Document ID: EPA-HQ-OAR-2009-0597-0001
Agency: epa
Document Type: Proposed Rule
Title: Prevention of Significant Deterioration (PSD): Reconsideration of Interpretation of Regulations that Determine Pollutants Covered by the Federal PSD Permit Program
Posted Date: 2009-10-07T04:00Z

[Federal Register: October 7, 2009 (Volume 74, Number 193)]
[Proposed Rules]               
[Page 51535-51549]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc09-24]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-HQ-OAR-2009-0597; FRL-8966-6]
RIN 2060 AP87

 
Prevention of Significant Deterioration (PSD): Reconsideration of 
Interpretation of Regulations That Determine Pollutants Covered by the 
Federal PSD Permit Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; reconsideration.

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SUMMARY: In a December 18, 2008 memorandum, EPA established an 
interpretation of the regulatory phrase ``subject to regulation'' that 
is applied to determine the pollutants subject to the federal 
Prevention of Significant Deterioration (PSD) program under the Clean 
Air Act (CAA or Act). On February 17, 2009, the EPA Administrator 
granted a petition for reconsideration of the regulatory interpretation 
in the memorandum. However, the Administrator did not grant a request 
to stay the memorandum, so the interpretation remains in effect for the 
federal PSD program pending completion of this reconsideration action. 
This document implements the grant of reconsideration by discussing and 
requesting public comment on various interpretations of the regulatory 
phrase ``subject to regulation.'' The interpretations discussed in this 
document include our current and preferred interpretation, which would 
make PSD applicable to a pollutant on the basis of an EPA regulation 
requiring actual control of emissions of a pollutant, as well as 
interpretations that would make PSD applicable to a pollutant on the 
basis of an EPA regulation requiring monitoring or reporting of 
emissions of a pollutant, the inclusion of regulatory requirements for 
specific pollutants in an EPA-approved state implementation plan (SIP), 
an EPA finding of endangerment, and the grant of a section 209 waiver. 
This document also takes comments on related issues and other 
interpretations that could influence this reconsideration.

DATES: Comments. Comments must be received on or before December 7, 
2009.
    Public Hearing. If anyone contacts EPA requesting a public hearing 
by October 22, 2009, we will hold a public hearing approximately 30 
days after publication in the Federal Register.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-

[[Page 51536]]

OAR-2009-0597, by one of the following methods:
     http://www.regulations.gov: Follow the on-line 
instructions for submitting comments.
     E-mail: a-and-r-docket@epa.gov.
     Mail: Air and Radiation Docket and Information Center, 
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460.
     Hand Delivery: Environmental Protection Agency, EPA West 
Building, Room 3334, 1301 Constitution Ave., NW., Washington, DC. Such 
deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0597. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://
www.regulations.gov or e-mail. The http://www.regulations.gov Web Site 
is an ``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through http://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket, visit the EPA Docket Center homepage at http://www.epa.gov/
epahome/dockets.htm.
    Docket: The December 18, 2008 interpretive memorandum, the petition 
for reconsideration, and all other documents in the record for this 
reconsideration are in Docket ID. No. EPA-HQ-OAR-2009-0597. 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., 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 in 
http://www.regulations.gov or in hard copy at the Air and Radiation 
Docket and Information Center, EPA/DC, EPA West Building, Room 3334, 
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is 
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding 
legal holidays. The telephone number for the Public Reading Room is 
(202) 566-1744, and the telephone number for the Air and Radiation 
Docket and Information Center is (202) 566-1742.
    Public Hearing: If a hearing is held, it will be held at the U.S. 
Environmental Protection Agency, 1200 Pennsylvania Avenue, Washington, 
DC 20004.

FOR FURTHER INFORMATION CONTACT: Mr. David J. Svendsgaard, Air Quality 
Policy Division, Office of Air Quality Planning and Standards (C504-
03), U.S. Environmental Protection Agency, Research Triangle Park, NC 
27711; telephone number: (919) 541-2380; fax number: (919) 541-5509; e-
mail address svendsgaard.dave@epa.gov.
    To request a public hearing, please contact Ms. Pam Long, Air 
Quality Policy Division, Office of Air Quality Planning and Standards 
(C504-03), U.S. Environmental Protection Agency, Research Triangle 
Park, NC 27711; telephone number: (919) 541-0641; fax number: (919) 
541-5509; e-mail address: long.pam@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me?

    Entities affected by this rule include sources in all industry 
groups. Entities potentially affected by this rule also include states, 
local permitting authorities, and tribal authorities. The majority of 
categories and entities potentially affected by this action are 
expected to be in the following groups:

------------------------------------------------------------------------
             Industry group                          NAICS \a\
------------------------------------------------------------------------
Utilities (electric, natural gas, other   2211, 2212, 2213.
 systems).
Manufacturing (food, beverages, tobacco,  311, 312, 313, 314, 315, 316.
 textiles, leather).
Wood product, paper manufacturing.......  321, 322.
Petroleum and coal products               32411, 32412, 32419.
 manufacturing.
Chemical manufacturing..................  3251, 3252, 3253, 3254, 3255,
                                           3256, 3259.
Rubber product manufacturing............  3261, 3262.
Miscellaneous chemical products.........  32552, 32592, 32591, 325182,
                                           32551.
Nonmetallic mineral product               3271, 3272, 3273, 3274, 3279.
 manufacturing.
Primary and fabricated metal              3311, 3312, 3313, 3314, 3315,
 manufacturing.                            3321, 3322, 3323, 3324, 3325,
                                           3326, 3327, 3328, 3329.
Machinery manufacturing.................  3331, 3332, 3333, 3334, 3335,
                                           3336, 3339.
Computer and electronic products          3341, 3342, 3343, 3344, 3345,
 manufacturing.                            4446.
Electrical equipment, appliance, and      3351, 3352, 3353, 3359.
 component manufacturing.
Transportation equipment manufacturing..  3361, 3362, 3363, 3364, 3365,
                                           3366, 3366, 3369.
Furniture and related product             3371, 3372, 3379.
 manufacturing.
Miscellaneous manufacturing.............  3391, 3399.
Waste management and remediation........  5622, 5629.
Hospitals/Nursing and residential care    6221, 6231, 6232, 6233, 6239.
 facilities.
Personal and laundry services...........  8122, 8123.
Residential/private households..........  8141.
Non-Residential (Commercial)............  Not available. Codes only
                                           exist for private households,
                                           construction and leasing/
                                           sales industries.
------------------------------------------------------------------------
\a\ North American Industry Classification System.

[[Page 51537]]

B. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this proposal will also be available on the World Wide Web. Following 
signature by the EPA Administrator, a copy of this notice will be 
posted on the EPA's New Source Review (NSR) Web site, under Regulations 
& Standards, at http://www.epa.gov/nsr.

C. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through 
http://www.regulations.gov or e-mail. Clearly mark the part or all of 
the information that you claim to be CBI. For CBI information in a disk 
or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM 
as CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2. Send or deliver information 
identified as CBI only to the following address: Roberto Morales, OAQPS 
Document Control Officer (C404-02), U.S. EPA, Research Triangle Park, 
NC 27711, Attention Docket ID No. EPA-HQ-OAR-2009-0597.
    2. Tips for preparing your comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

D. How can I find information about a possible public hearing?

    People interested in presenting oral testimony or inquiring if a 
hearing is to be held should contact Ms. Pam Long, New Source Review 
Group, Air Quality Policy Division (C504-03), U.S. EPA, Research 
Triangle Park, NC 27711, telephone number (919) 541-0641. If a hearing 
is to be held, persons interested in presenting oral testimony should 
notify Ms. Long at least 2 days in advance of the public hearing. 
Persons interested in attending the public hearing should also contact 
Ms. Long to verify the time, date, and location of the hearing. The 
public hearing will provide interested parties the opportunity to 
present data, views, or arguments concerning these proposed rules.

E. How is the preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
    C. What should I consider as I prepare my comments for EPA?
    D. How can I find information about a possible public hearing?
    E. How is the preamble organized?
II. Background
III. This Action
    A. Overview
    B. Actual Control of Emissions
    C. Monitoring and Reporting Requirement
    D. EPA-Approved State Implementation Plan
    E. Finding of Endangerment
    F. Granting of Section 209 Waiver
    G. Timing of Regulation
    H. Other Issues
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations 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
V. Statutory Authority

II. Background

    On December 18, 2008, in order to address an ambiguity that existed 
in the federal PSD regulations, then-EPA Administrator Stephen Johnson 
issued a memorandum setting forth the official EPA interpretation 
regarding which pollutants were ``subject to regulation'' for the 
purposes of the federal PSD permitting program. Memorandum from Stephen 
Johnson, EPA Administrator, to EPA Regional Administrators, RE: EPA's 
Interpretation of Regulations that Determine Pollutants Covered by 
Federal Prevention of Significant Deterioration (PSD) Permit Program 
(Dec. 18, 2008) (``PSD Interpretive Memo'' or ``Memo''); see also 73 FR 
80300 (Dec. 31, 2008) (public notice of Dec. 18, 2008 memo). The Memo 
was necessary after issues were raised regarding the scope of 
pollutants that should be addressed in PSD permitting actions following 
the Supreme Court's April 2, 2007 decision in Massachusetts v. EPA, 549 
U.S. 497 (2007).
    In Massachusetts v. EPA, the Supreme Court held that greenhouse 
gases (GHGs), including carbon dioxide (CO2), are air 
pollutants under the CAA. The case arose from EPA's denial of a 
petition for rulemaking filed by more than a dozen environmental, 
renewable energy, and other organizations requesting that EPA control 
emissions of GHGs from new motor vehicles under section 202 of the CAA. 
The Court found that in accordance with CAA section 202(a), the 
Administrator was required to determine whether or not emissions of 
GHGs from new motor vehicles cause or contribute to air pollution which 
may reasonably be anticipated to endanger public health or welfare, or 
whether the science is too uncertain to make a reasoned decision.\1\
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    \1\ On April 17, 2009, the EPA Administrator took the first step 
in the CAA section 202 rulemaking process by proposing endangerment 
and cause or contribute findings for GHGs under the CAA. See 74 FR 
18886 (April 24, 2009). On September 15, 2009, the U.S. Department 
of Transportation Secretary and EPA Administrator jointly signed a 
proposed rule establishing a national program that would improve 
fuel economy and reduce GHGs from motor vehicles.
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    On August 30, 2007, EPA Region VIII issued a PSD permit to Deseret 
Power Electric Cooperative, authorizing it to construct a new waste-
coal-fired electric generating unit near its existing Bonanza Power 
Plant, in Bonanza, Utah. Final Air Pollution Control Prevention of 
Significant Deterioration (PSD) Permit to Construct, Permit No. PSD-OU-
0002-04.00, Deseret Power Electric Cooperative (Aug. 30, 2007). The 
Deseret PSD permit did not include best available control technology 
(BACT)

