```

[Federal Register: November 18, 2010 (Volume 75, Number 222)]
[Proposed Rules]               
[Page 70657-70664]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18no10-17]                         

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R07-OAR-2010-0932, FRL-9228-5]

 
Approval and Promulgation of Implementation Plans; Kansas: 
Prevention of Significant Deterioration; Greenhouse Gas Permitting 
Authority and Tailoring Rule Revision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: EPA is proposing to approve a draft revision to the State 
Implementation Plan (SIP), submitted by the Kansas Department of Health 
and Environment (KDHE) on October 4, 2010 for parallel processing. The 
proposed SIP revision (Kansas Administrative Regulation 28-29-350) to 
Kansas's Prevention of Significant Deterioration (PSD) program provides 
the state of Kansas with authority to regulate GHG emissions under the 
PSD program. The proposed SIP revision also establishes appropriate 
emission thresholds and time-frames for which stationary sources and 
modification projects become subject to Kansas's PSD permitting 
requirements for their GHG emissions, in accordance with the provisions 
of the ``PSD and Title V Greenhouse Gas Tailoring Final Rule'' 
published June 3, 2010, in the Federal Register at 75 FR 31514. EPA is 
proposing approval through a parallel processing action.

DATES: Comments must be received on or before December 20, 2010.

[[Page 70658]]

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R07-
OAR-2010-0932, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: gonzalez.larry@epa.gov.
    3. Fax: (913) 551-7844.
    4. Mail: Air Planning and Development Branch, Air and Waste 
Management Division, U.S. Environmental Protection Agency, Region 7, 
901 North 5th Street, Kansas City, Kansas 66101.
    5. Hand Delivery or Courier: Mr. Larry Gonzalez, Air Planning and 
Development Branch, Air and Waste Management Division, U.S. 
Environmental Protection Agency, Region 7, 901 North 5th Street, Kansas 
City, Kansas 66101. Such deliveries are only accepted during the 
Regional Office's normal hours of operation. The Regional Office's 
official hours of business are Monday through Friday, 8 a.m. to 4:30 
p.m., excluding Federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R07-OAR-
2010-0932. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit through http://www.regulations.gov or e-mail, information that you consider to be CBI 
or otherwise protected. The http://www.regulations.gov Web site is an 
``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the  
http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in http://www.regulations.gov or in hard copy at the Air Planning and Development 
Branch, Air and Waste Management Division, U.S. Environmental 
Protection Agency, Region 7, 901 North 5th Street, Kansas City, Kansas 
66101. EPA requests that if at all possible, you contact the person 
listed in the FOR FURTHER INFORMATION CONTACT section to schedule your 
inspection. The Regional Office's official hours of business are Monday 
through Friday, 8:30 a.m. to 4:30 p.m., excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT: For information regarding the Kansas 
SIP, contact Mr. Larry Gonzalez, Air Planning and Development Branch, 
Air and Waste Management Division, U.S. Environmental Protection 
Agency, Region 7, 901 North 5th Street, Kansas City, Kansas 66101. Mr. 
Gonzalez's telephone number is (913) 551-7041; e-mail address: 
gonzalez.larry@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What action is EPA proposing in today's notice?
II. What is the background for the action proposed by EPA in today's 
notice?
III. What is the relationship between today's proposed action and 
EPA's proposed GHG SIP Call and GHG FIP?
IV. What is EPA's analysis of Kansas's proposed SIP revision?
V. Proposed Action
VI. Statutory and Executive Order Reviews

I. What action is EPA proposing in today's notice?

    On October 4, 2010, KDHE submitted draft revisions to Kansas 
Administrative Regulations to EPA for approval into the state of 
Kansas's SIP to (1) provide the state with the authority to regulate 
GHGs under its PSD program; and (2) establish appropriate emission 
thresholds and time-frames for determining which new or modified 
stationary sources become subject to Kansas's PSD permitting 
requirements for GHG emissions. These thresholds and time-frames are 
consistent with the ``PSD and Title V Greenhouse Gas Tailoring Final 
Rule'' (75 FR 31514) hereafter referred to as the ``Tailoring Rule.'' 
Final approval of Kansas's October 4, 2010, SIP revision will make 
Kansas's SIP adequate with respect to PSD requirements for GHG-emitting 
sources. Furthermore, final approval of Kansas's October 4, 2010, SIP 
revision will put in place the GHG emission thresholds for PSD 
applicability set forth in EPA's Tailoring Rule, ensuring that smaller 
GHG sources emitting less than these thresholds will not be subject to 
permitting requirements when these requirements begin applying to GHGs 
on January 2, 2011. Pursuant to section 110 of the CAA, EPA is 
proposing to approve this revision into the Kansas SIP.
    Due to the fact that this proposed rule revision is not yet state-
effective, Kansas requested that EPA ``parallel process'' the revision. 
Under this procedure, the EPA Regional Office works closely with the 
state while developing new or revised regulations. Generally, the state 
submits a copy of the proposed regulation or other revisions to EPA 
before conducting its public hearing. EPA reviews this proposed state 
action and prepares a notice of proposed rulemaking. EPA publishes this 
notice of proposed rulemaking in the Federal Register and solicits 
public comment in approximately the same time frame during which the 
state is holding its public hearing. The state and EPA thus provide for 
public comment periods on both the state and the Federal actions in 
parallel.
