Document ID: EPA-HQ-OAR-2011-0083-0360
Agency: epa
Document Type: Rule
Title: Deferral for CO2 Emissions From Bioenergy and Other Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs
Posted Date: 2011-07-20T04:00Z

[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Rules and Regulations]
[Pages 43490-43508]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17256]

[[Page 43489]]

Vol. 76

Wednesday,

No. 139

July 20, 2011

Part IV

Environmental Protection Agency

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40 CFR Parts 51, 52, 70, et al.

Deferral for CO2 Emissions From Bioenergy and Other Biogenic 
Sources Under the Prevention of Significant Deterioration (PSD) and 
Title V Programs; Final Rule

  Federal Register / Vol. 76, No. 139 / Wednesday, July 20, 2011 / 
Rules and Regulations  

[[Page 43490]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2011-0083; FRL-9431-6]
RIN 2060-AQ79

Deferral for CO2 Emissions From Bioenergy and Other 
Biogenic Sources Under the Prevention of Significant Deterioration 
(PSD) and Title V Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This action defers for a period of three (3) years the 
application of the Prevention of Significant Deterioration (PSD) and 
Title V permitting requirements to biogenic carbon dioxide 
(CO2) emissions from bioenergy and other biogenic stationary 
sources. This action is being taken as part of the process of granting 
the Petition for Reconsideration filed by the National Alliance of 
Forest Owners (NAFO) on August 3, 2010, related to the PSD and Title V 
Greenhouse Gas Tailoring Rule. The result of this action is that during 
this three year period biogenic CO2 emissions are not 
required to be counted for applicability purposes under the PSD and 
Title V permitting programs. State, local, and tribal permitting 
authorities may adopt the deferral at their option but the deferral is 
effective upon publication for the PSD and Title V permit programs that 
are implemented by EPA.

DATES: This action is effective on July 20, 2011.

ADDRESSES: EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2011-0083. All documents in the docket are 
listed in the http://www.regulations.gov index. Although listed in the 
index, some information is not publicly available, e.g., confidential 
business information (CBI) or other information whose disclosure is 
restricted by statute. Certain other material, such as copyrighted 
material, will be publicly available only in hard copy. Publicly 
available docket materials are available either electronically at 
http://www.regulations.gov or in hard copy at the Air Docket, EPA/DC, 
EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC. This 
Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding Federal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Carole Cook, Climate Change Division, 
Office of Atmospheric Programs (MC-6207J), Environmental Protection 
Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone 
number: (202) 343-9334; fax number: (202) 343-2342; e-mail address: 
biodeferralPSD@epa.gov.

SUPPLEMENTARY INFORMATION: Regulated Entities. The Administrator 
determined that this action is subject to the provisions of Clean Air 
Act (CAA) section 307(d). See CAA section 307(d)(1)(V) (the provisions 
of section 307(d) apply to ``such other actions as the Administrator 
may determine''). These are final amendments to existing regulations. 
This action applies to stationary sources that emit biogenic 
CO2.

           Table 1--Examples of Affected Entities by Category
------------------------------------------------------------------------
                                                   Examples of affected
            Category                  NAICS             facilities
------------------------------------------------------------------------
Biomass combustion.............             221  Electric utilities
                                                  burning biomass fuels.
                                            321  Wood products
                                                  manufacturing, and
                                                  wood pellet fuel
                                                  manufacturing.
                                            322  Pulp and paper
                                                  manufacturing.
Municipal solid waste                    562213  Solid waste combustors
 combustion.                                      and incinerators.
Sources/users of biogas........             112  Animal production
                                                  manure management
                                                  operations.
                                         221320  Sewage treatment
                                                  facilities.
                                         562212  Solid waste landfills.
Fermentation processes.........          325193  Ethanol manufacturing.
                                         325411  Medicinal and botanical
                                                  manufacturing.
Other..........................         311/312  Food/Beverage
                                                  processors burning
                                                  agricultural biomass
                                                  residues, using
                                                  fermentation
                                                  processes, or
                                                  producing/using biogas
                                                  from anaerobic
                                                  digestion of waste
                                                  materials.
------------------------------------------------------------------------

    Table 1 of this preamble lists the types of entities that 
potentially could be affected by the deferral covered by this action. 
This list is not intended to be exhaustive, but rather provides a guide 
for readers regarding facilities likely to be affected by this action. 
Note that this rule does not make or infer any policy determination on 
the part of EPA whether any emissions from any of these sources may be 
determined ``fugitive'' emissions for the purposes of accounting and 
applicability under air permitting requirements. Such determinations 
are not within the scope of this rule and are part of the case-by-case 
application and review process established under the regulations 
covering these permitting requirements. If you have questions regarding 
the applicability of this action to a particular facility, consult the 
person listed in the FOR FURTHER INFORMATION CONTACT section of this 
preamble.
    What is the effective date? The final rule is effective on July 20, 
2011. Section 553(d) of the Administrative Procedure Act (APA), 5 
U.S.C. Chapter 5, generally provides that rules may not take effect 
earlier than 30 days after they are published in the Federal Register. 
EPA is issuing this final rule under section 307(d)(1) of the Clean Air 
Act, which states: ``The provisions of section 553 through 557 *** of 
Title 5 shall not, except as expressly provided in this section, apply 
to actions to which this subsection applies.'' Thus, section 553(d) of 
the APA does not apply to this rule. EPA is nevertheless acting 
consistently with the purposes of the underlying APA section 553(d) in 
making this rule effective on July 20, 2011. Section 5 U.S.C. 553(d)(3) 
allows an effective date less than 30 days after publication ``as 
otherwise provided by the agency for good cause found and published 
with the rule.'' As explained below, EPA finds that there is good cause 
for this rule to become effective on July 20, 2011, even through this 
results in fewer than 30 days from the date of publication in the 
Federal Register.
    EPA announced its intent to undertake this rulemaking on January 
12, 2011, in order to provide the Agency time to conduct a detailed 
examination of the science and technical issues associated with 
biogenic CO2 emissions

[[Page 43491]]

from stationary sources. The Agency intended to complete the rulemaking 
before sources would be subject to the PSD and Title V programs for GHG 
emissions because at that time it was possible that a source could be 
subject to those requirements based on biogenic CO2 
emissions. The Agency determined it could be burdensome for both 
permitting authorities and sources to assess those emissions until our 
detailed examination was complete. In a January 12, 2011, letter to 
several members of Congress, the Administrator wrote, ``No source will 
be subject to the pre-construction permitting requirement solely 
because of its greenhouse gas emissions until after July 1, 2011. With 
the approach of July 1 in mind, I am announcing today that, by that 
date, EPA will complete a rulemaking to defer for three years the 
application of the pre-construction permitting requirement to biomass 
and other biogenic CO2 emissions.''
    One purpose of the 30-day waiting period prescribed in 5 U.S.C. 
553(d) is to give affected parties a reasonable time to adjust their 
behavior and prepare before the final rule takes effect. Whereas here, 
the affected parties are anticipating this rule and requesting the 
flexibility it provides, and any delay in its effectiveness will result 
in uncertainty in the permitting process. In order to ensure that the 
final rule is available to the public by July 1, 2011, the final rule 
will be signed and made available on the EPA Web site. Publication may 
follow one to two weeks after that date. A shorter effective date is 
also consistent with the purposes of APA section 553(d)(1), which 
provides an exception for any action that grants or recognizes an 
exemption or relieves a restriction. Here, this action relieves a 
burden because it defers the applicability of the PSD and Title V 
permitting requirements for biogenic stationary sources for a period of 
three years. Accordingly, we find good cause exists to make this rule 
effective on July 20, 2011, consistent with the purposes of 5 U.S.C. 
553(d)(1) and (3).
    Judicial Review. Under section 307(b)(1) of the CAA, judicial 
review of this final rule is available only by filing a petition for 
review in the U.S. Court of Appeals for the District of Columbia 
Circuit (the Court) by September 19, 2011. Under CAA section 
307(d)(7)(B), only an objection to this final rule that was raised with 
reasonable specificity during the period for public comment can be 
raised during judicial review. CAA section 307(d)(7)(B) also provides a 
mechanism for EPA to convene a proceeding for reconsideration, ``[i]f 
the person raising an objection can demonstrate to EPA that it was 
impracticable to raise such objection within [the period for public 
comment] or if the grounds for such objection arose after the period 
for public comment (but within the time specified for judicial review) 
and if such objection is of central relevance to the outcome of the 
rule.'' Any person seeking to make such a demonstration to us should 
submit a Petition for Reconsideration to the Office of the 
Administrator, Environmental Protection Agency, Room 3000, Ariel Rios 
Building, 1200 Pennsylvania Ave., NW., Washington, DC 20460, with a 
copy to the person listed in the preceding FOR FURTHER INFORMATION 
CONTACT section, and the Associate General Counsel for the Air and 
Radiation Law Office, Office of General Counsel (Mail Code 2344A), 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20004. Note, under CAA section 307(b)(2), the 
requirements established by this final rule may not be challenged 
separately in any civil or criminal proceedings brought by EPA to 
enforce these requirements.
    Acronyms and Abbreviations. The following are acronyms and 
abbreviations of terms used in this preamble.

BACT best available control technology
BAU business as usual
CAA Clean Air Act
CBI confidential business information
CFI Call for Information
CFR Code of Federal Regulations
CH4 methane
CO2 carbon dioxide
CO2e carbon dioxide equivalents
EO Executive Order
EPA U.S. Environmental Protection Agency
FR Federal Register
GHG/GHGs greenhouse gas/greenhouse gases
GWP global warming potential
LULUCF Land-Use, Land-Use Change and Forestry
MSW municipal solid waste
NAFO National Alliance of Forest Owners
NAAQS National Ambient Air Quality Standards
NOX nitrogen oxides
NSPS New Source Performance Standards
NSR New Source Review
NTTAA National Technology Transfer and Advancement Act of 1995
PSD Prevention of Significant Deterioration
PTE potential to emit
RFA Regulatory Flexibility Act
SAB Science Advisory Board
SILs significant impact levels
SIP State Implementation Plan
SMCs significant monitoring concentrations
tpy tons per year
U.S. United States
UMRA Unfunded Mandates Reform Act
UNFCCC United Nations Framework Convention on Climate Change

    Outline. The information presented in this preamble is organized as 
follows:
I. Background
II. Summary of Final Action
    A. Overview of the Final Rule
    B. Legal Authority
    C. Facilities Permitted During Deferral
    D. Mechanism for Deferral and State Implementation
III. Response to Public Comments
    A. Overview of Public Comments
    B. Comments on the Deferral
    C. Comments on Science, Accounting, and Economic Issues
    D. Comments on PSD, Title V and the Tailoring Rule
    E. Comments on the Interim Guidance
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. Background

    On June 3, 2010, EPA published the final Prevention of Significant 
Deterioration (PSD) and Title V Greenhouse Gas Tailoring Rule (herein 
referred to as the Tailoring Rule; 75 FR 31514), setting thresholds for 
GHG emissions that define when permits under these programs are 
required for new and existing industrial facilities. Beginning January 
2, 2011, sources currently subject to PSD or Title V permitting 
programs were required to determine the best available control 
technology (BACT) for their GHG emissions, but only for GHG increases 
of 75,000 short tons per year (tpy) or more of total GHGs, on a carbon 
dioxide equivalents (CO2e) basis and any increase on a mass 
basis. At that time, no sources would be subject to CAA permitting 
requirements due solely to GHG emissions.
    Beginning July 1, 2011, the PSD permitting requirements will for 
the first time cover new construction projects that will emit GHGs of 
at least 100,000 tpy on a CO2e basis even if they do not 
exceed the permitting thresholds for any

