Document ID: EPA-HQ-OAR-2009-0517-19181
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2010-06-03T04:00Z

May 2010

Prevention of Significant Deterioration and Title V GHG Tailoring Rule:
EPA’s Response to Public Comments

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

Air Quality Policy Division

Research Triangle Park, NC



[This page intentionally left blank.]Foreword

This document provides responses to public comments on the U.S.
Environmental Protection Agency’s (EPA’s) proposed “Prevention of
Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.” 
EPA received comments on this proposal via mail, e-mail, facsimile, and
the web site at http://regulations.gov.  Additionally, EPA conducted two
public hearings to allow the public to provide oral testimony on the
proposed rule.  Copies of the public hearing transcripts and all comment
letters submitted to the docket are available at the EPA Docket Center
Public Reading Room, or electronically through
http://www.regulations.gov by searching Docket ID EPA-HQ-OAR-2009-0517.

In light of the very large number of comments received and the
significant overlap between many comments, this document does not
respond to each comment individually.  Rather, EPA summarizes and
provides a single response to each significant argument, assertion, and
question contained within the totality of comments.  Within each comment
summary, EPA provides in parentheses one or more Docket ID numbers for
commenters who raised particular issues.  However, the list of commenter
ID numbers is not meant to be exhaustive.  EPA does not individually
identify each and every commenter who made a certain point in all
instances, particularly in cases where multiple commenters express
essentially identical arguments.  Although portions of the preamble to
the final rule are paraphrased in this document, to the extent any
ambiguity is introduced by this paraphrasing, the preamble itself
remains the definitive statement of the rationale for the final rule.

The primary contact regarding questions or comments on this document is:

	Joseph Mangino

Air Quality Policy Division

	Office of Air Quality Planning and Standards 

	Mail Code C504-03

	Environmental Protection Agency

	Research Triangle Park, NC  27711

	e-mail:  mangino.joseph@epa.gov

	



[This page intentionally left blank.]

Table of Contents

  TOC \o "1-3" \h \z \u    HYPERLINK \l "_Toc260329787"  Foreword	 
PAGEREF _Toc260329787 \h  i  

  HYPERLINK \l "_Toc260329788"  Table of Contents	  PAGEREF
_Toc260329788 \h  iii  

  HYPERLINK \l "_Toc260329789"  Acronyms and Abbreviations	  PAGEREF
_Toc260329789 \h  vii  

  HYPERLINK \l "_Toc260329790"  Chapter 1.  Introduction	  PAGEREF
_Toc260329790 \h  1  

  HYPERLINK \l "_Toc260329791"  Chapter 2.  Public Hearing, Form
Letters, and General Comments Related to GHG-Related Rules and the
Proposed Tailoring Rule	  PAGEREF _Toc260329791 \h  3  

  HYPERLINK \l "_Toc260329792"  2.1  Public Hearings	  PAGEREF
_Toc260329792 \h  3  

  HYPERLINK \l "_Toc260329793"  2.2  Small Business Outreach Meeting	 
PAGEREF _Toc260329793 \h  4  

  HYPERLINK \l "_Toc260329794"  2.3  Meeting with Semiconductor Industry
Association	  PAGEREF _Toc260329794 \h  5  

  HYPERLINK \l "_Toc260329795"  2.4  Form Letters and General Comments
Received on GHGs Regulation and the Proposed Tailoring Rule	 5

  HYPERLINK \l "_Toc260329796"  2.5  General Comments on the Tailoring
Rule and Comments on Other GHG Regulations	 9

  HYPERLINK \l "_Toc260329797"  2.5.1  Regulation of GHGs Under the CAA
and The Proposed Tailoring Rule	  PAGEREF _Toc260329797 \h  10  

  HYPERLINK \l "_Toc260329798"  2.5.2  Endangerment Finding Under
Section 202 of the CAA	  PAGEREF _Toc260329798 \h  17  

  HYPERLINK \l "_Toc260329799"  2.5.3  Light Duty Vehicle Rule (LDVR)	 
PAGEREF _Toc260329799 \h  2  3

  HYPERLINK \l "_Toc260329800"  2.5.4  Reconsideration of Interpretation
of Regulations that Determine Pollutants Covered by CAA Permitting
Programs (“CAA Interpretation Reconsideration Rulemaking”)	  PAGEREF
_Toc260329800 \h  2  7

  HYPERLINK \l "_Toc260329801"  Chapter 3.  Comments on the Legal Basis
for the Proposed Rule	30 

  HYPERLINK \l "_Toc260329802"  3.1  Comments on Regulation of GHGs
under the CAA	30 

  HYPERLINK \l "_Toc260329803"  3.1.1  Comments on Regulation of GHGs
under the CAA in General	30 

  HYPERLINK \l "_Toc260329804"  3.1.2  Comments on Regulation of GHGs
under the PSD Program	  PAGEREF _Toc260329804 \h  3  3

  HYPERLINK \l "_Toc260329805"  3.1.3  Comments on Regulation of GHGs
under the Title V Program	  PAGEREF _Toc260329805 \h  3  9

  HYPERLINK \l "_Toc260329806"  3.2  Comments on the Administrative
Necessity Doctrine	 42

  HYPERLINK \l "_Toc260329807"  3.3  Comments on the Absurd Results
Doctrine	 49

  HYPERLINK \l "_Toc260329808"  3.4  Comments on the Step-by-Step
Process	 54

  HYPERLINK \l "_Toc260329809"  3.5  Comments on Implementation through
Retroactively Limiting Approval of SIPs and Title V Programs	 54

  HYPERLINK \l "_Toc260329810"  Chapter 4.  Comments on Streamlining
Options and Tools To Address the Administrative Burdens of PSD and Title
V for GHGs	 58

  HYPERLINK \l "_Toc260329811"  4.1  General Comments on Permit
Streamlining Options for PSD and Title V	 58

  HYPERLINK \l "_Toc260329812"  4.2  Redefining “Potential to Emit”	
62

  HYPERLINK \l "_Toc260329813"  4.3  Presumptive BACT	 65

  HYPERLINK \l "_Toc260329814"  4.4  General Permits and Permits-by-Rule
 77

  HYPERLINK \l "_Toc260329815"  4.5  Electronic Permitting	 81

  HYPERLINK \l "_Toc260329816"  4.6  “Lean” Techniques for Permit
Process Improvement	 82

  HYPERLINK \l "_Toc260329817"  Chapter 5.  Comments on the Proposed
Definition of the GHG Pollutant	 84

  HYPERLINK \l "_Toc260329818"  5.1  Comments on the Compounds Included
in the Definition of the GHG Pollutant	 84

  HYPERLINK \l "_Toc260329819"  5.2  Comments on Use of GWP and the CO2e
Metric	 90

  HYPERLINK \l "_Toc260329820"  5.2.1  General Support and Opposition to
the CO2e Metric	 90

  HYPERLINK \l "_Toc260329821"  5.2.2  Comments on Combining the Six
GHGs into a Single Metric	 94

  HYPERLINK \l "_Toc260329822"  5.2.3  Comments on Linking the
Definition of CO2e to EPA’s “Inventory of U.S. Greenhouse Gas
Emissions and Sinks”	 98

  HYPERLINK \l "_Toc260329823"  5.2.4  Comments on the Use of Dual
Thresholds for Pollutants that Do Not Exceed the Statutory Thresholds
but Do Exceed the CO2e Thresholds	 101

  HYPERLINK \l "_Toc260329824"  5.2.5  Comments on the Use of English
versus Metric Tons for GHG Metric	 103

  HYPERLINK \l "_Toc260329825"  Chapter 6.  Comments on Permitting
Thresholds	 104

  HYPERLINK \l "_Toc260329826"  6.1  Comments on Administrative Burden
and Sources Impacted under the Statutory Thresholds	 104

  HYPERLINK \l "_Toc260329827"  6.2  Comments on the Administrative
Burden and Sources Impacted under the Proposed Thresholds	 107

  HYPERLINK \l "_Toc260329828"  6.3  Comments on the Methodology Used to
Evaluate Burden	 115

  HYPERLINK \l "_Toc260329829"  6.4  Comments on Recommended Thresholds	
124

  HYPERLINK \l "_Toc260329830"  6.4.1  Comments Recommending a Non-GHG
Trigger	 124

  HYPERLINK \l "_Toc260329831"  6.4.2  Comments Recommending Specific
Thresholds	 127

  HYPERLINK \l "_Toc260329832"  6.4.3  Comments on the PTE Basis for
Thresholds	 145

  HYPERLINK \l "_Toc260329833"  6.4.4  Comments Recommending Alternative
Approaches to Applicability	 146

  HYPERLINK \l "_Toc260329834"  6.4.5  Comments on the Proposed Phasing
of the Thresholds	 148

  HYPERLINK \l "_Toc260329835"  Chapter 7.  Comments on the Economic
Impacts of the Proposed Rule	 153

  HYPERLINK \l "_Toc260329836"  7.1  Economic/Societal Impacts and the
Regulatory Impacts Analysis of the Rule	 153

  HYPERLINK \l "_Toc260329837"  7.2  Regulatory Flexibility Analysis	
164

  HYPERLINK \l "_Toc260329838"  Chapter 8.  Implementation Issues	 172

  HYPERLINK \l "_Toc260329839"  8.1  Comments on EPA’s Mechanism for
Implementing and Adopting the Tailoring Approach	 172

  HYPERLINK \l "_Toc260329840"  8.2  Transitional Issues	 182

  HYPERLINK \l "_Toc260329841"  8.2.1  Requests for “Grandfathering”
and for Exemptions from Revision, Reopening or Update Requirements for
Application and Permits	 182

  HYPERLINK \l "_Toc260329842"  8.2.2  Requests for Delays in
Implementation	 192

  HYPERLINK \l "_Toc260329843"  8.3  Requests for Specific
Exemptions/Deferrals from Applicability	 202

  HYPERLINK \l "_Toc260329844"  8.3.1  Source Categories	 202

  HYPERLINK \l "_Toc260329845"  8.3.2  Biogenic Emissions and Combustion
of Biomass	 208

  HYPERLINK \l "_Toc260329846"  8.3.3  Fugitive Emissions	 213

  HYPERLINK \l "_Toc260329847"  8.3.4  Pollution Control Projects	 216

  HYPERLINK \l "_Toc260329848"  8.3.5  Indirect Emissions	 218

  HYPERLINK \l "_Toc260329849"  8.4  PSD and Title V Permitting
Implementation Issues and Questions	 218

  HYPERLINK \l "_Toc260329850"  8.4.1  General Suggestions, Comments, or
Questions	 218

  HYPERLINK \l "_Toc260329851"  8.4.2  General Requests for Guidance	
221

  HYPERLINK \l "_Toc260329852"  8.4.3  General Suggestions or Comments
for Specific Sectors	 224

  HYPERLINK \l "_Toc260329853"  8.4.4  General Suggestions or Comments
on Emissions Monitoring, Public Participation, and Funding	 226

  HYPERLINK \l "_Toc260329854"  8.4.5  PSD-Specific Implementation
Issues	 228

  HYPERLINK \l "_Toc260329855"  8.4.6  Title V-Specific Implementation
Issues	  PAGEREF _Toc260329855 \h  2  33

  HYPERLINK \l "_Toc260329856"  Chapter 9.  Comments on Statutory and
Executive Order Reviews	  PAGEREF _Toc260329856 \h  2  42

  HYPERLINK \l "_Toc260329857"  9.1  General Comment	  PAGEREF
_Toc260329857 \h  2  42

  HYPERLINK \l "_Toc260329858"  9.2  Executive Order 12866 –
Regulatory Planning and Review	  PAGEREF _Toc260329858 \h  2  42

  HYPERLINK \l "_Toc260329859"  9.3  Paperwork Reduction Act	  PAGEREF
_Toc260329859 \h  2  43

  HYPERLINK \l "_Toc260329860"  9.4  Regulatory Flexibility Act	 
PAGEREF _Toc260329860 \h  2  44

  HYPERLINK \l "_Toc260329861"  9.5  Unfunded Mandates Reform Act	 
PAGEREF _Toc260329861 \h  2  44

  HYPERLINK \l "_Toc260329862"  9.6  Executive Order 13132 –
Federalism	  PAGEREF _Toc260329862 \h  2  45

  HYPERLINK \l "_Toc260329863"  9.7  Executive Order 13175 –
Consultation and Coordination with Indian Tribal Governments	  PAGEREF
_Toc260329863 \h  2  46

  HYPERLINK \l "_Toc260329864"  9.8  Executive Order 13211 – Actions
That Significantly Affect Energy Supply, Distribution, or Use	  PAGEREF
_Toc260329864 \h  2  46

  HYPERLINK \l "_Toc260329865"  Chapter 10.  Miscellaneous Comments	 
PAGEREF _Toc260329865 \h  2  48

   TOC \o "1-3" \h \z \u  

 

Appendix A

Appendix B

Acronyms and Abbreviations

Acronym/

Abbreviation	Definition

ANPR	Advance Notice of Proposed Rulemaking

APA	Administrative Procedure Act

BACT	Best Available Control Technology

BMP	Best Management Practice(s)

Btu	British Thermal Unit

CAA or Act	Clean Air Act

CAAAC	Clean Air Act Advisory Committee

CAFE	Corporate Average Fuel Economy

CAIR	Clean Air Interstate Rule

CAM	Compliance Assurance Monitoring

CARB	California Air Resources Board

CCS	Carbon Capture and Sequestration

CFR	Code of Federal Regulations

CH4	Methane

CO	Carbon Monoxide

CO2	Carbon Dioxide

CO2e	Carbon Dioxide Equivalent

CREDO	Chaplains Religious Enrichment Development Operation

CRU	Climate Research Institute

CTG	Control Techniques Guidelines

CWA	Clean Water Act

D.C. Circuit	District Court Circuit

DOE	Department of Energy

DOT	Department of Transportation

EAB	Environmental Appeals Board

EITE	Energy-Intensive Trade-Exposed 

EO	Executive Order

EPA	Environmental Protection Agency

FERC	Federal Energy Regulatory Commission

FR or Fed. Reg.	Federal Register

GHG	Greenhouse Gas

GSP	Gross State Product

GWP	Global Warming Potential

HAP	Hazardous Air Pollutants

HFC	Hydrofluorocarbon

H.R.	House of Representatives

HVAC	Heating, Ventilation, & Air Conditioning

HQ	Headquarters

ICR	Information Collection Request

IGCC	Integrated Gasification Combined Cycle

IL	Illinois

IPCC	Intergovernmental Panel on Climate Change

Lbs	Pounds

LAER	Lowest Achievable Emission Rate

LFG	Landfill Gas

LDVR	Light-Duty Vehicle Rule

MMBtu	Million British Thermal Units

MSW	Municipal Solid Waste

MW	Megawatt

MWh	Megawatt Hours

MY	Model Year

N2O	Nitrous Oxide

NAAQS	National Ambient Air Quality Standard(s)

NESHAP	National Emission Standards for Hazardous Air Pollutants

NG	Natural Gas

NHTSA	National Highway Traffic Safety Administration

NMOC	Non-Methane Organic Compound

NOD	Notice of Determination

NOx	Nitrogen Oxides

NRC	Nuclear Regulatory Commission

NRDC	Natural Resources Defense Council

NSPS	New Source Performance Standard

NSR	New Source Review

NTTAA	National Technology Transfer and Advancement Act

OA	Office of Advocacy

OAR	Office of Air and Radiation

ODS	Ozone Depleting Substances

OIRA	Office of Information and Regulatory Affairs

OMB	Office of Management and Budget

OPEI	Office of Policy, Economics, and Innovation

PAL	Plantwide Applicability Limit

PFC	Perfluorocarbons

PM	Particulate Matter

POTW	Publicly Owned Treatment Works

ppm	Parts per Million

ppmv	Parts per Million by Volume

PRA	Paperwork Reduction Act

PSD	Prevention of Significant Deterioration

PTE	Potential to Emit

RACT	Reasonably Available Control Technology

R&D	Research and Development

RFA	Regulatory Flexibility Act

RIA	Regulatory Impact Analyses

RMRR	Routine Maintenance, Repair, Replacement

SBA	Small Business Administration

SBARP	Small Business Advocacy Review Panel

SBREFA	Small Business Regulatory Enforcement Fairness Act

SER	Small Entity Representative

SF6	Sulfur Hexafluoride

SIA	Semiconductor Industry Association

SIP	State Implementation Plan

SO2	Sulfur Dioxide

T&D	Transmission and Distribution

TDF	Tire-Derived Fuel

TIP	Tribal Implementation Plan

tpy/TPY	Tons Per Year

TSD	Technical Support Document

UMRA	Unfunded Mandates Reform Act

UNFCCC	United Nations Framework Convention on Climate Change

U.S.C.	United States Code

USDA	United States Department of Agriculture

U.S. or U.S.A.	United States of America

VA	Virginia

VOC	Volatile Organic Compound



Chapter 1.  Introduction

On October 27, 2009, we proposed to tailor the major source
applicability thresholds for greenhouse gas (GHG) emissions under the
Prevention of Significant Deterioration (PSD) and title V programs of
the Clean Air Act (CAA or Act) by setting first-phase applicability
threshold levels under both programs, setting a first-phase PSD
significance level for GHG emissions, undertaking efforts to streamline
the administration of the programs, and committing to an assessment of
the administration of the programs within 5 years and a second-phase
rulemaking within 6 years.  (See 74 Federal Register [FR] 55292, October
27, 2009).  As the first phase, we proposed to establish applicability
thresholds for both the PSD and title V programs at the level of 25,000
tons per year (tpy) carbon dioxide equivalent (CO2e) and to establish a
PSD significance level of between 10,000 and 25,000 tpy CO2e.  In
addition, we proposed to commit that, within 5 years of promulgating the
first phase, we would conduct a study of the permitting authorities'
ability to administer the programs going forward, and then, within a
year, conduct a rulemaking for the second phase of the program.  This
second phase would either confirm the first-phase permitting levels, or
establish revised levels or other streamlining techniques.  

We proposed to identify the GHG metric as the group of six GHGs, on a
CO2e basis.  A source’s emissions for any of the six primary GHGs that
are “subject to regulation” under the CAA, and therefore considered
“regulated NSR pollutants,” are summed on a CO2e basis using their
global warming potential (GWP) values.  The summed CO2e emissions would
then be compared to the applicable permitting threshold to determine
whether the source is subject to PSD and title V requirements.  

Moreover, we also proposed a process, consisting of several components,
for conforming the EPA-approved State Implementation Plans (SIPs) and
title V programs to reflect the GHG threshold levels.  As part of the
proposed Tailoring Rule, we proposed to limit our approval of previously
approved SIPs and title V programs to the extent that they would
require permitting for sources below the GHG permitting thresholds.  In
addition, we explained our intention to undertake a separate rulemaking
to resolve issues related to the definition of the pollutants covered
under the permitting programs in certain approved SIPs and title V
programs.