    After Kansas submits the formal state-effective rule and SIP 
revision request (including a response to all public comments raised 
during the state's public participation process), EPA will prepare a 
final rulemaking notice for the SIP revision. If changes are made to 
the state's proposed rule after EPA's notice of proposed rulemaking, 
such changes must be acknowledged in EPA's final rulemaking action. If 
the changes are significant, then EPA may be obliged to re-propose the 
action. In addition, if the changes render the SIP revision not 
approvable, EPA's re-proposal of the action would be a disapproval of 
the revision.

II. What is the background for the action proposed by EPA in today's 
notice?

    Today's proposed action on the Kansas SIP relates to three Federal 
rulemaking actions. The first rulemaking is EPA's ``Prevention of 
Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,'' 
Final Rule, (the Tailoring Rule). 75 FR 31514

[[Page 70659]]

(June 3, 2010). The second rulemaking is EPA's ``Action to Ensure 
Authority to Issue Permits Under the Prevention of Significant 
Deterioration Program to Sources of Greenhouse Gas Emissions: Finding 
of Substantial Inadequacy and SIP Call,'' Proposed Rule, (GHG SIP 
Call). 75 FR 53892 (September 2, 2010). The third rulemaking is EPA's 
``Action to Ensure Authority to Issue Permits Under the Prevention of 
Significant Deterioration Program to Sources of Greenhouse Gas 
Emissions: Federal Implementation Plan,'' Proposed Rule, 75 FR 53883 
(September 2, 2010) (GHG FIP), which serves as a companion rulemaking 
to EPA's proposed GHG SIP Call. A summary of each of these rulemakings 
is described below.
    In the first rulemaking, the Tailoring Rule, EPA establishes 
appropriate GHG emission thresholds for determining the applicability 
of PSD requirements to GHG-emitting sources. In the second rulemaking, 
the GHG SIP Call (which is not yet final), EPA proposed to find that 
the EPA-approved PSD programs in 13 states (including Kansas) are 
substantially inadequate to meet CAA requirements because they do not 
appear to apply PSD requirements to GHG-emitting sources. For each of 
these states, EPA proposes to require the state (through a ``SIP 
Call'') to revise its SIP as necessary to correct such inadequacies. 
EPA is proposing an expedited schedule for these states to submit their 
SIP revision, in light of the fact that as of January 2, 2011, certain 
GHG-emitting sources will become subject to the PSD requirements and 
may not be able to obtain a PSD permit in order to construct or modify. 
In the third rulemaking, the proposed GHG FIP, EPA is proposing a FIP 
to apply in any state that is unable to submit, by its deadline, a SIP 
revision to ensure that the state has authority to issue PSD permits 
for GHG-emitting sources. Kansas is now seeking to revise its SIP to 
make it adequate with respect to PSD requirements for GHG-emitting 
sources. Furthermore, Kansas is seeking to revise its SIP to put in 
place the GHG emission thresholds for PSD applicability set forth in 
EPA's Tailoring Rule, thereby ensuring that smaller GHG sources 
emitting less than these thresholds will not be subject to permitting 
requirements when these requirements begin applying to GHGs on January 
2, 2011.
    Below is a brief overview of GHGs and GHG-emitting sources, the CAA 
PSD program, minimum SIP elements for a PSD program, and EPA's recent 
actions regarding GHG permitting. Following this section, EPA 
discusses, in sections III and IV, the relationship between the 
proposed Kansas SIP revision and EPA's other national rulemakings as 
well as EPA's analysis of Kansas's SIP revision.

A. What are GHGs and their sources?

    A detailed explanation of GHGs, climate change and the impact on 
health, society, and the environment is included in EPA's technical 
support document for EPA's GHG endangerment finding final rule 
(Document ID No. EPA-HQ-OAR-2009-0472-11292 at http://www.regulations.gov). The endangerment finding rulemaking is discussed 
later in this rulemaking. A summary of the nature and sources of GHGs 
is provided below.
    GHGs trap the Earth's heat that would otherwise escape from the 
atmosphere into space and form the greenhouse effect that helps keep 
the Earth warm enough for life. GHGs are naturally present in the 
atmosphere and are also emitted by human activities. Human activities 
are intensifying the naturally occurring greenhouse effect by 
increasing the amount of GHGs in the atmosphere, which is changing the 
climate in a way that endangers human health, society, and the natural 
environment.
    Some GHGs, such as carbon dioxide (CO2), are emitted to 
the atmosphere through natural processes as well as human activities. 
Other gases, such as fluorinated gases, are created and emitted solely 
through human activities. The well-mixed GHGs of concern directly 
emitted by human activities include CO2, methane 
(CH4), nitrous oxide (N2O), hydrofluorocarbons 
(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride 
(SF6), hereafter referred to collectively as ``the six well-
mixed GHGs,'' or, simply, GHGs. Together these six well-mixed GHGs 
constitute the ``air pollutant'' upon which the GHG thresholds in EPA's 
Tailoring Rule are based. These six gases remain in the atmosphere for 
decades to centuries where they become well-mixed globally in the 
atmosphere. When they are emitted more quickly than natural processes 
can remove them from the atmosphere, their concentrations increase, 
thus increasing the greenhouse effect.
