Final Summary

of the 

Discretionary RFA Small Business Outreach

for

EPA’s Proposed GHG Regulations 

and their 

NSR and Title V Impacts

February 5, 2010
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Final Summary of the RFA Small Business Outreach

for

EPA’s Proposed GHG Regulations and their NSR and Title V Impacts

INTRODUCTION

The Environmental Protection Agency (EPA) is currently developing a group of 

regulatory actions for regulation of greenhouse gases (GHG). One of these actions is a rule 

which was proposed on October 27, 2009, entitled the Prevention of Significant Deterioration 

and Title V Greenhouse Gas Tailoring Rule (74 FR 55292), otherwise known as the Tailoring 

Rule. This regulation is intended to tailor the major source applicability thresholds for GHG 

emissions under the Prevention of Significant Deterioration (PSD) and Title V programs of the 

Clean Air Act and to set a PSD significance level for GHG emissions. 

While this proposed rule does not have a Significant Impact on a Substantial Number of 

Small Entities (SISNOSE) and therefore does not obligate EPA to convene a formal Small 

Business Advocacy Review (SBAR) panel, EPA is aware that many small entities may be 

interested in the various GHG rulemakings currently under development. As a result, in 

collaboration with the Small Business Administration (SBA), EPA conducted an outreach 

meeting designed to exchange information with small entities that may be interested in these 

regulations. The outreach effort was organized and led by representatives from EPA’s Office of 

Air Quality Planning and Standards within the Office of Air and Radiation, EPA’s Office of 

Policy Economics and Innovation, the Office of Information and Regulatory Affairs within the 

Office of Management and Budget (OMB), and the Office of Advocacy of the Small Business 

Administration.

This summary includes the following: 

 Background information on the proposed rule under development;

 A summary of the outreach meeting; and 

 The written comments and responses of the Small Entity Representatives (SERs).

Once completed, the final summary for this outreach meeting will be included in the rulemaking 

record for the Tailoring Rule. In light of the final summary, the Agency will make changes to 

the proposed rule where appropriate.

This document includes a summary of the advice and recommendations received from the 

SERs identified for the purposes of this process during the Outreach meeting. Written comments 

submitted by the representatives are provided in Appendix B to the summary. 

It is important to note that the findings and discussion in this summary are based on the 

information available at the time this summary was drafted. EPA is continuing to conduct 

analyses relevant to the proposed rule, and additional information may be developed or obtained 

during the remainder of the rule development process and from public comments on the 

proposed rule. 
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This summary begins with a background section that describes the purpose of the rule 

and any relevant regulatory history. The next section describes the small entity Outreach 

conducted by the EPA workgroup. The core of the summary collects the comments and 

recommendations received from the SERs. 

BACKGROUND

On April 2, 2007, the Supreme Court found that GHGs, including carbon dioxide, are air 

pollutants covered by the CAA. Massachusetts v. EPA, 549 U.S. 497 (2007). The Supreme 

Court found that EPA was required to determine whether or not emissions of GHGs from new 

motor vehicles cause or contribute to air pollution which may reasonably be anticipated to 

endanger public health or welfare, or whether the science is too uncertain to make a reasoned 

decision. In April 2009, EPA responded to the Court by proposing a finding that emissions of 

GHGs from new motor vehicles and engines contribute to air pollution that may reasonably be 

anticipated to endanger both public health and welfare. On December 7, 2009, the Administrator 

signed two distinct findings regarding GHG under section 202(a) of the Clean Air Act:

Endangerment Finding: The Administrator found that the current and projected 

concentrations of the six key well-mixed GHG--carbon dioxide (CO2), methane (CH4), 

nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur 

hexafluoride (SF6)--in the atmosphere threaten the public health and welfare of current 

and future generations. 

Cause or Contribute Finding: The Administrator found that the combined emissions of 

these well-mixed GHG from new motor vehicles and new motor vehicle engines 

contribute to the greenhouse gas pollution which threatens public health and welfare. 

These findings, which were published December 15, 2009 (74 FR 66496), do not 

themselves impose any requirements on industry or other entities. However, they are a 

prerequisite to finalizing the EPA’s proposed greenhouse gas emission standards for light-duty 

vehicles, which were proposed by EPA in September 2009. Under the Agency’s current 

interpretation of existing regulations, Clean Air Act permitting requirements under the PSD and

title V programs for GHG emissions would be triggered upon finalization of the light-duty 

vehicle rule, and thus would be the first time GHGs emissions would be subject to either of these 

Clean Air Act permitting programs. 

As explained in the Tailoring Rule proposal, State permitting authorities would be 

paralyzed by enormous numbers of permit applications from sources with GHG emissions if 

PSD and Title V requirements were applied at the applicability levels provided under the CAA. 

Without the Tailoring Rule, EPA estimates that permitting authorities would receive 

approximately 40,000 PSD permit applications each year; currently, they receive approximately

300. In addition, they would be required to issue Title V permits for approximately six million 

sources; currently, their Title V inventory is some 15,000 sources. These estimated permitting 

burdens are orders of magnitude greater than the current inventory of permits and would vastly
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exceed the current administrative resources of permitting authorities. In addition, EPA 

recognizes that under the applicability levels, an enormous number of new sources that have not 

previously been subject to PSD or Title V would have to get permits due to their GHG 

emissions. 

This rulemaking proposed to raise the permitting thresholds for sources of GHG’s. 

Specifically, EPA proposed that sources with the potential to emit less than 25,000 tons per year 

of CO2 equivalent (CO2e) are not required to obtain a Title V permit or PSD permit for a period 

of at least five years, during which time, EPA will conduct a study of permitting burdens and 

possible streamlining methods. Under the proposed rule, EPA would revisit the appropriate 

applicability thresholds after the sixth year. In the six years following promulgation of this rule, 

the EPA estimates that, compared to baseline estimates that do not include the effects of this rule, 

over six million sources of GHG emissions will be allowed to operate without the need for a title 

V permit, and 40 thousand new sources or modifying sources will not be subject to NSR 

requirements for GHGs. For this larger number of smaller sources, this rule alleviates the 

regulatory burden associated with obtaining a title V or PSD permit or complying with NSR Best 

Available Control Technology (BACT) requirements. Therefore, this proposed action may be 

considered beneficial to these small entities as it provides relief from regulation that would 

otherwise be required. Given that these smaller sources of GHG account for only about 7 

percent of the total GHG CO2e emissions in the United States, while representing over 95 

percent of the total number of sources potentially requiring a PSD permit for GHGs emissions 

under the permitting thresholds contained in the CAA, the EPA believes the regulatory scheme 

proposed in the Tailoring Rule represents a prudent path forward in addressing GHG emissions 

under the Clean Air Act.

