting jurisdictions in the nation,

EPA concluded:

Overall, EPA has received information about the status of 99 jurisdictions (49 states 6 , 4 territories, 45 localities, and the District of Columbia), and included that information in Attachment 1. Of these jurisdictions, 94 will have, for Federal law purposes, a PSD permitting program for GHG emissions at the Tailoring Rule thresholds on Jan. 2, 2011. Of these 94 entities, 84 will have made any necessary amendments to state or local law to ensure that state or local permits are not required for GHG emissions below Tailoring Rule thresholds. By the end of the first quarter of 2011, only one jurisdiction will not have authority to permit GHG sources, and that jurisdiction will obtain authority by July 1, 2011 and in the meantime, does not expect large sources seeking permits for their GHGs. In addition, by the end of the first quarter of 2011, all but one more state will have made any necessary amendments to state or local law to ensure that permits are not required for GHG emissions below Tailoring Rule levels. 1 program with GHG permitting authority at the lower statutory levels has not yet determined how, and on which timeline, it will incorporate the Tailoring Rule thresholds into its state law. As discussed above, for one remaining program – Texas’ ––– we intend to continue to work on establishing, in a satisfactory manner, a permitting authority.

Declaration of Gina McCarthy, ¶98, p. 20, “EPA's Response To Motions To Stay," Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases)) (McCarthy Declaration). This declaration is included in the docket for this rulemaking and the information it provides is incorporated by reference.

6 In California’s PSD program is administered in its entirety by local jurisdictions.2 – Legal Authority and Procedural Recommendations

22 Thus, in virtually all the states, with the main exception of Texas, (i) the states and EPA will be able to assure that a permitting authority will be available as of January 2, 2011, or as soon thereafter as the state believes is necessary to process permit applications from the sources, and (ii) as of January 2, 2011, or very soon thereafter, under both state and federal law, the higher Tailoring Rule thresholds will apply. This survey is the most recent of the surveys and the most robust, because it relies on written submissions from the state and oral communications between the various state and EPA officials In addition, as noted in the SID for this rule, many of the states affected by this SIP call action are progressing in developing their

SIPs.

Comment:

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

Response:

EPA responds to these points elsewhere in this RTC. EPA has developed and made available to sources and states BACT guidance for GHGs and has prepared several white papers for specific types of sources. 7 The public process for the GHG BACT guidance is not relevant to this SIP call action, although we note that EPA has offered the public an opportunity to comment on the guidance. In addition, the RACT/BACT/LAER Clearinghouse has been updated to include information about GHG control options. EPA remains committed to working with states as they gain experience with these types of BACT determinations. The BACT guidance was not available before the close of the comment period on this rulemaking and was not a subject of this rulemaking.

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

23 Comment:

Another industry commenter (0074.1) similarly be lieves that states are not prepared to commence GHG regulation. The commenter stated that the issue is not just the states whose laws do not authorize GHG regulation but also those states who are unwilling to adopt EPA’s “subject to regulation” interpretation and are therefore in the process of changing their state law

thresholds. The commenter indicated that thos e states that cannot change their state law thresholds in time will be subject to the “absurd results” of too many sources subject to PSD regulation that the Tailoring Rule is supposed to avoid. The commenter summarized the posted letters that states sent EPA reporting on their intentions as to changing their state laws, which according to the commenter show that a large minority of states will not be ready as of January 2, 2011, to begin regulation in conformity with the Tailoring Rule. The commenter indicated that only 17 states and 4 local air pollu tion control agencies told EPA that they think they can modify their regulations to permit GHG emissions before January 2, 2011, but even these had to qualify their responses in light of the possibility that delays could occur in the regulatory or legislative process. The comment er believes EPA must therefore defer regulation in order to avert the economic consequences that it forecasts from this state of affairs.

Response:

This comment is not germane to this action because the states described by thecommenter are not affected by this action. Their SIPs have authority to apply PSD to GHGemitting sources, and this SIP call action concerns states whose SIP PSD programs do not apply to GHG-emitting sources. In any event, for reasons described elsewhere, the information

available to EPA indicates that these states will be ready to implement PSD for GHG-emitting sources in conformity with the Tailoring Rule thresholds by January 2, 2011, or very soon thereafter.

Comment:

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

Response:2 – Legal Authority and Procedural Recommendations

24 We respond to most of the points made by this commenter in the preamble to the final rule and elsewhere in this RTC. We add the following: The commenter has not provided persuasive evidence that the GHG rules cause uncertainty or that the FIP would exacerbate it. In the litigation over the GHG rules, EPA's opposition to motions to stay the GHG rules responded to similar allegations of uncertainty by saying that the allegations were unproven and that, on the contrary, the GHG rules reduced uncertainty by resolving the issue of when and in what manner GHGs would become regulated. EPA cited declarations by EPA's economists for support. "EPA's Response To Motions To Stay," Coalition for Responsible Regulation v. EPA

, No. 09-1322 (and consolidated cases), at 68-72; and EPA incorporates those statements and declarations by reference into this response. Declaration of Jared R. Creason, "EPA's Response To Motions To Stay," Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases), at 3-4; Declaration of Jared R. Creason, "EPA's Response To Motions To Stay," Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases). Specifically, EPA stated –

Industry Movants allege that the uncertainty caused by EPA’s actions triggers a long chain of economic harms to various industries and then to the public.... Even if these were accurate predictions (which they are not), they are allegations based on wholly hypothetical events....

... In fact, ... the existence of EPA’s regulations decrease the uncertainty surrounding the greenhouse gas-related requirements industry will face under the Act. As the Fourth Circuit recently stated, “Without a single system of permitting [promulgated by EPA], it would be virtually impossible to predict the standard for lawful emissions....” N.C. ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d 291, 306 (4 th Cir. 2020) (internal quotations omitted).

The [Johnson Memo Reconsideration] resolves uncertainty over exactly when greenhouse gases (and other pollutants) become “subject to regulation” under the Clean Air Act, and the Tailoring Rule provides certainty by clarifying for numerous entities potentially covered for the first time by the PSD and Title V stationary source permit provisions when and under what circumstances they will face regulation, at least through 2016.

EPA's Response To Motions To Stay at 68-70 (emphasis omitted, footnotes omitted).

In addition, the state and environmental intervenors in that litigation also filed a response to motions for stay that provided further explanation as to why the GHG rules do not worsen, and instead lessen, uncertainty, and that included declarations from economists and industry to that effect. “State and Environmental Intervenors’ Joint Response To Motions To Stay,”Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases), at 37-38 (citing Keohane Declaration (Ex. 28); Bradley Declara tion (Ex. 21) ¶¶ 9-11; Miller Declaration (Ex. 33) ¶10; Arensmeyer Declaration (Ex. 20) ¶¶ 4-6; Knapp Declaration (Ex. 29) ¶¶ 4-6).2 – Legal Authority and Procedural Recommendations

25 EPA agrees with those statements and incorporates them and the accompanying declarations into this response by reference.

Comment:

One environmental group commenter (0104.1) applauded the states for their swift responses taken to date to prepare for the federal GHG requirements. The commenter indicated that the vast majority of states have represented that they will have the necessary regulatory changes in place by January 2, 2011, or soon thereafter, quoting a recent compilation of the “60- day letters” by NACAA.

Response:

EPA appreciates these comments.



### 2.3.1 States that Agree to the 3-Week Deadline

Comment:

Several industry (0064.1/0096.1, 0071.1/0102.1, 0073.1) and state agency (0054.1/0055.1, 0084.2, 0086.1) commenters raised issues related to the proposed voluntary 3-

week SIP deadline. The comments are summarized below.

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

FIP to these 13 states.

Another industry commenter (0071.1/0102.1) believes that EPA’s suggestion that some states may wish to acquiesce to a radically more truncated SIP revision schedule is inconsistent with section 110(k)(5), as well as the entirety of the SIP revision, review, and approval process established in CAA section 110. In the context of raising the specter of the construction moratorium, EPA effectively invites states to “advise[]” EPA that they “would not object to a shorter period, as short as 3 weeks from the date of signature of the final rule.” 75 FR 53901. EPA contends that the purpose of establishing this shorter deadline period is that it would2 – Legal Authority and Procedural Recommendations

26 “accommodate states that wish to ensure that a FIP is available as, in effect, a backstop to ensure that there is no gap in PSD permitting” and, thus, no (purported) construction moratorium. Id.

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

Response:

EPA responds to most of the points in this comment in our preamble to the final rule, but we add the following: The timing issue that this rulemaking addresses arose because the affected states' SIPs do not automatically appl y PSD requirements to air pollutants that are newly subject to regulation. As a result, at the time that EPA promulgated the Light-Duty Vehicle Rule by notice published May 7, 2010 8 --thereby, in conjunction with the CAA, triggering the application of PSD to GHG-emitting sources as of January 2, 2011—the states did not have the authority to act as permitting authority as of January 2, 2011. For this reason, the states had a relatively short period of time in which to adopt a SIP revision and have it approved byEPA in order to acquire that authority by January 2, 2011, or shortly thereafter, when GHGemitting sources in those states may need such an authority to process their PSD permit applications. (Even so, as noted in the preamble to the final rule, states have been on notice since EPA signed the LDVR that PSD would be triggered for GHGs on January 2, 2011, and some states began their state processes for SIP revision soon thereafter.)

As described in the preamble, EPA has moved expeditiously in proposing and promulgating this SIP call. Moreover, about half of the affected states have been able to, or expect to be able to, adopt SIP revisions and s ubmit the SIP revisions for approval by EPA by January 2, 2011, or a short time thereafter, which for those states is soon enough to meet the permitting needs of their sources. See McCarthy Declaration, ¶55, p. 12. In adopting their SIP revisions, these affected states have allowed full public participation.

8 "Light-Duty Vehicle Greenhouse Gas Emissi on Standards and Corporate Average Fuel Economy Standards; Final Rule." 75 FR 25324 (May 7, 2010).2 – Legal Authority and Procedural Recommendations

27 The remaining affected states have selected from the 3-week-to-12-month range of SIP submittal deadlines a deadline on the early side and have indicated that they expect to receive a FIP. EPA disagrees with the commenter’s argument that this means that EPA has set a deadline that is unreasonable because it deprives the public of the opportunity for meaningful participation. Rather, this deadline range that EPA has provided is reasonable under these circumstances in which the affected states’ lack of automatic PSD applicability has created the timing issue described above. The range of deadlin es has given those affected states that could not or would not adopt a SIP revision by January 2, 2011, or soon thereafter the opportunity to choose among a range of possible deadlines that at least allowed the state to balance whatever desires it has to assure the availability of a permitting authority to its GHG-emitting sources and to become the permitting authority for its GHG-emitting sources in the first instance.

Moreover, affected states that choose an early deadline and expect to receive a FIP are not depriving the public of the opportunity to participate meaningfully in the SIP revision process. Those states are free to, and strongly encouraged by EPA to, proceed with the SIP adoption process, including public participation, to replace the FIP as soon as possible. Thus, so far as EPA is concerned, the early deadline simply offers the state the opportunity for an interim FIP to protect its sources while it proceeds with SIP adoption. In any event, under any circumstances, a state is always able to choose not to adopt a SIP revision and instead to accept a FIP. That is, even if the present circumstances had been different so that no timing issue presented itself, and EPA had simply established, say, a 12-month deadline for SIP submission, a state would not have been obligated to adopt a SIP revision and instead could have opted for a FIP. Under those circumstances, the public would have no different opportunity for participation than it does in the present circumstances. As a result, contrary to the commenter’s arguments, the deadline range that EPA has offered the states is reasonable under the circumstances and does not abrogate the public’s opportunity to participate in the SIP revision

process.

Comment:

An industry commenter (0064.1/0096.1) stated that, for states that manage to submit a revised SIP by the date 3 weeks after publication of the final rule, EPA should commit to review and respond to a revised SIP within 10 calendar days. To this end, the commenter supported EPA’s proposals to streamline its notice-and-comme nt period with that of the states, including the proposal to parallel-process the federal comment period with the state comment period.2 – Legal Authority and Procedural Recommendations

28 Response:

EPA appreciates these comments and while we cannot commit to review and take final action on a SIP submission within 10 calendar days of receipt, we do intend to parallel-process SIP submissions if requested by the states and to take final action on an expedited schedule, as stated in the McCarthy Declaration, ¶46, p. 10; 94, pp. 19-20.

Comment:

One state agency commenter (0054.1/0055.1), who noted that her state (Arkansas) does not have PSD permitting requirements that cover GHG-emitting sources and chooses to accept the 3-week deadline in order to keep PSD permits flowing smoothly, nevertheless expressed the belief that EPA’s interpretation of “reasonable deadline” is not realistic and took issue with the proposed 3-week-to-12-month deadline's becoming the standard of reasonableness. The commenter explained that her state’s standard rulemaking process is longer than the proposed 3- week-to-12-month deadline, which weighs against calling this deadline reasonable. The commenter agreed that it is imperative to minimize the period when sources will be subject to PSD but not have a PSD permitting authority availabl e, but she stated that this would not be anissue but for the rules and timelines put into place by EPA to implement the regulation of GHGemitting sources. Finally, the commenter stated that her agency does “not object” to the 3-week deadline, but this is only out of necessity, not out of reasonableness, and urged against viewing stringent, shortened deadlines such as this as “reasonable” in the future.

Response:

EPA responds to most of these comments in the preamble to the final rule, but we add

here that we do not view the 3-week deadline that some states have selected to establish under all circumstances the standard of reasonableness for a SIP call deadline. Rather, we view the 3- week-to-12-month deadline range to be reasonable under the present circumstances, as

described above.

