UNITED STATES ENVIRONMENTAL PROTECTIONAGENCY WASHINGTON, D.C. 20460



## DEC 18 2008 THE ADMINISTRATOR



### MEMORANDUM

TO:

FROM:



### RE: Regional Administrators

Stephen 

### L. Johnson, Administrator

EPA's Interpretation of Regulations that Determine Pollutants Covered By Federal Prevention of Significant Deterioration (PSD) Permit Program.

INTRODUCTION

In this memorandum, 

### I am establishing an interpretation clarifying the scope of the EPA regulation that determines thepollutants subject to the federal Prevention of SignificantDeterioration (PSD) program under the Clean Air Act (CAA or Act). Under Title 

### I, Part C of the Act, the PSD program preconstruction permit requirement applies to any new major stationary source or modified existing major stationary source of regulated air pollutants located in an area that is either attaining the National Ambient Air Quality Standards (NAAQS) or unclassifiable. Under the federal PSDpermitting regulations, onlynewly constructed or modified major sources that emit one or more "regulated NSR pollutants," as that term is defined in 40 C.F.R. 52.21(b)(50), are subject
to the requirements ofthe PSD program, including the requirement to install the best availablecontrol technology (BACT) for those regulated NSR pollutants that the facility emits in significant amounts. This memorandum contains EPA's definitive interpretation of40 C.F.R. 

### 52.21(b)(50) and is intended to resolve any ambiguity in subpart (vi) of that paragraph, which includes "any pollutant that otherwise is subject to regulation under the Act." As of the date ofthis memorandum, EPAwill interpret this definition of "regulated NSR pollutant" to exclude pollutants for which EPA regulations only require monitoring

orreporting but to include each pollutant subject to either a provision inthe Clean Air Act orregulation adopted by EPA under the Clean Air Act that requires actual control of emissions ofthat pollutant.

As a matter ofpractice, EPA has not historically applied the PSD program to pollutants that are subject only to monitoring and reporting requirements. EPA may mandate monitoring and reporting by regulation to gather information about emissions for several purposes, including establishing emissions baselines or informing decisions regarding whether to establish controls or limitations for a particular pollutant. Although EPA has not required that PSD permits contain emissions limitations for pollutants subject only to monitoring and reporting requirements, the EPA Environmental Appeals

InternetAddress (U L) http'lhiww.epa.gov 

# t RecycledlRecyclable Printed with Vegetable Oil Based In son 100% Postconsumer, Process Chlorine Free Recycled PaperBoard (EAB or Board) recently determined that prior EPA actions are insufficient to establish a binding interpretation that section 52.21(b)(50) covers only pollutants subject
to regulations that require actual control of emissions. In re: Deseret PowerElectric Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13,2008). The Board's decision has contributed to uncertainty regarding the scope of the PSD program. Permitting authorities, applicants, and other interested parties do not currentlyknow whether pollutants for which EPAhas only established regulatory requirements to monitor and report emissions are covered by the PSD program and whether sources must consider these pollutants when assessing whether they are major sources that must apply for a PSD permit.

I respect the EAB decision in Deseret, which was thorough, thoughtful, and based

on the permitting record before the Board. This memorandum is not intended to supersede the Board's decision, which was issued in accordancewith authority delegated
to the EABby the EPA Administrator. See40 C.F.R. 

## 5 124.2;40 C.F.R.

## 5 124.19; 57 Fed. Reg. 5320 (Feb. 13, 1992). Thepurpose of this memorandum is to build on the Board's Deseret opinion and address ambiguity in EPA's regulations that remains after the EAB concluded the Agency did not previously establish the interpretation that pollutants subject solely to monitoring or reporting requirements arenot "regulated NSR pollutants" that require emissions limitationsbased on levels that can be achieved using BACT. Deseret slip op. at 9. This memorandum is intended to reduce ambiguity by setting forth an initial interpretation ofEPA's regulation at 40 C.F.R. 

## 5 52.21(b)(50).

The EAB encouraged EPA offices to consider whether to undertake an action of nationwide scope to address the interpretation of the phrase "subject to regulation under the Act," which is used in the regulatory definition of "regulated NSR pollutant." See Deseret slip op. 63-64. This memorandum is intended to accomplishthat purpose, thus relieving individual EPA Regional Offices ofthe burden ofresolving an issue which affects the entire national permitting program. Immediate issuance of this interpretation of EPA's regulation is needed to ensure the continuing operation of the federal PSD permitting program and to resolve ambiguity and reduce confusion amongpermitting authorities, the regulated community, and other interested stakeholders. This memorandum reflects my considered judgment and explains existingregulatory requirements. The interpretation adopted in this memorandum is consistent with the historic practice ofthe Agency and with prior statements by Agency officials, including the Administrator, the EAB, and the General Counsel. EPA has not previously issued a definitive interpretation ofthe definition of "regulated NSR pollutant" in section 52.21(b)(50) or an interpretation ofthe phrase "subject to regulation under the Act" that addressed whether monitoring and reporting requirements constitute "regulation" within the meaning of this phrase.

Theinterpretation in this memorandum applies to all PSDpermitting actionsby EPARegions (and delegated Statesthat issue permits on behalf of EPA Regions), under the federal PSD permitting program governed by 40 C.F.R. 

## 5 52.21. I request that the Regional Offices implement the attached interpretation immediately in federal PSD permitting actions. In addition, Regional Offices should take immediate steps to inform

### delegated Statesofthis interpretation. I also encourage Regional Offices to promptly communicatethis interpretationto state and local agencies that implementEPA-approved PSD programs under their State Implementation plans.'

I. BACKGROUND ON THE EAB'S 

### DESERETDECISION 

### AND THENEED FOR THIS CLARIFICATION OF THE PSD REGULATIONS

A. The Deseret Decision

On November 13,2008,the EAB issued a decision in In

### reDeseret Power Electric Cooperative, PSD Appeal No. 07-03 (EAB 2008). Thecase involved an appeal of a PSD permit that Region 

### 8 had issued on August 30,2007, to Deseret Power Electric Cooperative (Deseret) authorizingit to construct a new waste-coal-fired electric generatingunit near its existing BonanzaPower Plant, in Bonanza, Utah. The Board issued an order and opinion remandingthe permit because it found that Region 8 erroneouslybelieved itwas required to follow a historic agency interpretation concerning the scope ofthe phrase "subject to regulation" used in the regulatory definition of the
term "regulated NSR pollutant," 40 C.F.R. 52.21(b)(50),and the Clean Air Act (section 165and 1 69).2 The Board found that the permittingrecord failed to set forth "sufficiently clear and consistent articulations of an Agency interpretation to constrain the authority" ofthe Region in the manner explained in the Region's response to public comments. The Board also considered additionalAgency documentscited in the briefs submittedby various parties and concludedthat these Agency actions also were insufficientto unequivocally establish the specific interpretationofthe phrase "subject to regulation" that Region 8 believed it was bound to apply in issuingthe permit.