[[Page 43492]]

other pollutant. Modifications at existing facilities that increase GHG 
emissions by at least 75,000 tpy, and any amount on a mass basis, will 
be subject to permitting requirements, even if they do not 
significantly increase emissions of any other pollutant. Operating 
permit requirements will, for the first time, apply to sources based on 
their GHG emissions even if they would not apply based on emissions of 
any other pollutant. Facilities that emit at least 100,000 tpy 
CO2e will be subject to Title V permitting requirements.
    As discussed in the final Tailoring Rule, EPA decided not to 
provide exemptions from applicability determinations (major source and 
major modification) under PSD and Title V for certain GHG emission 
sources, including biogenic emissions. EPA decided instead to address 
the need for tailoring through a uniform threshold-based approach, 
rather than through a collection of various specific exclusions. At 
that time, EPA also noted that it planned to seek further comment on 
how it might address biogenic CO2 emissions under the PSD 
and Title V programs through a future action.
    On July 15, 2010, EPA published a Call for Information (CFI) to 
solicit information and viewpoints from interested parties on 
approaches to accounting for GHG emissions from bioenergy and other 
biogenic sources (75 FR 41173). The purpose of this CFI was to request 
comment on possible accounting approaches for biogenic CO2 
emissions under the PSD and Title V programs, as well as to receive 
data submissions about these sources and their GHG emissions, general 
technical comments on accounting for these emissions, and comments on 
the underlying science that should inform any such accounting approach.
    On August 3, 2010, NAFO petitioned the EPA to reconsider and stay 
the implementation of the PSD and Title V GHG Tailoring Rule. The 
petition alleged that the final Tailoring Rule declared, for the first 
time and without any prior proposal or notice to industry, that EPA 
would count CO2 emissions from combustion of biomass toward 
the applicability thresholds established for the PSD and Title V 
permitting programs of the CAA. Petitioners further alleged that EPA's 
proposed rule had provided for the appropriate and opposite conclusion: 
That CO2 emissions from combustion of biomass should not be 
counted. Petitioners stated that there is near-universal recognition 
that CO2 emitted from combustion of fuels derived from 
biomass should be excluded from GHG regulations because production and 
combustion of such fuels do not increase atmospheric CO2 
levels. Pending reconsideration, petitioners requested that the 
application of the PSD and Title V permitting programs to emissions of 
CO2 from biomass be stayed.
    We considered carefully the petitioners' assertions and noted that 
we also received comments through the CFI supporting the exclusion of 
biogenic CO2 from stationary source permitting requirements. 
Through the CFI, however, EPA also received information supporting the 
position that biogenic CO2 should not be excluded from 
permitting programs, and that the use of certain types of biomass as 
fuel could increase atmospheric CO2 levels. Based on 
consideration of the petitioners' arguments, together with the weight 
of the comments received through the CFI, EPA concluded that the issue 
of accounting for the net atmospheric impact of biogenic CO2 
emissions is complex enough that further consideration of this 
important issue is warranted. Therefore, EPA granted the NAFO petition 
on January 12, 2011.\1\
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    \1\ http://www.epa.gov/NSR/actions.html#mar11.
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    On January 12, 2011, EPA also announced in letters to Members of 
Congress and NAFO its intent to take a number of steps to address the 
issues associated with biogenic CO2 emissions from 
stationary sources. Pursuant to this announcement, on March 21, 2011, 
EPA published a notice of proposed rulemaking to defer for three years 
the application of the PSD and Title V permitting requirements to 
biogenic CO2 emissions from stationary sources (76 FR 
15249). Concurrent with this rulemaking, EPA also issued interim 
guidance entitled, ``Guidance for Determining Best Available Control 
Technology for Reducing Carbon Dioxide Emissions from Bioenergy 
Production'' to help permitting authorities establish a basis for 
concluding that under the PSD Program the combustion of biomass fuels 
can be considered BACT for biogenic CO2 emissions at 
stationary sources until such time as the deferral becomes effective. 
During the three-year deferral period, EPA will conduct a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources, including engaging with Federal 
partners, technical experts, and an independent scientific panel to 
consider technical issues. Based on the feedback from the scientific 
and technical review, EPA will then undertake a rulemaking to determine 
how biogenic CO2 emissions should be treated and accounted 
for in PSD and Title V permitting.
    On April 27, 2011, EPA's Science Advisory Board (SAB) published a 
notice soliciting experts for a peer review of EPA's science and 
technical work on biogenic CO2 emissions. 76 FR 23587. EPA 
intends to provide its study that examines the science and technical 
issues associated with biogenic CO2 emissions from 
stationary sources and accompanying accounting framework to the SAB for 
peer review later in 2011.

II. Summary of Final Action

A. Overview of the Final Rule

    This action defers for a period of three (3) years the 
consideration of CO2 emissions from bioenergy and other 
biogenic sources (hereinafter referred to as ``biogenic CO2 
emissions'') when determining whether a stationary source meets the PSD 
and Title V applicability thresholds, including those for the 
application of BACT. Stationary sources that combust biomass (or 
otherwise emit biogenic CO2 emissions) and construct or 
modify during the deferral period will avoid the application of PSD to 
the biogenic CO2 emissions resulting from those actions. 
This deferral applies only to biogenic CO2 emissions and 
does not affect non-GHG pollutants or other GHGs (e.g., methane 
(CH4) and nitrous oxide (N2O)) emitted from the 
combustion of biomass fuel. Also, this deferral only pertains to 
biogenic CO2 emissions in the PSD and Title V programs and 
does not pertain to any other EPA programs such as the GHG Reporting 
Program.
    EPA recognizes that use of certain types of biomass can be part of 
the national strategy to reduce dependence on fossil fuels, efforts are 
underway at the Federal, State and regional level to foster the 
expansion of renewable resources and promote bioenergy projects when 
they are a way to address climate change, increasing domestic 
alternative energy production, enhancing forest management and creating 
related employment opportunities. We believe part of fostering this 
development is to ensure that those feedstocks with negligible net 
atmospheric impact not be subject to unnecessary regulation. At the 
same time, it is important that EPA have time to conduct its detailed 
examination of the science and technical issues related to accounting 
for biogenic CO2 emissions and therefore have finalized this 
deferral.
    This deferral is intended to be a temporary measure, in effect for 
no more than three years, to allow the Agency time to complete its work 
and

[[Page 43493]]

determine what, if any, treatment of biogenic CO2 emissions 
should be in the PSD and Title V programs. This is not EPA's final 
determination on the treatment of biogenic CO2 emissions in 
those programs. The Agency plans to complete its science and technical 
review and any follow-on rulemakings within the three-year deferral 
period and further believes that three years is ample time to complete 
these tasks. It is possible that the subsequent rulemaking, depending 
on the nature of EPA's determinations, would supersede this rulemaking 
and become effective in fewer than three years.
    Biogenic CO2 emissions are defined as emissions of 
CO2 from a stationary source directly resulting from the 
combustion or decomposition of biologically-based materials other than 
fossil fuels and mineral sources of carbon. Examples of ``biogenic 
CO2 emissions'' include, but are not limited to:

     CO2 generated from the biological 
decomposition of waste in landfills, wastewater treatment or manure 
management processes;
     CO2 from the combustion of biogas collected 
from biological decomposition of waste in landfills, wastewater 
treatment or manure management processes;
     CO2 from fermentation during ethanol 
production or other industrial fermentation processes;
     CO2 from combustion of the biological 
fraction of municipal solid waste or biosolids;
     CO2 from combustion of the biological 
fraction of tire-derived fuel; and
     CO2 derived from combustion of biological 
material, including all types of wood and wood waste, forest 
residue, and agricultural material.
    For stationary sources co-firing fossil fuel and biologically-based 
fuel, and/or combusting mixed fuels (e.g., tire-derived fuels, 
municipal solid waste (MSW)), the biogenic CO2 emissions 
from that combustion are included in this deferral. However, the fossil 
CO2 emissions are not. Emissions of CO2 from 
processing of mineral feedstocks (e.g., calcium carbonate) are also not 
included in this deferral. Various methods are available to calculate 
both the biogenic and fossil portions of CO2 emissions, 
including those methods contained in the GHG Reporting Program (40 CFR 
Part 98). Consistent with the other pollutants in PSD and Title V, 
there are no requirements to use a particular method in determining 
your biogenic and fossil CO2 emissions.

B. Legal Authority

1. Applicability of PSD and Title V to Biogenic CO2 
Emissions From Major Stationary Sources
    As currently written, the PSD and Title V regulations apply to 
biogenic CO2 emissions from major sources or major 
modifications at such sources according to the limitation included 
under the definition of ``subject to regulation'' in the State 
Implementation Plan (SIP) regulations at 40 CFR 51.166 and the Title V 
state program regulations at 40 CFR 70.2, as well as the Federal 
Implementation Plan requirements at 40 CFR 52.21 and the Title V 
Federal program regulations at 40 CFR 71.2. Thus, revisions to these 
regulations are necessary to defer application of the PSD and Title V 
programs to such sources of biogenic CO2.
    Stationary sources of air pollutants, including sources of biogenic 
CO2 emissions, are currently subject to PSD requirements if 
they emit more than 100 or 250 tpy of a regulated NSR pollutant other 
than GHGs and have triggered PSD as a result of these emissions, 
subject to the permitting thresholds established in the Final Tailoring 
Rule described below. The 100/250 tpy thresholds previously described 
originate from section 169 of the CAA, which applies PSD to any ``major 
emitting facility'' and defines the term to include any source with a 
potential to emit (PTE) ``any air pollutant'' in an amount over 100 or 
250 tpy, depending on source category.
    EPA's long-standing regulations limit the PSD applicability 
provision that refers to ``any air pollutant'' to refer to any 
``regulated NSR pollutant,'' which in turn includes any air pollutant 
``subject to regulation'' under the CAA. Similarly, under sections 
165(a)(4) and 169(3) of the CAA, the BACT requirement applies to ``each 
pollutant subject to regulation'' under the CAA. As noted in other 
recent EPA actions, GHGs are currently ``subject to regulation'' under 
the CAA; subject, for PSD purposes, to specific limitations reflected 
in the definition of that term that EPA adopted in the Tailoring Rule. 
Thus, emissions of GHGs (including CO2) must be considered 
in determining whether a source is a major emitting facility subject to 
PSD, as a result of construction or modification, and whether the BACT 
requirement applies to GHGs (including CO2 as a component of 
GHGs). In light of the way these regulations are currently written, EPA 
is unable to exclude biogenic CO2 emissions from PSD review 
without amending the regulations.
    With respect to Title V, as noted previously, Title V applies to 
sources, among others, that emit 100 tons per year of specified 
quantities of ``any air pollutant,'' see CAA section 502(a), 501(2)(B) 
and 302(g).
2. Tailoring Rule
a. Rationale and Requirements
    In the Tailoring Rule, EPA codified its interpretation that 
``subject to regulation'' only extends to major sources of air 
pollutants subject to a requirement for actual control of the quantity 
of emissions of that pollutant, and that such a control requirement has 
taken effect and is operative to control, limit or restrict the 
quantity of emissions of that pollutant released from the regulated 
activity, see 75 FR at 31606-07, and further defined ``subject to 
regulation'' such that GHGs are only ``subject to regulation'' under 
certain circumstances defined in the Tailoring Rule.
    In the Tailoring Rule, EPA recognized that if the applicability 
provisions of the PSD and Title V programs were applied literally so 
that PSD and Title V requirements applied to GHG-emitting sources at 
the 100/250 tpy levels provided in the CAA, then the permitting 
authorities would be overwhelmed by the large numbers of permittees and 
many small sources would be unduly encumbered by the permitting 
demands. In light of those impacts, EPA concluded that, as a legal 
matter, Congress did not intend that the PSD and Title V applicability 
requirements be applied literally to all sources emitting GHGs over the 
major source thresholds as of January 2, 2011, the date by which EPA 
determined that GHGs become subject to regulation under the CAA as a 
result of the motor vehicle rule. Instead, EPA concluded that it is 
authorized to tailor those applicability requirements to apply PSD and 
Title V to such sources in a phased-in manner, starting with the 
largest sources first.
    Specifically, in the Tailoring Rule, EPA has implemented these PSD 
and Title V applicability provisions by applying the familiar two-step 
framework for interpreting administrative statutes recognized by the 
Supreme Court in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), 
taking into account certain legal doctrines. Those doctrines, insofar 
as relevant to the Tailoring Rule, are (1) the ``absurd results'' 
doctrine, which authorizes agencies to apply statutory requirements 
differently than a literal reading would indicate, as necessary to 
effectuate congressional intent and

[[Page 43494]]

