1

**AMENDMENTS TO DELEGATION OF AUTHORITY PROVISIONS IN THE PSD PROGRAM**  **(SAN 5486) DOCKET NO. EPA** 
**- HQ** 
**- OAR** 
**- 2010** 
**- 0943**  **Response to Comments**

**Commenter Key:** Commenter 0002 Anony mous Public Comment
Commenter 0003 C. Kollm
Commenter 0004 Harold “Gus” Frank, Chairman Forest Count y Potawatomi Community (FCPC) P.O. Box 340 Crandon, WI54520
Commenter 0005 Alex Jackson, Air Program Coordinator Resource Management

- Environmental Program Fond du Lac Band of Lake Superior Chippewa 218

- 878

- 7112
Commenter 0006 Mark R. Yingling, Vice President

- Environmental Peabody Energy Company Peabody Plaza 701 Market Street St. Louis, MO 63101 314

- 342

- 34002

**COMMENT ER 0002** 

**–** Rules & Regulations are the very important for society

and people. http://www.sankalptech.com ; http://www.mlmsoftwareindia.in
**RESPONSE**

**–** Thank you for your comment. We agree that rules and regulations are important and this rule ame ndment is necessary to update outdated language and correct an oversight

. **COMMENT ER**  **0003**

**–** I think that this proposed rule to delete restrictions on tribal governments from taking control of PSD programs is an extremely practical rule. This rule reflects the input of the regulated community , which implies collaboration and a buy - in from an important stakeholder. Deleting the restriction is a strong example of how a procedural limitation influences the substantive options of the regulate d, which in turn, may influence the quality

of the program as a whole; now an entire new group of tribes is able to use an existing regulatory tool to fight air pollution. Additionally , the correction of erroneous language that proved to be problematic is a responsible use of an agency rule. It is especiall y important that the local governments are empowered to incorporate the needs of their community in a regulation schemes because of the unique nature of air pollution. Namel y, we are all stakeholders in o ur nation’s air because of air currents and weather patterns. Ensuring that all who wish to be involved in the fight to clean up our nation’s air are afforded that opportunity is essential to our future. It appears to have been an oversight that tribes wer e excluded from the rule in the first instance and not placed on equal footing with other local entities. From the proposed rule it seems that the regulated community has been involved in this process, however I’m concerned about how the agency

intends to provide outreach to other tribes that may not have been involved in the process. Further, while delegating this authority is responsible and practical, it would be irresponsible and counterproductive to delegate the authority without providing additional s upport during the transition to those that require it. This rule does not address if tribes are adequatel y equipped to manage a PSD program or if additional support will be given if needed. Hopefull y, there is already a regulatory structure in place to do just that

. **RESPONSE**

**–** Thank you for your comment s . We agree that this rule is important to increase opportunities for involvement of interested tribes in air program implementation . It is designed to eliminate a prior limitation on tribal involvement and expand the Agency ’s ability to work with interested tribes on implementation of the federal PSD program

. Following promulgation of this rule, we intend to hold conference calls and additional trainings to assist tribes in the delegation process. **COMMENT ER 0004** 

**–** The Forest Potawatomi Community ( “ FCPC ” or “ the Tribe ” ), a federally recognized tribe located in northern Wisconsin would like to thank the EPA for the opportunity

to comment on EPA’s proposed amendments to Delegation of Authority provisions in the Prevention of Significant Deterioration Program (PSD) (40 CFR Part 52.21). FCPC supports the delegation opportunities available for tribes under the proposed amendment changes. This action will enable EPA to delegate the Federal PSD program to intere sted Indian tribes and will provide appropriate opportunities for those tribes to seek delegation over relevant sources and modifications in their areas. This action is consistent with existing PSD regulatory requirements, which already provide for delegation of the administration of the program to tribes. Moreover, this action supports tribal self

- governance, a matter of significant importance to tribes.3

**RESPONSE**
**-** Thank yo u for your comments. We agree that this rule is important to increase opportunit ies for involvement of interested tribes in air program implementation . It is designed to eliminate a prior limitation on tribal involvement and expand the Agency ’s ability to work with interested tribes on implementation of the federal PSD program

. **COMME NTER 0005** 

**–** The Fond du Lac Reservation was established b y the Treaty of LaPointe (1854) between the Lake Superior Chippewa and the United States Government, with established boundaries located in Northeastern Minnesota. The Fond du Lac Band (“the Band”) has an active environmental program, and was granted Treatment as an Affected State for air quality in 2004. On this basis, the Band submits the following comments regarding the U.S. Environmental Protection Agency ’s (“EPA”)’s proposed Amendment to Delegation of Authorit y Provisions in the Prevention of Significant Deterioration (PSD) Program, dated December 30, 2011, in the Federal Register Volume 76, Number 251. The 1977 Clean Air Act (CAA) included a provision to exclude tribes from taking delegation of the PSD program. The creation of the Tribal Authority Rule (TAR) allows for tribes to take delegation of most elements of the Act if they choose to. The Federal Implementation Plan (FIP) also is used to address permitting in Indian country for non

- attainment areas and small sources allows for tribes to take delegation of other permitting responsibilities. This rule removes the barrier for tribes to take delegation of the PSD program. Furthermore, the proposal and eventual passing of this amendment to the PSD program will give tribes the ability to enact their own PSD program if they

so choose. It is another delegation of authority that helps ensure self governance for tribal communities. The Fond du Lac Band supports President Obama and the Administrator in their pursuit of equality and of fulfilling the United States’ trust responsibilities to the tribes.
**RESPONSE**
**-** Thank yo u for your comments. We agree that this rule is important to increase opportunities for involvement of interested tribes in ai r program implementation . It is designed to eliminate a prior limitation on tribal involvement and expand the Agency ’s ability to work with interested tribes on implementation of the federal PSD program