    In the U.S., the combustion of fossil fuels (e.g., coal, oil, gas) 
is the largest source of CO2 emissions and accounts for 80 
percent of the total GHG emissions by mass. Anthropogenic 
CO2 emissions released from a variety of sources, including 
through the use of fossil fuel combustion and cement production from 
geologically stored carbon (e.g., coal, oil, and natural gas) that is 
hundreds of millions of years old, as well as anthropogenic 
CO2 emissions from land-use changes such as deforestation, 
perturb the atmospheric concentration of CO2, and the 
distribution of carbon within different reservoirs readjusts. More than 
half of the energy-related emissions come from large stationary sources 
such as power plants, while about a third come from transportation. Of 
the six well-mixed GHGs, four (CO2, CH4, 
N2O, and HFCs) are emitted by motor vehicles. In the U.S., 
industrial processes (such as the production of cement, steel, and 
aluminum), agriculture, forestry, other land use, and waste management 
are also important sources of GHGs.
    Different GHGs have different heat-trapping capacities. The concept 
of Global Warming Potential (GWP) was developed to compare the heat-
trapping capacity and atmospheric lifetime of one GHG to another. The 
definition of a GWP for a particular GHG is the ratio of heat trapped 
by one unit mass of the GHG to that of one unit mass of CO2 
over a specified time period. When quantities of the different GHGs are 
multiplied by their GWPs, the different GHGs can be summed and compared 
on a carbon dioxide equivalent (CO2e) basis. For example, 
CH4 has a GWP of 21, meaning each ton of CH4 
emissions would have 21 times as much impact on global warming over a 
100-year time horizon as 1 ton of CO2 emissions. Thus, on 
the basis of heat-trapping capability, 1 ton of CH4 would 
equal 21 tons of CO2e. The GWPs of the non-CO2 
GHGs range from 21 (for CH4) up to 23,900 (for 
SF6). Aggregating all GHGs on a CO2e basis at the 
source level allows a facility to evaluate its total GHG emissions 
contribution based on a single metric.

B. What are the general requirements of the PSD program?

1. Overview of the PSD Program
    The PSD program is a preconstruction review and permitting program 
applicable to new major stationary sources and major modifications at 
existing stationary sources. The PSD program applies in areas that are 
designated ``attainment'' or ``unclassifiable'' for a national ambient 
air quality standard (NAAQS). The PSD program is contained in part C of 
title I of the CAA. The ``nonattainment NSR'' program applies in areas 
not in attainment of a NAAQS or in the Ozone Transport Region, and it 
is implemented under the requirements of part D of title I of the CAA. 
Collectively, EPA commonly refers to these two programs as the major 
NSR program. The governing EPA rules are generally contained in 40 CFR 
51.165, 51.166,

[[Page 70660]]

52.21, 52.24, and part 51, Appendices S and W. There is no NAAQS for 
CO2 or any of the other well-mixed GHGs, nor has EPA 
proposed any such NAAQS; therefore, unless and until EPA takes further 
such action, the nonattainment NSR program does not apply to GHGs.
    The applicability of PSD to a particular source must be determined 
in advance of construction or modification and is pollutant-specific. 
The primary criterion in determining PSD applicability for a proposed 
new or modified source is whether the source is a ``major emitting 
facility,'' based on its predicted potential emissions of regulated 
pollutants within the meaning of CAA section 169(1), that either 
constructs or undertakes a modification. EPA has implemented these 
requirements in its regulations, which use somewhat different 
terminology than the CAA does, for determining PSD applicability.
a. Major Stationary Source
    Under PSD, a ``major stationary source'' is any source belonging to 
a specified list of 28 source categories that emits or has the 
potential to emit 100 tpy or more of any air pollutant subject to 
regulation under the CAA, or any other source type that emits or has 
the potential to emit such pollutants in amounts equal to or greater 
than 250 tpy. We refer to these levels as the 100/250-tpy thresholds. A 
new source with a potential to emit (PTE) at or above the applicable 
``major stationary source threshold'' is subject to major NSR. These 
limits originate from section 169 of the CAA, which applies PSD to any 
``major emitting facility'' and defines the term to include any source 
that emits or has a PTE of 100 or 250 tpy, depending on the source 
category. Note that the major source definition incorporates the phrase 
``subject to regulation,'' which, as described later, will begin to 
include GHGs on January 2, 2011, under our interpretation of that 
phrase as discussed in the recent memorandum entitled, 
``Reconsideration of Interpretation of Regulations that Determine 
Pollutants Covered by Clean Air Act Permitting Programs.'' 75 FR 17004 
(April 2, 2010).
b. Major Modifications
    PSD also applies to existing sources that undertake a ``major 
modification,'' which occurs when: (1) There is a physical change in, 
or change in the method of operation of, a ``major stationary source;'' 
(2) the change results in a ``significant'' emissions increase of a 
pollutant subject to regulation (equal to or above the significance 
level that EPA has set for the pollutant in 40 CFR 52.21(b)(23)); and 
(3) there is a ``significant net emissions increase'' of a pollutant 
subject to regulation that is equal to or above the significance level 
(defined in 40 CFR 52.21(b)(23)). Significance levels, which EPA has 
promulgated for criteria pollutants and certain other pollutants, 
represent a de minimis contribution to air quality problems. When EPA 
has not set a significance level for a regulated NSR pollutant, PSD 
applies to an increase of the pollutant in any amount (that is, in 
effect, the significance level is treated as zero).