avoid absurd results; (2) the ``administrative necessity'' doctrine, 
which authorizes agencies to apply statutory requirements in a way that 
avoids impossible administrative burdens; and (3) the ``one-step-at-a-
time'' doctrine, which authorizes agencies to implement a regulatory 
scheme in a deliberate, step-wise fashion. See 75 FR 31541-31579.
    Under Chevron, the agency must, at step 1, determine whether 
Congress' intent as to the specific matter at issue is clear, and, if 
so, the agency must give effect to that intent. 467 U.S. at 842. If 
congressional intent is not clear, then, at step 2, the agency has 
discretion to fashion an interpretation that is a reasonable 
construction of the statute. 467 U.S. at 865. To determine 
congressional intent, the agency must first consider the words of the 
statutory requirements, and if their literal meaning answers the 
question at hand, then, in most cases, the agency must implement those 
requirements by those terms.
    However, under the ``absurd results'' doctrine, the literal meaning 
of statutory requirements should not be considered to indicate 
congressional intent if that literal meaning would produce a result 
that is senseless or that is otherwise inconsistent with -- and 
especially one that undermines -- underlying congressional purpose. In 
these cases, if congressional intent for how the requirements apply to 
the question at hand is clear, the agency should implement the 
statutory requirements not in accordance with their literal meaning, 
but rather in a manner that most closely effectuates congressional 
intent. If congressional intent is not clear, then an agency may select 
an interpretation that is reasonable under the statute.
    Under the ``administrative necessity'' doctrine, Congress is 
presumed, at Chevron step 1, to intend that its statutory directives to 
agencies be administrable, and not to have intended to have written 
statutory requirements that are impossible to administer. Therefore, 
under this doctrine, an agency may depart from statutory requirements 
that, by their terms, are impossible to administer, but the agency may 
depart no more than necessary to render the requirements administrable.
    In addition to the ``absurd results'' and ``administrative 
necessity'' doctrines, another judicial doctrine supports at least part 
of EPA's Tailoring Rule, and that is the doctrine that agencies may 
implement statutory mandates one step at a time, which we will call the 
``one-step-at-a-time'' doctrine. The U.S. Supreme Court recently 
described the doctrine in Massachusetts v. EPA, 549 U.S. 497, 524 
(2007), as follows: ``Agencies, like legislatures, do not generally 
resolve massive problems in one fell regulatory swoop;'' and instead 
they may permissibly implement such regulatory programs over time, 
``refining their preferred approach as circumstances change and as they 
develop a more nuanced understanding of how best to proceed.''
    In the Tailoring Rule, EPA closely considered the burdens to the 
permitting authorities of applying PSD and Title V to GHG-emitting 
sources. For example, EPA calculated, on a national basis, the workload 
that GHG permit applications would entail, and compared that to the 
existing workload of permitting authorities. EPA concluded that 
permitting authorities would be overwhelmed by permit applications if 
the PSD and Title V applicability thresholds were applied literally as 
of January 2, 2011, to the GHG emissions from stationary sources. In 
addition, EPA calculated the cost to the sources of permitting 
requirements and concluded that many small sources would become subject 
to unduly high expenses.
    Accordingly, in applying the Chevron analytical framework, in 
conjunction with the absurd results and administrative necessity 
doctrines, EPA concluded that Congress intended that PSD and Title V 
apply to the GHG emissions from stationary sources, but that, in light 
of the burdens to the permitting authority and the costs to the sources 
of determining applicability of permitting requirements by applying the 
statutory thresholds to GHG emissions, the application of the 
permitting programs should be phased in, starting with the largest 
sources of GHG emissions first. EPA also concluded that the calculation 
for determining which sources emit the ``largest'' amount of GHG 
emissions should be based on the amount of GHG pollutant emitted in 
tons per year, weighted by the global warming potential (GWP) of the 
particular GHG pollutant.
    Accordingly, in the Tailoring Rule, EPA established two steps to 
implement PSD and Title V. At step 1, beginning January 2, 2011, 
sources currently subject to PSD or Title V permitting programs were 
required to determine the BACT for their GHG emissions, but only for 
GHG increases of 75,000 short tons per year (tpy) or more of total 
GHGs, on a CO2e basis and any increase on a mass basis. At 
that time, no sources would be subject to CAA permitting requirements 
due solely to GHG emissions. At step 2, beginning July 1, 2011, the PSD 
permitting requirements will for the first time cover new construction 
projects that will emit GHG emissions of at least 100,000 tpy on a 
CO2e basis (and 250 tons on a mass basis) even if they do 
not exceed the permitting thresholds for any other pollutant. 
Modifications at existing facilities that emit at that level and 
increase GHG emissions by at least 75,000 tpy CO2e and by any amount on 
a mass basis will be subject to permitting requirements, even if they 
do not significantly increase emissions of any other pollutant.
    In addition, EPA committed to promulgate by July 1, 2012, another 
rulemaking--in effect, step 3 of the Tailoring Rule--that would 
consider whether to reduce the thresholds further. EPA also committed 
to promulgate another rulemaking after that, by April 1, 2016, that 
would consider still further action. As EPA stated in the Tailoring 
Rule, part of the purpose of the phase-in approach embodied in the 
Tailoring Rule is to allow permitting authorities time to acquire 
additional resources and to allow EPA time to develop streamlining 
methods and thereby enable the application of PSD and Title V to more 
sources in subsequent rulemakings.
    As noted previously, in the Tailoring Rule, EPA determined that the 
amount of each GHG emitted by a facility should be calculated by 
reference to the weight of the GHG emissions, in tons of 
CO2e per year for determining if GHGs were ``subject to 
regulation'' for a particular facility and project. The Tailoring Rule 
proposal referenced EPA's Inventory of U.S. Greenhouse Gas Emissions 
and Sinks (Inventory) \2\ submitted annually to the United Nations 
Framework Convention on Climate Change (UNFCCC), for the applicable GWP 
values and guidance on how to calculate a source's GHG emissions in tpy 
CO2e. 75 FR 31514-31608. The Inventory includes emissions of 
the six GHGs in terms of CO2e units. By linking the 
calculation of CO2e for GHGs to GWP values, a facility could 
evaluate its total GHG emissions contribution based on a single metric. 
We solicited comment on the benefits and limitations of this proposed 
metric.
---------------------------------------------------------------------------

    \2\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2008,'' U.S. Environmental Protection Agency, EPA 430-R-10-006 
(April 15, 2010). http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
---------------------------------------------------------------------------

    While we referred to the Inventory for GWP identification purposes 
only, several commenters appeared to misunderstand our intent, claiming 
that the Inventory excludes CO2 emitted from biomass. These 
commenters

[[Page 43495]]

requested that, in calculations of emissions for determining 
applicability of PSD and Title V, EPA exempt emissions from biogenic 
activities or biomass combustion or oxidation activities, including 
solid waste landfills, waste-to-energy projects, fermentation 
processes, combustion of renewable fuels, ethanol manufacturing, 
biodiesel production, and other alternative energy production that uses 
biomass feedstocks (e.g., crops or trees). In particular, these 
commenters urged that EPA exclude emissions from biomass combustion in 
determining the applicability of PSD to such sources based on the 
notion that such combustion is ``carbon neutral'' (i.e., that 
combustion or oxidation of such materials would cause no net increase 
in GHG emissions on a lifecycle basis).
b. Treatment of Biogenic Emissions
    In response, when finalizing the Tailoring Rule, we acknowledged 
the role that biomass or biogenic fuels and feedstocks could play in 
reducing anthropogenic GHG emissions, and did not dispute the 
commenters' observations that many state, Federal, and international 
rules and policies treat biogenic and fossil sources of CO2 
emissions differently (75 FR 31514). Regarding commenters' claims that 
the Inventory excludes CO2 emissions from biomass, EPA noted 
that the Inventory does not exclude these emissions (see section II.A.2 
of the preamble to the proposed deferral rule). Rather, they are 
included in the Land-Use, Land-Use Change and Forestry (LULUCF) Sector 
rather than the Energy Sector to avoid double-counting at the national 
scale. The narrow reference to the use of the Inventory's GWP values 
for estimating GHG emissions was provided to offer consistent guidance 
on how to calculate these emissions and not as an indication, direct or 
implied, that biomass emissions would be excluded from permitting 
applicability merely by association with the national inventory, see 74 
FR 55351, under the definition for ``carbon dioxide equivalent.''
    We determined that our application of the ``absurd results,'' 
``administrative necessity,'' and one-step-at-a-time legal rationales 
supporting the Tailoring Rule, based on the expected overwhelming 
permitting burdens in its absence, did not provide sufficient basis to 
exclude emissions of CO2 from biogenic sources in 
determining permitting applicability provisions at that time. We 
reasoned that such an exclusion alone, while reducing burdens for some 
sources, would not address the overwhelming permitting burdens, and a 
threshold-based approach would still be needed. At that time, we had 
not examined burdens with respect to specific source categories 
impacted by the rule and thus had not analyzed the administrative 
burden of permitting projects that specifically involve biogenic 
CO2 emissions taking account of the threshold-based 
approach. Commenters also did not provide information to demonstrate 
that an overwhelming permitting burden would still exist, justifying a 
temporary exclusion for biomass sources.
    In the final Tailoring Rule, we indicated that the decision not to 
provide this type of an exclusion at that time did not foreclose EPA's 
ability to either (1) provide this type of exclusion at a later time 
with additional information about overwhelming permitting burdens due 
to biomass sources, or (2) provide another type of exclusion or other 
treatment based on some other rationale. Although we did not take a 
final position, we noted that some commenters' observations about a 
different treatment of biomass combustion warranted further exploration 
as a possible rationale.
    Therefore, although we did not establish a permanent exclusion from 
PSD or Title V applicability based on specific characteristics of 
biogenic CO2, we indicated our intent to seek further 
comment on how we might address emissions of biogenic CO2 
under the PSD and Title V programs through a future action.
    We further noted that, while not promulgating an applicability 
exclusion for biogenic emissions and biomass fuels or feedstocks in the 
final Tailoring Rule, flexibility exists to apply the existing 
regulations and policies regarding BACT in ways that take into account 
their net effects on atmospheric GHG concentrations. Without prejudging 
the outcome of our process to seek comment on whether and how we might 
address emissions of biogenic carbon under the PSD and Title V programs 
through a future action, we indicated that this issue warranted further 
exploration.
    As mentioned earlier in the preamble, in order to explore the issue 
further following the promulgation of the Tailoring Rule, on July 15, 
2010, EPA solicited views from the public through a CFI on approaches 
to accounting for biogenic CO2 emissions, on the means to 
estimate and measure CO2 emissions from a variety of 
biogenic CO2 sources and other information on biogenic 
sources that may be affected but not identified in the CFI.
    With promulgation of the Tailoring Rule we committed to issue 
technical and policy guidance for permitting of GHGs. Subsequently, the 
information gathered from stakeholders in response to the CFI provided 
diverse perspectives on treatment of biogenic CO2 emissions 
in pre-construction and operating permit reviews, including many 
requests to exclude, either partially or wholly, biogenic 
CO2 sources from PSD applicability determinations and BACT 
analyses on the basis of Inventory results and other considerations. On 
November 10, 2010, EPA issued the draft ``PSD and Title V Permitting 
Guidance for Greenhouse Gases'' which provides the basic information 
that permit writers and applicants need to address GHG emissions in 
permits. Within the November guidance, EPA acknowledged the numerous 
stakeholder comments on biogenic CO2 BACT analyses and 
provided general guidance to permitting authorities to consider 
environmental, energy, and economic benefits that may accrue from the 
use of certain types of biomass (e.g., biogas from landfills for energy 
generation), consistent with existing air quality standards. We also 
committed to provide more detailed technical and policy guidance early 
in 2011 for completing step 4 of a ``top-down'' BACT analysis for GHG 
emissions from certain types of biomass sources to enable permitting 
authorities to simplify and streamline BACT determinations for such 
sources. EPA provided interim guidance on this topic in March 2011, 
concurrent with the proposal of this rule to assist permitting 
authorities before the deferral becomes effective.\3\
---------------------------------------------------------------------------

    \3\ ``Guidance for Determining Best Available Control Technology 
for Reducing Carbon Dioxide Emissions from Bioenergy Production,'' 
U.S. EPA Office of Air and Radiation, March 2011. (http://www.epa.gov/nsr/ghgdocs/bioenergyguidance.pdf)
---------------------------------------------------------------------------

    Noting that a variety of Federal and state policies have recognized 
that some types of biomass can be part of a national strategy to reduce 
dependence on fossil fuels and to reduce emissions of GHGs, EPA has 
determined that it is appropriate for permitting authorities to account 
for both existing Federal and state policies and their underlying 
objectives in evaluating the environmental, energy and economic 
benefits of biomass fuel. Based on these considerations, permitting 
authorities might determine that the use of certain types of biomass 
alone meets the BACT requirement for GHGs.
    As described in the Background section of this preamble, NAFO 
petitioned the EPA on August 3, 2010 to reconsider and stay the 
implementation of the PSD and Title V GHG Tailoring Rule. Pending 
reconsideration, petitioners requested that the application of the PSD 
and Title V

