Federal Register / Vol. 77, No. 134 / Thursday, July 12, 2012 / Rules and Regulations 41051 

1 ‘‘Prevention of Significant Deterioration and 

Title V Greenhouse Gas Tailoring Rule; Final Rule,’’ 

75 FR 31514, June 3, 2010 (the Tailoring Rule). 

miles north of the Kingston Rhinecliff 

Bridge. 

(b) Effective Date. This rule is 

effective from 7:30 a.m. until 8:30 a.m. 

on July 15, 2012. 

(c) Definitions. The following 

definitions apply to this section: 

(1) Designated Representative. A 

‘‘designated representative’’ is any Coast 

Guard commissioned, warrant or petty 

officer of the U.S. Coast Guard who has 

been designated by the Captain of the 

Port Sector New York (COTP), to act on 

his or her behalf. The designated 

representative may be on an official 

patrol vessel or may be on shore and 

will communicate with vessels via 

VHF–FM radio or loudhailer. In 

addition, members of the Coast Guard 

Auxiliary may be present to inform 

vessel operators of this regulation. 

(2) Official Patrol Vessels. Official 

patrol vessels may consist of any Coast 

Guard, Coast Guard Auxiliary, state, or 

local law enforcement vessels assigned 

or approved by the COTP. 

(3) Spectators. All persons and vessels 

not registered with the event sponsor as 

participants or official patrol vessels. 

(d) Regulations. (1) The general 

regulations contained in 33 CFR 165.23, 

as well as the following regulations, 

apply. 

(2) No vessels, except for event 

coordinators and support vessels, will 

be allowed to transit the safety zone 

without the permission of the COTP. 

Vessels not associated with the event 

that are permitted to enter the regulated 

areas shall maintain a separation of at 

least 100 yards from the participants. 

(3) All persons and vessels permitted 

by the COTP to enter the safety zone 

shall comply with the instructions of 

the COTP or the designated 

representative. Upon being hailed by a 

U.S. Coast Guard vessel by siren, radio, 

flashing light, or other means, the 

operator of a vessel shall proceed as 

directed. Failure to comply with a 

lawful direction may result in expulsion 

from the regulated area, citation for 

failure to comply, or both. 

(4) Vessel operators desiring to enter 

or operate within the regulated area 

shall contact the COTP or the 

designated representative via VHF 

channel 16 or 718–354–4353 (Sector 

New York command center) to obtain 

permission to do so. 

(5) Spectators or other vessels shall 

not anchor, block, loiter, or impede the 

transit of event participants or official 

patrol vessels in the regulated areas 

during the effective dates and times, 

unless authorized by COTP or the 

designated representative. 

(6) The COTP or the designated 

representative may delay or terminate 

any marine event in this subpart at any 

time it is deemed necessary to ensure 

the safety of life or property. 

Dated: June 27, 2012. 

G.A. Loebl, 

Captain, U.S. Coast Guard, Captain of the 

Port, New York. 

[FR Doc. 2012–17003 Filed 7–11–12; 8:45 am] 

BILLING CODE 9110–04–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–HQ–OAR–2009–0517; FRL–9690–1] 

RIN 2060–AR10 

Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring 

Rule Step 3 and GHG Plantwide 

Applicability Limits 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: The EPA is promulgating the 

third step (Step 3) of our phase-in 

approach to permitting sources of 

greenhouse gas (GHG) emissions that we 

committed to do in the GHG Tailoring 

Rule. This rule completes Step 3 by 

determining not to lower the current 

Prevention of Significant Deterioration 

(PSD) and title V applicability 

thresholds for GHG-emitting sources 

established in the Tailoring Rule for 

Steps 1 and 2. We are also promulgating 

regulatory revisions for better 

implementation of the federal program 

for establishing plantwide applicability 

limitations (PALs) for GHG emissions, 

which will improve the administration 

of the GHG PSD permitting programs. 

DATES: This action is effective on 

August 13, 2012. 

ADDRESSES: The EPA has established a 

docket for this rulemaking under Docket 

ID No. EPA–HQ–OAR–2009–0517. All 

documents in the docket are listed in 

the www.regulations.gov index. 

Although listed in the index, some 

information is not publicly available, 

e.g., Confidential Business Information 

or other information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

is not placed on the Internet and will be 

publicly available only in hard copy. 

Publicly available docket materials are 

available either electronically in 

www.regulations.gov or in hard copy at 

the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Avenue 

Northwest, Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air and Radiation 

Docket and Information Center is (202) 

566–1742. 

FOR FURTHER INFORMATION CONTACT: 

Michael S. Brooks, Air Quality Policy 

Division, Office of Air Quality Planning 

and Standards (C504–05), 

Environmental Protection Agency, 

Research Triangle Park, North Carolina 

27711; telephone number (919) 541– 

3539; fax number (919) 541–5509; email 

address: brooks.michaels@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Executive Summary 

1. Purpose of the Regulatory Action 

The purpose of this Step 3 rule is to 

continue the process of phasing in GHG 

permitting requirements under the PSD 

and title V programs begun in Steps 1 

and 2 of the Tailoring Rule.1 As a result 

of actions to regulate GHGs under other 

Clean Air Act (CAA) programs, GHGs 

are required to be addressed under the 

major source permitting requirements of 

the Act’s PSD and title V programs. The 

Tailoring Rule was necessary because 

the CAA applicability requirements that 

determine which sources are subject to 

permitting under these programs are 

based on annual potential emission 

rates of 100 or 250 tons per year (tpy). 

Implementing these requirements for 

GHG-emitting sources immediately after 

they became subject to PSD and title V 

requirements would have brought so 

many sources into those programs so as 

to overwhelm the capabilities of state 

and local (hereafter, referred to 

collectively as state) permitting 

authorities to issue permits, and as a 

result, would have impeded the ability 

of sources to construct, modify or 

operate their facilities. 

To prevent this outcome, the EPA 

promulgated the Tailoring Rule to tailor 

the PSD and title V applicability criteria 

that determine which GHG sources and 

modification projects become subject to 

the permitting programs. In the 

Tailoring Rule, we explained that the 

administrative burdens of immediate 

implementation of the PSD and title V 

requirements without tailoring ‘‘are so 

severe that they bring the judicial 

doctrines of ‘absurd results,’ 

‘administrative necessity,’ and ‘onestep-at-a-time’ into the Chevron twoVerDate Mar<15>2010 13:33 Jul 11, 2012 Jkt 226001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\12JYR1.SGM 12JYR1

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41052 Federal Register / Vol. 77, No. 134 / Thursday, July 12, 2012 / Rules and Regulations 

2Consistent with the definition that the EPA is 

promulgating in 40 CFR 52.21(aa)(2)(xii) and the 

relevant GHG thresholds in effect at this time, a 

GHG-only source is an existing stationary source 

that emits 100,000 tpy CO2e or more, but does not 

emit or have the potential to emit any other 

regulated NSR pollutant at or above the applicable 

major source threshold. 

step analytical framework for statutes 

administered by agencies.’’ 75 FR 31517 

June 3, 2010. We further explained that 

on the basis of this legal interpretation, 

we would phase in the applicability of 

PSD and title V to GHG-emitting sources 

so that those requirements would apply 

to at least the largest sources initially, 

and to as many more sources as 

promptly as possible, at least to a 

certain point. Id. In the Tailoring Rule, 

we went on to promulgate the first two 

steps of the phase-in program, which we 

call Step 1, which took effect on January 

2, 2011; and Step 2, which took effect 

on July 1, 2012, and incorporated Step 

1. In these steps, we established the PSD 

and title V applicability thresholds at 

what we call the 100,000/75,000 levels, 

which refers to the number of tpy in 

carbon dioxide equivalent (CO2e) 

potential emissions. 

In addition, in the Tailoring Rule, we 

made regulatory commitments for 

subsequent action, including this Step 

3. Specifically, we committed in Step 3 

to propose or solicit comment on 

lowering the 100,000/75,000 threshold 

on the basis of three criteria that 

concerned whether the permitting 

authorities had the necessary time to 

develop greater administrative capacity 

due to an increase in resources or 

permitting experience, as well as 

whether the EPA and the permitting 

authorities had developed ways to 

streamline permit issuance. We 

committed to complete the Step 3 action 

by July 1, 2012. 

In this rulemaking, we have evaluated 

whether it is now possible to lower the 

100,000/75,000 threshold to bring 

additional sources into the PSD and title 

V permitting programs in light of the 

three criteria. In addition, we have 

continued our identification and 

evaluation of potential approaches to 

streamline permitting so as to enable 

permitting authorities to permit more 

GHG-emitting sources without undue 

burden. 

2. Summary of Major Provisions 

The EPA is finalizing Step 3 by 

determining not to lower the current 

GHG applicability thresholds from the 

Step 1 and Step 2 levels at this time. We 

have found that the three criteria have 

not been met because state permitting 

authorities have not had sufficient time 

and opportunity to develop the 

necessary infrastructure and increase 

their GHG permitting expertise and 

capacity, and that we and the state 

permitting authorities have not had the 

opportunity to develop streamlining 

measures to improve permit 

implementation. 

We are also promulgating revisions to 

our regulations under 40 CFR part 52 for 

better implementation of the federal 

program for establishing PALs for GHG 

emissions. A PAL establishes a sitespecific plantwide emission level for a 

pollutant that allows the source to make 

changes at the facility without triggering 

the requirements of the PSD program, 

provided that emissions do not exceed 

the PAL level. Under the EPA’s 

interpretation of the federal PAL 

provisions, such PALs are already 

available under PSD for non-GHG 

pollutants and for GHGs on a mass 

basis, and we are revising the PAL 

regulations to allow for GHG PALs to be 

established on a CO2e basis as well. We 

are also revising the regulations to allow 

a GHG-only source 2 to submit an 

application for a CO2e-based GHG PAL 

while also maintaining its minor source 

status. We believe that these actions 

could streamline PSD permitting 

programs by allowing sources and 

permitting authorities to address GHGs 

one time for a source and avoid repeated 

subsequent permitting actions for a 10- 

year period. 

B. Does this action apply to me? 

Entities affected by this action include 

sources in all sectors of the economy, 

including commercial and residential 

sources. Entities potentially affected by 

this action also include states, local 

permitting authorities and tribal 

authorities. The majority of categories 

and entities potentially affected by this 

action are expected to be in the 

following groups: 

Industry group NAICSa

Agriculture, fishing, and hunting ............................................................... 11 

Mining ....................................................................................................... 21 

Utilities (electric, natural gas, other systems) .......................................... 2211, 2212, 2213 

Manufacturing (food, beverages, tobacco, textiles, leather) .................... 311, 312, 313, 314, 315, 316 

Wood product, paper manufacturing ........................................................ 321, 322 

Petroleum and coal products manufacturing ........................................... 32411, 32412, 32419 

Chemical manufacturing ........................................................................... 3251, 3252, 3253, 3254, 3255, 3256, 3259 

Rubber product manufacturing ................................................................. 3261, 3262 

Miscellaneous chemical products ............................................................. 32552, 32592, 32591, 325182, 32551 

Nonmetallic mineral product manufacturing ............................................. 3271, 3272, 3273, 3274, 3279 

Primary and fabricated metal manufacturing ........................................... 3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 

3327, 3328, 3329 

Machinery manufacturing ......................................................................... 3331, 3332, 3333, 3334, 3335, 3336, 3339 

Computer and electronic products manufacturing ................................... 3341, 3342, 3343, 3344, 3345, 4446 

Electrical equipment, appliance, and component manufacturing ............ 3351, 3352, 3353, 3359 

Transportation equipment manufacturing ................................................. 3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369 

Furniture and related product manufacturing ........................................... 3371, 3372, 3379 

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

Waste management and remediation ...................................................... 5622, 5629 

Hospitals/Nursing and residential care facilities ....................................... 6221, 6231, 6232, 6233, 6239 

Personal and laundry services ................................................................. 8122, 8123 

Residential/private households ................................................................. 8141 

Non-Residential (Commercial) ................................................................. Not available. Codes only exist for private households, construction 

and leasing/sales industries. 

a North American Industry Classification System. 


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Federal Register / Vol. 77, No. 134 / Thursday, July 12, 2012 / Rules and Regulations 41053 

3 ‘‘Prevention of Significant Deterioration and 

Title V Greenhouse Gas Tailoring Rule Step 3, GHG 

Plantwide Applicability Limitations and GHG 

Synthetic Minor Limitations; Proposed Rule,’’ 77 

FR 14226, March 8, 2012 (the Step 3 proposal). 

C. How is this preamble organized? 

The information in this 

SUPPLEMENTARY INFORMATION section of 

this preamble is organized as follows: 

Outline 

I. General Information 

A. Executive Summary 

1. Purpose of the Regulatory Action 

2. Summary of Major Provisions 

B. Does this action apply to me? 

C. How is this preamble organized? 

D. What acronyms, abbreviations and units 

are used in this preamble? 

II. Overview of the Final Rule 

III. Background 

A. Statutory and Regulatory Background 

for PSD and Title V 

B. How does the Tailoring Rule address 

GHG emissions under PSD and title V? 

C. In the Tailoring Rule, what 

commitments did the EPA make for Step 

3 and subsequent action? 

D. In the Tailoring Rule, what plan did the 

EPA announce for developing 

streamlining measures, and what has the 

EPA done since then? 

E. What did the EPA propose in the Step 

3 proposal? 

IV. Summary of Final Actions 

A. Applicability Thresholds for GHGs 

B. Plantwide Applicability Limitations for 

GHGs 

C. Synthetic Minor Source Permitting 

Authority for GHGs and Other 

Streamlining Measures 

V. What is the legal and policy rationale for 

determining not to lower the current 

thresholds in the final action? 

A. Overview 

B. Have states had adequate time to ramp 

up their resources? 

C. What is the ability of permitting 

authorities to issue timely permits? 

D. What progress has the EPA made in 

developing streamlining methods? 

E. What would be the effects on emissions 

of lowering the current thresholds? 

F. What is the effective date of this action? 

G. Conclusion 

VI. What streamlining approach is the EPA 

finalizing with this action? 

A. What is the EPA finalizing? 

B. What is a PAL? 

C. Why is the EPA amending the 

regulations? 

D. Extending PALs to GHGs on a CO2e 

Basis and Using PALs To Determine 

Whether GHG Emissions Are ‘‘Subject to 

Regulation’’ 

E. Can a GHG source that already has a 

mass-based GHG PAL obtain a CO2ebased PAL? 

VII. Comment and Response 

A. Thresholds for GHGs 

1. Narrow Scope of Step 3 

2. The Three Criteria 

3. Disparity Between Estimated and Actual 

Numbers of Permits 

B. Plantwide Applicability Limitations for 

GHGs 

VIII. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution or Use 

I. National Technology Transfer and 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

K. Congressional Review Act 

L. Judicial Review 

IX. Statutory Authority 

D. What acronyms, abbreviations and 

units are used in this preamble? 

The following acronyms, 

abbreviations and units are used in this 

preamble: 

APA Administrative Procedure Act 

BACT Best Available Control 

Technology 

CAA or Act Clean Air Act 

CAAAC Clean Air Act Advisory 

Committee 

CFR Code of Federal Regulations 

CO2e Carbon Dioxide Equivalent 

EPA U.S. Environmental Protection 

Agency 

FIP Federal Implementation Plan 

FR Federal Register 

GHG Greenhouse Gas 

NAAQS National Ambient Air Quality 

Standard 

NACAA National Association of Clean 

Air Agencies 

NSR New Source Review 

NTTAA National Technology Transfer 

and Advancement Act 

OMB Office of Management and 

Budget 

PAL[s] Plantwide Applicability 

Limitation[s] 

PSD Prevention of Significant 

Deterioration 

SCAQMD South Coast Air Quality 

Management District 

SIP State Implementation Plan 

tpy Tons Per Year 

UMRA Unfunded Mandates Reform 

Act 

II. Overview of the Final Rule 

In the Tailoring Rule, we included an 

enforceable commitment to complete a 

rulemaking to propose or solicit 

comment on Step 3 of the phase-in 

approach to GHG permitting, and 

complete that action by July 1, 2012. We 

stated in the Tailoring Rule that in Step 

3, we would lower the applicability 

thresholds, and consequently increase 

the number of GHG sources required to 

obtain such permits, only if we 

determined that the states have had 

enough time to develop the necessary 

infrastructure and increase their GHG 

permitting expertise and capacity to 

efficiently manage the expected increase 

in administrative burden from such 

permitting, and only if we and the 

permitting authorities had the 

opportunity to expedite, or otherwise 

decrease the burdens of, GHG 

permitting through streamlining 

measures. 

We proposed Step 3 by notice dated 

March 8, 2012.3 In that notice, we 

proposed determining not to lower the 

current applicability thresholds for PSD 

and title V. We also proposed two 

streamlining approaches to improve 

permit implementation: (1) The use of 

GHG PALs on either a mass or CO2e 

basis, which includes the option to use 

the CO2e-based increases provided in 

the subject to regulation applicability 

thresholds in setting the PAL, and to 

allow PALs to be used as an alternative 

approach for determining whether a 

project is a major modification and 

whether GHG emissions are subject to 

regulation; and (2) regulatory authority 

for the EPA or a delegated state or local 

agency to issue synthetic minor 

limitations for GHG in areas subject to 

a Federal Implementation Plan (FIP) 

that imposes PSD permitting programs 

for GHGs. 

In the short period of time since the 

EPA promulgated the Tailoring Rule, 

the EPA and the states have not made 

sufficient progress developing sufficient 

capacity or streamlining mechanisms to 

handle a larger number of permits than 

Steps 1 and 2 require. As a result, we 

are finalizing Step 3 by determining not 

to lower the current, 100,000/75,000 

applicability thresholds. In addition, we 

are finalizing a portion of the GHG PALs 

streamlining measure we proposed for 

Step 3. At this time we are not finalizing 

our proposed streamlining measure of 

providing regulatory authority for the 

EPA or a delegated agency to issue 

synthetic minor limitations for GHG in 

areas subject to a PSD FIP for GHGs or 

other streamlining measures. 

In section III of this preamble, we 

discuss background information, 

including how the Tailoring Rule 

addresses GHG emissions under PSD 

and title V, what commitments the EPA 

made for Step 3 and subsequent actions 

and what we said in the Step 3 

proposal. 


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41054 Federal Register / Vol. 77, No. 134 / Thursday, July 12, 2012 / Rules and Regulations 

4 ‘‘Endangerment and Cause or Contribute 

Findings for Greenhouse Gases Under Section 

202(a) of the Clean Air Act,’’ 74 FR 66496, 

December 15, 2009 (the Endangerment and Causeor-Contribute Findings); ‘‘Light-Duty Vehicle 

Greenhouse Gas Emission Standards and Corporate 

Average Fuel Economy Standards; Final Rule,’’ 75 

FR 25324, May 7, 2010 (the Light-Duty Vehicle 

Rule); ‘‘Interpretation of Regulations that Determine 

Pollutants Covered by Clean Air Act Permitting 

Programs,’’ 75 FR 17004, April 2, 2010 (the Timing 

Decision or the Johnson Memo Reconsideration). 

5 ‘‘Action to Ensure Authority to Issue Permits 

under the Prevention of Significant Deterioration 

Program to Sources of Greenhouse Gas Emissions: 

Finding of Substantial Inadequacy and SIP Call— 

Final Rule,’’ 75 FR 77698, December 13, 2010 (the 

GHG PSD SIP Call); ‘‘Action to Ensure Authority to 

Issue Permits Under the Prevention of Significant 

Deterioration Program to Sources of Greenhouse 

Gas Emissions: Federal Implementation Plan; Final 

Rule,’’ 75 FR 82246, December 30, 2010 (the GHG 

PSD SIP Call FIP); ‘‘Limitation of Approval of 

Prevention of Significant Deterioration Provisions 

Concerning Greenhouse Gas Emitting Sources in 

State Implementation Plans; Final Rule,’’ 75 FR 

82535, December 30, 2010 (the PSD Narrowing 

Rule); ‘‘Action to Ensure Authority to Implement 

Title V Permitting Programs Under the Greenhouse 

Gas Tailoring Rule; Final Rule,’’ 75 FR 82254, 

December 30, 2010 (the Title V Narrowing Rule). 

6We include this discussion of the Tailoring Rule 

for background purposes only. In our Step 3 

proposal we did not re-open for comment any of the 

determinations made in the Tailoring Rule or 

subsequent related final rules or our rationale for 

finalizing such rules, and we do not re-open now. 