In conjunction with the first phase of our proposed action to tailor the
GHG permitting thresholds, we committed to a concurrent effort to
investigate, evaluate, and support the implementation of streamlining
techniques to address GHG sources.  In addition to developing permit
streamlining techniques, we also proposed plans to compile and make
available technical and background information on GHG emission factors,
control technologies, strategies and measurement and monitoring
methodologies for key GHG source categories.  We also stated that we
would pursue using this information to develop presumptive Best
Available Control Technology (BACT) levels for selected source
categories, focusing our support effort on the largest emitting GHG
source categories.  A key objective of this support effort is to help
permitting authorities find cost effective ways to achieve GHG controls
under the BACT requirement.  

The docket for this proposed rulemaking contains 19,123 public
submission items that represent over 446,000 public comments received
during the public comment period for the proposed rule.  The docket also
contains the transcripts for two public hearings conducted for the
proposed rule (see Docket Id. No. EPA-HQ-OAR-2009-0517-5319 for the
transcript of the November 18, 2010 public hearing in Arlington, VA, and
Docket Id. No. EPA-HQ-OAR-2009-0517-3412 for the transcript of the
November 19, 2010 public hearing in Rosemont, IL.  Appendix A to this
document presents the list of public submissions (by Docket ID No.) with
a description of the type of comment and the organization/individual
submitting the comment.  Specific and general comments received at the
public hearings and during the public comment period for the proposal
are summarized in this document, organized under the following Chapters:

Chapter 2 – Public Hearing, Mass Campaign Letters/Form Letters, and
General Comments Related to GHG-Related Rules and the Proposed Tailoring
Rule

Chapter 3 – Comments on the Legal Basis for the Proposed Rule

Chapter 4 – Comments on Streamlining Options and Tools To Address the
Administrative Burdens of PSD and Title V for GHGs

Chapter 5 – Comments on the Proposed Definition of the GHG Pollutant

Chapter 6 – Comments on Permitting Thresholds

Chapter 7 – Comments on the Economic Impacts of the Proposed Rule

Chapter 8 – Comments on Implementation Issues

Chapter 9 – Comments on Statutory and Executive Order Reviews

Chapter 10 – Miscellaneous Comments

Chapter 2.  Public Hearing, Form Letters, and General Comments Related
to GHG-Related Rules and the Proposed Tailoring Rule

	The proposal preamble for the Tailoring Rule provided background
information on GHG regulation under the CAA, the current (at that time)
and proposed treatment of GHG emissions under the title V and PSD
programs and what future actions may change that treatment.  The
proposal also announced that we would conduct a public hearing if one
was requested and provided numerous avenues that the public could use to
comment on the proposed Tailoring Rule.  A public hearing was requested
and two public hearings were held, and hundreds of thousands of comments
were received on the proposal through various avenues.  An overview of
the public hearings, mass campaign letters/form letters and general
comments related to the proposed Tailoring Rule are presented in this
Chapter.  Section 2.1 of this Chapter presents an overview of the public
hearings; section 2.2 summarizes the form letters as well as the general
support and opposition comments related to the proposal; and section 2.3
summarizes examples of the general comments received on the regulation
of GHGs under the CAA, the proposed Tailoring Rule, and other CAA
GHG-related rules.  

2.1  Public Hearings

	On November 18 and November 19, 2009, EPA conducted public hearings on
the proposed PSD and title V GHG Tailoring Rule in Arlington, Virginia
(VA) and Rosemont, Illinois (IL), respectively.  There were 128
attendees and 49 speakers at the Arlington, VA hearing, and 157
attendees and 77 speakers at the Rosemont, IL hearing.  Transcripts for
these hearings can be found in the docket for this rulemaking (see EPA
Docket No. EPA-HQ-OAR-2009-0517-5319 for the Arlington, VA public
hearing transcript, and EPA-HQ-OAR-2009-0517-3412 for the Rosemont, IL
public hearing transcript).  

	Each of the public hearings conducted for the PSD and title V proposed
GHG Tailoring Rule included an introduction which included an overview
of the proposed rule, and procedures for the hearing by the EPA. 
Comments received at both of these hearings parallel comments received
during the public comment period.  Some of the more unique comments not
received during the public comment period were about the use of nuclear
power and/or use of clean coal technology, and/or the vegan lifestyle as
being necessary or desired in reducing carbon dioxide (CO2) and other
GHG emissions, and were not specifically germane to the proposed
Tailoring Rule rulemaking.  One commenter (representing the
Nongovernmental International Panel on Climate Change) raised extensive
arguments against the scientific basis EPA is using to support
regulation of GHGs and provided copyrighted material that is in
opposition to EPA’s position/conclusions (which is available for
viewing at the Air Docket; see EPA Docket No.
EPA-HQ-OAR-2009-0517-5319.2 for further information).  Several
commenters support EPA regulating GHG emissions (focusing on support for
reductions from coal and/or other industries), while others opposed the
regulation of GHG emissions on an economic or scientific basis.  Oral
testimonies at public hearings from differing industries/environmental
groups raise parallel arguments to those submitted in greater detail
during the public comment period.  The more-detailed comments submitted
during the public comment period that are representative of those
presented at the public hearings are represented and responded to in
this document.

2.2  Small Business Outreach Meeting

The EPA, in collaboration with the Small Business Administration (SBA)
and OMB, conducted an outreach meeting designed to exchange information
with small entities that may be affected by various rulemakings that EPA
is developing for GHGs.  The meeting focused, in particular, on the
proposed Tailoring Rule.  Small entity representatives (SERs)
participating in person and via conference call were briefed on the
rulemaking proposal and given the opportunity to provide input that the
EPA considered while developing the final rule.  The meeting took place
in Arlington, Virginia on November 17, 2009, and included
representatives from EPA, SBA, OMB, as well as small entity
representatives.  The outreach effort was organized and led by
representatives from EPA’s OAQPS within the Office of Air and
Radiation (OAR), EPA’s Office of Policy, Economics, and Innovation
(OPEI), the Office of Information and Regulatory Affairs (OIRA) within
the OMB, and the Office of Advocacy (OA) of the SBA.  Documentation of
this meeting, which includes a summary of the advice and recommendations
received from the SERs identified for the purposes of this process can
be obtained in the docket for this rulemaking.  (See Docket No.
EPA-HQ-OAR-2009-0517-19130).  

Comment:

Comments received from small entity representatives are generally
reflected by comments submitted during the public comment period and are
addressed elsewhere in the RTC.  One of the more unique comments not
generally provided in written comments during the public comment period
was provided by an agriculture representative (Farm Bureau).  This
commenter stated that section 424 of the Interior and Environment
Appropriations Act states that, notwithstanding any other provision of
law, none of the funds made available in this Act or any other Act may
be used to promulgate or implement any regulation requiring the issuance
of permits under title V of the CAA for CO2, nitrous oxide (N2O), water
vapor or methane (CH4) emissions resulting from biological processes
associated with livestock production.   The Farm Bureau representative
was concerned that the Light Duty Vehicle Rule (LDVR) will trigger title
V permits for livestock operations involving biological processes.   

Response:  

The appropriations provision states that “[n]otwithstanding any other
provision of law, none of the funds made available in this Act or any
other Act may be used to promulgate or implement any regulation
requiring the issuance of permits under title V of the CAA (42 United
States Code [U.S.C.] 7661 et seq.) for carbon dioxide, nitrous oxide,
water vapor, or methane emissions resulting from biological processes
associated with livestock production.”  Section 424 of the FY 2010
Interior-Environment Appropriations Act.  This language does not
prohibit EPA from spending funds on the Tailoring Rule because the
Tailoring Rule does not require the issuance of permits under title V
for certain emissions from biological processes associated with
livestock production.  Rather, the statute would require title V permits
(to the extent title V does apply to these emissions) in the absence of
the Tailoring Rule.   In other words, if we do not finalize this
Tailoring Rule then, pursuant to the terms of the CAA, sources of GHG
emissions in excess of the 100 tpy would be subject to title V
permitting as of January 2, 2010.  The Tailoring Rule relieves certain
sources of the obligation to apply for title V permits, and thus its
promulgation is not prohibited by section  424 of the Interior and
Environment Appropriations Act for Fiscal Year 2010.

Moreover, the LDVR also was not prohibited by this provision because the
regulations in the LDVR do not require issuance of permits under title V
for emissions from biological processes associated with livestock.  
The regulatory requirements in the LDVR are directed at automobile
manufacturers and the vehicles they produce, and would not address or
require issuance of any permits under title V.   EPA does not interpret
the provision to prohibit the Agency from promulgating or implementing
regulations that do not establish title V permitting requirements for
certain emissions from biological processes associated with livestock. 
 For example, EPA does not interpret the provision to prohibit the
Agency from promulgating or implementing a non-title V regulation that,
by operation of the CAA, could make a pollutant “subject to
regulation” under the Act, potentially triggering title V.   Such a
regulation would not itself establish (or implement) any requirements
under title V.   Further, a mobile source regulation such as the Light
Duty Vehicle Rule, would not establish any requirements with regard to
GHG emissions from livestock.  This interpretation is consistent with
the legislative history of this provision, which states that the
provision "[p]rohibits EPA from regulating certain livestock emissions
under the Clean Air Act," S. Rep. No. 111-38 at 95 (2009), and described
this “a provision … regarding greenhouse gas reporting requirements
associated with livestock production.”   House Rep. No. 111-316
(2009).

2.3  Meeting with Semiconductor Industry Association

	The EPA met with the Semiconductor Industry Association (SIA) on
February 3, 2010 to listen to comments they had on the proposed
Tailoring Rule.  Documentation for this meeting can be found in the
docket for this rulemaking.  (See Docket No. EPA-HQ-OAR-2009-0517)
Comments received from SIA at the meeting parallel their written
comments on the proposal and are addressed in this RTC.

2.4  Form Letters and General Comments Received on GHGs Regulation and
the Proposed Tailoring Rule

Comment:

Hundreds of thousands (over 400,000) of form letters were received
during the public comment period for the proposed Tailoring Rule.  In
addition, thousands of commenters submitted e-mails providing statements
of general support or opposition to the proposed Tailoring Rule and
regulation of GHGs.  Examples of the comments submitted are presented in
this subsection of the RTC, and examples of many of the “base” form
letters cited in these examples (in italics) are included in Appendix B
of this document.  Note that many of the form letters are similar in
content and often even adopt phrases used in another letter.  Where
substantive additional comment was provided with a form letter, we have
addressed the comment or parallel comment in the appropriate Chapter of
this document.

	

Many commenters support regulation of GHGs because:

Regulation of GHGs is the right thing to do (Chaplains Religious
Enrichment Development Operation [CREDO] Action, over 34,500
commenters).  (8909)

They support EPA’s goal of controlling GHG emissions (over 7,200
commenters).

They support the overall plan to limit global warming pollution emitted
by coal plants and other big polluters through the CAA (Form Letter 9,
over 8,300 commenters). 

They support EPA’s recognition that GHGs must be regulated to protect
human health and the environment (Form Letter 11, over 80 commenters). 

They generally support EPA in reducing GHG emissions and using
regulations to control emissions (Form Letter 17, over 200 commenters). 

	Other commenters oppose regulation of GHGs because:

They generally oppose EPA’s regulation of GHGs (over 150 commenters).

They assert that regulating GHGs under the CAA will cripple the
country’s economy and that EPA’s rationale for the proposed
Tailoring Rule, by claiming “absurd results” and “administrative
necessity,” is flawed given that the EPA is applying the law that
produces the “absurd results” (Form Letter 5, over 18,500
commenters).  The commenters urge EPA to defer to Congress to decide how
to regulate GHGs.

	

In regards to the Tailoring Rule, many commenters support the proposed
rule.  Some of these commenters (over 280 commenters) use a form letter
to express their support (only provide comments that are several lines
in length), while other commenters use form letters to express their
support.  Form letter supporters believe that:

The biggest polluters should be regulated and prevented from passing on
the costs associated with their pollution to the public.  They add that
the public that is most exposed and vulnerable to these big polluters
are the undeserved and people in poverty (Form Letter 6, over 30
commenters).  

The proposed rule and EPA’s efforts to address GHG emissions will
ensure substantial capital investments in the largest sources of GHGs
are in sync with efforts to reduce GHGs, avoiding costly retrofits in
the future (Form Letter 7, over 600 commenters)  The commenters also
support the use of the 25,000 ton threshold to shield small sources.  

EPA should regulate GHGs from “mega-polluters” (Form Letter 8, a
couple of commenters).

The rule targets the worst offenders and that it will create the largest
emissions reductions while helping the economy grow (Form Letter 10,
over 10 commenters).  

EPA should “finalize a strong rule to require big smokestack
industries to meet modern pollution standards for carbon emissions”
(Form Letter 12, over 550 commenters).  They also generally support
EPA’s goal of controlling GHG emissions.

EPA should “finalize a strong rule to require big smokestack
industries to meet modern pollution standards for global warming
pollution” (Form Letter 13, over 49,900 commenters).  The letter also
urges EPA to investigate various renewable resources such as wind and
solar power to further reduce global warming pollution and transition to
clean energy sources.  

EPA should finalize a strong rule to hold industry sources accountable
(Form Letter 14, over 9,700 commenters).  The letter asserts that EPA's
proposed new rule would use the CAA to curb pollution from these large
sources, while at the same time assuring small sources (like millions of
mom and pop businesses) that they will not be regulated.

EPA should require America’s largest industrial facilities to obtain
CAA Permits (Form Letter 15, over 5,900 commenters).  

This proposal is an essential step that will help reduce GHG pollution
and address climate change (Form Letter 16, over 180 commenters).  

The proposed rule is a major step to holding “mega-polluters”
accountable for GHG emissions, and this strategy will ensure that GHG
emissions are cut quickly while maintaining economic growth (Form Letter
18, over 38,600 commenters).  

A strong rule by the EPA requiring heavy polluters to meet modern
emission standards when expanding or building new facilities is a
critical first step in cutting America’s emissions (Form Letter 19,
over 5,400 commenters).  The letter also requests that a reporting
system be created to provide businesses the necessary data to compare
and control emissions as well as inform federal strategies on national
emissions reduction.  

EPA’s rule will limit GHGs from the largest sources of U.S. global
warming pollution sources (Form Letter 20, over 39,500 commenters). 

Regulation of “big polluters” and the reduction of GHG emissions
from coal plants under the CAA is the right thing to do.  (Form Letters
21 through 24, over 190,000 commenters).

EPA should require mitigating global warming pollution by transitioning
to clean energy sources that do not harm the environment, never run out,
and create new, local jobs (Form Letter 25, over 170 commenters).  The
postcard asserts that mitigation of global warming pollution will only
succeed if we require coal-fired power plants-America's largest single
source of global warming pollution-and other big polluters to reduce
their GHG emissions.

	Nevertheless, many commenters oppose the proposed rule because they
believe that:

The rule is based upon “faulty and discredited science” and would
raise energy prices (Form Letter 1, over 800 commenters).  

The CAA is not designed to regulate GHGs and that regulating GHGs under
the CAA will lead to economic hardship and few environmental benefits
(Form Letter 2, over 20 commenters).  Moreover, the letter cites A
Regulatory Burden: The Compliance Dimension of Regulating CO2 as a
Pollutant” which provides a breakdown of the millions of businesses
that have the potential to emit (PTE) 250 tpy or more. 

The proposed rule will have unintended adverse consequences (Form Letter
3, over 500 commenters).  Consequences cited by the letter include
permitting delays, and the prevention of energy sector projects from
moving forward.  The letter also advocates that a market-based mechanism
be employed for addressing GHGs, although no specifics are provided.  

Congress (not EPA) should address the climate change issue.  (Form
Letter 4, over 800 commenters).  The letter asserts that the proposed
rule opens the door for regulation of GHGs emitted from many small
businesses and even homes.  The letter also states that the proposed
rule will cost jobs and undermine America’s ability to remain
globally-competitive.  

	Other commenters provide general comments, ranging from topics on
health care to why coal is a good or bad energy source, and on various
types of renewable resources that should be used for energy independence
(over 580 commenters).  

Response: 

	We agree with those commenters that support EPA’s efforts to regulate
GHGs.  As we state in the final rule titled: “Endangerment and Cause
or Contribute Findings for Greenhouse Gases Under Section 202(a) of the
Clean Air Act” (74 FR 66496), the Agency has found that GHGs in the
atmosphere may reasonably be anticipated to endanger both public health
and public welfare.  The Agency reached this determination after
considering an extensive amount of data on both observed and projected
effects of GHGs in the atmosphere, their effect on climate, and the
public health and welfare risks and impacts associated with such climate
change not only in the U.S., but also in the world.  See 74 FR 66496 for
more information.  Furthermore, even if some of the data that the Agency
considered to reach this conclusion were erroneous, as some of these
commenters claim, the overall evidence that the EPA looked at provides
compelling support that GHGs endanger the public health and public
welfare of both current and future generations.  In addition, the risk
and the severity of adverse impacts on public health and welfare are
expected to increase over time.

	However, regardless of whether the CAA is the preferred mechanism for
GHG regulation and as we state in the final action titled:
“Reconsideration of Interpretation of Regulations That Determine
Pollutants Covered by Clean Air Act Permitting Programs (75 FR 17004),
the U.S. Supreme Court determined that GHGs fit within the definition of
air pollutant in the Act and directed EPA to take actions in accordance
with that determination.  EPA is responding to the Court’s decision by
following the statutory requirements of the CAA.  Accordingly, EPA
finalized its endangerment and cause and contribute findings for GHGs
under section 202(a) of the CAA and finalized corresponding GHG controls
for light duty vehicles.  In addition, the final vehicle rule will
trigger PSD requirements for GHGs because EPA has decided to interpret
the phrase “subject to regulation” found within the definition of
the term “regulated NSR pollutant” to include each pollutant subject
to either a provision in the CAA or regulation adopted by EPA under the
CAA that requires actual control of emission of a pollutant when the
regulatory requirement to control emissions of that pollutant “takes
effect.”  Thus, EPA is taking appropriate action in the
“Reconsideration of Interpretation of Regulations that Determine
Pollutants covered by Clean Air Act Permitting Programs” (see 75 FR
17004) and this rule to ensure a common sense and efficient approach to
GHG regulation.  For these reasons, this rule is not the appropriate
forum for addressing whether the CAA is suited to GHG regulation or
opining on potential Congressional action with regard to GHG regulation.

	We also agree with those commenters that support the Tailoring Rule
because without it, and as we state in the preamble of this rule, PSD
and title V requirements would apply, as of January 2, 2011, at the 100
or 250 tpy levels provided under the CAA, greatly increasing the number
of required permits, overwhelming the resources of permitting
authorities, and severely impairing the functioning of the programs. 
EPA is relieving these resource burdens by phasing-in the applicability
of these programs to GHG sources.  