[[Page 43496]]

permitting programs to emissions of CO2 from biomass be 
stayed.
    Based on consideration of the petitioners' arguments, together with 
the weight of the comments received on the CFI, EPA concluded that the 
issue of accounting for the net atmospheric impact of biogenic 
CO2 emissions is complex enough that further consideration 
of this important issue is warranted. Therefore, EPA granted the 
petition on January 12, 2011.
    However, EPA did not grant the request for an administrative stay 
of the Tailoring Rule, because the rule is critical for making overall 
implementation of the PSD program feasible. Furthermore, an 
administrative stay of the statements in the preamble of the Tailoring 
Rule that describe EPA's initial determination not to exempt emissions 
of CO2 from biomass would not provide the requested relief 
of excluding emissions of CO2 from biomass from the PSD and 
Title V permitting programs. The effect of a stay of this or any other 
aspect of the Tailoring Rule would be to return to the legal regime 
that existed before EPA's issuance of a final Tailoring Rule. As no 
exemption for emissions of CO2 from biomass existed prior to 
the final rule, an administrative stay would not result in an exemption 
from the requirements of PSD and Title V.
3. Rationale in Support of Interim Biomass Deferral
a. Regulation at This Time Is Not Justified
    Since finalizing the Tailoring Rule, EPA has gathered additional 
information concerning biomass through the CFI and in response to the 
proposal for this rule. The information collected to this point 
underscores the complexity and uncertainty associated with accounting 
for biogenic emissions of CO2 and indicates that at present 
attempting to determine the net carbon cycle impact of particular 
facilities combusting particular types of biomass feedstocks would 
require extensive analysis and would therefore entail extensive 
workload requirements by many of the permitting authorities. In 
contrast to other sources of GHG emissions, these uncertainties and 
complexities are exacerbated because of the unique role and impact 
biogenic sources of CO2 have in the carbon cycle. Further, 
methodologies are not sufficiently developed to assure that various 
permitting authorities would be able to perform the necessary 
calculations reasonably and consistently to determine the net 
atmospheric impact in many, if not all, instances.
    The extensive workload requirements required to understand the net 
biogenic CO2 emissions from bioenergy facilities and other 
sources of biogenic CO2 emissions, as part of the PSD and 
Title V permit process, including specifically how to measure and 
account for biogenic CO2 emissions, would unnecessarily 
strain the resources of the affected permitting authorities and result 
in delays in processing permits for other applicants. Moreover, at 
present, devoting these limited permitting authority resources to 
biomass sources would not be productive in light of the possibility 
that EPA may ultimately determine that the utilization of some or all 
biomass feedstocks for bioenergy has a negligible (or de minimis), 
negative, or positive net impact on the carbon cycle.
    Therefore, the information EPA has collected since promulgating the 
Tailoring Rule indicates that it is consistent with the rationale of 
the Tailoring Rule for affected permitting authorities to defer on a 
temporary basis biogenic CO2 emissions from PSD and Title V 
applicability. During this deferral, EPA will conduct a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources, which will include a peer review by 
the SAB, and resolve technical issues in order to account for biogenic 
CO2 emissions in ways that are scientifically sound and also 
manageable in practice.
    As noted previously, EPA based the Tailoring Rule on the extreme 
administrative burdens to permitting authorities, and undue costs to 
sources, that would result from a literal application of the PSD and 
Title V 100/250 tpy statutory thresholds, as of January 2, 2011, when 
those requirements first applied to GHGs. EPA reasoned that, in 
accordance with the Chevron analytical framework for statutory 
construction, taking into account the ``absurd results'' and 
``administrative necessity'' lines of cases, Congress did not intend 
that the PSD and Title V requirements apply at the 100/250 tpy 
statutory thresholds to GHG-emitting sources as of January 2, 2011, but 
rather that those requirements could be limited, at least initially, 
through a phase-in approach, to higher-emitting sources.
    Just as the extensive workload of processing permit applications 
from sources below the Tailoring Rule thresholds justified exempting 
those sources at least from the initial steps in the Tailoring Rule 
phase-in program, so too the extensive workload associated with 
analyzing and accounting for biogenic CO2 emissions as part 
of processing permit applications from biomass facilities justifies 
exempting those sources for a period of time, in the affected states, 
pending EPA's development of a consistent and practical framework for 
determining net carbon cycle impacts. The three-year deferral EPA is 
finalizing in this action is reasonable to allow time for the 
development of the accounting framework and subsequent rulemaking.
    In effect, this deferral is a step back from the Tailoring Rule's 
approach but the decision to defer the applicability of PSD and Title V 
to biogenic CO2 emissions is nonetheless supported, in part, 
on the same rationale as EPA used to justify the Tailoring Rule's 
phase-in approach. This action constitutes a refinement of the approach 
EPA has taken to regulate GHG emissions from stationary sources through 
a phased-in approach, based on an evolving understanding of the 
complexities, uncertainties, and nuances associated with biogenic 
emissions.
    An alternative way to reduce the permitting burden would be to 
apply PSD and Title V to all facilities with biogenic CO2 
emissions that emit at or above the Tailoring Rule thresholds, but 
without making any effort to take into account net carbon cycle 
impacts. However, we believe that it is conceivable that as a result of 
the scientific examination of biogenic CO2 emissions, we 
could conclude that the net carbon cycle impact for some biomass 
feedstocks is trivial, negative, or positive. Accordingly, this could 
result in regulation of sources with trivial or positive impacts on the 
net carbon cycle, as previously discussed. To avoid this outcome, given 
our current state of knowledge, we believe a case-by-case net carbon 
cycle impact analysis would be required in the course of reviewing each 
permit application. This burden would be in addition to the currently 
existing burden associated with obtaining a PSD or Title V permit. In 
light of the permitting burdens assessed in the Tailoring Rule, adding 
to that burden in many states would frustrate the goals we sought to 
accomplish in the Tailoring Rule to ensure that the PSD and Title V 
programs can be administered in each state.
    Furthermore, given the potential that the utilization of at least 
some biomass feedstocks may have a negligible impact on the net carbon 
cycle, engaging in this type of burdensome analysis may not be an 
optimal use of the limited resources of PSD and Title V permitting 
authorities. The additional scientific examination being undertaken by 
the EPA could ultimately conclude that

[[Page 43497]]

such resources could have been more effectively utilized to target 
CO2 emissions that clearly have a detrimental impact on the 
net carbon cycle. Establishing a three-year deferral period for 
biogenic CO2 emissions will enable EPA to consider the 
results of the detailed examination of the science of these emissions 
and undertake a rulemaking to determine the best way to account for 
biogenic CO2 emissions when determining PSD applicability.
    Another important reason for the three-year deferral period is to 
allow sufficient time to consider the unique characteristics and 
attributes of biogenic CO2 feedstocks, as opposed to other 
sources of GHG, using the results from the detailed examination 
mentioned previously, within both the state permitting agencies and 
affected facilities. While the interim BACT guidance described 
previously will help alleviate some of this burden before the deferral 
becomes effective, we expect that more and more diverse users of 
biomass combustion or other biogenic CO2 sources are likely 
to be affected under step 2 of the Tailoring Rule because, under step 
2, these sources can trigger permitting requirements based solely on 
their GHG emissions with no prerequisite requirement that they 
otherwise trigger PSD or Title V permitting requirements for a non-GHG 
pollutant. We believe, absent the deferral period and the completion of 
EPA's full analysis of the unique technical issues associated with 
these diverse facilities emitting biogenic CO2, that it 
would be particularly challenging for many of the permitting 
authorities and facilities to process permits involving these 
emissions. Also, as described elsewhere in this preamble, this interim 
deferral is intended to temporarily exclude biogenic CO2 
emissions from the definition of ``subject to regulation,'' as that 
term was defined for purposes of the Tailoring Rule, for a period of 
three years, while EPA further considers, through notice and comment 
rulemaking, the approach to accounting for these emissions on a 
permanent basis.
b. One-Step-at-a-Time Doctrine
    EPA relied, in part, on the ``one-step-at-a-time'' doctrine, which 
authorizes agencies to implement statutory requirements a step at a 
time, in finalizing the Tailoring Rule. 75 FR 31514, 31578 (June 3, 
2010). As described in the Tailoring Rule and earlier in the preamble, 
the case law recognizing the ``one-step-at-a-time'' doctrine, within 
the Chevron framework, justifies an agency's step-by-step approach 
under the following circumstances or conditions: (1) The agency's 
ability to comply with a statutory directive depends on facts, 
policies, or future events that are uncertain; (2) the agency has 
estimated the extent of its remaining obligation; (3) the agency's 
incremental actions are structured in a manner that is reasonable in 
light of the uncertainties; and (4) the agency is on track to full 
compliance with the statutory requirements.
    In the proposed rule, EPA stated in footnote 13 that the ``one-
step-at-a-time'' doctrine was not relevant to this rulemaking. This 
statement was made without explanation. One commenter (EPA-HQ-OAR-2011-
0083-0084) stated ``[b]ased on EPA's statements in the Tailoring Rule, 
which does rely on the `one-step-at-a-time' doctrine, it appears that 
the doctrine would apply equally well to EPA's decision to delay 
regulation of biogenic CO2 emissions under the PSD and Title 
V programs.'' For the reasons stated below, EPA now agrees that, 
because of the complexity and uncertainty of the science associated 
with accounting for biogenic sources of CO2, the interim 
deferral of the PSD and Title V program for such emissions would be a 
reasonable exercise of the ``one-step-at-a-time'' doctrine.
    First, as the DC Circuit stated in National Association of 
Broadcasters v. FCC, 740 F.2d 1190, 1210 (DC Cir. 1984) (``National 
Association of Broadcasters''), incremental agency action is most 
readily justifiable ``against a shifting background in which facts, 
predictions, and policies are in flux and in which an agency would be 
paralyzed if all the necessary answers had to be in before any action 
at all could be taken.'' Those circumstances are present here, and so 
is the fact that the task at hand is extraordinarily demanding. As 
discussed previously, EPA is in the process of conducting a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources to better understand their role on 
the carbon cycle and to develop an accounting framework for use by 
permitting authorities and sources. This examination will include 
discussion with partners and scientists both inside and outside the 
Federal government, as well as engagement with the Science Advisory 
Board, to consider technical issues that the Agency must resolve in 
order to account for biogenic CO2 emissions in ways that are 
scientifically sound and also manageable in practice.
    Second, as the Court stated in National Association of 
Broadcasters, ``the agency [should] ma[k]e some estimation, based upon 
evolving economic and technological conditions, as to the nature and 
magnitude of the problem it will have to confront when it comes to 
[undertake the remaining steps]'' and that estimation must be 
``plausible and flow from the factual record compiled.'' Id. at 1210. 
Here, EPA has done this by deferring the applicability of PSD and Title 
V to biogenic emissions of CO2 from stationary sources for 
only as long as necessary for EPA to complete the needed scientific 
study of these emissions, develop an accounting framework, and as 
appropriate conduct rulemaking specific to the unique nature and 
characteristics of these emission sources.
    In order to explore the issues further following the promulgation 
of the Tailoring Rule, on July 15, 2010, EPA solicited views from the 
public through the CFI on approaches to accounting for biogenic 
CO2 emissions, including whether some or all of a source's 
biogenic CO2 emissions could be discounted based on a 
determination that they are canceled out by the CO2 
absorption associated with growing the fuel (75 FR 41173). Also, we 
solicited information on the means to estimate and measure 
CO2 emissions from a variety of biogenic CO2 
sources that typically have not been part of emission inventories 
(e.g., CO2 from landfills, livestock management, and 
fermentation processes), as well as information on other biogenic 
sources that may be affected but which were not identified specifically 
in the CFI.
    With promulgation of the Tailoring Rule, we committed to issue 
technical and policy guidance for permitting of GHGs. Subsequently, the 
information gathered from stakeholders in response to the CFI provided 
diverse perspectives on treatment of biogenic CO2 emissions 
in pre-construction and operating permit reviews, including many 
requests to exclude, either partially or wholly, biogenic 
CO2 sources from PSD applicability determinations and BACT 
analyses on the basis of Inventory results and other considerations.
    Third, again as the Court stated in National Association of 
Broadcasters, it must be ``reasonable, in the context of the decisions 
made in the proceeding under review, for the agency to have deferred 
the issue to the future. With respect to that question, postponement 
will be most easily justified when an agency acts against a background 
of rapid technical and social change and when the agency's initial 
decision as a practical matter is reversible should the future 
proceedings yield drastically unexpected results.'' Id. at 1211. Here,

[[Page 43498]]

our deferral is reasonable in light of the technical and scientific 
questions that are raised by biogenic emissions from stationary 
sources, which will be addressed by EPA's ongoing study, development of 
an accounting framework, and any subsequent rulemaking. As explained in 
the proposal and elsewhere in the preamble to this final rule, EPA 
believes it has the authority to exclude biogenic CO2 
emissions from the PSD and Title V requirements for the proposed three-
year deferral period and will be exploring whether a permanent 
exemption is appropriate for at least some and perhaps all types of 
feedstocks.
    However, the possibility also remains that more detailed 
examination of the science of biogenic CO2 will demonstrate 
that the utilization of some biomass feedstocks for bioenergy 
production will have a significant impact on the net carbon cycle, 
making literal application of the PSD program requirements to such 
emissions, consistent with the Tailoring Rule, necessary to fulfill 
congressional intent. Thus, EPA is finalizing only a temporary, rather 
than a permanent, deferral of PSD requirements for such sources at this 
time. EPA notes that the issue of subsequent applicability of the PSD 
and Title V programs to facilities that may be permitted during the 
deferral period is discussed in more detail in section II.C.
    Finally, as the DC Circuit stated in Grand Canyon Air Tour 
Coalition v. F.A.A., 154 F.3d 455, 477-78 (DC Cir. 1998), the Courts 
will accept an initial step towards full compliance with a statutory 
mandate, as long as the agency is headed towards full compliance, and 
we now believe that the doctrine is applicable here.
    As we have described in the CFI, the preamble to the proposed 
deferral and elsewhere in the preamble for this final rule, there is 
little question as to the complexity in accounting for and 
understanding the impact of biogenic CO2 emissions from 
stationary sources on net atmospheric CO2 emissions such 
that sources and permitting authorities may not reasonably be expected 
to comply with or implement PSD and Title V applicability requirements 
in the near term. As described elsewhere in this preamble, the deferral 
is limited to three years, and EPA may, before the expiration of the 
deferral, undertake additional rulemaking to clarify the applicability 
of PSD and Title V permitting requirements for specific categories of 
biogenic emissions as may be appropriate based on the scientific record 
EPA is currently developing. See Grand Canyon Air Tour, 891 F.2d at 
476-77 (upholding agency action as a step towards full compliance with 
statutory mandate when the agency expected full compliance to occur 
some 20 years after the deadline in the statute).
    This rulemaking constitutes an initial step toward full compliance, 
and, seen in that light, is supported by the ``one-step-at-a-time'' 
doctrine.
c. EPA Not Required to Regulate Where Benefits of Regulation Would Be 
Trivial
    EPA believes it has the authority to exclude biogenic 
CO2 emissions from the PSD and Title V requirements, if 
scientific analysis supports conclusions about the nature of biogenic 
CO2 in question that in turn support such an exclusion; the 
agency will be using the three-year deferral period to better 
understand the science associated with biogenic CO2 
emissions and to explore whether or not a permanent exemption is 
permissible for at least some and perhaps all types of feedstocks.
    Courts have recognized that administrative agencies have the 
implied authority to establish exemptions ``when the burdens of 
regulation yield a gain of trivial or no value.'' Alabama Power Co. v. 
Costle, 636 F.2d 323, 360 (DC Cir. 1980). In this decision that 
specifically addressed the requirements of the PSD program, the DC 
Circuit described this principle as follows:

    Categorical exemptions may also be permissible as an exercise of 
agency power, inherent in most statutory schemes, to overlook 
circumstances that in context may fairly be considered de minimis. 
It is commonplace, of course, that the law does not concern itself 
with trifling matters, and this principle has often found 
application in the administrative context. Courts should be 
reluctant to apply the literal terms of a statute to mandate 
pointless expenditures of effort. Id. (internal citations omitted).