2. General Requirements for PSD
    This section provides a very brief summary of the main requirements 
of the PSD program. One principal requirement is that a new major 
source or major modification must apply best available control 
technology (BACT), which is determined on a case-by-case basis taking 
into account, among other factors, the cost effectiveness of the 
control and energy and environmental impacts. EPA has developed a 
``top-down'' approach for BACT review, which involves a decision 
process that includes identification of all available control 
technologies, elimination of technically infeasible options, ranking of 
remaining options by control and cost effectiveness, and then selection 
of BACT. Under PSD, once a source is determined to be major for any 
regulated NSR pollutant, a BACT review is performed for each attainment 
pollutant that exceeds its PSD significance level as part of new 
construction or for modification projects at the source, where there is 
a significant increase and a significant net emissions increase of such 
pollutant.\1\
---------------------------------------------------------------------------

    \1\ EPA notes that the PSD program has historically operated in 
this fashion for all pollutants--when new sources or modifications 
are ``major,'' PSD applies to all pollutants that are emitted in 
significant quantities from the source or project. This rule does 
not alter that for sources or modifications that are major due to 
their GHG emissions.
---------------------------------------------------------------------------

    In addition to performing BACT, the source must analyze impacts on 
ambient air quality to assure that sources do not cause or contribute 
to violation of any NAAQS or PSD increments and must analyze impacts on 
soil, vegetation, and visibility. In addition, sources or modifications 
that would impact Class I areas (e.g., national parks) may be subject 
to additional requirements to protect air quality related values 
(AQRVs) that have been identified for such areas. Under PSD, if a 
source's proposed project may impact a Class I area, the Federal Land 
Manager is notified and is responsible for evaluating a source's 
projected impact on the AQRVs and recommending either approval or 
disapproval of the source's permit application based on anticipated 
impacts. There are currently no NAAQS or PSD increments established for 
GHGs, and therefore these PSD requirements would not apply for GHGs, 
even when PSD is triggered for GHGs. However, if PSD is triggered for a 
GHG-emitting source, all regulated NSR pollutants that the new source 
emits in significant amounts would be subject to PSD requirements. 
Therefore, if a facility triggers NSR for non-GHG pollutants for which 
there are established NAAQS or increments, the air quality, additional 
impacts, and Class I requirements would apply to those pollutants.
    Pursuant to existing PSD requirements, the permitting authority 
must provide notice of its preliminary decision on a source's 
application for a PSD permit and must provide an opportunity for 
comment by the public, industry, and other interested persons. After 
considering and responding to comments, the permitting authority must 
issue a final determination on the construction permit. Usually NSR 
permits are issued by a state or local air pollution control agency 
that has its own authority to issue PSD permits under a permit program 
that has been approved by EPA for inclusion in its SIP. In some areas, 
EPA has delegated its authority to issue PSD permits under federal 
regulations to the state or local agency. In other areas, EPA issues 
the permits under its own authority.

C. What are the CAA requirements to include the PSD program in the SIP?

    The CAA contemplates that the PSD program be implemented in the 
first instance by the states and requires that states include PSD 
requirements in their SIPs. CAA section 110(a)(2)(C) requires that--
    Each implementation plan * * * shall * * * include a program to 
provide for * * * regulation of the modification and construction of 
any stationary source within the areas covered by the plan as necessary 
to assure that national ambient air quality standards are achieved, 
including a permit program as required in part [ ] C * * * of this 
subchapter.
    CAA section 110(a)(2)(J) requires that--
    Each implementation plan * * * shall * * * meet the applicable 
requirements of * * * part C of this subchapter (relating to 
significant deterioration of air quality and visibility protection).
    CAA section 161 provides that--

[[Page 70661]]

    Each applicable implementation plan shall contain emission 
limitations and such other measures as may be necessary, as determined 
under regulations promulgated under this part [C], to prevent 
significant deterioration of air quality for such region * * * 
designated * * * as attainment or unclassifiable.
    These provisions, read in conjunction with the PSD applicability 
provisions--which, as noted above, applies, by its terms, to ``any air 
pollutant,'' and which EPA has, through regulation, interpreted more 
narrowly as any ``NSR regulated pollutant''--and read in conjunction 
with other provisions, such as the BACT provision under CAA section 
165(a)(4), mandate that SIPs include PSD programs that are applicable 
to, among other things, any air pollutant that is subject to 
regulation, including, as discussed below, GHGs on and after January 2, 
2011.\2\
---------------------------------------------------------------------------

    \2\ In the Tailoring Rule, EPA noted that commenters argued, 
with some variations, that the PSD provisions applied only to NAAQS 
pollutants, and not GHG, and EPA responded that the PSD provisions 
apply to all pollutants subject to regulation, including GHG. See 75 
FR 31560-62 (June 3, 2010). EPA is not re-opening that issue in this 
rulemaking, and does not solicit comment on it.
---------------------------------------------------------------------------

    A number of states do not have PSD programs approved into their 
SIPs. In those states, EPA's regulations at 40 CFR 52.21 govern, and 
either EPA or the state as EPA's delegatee acts as the permitting 
authority. On the other hand, most states have PSD programs that have 
been approved into their SIPs, and these states implement their PSD 
programs and act as the permitting authority. Kansas has a SIP-approved 
PSD program.

D. What actions has EPA taken concerning PSD requirements for GHG-
emitting sources?