SMALL ENTITY REPRESENTATIVES

The SERs that participated in this Outreach effort included the following:

Small Entity Representatives In Person

Ben Brandes, National Mining Association (NMA)

Shannon Crawford, National Solid Waste Association (NSWA)

Bradford Frisby, National Mining Association (NMA)

Rhea Hale, American Forest and Paper Association (AFPA)

Jeff Hannapel, American Foundry Society (AFS)

Rick Krouse, Farm Bureau (FB)

Beth Milito, National Federation of Independent Business (NFIB)

Susan Miller, The Brick Industry Association (BIA)

Dan Moss, Synthetic Organic Chemical Manufacturers Association (SOCMA)

Theresa Pugh, American Public Power Association (APPA)

Ed Repa, National Solid Waste Association (NSWA)

Small Entity Representatives Via Teleconference
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Sally Allen, Gary-Williams Energy Cooperation and Small Business Refiners

Leslie Bellas, National Lime Association (NLA)

Jeff Brediger, City of Orville, OH

Brian Brendle, National Association of Manufacturers (NAM)

Terri Gerlach, Hartzell Hardwoods, Inc.

John Hopewell, National Paint and Coatings Association (NPCA)

Brittany Jablonsky, National Farmers Union (NFU)

Kathleen Lockhart, Sugar Cane Growers Cooperative (SCGC)

Bob Neufeld, Wyoming Refining Company

Karen Penafiel, Building Owners and Managers Association (BOMA)

Steve Sherk, American Refining Group, Small Business Refiners

Bill Wenhauf, National Rural Electric Cooperative Association (NRECA)

OUTREACH MEETING

The EPA, in collaboration with the SBA, conducted an outreach meeting designed to 

exchange information with small entities that may be affected by various rulemakings that EPA 

is developing for GHGs. The meeting focused, in particular, on the proposed Tailoring Rule. 

Small entity representatives participating in person and via conference call were briefed on the 

rulemaking proposal and given the opportunity to provide input that the EPA will consider as the 

rulemaking is further developed. 

The meeting took place in Arlington, Virginia on November 17, 2009, and included 

representatives from EPA, SBA, OMB, as well as the SERs listed above. Slides from the 

meeting are attached as Appendix A.

EPA invited SERs to give their focused feedback on concerns that they may have 

regarding this rulemaking. The following questions were e-mailed to each SER before the 

meeting and were discussed during this outreach meeting:

 Are you a small business that would exceed the proposed 25,000 CO2e threshold?

 Can you provide data showing this? If you are in excess of the threshold, do you already 

have a title V or PSD permit due to other pollutants?

 How many other small entities in your industry would have to get a new permit? How 

many would have to revise an existing permit?

 If we lowered the threshold, how would it affect your industry? What if we raised the 

threshold?

 What would the economic impacts of the current threshold be on your business? For a 

higher or lower threshold?

In addition, EPA requested that any written response to these questions be submitted by

December 1, 2009, which EPA later extended until December 4, 2009. The written responses 

that EPA received are provided in Appendix B. There were three respondents: The American 

Forest and Paper Association, the American Public Power Association, and the Small Business 

Refiners.
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At the outreach meeting, EPA gave an overview of the suite of GHG rulemakings being 

considered by EPA, followed by more specific information regarding the proposed Tailoring 

Rule. The slides from these presentations are included in Appendix A. After the presentations, 

EPA opened the meeting to a more general discussion of the questions presented above, as well 

as other general concerns regarding GHG regulation under the PSD program. Throughout the 

outreach meeting, the SERs present, both in person and via teleconference, openly discussed 

their comments and concerns with the EPA representatives. A summary of key comments from 

the outreach meeting, many of which were made during discussions of EPA’s questions for the 

SERs, as well as preliminary responses from the EPA representatives present at the meeting, are 

provided below:

Section 424 of the Interior Environment Appropriations Act

 The Farm Bureau representative commented that Section 424 of the Interior Environment 

Appropriations Act states that, notwithstanding any other provision of law, none of the 

funds made available in this Act or any other Act may be used to promulgate or 

implement any regulation requiring the issuance of permits under Title V of the Clean Air 

Act for carbon dioxide, nitrous oxide, water vapor or methane emissions resulting from 

biological processes associated with livestock production. The Farm Bureau 

representative was concerned that the light duty vehicle rule will trigger Title V permits 

for livestock operations involving biological processes. He asked how the enactment of 

this provision that has been signed into law will affect the promulgation of the Light Duty 

Vehicle Rule. The BIA representative also inquired as to whether Section 424 has any

exceptions for biofuels.

EPA responded that the EPA was aware of Section 424 of the Interior Environment 

Appropriations Act and that an internal EPA workgroup has been formed to evaluate 

what this provision will mean for various EPA rulemakings. EPA stated that it had not 

yet reached a conclusion on what Section 424 will mean with regards to the Tailoring 

Rule or other EPA rulemakings.

Timing of the PSD Reconsideration Rule with the Tailoring Rule

 The Farm Bureau representative commented that the Stephen Johnson PSD Applicability

Reconsideration rulemaking comment period closes prior to the proposed Tailoring Rule. 

He expressed concern that, conceivably, the Stephen Johnson PSD Applicability

Reconsideration rulemaking may become final before the Tailoring Rule. He expressed 

that if the EPA’s preferred option regarding PSD applicability is not maintained, such a 

gap could result in unintended small GHG emission sources being subject to PSD. The 

Farm Bureau representative requested that EPA consider finalizing these two 

rulemakings at the same time so this gap does not occur. The American Public Power 

Association representative further expressed that they considered requesting an extension 

of the comment period for the Tailoring Rule but that they did not want to increase that 

potential “gap.” 
7

EPA responded that it is aware of the gap concern that the Farm Bureau referred to and 

that the Administration and EPA have committed to sequencing the GHG rulemakings in 

a common sense way.