. **COMMENT ER 0006** 

**–** Peabody Energy Company

("Peabody " or "Company ") is the world's largest private sector coal company . Our products fuel approximately 10 percent of America's and 2 percent of the world's generation of electric power. The Company supplies approximately 340 electric utility

and industrial cust omers in about 40 states and 19 countries. In the United States, Peabody companies operate a number of surface and underground mines in the I llinois Basin that collectively

produce about 32 million tons per year. Peabody companies also operate three large surface coal mines in the Powder River Basin of Wyoming that produce about 150 million tons per year; an underground coal mine in Colorado that produces about 8.6 million tons per year; and three surface coal mines in the Southwest that produce about 14 million tons per ye ar. One of Peabody's surface mines in the Southwest is located on tribal lands of the Navajo Nation

. The Navajo Nation currently does not have an EPA

- approved tribal implementation plan for an y programs under the Clean Air Act (CAA ). As a result, CAA programs applicable to the Company 's surface coal mine on lands of the Navajo Nation are administered by EPA.4

EPA Region IX has previously delegated its administrative authority under the part 71 federal operating permit program to Nav ajo Nation Environmental Protection Agency (NNEPA). 69 Fed.Reg. 67,578 (Nov. 18, 2004). In addition, EPA has recentl y promulgated federal new source review (NSR) rules in Indian country , and they contain provisions for EPA's administrative delegation of particular aspects of those rules to tribes. 40 C.F.R. §§ 49.161, 49.173. As a result of Peabody's experiences with EPA's previous provisions for delegation of its administrative authority

under other federal permit programs, Peabody has substantial intere st in and concerns with the Agency 's current proposal. As explained herein, the Company first questions the legal authority under the C AA upon which EPA relies to delegate its federal administrative authority

to tribes. The Company

also believes that the d escriptive details and explanations accompan yi ng EPA's previous prescriptive rulemakings for administrative delegation compel the Agency to do likewise for the instant administrative delegation provision. Peabody also believes that EPA should state expli citly that a tribal agency

with delegated administrative authority

under the federal PSD program must apply the substantive and procedural federal regulations that address those program elements for which the tribe has been given responsibility . In order t o provide clarity and certainty to regulators and regulated alike, EPA should also explain that the C AA prohibits a federal permit issued solely under a tribe's delegated administrative authority to be supplemented by

requirements of non

- federall y enforcea ble tribal regulations. Indeed, such a permit with added requirements based on tribal regulations is no longer only a federal permit. Finally , Peabody

believes the proposed rulemaking must provide for a delegation agreement between EPA and the tribe. Regulatory requirements for the delegation agreement should be clear and explicit, and the associated preambles should expand on those criteria by explaining the legal stature and limitations of such a two

- part y agreement. The regulations should also make clear that eligibility

for treatment as a state (TAS) is not a prerequisite for a tribe to receive EPA's administrative delegation under the federal PSD program. **1. EPA's Proposed Action and Peabody's Support for the Concept**
**.** EPA's original PSD program was promulgated in 1974. 39 Fed. Reg. 42,510 (Dec. 5, 1974) (codified at 40 C.F.R. § 52.21). That federal program provided specific requirements for the "review of new sources" at § 52.21(d) and for "public participation" at § 52.21(e). That federal program also provided for EPA's delegation of its administrative authority as follows: (f) Delegation of authority. (1) The Administrator shall have the authorit y t o delegate responsibility

for implementing the procedures for conducting source review pursuant to paragraphs (d) and (e), in accordance with subparagraphs (2), (3) and (4) of this paragraph. * * * * (4) The Administrator's authority for implementing the procedures for conducting source review pursuant to this section shall not be redelegated , other than to a regional office of [EPA], for new or modified sources which are located on Indian reservations ... 39 Fed. Reg. 42,517 (originally

codified at 40 C.F.R. § 52.21 (f)) (emphasis added). EPA's originall y proposed PSD regulations had been un clear about what PSD functions the Administrator intended to delegate to states. In finalizing those federal regulations, EPA5

therefore explained that "the only functions [of the federal PSD program] which will be delegated to s tates will be the preconstru ction review under paragraphs (d) and (e) [of § 52.21]." Id. at 42,512. The preambles to EPA's PSD rulemaking at that time contained no further substantive discussion of EPA's "delegation of authority ." Those original provisions for EPA's delegation of authority for states to administer federal PSD requirements are codified today at 40 C.F.R. § 52.21 (u). Now, however, EPA proposes to revise those federal PSD regulations in order to allow EPA also to delegate its authority to administer the federal PSD pro gram to interested tribes. For the reasons explained below, Peabody strongly encourages EPA to defer its proposed action until the Agency not onl y explains the legal authority underl yi ng its process for administrative delegation but also provides a clear and complete explanation of the administrative delegation concept, including the relevant limitations on each delegate tribal agency

. Notwithstanding Peabody's reservations with the legal underpinning of EPA's delegation of administrative authority , and no twithstanding the current lack of clarity and consistency

in the Agency 's process for administrative delegation, Peabody strongl y supports EPA's efforts to build tribal capacities for implementing and enforcing C AA programs. Like EPA, the Company believes it is important to provide opportunities to tribes to be involved with the implementation of important CAA programs on tribal lands. Thus, Peabody emphasizes that its doubts about EPA's legal basis for delegating its administrative authority should not be construed as the Company 's opposition to a fundamental concept that provides for tribal administration of portions of the C AA