1. What are the Endangerment Finding, the Light Duty Vehicle Rule, and 
the Johnson Memo Reconsideration?
    By notice dated December 15, 2009, pursuant to CAA section 202(a), 
EPA issued, in a single final action, two findings regarding GHGs that 
are commonly referred to as the ``Endangerment Finding'' and the 
``Cause or Contribute Finding.'' ``Endangerment and Cause or Contribute 
Findings for Greenhouse Gases Under Section 202(a) of the Clean Air 
Act,'' 74 FR 66496. In the Endangerment Finding, the Administrator 
found that six long-lived and directly emitted GHGs--CO2, 
CH4, N2O, HFCs, PFCs, and SF6--may 
reasonably be anticipated to endanger public health and welfare. In the 
Cause or Contribute Finding, the Administrator ``define[d] the air 
pollutant as the aggregate group of the same six * * * greenhouse 
gases,'' 74 FR 66536, and found that the combined emissions of this air 
pollutant from new motor vehicles and new motor vehicle engines 
contribute to the GHG air pollution that endangers public health and 
welfare.
    By notice dated May 7, 2010, EPA and the National Highway Traffic 
Safety Administration published what is commonly referred to as the 
``Light-Duty Vehicle Rule'' (LDVR), which for the first time 
established Federal controls on GHGs emitted from light-duty vehicles. 
``Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 
Average Fuel Economy Standards; Final Rule.'' 75 FR 25324. In its 
applicability provisions, the LDVR specifies that it ``contains 
standards and other regulations applicable to the emissions of six 
greenhouse gases,'' including CO2, CH4, 
N2O, HFCs, PFCs, and SF6. 75 FR 25686 (40 CFR 
86.1818-12(a)). Shortly before finalizing the LDVR, by notice dated 
April 2, 2010, EPA published a notice commonly referred to as the 
Johnson Memo Reconsideration. On December 18, 2008, EPA issued a 
memorandum, ``EPA's Interpretation of Regulations that Determine 
Pollutants Covered by Federal Prevention of Significant Deterioration 
(PSD) Permit Program'' (known as the ``Johnson Memo'' or the ``PSD 
Interpretive Memo,'' and referred to in this preamble as the 
``Interpretive Memo''), that set forth EPA's interpretation regarding 
which EPA and state actions, with respect to a previously unregulated 
pollutant, cause that pollutant to become ``subject to regulation'' 
under the Act. Whether a pollutant is ``subject to regulation'' is 
important for the purposes of determining whether it is covered under 
the federal PSD permitting program. The Interpretive Memo established 
that a pollutant is ``subject to regulation'' only if it is subject to 
either a provision in the CAA or regulation adopted by EPA under the 
CAA that requires actual control of emissions of that pollutant 
(referred to as the ``actual control interpretation''). On February 17, 
2009, EPA granted a petition for reconsideration on the Interpretive 
Memo and announced its intent to conduct a rulemaking to allow for 
public comment on the issues raised in the memorandum and on related 
issues. EPA also clarified that the Interpretive Memo would remain in 
effect pending reconsideration.
    On March 29, 2010, EPA signed a notice conveying its decision to 
continue applying (with one limited refinement) the Interpretive Memo's 
interpretation of ``subject to regulation'' (``Reconsideration of 
Interpretation of Regulations that Determine Pollutants Covered by 
Clean Air Act Permitting Programs''). 75 FR 17004. EPA concluded that 
the ``actual control interpretation'' is the most appropriate 
interpretation to apply given the policy implications. However, EPA 
refined the Agency's interpretation in one respect: EPA established 
that PSD permitting requirements apply to a newly regulated pollutant 
at the time a regulatory requirement to control emissions of that 
pollutant ``takes effect'' (rather than upon promulgation or the legal 
effective date of the regulation containing such a requirement). In 
addition, based on the anticipated promulgation of the LDVR, EPA stated 
that the GHG requirements of the vehicle rule would take effect on 
January 2, 2011, because that is the earliest date that a 2012 model 
year vehicle may be introduced into commerce. In other words, the 
compliance obligation under the LDVR does not occur until a 
manufacturer may introduce into commerce vehicles that are required to 
comply with GHG standards, which will begin with model year 2012 and 
will not occur before January 2, 2011.
2. What is EPA's Tailoring Rule?
    On June 3, 2010 (effective August 2, 2010), EPA promulgated a final 
rulemaking for the purpose of relieving overwhelming permitting burdens 
that would, in the absence of the rule, fall on permitting authorities 
and sources, i.e., the Tailoring Rule. 75 FR 31514. EPA accomplished 
this by tailoring the applicability criteria that determine which GHG 
emission sources become subject to the PSD program \3\ of the CAA. In 
particular, EPA established in the Tailoring Rule a phase-in approach 
for PSD applicability and established the first two steps of the phase-
in for the largest GHG-emitters. Additionally, EPA committed to certain 
follow-up actions regarding future steps beyond the first two, 
discussed in more detail later.\4\
---------------------------------------------------------------------------

    \3\ The Tailoring Rule also applies to the title V program, 
which requires operating permits for existing sources. However, 
today's action does not affect Kansas's title V program.
    \4\ EPA adopted the Tailoring Rule after careful consideration 
of numerous public comments. On October 27, 2009 (74 FR 55292), EPA 
proposed the Tailoring Rule. EPA held two public hearings on the 
proposed rule, and received over 400,000 written public comments. 