# ' The EPA regulation setting forth PSD program requirements for State Implementation Plans also includes the same definition of this term at 40 C.F.R. 

## 4 51.166(b)(49). Because the same languageisused in this regulation, Regional Administratorsmay also apply the interpretation described in this memorandum prospectively when reviewing and approvingnew submissions for approval or revision of state plans. Because the EAB 

### determined that the interpretation adopted in this memorandum was not previously establishedby the Agency, this interpretationdoes not apply retroactively to prior approvals of State Plans by EPA Regional Offices. To the extent approved State Implementation Plans contain the same language

### as used in 40 C.F.R.

## 4 52.21(b)(50)or 40 C.F.R. 

## 4 51.166(b)(49),Statesmay interpretthat language in stateregulations in the

samemanner reflected in this memorandum.

The statute and regulationuse similarbut not identical language. Theregulation defines aregulated NSR pollutant to include "Any pollutant that otherwise is subject to regulation under the Act" and requiresBACT for "each regulated NSR 

### pollutant." 40 C.F.R.

## 55 52.21(b)(50), (j). 

### The CleanAir Actrequires BACT for "each pollutant subjectto regulation under this Act." CAA 

## $8 165(a)(4), 169. TheUnited States Code refers to "each pollutant regulated under this chapter," which is a reference to Chapter 85 of Title 42 of the Code, where the Clean Air Act is codified. See 42 U.S.C. 

## $5 7475(a)(4),7479(3). For simplicity, this memorandum generally uses "the Act" and the Clean Air Act section numbers rather than the U.S. Code citation.More specifically, the primary issue before the Board was whether the permit had
to include BACT limits for carbon dioxide (C02) under the definition of a "regulated NSR pollutant" and statutory languagein sections 165 and 169that make the BACT requirement applicableto "each pollutant subjectto regulation" under the Act. The Petitioner (Sierra Club) argued that this statutory languagewas unambiguous and subject to only one interpretationas a matter of law, leaving the Agency, and hence the Region, no discretionto interpret the phrase. Petitioner argued that the act ofpromulgatinga "regulation" in the Code ofFederal Regulationsthat required power plants to monitor and report, but not control or otherwise limit, C02emissions clearly rendered C02a pollutant "subject to regulation" for purposes of the PSD program and thus required that the PSD permit in that case contain an emissions limitation for ~02.~
Region 8 and the Office ofAir and Radiation (OAR), represented by Regional Counsel and the Officeof General Counsel, argued that the statutory phrase "subject to regulation under this Act" is ambiguousand therefore subject to reasonable interpretation by the Agency. Moreover, the offices contended that EPA had historically interpreted the phrase "subject to regulation" to include only those pollutants "subject to a statutoryor regulatoryprovision that requires actual controlof emissions of that pollutant," thus excluding pollutants (like C02) for which only monitoring is required. The Region and 

### OAR argued that Region 8 followed this longstanding interpretation and thus properly did not include BACT limits for C02 in the PSD permit for Deseret.

TheBoard rejected Petitioner's argument that the Act compelled only one interpretation of the phrase "subject to regulation" and found "no evidence of a Congressional intent to compel EPA to apply BACT to pollutants that are subject only to monitoring and reporting requirements." Deseret slip op. at 63. Thus, the Board agreed with the Region and OAR that the statutoryphrase "subject to regulation under this Act" is ambiguous. However, as discussed above, the Board also concluded that the Region's reason for not includinga BACT limit for C02 in the permit
-that it was bound by a historic interpretation of the phrase "subject to regulation" -was not supported by the administrativerecord for the permit. 

### Id. Thus, the Board remanded the permit to the Region to "reconsider whether or not to impose a C02 BACT limit in light ofthe Agency's discretion to interpret, consistentwith the CAA, what constitutes a 'pollutant subjectto regulationunder this Act."' ~d.~ The 

### EAB also encouraged EPA officesto consider whether to undertake an action of nationwide scope to address the interpretation of the phrase "subject to regulationunder the Act." 

### Id. at 63-64.

B. Implications of theDeseret Decision for the PSD Permitting Program

The appeal also involved the question of whetherthe monitoring regulations that EPA issued pursuant to section 821 ofthe Clean Air Act Amendments of 1990 were issued or are enforceable under the Clean Air Act. That issue is not addressed in this memorandum.
4 TheBoard rejected Petitioners' other challenge to the permit based on the alternatives analysis for the permit. 

### Id. at 21-23.As a result ofthe Board's decision, states, regulatory agencies, industry and the public would benefit from clarification regarding how EPA interprets this key phrase "subject to regulation" in the PSD program's regulatory definitionof "regulated NSR pollutant." Currently, roughly 275 sources obtain PSD permits nationwide per year. Approximately 50ofthem obtain PSD permits issued by EPA ordelegated states implementing the federal PSD program at 40 C.F.R. 

## 5 52.21. The remainder areissued under approved StateImplementation Plans. TheDeseret decision has led to confusion for sources applying for PSD permits under 40 C.F.R. 

## 5 52.21 because they currently do
not know ifthey should include a BACT analysis with their PSD permit application for carbon dioxide or any other pollutant forwhich only monitoring regulations exist. The Board's decision has also caused confusion among delegated permitting agencies which

are unsure how EPA interprets its regulations, which they are implementing on EPA's behalf.

Moreover, as discussed in detail below, because the term "regulated NSR pollutant" is found in the definition of "major stationary source" at 40 

### C.F.R.

## 5 52.21(b)(l)(i)(a), there is also confusion asto which sources must apply for PSD permits, since newly constructed ormodified "major stationary sources" must obtain PSD permits. There is currently uncertainty regarding the pollutants that must be considered when determining major source status. Thus, while theDeseret case decision was about whether a major stationary source obtaining a PSD permit based on its emissions of other pollutants was required to install BACT for an additional pollutant, it has created questions for hundreds ofthousands of smaller sources that must determine whether they

are "major sources'' that must obtain PSD permits if they experience a major modification or construct a new facility. This confusion potentially extends to source categories that have never had to obtain PSD permits in thepast.