Potential to Emit

 OMB clarified that the proposed Tailoring Rule thresholds were based on potential to 

emit and not actual emissions. This clarification is important because the GHG 

Mandatory Reporting Rule thresholds and draft legislation in the Senate and House are 

based on actual emissions. OMB further stated that this means that a source that may not 

have to report under the GHG Mandatory Reporting Rule may be subject to PSD and 

Title V due to its potential to emit. OMB requested whether EPA could provide an 

example as to how potential to emit is calculated.

In response, an EPA representative stated that the docket provides support (in the 

Technical Support Document) for their potential to emit emissions thresholds selection. 

He explained that EPA looked at actual emissions, economic data, and operational 

information by industry sector and made assumptions. EPA stated that, for example, for 

residential units, it is believed that most GHG emissions result from space and water 

heating and that most emissions will occur in colder months. Therefore, EPA calculated 

emissions and made adjustments to account for greater heating needs in colder months 

and made similar extrapolations for other sectors. 

 The American Public Power Association representative stated that most of their 

equipment is designed to have far greater potential to emit than actual emissions and that 

equipment is often not run at full capacity, and that therefore, EPA has underestimated 

the regulatory impact of some types of combustion equipment. She opined that she is 

sure that they are not the only industry sector whose operations do not run at full capacity

(e.g., batch chemical manufacturers, small refiners). APPA is not sure what their 

recommendation might be to EPA (e.g., it maybe to base applicability emissions 

thresholds calculations on the number of hours equipment is run or they may suggest the 

addition of some rule clarification). As proposed, the APPA representative stated that 

even a 12 MW boiler that does not run more than 600 hours per year would not get below 

the PSD/Title V threshold because of emissions thresholds being based on potential to 

emit.

Legal Basis of the Rule

 The National Federation of Independent Business representative inquired whether there 

were other rules where the “absurd results” and “administrative necessity” arguments 

were used to support a rulemaking and whether they were challenged. The Farm Bureau 

representative commented that in the “administrative necessity” discussion, the court did 

not rule in favor of those seeking to apply the doctrine in any of the cases cited. 

EPA stated that there is an extensive discussion in the preamble to the proposed Tailoring 

Rule regarding previous use of and court decisions about these arguments.
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Carbon Neutrality of Biomass

 The American Forest and Paper Association representative commented that the difference 

between EPA’s proposed Tailoring Rule and the Mandatory Reporting Rule and other 

EPA rulemakings is that the Tailoring Rule does not uphold the principle of carbon 

neutrality of biomass and does not differentiate between biogenic emissions and fossil 

fuel emissions when calculating whether a source would be major under this rule. She 

expressed that this is against all EPA precedent. The AFPA representative inquired 

whether EPA’s calculations included biogenic emissions or just biofuel emissions (which 

is the usual case), and whether there was a deliberate consideration to include biogenic 

emissions in this case when EPA has not previously. The AFPA representative stated 

that an example of biogenic emissions would be the combustion of wood residuals. She 

explained that international and Federal principles have upheld that emissions 

calculations were to include all fossil fuel emissions but that biogenic emissions (i.e., 

combustion of wood residuals) did not need to be included. The AFPA representative 

explained that her association represents less than 50 percent of her industry sector and 

proportionately larger businesses and that she imagined that there are a lot of smaller 

wood products facilities that would be subject to PSD/title V under the proposed 

rulemaking. She estimated that about 5 mills would be subject to PSD/title V under the

proposed rule if EPA did not require the inclusion of biogenic emissions and about 150 

mills if EPA did require the inclusion of biogenic emissions.

An EPA representative responded that he did not know whether biogenic emissions were 

included in the calculations. He added that EPA did not look at distinct source categories 

at the proposed threshold level as EPA’s goal was to establish the level at which the 

administrative burden that would result from the triggering of PSD/Title V with the 

promulgation of the Light Duty Vehicle rule would be manageable. EPA encouraged the 

AFPA to provide written comments and directed her to the docket for the proposed 

rulemaking for the technical support document that details the emissions 

analysis/calculations.

 The American Public Power Association representative agreed with AFPA regarding the 

need to exclude biogenic emissions from PSD/Title V emissions calculations for 

purposes of applicability. She reported that many utilities have added biomass as a way

of meeting state renewable electrical/energy standards and that she would not be 

surprised if Congress were to adopt national standards. Based on her read, an electric 

utility facility that is a completely renewable facility that burns biomass could trigger 

PSD/Title V permitting requirements. She represents a 70 MW power plant that has no 

fossil generation at the plant except for emergency storm management and, if it needed to 

increase operations to meet load requirements, would trigger PSD and Title V permit 

requirements for CO2, and possibly NOx, if biogenic emissions are included in the final 

PSD and Title V GHG Tailoring Rule applicability emissions threshold calculations. 

Trying to meet renewable standards in the Southeast is limited to the use of biomass. She 

suggested that EPA make further BACT or Tailoring Rule decisions that would exclude 

the CO2 content from biomass usage.
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 A representative from AFPA added that, from a heating value perspective, fossil fuel is 

more efficient. If fossil fuel and biomass are treated equally under the proposed 

Tailoring Rule, there would not be any reason for industry to use biomass over fossil fuel. 

She opined that this is contrary to National Climate Change Policy which encourages the 

use of renewable fuels, and international policy, which is universally accepted.

Process Emissions 

 The National Lime Association representative inquired whether EPA took into account 

process emissions in its emissions analysis. The NLA representative stated that the lime 

production industry is comprised mostly of small businesses, and the major modification 

proposed PSD threshold level may prevent or delay facilities from doing energy

efficiency projects. She explained that half of the emissions from lime production are 

inherent in the process of manufacturing lime. Many facilities engage in energy

efficiency programs to reduce fuel consumption but allow them to increase production 

which could possibly cause an increase in CO2 that could trigger PSD. She explained 

that making lime is done by heating limestone to a very high temperature which causes a 

release of CO2. For eight years they have been part of Climate VISION1to improve 

energy efficiency. She requested that there be some kind of exemption for those process 

emissions, as there would be no Best Available Control Technology (BACT) for that and 

if they are required to go through PSD review every time they do an energy efficiency

project, it would substantially burden small businesses. 