In section IV, we describe this final 

action. In section V, we discuss our 

legal and policy rationale for 

determining not to lower the current 

100,000/75,000 applicability 

requirements for GHG PSD and title V 

permitting. In section VI, we discuss our 

rationale for revising regulations for the 

better implementation of GHG PALs, 

which will improve the administration 

of GHG PSD permitting programs. In 

section VII, we briefly summarize some 

key comments received on the portions 

of the proposal that we are finalizing 

and we summarize our responses; in 

section VIII, we address the statutory 

and Executive Order reviews that are 

required for all rulemakings; and in 

section IX, we provide the statutory 

authority for the rulemaking. 

III. Background 

This section describes key aspects of 

the background for this rulemaking. For 

other background information, such as a 

description of GHGs and their sources, 

the regulatory backdrop to the Tailoring 

Rule and the EPA’s GHG PSD and title 

V programs, see the Tailoring Rule, the 

related actions that the EPA took shortly 

before finalizing the Tailoring Rule 4

and the GHG PSD and title V 

implementation rules that the EPA 

promulgated shortly after the Tailoring 

Rule.5 For purposes of this rule, we 

assume that the reader is familiar with 

these materials. In the following 

paragraphs we provide a brief summary 

of key statutory and regulatory 

background for the PSD and title V 

permitting programs for purposes of this 

rulemaking. 

A. Statutory and Regulatory Background 

for PSD and Title V 

Under the CAA, PSD applies to any 

‘‘major emitting facility’’ that 

commences construction or undertakes 

a ‘‘modification.’’ CAA section 165(a), 

169(2)(C). The Act defines the term 

‘‘major emitting facility’’ as a stationary 

source that emits or has the potential to 

emit any air pollutant in the amount of 

at least 100 or 250 tpy, depending on 

the source category, on a mass basis. 

CAA section 169(1). The Act also 

defines ‘‘modification’’ as any physical 

or operational change that increases the 

amount of any air pollutant emitted by 

the source. CAA section 111(a)(4). 

Under the CAA, title V applies to, 

among other sources, a ‘‘major source,’’ 

which is defined to include any 

stationary source that is a ‘‘major 

stationary source’’ under section 302 of 

the Act. CAA section 501(2). Under 

section 302, a ‘‘major stationary source’’ 

is defined as any stationary facility or 

source of air pollutants which directly 

emits, or has the potential to emit, 100 

tpy or more of any air pollutant. CAA 

section 302(j). 

The EPA’s regulations implement 

these requirements. Under the 

regulations, PSD applies to any ‘‘major 

stationary source’’ that begins actual 

construction on a new facility or 

undertakes a ‘‘major modification’’ in an 

area designated as attainment or 

unclassifiable for a national ambient air 

quality standard (NAAQS). 40 CFR 

52.21(a)(2)(i)–(iii). The regulations 

define a ‘‘major stationary source’’ as a 

stationary source that emits, depending 

on the source category, at least 100 or 

250 tpy, on a mass basis, of a ‘‘regulated 

[new source review (NSR)] pollutant.’’ 

40 CFR 52.21(b)(1)(i)(a)–(b). A 

‘‘regulated NSR pollutant’’ is defined as 

any of the following: (1) In general, any 

pollutant subject to a NAAQS, (2) any 

pollutant subject to a new source 

standard of performance under CAA 

section 111, (3) any of a certain type of 

stratospheric ozone depleting 

substances, or (4) ‘‘[a]ny pollutant that 

otherwise is subject to regulation under 

the Act’’ (with certain exceptions for 

hazardous air pollutants under CAA 

section 112). 40 CFR 52.21(b)(50)(i)–(iv). 

The title V regulations define a ‘‘major 

source’’ in 40 CFR 70.2. 

B. How does the Tailoring Rule address 

GHG emissions under PSD and title V? 6

In the Tailoring Rule, the EPA 

explained that the rulemaking was 

necessary because without it, the CAA 

PSD preconstruction review permitting 

program and the title V operating permit 

program would apply to all stationary 

sources that emit or have the potential 

to emit at least 100 or 250 tpy of GHGs 

beginning on January 2, 2011. 

In the Tailoring Rule, we explained 

that in light of the overwhelming 

administrative burdens that would 

result from applying PSD and title V at 

the 100/250 tpy statutory levels, we 

would exercise our legal authority to 

phase in the applicability of PSD and 

title V to GHG-emitting sources so that 

those requirements would apply ‘‘at 

least to the largest sources initially, at 

least to as many more sources as 

possible and as promptly as possible 

over time * * * and at least to a certain 

point.’’ 75 FR 31517 June 3, 2010. In the 

Tailoring Rule, we went on to 

promulgate the first two steps of the 

phase-in program, which we call Steps 

1 and 2, and we made commitments for 

subsequent action. 

In selecting those thresholds, we 

closely reviewed the numbers of 

potential additional permitting actions 

for GHG-emitting sources, and the 

resulting administrative burdens, that 

could occur at various permitting 

thresholds. We further estimated that 

the combined additional PSD and title 

V permitting burdens due to Steps 1 and 

2 could, on an annual basis, mean a 42 

percent increase in costs over the 

current PSD and title V program. 75 FR 

31540, Table V–1 June 3, 2010. 

C. In the Tailoring Rule, what 

commitments did the EPA make for 

Step 3 and subsequent action? 

In the Tailoring Rule we committed to 

undertake Step 3 by proposing or 

soliciting comment on lowering the 

thresholds, so that more sources would 

be subject to PSD and title V 

requirements, but we did not commit to 

finalize lower thresholds. We 

committed to complete Step 3 by July 1, 

2012. We further stated that in light of 

the administrative burdens, we would 

not, in Step 3, lower the thresholds 

below the 50,000/50,000 tpy CO2e 

levels. In addition, we committed to 

complete a study of the administrative 

burdens by April 30, 2015, and to 

complete Step 4 by April 30, 2016. 40 

CFR 52.22(b); 40 CFR 70.12(b). 


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Federal Register / Vol. 77, No. 134 / Thursday, July 12, 2012 / Rules and Regulations 41055 

7While we are not taking final action on the GHG 

synthetic minor permitting program described in 

the Step 3 proposal, that decision does not affect 

our authority to issue GHG PAL permits under the 

Minor Source Approach that we are finalizing in 

this action. 

D. In the Tailoring Rule, what plan did 

the EPA announce for developing 

streamlining measures, and what has 

the EPA done since then? 

In the Tailoring Rule, we announced 

a plan to explore streamlining 

techniques that could make the 

permitting programs more efficient to 

administer for GHGs, and that therefore 

could allow expanding those programs 

to smaller sources. Streamlining 

techniques to be evaluated included: (1) 

Defining potential emissions to be closer 

to actual emissions for various source 

categories, (2) establishing emission 

limits for presumptive Best Available 

Control Technology (BACT) for various 

source categories, (3) encouraging use of 

general permits or permits-by-rule, (4) 

encouraging use of electronic permitting 

and (5) encouraging the application of 

more efficient techniques (which we 

call Lean techniques) to the permitting 

process for more efficient permitting of 

GHG sources. We believe that these 

techniques have the potential to 

streamline the PSD and title V 

permitting programs for GHGs to ‘‘allow 

the expeditious expansion of PSD and 

title V applicability to more GHGemitting sources while protecting those 

sources and the permitting authorities 

from undue expenses.’’ 75 FR 31526 

June 3, 2010. 

While we intend to move forward to 

develop streamlining approaches, we 

also stated in the Tailoring Rule that we 

did not expect to develop and 

implement any of these prior to Step 3. 

We also stated in the rule that several 

of these streamlining approaches will 

take several years to develop, requiring 

separate rulemaking both at the federal 

level, and then through state and local 

processes. We, nonetheless, committed 

to explore a number of possible 

streamlining actions prior to the Step 3 

rulemaking. 

We are making progress in developing 

streamlining approaches. In addition to 

discussing and soliciting comment on 

streamlining measures in the Step 3 

proposal, in April 2012, we convened 

what we call the GHG Permit 

Streamlining Workgroup (or the 

Workgroup). The Workgroup is formed 

under the Clean Air Act Advisory 

Committee (CAAAC): Permits, New 

Source Review and Toxics 

Subcommittee. The Workgroup is 

comprised of industrial, environmental, 

tribal and state and local 

representatives. It is tasked with 

exploring potential streamlining 

approaches that may make the 

administration of the CAA permitting 

programs more efficient for permitting 

authorities, and that may potentially 

reduce the permitting burden for 

smaller GHG-emitting sources if the 

programs are expanded to apply to these 

sources. The Workgroup meets regularly 

and is expected to complete a report by 

October 2012. 

E. What did the EPA propose in the Step 

3 proposal? 

In the Federal Register dated March 

8, 2012, the EPA proposed Step 3, 

proposing to determine not to lower the 

GHG PSD and title V threshold levels 

from the 100,000/75,000 tpy CO2e Step 

2 levels. 77 FR 14226 March 8, 2012. 

The EPA explained that the criteria it 

identified in the Tailoring Rule for 

evaluating whether to lower the 

thresholds in Step 3 did not, at the 

present time, point towards lowering 

them. The EPA further explained that 

the states generally had not had the time 

to increase their resources sufficiently 

or develop GHG-specific permitting 

expertise, and that we and the states had 

not had the opportunity to develop 

streamlining measures. 77 FR 14228 

March 8, 2012. 

In addition, we proposed to revise the 

PSD regulations to provide for GHG 

PALs. We stated that ‘‘[w]e believe that 

this action will streamline PSD 

permitting programs by allowing 

sources and permitting authorities to 

address GHGs one time for a source and 

avoid repeated subsequent permitting 

actions.’’ 77 FR 14228 March 8, 2012. 

In addition, we proposed regulatory 

provisions to allow for ‘‘synthetic 

minor’’ permits for GHGs under the 

federal PSD program. We stated that 

‘‘[w]e believe that permitting synthetic 

minor GHG sources under these 

provisions will reduce the number of 

sources subject to PSD and title V, 

reducing the burden on state permitting 

authorities and the sources.’’ 77 FR 

14228 March 8, 2012. 

IV. Summary of Final Actions 

A. Applicability Thresholds for GHGs 

In this rule, consistent with the 

proposal, we are finalizing Step 3 by 

determining not to lower the current 

100,000/75,000 tpy CO2e PSD and title 

V applicability threshold levels. This 

action is based on our analysis of the 

three criteria—(1) the time that 

permitting authorities need to ramp up 

their resources, including developing 

permitting infrastructure as well as 

hiring and training staff, (2) sources’ 

abilities to meet the requirements of the 

PSD program and permitting authorities’ 

abilities to issue timely permits, 

including gaining experience with GHG 

permitting and (3) whether the EPA and 

the states could develop streamlining 

measures. 75 FR 31559 June 3, 2010. 

Information currently available to the 

EPA indicates that these criteria have 

not been met. 

B. Plantwide Applicability Limitations 

for GHGs 

We are finalizing the proposed 

streamlining measure that would revise 

the existing PAL permitting program to 

allow permitting authorities to issue 

GHG PALs on either a mass basis (tpy) 

or a CO2e basis, including the option to 

use the CO2e-based increases provided 

in the subject to regulation thresholds in 

setting the PAL, and to allow such PALs 

to be used as an alternative approach for 

determining whether a project is a major 

modification and whether GHG 

emissions are subject to regulation. 

Within the GHG PAL proposal, we 

discussed the potential options of a 

Minor Source Approach and a Major 

Source Opt-in Approach for allowing 

sources that are not currently major 

sources to receive a PAL. After 

reviewing the comments received, we 

are finalizing the Minor Source 

Approach, which will allow permitting 

authorities to issue GHG PALs to GHGonly sources without requiring the 

source to undertake an action that 

would make GHGs ‘‘subject to 

regulation’’ and bring the source into 

major stationary source status under the 

Tailoring Rule. Thus, GHG-only sources 

may obtain a GHG PAL and remain a 

‘‘minor source’’ so long as their GHG 

emissions remain below the PAL.7

However, we are not finalizing the 

Major Source Opt-in Approach, since 

many public comments that supported 

the GHG PALs changes questioned the 

usefulness of this approach for 

providing real streamlining benefits. 

C. Synthetic Minor Source Permitting 

Authority for GHGs and Other 

Streamlining Measures 

In our Step 3 proposal, we also 

proposed creating the regulatory 

authority for the EPA to issue synthetic 

minor limitations for GHGs in areas 

subject to a GHG PSD FIP, and 

discussed our progress in evaluating the 

suitability of other streamlining 

measures and solicited further comment 

on those other streamlining measures. 

We are not finalizing the proposed 

synthetic minor streamlining measure 

for GHGs in areas subject to a GHG PSD 

FIP after considering public comments 

that suggest the program may not be 


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8S. Brown, A. Fishman, ‘‘The Status of State 

Environmental Agency Budgets, 2009–2011.’’ 

9Letter from S. William Becker, NACAA, to 

Honorable Michael Simpson and Honorable James 

Moran, U.S. House of Representatives. 

needed at this time. We also are not 

taking further action on the other 

streamlining measures at this time, as 

we consider the comments received. 

However, we continue to pursue 

streamlining options as expeditiously as 

possible, beginning immediately and 

proceeding throughout the phase-in 

period and encourage permitting 

authorities to do the same. We thank the 

commenters for their input, which we 

will consider as we move forward to 

develop effective streamlining measures 

to make the GHG permitting programs 

more efficient to administer. Any such 

action would provide for additional 

opportunity for stakeholder input and 

comment, as appropriate. 

V. What is the legal and policy 

rationale for determining not to lower 

the current thresholds in the final 

action? 

A. Overview 

This final rule fulfills our 

commitment in the Tailoring Rule to 

undertake Step 3 of the GHG PSD and 

title V phase-in process. At this time we 

conclude that while they have taken 

important initial steps to manage this 

new program, state permitting 

authorities have not had sufficient time 

and opportunity to develop the 

necessary infrastructure and increase 

their GHG permitting expertise and 

capacity, and that we and the state 

permitting authorities have not had the 

opportunity to develop streamlining 

measures. As a result, the criteria for 

lowering the applicability thresholds 

from their current Step 2 levels have not 

been met. Accordingly, we are 

determining not to lower the thresholds, 

so that they will remain at the 100,000/ 

75,000 levels. 

In the Tailoring Rule, we committed 

to undertake future rulemaking, 

including this Step 3 rulemaking, to 

examine whether we could lower the 

thresholds to as low as 50,000/50,000 

tpy CO2e, and thereby apply PSD and 

title V to more sources. We recognized 

that lowering the thresholds would add 

more administrative costs on top of 

those added by Steps 1 and 2, and as a 

result, we stated that whether and when 

we would lower the thresholds would 

depend on three criteria: (1) The time 

that permitting authorities need to ramp 

up their resources, including developing 

permitting infrastructure as well as 

hiring and training staff, (2) sources’ 

abilities to meet the requirements of the 

PSD program and permitting authorities’ 

abilities to issue timely permits, 

including gaining experience with GHG 

permitting and (3) whether the EPA and 

the states could develop streamlining 

measures. 

As described in the following subsections, the states and the EPA have 

made some progress in these areas. For 

example, the states have issued some 

GHG PSD permits and we will be 

finalizing one streamlining measure in 

this final rulemaking. However, neither 

the states nor the EPA have had the 

opportunity to make significant progress 

in these areas. First, the states generally 

have made little progress in developing 

their GHG permitting infrastructure— 

e.g., hiring additional personnel and 

establishing policies and conducting 

outreach programs to sources unfamiliar 

with the permitting process—largely 

because their permitting resources have 

not increased. In fact, some states 

indicate that their permitting resources 

have decreased, and some indicate that 

their resources may decrease further in 

the near future. Second, the states have 

had only limited experience in GHG 

PSD permitting and therefore have not 

had the opportunity to develop 

significant expertise. The main reasons 

for this are the unexpectedly low 

amount of PSD permitting to date and 

the short amount of time since GHG 

permitting began. Similarly, for title V, 

applications for title V permits are 

generally not due until a year after title 

V becomes applicable to a source. Thus, 

for Step 2 title V sources, permit 

applications were generally not due 

until July 1, 2012. As a result, states 

would only start reviewing such 

applications by this date, and 

accordingly they would not have gained 

much experience permitting such 

sources under title V by July 1, 2012. 

Finally, the states and we have not had 

the opportunity to develop significant 

streamlining approaches. This is largely 

because, as we stated in the Tailoring 

Rule, certain streamlining approaches 

require a longer process to develop, 

including significant data collection 

activities, notice and comment 

rulemaking to obtain specific authority 

and, in some cases, the development of 

necessary implementation tools. 

Because of these criteria, we are not 

lowering the thresholds from their 

current levels. 

The following discusses these criteria, 

and notes the states’ and our experience 

with GHG permitting to date under the 

current Step 1 and Step 2 applicability 

thresholds. We also address the 

environmental benefits potentially 

associated with any further reduction in 

the GHG PSD permitting thresholds. 

B. Have states had adequate time to 

ramp up their resources? 

One criterion that we described in the 

Tailoring Rule for whether to lower the 

thresholds in Step 3 was whether the 

permitting authorities could increase 

their resources. Specifically, we 

described this criterion as ‘‘the time that 

permitting authorities need to ramp up 

their resources in an orderly and 

efficient manner to manage the 

additional workload.’’ 75 FR 31559 June 

3, 2010. We explained that we expected 

Steps 1 and 2 to result in an increase in 

the numbers of PSD permits for new 

construction and modifications and in 

the numbers of title V permits; and we 

expected that some increase in state 

permitting resources would be needed 

to accommodate, at least in part, those 

new demands. 

In fact, all indications are that the 

states have not had the opportunity to 

obtain the necessary resources and to 

develop their infrastructure to 

accommodate the level of permitting 

expected in Steps 1 and 2. Instead, in 

many cases, reductions in state 

environmental agency budgets have 

occurred, which is fully consistent with 

the overall reductions in state budgets 

that have been recently seen across the 

nation. 

In the proposal, we noted several 

indications that state permitting 

resources have decreased in the past 

several years. For example, an August 

2010 report by the Environmental 

Council of the States concluded that 

state budgets decreased by an average of 

approximately $21 million per state 

from 2009 to 2011.8 In addition, a June 

28, 2011 letter from the National 

Association of Clean Air Agencies 

(NACAA) to the U.S. House of 

Representatives detailing the status of 

40 state and local air quality agencies 9

indicated that 80 percent of air agencies 

experienced a decline in staffing levels 

in the preceding 4 years. According to 

the letter, over the years 2008–2010, the 

average loss of staff per agency was 16.7 

percent. In addition to staffing losses, 48 

percent of air agencies experienced 

furloughs, and the majority faced 

significant declines in budgets. These 

cutbacks resulted in curtailing core air 

program activities including permit 

issuance, as well as education and 

outreach programs. Further, we also 

noted in the proposal that we had 

consulted informally with some states, 

and many confirmed that they have seen 


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10The SCAQMD comments are located in the 

docket for this rulemaking, Docket No. EPA–HQ– 

OAR–2009–0517–19280. 

11One environmental advocacy organization 

commented that in its view, its home state of 

Pennsylvania underfunded the state environmental 

agency. The commenter emphasized that such 

underfunding should not be taken as an indication 

of a lack of GHG permitting capacity. Another 

environmental advocacy organization made a 

comparable point more generally. We have applied 

this criteria on a nationwide basis, and we have 

found that many states are confronting decreased 

resources, including states, such as some of the 

ones in the Regional Greenhouse Gas Initiative, that 

have taken action to regulate GHGs. 

12As we noted in the Step 3 proposal, some states 

have also been obliged to devote resources to 

developing and submitting for EPA approval SIP 

revisions and title V program revisions authorizing 

GHG permitting, instead of using those resources to 

build GHG permitting infrastructure. 77 FR 14236 

March 8, 2012. 

13This criterion may be measured by the period 

of time permitting authorities need to issue permits. 

14 In the Tailoring Rule, we described this 

criterion as ‘‘information we have as to the sources’ 

abilities to meet the requirements of the PSD 

program and the permitting authorities’ ability to 

process permits in a timely fashion.’’ 75 FR 31,559 

June 3, 2010. An issue arises as to the meaning of 

this reference to sources. We stated in the Step 3 

proposal: ‘‘We note that in the Tailoring Rule, we 

made clear that sources’ abilities to meet the 

requirements of the PSD and title V programs 

depend at least in part on the ability of the states 

to develop, as part of the state programs, outreach 

and educational efforts to facilitate source 

compliance. Accordingly, for present purposes, we 

think this component concerning sources may be 

examined by a review of the states’ progress in 

developing state GHG permitting programs.’’ 77 FR 

14232 March 8, 2012. Industry commenters took 

issue with this statement, and asserted that this 

criterion requires an examination of sources’ 

abilities to meet PSD requirements that is 

independent of the permitting authorities’ ability to 

process permits in a timely fashion. We do not find 

it necessary in this rulemaking to resolve this issue 

as to the meaning of the reference to sources. This 

is because for purposes of this rulemaking, the 

information we have about permitting authorities 

leads us to conclude that this criterion points 

towards determining not to lower the thresholds. 