[[Page 51538]]

limits for CO2. In responding to comments received during 
the permitting process, the Region acknowledged the Massachusetts 
decision but found that decision alone did not require PSD permits to 
include limits on CO2 emissions. Region VIII explained that 
the requirement for PSD permits to contain BACT emissions limitations 
for each pollutant ``subject to regulation'' under the CAA, as found in 
the CAA section 165(a)(4) and 40 CFR 52.21(b)(12), did not apply to 
CO2 emissions because the Agency had historically 
interpreted the phrase ``subject to regulation'' to ``describe 
pollutants that are presently subject to a statutory or regulatory 
provision that requires actual control of emissions of that 
pollutant.'' Region VIII explained that EPA codified this approach by 
defining the term ``regulated NSR pollutant'' in 40 CFR 52.21(b)(50) 
and requiring BACT for ``each regulated NSR pollutant'' in 40 CFR 
52.21(j)(2). See Response to Public Comments on Draft Air Pollution 
Control Prevention of Significant Deterioration (PSD) Permit to 
Construct, Permit No. PSD-OU-0002-04.00 (Aug. 30, 2007) at 5-6.
    On November 13, 2008, the Environmental Appeals Board (EAB) issued 
a decision in a challenge to the Deseret PSD permitting decision. In re 
Deseret Power Electric Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13, 
2008) (``Deseret''). In briefs filed in that case, Region VIII and the 
EPA Office of Air and Radiation maintained the position that the Agency 
had a binding, historic interpretation of the phrase ``subject to 
regulation'' in the federal PSD regulations that required PSD permit 
limits to apply only to those pollutants already subject to actual 
control of emissions under other provisions of the CAA. Response of EPA 
Office of Air and Radiation and Region VIII to Briefs of Petitioner and 
Supporting Amici (filed March 21, 2008). Accordingly, these EPA offices 
argued that the regulations contained in 40 CFR Part 75, which require 
monitoring of CO2 at some sources, did not make 
CO2 subject to PSD regulation. The order and opinion issued 
by the EAB remanded the permit after finding that prior EPA actions 
were insufficient to establish a historic, binding interpretation that 
``subject to regulation'' for PSD purposes included only those 
pollutants subject to regulations that require actual control of 
emissions. However, the EAB also rejected arguments that the CAA 
compelled only one interpretation of the phrase ``subject to 
regulation'' and found ``no evidence of a Congressional intent to 
compel EPA to apply BACT to pollutants that are subject only to 
monitoring and reporting requirements.'' Thus, the Board remanded the 
permit to the Region to ``reconsider whether or not to impose a 
CO2 BACT limit in light of the `subject to regulation' 
definition under the CAA.'' The Board encouraged EPA to consider 
``addressing the interpretation of the phrase `subject to regulation 
under this Act' in the context of an action of nationwide scope, rather 
than through this specific permitting proceeding.'' See Deseret at 63-
64.
    Shortly thereafter, in order to address the ambiguity that existed 
in the federal PSD program following the EAB's Deseret decision, then-
EPA Administrator Stephen Johnson issued the PSD Interpretive Memo. The 
Memo sets forth the official EPA interpretation regarding which 
pollutants are ``subject to regulation'' for the purposes of the 
federal PSD permitting program, interpreting the phrase to include 
pollutants ``subject to either a provision in the CAA or regulation 
adopted by EPA under the CAA that requires actual control of emissions 
of that pollutant,'' while excluding pollutants ``for which EPA 
regulations only require monitoring or reporting.'' See Memo at 1. On 
December 31, 2008, EPA received a Petition for Reconsideration of the 
position taken in the PSD Interpretive Memo from Sierra Club and 14 
other environmental, renewable energy, and citizen organizations. 
Petition for Reconsideration, In the Matter of: EPA Final Action 
Published at 73 FR 80300 (Dec. 31, 2008), entitled ``Clean Air Act 
Prevention of Significant Deterioration (PSD) Construction Permit 
Program; Interpretation of Regulations That Determine Pollutants 
Covered by the Federal PSD Permit Program.'' Petitioners argued that 
the PSD Interpretive Memo ``was impermissible as a matter of law, 
because it was issued in violation of the procedural requirements of 
the Administrative Procedures Act * * * and the Clean Air Act * * *, it 
directly conflicts with prior agency actions and interpretations, and 
it purports to establish an interpretation of the Act that conflicts 
with the plain language of the statute.'' See Petition at 2. 
Accordingly, Petitioners requested that EPA reconsider and retract the 
PSD Interpretive Memo. Petitioners later amended their Petition for 
Reconsideration to include a request to stay the effect of the Memo 
pending the outcome of the reconsideration request. Amended Petition 
for Reconsideration (filed Jan. 6, 2009).\2\
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    \2\ On January 15, 2009, a number of environmental organizations 
that filed this Petition for Reconsideration also filed a petition 
challenging the PSD Interpretive Memo in U.S. Court of Appeals for 
the District of Columbia Circuit. Sierra Club v. E.P.A., No. 09-1018 
(D.C. Cir., filed Jan. 15, 2009).
    Thereafter, various parties moved to intervene in that action or 
filed similar petitions challenging the Memo. The consolidated D.C. 
Circuit cases have been held in abeyance pending this 
reconsideration process. Id., Order (filed March 9, 2009).
---------------------------------------------------------------------------

    On February 17, 2009, the EPA Administrator granted the Petition 
for Reconsideration on the PSD Interpretive Memo, citing to the 
authority under the Administrative Procedures Act, and announced her 
intent to conduct a rulemaking to allow for public comment on the 
issues raised in the Memo and on any issues raised by the opinion of 
the EAB's Deseret decision, to the extent they do not overlap with the 
issues raised in the Memo.\3\ Administrator Jackson did not stay the 
effectiveness of the PSD Interpretive Memo pending reconsideration, but 
she did reiterate that the Memo ``does not bind States issuing [PSD] 
permits under their own State Implementation Plans.'' See Letter from 
Lisa P. Jackson, EPA Administrator, to David Bookbinder, Chief Climate 
Counsel at Sierra Club (Feb. 17, 2009) at 1.
---------------------------------------------------------------------------

    \3\ Because Administrator Jackson's grant of reconsideration 
directed the Agency to conduct this reconsideration using a notice 
and comment process, this action does not address the procedural 
challenge presented in the Petition for Reconsideration.
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III. This Action

A. Overview

    In accordance with the Administrator's February 17, 2009 letter 
granting reconsideration, in the sections that follow, we summarize the 
interpretation contained in the PSD Interpretive Memo regarding when a 
pollutant becomes ``subject to regulation'' for the purposes of 
applying PSD program requirements and the Memo's arguments in support 
of that interpretation, as well as a summary of Petitioners' main 
arguments in favor of alternative interpretations, and request public 
comment on those interpretations.\4\ Specifically, this reconsideration 
action addresses five interpretations of the regulatory phrase 
``subject to regulation''--the actual control interpretation adopted by 
the PSD Interpretive Memo; the monitoring and reporting interpretation 
advocated

[[Page 51539]]