Given the confusion resulting from the Board's conclusion that the documents relied on by the Region and OAR did not establish a "sufficiently clear and consistent articulation ofan Agency interpretation" of "subject to regulation," id. at 37, the Agency believes that the best path forward is to establish a clear interpretation ofits regulations at this time. Immediate issuance ofthis interpretation is appropriate to ensure consistent implementation ofthe PSD program byRegions and delegated states, and to eliminate ambiguity and confusion among permitting authorities, the regulated community, and other stakeholders. As discussed in more detail below, the Agency may adopt this first clear, binding interpretation in this memorandum because the EAB held that documents cited by the Region and OAR had not established an interpretation and the interpretation
set forth in this memorandum is consistent with, and a further elaboration of, those prior
statements on the matter. The Agency's exercise of its discretion to interpret what constitutes a pollutant subject to regulation is detailed below.

EPA'S INTERPRETATION 

### OF 

### THE TERM "REGULATED NSR POLLUTANT" 

### IN 40 C.F.R. 

## 5 52.21(b)(50)EPA interprets the definition of "regulated NSR pollutant" in 40 C.F.R. 

## 8 52.21(b)(50) to exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either aprovision in the Clean Air Act

orregulation promulgated by EPA under the Clean Air Act that requires actual control of emissions of that pollutant.5 This interpretation is supported by the language and
structure of the regulation and sound policy considerations. Furthermore, this interpretation is consistent with past practice in the PSD permitting program, EPA's prior statements regarding pollutants6subject to the PSD program, and is permissible under the Clean Air Act.

A. Language and Structureof 40 C.F.R. 

### 6 52.21(b)(50) Support Limiting Its Applicability To Pollutants That Must be Controlled Under Clean Air Act Regulations

The structure and language of EPA's definition of "regulated NSR pollutant" at 40 C.F.R. 52.21(b)(50) supports an interpretation that it covers only those pollutants subject to a statutory orregulatory provision that requires actual control of emissions of that pollutant. Theportions ofthe definition pertinent to this memorandum read as follows:

RegulatedNSR pollutant, for purposes of this section, means the following:

Congress could require control of emissions through a statutoryprovision that directly imposes actual controls or limitations on a particular pollutant or that requires EPA to write regulations to control or limit particular pollutants. As discussed further below, in the latter circumstance, EPA does not interpret the PSDrequirements to apply to such a pollutant until EPA promulgates the regulation required by the Act.

This memorandum does not seek to further define the specific nature or scope of any individual "pollutant" that is subject to such controls. Any ambiguity asto whether some part, component, or constituent of a substance or category of substances is controlled under a regulation should be resolved in the context of interpreting the individual rule that gives rise to the issue. See, e.g.,Regulating Greenhouse Gas Emissions Under the Clean Air Act, Advance Notice ofProposed Rulemaking ("ANPR), 

### 73 Fed. Reg. 44354 (July 30,2008) at 44420-421 (describing the various consequences that could arise given the definition ofthe "pollutant" that EPA may establish in a regulation ofone ormany greenhouse gases). For example, in adopting the New SourcePerformance Standard (NSPS) for municipal solid waste (MSW) landfills, EPA was explicit that it was regulating only MSW landfill emissions collectively, and not the individual components of those emissions. 56Fed. Reg. 24468,24470 (May 30, 1991)("The pollutant to be regulated under the proposed standards and guidelines is "MSW landfill emissions."); id.
at 24474 ("The EPA views these emissions as a complex aggregate of pollutants which together pose a threat to public health and welfare based on the combined adverse effects ofthe various components.



### . . .TheEPA thus views the complex air emission mixture from landfills to constitute a single designated pollutant.").(i) Anypollutant for which a national ambient air quality standard has been promulgated and any constituents orprecursors for suchpollutants identified by the Administrator. 

## * * * (ii) Any pollutant that is subject to any standard promulgated under section 

### 111

### of the Act. (iii) Any Class I or I1 substance subject to a standard promulgated or established by title VI ofthe Act; (iv) Any pollutant that otherwise is subject to regulation under the Act;

40 C.F.R. Cj 52.21(b)(50), as amended,73 Fed. Reg. 28321 (May 16,2008). The definition also excludes hazardous air pollutants from the PSD program in accordance with section 112(b)(6)ofthe Act and discusses a transition period established in 2008 for addressing condensable particulate matter.

As reflected above, the first three parts ofthe definition describepollutants that

are subject to regulatory requirements that mandate control or limitation of the emissions of such pollutants.7 40 C.F.R. Cj 52.21(b)(50)(i)-(iii). Consistent with the text of the Act, the fourth part ofthe definition of "regulated NSR pollutant" covers "[alny pollutant that otherwise is subject toregulation under the Act." 40 C.F.R. Cj 52,21(b)(50)(iv).

Dictionary definitions illustrate that the term "regulation" (used in the fourth part ofthe definition) is susceptible to more than one meaning. This term can be used to describe arule contained in a legal code, such as the Code ofFederal Regulations, orthe
act orprocess of controlling orrestricting an activity. The primary meaning of the term "regulation" in Black's Law Dictionary (gth Ed.) is "the act orprocess of controllingby rule or restriction." However, an alternative meaning in this same dictionary defines the
term as "a rule or order, having legal force, usu. issued by an administrative agency or local government." The primary meaning in Webster's dictionary for the term "regulation" is "the act ofregulating: the state of being regulated." Merriam-Webster's Collegiate Dictionary 983 (loth ed. 2001). Webster's secondary meaning is "an authoritative rule dealing with details of procedure" or "a rule or order issued by 

### an executive authority orregulatory agency of a government and having the force oflaw." Webster's also defines the term "regulate" and the inflected forms "regulated" and "regulating" (both ofwhich are used in Webster's definition of "regulation") as meaning "to govern or direct according to rule" or to "to bring under the control of law or constituted authority." 

### Id. 

### In the context ofconstruing the Act, the 

### EAB observed in the Deseret case that a plain meaning could not be ascertained from looking solely at the word "regulation." The Board reached this conclusion after considering the dictionary definitions ofthe term "regulation" cited above. Deseret slip op. at 28-29.

The interpretation ofthe phrase "subject to regulation" in section 52.21(b)(50)(iv) that EPA is adopting in this memorandum is directly supported by the primary meaning ofthe term "regulation" used in the dictionaries described above. Each of these definitions uses the word "control" or incorporates it through reference to a definition of


# 'Class I or I1 substances are specific categories of ozone depleting emissions.a similarword. Furthermore, in construing similar language in the Act, the EAB recognized that "subject to regulation" may be read to mean "subject to control" by virtue of a regulation orotherwise. 