Even if the sources were to be treated as a separate 

component of this criterion, no commenter 

suggested that information about the sources would 

lead us to conclude anything differently about this 

criterion. Because, in this rulemaking, information 

about sources does not play a role in assessing this 

criterion, it is not necessary to resolve the issue of 

the meaning of the sources’ abilities to comply with 

GHG permitting requirements, and whether sources’ 

abilities to comply should be considered 

independently from the permitting authorities’ 

ability to administer GHG permitting. 

their budgets and staffs reduced in 

recent years as the states have 

responded to the economic downturn 

and budget shortfalls. 

In light of these developments, we 

noted in the Step 3 proposal: 

* * * States have not been able to develop 

their GHG permitting infrastructure—e.g., 

hiring additional personnel, establishing 

policies and conducting outreach programs 

to sources unfamiliar with the permitting 

process—largely because their permitting 

resources have not increased and, in fact, in 

some cases have decreased and may decrease 

further in the near future. 

77 FR 14235 March 8, 2012. We 

received comments from states and 

localities supporting those statements, 

and providing confirmation that their 

resources for GHG permitting were 

falling, in part because of lower overall 

resources. For example, the South Coast 

Air Quality Management District 

(SCAQMD) stated, ‘‘* * * SCAQMD’s 

overall staffing, as well as permitting 

resources, continue to drop.’’ 10 11

These recent reductions in state 

permitting resources have undermined 

the states’ ability to build their GHG 

permitting infrastructure through hiring 

and training of staff and through 

education and outreach programs to the 

affected sources.12 These reductions 

point away from lowering the Step 1 

and 2 thresholds at this time. In the 

Tailoring Rule, we estimated that 

lowering the thresholds to 60,000/ 

60,000 tpy CO2e would increase 

administrative burdens by 20 percent 

above the total burdens at the Step 2 

levels (and 40 percent above the preGHG permitting burdens); and that 

lowering them to 50,000/50,000 tpy 

CO2e would increase administrative 

burdens by 40 percent above the total 

burdens at the Step 2 levels (and 99 

percent above the pre-GHG permitting 

burdens). Also, as a result of a large 

increase in the number of GHG sources 

required to get permits, permitting 

agencies will need to conduct education 

and outreach programs to small 

business and the public who have not 

typically been subject to air quality 

permitting requirements in the past to 

raise awareness and understanding of 

the regulatory requirements for these 

smaller sources. Absent this outreach 

effort, we believe that many sources will 

not understand, and perhaps may not 

even be aware of, the new regulatory 

obligations. 

It is important to recognize that to this 

point, states have not been confronted 

with the amount of GHG permit activity 

that we estimated in the Tailoring Rule 

for Steps 1 and 2. Environmental 

advocacy organizations emphasized this 

point in commenting on the proposal, 

and one of these organizations 

concluded that the EPA should lower 

the thresholds. We respond to these 

comments in more detail below, but in 

brief, although we recognize the 

disparity in actual permitting activity 

compared to our estimates, this 

disparity does not serve as a basis for 

lowering the thresholds in this Step 3 

rulemaking. As we discuss below, there 

is some indication that at least part of 

this disparity may be temporary, due to 

the recent economic downturn and slow 

recovery, as well as other factors. 

Moreover, in the Tailoring Rule, we 

based the level of the thresholds on 

overall administrative burden that we 

determined based on several sets of data 

and a complex, multi-component 

methodology. The number of GHG 

permits is an important component of 

overall burden, but there are other 

components as well, including (1) the 

per-permit processing costs and (2) 

other administrative burdens, including 

training and enforcement expenses, 

public education and outreach 

expenses, and the expenses of 

additional synthetic minor source 

permitting for GHG sources seeking to 

avoid PSD and title V applicability. At 

this time, with just the first year of 

implementation of the Step 2 thresholds 

having been completed on June 30, 

2012, we do not have enough new 

information about the data sets and 

methodology to merit revising the 

administrative burden estimates or, 

therefore, the thresholds. In particular, 

we note some indications that in the 

Tailoring Rule, we may have 

underestimated the administrative 

burdens in certain respects by, for 

example, not fully accounting for the 

additional synthetic minor permitting 

activity, that is, sources taking synthetic 

minor limitations on their GHG 

emissions so as to avoid becoming 

subject to PSD or title V due to those 

emissions. As a result, contrary to the 

commenters, we do not consider the 

unexpectedly smaller number of GHG 

permits to indicate that states have 

greater permitting capacity. 

For the previously described reasons, 

states have not had the opportunity to 

build capacity and resources to handle 

GHG permitting. Accordingly, this 

criterion of state resources supports 

determining not to lower the current 

thresholds. 

C. What is the ability of permitting 

authorities to issue timely permits? 

Another criterion identified in the 

Tailoring rule is whether permitting 

authorities have the ability to issue 

timely permits 13 based on efficiencies 

resulting from GHG permitting 

implementation experience.14 In 

describing this criterion in the Tailoring 

Rule, we expected that permitting 

authorities, by acting on the anticipated 

volume of GHG PSD permit actions, 

would have the opportunity to establish 

efficient methods for resolving issues 

and processing permits, including 

developing expertise within their staffs. 

This would allow them to achieve 

efficiencies that, in turn, would create 

capacity for processing more GHG 


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15Environmental advocacy organization 

commenters stated that in light of the less-thanexpected amount of GHG permitting activity, the 

three criteria should be considered either to be 

irrelevant or to have been met. We respond to this 

comment below and, in more detail, in the 

Response to Comments document. 

16The Tailoring Rule regulations provide that 

Step 3 ‘‘shall become effective July 1, 2013.’’ 

40 CFR 52.22(b)(1), 70.12(b)(1), 71.13(b)(1), which 

we read to mean effective by July 1, 2013, 

consistent with the accompanying discussion in the 

preamble. 75 FR 31516 June 3, 2010 (describing 

Step 3 as possibly including more sources 

‘‘beginning by July 1, 2013’’). 

permit applications. Thus, with this 

criterion, we based our commitment to 

complete the Step 3 rulemaking in part 

on the assumption that Steps 1 and 2 

would provide us with the necessary 

information to determine whether and 

when it has become possible for states 

to administer GHG permitting programs 

for additional sources. However, as 

events have transpired, states have not 

yet had the opportunity to make this 

progress. 

In our Step 3 proposal, we showed 

that as of December 1, 2011, the EPA 

and permitting authorities had issued 18 

GHG PSD permits. We noted that these 

18 permit actions had been spread 

among 11 states, almost all of which had 

issued only one GHG permit. We 

concluded: ‘‘This activity has simply 

been too limited to allow States to build 

internal capacity to handle GHG 

permitting for a diverse set of sources, 

to develop more efficient techniques for 

permitting any particular source 

category, or to develop streamlining 

approaches to address GHG permitting.’’ 

77 FR 14237 March 8, 2012. 

Since then, the pace of permitting has 

remained too low for states to build 

their GHG permitting capacity. As of 

May 21, 2012, the EPA and permitting 

authorities have issued a total of 44 

GHG PSD permits. Importantly, states 

have seen little if any title V permitting 

activity to this point; indeed, 

applications for title V permits from 

Step 2 (or ‘‘GHG-only’’) sources were 

generally not due until July 1, 2012 

(i.e., 1 year after the effective date of 

Step 2, when GHG-only sources could 

have first become subject to title V). 

Therefore, the conclusions we drew at 

proposal remain valid. The GHG 

permitting activity has simply been too 

limited to allow states to build internal 

capacity to handle GHG permitting for 

a diverse set of sources, to develop more 

efficient techniques for permitting any 

particular source category or to develop 

streamlining approaches to address 

GHG permitting. In sum, the states’ 

experiences to date do not provide a 

basis for us to conclude that permitting 

authorities in fact have the ability to 

issue timely permits for a larger set of 

actions based on GHG permitting 

experience. Therefore, this criterion 

points towards determining not to lower 

the current thresholds. 

D. What progress has the EPA made in 

developing streamlining methods? 

In the Tailoring Rule, we indicated 

that the criterion of implementation of 

permit streamlining measures would 

assist permitting authorities by 

removing some sources from the permit 

program, or allowing more efficient 

processing of permit applications. 

Specifically, we described this criterion 

as ‘‘our progress in developing 

streamlining methods that will render 

the permitting authority workload more 

manageable by taking some sources off 

the table (through regulations or 

guidance interpreting ‘potential to 

emit’), and by allowing for more 

efficient permit processing (through 

general permits and presumptive 

BACT).’’ 75 FR 31559 June 3, 2010. We 

further stated, however, that some 

streamlining methods would take 

several years for the EPA to develop, 

and for states to gain authority to 

implement. Thus, we did not anticipate 

that streamlining approaches would 

necessarily be available by the time of 

the Step 3 rulemaking. We also noted 

that in consultations with the states, 

they reported that they had made little 

progress in implementing streamlining 

measures, and none had adopted 

streamlining measures specifically to 

address GHGs. 

The states and we continue to make 

progress in streamlining. The revision to 

the PALs regulations that we 

promulgate in this action is a step in 

that direction. In addition, as noted, we 

recently convened the CAAAC GHG 

Permit Streamlining Workgroup to 

explore potential streamlining 

approaches. The Workgroup meets 

regularly and is expected to issue a 

report by this October with suggestions 

for specific approaches. Even so, to this 

point, neither we nor the states have 

been able to develop or implement 

sufficient streamlining actions to 

meaningfully reduce permitting 

administrative burdens. Accordingly, 

this criterion points towards 

determining not to lower the current 

thresholds.15

E. What would be the effects on 

emissions of lowering the current 

thresholds? 

The fact that the PSD program would 

apply to a large percentage of the 

national inventory of stationary source 

GHG emissions at the 100,000/75,000 

tpy CO2e levels of the Tailoring Rule, 

while increasing the number of sources 

subject to permitting by only a modest 

amount, supported the reasonableness 

of our decision to establish the 

thresholds at those levels. For the 

current rulemaking, we have conducted 

further analysis, which shows that 

reducing the thresholds in Step 3 to as 

low as 60,000/60,000 tpy CO2e would 

bring within the potential sphere of the 

PSD program less than an additional 1 

percent of all GHG emissions from all 

stationary sources nationally while 

potentially subjecting over 2,000 

additional sources to the permitting 

program. Our analysis shows that as the 

thresholds go lower, the number of 

sources increases dramatically, but the 

volume of GHG emissions emitted by 

each additional source gets smaller and 

smaller. Lowering the thresholds to 

50,000/50,000 tpy CO2e would bring 

within the sphere of PSD an additional 

3 percent of the national inventory of 

GHG emissions while potentially 

subjecting over 4,500 additional sources 

to the permitting programs. Of course, 

in any year, only a fraction of national 

GHG stationary source emissions would 

actually become subject to PSD controls 

because only a fraction of sources would 

undertake modifications or new 

construction that trigger BACT controls. 

Thus, the additional reductions in GHG 

emissions from lowering the thresholds 

in Step 3 would be small under any 

circumstances even if the thresholds 

were lowered to 50,000/50,000 tpy 

CO2e. This small amount of incremental 

environmental benefit from lowering the 

thresholds, coupled with the additional 

burden associated with permitting these 

sources (in light of the lack of increase 

in state resources and experience as 

well as the lack of streamlining 

measures), supports the reasonableness 

of our determination not to lower the 

thresholds in Step 3. 

F. What is the effective date of this 

action? 

The effective date of this action is 

August 13, 2012. In the Tailoring Rule, 

we provided that Step 3 would take 

effect by July 1, 2013.16 We selected this 

date because it would provide a 1-year 

delay following the required, July 1, 

2012 date of promulgation of Step 3. 

The purpose of the delay would be to 

allow states sufficient time to 

incorporate any lower thresholds into 

their state implementation plans (SIPs), 

and submit a SIP revision for EPA 

approval. However, because the EPA is 

determining not to lower the thresholds, 

SIP revisions are not necessary and, as 


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a result no delay in the effective date is 

necessary. 

G. Conclusion 

In the Tailoring Rule, we recognized 

that the Step 1 and 2 thresholds we 

promulgated would create significant 

administrative burdens on permitting 

authorities. We stated that we would 

lower the thresholds, and thereby create 

additional administrative burdens, 

based on consideration of three criteria 

concerning state resources and 

experience as well as EPA and state 

efforts to streamline the permitting 

process. In this rulemaking, on the basis 

of these criteria and the public 

comments received, we determine not to 

lower the thresholds at this time. 

Permitting authorities need additional 

time to secure resources, hire and train 

staff, and gain experience with GHG 

permitting, and additional time is 

required to develop streamlining 

measures to expedite permit program 

administration, before we move toward 

fuller implementation of the program. 

We note that determining not to lower 

the current PSD and title V thresholds 

for Step 3 does not have implications for 

whether we will lower the thresholds in 

Step 4 or afterwards. Our actions in Step 

4 will depend on our evaluation of the 

appropriate factors at the time of that 

rulemaking. If those factors point in the 

direction of lowering the thresholds, we 

will act accordingly. 

As noted, we recognize the concerns 

expressed by environmental advocacy 

organization commenters concerning 

the disparity between expected number 

of permits and actual number of 

permits. We intend to track permitting 

activity to provide a sufficient base of 

information to assure that the 5-year 

study (required to be completed by 

April 30, 2015) is robust, and to 

facilitate appropriate action concerning 

the thresholds in Step 4 (required to be 

completed by April 30, 2016). We 

discuss these plans below in our 

response to these commenters. 

VI. What streamlining approach is the 

EPA finalizing with this action? 

In the Tailoring Rule, the EPA 

committed to explore streamlining 

measures as an integral part of the 

phase-in approach to permitting 

requirements for GHG emissions under 

PSD and title V. Streamlining 

techniques would allow permitting 

authorities to be more efficient in 

administering their GHG permit 

programs by reducing the overall 

resources required to administer these 

programs now and in the future. By 

implementing effective streamlining 

techniques, permitting, authorities 

could move more rapidly toward 

regulating a larger set of GHG sources at 

lower thresholds. In the Tailoring Rule, 

we identified potential streamlining 

options. We also acknowledged that it 

will take us several years to develop, 

and for states to gain authority to 

implement, effective streamlining 

methods. We committed to continue to 

explore the identified options, and to 

request comment on these and any 

additional streamlining approaches in 

the Step 3 rulemaking. 

This final rule provides a mechanism 

to streamline the GHG PSD permit 

program by expanding the existing PSD 

PAL provisions to better implement 

PALs for GHGs. The expanded PAL 

provisions (1) allow permitting 

authorities to establish GHG PALs on 

either a mass basis (tpy) or a CO2e basis, 

(2) include the option to use the CO2ebased increase provided in the subject 

to regulation thresholds in setting the 

CO2e PAL, (3) include the option to 

issue a GHG PAL (issued on a mass 

basis or CO2e basis) to GHG-only 

sources that have the potential to 

become major sources under the 

Tailoring Rule and (4) allow GHG PALs 

(issued on a mass basis or CO2e basis) 

to be used as an alternative approach for 

determining both whether a project is a 

major modification and whether GHG 

emissions are subject to regulation. 

Accordingly, permitting authorities 

implementing the federal PSD program 

will be able to use the authority 

provided to them under 40 CFR 52.21, 

including the changes finalized in this 

rule, and corresponding permitting 

procedures (such as those in 40 CFR 

part 124) to issue PAL permits for GHGs 

in a manner consistent with PAL 

permits issued for regulated NSR 

pollutants other than GHGs. 

In the Tailoring Rule, we did not 

identify PALs as a viable streamlining 

technique for GHG sources. However, 

since we finalized the Tailoring Rule, 

we have recognized that PALs could be 

designed in a way that could be useful 

for easing the administration of GHG 

permitting, and we proposed changes to 

the existing PAL rules in our Step 3 

proposal to address the unique PSD 

applicability aspects associated with 

GHGs. In the final rule, we have 

amended the existing PAL regulations to 

recognize the unique applicability 

characteristics of GHGs and to provide 

GHG sources with greater operational 

flexibility, while making application of 

the PAL rules to GHGs more consistent 

with the outcome achieved when those 

rules are applied to other regulated NSR 

pollutants. We believe the approach to 

PALs in the final rule will provide air 

quality benefits by encouraging sources 

to control GHG emissions through 

efficiency improvements or the use of 

other emission reduction procedures, 

processes or equipment before such 

sources are subject to PSD permitting for 

GHGs, and may encourage sources 

potentially subject to PSD to limit their 

emissions without triggering major 

modification permitting procedures or 

related administrative processes 

necessary to revise title V permits to 

reflect such major modifications. 

Accordingly, this final rule amends 

the PSD regulations at 40 CFR 52.21 to 

create authority for permitting 

authorities applying the federal PSD 

permitting program to issue PALs on 

either a mass basis or a CO2e basis to 

major sources and GHG-only sources 

that have the potential to become major 

sources, including the option to use the 

CO2e-based applicability thresholds 

provided in the ‘‘subject to regulation’’ 

definition in setting the PAL limit for a 

CO2e-based PAL, and also to allow such 

PALs to be used as an alternative 

approach for determining whether a 

project is a major modification and 

subject to regulation for GHGs. We are 

also making small changes to a number 

of the existing provisions in order to 

ensure that those provisions can be 

implemented in light of the GHG-based 

changes described above. In so doing, 

we did not seek comment on or re-open 

the entire PAL program. Instead, the 

request for comment was limited to the 

specific changes we are making with 

respect to GHGs (non-GHG PAL-related 

issues are outside the scope of this 

rulemaking). The following discussion 

outlines our approach to PALs for 

GHGs. 

A. What is the EPA finalizing? 

As noted, we are finalizing revisions 

to the federal PAL regulations to allow 

permitting authorities to establish GHG 

PALs on either a mass basis (tpy) or a 

CO2e basis, including the option to use 

the CO2e-based applicability thresholds 

for GHGs provided in the subject to 

regulation definition in setting the PAL 

on a CO2e basis and to issue a GHG PAL 

to GHG-only sources that have the 

potential to become major sources under 

the Tailoring Rule (Minor Source 

Approach), and to allow GHG PALs to 

be used as an alternative approach for 

determining both whether a project is a 

major modification and whether GHG 

emissions are subject to regulation. 

B. What is a PAL? 

Under the EPA’s existing regulations, 

a PAL is an emissions limitation for a 

single pollutant expressed in tpy that is 

enforceable as a practical matter and is 

established source-wide in accordance 


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17See EPA guidance ‘‘Establishing a Plantwide 

Applicability Limitation for Sources of GHGs’’ 

April 19, 2011, located at http://www.epa.gov/nsr/ 

ghgdocs/ghgissuepal.pdf. 

18This is a consequence of the wording used to 

implement the Tailoring Rule Step 1 and 2 

thresholds through the definition of ‘‘subject to 

regulation.’’ 

19While the changes we are finalizing in this 

rulemaking will allow minor sources that are also 

GHG-only sources to obtain a PAL for their GHG 

emissions only under the federal PAL program, the 

revisions in this rulemaking will not allow any 

other minor sources to obtain a PAL for any 

pollutants and do not otherwise disturb the settled 

requirement that a source seeking to obtain a PAL 

for non-GHG pollutants must be a major stationary 

source. 

with specific criteria. 40 CFR 

52.21(aa)(2)(v). Such PALs are voluntary 

in the sense that sources may, but are 

not required to, apply for a PAL, and the 

decision to issue a PAL to particular 

source is at the discretion of the 

permitting authority. These PALs offer 

an alternative method for determining 

major NSR applicability. If a source can 

maintain its overall emissions of the 

PAL pollutant below the PAL level, the 

source can make a change without 

triggering PSD review. This allows 

sources to make the changes necessary 

to respond rapidly to market conditions, 

while generally assuring the 

environment is protected from adverse 

impacts from the change. A PAL also 

results in significant environmental 

benefit by providing the community 

with an understanding of the long-term 

emissions impact from a facility, by 

preventing emissions creep (i.e., a series 

of unrelated individual emissions 

increases that are below major NSR 

applicability thresholds) and by 

requiring enhanced monitoring, 

recordkeeping and reporting provisions 

to demonstrate compliance with the 

PAL. 