by Petitioners; the inclusion of regulatory requirements for specific 
pollutants in SIPs, which is discussed in both the PSD Interpretive 
Memo and the Petition for Reconsideration; \5\ an EPA finding of 
endangerment, which is discussed in the PSD Interpretive Memo; and the 
grant of a section 209 waiver, which was raised by commenters in 
another EPA action. EPA is also addressing other issues raised in the 
PSD Interpretive Memo and related actions that may influence the 
present reconsideration and request for public comment, as necessary.
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    \4\ While the sections below provide a summary of the primary 
arguments contained in the PSD Interpretive Memo and the Petition 
for Reconsideration, we advise the public to review the original 
documents contained in Docket EPA-HQ-OAR-2009-0597 in preparing 
their comments.
    \5\ As noted previously, the only change between the original 
Petition (filed Dec. 31, 2008) and the Amended Petition (filed Jan. 
6, 2009) is the addition of a request that EPA stay the effect of 
the PSD Interpretive Memo pending the outcome of the reconsideration 
request. Since the request for a stay was already denied in the 
February 17, 2009 letter granting reconsideration, the remainder of 
this notice references the original Petition when summarizing the 
arguments contained in those documents.
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    Of the five interpretations described in this reconsideration, the 
EPA continues to favor the ``actual control interpretation,'' which 
remains in effect at this time. As explained in the following section, 
the actual control interpretation best reflects our past policy and 
practice, is in keeping with the structure and language of the statute 
and regulations, and best allows for the necessary coordination of 
approaches to controlling emissions of newly identified pollutants. 
While the other interpretations described herein may represent 
alternatives for interpreting ``subject to regulation,'' no particular 
one is compelled by the statute, nor did the EAB determine that any one 
of them was so compelled. Because we have overarching concerns over the 
policy and practical application of each of the other interpretations, 
as discussed in more detail later in this notice, we are inclined to 
adopt the actual control interpretation as our final interpretation. 
Nevertheless, in this notice, we are requesting comment on a wide range 
of issues related to each of these interpretations and will carefully 
consider those comments before reaching a final decision.
    As a general matter, the stated purpose of the PSD Interpretive 
Memo is to ``establish[ ] an interpretation clarifying the scope of the 
EPA regulation that determines the pollutants subject to the federal 
Prevention of Significant Deterioration (PSD) program under the Clean 
Air Act (CAA or Act)'' by providing EPA's ``definitive interpretation'' 
of the definition of the term ``regulated NSR pollutants'' found at 40 
CFR 52.21(b)(50) and resolving ``any ambiguity in subpart ([iv]) of 
that paragraph, which includes `any pollutant that otherwise is subject 
to regulation under the Act.''' See Memo at 1. As the Memo explains, 
the statute and regulation use similar language--the regulation defines 
a regulated NSR pollutant to include ``[a]ny pollutant that otherwise 
is subject to regulation under the Act'' and requires BACT for ``each 
regulated NSR pollutant,'' 40 CFR 52.21(b)(50) and (j), while the Act 
requires BACT for ``each pollutant subject to regulation under this 
[Act],'' CAA sections 165(a)(4) and 169. The EAB has already determined 
that ``the meaning of the term `subject to regulation under this Act' 
as used in [CAA] sections 165 and 169 is not so clear and unequivocal 
as to preclude the Agency from exercising discretion in interpreting 
the statutory phrase'' in implementing the PSD program. See Deseret at 
63.
    The PSD Interpretive Memo seeks to resolve the ambiguity in 
implementation of the PSD program by stating that ``EPA will interpret 
this definition of `regulated NSR pollutant' to exclude pollutants for 
which EPA regulations only require monitoring or reporting but to 
include each pollutant subject to either a provision in the Clean Air 
Act or regulation adopted by EPA under the Clean Air Act that requires 
actual control of emissions of that pollutant.'' The Memo states that 
``EPA has not previously issued a definitive interpretation of the 
definition of `regulated NSR pollutant' in section 52.21(b)(50) or an 
interpretation of the phrase `subject to regulation under the Act' that 
addressed whether monitoring and reporting requirements constitute 
`regulation' within the meaning of this phrase.'' The Memo, however, 
explains that the interpretation reflects the ``considered judgment'' 
of then-Administrator Johnson regarding the PSD regulatory requirements 
and is consistent with both historic Agency practice and prior 
statements by Agency officials. See Memo at 1-2.
    The Petition for Reconsideration generally argues that the 
interpretation in the Memo ``misconstrues the plain language of the 
Act, adopts impermissible interpretations of existing regulations, and 
ignores the distinct purpose of the PSD program.'' Petitioners assert 
that the PSD Interpretive Memo ``attempts to revive a definition [of 
``subject to regulation''] that the EAB found was not supported by any 
prior interpretation of the statute.'' The Petition also claims that 
CO2 is a pollutant ``subject to regulation'' for the 
purposes of the PSD program because CO2 emissions are 
already regulated under an existing SIP and existing monitoring and 
reporting requirements. See Petition at 9-10.
    Although EPA issued the Memo after the EAB's Deseret decision, 
which specifically concerned whether CO2 emissions should be 
considered ``subject to regulation,'' the PSD Interpretive Memo 
establishes an interpretation of ``subject to regulation'' that applies 
generally to the PSD program and the treatment of all pollutants under 
that program. Petitioners requested reconsideration of the entire PSD 
Interpretive Memo, but their arguments primarily address the Memo's 
application to CO2 and only address the broader 
applicability of the PSD program to other pollutants as a secondary 
matter. Issues of general and specific PSD applicability are somewhat 
interchangeable, but it is important to address the pollutant 
applicability issue for the PSD program as a whole. Accordingly, we 
will generally focus this reconsideration on the application of the 
interpretation of the definition of ``subject to regulation'' to all 
pollutants, instead of focusing on the specific applicability to 
CO2 or GHGs, including particular actions that Petitioners 
argue have triggered PSD requirements for those pollutants. This will 
allow us to uniformly apply the final interpretation in the future as 
new pollutants become potentially ``subject to regulation.''

B. Actual Control of Emissions

    The PSD Interpretive Memo established that EPA will interpret the 
``subject to regulation'' provision of the ``regulated NSR pollutant'' 
definition ``to include each pollutant subject to either a provision in 
the Clean Air Act or regulation adopted by EPA under the Clean Air Act 
that requires actual control of emissions of that pollutant.'' 
(Hereinafter, referred to as the ``actual control interpretation.'') In 
so doing, the Memo observes that the EAB rejected claims that the 
language of the CAA compelled only one interpretation of the phrase 
``subject to regulation,'' and instead found that the phrase is 
ambiguous.
    The PSD Interpretive Memo explains that the ``structure and 
language of EPA's definition of `regulated NSR pollutant' at 40 CFR 
52.21(b)(50)'' supported the actual control interpretation. The Memo 
discusses how the first three parts of the definition describe 
pollutants that are subject to regulatory requirements that mandate 
control or limitation of the emissions of those pollutants, which 
suggests that the use of ``otherwise subject to regulation'' in the 
fourth prong also intended some prerequisite

[[Page 51540]]

act or process of control. The Memo also explains that the definition's 
use of ``subject to regulation'' should be read in light of the primary 
meaning of ``regulation'' in various dictionaries, which each used or 
incorporated a control requirement. See Memo at 6-9.
    The PSD Interpretive Memo observes that the actual control 
interpretation is consistent with EPA's broad responsibilities under 
the CAA. The Memo explains that the actual control interpretation gives 
a broad scope to the PSD permitting program while instilling 
``reasonable boundaries'' for administration of the program in an 
``effective, yet manageable,'' way. The Memo also explains that 
important policy concerns support application of PSD requirements only 
after actual control requirements are in place under another part of 
the Act, because the actual control interpretation: (1) Allows the 
Agency to assess ``whether there is a justification for controlling'' 
those emissions based on relevant criteria in the Act; (2) provides an 
opportunity for public notice and comment when a new pollutant is 
proposed to be regulated under other portions of the Act; (3) promotes 
``the orderly administration of the permitting program by providing an 
opportunity for EPA to develop regulations to manage the incorporation 
of a new pollutant into the PSD program''; (4) preserves EPA's 
``ability to gather information to inform the Administrator's judgment 
regarding the need to establish controls on emissions''; and (5) 
safeguards the Administrator's authority to require such controls on 
individual pollutants under other portions of the Act before triggering 
PSD requirements. Finally, the Memo clarifies that while the ``subject 
to regulation'' interpretation issue had been raised in the context of 
CO2 emissions, ``adoption of [the actual control] 
interpretation is also necessary to preserve EPA's ability to collect 
emissions data on other pollutants for research and other purposes,'' 
both now and in the future, without triggering the requirements of the 
PSD permitting program. See Memo at 9-10.
    The PSD Interpretive Memo next describes how an actual control 
interpretation of ``subject to regulation'' is ``consistent with the 
historic practice of the Agency and with prior statements by Agency 
officials.'' The Memo explains that a review of numerous federal PSD 
permits shows that EPA has been applying the actual control 
interpretation in practice--issuing permits that only contained 
emissions limitations for pollutants subject to regulations requiring 
actual control of emissions under other portions of the Act. The Memo 
also articulates that in 1998, well after promulgation of the 
CO2 monitoring regulations, the EPA found CO2 to 
be a pollutant under the Act and stated that EPA had the authority to 
regulate it, but found ``the Administrator has made no determination to 
date to exercise that authority under the specific criteria provided 
under any provision of the Act.'' \6\ The PSD Interpretive Memo 
explains that the 1978 Federal Register notice promulgating the initial 
PSD regulations, which stated that pollutants ``subject to regulation'' 
in the PSD program included ``any pollutant regulated in Subchapter C 
of Title 40 of the Code of Federal Regulations,'' is not inconsistent 
with the actual control interpretation because actual control could be 
inferred by the specific list of regulated pollutants that followed the 
reference to 40 CFR. See Memo at 10-13.
---------------------------------------------------------------------------

    \6\ Memorandum from Jonathan Z. Cannon, General Counsel to Carol 
M. Browner, Administrator, entitled EPA's Authority to Regulate 
Pollutants Emitted by Electric Power Generation Sources (April 10, 
1998).
---------------------------------------------------------------------------

    Finally, the PSD Interpretive Memo finds that the actual control 
interpretation is supported, and not precluded, by the language and 
structure of the CAA. The Memo notes that the EAB had already concluded 
that the CAA's use of the phrase ``subject to regulation under this 
Act'' was ambiguous and susceptible to various interpretations, and 
explains that the Board determined that ``the terms of the statute do 
not preclude reading `subject to regulations under this Act' to mean 
`subject to control' by virtue of a regulation or otherwise.'' The Memo 
argues that the actual control interpretation was consistent with 
Congress' specification that BACT control under PSD ``could be no less 
stringent than NSPS [i.e., New Source Performance Standards] and other 
control requirements under the Act indicates that Congress expected 
BACT to apply to pollutants controlled under these programs.'' The Memo 
also finds support for the actual control interpretation in the non-PSD 
portions of the Act, reasoning that similar to those CAA sections that 
authorized the Administrator to establish emissions limitations or 
controls under other programs, Congress ``expected that pollutants 
would only be regulated for purposes of the PSD program after the 
Administrator has promulgated regulations requiring control of a 
particular pollutants. [sic]'' See Memo at 13-14.
    In contrast, the Petition for Reconsideration argues that in 
putting forth the actual control interpretation, the PSD Interpretive 
Memo ``attempts to revive'' a definition of ``subject to regulation'' 
that was not supported by the EAB's Deseret decision. See Petition at 
9-10. With regard to the Memo's assertion that the interpretation is 
supported by the language and structure of the ``regulated NSR 
pollutant'' definition, Petitioners disagree. The Petition argues that 
the Memo placed undue emphasis on the PSD regulation while ``[i]n 
reality, the [PSD Interpretive] Memo is interpreting the language of 
the statute'' because the regulation ``simply parrots'' the language 
contained in the Act. As such, Petitioners claim that the Agency's 
actual control interpretation is not entitled to any deference. 
Petitioners also argue that the Memo improperly relied on the other 
prongs of the definition in finding an actual control interpretation, 
contending that the EAB already rejected that type of analysis and that 
the first three prongs referred to a promulgated ``standard'' (and not 
to controls) such that the last prong should apply to pollutants 
regulated in some other way than a standard. See Petition at 18-20.
    The Petition asserts that the PSD Interpretive Memo improperly 
relies on a number of Agency documents in arriving at the actual 
control interpretation. Petitioners argue that the EAB already 
determined that ``the only relevant interpretation of the applicable 
statutory and regulatory language was to be found in EPA's 1978 PSD 
rulemaking'' (emphasis in original) and that the 1978 preamble 
interpretation ``directly contradicted EPA's theory'' regarding an 
actual control interpretation. Petitioners also note that the EAB 
determined that the interpretation of ``subject to regulation'' found 
in the 1978 preamble language suggests that the phrase includes ``any 
pollutant covered by a regulation in Subchapter C of Title 40 of the 
CFR, such as CO2.'' Petitioners argue that the Memo 
improperly attempts to alter the still-applicable 1978 interpretation 
because the EAB already rejected reliance on the types of control 
requirements identified following the ``subject to regulation'' 
sentence in the 1978 preamble, and because there is no ambiguity in the 
language used in the 1978 preamble's interpretation. See Petition at 3 
and 15-18.
    The Petition for Reconsideration also contends that the PSD 
Interpretive Memo ignores the plain language of the CAA because 
CO2 is clearly ``subject to regulation under the Act.'' With 
regard to the EAB's finding of ambiguity in the Act's use of ``subject 
to regulation,''