Comment:

A state agency commenter (0086.1) stated that the “choice” between EPA’s two alternatives (promulgate and receive EPA approval of a SIP revision by January 2, 2011, or accept imposition of a FIP) is an untenable situation because obtaining EPA approval of even a simple SIP revision in 4 or 5 months is extremely unlikely – the commenter’s agency is currently waiting for SIP approval on several submittals, some dating as far back as 1994. The commenter noted that this timeline is a practical impossibility because his state (Arizona) requires a public process to revise SIP regulations. The commenter added that the legal challenges to the Tailoring Rule make it difficult to justify expending any time on adopting the rule.2 – Legal Authority and Procedural Recommendations

29 Another state agency commenter (0084.2) argued that accepting an earlier deadline so that a FIP can be imposed by EPA would put the state (Texas) on a significantly earlier clock to implement a GHG PSD program that the state does not believe is legal under the Act, or face the potential loss of federal grant funds per section 179(a) of the Act. The commenter also expressed a lack of confidence that the FIP would resolve the issue of PSD permitting uncertainty because EPA has not yet issue BACT guidance for GHG sources which, according to the commenter, EPA assured in the Tailoring Rule was forthcoming, would undergo notice and comment, and would “culminate in training courses for state, local and tribal permitting authorities” (citing 75 FR 31589, June 3, 2010). The commenter noted that its agency has participated in the CAAAC GHG BACT workgroup and that consensus on the definition and scope of BACT for GHGs does not exist. Thus, the commenter believes, it is unlikely that EPA will be able to finalize guidance that takes into account all the diverse concerns raised during theworkgroup, and if guidance is available by January 2, 2011, the only certainty for state- or EPAissued permits will be challenges disputing the BACT determination. The commenter added that any forthcoming guidance will be of limited usefulness until the control technology is proven. According to the commenter, on January 2, 2011, applicants may know where to submit their applications but will not know what controls to propose as BACT. The commenter concluded that industry should be particularly concerned by EPA's lack of resources and experience to issue GHG permits (which the commenter believes is made apparent by EPA's request for states to take delegation of the FIP), because even under the FIP it is unlikely that any construction of new major GHG sources or major modifications will commence in the foreseeable future.

Response:

We respond elsewhere in the record to many of the points raised by the commenter. See section IV.B.1.b(ii)(I) of the preamble to the final rule for a discussion of issues related to the 3- week deadline and section V.C for a discussion of the primacy of the SIP process.

We add here that, as discussed in the preamble to the final rule, the CAA section 179 sanctions, including loss of federal highway f unding, do not apply to PSD SIPs. Accordingly, under this rulemaking, a state's acceptance of an early SIP submission deadline, followed by an EPA finding of failure to submit by that date, w ould not lead to the imposition of sanctions. In addition, EPA's encouraging states to accept dele gation of FIP authority is not an indication that EPA does not have the resources to implement a FIP; rather it is a recognition that states may wish to retain control over the permitting process even when EPA promulgates a FIP. In any event, EPA does have the resources to meet its permitting obligations under FIPs. McCarthy Declaration, ¶61, p. 13

.

In addition, we note that we made draft GHG BACT guidance available for public comment on November 10, 2010, that we intend to finalize this guidance, and that we have already begun to provide training on an expedited schedule. Accordingly, we continue to believe2 – Legal Authority and Procedural Recommendations

30 that workable guidance will be in place by January 2, 2011, to facilitate sources’ preparation of PSD applications and reviewing authorities’ review.



### 2.3.2 Adequacy of the 12-Month Schedule and Whether It Is a

“Reasonable Deadline”

Comment:

Two state agency commenters (0078.1, 0084.2) and numerous industry commenters (0056.2/0063.1/0100.1, 0065.1, 0068.1, 0069.1, 0071.1/0102.1, 0074.1, 0081.1/0109.1) indicated that 12 months is not a reasonable deadline for states to revise their SIPs to regulate GHGs under PSD, while one environmental group commenter (0104.1) maintained that this does represent a

reasonable deadline in this situation. The comments are detailed below.

One industry commenter (0071.1/0102.1) stated th at even if section 110(k)(5) did apply here (which he believes it does not), the period of time EPA proposes to give states to revise their SIPs is not, under the circumstances, a “reasonable” period as required by that provision of the CAA. EPA ignores the complexity of the issues that states would have to confront and resolve in determining whether and how to effect the vast expansion of their PSD programs that GHG regulation would entail. At the same time, EPA ignores the states’ obligation to allow for meaningful public review of, and a meaningful opportunity to provide public comments on, any

such SIP revision.

This commenter (0071.1/0102.1) further expl ained that states’ adoption of GHG regulation in PSD SIPs, as required by the Tailoring Rule, would fundamentally change those states’ PSD programs. States would be required to decide whether to revise their SIPs to regulate GHGs, a pollutant that is fundamentally unlike any other pollutant ever before regulated under the PSD program , and if so how to incorporate the elements of the Tailoring Rule into their SIPs in light of existing state laws and regulations. This task presents states with a host of difficult implementation issues.

The commenter (0071.1/0102.1) believes that the difficulty in resolving these issues is illustrated by the facts that, under the Tailoring Rule, GHG emissions will be subject to new and unique measurement methodologies and that PSD regulation of GHGs inescapably will entail consideration of new BACT strategies. Acco rding to the commenter, BACT for GHG emission sources is highly uncertain, and EPA still has not issued long-promised guidance on the matter. In addition, the Tailoring Rule, in its second phase, would expand the PSD program to cover innumerable sources never before regulated under the program. Finally, a number of states, broad sectors of industry, and two environmental organizations are challenging in the U.S. Court of Appeals for the D.C. Circuit the legality of various aspects of the Tailoring Rule, including the revisions made by that rule to 40 CFR 51.166. The outcome of that litigation will not be

known for some time.2 – Legal Authority and Procedural Recommendations

31 In such a setting, the commenter (0071.1/0102.1) believes that it is imperative that states be allowed a reasonable period of time for completing the SIP development, public notice and hearing, and approval process for SIP revi sions. Because EPA’s proposed December 2011 deadline does not afford states “reasonable” time to accomplish all that they would need to do to address the Tailoring Rule’s requirements, it is inconsistent with CAA section 110(k)(5).

Response:

EPA responds to many of the commenter’s points elsewhere in the record but adds the following response here: The CAA section 110(k)(5) requirement for a "reasonable deadline" refers to the period of time needed for the state to adopt a SIP revision, coupled with, under the present circumstances, the benefits of giving the state choices and of preserving the state’s ability to assure its sources of the availability of a permitting authority when the sources need one. The requirement does not mandate considerati on of the various other circumstances raised by the commenter, such as the number of previously unregulated sources. Those circumstances may be relevant for the state’s ability to implement the SIP revision once adopted and the state’s need for resources to do so, but not the state’s ability to adopt the SIP revision in the first instance. It should be kept in mind that the SIP revisions at issue here would apply the affected states’ PSD programs to GHG-emitting sources, which most of the state PSD programs in the country already do.

In addition, the commenter has not explained why the various complexities of GHG permitting that the commenter identifies would require a deadline longer than 12 months and

what that deadline should be.

Moreover, in the Tailoring Rule, EPA reviewed the states’ resource needs for GHG permitting, including the needs arising from the new BACT determinations and the additional sources that would become subject to PSD, and concluded that states would be able to implement PSD permitting for their GHG-emitting sources on the January 2, 2011, and July 1, 2011, timetables at the Tailoring Rule thresholds. EPA is not reopening those determinations in this rulemaking and, in any event, the commenter has presented no new information that would call these determinations into question.

Also note that in the litigation over the GHG rules, states and environmental organizations that intervened on EPA’s behalf responded to motions for stays by providing declarations from a large number of states indica ting that these states would be ready to begin permitting GHG-emitting sources under the Tailoring Rule thresholds by January 2, 2011. The intervenors’ response to the stay motion and the accompanying declarations by states are included in the docket. “State and Environmental Intervenors’ Joint Response To Motions To Stay,” Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases), at 26 (citing declarations from 19 states).2 – Legal Authority and Procedural Recommendations

32 Comment:

An industry commenter (0071.1/0102.1) believes th at the NSR regulations clearly give states 3 years to amend their SIPs. In the proposed rule, EPA asserts that the December 2011 deadline is “reasonable” within the meaning of CAA section 110(k)(5). EPA does not so much as mention, however, 40 CFR 51.166(a)(6) – a legislative rule that is binding on the Agency – which unambiguously affords states 3 years to develop and submit CAA section 110(a) PSD SIP revisions. When EPA promulgated this legislative rule in 2002, it recognized the irrelevance of CAA section 110(k)(5) and explained that CAA section 110(a) “ does not specify a date for

submission of SIPs when we revise the PSD and NSR rules .” 67 FR 80186, 80241 (emphases added). In light of this, the Agency concluded it was “appropriate to establish a date analogous

to the date for submission of new SIPs wh en a NAAQS is promulgated or revised.” Id . EPA recognized that, “[u]nder section 110(a)(1) of the Act ..., that date is 3 years from promulgation or revision of the NAAQS.” Id . It was for that reason that EPA “made conforming changes to the PSD regulations at § 51.166(a)(6)(i) to indicate that State and local agencies must adopt and submit plan revisions within 3 years after new amendments are published in the Federal Register .” Id . (emphasis added).

Three industry commenters (0065.1, 0068.1, 0069.1) al so indicated that based on EPA’s prior NSR rulemakings (e.g., the 2002 NSR Reform rule and 2008 PM 2.5 Implementation rule), section 110(a) of the Act, and EPA’s own re gulations at 40 CFR 51.166(a)(6)(i), EPA should provide states with up to 3 years to revise th eir SIPs following EPA’s addition of GHGs as a new pollutant to be regulated under the PSD program. According to the commenters, rather than subjecting states to an immediate and economi cally devastating construction ban, EPA should provide states such a timeframe to proceed with their own notice-and-comment processes, revise related state law as needed, and revise their SIPs to accommodate EPA’s addition of GHGs to the PSD permitting program.

Two of these commenters (0065.1, 0069.1) stated that, considering that the Act (like analogous state law), requires public notice and a hearing before a state can revise its SIP, the 12-month timeframe that EPA would give states to submit their revised SIPs is much too brief. The commenters pointed out that the default amount of time that the Act provides for states to revise their SIPs to cover a newly added pollutant is 21 months after EPA promulgates a NAAQS for the new pollutant, and that the Act’s default timeframe for allowing states to revise their SIPs due to a “substantial inadequacy” with the SIP’s ability to maintain NAAQS for a conventional pollutant is 18 months. Given that there is no NAAQS for GHGs, the commenter believes that EPA should significantly increase the amount of time for states to revise the SIPs to add GHGs to their PSD programs.

Another industry commenter (0074.1) also stated that EPA has failed to provide states with a “reasonable” amount of time to make the necessary law and/or regulatory changes. The commenter noted that under EPA’s schedule, EPA will not even finalize the SIP call until2 – Legal Authority and Procedural Recommendations

33 December 1, even though GHG regulation will begin at the beginning of the following month. According to the commenter, it is not possible for a state to make law and/or regulatory changes through rulemaking and/or legislation and then have its SIP revision approved by EPA through notice-and-comment rulemaking within 1 month. The commenter added that the provision in the SIP call under which states technically can take up to 1 year to respond to the SIP call does not cure EPA’s failure to give states a sufficient oppor tunity to submit SIP revisions because if states take a full year, potentially severe adverse economic consequences will ensue.

This industry commenter (0074.1) stated that o ffering to step in with a FIP does not cure EPA’s failure to allow states a reasonable opportunity to develop and submit revised SIPs. The commenter opined that EPA cannot maintain that it is providing states with a reasonable opportunity to make SIP revisions while at the same time sanctioning states that take that opportunity—whether the sanction is a construction ban or the surrender of sovereignty to EPA.

The commenter (0074.1) added that the problem of inadequate time for states to make SIP revisions is exacerbated by the fact that, at proposal, EPA was uncertain how many states will be subject to the SIP call—the final number will not be known until the final SIP call is issued. Additionally, the commenter (0074.1) stated that it is not known whether EPA will finalize its SIP call on December 1. The commenter noted that when the Tailoring Rule was first proposed, EPA identified the state law problem that the SIP call now addresses and said that the SIP call would be proposed and then finalized by last March; because that did not happen, it is certainly conceivable that EPA will not be able to meet the December 1 deadline, particularly given that EPA missed the originally scheduled date for a public hearing on the proposed FIP

rule.

Response:

EPA has responded to many of the commenters' points in the preamble to the final rule and elsewhere in the record for this rule, but we add to our response as follows: EPA is not sanctioning states through a surrender of sovereignty to EPA. The range of SIP submittal deadlines that EPA offers the states is reasonable under the circumstances, including the fact that the timing issue has arisen from the fact t hat the affected states' SIPs do not automatically apply PSD to pollutants newly subject to regula tion. Under these circumstances, allowing the states a choice of deadlines, which in turn allows the states to balance their various considerations, including the needs of their sources for a permitting authority, is reasonable. Nor should a FIP be viewed as a surrender of state sovereignty. The FIP may be an interim measure that lasts only as long as the state need s to submit a SIP revision. The state may accept delegation of the FIP and thereby exercise extensive authority over PSD permitting.

Comment:

Another industry commenter (0081.1/0109.1) also stated that under section 110(k)(5) of the Act, states must be given a “reasonable” period of time, up to 18 months, to respond to the2 – Legal Authority and Procedural Recommendations

34 SIP call (or should be given 3 years under 40 CFR 51.166(a)(6)(i) since the states are required to change their SIPs to conform to changes in the PSD regulations). With the SIP call proposal on September 2, 2010, and a final rule possibly by December 1, 2010, states will only have 1 month before the GHG PSD requirements become effective. The commenter asserted that this is not a remotely “reasonable” time for states to change their SIPs. The commenter indicated that while EPA ostensibly gives states 1 year to submit SIP revisions, this is a ruse because according to EPA severe economic consequences will occur in any state that does not have approved SIP revisions by January 2, 2011, because a construction moratorium will ensue.