C. Why is the EPA amending the 

regulations? 

We are revising the existing PAL 

regulations because the EPA interprets 

the existing regulations under 40 CFR 

52.21 for the federal PAL and PSD 

programs to allow permitting authorities 

to issue GHG PALs only on a mass 

basis.17 In addition, our interpretation of 

the existing regulations did not provide 

for the use of the CO2e-based subject to 

regulation thresholds in setting the PAL 

limit, only allowed GHG PALs to be 

issued to existing major stationary 

sources [40 CFR 52.21(aa)(1)] and did 

not allow compliance with a PAL to be 

considered for the purpose of 

determining whether GHG emissions are 

‘‘subject to regulation.’’ 

The PSD provisions generally define a 

‘‘major stationary source’’ as a stationary 

source which emits or has the potential 

to emit 100 or 250 tpy or more of a 

regulated NSR pollutant, depending on 

the type of source. 40 CFR 

52.21(b)(1)(i)(a)–(b). A ‘‘GHG-only 

source’’ is an existing stationary source 

that emits or has the potential to emit 

100/250 tpy of GHGs on a mass basis, 

and emits or has the potential to emit 

CO2e in amounts equal to or more than 

the GHG subject to regulation threshold 

for new sources (currently 100,000 tpy 

of CO2e or more), but does not emit or 

have the potential to emit any other 

regulated NSR pollutant at or above the 

applicable major source threshold. 

Regardless of the amount of GHGs 

currently emitted, a GHG-only source 

that has avoided PSD applicability for 

GHG under Step 1 or 2 of the Tailoring 

Rule would be a minor source for 

purposes of PSD, and could only 

become major for PSD when it proposes 

to undertake a change that increases 

GHG emissions by at least 75,000 tpy 

CO2e, the amount of increase needed 

under the current Tailoring Rule 

thresholds.18 40 CFR 52.21(b)(49)(v)(b). 

Because the existing PAL provisions are 

only available to existing major 

stationary sources, permitting 

authorities issuing a PAL under the 

federal PAL program can only issue a 

PAL to a GHG-only source when the 

source proposes to undertake a change 

that would make it an existing major 

stationary source.19 40 CFR 52.21(aa)(1). 

As a result, GHG-only sources may not 

currently use PALs as an alternative 

mechanism for determining major NSR 

applicability in the same way that 

existing major stationary sources of nonGHG regulated NSR pollutants may. 

Instead, because the Tailoring Rule 

applicability determinations depend on 

the GHG emissions related to a 

particular action on the part of the 

source, GHG-only sources must 

currently wait to obtain a PAL until they 

actually propose to make a change that 

qualifies the source as a major stationary 

source under the PSD program. 

Moreover, as we read the current federal 

regulations in 40 CFR 52.21, any GHG 

PALs issued under those regulations can 

only be mass-based. This requirement is 

due to the fact that PALs were originally 

designed to be an alternative method for 

determining PSD applicability for 

regulated air pollutants, and such 

pollutants only have mass-based 

applicability triggers for PSD, which the 

PAL provisions reference. For example, 

setting an actuals PAL level under 40 

CFR 52.21(aa)(6) of the existing 

regulations requires reliance on the 

mass-based baseline actual emissions 

under 40 CFR 52.21(b)(48) and massbased significant levels under 40 CFR 

52.21(b)(23). 

On the other hand, PSD applicability 

for GHG emissions from existing sources 

under the Tailoring Rule relies on CO2e 

thresholds for determining whether the 

GHG emissions from any particular 

action are ‘‘subject to regulation,’’ which 

in turn informs the determination of 

whether a source is a major 

modification. Thus, under the current 

regulations, there is a mismatch 

between the mass-based PAL and the 

CO2e-based portions of the PSD 

applicability thresholds, such that the 

existing PAL regulations do not provide 

an effective alternative applicability 

determination mechanism for GHG 

sources. 

We believe changing the PAL 

regulations to provide for CO2e-based 

PALs will provide GHG sources with 

additional operational flexibility, and 

could reduce GHG workload burdens on 

permitting authorities by decreasing the 

number of PSD permit applications that 

permitting authorities must process for 

these sources over the long term. Being 

able to establish a PAL on a CO2e basis 

will provide planning certainty to GHG 

sources, and will relieve the current 

time pressure to issue a PAL permit 

concurrent with authorization for a 

planned major modification which 

could potentially delay that project. We 

also believe that, regardless of which 

metric is specified to measure GHG 

emissions in a PAL, compliance with a 

GHG PAL generally assures that the 

environment remains protected from 

adverse air impacts resulting from 

changes a source undertakes in 

compliance with such a PAL, because 

emissions cannot exceed this preestablished level without further review. 

A PAL also provides an incentive for a 

source to minimize GHG emissions 

increases from future projects in order 

to stay under the PAL and avoid 

triggering major modification permitting 

requirements. 

These regulatory changes that allow 

sources to establish a PAL on a CO2e 

basis also make PALs for GHGs function 

similarly to PALs for non-GHGs. A 

significant emissions rate, as specified 

in 40 CFR 52.21(b)(23), is a threshold 

used to determine when PSD applies to 

modifications at existing major 

stationary sources, and only 

modifications that result in net 

emissions increases above the 

significant rate trigger major PSD 

permitting requirements. Unless a 

specific significant emissions rate has 

been established, the federal regulations 

specify that the significant rate is 

effectively zero, i.e., any increase in 

emissions would trigger PSD. Under the 


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20A source may be major for title V but minor for 

PSD because of the difference in applicability 

thresholds (e.g., title V major source status may be 

100 tpy on a mass basis for a particular regulated 

air pollutant but 250 tpy on a mass basis under PSD 

for the same pollutant) and/or for other reasons 

(e.g., a source that did not trigger PSD when it 

commenced construction and that did not 

subsequently increase its emissions above any 

major modification threshold but still has emissions 

over 100 tpy on a mass basis). In such cases, the 

title V permit may be an available mechanism to 

issue such PALs. 40 CFR 52.21(aa)(2)(ix). 

current PAL provisions, a permitting 

authority establishes the PAL level for a 

pollutant at a particular source by 

adding the applicable significant rate 

found in 40 CFR 52.21(b)(23) to the 

baseline actual emissions of that 

pollutant at the source. 

The EPA did not promulgate a 

significant emissions rate for GHG 

emissions in 40 CFR 52.21(b)(23) in the 

final Tailoring Rule. Thus, if a 

permitting authority establishes a massbased GHG PAL under the existing 

federal regulations, the PAL level 

included in the permit may not include 

any margin above the baseline actual 

emissions to account for emissions 

growth. Absent this margin, a GHG PAL 

would usually provide less flexibility to 

a source when compared to PALs for 

other regulated NSR pollutants. 

This final rule revises the PAL and 

‘‘subject to regulation’’ provisions in 40 

CFR 52.21 to provide GHG sources with 

the same kind of flexibility sources 

currently have for other regulated NSR 

pollutants by allowing sources the 

option to establish a CO2e-based PAL 

using the CO2e-based emission increase 

provided in the subject to regulation 

thresholds in 40 CFR 52.21(b)(49). Thus, 

under the final rule, a permitting 

authority issuing a CO2e-based PAL 

under the current Tailoring Rule 

thresholds may add 75,000 tpy CO2e to 

a source’s CO2e baseline actual 

emissions to establish the PAL level, 

because the Tailoring Rule established 

75,000 tpy CO2e as the appropriate rate 

of emissions increase for the GHG 

subject to regulation applicability 

threshold for existing sources. In the 

Tailoring Rule, the EPA revised the 

definition of ‘‘subject to regulation’’ to 

establish a threshold level of GHG 

emissions that a source must meet, on 

both a source and project basis, before 

GHGs are considered a regulated NSR 

pollutant for PSD permitting purposes. 

However, the EPA also made clear that 

its action had the same substantive 

effect and should be treated as if the 

EPA had revised other components of 

the definition of ‘‘major stationary 

source’’ to achieve the same effect. 

Thus, in addressing PALs for GHGs in 

this rule, the EPA is continuing to focus 

on the thresholds incorporated into the 

‘‘subject to regulation’’ provision, 

consistent with the approach in the 

Tailoring Rule. 

The PAL revisions in this final rule 

will also have the effect of streamlining 

future major NSR applicability 

determinations for sources that choose a 

GHG PAL. The revisions eliminate the 

need to evaluate GHG emissions for 

major NSR applicability as long as the 

source is complying with the GHG PAL, 

because a GHG PAL can function to 

assure not only that a change is not 

considered a major modification, but 

also that GHG emissions from the source 

undertaking that change are not subject 

to regulation. Since the PSD regulations, 

including the Tailoring Rule, require an 

existing source to determine (1) whether 

a specific action would increase the 

GHG emissions by a certain CO2e 

amount that would make them subject 

to regulation for PSD permitting 

purposes, and if so, (2) whether the 

GHG emissions increase is also 

significant on a mass basis to qualify the 

change as a major modification, the rule 

changes that allow for setting a GHG 

PAL at a level that either includes the 

CO2e-based increase identified in the 

Tailoring Rule thresholds or the massbased significant emissions rate will 

insure that the source does not exceed 

that amount and thus will not emit 

GHGs in amounts that would trigger 

PSD permitting obligations. In sum, we 

believe that the existing federal PAL 

regulations do not generally provide an 

effective means of achieving burden 

reductions for permitting authorities 

and GHG sources when compared to the 

operational flexibility provided by PALs 

for regulated NSR pollutants other than 

GHGs, and therefore are overly 

restrictive with respect to GHG sources. 

Accordingly, in this final rule we are 

revising the PSD rules for PALs to allow 

permitting authorities to: (1) Issue 

effective PALs to GHG-only sources; (2) 

issue either a mass-based (tpy) or a 

CO2e-based PAL to a particular source; 

(3) allow CO2e-based PALs to include 

the CO2e-based emission increases 

provided in the subject to regulation 

thresholds; and (4) allow compliance 

with a GHG PAL to be used as an 

alternative applicability approach for 

determining both whether a project is a 

major modification and is subject to 

regulation for GHGs. Provided a source 

complies with a GHG PAL that meets 

the requirements in 40 CFR 52.21(aa)(1) 

through (15), GHG emissions at the 

source will not be ‘‘subject to 

regulation,’’ and a project at the source 

will not result in a major modification 

for GHG purposes. 

The Minor Source Approach 

discussed in the proposal for Step 3 

allows a GHG-only source to remain a 

minor source for PSD purposes and still 

obtain a GHG PAL.20 In this way 

permitting authorities can issue a GHG 

PAL to a GHG-only source that would 

only cover GHG emissions without 

requiring the source to trigger PSD 

permitting requirements as a 

prerequisite. 

We are providing for the Minor 

Source Approach for GHG PALs in this 

final rule by revising the PAL 

regulations to allow a GHG-only source 

to submit an application for a GHG PAL 

while maintaining its minor source 

status. We also define a number of terms 

when used for the specific purpose of 

imposing a GHG PAL for a minor 

source. A GHG-only source that 

complies with its GHG PAL will not 

trigger PSD permitting requirements for 

GHGs, but could still trigger PSD for 

other regulated NSR pollutants if it 

undertakes a change that increases 

emissions by an amount at or above the 

major source threshold for any non-GHG 

regulated NSR pollutant. 40 CFR 

52.21(b)(1)(i)(c). 

Moreover, under the Tailoring Rule, 

GHG-only sources must determine 

whether any project will result in GHG 

emissions that are subject to regulation 

(on a CO2e basis) and correspondingly 

will also result in a major modification 

(on a mass basis). Because GHG-only 

sources must undertake these 

determinations for any change, even 

those that would not lead to emissions 

at or above the applicable thresholds for 

GHGs, the regulatory revisions we are 

finalizing clarify that GHGs will not be 

‘‘subject to regulation’’ under 40 CFR 

52.21(b)(49) at such sources, as long as 

the source is complying with a GHG 

PAL that meets the requirements in 40 

CFR 52.21(aa)(1) through (15). We 

believe that extension of the PAL 

program to these sources through the 

Minor Source Approach is consistent 

with the purposes and design of the 

PAL program—to allow use of a PAL as 

an alternative PSD applicability 

approach for existing sources. 

Issuing GHG PALs to GHG-only 

sources that remain minor sources does 

not conflict with the basis for the 

existing PAL rules. When we 

promulgated the existing PAL rules in 

2002 (67 FR 80186), we limited the 

application of the PAL provisions to 

existing major stationary sources only. 

We included this provision based on 

our decision to limit PALs to sources 

that had historical emissions through 

which the permitting authority could 

establish a baseline actual emissions 

level. New major stationary sources do 


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not have historical actual emissions 

from which a permitting authority can 

establish an actuals PAL, and so we 

declined to include these sources in the 

actuals PAL program. By contrast, 

because GHG-only sources are existing 

sources, specific sources could already 

have sufficient historical actual 

emissions data to provide the GHG 

information necessary to set the actuals 

PAL for GHGs or may be collecting data 

now that would allow them to establish 

a GHG PAL in the future. However, 

permitting authorities retain discretion 

to determine, on a case-by-case basis, 

whether the historical actual emissions 

data available for a particular source is 

sufficient to establish a GHG PAL. 

When we originally promulgated the 

PAL rules, we also chose not to extend 

the PAL program to minor source NSR 

permit programs, because the PAL rules 

provide an alternative PSD applicability 

provision to determine whether a 

project results in a major modification, 

and we did not believe the program 

would be useful to minor sources. At 

that time, the rules generally required 

only existing major stationary sources to 

undertake a major modification 

applicability analysis to determine 

whether a change triggers PSD review. 

Given the unique ‘‘subject to regulation’’ 

PSD applicability requirement for 

GHGs, wherein an existing source that 

emits major amounts of GHGs is a major 

stationary source only at the time it 

proposes to undertake a project that will 

result in an emissions increase that 

equals or exceeds the subject to 

regulation thresholds, we do not believe 

that extending the PAL provisions to 

allow GHG-only sources to get GHG 

PALs runs afoul of the reasoning we 

provided when initially limiting the 

PAL program to existing major 

stationary sources. 

Because the GHG-only source must be 

a minor source when it applies for its 

GHG PAL and will remain a minor 

source under this Minor Source 

Approach (absent any other PSDtriggering change), and will not be 

expected to trigger a major modification 

applicability analysis for future 

increases in non-GHG regulated NSR 

pollutants, we believe it is unnecessary 

to extend the PAL authority under this 

approach to other pollutants. Moreover, 

we recognize that extending the PAL 

program in that way could place a 

burden on permitting authorities and 

redirect resources needed to issue 

permits to other stationary sources that 

trigger PSD requirements for GHGs. 

The Minor Source Approach of the 

final rule is consistent with the CAA in 

that it regulates sources that, but for the 

Tailoring Rule, would be major 

stationary sources based on the mass of 

their GHG emissions. This approach is 

also consistent with our Tailoring Rule 

principles, since we expect that the 

GHG PALs established under this rule 

would be established at levels very close 

to relevant GHG applicability thresholds 

in the Tailoring Rule. Because of the 

unique nature of GHG emissions, the 

EPA has determined that the scope of 

the regulatory revisions that it is 

finalizing to implement this Minor 

Source Approach for PALs is available 

only for a source’s GHG emissions and 

not for non-GHG pollutants. As 

mentioned above, the Minor Source 

Approach for GHG PALs also fulfills our 

streamlining goals by allowing 

applicability determinations for PSD to 

occur through an alternative mechanism 

that helps to manage permitting 

authorities’ long term permitting 

burdens. 

These regulatory revisions are also 

consistent with our permitting authority 

under the CAA. As we explained in the 

Step 3 proposal, in the context of the 

Tailoring Rule, we interpret sections 

165, 169 and 301 of the CAA to provide 

authority to issue preconstruction 

permits to GHG sources that do not 

qualify as major sources under the 

Tailoring Rule, but that emit or have the 

potential to emit GHGs at or above the 

statutory major source thresholds and 

that, without the Tailoring Rule, would 

qualify as ‘‘major emitting facilities’’ 

under the CAA. As explained in the 

Tailoring Rule, because the 

administrative burden associated with 

immediately implementing the PSD 

permitting program at statutory levels 

for GHGs would have crippled the 

program, we tailored the program and 

phased in the permitting requirements 

to ensure that the program would be 

administrable for GHGs. Under the 

Minor Source Approach that we are 

finalizing in this action, qualifying 

sources emit or have the potential to 

emit GHGs in levels above, and in many 

cases much higher than, the statutory 

thresholds. But for the Tailoring Rule, 

such sources would qualify as ‘‘major 

emitting facilities’’ under CAA section 

169 and would be subject to PSD 

permitting requirements. Because the 

PAL provisions finalized today could 

also help to ensure that the PSD 

permitting program can be administered 

in an effective and efficient manner for 

GHGs, we interpret CAA sections 165 

and 169 to convey to permitting 

authorities, including the EPA, the legal 

authority to issue GHG PAL permits to 

sources that qualify under the Minor 

Source Approach. Similarly, we 

interpret CAA section 301(a)(1) to 

provide additional authority to issue 

PAL permits to such sources. 

Accordingly, the EPA interprets sections 

165, 169 and 301 of the CAA to provide 

the authority to issue GHG PAL permits 

under the Minor Source Approach as 

finalized in this action. 

D. Extending PALs to GHGs on a CO2e 

Basis and Using PALs To Determine 

Whether GHG Emissions Are ‘‘Subject to 

Regulation’’ 

In this action, we are allowing 

permitting authorities to establish a 

CO2e-based GHG PAL, and in so doing, 

allowing them to add up to an amount 

equal to the emissions increase 

contained in the ‘‘subject to regulation’’ 

applicability threshold (currently 75,000 

tpy CO2e for an existing source) to the 

source’s baseline actual emissions to set 

the actuals PAL level for GHGs. We are 

also allowing GHG PALs, either on a 

mass basis or a CO2e basis, to serve as 

an alternative approach for determining 

whether GHG emissions are subject to 

regulation. That is, rather than applying 

the emissions increase tests currently 

contained in the ‘‘subject to regulation’’ 

definition, a source could demonstrate 

that GHG emissions are not ‘‘subject to 

regulation’’ by complying with a GHG 

PAL. Thus, compliance with a GHG 

PAL would be used as an alternative 

approach for determining that a project 

neither causes GHG emissions to be 

subject to regulation, nor causes the 

source to have a major modification. 

With respect to the subject to 

regulation determination, we believe 

that it is necessary to allow GHG PALs 

to be used as an alternative provision for 

making this determination, because 

failing to do so would negate the 

flexibility we wish to achieve by 

revising GHG PALs. This is because 

without these regulatory revisions, 

sources would still be required to 

monitor individual emissions changes 

using the procedures in 40 CFR 

52.21(b)(49) to determine whether a 

project causes GHG emissions to be 

‘‘subject to regulation.’’ If we do not 

allow GHG PALs to be used to 

determine whether GHGs are subject to 

regulation, these determinations would 

use procedures that rely on an 

emissions-unit-by-emissions-unit 

analysis and a shorter contemporaneous 

period to evaluate net emissions 

changes, neither of which are required 

under a PAL. This would undermine the 

very benefits the PAL is intended to 

provide, such as clarity, regulatory 

certainty and operational flexibility. We 

believe that the enhanced 

recordkeeping, reporting and 

monitoring associated with a PAL, and 

the environmental benefits resulting 


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from a PAL, warrant extension of the 

alternative applicability provisions to 

‘‘subject to regulation’’ determinations 

to assure that the GHG PAL provides the 

intended flexibility to sources. 

With respect to extending the PAL 

regulations to allow GHG limits to be set 

on a CO2e basis, we also believe these 

changes provide PALs to be used for 

GHGs in a manner consistent with the 

Tailoring Rule and the purpose of the 

PAL program. When we originally 

proposed the Tailoring Rule, we 

proposed to include applicability 

thresholds within the definitions of 

major stationary source and major 

modification, based on emissions of 

CO2e. We also originally proposed to 

establish a CO2e-based significant 

emissions rate. However, in the final 

rule, we changed our regulatory 

approach and instead included these 

applicability thresholds within the 

‘‘subject to regulation’’ definition, and 

we did not revise the definition of 

significant to include a CO2e-based 

emissions rate. We did so, in part, 

because we intended this change in 

regulatory structure to facilitate more 

rapid adoption of the rules by 

permitting authorities. Nonetheless, we 

also explained that we intended the 

definition of ‘‘subject to regulation’’ to 

function in tandem with the definitions 

of ‘‘major stationary source’’ and ‘‘major 

modification’’ to determine whether a 

given project triggers PSD 

preconstruction permit requirements. 75 

FR 31582 June 3, 2010. That is, if a 

source emits GHG emissions at a level 

that causes the emissions to become 

‘‘subject to regulation,’’ that same level 

of emissions increase will likely cause 

the source to be a major stationary 

source and to trigger PSD requirements 

as a major modification. Since the PAL 

program for non-GHG pollutants allows 

actuals PAL levels to be set by adding 

up to the amount of the emissions that 

would be allowed before a project 

triggered PSD requirements as a major 

modification, we think the PAL program 

for GHGs should apply similarly. 