[[Page 51541]]

Petitioners simply note that ``[t]o the extent the EAB declined to hold 
that the PSD provision requires use of BACT for CO2 
emissions, [Petitioners] disagree with the Board's decision in that 
case.'' See Petition at footnote 10. Petitioners assert that the Memo's 
reliance on the structure of the CAA contradicts the broad purpose of 
regulation under the PSD program. The Petition asserts that Congress 
``deliberately established a much lower threshold'' for requiring PSD 
control mechanisms than they did when ``establishing generally 
applicable standards such as the NAAQS, [NSPS], or motor vehicle 
standard.'' See Petition at 21.
    With this reconsideration, we note the policy and legal arguments 
stated in the PSD Interpretive Memo, and summarized above, for the 
actual control interpretation. This interpretation remains our 
preference for a number of reasons. The Memo explains that this 
interpretation best reflects our past policy and practice, as applied 
consistently over the years. The Memo also describes why such an 
interpretation allows for a more practical development of regulations 
and guidance concerning control of pollutants once they are determined 
to endanger public health or welfare. Triggering PSD prior to a 
judicious review of the pollutant's health and environmental effects, 
as well as its emission characteristics and control options for 
different source types, could lead to serious implementation 
consequences for the program as a whole. As part of this 
reconsideration, we request comment on whether the policy concerns EPA 
described in the PSD Interpretive Memo, as well as those noted in the 
Petition for Reconsideration, are also of concern to commenters.
    For example, the Memo notes the importance of providing EPA the 
time to collect and assess data on newly identified pollutants prior to 
undertaking PSD reviews and determining emission control requirements. 
Without this time, the EPA's ability to make regulatory decisions that 
are based on analysis of a robust and relevant dataset on a pollutant 
would be significantly hampered. Furthermore, without this prior review 
period, individual technical BACT reviews could be time-consuming due 
to the need to research and develop the generally available emission 
control options for a new pollutant about which this information is not 
well known. Triggering PSD with the actual control interpretation would 
also allow EPA to review and promulgate a significant emissions rate 
for a pollutant before it would be subject to PSD permitting 
requirements, so that de minimis increases in emissions are not 
automatically captured, thus hindering efficient implementation of the 
program. Thus, the actual control interpretation allows the greatest 
opportunity for the EPA to address whether and how a pollutant should 
be ``subject to regulation'' based on the promulgation of more general 
control requirements.
    This opportunity extends not only to CO2 and other GHGs, 
but to non-GHG pollutants that may, in the future, become regulated NSR 
pollutants. Therefore, we request comment on the importance of 
affording EPA the necessary time to study and evaluate the emissions 
characteristics and control options for new pollutants prior to making 
emissions of those pollutants subject to PSD permitting requirements. 
Similarly, we ask for comment on the extent to which the availability 
of such time under the actual control interpretation should weigh in 
our consideration of whether to adopt this approach. Finally, we seek 
comment on any other policy factors we should consider that are not 
addressed in the Memo or the Petition for Reconsideration that would 
weigh for or against the actual control interpretation.

C. Monitoring and Reporting Requirement

    In addition to finding that the actual control interpretation 
should be applied to the federal PSD program, the PSD Interpretive Memo 
also rejects an interpretation of ``subject to regulation'' in the 
regulated NSR pollutant definition that would have applied to 
pollutants for which EPA regulations only require monitoring or 
reporting. (Hereinafter, referred to as the ``monitoring and reporting 
interpretation.''). The Memo begins by noting that the EAB's Deseret 
decision found ``no evidence of a Congressional intent to compel EPA to 
apply BACT to pollutants that are subject only to monitoring and 
reporting requirements.'' See Memo at 4. The Memo finds such an 
interpretation is inconsistent with important policy considerations, 
past Agency practice and statements, and an overall reading of the CAA.
    In describing policy concerns arising from the monitoring and 
reporting interpretation, the PSD Interpretive Memo explains that 
``requiring [PSD emissions] limitations automatically for pollutants 
that are only subject to data gathering and study would frustrate EPA's 
ability to accomplish several objectives of the Clean Air Act.'' The 
Memo explains that administration of the CAA's pollutant control 
programs relies on reasoned decision-making that is often based on 
collection of emissions data under CAA section 114(a)(1). The Memo 
predicts that adopting the monitoring and reporting interpretation 
would impair EPA's decision-making, leading to the ``perverse result'' 
of requiring PSD limits for a pollutant while the Agency is still 
deciding whether to establish controls on that pollutant under other 
parts of the Act. The Memo also stresses that the monitoring and 
reporting interpretation had broader implications than PSD limits for 
CO2 because it would apply to other pollutants that may 
emerge in the future. See Memo at 9-10.
    The PSD Interpretive Memo also finds that the monitoring and 
reporting interpretation is inconsistent with past agency practice 
because ``EPA has not issued PSD permits containing emissions 
limitations for pollutants that are only subject to monitoring and 
reporting requirements,'' including CO2 emissions. The Memo 
determines that the monitoring and reporting interpretation is not 
required under the 1978 preamble language, explaining that the preamble 
language could be interpreted in a variety of ways and ``did not 
specifically address the issue of whether a monitoring or reporting 
requirement makes a pollutant `regulated in' [Subpart C of Title 40] of 
the Code of Federal Regulations.'' See Memo at 11-12.
    Finally, the PSD Interpretive Memo articulates that the monitoring 
and reporting interpretation is not required by the language of the 
CAA. The Memo emphasizes that the EAB rejected arguments that the 
language of the CAA required application of the monitoring and 
reporting interpretation, instead finding ``no evidence of 
Congressional intent to compel EPA to apply BACT to pollutants that are 
subject only monitoring and reporting requirements.'' The Memo reasons 
that the overall regulatory direction given to EPA in the CAA is 
``evidence that Congress generally expected that EPA would gather 
emissions data prior to establishing plans to control emissions or 
developing emissions limitations'' and finds rejection of the 
monitoring and reporting interpretation ``fully consistent with 
Congressional design.'' See Memo at 4.
    The Petition for Reconsideration asserts that applying the 
monitoring and reporting interpretation to the PSD program is 
appropriate because ``monitoring and reporting requirements clearly 
constitute regulation'' and CO2 emissions are subject to PSD 
permitting

[[Page 51542]]

requirements based on the existing requirement to monitor and report 
CO2 emissions. Petitioners state that the policy concerns 
expressed in the Memo are a ``red herring'' because ``EPA has not 
identified a single pollutant other than CO2 that would be 
affected by an interpretation of `regulation' in Section 165 to include 
monitoring and reporting regulations.'' The Petition argues that EPA 
can gather pollutant information about pollutants under Section 114 
without adopting regulations, and thus avoid triggering PSD 
requirements for those pollutants. See Petition at 13 and 22.
    The Petition stresses that the PSD Interpretive Memo could not 
eliminate the monitoring and reporting interpretation based on concerns 
about applying it to future pollutants because Congress could choose to 
expressly exclude future pollutants from PSD requirements in express 
terms. Petitioners also argue that the Memo does not provide a 
statutory provision to support the claim that requiring BACT for 
pollutants under a monitoring and reporting interpretation would 
conflict with the information-gathering objectives of the CAA. The 
Petition also contends that the Memo fails to demonstrate anything 
``unworkable'' about requiring PSD for pollutants subject to monitoring 
regulations. See Petition at 22-23.
    Finally, Petitioners assert that CO2 is clearly 
``subject to regulation'' under the interpretation provided in the 1978 
preamble language because the CO2 monitoring and reporting 
regulations are contained in the Subpart C of Title 40 of the CFR. 
Petitioners contend that the CO2 monitoring and reporting 
requirements meet the statutory and regulatory definition of ``subject 
to regulation'' and have the force of law in the same way as control 
requirements. The Petition also claims that each of the dictionary 
definitions of ``regulation'' relied upon in the Memo would include 
monitoring. Petitioners also contend that a monitoring and reporting 
interpretation is consistent with an actual control requirement because 
there must be some control of pollutant emissions in order to monitor 
them. See Petition at 14-16.
    We note that the EAB already found ``no evidence of Congressional 
intent to compel EPA to apply BACT to pollutants that are subject only 
monitoring and reporting requirements.'' See Deseret at 63. In light of 
that finding, we request comment on the arguments made in the Memo and 
discussed further in this reconsideration proposal. Our review of the 
arguments in the PSD Interpretive Memo indicates that a monitoring and 
reporting interpretation would be unlikely to preserve the Agency's 
ability to conduct monitoring or reporting for investigative purposes 
to inform future rulemakings involving actual emissions control or 
limits. The Petition for Reconsideration argues that these concerns are 
a ``red herring'' because EPA has not identified a pollutant other than 
CO2 that would be affected by the monitoring and reporting 
interpretation. We believe that additional comment would assist us in 
evaluating this concern.
    However, we also note that EPA has issued regulations, such as 
NSPS, that require monitoring of noncriteria pollutant emissions in 
order to demonstrate compliance with the regulation on the criteria 
pollutant(s). For example, one of our NSPS stipulates that if a source 
uses Continuous Emissions Monitoring Systems (CEMS) to measure 
emissions of NOx and SO2 from its boiler, the 
source must also have a CEMS to measure oxygen gas (O2) or 
CO2. 40 CFR 60.49Da(b) and (c). Clearly, there is no intent 
by the EPA to consider O2 as ``subject to regulation,'' and 
therefore subject to PSD, as a result of this NSPS requirement, but the 
application of the monitoring and reporting interpretation as put 
forward in the Petition could require just that.
    In addition, it is not always possible to predict when a new 
pollutant will emerge as a candidate for regulation. In such cases, the 
Memo's reasoning is correct in that we would be unable to promulgate 
any monitoring or reporting rule for such a pollutant without 
triggering PSD under this interpretation. Nonetheless, we seek 
additional comment on the extent to which our interest in preserving 
the ability to investigate unregulated pollutants as stated in the memo 
is a real, rather than hypothetical, concern. We further seek comment 
on any other policy factors we should consider that are not addressed 
in the Memo or the Petition for Reconsideration that would weigh for or 
against the monitoring and reporting interpretation.