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

One industry commenter (0056.2/0063.1/0100.1) stated that EPA has arbitrarily failed to provide states with a reasonable deadline to correct inadequacies in their SIPs. The commenter acknowledged that section 110 of the Act confers upon EPA the authority to issue SIP calls and also to limit the time period that a state will have to correct the inadequacies of its SIP. However, the commenter contended that EPA exceeded the authority that section 110 confers and noted that EPA did not cite to section 110(a )(2)(E)(i) which requires that a SIP must provide necessary assurances that the state will have adequate personnel, funding, and authority under state law to carry out the implementation plan. The commenter asserted that section 110(a)(2)(E)(i) demonstrates three important things in this case:

• Congress’ recognition of the relevance and importance of adequate state resource capabilities to the success of an implementation plan.

• EPA should have evaluated the adequacy of the states’ resources before issuing the LDVR with a January 2, 2011, effective date (or reached a different conclusion in the Johnson Memo Reconsideration).

• EPA was aware of all the assurance criteria in the section (as evidenced by its reliance on the section’s requirement for assurance of legal authority) yet disregarded the need to

consider resources.

The commenter (0056.2/0063.1/0100.1) recommended that EPA stay the January 2, 2011, date it set for the states to begin applying PSD permits to GHGs and conduct an analysis of the capabilities of the states and EPA Regional Offices to apply PSD permits to GHGs.2 – Legal Authority and Procedural Recommendations

35 Response:

EPA has responded to many of these points in the preamble to the final rule and elsewhere in this RTC and adds the following: As noted above, in the Tailoring Rule, EPA reviewed the states' resource needs for GHG perm itting and concluded that states would be able to implement PSD permitting for their GHG-emitting sources on the January 2, 2011, and July 1, 2011, timetables at the Tailoring Rule thresholds. EPA is not reopening those determinations in this rulemaking and, in any event, the commenter has presented no new information that would call the determinations into question.

Comment:

One state agency commenter (0078.1) indicated that while his state (Indiana) is undertaking the rulemaking necessary to incorporate the Tailoring Rule into state law by January 2, 2011, under current federal regulations at 40 CFR 51.166(a)(6) states should have up to 3 years after publication of the final federal rule amendments to submit revisions to their respective PSD SIPs. Another state agency commenter (0084.2) similarly stated that the proposed 1-year deadline is not reasonable because it is not consistent with 40 CFR 51.166(a)(6)(i).

In contrast, one environmental group comment er (0104.1) asserted that the proposed SIP call deadlines are reasonable in view of the Act’s remedial purpose, the urgency of the climate crisis, and the need to ensure that pollution controls can be implemented as smoothly and quickly as possible. The commenter stated that the Act must be interpreted with its core purposes in mind (citing New York v. EPA , 413 F3d 3, 23 (D.C. Cir. 2005)), and that the PSD program sets out “to protect public health and welfare from ... air pollution” and to “insure that economic growth will occur in a manner consistent with the preservation of existing clean air resources” (citing CAA section 160). According to the commenter, any gaps in a state’s ability to issue appropriate permits would frustrate these purposes by making it difficult to quickly permit projects with appropriate controls, and would also slow the development and implementation of useful control technology in direct contraven tion of the technology-forcing purposes of this

section of the Act.

The environmental group commenter (0104.1) stated that because EPA has determined that GHGs in the atmosphere are endangering public health and welfare, it is clear that there is no room for delay (74 FR 66496, December 15, 2009). According to the commenter, GHG levels and attendant risks will continue to rise if new and modified major stationary sources fail to control their emissions by applying BACT, which will make it steadily more difficult to avoid abrupt and irreversible severe climate changes. The commenter believes that this justifies especially swift joint state and federal efforts to apply the PSD program in this context.2 – Legal Authority and Procedural Recommendations

36 The environmental group commenter (0104.1) contended that a 1-year deadline is more than reasonable. The commenter also agreed that it makes sense to allow states to select an even earlier deadline so EPA can quickly put a FIP in place once the deadline has passed, protecting the permitting process while states continue with SIP revisions. The commenter believes that the structure that EPA proposed will ensure that states have the power to prevent any disruption to their permitting processes, and to immediately and economically begin to control GHG emissions from the largest new and modified stationary sources.

The environmental group commenter (0104.1) asserted that the commenters who argued that states must be given at least 3 years to s ubmit their SIP revisions and that these states may issue permits without BACT limits for GHGs in the interim are wrong. The commenter responded to those arguments as follows:

• Section 110(a) of the Act, which provides that SIPs addressing new or revised NAAQS must be submitted “within 3 years (or such shorter period as the Administrator may prescribe),” is not relevant because it applies, by its terms, only to SIP revisions related to NAAQS, which are not at issue here. Even if it were relevant, it explicitly recognizes that EPA may prescribe a shorter deadline and therefore does not constrain EPA.

• 40 CFR 51.166(a)(6)(i), which allows up to 3 years to submit revised PSD SIP provisions is not relevant because it applies only to “[a]ny State required to revise its implementation plan by reason of an amendment to this section [40 CFR 51.166].” The SIPs at issue here are inadequate not because of revisions to the regulations, but because they do not comply with the Act’s statutory requirement that sources apply BACT for all pollutants subject to regulation, which will now include GHGs.

• Even if 40 CFR 51.166(a)(6)(i) did apply, it would not affect the legality of EPA’s proposals because it was designed to be analogous to the timetable set in section 110(a) of the Act (67 FR 80186, 80240-41, December 31, 2002), and like that section, sets a maximum, not minimum, time limit. Revisions are to be submitted “not later” than 3 years after a regulatory change – but may be submitted sooner, as the Act “does not specify a date for submission of SIPs when [EPA] revise[s] the PSD and NSR rules.” Id. Thus, EPA’s authority to set appropriate deadlines is not constrained by this part of the regulations.

• The commenters are mistaken who construe 40 CFR 51.166(a)(6)(iii), which states that a SIP revision “shall take effect no later than the date of its approval,” to mean that states may issue permits that do not address GHGs in the meantime (that is, for up to 3 years after January 2, 2011). This section of the regulation only clarifies the obvious point that in the interim, the SIP is not compliant with the Act, and so permits may not be issued under the flawed portions of the SIP. The contrary interpretation would countenance years of illegal permits prior to revision to the SIP, which cannot be squared with the Act’s core requirement that no major source may be constructed unless it has a permit requiring it to install BACT for each pollutant subject to regulation under the Act.2 – Legal Authority and Procedural Recommendations

37 Response:

Without necessarily agreeing with all of their rationale, we agree with the commenter who indicated that a 1-year SIP-submittal deadline is reasonable. We disagree with the commenters who argued the opposite point of view. See sections IV.B.1.a(ii)(II)(B) and IV.B.1.b(ii)(I) of the preamble to the final rule for a comprehensive discussion of this issue and the statutory and regulatory bases for this deadline. We also agree that to the extent adverse commenters "construe 40 CFR 51.166(a)(6)(iii), which states that a SIP revision “shall take effect no later than the date of its approval,” to mean that states may issue permits that do not address GHGs in the meantime (that is, for up to 3 years after January 2, 2011),” those adverse commenters are mistaken because “[t]his section of the regulation only clarifies the obvious point that in the interim, the SIP is not compliant with the Act, and so permits may not be issued under the flawed portions of the SIP." We also agree with the commenter's general view that this action furthers the statutory goals of the CAA.



### 2.3.3 Effects of States Not Having PSD Permitting Authority After January 2, 2011, Due to Later SIP Revision Submittal

Comment:

One state agency commenter (0086.1) and numerous industry commenters (0065.1, 0068.1, 0069.1, 0070.1, 0071.1/0102.1, 0074.1, 0081.1/0109.1, 0103.1) contended that EPA was incorrect in stating that a PSD permitting morato rium will go into effect after January 2, 2011, in states that do not have authority to issue PSD permits to GHG sources. These comments are

summarized below.

One industry commenter (0071.1/0102.1) urged EPA to make clear that both before and after the Tailoring Rule’s dates of January 2, 2011, and July 1, 2011 (and at all times before June 3, 2013, i.e., 3 years after the Tailoring Rule’s publication), states with previously approved PSD programs may continue to issue valid PSD preconstruction permits that do not address

GHG emissions. The commenter indicated that EP A should additionally clarify that there is no legal “cloud” over those permits. Adoption of a new minimum requirement for PSD programs places states on a 3-year schedule to adopt prospective revisions to their PSD SIPs under section 110(a). During this period, states with previously approved PSD programs may continue to issue valid PSD permits under those programs without addressing the new requirements. Thus, no construction moratorium has in fact been imposed, or can be imposed, by promulgation of the Tailoring Rule’s January 2, 2011, and July 1, 2011, applicability dates. If a state does not revise its SIP to incorporate PSD regulation of GHG emissions by the time of expiration of the 3- year schedule provided in 40 CFR 51.166(a)(6), then and only then could EPA have authority to propose and promulgate a prospectively applicable FIP under section 110(c) of the CAA. In no event may EPA issue a section 110(k)(5) SIP call to require state adoption of the new minimum requirements for SIPs reflected in the Tailoring Rule.2 – Legal Authority and Procedural Recommendations

38 Two other industry commenters (0070.1, 0103.1) similarly argued that no construction ban will come into effect on January 2, 2011, because EPA must allow states that lack authority for regulating GHGs and the Tailoring Rule 3 years from June 3, 2010, to adopt such regulations and submit them to EPA for review. One of these commenters (0070.1) added that until a SIP is revised to add GHGs to the pollutants subject to regulation, a state or Air Management District can continue to issue PSD permits to sources, even those that will construct changes that may increase GHG pollutants, because those SIPs are federal law. This commenter noted that section 110(l) of the Act provides that a state must itself provide a reasonable time to amend its laws and provide an opportunity for public comment. The commenter asserted that the provisions of section 110(l) would not make sense if addition of a pollutant to the list that EPA deems to be subject to regulation under the Act were to immediately result in a de facto ban on

construction.

Response:

As indicated above, section IV.B.1.a(ii)(II)(B) of the preamble to the final rule includes an in-depth discussion on the timeline for SIP submittals and their statutory and regulatory bases. In addition, that section and section IV.B.1.b(ii) of the preamble discuss the commenters’ erroneous assertion that EPA is acting to impose a construction “ban” or “moratorium” after January 2, 2011 in states that lack authority to issue PSD permits to sources of GHG emissions.

In addition, CAA section 110(l) provides that each SIP revision submitted by a state must be adopted by the state after reasonable notice and public hearing, and cannot be approved by EPA if it interferes with any other applicable CAA requirement. By its terms, this provision does not supercede or conflict with any provision of the PSD requirements that, as explained in the preamble, apply PSD to any pollutant newly subj ect to PSD requirements. The commenter’s argument appears to be based on the premise that the CAA PSD provisions do not apply by their terms to sources, and instead apply to sources only if first incorporated into an approved SIP. For the reasons discussed in the preamble, EPA’s position is that this premise is incorrect.

Comment:

This industry commenter (0070.1) also noted th at procedures for review and disapproval of SIP revisions are laid out in sections 110(k) and 109 9 of the Act, which the commenter reads to say that if a state fails to submit a plan or satisfy a minimum requirement of the Act, EPA must issue a notice of inadequacy under section 110(k)(5) and allow the state to correct that deficiency after reasonable notice and public hearing per section 110(l). According to the commenter, only if the state does not correct su ch deficiency may EPA pursue a proposed and final agency finding under section 110(k) that the state has failed to implement the new

9 The commenter likely intended to refer to CAA section 179, not 109.2 – Legal Authority and Procedural Recommendations

39 requirements, and only after 24 months following the finding can EPA apply sanctions listed in section 109(b) of the Act, including a constructi on moratorium. The commenter added that EPA has provided 3-year transition periods on numerous occasions over the last four decades when it has revised standards for air pollutants, making those standards and other emission limits more stringent or changing the form of the standard (i.e., 1-hour ozone NAAQS) or the pollutant itself

PM 2.5 for PM 10 and PM 10 for TSP. The commenter believes that there is no basis to distinguish GHGs from these prior pollutants, and that the fact that there has been no NAAQS set for the GHGs makes it difficult to understand why there is such urgency for GHGs to be subject to construction permitting. The commenter urged EPA to issue guidance or an interpretative rule to

make clear that sources located in PSD areas w ith approved SIP PSD programs are not subject to GHG PSD permitting requirements until states have a reasonable period in which to revise their

SIPs.

Response:

EPA interprets CAA section 110(k) by its terms to apply in the manner described at length in the preamble to the final rule, and not in the manner described by the commenter. That is, CAA section 110(k)(5) authorizes EPA to find that a SIP is substantially inadequate to comply with a CAA requirement, and once EPA makes that finding, then EPA shall require the state to revise the SIP and may establish a deadline for the state to do so. CAA section 110(k)(5) does not, by its terms, apply if a state fails to submit a plan or submits one that does not satisfy a minimum requirement of the CAA. Moreover , CAA section 110(k)(5) does not authorize EPA to issue a finding that a state has failed to implement the requirement to submit a SIP. As discussed in the preamble to the final rule, the delays in construction and modification that sources in states that lack a permitting author ity may confront are not a sanction under CAA section 179(b), but rather are an unavoidable consequence when PSD becomes applicable to those sources by operation of the CAA before the state has an approved PSD program that applies to those sources.