Accordingly, since the CO2e-based 

emission increase contained in the 

second part of the ‘‘subject to 

regulation’’ definition works in tandem 

with the ‘‘major modification’’ provision 

to determine whether PSD applies, we 

are amending the regulations so that a 

CO2e-based GHG PAL can be 

established by adding up to an amount 

equal to the CO2e emissions increase 

defined as ‘‘significant’’ for the purposes 

of 40 CFR 52.21(b)(49)(iii) at the time 

the PAL permit is being issued 

(currently, 75,000 tpy CO2e) to the 

source’s baseline actual emissions. 

In our proposed Tailoring Rule, we 

noted that, in rare instances, there may 

be an exception to the general principle 

that a GHG source exceeding the 

proposed 75,000 tpy CO2e significant 

emissions threshold for major 

modification applicability would also 

exceed the statutory mass applicability 

thresholds for PSD, namely if a source 

emits very small amounts of a particular 

GHG that carries a very large global 

warming potential. 74 FR 55330 October 

27, 2009. We noted our concern that the 

proposed rule could cause such sources, 

whose mass emissions do not meet the 

major stationary source tpy threshold, to 

nonetheless be regulated under the 

permit programs. When we finalized the 

Tailoring Rule using the subject to 

regulation approach, we resolved this 

concern by retaining both a mass-based 

threshold and a CO2e-based threshold. 

Our intent in retaining both thresholds 

was to assure that there was no source 

with GHG emissions that were subject to 

PSD that would not otherwise meet the 

statutory criteria for treatment as a 

major stationary source. 

This same regulatory structure can 

create the opposite effect for sources 

operating under a GHG PAL. Instead of 

providing GHG PAL sources with the 

ability to use either threshold to show 

that they are not undertaking a major 

modification and that major NSR does 

not apply, sources must monitor both 

thresholds to prove this outcome under 

the current rules. This is because a 

mass-based GHG PAL cannot assure that 

there is no increase in CO2e tpy GHG. 

Since the Tailoring Rule requires a 

source to determine whether a specific 

action would increase the GHG 

emissions by a certain amount that 

would make them subject to regulation 

for PSD permitting purposes, setting a 

CO2e-based GHG PAL based on the 

increase identified in the Tailoring Rule 

thresholds will require that the source 

does not exceed that amount and thus 

will insure that changes at the source 

would not cause an increase in GHGs 

emissions in an amount that would be 

subject to regulation and thus insures 

that they are not subject to PSD 

permitting. In addition, since the 

Tailoring Rule and the existing PSD 

regulations require similar calculation 

of a source’s emissions to determine 

whether a major modification triggers 

PSD permitting requirements for GHGs, 

compliance with a mass-based PAL, 

which as explained earlier will not 

allow any increase above baseline and 

thus does not result in a significant 

emissions increase, will also insure that 

a source with a mass-based GHG PAL 

does not trigger those requirements. 

Expanding the GHG PAL program to 

allow GHG PALs to be used as an 

alternative method of assuring that any 

changes at the source are neither 

‘‘subject to regulation’’ nor major 

modifications resolves this issue, 

making GHG PALs function more like 

PALs for non-GHG pollutants. 

E. Can a GHG source that already has 

a mass-based GHG PAL obtain a CO2ebased PAL? 

In the Step 3 proposal, we proposed 

to add transition provisions to the PAL 

regulations that would allow a GHG 

source that has a mass-based GHG PAL 

to convert to a CO2e-based GHG PAL 

once, at the source’s option, and if 

agreed to by the permitting authority. 

However, public comments indicate that 

there is no pressing need for such a 

transition provision at this time. As a 

result, we are not finalizing that 

segment of the proposal at this time. We 

are also not aware of any mass-based 

PALs that have been issued or are being 

reviewed by any permitting authorities 

that may need such transition 

provisions. If the need for such a 

transition provision arises in the future; 

we can address it as part of our future 

streamlining actions. Streamlining 

continues to be a key element to our 

phased-in approach to GHG permitting 

and we fully intend to move forward 

expeditiously with developing 

additional streamlining approaches. 

VII. Comment and Response 

In this section, we briefly summarize 

and respond to some key comments we 

received during the comment period. 

We describe in detail these and other 

comments as well as our responses in 

the Response to Comments document to 

this rule, which can be found in the 

docket for this rulemaking under Docket 

No. EPA–HQ–OAR–2009–0517. 

A. Thresholds for GHGs 

We received dozens of comments, 

including 90 from individual citizens, 

on the proposed Step 3 rulemaking. The 

majority of the commenters other than 

individual citizens were from industry, 

and most of these comments supported 

the proposal not to lower the GHG 

thresholds. Some of these commenters 

made clear that they supported 

maintaining these applicability 

thresholds only if the DC Circuit 

upholds the Tailoring Rule against the 

current legal challenges and only as 

long as the EPA requires GHG 

permitting under PSD. Reasons 

supporting not lowering the Step 1 and 

2 thresholds included the lack of 

permitting authorities’ ability to fully 

implement the program at (or closer to) 


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statutory applicability thresholds, the 

lack of implementation of effective 

permit streamlining measures at this 

time and the inability of sources to cope 

with regulatory burdens. In addition, 

several state and local agency 

commenters supported the current 

thresholds, citing the need for increased 

resources, a large learning curve and 

little incremental air quality benefit in 

the control of GHGs. We appreciate 

these comments, and in some cases they 

provided additional information 

concerning state permitting 

administration and possible reasons for 

the less-than-expected numbers of 

permit applications that we have 

incorporated into our rationale. Two 

environmental advocacy organization 

commenters, one of which consisted of 

a group of national organizations, 

opposed the proposal, and we discuss 

their comments in detail immediately 

below. 

Environmental advocacy organization 

commenters stated that for the EPA to 

justify not lowering the current 

Tailoring Rule thresholds, ‘‘the doctrine 

of administrative necessity requires that 

EPA provide evidence of continuing 

administrative impossibility,’’ and 

therefore the EPA must provide data 

demonstrating that lowering thresholds 

would create administrative 

impossibilities. In addition, these 

commenters raised concerns about some 

of the specific aspects of the three 

criteria. For example, with respect to the 

criterion of whether states have had the 

time to increase their permitting 

resources, the commenters cautioned 

that the EPA should not ‘‘attempt to rely 

on a decision by one or more state 

legislatures to underfund CAA programs 

as evidence of ‘administrative 

necessity.’ ’’ 

In addition, the environmental 

advocacy organization commenters 

stressed that the actual permitting 

activity has been much less than the 

EPA’s methodology estimated, and 

stated, ‘‘[w]here estimates of permitting 

burdens conflict with actual experience, 

the agency must update its methods for 

assessing administrative loads based on 

the actual experience of permitting 

agencies to date.’’ The commenters 

stated that the EPA’s claims that macroeconomic fluctuations were the cause of 

the unexpectedly low level of 

permitting could not be supported. One 

of the commenters further stated that 

the EPA could not rely on the three 

criteria it identified to justify 

maintaining the thresholds because 

‘‘[t]hese criteria are pertinent only in the 

face of evidence that the permitting 

demand continues to exceed capacity by 

a significant amount * * * EPA’s 

current record does not so 

demonstrate.’’ This commenter asserted 

that in the Step 3 proposal, the ‘‘EPA 

has not provided sufficient justification 

for its conclusion that the permitting 

load faced by permitting agencies 

warrants maintenance of the current 

thresholds for the period covered by 

Step 3. While maintenance of the 

current applicability thresholds for GHG 

emissions may be justified by a record 

demonstrating continued administrative 

necessity, the EPA has not yet provided 

sufficient evidence in its proposed 

action.’’ This commenter concluded that 

the EPA ‘‘may wish to consider a 

supplementary proposal or notice of 

data availability that ensures adequate 

and transparent notice to stakeholders 

with adequate opportunity to 

comment.’’ The other commenter 

asserted that the limited amount of 

actual permitting means that the three 

criteria either are not required to have 

been met or in fact have been met. This 

other commenter concluded that the 

EPA was required to lower the 

thresholds. 

1. Narrow Scope of Step 3 

a. Summary 

The EPA disagrees with the 

environmental advocacy organization 

commenters’ views that in Step 3, the 

EPA must justify maintaining the 

current thresholds on grounds of 

administrative necessity. In brief, the 

structure of the Tailoring Rule’s multistep phase-in process makes clear that 

Step 3 is a narrow action designed to 

afford the EPA the opportunity to lower 

the Tailoring Rule thresholds shortly 

after promulgating the Tailoring Rule if 

certain specific events were to happen. 

Those events, which are reflected in the 

three criteria the EPA articulated as the 

basis for Step 3, concern improvement 

in state resources and expertise as well 

as the development of streamlining 

methods. Under these circumstances, it 

would not have been appropriate to wait 

several years, until the EPA completed 

the 5-year study and then promulgated 

Step 4, before lowering the thresholds. 

Importantly, Step 3 occurs too soon after 

the Tailoring Rule to permit a more 

fundamental review of the data and 

methodology underlying the EPA’s 

estimates of permitting burdens. That 

more fundamental review, to the extent 

needed, could occur during the 5-year 

study and Step 4 that are required 

several years later, in 2015 and 2016, 

respectively. The terms of the Tailoring 

Rule regulatory provisions and the 

discussion in the rule’s preamble 

concerning this phase-in approach— 

Step 3, the 5-year study and Step 4—as 

interpreted by the EPA, confirm the 

narrowness of Step 3. As a result, the 

EPA is authorized to proceed with Step 

3 as we do in this rulemaking, which is 

by applying the three criteria to 

determine whether to lower the 

thresholds. 

b. Discussion 

Step 3 can be best understood when 

viewed in the overall context of the 

phase-in process. The following is the 

schedule that the EPA established in the 

Tailoring Rule for the phase-in process, 

including Step 3 and subsequent action: 

June 3, 2010: Tailoring Rule is published in 

the Federal Register. 

January 2, 2011: Step 1 takes effect. 

July 1, 2011: Step 2 takes effect. 

July 1, 2012: Title V permit applications are 

due for sources that become subject to Step 

2. 

July 1, 2012: The EPA completes Step 3. 

July 1, 2013: Step 3 takes effect. 

April 30, 2015: The EPA completes 5-year 

study. 

April 30, 2016: The EPA completes Step 4. 

40 CFR 52.22(b). 

In the first instance, Step 3’s 

narrowness is clear from its timing, so 

soon after Steps 1 and 2. In 

promulgating the Tailoring Rule, which 

included Steps 1 and 2, the EPA 

undertook a robust analysis of 

administrative necessity. This analysis 

included compiling several sets of data 

and developing a complex, multicomponent methodology, all of which 

were fully vetted through the Tailoring 

Rule process. 

The EPA scheduled Step 3 shortly 

after the promulgation of Steps 1 and 2. 

Under this schedule, the EPA would 

promulgate Step 3 on the same day as 

the close of the first full year that Step 

2 would have been in effect. As noted, 

Step 3’s purpose was to provide a 

vehicle for the prompt lowering of the 

thresholds if certain events occurred by 

that time—state resources or expertise 

increased significantly, or the EPA was 

able to streamline permitting—so as to 

avoid a delay of some 4 years until the 

promulgation of Step 4 before lowering 

the thresholds. The EPA never intended 

that Step 3 entail a broad review of the 

underlying data sets and methodology 

for assessing permitting burden. Step 3 

is simply too soon after the 

promulgation of the Tailoring Rule, and 

too soon after Step 2, for the EPA to 

have acquired and evaluated sufficient 

information to be able to review and 

revise the data and methodology. 

The narrowness of Step 3 is also clear 

from the EPA’s description of it in the 

Tailoring Rule regulations and 

preamble. The regulations establish Step 

3 in a paragraph entitled, ‘‘Near-term 


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21We recognize that on a nationwide basis, state 

budget pressures have resulted from recent 

macroeconomic conditions, and that with ongoing 

economic growth, state budgets may be expected to 

increase. But at present, we remain concerned that 

on a nationwide basis, the capacity of state and 

local permitting authorities for GHG permitting may 

be less than what we expected at the time of the 

Continued 

Action on GHGs,’’ and describe it as 

follows: ‘‘The Administrator shall solicit 

comment, under section 307(b) of the 

Act, on promulgating lower GHGs 

thresholds for PSD applicability.’’ 40 

CFR 52.22(b)(1). The Tailoring Rule 

preamble elaborated as follows: 

[The] EPA includes an enforceable 

commitment to undertake a notice-andcomment rulemaking that would begin with 

[a supplemental notice of proposed 

rulemaking] that we expect to be issued in 

2011 and that we commit will be finalized in 

2012. The notice will propose or solicit 

comment on further reductions in the 

applicability levels. This rulemaking will 

take effect by July 1, 2013 and therefore, in 

effect, constitute [sic: constitutes] Step 3. In 

this [Tailoring Rule] action, we are 

committing to a rulemaking for Step 3, but 

are not promulgating Step 3, because it is 

important to allow EPA and the permitting 

authorities to gain experience permitting 

sources under Steps 1 and 2, and to allow 

time to develop streamlining methods, before 

attempting to determine what would be the 

next phase-in levels for PSD and title V 

applicability. 

75 FR 31572 June 3, 2010. As noted 

above, the preamble went on to 

explicitly identify three criteria for the 

EPA to evaluate in Step 3 to determine 

whether to lower the thresholds, which 

concerned progress in permitting 

authorities’ acquiring resources and 

developing expertise, as well as the 

EPA’s and the permitting authorities’ 

progress in developing streamlining 

measures. 75 FR 31559 June 3, 2010. 

The EPA interprets these regulations 

and preamble discussion to make clear 

that the EPA designed Step 3 narrowly 

as an opportunity to lower the 

thresholds very soon after finalizing the 

Tailoring Rule, if PSD and title V 

implementation for GHGs was on track 

and if certain events were unfolding in 

a way that allowed permitting at a lower 

threshold. We note that courts grant an 

administrative agency the highest level 

of deference in interpreting the agency’s 

own regulations. Auer v. Robbins, 519 

U.S. 452, 461 (1997). 

Our interpretation of the Step 3 

provisions finds support by contrasting 

them with the provisions for Step 4. The 

regulations establish Step 4 in a 

paragraph titled, ‘‘Further Study and 

Action on GHGs.’’ 40 CFR 51.22(b)(2), 

40 CFR 70.12(b)(2). Importantly, the 

regulations make clear that Step 4 is to 

be preceded by, and must be based on, 

an assessment—which we call the 5- 

year study—that must be completed by 

April 30, 2015. That study is to be wideranging: The regulations describe it as 

‘‘a study projecting the administrative 

burdens’’ of regulating sources below 

the then-existing thresholds. 40 CFR 

52.22(b)(2)(i), 40 CFR 70.12(b)(2)(i). The 

regulations go on to describe Step 4 as 

a rule that is ‘‘[b]ased on the results of 

the study’’ and ‘‘address[es] the 

permitting obligations of such sources,’’ 

and that must be finalized by April 30, 

2016. 40 CFR 52.22(b)(2)(ii), 40 CFR 

70.12(b)(2)(ii). 

Step 4’s provisions, along with its 

timing, make clear that it has a broader 

scope than Step 3. By the time of the 5- 

year study, several years of 

implementation of GHG permitting will 

have occurred, and as a result, the EPA 

will have a more robust set of data 

concerning various aspects of 

implementation and the EPA’s 

methodology. As noted, in the study, 

the EPA must evaluate that data as 

appropriate and ‘‘project[] * * * 

administrative burdens.’’ The EPA must 

then conduct the Step 4 rulemaking 

based on the study. All this makes clear 

that Step 4 provides a greater 

opportunity for evaluating 

administrative necessity, as appropriate, 

but Step 3, in contrast, is designed more 

narrowly. 

That Step 3 has a narrow scope is 

further made clear by reference to the 

separate provision in the Tailoring Rule 

regulations that under no circumstances 

will the EPA lower the thresholds below 

the 50,000/50,000 tpy CO2e level before 

April 30, 2016. 40 CFR 52.22(b)(2)(iii), 

40 CFR 70.12(b)(2)(iii). This provision 

means that the EPA would not lower the 

thresholds below those levels during 

Step 3. The environmental advocacy 

organization commenters did not 

comment that the EPA was free to 

disregard this limit in Step 3, and as a 

result, those commenters appeared at 

least implicitly to accept that this limit 

does constrain whatever action the EPA 

may take in Step 3. It is the EPA’s 

interpretation that just as the EPA 

narrowed Step 3 by establishing the 

50,000/50,000 tpy CO2e floor, the EPA 

also narrowed the scope of Step 3 to be 

limited to the three criteria, described 

above. In addition, the presence of this 

50,000/50,000 tpy CO2e limit 

contradicts commenters’ argument that 

the EPA should be required to make a 

new showing of administrative 

impossibility in Step 3. It would be 

illogical for the EPA to be required to 

conduct a new evaluation of 

administrative burdens and a new 

showing of administrative impossibility 

in Step 3 if the EPA had already decided 

that no matter what the evaluation of 

administrative burdens revealed, Step 3 

could not result in thresholds below the 

50,000/50,000 tpy CO2e level. 

The environmental advocacy 

organization commenters emphasize the 

imperatives of the administrative 

necessity doctrine, and we fully 

recognize those imperatives. We 

discussed the administrative necessity 

doctrine at length in the proposed and 

final Tailoring Rule preambles, and we 

concluded that the doctrine authorized 

us to promulgate the Tailoring Rule only 

on the basis that we would phase in the 

PSD and title V applicability thresholds 

as quickly as possible and as closely as 

possible to the statutory 100/250 tpy 

levels. But we are authorized to create 

a structure for this phase-in process to 

achieve the overall goal, and in doing 

so, we may design a particular step to 

achieve a particular effect. We designed 

Step 3 narrowly to provide an 

opportunity to adjust the thresholds 

soon after promulgating them if certain 

events transpired. This is consistent 

with, and could help assure the success 

of, the overall phase-in process. 

Contrary to the environmental advocacy 

organization commenters’ comments, 

Step 3 does not necessarily entail a reanalysis of administrative burdens or a 

new showing of administrative 

impossibility simply because Step 3 is 

an action that the EPA is taking within 

an overall context that involves the 

administrative necessity doctrine. 

2. The Three Criteria 

The EPA disagrees with various 

comments by the environmental 

advocacy organization commenters 

concerning the specifics of the three 

criteria for lowering the Tailoring Rule 

thresholds. With respect to their 

comment on the criterion of state 

resources, we acknowledge their 

concern as to whether a state could in 

effect manipulate the first criterion in 

the manner they suggest by 

underfunding the state environmental 

agency. However, we apply this 

criterion on a nationwide basis, so that 

we examine whether the states taken as 

a whole have increased their resources. 

At proposal, we noted evidence that 

because of the recent economic 

downturn and slow recovery, state 

environmental agencies across the 

country have generally seen budget 

reductions. This includes agencies in 

states that have moved forward to 

regulate GHGs in other ways. Applying 

this criterion on a nationwide basis 

minimizes concerns about a particular 

state seeking to underfund its 

environmental agency.21


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Tailoring Rule, and that possible diminution of 

capacity at least partly offsets the less-thanexpected number of permitting actions. 

3. Disparity Between Estimated and 

Actual Numbers of Permits 

We recognize the disparity that the 

environmental advocacy organization 

commenters stress between the 

estimated and actual permitting. 

However, we disagree that this disparity 

obliges us to reconsider the Tailoring 

Rule data and methodology during Step 

3. For the reasons described above, Step 

3 has a narrow scope: it is limited to the 

three criteria and as a result, it does not 

entail a review of the underlying data 

and methodology. 

a. No Re-Opening of Methodology 

In addition, we made clear in the Step 

3 proposal that we would not re-open 

the methodology in this rulemaking: 

[I]n this rulemaking, we are relying on the 

same methodology used in the Tailoring Rule 

to calculate administrative burdens, and we 

are not re-opening that methodology or 

soliciting comment on it. We are simply 

proposing action and soliciting comment on 

Step 3 of the phase-in approach. 