. **2. EPA Must Explain the Underlying Legal Authority for the Agency's Delegation of Its**  **Administrative Authority.** The Agency 's proposed action raises fundamental questions about the underl yi ng legal basis upon which EPA relies to delegate its authority to administer federal CAA programs. The C AA plainly authorizes the Agency

to approve state regulations developed under state law for administering and enforcing different C AA programs. CM §§ 11 0 (b), 110(k). The C AA also authorizes EPA to treat eligible tribes as states, leading to EPA approval of tribal regulations developed under tribal law for administering and enforcing different CAA programs. CAA § 301(d). Finally , the CAA also requires EPA to develop its own federal regulations for administering and enforcing a CAA program in the absence of EPA

- approved state or tribal regulations for implementing that program. CAA § 11 0 (c).
Howev er, nowhere in the Act is it clear that EPA is allowed to delegate its federal authority to a state or tribe to administer EPA's federal regulations. An EPA notice of proposed rulemaking "must be accompanied by a statement of its basis and purpose[.]" CAA § 307(d)(3). 'The statement of basis and purpose shall include a summary of . . . the major legal interpretations and policy considerations underlying the proposed rule." Id. In the instant rulemaking proposal, however, EPA does not identify any particular legal authority for the Agency 's "administrative delegation" to tribes. Instead, EPA merely states that "we are exercising our discretion to delegate administration of the Federal NSR program to interested and qualified Tribal agencies ... " 76 Fed. Reg. 38,779. Peabody believes EPA's cursory

explanation of the basis for its proposed action falls far short of the statement of basis required by the Act. EPA must identify specific legal authority upon which the Agency

relies to delegate its administrative authority under the PSD program to interested6

tribes. Moreover, as explained below, Peabody believes that § 307(d)(3) also requires EPA to explain its legal interpretation of the scope of a delegate agency 's authorit y under the CAA. **3. Regulations and Ass ociated Preambles that Define and Describe the**  **Administrative Delegation Process Are**  **Necessary**

. EPA first provided a mechanism for delegating its a dministrative authority

to a tribe as part of the federal operating permit program under 40 C.F.R. part 71. Specific regulations addressing the requirements for administrative delegation and how it would be implemented were prescribed. 40 C.F.R. § 71.10. EPA accompanied its proposed rulemaking with more explicit discussions of the regulatory options for such adm inistrative delegation and associated implementation procedures. 60 Fed. Reg. 20,811

- 12, 20,822

- 24 (Apr. 27, 1995). EPA accompanied its final rulemaking with more details about the regulatory

approach selected by EPA and wh y it made that selection and also with more details about procedural issues attendant to administrative delegation. 61 Fed. Reg. 34,215, 34,225

- 26 (July 1, 1996). EPA took the same rulemaking approach when it promulgated provisions for administrative delegation of the Federal Air Rules f or Indian Reservations in Idaho, Oregon and Washington. 40 C.F.R. § 49.122. Again, during both proposed and final rulemakings, EPA's accompan yi ng preambles described how the administrative delegation process would work. 70 Fed. Reg. 18,080

- 81, 18,084, 18,0 86 (Apr. 8, 2005); 67 Fed. Reg. 11,751

- 52 (Mar. 15, 2002). Most recentl y, EPA has provided for administrative delegation in its federal minor new source review program in Indian country , 40 C.F.R. § 49.161, and in its federal major new source review program for nonattainment areas in Indian country , 40 C.F.R. § 49.173. As if to acknowledge that its previous descriptions of the administrative delegation process were incomplete and inconsistent, EPA's preambles to those most recent regulations are chara cterized by more thorough descriptions of how administrative delegation works and how administrative delegation differs fundamentally from program delegation. 76 Fed. Reg. 38,779

- 81 (July 1, 2011); 71 Fed. Reg. 48,721

- 22 (Aug. 21, 2006). EPA's regulation that would authorize administrative delegation to tribes under the federal PSD permit program must be accompanied b y the same types of substantive, preambular discussions that EPA provided with prior administrative delegations under other federal permit programs. Indeed, the PSD regulation itself that provides for administrative delegation should be far more prescriptive, in keeping with those regulatory provisions for administrative delegation of other federal rules as cited above. In short, the approach that EPA has initially taken with the proposed rule in question is wholly unacceptable; it fails to provide the certainty, the clarity and the consistency

that is needed not only

by tribes seeking administrative delegation of PSD rules but also by regulate d entities that would be subject to such delegated authority. **4. The Nature and Extent of EPA's Delegated Administrative Authority Must Be Clearly**  **Defined.** EPA paints its proposed delegation of administrative authority under the federal PSD program as no thing more than "business as usual," explaining that the proposed action is consistent with EPA's existing and well

- established procedures for delegating administration of Federal C AA programs . . . - 40 CFR 71.40) and 71.10 (Federal operating permits), 40 CFR 49.122 (Federal air rules for Indian reservations in the Pacific Northwest), and 40 CFR 49.161 and 49.173 (NSR rules for Indian country).7

76 Fed. Reg. 82,236. While EPA may have existing procedures for "delegating administration of federal CM programs," those existing procedures, contrary to the Agency 's assertion, are far from being "well

- established." Those procedures not only differ substantively

in certain content, but the Agency 's explanations of how administrative delegation works with the di fferent federal programs are often inconsistent and seemingl y conflicting. For example, when EPA first developed federal PSD regulations in 1974, there were no comparable state PSD regulations. See § 52.21(a) at 39 Fed. Reg. 42,514. Consequently , when a s tate was delegated authority under § 52.21 (u) to administer those original PSD regulations, the state obviously

had no alternative but to appl y the same federal PSD regulations that EPA would have otherwise applied. That same fundamental principle applies to EPA's administrative delegations under federal permit programs today . Yet EPA seems reluctant to state explicitly that a delegate agency

must apply

the federal regulations for the permitting functions for which that state/tribal agency

has been delegat ed responsibility

. Until that legal obligation of a delegate agency is identified and explained by EPA, each delegate agency will be left to consider whether it may also apply

its own state or tribal regulations when it exercises its delegated federal administrative authority . The unequivocal answer is “ no"; when acting under EPA's delegation of administrative authority , a state or tribal agency must only a pply the procedural and substantive requirements of the federal program in question. In re West Su burban Recycling and Energy Center, L.P., 6 E.A.D. 692, 703

- 07 (EAB Dec. 11, 1996) (hereinafter “ WSERC").