The public comment period ended on December 28, 2009. The comments 
provided detailed information that helped EPA understand better the 
issues and potential impacts of the Tailoring Rule. The preamble of 
EPA's Tailoring Rule describes in detail the comments received and 
how some of these comments were incorporated in EPA's final rule. 
See 75 FR 31514 for more detail.

---------------------------------------------------------------------------

[[Page 70662]]

    For the first step of the Tailoring Rule, which will begin on 
January 2, 2011, PSD requirements will apply to major stationary source 
GHG emissions only if the sources are subject to PSD anyway due to 
their emissions of non-GHG pollutants. Therefore, in the first step, 
EPA will not require sources or modifications to evaluate whether they 
are subject to PSD requirements solely on account of their GHG 
emissions. Specifically, for PSD, Step 1 requires that as of January 2, 
2011, the applicable requirements of PSD, most notably, the BACT 
requirement, will apply to projects that increase net GHG emissions by 
at least 75,000 tpy CO2e, but only if the project also 
significantly increases emissions of at least one non-GHG pollutant.
    The second step of the Tailoring Rule, beginning on July 1, 2011, 
will phase in additional large sources of GHG emissions. New sources 
that emit, or have the potential to emit, at least 100,000 tpy 
CO2e will become subject to the PSD requirements. In 
addition, sources that emit or have the potential to emit at least 
100,000 tpy CO2e and that undertake a modification that 
increases net GHG emissions by at least 75,000 tpy CO2e will 
also be subject to PSD requirements. For both steps, EPA notes that if 
sources or modifications exceed these CO2e-adjusted GHG 
triggers, they are not covered by permitting requirements unless their 
GHG emissions also exceed the corresponding mass-based triggers in tpy.
    EPA believes that the costs to the sources and the administrative 
burdens to the permitting authorities of PSD permitting will be 
manageable at the levels in these initial two steps and that it would 
be administratively infeasible to subject additional sources to PSD 
requirements at those times. However, EPA also intends to issue a 
supplemental notice of proposed rulemaking in 2011, in which the Agency 
will propose or solicit comment on a third step of the phase-in that 
would include more sources, beginning on July 1, 2013. In the Tailoring 
Rule, EPA established an enforceable commitment that the Agency will 
complete this rulemaking by July 1, 2012, which will allow for 1 year's 
notice before Step 3 would take effect.
    In addition, EPA committed to explore streamlining techniques that 
may well make the permitting programs much more efficient to administer 
for GHG, and that therefore may allow their expansion to smaller 
sources. EPA expects that the initial streamlining techniques will take 
several years to develop and implement.
    In the Tailoring Rule, EPA also included a provision, that no 
source with emissions below 50,000 tpy CO2e, and no 
modification resulting in net GHG increases of less than 50,000 tpy 
CO2e, will be subject to PSD permitting before at least 6 
years (i.e., April 30, 2016). This is because EPA has concluded that at 
the present time the administrative burdens that would accompany 
permitting sources below this level would be so great that even with 
the streamlining actions that EPA may be able to develop and implement 
in the next several years, and even with the increases in permitting 
resources that EPA can reasonably expect the permitting authorities to 
acquire, it would be impossible to administer the permit programs for 
these sources until at least 2016.
    As EPA explained in the Tailoring Rule, the threshold limitations 
are necessary because without them, PSD would apply to all stationary 
sources that emit or have the potential to emit more than 100 or 250 
tons of GHG per year beginning on January 2, 2011. This is the date 
when EPA's recently promulgated LDVR takes effect, imposing control 
requirements for the first time on CO2 and other GHGs. If 
this January 2, 2011, date were to pass without the Tailoring Rule 
being in effect, PSD requirements would apply to GHG emissions at the 
100/250 tpy applicability levels provided under a literal reading of 
the CAA as of that date. From that point forward, a source owner 
proposing to construct any new major source that emits at or higher 
than the applicability levels (and which therefore may be referred to 
as a ``major'' source) or modify any existing major source in a way 
that would increase GHG emissions would need to obtain a permit under 
the PSD program that addresses these emissions before construction or 
modification could begin.
    Under these circumstances, many small sources would be burdened by 
the costs of the individualized PSD control technology requirements and 
permit applications that the PSD provisions, absent streamlining, 
require. Additionally, state and local permitting authorities would be 
burdened by the extraordinary number of these permit applications, 
which are orders of magnitude greater than the current inventory of 
permits and would vastly exceed the current administrative resources of 
the permitting authorities. Permit gridlock would result since the 
permitting authorities would likely be able to issue only a tiny 
fraction of the permits requested.
    In the Tailoring Rule, EPA adopted regulatory language codifying 
the phase-in approach. As explained in that rulemaking, many state, 
local and tribal area programs will likely be able to immediately 
implement the approach without rule or statutory changes by, for 
example, interpreting the term ``subject to regulation'' that is part 
of the applicability provisions for PSD permitting. EPA has requested 
permitting authorities to confirm that they will follow this 
implementation approach for their programs, and if they cannot, then 
EPA has requested that they notify the Agency so that we can take 
appropriate follow-up action to narrow federal approval of their 
programs before GHGs become subject to PSD permitting on January 2, 
2011.\5\ On October 1, 2010, the state of Kansas provided a letter to 
EPA with the requested modification. See the docket for this proposed 
rulemaking for a copy of Kansas's letter.