77 FR 14255 March 8, 2012. We affirm 

here that we are not re-opening the data 

and methodology. 

b. Reasons for Not Reconsidering Data 

Sets and Methodology 

Although we are not re-opening the 

data and methodology, for the sake of 

completeness, we will respond directly 

to concerns expressed by the 

commenters. Even if we were prepared 

to re-open the data and methodology, 

we would conclude that 

notwithstanding the disparity 

commenters emphasize, they have not 

provided, and we do not have, sufficient 

information to be able to conduct a 

review and revision of the data and 

methodology at this time. 

(1) Summary 

In the Tailoring Rule, our analysis of 

administrative burden was rendered 

complex by the need to account for 

many different types of permitting 

activity. We had to rely on several 

different sources of data and we had to 

develop a complex and multicomponent methodology, with 

numerous assumptions and estimates. 

The sources of data were the best 

available, the assumptions in the 

methodology were reasonable and, 

importantly, all were fully vetted 

through the Tailoring Rule process. No 

one commented that the data and 

methodology over-estimated the amount 

of permitting burden, and no one 

brought such a challenge after 

promulgation. 

In this Step 3 rulemaking, 

environmental advocacy organization 

commenters pointed out the disparity 

between the expected and actual 

number of GHG permit actions, but they 

did not challenge any specific aspects of 

this data and methodology. Thus, it 

remains possible that at least part of the 

disparity is temporary, due to macroeconomic conditions and other factors. 

Even if the disparity has occurred 

because the data and methodology do 

contain inaccuracies that yield an overestimate of the number of GHG permits, 

such inaccuracies must be considered in 

the context of the overall administrative 

burden due to GHG permitting. This 

burden also entails the amount of perpermit processing costs and other 

components of permitting 

administration, such as minor source 

permitting. Therefore, even if we were 

to conclude that actual data show an 

overestimate in the number of GHG 

permits, we are not in a position at 

present to attempt to lower the 

applicability thresholds. 

We have little information as to the 

amount of any overestimate in actual 

permits. Other information may suggest 

that we have not accounted for certain 

other components of permitting 

administration—such as additional 

synthetic minor source permitting— 

which points towards an under-estimate 

of GHG-related permitting burden. And 

most broadly, we may well receive new 

information over time concerning other 

aspects of our data sets and 

methodology that may point towards 

adjustments in overall permitting 

burden and, ultimately, in the 

applicable thresholds, even though at 

present, we cannot predict the direction 

and extent of those adjustments. As a 

result, attempting to make an 

adjustment at this time to permitting 

thresholds based on the current 

information concerning numbers of 

GHG permits would amount to a 

piecemeal approach that would create 

significant uncertainty for the 

permitting authorities and regulated 

community, and we decline to adopt it. 

For all these reasons, it would be 

premature to attempt to lower the 

permitting thresholds based on the 

partial information we have concerning 

numbers of GHG permits. 

(2) Discussion 

At the outset, it must be emphasized 

that in the Tailoring Rule, our analysis 

of administrative burden was rendered 

complex by the fact that there are many 

different types of sources (that is, many 

different types of industrial sources as 

well as commercial and residential 

sources), many different sizes of sources 

(that is, minor and major sources, and 

many sizes of major sources), two types 

of activity that trigger PSD (that is, new 

construction and modifications), two 

types of sources based on their 

association with the PSD and title V 

programs (that is, ‘‘anyway’’ sources 

that are subject to PSD and title V 

anyway due to their non-GHG 

emissions, and GHG-only sources for 

whom the PSD or title V requirements 

are triggered solely because of their 

GHG emissions) and two permitting 

programs (that is, PSD and title V). To 

estimate the administrative burdens 

associated with the full range of GHG 

permitting activity, we had to rely on 

several different sources of data 

concerning the amounts of PSD and title 

V permitting activity and a complex and 

multi-component methodology, which 

in turn included many assumptions and 

estimates. The data sets and 

methodology were fully vetted through 

the Tailoring Rule process. At proposal, 

no one commented that the data and 

methodology overestimated the amount 

of GHG permitting burden. On the 

contrary, stakeholders commented that 

the EPA had significantly 

underestimated the numbers of permits 

and per-permit costs. Based on those 

comments and the EPA’s further 

analysis, the EPA revised its 

methodology to substantially increase 

the expected number of GHG permitting 

actions and the amount of time the 

permitting authorities would need to 

process some of them. Following 

promulgation of the Tailoring Rule, no 

one sought administrative 

reconsideration or a court challenge of 

the data and methodology. 

Although environmental advocacy 

organization commenters have pointed 

out the disparity between the total 

number of expected annual permits, 

based on the EPA’s methodology, and 

the total actual number, these 

commenters did not provide any 

specific information that casts doubt on 

any particular aspect of the data and 

methodology. 

In the absence of such information, 

there are several possible explanations 

for the disparity. It is possible that the 

unexpectedly small amount of permit 

activity is at least in part a temporary 

phenomenon due, as discussed in the 

proposal, to prospective permittees 

having accelerated their applications to 

2010 to avoid GHG PSD requirements, 

or, as noted above, to recent macroeconomic conditions. In addition, 

industry commenters have stated 

because GHG permitting is still in its 

initial stage, some sources have taken a 


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22 ‘‘Summary of Methodology and Data Used to 

Estimate Burden Relief and Evaluate Resource 

Requirements at Alternative Greenhouse Gas (GHG) 

Permitting Thresholds’’ (March 2010), included as 

Attachment C to the ‘‘Regulatory Impact Analysis 

for the Final Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring Rule: Final 

Report’’ (May 2010), Docket No. EPA–HQ–OAR– 

2009–0517–19161. 

wait-and-see approach before 

undertaking new construction or 

modifications, and that has resulted in 

fewer permit applications. Another 

factor is the possibility that some of the 

smaller sources that have never before 

been subject to the PSD program, but 

that are now subject to GHG PSD 

permitting requirements, are unaware of 

their permitting obligations. Most 

generally, as we noted in the Step 3 

proposal, some officials in several states 

have stated that they thought the pace 

of GHG permitting would increase 

above the pace observed in 2011. Even 

so, we recognize that it is also possible 

that some aspects of the data sets and 

methodology do contain inaccuracies 

that may point towards overestimation 

of the number of GHG permits. During 

the Tailoring Rule, we did acknowledge 

uncertainties in many aspects of the 

methodology, which were discussed in 

the primary technical support document 

that described the methodology.22

However, the possibility that we overestimated numbers of GHG permits due 

to inaccuracies in the data or 

methodology must be considered in the 

context of the overall administrative 

burden due to GHG permitting. This 

burden entails not only (1) the number 

of GHG permits; but also (2) the amount 

of per-permit processing costs; and (3) 

other components of GHG permitting 

administration, which include minor 

source permitting, hiring and training, 

outreach and education as well as 

enforcement actions. Viewed in this 

context, it is clear that even if we were 

to conclude that actual data shows an 

overestimate in the number of GHG 

permits, we are not in a position at 

present to attempt to lower the 

applicability thresholds, as an 

environmental advocacy organization 

commenter urged. 

There are several reasons: First, we do 

not know the amount of any 

overestimate, in light of the fact that at 

least some of it may be due to macroeconomic conditions and other factors; 

and in addition, the information that we 

have concerning the number of GHG 

permits actually issued provides little 

insight into which of the many data 

points or assumptions and estimates in 

the methodology may have led to the 

overestimate. This means we do not 

have enough information to adjust the 

estimates of overall permitting burden 

or the applicable thresholds. 

Second, the information concerning 

numbers of permits tells only part of the 

overall administrative-burden story. 

Over time, we may well receive other 

information that may suggest that our 

data sets and methodology do not 

account for certain components of 

permitting administration, which point 

towards an under-estimate of permitting 

burden. For example, our methodology 

does not account for the permitting 

burdens resulting from permitting 

synthetic minor sources that seek to 

avoid GHG requirements, staff hiring 

and training, public education and 

outreach to sources and enforcement. 75 

FR 31571 June 3, 2010. 

Third and most broadly, we must 

recognize that we may receive more 

information over time that may shed 

light on the accuracy of various aspects 

of our methodology. This is true not 

only for the numbers of permits that we 

estimate and other components of the 

GHG permitting program, but also for 

the estimates of the per-permit costs to 

the permitting authorities. For example, 

GHG-only sources have not been 

required to submit their Step 2 title V 

permit applications until July 1, 2012, 

and as a result, we have little actual 

information concerning numbers of title 

V permits or other aspects of title V 

permitting. As noted, to this point, little 

information has been provided to the 

EPA to specifically verify or call into 

question the many data sets or estimates 

and assumptions in the methodology. 

As a result, even if the EPA had 

sufficient information to conclude that 

specific aspects of its methodology 

contained inaccuracies that pointed in 

the direction of over-estimating 

administrative permit burden, that 

information would affect only part of 

overall administrative burden, and it 

would be premature to attempt to adjust 

the permitting thresholds based solely 

on that partial information. Soon 

thereafter, the EPA could acquire 

additional information indicating that 

other aspects of its methodology were 

also inaccurate, and that information 

would lead to calls for the EPA to 

continue to revise the data sets and 

methodology whenever additional 

information became available that 

pointed towards a different burden 

estimate and therefore a different 

threshold. Such a piecemeal approach 

would create significant uncertainty for 

the permitting authorities and regulated 

community, and we decline to adopt it. 

We also disagree with another 

environmental advocacy organization’s 

comment that the EPA should consider 

issuing ‘‘a supplemental notice of 

proposed rulemaking or notice of data 

availability that ensures adequate and 

transparent notice to stakeholders with 

adequate opportunity to comment,’’ in 

lieu of finalizing Step 3 at this time. 

Even if there is a basis to believe that 

the methodology for estimating PSD 

GHG permitting burden may be 

inaccurate, it is reasonable for the EPA 

to finalize at this time the Step 3 

rulemaking as proposed, thereby 

determining not to lower the thresholds. 

This will maintain the schedule for 

action already established in the 

regulations promulgated during the 

Tailoring Rule. In particular, the EPA is 

already obligated to undertake the 5- 

year study, to be followed by Step 4, 

which will afford the opportunity to 

review and revise the data sets and 

methodology, as appropriate, on a 

schedule that can accommodate any 

need to gather and analyze data. 

Importantly, this schedule will also 

accommodate the development of GHG 

permitting under title V, including the 

collection and analysis of information 

concerning progress. This approach of 

conducting any necessary review during 

the 5-year study and Step 4 will avoid 

uncertainty concerning the timing of 

when the EPA may lower the 

thresholds. 

The key to our decision to proceed at 

this juncture is the fact that under the 

regulations we promulgated during the 

Tailoring Rule, we are already obligated 

to undertake the 5-year study by April 

30, 2015 and to finalize Step 4 by April 

30, 2016. In the Tailoring Rule 

regulations, we described the study as 

‘‘a study projecting the administrative 

burdens’’ of regulating sources below 

the then-existing thresholds, 40 CFR 

52.22(b)(2)(i), and in the Tailoring Rule 

preamble we added to that description 

the following: 

In this action, EPA is also finalizing its 

proposal to commit to conduct an assessment 

of the threshold levels—to be completed in 

2015, 5 years after this action—that will 

examine the permitting authorities’ progress 

in implementing the PSD and title V 

programs for GHG sources as well as EPA’s 

and the permitting authorities’ progress in 

developing streamlining methods. We further 

commit to undertake another round of 

rulemaking—beginning after the assessment 

is done, and to be completed by April 30, 

2016—to address smaller sources. 

75 FR 31573 June 3, 2010. We went on 

to point out that the timing of the 5-year 

study and Step 4 was consistent with 

our development of streamlining 

methods, some of which would require 

rulemaking, and therefore would take 

several years. 75 FR 31573 June 3, 2010. 

This schedule for the 5-year study and 

Step 4 rulemaking will also facilitate a 


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robust collection and review of data, as 

appropriate. In the Tailoring Rule, the 

EPA calculated the administrative 

burdens of GHG permitting based on 

data for (1) the numbers and types of 

PSD and title V GHG permitting 

actions—e.g., new construction and 

modifications, ‘‘anyway’’ sources and 

GHG-only sources—and (2) the expected 

processing time for the different types of 

GHG permits. The sets of data that were 

available to us at the time of the 

Tailoring Rule—which remain the only 

data available to us—were the 

foundation for our calculations. If the 

reason why permit activity to this point 

has been lower than expected is due to 

inaccuracies in those data, then we will 

need to correct the data based on the 

actual experience of the permitting 

authorities. 

Because GHG permitting is a new 

addition to the PSD program, we believe 

that we would need 2 full years (July 1, 

2012 to June 30, 2014) of the abovedescribed data about the GHG 

permitting, after the initial, ‘‘start-up’’ 

year (July 1, 2011 to June 30, 2012). Data 

from the initial year would be valuable, 

but because GHG permitting is new, the 

initial year may well have involved 

some inefficiencies and a learning 

curve. As a result, the initial year may 

not be considered to be representative of 

a permitting authority’s normal 

administration of the permitting 

program. Moreover, we believe that 2 

full years of data are necessary to 

accurately reflect representative 

operations, particularly since the 

program is new. For example, if we 

were to select the number of permits 

issued as a measure of permitting 

activity, that number may vary widely 

over a several-month period, and that 

could skew the total for a particular 

year, but that variability would have 

less of an impact over a 2-year period. 

We would expect to be able to collect 

this data from the 2-year period in time 

to complete the 5-year study that is due 

by April 30, 2015. Following the study, 

we would be able to conduct the Step 

4 rulemaking by the required April 30, 

2016 completion date. 

We disagree with the suggestion from 

the environmental advocacy 

organization commenter that we 

consider issuing a supplemental notice 

of proposed rulemaking at this time, 

instead of finalizing Step 3. The 

commenter did not describe what 

information it expected could be 

obtained through a supplemental notice 

of proposed rulemaking. We see little 

value to such an action at this time. If 

the reason for the unexpectedly low 

level of permit activity is inaccuracies 

in our data sets or methodology, as the 

commenter suggests, then the best way 

to address that is through the 5-year 

study, as described. That process allows 

a robust review. If the problem turns out 

to be inaccuracies in the data set or 

methodology, we believe it is better to 

have the opportunity to collect a 

comprehensive set of data. 

Another reason why we decline 

commenter’s suggestion to delay 

completing Step 3 and issue a 

supplemental notice of proposed 

rulemaking is that any such delay 

would put pressure on the time frame 

for the 5-year study and Step 4, in light 

of how quickly they follow Step 3, and 

that would create uncertainty for 

sources and state or local permitting 

authorities. We note that delaying 

completion of Step 3 and the final 

action we take on Step 3 in this 

rulemaking both have the same effect, 

which is to leave in place the Step 2 

thresholds. Completing Step 3 now 

allows us to remain on track for the 5- 

year study and Step 4, as prescribed in 

the regulations. We think it is unlikely 

that delaying completion of Step 3, as 

commenters suggest, would lead to a 

lowering of thresholds sooner than Step 

4 because we do not believe the 

information collected could be 

sufficiently robust to serve as the basis 

of lowering the thresholds. 

In summary, we recognize the 

environmental advocacy organization 

commenters’ concerns that there is a 

disparity between the estimates of 

permits issued and the actual numbers 

of permits issued to date. If this 

disparity persists, it will deepen 

concerns about whether the Tailoring 

Rule data sets or methodology 

overestimated permitting burden. 

However, we also recognize other 

indications that suggest that our 

methodology may have under-estimated 

permitting burden in other respects, and 

we also recognize that to this point, 

with the first full year of Step 2 only just 

now concluding, we do not have any 

more information than we had when we 

promulgated the Tailoring Rule about 

many aspects of our data sets and 

methodology that we have 

acknowledged entail uncertainty. By the 

same token, the great majority of title V 

permitting activity is only now just 

about to begin, and therefore we have 

little information about it. Title V 

permitting activity is important for 

purposes of not just title V permitting 

burdens but also PSD permitting 

burdens because permitting authorities 

generally administer the two programs 

in close relation to each other. 

Accordingly, we intend to collect 

information concerning recent, current 

and future permitting activity in the 

states. We also intend to review 

information available to us from other 

sources, such as the Greenhouse Gas 

Mandatory Reporting Rule. Our goal 

would be to collect data that would help 

us analyze how the various estimates in 

our methodology vary from actual 

experience and how we can refine our 

analysis. With this approach, as we 

conduct the 5-year study (due to be 

completed by April 30, 2015), we would 

have data concerning permitting activity 

over both (1) the 2-year period when 

Step 2 will have been in full swing (July 

1, 2012 to June 30, 2014), as well as (2) 

the earlier start-up period (January 2, 

2011 to June 30, 2012). 

If we find that a significant disparity 

between estimated and actual numbers 

of permit actions has persisted, or if 

significant disparities have become 

apparent between other aspects of our 

methodology and actual permitting 

experience, we would expect to address 

those disparities and the relevant 

aspects of our methodology in the 5-year 

study. In this event, in Step 4, we would 

review and revise our data and 

methodology as appropriate. Based on 

that review and revision, we would 

review and revise, as appropriate, the 

administrative burden estimates and the 

applicability thresholds that are based 

on those burden estimates. 

B. Plantwide Applicability Limitations 

for GHGs 

We received dozens of comments, 

including many from the regulated 

community and individual permitting 

authorities, on the proposed changes to 

the PALs provisions to better address 

GHGs. As explained above, we are 

providing a general summary of those 

comments, as well as providing 

responses to a few key comments in this 

section. We discuss the comments 

received and our responses in more 

detail in the Response to Comments 

document that appears in the docket for 

this final rule. 

As a general matter, many 

commenters on the proposal expressed 

general support for the concept of GHG 

PALs, although some had misgivings 

about some aspects of the proposal. 

Supporters indicated that GHG PALs 

can streamline PSD permitting and 

reduce administrative burden for some 

sources, and most thought that the 

Minor Source Approach would be more 

beneficial and less burdensome than the 

Major Source Opt-In Approach. Some 

comments stated that GHG PALs will 

have advantages, including leading 

sources to minimize emissions to create 

room for later expansion, providing 

certainty for planning purposes, helping 

address changing market conditions and 


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reducing overall workload over the term 

of the permit. Several commenters 

stated that PALs for GHGs would be 

consistent with the treatment of other 

regulated NSR pollutants in the PSD 

programs. Other commenters indicated 

that using GHG PALs as an alternative 

for determining whether GHGs are 

subject to regulation and whether a 

project is a major modification for 

purposes of permitting is appropriate, 

and one elaborated that use of PALs will 

provide assurance that GHGs are not 

subject to regulation and will not trigger 

a major modification. On the other 

hand, several commenters generally 

opposed the GHG PAL proposal, stating 

that they do not believe that the EPA 

had provided an appropriate basis for 

changing the existing PAL program to 

address GHGs or that such changes were 

necessary. One commenter stated that 

the GHG PAL proposal offers little 

streamlining and only complicates 

permitting. 

While we did not identify PALs as a 

viable streamlining technique for GHG 

sources in the Tailoring Rule, since we 

finalized that rule, we have recognized 

that plant-wide limitations could be 

designed in a way that would be useful 

for easing administration of GHG 

permitting and are adopting changes to 

the existing PAL regulations to address 

the unique PSD applicability issues 

associated with GHGs. After reviewing 

the comments received, we believe 

finalization of the changes to allow 

permitting of GHG PALs using the 

Minor Source Approach and on a CO2e 

basis, including the option to use the 

CO2e-based applicability thresholds 

provided in the subject to regulation 

definition in setting the PAL, will 

provide for better implementation of 

PALs for GHGs, is consistent with the 

approach to GHG permitting described 

in the Tailoring Rule and thus can play 

a relevant role in our strategy for 

developing streamlining options for 

permitting authorities to help ease the 

administrative burdens associated with 

GHG permitting for sources and 

permitting authorities alike. To the 

extent that some commenters oppose 

the use of PALs generally, we note that 

use of PALs as an alternative NSR 

applicability mechanism and the basic 

elements of PAL permits have already 

been upheld. New York v. EPA, 413 

F.3d 3, 36–38 (D.C. Cir. 2005). The 

changes the EPA is finalizing to make 

implementation of that mechanism 

more useful as applied to GHGs are 

consistent with that decision, as well as 

the Tailoring Rule. Aside from the 

specific GHG-based revisions to the PAL 

provisions that the EPA is promulgating 

in this action, the EPA did not seek 

comment on, or otherwise re-open the 

existing PAL provisions, so any 

comments on non-GHG PAL-related 

issues are outside the scope of this 

rulemaking. 