The Tailoring Rule establishes two initial steps of the phase-in.  Step
1 begins on January 2, 2011, and covers only sources and modifications
that would otherwise undergo PSD or title V permitting based on
emissions of non-GHG pollutants.  Step 2 begins on July 1, 2011, and
covers large sources of GHG emissions that emit or have the potential to
emit 100,000 tpy CO2e or more, and modifications at those sources that
increase net GHG emissions by 75,000 tpy CO2e or more, provided those
sources or modifications also have GHG mass emissions that exceed the
relevant mass-based applicability thresholds.  This rule also requires
EPA to promulgate by July 1, 2012, a step 3 rule that will consider
phasing-in additional sources.  EPA excludes from PSD and title V
permitting for GHG emissions, until at least April 30, 2016, sources
that are not already subject and that emit less than 50,000 tpy of CO2e,
as well as modifications that do not increase net GHG emissions by
50,000 tpy CO2e, or more.  EPA will use this time to streamline the
programs for those sources and must complete a study by April 30, 2015,
to assess improvements in administrability of the programs for such
sources, and must complete a rule by April 30, 2016, addressing
additional such sources based on this study.  Thus, we disagree with the
commenters that believe that the proposed rule will have unintended
adverse consequences including permitting delays and the prevention of
energy sector projects from moving forward since we are phasing-in the
applicability of the PSD and title V programs to GHG sources as
described here and in more detail in the preamble of this rule.

EPA’s legal basis for this Tailoring Rule is its interpretation of the
PSD and title V applicability provisions under the familiar Chevron
two-step framework for interpreting administrative statutes, taking
account of the legal doctrines authorizing agencies to apply statutory
requirements in way that avoids absurd results or administrative
impossibility and authorizing agencies to implement statutory
requirements a step at a time.  Details on why we disagree with those
commenters that oppose the use of the “administrative results” and
“administrative necessity” doctrine are included in the final
preamble of this rule under section V.B. 

2.5  General Comments on the Tailoring Rule and Comments on Other GHG
Regulations

2.5.1  Regulation of GHGs Under the CAA and the Proposed Tailoring Rule

Comment:

Several commenters (0480, 0600, 4631, 5184, 8071) explicitly state that
they generally support EPA’s mission in regards to climate change. 
However, one of these commenters also states that climate change is a
global problem and requires a global solution.  It is imperative that
the U.S. re-establish itself as a world leader in solving the complex
challenges posed by climate change.  Strong U.S. emission reduction
commitments will enable a wide range of developing economies to take
more ambitious domestic actions and create new markets to grow the
global green economy from which we will all benefit (0600).

	Various commenters (0480, 0600, 3916, 3918, 3998, 4154, 4238, 4239,
4518, 4694, 4742, 4746, 4778, 4860, 4863, 4903, 4988, 5039, 5052, 5057,
5081, 5305, 5314, 5528, 5745,  6665, 7935, 8025, 8607, 8803, 8685,
9613), including four commenters (5122, 5306, 5311, 5448) representing
12 environmental advocacy groups, generally support the regulation of
GHGs and the use of the CAA to regulate GHGs.  One commenter adds that
in the absence of comprehensive climate change legislation, EPA must act
under its authority in the CAA (3918), while another commenter opines
that the CAA is necessary and appropriate as a critical bridge towards
comprehensive federal legislation, and can be a valuable component of
comprehensive federal climate policy in the future (7935).

Other commenters (0033, 0041, 0410, 3741, 5140, 5258, 5278, 5136, 5452,
5603, 5606, 5784, 6712, 7133, 7295, 7961, 8014, 17451) explicitly state
that they generally oppose EPA regulating CO2/GHG emissions while
several other comments (0040, 0331, 2504, 2797, 2832, 3277, 3278, 3512,
3513, 3607, 3720, 3741, 3858, 3906, 3915, 3917, 4020, 4095, 4106, 4108,
4113, 4118,4119, 4120, 4123, 4208, 4209, 4228, 4298, 4302, 4504, 4512,
4514, 4515, 4519, 4521, 4522, 4525, 4544, 4554, 4567, 4630, 4667, 4691,
4745, 4749, 4794, 4801, 4851, 4859, 4862, 4863, 4866, 4871, 4903, 4904,
4949, 4990, 4991, 5004, 5038, 5040, 5045, 5052, 5056, 5058, 5062, 5063,
5064, 5073, 5074, 5079, 5082, 5083, 5085, 5104, 5109, 5111, 5112, 5113,
5120, 5123, 5124, 5125, 5129, 5130, 5135, 5136, 5137, 5140, 5142, 5144,
5145, 5179, 5182, 5183, 5198, 5199, 5205, 5214, 5235, 5236, 5245, 5257,
5274, 5275, 5276, 5278, 5279, 5280, 5300, 5301, 5305, 5307, 5310, 5312,
5313, 5315, 5316, 5317, 5318, 5328, 5335, 5336, 5340, 5342, 5344, 5347,
5367, 5391, 5392, 5417, 5425, 5444, 5449, 5525, 5603, 5605, 5607, 5676,
5706, 5708, 5712, 5714, 5715, 5725, 5740, 5743, 5744, 5768, 5769, 5770,
5771, 5773, 5784, 5787, 5789, 5800, 5801, 5803, 5808, 5809, 5844, 5884,
5885, 5886, 5922, 5939, 6201, 6202, 6270, 6460, 6491, 6609, 6880, 7026,
7125, 7126, 7130, 7131, 7134, 7192, 7193, 7203, 7204, 7212, 7217, 7294,
7961, 7986, 8014, 8015, 8071, 8273, 8283, 8300, 8303, 8459, 8460, 8513,
8514, 8521, 8533, 8583, 8584, 8585, 8691, 9269, 10432, 14697, 14710,
16411, 17451, 18025, 19129) oppose the use of the CAA to regulate GHGs. 
The reasons for their opposition include:  

The CAA is not the tool or is ill-suited for addressing GHG emissions
(0040, 2797, 2832, 3512, 3917, 4020, 4118, 4119, 4120, 4123, 4208, 4209,
4228, 4243, 4302, 4514, 4521, 4525, 4630, 4667, 4801, 4851, 4862, 4863,
4866, 4903, 4990, 5040, 5056, 5062, 5064, 5073, 5074, 5082, 5085, 5130,
5136, 5140, 5142, 5144, 5199, 5214, 5236, 5275, 5278, 5280, 5300, 5301,
5305, 5307, 5312, 5313, 5315, 5316, 5317, 5318, 5328, 5335, 5336, 5340,
5347, 5367, 5444, 5740, 5769, 5770, 5773, 5784, 5808, 6202, 6270, 6460,
6609, 7126, 7193, 8300, 8513, 8691, 10432, 14697, 17451, 18025, 19129),
and have problems with the legal/congressional intent and scientific
basis for using the CAA to regulated GHGs (2797, 3512, 3513, 3858, 4095,
4106, 4243, 4298, 4515, 4554, 4691, 4741, 4745, 4851, 4871/5063/5605,
4949, 5004, 5058, 5074, 5082, 5111, 5124, 5137, 5183, 5199, 5275, 5318,
5391, 5706, 5744, 5787, 5844, 5922, 7193, 7961, 8014, 8459, 8460, 10432,
14697, 17451, 18025, 19129).  

Attempting to implement a comprehensive federal climate policy by means
of the decades-old CAA achieves none of EPA’s objectives.  The CAA was
not designed to address global climate issues.  Even though EPA attempts
to avoid “absurd results” by proposing the Tailoring Rule, all the
Tailoring Rule does is highlight the legal and practical problems of
attempting to regulate stationary source GHG emissions under the CAA. 
(4862, 8513)

Forcing GHG regulation under the CAA is inappropriate.  For example, by
regulating GHGs through PSD requirements triggered by finalizing the
motor vehicle rule, EPA will in effect preclude permitting authorities
and regulated entities alike from needed time to adequately analyze
emissions and available controls and otherwise prepare for
source-specific regulation.  (5315)  

The differences of GHGs relative to NAAQS pollutants are so substantial
that EPA, working closely with Congress, should be evaluating more
appropriate solutions to regulating GHG rather than force fitting them
into existing CAA programs not designed to regulate GHGs (3917, 4209,
4243, 4302, 4863, 4866, 5040, 5064, 5074, 5145, 5199, 5214, 5275, 5280,
5305, 5307, 5335, 5336, 5525, 5886, 8691).  They believe or state that: 

EPA has spent decades developing health-based NAAQS and no such standard
exists for CO2e.  (5305) 

The CAA is clearly not designed to address pollutants that are
distributed on a global scale and remain in the atmosphere (4243, 8691).
 The CAA – designed for regulating pollutants from specific sources
and measuring impacts on specific areas – mandates EPA to designate
areas as either attainment or nonattainment (4243).  Due to the global
nature of GHGs and their associated atmospheric lifetime properties, EPA
would likely have to assess air quality on a national scale, and thus
designate the entire country as either attainment or nonattainment
(4243).

The impacts of conventionally-regulated pollutants under the CAA (e.g.,
criteria pollutants) are more local and regional as opposed to
well-mixed and dispersed GHG.  (5040, 5145, 5199, 5275, 5280, 5886); 

CO2 creates different effects on human health (which has secondary
non-direct effects) than conventional pollutants regulated under the CAA
(e.g., hazardous air pollutant [HAP] and criteria pollutants which have
primary direct and secondary non-direct effects), and therefore, the EPA
is attempting to regulate the secondary effects of a pollutant (CO2)
rather than the pollutant itself.  (5214)  

The CAA is in large part a statutory structure for regulating localized
air emissions based upon empirical health and environmental based
standards, and therefore not designed for the regulation of global GHGs
- much of which originate outside the U.S. and for which there are no
empirical standards.  (4209, 5525)

The fate of criteria pollutants in the atmosphere are well understood
while current global climate models are typically long term, macroscopic
overviews.  (5305)

Control technologies for criteria pollutants have an established track
record, whereas control and measurement of GHG are more tenuous.  (5305)

Federal regulatory thresholds have been developed around criteria
pollutants which are more typically emitted at the parts per million
concentration level, as opposed to GHG which are typically emitted at
the percent levels.  CO2, for example, is emitted at levels that are
completely different from the currently regulated pollutants (4302,
5214) and the health effects levels are also completely different
(4302).  

The CAA fails to encourage innovation to reduce emissions beyond its
scope through such critical projects as emissions mitigation programs in
agriculture, forestry, greenscaping, and beyond.  (8691).

	Opposing commenters (3278, 3512, 3513, 4095, 4020, 4106, 4118, 4504,
4667, 5275, 5317, 5335, 5715, 5743, 5787, 6457, 8691) also provide
suggestions, including:

Prior to developing any GHG air permitting regulation that is intended
to address climate change concerns; an overall air quality assessment
needs to be completed by EPA.  This assessment must include: 1) An
overall emissions inventory which includes all GHG emissions from all
source categories (mobile, off-road mobile, area, stationary sources);
2) A climate change assessment to determine the relative impact of each
source category (climate change models could be used to conduct this
assessment) and; 3) A GHG reduction strategy focusing on the largest
emitting sources.  Specific regulations or permit requirements should
not be developed until this assessment is completed.  (5787)

EPA has available to it several means of avoiding the need for any
tailoring, all of which are consistent with the CAA.  (5715)   

EPA should have declined to find that GHG emissions endanger public
health and welfare.  The Supreme Court has left EPA with the option of
declining to make an endangerment finding on the basis of such
prudential considerations as the CAA unsuitability for regulating GHGs,
itself established by the very proposal under consideration.  

Under the clear terms of the CAA, EPA can determine that GHGs do not
contribute to climate change or EPA can provide some reasonable
explanation as to why it cannot or will not exercise its discretion to
determine whether they do.  

A reviewing court surely would accept as a reasonable explanation
"economic and bureaucratic collapse resulting from application of CAA
programs to control a vanishingly small fraction of total emissions of a
'pollutant' that is a natural, trace constituent of the global
atmosphere with no known or knowable 'safe' or 'unsafe levels,' the
presence in the atmosphere of which possibly leads to variations in
temperature that yield costs and benefits far beyond human capacity to
meaningfully quantify."  And so Massachusetts leaves EPA to the best
option of all:  Decline further action until Congress actually enacts a
law intended to control GHGs without all of the unintended consequences
of trying to do so under the CAA.

If EPA were correct that the adoption of mobile source standards
ineluctably leads to regulation of GHG emissions from stationary
sources, and to the untenable costs and administrative burdens that it
then seeks to avoid with the Tailoring Rule, it should indefinitely
postpone those burdens by declining to adopt the vehicle emissions
rules.  EPA's proposed GHG emission standards for motor vehicles are
only 4 percent more stringent in effect than the fuel efficiency
standards proposed by the Department of Transportation (DOT).

Even if EPA were to press its finding that mobile source GHG emissions
endanger public health and welfare, and to adopt tailpipe standards and
fuel efficiency standards accordingly, it is not at all inevitable that
GHG's then become a "regulated pollutant" for purposes of CAA permitting
programs intended for stationary sources.  In fact, quite the contrary,
Congress did not mandate the nonsensical result that a decision to
regulate mobile source emissions of a pollutant should somehow change
the requirements for issuing permits to stationary sources. 

The CAA is the wrong tool to use to reduce GHG emissions.  If
nonetheless EPA decides to proceed with the PSD Tailoring Rule, neither
the statute nor the Supreme Court ruling compels the approach proposed
by EPA.  EPA must exercise more flexibility than proposed and take into
account the nature of GHG emissions (compared to conventional
pollutants); the relative contribution from each industry to the total
global emissions that EPA claims is causing the endangerment, and the
facts and circumstances applicable to each industry.  (5335)  

An effective climate change program will be market-based, comprehensive,
and would preempt state law – and it should come from Congress.  The
commenter recommends that any economy-wide climate change program should
have flexible approaches to establish a price signal for carbon.  The
commenter suggests such approaches may vary by economic sector and could
include, depending on the sector, market-based incentives; cap and
trade; tax reform; performance standards; and incentives for technology
research, development, and deployment.  (3512) 

A market-based program to regulate GHG emissions would work (4120, 4504,
4667, 8691).  Cap-and-trade has the added benefit of harmonizing with
similar programs already in place and under consideration globally
(5743, 8691).  Another commenter added that market-based approaches
achieved through new legislation should properly consider energy,
emissions, allowances and costs, including legislation that coordinates
energy efficiencies and emission reductions, and that provides
compliance options and cost management through provisions such as
cap-and-trade, prevention of GHG leakage to overseas from unequal
impacts on energy intensive and trade exposed industry in the U.S., and
provisions for cost-effective GHG offsets (4667).  Commenter 4020
prefers a legislative solution to this issue, and favors a market-based
cap and trade program tailored to address issues of emission reductions
and allocations, credits for early performance and alternative measures
to reduce GHG’s, such as through expanded recycling.  

Emissions offsets provide critical cost-containment and price stability,
whether under federal cap-and-trade legislation or existing CAA
authority, by providing flexibility to regulated industries to find the
lowest-cost emissions reductions across a range of options.  GHG
reduction opportunities are diverse and spread across the entire
economy, and offset trading is the best means to tap these opportunities
and create real change by overcoming market barriers, serving investment
needs, and correcting misaligned incentives.  Numerous studies have
concluded that use of market-based offset approaches can reduce air
pollution compliance costs in the range of 70-90 percent.  In addition
to providing cost-containment and price moderation, by energizing
innovation and market forces, offset projects provide an essential
bridge to a transformative low-carbon economy.  Offset projects are
already providing jobs and opportunity for the U.S. economy through a
robust voluntary market.  (6457)

Future legislation should not impose a carbon tax.  The commenter states
that federal regulations that would result in federal or state program
fees or taxes on the livestock industry will impose a significant added
cost that almost always cannot be absorbed or passed on to consumers. 
(5743)  

	Several commenters (3512, 3917, 3954, 4106, 4554, 4667, 4691, 4862,
4866, 4990, 5052, 5056, 5062, 5085, 5086, 5123, 5124, 5140, 5182, 5245,
5257, 5258, 5274, 5275, 5278, 5279, 5301, 5307, 5315, 5318, 5328, 5336,
5347, 5367, 5451, 5607, 5744, 5769, 5922, 6491, 7134, 7203, 7204, 7212,
7217, 8014, 8015, 8071, 8300, 8401, 8405, 8513, 8585, 8691, 10432,
14710, 16411) also opine that GHGs regulations should be developed by
Congress or established under a single national program.  Some of these
commenters made the following points:

New regulations should be determined by Congress-not by the EPA (3512,
4667, 5086, 5140, 5182, 5245, 5258, 5275, 5278, 5279, 5336, 5451, 5607,
5769, 5922, 6491, 7134, 7212, 7217, 8014, 8015, 8071, 8585).   

The cap-and-trade program that Congress is considering to limit GHG
emissions may have duplicative, contradictory, or overlapping
requirements with this rule.  (5336)  

GHG regulation is beyond the authority of just the EPA (4554, 5124,
5182, 5318, 5607, 6491, 7134, 7212, 8071). 

EPA’s recent GHG-related rulemakings are not compelled under the CAA,
and the EPA should exercise its discretion under the statute in
deference to Congress’ primary role in establishing this new and
sweeping policy framework.  (5086)

The best way to arrive at the right climate change solution is to
develop a single national program, scientifically based and purposefully
designed to deal with the issue of climate change, and addressing as
well the interrelated issues of energy policy,  (8015)  

EPA should not regulate GHG emissions from stationary sources using
existing CAA authority unless and until Congress has had an opportunity
to consider the policy and economic implications of taking this step. 
(5123)

Regulating GHGs under the CAA should be addressed through the
legislative or regulatory process.  (3917, 4667, 4691, 4862, 4990, 5056,
5062, 5085, 5140, 5274, 5278, 5328, 5367, 8513)  

EPA has voluntarily elected to establish a national GHG emission limit
as part of the LDVR before the CAA was ready to regulate GHG emissions
effectively and before Congress has had an opportunity to pass
comprehensive climate change legislation.  (5245)  

New legislation (5052) and international agreements are needed to
address the GHG emissions not only in the U.S. but worldwide (4106,
4866, 5257, 5307, 5315, 5336, 8691).  Climate change is a global issue
best addressed on a worldwide basis.  

EPA should develop a single national program to deal with the issue of
climate change, and address the interrelated issues of energy policy. 
The commenter notes it is essential that climate change regulatory
policy promote the health and welfare of Americans by not causing severe
adverse economic impacts domestically and placing U.S. industry at a
severe international competitive disadvantage.  (16411)  

Congress continues to debate market approaches such as a cap-and-trade
system for reducing GHG emissions, a command and control regulatory
scheme under the CAA will only complicate the regulation of GHGs –
resulting in a maze of partially developed regulatory permitting
regulations that will be in direct conflict with Congressional
legislative language and intent.  Because GHG reduction technologies are
in the research and development (R&D) stage, the commenter believes that
unproven technologies will complicate and delay BACT determinations,
whereas a market-based legislative solution would allow reductions at
the lowest cost to society.  The commenter is also concerned about the
impact of the PSD program on the ability to use offsets, such as
landfill and coal mine waste-to-energy projects, under a future
market-based program – without a clear signal of a future for these
offset projects, incentives for reductions from these projects would
wither.  (5301)

	

Various commenters (0600, 3916, 3918, 3998, 4154, 4238, 4239, 4518,
4694, 4746, 4778, 4860, 4863, 4903, 5039, 5052, 5057, 5081, 5305, 5314,
5528, 5740, 5745, 5808, 7935, 8025, 8607, 8803, 9613), including four
commenters (5122, 5306, 5311, 5448) representing 12 environmental
advocacy groups, generally support the use of the CAA to regulate GHGs
and the proposed Tailoring Rule. These commenters often made the
following points: 

The rule is a significant step forward in the national effort to develop
a clear regulatory structure for addressing GHG emissions in the U.S. 
(4860, 3918).  