In response, an EPA representative stated that all of the industry specific comments have 

been useful. He reiterated the purpose of the proposed rulemaking and stated that all 

comments will be taken into consideration. 

Differences between Mandatory Reporting Rule and Tailoring Rule Metrics

 The BIA representative commented that there are three differences between the GHG 

Mandatory Reporting Rule and EPA’s proposed Tailoring Rule. The first difference is 

that the Reporting Rule requires emissions calculations to be based on actual emissions 

and the Tailoring Rule requires emissions calculations to be based on potential to emit. 

The BIA representative stated that though her industry would like their actual emissions 

and potential emissions to be closer together (reflecting operations closer to capacity) this 

is not where they are now, given the economy. The second difference is that the 

proposed Tailoring Rule emissions measurement is in short tons versus metric tons. She 

explained that when a source is close to the threshold line, that 10 percent is important. 

The third difference is that their industry, under the Mandatory Reporting Rule, only

needs to include combustion emissions where the proposed Tailoring Rule would require 

all of their emissions when determining whether they are a major source. 

 

1 Climate VISION (Voluntary Innovative Sector Initiatives: Opportunities Now) is a voluntary public-private 

partnership initiative to improve energy efficiency and GHG intensity in energy-intensive industrial sectors, by 

accelerating the transition to technologies, practices, and processes that are cleaner, more efficient, and capable of 

reducing, capturing or sequestering GHGs. http://www.climatevision.gov
10

State Laws in conflict with Tailoring Rule

 The Farm Bureau representative raised a concern regarding state laws. He stated that 

though the Tailoring Rule will meet Federal requirements, sources will still be subject to 

state laws. States will likely not address changes to their laws until the Tailoring Rule is 

final and there may be a gap in coverage between the lower and the proposed higher 

thresholds for GHGs. The Farm Bureau representative inquired whether EPA has a list 

of States that need to change their laws and regulations and what they need to change to 

be consistent with the Tailoring Rule. He added that such a list would be helpful when 

engaging States to change either their statutes or regulations. The Farm Bureau 

representative commented that, until the state law issue is addressed, there will be no 

impact from the proposed Tailoring Rule. 

EPA acknowledged that some States may need to change their regulations and laws to be 

consistent with EPA’s proposed rule. An agency representative reported that EPA has 

been speaking to a number of States and are encouraging States to move forward now 

rather than later, and that some States are already taking action on this.

Burden Estimates

 Referring to slide 15 of EPA’s presentation, the National Farm Union representative 

inquired whether EPA has estimated the cost associated with those sources that would 

still be subject to PSD and Title V under the proposed Tailoring Rule thresholds and 

requested that, if possible, she receive a follow-up e-mail referring her to this 

information. The National Farm Union also inquired how EPA was defining small entity.

An EPA representative stated that the presentation was focused on burden reduction as a 

result of the proposed rule, but that the Regulatory Impacts Assessment (RIA) developed 

for the proposed Tailoring Rule includes the costs that would still be incurred by sources 

subject to PSD and Title V under the proposed Tailoring Rule. He added that there is 

uncertainty in data and information, and that data on agricultural operations were scarce 

and that the EPA would welcome more data to be submitted with any written comments 

on the proposed rule and/or as part of this outreach. EPA responded to the “small entity” 

question by clarifying that a small entity differs depending on industry sector, and 

explained that when he referred to “small” entities, he meant small with regards to their 

emissions profile.

 The National Federation of Independent Business expressed that slide 14 (2nd bullet) 

states that facilities proposed for exclusion comprise only 7 percent but that EPA stated 

that those entities were covered elsewhere. 

EPA responded by referring to slide 23 and explained that when you move from a 

threshold of 25,000 CO2e to 100/250 CO2e, which would be the threshold that would 

apply in absence of the proposed rule, there is an incremental change in emissions that 

would be subject to PSD of about 7 percent (i.e., if the proposal is finalized, only 7 
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percent of GHG emissions would be excluded from PSD applicability, though the 

number of facilities excluded could be in the millions). EPA also clarified that those 

emissions may be covered under voluntary programs or energy efficiency programs but 

not under another Federal permitting program.

 The representative from the American Foundry Society asserted that there would be a 

huge burden associated with the permitting requirements and, depending on BACT (e.g., 

switching fuels), this burden would be even more significant. He also asserted that he 

believed EPA’s estimate of $45,000 to obtain a Title V permit is low and that he believes 

the costs are doubled. Additionally, he commented that the cost of permitting authorities 

per permit, where States need to go to a fee program, will be an added cost for facilities.

 The American Public Power Association representative requested that EPA, when 

conducting its impacts analysis, do a more thorough job accounting for the economic 

downturn over the last 12 months (utilities have lost 20 percent industrial/commercial 

load in the last year) and the economic fragility. She asserted that, without consideration 

of these economic times, entities will likely move offshore.

 The NLA representative commented that impact considerations include more than 

applying for a permit, and could include the burden of the permitting agency needing to 

review applicability determinations filed with these agencies to ensure they are not going 

to be subject to PSD or open to enforcement action.

 The American Foundry Society representative stated that the cost of controls and the 

cumulative effect of these regulations are both big issues for small businesses. He 

commented that their industry uses fuels to heat metals and requiring that their industry

switch fuels could result in significant impacts.

New Permits Needed Because of Regulation of GHGs

 The NLA representative responded that most of their facilities already have Title V 

permits and the most significant issue for her industry is the PSD significance level for 

modifications. She reiterated that a number of energy efficiency programs would be 

triggered for CO2 but not for other regulated pollutants.

 The City of Orrville, Ohio representative responded that, of the approximately 60 

members, all have Title V permits but that they shared a similar concern as the NLA 

representative regarding the proposed modification significant level, which might inhibit 

any kind of improvements. 

 The representative from the American Foundry Society responded that there are many

large GHG emitters in his industry that were small businesses, even more if applicability

emissions thresholds are based on potential to emit versus actual emissions. He noted 

that 400-500 facilities in the metal casting industry, that would meet the definition of 

small business, would exceed the 25,000 CO2e proposed threshold. The American 

Foundry Society representative clarified that his numbers were based on the criteria given 
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in the Reporting Rule and that these numbers would need to be adjusted based on the 

criteria for the Tailoring Rule, and that the adjusted numbers would be provided to EPA. 