### Deseret slip op. at 33.

Furthermore, the placement ofthe word "regulation" after the phrase "subject to" in the context of the fourth part of the definition supports reading section 52.21(b)(50)(iv)
to describe an act or process rather than a rule in a code. Theuse ofthe singular "regulation" without an article (such as "a" or "the") preceding the word is more naturally read to describe an "act orprocess," which supports the application ofthe meaning from Black's Law Dictionary (gth Ed.) that emphasizes "controlling byrule or restriction." EPA did not choose to use the plural "regulations" or an articlebefore the word, which would have produced language such as "subject to regulations under the Act" or "subject to A regulation under the Act." A regulation that used these phrases (instead of the one EPA chose)would be more consistent with the dictionary meanings that describe a regulation as a "rule" such as would be contained in the Code ofFederal Regulations.

Likewise, the combination of the general language in the fourth subpart with more specific provision in the first three subpartsofthe regulation is meaningful. Each ofthe identified categories is a class ofregulations that require actualcontrol or limitation of emissions of pollutants and none involve only monitoring and reporting ofpollutant emissions. The use ofthe word ''otherwise" in front ofphrase "subject to regulation" establishes a link between the first three parts ofthe definition and the fourth, suggesting that the fourparts ofthe definition should be read in concert. Specifically, the placement of the fourthpart of the definition after the first three parts identifying regulations that require controls supportsreading the fourth part to cover the same type ofregulatory requirements addressed in the first three parts ofthe definition.

Courts have recognized that "[wlhere general words follow the enumeration of particular classes ofthings, the general words are most naturally construed as applying only to things of the same general class as those enumerated." 

### See American Mining Congressv. 

### US.EPA, 824F.2d 1177, 1189(D.C. Cir. 1987). Accordingly, the general language including pollutants "otherwise subject to regulation," asused in the fourth part ofthe regulated NSR pollutant definition, can be read to apply to the same general class ofpollutants enumerated in the first three parts of the definition 

### -- pollutants that are subject to a promulgated regulation requiring actual control of apollutant.

In the

### Deseret opinion, the EAB declined to apply this principle (known in legal terms the 

### ejusdemgeneris canon of interpretation) in the absence of any analysis or statement of intent in the preamble to the 2002 rulemaking in which EPA adopted the definition ofthe term "regulated NSR pollutant." Slip Op. at 45-46. EPAhas prepared this memorandum, in part, to provide the analysis and statement of intent that were lacking in the record of the Deseret permit. For the policy reasons discussed in this memorandum, EPA reads the definition of "regulated NSR pollutant" to apply only to the

same general class ofregulated pollutants as those enumerated in the first three parts of the definition. Since the phrase "subject to regulation" does not have a clear meaning, asthe Board recognized in interpreting the statutory text ofthe Act in theDeseret opinion, it then follows, with this additional analysis and statement of intent regarding the regulation, that the principle ofejusdem generis canbe applied to the general language in section 52.21(b)(50)(iv) ofEPA's PSD regulations.

B. Important Policy Considerations SupportThe Interpretation Adopted Here

I believe that EPA's various responsibilities under the Clean Air Act are most effectively implemented by making PSD emissions limitations applicable when the Agency promulgates a regulation restricting pollutant emissions based on a considered judgment by the Administrator (or the Congress) that particular pollutants should be subject to control or limitation. Requiring such limitations automatically for pollutants that are only subject to data gathering and study would hstrateEPA's abilityto accomplish several objectives of the Clean Air Act. The Agency's interpretation ofthe
scope ofthe PSD program set forth in this memorandum remains broad, covering any pollutant subject to control through regulations established under the Act that apply in a particular area. However, this broad application ofthe PSD program should not be without reasonable boundaries that make theNSR program and other Act programs effective, yet manageable, for EPA and the states to administer.

The administration of emissions control programs under the Act requires reasoned decision-makingthat is often informed by review of emissions data. Section 114(a)(l)of the Act authorizestheAdministrator to require various persons to gather and report emissions data for a number ofpurposes. 42 U.S.C. § 7414(a)(l). These include developing an implementation plan or emissions standards for specific source categories under sections 111, 112 or 129 of the Act; determining if any person is in violation of any standard orrequirement of an implementation plan or emissions standard; or "carrying out anyprovision" ofthe Act. The latter may include information gathering for research under provisions ofthe Act that direct or authorizeEPAresearch on various matters. Although there are exclusions in section 114(a)(l)regarding certain title I1 requirements applicable to manufacturers of new motor vehicle and motor vehicle engines, section 

### 208 ofthe Act authorizes the gathering of information related to those areas. 42 U.S.C. § 7542.



### An interpretation ofthe PSD regulations that makes the substantiverequirements ofthe program applicable to individual pollutants based solely onmonitoring and reporting requirements (contained in regulations established under section 114or other authority in the Act) would lead to the perverse result ofrequiring emissions limitations under the PSD program while the Agency is still gathering the information necessary to conduct research or evaluate whether to establish controls on the pollutant under other parts of the Act. Thiswould frustrate the Agency's ability to gather information using section 114and other authority and make informed and reasonedjudgments about the need to establish controls or limitations on individual pollutants. If EPAinterpreted the requirement to establish emissions limitations based on BACT to apply solely on the basis of a regulation that requires collecting and reporting emissions data, the mere act of

### gathering information would essentially dictate the result ofthe decision that the information is being gathered to inform (whether or not to require control of a pollutant).

I 

### prefer an interpretation that allows the Agency to first assess whether there is a justification for controlling emissions of a particular pollutant under relevant criteria in the Act. This interpretation permits the Agency to provide notice to the public and an opportunityto comment when a new pollutant is proposed to be regulated under one or

more programs in the Act. It also promotes the orderly administration ofthe permitting program by providing an opportunity for EPA to develop regulations to manage the incorporation of a new pollutant into the PSD program, for example, bypromulgating a significant emissions rate (or de 

### minimis 

### level) for the pollutant when itbecomes regulated. See 40 

### C.F.R. 

## 8 52.21(b)(23). Furthermore, an interpretation that preserves the Agency's ability to gather information to inform the Administrator's judgment regarding the need to establish controls on emissions without automatically triggering such controls in no way limits the Agency's authorityto require controls on emissions of

a particular pollutant when the Administrator determines they are warranted. This interpretation preserves the Administrator's authority to require control ofindividual pollutants through emissions limitations or other restrictions under various provisions of the Act, which would then trigger the requirements ofthe PSD program for any pollutant addressed in such an action.