Adoption of the rule will allow their state to focus on the largest
sources of GHGs (3916).  

With the implementation of the rule, impacts on some of the sensitive
lands of Indian Country may be diminished.  (4778, 8803)  

The applicability thresholds governing the traditional criteria
pollutants are not appropriate for facilities that emit CO2 and other
GHGs and must be increased in order to provide a workable and reasonable
regulatory structure - and to avoid the “absurd results” that EPA
discusses (3998).  In addition, various commenters that do not
necessarily agree with EPA’s legal interpretation of when PSD and
title V permitting requirements would be triggered, do agree that a
"tailoring" of the thresholds for each of these programs must be
performed to avoid the unintended consequence of subjecting a large
number of small sources to the regimens of PSD and title V (4746, 4863,
4903, 5052, 5740, 5808, and 5305).

The rule:

Proposes a regulatory method that has been proven as an effective means
of achieving pollution reduction.  EPA analysis has found the CAA has
achieved cost-effective reductions in sulfur dioxide (SO2), nitrogen
oxides (NOx), and particulate matter (PM) with an economic benefit
demonstrated to be 42 times greater than the costs of compliance. 
Therefore, applying BACT standards under the CAA to GHG emissions
continues the legacy of a demonstrably successful program to now meet
the threats of global climate change and energy independence.  (0600)

Establishes an equitable framework, by setting a regulatory threshold
that holds the largest polluters accountable while protecting the
nation’s schools, farms, and small businesses.  This arrangement would
most fairly assign responsibility to the small handful of big polluters
who account for a majority of the nation’s global warming pollution. 
This allows the EPA to achieve the greatest impact with the fewest
agency resources in the short timeframe needed to protect the public
from the risks to health and welfare posed by climate change.  (0600)

Facilitates a sustainable energy strategy for the country’s future. 
By applying NSR standards for GHG emissions, the EPA sends a strong
signal of support for the clean energy industry.  No longer will
fossil-fuel facilities reap the unfair advantage of being financially
unaccountable for the costs of their pollution.  Such signals are
necessary to drive investment in low-carbon technologies that will spur
sustainable growth and create valuable jobs.  (0600) 

Other commenters (2504, 2797, 3278, 3512, 3858, 3278, 3607, 3720, 3741,
3915, 4020, 4118, 4120, 4123, 4298, 4512, 4519, 4521, 4554, 4768, 4866,
4871/5063/5605, 4903, 4949, 4990, 5045, 5056, 5062, 5073, 5074, 5082,
5085, 5111, 5135, 5140, 5142, 5276, 5278, 5307, 5308, 5312, 5315, 5318,
5328, 5336, 5340, 5417, 5706, 5769, 5773, 5800, 5922, 7026, 7986, 8585)
oppose the issuance of the Tailoring Rule because they believe that: 

The rule is unnecessary.  The LDVR does not need to trigger PSD and
title V  (5312)  (See comments on the LDVR rulemaking and the “subject
to regulation” reconsideration rulemaking in this section for further
comments regarding applicability trigger dates for GHG PSD and title V
requirements).

The Tailoring Rule should not be finalized under the authority of CAA
section 202.  (4118).  EPA should delay or withdraw the rule and lay a
statutory groundwork that will enable a reasonable and orderly
transition for incorporation of GHG emissions into the existing PSD and
title V programs.  (3278)  

EPA should conclude that PSD and title V permitting are not meant to
apply based on a source’s CO2 or GHG emissions, and cite
Congressional, legislative history, and legal support for their
position.  (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922)  

EPA must realize that it is unreasonable and unnecessary to interpret
the CAA to impose PSD requirements suddenly upon issuance of a wholly
separate regulation such as the LDVR.  (4871/5063/5605) 

The proposal will precipitate costly legal challenges and more time is
needed to study the environmental and economic impacts that would be
associated with regulating GHGs.  (8585)

The rule is not an efficient use of taxpayer money and represents
duplicity of regulation for no apparent reason.  (4554)

Response:

Most of the above comments are not relevant to the proposed rule at
issue in this rulemaking.  This rulemaking is not about whether and/or
when EPA should determine, under section 202(a), that emissions of GHGs
from new motor vehicles cause or contribute to air pollution that may
reasonably  be anticipated to endanger public health or welfare, and if
so when EPA should or should not establish emissions standards under
section 202(a) of the CAA.  Rather, this proposed rule was about
developing a reasonable implementation plan for the PSD and title V
permitting programs in the event they are triggered for GHGs.  Thus, for
example, comments questioning the timing of a final section 202(a)
endangerment finding, opining about the timing of regulations under
section 202(a), discussing generally the appropriateness of using the
CAA to address GHGs, arguing that GHGs require a global approach, noting
a preference for legislation generally and/or a preference for a
particular regulatory or legislative approach, and otherwise arguing
against CAA actions to address GHGs are outside the scope of the
specific questions and issues raised and addressed in the proposed
Tailoring Rule.  Therefore, we are not responding to them in this RTC. 
We note that many of these comments have been raised and addressed in
other GHG rulemakings.  See, e.g.,  Final Endangerment and Cause or
Contribute Findings for Greenhouse Gases Under Section 202(a) of the
Clean Air Act, 74 FR 66496, 66500 (Dec. 15, 2009) (responding to
comments regarding timing of endangerment finding).  As noted above,
comments that are relevant to the specific issue of how to implement the
title V and PSD programs for GHGs are addressed in Chapter 8 of this RTC
(Implementation Issues).   

	Importantly, because EPA has finalized the endangerment finding and the
LDV rule, we must move forward with the Tailoring Rule.  Thus, we also
agree with those commenters that support the Tailoring Rule because
without it, and as we state in the preamble of this rule, PSD and title
V requirements would apply, as of January 2, 2011, at the 100 or 250 tpy
levels provided under the CAA, greatly increasing the number of required
permits, overwhelming the resources of permitting authorities, and
severely impairing the functioning of the programs.  EPA is relieving
these resource burdens by phasing-in the applicability of these programs
to GHG sources as we explained above and as explained in more detail in
the preamble of this final action.  

EPA’s legal basis for this Tailoring Rule is its interpretation of the
PSD and title V applicability provisions under the familiar Chevron
two-step framework for interpreting administrative statutes, taking
account of the legal doctrines authorizing agencies to apply statutory
requirements in way that avoids absurd results or administrative
impossibility and authorizing agencies to implement statutory
requirements a step at a time.  Details on why we disagree with those
commenters that oppose the use of the “absurd results” and
“administrative necessity” doctrine as well as our responses to the
comments received on how this Tailoring Rule fits into the CAA (e.g.,
details on our interpretation of the concept that a NAAQS should be
established before GHGs can be regulated under the PSD program) are
included under Section V.B. under the final preamble of this rule.  We
note that for the reasons presented in those sections we disagree that
we are required, or allowed, to undertake the rulemakings and other
regulatory actions (e.g., inventory development) that commenters suggest
are needed prior to subjecting a pollutant to PSD review.  See also 75
FR 17400 (April 2, 2010).

2.5.2  Endangerment Finding Under Section 202 of the CAA 

Comment:

Two commenters representing eight environmental groups, support the
endangerment finding under section 202 of the CAA.  (5306, 5311)

	Other commenters (3720, 3954, 4095, 4118, 4542, 4630, 4631, 4693, 4741,
4851, 4867, 4871, 5005, 5045, 5063, 5082, 5110, 5120, 5129, 5137, 5140,
5142, 5184, 5235, 5278, 5309, 5310, 5317, 5328, 5605, 5607. 5712, 5715,
5718, 5800, 6712, 7204, 8015, 8459, 10432, 14697) express or imply that
they oppose the endangerment finding under section 202 of the CAA.  

Other  commenters argue that EPA is under no obligation to issue these
rules at the present time, and that the Supreme Court noted in
Massachusetts v. EPA that the EPA has administrative discretion
regarding the timing and form of issuing rules (0523, 3720, 5110, 5120,
5235, 5800, 8015, 16411).  

	Several other commenters (4542, 4851, 5142, 5235, 5712, 8459) state
that the science does not support an endangerment finding, while other
commenters (e.g., 15054) request clarification/evidence and
quantification of the effects of global warming that they believe EPA
had not sufficiently provided to support an endangerment finding
because:

Data from the Intergovernmental Panel on Climate Change (IPCC) has been
found to be suspect.  The IPCC relied on information from the Climate
Research Institute (CRU) at the University of East Anglia in England. 
More than 61 megabytes of CRU e-mails and documents that were made
public has cast serious doubt of the reliability of this information and
its ability to meet the requirements of the IQA.  The publicly-available
e-mails suggest that CRU scientists have been suppressing, possibly
destroying and misstating data.  Public review needs to be held to
determine if raw data was deleted, doctored or otherwise withheld that
would have changed any of the GWPs prior to relying on the values
referenced to the IPCC SAR.  There must be an opportunity to determine
if a correction is needed and, if so, then time needed to propose the
correction.  The commenter asserts that EPA’s proposal to define, by
reference, the GWPs of EPA's Inventory of U.S. Greenhouse Gas Emissions
and Sinks also violates the CAA 307(d) rulemaking requirements, as well
as regulations of the Director of the Federal Register.  (8459)

EPA's finding that high concentrations of GHGs are "very likely" the
cause of increased global temperatures ignores strong evidence that
global temperatures have stopped rising.  As recently as November 20,
2009 Der Spiegel reported that climatologists are "puzzled as to why
average global temperatures have stopped rising over the last 10 years."
 (5235)  

The article cites a recent study completed by Great Britain's Hadley
Centre for Climate Prediction and Research questioning the IPCC's
figures pertaining to an increase in global climate temperatures. 
According to the Hadley Centre, the “world grew warmer by .07 degrees
Celsius from 1999 to 2008 and not by the .2 degrees Celsius assumed by
the United Nations Intergovernmental Panel on Climate Change." 
Furthermore, the Hadley Center attributes the .07 degree increase to
naturally occurring phenomena, El Niño and La Niña. 

Recently released confidential documents from the University of East
Anglia's Climate Research Unit, strongly suggest that key IPCC
scientists have improperly manipulated evidence to support the theory of
anthropogenic global warming.  (4542, 4851)

	A couple of commenters believe EPA misstates the regulatory
ramifications of the Supreme Court's decision in Massachusetts vs. EPA
(5082) or EPA could have determined that a policy-based reason prevents
EPA from making a reasoned decision on endangerment (5110) because: 

EPA could provide some reasonable explanation as to why it cannot or
will not exercise its discretion to determine whether GHG emissions from
new motor vehicles or new motor vehicle engines contribute to air
pollution that may reasonably be anticipated to endanger public health
or welfare.  The commenter believes that EPA can meet this standard, and
respond to the remand in Massachusetts on the ground that an
endangerment finding under section 202 will directly lead to the trigger
of NAAQS, NSPS, PSD and title V, which the commenter believes were never
intended to cover such emissions, and triggering these provisions will
have a devastating effect on the already fragile economy.  (5082)

The Court did not require that EPA’s "reasonable explanation" not to
undertake the endangerment process be wholly science-based.  Instead,
the commenter believes that a decision by EPA not to undertake the
process for finding endangerment, on the basis that such a finding will
trigger a regulatory cascade and cause economic chaos - of the precise
type contemplated by the Tailoring Rule itself - constitutes a
"reasonable explanation" as required by the ruling in the cited case. 
(5110)  The commenter cites the statement made by the Supreme Court that
states:  "[u]nder the clear terms of the CAA, EPA can avoid taking
further action only if it determines that GHGs do not contribute to
climate change or if it provides some reasonable explanation as to why
it cannot or will not exercise its discretion to determine whether they
do." 

Other commenters argue that: 

By moving several separate, near-simultaneous packages to initiate and
define the regulation of GHGs under authority of the CAA, EPA has
obscured fundamental issues of how and when EPA should proceed to
respond to the Supreme Court’s decision in Massachusetts v. EPA. 
(4095)  

EPA did not allow for comment on the affect the findings of endangerment
and the promulgation of mobile source rules under section 202 had on the
implementation of PSD or other title I requirements on stationary
sources, saying it was unrelated.  Under the Tailoring Rule, EPA is
proposing regulations on stationary sources without discussion or
elicitation of comment on how the other requirements of title I under
the CAA are affected by these coordinated rulemakings.  EPA must analyze
and describe how the other provisions of title I will be affected by its
coordinated rulemakings for GHGs before finalizing any GHG Endangerment
Finding or rulemakings under the Act.  (5082)

Finally, some commenters believe EPA should withdraw or revoke the
Endangerment Finding and/or proposed Tailoring Rule because: 

EPA should defer to sound science, Congress, and world organizations to
address policy on the issue of manmade climate change.  (5607, 5712)

The Tailoring Rule will have a devastating effect on their state’s
economy.  (4871/5063/5605)

Response:

	As noted earlier, comments regarding the section 202(a) endangerment
and cause or contribute findings, and the Supreme Court’s decision in
Massachusetts v. EPA, are outside the scope of this rulemaking.  Indeed,
many of these same issues were raised in the comment period on the
findings or on pending petitions for reconsideration on the findings. 
Thus, they have either already been responded to in the final findings,
to the extent relevant, or are pending before EPA in petitions for
reconsideration and will be addressed in EPA’s response to those
petitions.  They are not, however, within the scope of this rulemaking. 

We disagree with commenters who argue that EPA has obscured fundamental
issues of how it should respond to the Supreme Court’s decision or the
effect of regulating GHGs under the CAA through the promulgation of
several rules addressing GHGs.  EPA has been moving forward in careful,
thoughtful manner to address this complicated issue.  This rule, which
addresses implementation issues regarding the PSD and title V programs
is a key part of that overall process.

We further note that withdrawing the Tailoring Rule would be
counter-productive to solving the problems that commenters argue flow
from the endangerment finding and LDVR.  The Tailoring Rule will provide
relief and establish a reasonable path forward for implementing the PSD
and title V programs.  See section 6.1 of this RTC. 

2.5.3  Light Duty Vehicle Rule (LDVR) 

Comment:

	Several commenters (5306, 5311) support the promulgation of the LDVR
under section 202 of the CAA, at least in the near term. 

One commenter (4524), while not necessarily supporting or opposing the
rule, states that EPA should take steps to allow for sufficient time for
states to revise their own title V and PSD programs before GHGs become
regulated pollutants triggering PSD and title V requirements by either
delaying the adoption of its portion of the LDVR or by adopting an
effective date of its portion of the rule that gives a sufficient time
for states to revise their own title V and PSD programs.

Several other commenters (3513, 3720, 3858, 4016, 4095, 4021, 4106,
4113, 4118, 4122, 4123, 4243, 4318, 4519, 4522, 4523, 4631, 4741, 4851,
4862, 4870, 4952, 4992, 5005, 5038, 5052, 5080, 5083, 5088, 5089, 5113,
5114, 5120, 5123, 5128, 5137, 5140, 5141, 5143, 5184, 5214, 5224, 5245,
5278, 5310, 5316, 5317, 5327, 5328, 5342, 5345, 5346, 5390, 5451, 5601,
5712, 5713, 5714, 5715, 5741, 5768, 5773, 5800, 5886, 6141, 6414, 6459,
6880, 7217, 8015, 8071, 8273, 8301, 8303, 8533, 8545, 8581, 16411)
oppose the promulgation or support delaying promulgation of the LDVR
under section 202 of the CAA because:

EPA is not required by the CAA or judicial decisions to regulate GHGs
from motor vehicles under CAA section 202/statute by a particular
deadline.  (3513, 3720, 4095, 4519, 5005, 5120, 5245, 5310, 5316, 5317,
5328, 5452, 5800)

While EPA is now required to set standards for vehicles under CAA
section 202 by virtue of its December 6, 2009 final Endangerment
Determination, the Supreme Court’s opinion in Massachusetts v. EPA
indicated clearly that EPA has significant discretion with regard to the
time, manner, and form of its regulations (4095).  

EPA was not forced to propose a LDVR that needs to be promulgated by
March 31, 2010 to ensure that this requirement applies to 2012 MY
vehicles.  Because of its own proposed action, EPA has created the very
“absurd result” from which it now seeks relief in the proposed GHG
Tailoring Rule.  (5245, 5452)  

EPA as a policy decision could decide not to establish GHG emission
limits under section 202(a) of the CAA at this time (4519, 5317).  One
commenter added that a decision not to regulate under the CAA would be
consistent with the text of the CAA and the Supreme Court’s decision
in Massachusetts v. EPA, 549 U.S. 497 (2007), which emphasizes that the
Court “h[e]ld only that EPA must ground its reasons for action or
inaction in the statute.”  Id. at 535 (emphases added) (5317).  In
other words, section 202(a) imposes no deadline for promulgating
regulations.

EPA’s section 202 rule should be withdrawn or re-proposed since it
violates several statutes and EOs.  (4095, 5607)

The proposed rules: (1) are not projected by EPA to prevent, to any
meaningful or discernible extent, risks to public health and welfare
(5317); and (2) are, with respect to the small reductions of those risks
that those rules are projected to produce, essentially duplicative of
NHTSA’s proposed Corporate Average Fuel Economy (CAFÉ) standards
(3720, 4016, 4095, 4106, 4113, 4118, 4123, 4870, 5184, 5245, 5245, 5317,
5328, 5451, 5713, 5800, 6880, 8071, 8303, 8533, 8581).

	Commenters who support delaying the promulgation of the LDVR (if not
forego promulgation altogether) (3720, 3858, 4095, 4113, 4118, 4122,
4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5245, 5317,
5327, 5601, 5741, 5768, 5800, 6459, 6880, 8273, 8301, 8303, 8533, 8581)
added that: 

EPA could use this time to pursue streamlining of PSD and title V
requirements for GHGs, to allow states time to prepare, and to avert
negative economic impacts (3720, 4095, 4524, 5800).