The application of the PSD requirements in the CAA to GHGs at this time is distinguishable from the transition periods that arose after EPA revised or promulgated additional NAAQS for particulate matter or ozone. Each of the examples cited by the commenter involved the promulgation or revision of a NAAQS, which differs from the present situation involving GHGs becoming a pollutant subject to regulation for the first time without the corresponding promulgation of a NAAQS. As addre ssed in other comment responses, the 3-year deadline in CAA section 110(a)(1) is invoked by the promulgation of a NAAQS and is not expressly applicable to the implementation of the provisions in CAA section165 that apply immediately to each pollutant subject to regulation under the Act. See, 75 FR 17004 (April 2, 2010) and supporting Response to Comments Documents (sections 9.8 and 10.2); see also,

Alabama Power Co. v. Costle , 636 F.2d 323, 403-406 (C.A.D.C., 1979) (rejecting arguments that CAA section 165 should not automatically appl y to all pollutants subject to regulation under the Act.); 67 FR 80240 (stating that the PSD program applies automatically to newly regulated2 – Legal Authority and Procedural Recommendations

40 NSR pollutants). In the particulate matter examples provided by the commenter where EPA either changed the indicator for the NAAQS (TSP to PM 10 ) or added an additional NAAQS based on an additional indicator (PM 2.5 ), particulate matter was already in some form a regulated NSR pollutant subject to the PSD requirements. With respect to ozone, the commenter did not provide sufficient information for EPA to determine whether the “one-hour ozone” example referenced involved the initial promulgation of a NAAQS for ozone using a one-hour averaging time or the transition from the latter standard to the current standard which uses an 8-hour averaging time. In any event, ozone and its precursors have been regulated under the CAA since before the PSD requirements were established in 1977. Thus, it appears that ozone and it precursors were also already regulated pollutants at the time of any transition period that the commenter intended to reference.

Although applicable to a pollutant that became subject to regulation by virtue of the promulgation of a NAAQS, EPA’s transition policy for PM 2.5 was based on a consistent interpretation of the CAA. The foundation of EPA’s 1997 memorandum that established this policy was that PM 2.5 became a pollutant subject to regulation upon the effective date of the NAAQS and needed to be addressed in SIP-approved state permitting programs upon the effective date of the PM 2.5 standard. If EPA had interpreted the CAA to exempt PM 2.5 from the PSD permitting requirements in section 165 in those states with approved PSD permitting programs, it would not have been necessary to establish the particular transition policy that EPA applied in that instance. EPA’s 1997 memorandum specifically referenced sections 165(a)(3) and 165(a)(4) of the CAA and provided an alternative means for demonstrating compliance with these statutory requirements applicable to PM 2.5 at the time. Nowhere in that 1997 transition policy memorandum did EPA indicate that states with approved programs need not be concerned with PM 2.5 requirements under the PSD program until they revised their SIPs within the next 3 years. Instead, EPA advised that, due to analytical challenges for PM 2.5 , such states should use an analysis of PM 10 as a surrogate for meeting requirements for PM 2.5 that were otherwise applicable under CAA section 165. EPA’s action in 2008 to extend this transition policy was similarly grounded on the recognition that PM 2.5 was a regulated pollutant that had to be addressed in PSD permitting through the surrogacy approach. 73 FR at 28341; 70 FR at 66043. Furthermore, this 1997 transition policy was based on air quality modeling limitations and related data gaps that are applicable to the determination of BACT for GHGs that will apply under CAA section 165(a)(4) when GHGs become subject to regulation.

In the 1987 action that allowed some transition to implementing the PM 10 NAAQS, the time period within which states had to amend their SIPs was 9 months rather than 3 years. 52 FR at 24682. Furthermore, EPA explained in t hat action that other regulated forms of particulate matter would continue to be covered by state programs in the interim period. Id

.

Comment:2 – Legal Authority and Procedural Recommendations

41 Three other industry commenters (0065.1, 0068.1, 0069.1) similarly stated that EPA is incorrect in declaring that the Act imposes a construction ban on sources in states subject to the SIP call effective on January 2, 2011. The commenters stated that in the SIP call proposal, EPA pointed to no provision in the Act that supports its contention that Congress intended a construction ban to apply when EPA newly regul ates a pollutant. The commenters opined that given that a construction ban is an extreme remedy, one would expect to see an explicit authorization in the statute itself, and went on to note that when Congress imposed penalties for state recalcitrance related to nonattainment areas in the Act, it did so explicitly in section 179 of the Act, not through silence. According to the commenters, EPA is interpreting the Act to impose penalties much more stringent in attainment areas (construction bans), than even the strictest penalties for nonattainment areas (highway sanctions). The commenters concluded that if Congress had intended that a construction moratorium apply in areas attaining the NAAQS merely because a state cannot regulate a pollutant for which no NAAQS has been issued in a few PSD permits, there surely would be an explicit statement in the Act. The commenters believe that this conclusion is reinforced by Congress’ repeal of the only construction ban in the Act, section 110(a)(2)(I), as it existed prior to the 1990 Amendments.

Another industry commenter (0081.1/0109.1) made similar arguments that the proposed imposition of a construction moratorium in the SIP call does not conform to the Act and EPA regulations because under the Act, the most severe section 179(b) sanctions (withdrawing federal highway funding and doubling offset ratios for new sources in nonattainment areas) fall far short of a full construction ban, and those sanctions befa ll only those states that fail to meet reasonable deadlines, after proper notice, in a way that might lead to public exposure to air pollutants with immediate health consequences. The commenter indicated that EPA is imposing unreasonable deadlines and asserted that no deadline can be “reasonable” without a valid reason, and EPA has given no valid reason for its rush, other than to require states to comply with its own arbitrarily selected January 2, 2011, deadline (which it has the power to stay or revise). The commenter believes it is absurd to suggest that such SIP panic is appropriate for the first time ever in response to GHGs, for which there is no NAAQS, especially given that the entire SIP process is intended solely for the attainment and maintenance of the NAAQS.

Response:

As indicated above, section IV.B.1.a(ii)(II)(B) of the preamble to the final rule includes an in-depth discussion on the timeline for SIP submittals and their statutory and regulatory bases. In addition, that section and section IV.B.2.b(ii) of the preamble discuss the commenters’ erroneous assertion that EPA is acting to impose a construction “ban” or “moratorium” after January 2, 2011 in states that lack authority to issue PSD permits to sources of GHG emissions.

Comment:2 – Legal Authority and Procedural Recommendations

42 One of the commenters (0068.1) added that EPA’s interpretation that such a ban (if authorized) is immediate is unreasonable – requiring the state to either comply with an instantaneous deadline to implement PSD program for a new pollutant (which may violate state laws providing for due process and administrative procedure) or halt all new construction (which may have potentially devastating economic impacts).

Response:

We disagree with the commenter. As discussed in the preamble to the Tailoring Rule and elsewhere in this RTC, the potential for what the commenter refers to as a construction ban or moratorium stems from the lack of availability of a permitting authority when sources in a particular state may become subject to PSD, and sources may become subject to PSD by operation of the CAA, in conjunction with EPA' s promulgation of a regulation that newly subjects a pollutant to regulation. The impacts of this situation, which the commenter describes as “potentially devastating,” do not change the operation of the CAA. Accordingly, EPA’s interpretation of the operation of the CAA is not unreasonable because of those effects, as described by the commenter.

Comment:

One industry commenter (0074.1) also stated that the proposed imposition of a construction moratorium in the SIP call does not conform to the Act and EPA regulations. The commenter indicated that although EPA may impose a FIP after it finds that a SIP fails to meet an applicable CAA requirement and after EPA gi ves the state a reasonable opportunity to correct the deficiency, EPA may not directly change the SIP itself. The commenter noted that under the proposed SIP call, states whose SIPs provide for them to issue PSD permits for sources subject to PSD permitting under pre-Tailoring Rule standards would no longer be authorized to act under those SIPs in issuing PSD permits for sources with potential emissions of GHGs above the Tailoring Rule thresholds—at least until they change their SIPs to accommodate GHG regulation. According to the commenter, EPA would effectively be amending the SIPs to impose a permitting, and therefore a construction, moratorium on sources with potential emissions above the Tailoring Rule thresholds, which the commenter does not believe EPA has the authority to do.

Response:

EPA disagrees that it is either applying a construction moratorium or changing the SIP for an affected state. Although each affected state’s SIP PSD program in question applies to certain non-GHG pollutants, and as a result, the permitting authority may issue a permit to a source of those pollutants, that permit is limited to the non-GHG pollutants. Once GHGs become subject to regulation, the source will also need a permit for its GHG emissions, and if there is no permitting authority available to issue that permit, then the source may face delays in construction or modification, notwithstanding the fact that it has a permit covering its non-2 – Legal Authority and Procedural Recommendations

43 GHG emissions. This situation occurs by operati on of the CAA, as described elsewhere, and not, as the commenter alleges, due to any changes to the affected state’s SIP by EPA.

Comment:

One state agency commenter (0086.1), who does not agree that applying PSD to GHGs is required under the Act, also disagrees that a construction ban will apply to any state that lacks a state or federal PSD program covering GHGs on January 2, 2011. Although the commenter believes that the requirement to regulate GHGs ultimately will be overturned by Congress and the courts, the commenter’s state (Arizona) has reluctantly decided not to object to the shortest SIP deadline (as discussed elsewhere in this RTC) because of the commenter’s belief that federal enforcement actions or citizens suits based on EPA’s attempted construction ban would be extremely disruptive to the state’s economy.

Response:

EPA appreciates the comment and no response is necessary.

Comment:

Three industry commenters (0064.1/0096.1, 0081.1/0109.1, 0082.1/0099) acknowledge that a PSD permitting moratorium may go into effect after January 2, 2011, in states that do not have authority to issue PSD permits to GHG sources. These commenters discussed the economic impacts that that they expect to occur after that date, as summarized below.

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

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

from the recession.

Response:

EPA appreciates the comment. For the reasons described in the preamble to the final rulemaking, EPA considers the deadline range provided to be reasonable because the affected states may choose within that range. EPA does not agree that an inflexible deadline of 3 weeks

would be reasonable

. EPA appreciates the concern about an unlevel playing field but that is a consequence of the principles of federalism that underlie CAA section 110(k)(5) and the CAA2 – Legal Authority and Procedural Recommendations

44 SIP provisions generally. For example, if EPA had established a uniform 12-month threshold for SIP submittals, some states could have submitted, and received EPA approval of, a SIP revision earlier than other states, and that too would create, in a certain sense, an unlevel playing field.

Comment:

An industry commenter (0081.1/0109.1) indicated th at states currently lacking authority to regulate GHGs (Wyoming, Kentucky, and Texas) constitute more than 50 percent of coal production in the United States, and both Wyoming and Texas state that they will not be in a position to change their laws as demanded by EPA by the beginning of 2011.

This commenter (0081.1/0109.1) added that EPA's imposition of a FIP does not alter the fact that the regulatory timetable is likely to result in a permitting gap and therefore a construction moratorium in some states. The commenter stated that because EPA cannot impose the FIP unless the states fail to comply with the SIP call and since EPA has provided states with 1 year to comply, there will still be an 11-month regulatory gap in states that are not able to change their laws and regulations within 1 year after the December 1, 2010, SIP call (assuming the SIP call is finalized on December 1; if the SIP call is delayed, the gap will be longer). (See section 2.3.3 of this RTC for the commenter’s comments on the states’ option to accept a SIP call deadline of December 22, 2010.)

Response:

Through the final rule and the companion FIP rule, EPA is taking action to avoid any gap in permitting authority and the economic harm that could result. In addition, states that currently lack authority to regulate GHGs under PSD are acting expeditiously to obtain that authority. Section IV.B.1.b(ii) of the preamble to the final rule discusses how the SIP submittal deadlines in the final rule are structured to eliminate or minimize any permitting delays. As discussed in the SID, sources in Wyoming and Kentucky will not face a gap period. Texas is also discussed elsewhere in the preamble and SID.

Comment:

An industry commenter (0081.1/0109.1) asserted thatthe problem is not just the lack of authority to regulate GHGs in some states, but al so that in a large number of states (including many significant coal- or metals-producing states) the PSD thresholds will not be changed to match the Tailoring Rule thresholds for GHGs by January 2, 2011. The commenter believes that in these states, the “absurd results” and permitting gridlock that EPA is trying to prevent with the Tailoring Rule will come about anyway, and mines will not be able to obtain needed permit revisions to continue in operation.

Response:2 – Legal Authority and Procedural Recommendations

45 This comment concerns states not affected by this rulemaking, and therefore this comment is not relevant to this rulemaking. In any event, EPA responds to this comment in the preamble to the final rule.

Comment:

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

resources and when.

Response:

EPA will have the resources necessary to implement any FIPs that are required. McCarthy Declaration, ¶66, p. 13.

Comment:

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

Response:

For the reasons discussed elsewhere, EPA’s information is that in almost all cases, the states and EPA will be ready to implement PSD for GHG-emitting sources as of January 2, 2011, at the Tailoring Rule thresholds. The costs and benefits of regulating GHGs are not an issue in this rulemaking. If those costs and benefits were at issue in another other GHG rulemaking, then EPA, in responding to this comment, is not reopening that issue for those rules. EPA has undertaken all required analyses for this rule. It should be noted that applying PSD to GHGs does have significant benefits, which EPA described in its response to motions to stay the2 – Legal Authority and Procedural Recommendations

46 GHG rules, in the litigation over the GHG rules, and we incorporate by reference that response

here. 10

Comment:

An industry commenter (0082.1/0099) believes that the proposal does not allow sufficient time for states not currently authorized to regulate GHG under their SIP to be ready to regulate GHG by January 2, 2011, so that these states will not be able to issue PSD permits to sources of GHGs and, until the EPA issues a FIP for an area, EPA cannot issue a permit either. The commenter indicated that the result will be a gap in compliance that will effectively constitute a moratorium on building for those entities in those states that are subject to regulation. The commenter stated that the proposal appears to try to act as expeditiously as possible, but the problem is that the CAA process takes longer than a month to implement. The commenter added that the proposal does not account for the increased costs and manpower that will be required in order to implement an increased workload.