**a. EPA's**  **Delegation of**  **Administrative Authority Requires the Delegate Agency to Use**  **Applicable Federal Regulations.** EPA has not provided a substanti ve, informative discussion of the administrative delegation concept until the Agency's recent rulemaking for federal NSR rules in Indian country

. EPA's prior discussions of administrative delegation generall y have lacked clarity and consistency

when defini ng the scope of a delegate agency's authority . The following statements within the preamble to the final NSR rules in Indian country , however, speak to a delegate agency's obligation to apply onl y the federal regulations of the federal program functions fo r which the agency has been delegated responsibility :

• “ [U]nder a delegated Federal program, the delegated Indian tribe would be assisting EPA with the administration of Federal requirements on EPA's behalf and under these Federal regulations. 76 Fed. Re g. 38,767 (emphasis added). • “ ... for delegating our Federal authority to states and/or tribes for administering Federal rules under the Act." Id. at 38,779 (emphasis added). • “ [T]he administrative delegation approach finalized in these rules provides for [EPA] to delegate administration of the Federal program operating under Federal law to interested Tribes[.]" Id. at 38,780 (emphasis added). • "The Federal requirements administered by the delegate Tribal agency will be subject to enforcement b y EPA un der Federal law," Id. (emphasis added). • "[A]ny permits issued under the Federal NSR program (even where issued by a Tribe acting on EPA's behalf pursuant to a delegation agreement) remain Federal in character[.]" Id. at 38,782 (emphasis added).8

In sum, when read objectively and in context, several statements in EPA's preamble to the final NSR rules in Indian country make clear that, when exercising its delegated authority to administer a federal C AA program, a tribal agency must onl y appl y the federal re gulations of that program. Left unstated is the important corollary to that legal principle, i.e., that EPA's administrative delegation neither requires nor authorizes the delegate tribal agency's use of any tribal regulations. That latter point was direc tly addressed b y EPA when it developed its regulations for administrative delegation of the part 71 federal permit program. As EPA explained, Two commenters requested that EPA include in part 71 the analogue to section 70.6(b)(2), a provision that requires the permitting authority to identify in the permit an y applicable requirements that are not federally enforceable. The EPA disagrees with this request because part 71 permits will not include any non - federall y enforceable applicable requirements[. ] 61 Fed. Reg. 34,219 (July 1, 1996) (emphasis added). In other words, even when issued b y a tribal agency

having been delegated authority to administer a part 71 program, a part 71 federal operating permit must not contain an y requirements based on tribal regulations. That is not to say

that a delegate tribal agency is prohibited from issuing a joint permit that c ontains both federal permit requirements based on a federal permit regulations as well as tribal permit requirements based solely on "tribal

- onl y" (non

- federall y enforceable) permit regulations. It just means that the federal portion of any joint permit may not contain any requirements based on non - federall y enforceable tribal regulations. See WSREC at 703

- 07. The C AA 's prohibition of tribal regulations in a federal permit, issued by either EPA or a delegate tribal agency , was confounded by other EPA preamble language during the Agency's development of the part 71 federal permit program. When EPA originally proposed the concept of administrati ve delegation of authority to administer a part 71 federal permit program, EPA contemplated one possible regulatory approach whereby

part 71 federal regulations would be "customized" to fit the unique needs of each state or tribal lands where that federal program would be administered. 61 Fed.Reg. 34,213. That candidate approach to part 71 envisioned that each state or tribe would have its own EPA

approved part 71 federal permit regulations and that EPA would need a "national template" onl y to fill in the gaps of deficient state or tribal part 71 programs. Id. Against that background for one potential approach where each state or tribe would have its own "customized" federal operating permit regulations, EPA explained that: The EPA would not demand that ea ch delegate agency administer a part 71 program in precisel y the same way because each delegate agency would have to comply

with its own procedures , a dministrative codes , regulations , and laws as well as the requirements of this part [71 ]. 60 Fed. Reg . 20,823 (Apr. 27, 1995) (emphasis added). When EPA's statement above is read out of context, one would conclude that a delegate agency administering a part 71 program would need to rel y on its own procedures, administrative codes, regulations, and laws. That conclusion9

is erroneous, however, because EPA's final part 71 federal program was not based on an individualized or "customized" approach for each state or tribe as originally contemplated. Instead, EPA's ultimate design of its part 71 program was based on a "national template" approach whereb y the same basic federal program would be applied b y EPA and b y each delegate agency . EPA's choice of a "one

- size

- fits

- all" regulation for part 71 therefore obviated the need for each delegate agency to have its "own procedures, administrative codes, regulations, and laws" to administer its delegated responsibilities. Instead, the delegate agency needed onl y to use the uniform federal regulations of part 71. Just like EPA does for administrative delegations under th e part 71 federal operating permit program and the part 49 federal regulations for NSR in Indian country as well as for particular federal rules for certain Indian reservations in the Pacific Northwest, EPA's pending administrative delegation to a tribe un der the part 52 federal PSD program will require the delegate agency

to appl y the substantive and procedural regulations of the federal program. EPA must make the scope of that proposed administrative delegation to tribes completely clear.
**b. EPA's Delega**  **ted "Program Authority" Requires the Tribal Agency to Use Applicable EPA** 
**** **approved Tribal Regulations.** EPA's description of administrative delegation during its rulemaking for NSR in Indian country was undoubtedly

clearer than its past descriptions due to the Agency's juxtaposition of that delegation concept with the contrasting concept of "program delegation." In particular, EPA provided the following explanations about program delegation: • Program delegation is implemented with the Treatment

- As

- a - State (TAS) process under the Tribal Air Rule (TAR) whereb y EPA approval is required for the tribe to run a C AA program under tribal law. Id. at 38,780 (emphasis added). • "Where we [EPA] approve a Tribal eligibility application and approve a Tribal NSR program, the approved Tribe will manage the program under Tribal law and the Tribal program becomes Federall y enforceable." Id. (emphases added). In other words, when EPA approves a "program delegation" for a tribe, the Agency approves the tribal program (tribal regulations) developed under tribal law as satisfying all pertinent requirements of the C AA . The tribal agency is thus authorized to run that tribal program under the C AA rather than to run the federal program (federal regulations) as a delegate agency on EPA's behalf.