Although this issue has been raised in the context of C02 emissions, EPA's interpretation of whether PSD requirements aretriggered by monitoring and reporting requirements has broader implications. While the timing ofthis memorandum was influenced by the uncertainty in the PSD program concerning whether permits must contain emissions limitations for C02and whether additional smaller sourcesmust now apply for permits when they construct or modify, the adoption ofthis interpretation is also necessaryto preserve EPA's ability to collect emissions data on otherpollutants for research and other purposes such as evaluating the need for emissions controls or limitations. The current concerns over global climate change should not drive EPA into adopting an unworkable policy ofrequiring emissions controls under the PSD program anytime that EPA promulgates a rule under the Act that requires a source to gather or report emissions dataunder the Act for anypollutant. This consideration is the same whether the substance at issue is COzor other substances that may emerge and require evaluation to inform a reasoned decision concerning whether controls should be established for such substances under the Clean Air Act. Furthermore, as 

### discussed above, the interpretation adopted here in no way limits EPA's ability to make a consideredjudgment that controls on aparticular pollutant arewarranted under the criteria in other parts of the Act and thereby invoke the requirements ofthe PSDprogram for that particular pollutant.

C. This Interpretation is Consistent with the Agency's Past Practice and Statements

The interpretation adopted in this memorandum is consistent with the historic practice of the Agency and with prior statements by Agency officials, including the Administrator, the 

### EAB, and the General Counsel.

### As a matter ofpractice, EPA has not issued PSD permits containing emissions limitations for pollutants that are only subject to monitoring and reportingrequirements. PSD permits issued by the Agency (and delegated states authorized to issue federal permits on EPA's behalf) have only contained emissions limitations for pollutants subject to regulations requiring actual control of emissions. EPA staffhave reviewed permits issued under this program and have not identified any federal PSD permits that establish limitations on the emissions ofpollutants that were only subjectto monitoring and reporting requirements established under the Act at the time the permit issued. Since 1993,EPA has had regulations in place requiring monitoring and reporting of carbon dioxide emissions. See Acid Rain Program: General Provisions and Permits, Allowance System, Continuous Emissions Monitoring, Excess Emissions and Administrative Appeals (final rule), 58Fed. Reg. 3590 (Jan. 11, 1993). I am not awareof anyPSD permits containing emissions limitations for carbon dioxide issued by either the Agency

or its delegates sincethat time. During at least part ofthis time period, EPA made clear that it considered C02 to be an air pollutant under the Act. See Memorandum from Jonathan 

### Z. Cannon, General Counsel to Carol 

### M. Browner, Administrator, entitled EPA 's

### Authority toRegulate Pollutants Emitted byElectric Power Generation Sources (April 10,1998)("Cannon Memo").

InDeseret, the EAB expressed some doubt asto whether this had been EPA's practice based on the lack of any specific evidence ofthis practice in the record ofthe Deseret permit. Slip op. at 53-54. Ln the absence of a definitive statement (which the EAE3 found did not exist) that monitoring and reporting regulations alone donot trigger substantive PSD requirements, one must look to individual permits issued under the federal PSD program to identify this practice. Therecord ofpermits compiled to support this memorandum is sufficient to demonstratethat EPA has not in practice issued PSD permits establishing emissions limitations forpollutants that are subject to only monitoring and reporting requirements.

Furthermore, the EAB observed that broad statements in the 1998memorandum cited aboveby the Agency's then General Counsel suggest that the Agency has not, as a matter ofpractice, treated carbon dioxide as a "regulated" pollutant under any provisions ofthe Act, including those establishingthe PSD program. Slip op. at 53-54. The Cannon memorandum described SOz,NOx,mercury, and C02 emitted into the ambient air as pollutants within the terms ofthe Act, but found that only SOz,NOx,and mercury were "already regulated" under the Act. Id. 

### The General Counsel noted that "[wlhile C02 emissions are within the scopeofEPA's authority to regulate, the Administrator has made no determination to dateto exercise that authority under the specific criteria provided under anyprovision of the Act." Id. At the time ofthis statement, EPA had alreadypromulgated regulations requiring recordkeeping and monitoring ofC02 emissions. See 

### 58Fed. Reg. 3590 (Jan. 11, 1993).

TheEAE3 also observed that in 1978

### EPA initially articulated an interpretation of the phrase "subject to regulation under this Act," asused in sections 165and 169 ofthe Act. Deseret slip op. at 39, 52. In 

### the preamble to the 1978 Federal Register noticepromulgating the initial PSD regulations after the 1977Amendments to the Act, Administrator Costle said the following:

"[Slubject to regulation under this Act"' means any pollutant regulated in Subchapter C ofTitle 40 of the Code ofFederal Regulations for any source type. This then includes all criteriapollutants subject to NAAQS review, pollutants regulated under the Standards of Performance for new Stationary Sources (NSPS), pollutants regulated under the National Emissions Standards for Hazardous Air Pollutants (NESHAP), and all pollutants regulated under Title 

### I1 of the Act regarding emissions standards for mobile sources.

43 Fed. Reg. 26388,26397 (June 19,1978);'see 

### also 42 Fed. Reg. 57479,57481 (Nov. 3, 1977) (same interpretation reflected in proposed rule).

The interpretation set forth today is not inconsistent with the preamble statements made by Administrator Costle in 1978because the specific categories ofregulations identified in the second sentence ofthe passage quoted above are all regulationsthat require control ofpollutant emissions. 

### In addition, the interpretation in the 1978 preamble said only that the PSD BACT requirement applies to "any pollutant regulated in Subpart C ofTitle 40 ofthe Code ofFederal Regulations," but it did not amplify the meaning ofthe term "regulated in." The EAB observed in a footnote to theDeseret opinion that one could argue that the 1978 interpretation meant that any type ofprovision relating to a pollutant (including a monitoring or reporting requirement) that was promulgated in subchapter C would trigger PSD requirements for thatpollutant, but one could also argue that this statement applied only to the then-current Subpart C and not necessarily to future additions to that Subchapter. Deseret slip op. at 42, n. 43. However,

even if the 1978 interpretation is construed to apply to future additions to subchapter C, it is still not clear that a monitoring or reporting requirement added to subchapter 

### C would make that pollutant "regulated in" subchapter C because ofthe alternative meanings of the term regulation, regulate, and regulated discussed earlier. Thus, the Agency's 1978 interpretive statement on the meaning of "pollutant subject to regulation under this Act" did not specifically address the issue ofwhether monitoring orreporting requirement makes a pollutant "regulated in" the described part of the Code of Federal Regulations.

The interpretation adopted here (that pollutants subject to the PSD BACT requirement are only those pollutants for which the Agency has established regulations requiring actual controls on emissions) is also not contradicted by other Agency
statements regarding the pollutants subject to the PSD program reflected in rulemakings, memoranda, and opinions ofthe EAB. 