It was also noted that most of these sources are area sources where EPA has previouslydetermined it was not appropriate for these facilities to have to obtain a Title V permit, 

though all have some type of air/operating permit. Under the proposed thresholds, these 

facilities would be subject to Title V for the first time, and some would be subject to 

PSD. 

 The Brick Industry Association representative responded that one to two-thirds of their 

facilities have Title V permits because of hazardous air pollutants, but that she did not 

believe there are any that are subject to the PSD program. She stated that, using AP-42 

emission factors, they have as many as 8 out of approximately 180 plants that could be 

major for PSD, and that there may be one or two existing PSD avoidance permits out 

there. The BIA representative clarified that including all emissions (e.g., including 

biogenic emissions), over 100 plants would be major based on CO2. Looking at 

significance levels, the brick industry would most likely be hit for fluorides and 

particulate matter, and possibly CO2. She noted that, again, this industry has never had to 

undergo this kind of PSD review. Of the 70 member companies, she estimated that only

6 are considered large with the remaining companies being small. The BIA 

representative stated that she would provide EPA with data.

 The Farm Bureau representative responded that approximately 500 dairy operations (25 

percent of all milk production), 100 pork operations (25 percent of all pork production), 

and 200 beef operations (60 percent of all beef feed operations) would be subject to Title 

V under a 25,000 CO2e threshold. He reported that they were unsure about poultry

operations, but that it was about 50 or 60 operations under the Mandatory Reporting 

Rule. The Farm Bureau representative stated that a good percentage of farm operations 

would likely get out of the PSD program under the proposed 25,000 CO2e threshold. In

response to a question from EPA regarding whether any of the operations that would be 

subject to Title V would be small, the Farm Bureau representative responded that the way

they calculate greenhouse gas emissions estimates for livestock operations come from 

USDA 1605(b) (Greenhouse Gas Registry Guidelines), where it is estimated that dairy

cows emit approximately 4 tons per year (tpy) GHGs, beef cows emit approximately 2 

tpy GHGs, and hogs emit approximately 0.5 tpy GHGs (based on methane). He stated 

that he would get the numbers to EPA. 

 The American Public Power Association representative commented that her association 

represents an estimated 2,000 State and Municipal electric utilities, 95 percent of which 

qualify as small businesses under the Small Business Regulatory Fairness Act (SBREFA) 

and 100 percent of which are subject to the Unfunded Mandate Reduction Act (UMRA). 

The UMRA’s goal is to reduce regulatory requirements to State and Local governments, 

where costs would be directly passed through to consumers. The APPA representative 

reported that there are an estimated 325 electric utilities that currently have Title V 

operating permits, and she thinks there is one existing PSD permit in Delaware. The vast 

majority of their members have no PSD permitting experience. She opined that EPA 

underestimated the regulatory impacts and costs to the electrical utility industry with 
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regards to PSD because of the triggering of other pollutants. She noted that one EPA 

presentation slide indicated that there were about 160 electric utilities that would get 

relief from the proposed rule, but she believed that those facilities are likely

manufacturing cogeneration facilities and not the kind of electric generation utility that 

you would call up when the lights go out and that she does not believe that there would 

be any change for the kind of electric generation facility that provides service to the 

community. 

Fees

 The American Public Power Association expressed concern regarding the $43/ton Title V 

permit fee that States might want. Some States cap these fees at $4,000 per boiler or 

provide a facility cap, but that some States do not. This money would be money that 

would not be going back to the city, which points to the Unfunded Mandates issue. The 

APPA representative explained that this money funds fire, policy, emergency response 

personnel, and in some cases, teachers’ salaries.

Regarding Title V permit fees, an EPA representative explained that States are not 

required to charge a minimum of $43/ton and that they are required to make a 

determination of the funding needed to run their Title V program, which must be 

approved by the EPA in order to collect fees, and that funds from permit fees cannot be 

used for other purposes. He acknowledged APPA’s concern but explained that there are 

provisions in the regulations that will minimize any abuse of Title V fees in the program 

and noted that where abuses have been identified in the past (i.e., Title V money used for 

other programs, such as transportation), EPA has required return of the money.

 The American Public Power Association representative requested that EPA reissue the 

John Seitz memorandum on Title V operating permits to remind States about the use of 

Title V fees.

 The Farm Bureau representative inquired whether the use of Title V fees to administer a 

State’s Title V permit program negates the “administrative necessity” argument set out in 

the preamble.

EPA responded to the Farm Bureau representative by stating that a State can administer 

their permitting program under the existing applicability thresholds (e.g., because of a 

small number of sources),and collect fees to do so if they can demonstrate to EPA that 

they can adequately administer the program. Under such a scenario, EPA can approve an 

alternative threshold limit to what EPA is proposing and part of that could include State 

collection of fees.

SISNOSE for Mines

 The National Mining Association representative commented that his association looked at 

EPA’s Technical Support Document for the proposed rule under the coal mining section 

and were concerned that there may be a SISNOSE on underground coal mines in the 
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industry. He further stated that they are talking with The Mine Safety and Health 

Administration (MSHA) to retrieve updated information (acknowledging that EPA 

obtained their numbers from MSHA) which has reported that the number of facilities that 

are considered gassy is about 148. The NMA representative stated that they are waiting 

for a list of these facilities that breaks out the number of employees and will share that 

information with EPA. He requested that EPA look at these facilities further as, for their 

industry, a small business is one that is based on 500 or less employees. Based on EPA’s 

RIA, he stated that about 98 percent of their industry is small, with 15 facilities above the 

proposed threshold, and the other 600 to 800 facilities falling below the threshold. The 

NMA representative also commented that EPA’s analysis assumes that no new 

underground coal mines will be built, reporting that though there may be some shrinkage 

of mines because of the economy, new mines are opening all the time. He further 

commented on EPA data that indicates that 103 coal mine sources would exceed the 

25,000 CO2e threshold for methane as not indicating whether those 103 sources are small 

or not. He requested that EPA evaluate these 103 sources to discern whether they are 

small businesses.