D. EPA-Approved State Implementation Plan

    In discussing the application of the actual control interpretation 
to specific actions under the CAA, the PSD Interpretive Memo rejects an 
interpretation of ``subject to regulation'' in which regulatory 
requirements for an individual pollutant in the SIP for a single state 
would ``require regulation of that pollutant under the PSD program 
nationally.'' (Hereinafter, referred to as the ``SIP interpretation.'') 
The Memo reasons that application of the SIP interpretation would 
convert EPA's approval of regulations applicable only in one state into 
a decision to regulate a pollutant on a nationwide scale for purposes 
of the PSD program. The PSD Interpretive Memo explains that the 
establishment of SIPs is better read in light of the ``cooperative 
federalism'' underlying the Act, whereby Congress allowed individual 
states to create and apply some regulations more stringently than 
federal regulations within its borders, without allowing individual 
states to set national regulations that would impose those requirements 
on all states. In rejecting the SIP interpretation, the PSD 
Interpretive Memo also explains that a similar position had been 
adopted in EPA's promulgation of the NSR regulations for fine 
particulate matter (or ``PM2.5''), without any public 
comments opposing that position. See Memo at 15-16.
    The Petition for Reconsideration argues that the SIP interpretation 
is appropriate for the PSD program and applies to CO2 
emissions at this time. Petitioners note that the Delaware SIP 
established regulations limiting CO2 emissions in 2008 and 
that, in approving that SIP provision, EPA stated it was doing so under 
the CAA, thus making the CO2 standards enforceable under 
various provisions of the CAA. The Petition argues that the Memo 
rejected the SIP interpretation without providing a relevant statutory 
or regulatory basis for that position. Instead, Petitioners claim that 
the SIP interpretation is directly supported by the plain language of 
``subject to regulation under the Act'' because those emissions are 
restricted under the CAA, whether in one state or all. Finally, the 
Petition asserts that because SIP regulations are incorporated into 
Subpart C of Title 40 of the CFR after approval by EPA, the SIP 
interpretation must apply given the 1978 preamble language interpreting 
``subject to regulation'' for the PSD program. See Petition at 10-12.
    EPA continues to believe that the CAA and our implementing 
regulations are intended to provide states flexibility to develop and 
implement SIPs to meet the air quality goals of their state. Each 
state's implementation plan is a reflection of the air quality concerns 
in that state, allowing a state to dictate treatment of specific 
pollutants of concern (or their precursors) within its borders based on 
air quality, economic, and other environmental concerns of that state. 
As such, pollutant emissions in one state may not present the same 
problem for a state a thousand miles away. As expressed in the PSD

[[Page 51543]]

Interpretive Memo, we have concerns that the SIP interpretation would 
improperly limit the flexibility of states to develop and implement 
their own air quality plans because the act of one state to establish 
regulatory requirements for a particular pollutant would drive national 
policy by determining that a new pollutant is ``subject to 
regulation,'' thus requiring all states to subject the new pollutant to 
PSD permitting. Whether one state, five states, or 45 states make the 
decision that their air quality concerns are best addressed by imposing 
regulations on a new pollutant, we do not think those actions should 
trump the cooperative federalism inherent in the CAA. While several 
states may face similar air quality issues and may choose regulation as 
the preferred approach to dealing with a particular pollutant, we are 
concerned that allowing the regulatory choices of some number of states 
to impose PSD regulation on all other states would do just that.
    The SIP interpretation could have significant negative consequences 
to the PSD program and the ability for states to manage their own air 
quality programs. One practical effect of allowing state-specific 
concerns to create national policy upon EPA's approval of a state's 
preferred implementation policy is that EPA's review of SIPs would 
likely be much more time-consuming, since we would have to consider 
each nuance of the SIP as a potential statement of national policy. 
Thus, there would be heightened oversight of air quality actions in all 
states--even those regarding local and state issues that are best 
decided by local agencies--for fear of having a national policy 
compelled by the action of one state. Given the need for states to 
effectively manage their own air quality programs, we believe ``subject 
to regulation under the Act'' is best interpreted as those pollutants 
subject to a nationwide standard, binding in all states, that EPA 
promulgates on the basis of its CAA rulemaking authority.
    Although we remain concerned about the consequences to the PSD 
program of the SIP interpretation as described in the Memo, we are 
seeking comment on the issues raised in the Petition for 
Reconsideration. However, our request for comment is limited because we 
have already finalized a position very similar to that in the Memo in 
our final NSR implementation rule for PM2.5 (73 FR 28321, 
May 16, 2008). As we explained in the final rule, we adopted the 
position contained in the proposed rule without receiving any public 
comments opposing that position. That final rule did not require 
ammonia to be regulated as a PM2.5 precursor but did give 
states the option to regulate ammonia as a precursor to 
PM2.5 in nonattainment areas for purposes of NSR on a case-
by-case basis. In that final rule, we explained that if a state 
demonstrates to the Administrator's satisfaction that ammonia emissions 
in a specific nonattainment area are a significant contributor to that 
area's ambient PM2.5 concentrations, the state would 
regulate ammonia as a PM2.5 precursor under the NSR program 
in that nonattainment area. We explained that once this demonstration 
is made, ammonia would be a ``regulated NSR pollutant'' under 
nonattainment NSR for that particular nonattainment area. In all other 
nonattainment areas in that state and nationally, ammonia would not be 
subject to the NSR program. With regard to PSD, we specifically stated 
that ``the action of any State identifying ammonia emissions as a 
significant contributor to a nonattainment area's PM2.5 
concentrations, or [EPA's] approval of a nonattainment SIP doing so, 
does not make ammonia a regulated NSR pollutant for the purposes of 
PSD'' in any areas nationally. See 73 FR 28330 (May 16, 2008). 
Therefore, we request comment on the question of whether there is a 
basis that can be upheld under the Act and our CAA implementing 
regulations that would allow for application of a different SIP-based 
interpretation than the interpretation established in that final 
PM2.5 NSR implementation rule. If so, we ask for comment on 
how the adoption of that different interpretation could be done in a 
way that addresses the specific policy concerns raised in the Memo.

E. Finding of Endangerment

    In providing the reasoning as to which actions make a pollutant 
``subject to regulation'' for the purposes of the PSD program, the PSD 
Interpretive Memo states that the ``otherwise subject to regulation'' 
prong of the regulated NSR pollutant definition should not be 
interpreted ``to apply at the time of an endangerment finding.'' See 
Memo at 14. (Hereinafter, referred to as the ``endangerment finding 
interpretation.'') As explained in the Proposed Endangerment and Cause 
or Contribute Findings for Greenhouse Gases under Section 202(a) of the 
CAA, there are actually two separate findings involved in what is often 
referred to as an endangerment finding. 74 FR 18886 (April 24, 2009). 
First, whether air pollution may reasonably be anticipated to endanger 
public health or welfare, and second, whether emissions from the 
relevant source category cause or contribute to this air pollution. In 
that proposal, we referred to the first finding as the endangerment 
finding, and the second as the cause or contribute finding. Often, 
however, both tests are referred to collectively as the endangerment 
finding. In this reconsideration package, we will consider the phrase 
``endangerment finding'' to refer to both findings.
    The only reference to an endangerment finding in the Petition for 
Reconsideration is in the argument that Congress ``clearly intended 
that BACT apply regardless of whether an endangerment finding had been 
made for that pollutant.'' However, the Petition does not argue that an 
endangerment finding itself should trigger PSD requirements. In fact, 
Petitioners argue against the endangerment finding interpretation, 
stating that Congress ``deliberately established a much lower threshold 
for requiring BACT than an `endangerment finding.' '' See Petition at 
21.
    The issue of whether ``lower thresholds'' (such as monitoring and 
reporting requirements) should make a pollutant ``subject to 
regulation'' within the meaning of the PSD program is already being 
addressed in other sections of this notice. However, in accordance with 
the February 17, 2009 grant of reconsideration, EPA has reconsidered 
the endangerment finding interpretation included in the PSD 
Interpretive Memo and proposes to reaffirm that an endangerment finding 
is not an appropriate trigger for PSD regulation. To be clear, this 
proposed affirmation applies to both steps of what is often referred to 
as the endangerment finding--the finding that air pollution may 
reasonably be anticipated to endanger public health or welfare and the 
finding that emissions of an air pollutant from a particular source 
category causes or contributes to this air pollution--regardless of 
whether the two findings occur together or separately.
    As the PSD Interpretive Memo explains, an endangerment finding 
should not be construed as ``regulating'' the air pollutant(s) at 
issue. It is, rather, a prerequisite to issuing regulations that 
themselves impose control requirements. As such, it is unlike the other 
triggering actions identified in the ``regulated NSR pollutant'' 
definition, which set standards that require imposition of actual 
limitations on emissions that a source or sources must comply with. An 
endangerment finding, a cause or contribute finding, or both, on the 
other hand, do not contain or require source limits that are backed by 
rule of law; rather, they are often the