### OAR and Region 

### 8previously believed that these Agency actions had established a controllinginterpretation that the PSD BACT requirement applies only to pollutants for which a statute or regulation required actual



# 'Hazardous air pollutants are no longer covered by the PSD program due to an exclusion adopted in the 1990 Amendments to the Act. 42 U.S.C. 

## 5 7412(b)(6).

### control of

## emission^.^ However, the Board did not agree that these statements had conclusively established this interpretation. The Board observed that the mere absence of inconsistency between these prior statements and the interpretation followed by Region 8 

### in issuing theDeseret 

### permit was insufficient to establish that interpretation as controlling. Slip Op. at 48. Nevertheless, the Board's analysis inDeseret 

### illustrates the Agency's previous statements in rulemakings, memorandum, and EABdecisions are not inconsistent with the interpretation adopted in this memorandum.

ThisInterpretation is Permissible Under the Clean Air Act

This interpretation of the regulations is not precluded by the Act, and indeed is supported by reading the PSD provisions of theAct in the context ofother provisions of the Act that require emissions controls and authorize collection of emissions data to inform a decision to establish such controls. 

### In theDeseret 

### case, the EAB concluded that the phrase "subject to regulation under this Act" used in the Act was ambiguous and susceptible to both interpretations advocated by the parties in that case. Slip Op. at 28- 

### 35. 

### In this discussion, the Board concluded that the terms ofthe statutedonot preclude reading "subject to regulations under this Act" to mean "subject to control" by virtue of a regulation or otherwise. Id. 

### at 33.

The language in sections 165(a)(4)and 169(3)ofthe Clean Air Act requiring technology-based emissions limitations for "each pollutant subject to regulation under the Act" ispermissibly construed in context to call for emissions limitations under the PSD program only for those pollutants that are otherwise subject to controls on emissions based on an express EPA determination or Congressional directivethat suchcontrol is appropriate. Given that this language appears in a section 165(a)(4)
-

### a provision that requires actual controls on emissions
-

### it is reasonable to conclude that Congress intended EPAto apply such controls to the pollutants that are controlled under other provisions ofthe Act. The fact that Congress specified in the Act that BACT could be no less stringentthan NSPS and other control requirements under the Act indicates that Congress expected BACT to apply to pollutants controlled under these programs. See42 U.S.C. 

### $ 7479(3).

Given the way Congress drafted sections 165(a)(4) and 169(3) ofthe Act, it is apparent that Congress intended for EPA to determine the applicability of the BACT requirement on the basis ofdecisions to regulate particular pollutants under other parts of the Act. Other provisions in the Act that authorize the Administrator to establish emissions limitations orcontrolson emissions provide criteria for the exercise ofthe Administrator's judgment to determine which pollutants or source categories to regulate. Many ofthe criteria in the Act applicable to a determination by the Administrator to regulate pollutants or source categories arebased on public health or welfare. Seee.g.,

Thisunderstanding was the basis for the Agency's observations regarding when greenhouse gases would become "subject to regulation" that were contained in the recently-issued Advance Notice ofProposed Rulemaking on the use ofthe Clean Air Act to regulated greenhouse gas emissions. See 

### ANPR, 73Fed. Reg. at 44420 and n.96.

### 42 U.S.C. 

## 5 7408(a)(l)(A); 42 U.S.C. 

## 5 741l(b)(l)(A); 42 U.S.C. 

## 5 7521(a)(l). Thus, it followsthat Congress likewise expected that pollutants would onlybe regulated for purposes ofthe PSD program after the Administrator has promulgated regulations requiring control of a particular pollutants on the basis of a considered judgment applying the applicable criteria in the Act, after EPA promulgates regulations onthe basis of Congressional mandate that EPA establish controlsonparticular pollutants, or after Congress itself directly imposes actual controls on a particular pollutant.

Furthermore, Congress authorized EPA to gather emissions dataunder section 114and other provisions of the Act forvarious purposes, including informing decisions
to establish controls on emissions. 42 U.S.C. 

## 5 7414(a). The enactment ofthis provision is evidence that Congress generally expected that EPA would gather emissions data prior
to establishing plans to control emissions or developing emissions limitations. Congress also included in section 307(d)(9) ofthe Act, which establishes a requirement for reasoned decision-making by authorizing courts to reverse Agency action that is arbitrary

orcapricious. 42 U.S.C. 

## 5 7607(d)(9). Considering the PSD provisions in the context of these other sections in the Act that authorize gathering emissions data and require reasoned decision-making, it is fully consistent with Congressional design to decline to require BACT limitations forpollutants that are not yet controlled but only subject to data collection and study.



### E. Timing, Form, and Scope ofRegulations That Invoke 

### PSD Program Requirements.

Because the first three parts ofthe definition of "regulated NSR pollutant" apply
to a standard "promulgated" under various provisions ofthe Act, EPA interprets the fourth part ofthe definition to also apply to a pollutant upon promulgation of a regulation that requires actual control ofemissions. Thus, 

### EPA does not consider a pollutant to be "subject to regulation" until the Agency has promulgated a regulation that requires control ofemissions ofthat pollutant. We donot interpret the fourth part ofthe definition to apply at the time of an endangerment findingor other determination that may be a prerequisite to issuing control requirements under certain provisions of the Act. For example, it isthe promulgation of aNAAQS under section 109,not the listing of a pollutant under section 108which is based in part on an endangerment finding, that makes apollutant a "regulated NSR pollutant" under the first prong of40 C.F.R. 52.21(b)(50)(i). Similarly, it is the promulgation ofa standard under section 111,not the listingofa source category based on an endangerment finding,that makes a pollutant a "regulated NSR pollutant" under the second prong. 40 C.F.R. 52.21(b)(50)(ii). This approach makes sense because decisions notpadeuntil promulgation of the final regulations establishing the control requirements for a pollutant often are relevant to decisions EPAmakes regarding implementation ofthe PSD program for that pollutant.



## . For example, until EPA issues the NSPS for a source category listed under section 11 l(b)(l)(A), EPA has not made a final decision regarding how to identify or definethe pollutant(s) that will be regulated by the NSPS. See, e.g.,

### Municipal Solid Waste Landfills NSPS, 61 Fed. Reg. 9905,9912 (1996) ("Today's rulemaking under section 11l(b) establishes a new classification ofpollutants subject to regulation under the CAA:"MSW landfill emissions."'). Indeed, EPA has promulgated PSD regulations for newly regulated pollutants concurrentlywith an NSPS in the past. 

### See id.

The categories ofregulations described in the first three parts ofthe definition of "regulated NSR pollutant" indicate that a requirement to control emissions of a pollutant can have more than one form. This can include a direct emissions limitation, such as the NSPS, or ambient standards, such 

### as the National Ambient Air Quality Standards that limit emissions upon promulgation through the PSD permitting criteria. 