The RFA for the Suite of GHG Regulations

 The NMA representative commented that the proposed Tailoring Rule was certified as 

having no SISNOSE because the proposal is relieving the regulatory burden. He inquired 

that, while he understood that perspective, does that mean the Regulatory Flexibility

Analysis (RFA) will be done in the Light Duty Vehicle Rule, and, if not, where will it be 

done? He further inquired, that if it is not going to be done, how does the Small Business 

Administration Advocacy Group feel about that?

EPA responded by stating that the Light Duty Vehicle Rule had also been certified as not 

having a SISNOSE because it does not directly impact any small entities. 

An SBA representative responded to NMA’s inquiry on this point by stating that they had 

requested an RFA in the form of a panel and it did not happen, and that they are in the

process of preparing a comment letter that addresses that issue. He explained that though 

the outreach meeting is part of an effort to educate small entities, in SBA’s opinion it is 

not the same thing as having a panel.

 The Farm Bureau representative agreed that the impacts of Title V and PSD should be 

addressed before going forward, and though he agreed that it should have been done 

under the Light Duty Vehicle Rule, he also believed that it could be argued as necessary

under this proposed rulemaking.

BACT for CO2

 The BIA representative asked what the controls for CO2 are, other than energy efficiency.

EPA responded that the GHG BACT Work Group (a subgroup of the Clean Air Act 

Advisory Committee) has been tasked by the Agency to look at this issue for individual 
15

source categories and the Work Group’s goal is to complete this effort by March, when 

the light duty vehicle rule is scheduled to be finalized.

 The American Public Power Association representative commented that she was at EPA 

a couple of weeks prior to this meeting where EPA invited electric utilities to discuss and 

discern what is potentially BACT for the electric utility industry with about 35 EPA 

staffers and contractors. The thinking at the meeting was that it would be geologic 

sequestration to meet something parallel to a natural gas standard. She explained that the 

concept presented to them was that a power plant could retrofit to meet a natural gas 

equivalent standard by gasifying coal or by doing geological sequestration of CO2. She

asserted that, although carbon sequestration has been commercially demonstrated by the 

oil and gas industry, it is not commercially demonstrated in the U.S. or the world for 

power plants (that neither have the infrastructure or operations to make carbon 

sequestration a feasible option). For most industries, BACT over the next 25 years for 

CO2 will entail energy efficiency or switching to natural gas, nuclear power, renewable, 

or some combination of these. 

The American Public Power Association representative stated that in the electric utility

industry, they want to keep coal as one of their options along with other options to 

maximize choices in fuel. Even if carbon sequestration is commercially demonstrated for 

power plants in the next ten years, she opined that it would take ten to fifteen years to 

obtain the proper Water Permits as it is a completely different process than controlling air 

pollutants. The American Public Power Association representative offered EPA more 

information on this issue. 

 The BIA representative added that their industry is also being hit by additional Maximum 

Achievable Control Technology standards and are having difficulty addressing how to 

deal will all these regulations in a bad economy. She reported that, for her industry, there 

is no offshore option.
16

Appendix A

Slides from the Outreach Meeting
17

Slide 1

EPA Climate Change Regulatory 

Activity

November 17, 2009

Slide 2

2

Massachusetts v. EPA and Resulting 

Rulemakings

 Massachusetts v. EPA

– April 2007

 Proposed Endangerment Finding

– Published April 24, 2009 - 74 FR 18886

– Public comment period closed June 23, 2009

 Proposed Light Duty Vehicle Rule

– Published September 28, 2009 - 74 FR 49454

– Public comment period closes November 27, 2009

 Proposed PSD/Title V Tailoring Rule

– Published October 30, 2009 – 74 FR 55292

– Public comment period closes 60 days following publication
18

Slide 3

3

Related GHG Rulemakings 

 Reconsideration of PSD Interpretive Memo

– Published October 7, 2009 – 74 FR 51535

– Public comment period closes December 7, 2009

 Final GHG Reporting Rule

– Published October 30, 2009 – 74 FR 56260 
19

Slide 1

GHG Regulations and 

their NSR/Title V Impacts

Small Entity Outreach Meeting

November 17, 2009

Slide 2

2

Goal

 Outreach to small entities to exchange 

information about the suite of GHG 

regulations and how they may impact the PSD 

and Title V permitting of small entities.
20

Slide 3

3

Types of Federal Air Permits

 Construction Permit

 Permit must be issued before the source can start 

construction

 Applies to major sources

 Major source program is known as New Source Review 

Construction Permit Program

 Operating Permit

 Permit must be issued before the source can begin 

operating

 Applies to major sources

 Program is the Title V Operating Permits Program

Slide 4

4

What is New Source Review (NSR)?

 Requires facilities to install modern pollution 

control equipment when:

 they are built or 

 when making a change that increases emissions significantly
21

Slide 5

5

What is an NSR permit?

 An enforceable legal document that a facility must comply

with. It restricts: 

 What construction is allowed

 What air emission limits must be met 

 How the source can be operated

 To assure compliance, a permit must contain monitoring, 

recordkeeping, and reporting requirements

 Public review of the proposed permit is required.

 Generally takes about a year to get the permit

Slide 6

6

Which facilities are regulated?

 Facilities are known as sources under the program.

 The major NSR program applies to major sources.

 Major sources are facilities that have the potential to emit 

pollutants in large amounts (that is, equal to or greater than 

certain emissions limits under the program, usually 100 or 

250 tons per year for new major sources and 40 tons per 

year or less for changes at existing sources).
22

Slide 7

7

Who Needs a Title V Permit?

 All major sources, which are:

 Any source that emits at least 10 tons per year of any

toxic air pollutant or 25 tons per year of all toxic air 

pollutants 

 Any other source that emits at least 100 tons per year 

 Some non-major sources (a few area sources and 

hazardous waste incinerators)

 Around 15,000 major sources nationwide 

 Includes around 300 sources on Tribal land

Slide 8

8

Title V Operating Permits

 The Title V Operating Permit must include all 

requirements that apply to the source under the 

Federal Clean Air Act.

 This includes the NSR permit requirements.

 It also includes any other federal control technology 

requirements, testing, monitoring, recordkeeping, and 

reporting requirements that apply to the source.