In an earlier case cited by the court in Alabama Power, the court 
described the doctrine as follows:

    The `de minimis' doctrine that was developed to prevent trivial 
items from draining the time of the courts has room for sound 
application to administration by the Government of its regulatory 
programs. * * * The ability, which we describe here, to exempt de 
minimis situations from a statutory command is not an ability to 
depart from the statute, but rather a tool to be used in 
implementing the legislative design. District of Columbia v. 
Orleans, 406 F.2d 957, 959 (1968).

In this respect, the Alabama Power opinion observed in a footnote that 
the de minimis principle ``is a cousin of the doctrine that, 
notwithstanding the `plain meaning' of a statute, a court must look 
beyond the words to the purpose of the act where its literal terms lead 
to `absurd or futile results.' '' Id. at 360 n. 89 (citations omitted).
    To apply an exclusion based on the de minimis doctrine, ``the 
agency will bear the burden of making the required showing'' that a 
matter is truly de minimis which naturally will turn on the assessment 
of particular circumstances. Id. The Alabama Power opinion concluded 
that ``most regulatory statutes, including the CAA, permit such agency 
showings in appropriate cases.'' Id.
    A notable limitation on the de minimis doctrine is that it does not 
authorize the agency to exclude something on the basis of a cost-
benefit analysis. As the court explained, this ``implied authority is 
not available for a situation where the regulatory function does 
provide benefits, in the sense of furthering the regulatory objectives, 
but the agency concludes that the acknowledged benefits are exceeded by 
the costs.'' Id. The court held that any ``implied authority to make 
cost-benefit decisions must be based not on a general doctrine but on a 
fair reading of the specific statute, its aims and legislative 
history.'' Id.
    Since Chevron, several courts have recognized de minimis exceptions 
(1) so long as they are not contrary to the express terms of the 
statute and (2) the agency's interpretation of the exception is a 
permissible reading of the statute. See e.g., Ober v. Whitman, 243 F.3d 
1190 (9th Cir. 2001); see also Ohio v. EPA, 997 F.2d 1520 (D.C. Cir. 
1993).
    The CAA is not so rigid as to preclude a de minimis exception. 
Since the early years of the PSD program, EPA has applied this de 
minimis principle to establish various types of values in the PSD 
regulations that may be used to exempt categories of source from all or 
part of the PSD program requirements.
    EPA also relied on the de minimis doctrine to establish values that 
permitting authorities can use to show that a source that requires a 
PSD permit meets the necessary criteria to obtain a permit. Significant 
impact levels may be used in particular ways identified in prior EPA 
rules and guidance as part of an assessment of whether a source causes 
or contributes to a violation of air quality standards. Significant 
monitoring concentrations may be used to exempt sources from pre-
construction monitoring requirements. See 75 FR 64864, 64890-97 
(October 20, 2010).
    Due to the complexity and uncertainty of the science associated 
with accounting for biogenic CO2 emissions and their impact 
on the carbon cycle and net atmospheric CO2

[[Page 43499]]

levels, requiring regulation of biogenic sources of CO2 at 
this time may lead to only trivial environmental benefits while 
exacerbating the regulatory burdens and absurd results the Tailoring 
Rule was intended to avoid because the subsequent scientific study may 
show that certain biogenic feedstocks have a trivial or even positive 
impact on net atmospheric CO2 levels.
d. Potential for Some Biomass Feedstocks To Have a de minimis, Neutral 
or Positive Impact on Net CO2 Levels in the Atmosphere
    As discussed previously in this preamble, EPA believes based on 
information currently before the Agency that at least some biomass 
feedstocks that may be utilized to produce energy or other products 
have a negligible impact on the net carbon cycle, or possibly even a 
positive net effect. Within the context of the PSD and Title V 
programs, the argument for treating CO2 emissions from 
bioenergy and biogenic sources differently from fossil-based 
CO2 emissions at the facility relies on the premise that 
sequestration occurs offsite, outside the boundaries of the facility. 
Such a negligible or positive impact on the carbon cycle and net 
atmospheric CO2 levels should not count towards the PSD and 
Title V applicability requirements. It appears that the potential may 
exist for EPA to determine that other types of biomass feedstocks would 
have a negligible impact on the net carbon cycle impact after further 
detailed examination of the science associated with biogenic 
CO2 emissions.
    Thus, if EPA were to require all bioenergy facilities or other 
sources of biogenic CO2 emissions to limit emissions of 
CO2 before this assessment is complete, it may later 
determine that such actions have required regulation of a trivial 
amount of emissions or even potentially of emissions that are 
associated with a net CO2 emissions benefit. To avoid this 
outcome, and because of the scientific uncertainty and administrative 
burdens associated with accounting for net biogenic CO2 
emissions relative to the carbon cycle, EPA believes an initial 
deferral of the PSD requirements for bioenergy and other biogenic 
sources is justified at this time to conduct the detailed scientific 
evaluation described elsewhere in the preamble. However, the 
possibility also remains that EPA's detailed examination of the science 
of biogenic CO2 will demonstrate that the utilization of 
some biomass feedstocks for bioenergy production will have a 
significant impact on the net carbon cycle, making application of the 
PSD program requirements to such emissions necessary to fulfill 
congressional intent. Thus, EPA is finalizing only a temporary, rather 
than a permanent, deferral of PSD requirements at this time in order 
for EPA to conduct a study of the science surrounding biogenic 
CO2 emissions and their role in the carbon cycle and to 
develop an accounting framework to help further relieve the burdens 
faced by permitting authorities. EPA is also seeking an independent 
peer review of the science and accounting framework by the Science 
Advisory Board to resolve the uncertainties that have been highlighted 
by commenters in response to the CFI and the proposal to this action.

C. Facilities Permitted During Deferral

    The final rule is an interim deferral for biogenic CO2 
emissions only and does not relieve sources of the obligation to meet 
the PSD and Title V permitting requirements for other pollutant 
emissions that are otherwise applicable to the source during the 
deferral period or that may be applicable to the source at a future 
date pending the results of EPA's study and subsequent rulemaking 
action.
    This means, for example, that if the deferral is applicable to 
biogenic CO2 emissions from a particular source during the 
three-year effective period and the study and future rulemaking do not 
provide for a permanent exemption from PSD and Title V permitting 
requirements for the biogenic CO2 emissions from a source 
with particular characteristics, then the deferral would end for that 
type of source and its biogenic CO2 emissions would have to 
be appropriately considered in any applicability determinations that 
the source may need to conduct for future stationary source permitting 
purposes, consistent with that subsequent rulemaking and the Final 
Tailoring Rule (e.g., a major source determination for Title V purposes 
or a major modification determination for PSD purposes).
    EPA also wishes to clarify that we did not propose and this rule 
does not require that a PSD permit issued during the deferral period be 
amended or that any PSD requirements in a PSD permit existing at the 
time the deferral takes effect, such as BACT limitations, be revised or 
removed from an effective PSD permit for any reason related to the 
deferral or when the deferral period expires.
    Section 52.21(w) requires that any PSD permit shall remain in 
effect, unless and until it expires or it is rescinded, under the 
limited conditions specified in that provision. Also note that we did 
not specifically propose or make final any change to these rescission 
provisions, nor were they addressed to any extent in the proposal. 
Thus, a PSD permit that is issued to a source while the deferral was 
effective need not be reopened or amended if the source is no longer 
eligible to exclude its biogenic CO2 emissions from PSD 
applicability after the deferral expires. However, if such a source 
undertakes a modification that could potentially require a PSD permit 
and the source is not eligible to continue excluding its biogenic 
CO2 emissions after the deferral expires, the source will 
need to consider its biogenic CO2 emissions in assessing 
whether it needs a PSD permit to authorize the modification. With 
respect to Title V, a source that becomes a major source subject to an 
approved Title V permit program as a result of biogenic emissions after 
the deferral expires would generally have one year from the date the 
source became subject to Title V to apply for an operating permit.
    Any future actions to modify, shorten, or make permanent the 
deferral for biogenic sources are beyond the scope of this action and 
will be addressed through subsequent rulemaking, based on the 
scientific study and development of an accounting framework described 
elsewhere in this preamble. At this time, the results of EPA's review 
of the science related to net atmospheric impacts of biogenic 
CO2 and the framework to properly account for such emissions 
in Title V and PSD permitting programs based on the study are 
prospective and unknown. Thus, we are unable to predict which biogenic 
CO2 sources, if any, currently subject to the deferral would 
be subject to any permanent exemptions or which currently deferred 
sources would be potentially required to account for their emissions in 
the future rulemaking EPA has committed to undertake for such purposes 
in three or fewer years. Only in that rulemaking can EPA address the 
question of extending the deferral or putting in place requirements 
that would have the equivalent effect on sources covered by this 
deferral.
    To the extent the deferral is not effective in a particular state 
at the time a PSD permit is issued, then the permit would need to 
include BACT limitations for GHGs if the source emits above levels that 
make GHGs subject to regulation under applicable rules. EPA issued 
interim guidance entitled, ``Guidance for Determining Best Available 
Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy 
Production'' to help permitting authorities, during the interim period 
before the deferral is

[[Page 43500]]

effective, establish a basis for concluding that under PSD Programs the 
combustion of biomass fuels can be considered BACT for biogenic 
CO2 emissions at stationary sources. To be clear, this 
guidance would apply during the deferral period for those permitting 
authorities where the deferral was not effective until EPA revises it 
or it is superseded by future guidance or rules.