### See CAA 

### $ 165(a)(3);40 C.F.R. 52.21(k)(l). TheNAAQS also require development of emissions limitations or other restrictions on emissions in state plans for attaining those standards. Furthermore, EPA has recognized that pollutant emissions may also be controlled through restrictions onthe production and import of substances that can be released into the atmosphere. However, because information gathering requirements do not impose
anyrestriction on the release of a pollutant into the air, the Agency does not interpret these types ofregulations in isolation to make a pollutant subject to regulation. When monitoring and reporting requirements are developed to facilitate enforcement of a regulation requiring control ofpollutant emissions, the control requirement triggers the PSD requirements, not the monitoringprovisions established to ensurecompliancewith that control requirement.

Furthermore, when an individual pollutant must be controlled under a regulation contained in the StateImplementation Plan of a single state, EPA does not interpret section 52.21(b)(50) to requireregulation ofthat pollutant under the PSD program nationally or in other states that have not determined the need to regulate that pollutant to protect the NAAQS in that other state. Several parties have argued in briefs to the EAB and public comment on PSD permits that EPA's approval ofregulations applicable only in an individual state makes pollutants regulated in only that state subject to the PSD
program in other states. However, the establishment of State Implementation Plans under the Act reflects the principle of "cooperative federalism" on which the Act isbased. 

### See Ellis v. 

### Gallatin Steel Co., 390F.3d 461, 467 (6th Cir. 2004). While Congress allowed individual states to create some regulations that are more stringent than federal regulations to apply within its borders, 42 U.S.C. 

### $ 7416, Congress did not allow individual states to set national regulations that impose those requirements on all other
states. 

### See State ofConnecticut

### v. US. 

### EPA, 656 F.2d 902,909(2d Cir. 1981) (finding that while a state is free to adopt air quality standards more stringent than required by the NAAQS or other federal law provisions, Congress "carefully drafted" the Act to preclude those stricter requirements from applying to other states.). Consistent with this legal precedent, EPA does not interpret section 52.21(b)(50) ofthe regulations to make C02 "subject to regulation under the Act" for the nationwide PSD program based solely on the regulation of apollutant by a single state in a SIP approved by EPA.

The latter aspect ofthis interpretation is consistent with onepreviously adopted by EPA when promulgating its regulations addressing the application ofthe New Source Review program to and its precursors. 73 Fed. Reg. 28321,28330 (May 16, 2008). That rule provides an option for individual states to regulate ammonia as a PM2.5 precursor under the non-attainment NSR program for a particular PM2.5 non-attainmentarea after making a demonstration that ammonia emissions are a significant contributor to that area's ambient PM2.5 concentrations. EPA explained in that rule that if this option were invoked by one state, such an action would not make ammonia subject to the NSR
program nationally or in other areas for which this demonstration had not been made. Id. EPA described this interpretation in the notice ofproposed rulemaking and public
comments on the rule did not contain any objections to this interpretation. 70Fed. Reg. 65984,66036 (Nov. 1,2005);73 Fed. Reg. at 28330.

PUBLIC PARTICIPATION CONSIDERATIONS

I am mindful of the significantpublic interest in this issue and the benefit of receiving public input on this question. However, administrative agencies are authorized to issue interpretations ofthis nature that clarify their regulations without completing a public commentprocess, and 

### Ibelieve that such action is warranted in this case for the

reasons discussed earlier. As described above, immediate claification of this issue is necessary to resolve confusion concerning whether certain sources should be seeking PSD permits and whether permits already under review must require limitations on pollutants subject only to monitoring and reporting requirements. The PSD permitting program has effectively become inoperative until EPA addresses this issue. A prolonged delay ofpermit reviews would contravene EPA's obligation under section 165(c)of the Clean Air Act to process PSD permit applications in a timely manner.

EPA's authority to make rules and interpret them derives from the CleanAir Act, and section 307(d) ofthe Clean Air Act and the Administrative Procedure Act (APA) establish procedures for our exercise ofrulemaking authority and exceptionsto those procedures. Under oneprovision of the APA, 5 U.S.C. 553(b)(A), interpretative rules are exempt from notice and comment requirements. Section 307(d) ofthe Clean Air Act establishesprocedures for, among other things, "the promulgation or revision of any regulations under part C of subchapter I ofthis chapter (relating to prevention of significant deterioration of air quality and protection ofvisibility)." However, that section ofthe CAA states clearly that 

### it "shall not apply in the case of any rule or circumstancereferenced to in subparagraphs (a) or (b) of subsection 553(b) ofTitle 5." Thus, section 307(b) ofthe Clean Air Act preserves the Agency's authority to establish interpretations of regulations promulgated under the Act without engaging in a notice and
comment rulemaking process that is otherwise required for the promulgation and revision ofPSD regulations. However, the adoption of an interpretation in this manner does not preclude subsequent action by the Agency to solicit public input onthe interpretation.



### An interpretative document is one that explains or clarifies, and is consistent with, existing statutes or regulation. National Family Planning andReproductive HealthAss 'n

v. Sullivan, 979 F.2d 227, 236-37 (D.C. Cir. 1992). This memorandum explains and clarifies the meaning ofthe definition of "regulated NSR pollutant" in section 52.2l(b)(50) ofthe existingNSR regulations, and does not alter the meaning ofthe definition in anyway that would be inconsistent with the terms of the regulation. This interpretation explainsthat in applying the regulation, EPA will use a common meaning ofthe term "regulation" to describe the act or process ofcontrolling or restricting an

### activity. Theterm "regulation" is susceptibleto this reading without any changeto the language in therule. Furthermore, section 52.21(b)(50) enumerates specific categories of regulations that each require control ofemissions of a pollutant before using general languagethat maybe read, in accordance with accepted principles of legal interpretation, to refer to items with the same characteristics asthe enumerated items. Thisreading is
not inconsistent with the existing language in the regulation, and it is permissible under the Clean Air Act.