 Requires sources to report their compliance status 

with all of the requirements.

 Requires an opportunity for public review of and 

comment on the proposed permit
23

Slide 9

9

How do Title V Permits Get Issued?

 Sources must apply to state or local agency

 Permitting agency negotiates terms and drafts 

permit

 Draft permit is reviewed by public 

 Public hearing may be requested

 Final permit is issued

 Public may petition the Administrator to object to 

the final permit

Slide 10

10

Massachusetts v. EPA and Resulting 

Rulemakings

 Massachusetts v. EPA

 April 2007

 Proposed Endangerment Finding

 Published April 24, 2009 - 74 FR 18886

 Public comment period closed June 23, 2009

 Proposed Light Duty Vehicle Rule

 Published September 28, 2009 - 74 FR 49454

 Public comment period closes November 27, 2009

 Proposed PSD/Title V Tailoring Rule

 Signed September 30, 2009 – FR publication forthcoming

 Public comment period will close 60 days following publication
24

Slide 11

11

Big burden, little gain

 Small businesses raised concerns over applying permit programs to such small 

sources if the thresholds remain at 100/250 tons. Some hypothetical examples 

of sources that may exceed 250 ton threshold: 

 A 60 horsepower internal combustion engine (the vast majority of stationary engines 

nationwide).

 A new 100,000 sq. ft. hotel or 50,000 sq. ft. restaurant.

 A large commercial property that spends (or could potentially spend) an average of 

$5,000/month on its natural gas bill.

 A major source that adds a gas furnace or space heater (assuming zero significance 

level).

 A boiler/furnace serving a multi-family residential building with more than 20 

occupied units.

 State agencies and EPA raised concerns about the administrative burden of 

running the permit programs for such small sources due to the very large 

numbers.

 In light of potentially enormous burdens but relatively little environmental 

impact, tailoring these programs for large numbers of small sources is 

necessary to provide a common sense approach to GHG regulation.

Slide 12

12

Why the Tailoring Rule is needed

 By rule/policy, PSD and Title V permitting programs under the Clean Air Act 

apply to major sources and modifications of “regulated NSR pollutants.” 

 GHG are not now “regulated” and thus are not covered by these programs now

 There are concerns about how we would administer these programs if GHG 

become “regulated”

 The first “regulation” of GHG will likely be with Light Duty vehicle rule 

promulgation in March 2010.

 Specifically the concerns about regulation of GHG stem from the fact that:

 By statute, for Title V, the major source threshold is 100 tons/year.

 By statute, for PSD, the threshold is 250 tons/year (100 tons/year for some 

categories).

 For PSD modifications, any change at a major source that results in “any increase” of 

GHGs would trigger PSD unless we establish a “significance level” that excludes 

smaller modifications.

 GHGs (especially CO2) are emitted in much greater mass than conventional 

pollutants, so very small sources exceed the 100/250 ton per year levels.
25

Slide 13

13

Why the Tailoring Rule is needed 

(continued)

 For title V, millions of smaller sources would be newly classified 

as major for GHG.

 About 15,000 major sources now

 For PSD, tens of thousands of smaller new sources and 

modifications each year would be newly classified as major for 

GHG.

 About 300 new major sources/modifications per year now

 The administrative burdens of permitting large numbers of 

newly-subject sources would cause severe disruption to the 

existing programs.

 Many of these sources are in commercial/residential categories that have 

no experience with CAA permitting

 Tailoring these programs to address large numbers of small 

sources is necessary to provide a common sense approach to 

GHG regulation.

Slide 14

14

How would the Tailoring Rule Address 

This?

 Proposes to raise the “major source” thresholds and PSD “significance levels”

 PSD and Title V: major source size raised to 25,000 tons/year CO2e (sum 

of 6 gases)

 PSD significance level: raised to a number within the range of 10,000-

25,000 tons/year CO2e (sum of 6 gases)

 Proposal takes comment on other levels.

 Proposal also takes comment on use of CO2e metric/6 gases

 Use of CO2e (sum of six gases) improves source flexibility, 

simplicity, and consistency with GHG control regulations/climate 

endpoint.

 Facilities above these levels would still be required to obtain permits.

 Facilities that remain covered are responsible for nearly 70 percent of 

stationary source GHG emissions.

 Facilities proposed for exclusion comprise only 7 percent.

 Based on our calculations, small farms, restaurants, office buildings, etc. would 

not need to get permits.
26

Slide 15

15

What are the small entities that will need to 

get a PSD permit?

 We estimate approximately 14,000 sources will need to get a 

permit based on their GHG emissions with the proposed 

threshold. 

 However, we estimate that the vast majority of these already

hold a permit.

 Some exceptions are:

 Landfills

 Some commercial sources

 Larger, multi-family residential sources.

Slide 16

16

Summary of Impacts of Rule

 Major benefit of rule is regulatory relief to small 

sources of GHG.

 Regulatory relief also means foregoing 

environmental benefits (costs) of regulation under 

title V and NSR for these sources.

 Other approaches such as voluntary measures and 

efficiency measures will be pursued in other forums 

to reduce GHG emissions from the affected smaller 

sources.
27

Slide 17

17

Estimated Number of Entities Avoiding Costs as a 

Result of Rule1

Category Title V 

Sources

New PSD 

Sources2

EGU 161 20

Industrial 156,545 303

Energy 3,644 35

Waste Treatment 1,431 0

Agriculture 37,351 299

Commercial 1,354,760 12,034

Residential 4,535,340 6,912

Total 6,089,232 19,603

1 Represents approximately 95% of the potential sources requiring an operating permit or PSD permits for GHG emissions and 

less than 10% of GHG emissions from stationary sources.

2 Number of sources does not include modifying PSD Sources.

Slide 18

18

Avoided Costs for Affected Entities –

Title V 1,2

Affected Entities Number of 

Permits

Avoided

Per Permit Cost 

(2007$)

Total Cost Avoided 

(millions 2007$)

Source

Industrial 195,895 46,350 9,079.7

Residential/

Commercial

5,956,513 4,986 29,699.2

Permitting Authority

Industrial 195,895 219,688 3,856.8

Residential/

Commercial

5,956,513 1,978 11,781.9

Total Cost 54,417.6

1 Avoided costs represent the initial ICR costs involved in permitting sources of GHG. Title V operating permits are required to

be renewed every 5 years.