Many commenters (including 

commenters that both supported and 

opposed GHG PALs) stated that specific 

regulatory text for GHG PALs must be 

made available to allow for effective and 

meaningful comment on the proposal. 

Many of these commenters indicated 

that proposed GHG PAL language must 

be subject to notice and comment 

rulemaking before the EPA can finalize 

the GHG-specific changes to the PAL 

provisions, and some stated that the 

description in the proposal was 

insufficient to provide notice of the 

intended changes to the PAL 

regulations. Commenters stated that the 

EPA should issue a re-proposal for the 

GHG PAL revisions and include 

proposed regulatory text for public 

notice and comment. Other 

commenters, however, indicated that 

the PAL provisions should be finalized 

as soon as possible. 

The EPA disagrees with the comments 

arguing that the EPA must provide 

notice-and-comment of specific 

regulatory text for its proposed GHG 

PALs changes before taking final action. 

The EPA notes that the CAA provisions 

contained in section 307, which govern 

rulemakings such as this, do not 

explicitly require the Agency to propose 

specific regulatory text as part of that 

process. In addition, the Administrative 

Procedure Act (APA) requires simply 

that ‘‘either the terms or substance of 

the proposed rule or a description of the 

subjects and issues involved’’ be 

included in a notice of proposed 

rulemaking. We believe that the notice 

and opportunity for comment provided 

for the GHG PALs proposal was 

sufficient to satisfy the requirements of 

the APA and CAA, and as explained 

below, we believe that we have 

provided adequate notice of the changes 

we are making to the PAL provisions to 

give a meaningful opportunity for 

comment on those changes. 

In the Step 3 proposal, we described 

the various changes we were proposing 

in detail (including a description of the 

Minor Source Approach that we are 

finalizing today), and included a 

description of how we intended to 

extend PALs to GHGs on a CO2e basis 

and a description of how we proposed 

to allow the use of PALs to determine 

whether GHG emissions are subject to 

regulation. 77 FR 14239 March 8, 2012. 

The Step 3 proposal also gave notice 

that we would revise a number of 

existing regulatory provisions to 

implement the approach selected. 77 FR 

14244 March 8, 2012. In addition, we 

highlighted specific provisions of the 

PALs that we proposed to change and 

explained how we proposed to change 

those provisions. 77 FR 14244 March 8, 

2012. For instance, we explained that 

for the Minor Source Approach, we 

proposed to revise the PAL applicability 

provisions in 40 CFR 52.21(aa)(1) to 

include GHG-only sources. Id. We 

further explained that we proposed to 

change the ‘‘subject to regulation’’ 

definition at 40 CFR 52.21(b)(49) and 

the PAL applicability section in 40 CFR 

52.21(aa)(1) to indicate that a source 

that complies with a GHG PAL will not 

be ‘‘subject to regulation’’ for GHGs. Id. 

In addition, we explained that we 

proposed to revise 40 CFR 52.21(aa)(6) 

to allow PALs issued on a CO2e basis to 

include the 75,000 tpy CO2e emissions 

increase from the applicability 

thresholds, so that amount could be 

added to baseline actual emissions in 

setting the level of the PAL. Id. While 

we are making GHG-specific revisions to 

a number of other regulatory provisions 

in the PAL regulations, these changes 

simply implement the same regulatory 

revisions that we described repeatedly 

in the proposal—i.e., making GHG PALs 

available on a CO2e and mass basis, 

allowing a CO2e-based PAL to include 

an emissions increase based on 

Tailoring Rule thresholds and the Minor 

Source Approach. Although the 

proposal did not list every specific 

provision we are revising in this final 

rule, each of these changes has the effect 

of implementing the GHG PAL approach 

described in the proposal and many of 

those changes are fairly small (for 

example, inserting ‘‘GHG-only source’’ 

to provisions that currently list only 

‘‘major stationary source’’). Accordingly, 

our proposal provided sufficient 

information on the regulatory changes 

that we are finalizing in this action that 

allowed for public notice and comment. 

We further note that the comments 

raising concerns about the adequacy of 

the notice for the GHG PAL revisions 

did not identify any particular aspect of 

the revisions that we are finalizing in 

this action that were not adequately 

explained in the proposal to allow for 

comment. In fact, despite the general 

notice concerns raised by commenters, 

many commenters did provide detailed 

comments on our proposed changes to 

the PAL provisions. We also note that 

while one comment indicated that the 

description of the proposed conversion 

from a mass-based PAL to a CO2e-based 

PAL was too opaque for meaningful 

comment, that comment is not relevant 


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to this final action because we are not 

taking action on that proposed change. 

For these reasons, we believe that we 

have provided sufficient notice and 

opportunity for comment on the 

revisions to the regulatory provisions for 

GHG PALs that we are adopting in this 

action. 

A number of commenters also 

requested that the EPA provide 

clarification that the proposed changes 

to address GHG PALs in the federal 

regulations would not impact existing 

state authority to issue PAL permits for 

GHG emissions or existing GHG PAL 

permits that might have already been 

issued. In this action, we are finalizing 

revisions to certain sections of the 

federal regulations governing the 

issuance of permits pursuant to federal 

authority at 40 CFR 52.21, in particular 

the provisions relating to PALs at 40 

CFR 52.21(aa) and provisions relating to 

the definition of ‘‘subject to regulation’’ 

at 40 CFR 52.21(b)(49). These provisions 

govern permits issued pursuant to 

federal authority, and, accordingly, 

these changes would only affect permits 

issued under federal authority 

(i.e., those issued by the EPA or a 

delegated state or local agency). We do 

not intend these changes to 40 CFR 

52.21 to affect existing state authority to 

issue PAL permits, and nothing in this 

action would require permitting 

authorities to take any action with 

respect to their existing PAL regulations 

or any existing PAL permits. We also 

note that these revisions are not 

minimum program requirements that 

must be adopted by states into their 

EPA-approved SIP PSD permitting 

programs. Accordingly, this final rule 

does not adopt these changes into the 

existing PAL provisions contained in 40 

CFR 51.166, but nothing in this action 

is intended to restrict states from 

adopting these, or similar, changes into 

their SIP-approved PAL program if they 

choose to do so. Moreover, to the extent 

that states with existing PAL permitting 

programs have interpreted their PAL 

provisions to allow PAL permits to be 

issued on a CO2e basis and for a PAL to 

be set at a level that reflects baseline 

actual emissions plus a 75,000 tpy CO2e 

emissions increase, the changes that the 

EPA is making to the PAL regulations in 

40 CFR 52.21 are not intended to change 

those existing state interpretations. 

Accordingly, the changes that the EPA 

is finalizing to address GHG PALs in the 

federal regulations do not, as a general 

matter, impact existing state authority to 

issue PAL permits for GHG emissions or 

existing GHG PAL permits that might 

have already been issued. 

VIII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This action is not a ‘‘significant 

regulatory action’’ under the terms of 

Executive Order 12866 (58 FR 51735, 

October 4, 1993) and is therefore not 

subject to review under Executive 

Orders 12866 and 13563 (76 FR 3821, 

January 21, 2011). 

B. Paperwork Reduction Act 

This action does not impose any new 

information collection burden. The final 

rule will not change the existing GHG 

permitting thresholds, and therefore 

will not impose any additional burden 

on sources to obtain PSD or title V 

permits or on permitting authorities to 

issue such permits. The provisions for 

GHG PALs, which have previously been 

approved by OMB, will have the effect 

of reducing permitting burden in that 

the burden associated with obtaining or 

issuing a PAL permit will be more than 

offset through avoiding subsequent PSD 

permitting actions with greater 

associated burden. In addition, the OMB 

has previously approved the 

information collection requirements 

contained in the existing regulations for 

the NSR and title V programs under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. and has 

assigned OMB control number 2060– 

0003 to the NSR program and OMB 

control numbers 2060–0243 and 2060– 

0336 to the title V program (40 CFR part 

70 and part 71 components, 

respectively). The OMB control 

numbers for the EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedures Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

that is a small industrial entity as 

defined in the U.S. Small Business 

Administration size standards (see 13 

CFR 121.201); (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; or (3) a small organization 

that is any not-for-profit enterprise that 

is independently owned and operated 

and is not dominant in its field. 

After considering the economic 

impacts of today’s final rule on small 

entities, I certify that this final action 

will not have a significant economic 

impact on a substantial number of small 

entities. In determining whether a rule 

has a significant economic impact on a 

substantial number of small entities, the 

impact of concern is any significant 

adverse economic impact on small 

entities, since the primary purpose of 

the regulatory flexibility analysis is to 

identify and address regulatory 

alternatives ‘‘which minimize any 

significant economic impact of the rule 

on small entities.’’ 5 U.S.C. 603 and 604. 

Thus, an agency may certify that a rule 

will not have a significant economic 

impact on a substantial number of small 

entities if the rule relieves regulatory 

burden, or otherwise has a positive 

economic effect, on all of the small 

entities subject to the rule. 

The final rule would not change the 

existing GHG permitting thresholds, and 

therefore would not impose any 

additional burden on any sources 

(including small entities) to obtain PSD 

or title V permits or on any permitting 

authorities (including small entities, if 

any) to issue such permits. The final 

provisions for GHG PALs could have the 

effect of reducing permitting burden on 

all entities, including small entities, in 

that the burden associated with 

obtaining or issuing a PAL permit could 

be more than offset through avoiding 

subsequent PSD permitting actions with 

greater associated burden. Moreover, the 

decision of any source (including small 

entities) to request a GHG PAL and the 

decision of any permitting authority 

(including small entities) to either adopt 

the GHG PAL regulations or issue a 

GHG PAL are completely voluntary. No 

source is required to seek a PAL and no 

permitting authority is required to issue 

a PAL, so there is no requirement for 

any entity (including a small entity) to 

use these rules if it believes the GHG 

PAL would not relieve burden. We have 

therefore concluded that today’s final 

rule will relieve regulatory burden for 

all affected small entities. 

D. Unfunded Mandates Reform Act 

This rule does not contain a federal 

mandate that may result in expenditures 

of $100 million or more for state, local 

and tribal governments, in the aggregate, 

or the private sector in any 1 year. The 

final rule will not change the existing 

GHG permitting thresholds, and 


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therefore will not impose any additional 

burden on sources to obtain PSD or title 

V permits or on permitting authorities to 

issue such permits. Moreover, the 

decisions of state, local and tribal 

governments to adopt the GHG PAL 

provisions generally and to issue a GHG 

PAL to any specific permitting action 

are completely voluntary. Thus, this 

rule is not subject to the requirements 

of sections 202 or 205 of the Unfunded 

Mandates Reform Act (UMRA). 

This rule is also not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. As 

noted previously, the effect of the final 

rule would be neutral or relieve 

regulatory burden. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the states, on the 

relationship between the national 

government and the states or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This final rule 

would maintain the existing structure of 

the PSD and title V programs and would 

not, therefore, affect the relationship 

between the national government and 

the states or the distribution of power 

and responsibilities among the various 

levels of government. In addition, the 

final rule would not change the existing 

GHG permitting thresholds, and 

therefore would not impose any 

additional burden on state permitting 

authorities to issue PSD or title V 

permits or such permits. The provisions 

for GHG PALs will have the effect of 

reducing permitting burden in that the 

burden associated with issuing a PAL 

permit would be more than offset 

through avoiding subsequent PSD 

permitting actions with greater 

associated burden. Thus, Executive 

Order 13132 does not apply to this rule. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 

2000). There are no tribal authorities 

currently issuing major NSR permits, 

one tribe is implementing a title V 

program based on a delegation 

agreement under 40 CFR part 71 and 

one tribe has recently obtained approval 

of title V program under 40 CFR part 70. 

However, the final rule would not 

change the existing GHG permitting 

thresholds, and therefore will not 

impose any additional burden on 

sources to obtain PSD or title V permits 

or on permitting authorities to issue 

such permits. The provisions for GHG 

PALs will have the effect of reducing 

permitting burden in that the burden 

associated with obtaining or issuing a 

PAL permit would be more than offset 

through avoiding subsequent PSD 

permitting actions with greater 

associated burden. Thus, Executive 

Order 13175 does not apply to this 

action. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

The EPA interprets Executive Order 

13045 (62 FR 19885, April 23, 1997) as 

applying only to those regulatory 

actions that concern health or safety 

risks, such that the analysis required 

under section 5–501 of the Executive 

Order has the potential to influence the 

regulation. This action is not subject to 

Executive Order 13045 because it does 

not establish an environmental standard 

intended to mitigate health or safety 

risks. 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution or Use 

This action is not subject to Executive 

Order 13211 (66 FR 28355, May 22, 

2001) because it is not a significant 

regulatory action under Executive Order 

12866. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (NTTAA), Public Law 104– 

113, 12(d) (15 U.S.C. 272 note) directs 

the EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials specifications, test methods, 

sampling procedures and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. The NTTAA directs the EPA to 

provide Congress, through the OMB, 

explanations when the Agency decides 

not to use available and applicable 

voluntary consensus standards. 

This rulemaking does not involve 

technical standards. Therefore, the EPA 

did not consider the use of any 

voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 (59 FR 7629, 

February 16, 1994) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies and activities on minority 

populations and low-income 

populations in the United States. 

The EPA has determined that this 

final rule will not have 

disproportionately high and adverse 

human health or environmental effects 

on minority or low-income populations 

because it does not affect the level of 

protection provided to human health or 

the environment. The final rule would 

not change the existing GHG permitting 

thresholds, and therefore would not 

affect the universe of sources subject to 

permitting. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. The EPA will 

submit a report containing this rule and 

other required information to the U.S. 

Senate, the U.S. House of 

Representatives and the Comptroller 

General of the United States prior to 

publication of the rule in the Federal 

Register. A Major rule cannot take effect 

until 60 days after it is published in the 

Federal Register. This action is not a 

‘‘major rule’’ as defined by 5 U.S.C. 

804(2). This action is effective on 

August 13, 2012. 

L. Judicial Review 

Under section 307(b)(1) of the Act, 

petitions for judicial review of this 

action must be filed in the United States 

Court of Appeals for the District of 

Columbia Circuit by September 10, 

2012. Filing a petition for 

reconsideration by the Administrator of 

this final rule does not affect the finality 

of this rule for the purposes of judicial 

review nor does it extend the time 

within which a petition for judicial 

review may be filed, and shall not 


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postpone the effectiveness of such rule 

or action. Under section 307(b)(2) of the 

Act, the requirements of this final action 

may not be challenged later in civil or 

criminal proceedings brought by us to 

enforce these requirements. 

Section 307(d)(1)(J) specifies that the 

provisions of section 307(d) apply to 

‘‘promulgation or revision of regulations 

under [part] C of title I (pertaining to 

prevention of significant deterioration of 

air quality and protection of visibility).’’ 

This section clearly subjects the 

portions of this action that pertain to 

PSD to the provisions of section 307(d). 

Section 307(d)(1)(V) provides that the 

provisions of section 307(d) apply to 

‘‘such other actions as the Administrator 

may determine.’’ Pursuant to this 

section, the Administrator determines 

that this entire action is subject to the 

provisions of section 307(d). This 

determination allows for uniform 

treatment for all aspects of this action. 

Section 307(b)(1) of the CAA indicates 

which Federal Courts of Appeal have 

venue for petitions of review of final 

actions by the EPA. This section 

provides, in part, that petitions for 

review must be filed in the Court of 

Appeals for the District of Columbia 

Circuit: (1) When the agency action 

consists of ‘‘nationally applicable 

regulations promulgated, or final actions 

taken, by the Administrator,’’ or (2) 

when such action is locally or regionally 

applicable, if ‘‘such action is based on 

a determination of nationwide scope or 

effect and if in taking such action the 

Administrator finds and publishes that 

such action is based on such a 

determination.’’ 

This rule is ‘‘nationally applicable’’ 

within the meaning of section 307(b)(1). 

This rule promulgates PSD regulations 

that are applicable in every state in 

which the EPA is the PSD permitting 

authority, and takes final action that is 

relevant for EPA-approved SIP PSD 

programs in the rest of the states, as well 

as EPA-approved title V programs in all 

states. For the same reasons, the 

Administrator also is determining that 

this action is of nationwide scope and 

effect for the purposes of section 

307(b)(1). This is particularly 

appropriate because, in the report on the 

1977 Amendments that revised section 

307(b)(1) of the CAA, Congress noted 

that the Administrator’s determination 

that an action is of ‘‘nationwide scope 

or effect’’ would be appropriate for any 

action that has a scope or effect beyond 

a single judicial circuit. H.R. Rep. No. 

95–294 at 323, 324, reprinted in 1977 

U.S.C.C.A.N. 1402–03. Here, the scope 

and effect of this rulemaking extends to 

all judicial circuits because PSD and/or 

title V programs in all areas across the 

country are affected by today’s final 

action. In these circumstances, section 

307(b)(1) and its legislative history call 

for the Administrator to find the rule to 

be of ‘‘nationwide scope or effect’’ and 

for venue to be in the D.C. Circuit. 

Thus, any petitions for review of this 

rule must be filed in the Court of 

Appeals for the District of Columbia 

Circuit within 60 days from the date 

final action is published in the Federal 

Register. 

IX. Statutory Authority 

The statutory authority for this action 

is provided by sections 101, 114, 165, 

169, 301, 501 and 502 of the CAA as 

amended (42 U.S.C. 7401, 7414, 7475, 

7579, 7601, 7661 and 7661a). 

List of Subjects in 40 CFR Part 52 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Carbon dioxide, 

Carbon dioxide equivalents, Greenhouse 

gases, Hydrofluorocarbons, 

Intergovernmental relations, Methane, 

Nitrous oxide, Perfluorocarbons, 

Reporting and recordkeeping 

requirements, Sulfur hexafluoride. 

Dated: June 29, 2012. 

Lisa P. Jackson, 

Administrator. 

For the reasons stated in the 

preamble, title 40, Chapter I of the Code 

of Federal Regulations is amended as set 

forth below. 

PART 52—[AMENDED] 

■ 1. The authority citation for part 52 

continues to read as follows: 

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

Subpart A—[Amended] 

■ 2. Section 52.21 is amended by: 

■ a. Revising paragraph (b)(49)(i); 

■ b. Revising paragraph (aa)(1)(i); 

■ c. Revising paragraph (aa)(1)(ii) 

introductory text; 

■ d. Revising paragraphs (aa)(1)(ii)(b) 

and (c); 

■ e. Adding paragraph (aa)(1)(ii)(d); 

■ f. Revising paragraph (aa)(1)(iii); 

■ g. Revising paragraphs (aa)(2)(i) and 

(iii); 

■ h. Adding paragraph (aa)(2)(iv)(c); 

■ i. Revising paragraphs (aa)(2)(v), (viii), 

(ix), (x) and (xi); 

■ j. Adding paragraphs (aa)(2)(xii), (xiii), 

(xiv) and (xv); 

■ k. Revising paragraph (aa)(3) 

introductory text; 

■ l. Adding paragraph (aa)(3)(iv); 

■ m. Revising paragraph (aa)(4)(i) 

introductory text; 

■ n. Revising paragraphs (aa)(4)(i)(a), (d) 

and (g); 

■ o. Revising paragraph (aa)(5); 

■ p. Revising the first sentence of 

paragraph (aa)(6)(i); 

■ q. Adding paragraph (aa)(6)(iii); 

■ r. Revising paragraph (aa)(7) 

introductory text; 

■ s. Revising paragraphs (aa)(7)(i), (iii), 

(v), (vi) and (vii); 

■ t. Adding paragraph (aa)(7)(xi); 

■ u. Revising paragraph (aa)(8)(ii)(b)(2); 

■ v. Revising paragraph (aa)(9)(i)(a); 

■ w. Revising paragraphs (aa)(9)(iv) and 

(v); 

■ x. Revising paragraphs (aa)(10)(i) and 

(ii); 

■ y. Revising paragraphs 

(aa)(10)(iv)(c)(1) and (2); 

■ z. Revising paragraph (aa)(11)(i) 

introductory text; 

■ aa. Revising paragraphs (aa)(11)(i)(a) 

and (b); 

■ bb. Revising paragraph (aa)(12)(i)(a); 

■ cc. Revising paragraphs (aa)(14)(i)(b) 

and (d); and 

■ dd. Revising paragraph (aa)(14)(ii) 

introductory text. 

The revisions and additions read as 

follows: 

§ 52.21 Prevention of significant 

deterioration of air quality. 