Delaying the GHG tailpipe rule would provide states with sufficient time
to update their SIPs to mirror EPA's proposed Tailoring Rule and
otherwise hire sufficient staff to deal with the onslaught of stationary
source permits that will result from the regulation of GHGs.  (3720,
5800)

A delay of 5 to 6 years will allow: (1) NHTSA’s new CAFE standards to
reduce vehicle emissions, (2) states to “ramp up” administrative
resources as necessary to address PSD and title V permit applications,
and (3) EPA and states to develop any appropriate and lawful
“streamlining” techniques for permits and permit processing.  The
commenter adds that this approach would obviate (or defer) any need to
deviate from the clear text of the CAA and would also allow EPA to
engage the regulated community and other members of the public in
meaningful discussion about how GHG emissions might be addressed in a
cost-effective way, to the extent GHG regulation may occur under the
Act, thereby allowing time and opportunity for development of reasonable
approaches to regulatory decision-making.  (5317) 

EPA could address GHGs through climate change legislation.  The LDVR
requirements being proposed overlap with the fuel efficiency standards
proposed by the NHTSA. 

	In addition, opposing commenters (3513, 3720, 4016, 4106, 4118, 4119,
4122, 4243, 4318, 4519, 4522, 4523, 4684, 4741, 4862, 4952, 4992, 5038,
5080, 5083, 5088, 5089, 5114, 5120, 5123, 5128, 5137, 5140, 5141, 5143,
5214, 5245, 5278, 5317, 5327, 5328, 5345, 5390, 5601, 5711, 5714, 5715,
5741, 5770, 5773, 5800, 6141, 6414, 6459, 7126, 7217, 8301, 8545, 16411)
provide the following suggestions: 

GHG emissions from automobiles can be regulated without using section
202, which would eliminate the need for the Tailoring Rule (5214).   For
example, one commenter stated that EPA could limit the scope of the
rulemaking for light-duty vehicles to fuel efficiency (CAFÉ) standards
while deferring regulatory action on tailpipe GHG standards.  (4106)

EPA should decouple the upcoming final vehicle emissions rule from
impacts on stationary sources in order to obviate the need for the
proposed Tailoring Rule (5317, 5844, 6141). One commenter added that EPA
can make a determination that the LDVR does not trigger PSD (or, by
extension, title V) requirements for CO2, even if the LDVR is
promulgated under section 202(a).  (5317)  

EPA and NHTSA should establish fuel economy standards that accomplish
the desired goals of substantial reductions in GHG emissions and
improvements in fuel economy.  If this was done, the other sections of
the CAA (specifically title V permitting and PSD permitting) will not be
triggered.  (4519) 

EPA should work together with the Administration and Congress to agree
on an interim legislative directive so that EPA could move forward on
the pending LDVR in a manner that would not trigger stationary source
controls.  (4016)  Automotive GHG emissions will be reduced through new
fuel efficiency regulations established by the U.S. DOT.  (5444, 5770)
and EPA could work through existing platforms, like those outlined by
the Department of Transportation (DOT) for light duty vehicles, to
better control GHG emissions and thus avoid radically altering the
regulations.  (7126)  

EPA should withdraw the GHG emissions limits from the LDVR, avoid the
administrative problem that is created through the applicability of PSD
and title V permit requirements for sources emitting small amounts of
GHGs, and allow Congress to address this issue with climate change
legislation.  (5088, 5245, 7217).      

Response:

	The comments that EPA had no authority to promulgate, or should not
have promulgated, the endangerment/cause or contribute findings or the
LDVR at the times that EPA did are not relevant to this rule, the
Tailoring Rule.  EPA has already promulgated the findings and the LDVR,
and the LDVR triggers PSD and title V applicability, as we have seen. 
These comments would have been relevant only to the proposed findings
and LDVR, and we are not, in this rulemaking, revisiting or reopening
the findings or the LDVR.  EPA does have pending before it ten petitions
to reconsider the endangerment and cause or contribute findings.  EPA is
carefully evaluating those petitions and expects to issue its
decision(s) on or about July 30, 2010.

Commenters claim that if EPA promulgates the LDVR, the “absurd
results” doctrine will no longer apply to the Tailoring Rule because
it will have been EPA’s own action – promulgation of the LDVR –
that gives rise to the “absurd results”.  We disagree for several
reasons.  For one thing, commenters have not cited case law, and our
research has disclosed none, in which a court specifically addressed a
similar situation and issued a holding along the lines of what
commenters urge.  Moreover, commenters’ approach would be punitive
because the absurd results would occur absent this rule going final. 
Such an outcome would be counter to the purpose of the doctrine.  That
is, it would mean that PSD and title V would apply to GHG sources by
their terms – at the statutory levels, as of January 2, 2011 – with
all the adverse consequences described elsewhere.  	In any event, and
although we are not obligated to respond to these comments on the
merits, they are incorrect on the merits, for the reasons that follow. 
This discussion should not be viewed as reopening the endangerment/cause
or contribute findings or the LDVR because, as stated previously, we are
not reconsidering or reopening those two actions in this rule.

In determining and implementing congressional intent, it is important
that  the statutory provisions at issue be considered together – (1)
the obligation to make a determination on endangerment and contribution
under CAA section 202(a); (2) if  affirmative endangerment/cause or
contribute findings are made,  the obligation to promulgate standards
applicable to the emission of any air pollutant from new motor vehicles
or new motor vehicle engines under CAA section 202(a); and (3) the PSD
and title V applicability provisions.  The most appropriate reading, and
certainly a reasonable reading, is that we are required to take the
action we have taken, and are taking with this rule, and that is to
issue the findings, promulgate the LDVR, and promulgate the Tailoring
Rule.  Our approach gives effect to as much of Congress’s intent for
each of these provisions, and the CAA as whole, as possible.  

With respect to the endangerment/cause or contribute findings under CAA
section 202(a), congressional intent is clear that, as we stated in
making the findings and the Supreme Court held in Massachusetts v. EPA,
we are precluded from considering factors other than the science based
factors relevant to determining the health and welfare effects of the
air pollution in question.  Accordingly,  EPA determined that under
Massachusetts v. EPA, 549 U.S. 497 (2007) we were precluded from
deferring or foregoing the findings due to concern over impacts on
stationary sources affected by PSD or title V requirements.  See 74 FR
at 66496, 66500-01 (“Taken as a whole, the Supreme Court’s decision
clearly indicates that policy reasons do not justify the Administrator
avoiding taking further action on the questions here.”); see also
Massachusetts v. EPA, 549 U.S. at 533; see also 74 FR at 66515-16
(December 9, 2009).  (The Administrator “must base her decision about
endangerment on the science, and not on the policy considerations about
the repercussions or impact of such a finding).  Moreover, as EPA also
noted, “EPA has the ability to fashion a reasonable and common-sense
approach to address greenhouse gas emissions and climate change.”  74
FR at 66516.

Regarding the timing of the LDVR, Congress’s intent was that
endangerment/cause or contribute findings under section 202(a) would in
fact lead to control of the air pollutants from new motor vehicles and
new motor vehicle engines contributing to the harm.  The primary goal of
section 202(a) is to achieve such reductions by requiring that EPA adopt
emissions standards, and as a result, proceeding with the LDVR is
consistent with that goal.  In contrast, deferring the LDVR and thereby
delaying achievement of the public health and welfare benefits Congress
expected and required under section 202(a) would run directly counter to
what Congress intended under section 202(a) - EPA issuing emissions
standards to address the public health and welfare problems that were
identified, not EPA refusing to do so.

Moreover, we have compelling reasons to proceed with the LDVR, in the
manner that we did.  As we stated in the LDVR, in response to similar
comments that we were not obligated to conduct that rulemaking, or to
conduct it at the time that we did: 

Some of the comments relating to the stationary source permitting issues
suggested that EPA should defer setting GHG standards for new motor
vehicles to avoid … [adverse] stationary source permitting impacts. 
EPA is issuing these final GHG standards for light-duty vehicles as part
of its efforts to expeditiously respond to the Supreme Court’s nearly
three year old ruling in Massachusetts v. EPA, 549 U.S. 497 (2007).  In
that case, the Court held that GHGs fit within the definition of air
pollutant in the Clean Air Act, and that EPA is therefore compelled to
respond to the rulemaking petition under section 202(a) by determining
whether or not emissions 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.  The Court further ruled that, in making these
decisions, the EPA Administrator is required to follow the language of
section 202(a) of the CAA.  The Court stated that under section 202(a),
"[i]f EPA makes [the endangerment and cause or contribute findings], the
Clean Air Act requires the agency to regulate emissions of the
deleterious pollutant."  549 U.S. at 534.  As discussed above, EPA has
made the two findings on contribution and endangerment.  74 FR 66496
(December 15, 2009).  Thus, EPA is required to issue standards
applicable to emissions of this air pollutant from new motor vehicles. 

	The Court properly noted that EPA retained "significant latitude" as to
the "timing ... and coordination of its regulations with those of other
agencies" (id.).  However it has now been nearly three years since the
Court issued its opinion, and the time for delay has passed.  In the
absence of these final standards, there would be three separate federal
and state regimes independently regulating light-duty vehicles to
increase fuel economy and reduce GHG emissions: NHTSA’s CAFE
standards, EPA’s GHG standards, and the GHG standards applicable in
California and other states adopting the California standards.  This
joint EPA-NHTSA program will allow automakers to meet all of these
requirements with a single national fleet because California has
indicated that it will accept compliance with EPA’s GHG standards as
compliance with California's GHG standards.  74 FR at 49460.  California
has not indicated that it would accept NHTSA’s CAFE standards by
themselves.  Without EPA’s vehicle GHG standards, the states will not
offer the federal program as an alternative compliance option to
automakers and the benefits of a harmonized national program will be
lost.  California and several other states have expressed strong concern
that, without comparable federal vehicle GHG standards, the states will
not offer the federal program as an alternative compliance option to
automakers.  Letter dated February 23, 2010 from Commissioners of
California, Maine, New Mexico, Oregon and Washington to Senators Harry
Reid and Mitch McConnell (Docket EPA-HQ-OAR-2009-0472-11400).  The
automobile industry also strongly supports issuance of these rules to
allow implementation of the national program and avoid “a myriad of
problems for the auto industry in terms of product planning, vehicle
distribution, adverse economic impacts and, most importantly, adverse
consequences for their dealers and customers.”  Letter dated March 17,
2010 from Alliance of Automobile Manufacturers to Senators Harry Reid
and Mitch McConnell, and Representatives Nancy Pelosi and John Boehner
(Docket EPA-HQ-OAR-2009-0472-11368).  Thus, without EPA’s GHG
standards as part of a federal harmonized program, important GHG
reductions as well as benefits to the automakers and to consumers would
be lost.  In addition, delaying the rule would impose significant
burdens and uncertainty on automakers, who are already well into
planning for production of MY 2012 vehicles, relying on the ability to
produce a single national fleet.  Delaying the issuance of this final
rule would very seriously disrupt the industry’s plans. 

Instead of delaying the LDVR and losing the benefits of this rule and
the harmonized national program, EPA is directly addressing concerns
about stationary source permitting in other actions that EPA is taking
with regard to such permitting. That is the proper approach to address
the issue of stationary source permitting, as compared to delaying the
issuance of this rule for some undefined, indefinite time period.

	

75 FR 25,402 cols. 1-3 (May 7, 2010) (footnote omitted).

With respect to both the endangerment/cause or contribute findings and
the LDVR, it would require speculation and conjecture to defer – or,
certainly, to forego altogether - the findings or LDVR until EPA
completed streamlining the PSD and title V requirements on grounds that
doing so would allow full compliance in the future with all PSD and
title V statutory provisions.  That is the gist of commenters’
argument – that EPA should defer or forego issuance of the findings
and the LDVR to avoid causing an absurd result from implementation of
the separate PSD and title V programs.  Underlying this claim is the
assumption that this would allow EPA to avoid the “absurd results”. 
As we discuss elsewhere in this rulemaking, there is no basis at this
point to determine that streamlining will ultimately allow full
compliance with the PSD and title V requirements.  Rather, it is
possible that EPA may conclude that none of the available streamlining
techniques will allow all GHG sources at the statutory thresholds to
comply with PSD and title V requirements in a manner that does not
impose undue costs on the sources or undue administrative burdens on the
permitting authorities.  Under these circumstances, EPA may then
permanently exclude GHG source categories from PSD or title V
applicability under the absurd results doctrine.  Moreover, it may well
take many years before EPA is in a position to come to a conclusion
about the extent to which streamlining will be effective and therefore
be able to come to a conclusion as to whether any source categories
should be permanently excluded from PSD or title V applicability.  In
this final rulemaking, we describe what actions we expect to take in the
first 6 years after PSD and title V are triggered for GHG sources, and
we may well be in a situation in which we continue to evaluate
streamlining measures and PSD and title V applicability to GHG sources
after this 6-year period.  

Accordingly, deferring the endangerment/cause or contribute findings and
LDVR until such time that PSD and title V streamlining would allow full
implementation of these programs at the statutory limits would serve
only to delay the benefits of the LDVR, as well as the benefits that
come from phasing in implementation of the PSD program to cover larger
sources first.  It would rely on an assumption that is unfounded at this
point, that is, that such full compliance will be required at some point
in the future.  Delaying the emissions benefits of the LDVR and the
related emissions benefits from partial implementation of the PSD
program fails to implement Congress’ intent that the
endangerment/cause or contribute findings “shall” lead to emissions
standards for new motor vehicles contributing to the endangerment, and
related emissions controls for the same air pollutant under the PSD
program.  EPA need not determine at this time what approach would be
appropriate if there was a determination that full compliance with PSD
and title V would in fact occur at some point in the future.  In this
case, absent such a determination, it would be improper to rely on
speculation of such a future possibility as a basis under section 202(a)
to defer or forego issuance of the LDVR on the grounds that EPA should
defer or forego the LDVR to avoid causing an absurd result.  Likewise
there is no basis to defer proceeding at this time with the streamlining
of the PSD and title V programs.

With respect to the PSD and title V applicability requirements, as we
discuss elsewhere, we believe that Congress expressed a clear intent to
apply PSD and title V to GHG sources and that the phase-in approach
incorporated in the Tailoring Rule is fully appropriate.  Proceeding now
with the endangerment/contribution findings and LDVR, even if phasing-in
of the PSD and title V programs is required, is consistent with our
interpretation of the PSD and title V applicability requirements. 
Delaying the endangerment/contribution findings or LDVR, and thereby
delaying the triggering of PSD and title V requirements for GHG sources,
would lead to the loss of a practicable opportunity to implement the PSD
and title V requirements in important part, and thereby lead to the loss
of important benefits.  As discussed elsewhere, promulgating the LDVR
and applying the PSD and title V requirements to the largest GHG
sources, as we do in this Tailoring Rule, is practicable because the
sources that would be affected by the initial implementation steps we
promulgate in this rule are able to bear the costs and the permitting
authorities are able to bear the associated administrative burdens. 
Promulgating the LDVR now provides important advantages because the
sources that would be affected by the initial steps are responsible for
most of the GHG emissions from stationary sources.  

It should also be noted that as discussed elsewhere in this rulemaking,
our ability to develop appropriate streamlining techniques for PSD and
title V requirements is best done within the context of actual
implementation of the permitting programs, and not in isolation of them.
 That is, because the great majority of GHG sources have not been
subject to PSD and title V requirements, we will need to rely on the
early experience in implementing the permitting requirements for the
very large sources that initially will be subject to those requirements
in order to develop streamlining techniques for smaller sources.  It is
the real world experience gained from this initial phase that will allow
EPA to develop any further modifications that might be necessary.  This
would not and could not occur if the LDVR were delayed indefinitely or
permanently, so that PSD and title V requirements were not triggered. 
It is unrealistic to expect that delaying action until a future
Tailoring Rule could resolve all of the problems identified in this
rulemaking, absent any real world implementation experience.  

At its core, commenters’ argument is that EPA should delay (if not
forego altogether) doing anything to address GHG emissions and the
problems they cause until it can do so in a way that does not cause any
implementation challenges, even if that delay results in continued
endangerment to public health and welfare.  EPA does not take such a
myopic view of its duties and responsibilities under the CAA.  Congress
wrote the CAA to, among other things, promote the public health and
welfare and the productive capacity of the population.  CAA section
101(b)(1).  EPA’s path forward does just this.  Thus, proceeding with
the endangerment/cause or contribute findings, the LDVR, and with PSD
and title V through the phase-in approach of the Tailoring Rule
maximizes the ability of EPA to achieve the Congressional goals
underlying sections 202(a) and the PSD and title V provisions, and the
overarching CAA goal of protecting public health and welfare.  Congress
called for EPA (1) to determine whether emissions from new motor
vehicles contribute to air pollution that endangers, (2) if that the
determination is affirmative, to issue emissions standards for new motor
vehicles to address the endangerment, and (3) to implement the PSD and
title V program to address similar emissions in their permitting program
as another tool to address the air pollutant at issue.  Delaying both
the LDVR and PSD/title V implementation, as commenters have called for,
would run directly counter to these Congressional expectations. 
Commenters’ calls for deferral or foregoing of the findings or LDVR
are generally phrased in a conclusory fashion, and do not demonstrate
how EPA could take the required CAA actions concerning GHGs while
remaining within the requirements of each of the various CAA provisions,
and achieving the overall goals of the CAA.  As such the comments do not
provide a valid basis for the deferral of agency action they suggest. 

2.5.4  Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by CAA Permitting Programs (“CAA Interpretation
Reconsideration Rulemaking”) 

Comment:

Three commenters, representing nine environmental advocacy groups,
support EPA’s “Reconsideration of Interpretation of Regulations that
Determine Pollutants Covered by Clean Air Act Permitting Programs”
proposal.  (5139, 5306, 5311)

Other commenters (4095, 4118, 4119, 4243, 4298, 4515, 4567, 4691, 4741,
4746, 4862, 4863, 4871/5063/5605, 4903, 5052, 5062, 5073, 5082, 5083,
5084, 5088, 5111, 5120, 5123, 5133, 5137, 5138, 5140, 5141, 5143, 5145,
5147, 5199, 5224, 5278, 5305, 5317, 5328, 5345, 5390, 5714, 5715, 5740,
5800, 5808, 5886, 6414, 7026, 8460, 8513, 8545, 16411) on the
“Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by CAA Permitting Programs” proposed rulemaking
express that EPA should use its discretion to find that issuance of the
title II LDVR will never trigger PSD and title V permitting.  Other
commenters add that they disagree with EPA’s conclusion that the title
II LDVR triggers PSD/title V (4095, 4903 5062, 5083, 5120, 5800, 5317,
5714, 5773).