[[Page 51544]]

first step required before EPA may set specific emissions limits 
through a rule.
    Furthermore, the other actions addressed in the ``regulated NSR 
pollutant'' definition weigh against the endangerment finding 
interpretation. Under the first prong of that definition, PSD 
regulation is triggered by promulgation of a National Ambient Air 
Quality Standard (NAAQS) under CAA section 109. However, in order to 
promulgate NAAQS standards under section 109, since 1970 EPA must list 
and issue air quality criteria for a pollutant under section 108, which 
in turn can only happen after the Administrator makes an endangerment 
finding and a version of a cause or contribute finding, in addition to 
meeting other requirements. See CAA sections 108(a)(1) and 109(a)(2). 
Thus, if we were to find that an endangerment finding and/or cause or 
contribute findings would make a pollutant ``subject to regulation'' 
within the meaning of the PSD program, it would read all meaning out of 
the first prong of the ``regulated NSR pollutant'' definition because a 
pollutant would become subject to PSD permitting requirements well 
before the promulgation of the NAAQS under section 109.40 CFR 
52.21(b)(50)(i).
    Similarly, the second prong of the definition of ``regulated NSR 
pollutant'' includes any pollutant that is subject to a standard 
promulgated under section 111 of the CAA. Section 111 requires the 
Administrator to list a source category, if in his or her judgment, 
``it causes, or contributes significantly to, air pollution which may 
reasonably be anticipated to endanger public health or welfare.'' See 
CAA section 111(B)(1)(A). After EPA lists a source category, it 
promulgates NSPS for that source category. For a source category not 
already listed, if we were to list it on the basis of its emissions of 
a pollutant that was not previously regulated, and such a listing made 
that pollutant ``subject to regulation'' within the meaning of the PSD 
program, this chain of events would result in triggering PSD permitting 
requirements for that pollutant well in advance of the point 
contemplated by the second prong of the regulated NSR pollutant 
definition. 40 CFR 52.21(b)(50)(ii).
    In addition, as explained in the Memo, waiting to apply PSD 
requirements until after the actual promulgation of control 
requirements that follow an endangerment finding ``makes sense.'' The 
Memo explains that when promulgating the final regulations establishing 
the control requirements for a pollutant, EPA often makes decisions 
that are also relevant to decisions that must be made in implementing 
the PSD program for that pollutant. See Memo at 14. For example, EPA 
often does not make a final decision regarding how to identify the 
specific pollutant subject to an NSPS standard until the NSPS is 
issued, which occurs after both the endangerment finding and the source 
category listing.
    Accordingly, we believe that the prerequisite act of making an 
endangerment finding, a cause or contribute finding, or both, should 
not make a pollutant ``subject to regulation'' for the purposes of the 
PSD program. As explained above, EPA believes that there are strong 
legal and policy reasons for rejecting the endangerment finding 
interpretation. EPA seeks comment on any other policy factors or legal 
arguments that are not addressed above but could weigh for or against 
our consideration of the endangerment finding interpretation.

F. Granting of Section 209 Waiver

    While neither the PSD Interpretive Memo nor the Petition for 
Reconsideration raise the issue of whether a decision to grant a waiver 
under the section 209 of the CAA would trigger PSD requirements under 
the CAA section 165(a)(4), EPA received comments in response to the 
proposed grant of a CAA section 209 waiver to the state of California 
to establish GHG emission standards for new motor vehicles that 
suggested that arguments might be made that the grant of the waiver 
made GHGs subject to regulation for the purposes of PSD. See 74 FR 
32744, 32783 (July 8, 2009). Those commenters requested that EPA state 
clearly that granting the California Waiver did not render GHGs 
``subject to regulation'' under the CAA, while others commented that 
the question of when and how GHGs should be addressed in the PSD 
program or otherwise regulated under the Act should instead be 
addressed in separate proceedings. At that time, EPA stated that the 
PSD interpretation issues were not a part of the waiver decision and 
would be more appropriately addressed in another forum.
    Accordingly, we are taking this opportunity to state our position 
that a decision to grant a CAA section 209 waiver to the state of 
California to establish GHG emission standards for new motor vehicles 
does not trigger PSD requirements for GHGs. As explained below, EPA 
does not interpret the CAA or the Agency's PSD regulations to make the 
PSD program applicable to pollutants that may be regulated by states 
after EPA has granted a waiver under section 209 of the CAA.
    As the EPA Administrator previously explained to Congress, ``a 
decision to grant a waiver under section 209 of the Act removes the 
preemption of state law otherwise imposed by the Act. Such a decision 
is fundamentally different from the decisions to establish requirements 
under the CAA that the Agency and the [EAB] have considered in 
interpreting the provisions governing the applicability of the PSD 
program.'' Letter from Lisa P. Jackson to Senator James M. Inhofe 
(March 17, 2009). As explained more fully below, the decision to grant 
a CAA section 209 waiver is different from the other actions that have 
been alleged to trigger the statutory and regulatory PSD requirements, 
including the other interpretations of ``subject to regulation'' 
discussed above, in two key respects.
    First, a waiver granted under CAA section 209(b)(1) simply removes 
the prohibition found in section 209(a) that forbids states from 
adopting or enforcing their own standards relating to control of 
emissions from new motor vehicles or new motor vehicle engines. Thus, 
the grant of the waiver simply allows California the authority to adopt 
and enforce state emissions standards for new motor vehicles that it 
would have otherwise had without the initial prohibition in section 
209(a). As EPA previously explained, by removing the section 209(a) 
prohibition, the waiver ``merely gives back to California what was 
taken away by section 209(a)--the ability to adopt and enforce its own 
state emission standards.'' See 74 FR 32751 (July 8, 2009). 
Importantly, granting the waiver does not itself establish any federal 
emission standards or other federal requirements for the pollutants. 
Courts have recognized such a distinction. See American Automobile 
Manufacturers Association v. Commissioner, Massachusetts Department of 
Environmental Protection, 31 F.3d 18, 21 (1st Cir. 1994) (stating that 
``there can be only two types of cars `created' under emissions 
regulations in this country: `California' cars and `federal' (that is, 
EPA-regulated) cars''). Thus, grant of a section 209 waiver to the 
California emissions standards does not render those standards to be 
federal standards and does not make a pollutant covered by the 
California standards ``subject to regulation'' under the CAA. \7\
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    \7\ EPA recognizes that two courts have addressed the issue of 
whether the California motor vehicle standards have the effect of 
federal standards once a section 209 waiver is granted, but those 
cases are not applicable to our current determination because they 
did not involve interpretation of the CAA. Those cases were 
examining whether the California standards were ``other motor 
vehicle standards of the government'' under the specific provisions 
of the Energy Policy and Conservation Act (EPCA). See Century Valley 
Chrysler-Jeep, Inc. v. Goldstene, 529 F.Supp. 2d 1151 (E.D. Cal. 
2007), appeals pending Nos. 08-17378, 08-17380 (9th Cir., filed Oct. 
30, 2008); Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie, 
508 F.Supp. 2d 295 (D. Vt. 2007). In those cases, automobile dealers 
and manufacturers brought action challenging the validity of the 
California GHG emissions standards, arguing that the standards were 
preempted by the fuel economy standards established by EPCA. After 
examining the statutory language and legislative history of EPCA, 
the courts found that the EPCA fuel standards were not preemptive of 
the California standards. The courts noted that the term ``Federal 
standards fuel economy reduction'' as used in the original 
codification of section 502(d) of the Energy Policy and Conservation 
Act (EPCA), referred to EPA-approved California emission standards, 
and noted that ``there is nothing in [EPCA] or in case law to 
support the proposition that a regulation promulgated by California 
and granted waiver of preemption under [CAA] section 209 is anything 
other than a `law of the Government' whose effect on fuel economy 
must be considered by NHTSA in setting fuel economy standards.'' 
Century Valley Chrysler-Jeep, 529 F.Supp. 2d at 1173. See also Green 
Mountain Chrysler Plymouth Dodge Jeep, 508 F.Supp. 2d at 347.
    However, these Courts did not examine whether California 
standards were federal standards under the specific provisions of 
the CAA. Accordingly, their holdings are properly limited to 
interpretation of EPCA's preemption provisions and are not binding 
on our present consideration of whether the California standards 
should be considered federal standards under the provisions of the 
CAA, in particular, provisions such as the PSD program. As noted 
above, a waiver granted to California motor vehicle emissions 
standards does not preempt the federal CAA standards but instead 
lifts the preemption that the Act would normally have under CAA 
Sec.  209(a). Accordingly, we believe these courts' determinations 
that the California emissions standards were a type of ``Federal 
standards fuel economy reduction'' that were not preempted by EPCA's 
fuel economy provisions do not change the fact that the California 
standards are not federal standards that EPA adopts or enforces as 
part of its CAA regulatory program, and thus should not trigger PSD 
permitting requirements.

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[[Page 51545]]

    Second, enforcement of any emission standard that might be 
established after a waiver is granted would occur pursuant to 
regulation under state law, not regulation ``under the Act.'' 
Specifically, section 209(b)(3) of the CAA provides that for any new 
motor vehicle to which state emission standards apply pursuant to a 
waiver granted under section 209(b)(1), ``compliance with such State 
standards shall be treated as compliance with applicable Federal 
standards'' for purposes of Title II of the Act. This provision was 
added when Congress amended section 209 to allow some California 
standards to be less stringent than federal standards as long as 
California's standards are ``in the aggregate'' at least as protective 
of human health and the environment. Section 209(b)(3) ensures that a 
vehicle complying with California's standards for which a waiver has 
been granted, but not necessarily all federal standards, is not subject 
to enforcement under the Act for failure to meet all federal standards. 
However, EPA would not enforce California's standards as it would its 
own. Although the California standards for which EPA has granted a 
waiver include GHG emissions standards, EPA's granting of a waiver does 
not promulgate those GHG standards as EPA standards, nor does it lead 
to EPA enforcement of those GHG standards. Therefore, the grant of a 
waiver to California does not render GHG emissions subject to 
regulation under the CAA.
    We are also aware that some states have chosen, pursuant to section 
177 of the CAA, to adopt the California low emission vehicle (CAL LEV) 
program into their state pollution control programs, including specific 
pollutant emissions standards that are included in CAL LEV after the 
grant of a section 209 waiver. However, for the same reasons as 
discussed above, the adoption of those standards by other states under 
section 177 does not change the fact that those standards are still 
state standards enforced under state law. Accordingly, we find that 
adoption of waived standards pursuant to CAA section 177 should not 
trigger PSD requirements for the pollutants included in those 
standards.\8\
---------------------------------------------------------------------------

    \8\ To the extent that some states adopt the CAL LEV emission 
standards pursuant to section 177 and then incorporate by reference 
those standards into their SIPs, including the emission standards 
included in the CAL LEV program pursuant to a section 209 waiver, 
the PSD Interpretive Memo already expressed the view that inclusion 
of a pollutant standard in a SIP does not make that pollutant 
subject to the PSD program requirements. While we are taking comment 
on that SIP interpretation as part of this reconsideration, the 
current inclusion of the CAL LEV standards into state SIPs does not 
make the pollutants covered by those standards ``subject to 
regulation'' under the Act since the PSD Interpretive Memo remains 
in effect for the federal PSD program.
---------------------------------------------------------------------------

    Accordingly, we believe that neither the act of granting a section 
209 waiver for emission standards nor the adoption of such standards 
pursuant to section 177 makes a pollutant ``subject to regulation'' for 
the purposes of the PSD program. EPA believes there is strong legal 
support for this position. EPA requests comment on this position and 
any other legal or policy factors that weigh for or against our 
consideration of the grant of a section 209 waiver interpretation.