Response:

EPA appreciates the comment. As discussed in the preamble to the final rule, leaving Texas aside, EPA does not expect any meaningful compliance gap in any of the other affected states, and EPA is addressing Texas elsewhere. In addition, EPA did account for the increased costs and manpower needed to implement GHG PSD permitting in the Tailoring Rule and is not further addressing, or reopening, that issue in this rulemaking.



### 2.4 Does a Public Hearing Held on the State Level Meet CAA Requirements for a Public Hearing?

Comment:

One state agency commenter (0060.1) supported EPA’s willingness to consider state public participation procedures required under the Administrative Procedure Act as satisfying the federal SIP public participation requirements. The commenter noted that because of the similarity in the required minimum public participation procedures, her state (Connecticut) has used this approach in the past and found that it significantly shortens the length of regulatory and SIP processing. The commenter added that her state has been careful to provide adequate published notice concerning both the SIP revision and state regulatory adoption aspects of its public hearings and has thus avoided unnecessary time and expenses incurred in published notices, waiting for comments, and holding public hearings.

10 “EPA’s Response To Motions To Stay,” Coalition for Responsible Regulation v. EPA , D.C. Cir. No. 09-1322 (and consolidated cases), 93-97.2 – Legal Authority and Procedural Recommendations

47 One industry commenter (0064.1/0096.1) also supported the proposal to accept the public hearing that the state holds as meeting the requirement for the hearing on the SIP submittal, provided there is appropriate notice at the federal level and opportunity for comment in the state proceeding by all interested parties.

Response:

We agree with the commenters that this approach is appropriate, given proper safeguards. See section V.C of the preamble to the final rule for more on this topic.



### 2.5 Do CAA Section 179 Sanctions Apply to States that Fail To Submit a Timely SIP Revision?

Comment:

One local agency commenter (0089.1/0111.1) expressed the understanding, in accordance with EPA’s proposal (citing 75 FR 53905), that EPA’s finding that the local agency failed to submit a required SIP revision for a PSD area will not trigger mandatory sanctions. One environmental group commenter (0104.1) similarl y agreed with EPA that states that do not submit timely SIP revisions under these proposal s are not subject to CAA section 179(b) sanctions, because the relevant sanctions apply only to nonattainment areas, which are not at

issue in this case.

Response:

The commenters are correct. As we noted in the proposed rulemaking, 75 FR at 53905, and reiterated in the preamble to the final rulemaking, it has been a longstanding EPA position that a finding that a state has failed to submit a required SIP revision for a PSD area will not trigger mandatory sanctions.



### 2.6 Title V Program Applicability Issues

Comment:

One industry commenter (0082.1/0099) noted that the title V operating permit program will also go into effect for GHG on January 2, 2011, and that, unlike the PSD program which only applies to those entities wanting to build new facilities, the title V program applies to all entities emitting over the threshold amount of 100 tpy. The commenter believes that states having issues with PSD permitting would have the same or similar issues with title V permitting—namely, not being applicable to GHG or not being applicable at Tailoring Rule thresholds. The commenter pointed out that the SIP call proposal does not address issues with the title V operating permit program and expressed concern that state permitting programs will be overwhelmed by the more than 6 million new title V permits that EPA estimates will have to2 – Legal Authority and Procedural Recommendations

48 be issued if the program is implemented at statutory thresholds. The commenter stated that this is of special concern to farmers and ranchers because farms and ranches will become immediately subject to title V permit requirements.

Response:

EPA notes that this comment is not germane to this final rule but acknowledges that state permit programs would be overwhelmed if they had to issue approximately 6 million new title V permits. To prevent such a situation, EPA promulgated the Tailoring Rule and, as discussed in the final Tailoring Rule, EPA is taking additional actions separately. EPA understands that some states will be able to interpret their approved title V programs consistent with the Tailoring Rule threshold. For other states, where the approved title V program may apply to sources of GHG at the 100-tpy level, EPA intends to narrow the approved state program to conform to the Tailoring Rule threshold by the end of 2010. If a state with an approved title V program lacks any authority to permit sources that are major sources subject to title V as a result of their GHG emissions, then there is no title V permit program "applicable to the source" and those sources in that state have no obligation to apply for a title V permit until after such time as a permit program becomes applicable to them. See CAA section 503(a). EPA intends to work with states, through program revisions, notices of deficiency, and/or application of the federal title V program, in order to assure that major sources of GHGs in all states are subject to title V programs.

Comment:

One state agency commenter (0080.1) noted that under state regulations approved pursuant to 40 CFR part 70, sources will be obligated to include GHGs in title V permit renewal applications on and after January 2, 2011. Because of the significant impact this will have on title V permitting, the commenter requested that the separate rulemaking pertaining to title V programs referred to in the proposal (citing 75 FR 53905) be proposed and published prior to this rulemaking becoming final. The commenter suggested that the separate title V rulemaking should include provisions to address insignificant sources and establish de minimis levels.

Response:

EPA’s separate rulemaking on title V will address the inclusion of new sources in approved title V programs due solely to emissions of GHG. EPA does not believe it would be appropriate to delay this PSD rulemaking and, further, does not believe there is a need for additional rulemaking at this time to address the impact of including GHG emissions in title V permit applications for sources otherwise subject to title V. For sources not triggering PSD, there will likely be no applicable requirements under title V for GHGs. As a result, the primary impact of including GHGs in title V applications will be the requirement that sources generally must provide information regarding all emissions of pollutants for which they are major. Under the Tailoring Rule, sources will be major for GHGs only if, as of July 1, 2011, they emit or have2 – Legal Authority and Procedural Recommendations

49 the potential to emit at least 100,000 tpy CO 2 e, as well as 100 tpy on a mass basis. In many cases, particularly where the source has no applicable requirements for GHGs, emissions descriptions (instead of estimates) may be sufficient to satisfy this requirement. For sources subject to the GHG Reporting Rule, the emissions description requirements in the title V rules can generally be satisfied by information provided under the GHG Reporting Rule.50 

## 3.0 Classification of State SIPs

3.1 Presumptive Adequacy List

Comment:

Three industry commenters (0074.1, 0081.1/0109.1, 0103.1) expressed reservations regarding EPA’s position related to the states’ freedom to reinterpret the phrase “subject to regulation” in existing SIPs to provide for re gulation of GHGs at Tailoring Rule thresholds without rulemaking. The comments are discussed below.

One industry commenter (0074.1) asserted that the proposed SIP call improperly provides for states to change their SIPs without notice-and-comment rulemaking through interpretation of the phrase “subject to regulation” to effectively amend the state PSD regulatory thresholds to conform to the Tailoring Rule levels. The commenter contended that EPA realized that there is insufficient time for the large number of states whose state law thresholds are at or below the CAA statutory levels to make the necessary law changes and, solely as a matter of expediency, decided that states with low thres holds did not have to change those thresholds through notice-and-comment rulemaking and/or le gislation but could do so as a matter of interpretation. The commenter stated, however, that apart from whether, as matter of state law, a legislative rule can be revised without notice-and-comment rulemaking, under CAA section 110(a)(1) a SIP can be revised only after “reasonable notice and public hearings.”

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

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

A third industry commenter (0081.1/0109.1) noted that some states (giving Texas as an example) do not agree that state laws or regul ations that provide for PSD permitting of air pollutants that are “subject to regulation” can be interpreted as authorizing regulation of a previously unregulated air pollutant without ac tion by the state legislature. The commenter believes that EPA’s position to the contrary may not be valid and, in any event, may create uncertainty if the issue is litigated in the courts of one or more states.3 – Classification of State SIPs

51 Response:

These comments are not relevant to the SIP call rulemaking because the issue raised in these comments affects only states with appr oved PSD programs that apply to GHG-emitting

sources.

Comment:

One state government commenter (0052) from a state on the Presumptive Adequacy List informed EPA that his state (Wyoming) is unable to regulate GHG emissions and therefore cannot implement the Tailoring Rule. The commenter indicated that the state’s Environmental Quality Act prevents the state from regulating GHGs, and that authority to do so would require legislative action which could not occur until the 2011 legislative session, long after the January 2, 2011, deadline for the implementation of the Tailoring Rule. A commenter (0079.1) from the reviewing authority in the same state (Wyoming) made the same assertion and provided the relevant language from the state’s Environmental Quality Act.

In contrast, an environmental group comment er (0053.1) from the same state disagreed that the state’s Environmental Quality Act prev ents the state (Wyoming) from regulating GHGs and cited recent actions by the state Environmental Quality Council and Supreme Court in support of that view. A second environmenta l group commenter (0110) from the same state (Wyoming) indicated that regardless of state law, the Supremacy Clause of the U.S. Constitution requires that state law yield to federal law, meaning that there should be no bar to the state developing a timeline for revision of its SIP to regulate GHGs under PSD.

Response:

In the SIP call proposal, Wyoming was included on the Presumptive Adequacy List. In the final action, we are issuing a SIP call for Wyoming, based on information submitted by the state during the SIP call proposal's comment period. See appendix N to the SID, where we provide our reasons for issuing a SIP call for Wyoming and respond to these comments regarding Wyoming.



### 3.2 Presumptive SIP Call List

Comment:

One local agency commenter (0061.1), whose jurisdiction (Sacramento Metropolitan Air Quality Management District or SMAQMD) wa s included on the Presumptive SIP Call List, provided a supplementary analysis of the SM AQMD SIP PSD regulations purporting to show that the SIP does allow the district to apply PSD permitting requirement to sources of GHGs. Thus, the commenter believes that a SIP call is not necessary for the SMAQMD.3 – Classification of State SIPs

52 Response:

We disagree with the commenter. For reasons that we provide in appendix D to the SID, we are therefore issuing a SIP call for SMAQMD.

Comment:

One state agency commenter (0084.2) confirmed that the state (Texas) does not have authority under its existing PSD regulations to regulate sources of GHGs. This commenter contested the legality of EPA’s entire GHG regulator y framework and indicated that the state has no intention of regulating GHGs.

Response:

We address Texas in appendix M of the SID.



### 3.3 Deadline Accepted by States for Submitting SIP Revision

Comment:

Two state agency commenters (0054.1/0055.1, 0086.1) confirmed that their states (Arkansas and Arizona, respectively) do not object to the shortest SIP deadline of 3 weeks after the SIP call because of the precarious position their states’ PSD permitted facilities would be in without the speedy issuance of a FIP. The commenters emphasized that their states were forced to take this position only out of the necessity born from EPA’s crafted situation; see section 2.3 of this RTC for these commenters’ thoughts on the reasonableness of this deadline.

Another state agency commenter (0058.1) stat ed that, considering EPA’s interest in establishing PSD permitting authority for GHGs by January 2, 2011, and his state’s (Florida’s) interest in avoiding any resulting “construction ban” that might result from the failure to do so, the commenter’s agency does not object to EPA’s establishment of a deadline of December 22, 2010, for a corrective SIP revision.

Two state agency commenters (0079.1. 0101.1) stated that in light of the importance of having in place as soon as possible PSD permitting authority for GHG-emitting sources that may be subject to PSD requirements, the commenter s’ states (Wyoming and Oregon, respectively) do not object to EPA’s establishment of a deadline of December 22, 2010. Another state agency commenter (0112.1/0113.1) similarly stated that to ensure that industrial sources are able to construct or modify, his state (Idaho) requested a December 22, 2010, deadline for submitting a

SIP revision.

One state agency commenter (0085.1) who expects his state (Kansas) to be able to submit final SIP revisions by December 1, 2010, nevertheless st ated that if EPA is unable to act quickly,3 – Classification of State SIPs

53 the state requests the shortest possible deadline, which is either December 22, 2010, or 3 weeks after the date of signature of the final rule. In addition, the commenter added that if EPA cannot assure the state that the SIP revision (if a pprovable) will be approved by January 2, 2011, the state does not object to EPA immediately issui ng a finding of failure to submit a required SIP revision and immediately promulgating a FIP for the state. In this case, the commenter requested immediate delegation of PSD permitting authority to his agency to assure that there is no permitting moratorium or construction ban.

One local agency commenter (0061.1) stated that in light of the importance of having clear PSD permitting authority for GHG sources in place as soon as possible, his jurisdiction (SMAQMD) would not object to EPA’s establishment of a deadline of January 31, 2011, despite the fact that the commenter now reads SMAQMD SIP as a whole to allow application of PSD requirements to sources of GHGs.

Another local agency commenter (0089.1/0111.1) indicated that her agency expects to submit conforming SIP revisions by December 1, 2010; however if the agency (Louisville Metro Air Pollution Control District) is unable to finalize the regulations by that date, the agency does not object to EPA’s establishment of January 1, 2011, as the deadline.

One state agency commenter (0095), who anticipates that the state’s (Nebraska’s) SIP submittal will be final by January 2, 2011, indicated that the state shares EPA’s perception of theimportance of having a PSD permitting authority in place as soon as possible for any GHGemitting sources that may be subject to PSD re quirements to avoid a regulatory construction freeze; therefore, the state does not object to EPA’s establishment of a deadline of March 1, 2011, for submittal of the state’s corrective SIP.

One state agency commenter (0060.1/0108.1) i ndicated that recognizing the importance of having a PSD permitting authority in place for any GHG sources that may be subject to PSD requirements, his state (Connecticut) does not object to EPA’s establishment of a corrective SIP submittal deadline of March 1, 2011.

One state agency commenter (0080.1) proposed a deadline of March 31, 2011, to allow more time to complete the SIP call process. This agency (Kentucky Department of Environmental Protection) hopes to submit its SIP revision by January 1, 2011, but acknowledges that contingencies may alter this anticipated timeline.