**c. Conclusion** 
**.** Aside from "administrative delegation" and "program delegation," EPA does not have a third delegation concept whereby a federal permit issued solely under a delegation of administrative authority

may nevertheless be supplemented with tribal requirements based on tribal

- only

(non

- federally enforceable) regulations. Therefore, EPA must take the existing uncertainty out of its administrative delegation process, so a delegate agency knows the limits on its federal authority

and af fected permit applicants have certainty about how their actions will be regulated. In particular, EPA should state succinctl y that a tribal agency which has been delegated administrative authority

must apply

only the federal regulations applicable to the federal requirements which the tribe has been authorized to administer. EPA should further state clearly that a tribal agency

which has been delegated program authority must apply onl y the tribal10

regulations developed under tribal law for the EPA

- approved tribal program. Simply put, a delegate tribal agency's administration of a federal C AA program does not rely on tribal regulations, and administration of an EPA

- approved tribal C AA program does not rel y on federal regulations.
**5. The Nature and Extent of Required Tribal Authority for a Delegate Agency Must**  **Be Clearly Defined.** Inseeking EPA's administrative delegation under the part 71 federal operating permit program, a tribe must submit a legal opinion "stating that the laws of the ... Indian tribe prov ide adequate authority to carry out all aspects of the delegated program." 40 C.F.R. § 71.1 0 (a). One tribe interprets that provision as "a federal requirement for tribes to have their own authorities to administer the p art 71 program, including authorities for permit p rocessing, monitoring and reporting, and permit enforcement." In re Peabody Western Coal Company, CAA Appeal No. 11

- 01 (EAB May 16, 2011) (Petition for Review, Ex. I(NNEPA Responses to Comments on Draft Revised Part 71 Permit and Draft Revise d Statement of Basis, 9 (Feb. 28, 2011))). Peabody believes that interpretation vastly over - states the actual tribal authority required for a tribe to be delegated federal administrative authority

. EPA's more recent rulemaking for administrative delegatio n under the federal NSR rules in Indian country

confirms the Company 's opinion. In lieu of requiring a tribe to have "adequate authority to carry out all aspects of the delegated program," EPA's latest administrative delegation provision only requires "a d escription of the laws of the Tribe that provide adequate authority to administer the Federal rules and provisions for which delegation is requested." 40 C.F.R. § 49.161(b)(1)(C) (emphasis added). EPA's latter language concerning the scope of tribal authority needed b y a tribe seeking administrative delegation makes clear that the delegate agency will be "administer[ing] the Federal [part 52 PSD] rules and provisions" and not an y separate tribal permitting regulations. Moreover, EPA's discussion of administrative delegation under federal NSR rules in Indian country makes clear that the delegate tribal agency will have no enforcement authority for the federal rules that it will administer. 76 Fed. Reg. 38,780 ("The Federal requirements administered by the delegate Tribal agency will be subject to enforcement by EPA under Federal law."). Peabody believes that substantial uncertainty currently exists among tribes and regulated entities about the nature and extent of tribal authority required of a tribe seeking administrative delegation under a federal permit program. Just as EPA has done with its federal NSR rules in Indian country , the Agency's administrative delegation provisions in the federal PSD rules must clearl y explain that tribal law needs onl y to authorize the applicable tribal agency to administer the federal PSD rules and provisions for which it is delegated responsibility. **6. A Requirement for a Delegation Agreement Is Appropriate and Necessary.** Consistent with EPA's regulations for adminis trative delegation of other federal rules, the proposed rule must require a delegation agreement between EPA and the delegate tribe. That proposed regulatory

provision and the accompanying preamble must clearl y describe what the delegation agreement does and does not do. In particular, the delegation agreement should identify the specific federal PSD rules that the delegate tribe will have the responsibility for administering. The delegation agreement should also explain that EPA is not delegating an y fede ral enforcement authorit y. The delegation11

agreement should be so explicit as to explain that the delegate agency "acts in EPA's shoes," administering the delegated provisions as EPA would otherwise do. EPA must also explain that the delegation agreement d oes not constitute rulemaking under the CAA, and therefore an y provisions of the agreement are not binding against third parties, i.e., those provisions are not enforceable against any source. EPA must further explain that any conflict between a provision in the federal PSD regulations and its counterpart in the delegation agreement will be governed by the PSD rules. In sum, a delegation agreement is an integral component of any EPA administrative delegation to a tribe. A delegation agreement must be requi red by the instant rulemaking, and that agreement must clearl y define the precise limitations on the federal authority and scope of responsibility of any delegate tribe. **7. Tribal Eligibility for Treatment**  **as a State Is Not Required for Delegation of**  **Administrative Authority.** Tribes do not need to seek treatment as a state (TAS) under the tribal air rule (TAR) in order to request EPA's delegation of administrative authority for particular federal NSR rules in In dian country . 76 Fed. Reg. 38,780. Howev er, tribes requesting EPA's delegation of administrative authority for particular federal operating rules must first obtain TAS eligibility . 40 C.F.R § 71.10(a) (Administrator may delegate authority