D. Mechanism for Deferral and State Implementation

    Consistent with the proposed rule, EPA is implementing the deferral 
by amending the definition of ``subject to regulation'' in its PSD and 
Title V regulations. The adoption of the deferral for biogenic 
CO2 emissions from Title V and PSD permitting programs under 
40 CFR part 70 and 40 CFR 51.166 is optional for any state, local, or 
tribal (state) permitting authority, but is effective immediately upon 
publication for Title V and PSD permitting programs under 40 CFR part 
71 and 40 CFR 52.21 that EPA implements.
    The proposal did not specifically require each state to revise its 
PSD and Title V permitting programs (required under parts 51.166 and 
70) to impose the deferral for three years, although it was clear that 
the proposal was intended to revise the permitting programs that EPA 
implements (required under parts 52.21 and part 71) for this purpose, 
and it was clear that EPA intended to implement the deferral by 
changing its implementing regulations. Many state commenters on the 
proposal seemed to assume that the deferral was mandatory for the 
states and questioned how they would revise their SIPs and Title V 
programs by July 1, 2011, as they read EPA's proposal to require.
    For the purposes of this final rule, EPA is clarifying that each 
state may decide if it wishes to adopt the deferral and proceed 
accordingly, with appropriate program changes, if needed. Also, EPA 
suggests that each state communicate with its stationary sources its 
intent in this regard. Because the deferral is not required, states 
that do not wish to revise their current permit programs do not need to 
make any program changes in response to this final rule. Also, states 
that do wish to adopt the deferral do not need to make any changes that 
would otherwise be necessary by July 1, 2011, the start of step 2 under 
the Tailoring Rule. Although the preamble for the proposal did discuss 
the beginning of step 2 of the Tailoring Rule as a time when more 
sources would be subject to permitting, because sources could be 
subject to Title V without a prerequisite that they also be subject to 
PSD and because they could be subject to PSD for GHGs without being 
subject first for another regulated NSR pollutant, it did not discuss 
any requirement for any state deferral to be effective by July 1, 2011, 
and we are not requiring this in this final rule.
    However, although state program changes are not required under 
today's final rule, EPA sees several reasons that a state should adopt 
the deferral in its state programs and, based on comments received, EPA 
expects that many states will adopt the deferral. Many of these reasons 
are the same reasons prompting EPA to adopt the deferral for the permit 
programs we implement. That is, states that expect to receive permit 
applications from a number of biomass facilities, and, in particular, a 
number of different types of biomass facilities, are likely to need 
more time to determine how best to address technical, scientific, and 
practical issues related to biogenic CO2 without disrupting 
the proper functioning and timeliness of the permitting programs. Of 
course, it is at least in theory possible that such a state may, on its 
own, be able to address those issues, or may for other reasons have 
adequate resources to address those issues. Even so, we expect that 
many states will need to, and therefore should, adopt the deferral, and 
therefore, like the proposal, this final rule strongly encourages 
states that wish to adopt the three-year deferral to submit SIP 
revisions or Title V program revisions. However, like the proposal, 
this final rule does not mandate such submittals, recognizing that some 
states may not have any (or may have only a few) sources that combust 
biomass, and may have adequate information and resources regarding the 
nature of biogenic emissions from those sources, or may for other 
reasons be able to conduct permitting of bioenergy sources without 
straining their permitting resources.
    Furthermore, the justification that supports this deferral for 
including biogenic CO2 in PSD applicability determinations 
is not applicable in the case of a PSD permit that was issued before 
completion of this rule during step 1 of the phase in of GHG 
requirements under the Tailoring Rule. If a permit has been issued, 
then the burden described above has already been experienced and 
overcome by the permitting authority. Furthermore, this burden will 
have been experienced in the context of step 1 of the GHG permitting 
phase under the Tailoring Rule, and thus was easier to accommodate as 
part of the more limited increase in workload that permitting 
authorities have faced in addressing GHG requirements during step 1. In 
the context of step 2 where permitting authorities will have to process 
a greater number of permit applications, the incremental burden of 
evaluating the net atmospheric impacts of biogenic CO2 has a 
more significant impact on the ability of permitting authorities to 
administer the permitting programs. This analysis adds a burden that 
EPA had not considered when it completed the Tailoring Rule.
    EPA also issued interim guidance entitled, ``Guidance for 
Determining Best Available Control Technology for Reducing Carbon 
Dioxide Emissions from Bioenergy Production'' to help permitting 
authorities establish a basis for concluding that under the PSD Program 
the combustion of biomass fuels can be considered BACT for biogenic 
CO2 emissions at stationary sources until such time as the 
deferral becomes effective. EPA wishes to clarify that the guidance is 
non-binding and case-by-case BACT determinations made in accordance 
with the guidance may nonetheless be subject to challenge in each 
permitting action. Accordingly, the interim guidance does not provide 
the same level of certainty to sources and decrease in administrative 
burdens to permitting authorities and sources that the deferral does.
    EPA developed the interim BACT guidance primarily for application 
during step 1 of the phase of GHG permitting requirements under the 
Tailoring Rule. While the guidance suggests reasoning that may serve to 
reduce the resource demands of conducting a net carbon cycle analysis 
in the context of permitting, it does not eliminate the need for 
permitting authorities to conduct some evaluation of energy, 
environmental, and economic impacts in step 4 of the BACT analysis. The 
guidance discusses the complexities of conducting a net carbon cycle 
analysis, but places the emphasis on showing the economic and energy 
benefits of utilizing biomass. Permitting authorities that apply this 
approach still need to identify the specific energy and economic 
benefits of utilizing particular biomass feedstocks to apply this 
rationale. To the extent these benefits cannot be identified or shown 
to override other considerations, a permitting authority may need to 
explore the net carbon cycle impact in more depth to justify the 
conclusion that utilization of a biomass feedstock is BACT by itself. 
In states that do not elect to adopt the deferral, the incremental 
burden of conducting the analysis described in the guidance will have a 
more significant impact on the

[[Page 43501]]

overall ability to administrate the permitting program in the context 
of step 2 of the GHG permitting than it did in step 1, in which the 
overall increase in workload from incorporating GHG requirements into 
PSD permit reviews was less than it will be in step 2.
    This deferral may not be effective in any jurisdiction before EPA 
publishes a final rule and it takes effect. Also, for any state that 
found it necessary to revise its permitting programs to implement the 
Final Tailoring Rule, EPA believes it unlikely that such a state would 
be able to implement the deferral under its state rules without making 
additional changes to its program consistent with the regulatory 
changes in this final rule. For any state that was able to implement 
the Final Tailoring Rule through interpretation of the term ``subject 
to regulation'', consistent with the Final Tailoring Rule, without 
making any changes to state regulations, EPA believes it is likely they 
would be able to implement the deferral under their state rules without 
making additional revisions. In either of these cases, EPA recommends 
that states communicate with the stationary sources under their 
jurisdiction regarding whether they intend to adopt the deferral, and 
if they do, when it will become effective.

III. Response to Public Comments

A. Overview of Public Comments

    We received a significant number of public comments on the proposed 
deferral. Some of these comments covered issues such as:

     Content of the Deferral (e.g., pollutants and sources 
covered, start and end date, terminology);
     Implementation of the Deferral; and
     Legal Authority.

While those comments addressed the deferral itself, a large number of 
the comments actually raised issues outside the scope of this 
rulemaking and covered topics such as:

     Science, accounting, and economic issues related to 
biogenic CO2 emissions (e.g., carbon cycle dynamics, 
accounting methodologies, forest economics and sustainability);
     PSD, Title V and the Tailoring Rule; and
     The Interim Guidance, ``Guidance For Determining Best 
Available Control Technology for Reducing Carbon Dioxide Emissions 
From Bioenergy Production'' (March 21, 2011).

    EPA acknowledges those comments that are outside the scope of this 
rulemaking and notes that many of the issues raised were similar, if 
not identical, to those presented in comments to the CFI last year. We 
will be considering those topics as part of the detailed examination of 
the science and technical issues associated with accounting for 
biogenic CO2 emissions from stationary sources. We also may 
consider the issues in any subsequent rulemakings we undertake related 
to the PSD, Title V and other stationary source programs. However, we 
do not respond to them in this rulemaking.
    The sections below contain a brief summary of the some of the major 
comments and responses we received on the proposal. Responses to the 
substantive comments can be found in the response to comments document 
entitled, ``Deferral for CO2 Emissions from Bioenergy and 
Other Biogenic Sources under the Prevention of Significant 
Deterioration (PSD) and Title V Programs, Summary of Public Comments 
and Responses,'' available in docket EPA-HQ-OAR-2011-0083.

B. Comments on the Deferral

    We received comments on different aspects of the deferral. They fit 
into several broad categories as discussed below.
    Terminology. We received several comments requesting clarity on the 
terminology in the deferral, including the terms biogenic 
CO2 emissions, biologically-based material and examples of 
the types of sources that these emissions can come from. As discussed 
in section II, we finalized the terms biogenic CO2 emissions 
(described as, emissions of CO2 from a stationary source 
directly resulting from the combustion or decomposition of 
biologically-based materials other than fossil fuels and mineral 
sources of carbon (e.g. calcium carbonate)) and biologically-based 
material (non-fossilized and biodegradable organic material originating 
from plants, animals or micro-organisms [including products, by-
products, residues and waste from agriculture, forestry and related 
industries as well as the non-fossilized and biodegradable organic 
fractions of industrial and municipal wastes, including gases and 
liquids recovered from the decomposition of non-fossilized and 
biodegradable organic material]) with very little change. We added the 
clause about ``mineral sources'' of carbon to biogenic CO2 
emissions in response to requests for additional clarification on which 
sources of CO2 were not included in the deferral. We also 
clarified that in the examples of sources of biogenic CO2 
emissions, CO2 from fermentation includes CO2 
from ethanol production as well as other industrial processes.
    Pollutants. We received comments on which pollutants are covered by 
the deferral, particularly methane (CH4) and nitrous oxide 
(N2O). A few comments requested that CH4 and 
N2O also be included in the deferral as they result when 
biomass is combusted. While CH4 and N2O are 
produced when biomass is combusted, the level of emissions and 
resulting impact on atmospheric concentrations of these gases are 
primarily related to the feedstock handling and combustion conditions 
at the specific plant rather than the source of the feedstocks. We 
finalized this rule as proposed and included only biogenic 
CO2 emissions for this reason, and note that emissions of 
non-CO2 GHGs are typically a small proportion of the total 
GHG emissions from combustion of biologically based material. Since the 
non-CO2 GHGs are so small relative to CO2, the 
deferral of biogenic CO2 emissions will ensure the biomass 
combustion projects will likely not meet the applicability thresholds 
based on their CH4 and N2O emissions alone.
    Duration. We received several comments on the duration of the 
deferral, including its start date and end date. Specifically, several 
comments recommended that EPA remove the three-year sunset date and 
make the deferral permanent until the Agency completes its study and 
takes further action. Others concluded EPA does not need three years to 
complete its work and should shorten the deferral.
    EPA is conducting a detailed examination of the science and 
technical issues associated with biogenic CO2 emissions and 
is developing an accounting framework. Once that work is complete, the 
Agency intends to undertake a notice-and-comment rulemaking to 
establish the treatment of these emissions in the PSD and Title V 
programs. We have determined that three years will be required to 
complete the scientific work as well as the follow-on rulemaking. As 
stated in section II of this preamble, the deferral is intended to be a 
temporary measure to allow the Agency time to complete its work and 
determine what, if any, treatment of biogenic CO2 emissions 
should be in the PSD and Title V programs. Therefore, we did not agree 
to make the deferral permanent or to shorten it.
    Sources covered by and permitted during the deferral. We received 
several comments requesting clarity on which sources of biogenic 
CO2 emissions were covered by the deferral. This is related 
to the comments on definitions described above, and we provided clarity 
on those sources, where necessary. We also received several comments on 
the application of the PSD and Title V programs during the

[[Page 43502]]

deferral, including the availability of grandfathering or a permitting 
moratorium for sources subject to the deferral and on the availability 
of authority to revise BACT.
    The final rule is an interim deferral for biogenic CO2 
emissions only and does not relieve sources of the obligation to meet 
the PSD and Title V permitting requirements for other pollutant 
emissions that are otherwise applicable to the source during the 
deferral period or that may be applicable to the source at a future 
date pending the results of EPA's study and subsequent rulemaking 
action. At this time, we are unable to predict which biogenic 
CO2 sources, if any, currently subject to the deferral would 
be subject to any permanent exemptions or which currently deferred 
sources would be potentially required to account for their emissions in 
relation to future permitting actions as a result of the future 
rulemaking EPA has committed to undertake for such purposes in three or 
fewer years. Only in that rulemaking can EPA address the question of 
extending the deferral or putting in place requirements that would have 
the equivalent effect on sources covered by this deferral.
    This means, for example, that if the deferral is applicable to 
biogenic CO2 emissions from a particular source during the 
three-year effective period and the study and future rulemaking do not 
provide for a permanent exemption from the PSD and Title V permitting 
requirements for the biogenic CO2 emissions from a source 
with particular characteristics, then the deferral would end for that 
source and those biogenic CO2 emissions would have to be 
appropriately considered in any applicability determinations that the 
source may need to conduct for future stationary source permitting 
purposes, consistent with that subsequent rulemaking and the Final 
Tailoring Rule (e.g., a major source determination for Title V purposes 
or a major modification determination for PSD purposes).
    Many commenters on the proposed deferral asked EPA to provide 
grandfathering from permitting requirements for sources that are 
currently not subject to permitting requirements but that in the future 
may be covered by the deferral. In addition, some commenters asked for 
the deferral to be made retroactively effective (e.g., during step 1 of 
the Tailoring Rule or January 1, 2011 through June 30, 2011) in states 
prior to state adoption of any SIP revision or Title V program change 
that may be necessary to revise the programs to incorporate the 
deferral, or that the deferral permanently apply to any source subject 
to it at any time.
    As explained in section II.C of this preamble, EPA has decided to 
not offer any kind of grandfathering or moratorium on future Title V 
and PSD permitting for biogenic CO2 sources subject to the 
three-year deferral.
    EPA wishes to clarify that we did not propose and this rule does 
not require that a PSD permit issued during the deferral period be 
amended or that any PSD requirements in a PSD permit existing at the 
time the deferral takes effect, such as BACT limitations, be revised or 
removed from an effective PSD permit for any reason related to the 
deferral or when the deferral period expires.
    Section 52.21(w) requires that any PSD permit shall remain in 
effect, unless and until it expires or it is rescinded, under the 
limited conditions specified in that provision. To the extent the 
deferral is not effective in a particular state at the time a PSD 
permit is issued, then the permit would need to include BACT 
limitations for GHGs if the source emits above levels that make GHGs 
subject to regulation under applicable rules.
    Thus, a PSD permit that is issued to a source while the deferral 
was effective need not be reopened or amended if the source is no 
longer eligible to exclude its biogenic CO2 emissions from 
PSD applicability after the deferral expires. However, if such a source 
undertakes a modification that could potentially require a PSD permit 
and the source is not eligible to continue excluding its biogenic 
CO2 emissions after the deferral expires, the source will 
need to consider its biogenic CO2 emissions in assessing 
whether it needs a PSD permit to authorize the modification.
    Any future actions to modify, shorten, or make permanent the 
deferral for biogenic sources are beyond the scope of this action and 
will be addressed through subsequent rulemaking, based on the 
scientific study and development of an accounting framework described 
elsewhere in this preamble.
    Implementation of the Deferral. We received comments suggesting 
that adoption of the deferral must be mandatory for states, as well as 
comments saying that the states should have flexibility regarding 
adoption of the deferral. As explained in section II. D of this 
preamble, EPA is not making adoption of this deferral mandatory. Each 
state may decide if it wishes to adopt the deferral and proceed 
accordingly, with appropriate program changes, if needed. Based on the 
comments received, we recognize that some states may not have any, or 
may have only a few, sources that combust biomass, and may have 
adequate information and resources as to the nature of biogenic 
emissions from those sources. That said, EPA recommends that each state 
communicate with its stationary sources its intent in this regard and 
utilize the interim guidance document as appropriate.
    Even though adoption of the deferral is not mandatory, EPA sees 
several reasons why a state might want to adopt the deferral in its 
state programs and many of these reasons are the same reasons why EPA 
is adopting the deferral for the permit programs we implement (e.g., 
the need for more time to determine how to address technical, 
scientific, and practical issues related to biogenic CO2 
without disrupting the proper functioning and timeliness of the 
permitting programs).
    However, although state program changes are not required under 
today's final rule, EPA sees several reasons that a state might want to 
adopt the deferral in its state programs; many of these reasons are the 
same reasons prompting EPA to adopt the deferral for the permit 
programs we implement (e.g., the need for more time to determine how 
best to address technical, scientific, and practical issues related to 
biogenic CO2 without disrupting the proper functioning and 
timeliness of the permitting programs). Also, like the proposal, this 
final rule strongly encourages states that wish to adopt the three-year 
deferral to submit SIP revisions or Title V program revisions, but does 
not mandate such submittals, recognizing that some states may not have 
any (or may have only a few) sources that combust biomass, and may have 
adequate information and resources regarding the nature of biogenic 
emissions from those sources.
    Furthermore, the justification that supports this deferral for 
including biogenic CO2 in PSD applicability determinations 
is not applicable in the case of a PSD permit that was issued before 
completion of this rule during step 1 of the phase-in of GHG 
requirements under the Tailoring Rule. If a permit has been issued, 
then the burden described above has already been experienced and 
overcome by the permitting authority. Furthermore, this burden will 
have been experienced in the context of step 1 of the GHG permitting 
phase in under the Tailoring Rule, and thus was easier to accommodate 
as part of the more limited increase in workload that permitting 
authorities have faced in addressing GHG requirements during step 1. In 
the context of step 2 where permitting authorities will have to