A few commenters (4118, 4741, 5062, 5082, 5084, 5199) suggest that we
can interpret the CAA such that:

It does not apply to a pollutant under PSD until “actual controls”
are required to be implemented (5082, 5084) or, alternatively, until EPA
designates a pollutant as regulated under the provisions of title I as
detailed in the provisions and requirements of title I section 108. 
However, one of these commenters adds that the provisions in the Johnson
Memorandum are not sufficient to provide an orderly interpretation of
GHG regulations under the PSD and title V programs.  (5084)  

(1) PSD requirements should not be considered to apply to emissions of a
pollutant before an emission control regulation for that pollutant has
become effective (in this case the motor vehicle rule), and (2) that to
be "effective" a regulation must have become applicable in a real-world
sense, such that the new requirements imposed by the regulation have
actually become applicable for regulated sources and are no longer
merely prospective obligations.  (5062, 5199)  

The phrase “pollutants subject to regulation” excludes GHGs.  This
simple and straightforward approach again provides EPA a way to avoid
"absurd results" without stretching the "administrative necessity"
doctrine further than it can lawfully reach.  (4118, 4741)

Various commenters state that EPA should clarify under the Tailoring
Rule that the trigger date for GHGs being a “pollutant subject to
regulation” is no earlier than the date of compliance with the section
202 rule (3720, 4016, 4118, 4119, 4298, 4567, 4684, 4903, 5062, 5073,
5111, 5133,  5138, 5147, 5714, 5800, 7026, 8460) or no earlier than the
date on which the final motor vehicle GHG rules “take effect” or
actual controls are required (3720, 4118, 4120, 4122, 4243, 4318, 4522,
4523, 4691,  4952, 4992, 5038, 5062, 5080, 5089, 5114, 5128, 5317, 5327,
5328, 5601, 5711, 5741, 5800, 6459, 8301).  PSD requirements should not
be triggered when a rule controlling GHGs pollutants is promulgated
(4120, 4691, 5062, 5088).  In addition, some commenters assert that this
date is:

No sooner than the date on which a 2012 model year vehicle can be
produced and is subject to “actual controls.”  (3720, 4016, 4106,
4118, 4119, 4298, 4684, 5111, 5800, 7026)  

When EPA certifies that the first 2012 model vehicles meet the GHG
limits in the vehicle rule.  (5133)

The date on which such rules would become operative and create current,
legally binding obligations, which would be no earlier than October 1,
2011 and could be as late as in January 2011, or sometime in 2012. 
(3720, 4120, 4122, 4243, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089,
5114, 5128, 5317, 5327, 5328, 5601, 5711, 5741, 5800, 6459, 8301).

A few commenters added that this date should not be the date when the
Tailoring Rule goes into effect, since the proposed Tailoring Rule
appears to be written so that GHG emissions above the thresholds would
trigger PSD and title V applicability as soon as the Tailoring Rule goes
into effect.  See, e.g., proposed 40 C.F.R. 52.21(b)(1)(i)(d)).  That
would be inconsistent with EPA’s claim of statutory authority to apply
these permitting programs to GHGs.  (4903, 5062, 5317)  

One commenter requests that EPA clarify when each of the six GHGs become
“subject to regulation” under the CAA.  (5922)

	Other commenters argue that PSD is triggered only after a NAAQS has
been established for those pollutants and where a source’s location is
in attainment with a NAAQS.  (3513, 4095, 4118, 4243, 4862, 5123, 5141,
5143, 5181, 5277, 8513, 16411).  Some commenters add that:  

GHG emissions occurring as part of a construction or reconstruction or
modification cannot independently trigger PSD permitting, but rather PSD
can be triggered by emissions of a NAAQS pollutant, and then a BACT
determination could potentially extend to GHG emissions units if
emissions are over established thresholds and if the specific GHGs being
emitted by the source have been subject to actual control at stationary
sources under the CAA.  (8513).  

EPA should interpret PSD as being triggered only upon a significant net
emissions increase of a criteria pollutant.  Under this interpretation,
only those major sources that otherwise trigger PSD for a criteria
pollutant would have to comply with BACT for GHGs (4095, 4298).  Sources
that are major only for GHGs, or that undergo a change that increases
only GHG emissions should not be subject to PSD (4095).  The commenter
(4095) asserts that this interpretation of when PSD would be triggered
would largely eliminate the “absurd results” EPA cites as
justification for the Tailoring Rule.  

Section 116 of the CAA mandates the promulgation of PSD regulations
within 2 years of establishing a new NAAQS and provides that the
effective date for such regulations is to occur one year later.  Thus,
PSD applicability is never “triggered” by a new pollutant becoming
“subject to regulation” under the CAA, only by the establishment of
a new NAAQS pursuant to sections 108 and 109 of the CAA and the
designation of new areas for that NAAQS under section 107.  (4095)

	Commenter 4871 asks whether it is EPA’s position that GHGs will be
“subject to regulation” upon promulgation of EPA’s LDVR (i.e., the
date the final rule appears in the Federal Register), or upon the
effective date of this rule, which is typically 60 days after
publication.  

Response:

EPA addressed these topics in detail in the April 2, 2010 final action
(75 FR 17400) and the associated RTC document located in the docket for
that action.  EPA incorporates those documents by reference as its
response to the comments on these topics submitted to the docket for
this action.  Additional responses to comments arguing that a NAAQS
should be established before GHGs can be regulated under the PSD program
are found in the preamble of this final rule under section V.B.  

Chapter 3.  Comments on the Legal Basis for the Proposed Rule

	In this chapter we summarize and respond to the significant comments
related to the legal basis for the proposed rule.  In the first section
we discuss regulation of GHGs under the CAA.  While we did not discuss
this topic at length in the proposal preamble, we received numerous
comments on this subject which we address in section 3.1.

	In sections 3.2 through 3.4, we address the comments received on the
legal bases we proposed for phasing in the applicability thresholds for
PSD and title V:  the “administrative necessity” and “absurd
results” doctrines, as well as the line of cases that establishes, in
certain situations, the acceptability of a “step-by-step process”
for implementing a statutory requirement.  We do not summarize and
directly respond to the numerous comments we received that stated,
without specific reference to any of these three potential legal bases,
that it is legally impermissible to alter the unambiguous numeric
thresholds in the CAA.  We believe that our responses to the more
specific comments on the potential legal bases for the rule serve to
respond to these more general legal concerns as well.

	In addition, we received numerous comments on the legal basis for our
proposal to retroactively limit our approval of the PSD provisions in
SIPs and of title V programs.  These comments are addressed in section
3.5.

3.1  Comments on Regulation of GHGs under the CAA 

	We received many comments questioning EPA’s interpretation that GHGs
can, and should, be regulated under the CAA.  However, many of these
comments pertain to the related developments that triggered the
Tailoring Rule proposal (i.e., the Massachusetts v. EPA decision, the
section 202(a) Endangerment Finding, the LDVR, and the reconsideration
of the PSD Interpretive Memorandum) and are not, therefore, germane to
this rulemaking.  Such comments, which were also submitted for
consideration under the related actions, are properly addressed in those
actions.  Here we address only those comments that pertain more directly
to the Tailoring Rule.  Section 3.1.1 addresses general comments
regarding regulation of GHGs under the CAA, comments on regulating GHGs
under the PSD program are addressed in section 3.1.2, and in section
3.1.3 we address comments on regulating GHGs under the title V program.

3.1.1  Comments on Regulation of GHGs under the CAA in General

	In our recent actions, we have announced our intention to begin
regulating GHGs under various portions of the CAA and have begun to
follow through on that intention.  We have finalized an Endangerment
Finding for GHGs under section 202(a) of the CAA and have finalized the
LDVR.  In addition, we have finalized our interpretation of when an air
pollutant becomes subject to regulation for purposes of the PSD and
title V programs.  We received numerous comments on the general topic of
regulating GHGs under the CAA.  

Comment:

Many state government (4209, 4771, 5258, 5318, 5451, 5525, 5607, 5784,
6491, 7134, 7212, 7217, 8071), industry (4095, 4118, 4243, 4298, 4691,
4851, 4862, 4903, 5004, 5041, 5111, 5136, 5182, 5199, 5275, 5301, 5312,
5315, 5317, 5922, 6609, 6880, 8015, 8303, 8533, 8545), and state/local
air agency (2797, 3858, 4871/5063/5605, 4949) commenters argue that the
CAA was never intended by Congress or is ill-suited to address GHGs. 
These commenters often cite the development of the CAA over time, the
language and structure of the CAA, and the legislative history to assert
that EPA cannot and should not go forward with regulation of GHGs under
the CAA.  These commenters often made the following points:

Congress enacted the CAA of 1970 and subsequent amendments, including
those in 1990, with an explicit focus on large sources and certain
categories of pollutants that have direct effects on public health in
the U.S. (which does not include GHGs).  (5111, 8545)

The CAA is intended to address pollutants with direct impacts and
control alternatives on a local, state, or regional level, but GHGs are
global pollutants that produce indirect impacts on a global level. 
(4209, 4243, 4851, 5136, 5199, 6315, 5525, 8545)

The need for the Tailoring Rule demonstrates that the CAA is not
structured to address global pollutants.  (4298, 4862, 5111, 5784)

Regulating GHG under the Act is not consistent with the intent of the
Act as expressed in section 101(b) because their inclusion will do
little to “protect and enhance the quality of the Nation’s air
resources” yet will significantly weaken the “productive capacity of
[the U.S.] population.”  (5138, 5301) 

The issue of global climate change resulting from the emissions of GHGs
should be addressed through comprehensive federal legislation, full
public debate, and U.S. political consensus, rather than through
unilateral EPA action.  (5182, 5258, 5275, 5312, 5451, 5607, 6491, 7212,
7217, 7134, 8015, 8071) 

Congress declined to give EPA clear authority to regulate GHGs in the
CAA.  For EPA to seize such authority is an affront to rule by consent
of the governed.  (5784) 

The CAA does not allow EPA to deliver the regulatory relief it theorizes
will occur (i.e., thresholds higher than the 100/250 tpy prescribed
under the CAA) and thus this rule is unnecessary, ineffective and/or
unlawful (4095, 4118, 4903, 5004, 6609, 6880, 8303, 8533). 

On the other hand, numerous state/local air agency (3916, 3918, 4154,
4238, 4239, 4694, 4778, 4860, 5039, 5057, 5081, 5314, 5528, 7935, 8025,
8803), state government (0600, 4518), and environmental (5122, 5306,
5311, 5448) commenters support the use of the CAA to regulate GHGs. 
These commenters typically believe it is important to begin regulation
of the largest sources of GHGs now, pending comprehensive climate change
legislation.  Some of these commenters indicate that the CAA can be a
valuable component of comprehensive federal climate policy in the
future. 

One industry commenter (5110) believes that CAA section 115
(International Air Pollution) and section 179B (International Border
Areas) are the logical place to start to address global GHG pollution
under the current CAA.  According to the commenter, section 115 has not
been used to regulate domestic emissions that are connected to
international air pollution, but only because each time its use was
considered Congress enacted legislation to address the problem (i.e.,
for the acid rain and stratospheric ozone programs).  Section 179B would
apply only if a NAAQS for GHGs is promulgated.

One industry commenter (5143) suggests EPA should consider invoking
other CAA authorities such as NSPS and section 111(d) in lieu of
PSD/title V permitting.  Under this approach, EPA would have the ability
to set emissions performance standards for existing sources, and thereby
avoid many of the difficulties under the PSD and title V permitting
regimes.  Regulation under section 111(d) offers additional advantages,
including flexibility in determining the scope of sources to be
regulated, the type and stringency of standards and guidelines and the
timing of their implementation, and the ability to weigh the costs and
benefits.

Response:

Comments that the CAA was never intended by Congress to address GHGs are
not relevant to this tailoring rulemaking.  In any event, the U.S.
Supreme Court’s decision in Massachusetts v. EPA,  549 U.S. 497
(2007), which held that GHGs are an “air pollutant” under the CAA,
made clear that the requirements of CAA section 202(a) apply to GHGs if
EPA makes the endangerment and contribution findings.  As a result, this
decision makes clear that the CAA does apply to GHGs, notwithstanding
the commenters’ concerns.

In addition, in EPA’s recently promulgated LDVR for GHGs, EPA
promulgated requirements for GHGs under CAA section 202(a), and we
explained our basis for doing so.  “Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy Standards; Final
Rule,” p. 151 (promulgated on April 1, 2010),    HYPERLINK
"http://www.epa.gov/otaq/climate/regulations/ldv-ghg-final-rule.pdf" 
http://www.epa.gov/otaq/climate/regulations/ldv-ghg-final-rule.pdf  

	In that rule, we also responded to some of the same arguments made by
commenters in this rule that EPA does not have authority under the CAA
to regulate GHGs.  See “Light-Duty Vehicle Greenhouse Gas Emission
Standards and Corporate Average Fuel Economy Standards,

EPA Response to Comments Document for Joint Rulemaking,” p. 1-67,   
HYPERLINK "http://www.epa.gov/otaq/climate/regulations/420r10012a.pdf" 
http://www.epa.gov/otaq/climate/regulations/420r10012a.pdf . 

	The comments concerning sections 115 and 111(d) are not relevant to
this rulemaking.  In the preamble for this rule we state a reason why
the PSD and title V requirements apply to GHG sources.  These
requirements are not vitiated by the possible applicability of, or
benefits of, other sections of the CAA to GHGs, such as sections 115 and
111(d), as raised by the commenters.

	It is the position of the agency that comprehensive climate change
legislation is a more effective way to address GHGs than through the
CAA, but that does not mean that the CAA does not apply to GHGs.

3.1.2  Comments on Regulation of GHGs under the PSD Program

	We proposed the Tailoring Rule based on our interpretation that GHG
sources would become subject to the PSD and title V permitting programs
upon finalization of the LDVR.  In this section, we address the numerous
comments that we received on the legal aspects of regulating GHGs under
PSD.

Comment:

Many state (4871) and industry (3512, 3513, 4095, 4106, 4522, 4745,
4771, 4870, 4952, 5052, 5058, 5083, 5110, 5112, 5137, 5138, 5140, 5169,
5179, 5183, 5275, 5278, 5345, 5417, 5446, 5800, 5844, 5922, 5935, 8089,
16411) commenters believe that, based on the language of the CAA, PSD
applicability can be triggered only by pollutants for which there is a
NAAQS.  Several of the commenters submitted one or more points of the
following argument:

	The EPA bases applicability of the PSD program solely on the scope of
“pollutants subject to regulation” under CAA section 165(a)(4). 
While this language is relevant to PSD applicability because it
determines the applicability of the BACT requirement, EPA must take into
consideration the statutory provisions that act to constrain the
applicability of the PSD program at the outset.  The text of the statute
is more naturally read to limit PSD applicability to sources that are
major for a NAAQS [criteria] pollutant only.  Once PSD is triggered by a
major source for a NAAQS pollutant, the statute would impose BACT on
pollutants “subject to regulation.”  The EPA’s approach – which
first asks what pollutants are “subject to regulation” and then
bases all applicability determinations of the PSD program solely on this
criterion – is inconsistent with the statutory language because it
bypasses the core applicability provisions and renders their inclusion
in the statute superfluous.

	Indeed, the text of sections 161 and 165(a) limit application of PSD to
certain areas – those designated attainment or unclassifiable pursuant
to section 107 of the CAA.  Section 107 is applicable only to NAAQS
pollutants.  Only section 165(a)(4) (which simply establishes the
requirement to apply BACT) uses the phrase “pollutants subject to
regulation.”  The EPA has not effectuated the applicability limitation
in section 161 and 165(a) by interpreting that language as mere
surplusage.  Specifically, under EPA’s historical interpretation of
the statutory provisions, the location limiting language would simply
require that a source be located in an area that is attainment for any
pollutant.  But that is no limitation at all since every area of the
country is and always has been in attainment with at least one criteria
pollutant.  Congress must be presumed to have been aware of this fact
when it enacted the PSD provisions, making EPA’s construction
inconsistent with canons of statutory construction requiring all words
in the statute to be given meaning.

	The NAAQS prerequisite requirement of the CAA is also consistent with
the holding in Alabama Power Co. v. Costle (636 F.2d 323 (D.C. Cir.
1979), where the court found that location is the key determinant for
PSD applicability and rejected EPA’s contention that PSD should apply
in all areas of the country, regardless of attainment status.  The court
stated:  “The plain meaning of the inclusion in [42 U.S.C. § 7475]
of the words ‘any area to which this part applies’ is that Congress
intended location to be the key determinant of the applicability of the
PSD review requirements.”  (636 F.2d 365 (D.C. Cir. 1979))

	In its regulatory response to the Alabama Power decision, EPA gave this
ruling only grudging effect by an interpretation of PSD requirements in
the preamble to the 1980 PSD regulations.  (45 FR 52675, 52676, August
7, 1980)  The 1980 Preamble provides that PSD requirements still apply
to any area that is “designated … as ‘attainment’ or
‘unclassifiable’ for any pollutant for which a national ambient air
quality standard exists.”  This is inconsistent with the CAA, but
attracted little scrutiny because, to date, it has had very little
practical impact.  But now, this incorrect interpretation could trigger
a host of absurd results that contravene Congressional intent. 
Accordingly, to give effect to unambiguous terms of the statute (and
regulations), EPA cannot require a source to undergo PSD permitting
solely on the basis of emissions of a pollutant for which there is no
NAAQS.  [Chevron, U.S.A. v. Natural Resources Defense Council (NRDC),
467 U.S. 837, 842 (1984) (agency must give effect to the unambiguously
expressed intent of Congress)].

	Because EPA’s improper interpretation appears only in the preamble to
the 1980 PSD rules and the regulatory language in 40 Code of Federal
Regulations (CFR) 52.21(a)(2) properly includes the location limitation
of the statutory provisions, the only change that is needed for EPA to
properly limit the scope of PSD applicability consistent with the
statute is to announce its interpretation in the Federal Register. 
Since EPA has solicited comment on the effect of this proposed rule
regarding PSD applicability, not only in the LDVR but also in the
reconsideration of the PSD Interpretive Memorandum, it is a logical
outgrowth of these actions for the Agency to announce that in response
to comments it is adopting the proper scope of applicability for the PSD
program.

	Some industry commenters (4095, 4745, 4870, 4952, 5052, 5137) also
argue that this interpretation (that PSD applicability is based only on
NAAQS pollutants) is further supported by the presence of section 166 in
the CAA, which sets forth the process and time line to regulate “other
pollutants” under PSD.  These commenters make the following points:

Section 166 mandates the promulgation of PSD regulations within 2 years
of establishing a NAAQS for a new pollutant, provides that the effective
date for such regulations is to occur 1 year later, and requires EPA to
approve plan revisions for the new regulations within 25 months of their
promulgation.  (4095, 4745, 4870, 4952, 5137)

An endangerment finding is merely the first step in establishing a NAAQS
for CO2 and other GHGs under section 109 and, unless and until a NAAQS
is established and the steps set out in section 166 are subsequently
followed, EPA has no legal authority regulate GHGs under the PSD/NSR
provisions of the CAA.  (4095, 4870, 5137)

It seems inconceivable that the statutory structure of the PSD program
could be interpreted to provide for near-immediate triggering of PSD
applicability for GHGs upon becoming subject to regulation when section
166 provides for 2 years to promulgate new PSD regulations for new NAAQS
and another 25 months for EPA to act on plan submissions related to the
new NAAQS.  Instead, the interplay of sections 166 and 165 of the CAA
bespeak of a clear statutory scheme that PSD applicability is never
“triggered” by a new pollutant becoming “subject to regulation”
under the CAA, only by the establishment of a new NAAQS pursuant to
sections 108 and 109 of the CAA and the designation of new areas for
that NAAQS under section 107.  (4745, 4952)  The CAA clearly requires
EPA to first establish a National Ambient Air Quality Standard (NAAQS)
for GHGs before the Agency has the legal ability under the CAA to
require PSD solely on the basis of increases in GHG emissions.  (4095,
5183, 5844, 5922)  Since EPA is not establishing a NAAQS for GHGs, the
PSD program should not be made applicable to GHG emissions (3513, 4106,
5183, 5275).  