to administer a part 71 operating permits program to an " eligible" Tribe). Peabody believes this substantive difference in the two processes for administrative delegation is due to EPA's recognition, after promulgation of § 71.10(a), that eligibility for treatment as a state is not a prerequisite for EPA's admi nistrative delegation to a tribe. Peabody, therefore, believes that the preamble to the instant rulemaking must clearl y explain that a tribe seeking administrative delegation of part 52 federal PSD rules does not have to demonstrate eligib ility for treatme nt as a state. In closing, Peabody thanks the Agency for this opportunity to review and comment on the proposed rulemaking that would allow EPA to delegate its administrative authority under the part 52 federal PSD program to tribes. Peabody supports the basic concept underlying the proposed action, i.e., to assist tribes in building greater capacities to implement and enforce CAA programs on lands of those tribes. Peabody cannot, however, endorse EPA's proposed approach for doing so because it does essent ially nothing more than delete some regulatory language and add a little new regulatory language. Substantive regulatory provisions for implementing EPA's administrative delegation to tribes under the federal PSD program are missing. Clear and consistent p reambular explanations of the individual regulatory provisions and the basis for them are likewise missing. EPA must understand that a cloud of confusion and uncertainty continues to hang over EPA's administrative delegation process. If EPA intends to pro mulgate an effective and understandable regulation for delegating administrative authority under the federal PSD program to tribes, then EPA has substantial work left to do before finalizing that regulation. The existing proposal glosses over all important legal and administrative principles related to the Agency 's administrative delegation process, thus failing to satisfy the fundamental statutory requirements for rulemaking under section 307(d) of the CAA. Given the significant omissions12

and deficiencies in the proposed rule and accompanying preamble, Peabody believes EPA has no recourse but to issue a supplemental proposal that addresses the various concerns expressed herein.
**RESPONSE**

**– Issue 1** 

**– Support** 

**– The**  **EPA appreciates the commenter’s** s trong support for efforts to build tribal capacity

for implementing and enforcing CAA programs and recognition of the fact that it is i mportant to provide tribes opportunities to be involved in implementation of CAA programs in Indian country

. The EPA addr esses the issues raised by the commenter in turn below.
**Issue 2**

**– Legal authority for administrative delegation** 

– Section 301 (a) of the Clean Air Act (the Act) , authorizes the Administrator to “prescribe such regulations as are necessary to carry out [her ] duties under [the Clean Air Act].” 42 U.S.C. §7601(a)

. The Administrator’s duties under the Clean Air Act include establishing a Federal Implementations Plan for issuing PSD permits where a state lacks an approved PSD program in its SIP. 42 U.S.C. 7410( a)(2)(C); 7410(c). Carrying out that duty is facilitated b y having a mechanism through which state, local and tribal governments can appl y to the EPA for authorization to administer the federal PSD permitting regulations on behalf of the EPA. Th is ty pe of a delegation to state and local air pollution control agencies serves both to conserve Agency resources for use in implementing the PSD program and various other provisions of the Act and encourages state and local agencies which have not otherwise obtain ed approval of a state implementation plan (SIP)

- based PSD program to nevertheless take on certain implementation responsibility by assisting the EPA with administration of the Federal PSD Program through the delegation

. The Administrator previously exerci sed its section 301(a) rulemaking authority for this purpose in establishing what is now 40 C.F.R. 52.21(u) authorizing the administrative delegation of the Federal PSD Program (40 C.F.R. 52.21) to state and local agencies. The same rationale applies equal ly to administrative delegation of the Federal PSD P rogram to tribal governments. In fact, there is even greater reason to allow tribes to accept delegation of the Program as it will assist them in developing the capacity needed to establish and implement their own programs in the future should they choose to do so. As a result, and as explained in the preamble to the proposed rule, the Administrator is exercising authorit y under §301(a) to enable tribal governments to assume this authority and remov ing a restriction in existing regulations on the delegation of the Federal PSD P rogram to tribal agencies

. By

establishing this mechanism for carrying out the Administrator’s duties through rulemaking, the EPA ’s action is fully consistent with Congress’ enactme nt of §301( d) of the Act in the Clean Air Act Amendments of 1990. As with the existing mechanism in place for state and local governments under 52.21(u), the amended version of this regulation simply authorizes tribal governments to administer a PSD permittin g program on behalf of the EPA and to apply the same provisions of federal law that the EPA would otherwise apply in the absence of the delegation

. See, In re Seminole Electric Cooperative , PSD Appeal No. 08

- 09, Slip. Op. at 8 (EAB Sept. 22, 2009) (a del eg ate “acts on behalf , or ‘in the shoes’ of EPA.” 45 Fed. Reg. 33290, 33413 (May 19, 1980) (“A delegate under section 52.21(u) stands in the shoes of an EPA Regional Administrator.”)

. The authorit y of a delegate agency to review PSD permits applicat ions stems solely from a Delegation Agreement with an EPA Regional Off ice, and a delegate acts only to implement federal PSD requirements. West Suburban Recycling & Energy Ctr, L.P. , 6 E.A.D. 692, 703 (EAB 1996) . The powers conferred under a delegation a greement are limited only to exercising the federal PSD authority13

contain ed in 40 CFR 52.21. Id . at 704. A delegate is responsible for conducting its review and making its permitting decision on the basis of the federal PSD program provisions contained in 40 C.F.R. s. 52.21. I d. at 707. Thus, this regulation provides no greater authority to tribal governments than Congress provided to the Administrator under section 165 of the Clean Air Act and that an EPA Regional Office may exercise under 40 C.F.R. 52.21.
T he final action produced under this process is ultimately action of the United States Environmental Protection Agency