* * * * * 

(b) * * * 

(49) * * * 

(i) Greenhouse gases (GHGs), the air 

pollutant defined in § 86.1818–12(a) of 

this chapter as the aggregate group of six 

greenhouse gases: Carbon dioxide, 

nitrous oxide, methane, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride, shall not be 

subject to regulation except as provided 

in paragraphs (b)(49)(iv) through (v) of 

this section and shall not be subject to 

regulation if the stationary source 

maintains its total source-wide 

emissions below the GHG PAL level, 

meets the requirements in paragraphs 

(aa)(1) through (15) of this section, and 

complies with the PAL permit 

containing the GHG PAL. 

* * * * * 

(aa) * * * 

(1) * * * 

(i) The Administrator may approve 

the use of an actuals PAL, including for 

GHGs on either a mass basis or a CO2e 

basis, for any existing major stationary 

source or any existing GHG-only source 

if the PAL meets the requirements in 

paragraphs (aa)(1) through (15) of this 

section. The term ‘‘PAL’’ shall mean 

‘‘actuals PAL’’ throughout paragraph 

(aa) of this section. 

(ii) Any physical change in or change 

in the method of operation of a major 

stationary source or a GHG-only source 

that maintains its total source-wide 

emissions below the PAL level, meets 


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the requirements in paragraphs (aa)(1) 

through (15) of this section, and 

complies with the PAL permit: 

* * * * * 

(b) Does not have to be approved 

through the PSD program; 

(c) Is not subject to the provisions in 

paragraph (r)(4) of this section 

(restrictions on relaxing enforceable 

emission limitations that the major 

stationary source used to avoid 

applicability of the major NSR program); 

and 

(d) Does not make GHGs subject to 

regulation as defined by paragraph 

(b)(49) of this section. 

(iii) Except as provided under 

paragraph (aa)(1)(ii)(c) of this section, a 

major stationary source or a GHG-only 

source shall continue to comply with all 

applicable Federal or State 

requirements, emission limitations, and 

work practice requirements that were 

established prior to the effective date of 

the PAL. 

(2) * * * 

(i) Actuals PAL for a major stationary 

source means a PAL based on the 

baseline actual emissions (as defined in 

paragraph (b)(48) of this section) of all 

emissions units (as defined in paragraph 

(b)(7) of this section) at the source, that 

emit or have the potential to emit the 

PAL pollutant. For a GHG-only source, 

actuals PAL means a PAL based on the 

baseline actual emissions (as defined in 

paragraph (aa)(2)(xiii) of this section) of 

all emissions units (as defined in 

paragraph (aa)(2)(xiv) of this section) at 

the source, that emit or have the 

potential to emit GHGs. 

* * * * * 

(iii) Small emissions unit means an 

emissions unit that emits or has the 

potential to emit the PAL pollutant in 

an amount less than the significant level 

for that PAL pollutant, as defined in 

paragraph (b)(23) of this section or in 

the Act, whichever is lower. For a GHG 

PAL issued on a CO2e basis, small 

emissions unit means an emissions unit 

that emits or has the potential to emit 

less than the amount of GHGs on a CO2e 

basis defined as ‘‘significant’’ for the 

purposes of paragraph (b)(49)(iii) of this 

section at the time the PAL permit is 

being issued. 

(iv) * * * 

(c) For a GHG PAL issued on a CO2e 

basis, any emissions unit that emits or 

has the potential to emit equal to or 

greater than the amount of GHGs on a 

CO2e basis that would be sufficient for 

a new source to trigger permitting 

requirements under paragraph (b)(49) of 

this section at the time the PAL permit 

is being issued. 

(v) Plantwide applicability limitation 

(PAL) means an emission limitation 

expressed on a mass basis in tons per 

year, or expressed in tons per year CO2e 

for a CO2e-based GHG emission 

limitation, for a pollutant at a major 

stationary source or GHG-only source, 

that is enforceable as a practical matter 

and established source-wide in 

accordance with paragraphs (aa)(1) 

through (15) of this section. 

* * * * * 

(viii) PAL major modification means, 

notwithstanding paragraphs (b)(2), 

(b)(3), and (b)(49) of this section (the 

definitions for major modification, net 

emissions increase, and subject to 

regulation), any physical change in or 

change in the method of operation of the 

PAL source that causes it to emit the 

PAL pollutant at a level equal to or 

greater than the PAL. 

(ix) PAL permit means the major NSR 

permit, the minor NSR permit, or the 

State operating permit under a program 

that is approved into the State 

Implementation Plan, or the title V 

permit issued by the Administrator that 

establishes a PAL for a major stationary 

source or a GHG-only source. 

(x) PAL pollutant means the pollutant 

for which a PAL is established at a 

major stationary source or a GHG-only 

source. For a GHG-only source, the only 

available PAL pollutant is greenhouse 

gases. 

(xi) Significant emissions unit means 

an emissions unit that emits or has the 

potential to emit a PAL pollutant in an 

amount that is equal to or greater than 

the significant level (as defined in 

paragraph (b)(23) of this section or in 

the Act, whichever is lower) for that 

PAL pollutant, but less than the amount 

that would qualify the unit as a major 

emissions unit as defined in paragraph 

(aa)(2)(iv) of this section. For a GHG 

PAL issued on a CO2e basis, significant 

emissions unit means any emissions 

unit that emits or has the potential to 

emit GHGs on a CO2e basis in amounts 

equal to or greater than the amount that 

would qualify the unit as small 

emissions unit as defined in paragraph 

(aa)(2)(iii) of this section, but less than 

the amount that would qualify the unit 

as a major emissions unit as defined in 

paragraph (aa)(2)(iv)(c) of this section. 

(xii) GHG-only source means any 

existing stationary source that emits or 

has the potential to emit GHGs in the 

amount equal to or greater than the 

amount of GHGs on a mass basis that 

would be sufficient for a new source to 

trigger permitting requirements for 

GHGs under paragraph (b)(1) of this 

section and the amount of GHGs on a 

CO2e basis that would be sufficient for 

a new source to trigger permitting 

requirements for GHGs under paragraph 

(b)(49) of this section at the time the 

PAL permit is being issued, but does not 

emit or have the potential to emit any 

other non-GHG regulated NSR pollutant 

at or above the applicable major source 

threshold. A GHG-only source may only 

obtain a PAL for GHG emissions under 

paragraph (aa) of this section. 

(xiii) Baseline actual emissions for a 

GHG PAL means the average rate, in 

tons per year CO2e or tons per year 

GHG, as applicable, at which the 

emissions unit actually emitted GHGs 

during any consecutive 24-month 

period selected by the owner or operator 

within the 10-year period immediately 

preceding either the date the owner or 

operator begins actual construction of 

the project, or the date a complete 

permit application is received by the 

Administrator for a permit required 

under this section or by the permitting 

authority for a permit required by a 

plan, whichever is earlier. For any 

existing electric utility steam generating 

unit, baseline actual emissions for a 

GHG PAL means the average rate, in 

tons per year CO2e or tons per year 

GHG, as applicable, at which the 

emissions unit actually emitted the 

GHGs during any consecutive 24-month 

period selected by the owner or operator 

within the 5-year period immediately 

preceding either the date the owner or 

operator begins actual construction of 

the project, except that the 

Administrator shall allow the use of a 

different time period upon a 

determination that it is more 

representative of normal source 

operation. 

(a) The average rate shall include 

fugitive emissions to the extent 

quantifiable, and emissions associated 

with startups, shutdowns, and 

malfunctions. 

(b) The average rate shall be adjusted 

downward to exclude any noncompliant emissions that occurred 

while the source was operating above an 

emission limitation that was legally 

enforceable during the consecutive 

24-month period. 

(c) The average rate shall be adjusted 

downward to exclude any emissions 

that would have exceeded an emission 

limitation with which the stationary 

source must currently comply, had such 

stationary source been required to 

comply with such limitations during the 

consecutive 24-month period. 

(d) The average rate shall not be based 

on any consecutive 24-month period for 

which there is inadequate information 

for determining annual GHG emissions 

and for adjusting this amount if required 

by paragraphs (aa)(2)(xiii)(b) and (c) of 

this section. 


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(xiv) Emissions unit with respect to 

GHGs means any part of a stationary 

source that emits or has the potential to 

emit GHGs. For purposes of this section, 

there are two types of emissions units as 

described in the following: 

(a) A new emissions unit is any 

emissions unit that is (or will be) newly 

constructed and that has existed for less 

than 2 years from the date such 

emissions unit first operated. 

(b) An existing emissions unit is any 

emissions unit that does not meet the 

requirements in paragraph (aa)(2)(xiv)(a) 

of this section. 

(xv) Minor source means any 

stationary source that does not meet the 

definition of major stationary source in 

paragraph (b)(1) of this section for any 

pollutant at the time the PAL is issued. 

(3) Permit application requirements. 

As part of a permit application 

requesting a PAL, the owner or operator 

of a major stationary source or a GHGonly source shall submit the following 

information to the Administrator for 

approval: 

* * * * * 

(iv) As part of a permit application 

requesting a GHG PAL, the owner or 

operator of a major stationary source or 

a GHG-only source shall submit a 

statement by the source owner or 

operator that clarifies whether the 

source is an existing major source as 

defined in paragraph (b)(1)(i)(a) and (b) 

of this section or a GHG-only source as 

defined in paragraph (aa)(2)(xii) of this 

section. 

(4) General requirements for 

establishing PALs. (i) The Administrator 

is allowed to establish a PAL at a major 

stationary source or a GHG-only source, 

provided that at a minimum, the 

requirements in paragraphs (aa)(4)(i)(a) 

through (g) of this section are met. 

(a) The PAL shall impose an annual 

emission limitation expressed on a mass 

basis in tons per year, or expressed in 

tons per year CO2e, that is enforceable 

as a practical matter, for the entire major 

stationary source or GHG-only source. 

For each month during the PAL 

effective period after the first 12 months 

of establishing a PAL, the major 

stationary source or GHG-only source 

owner or operator shall show that the 

sum of the monthly emissions from each 

emissions unit under the PAL for the 

previous 12 consecutive months is less 

than the PAL (a 12-month average, 

rolled monthly). For each month during 

the first 11 months from the PAL 

effective date, the major stationary 

source or GHG-only source owner or 

operator shall show that the sum of the 

preceding monthly emissions from the 

PAL effective date for each emissions 

unit under the PAL is less than the PAL. 

* * * * * 

(d) The PAL shall include fugitive 

emissions, to the extent quantifiable, 

from all emissions units that emit or 

have the potential to emit the PAL 

pollutant at the major stationary source 

or GHG-only source. 

* * * * * 

(g) The owner or operator of the major 

stationary source or GHG-only source 

with a PAL shall comply with the 

monitoring, recordkeeping, and 

reporting requirements provided in 

paragraphs (aa)(12) through (14) of this 

section for each emissions unit under 

the PAL through the PAL effective 

period. 

* * * * * 

(5) Public participation requirements 

for PALs. PALs for existing major 

stationary sources or GHG-only sources 

shall be established, renewed, or 

increased through a procedure that is 

consistent with §§ 51.160 and 51.161 of 

this chapter. This includes the 

requirement that the Administrator 

provide the public with notice of the 

proposed approval of a PAL permit and 

at least a 30-day period for submittal of 

public comment. The Administrator 

must address all material comments 

before taking final action on the permit. 

(6) * * * 

(i) Except as provided in paragraph 

(aa)(6)(ii) and (iii) of this section, the 

plan shall provide that the actuals PAL 

level for a major stationary source or a 

GHG-only source shall be established as 

the sum of the baseline actual emissions 

(as defined in paragraph (b)(48) of this 

section or, for GHGs, paragraph 

(aa)(2)(xiii) of this section) of the PAL 

pollutant for each emissions unit at the 

source; plus an amount equal to the 

applicable significant level for the PAL 

pollutant under paragraph (b)(23) of this 

section or under the Act, whichever is 

lower. * * * 

* * * * * 

(iii) For CO2e based GHG PAL, the 

actuals PAL level shall be established as 

the sum of the GHGs baseline actual 

emissions (as defined in paragraph 

(aa)(2)(xiii) of this section) of GHGs for 

each emissions unit at the source, plus 

an amount equal to the amount defined 

as ‘‘significant’’ on a CO2e basis for the 

purposes of paragraph (b)(49)(iii) at the 

time the PAL permit is being issued. 

When establishing the actuals PAL level 

for a CO2e-based PAL, only one 

consecutive 24-month period must be 

used to determine the baseline actual 

emissions for all existing emissions 

units. Emissions associated with units 

that were permanently shut down after 

this 24-month period must be subtracted 

from the PAL level. The reviewing 

authority shall specify a reduced PAL 

level (in tons per year CO2e) in the PAL 

permit to become effective on the future 

compliance date(s) of any applicable 

Federal or state regulatory 

requirement(s) that the reviewing 

authority is aware of prior to issuance 

of the PAL permit. 

(7) Contents of the PAL permit. The 

PAL permit must contain, at a 

minimum, the information in 

paragraphs (aa)(7)(i) through (xi) of this 

section. 

(i) The PAL pollutant and the 

applicable source-wide emission 

limitation in tons per year or tons per 

year CO2e. 

* * * * * 

(iii) Specification in the PAL permit 

that if a major stationary source or a 

GHG-only source owner or operator 

applies to renew a PAL in accordance 

with paragraph (aa)(10) of this section 

before the end of the PAL effective 

period, then the PAL shall not expire at 

the end of the PAL effective period. It 

shall remain in effect until a revised 

PAL permit is issued by a reviewing 

authority. 

* * * * * 

(v) A requirement that, once the PAL 

expires, the major stationary source or 

GHG-only source is subject to the 

requirements of paragraph (aa)(9) of this 

section. 

(vi) The calculation procedures that 

the major stationary source or GHG-only 

source owner or operator shall use to 

convert the monitoring system data to 

monthly emissions and annual 

emissions based on a 12-month rolling 

total as required by paragraph (aa)(13)(i) 

of this section. 

(vii) A requirement that the major 

stationary source or GHG-only source 

owner or operator monitor all emissions 

units in accordance with the provisions 

under paragraph (aa)(12) of this section. 

* * * * * 

(xi) A permit for a GHG PAL issued 

to a GHG-only source shall also include 

a statement denoting that GHG 

emissions at the source will not be 

subject to regulation under paragraph 

(b)(49) of this section as long as the 

source complies with the PAL. 

(8) * * * 

(ii) * * * 

(b) * * * 

(2) Reduce the PAL consistent with 

any other requirement, that is 

enforceable as a practical matter, and 

that the State may impose on the major 

stationary source or GHG-only source 

under the State Implementation Plan; 

and 


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(9) * * * 

(i) * * * 

(a) Within the time frame specified for 

PAL renewals in paragraph (aa)(10)(ii) 

of this section, the major stationary 

source or GHG-only source shall submit 

a proposed allowable emission 

limitation for each emissions unit (or 

each group of emissions units, if such a 

distribution is more appropriate as 

decided by the Administrator) by 

distributing the PAL allowable 

emissions for the major stationary 

source or GHG-only source among each 

of the emissions units that existed under 

the PAL. If the PAL had not yet been 

adjusted for an applicable requirement 

that became effective during the PAL 

effective period, as required under 

paragraph (aa)(10)(v) of this section, 

such distribution shall be made as if the 

PAL had been adjusted. 

* * * * * 

(iv) Any physical change or change in 

the method of operation at the major 

stationary source or GHG-only source 

will be subject to major NSR 

requirements if such change meets the 

definition of major modification in 

paragraph (b)(2) of this section. 

(v) The major stationary source or 

GHG-only source owner or operator 

shall continue to comply with any State 

or Federal applicable requirements 

(BACT, RACT, NSPS, etc.) that may 

have applied either during the PAL 

effective period or prior to the PAL 

effective period except for those 

emission limitations that had been 

established pursuant to paragraph (r)(4) 

of this section, but were eliminated by 

the PAL in accordance with the 

provisions in paragraph (aa)(1)(ii)(c) of 

this section. 

(10) * * * 

(i) The Administrator shall follow the 

procedures specified in paragraph 

(aa)(5) of this section in approving any 

request to renew a PAL for a major 

stationary source or a GHG-only source, 

and shall provide both the proposed 

PAL level and a written rationale for the 

proposed PAL level to the public for 

review and comment. During such 

public review, any person may propose 

a PAL level for the source for 

consideration by the Administrator. 

(ii) Application deadline. A major 

stationary source or GHG-only source 

owner or operator shall submit a timely 

application to the Administrator to 

request renewal of a PAL. A timely 

application is one that is submitted at 

least 6 months prior to, but not earlier 

than 18 months from, the date of permit 

expiration. This deadline for application 

submittal is to ensure that the permit 

will not expire before the permit is 

renewed. If the owner or operator of a 

major stationary source or GHG-only 

source submits a complete application 

to renew the PAL within this time 

period, then the PAL shall continue to 

be effective until the revised permit 

with the renewed PAL is issued. 

* * * * * 

(iv) * * * 

(c) * * * 

(1) If the potential to emit of the major 

stationary source or GHG-only source is 

less than the PAL, the Administrator 

shall adjust the PAL to a level no greater 

than the potential to emit of the source; 

and 

(2) The Administrator shall not 

approve a renewed PAL level higher 

than the current PAL, unless the major 

stationary source or GHG-only source 

has complied with the provisions of 

paragraph (aa)(11) of this section 

(increasing a PAL). 

* * * * * 

(11) * * * 

(i) The Administrator may increase a 

PAL emission limitation only if the 

major stationary source or GHG-only 

source complies with the provisions in 

paragraphs (aa)(11)(i)(a) through (d) of 

this section. 

(a) The owner or operator of the major 

stationary source or GHG-only source 

shall submit a complete application to 

request an increase in the PAL limit for 

a PAL major modification. Such 

application shall identify the emissions 

unit(s) contributing to the increase in 

emissions so as to cause the major 

stationary or GHG-only source’s 

emissions to equal or exceed its PAL. 

(b) As part of this application, the 

major stationary source or GHG-only 

source owner or operator shall 

demonstrate that the sum of the baseline 

actual emissions of the small emissions 

units, plus the sum of the baseline 

actual emissions of the significant and 

major emissions units assuming 

application of BACT equivalent 

controls, plus the sum of the allowable 

emissions of the new or modified 

emissions unit(s) exceeds the PAL. The 

level of control that would result from 

BACT equivalent controls on each 

significant or major emissions unit shall 

be determined by conducting a new 

BACT analysis at the time the 

application is submitted, unless the 

emissions unit is currently required to 

comply with a BACT or LAER 

requirement that was established within 

the preceding 10 years. In such a case, 

the assumed control level for that 

emissions unit shall be equal to the 

level of BACT or LAER with which that 

emissions unit must currently comply. 

* * * * * 

(12) * * * 

(i) * * * 

(a) Each PAL permit must contain 

enforceable requirements for the 

monitoring system that accurately 

determines plantwide emissions of the 

PAL pollutant in terms of mass per unit 

of time or CO2e per unit of time. Any 

monitoring system authorized for use in 

the PAL permit must be based on sound 

science and meet generally acceptable 

scientific procedures for data quality 

and manipulation. Additionally, the 

information generated by such system 

must meet minimum legal requirements 

for admissibility in a judicial 

proceeding to enforce the PAL permit. 

* * * * * 

(14) * * * 

(i) * * * 

(b) Total annual emissions (expressed 

on a mass-basis in tons per year, or 

expressed in tons per year CO2e) based 

on a 12-month rolling total for each 

month in the reporting period recorded 

pursuant to paragraph (aa)(13)(i) of this 

section. 

* * * * * 

(d) A list of any emissions units 

modified or added to the major 

stationary source or GHG-only source 

during the preceding 6-month period. 

* * * * * 

(ii) Deviation report. The major 

stationary source or GHG-only source 

owner or operator shall promptly 

submit reports of any deviations or 

exceedance of the PAL requirements, 

including periods where no monitoring 

is available. A report submitted 

pursuant to § 70.6(a)(3)(iii)(B) of this 

chapter shall satisfy this reporting 

requirement. The deviation reports shall 

be submitted within the time limits 

prescribed by the applicable program 

implementing § 70.6(a)(3)(iii)(B) of this 

chapter. The reports shall contain the 

following information: 

* * * * * 

[FR Doc. 2012–16704 Filed 7–11–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 63 

[EPA–R09–OAR–2012–0286; FRL–9698–7] 

Delegation of National Emission 

Standards for Hazardous Air Pollutants 

for Source Categories; Gila River 

Indian Community 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Direct final rule. 


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