Now that EPA has announced that it believes that there is a public
health and welfare effect from GHGs, EPA must establish a NAAQS to
determine the level at which public health and welfare need to be
protected.  This would allow the full PSD program to be implemented for
GHGs, including the CAA’s requirements for an impact analysis and PSD
increments (PSD provisions that are currently meaningless for GHGs in
the absence of a NAAQS) (5052).  Another commenter reports that they
would not support the establishment of a NAAQS for GHGs, as an
“attainment” or “nonattainment” status for the entire U.S. given
the global nature of GHGs.  (4106)

	Some industry (5111, 5278, 5140, 5715) commenters base comments on the
language of section 110(a)(2)(C) of the CAA, which requires SIPs to
include PSD permit programs “as necessary” to assure that the NAAQS
are achieved:

Industry commenters 5278, 5140 infer from the language of section 110
(a)(2)(C) that the purpose of the PSD program is to assure the NAAQS are
achieved.  The commenters contend that it is inconsistent with this
language to apply PSD based on emissions of pollutants such as GHGs for
which there is no NAAQS.  In addition, these commenters point out that
CAA section 163(b)(4) specifies that the maximum allowable concentration
of “any air pollutant” in “any area” to which part C applies
shall not exceed the NAAQS, further indicating that the PSD program is
focused on attaining the NAAQS and is not applicable to non-NAAQS
pollutants such as GHGs.

Industry commenters (5111, 5715) state that parts A and C of title I
plainly indicate that the PSD program is implemented solely through
SIPs, and that while states’ SIPs must include PSD permit programs
“as necessary” to assure that the NAAQS are achieved, the CAA cannot
be read to authorize, much less require, SIPs (including their PSD
programs) to include provisions that are not necessary for the
achievement of the NAAQS – such as the regulation of sources based on
emissions on a non-NAAQS pollutant like GHGs.  The commenter adds that
EPA has often refused to approve the inclusion of provisions of a
state’s air quality rules into SIPs because they are not related to
the attainment or maintenance of the NAAQS.  

	A number of industry (4630, 4801, 4870, 5052, 5082, 5112, 5446) and
state (4521) commenters also assert that the language and legislative
history of the PSD provisions of the Act make it clear that Congress
never intended PSD to apply to such pollutants as GHGs.  These
commenters state the PSD program was clearly intended to address
ground-level pollution threats to local air quality, such that pollution
controls on major sources can affect local and regional ambient air
quality.  The commenters point out that GHGs are present in the global
atmosphere at uniform concentrations which do not pose a direct threat
to human health and, thus, are not intended to be covered by PSD.  Some
specific comments include the following:

It is clear that PSD is designed to prevent significant deterioration to
the “ambient air” for NAAQS pollutants, and it would be reasonable
for EPA to interpret “ambient air” to exclude regulating the climate
and the stratosphere (which would not preclude EPA from regulating GHGs
in the future when the EPA has examined the technologies for controlling
GHGs from specific industries).  (5052)

Regulation of GHGs under the CAA will constrain an expressed intent of
the PSD program under section 160(c) which states that one purpose of
the PSD program is to "insure that economic growth will occur consistent
with the preservation of existing clean air resources.  (5082)

The original 28 source categories listed by Congress constitute the
sources EPA regarded as posing the greatest potential for air quality
degradation due to conventional pollutants.  The 100 tpy threshold for
these source categories makes sense only in terms of conventional
pollutants.  (4870, 5112, 5446)  

The air quality monitoring and impact analysis provisions of CAA
sections 165(a) and (e) focus on local and regional impacts.  For
example, section 165(e)(1) requires an analysis of “the ambient air
quality at the proposed site and in areas which may be affected by
emissions from [the proposed] facility for each pollutant subject to
regulation under the [CAA] which will be emitted from such facility.” 
(4522, 4870, 5112, 5446)

The legislative history of sections 165(a) and 169(l) under the 1977 CAA
amendments makes clear that Congress had only conventional pollutants in
mind when creating those provisions.  Both the Senate and the House were
engaged primarily in continuing the work that a prior Congress had
begun, through the 1970 CAA, to rid the Nation, especially urban areas,
of unhealthy levels of smog, particulates, sulfur dioxide, and other
conventional pollutants.  The air quality problems of concern to the
95th Congress in 1977 did not include global warming.  (4870)

The EPA has assumed, without any analysis, that the “any pollutant”
component of the phrase “any pollutant subject to regulation” has no
bounds and therefore can include GHGs.  However, the 100/250 tpy
statutory thresholds are an equally integral part of the statutory
fabric and cannot be reconciled with an unbounded reading of the phrase
“any pollutant subject to regulation.”  (4870)

Without a NAAQS, PSD increments, or proven control devices in practice,
regulating GHG emissions under the PSD program at this time will lead to
a paperwork exercise of “empty” or “hollow” permits.  (4521)

	In addition, some industry (4522, 5125, 5345) and state (4871)
commenters note that the CAA provides separate and distinct treatment
for stationary sources pursuant to title I and for mobile sources
pursuant to title II, including providing for a separate finding of
endangerment pursuant to the two titles.  These commenters believe that
the Endangerment Finding made pursuant to section 202 of the CAA is a
predicate only for the promulgation of standards for mobile sources
pursuant to title II, and GHGs cannot be considered “subject to
regulation” for purposes of title I of the CAA on the basis of actions
under title II.  

In particular, industry commenter 5345 states that the structure of the
Act assumes that title I action precedes title II action in that the
authorities and responsibilities to investigate the impacts of
pollutants on public health and welfare are set forth in title I (e.g.,
sections 103, 104 (specifically addressing fuels and vehicles), 105
(grants), 107 (states’ responsibility for air quality), 108 (including
section 108(e) which requires EPA to include emissions from mobile
sources in analyses of pollutant impacts)), while any evaluation
required under title II are dependent upon analyses performed under
title I or are directly related to mobile sources and fuels.  The
commenter contends that there is no evident intent that requirements
under title II should activate stationary source programs – to the
contrary the most recent Congressional action on the Act (Energy
Investment and Security Act of 2007, P.L. 110-140) shows that Congress
could intentionally address a mobile source issue without it spilling
over to title I stationary sources.

	Contrary to the commenters discussed above, some commenters agree with
EPA that GHGs will become subject to PSD when the control requirements
of the final LDVR go into effect.  While few commenters make an explicit
statement to this effect, many commenters acknowledge that this
regulatory action will render GHGs “subject to regulation,” and,
therefore, subject to PSD. 

Response:

In these comments, commenters argue that at least the applicability
provisions of the  PSD program should be limited to emissions by a
source in an attainment or unclassifiable area of NAAQS pollutants for
which the area is attainment or unclassifiable.  We will refer to this
as the “NAAQS Approach.”  We responded to many of these comments in
the preamble, section V.B.5.c.  We provide the following additional
responses:

	We disagree with commenters who assert that we improperly base PSD
applicability on the BACT provision, CAA section 165(a)(4), which
applies requirements to air pollutants that are “subject to
regulation.”  While we believe that PSD applies to sources of air
pollutants that are subject to regulation, this is because, as explained
in the preamble, we have long read the term “subject to regulation”
into the term “any air pollutant” as found in CAA section 169(1),
which is the PSD applicability provision.  

	We disagree that the provision in CAA section 165(a) (flush language at
beginning) that refers to “any area to which this part applies”
means that the PSD program is applicable only to a source that emits
NAAQS pollutants for which the area in which the source is located is
attainment or unclassifiable, for the reasons we stated in the preamble.
 In essence, in the 1977 Clean Air Act Amendments, Congress divided the
nation into two types of air quality basins, which could overlap: 
nonattainment areas and attainment/unclassifiable areas.  Congress
designed the provisions for nonattainment areas, found in Part D of
title I, to include stringent control requirements for sources that emit
NAAQS pollutants for which the area is nonattainment.  Congress designed
the provisions for attainment areas, found in Part C of title I, to
include control requirements for sources that emit NAAQS pollutants for
which the area is in attainment or unclassifiable.  However, Congress
also designed the part C provisions to cover non-NAAQS pollutants, as is
clear from the broadly phrased applicability provision, CAA section
169(1), which, as we have interpreted it, applies to “any air
pollutant [subject to regulation];” and the BACT provision, CAA
section 165(a)(4), which similarly applies to “any pollutant subject
to regulation.”  Thus, Congress in effect divided the nation into two,
sometimes overlapping, geographic “boxes,” one for nonattainment
areas, and one for attainment/unclassifiable areas, but the latter
“box” was large enough to include the non-NAAQS pollutants.  Through
this approach, Congress applied the relevant requirements of the PSD
process to non-NAAQS pollutants, including, most importantly, the
source-by-source BACT requirement.  As we discussed in the preamble, the
PSD process, with its stringent, source-by-source review requirements,
serves important environmental benefits, and it is for this reason that
Congress designed the PSD provisions to cover non-NAAQS pollutants.  The
inclusion of the phrase “any area to which this part applies” in CAA
section 165(a) has the effect of designating the relevant “box” –
the attainment/unclassifiable one, and not the nonattainment one – but
does not restrict the PSD requirements to NAAQS pollutants for which the
area is attainment or unclassifiable.  The phrase also makes clear that
certain of the PSD requirements, such as the CAA section 165(a)(2)
requirements for certain analysis and a hearing, as well as the CAA
section 165(a)(4) requirement for BACT -- which by their terms are broad
enough to apply to even a source in a nonattainment area that emits a
NAAQS pollutant for which the area is nonattainment -- apply only in
areas designated attainment or unclassifiable, and not in nonattainment
areas.  The D.C. Circuit’s decision in Alabama Power v. Costle
supports this analysis because it stated, as a background explanation,
that the PSD applicability provision under CAA §169(1) applies by its
terms to all pollutants, 636 F.2d at 352, but it held that because of
the limiting phrase, “any area to which this part applies” under CAA
§169(a), PSD requirements do not apply to sources constructing in
nonattainment areas.  Id. at 365.  Evidently, the Court recognized that
the existence in the CAA of the nonattainment provisions in Part D means
that NAAQS pollutants in nonattainment areas are to be governed by those
provisions, leaving the PSD provisions to cover both NAAQS pollutants in
attainment areas and non-NAAQS pollutants.

	We disagree with commenters who state that we could adopt the NAAQS
Approach in this final action as a logical outgrowth of our solicitation
of comment on the effect of the proposed rule regarding PSD
applicability.  We do not believe that our general solicitation of
comment can be said to have alerted the public to the possibility of
adoption of the NAAQS Approach.  In addition, the NAAQS approach would
amount to a fundamental change in our long-standing regulatory approach.
 Accordingly, were we inclined to consider the NAAQS approach further,
we would need to propose it.

	We disagree with commenters who state that CAA §166 acts to limit the
scope of the PSD program to NAAQS pollutants.  In Alabama Power v.
Costle,  636 F.2d 323, 405-406 (D.C. Cir. 1980), the D.C. Circuit
rejected a similar argument.  There, industry petitioners argued that a
pollutant did not become covered by the PSD program until EPA
promulgated a NAAQS and finalized a rulemaking under 166 for such
pollutant.  The Court rejected this argument as being "contradicted by
the plain language of section 165.”  Id. at 406.  The Court upheld
EPA’s regulations, which the Court described as “appl[ying] PSD and
BACT immediately to each type of pollutant regulated for any purpose
under any provision of the Act….”  Id. at 403.  We concur with the
Court’s analysis and similarly reject this claim.  By the same token,
we disagree with commenters who state that GHGs cannot be considered
“subject to regulation” by virtue of their regulation by the LDVR on
ground that the LDVR is promulgated under title II of the CAA.  

	We disagree with commenters who state that because certain provisions
in Part C are clearly directed towards NAAQS pollutants, that indicates
that part C as a whole is limited to NAAQS pollutants, or that the
applicability provisions of part C are limited to NAAQS pollutants.  We
recognize that a major focus of the PSD provisions was NAAQS pollutants
for which the area was attainment or unclassifiable, and this is clear
from many of the provisions in the PSD program and the legislative
history.  However, as we have discussed elsewhere, other provisions in
part C clearly apply to both NAAQS and non-NAAQS pollutants, and as a
result, we cannot conclude that the PSD program as a whole, or its
applicability provisions, applies to only NAAQS pollutants for which the
area is attainment or unclassifiable.  Further in this regard, we
disagree with commenters who state that the purpose provisions of CAA
section160 are limited to pollutants for which the area is designated
attainment or unclassifiable.  We believe that the purpose provisions
can be read more broadly to refer to non-NAAQS pollutants as well.  This
reading of the purpose provisions is consistent with the other
provisions in the PSD program that concern both NAAQS and non-NAAQS
pollutants.

We disagree with commenters that either our regulations or the CAA
provisions compel, or permit, a view that the PSD program is limited to
ground level pollution threats to local air quality.  While we agree
with the commenters that a major focus of the PSD program is on local
air quality, we reject the view that the program is solely concerned
with local air quality.   As an initial matter, we note that this
position is inconsistent with the plain language of our regulatory
applicability provisions – the definition of "regulated NSR pollutant"
– which we promulgated, as we discuss in the preamble, many years ago,
so that the time for challenge of which has long since passed. 
Specifically, we note that the definition of “regulated NSR
pollutant” by its terms covers ozone depleting substances, which are
regulated due to their effects on the stratosphere, and not because of
local effects or even effects on ambient air.  CAA section 165(a) (3)
requires that before a permit may issue, the owner or operator must
demonstrate that the facility will not "cause, or contribute to, a
violation of any . . . national ambient air quality standard in any air
quality control region."  By its terms, this requirement is not limited
to the attainment area in which the source is located.  Instead, this
requirement covers non-localized effects.  Indeed for some NAAQS, such
as ozone, the PSD program primarily serves to address air quality
impacts outside of the attainment area in which the source is locating
(even if the transport is to areas hundreds of miles away).  Similarly,
the requirement to ensure protection of air quality related values
addresses impacts outside of the attainment area in which the source is
locating.  Most importantly, however, without a clear demonstration that
Congress's sole focus – as  opposed to a major focus --  was to
address localized air quality impacts, the provisions cited by
commenters fail to overcome the plain language of Act.  Specifically,
none of the provisions identified by commenters demonstrates a
congressional intent to not give literal meaning to the requirement to
apply PSD to “any pollutant [subject to regulation],” under CAA
section 169(1) (as we interpret it), or "each pollutant subject to
regulation under this chapter."  CAA section 165(a)(4).  As discussed
more fully in the preamble, Congress certainly knew how to express a 
narrower pollutant coverage, such as that urged by petitioners.  For
example, in CAA section 166(e), Congress provided that area
classification plans would not be required for "any air pollutant for
which a national ambient air quality standard is established."

	We disagree with commenters that the phrase establishing the 100/250
tpy statutory thresholds should be interpreted to narrow the meaning of
the phrase, as we have interpreted it, “any air pollutant [subject to
regulation]” in the applicability provisions.  There is nothing
inherent in the 100/250 tpy statutory threshold that limits the “air
pollutant [subject to regulation]” to certain pollutants and not
others.

	We disagree with commenters that without a NAAQS, PSD increments, or
proven control devices in practice, regulating GHG emissions under the
PSD program at this time will lead to a paperwork exercise of
“empty” permits.  GHG sources that are subject to PSD will become
subject to the BACT requirement, which will be a case-by-case
determination and may well lead to, for example, energy efficiency
measures, which would be reflected in their permits.

	We disagree with commenters who state that because EPA has the
authority to interpret the applicability provisions narrowly – that
is, to read into the phrase “any air pollutant” in CAA §169(1) the
qualifier “subject to regulation” – we have authority to interpret
those provisions more narrowly still, to be limited to NAAQS pollutants
or pollutants that have local air quality impacts.  Our interpretation
that reads in the qualifier “subject to regulation” – which, as we
state elsewhere, we promulgated many years ago and are not now
re-opening – was a justifiable interpretation under the principles of
statutory construction, and we do not believe that the same is true of
the NAAQS Approach or a similar approach limiting PSD to pollutants with
local air quality impacts.

3.1.3  Comments on Regulation of GHGs under the Title V Program 

	As noted previously, we proposed the Tailoring Rule based on our
interpretation that GHG sources would become subject to the PSD and
title V permitting programs upon finalization of the LDVR.  In this
section, we address the comments that we received on the legal aspects
of regulating GHGs under title V.

Comment:

	Some industry (5140, 5181, 5278, 5317, 5800, 16411) and state (3278,
4019) commenters believe that Congress never intended the title V
program to cover GHGs, and that EPA need not interpret GHGs to be a
regulated pollutant subject to title V.  The following represent typical
reasons for this position:

Title V permits are intended to compile applicable requirements for
major sources.  Because there are no applicable requirements that
require control of GHGs, title V should not apply.  (5317)

EPA should conclude that PSD and title V permitting are not meant to
apply based on a source’s CO2 or GHG emissions, and cite
Congressional, legislative history, and legal support for their
position.  (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922)  

The legislative history shows that Congress did not intend for title V
to apply to the types of sources that will be covered based on GHG
emissions at the statutory level.  (5317)

Congress’ understanding of the scope of the title V program is
evidenced by the fact that the costs of the program were considered so
modest that they were not broken out in the analyses of the 1990 CAA
Amendments.  This would not have been the case if Congress had
envisioned that GHGs could be pollutants for which applicability could
be considered at a level of 100 tpy.  (5140, 5181, 5278)

The EPA has long exercised discretion with respect to the title V
provisions under the CAA, narrowing applicability from the statutory
“any air pollutant” to only those pollutants that are regulated
under the CAA (e.g., the Wegman memo).  (5140, 5278, 5317)

GHGs are not a regulated pollutant per 40 CFR 70.2 until a source
becomes subject to PSD.  Thus, there is no requirement for a source that
would be subject to title V only for GHGs to apply for a title V permit
within a year if it is not subject to PSD.  (3278)

Per the intent of title V, no title V application should be required if
the resulting permit would be a “hollow” permit.  In addition,
existing title V permits need not be revised for GHGs if there are no
emissions limits or standards that apply to GHGs.  (5317)

The EPA should interpret the CAA as requiring only sources that
otherwise trigger title V for criteria pollutants to be required to
obtain permits for their GHG emissions.  (5800)

	Industry commenter 5715 notes that the title V permit program is meant
for implementation by each state.  According to the commenter, title V
is intended solely to codify a stationary source’s otherwise
applicable requirements, but no such requirements are created by EPA’s
decision to regulate mobile source GHG emissions.  The commenter
concludes that EPA lacks authority under the Act to compel any state
title V program to govern GHGs.