. Seminole Electric , Slip. Op. at 8 (“state

- issued permits are federal permits”); 45 Fed. Reg. at 33413 (May 19, 1980) (“a permit i ssued by a delegate is still an EPA

- issued permit. ”). As a result , an y administrative or judicial review of delegate ’ s PSD permitting decision must be in accordance with federal procedures in 40 CFR 124.19. West Suburban at 703. A part y that seeks review of a permitting decision b y a delegate under 52.21(u) must first file an administrative appeal with the EPA’s Environmental Appeals Board. 40 C.F.R. 124.19( l)(1)

. When these review procedures are exhaus t ed (40 C.F.R. 124.19(l)(2) ) , a permit issued by a delegate agency

under 52.21(u) is reviewable in federal court pursuant to section 307(b) of the CAA and considered an action by the EPA

. Permits issued by delegate d agencies under section 52.21(u) have been reviewed in Federal co urt, and the court s have not questioned th e ability

of the EPA to delegate its federal authority

. Sierra Club v. EPA , 499 F.3d 653 , 654 (7 th Cir. 2007) (“ The federal Environmental Protection Agency (actuall y, Illinois's counterpart to the EPA, exercising a

uthority that the federal EPA had delegated to it, but we can ignore that detail) issued a permit to Prairie State Generating Company”) ; Memorandum Opinion, Chabot

Las Positas Community

College District v. EPA, Case No. 10

- 73870 (9 th Cir. May 4, 2012) ( “Pe titioner ... seeks review of a federal Prevention of Significant Deterioration (‘PSD’) permit issued to the Russell City Energy Center ... , b y the Bay Area Air Quality Management District ..., on behalf of the Environmental Protection Agency , pursuant to sectio n 165 of the Clean Air Act (‘CAA’), 422 U.S.C. § 7475.” ) The EPA notes that the second sentence of section 301(a) provides the Administrator the authority to delegate an y of her powers and duties under the Act, except the making of regulations subject to §307(d) of the Act, as she may deem necessary

or expedient to any

officer or employee of the EPA

. While this section does not directly address the delegation of powers to persons other than employees of the EPA, nothing in this provision indicates that it is intended to preclude the Administrator from providing for the delegation of certain of her authorities to entities that are not officers or emplo yees of the EPA through notice and comment rulemaking. This second sentence establish es the Administrato r’s authorit y to make internal delegations without the need for rulemaking. This sentence contains no language to indicate that it is the exclusive form of delegation that the Administrator may consider, or that this second sent ence functions as a limitati on on the Admin i strator’s rulemaking authority under the first sentence of se c tion 301(a). The EPA clearly

stated in the preamble to the proposed rule that its purpose was to correct certain outdated language that currently limits the EPA’s ability

to d elegate the Federal NSR PSD program to interested Indian tribes and that the proposed action was consistent with the EPA’s existing and well

- established procedures for delegating administration of Federal CAA programs, including delegation of the Federal N SR PSD program pursuant to 40 CFR 52.21(u). The EPA cited section 301(a) of the Clean Air Act as the source of authority for the proposed rulemaking, and the nature of this delegated power is well

- established in decisions of the EAB and other EPA resource s. The EPA thus provided both notice of its purpose and a14

summary of the major legal interpretations and policy considerations underlying the proposed rule sufficient to satisfy

the requirements of CAA section 307(d)(3). The EPA does not believe it is nece ssary to supplement this information by reproposing the propose d rule

. **Issue 3**

**– Describe administrative delegation process in the preamble**  **and include regulatory provisions which embody that process** 

- Delegations under section 52.21(u) are made effective through a delegation agreement between the appropriate EPA Regional Office and the delegate. Since the EPA’s practice of effectuating a delegation under this provision through an agreement with the dele gate has functioned smoothly for man y ye ars while providing flexibility to Regional Offices and their delegates to customize the process , the EPA does not believe that additional regulatory language is needed in 52.21(u) to prescribe a specific procedure f

or the delegation process. Furthermore, the proposed rule did not contain language to codify the procedure of using a delegation agreement

. However, the EPA agrees with the commenter that it would be helpful to provide tribal governments and the regulated community with an explanation of how EPA has administer ed the delegation process under section 52.21(u) for the Federal PSD Program and for the EPA to affirm that it intends to continue using this approach when applying this provision to tribal governments

. T he provision now designated as s ection 52.21(u) has been in place, in one form or another, since th e federal Prevention of Significant Air Quality Deterioration rule was first promulgated in 1974. (See, 39 Fed. Reg. 42510, 42517, December 5, 1974.) ; 45 Fed. Reg. 33290 (May 19, 1980). Over time, the EPA has used that provision to successfully delegate authority to implement the F ederal PSD P rogram to numerous state and local air pollution control agencies. See e.g. 46 Fed. Reg. 9580 (Jan. 29, 1981) (delegations to states in Region 5)

. Those delegations are authorized by the EPA’s Regional Offices , and the process for accomplishing such delegations varies somewhat from Region to Region. Regardless of the exact process used, however, the specifics of the delegation are embodied in a formal delegation agreement. The EPA believes that the many prior successful delegation s carried out under section 52,21(u) provide an appropriate background of experience for the Agency as it moves forward with including i nterested tribes as potential delegate agencies. The EPA expects that the same procedures that have been used with state and local agencies will prove relevant and equally successful as tribes begin to seek administrative delegation of the Federal PSD Program and that the precise details and functions at issue with any particular delegation will

– as they have been with states and local agencies

– be memorialized in an applicable delegation agreement between the EPA and the delegated tribal governing body

. As a result, the EPA does not believe that further discussion of a particular approach to accomplishing a delegation in the context of removing the restriction on delegating the F ederal PSD P rogram to tribal governments is needed