A local agency commenter (0077.1), whose agency (Clark County, Nevada, Department of Air Quality & Environmental Management) expects to submit SIP revisions to incorporate the Tailoring Rule by December 1, 2010, stated that if due to unforeseen circumstances the agency does not submit its SIP revisions by that date, it would accept a SIP submittal deadline of July 1,

2011.3 – Classification of State SIPs

54 One local agency commenter (0090.1) stated that to the extent that a prompt FIP will avoid a construction ban, his agency (Pinal County (Arizona) Air Quality) sees no choice but to ask for such a FIP. The commenter did not specify a particular SIP submittal deadline that his agency would accept.

One state agency commenter (0084.2) declined to accept an earlier deadline for a SIP revision. This state (Texas) contests the legality of the entire framework for regulating GHGs

under the Act.

Response:

See section IV.B.1(b)(ii) of the preamble to the final rule for a general discussion of flexibility for states to select the deadline that suits their individual circumstances. See section IV.B.2 of the final rule preamble and the SID for this rulemaking for the specific actions taken for each state.55 

## 4.0 Definition of “Regulated NSR Pollutant”

4.1 Does the Light-Duty Vehicle Rule Make GHGs a Regulated NSR

Pollutant?

Comment:

One state agency commenter (0080.1) indicated general agreement that the LDVR results in the application of PSD to the emissions of GHGs at stationary sources. However, the commenter expressed concerns with the regulatory approach EPA has provided in the Tailoring Rule and the current proposals.

Response:

EPA provided background information in the proposed SIP call on the LDVR, Tailoring Rule, and other proposals for information only. We did not solicit comment on, or reopen, the overall regulatory approach for GHGs in the SIP call rule, and this comment is not relevant to this rulemaking.



### 4.2 May a State Adopt a Different Definition of GHG?

Comment:

One industry commenter (0064.1/0096.1) believes that either of EPA’s recommended options for the substance of proposed corrective SIP revisions is acceptable (i.e., applying PSD to any regulated NSR pollutant, or specifically listing GHGs as a pollutant subject to PSD), provided that no state is permitted to adopt a different definition of GHGs than promulgated under the Tailoring Rule. The commenter asserted that no state should be permitted to adopt lower thresholds (including avoiding the use of the CO 2 e and/or short ton metric) or to unilaterally adopt a definition that includes more GHGs than set forth in the Tailoring Rule.

Response:

In the SIP call proposal, EPA solicited comment on whether to allow an affected state, in its corrective SIP revision, to adopt a different definition of GHGs than promulgated under the Tailoring Rule, and whether to allow other differences from what EPA promulgated under the Tailoring Rule. EPA stated:

In adding GHGs to the list of pollutants subject to PSD applicability, the State must define GHGs as a single pollutant that is the aggregate of the group of six gases: C0 2 , CH 4 , N 2 0, HFCs, PFCs, and SF 6 . As EPA stated in the Tailoring Rule, "[t]he final LDVR for GHGs specifies, in the rule's applicability provisions, the air pollutant subject to control as the aggregate group of the six4 – Definition of "Regulated NSR Pollutant"

56 GHGs * * * Because it is this pollutant that is regulated under the LDVR, it is this pollutant to which PSD * * * appli[es]." 75 FR 31528.

Although we propose to require that the State define GHGs as described immediately above, we solicit comment on whether the State may adopt a different definition that is at least as stringent, and, if so, what such a definition might be. We caution that a definition that includes more gases than the six identified above could prove to be less stringent in certain ways because it could allow greater opportunities for a source of different gases to net out of PSD.

...A State, in revising its SIP to apply PSD to GHG sources, may adopt the Tailoring Rule phase-in approach into its SIP or it may adopt lower thresholds, but if it adopts lower thresholds, it must show that it has "adequate personnel [and] funding * * * to carry out, "that is, administer and implement, the PSD program with those lower thresholds, in accordance with CAA section 110(a)(2)(E)(i).

In the Tailoring Rule, EPA adopted a CO 2 e metric and use of short tons (as opposed to metric tons) for calculating GHG emissions in order to implement the higher thresholds. 75 FR 31530, 31532. As noted above, a State retains the authority to adopt lower thresholds than in the Tailoring Rule in order to meet statutory requirements. As a result, the states are not obligated to adopt the

CO 2 e metric or use of short tons; however, the State must assure that its approach is at least as stringent as the thresholds in the Tailoring Rule.

75 Fed. Reg. 53,902/2 to 53,903/1

We did not receive any comments urging us to allow states to have a different definition of GHGs or to allow flexibility in calculating the threshold. Accordingly, we are finalizing our proposed rule that states are required to define GHGs as described in the LDVR and defined in the Tailoring Rule. As we have said elsewhere, a state is free to adopt a lower threshold for GHG applicability, as long as it demonstrates that it has the resources to implement its program at the lower level. Finally, at least in theory, a state that adopts the Tailoring Rule thresholds may seek to apply a different method than used in the Tailoring Rule to calculate the threshold (that is, different than use of CO 2 e or short tons), and we are not prepared to say at present that there are no circumstances under which the state may not be able to demonstrate equivalency.57 

## 5.0 State Regulatory Language – Does a General Authority Clause Allow Interpretation that the PSD Program Applies to
GHGs?

Comment:

One commenter (0071.1/0102.1) believes that the proposed SIP call rule is fatally tainted by the assumption that a state can evade the provisions of CAA section 110(a), which requires the state to provide for public participation in the SIP revision process, through the expedient of “interpreting” general language in previously approved SIPs as “incorporating” the new and unique provisions of the amendments to existing regulations that were promulgated in the Tailoring Rule and that, in EPA’s view, subject GHG emissions to PSD regulation.

In the preamble to the Tailoring Rule, EPA contends that “states may adopt our approach by interpreting the term ‘subject to regulation,’” as currently used in approved, pre-existing SIPs, “to have the same meaning that we are assigning to that term in our [new] regulations” (i.e., in the Tailoring Rule’s amendments to 40 CFR 51.166). 75 FR 31581. EPA’s contention is not remotely credible. In promulgating the Tailoring Rule, EPA “assigned meaning” to the theretofore regulatorily undefined phrase “subject to regulation” by creating, through rulemaking, a brand-new regulatory definition. This new definition is an intricate assemblage of five distinct subparagraphs (subdivided in turn into six separate clauses) that encompasses 11 column inches in the Federal Register and includes new numerical thresholds which are applied using a unique new metric and implemented by specific dates, all as detailed in the new definition. Additionally, the Tailoring Rule introduced entirely new (subsidiary) definitions of the terms “greenhouse gases” and “CO2 equivalent emissions.” EPA’s notion that states can somehow “interpret” the phrase “subject to regula tion” as “incorporating” these provisions is completely baseless.

Furthermore, any attempted SIP revision to incorporate by “interpretation” GHG regulation under the Tailoring Rule would run afoul of CAA section 110(i). Congress in section 110(i) provided that the only way in which “any requirement of an applicable implementation plan” pertaining to stationary sour ces may be changed, by either a state or EPA, is pursuant to the procedures established by CAA section 110(a) or (c). The commenter also

made reference to the decision in Concerned Citizens of Bridesburg v. EPA , 836 F.2d 777, 787 n.12 (3d Cir. 1987) (noting that CAA section 110(i) “appears to confirm what otherwise appears implicit in . . . the Clean Air Act, namely that the Act attempts to enumerate an exhaustive list of the EPA’s powers regarding SIPs” and that, “[l]ack ing another statutory source of authority, the EPA must utilize the [SIP] revision provisions to accomplish its purpose”).5 – State Regulatory Language

58 Response:

These comments are not germane to this rulemaking because they concern SIPs that have authority to apply PSD to GHG-emitting sources and do not concern the SIPs of the states affected by this rulemaking.59 

## 6.0 SIP Call

6.1 EPA Will Finalize SIP Call List Absent Further Information

Comment:

Three industry commenters (0065.1, 0068.1, 0069.1) asse rted that EPA’s plan to create the record for the proposed SIP call during the public comment period is impermissible because it deprives the commenter of the opportunity to comment on the basis of EPA’s action. The commenters stated that the information EPA receives in the SIP call rulemaking will form the basis for its final action in the SIP call rulemaking (that is, which states receive SIP calls), and because of this, EPA must provide the public with an opportunity to comment on this information and cannot base the very heart of its final rule on the information received during the public comment period. The commenters contended that these issues are not minor modifications to the rules of the variety that EPA typically makes in response to public comment (i.e., cannot be considered a “logical outgrowth”); rather, these changes go to the very substance

and basis of the rules. The commenters noted th at in a typical rulemaking process, EPA would gather appropriate information on the state regulations and present in a proposed rule its analysis as to why it believes the SIP is substantially inadequate; in this case no such analysis has been done, and EPA is using the proposed rule to create the analysis that would support its SIP call. According to the commenters, this significant departure from the rulemaking process is not permissible under the Act because it is inconsistent with both section 307(d) procedures and the Administrative Procedure Act (APA).

One industry commenter (0088.1) similarly st ated that EPA has failed to provide adequate public notice of the basis for its proposal. The commenter noted EPA’s announced intention to finalize calls for SIP revisions even in states to which it proposed no call based on information it receives during the comment period. The commenter believes that EPA’s plan to create the record for the SIP call during the public comment period impermissibly deprives the public of its opportunity to comment on the basis of EPA’s action in any state not specifically identified in the proposal.

Response:

EPA addressed this issue in section IV.D.2 of the preamble for this final rule. In addition, we note that the additional informati on we received during the comment period was consistent with our proposal or solicitation of comment, so that our final action and final basis for that action is consistent with that in the proposed rulemaking and, to the extent different, is a logical outgrowth.6 – SIP Call

60 

### 6.2 States Encouraged to Specify that PSD Applies to “Regulated
NSR Pollutants”

Comment:

One state agency commenter (0060.1/0108.1) questioned EPA’s distinction between states that includes GHGs in its PSD program by using the term “regulated NSR pollutant” versus states that accomplish the same result by individually listing the pollutants subject to PSD. The commenter noted that EPA stated in the SIP call proposal that it intends to issue a full approval for a PSD program that uses the first approach, but will approve a PSD program that includes GHGs among individually listed pollutant s only as SIP strengthening. The commenter encouraged EPA to reconsider this distinction and to fully approve any state program that addresses GHGs as set out in the Tailoring Rule, regardless of the format the state uses to revise

its SIP.

The commenter (0060.1/0108.1) understands that a SIP strengthening approval is a form of limited approval that EPA uses for SIP submissions that meet only some of EPA’s requirements, but for which there is no portion that may be separated out and fully approved or fully disapproved. The commenter does not understand which SIP call requirements it will fail to meet after it revises its regulations to include GHGs in the list of pollutants subject to its PSD program, to add applicability thresholds for GHGs, and to add GHGs to the pollutants for which a BACT review is required. The commenter stated that prior to EPA’s issuance of the Tailoring Rule, her state’s (Connecticut’s) PSD program was fully approved. Once her state adds GHG provisions that are least as stringent as those in the Tailoring Rule, the commenter believes that EPA should fully approve the state’s PSD program.

The commenter (0060.1/0108.1) also stated th at a SIP strengthening approval also

contradicts EPA’s discussion in the SIP ca ll preamble (citing 75 FR 53903) in which EPA described the advantages for a state that uses the “regulated NSR pollutant” approach. According to the commenter, EPA specifically noted that it is limiting the SIP call to the failure to apply PSD to GHG-emitting sources, as distinguish ed from finding that a SIP is substantially inadequate. The commenter believes that if EPA took such care to note that the only failure in a SIP is the failure to cover GHG sources, then the correction of that failure by any means should logically restore a SIP to full approvability.

The commenter (0060.1/0108.1) indicated that th e state is engaged in revising its PSD rules to cover GHGs but does not intend to change its existing approach of applying the PSD program to listed pollutants and will not be adopting a form of the “regulated NSR pollutant” approach. The commenter noted that even if the state did overhaul its program to use the “regulated NSR pollutant” approach, the state would still need to undertake a rule revision should EPA add or delete regulated NSR pollutants because the state has a general legislative6 – SIP Call

61 prohibition against prospective incorporation by reference of federal regulations, except under certain circumstances that are not present in this case.

One environmental group commenter (0104.1) agreed with EPA that states would be well-advised to adopt the PSD applicability provi sion found in EPA regulations – that is, that PSD applies to all “regulated NSR pollutants” – rather than simply adding GHGs to the SIP’s list of pollutants subject to PSD. The commenter believes that this formulation better reflects the Act’s expansive application of BACT requirement s to any pollutant subject to regulation under the Act, as stated in CAA section 165(a)(4). The commenter added that it will also make it easier for the states to quickly adopt future pollution control measures, including incipient efforts to control particularly dangerous forms of particulate matter pollution.

Response:

We continue to recommend the “regulated NSR pollutant” approach over listing individual pollutants, but we recognize that th e latter approach wouldl correct the substantial inadequacy for which we are issuing the SIP call (i.e., the failure of the PSD SIP to cover GHG sources). See section IV.C.1 of the preamble to the final rule for a discussion of this issue, as well as clarification of what we mean by a “SIP-strengthening" approval in this case.



### 6.3 SIP Submittal and Approval Process

Comment:

Four industry commenters (0065.1, 0068.1, 0069.1, 0082.1/0099) asserted that EPA’s proposed parallel processing approach is inconsiste nt with the Act. According to two of the commenters (0065.1, 0069.1), section 110(a)(2) of the Act requires that SIPs be adopted by states after reasonable notice and public heari ngs, and section 110(k) provides that EPA shall determine within 60 days of receiving a SIP submittal whether it is complete and shall act to approve or disapprove the plan within 12 months of the completeness determination. Three of the commenters (0065.1, 0068.1, 0069.1) contended that the Act creates a serial, not a parallel, process and that EPA cannot determine that a state’s SIP submittal meets the requirements for adoption under the Act and obtain comment on whether such procedures were followed to justify SIP approval when the state’s procedures are not even completed yet. The fourth commenter (0082.1/0099) raised the issue of whether a draf t SIP revision being proposed by a state is a “submission” of a SIP revision as required by the Act, and opined that a SIP revision cannot be “submitted” unless it has at least been finalized by the state.