Although 

### I believe it is appropriateunder the circumstances to establish this interpretation without a public comment process, the public has recently had two opportunities to present their views to the Agency on this issue. First, on November 21, 2007, the EAB granted review in the Deseret case on the issue of whether a PSD pennit must contain an emissions limitation for carbon dioxide and provided the opportunity for interested persons to submit amicusbriefs. Deseret, Order Granting Review, PSD Appeal No. 07-03. Region 8

### informed the public ofthe Board's decision to grant review and the opportunityto submit amicusbriefs through publication of a notice in several newspapers and by directly mailing the notice to those persons who received a mailed notice ofthe draft PSD permit. Notification ofPublic Notice of Grant of Review, PSD Appeal No. 07-03 (Dec. 18,2007). One individual, twelve environmental organizations, and eight statesjoined in amicus briefs presenting reasons why theybelieved the Agency should support Sierra Club's position and establish emissions limitations on carbon dioxide in permits. Three businesses (including the permit applicant) and twenty-four organizations (representing industry sectors and other interests)joined in briefs to the Agency presenting arguments for not requiring emissions limitations on carbon dioxide in permits at this time. Second, on July 30,2008, in the FederalRegister, EPA described what the Agencybelieved at the time to be its established interpretation ofthe PSD regulations in the Advanced Notice ofProposed Rulemaking on options for addressing greenhouse gas emissions under the Clean Air Act. 73Fed. Reg. at 44400,44420, 44498. The ANPR noted that this interpretation was under review by the EAB in the Deseret case. 73 Fed. Reg. at 44400. Thirteen entities submitted comments on the ANPR that included their views on whether the current PSD regulations require emissions limitations for greenhouse gases.

In developing this memorandum, I have considered the amicus briefs submitted to the EAB and public comments on the ANPR. Thus, although EPA is not taking comment

on this memorandum, this memorandum has alreadybeen informed by public views on the issued covered here. Many ofthe public submissions EPA has received advocatethat the Agency should use the Clean Air Act to address greenhouse gas emissions, including using the PSD program immediately to require new sources to mitigate their emissions. Thus, many parties advocate that EPA should interpret the PSD regulation as broadly as possible in orderto achieve the end result ofrequiring limitations on carbon dioxide emissions immediately for new and modified major sources. Otherparties that submitted their views to the Agency recommend that EPA proceed more cautiously and consider the significant implications of applying the PSD program to carbon dioxide and any other pollutant that EPA may wish to studybefore establishing limits on such pollutant in PSD permits.With the ANPR, EPA is taking the next step in responding to the Supreme Court's decision in Massachusetts v. EPA. I believe the ANPR process is the appropriate forum for addressing the larger questions ofwhether greenhouse gas emissions endanger public health orwelfare and whether EPA should utilize authorities contained in the Clean Air Act to regulate such emissions. The interpretation set forth in this memo addresses only the narrow question ofwhether EPA should require emissions limitation under the PSD program at the sametime the Agency or Congress determines that is necessary to study the nature and extent of emissions of a particular pollutant. Mydetermination that emissions limitations should not be required under the PSD program on the basis of monitoring and reporting requirements alone does not reflect a decision on the larger question ofwhether EPA's authority under the Clean Air Act should be used to address greenhouse gas emissions. If the Agency determines, after completing the process started by the ANPR, that it should establish controls for greenhouse gas emissions under the Clean Air Act, the interpretation established here would require PSDpermits to contain limitations on carbon dioxidewhen, and if, EPA promulgates regulations establishing those controls.

Furthermore, several members of the public are concerned about authorizing additional sources of carbon dioxide to construct out of concern that once built, such sources will forever emit carbon dioxide without limitation. However, the permitting of

new sources without limitations on carbon dioxide at present does not foreclose limitation of such emissions in the future, ifthe Agency ultimately determines that control of such emissions is warranted after considering all of the implications of such an action through the process started with the ANPR.

Some stakeholders argued that EPA should apply PSD to pollutants that are only monitored or reported because requiring a source to report emissions of a pollutant can provide 

### an incentive for that source to reduce its emissions of the pollutant. While I recognize that monitoring and reporting requirements may sometimes have this effect, such requirements are primarily intended to gather information and do not ensure that any source will in fact control emissions. As stated above, I believe that a pollutant should
not become subject to mandatory emissions limitations under the PSD program until the Administrator (or Congress) has decided that such pollutants should be directly controlled by regulation. The concerns discussed above about predetermining the result ofthe information gathering exercise are not changed by the fact that some sources might be motivated to voluntarily reduce emissions because of a mandatory disclosure ofthe
nature and extent of their emissions.

Since some Courts have limited an Agency's ability to change an established, authoritative interpretation of a regulation without engaging in a notice and comment rulemaking, the EAB in the Deseret case questioned whether subsequent EPA memoranda could change the interpretation set forth in the 1978preamble. Slipop. at 52 (citingAlaska Professional Hunters Ass 'nv. FAA, 177F.3d 1030, 1033-34 (D.C. Cir. 1999);Paralyzed Veterans ofAm v. 

### D.C. Arena 

### L.P., 117 F.3d 579, 586 (D.C. Cir. 1997)). However, these court decisions have also recognized that an Agency has the

### flexibility to establish an initial interpretation of a regulation without engagingin a notice and commentprocess. Furthermore, these cases donot necessarily require a rulemaking procedure when the Agency seeks to change its interpretation of a statute.

I 

### have evaluated the Agency's 1978interpretation in light ofthe Board's analysis in Deseret 

### to determine whetherthe interpretation announced in this memorandum would
amount to a change in the 1978interpretation that requires a notice and comment process. As explained above, my conclusion is that the 1978interpretation did not specifically address the issue discussed in this memorandum. That interpretation said only that the PSD BACT requirement applies to "any pollutant regulated in Subpart

### C of Title 40 of the Code ofFederal Regulations," but it did not amplifythe meaning ofthe term "regulated in." As discussed earlier, it follows from theEAB's analysis inDeseret 

### and the various dictionary meanings of "regulation" and "regulate" that the phrase "regulated in" used in the 1978preamble is ambiguous.

Furthermore, the 1978interpretation was an interpretation of the statutory language and did not addressthe regulatory language that wenow construe in this interpretative memorandum. The 1978statement referred to the language in the statute which said "pollutant subject to regulation under this Act." The 2002 regulation 

### I am interpreting here uses the phrase "pollutant that otherwise is subject to regulation under the Act" in a clause that appears among a list of specific types ofregulations under the Act that invoke therequirements ofthe PSDprogram. As discussed above, the Agency interpretsthe language in section 52.2l(b)(50)(iv) in context with otherparts ofthat definition.

Thus, 

### I do not believe the Agency's 1978interpretative statement regarding the
scope ofthe BACT requirement or the Board's opinion in Deseret 

### precludes the Agency from issuing this interpretation of section 52.21(b)(50). The interpretation adopted in this memorandum is based on a reasonable reading ofthe terms ofthe regulation, is consistent with past Agency practice, and is not precluded bythe Clean Air Act. Furthermore, for the reasons discussed above, it is not sound policy to trigger mandatory mitation under the PSD program onthe basis ofrules designed for