---------------------------------------------------------------------------

    \5\ Narrowing EPA's approval will ensure that for federal 
purposes, sources with GHG emissions that are less than the 
Tailoring Rule's emission thresholds will not be obligated under 
federal law to obtain PSD permits during the gap between when GHG 
PSD requirements go into effect on January 2, 2011 and when either 
(1) EPA approves a SIP revision adopting EPA's tailoring approach, 
or (2) if a state opts to regulate smaller GHG-emitting sources, the 
state demonstrates to EPA that it has adequate resources to handle 
permitting for such sources. EPA expects to finalize the narrowing 
action prior to the January 2, 2011 deadline with respect to those 
states for which EPA will not have approved the Tailoring Rule 
thresholds in their SIPs by that time.
---------------------------------------------------------------------------

    The thresholds that EPA established are based on CO2e 
for the aggregate sum of six GHGs that constitute the pollutant that 
will be subject to regulation, which we refer to as GHG.\6\ These gases 
are: CO2, CH4, N2O, HFCs, PFCs, and 
SF6. Thus, in EPA's Tailoring Rule, EPA provided that PSD 
applicability is based on the quantity that results when the mass 
emissions of each of these gases is multiplied by the GWP of that gas, 
and then summed for all six gases. However, EPA further provided that 
in order for a source's GHG emissions to trigger PSD requirements, the 
quantity of the GHG emissions must equal or exceed both the 
applicability thresholds established in the Tailoring Rule on a 
CO2e basis and the statutory thresholds of 100 or 250 tpy on 
a mass basis.\7\ Similarly, in order

[[Page 70663]]

for a source to be subject to the PSD modification requirements, the 
source's net GHG emissions increase must exceed the applicable 
significance level on a CO2e basis and must also result in a 
net mass increase of the constituent gases combined.
---------------------------------------------------------------------------

    \6\ The term ``greenhouse gases'' is commonly used to refer 
generally to gases that have heat-trapping properties. However, in 
this notice, unless noted otherwise, we use it to refer specifically 
to the pollutant regulated in the LDVR.
    \7\ The relevant thresholds are 100 tpy for title V, and 250 tpy 
for PSD, except for 28 categories listed in EPA regulations for 
which the PSD threshold is 100 tpy.
---------------------------------------------------------------------------

3. What is the GHG SIP Call?
    By notice dated September 2, 2010, EPA proposed the GHG SIP Call. 
In that action, along with the companion GHG FIP proposed rulemaking 
published at the same time, EPA took steps to ensure that in the 13 
states that do not appear to have authority to issue PSD permits to 
GHG-emitting sources at present, either the state or EPA will have the 
authority to issue such permits by January 2, 2011. EPA explained that 
although for most states, either the state or EPA is already authorized 
to issue PSD permits for GHG-emitting sources as of that date, our 
preliminary information shows that these 13 states have EPA-approved 
PSD programs that do not appear to include GHG-emitting sources and 
therefore do not appear to authorize these states to issue PSD permits 
to such sources. Therefore, EPA proposed to find that these 13 states' 
SIPs are substantially inadequate to comply with CAA requirements and, 
accordingly, proposed to issue a SIP Call to require a SIP revision 
that applies their SIP PSD programs to GHG-emitting sources. In the 
companion GHG FIP rulemaking, EPA proposed a FIP that would give EPA 
authority to apply EPA's PSD program to GHG-emitting sources in any 
state that is unable to submit a corrective SIP revision by its 
deadline. Kansas was one of the states for which EPA proposed a SIP 
Call. The state's comments regarding the proposed SIP call, submitted 
October 1, 2010, are included in the docket for this rulemaking.

III. What is the relationship between today's proposed action and EPA's 
proposed GHG SIP Call and GHG FIP?

    As noted above, by notice dated September 2, 2010, EPA proposed the 
GHG SIP Call. At the same time, EPA proposed a FIP to apply in any 
state that is unable to submit, by its deadline, a SIP revision to 
ensure that the state has authority to issue PSD permits to GHG-
emitting sources.\8\ As discussed in section IV of this proposed 
rulemaking, Kansas does not interpret its current PSD regulations as 
providing it with the authority to regulate GHG, and as such, Kansas is 
included on the list of areas for the proposed SIP call. Kansas's 
October 4, 2010, proposed SIP revision (the subject of this rulemaking) 
addresses this authority. EPA will not take final action on the GHG SIP 
Call for the state of Kansas if the state submits its final SIP 
revision to EPA prior to the final rulemaking for the GHG SIP Call.
---------------------------------------------------------------------------

    \8\ As explained in the proposed GHG SIP Call (75 FR 53892, 
53896), EPA intends to finalize its finding of substantial 
inadequacy and the SIP call for the 13 listed states by December 1, 
2010. EPA requested that the states for which EPA is proposing a SIP 
call identify the deadline--between 3 weeks and 12 months from the 
date of signature of the final SIP Call--that they would accept for 
submitting their corrective SIP revision. In its October 1, 2010 
letter, Kansas requested the earliest possible deadline, either 
December 22, 2010, or three weeks after signature of the final SIP 
Call.