. The EPA notes that it h as since written additional regulations that include somewhat more detailed delegation provisions. With regard to delegations to tribes, these include, for instance, the Federal Air Rules for Indian Reservations in I daho, Oregon and Washington and the rule titled Review of New Sources and Modifications in Indian Country . In those cases, the EPA was establishing new regulatory programs for areas of Indian country , including newl y established administrative delegation opportunities and procedures. In each cas e, the EPA provided a discussion of the delegation process that was appropriate for the new programs. By contrast, as discussed above in the case of 52.21(u), the EPA already has a substantial body of experience and history applying that provisions that on e can look to for guid ance
. The EPA believes the various provisions EPA has established for administrative delegations are15

appropriate for the particular programs in which they are included. As a result, some of the more recent regulatory

provisions differ from 52.21(u) in some respects.
**Issue 4**

**– Clearly define**  **the nature and extent of delegated administrative authority** 
**-** An administrative delegation of authority to assist the EPA with implement ation of the Federal PSD Program pursuant to 40 CFR 52.21(u) is by its very nature limited in scope. It onl y authorizes implementation by

the delegate agency of the substantive provisions of the Federal PSD Program as defined in 40 CFR 52.21 and the applicable procedural requirements in 40 C.F.R. Part 124, which are incorporated by reference in section 52.21(q) of EPA’s regulations

. West Suburban at 704

. As discussed above, the delegate agency “stands in the shoes of the Regional Administrator [ and must] follow the procedural requirements of Part 124 .” Since a delegation agreement merel y authorizes the delegate to administrator federal law requirements on behalf of the EPA, the delegation agreement does not expand the scope of federal law or restrict or limit legal authority that the delegate agency oth erwise possesses under state, local, or tribal law. A delegation under 52.21(u) grants authority to administrator federal law in section 52.21 to issue a permit that is necessary to satisfy the requirements of section 165 of the Clean Air Act. It does not alter or restrict separate legal requirements that may exist under state or tribal statutes and regulations. Thus, to the extent a statute or regulation in state or tribal law gives a state or tribal government a particular regulatory authorit y, that regul atory authorit y is not removed or limited by the delegation of additional federal authority from an EPA Regional Office. To the extent they have additional requirements in tribal law, tribes ( just like states and local agencies) that have taken delegation of the Federal PSD Program can also choose to issue a single permit document that include s requirements of tribal law in addition to those specified in 40 CFR 52.21. See , In re Knauf Fiber Glass, GmbH , 8 E.A.D. 121 (EAB 1999); In re: Peabody Western Coal C

o. , CAA Appeal No. 11

- 01, Slip. Op. at 12 (EAB March 13, 2012)

. An y such tribal requirements would not, however, be come requirements of federal law or be federally enforceable unless they

are embodied in an EPA

- approved Tribal Implementation Plan (TIP). Likewise, a delegation of federal authorit y does not expand the criteria applicable to a PSD permitting decision under federal law . A tribal delegate under 52.21(u) may not deny a federal PSD permit based solely

on the basis of a failure to comply with tribal permitting re quirement or other tribal law. West Suburban , 6 E,A,D, at 707

- 8. As long as it ensures that Part 124 procedures are satisfied at the same time, a tribe (or a state or local agency) to wh ich the authority to implement the Federal PSD Program is delegated does have some ability

to apply its own procedural requirements to supplement the Part 124 procedures. See , Peabody Western Coal , Slip Op. at 16. Any such procedural requirements may be reflected in the delegation agreement between the EPA and the delegate agency but may not supplant the Part 124 procedures

. West Suburban at 707.
**Issue 5**

**– Clearly define**  **the nature and extent of required tribal au**  **thority for a delegate agency**  **-** The EPA notes that where the Agency delegates administration of the Federal PSD Program to a state, local agency , or tribe, the program remains applicable to the regulated sources under f

ederal legal authority

established under the Clean Air Act and EPA’s regulations. As such , none of those entities need to have PSD program requirements in their state, local, or tribal laws. The transfer of federal authority to a delegate that lacks the or ganic authority to issue PSD permits meeting federal require ment s is a key element of the delegation arrangement under 52.21(u) that separates this approach from an EPA

- approval for a state to administ er a PSD16

program under its own authority

. Seminole Elec tric at 9. However, delegated agencies do need to have sufficient legal authority under state, local, or tribal law to enable them to assist in the administration of the program and to appl y the F ederal PSD P rogram regulations that provide the source of PS D permitting authority under the delegation.
**Issue 6**

**– Delegation agreement** 

**–** The EPA anticipates that consistent with prior delegation s to states and local agencies the scope, including an y limitations, of an administrative delegation of the Federal PS D Program to a tribe would be reflected in a formal delegation agreement . The delegation agreement would also delineate an y provisions/requirements, if any, for which the EPA will continue to remain responsible even after the delegation. For example, under man y of the EPA’s PSD program delegation agreements, the EPA retains responsibility for ensuring that the requirements of the Endangered Species Act are met. The EPA will alway s retain authorit y for enforcing the requirements of the Federal PSD Program under federal law. The EPA agrees with the commenter that the delegation document is not subject to notice and comment rulemaking. For the reasons discussed above, the EPA does not, however, believe that it is required to full y delineate the precise parameters of this process or to mandate the use of such a document in amending 40 C.F.R. 52.21(u) to remove the restriction on delegating the Federal PSD Program to tribes.
**Issue 7**

**– TAS applicability**  **and delegation**

**–** The EPA agrees that it is not necessary for a tribe to seek or obtain treatment in the same manner as a state (TAS) status as a prerequisite to being granted administrative delegation of the Federal PSD Program. Amended 40 C.F.R. 52.21(u) will itself put tribes on an equal footing with state and local air pollution control agencies for purposes of taking delegation to assist the EPA with administration of the Federal PSD Program

.