[[Page 43503]]

process a greater number of permit applications, the incremental burden 
of evaluating the net atmospheric impacts of biogenic CO2 
has a more significant impact on the ability of permitting authorities 
to administer the permitting programs. This analysis adds a burden that 
EPA had not considered when it completed the Tailoring Rule.
    As explained in section II.C of the preamble, EPA also issued 
interim guidance entitled, ``Guidance for Determining Best Available 
Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy 
Production'' to help permitting authorities establish a basis for 
concluding that under PSD Program the combustion of biomass fuels can 
be considered BACT for biogenic CO2 emissions at stationary 
sources until such time as the deferral becomes effective. This 
guidance may continue to assist permitting authorities where the 
deferral is not effective during the deferral period until EPA revises 
it or it is superseded by future guidance or rules. It should be noted 
that the guidance is non-binding, and case-by-case BACT determinations 
made in accordance with the guidance may nonetheless be subject to 
challenge in each permitting action. Accordingly, the interim guidance 
does not provide the same level of certainty to sources and decrease in 
administrative burdens to permitting authorities and sources that the 
deferral does.
    EPA developed the interim BACT guidance primarily for application 
during step 1 of the phase-in of GHG permitting requirements under the 
Tailoring Rule. While the guidance suggests reasoning that may serve to 
reduce the resource demands of conducting a net carbon cycle analysis 
in the context of permitting, it does not eliminate the need for 
permitting authorities to conduct some evaluation of energy, 
environmental, and economic impacts in step 4 of the BACT analysis. The 
guidance discusses the complexities of conducting a net carbon cycle 
analysis, but places the emphasis on showing the economic and energy 
benefits of utilizing biomass. Permitting authorities that apply this 
approach still need to identify the specific energy and economic 
benefits of utilizing particular biomass feedstocks to apply this 
rationale. To the extent these benefits cannot be identified or shown 
to override other considerations, a permitting authority may need to 
explore the net carbon cycle impact in more depth to justify the 
conclusion that utilization of a biomass feedstock is BACT by itself. 
In states that do not elect to adopt the deferral, the incremental 
burden of conducting the analysis described in the guidance will have a 
more significant impact on the overall ability to administrate the 
permitting program in the context of step 2 of the GHG permitting than 
it did in step 1, where the overall increase in workload from 
incorporating GHG requirements into PSD permit reviews was less than it 
will be in step 2.
    Legal Authority. We received several comments on EPA's legal 
authority to issue the deferral. A number of commenters expressed the 
view that EPA lacked the scientific basis to defer the applicability of 
PSD and Title V permitting requirements to biogenic emissions of 
CO2.
    A number of commenters argued that EPA had not demonstrated that 
the deferral was necessary to avoid administrative burden or 
impossibility, and that the science surrounding CO2 
emissions from biogenic sources and their role in the carbon cycle is 
settled enough to show that use of some or all biogenic feedstocks and 
emissions do have an impact on net atmospheric concentrations of 
CO2, or are not de minimis; therefore, these commenters 
argued that such emissions should be regulated under the PSD and Title 
V permitting programs.
    EPA disagrees with the commenters' characterization of the state of 
the science and administrative burdens facing permitting agencies and 
sources to account for biogenic sources of CO2 emissions as 
part of permitting actions. EPA notes that it also received a number of 
comments expressing the opposing view that a permanent deferral or 
exclusion was necessary because biogenic emissions of CO2 do 
not have an impact on atmospheric concentrations of CO2, or 
that use of certain categories of feedstock do not have such an impact. 
EPA also received comments from a number of permitting authorities and 
sources expressing the view that the science surrounding the accounting 
of net atmospheric CO2 emissions from biogenic sources, 
given the carbon cycle, warranted further study and development of an 
accounting framework to assist them with their permitting actions.
    EPA believes this diversity of views reflects the complexity of the 
science associated with accounting for biogenic CO2 
emissions as part of the PSD and Title V permitting programs. EPA 
agrees, based on information currently before the Agency, including 
information provided in response to the CFI and the proposal for this 
rule, that emissions from certain biomass feedstocks may have a 
negligible effect on atmospheric concentrations of CO2, but 
also believes based on the complexity of this evidence that the 
deferral to allow for further study is warranted. In addition, EPA is 
conducting an independent peer review by the Science Advisory Board of 
the science and accounting framework associated with biogenic 
CO2 emissions, which will benefit permitting authorities.
    While the interim BACT guidance described elsewhere in the preamble 
may help alleviate some of this uncertainty and burden for permitting 
authorities where the deferral is not effective, we expect that more 
and more diverse users of biomass combustion or other biogenic 
CO2 sources are likely to be affected under step 2 of the 
Tailoring Rule because, under step 2, these sources can trigger 
permitting requirements based solely on their GHG emissions with no 
prerequisite requirement that they otherwise trigger PSD or Title V 
permitting requirements for a non-GHG pollutant. We believe, absent the 
deferral period and the completion of EPA's full analysis of the unique 
technical issues associated with these diverse facilities emitting 
biogenic CO2, it would be particularly challenging for 
permitting authorities and facilities to process permits involving 
these emissions.
    A number of commenters challenged EPA's authority to amend the 
regulatory definition of ``subject to regulation'' to exclude biogenic 
sources of CO2 from regulation for three years under the 
administrative law doctrines and rationale articulated in the Tailoring 
Rule and elsewhere in this preamble. A number of commenters also 
expressed the view that the deferral would lead to significant 
development of the biomass industry during the deferral period and a 
permanent exclusion for these sources, in contradiction to the CAA's 
goal of protecting air quality.
    EPA disagrees with these commenters' characterization of the legal 
authority and rationale in support of this interim deferral. As 
described in Section II.B. of this preamble, this interim deferral is 
intended only to temporarily exclude biogenic CO2 emissions 
from the definition of ``subject to regulation,'' as that term was 
defined for purposes of the Tailoring Rule, for a period of three 
years, while EPA further considers, through notice and comment 
rulemaking, the approach to accounting for these emissions on a 
permanent basis. In response to commenters who speculate about the 
likelihood of significant development of the biomass industry or 
increases in the number of sources emitting biogenic CO2 
during the deferral period, EPA

[[Page 43504]]

notes that a decision to move forward with development of a facility is 
based on many economic and business factors, not just permitting 
requirements, that are beyond the scope of this final action.
    This interim deferral represents a permissible application of well-
established administrative law doctrines, necessitated by the 
scientific uncertainty surrounding the accounting of biogenic 
CO2 emissions, to develop a regulatory scheme that 
implements the CAA consistent with congressional intent in a step-wise 
fashion designed to minimize administrative burdens and avoid premature 
regulation of sources of air pollution whose biogenic CO2 
emissions could be shown to have de minimis impacts on a net carbon 
cycle basis after EPA completes further analysis. EPA notes that the 
issue of subsequent applicability of the PSD and Title V programs to 
facilities that may be permitted during the deferral period is 
addressed in sections II.C.
    EPA's establishment of this deferral is permissible and, based upon 
the information currently before the Agency, narrowly tailored to 
effectuate congressional intent. It appears that the potential may 
exist for EPA to determine that some other types of biomass feedstocks 
would have a negligible impact on the net carbon cycle impact after 
further detailed examination of the science associated with biogenic 
CO2 emissions. Thus, if EPA were to require all bioenergy 
facilities to limit emissions of biogenic CO2 before this 
assessment is complete, it may later determine that such emissions have 
trivial impact on the net carbon cycle. To avoid this outcome, and 
because of the administrative burdens associated with accounting for 
net biogenic CO2 emissions relative to the carbon cycle, EPA 
believes an initial deferral of the PSD requirements for bioenergy and 
other biogenic sources to allow for subsequent, phased-in regulations 
is justified at this time. However, the possibility also remains that 
EPA's detailed examination of the science of biogenic CO2 
will demonstrate that the utilization of some biomass feedstocks for 
bioenergy production will have a significant impact on the net carbon 
cycle, making application of the PSD program requirements to such 
emissions necessary to fulfill congressional intent.
    The extensive workload requirements required to understand the net 
biogenic CO2 emissions from bioenergy facilities and other 
sources of biogenic CO2 emissions, as part of the PSD and 
Title V permit process, including specifically how to measure and 
account for biogenic CO2 emissions, would unnecessarily 
strain the resources of many permitting authorities and result in 
delays in processing permits for other applicants. Moreover, at 
present, devoting these limited permitting authority resources to 
biomass would not be productive in light of the previously described 
possibility that EPA may ultimately determine that the utilization of 
some or all biomass feedstocks for bioenergy has a negligible or de 
minimis impact on the net carbon cycle.
    EPA received a comment arguing that the deferral was also supported 
under the ``one-step-at-a-time'' doctrine, which authorizes agencies to 
implement statutory requirements a step at a time. EPA also relied, in 
part, on this doctrine in finalizing the Tailoring Rule. 75 FR 31514, 
31578 (June 3, 2010).
    In the proposed rule, EPA stated in footnote 13 that the ``one-
step-at-a-time'' doctrine was not relevant to this rulemaking. This 
statement was made without explanation. The commenter stated ``[b]ased 
on EPA's statements in the Tailoring Rule, which does rely on the `one-
step-at-a-time' doctrine, it appears that the doctrine would apply 
equally well to EPA's decision to delay regulation of biogenic 
CO2 emissions under the PSD and Title V programs.'' As 
explained in more detail elsewhere in the preamble, EPA now agrees that 
because of the complexity and uncertainty of the science associated 
with accounting for biogenic sources of CO2 that the interim 
deferral of the PSD and Title V program for such emissions would be a 
reasonable exercise of the ``one-step-at-a-time'' doctrine.
    This rulemaking constitutes an initial step toward full compliance, 
and, seen in that light, is supported by the ``one-step-at-a-time'' 
doctrine. Even if the doctrine were found to apply only when an agency 
is committed to fully implementing statutory requirements according to 
their literal terms, we believe that the interim deferral promulgated 
in this final rule would be considered valid under the one-step-at-a-
time doctrine.
    EPA received a number of comments in favor of expanding the 
deferral to CO2e or other GHGs, not just CO2. EPA 
disagrees with the commenters seeking expansion of the deferral to 
CO2e. As explained elsewhere in the preamble, while 
CH4 and N2O are produced when biomass is 
combusted, the level of emissions and resulting impact on atmospheric 
concentrations of these gases are primarily related to the feedstock 
handling and combustion conditions at the specific plant rather than 
the source of the feedstocks. We finalized this rule as proposed and 
included only biogenic CO2 emissions for this reason, and 
note that emissions of non-CO2 GHG are typically a small 
proportion of the total GHG emissions from combustion of biologically 
based material. Since the non-CO2 GHG are so small relative 
to CO2, the deferral of biogenic CO2 emissions 
will ensure the biomass combustion projects will likely not meet the 
applicability thresholds on their CH4 and N2O 
emissions alone. Subsequent regulations to establish treatment of 
specific sources of biogenic emissions under the PSD and Title V 
programs are beyond the scope of this action.