Two of the industry commenters (0068.1, 0082.1/0099) noted that under parallel processing EPA will only require the final SIP to be “substantially similar” to the draft SIP (citing 75 FR 53889), which the commenters believe will undermine the public participation requirements of the Act. One of these commenters (0082.1/0099) stated that the Act requires6 – SIP Call

62 public notice and comment on a final SIP revision, not a “substantially similar” version. The commenter indicated that a final SIP revision may e ither add or delete sections of a draft, and there would be no opportunity for public comment on the added or deleted sections.

One of these commenters (0069.1) also stated that EPA’s proposed approach for expedited processing of SIP revisions to conform to the Tailoring Rule is flawed in that for states that have adopted the 2002 NSR Reform rules but for which EPA has not completed the SIP revision process, EPA’s proposal appears to approve the revisions relevant to this SIP call without approving the NSR Reform revisions that have been waiting for several years. Thus, the commenter believes, EPA would be approving changes based on the 1980 federal NSR regulations, while ignoring that the state is implementing the 2002 NSR Reform rules, and will do so even though the regulations that actually are being amended to include the Tailoring Rule

thresholds are the state rules modeled on the 2002 NSR Reform rules. The commenter offered Georgia and North Carolina as examples of states where this would be the case.

Another of the commenters (0082.1/0099) stated that the goal of attempting to approve SIP revisions as expeditiously as possible is wort hwhile, but not when the need for expediency is of the agency’s own creation. The commenter believes that this is especially true if questionable procedural shortcuts are the result. The commenter indicated that EPA can avoid the situation it is trying to address simply by delaying the app lication of GHG regulation to stationary sources to allow state permitting agencies the time to conform their GHG laws and regulations to federal laws and regulations.

One environmental group commenter (0104.1) simp ly stated that should EPA decide to “parallel-process” its review of a state’s SIP, it must fulfill all applicable public participation requirements.

One state agency commenter (0054.1/0055.1) agreed with EPA’s method of streamlining the SIP revision process by having simultaneous public participation processes for both the draft regulation and the proposed SIP approval. The commenter indicated that her state plans to pursue the parallel processing of its corrective SIP revision submittal in order to expedite SIP review and approval. The commenter believes that when the SIP revision substantially consists of the regulation change, the public participation process for the regulation should be able to proceed at the same time as the proposed SIP approval and still allow adequate due process for both the regulation and the SIP revision. The commenter also suggested that EPA publish notice of the public hearing in the same manner as a solo EPA public hearing notice, to ensure all necessary parties are notified.

Response:

Parallel processing is a well-established procedure, which is provided under longstanding EPA regulations, and EPA has used it for many rulemakings. See 40 CFR part 51,6 – SIP Call

63 appendix V, 2.3.1; see, e.g ., “Approval and Promulgation of State Implementation Plans and Designation of Areas for Air Quality Planning Pur poses in Ohio; Redesignation of Cincinnati to Attainment of the 1–Hour Ozone Standard and Appr oval of Ozone Maintenance Plan; Approval of Volatile Organic Compound Emissions Control Regulations; and Approval of Motor Vehicle Emissions Budgets -- Final rule,” 70 FR 35946 (June 21, 2005); "Approval and Promulgation of Implementation Plans; Texas; Control of Emissi ons of Nitrogen Oxides From Stationary Sources in the Houston/Galveston Ozone Nonattainment Area – Final Rule,” 66 FR 57230 (November 14, 2001); “Approval and Promulgation of Air Quality Implementation Plans; Massachusetts; Amendment to the Massachusetts Port Authority/Logan Airport Parking Freeze and City of Boston/East Boston Parking Freeze -- Final rule;” 66 FR 14318 (March 12, 2001).

In stating in the proposed SIP call that EPA would rely on parallel processing, if requested by a state, to expedite action on SIP submittals, EPA was stating that it would continue to follow this well-established procedure and was not reopening it for comment. Accordingly, these comments are not germane to this rulemaking, and it is not necessary to respond to these comments to the extent they concern the merits or mechanics of parallel processing.

In any event, parallel processing is a valid procedure as long as it is conducted in a way

that is consistent with APA notice-and-comme nt requirements or CAA section 307(d), as applicable. Allowing public comment on a draft SIP submittal, which is the essence of parallel processing, is consistent with such requirements because in essence, in that proposed rulemaking, EPA is proposing to approve a final SIP submittal if substantially similar to the draft SIP submittal, and the public is given a full opportunity to comment on that proposed approval. Moreover, EPA may give final approval to a final SIP revision that is substantially similar to the draft because under that circumstance, the final action would be a logical outgrowth of the proposal.

In addition, we disagree with the commenter's view that EPA’s proposed approach for expedited processing of SIP revisions to conform to the Tailoring Rule is flawed because the pending NSR Reform regulations have not yet been approved. For states with NSR Reform SIP submittals that are pending approval, EPA plans to issue a final approval of the NSR Reform SIP, so long as it complies with minimum elements of EPA's 2002 Reform rules, concurrently with the proposed approval of the state's Tailoring Rule SIP; and if EPA is not in a position to issue a final approval of the NSR Reform SIP, EPA intends to work with the state to fashion the Tailoring Rule SIP revision so that it is nevertheless approvable or to take other steps as appropriate so that EPA can approve the Tailoring Rule SIP revision without the lack of approval of the NSR Reform SIP posing an obstacle to that action.64 

## 7.0 Information Requested from States on Presumptive Adequacy List

7.1 Confirm that PSD Program Applies to GHG Sources

Comment:

One state agency commenter (0059.1) confir med that his state’s (Louisiana’s) PSD program, SIP, and Air Control Law allow application of the PSD program to major sources of GHGs. In support of this conclusion, the commenter provided the relevant language of the state’s PSD program (LAC 33:III.509), the current SIP language, and the Louisiana Air Control Law. The commenter noted that Louisiana, like most states, must revise its air quality regulations to fully address regulation of GHGs under the PSD program, which it plans to do via two rulemakings: (1) adoption of the Tailoring Rule GHG thresholds via fast-track rulemaking anticipated to be final as soon as December 20, 2010, although adverse comments could delay its effective date, and (2) repeal of an item on the Insignificant Activity List that states that

emissions of CO 2 “need not be included in a permit application.” Although the second rulemaking is not anticipated to be final prior to January 2, 2011, the existing provision should not compromise the agency’s ability to regulate GHGs because another provision specifies that “any activity for which a federal applicable requirement applies is not insignificant,” even if it meets the criteria prescribed in the Insignificant Activity List.

Another state agency commenter (0075.1) whos e state (Colorado) was included in the proposed Presumptive Adequacy List affirmed th e agency’s statutory authority to regulate GHG under the PSD and title V permitting programs, and its ongoing rulemaking process necessary to assure appropriate conforming regulatory change s. However, the commenter also recognized that EPA intends, where appropriate and necessar y, to promulgate a rule narrowing existing PSD and title V permitting authorities in SIPs by January 2, 2011, serving to rescind previous SIP approvals to the extent those PSD programs would apply to sources below the Tailoring Rule thresholds for GHGs and conforming those PSD programs to the Tailoring Rule thresholds. The commenter discussed the rulemaking process in his state, noting that the state will be able to request only conditional approval of its SIP re visions by January 2, 2011, which would create an inconsistency between the revised state rules and the approved SIP. Accordingly, the commenter asked EPA to take any federal SIP actions to narrow or curtail the state’s GHG threshold that EPA believes necessary to conform state air permitting regulations to the Tailoring Rule thresholds as a matter of state law by the end of December 2010.

Another state agency commenter (0078.1) indicated that his state (Indiana) is currently undertaking rulemaking to revise state rules in order to regulate GHGs and establish the applicability thresholds and definitions of the Tailoring Rule. The commenter noted that his state’s rule amendments will not become effective until at least March 2011, but the state will undertake emergency rulemaking as an interim measure to be effective on January 2, 2011, in7 – States on Presumptive Adequacy List

65 order to provide adequate time to complete the formal rulemaking process. The commenter added that the expiration of the emergency rulemaking and effectiveness of the permanent rule amendments will coincide to provide a seamless transition and ensure that the state has the proper authority to implement PSD and title V programs for GHGs. The commenter stated that his state’s authority for issuing PSD permits for GHGs (once the rule is revised) is primarily found in Indiana Code Section 13-15-2-2(e) which states that the boards (including the Indiana Air Pollution Control Board) may adopt rules to allow the department to issue permits when the rules adopted are consistent with federal law for federally authorized or delegated permit

programs.

Response:

These state commenters have reiterated that their SIP PSD programs apply to GHGemitting sources and they confirmed to EPA their intent to have a process in place in their states to issue permits as of January 2, 2011, thereby confirming that EPA does not need to include these states in the SIP call. Regarding the comment on narrowing the permitting authorities, EPA is in the process of promulgating rules to narrow its SIP approval of both the PSD and title V programs as they apply to GHGs. These rules are scheduled for promulgation at the end of December 2010.



### 7.2 Does the PSD Program Cite to Pollutants “Subject to Regulation”?

Comment:

One state agency commenter (0059.1) confirme d that the definition of “regulated NSR pollutant” in his state’s (Louisiana’s) PSD pr ogram (LAC 33:III.509) refers to “any pollutant that otherwise is subject to regulation under the Clean Air Act.” The commenter noted, however, that this language has not yet been approved into the SIP by EPA. Nevertheless, the commenter stated that it does not appear that the current SIP prohibits issuance of PSD permits to new major stationary sources or major modifications with significant GHG emissions.

Response:

Based on the comment received and other information collected by EPA, it appears that Louisiana’s PSD program allows for the issuance of PSD permits to GHG-emitting sources.66 

## 8.0 Other Comments

Comment:

Four industry commenters (0068.1, 0069.1, 0070.1, 0082.1/0099) indicated that EPA should issue SIP calls to states who will have authority to regulate GHGs under PSD by January 2, 2011, but will not be able to adopt the Tailoring Rule thresholds by that date. The commenters believe that these states represent a much larger problem than those states that will not have PSD authority for GHGs by that date.

One of the industry commenters (0070.1) noted that according to the “60-day letters,” nearly every state will need to revise either their PSD program regulations or their title V regulations, or both, in order to add GHGs and tailor their rules to meet EPA’s new regulations, and only roughly half of these states believe that they can complete such rulemaking by January 2, 2011. The commenter asserted that, if EPA does not concede (as the commenter believes it should) that the Act provides for a transition period for states to adopt regulations for GHG sources, EPA must publish proposed findings of SIP inadequacy for the states with approved PSD SIPs that would cover GHGs at the existing major source thresholds of 100/250 tpy and at a significance threshold of “any” (unless the state has demonstrated that it has the resources to administer such an expansive program).

Two of the industry commenters (0068.1, 0069.1) indicated that EPA should be addressing the severe regulatory and economic consequences in states that interpret their SIPs to allow GHGs to trigger PSD at the 100- or 250-t py level or that have no significance level for GHGs, particularly given that these states will clearly not have adequate personnel and funding as required by section 110(a)(2)(E) of the Act to administer their PSD programs. Based on the proposed rules, the commenters believe that EPA has not fully considered the effect of its recent rulemakings on states and other jurisdictions that have indicated the 100-tpy CO 2 e and 250-tpy

CO 2 e thresholds apply to determine if GHGs trigger PSD under their SIP rules. One of the commenters (0068.1) stated that EPA’s failure to consider these extreme administrative burdens is inconsistent with the Act and is arbitrary, citing Am. Wildlands v. Kempthorne , 530 F.3d 991, 997-98 (D.C. Cir. 2008) (quoting Motor Vehicle Mfrs. Ass’n. v. State Farm Mut. Auto. Ins. Co.

, 463 U.S. 29, 43 (1983)).

These commenters (0068.1, 0069.1) stated that according to the letters submitted to EPA by state and local permitting agencies, more than a dozen agencies implementing CAA permitting requirements will need to revise their regulations to incorporate EPA’s tailored thresholds for GHGs and may be unable to do so before the Tailoring Rule’s January 2, 2011, effective date, after which these agencies could be overwhelmed by permit applications from many newly covered emissions sources, essentially halting construction within the agencies’ jurisdictions. One of the commenters (0068.1) pointed out that even if a jurisdiction is able to revise its rules in time, until EPA issues final SIP approval, the existing approved SIP remains8 – Other Comments

67 enforceable by EPA and citizens (citing General Motors Corp. v. U.S. , 496 U.S. 530, 540 (1990)), which could leave the existing thresholds in effect for months.

One of these commenters (0069.1) indicated EPA should be focused on addressing the problem of states regulations that retain the st atutory PSD thresholds for GHGs rather than the comparatively minor issue of whether a state that will not face this onslaught can include GHG emission limits in a few permits each year. This commenter opined that EPA can hardly claim that states that can issue PSD permits at these lower thresholds do not have a “substantial inadequacy” when it claims that the inability to affect one or two permits per year does constitute such an inadequacy, yet EPA has included these states on its list of states with presumptively adequate SIPs. The commenter noted that the state legislative and administrative revision processes will take time, and asserted that during this period the affected states would suffer catastrophic economic damage due to an irresolvable backlog of PSD permit applications from GHG emissions sources above the applicable 100-tpy CO 2 e and 250-tpy CO 2 e thresholds. Because of the severity of these consequences, and because EPA’s own rulemaking actions have led the states on the Presumptive SIP Call List into this quandary, the commenter believes EPA has a responsibility to consider the full economic impact of this problem on the potentially

affected states.