---------------------------------------------------------------------------

IV. What is EPA's analysis of Kansas's proposed SIP revision?

    On October 4, 2010, KDHE provided a revision to Kansas's SIP to EPA 
for parallel processing and eventual approval. This revision to 
Kansas's SIP is necessary because without it, (1) the state of Kansas 
would not have authority to issue PSD permits to GHG-emitting sources, 
and as a result, absent further action, those sources may not be able 
to construct or undertake modifications beginning January 2, 2011; and 
(2) assuming that the state of Kansas attains authority to issue PSD 
permits to GHG-emitting sources, PSD requirements would apply, as of 
January 2, 2011, at the 100- or 250-tpy levels provided under the CAA. 
This would greatly increase the number of required permits, imposing 
undue costs on small sources; which would overwhelm Kansas's permitting 
resources and severely impair the function of the program.
    The state of Kansas's September 26, 2010, proposed SIP revision: 
(1) Provides the state of Kansas with the authority to regulate GHG 
under the PSD program of the CAA, and (2) establishes thresholds for 
determining which stationary sources and modification projects become 
subject to permitting requirements for GHG emissions under the PSD 
program. Specifically, Kansas's October 4, 2010, proposed SIP revision 
includes changes to Kansas Air Regulations (KAR) 28-19-350--Prevention 
of significant deterioration of air quality. These revisions update 
Kansas's air regulations by providing the state the authority to 
regulate GHGs and aligning the thresholds for GHG permitting 
applicability with those specified in the Tailoring Rule.
    The state of Kansas is currently a SIP-approved state for the PSD 
program. However, Kansas does not interpret its current rules, which 
are generally consistent with the Federal rules, to be applicable to 
GHGs. In the letter dated October 1, 2010, referenced above, Kansas 
notified EPA that the state does not currently have the authority to 
regulate GHG and thus is in the process of revising its regulation (the 
subject of this proposed action) to provide this authority. To provide 
this authority, Kansas is updating the definitions for ``major source'' 
and ``subject to regulation'' to explicitly include GHG as a regulated 
NSR pollutant under the CAA. Specifically, the Kansas proposed rule 
would incorporate by reference 40 CFR 52.21 as of July 1, 2007, and as 
amended by the Tailoring Rule promulgated on June 3, 2010. EPA has 
preliminarily determined that this change to Kansas's regulation is 
consistent with the CAA and its implementing regulations regarding 
GHG.\9\
---------------------------------------------------------------------------

    \9\ Kansas's submittal incorporates by reference 40 CFR 52.21 as 
of July 1, 2007, as amended by the Tailoring Rule. In today's 
proposed rulemaking, EPA is not taking action on any of Kansas's 
changes to their PSD regulations regarding the ``Ethanol Rule'' (72 
FR 24060, May 1, 2007). Kansas submitted its Ethanol Rule revision 
in 2009, and EPA intends to act on that revision in a separate 
rulemaking. Kansas has not adopted EPA's ``Fugitive Emissions Rule'' 
(73 FR 77882, December 19, 2008), so this proposal also does not 
address the Fugitive Emissions Rule.
---------------------------------------------------------------------------

    The changes included in this submittal are substantively the same 
as EPA's Tailoring Rule. The Kansas rules have been formatted to 
conform to Kansas's rule drafting standards, but in substantive content 
the rules that address the Tailoring Rule provisions are the same as 
the federal rules. As part of its review of the Kansas submittal, EPA 
performed a line-by-line review of Kansas's proposed changes to its 
regulations and has preliminarily determined that they are consistent 
with the Tailoring Rule. These changes to Kansas's regulations are also 
consistent with section 110 of the CAA because they are incorporating 
GHGs for regulation in the Kansas SIP.

V. Proposed Action

    Pursuant to section 110 of the CAA, EPA is proposing to approve the 
state of Kansas's revisions to the Kansas Administrative Regulations 
that were submitted to EPA on October 4, 2010, relating to PSD 
requirements for GHG-emitting sources. Specifically, Kansas's October 
4, 2010, proposed submission: (1) Provides the state of Kansas with the 
authority to regulate GHGs under its PSD program, and (2) establishes 
appropriate emissions thresholds for determining PSD applicability to 
new and modified GHG-emitting sources in accordance with EPA's 
Tailoring Rule. EPA has made the preliminary determination that this 
SIP revision is

[[Page 70664]]

approvable because it is in accordance with the CAA and EPA regulations 
regarding PSD permitting for GHGs.
    As noted above, at Kansas's request, EPA is ``parallel processing'' 
this proposed rule revision. After Kansas submits the formal state-
effective rule revisions (including a response to all public comments 
raised during the state's public participation process), EPA will 
prepare a final rulemaking notice for the SIP revision. If changes are 
made to the state's proposed rule after EPA's notice of proposed 
rulemaking, such changes must be acknowledged in EPA's final rulemaking 
action. If the changes are significant, then EPA may be obliged to re-
propose the action. In addition, if these changes render the SIP 
revision not approvable, EPA's re-proposal of the action would be a 
disapproval of the revision.

VI. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves the state's law as meeting federal 
requirements and does not impose additional requirements beyond those 
imposed by the state's law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the state of Kansas, and EPA notes that it will not impose substantial 
direct costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, and Reporting and recordkeeping 
requirements.

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

    Dated: November 9, 2010.
Karl Brooks,
Regional Administrator, Region 7.
[FR Doc. 2010-29144 Filed 11-17-10; 8:45 am]
BILLING CODE 6560-50-P
```