2 Number of permits differs from affected title V sources on slide 6 because new NSR sources will also be required to obtain 

an operating permit.
28

Slide 19

19

Legal Basis for Proposal

 Although the rule departs from statutory thresholds it is permissible to do so under 

two separate legal bases: 

 “Absurd results”

 Courts have held that a statutory requirement need not be applied 

literally if doing so would produce “absurd results” that would be 

inconsistent with congressional intent. 

 Applying the PSD and Title V statutory thresholds literally would be a 

classic case of an “absurd result” because it would sweep into the two 

permitting programs unprecedented numbers of small sources that 

Congress did not intend be included, and the resulting administrative 

burdens would prevent the State permitting authorities from permitting 

the larger sources that Congress did intend be included.

 “Administrative necessity”

 Courts have held that a statutory requirement need not be applied 

literally if it would be impossible for the agency to administer it.

 Applying the PSD and Title V statutory thresholds literally would create 

impossible administrative burdens for the State permitting agencies.

Slide 20

20

Selection of Proposed Levels

 Selection driven by what is necessary to meet congressional intent 

as closely as possibly, and what is administratively feasible.

 Must choose lowest level that we judge possible to administer

 25,000 tons per year CO2e (and 10,000-25,000 tons per year CO2e 

for modifications) is proposed as the lowest level at which the 

program could be administered for the next six years, because:

 Going lower (we evaluated 1,000, 5,000, and 10,000 tpy) starts 

to rapidly increase commercial and residential source 

applicability.

 Going higher (we evaluated 50,000 and 100,000) is likely 

harder to justify with administrative necessity because coverage 

is less than we have now.
29

Slide 21

21

Selection of Proposed Levels (continued)

 At proposed levels, GHG regulation would add workload to 

permitting authorities, but proposal suggests it would not overwhelm 

them:

 About 3,000 sources to Title V’s current universe of 15,000 

sources. 

 Fewer than 100 sources and modifications per year to PSD’s 

current universe of 300 permits per year. 

 Most of the added sources are large municipal solid waste 

landfills with major amounts of methane.

 A large share (but not all) of existing major source population 

will also be major for GHG.

 Promotes coverage of nearly 70% of GHG emissions (see next 

slide). Lower thresholds yield small increases in coverage but 

significant increases in burden.

Slide 22

22

Additional Information About 25,000 ton/year Level

25,000 level 

excludes all but the 

largest commercial 

and multi-family 

residential sources

25,000 is consistent 

with GHG reporting 

rule

Existing Facilities Exceeding GHG Permitting Thresholds

(By Sector based on PTE)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

5,000 10,000 25,000 50,000

Permitting Threshold (tons CO2-eq/yr)

# of Existing Facilities

Electricity Generation

Industrial

Oil/Gas/Coal Production

Waste

Commercial

Residential
30

Slide 23

23

-At 25,000 tpy level, 68% of CO2e (87% of CO2) emissions are still covered

by the permit programs. 

-For comparison, 72% of NOx is covered at the 250 tpy level.

Existing Facility and GHG Emissions Coverage by Permitting 

Threshold

13,661 7,245 4,850

1,058,296

278,340

52,888 26,898

64%

75%

73%

71% 70%

68%

65%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

250 1000 5000 10,000 25,000 50,000 100,000

Threshold in tons/yr CO2-eq

# Facilities Covered

50%

55%

60%

65%

70%

75%

80%

85%

90%

% of National Stationary Source GHG 

Emissions Covered

Facilities Covered Emissions Covered

Slide 24

24

Additional Elements of Proposal

 EPA identifies measures it will consider for streamlining 

permitting over the next several years.

 For example, general permits.

 After 5 years, EPA will evaluate whether to change threshold, 

and if so, will do a rulemaking.

 Streamlined approach to get rule in place in States.

 Does not address how to set BACT for sources left in 

program, but commits to separate process to assist with this.

 Also separately notes that, while it makes sense to remove 

smaller sources from permitting, there may be other cost 

effective ways to address their emissions.
31

Slide 25

25

Implementation Issues

 Getting the Tailoring rule in place in States:

 Will require somewhat novel approach of “narrowing” our existing approvals of 

permit programs to clarify that our approval does not include sources below 25,000 

tons/year CO2e or modifications below 10,000 tons/year CO2e.

 States can provide SIP revision for EPA approval should they seek to establish 

lower thresholds.

 For smaller sources that are deferred due to Tailoring rule:

 Proposal signals intent to identify cost-effective and implementable opportunities 

for reductions from these sources through means other than PSD during the deferral 

period (e.g., energy efficiency measures, renewable grants, etc.) 

 For larger sources that do not get deferred (i.e., that remain subject to permit programs 

because they emit more than 25,000 tpy):

 Proposal indicates intent to separately assist with challenges of determining BACT 

for new GHG pollutants by developing control-related information to aid in making 

such determinations.

 Proposal acknowledges that Title V programs will have more workload and will 

need to collect adequate fee revenue, but this rule is not the forum for proposing 

changes to fee provisions and does not make findings of inadequate fee provisions 

in State programs.

Slide 26

26

For more information

 Preamble and proposed regulatory text available at 

www.regulations.gov after publication in the Federal 

Register

 Instructions for submitting written comments found 

in preamble:

 www.regulations.gov

 Additional information: www.epa.gov/nsr

 Juan Santiago, AQPD: 919-541-1084

 Email: santiago.juan@epa.gov
32

Slide 27

27

Questions for SERS

 Are you a small business that would exceed the proposed 

25,000 CO2-eq threshold?

 Can you provide data showing this? If you are in excess of 

the threshold, do you already have a title V or PSD permit 

due to other pollutants?

 How many other small entities in your industry would have to 

get a new permit? How many would have to revise an 

existing permit?

 If we lowered the threshold, how would it affect your 

industry? What if we raised the threshold?

 What would the economic impacts of the current threshold be 

on your business? For a higher or lower threshold?

Slide 28

28

Estimating Your Emissions

 AP-42: www.epa.gov/ttn/chief/ap42/

 www.epa.gov/climateleaders/resources/index.html
33

Appendix B

Written Responses to EPA’s Questions