G. Timing of Regulation

    In a related matter concerning the final interpretation of the 
regulatory language found in 40 CFR 52.21(b)(50)(iv), we are seeking 
comment on whether the interpretation of ``subject to regulation'' 
should also more clearly identify the specific date on which PSD 
regulatory requirements would apply. In the PSD Interpretative Memo, 
the Administrator stated that EPA interprets language in the definition 
of ``regulated NSR pollutant'' to mean that the fourth part of the 
definition should ``apply to a pollutant upon promulgation of a 
regulation that requires actual control of emissions.'' See Memo at 14. 
However, after evaluating the underlying statutory requirement in the 
CAA and the language in all parts of the regulatory definition more 
closely, EPA proposes to modify its interpretation of the fourth part 
of the definition with respect to the timing of PSD applicability.
    In considering the actual application of PSD requirements to 
regulated NSR pollutants that are ``subject to regulation,'' we believe 
that the term ``subject to regulation'' in the statute and regulation 
is most naturally interpreted to mean that PSD requirements apply when 
the regulations addressing a particular pollutant become final and 
effective. The CAA requires PSD controls ``for each pollutant subject 
to regulation'' under the Act that are emitted from a source and does 
not mention promulgation. See 42 U.S.C. 7475(a)(4) and 7479(3) 
(emphasis added). The regulatory language of 40 CFR 52.21(b)(50)(iv) 
does not specify the exact time at which the PSD requirements should 
apply to pollutants in that class, whether upon promulgation or 
effective date of the underlying regulation. However, the use of 
``subject to'' in the Act suggests that PSD requirements are intended 
to be triggered when those standards become effective for the 
pollutant. No party is required to comply with a regulation until it 
has become final and effective. Prior to that date, an activity covered 
by a rule is not in the ordinary sense ``subject to'' any regulation. 
Regardless of whether one interprets regulation to mean monitoring or 
actual control of emissions, prior to the effective date of a rule 
there is no regulatory requirement to monitor or control emissions.
    In addition, applying PSD to a pollutant upon the effective date of 
a regulation would harmonize application of the PSD program with the 
requirements of the Congressional Review Act (CRA). Under the CRA, 
major regulations promulgated by EPA do not become effective until 
after Congress has had an opportunity to review them. See 5 U.S.C. 801 
et seq. As part of that review, Congress can potentially disapprove 
final actions issued by federal agencies within a specified time 
period. Accordingly, under the CRA, a major rule cannot take

[[Page 51546]]

effect until 60 days after it is published in the Federal Register. 
Since an EPA regulation that would trigger PSD requirements for a 
pollutant could be disapproved by Congress after it is promulgated, it 
would be more consistent with the CRA to defer application of PSD 
requirements to a pollutant until the rule regulating the pollutant is 
final and effective, and not simply promulgated.
    Since the fourth part of the definition of ``regulated NSR 
pollutant'' (40 CFR 52.21(b)(50)(iv)) does not use the word promulgated 
and uses the ``subject to regulation'' language from the CAA, the 
language in the fourth part of the definition can be interpreted to 
render PSD requirements applicable to a pollutant upon the effective 
date of a regulation. Because this is consistent with a more natural 
reading of the statutory language in the Clean Air Act, the application 
of the Congressional Review Act to EPA regulations, and the ``actual 
control interpretation'' favored by EPA at this time, we propose upon 
reconsideration to interpret 40 CFR 52.21(b)(50)(iv) to make PSD 
requirements applicable to a pollutant upon the effective date of a 
regulation covered by this part of the definition.
    The PSD Interpretive Memo relied on other parts of the definition 
of ``regulated NSR pollutant'' to conclude that PSD requirements apply 
to a pollutant upon promulgation of a control requirement. However, a 
closer reading of the other parts of that definition indicates that the 
language used in several parts of the definition may in fact be 
construed to make PSD applicable upon the effective date of regulatory 
requirements, rather than the date of promulgation. The definition says 
that PSD requirements apply to NSPS or Title VI pollutants once they 
are ``subject to a[ny] standard promulgated under'' particular 
provisions of the CAA. 40 CFR 52.21(b)(50)(ii)-(iii). While the word 
``promulgated'' appears in the definition, this term qualifies the 
underlying standard and does not directly address the actual 
application of PSD requirements. Under the language in these two parts 
of the definition, PSD requirements apply when a pollutant becomes 
``subject to'' the underlying standard, which is ``promulgated under'' 
a particular part of the Act. For the same reasons as discussed above, 
we think it is best to interpret these two provisions to apply PSD 
requirements to NSPS and Title VI pollutants on the effective date of 
the underlying standards.
    However, different timing language is used for the first class of 
pollutants described in the regulated NSR pollutant definition: PSD 
requirements apply once a ``standard has been promulgated'' for a NAAQS 
pollutant or its precursors. 40 CFR 52.21(b)(50)(i). The use of ``has 
been'' in the regulation indicates that a pollutant becomes a 
``regulated NSR pollutant,'' and hence PSD requirements for the 
pollutant are triggered, on the date a NAAQS is promulgated. Thus, it 
may not be possible for EPA to read the regulatory language in this 
provision to make PSD applicable to a NAAQS pollutant upon the 
effective date of the NAAQS. Although our present view is that the 
Clean Air Act is most naturally read to make PSD requirements 
applicable upon the effective date of a rule that ``regulates'' the 
pollutant, we are not at this time proposing to modify the language in 
40 CFR 52.21(b)(50)(i). Since EPA is not presently proposing to 
establish a NAAQS for any additional pollutants, the timing of PSD 
applicability for a newly identified NAAQS pollutant does not appear to 
be of concern at this time. If EPA adopts the interpretation proposed 
here with respect to the timing of PSD applicability, we will consider 
whether a revision of this regulatory language is needed at such time 
as EPA may be considering promulgation of a NAAQS for an additional 
pollutant.
    Accordingly, in considering statutory language and the actual 
application of PSD requirements in practice, we believe the ``subject 
to regulation'' language in the fourth part of the regulated NSR 
pollutant definition should be interpreted such that PSD requirements 
would not apply to pollutants covered by this part of the definition 
until the effective date of the underlying regulation. EPA believes the 
underlying statutory requirements and the structure of the regulation 
support this position. EPA requests comment on our interpretation that 
a pollutant becomes ``subject to regulation'' under section 
52.21(b)(50)(iv) upon the effective date of the underlying regulation, 
as well as any other legal or policy factors that that could inform 
this interpretation.

H. Other Issues

    As a general matter, during the public comment period for other GHG 
rulemaking actions, such as the GHG Mandatory Reporting Rule (74 FR 
16447, April 10, 2009) and the proposed Endangerment Finding (74 FR 
18885, April 24, 2009), EPA received some comments that discussed the 
interpretation of the PSD applicability issues we are reconsidering 
here. The notices of proposed rulemaking for those packages clearly 
indicated that the issue of how and when PSD permitting requirements 
would apply to GHG pollutants would be addressed during this 
reconsideration action (74 FR at 16456, n. 8 and 18905, n. 29), and EPA 
will not be searching other rulemaking dockets for comments that might 
be applicable to our current reconsideration of the PSD Interpretive 
Memo. Accordingly, we direct all parties that might have submitted 
comments regarding interpretation of the PSD applicability definitions 
in those other rulemakings to submit new comments in accordance with 
the requests in this reconsideration process. In particular, commenters 
should submit only those portions of their previously submitted 
comments that respond to the specific requests for comment in this 
action.
    We believe the above summary of the PSD Interpretive Memo, the 
summary of Petitioners' arguments for reconsideration of the Memo, and 
the requests for comments presented thus far provide an adequate basis 
for the public to comment on the Agency's reconsideration of the PSD 
Interpretive Memo. However, in accordance with Administrator Jackson's 
February 17, 2009 grant of reconsideration, EPA also seeks comment on 
any other interpretations of ``subject to regulation'' and any other 
issues that were not addressed in the PSD Interpretive Memo but may 
help to inform our present reconsideration of that Memo, including 
those raised by the EAB's Deseret decision.
    For example, there is an issue from the Deseret case that is 
relevant to our consideration of the monitoring and reporting 
interpretation. Briefs submitted by Region VIII and the EPA Office of 
Air and Radiation (OAR) in that case argued that even if the monitoring 
and reporting interpretation was adopted by the Board, PSD permitting 
requirements would not apply to CO2 emissions. Region VIII 
and OAR reasoned that the existing CO2 monitoring and 
reporting regulations were not promulgated ``under the Act'' because 
the text, context, and legislative history of the underlying statutory 
provision ``demonstrate that Congress did not intend section 821 of the 
1990 Public Law'' amending the CAA to become part of the CAA. See 
Deseret at 55. The EAB found that the statutory text both supported and 
subverted this argument, and also that the Agency's prior actions and 
statements were inconsistent with and contradictory to it. Accordingly, 
the Board declined to rely on this argument in deciding the case and 
directed Region VIII to