The other of these industry commenters (0068.1) stated that the onslaught of new permit applications could bring construction to a standstill in affected jurisdictions, including projects that promote reduction of GHGs overall. This commenter indicated that EPA has failed to analyze the economic impacts of its actions despite the purpose of the Act to balance air quality with a productive society per CAA section 101(b)(1). The commenter asserted that EPA has also ignored the potential impacts on other national policies, such as promotion of use of renewable fuels that may be significantly affected by new permitting requirements and permitting delays.

Another of the industry commenters (0082.1/0099) similarly stated that neither proposal addresses the issue of states that must adjust their thresholds to be in conformance with the Tailoring Rule, which likely must go through the same process for changing threshold levels as for adding GHG as a regulated pollutant. The commenter believes there are likely some states caught in this situation, but no relief is provided to them or to those sources that must obtain permits in those states – SIP calls will be issued only to those states that do not or cannot regulate GHG, not to those states that must amend their threshold levels. As an example, the

commenter noted that Missouri indicated that it is authorized under state law to regulate GHG but that it must amend its regulations to apply tailoring rule thresholds to NSR/PSD permitting. Missouri indicated that it might be able to issue an emergency regulation to accomplish this, but an emergency regulation is only valid for 6 months, while permanent regulations take 12- 18 months to promulgate. The commenter concluded that Missouri will at some point not be in compliance with federal rules, but will not face a SIP call because it has authority to regulate GHG. The commenter believes these concerns will become reality in at least some states, with8 – Other Comments

68 small entities like farms, schools, hospitals, churches, and single family residences becoming subject to PSD and title V permitting requirements unless or until the state has had an opportunity to amend its law to conform to Tailoring Rule thresholds.

Response:

These comments have no legal relevance to the SIP call because the states that are the focus of these commenters are not subject to the SIP call. We wish to note, however, that EPA is addressing expeditiously and comprehensively precisely the problems identified by the commenters. See section IV.D.1 of the preamble to the final rule for additional discussion of this

issue.

Comment:

Two industry commenters (0068.1, 0069.1) indicated that states interpreting their minor NSR programs to regulate GHGs at existing permitting thresholds will not be adequately staffed or funded because most SIPs use similar definitions of the types of pollutants that trigger major and minor NSR but impose a lower threshold for triggering minor NSR (in some cases as low as 2 tpy). The commenters noted that while the minor NSR control level may be less stringent, these permits still need to be processed, and many especially small sources of GHGs would require emissions permits, even though they had not required construction or operating permits previously. One of these commenters (0069.1) stated that the regulatory and legislative revisions necessary to resolve states’ minor source permitting issues will not be ready by the Tailoring Rule’s January 2, 2011, effective date and likely not until the summer of 2011. This commenter asserted that many states would face regulatory gridlock and pure chaos for small sources that have never been in the program before, and that this gridlock would have the ripple effect of slowing down permit processing for larger sources trying to implement projects that provide economic growth. The other of these commenters (0068.1) likewise stated that EPA has failed to consider the potential ripple effects of minor source permitting on major source permitting.

Response:

This SIP call rulemaking does not concern minor NSR and as a result, commenters’ comments are not relevant to this rulemaking. In any event, EPA stated in the proposed Tailoring Rule that we did not consider mi nor source NSR a concern because CAAsection 110 does not require states to apply minor-source NSR to non-NAAQS pollutants. We have not heard from states that even if they had authority to interpret their rules to apply minor NSR requirements to GHG-emitting sources, the states are in fact interpreting their rules in this

manner.8 – Other Comments

69 Comment:

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

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

under each RIN.

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

The same industry commenter (0056.2/0063.1/0100.1) expressed concern that in spite of the interdependence of the two actions, EPA may a ssert that the two final rules are two separate and independent proceedings with two separate and unrelated rulemaking records. The commenter stated that EPA’s segmentation of earlier GHG rulemakings into discrete and unrelated proceedings denied the regulated community and states the opportunity to engage fully in the rulemaking process. The commenter urged EPA to agree that the two proposals should be treated as a single rulemaking with one rulemaking record.

Response:

EPA asserts that the GHG SIP call and GHG FIP rulemakings, while proposed as companion rulemakings, are two separate proceedings with two separate rulemaking records. Expecting that comments on the two rulemakings would be interrelated, we established a common docket for the rulemakings. We are considering the comments relevant to the SIP call in this action, and we will consider the comments relevant to the FIP in the FIP action. As an aside, we note when EPA issued the endangerment finding and the cause or contribute finding regarding GHGs in 2009, those two distinct findings also shared a docket.

Comment:

An industry commenter (0056.2/0063.1/0100.1) requested that EPA include in the docket for the SIP call and FIP rulemakings the state comments on the Tailoring Rule concerning the administrative and staffing resources and capabilities of the states to issue timely permits and provided a list of the relevant documents. The commenter noted that EPA has refused a request from Senator Imhofe to include these comments in the docket for these rulemakings and called EPA’s rejection of the request and decision to instead post the comments on the EPA web site unreasonable and arbitrary.8 – Other Comments

70 The commenter (0056.2/0063.1/0100.1) asserted that information in these state comments regarding their capability to implement PSD for GHG sources must be considered by EPA in the current rulemakings. The commenter believes, however, that in their attempts to quantify the staffing and other resources that they would need for the Tailoring Rule, the states were forced to underestimate the necessary staffing and resources because they did not have EPA’s relevant GHG BACT guidance available to them at the time they made the estimates.

Response:

Comments on the Tailoring Rule and the state’s capacity to implement the Tailoring Rule are not germane to this rulemaking. State responses to this, the SIP call rulemaking, have been

included in the docket.

Comment:

An industry commenter (0056.2/0063.1/0100.1) reque sted that EPA extend the comment period for the SIP call proposal to October 14, 2010, because a public hearing was requested on the companion FIP proposal and the comment period for the FIP proposal had been extended to October 14, 2010. The commenter noted that since the proposals share a common docket, differing only in RIN numbers, both comment periods should have been extended.

Response:

Although the SIP call and FIP as companion rulemakings share a common docket, each is a separate rulemaking with its own comment period, and the comment period end dates were provided in separately published notices. We extended the comment period end date for the FIP proposal due to procedure, related to the timing of the public hearing held on the FIP proposal. We do not see why doing so would justify an extension of the comment period end date for the

SIP call.

Toward developing this final rulemaking, we a cknowledge receipt of very late comments (with a receipt date closer to the date of prom ulgation than to the comment period end date), and they are identified in Table 1 of this RTC under identification numbers 0116 through 0117. We could not consider and address those very late comments in this rulemaking.

Comment:

One industry commenter (0056.2/0063.1/0100.1) stat ed that when EPA initiated the SIP call and FIP rulemakings, the prior LDVR and Johnson Memo Reconsideration rulemakings became joined with this docket and their legal merits and application to the proposals placed into issue in this proceeding, where they must be addressed by EPA independently from the legal challenges pending in court. The commenter went on to argue that EPA’s failure to consider the8 – Other Comments

71 full impact of the two prior rulemakings on states and stationary sources was arbitrary and that EPA must consider those impacts in the current rulemakings.

Response:

We disagree with this comment, and we are not reopening any of the issues addressed in the LDVR and Johnson Memo Reconsideration actions. It is frequently the case that an agency conducts a rulemaking that is based to one degree or another on actions or interpretations of the agency in a prior rulemaking, but that does not mean that the later rulemaking necessarily reopens the issues in the prior rulemaking or is unreasonable if it does not do so. If that were the case, then many issues addressed by agencies would remain unresolved for lengthy periods of time Therefore, EPA was not obliged to, in effect, reconsider the LDVR and Johnson Memo Reconsideration in this action. By the same token, EPA was not required to consider any impacts of the prior actions on states and stationary sources.

Comment:

One state agency commenter (0078.1) indicated that while his state (Indiana) is undertaking the rulemaking necessary to incorporate the Tailoring Rule into state law by January 2, 2011, the state does not agree with EPA’s legal interpretation of the Act and the PSD program which have led to the regulation of GHG emissions from stationary sources within the

framework of NSR.

Response:

We appreciate that the commenter's state will have its permitting authority in place by January 2, 2011. The legal basis for PSD applicability to GHG-emitting sources is not relevant to this SIP call action and EPA is not reopening that issue in this action, although, for background information, we describe that legal basis in the preambles to both the proposed and final SIP call rules.

Comment:

One state agency commenter (0079.1) noted that there was a call for information (CFI) to

solicit data on technical issues with the combustion of biomass as a fuel and these emissions with respect to PSD applicability and the BACT review process. The commenter indicated that there are currently no major sources in his state (Wyoming) that use biomass as a fuel and, therefore, the agency’s experience is limited in this area.

Another state agency commenter (0086.1) expr essed frustration at EPA’s failure to exempt biomass combustion facilities from the new GHG permitting requirements. Despite EPA’s opinion about the carbon neutrality of biomass combustion facilities, the commenter believes that these facilities do displace emissions from traditional fossil fuel combustion8 – Other Comments

72 facilities by burning forest slash and fallen trees that might otherwise be wasted. The state sees great opportunity in expanding the number of biomass combustion facilities and associated jobs within the rural areas while taking advantage of the clean, renewable energy byproducts of an effective forest management program. The co mmenter asserts that EPA’s approach creates disincentives for industries to consider economically viable renewable alternatives to fossil fuels.

One industry commenter (0068.1) stated that EPA should resolve issues related to the proper regulation of biogenic emissions of GHGs before requiring states to impose burdensome requirements on sources of biogenic emissions.

One environmental group commenter (0104.1) noted EPA’s explanation that biomass combustion will influence PSD applicability decisions, citing 75 FR 5388 and 53902. The commenter expressed the expectation that EPA’s recent call for information on this matter will help shape the agency’s approach, and attached comments submitted by many of comment cosigners in response to that call.

Response:

The topic of biomass and other biogenic sources of GHG emissions is not germane to this action. For purposes of background information, we noted the topic in the preamble to the proposed rule. We did not solicit comment on this topic. For further background information, we also address the topic in section III.B.2 of the preamble to the final rule, as well as in our recently released guidance, "PSD and Title V Permitting Guidance for Greenhouse Gases."

Comment:

One individual commenter, an environmenta l consultant (0048.1), stated that EPA misrepresents the need for PSD control of GHGs. The commenter indicated that EPA has always quoted the IPCC AR 4 and added that the quoted report is known for errors. The commenter believes that such reliance by EPA on other people's work shows that EPA has no expertise in climate science and in GHG, in particular, or that EPA is reluctant to make an affirmative statement that they cannot support on the witness stand.

Response:

The issues concerning the science of climate change are not germane to this rulemaking and EPA is not reopening those issues here. As background information, EPA has made its views on the science of climate change known in the endangerment finding, "Endangerment and Cause or Contribute Findings for Greenhouse Ga ses Under Section 202(a) of the Clean Air Act," 74 FR 66496 (December 15, 2009); and EPA responded to arguments similar to those made by the commenter in its response to stay motions in the GHG litigation, “EPA's Response To Motions To Stay," Coalition for Responsible Regulation v. EPA , No. 09-1322 (and consolidated cases), 20-39.8 – Other Comments

73 Comment:

One private citizen commenter (0062) stated that Virginia’s Attorney General Ken Cuccinelli’s suit to avoid meeting the new CAA standards to control GHGs (causing Virginia to likely be one of the states that will not have a corrective SIP), is intended to gain notoriety for himself and protect Virginia’s biggest air polluters. The commenter supports the Tailoring Rule

and EPA’s efforts to reduce CO 2 and other GHGs through the proposed permitting process. The commenter provided examples of pollution of both water and air by corporations in the state of Virginia, and Virginia’s leniency in allowing it. The commenter, therefore, urged EPA to push ahead with its permitting process to control CO 2 and other GHGs.

Response:

EPA appreciates the commenter’s concern. However , we note that Virginia is not a state subject to this action as it has adequate authority in its current SIP to issue PSD permits to sources of GHG emissions.

Comment:

One industry association commenter (0064.1/ 0096.1) believes that Congress should craft national climate legislation. The commenter stat ed that EPA’s GHG rulemakings, if structured appropriately, could provide a useful national fram ework for federal actions that could avoid the difficulties likely to arise under a patchwork of state and regional regulatory programs. However, the commenter indicated, the PSD permitting program is not an effective mechanism for GHGs, and if EPA is going to regulate GHGs , EPA should regulate them under section 111 of the Act. (Comment 0096.1 contains additional detail on the commenter’s recommended approach.) Although the commenter disagrees with EPA’s interpretation of its authority to regulate GHGs under PSD, the commenter supports EPA in its general effort to harmonize state permitting programs with the Tailoring Rule.

Response:

EPA appreciates this comment, although it does not require a response because the other GHG rulemakings and regulation of GHG emissions under section 111 of the Act are not the subject of this rulemaking.

Comment:

Various commenters included with their comments, or incorporated by reference, their comments on other GHG rules. For example, Texas attached copies of its request for a stay of the Tailoring Rule and its request for a stay of the Endangerment Finding, the Johnson Memo Reconsideration, and the LDVR. One industry commenter (Coalition for Responsible8 – Other Comments

74 Regulation; 0088.1) adopted by reference and included in this docket the comments filed on both the Tailoring Rule and the Johnson Memo Reconsideration, as well as the commenter’s motion to stay those and other rules as now pending with the D.C. Circuit Court of Appeals (see comment attachments 0088.2-0088.30).

Response:

Those comments are not germane to this rulemaking and, as a result, EPA is not addressing them. However, EPA notes that it responded to those comments in those other

actions.