C. Comments on Science, Accounting, and Economic Issues

    As noted above, we received a large number of comments that 
provided the same or similar information to the comments received 
through the CFI last year. Those comments are summarized briefly below 
and also contained in the response to comments document. While we did 
not respond to these comments as they are outside the scope of this 
rulemaking, we will consider many of them during our ongoing work on 
biogenic CO2 emissions.
    Carbon cycle dynamics. We received several comments on the net 
atmospheric impact of biomass. Some commenters supported the conclusion 
that biomass has zero net atmospheric impact based on the premise that 
biomass is part of the natural carbon cycle and does not add additional 
carbon to the atmosphere. Conversely, other commenters supported the 
conclusion that biomass combustion increases the atmospheric carbon 
load. Issues raised by commenters, including the time delays between 
sequestration from and release to the atmosphere, differences between 
feedstocks, influences of different spatial scale, and differences in 
combustion efficiencies, are important in the development of accounting 
methodologies and will be considered during the scientific review that 
will take place during the three-year deferral period. EPA will 
consider such issues in order to account for biogenic CO2 
emissions from stationary sources in ways that are scientifically sound 
and manageable in practice.
    Accounting methodologies used by other programs. We received 
several comments discussing the accounting methodologies used in 
international, U.S. government (including U.S. EPA) and state 
regulatory and policy programs. The accounting approaches taken by 
other programs, including other EPA programs, will be considered in 
EPA's detailed examination of the scientific and technical issues 
related to

[[Page 43505]]

biogenic CO2 emissions and any subsequent rulemakings we 
undertake during the deferral period.
    Components of accounting methodologies. We received several 
comments highlighting the challenges associated with different 
components of biogenic CO2 emissions accounting 
methodologies, including using ``business-as-usual'' (BAU) projections, 
employing case-by-case analyses and considering a feedstock-based 
accounting approach. EPA will consider these topics in our review of 
the scientific and technical issues related to accounting for biogenic 
CO2 emissions, as well as in the subsequent rulemaking to 
establish the treatment of these emissions in the PSD and Title V 
programs.
    Forest economics and sustainability. We received some comments 
supporting forest biomass as an energy feedstock and discussing the 
role of bioenergy markets in sustaining forest conservation. EPA thanks 
the commenters for these comments and considers these views beyond the 
scope of this deferral action.

D. Comments on PSD, Title V and the Tailoring Rule

    We received some comments on the PSD and Title V programs and how 
they relate to the Tailoring Rule, including comments about the need to 
adjust the thresholds for GHG applicability, facilities that should or 
should not be covered, and the ultimate treatment of biogenic 
CO2 in these programs. These comments are contained in the 
response to comments document. The dates, thresholds and other 
requirements established in the Tailoring Rule are not a subject of 
this rulemaking and thus these comments are outside the scope of this 
action.

E. Comments on the Interim Guidance

    We received some comments on the interim guidance document released 
in March 2011 designed to help permitting authorities establish a basis 
for concluding that under PSD and Title V Programs the combustion of 
biomass fuels can be considered BACT for biogenic CO2 
emissions at stationary sources before the deferral becomes effective. 
These comments are contained in the response to comments document and 
are briefly summarized below. While these comments are outside the 
scope of this rulemaking, we will likely be considering many of them 
during our ongoing work on biogenic CO2 emissions.
    Some commenters asserted that biogenic fuels should not be 
considered BACT for controlling biogenic CO2 emissions at 
energy projects, while others supported the inclusion of biogenic fuels 
as BACT in the interim guidance. As stated in the March 2011 interim 
guidance document, EPA has not provided a final determination of BACT 
for any particular source, since such determinations can only be made 
by individual permitting authorities on a case-by-case basis after 
consideration of the record in each case. Upon consideration of the 
record in an individual case, if a permitting authority has a reasoned 
basis to address particular issues in a different manner than EPA 
recommends in the bioenergy BACT guidance, they have the discretion to 
do so. EPA is granting the deferral of biogenic CO2 
emissions from stationary source permitting requirements because the 
issue of accounting for the net atmospheric impact of biogenic 
CO2 emissions is complex enough that further consideration 
of this important issue is warranted.

IV. Statutory and Executive Order Review

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is 
therefore not subject to review under Executive Orders 12866 and 13563 
(76 FR 3821, January 21, 2011).

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
Instead, this action will reduce costs incurred by any facility with 
biogenic CO2 emissions, as well as permitting authorities, 
relative to the costs that would be incurred if EPA did not revise the 
rule.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB has previously approved the 
information collection requirements contained in the existing 
regulations for PSD (see, e.g., 40 CFR 52.21) and Title V (see 40 CFR 
parts 70 and 71) under the provisions of the Paperwork Reduction Act, 
44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0003 
and OMB control number 2060-0336. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute, unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this action on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's regulations at 13 CFR 121.201; 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise that is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of this final action on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    We believe that this final rule will relieve the necessary analysis 
and corresponding workload requirements for most affected facilities, 
including small businesses, subject to the PSD and Title V programs. As 
a result, the program changes provided in this rule are not expected to 
result in a significant economic impact on a substantial number of 
small entities. In addition, EPA determined that the final rulemaking 
would not have a significant impact on small governmental 
jurisdictions. The EPA has therefore concluded that this final action 
will not have a significant economic impact on a substantial number of 
small entities.

[[Page 43506]]

D. Unfunded Mandates Reform Act (UMRA)

    This final rule does not contain a Federal mandate that may result 
in expenditures of $100 million or more for state, local, and tribal 
governments, in the aggregate, or the private sector in any one year. 
Only those few states whose permitting authorities do not implement the 
Federal PSD and Title V rules by reference in their SIPs will have a 
small increase in burden. If those states choose to adopt this 
deferral, they will have to amend their corresponding SIPs to 
incorporate the amendments from today's action, as the deferral that we 
finalized will not otherwise apply to the PSD and Title V programs. 
Thus, this rule is not subject to the requirements of sections 202 or 
205 of the UMRA.
    This rule is also not subject to the requirements of section 203 of 
UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. As discussed 
earlier, this rule is expected to result in an administrative burden 
reduction for all affected permitting authorities and permittees, 
including small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in EO 13132. These amendments will simplify and reduce the 
burden of implementing the PSD and Title V operating permit programs, 
by deferral of PSD and Title V application requirements to biogenic 
CO2 emissions at a facility. Thus, EO 13132 does not apply 
to this action.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.''
    The EPA has concluded that this final rule may have Tribal 
implications. However, it will neither impose substantial direct 
compliance costs on Tribal government, nor preempt Tribal law. There 
are no Tribal authorities currently issuing PSD and Title V permits; 
however, this may change in the future.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 
1997) as applying only to those regulatory actions that concern health 
or safety risks, such that the analysis required under section 5-501 of 
the EO has the potential to influence the regulation. This action is 
not subject to Executive Order 13045 because it does not establish an 
environmental standard intended to mitigate health or safety risks.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not a ``significant energy action'' as defined in EO 
13211 (66 FR 28355, May 22, 2001) because it is not likely to have a 
significant adverse effect on the supply, distribution, or use of 
energy. Further, we have concluded that this rule is not likely to have 
any adverse energy effects because this action would not create any new 
requirements for sources in the energy supply, distribution, or use 
sectors.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113 (15 U.S.C. 272 note) directs 
EPA to use voluntary consensus standards in its regulatory activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures, and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA is 
not considering the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the U.S.
    The EPA has determined that this rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment, as any impacts that it will have will be global in nature 
and will not affect local communities or populations in a manner that 
adversely affects the level of protection provided to human health or 
the environment.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 
generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to each House of the Congress and to the Comptroller 
General of the United States. EPA will submit a report containing this 
rule and other required information to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the U.S. prior to 
publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective on July 20, 2011.

List of Subjects

40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Incorporation by reference, Intergovernmental 
relations, Methane, Nitrous oxide.

40 CFR Part 52

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Incorporation by reference, Intergovernmental 
relations, Methane, Nitrous oxide.

40 CFR Part 70

    Environmental protection, Administrative practice and procedure,

[[Page 43507]]

Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

40 CFR Part 71

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon dioxide, Carbon dioxide equivalents, 
Greenhouse gases, Intergovernmental relations, Methane, Nitrous oxide.

    Dated: July 1, 2011.
Lisa P. Jackson,
Administrator.

    For the reasons stated in the preamble, Title 40, chapter I, of the 
Code of Federal Regulations is amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--[Amended]

0
2. Section 51.166 is amended by revising paragraph (b)(48)(ii)(a) to 
read as follows:

Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (48) * * *
    (ii) * * *
    (a) Multiplying the mass amount of emissions (tpy), for each of the 
six greenhouse gases in the pollutant GHGs, by the gas's associated 
global warming potential published at Table A-1 to subpart A of part 98 
of this chapter--Global Warming Potentials. For purposes of this 
paragraph (b)(48)(ii)(a), prior to July 21, 2014, the mass of the 
greenhouse gas carbon dioxide shall not include carbon dioxide 
emissions resulting from the combustion or decomposition of non-
fossilized and biodegradable organic material originating from plants, 
animals, or micro-organisms (including products, by-products, residues 
and waste from agriculture, forestry and related industries as well as 
the non-fossilized and biodegradable organic fractions of industrial 
and municipal wastes, including gases and liquids recovered from the 
decomposition of non-fossilized and biodegradable organic material).
* * * * *

PART 52--[AMENDED]

0
3. The authority citation for part 52 continues to read as follows:

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

Subpart A--[Amended]

0
4. Section 52.21 is amended by revising paragraph (b)(49)(ii)(a) to 
read as follows:

Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (49) * * *
    (ii) * * *
    (a) Multiplying the mass amount of emissions (tpy), for each of the 
six greenhouse gases in the pollutant GHGs, by the gas's associated 
global warming potential published at Table A-1 to subpart A of part 98 
of this chapter--Global Warming Potentials. For purposes of this 
paragraph, prior to July 21, 2014, the mass of the greenhouse gas 
carbon dioxide shall not include carbon dioxide emissions resulting 
from the combustion or decomposition of non-fossilized and 
biodegradable organic material originating from plants, animals, or 
micro-organisms (including products, by-products, residues and waste 
from agriculture, forestry and related industries as well as the non-
fossilized and biodegradable organic fractions of industrial and 
municipal wastes, including gases and liquids recovered from the 
decomposition of non-fossilized and biodegradable organic material).
* * * * *

PART 70--[AMENDED]

0
5. The authority citation for part 70 continues to read as follows:

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

0
6. Section 70.2 is amended by revising paragraph (2) of the definition 
of ``Subject to regulation'' to read as follows:

Sec.  70.2  Definitions.

* * * * *

Subject to Regulation

* * * * *
    (2) The term tpy CO2 equivalent emissions (CO2e) shall represent an 
amount of GHGs emitted, and shall be computed by multiplying the mass 
amount of emissions (tpy), for each of the six greenhouse gases in the 
pollutant GHGs, by the gas's associated global warming potential 
published at Table A-1 to subpart A of part 98 of this chapter--Global 
Warming Potentials, and summing the resultant value for each to compute 
a tpy CO2e. For purposes of this paragraph, prior to July 
21, 2014, the mass of the greenhouse gas carbon dioxide shall not 
include carbon dioxide emissions resulting from the combustion or 
decomposition of non-fossilized and biodegradable organic material 
originating from plants, animals, or micro-organisms (including 
products, by-products, residues and waste from agriculture, forestry 
and related industries as well as the non-fossilized and biodegradable 
organic fractions of industrial and municipal wastes, including gases 
and liquids recovered from the decomposition of non-fossilized and 
biodegradable organic material).
* * * * *

PART 71--[AMENDED]

0
7. The authority citation for part 71 continues to read as follows:

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

Subpart A--[Amended]

0
8. Section 71.2 is amended by revising paragraph (2) of the definition 
of ``Subject to regulation'' to read as follows:

Sec.  71.2  Definitions.

* * * * *

Subject to Regulation

* * * * *
    (2) The term tpy CO2 equivalent emissions (CO2e) shall 
represent an amount of GHGs emitted, and shall be computed by 
multiplying the mass amount of emissions (tpy), for each of the six 
greenhouse gases in the pollutant GHGs, by the gas's associated global 
warming potential published at Table A-1 to subpart A of part 98 of 
this chapter--Global Warming Potentials, and summing the resultant 
value for each to compute a tpy CO2e. For purposes of this 
paragraph, prior to July 21, 2014, the mass of the greenhouse gas 
carbon dioxide shall not include carbon dioxide emissions resulting 
from the combustion or decomposition of non-fossilized and 
biodegradable organic material originating from plants, animals, or 
micro-organisms (including products, by-products, residues and waste 
from agriculture, forestry and related industries as well as the non-
fossilized and biodegradable organic fractions of industrial and 
municipal wastes, including gases and liquids recovered from the 
decomposition of

[[Page 43508]]

non-fossilized and biodegradable organic material).
* * * * *
[FR Doc. 2011-17256 Filed 7-19-11; 8:45 am]
BILLING CODE 6560-50-P