[[Page 51547]]

consider the issue more fully on remand. Should the EPA adopt the 
monitoring and reporting interpretation, it will be necessary for EPA 
to resolve whether or not the existing CO2 monitoring and 
reporting regulations were promulgated ``under the Act'' since the 
position taken by Region VIII and OAR in the Deseret case would keep us 
from applying that interpretation in some instances. We therefore 
welcome comments on this issue. We note that there are several factors 
that make us less inclined to maintain the position advocated by Region 
VIII and OAR in the Deseret case on remand. Notably, the EAB found that 
EPA's previous statements on whether section 821 was part of the Clean 
Air Act had been inconsistent and that EPA had taken actions that were 
contradictory to the position advocated by Region VIII and OAR. 
Although we are considering changing our position, we want our review 
of this issue to be informed by public comments. Accordingly, 
consistent with our grant of reconsideration, we seek comment on the 
section 821 issue and any other issues or interpretations to the extent 
they could inform our final interpretation of the regulatory phrase 
``subject to regulation.''
    In addition, this reconsideration of the PSD Interpretive Memo is 
following the type of notice and comment process normally found in 
formal rulemaking proceedings. See CAA section 307(d). Accordingly, EPA 
is also seeking comment on whether or not, upon completion of this 
reconsideration, the Agency should codify the final interpretation of 
what makes a pollutant ``subject to regulation'' for the purposes of 
PSD applicability into the definitions section of the federal PSD 
regulations. 40 CFR 52.21(b). If a commenter supports EPA codifying its 
``subject to regulation'' PSD applicability position, we request that 
the commenter include in their comment suggested amendatory language 
for inclusion in 40 CFR 52.21.
    As we are requesting comment on whether to codify the Agency's 
final interpretation in the federal PSD rules found at 40 CFR 52.21, we 
also request comment on whether that interpretation should be also 
codified in 40 CFR 51.166 for permitting authorities with approved 
implementation plans. We note that the PSD Interpretive Memo expressly 
limits the applicability of the interpretation to permitting 
jurisdictions that fall under the federal PSD program. Since the EAB 
determined that the interpretation adopted in this memorandum was not 
previously established by the Agency, that interpretation should not 
apply retroactively to prior approvals of SIPs by EPA Regional Offices. 
However, the Memo gives discretion to EPA Regional Office authorities 
to apply the Memo's interpretation prospectively when reviewing and 
approving new submissions for approval or revision of state plans under 
40 CFR 51.166. The Memo also explains that when states use the same 
language in their approved implementation plans as contained in 40 CFR 
52.21(b)(50), those states may interpret that language in their state 
regulations in the same manner as reflected in the Memo. See Memo at 3, 
n. 1. For the sake of consistent application of EPA's final 
interpretation, we are soliciting comment on whether we should also 
codify the Agency's final interpretation as a revision to 40 CFR 
51.166.
    Finally, we note that, in addition to the policy questions raised 
by each of the interpretations above, there is another overarching 
consideration upon which we seek comment: the consequence that a given 
interpretation would have on the scope and timing of the triggering of 
the PSD program for GHGs. Although the policy questions discussed 
earlier extend beyond the immediate issues surrounding triggering of 
PSD for GHGs, we also seek comment on whether these immediate issues, 
discussed below, warrant consideration in this reconsideration effort.
    The actual control interpretation would mean that GHGs become 
``subject to regulation'' upon final promulgation of the GHG Light Duty 
Vehicle Rule. We are concerned about millions of small and previously 
unpermitted sources becoming immediately subject to PSD permitting as a 
result of finalization of that rule. The basis for this concern, and 
EPA's approach to addressing it, are explained in a separate notice 
published in the Proposed Rules section of this Federal Register known 
as the GHG Tailoring Rule. The GHG Tailoring Rule proposes to establish 
temporary applicability thresholds for PSD and Title V purposes to 
levels that reflect the administrative capabilities of permitting 
authorities to address GHG emissions from stationary sources. Without 
the GHG Tailoring Rule, PSD permitting requirements would apply to 
numerous small sources, resulting in a program that is impossible to 
administer due to a tremendous influx of permit applications 
accompanied by, at least initially, a shortfall of resources, training, 
and experience by permitting authorities, the regulated community, and 
other stakeholders.
    The GHG Tailoring Rule is intended to address this problem in 
advance of regulation under the GHG Light Duty Vehicle Rule. Therefore, 
under our preferred interpretation of ``subject to regulation'', EPA 
will not face the administrative impossibility problem if the GHG 
Tailoring Rule is finalized according to this planned timing. However, 
if EPA adopts any other interpretation (which thereby would void the 
PSD Interpretive Memo), additional timing considerations arise. 
Finalizing any other interpretation prior to promulgating the GHG Light 
Duty Vehicle Rule would result in earlier triggering of PSD permitting 
requirements for future new and modified sources of GHGs including the 
large numbers of small sources addressed by the GHG Tailoring Rule. On 
the other hand, finalizing any other interpretation after EPA 
promulgates the GHG Light Duty Vehicle Rule would likely have a limited 
effect on triggering PSD permitting requirements for future new and 
modified sources of GHGs, because we expect that the GHG Light Duty 
Vehicle Rule would already have triggered PSD for the same pollutants 
and the GHG Tailoring Rule would be in place. Our strong preference is 
that these three actions--the GHG Light Duty Vehicle Rule, the GHG 
Tailoring Rule, and this reconsideration--work together with EPA's 
other GHG-related actions to yield a common sense and efficient 
approach to GHG regulation that does not result in the imposition of an 
impossible administrative burden on permitting agencies. Our preferred 
approach has the added benefit of achieving this goal by triggering PSD 
only after the GHG Tailoring Rule can be put in place. We seek comment 
on whether and how this goal could be achieved were EPA to adopt any of 
the other four interpretations.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action.'' The action was 
identified as a ``significant regulatory action'' because it raises 
novel legal or policy issues. Accordingly, EPA submitted this action to 
the Office of Management and Budget (OMB) for review under EO 12866 and 
any changes made in response to OMB recommendations have been 
documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction

[[Page 51548]]

Act, 44 U.S.C. 3501 et seq. We are not promulgating any new paperwork 
requirements (e.g., monitoring, reporting, and recordkeeping) as part 
of this proposed action. The OMB has previously approved the 
information collection requirements contained in the existing NSR 
regulations (40 CFR parts 51 and 52) under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and has assigned OMB 
control number 2060-0003, EPA ICR number 1230.23. The OMB control 
numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    This proposed reconsideration of the PSD Interpretive Memo is not 
subject to the Regulatory Flexibility Act (RFA), which generally 
requires an agency to prepare a regulatory flexibility analysis for any 
rule that will have a significant economic impact on a substantial 
number of small entities. The RFA applies only to rules subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act (APA) or any other statute. In the case of this 
reconsideration process, public notice and comment was not required 
under the APA or CAA, but rather was voluntarily conducted in 
accordance with the February 17, 2009 letter granting reconsideration. 
Accordingly, an RFA analysis is not required.
    However, EPA recognizes that some small entities continue to be 
concerned about the potential impacts of the statutory imposition of 
PSD requirements that may occur given the various EPA rulemakings 
currently under consideration concerning greenhouse gas emissions. As 
explained in the preamble for the proposed GHG Tailoring Rule, located 
in the Proposed Rules section of this Federal Register, EPA is using 
the discretion afforded to it under the RFA to consult with OMB and the 
Small Business Administration, with input from outreach to small 
entities, regarding the potential impacts of PSD regulatory 
requirements as that might occur as EPA considers regulations of GHGs. 
Concerns about the potential impacts of statutorily imposed PSD 
requirements on small entities will be the subject of deliberations in 
that consultation and outreach. Concerned small entities should direct 
any comments relating to potential adverse economic impacts on small 
entities from PSD requirements for GHG emissions, including any 
concerns about the impacts of this reconsideration action, to the 
docket for the GHG Tailoring Rule.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 
U.S.C. 1531-1538, requires federal agencies, unless otherwise 
prohibited by law, to assess the effects of their regulatory actions on 
state, local, and tribal governments and the private sector. Federal 
agencies must also develop a plan to provide notice to small 
governments that might be significantly or uniquely affected by any 
regulatory requirements. The plan must enable officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant federal 
intergovernmental mandates and must inform, educate, and advise small 
governments on compliance with the regulatory requirements.
    This proposed reconsideration 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. Thus, this proposed rule is not subject to the 
requirements of sections 202 or 205 of UMRA.
    In developing this reconsideration notice, EPA consulted with small 
governments pursuant to a plan established under section 203 of UMRA to 
address impacts of regulatory requirements in the rule that might 
significantly or uniquely affect 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 Executive Order 13132. This action would ultimately 
simplify and reduce the burden on state and local agencies associated 
with implementing the PSD program by providing clarity on what 
pollutants are ``subject to regulation'' to the CAA for PSD 
applicability purposes. Therefore, this proposed rule will not impose 
substantial direct compliance costs on state or local governments, nor 
will it preempt state law. Thus, the requirements of sections 6(b) and 
6(c) of the Executive Order do not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and state and local 
governments, EPA specifically solicits comment on this proposed rule 
from state and local officials.

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

    Subject to the Executive Order 13175, entitled ``Consultation and 
Coordination with Indian Tribal Governments'' (65 FR 67249, November 9, 
2000), EPA may not issue a regulation that has tribal implications, 
that imposes substantial direct compliance costs, and that is not 
required by statute, unless the federal government provides the funds 
necessary to pay the direct compliance costs incurred by tribal 
governments, or EPA consults with tribal officials early in the process 
of developing the proposed regulation and develops a tribal summary 
impact statement.
    EPA has concluded that this action may have tribal implications. 
However, it will neither impose substantial direct compliance costs on 
tribal governments nor preempt tribal law. There are no tribal 
authorities currently issuing major NSR permits; however, this may 
change in the future.
    Although Executive Order 13175 does not apply to this proposed 
rule, EPA specifically solicits additional comment on this proposed 
action from tribal officials.

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

    EPA interprets EO 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 EO 
13045 because this proposed reconsideration merely proposes to 
reconsider EPA's previous PSD applicability with regards to what 
constitutes a pollutant being ``subject to regulation'' under the CAA 
for the purposes of PSD applicability.

H. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (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. This 
action proposes options and positions that would clarify PSD 
applicability for pollutants ``subject to regulation'' under the CAA 
and does

[[Page 51549]]

not, in and of itself, pose any new requirements.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (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. NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This proposed reconsideration 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.
    EPA has determined that this proposed reconsideration of PSD 
applicability will not have a 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. This proposed reconsideration merely 
proposes to reconsider EPA's previous PSD applicability with regards to 
what constitutes a pollutant being ``subject to regulation'' under the 
CAA for the purposes of PSD applicability.

V. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 107, 110, and 301 of the CAA as amended (42 U.S.C. 7401, 7410, and 
7601).

List of Subjects in 40 CFR Part 52

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Reporting and 
recordkeeping requirements.

    Dated: September 30, 2009.
Lisa P. Jackson,
Administrator.
[FR Doc. E9-24196 Filed 10-6-09; 8:45 am]

BILLING CODE 6560-50-P