Response:

EPA has addressed many of these comments in the preamble to the final
rule, particularly in section V.B.  As discussed in the preamble,
although we agree that various provisions of title V indicate that a
purpose of title V is to gather a source’s applicable requirements
into a single permit, see CAA sections 503(b)(1), 504(a), we do not read
those provisions as expressly limiting title V to sources with
applicable requirements.  The applicability provisions, by their terms,
include sources based on amount of emissions, and do not include any
explicit limits to applicability based on whether the sources has
applicable requirements.  As described in the preamble, we believe that
Congress, although clearly expressing an intent that title V apply to
GHG sources generally, did not express a clear intent as to how title V
applies to GHG sources.  The tension between these two sets of
provisions, which we identified in the proposal and commenters further
discussed, provides further support for that conclusion.  Accordingly,
we have discretion under Chevron step 2 to determine a reasonable
approach, consistent with the statutory requirements, concerning the
application of title V to GHG sources with empty permits.

We note that to date, we have issued permits to sources without
applicable requirements, albeit on rare occasions.  We have little
reason to believe that the “empty-permits” issue will arise in steps
1 and 2 of our tailoring approach because we believe there will be no
“empty permits” in step 1 or step 2 or, if there are, that they will
be very few in number.  As stated in the preamble, we believe that the
tailoring approach we adopt in this rulemaking for steps 1 and 2 is a
reasonable approach that is consistent with statutory requirements.  

We need to gather more information concerning the potential number and
utility of “empty permits” for GHG sources, in light of the fact
that the need for requirements in title V permits will vary based on the
requirements of each SIP, and the fact that some SIPs contain broadly
applicable requirements.  As stated in the preamble, we intend to
consider the issue of the applicability of title V to GHG sources with
“empty permits” in step 3 of our tailoring approach.  When we do so,
we will further assess the potential for the approach of excluding empty
permits from title V to relieve burden consistent with statutory
requirements. 

The preamble also contains an extensive discussion of evidence of
Congressional intent about the size, scope, and timelines for permitting
under the title V program.  EPA agrees that subjecting all sources that
emit at least 100 tpy of GHG to title V permitting as of January 2011
would be inconsistent with Congressional intent.  For the reasons
described in the preamble, we believe that the tailoring approach we
adopt in this rulemaking best reconciles the statutory provisions with
congressional intent.

EPA disagrees with the comment that suggests that sources with GHG
emissions in excess of the major source threshold (or the threshold as
tailored by this rule) would not be required to apply for title V
permits as a result of GHG emissions until the source triggered PSD. 
Although it is true that GHG are not specified in the definition of
“regulated air pollutant” in 40 CFR 70.2, any “major source” is
subject to title V permitting, see 40 CFR 70.3, and the definition of
“major source” in 40 CFR 70.2 refers to “any air pollutant,” not
simply regulated air pollutants.  See also CAA section 501, 502, 302. 
The EPA has consistently interpreted the regulatory and statutory
definitions of “major source” under title V, including the term
“any air pollutant”, as applying to pollutants “subject to
regulation.”  Memorandum from Lydia N.Wegman, Deputy Director, Office
of Air Quality Planning and Standards, U.S. EPA, to Air Division
Directors, “Definition of Regulated Air Pollutant for Purposes of
Title V” (Apr. 26, 1993)(Wegman Memo).  EPA recently re-affirmed this
position in EPA’s Reconsideration of Interpretation of Regulations
that Determine Pollutants Covered by Clean Air Act Permitting Programs.
75 FR 17704, 17022-23 (April 2, 2010)(Interpretive Memorandum
Reconsideration Final Action).  We do not interpret the Act to give EPA
discretion to exclude categorically major sources of certain pollutants 
subject to regulation (such as those that are not criteria pollutants)
from the requirements of title V.  Thus, when GHG become subject to
regulation, sources which emit GHGs in excess of the major source
threshold (or the threshold as tailored by this rule) are subject to the
obligation to undergo title V permitting. 

EPA notes that this approach is based on its interpretation of sections
302, 501, and 502 of the Act.  Thus, EPA believes that such sources are
required by the Act to apply for title V permits, and EPA is authorized
to ensure that approved title V programs issue permits to such sources.

EPA agrees with the comment that where a source has previously been
issued a title V permit, the permit need not be revised solely as a
result of GHG becoming subject to regulation if the source is not
subject to any additional applicable requirements.  Transition issues
related to title V permits are discussed in more detail in section V.E.4
 of the preamble.

3.2  Comments on the Administrative Necessity Doctrine

Many state (4519, 4864, 4871), industry (3512, 4095, 4118, 4302, 4741,
4749, 4841, 4870, 4871, 4905, 5086, 5088, 5104, 5110, 5125, 5140, 5169,
5179, 5181, 5276, 5278, 5312, 5317, 5328, 5343, 5390, 5676, 5715, 5789,
5939, 8283, 8545), environmental (5139), and agricultural (3953, 3953,
5062, 5168, 5743) commenters believe that EPA’s invocation of the
administrative necessity doctrine is legally uncertain and could (or
should) to be struck down upon review, which would lead to reinstatement
of the statutory thresholds for PSD and title V and the permitting
overload and paralysis that EPA hoped to avoid.  Commenters give a
number of reasons for this belief, including the following:

The EPA misstates the nature and availability of the administrative
necessity doctrine.  (5317, 5676)

The administrative necessity doctrine applies where Congress intended
regulation but it cannot be carried out.  (5169, 5317)  Commenter 5317
believes that the administrative necessity doctrine fails on this count
because, as the proposal preamble demonstrates, Congress never intended
GHG sources to be regulated under PSD or title V.  Commenter 5169
believes that the doctrine fails on this count because EPA cannot
demonstrate that the statute clearly intends for GHGs to be “subject
to regulation” as evidenced by the contentious debate surrounding this
issue (e.g., the controversy over the Endangerment Finding, the PSD
Interpretive Memo, etc.).

The administrative necessity doctrine is a narrow and limited doctrine
that cannot support such a wide departure from the statute.  It is not a
delegation to rewrite the CAA.  (3512, 4118, 4905, 5168, 5181, 5343,
5676, 5743, 8283)

The EPA cannot use the administrative necessity doctrine in this case
because it has created the situation though its own discretionary
actions which it now seeks to remedy using this doctrine.  Where there
is a statutory alternative that would eliminate the administrative
necessity, EPA must use it.  (3512, 3953, 4118, 4302, 4741, 4905, 5062,
5169, 5179, 5317, 5328, 5715)

According to the Alabama Power decision, the administrative necessity
doctrine does not create a general ability to vary from the statute
based on a determination that the costs outweigh the benefits.  The EPA
is attempting to do just that.  (4243, 4870, 5139)

The Alabama Power court noted that there is a particularly high burden
of proof when attempting to invoke this doctrine prospectively, which is
what EPA is trying to do here.  (4095, 4741, 4870, 5104, 5139, 5140,
5278)

The Alabama Power court indicated that categorical exemptions from clear
statutory language, such as EPA is attempting, are not favored under
this doctrine.  (4870, 5104, 5140, 5278)

The administrative necessity doctrine was not upheld in any of the six
cases cited by EPA in the proposal preamble.  Contrary to EPA’s
assertion, the facts in this case are not more supportive than in the
unsuccessful cases.  (3953, 4741, 4870, 5110, 5139, 5140, 5278, 5317,
5343, 5676)

Even if the conditions for the administrative necessity doctrine exist,
EPA has not met the burden of proof that the doctrine is justified. 
(4095)

The EPA’s claim of administrative necessity is unfounded for a variety
of reasons related to the achievability of the permitting requirements
and EPA’s past regulatory practices.  (5312, 5715)

The administrative necessity doctrine is legally vulnerable because the
Tailoring Rule will be ineffective – state laws with thresholds at the
100/250 tpy levels will continue to apply.  (4095)

The “administrative necessity” doctrine was not available because
EPA has not moved expeditiously to initiate streamlining.  (4095) 

The “administrative necessity” doctrine was not available because
EPA has not explained the amount of time that it needed to conduct
streamlining measures.  (4095)  

A commenter also asserted that EPA has not established that it faces a
shortage of funds, time, or technical personnel, and that for this
reason, too, the “administrative necessity” doctrine is not
available.  (4095)  

The title V fee provisions (which require states to collect fees
sufficient to fund the program) undercut the administrative necessity
doctrine for that program.  (3953)

Some industry (4298, 5052, 5104, 5111, 5143) and state (3918, 4694,
4860, 5057, 5314) commenters agree with EPA’s proposed use of the
administrative necessity doctrine, if EPA proceeds with applying PSD and
title V to GHGs.  The commenters make the following additional points:

This situation meets the requirements for the administrative necessity
doctrine based on the shortage of funds, time, and personnel needed to
administer the programs.  (5143)

The administrative necessity doctrine will face a lower burden given
that EPA intends to phase in the statutory thresholds.  (5052)

The EPA is correct in its analysis that the Tailoring Rule does not
represent a permanent exemption based on cost/benefit considerations. 
(5052)

The EPA’s 3-step process for implementing the administrative necessity
doctrine is correctly formulated.  (5052, 5111)

The administrative necessity doctrine and the absurd results doctrine
are independent precedents – one may prevail even if the other does
not.  (5052)

However, some of these supportive commenters (5052, 5143) believe that
EPA must take additional steps to improve the administrability of the
PSD and title V programs through other means so as to deviate as little
from the statute as possible in order to prevail in court.  One such
supportive commenter (5052) believed such additional steps include
“further steps to streamline the application of PSD by delaying for
another year its applicability date, by redefining critical
applicability requirements (at least temporarily), and by adjusting the
definition of ‘major source’ in the first phase of the program to
avoid initially [sic.] applicability to small businesses….”  Another
supportive commenter (5143) believes that the administrative necessity
doctrine is justified, but EPA’s analysis is deficient because a
systematic, sector-based evaluation is needed with full analysis of, and
measures to mitigate, the serious regulatory, technical, and economic
consequences.

	Some of the industry commenters (5140, 5181, 5278) who believe that the
administrative necessity doctrine will fail for the PSD program believe
that it is more legally defensible for the title V program.  These
commenters believe it is clear that Congress clearly did not intend for
over 6 million sources to be covered by the title V program.  The
commenters add that when the title V regulations were first issued, the
question of whether CO2 was required to be considered in determining
title V applicability was raised and the Agency issued a determination
that CO2 was not considered an air pollutant that could trigger title V
applicability.  

One environmental commenter (5306) supports the use of only the
administrative necessity doctrine (and not the absurd results doctrine)
for the first phase of the Tailoring Rule.  This commenter believes that
EPA should defer any decisions on whether application of the statutory
thresholds would constitute an absurd result until it has completed the
further proceedings contemplated in the proposal to streamline
implementations of the PSD and title V programs.

In addition, a few commenters (5139, 5315) argue that the resource
constraints and administrative challenges at the heart of the Tailoring
Rule have been caused in large part by the agency’s lengthy delay in
addressing GHGs under the CAA. 

Response:

Having reviewed the comments, we continue to believe that the
“administrative necessity” doctrine supports our rulemaking in the
manner that we describe in the preamble.  We believe that we have
accurately stated the nature and availability of the doctrine, which we
set out at length in the proposal, including summarizing in detail all
of the D.C. Circuit case law.  We believe that the doctrine applies
because, as we discuss in the preamble, Congress intended that PSD and
title V apply to GHG sources in general, but that a literal reading of
the PSD and title V applicability provisions creates administrative
burdens that are impossible for the permitting authorities to carry.  

Some commenters argued that the administrative necessity doctrine is not
available to EPA under the present circumstances, which are that the
need to apply the doctrine – which render the PSD and title V
requirements administrable -- result from an action that EPA itself
took, which is promulgating the LDVR and thereby triggering PSD and
title V applicability.  That is, according to these comments, EPA
created this situation through its own discretionary actions and, for
that reason, cannot avail itself of the “administrative necessity”
doctrine. 

We do not find anything in the “administrative necessity” caselaw,
and commenters have not pointed to anything, that limits the
availability of the doctrine in the manner suggested by the commenters. 
Once PSD and title V are triggered, the administrative burdens will
become overwhelming, and that scenario brings into play the
“administrative necessity” doctrine.  Preclusion of the use of the
doctrine for this rule, the Tailoring Rule, as suggested by commenters,
would not be appropriate because that would, in effect, punish the EPA,
permitting authorities, and the regulated community for EPA’s action
in another rule, the LDVR.  We believe that commenters’ argument that
the doctrine is not available for use in the Tailoring Rule are in
effect arguing that EPA should not, or is not authorized to, proceed
with the LDVR because doing so would trigger PSD and title V
applicability and that, in turn, would give rise to absurd results and
administrative impossibilities.  Several commenters do directly make
that comment as well.  We respond to that comment elsewhere. 

To the commenter who argues that Congress did not intend that GHGs
become “subject to regulation” under other provisions of the CAA, we
respond that once we regulate GHGs under another provision of the CAA,
then, under our reconsideration of the interpretive memo, GHGs are
“subject to regulation” for purposes of PSD and title V.  Any
comments that GHGs should not have been regulated under the other CAA
provision may be relevant for that rulemaking, but not the Tailoring
Rule; and any comments that the interpretive memo reconsideration was
incorrect may be relevant for the interpretive memo reconsideration,
but, again, not the Tailoring Rule.

The comments that the “administrative necessity” doctrine is a
narrow and limited doctrine that cannot support such a wide departure
from the statute because it is not a delegation to rewrite the CAA are,
in general, linked to the comments that EPA cannot use the
administrative necessity doctrine in this case because it has created
the situation though its own discretionary actions which it now seeks to
remedy using this doctrine.  These commenters add that there alternative
ways to interpret the statutory requirements that would eliminate the
administrative necessity, such as interpreting the PSD provisions to
apply only to sources that emit NAAQS pollutants for which the area is
designated attainment or unclassifiable (or some variation of that
argument), or interpreting the term “subject to regulation” to
exclude GHGs.  According to these commenters, EPA must use one of those
alternatives.

Our response to these comments is that for the reasons discussed in the
preamble, we believe that the “administrative necessity” doctrine
provides a basis for the Tailoring Rule.  As we stated in the preamble,
the PSD provisions and their legislative history and the title V
provisions and their legislative history indicate a clear congressional
intent, under Chevron step 1, on the issue of whether PSD and title V,
respectively, apply to GHG sources, and that is in the affirmative, that
PSD and title V do apply to GHG sources.  In the preamble, we further
discuss congressional intent as to how PSD and title V apply to GHG
sources, and we conclude that the Tailoring Rule is appropriate under
that analytical approach.  As we further discuss, the “administrative
necessity” doctrine is consistent with this approach.  Because
Congress intended that PSD and title V apply to GHG sources, but a
literal application of the PSD and title V applicability provisions to
GHG sources would be impossible to administer, then, under the
“administrative necessity” doctrine, PSD and title V applicability
may be phased-in for GHG sources.

	We disagree with commenters that under the “administrative
necessity” doctrine, we must construe the PSD and title V requirements
as commenters have suggested, e.g., for PSD, to limit PSD to sources
that emit a NAAQS pollutant for which the area is attainment or
unclassifiable, and for PSD and title V, by construing the term
“subject to regulation” to exclude GHGS -- in order to avoid
creating an administrative impossibility.  Under our analytical approach
– the key to which is that Congress expressed a clear intent that PSD
and title V apply to GHG sources – PSD and title V must be applied to
GHG sources, and the “administrative necessity” doctrine authorizes
a mechanism to do so.  That mechanism is a phase-in approach.  The
alternative analytical constructions suggested by commenters are not
justifiable because they are not consistent with congressional intent,
which is, as we have said, to apply PSD and title V to GHG sources.

	EPA disagrees with commenters that EPA is required to adopt the
alternative constructions recommended by commenters on grounds that
those constructions are reasonably consistent with the PSD and title V
provisions by their terms and avoid the problems of administrative
impossibility.  As discussed in the preamble, the PSD and title V
provisions, by their terms, read literally, clearly apply to GHG
sources.  The alternative constructions recommended by commenters, which
exempt GHG sources from PSD and title V, cannot be considered to be
constructions that are reasonably consistent with the terms of the
statutory provisions.  We discuss elsewhere why interpreting the PSD
provisions to apply only to sources that emit NAAQS pollutants for which
the area is attainment or unclassifiable is not valid.  Although we
adopt an interpretation of “subject to regulation” under the
Tailoring Rule – under which GHGs emitted from certain sources are
considered to be subject to regulation and  GHGs emitted from other
sources are not, at present – we recognize that this interpretation is
not consistent with the literal meaning of the term “subject to
regulation.”  Rather, under a literal meaning, as we have said in the
preamble, once GHGs are regulated under the LDVR, then all GHGs are
considered to be subject to regulation in a literal sense.  However, our
construction is acceptable in the context of our analytical approach. 
Therefore, although the alternative constructions do obviate the problem
of administrative impossibility, simply because they exempt GHG sources
from PSD and title V, their inconsistency with the literal terms of the
provisions and with clear congressional intent to apply PSD and title V
to GHG sources means that EPA cannot adopt them.

	As for certain aspects of the “administrative necessity” doctrine
raised by commenters, we disagree that we are conducting the type of
cost-benefit analysis that the D.C. Circuit, in Alabama Power v. Costle,
636 F.2d 323 (D.C. Cir. 1980) said could not be used, as we say in the
preamble.  In addition, we state in the preamble that we recognize, as
commenters emphasize, that the “administrative necessity” doctrine
carries a particularly high burden of proof when the agency is
attempting to invoke the doctrine prospectively, but we believe that the
facts in this case are compelling and therefore that we meet that burden
of proof.  We also recognize that the Court in Alabama Power indicated
that categorical exemptions are not favored under the “administrative
necessity” doctrine.  We read the opinion to leave the door open to
categorical exemptions, although cautioning that they are disfavored,
based on a strong factual showing.  We are not, in this rule,
promulgating any categorical exemptions, although we note that we may
address them in future rulemaking.  We also recognize, as commenters
pointed out, that the administrative necessity doctrine was not upheld
in any of the cases cited by EPA in the proposal preamble.  We disagree
with commenters that the facts in this case are not more supportive than
in the unsuccessful cases.  In the proposal, we compared the facts of
the present case to those in the cases decided by the D.C. Circuit, and
explained why the facts in the present case are more compelling than the
facts in the other cases.  For reasons discussed in the preamble to this
final Tailoring Rule, since we published the proposed rulemaking, we
have improved our understanding of the facts, and we now recognize that
the facts are even more compelling than we understood them to be at
proposal.

As for the comment that the “administrative necessity” doctrine is
legally vulnerable because the Tailoring Rule will be ineffective –
state laws with thresholds at the 100/250 tpy levels will continue to
apply – we have revised our proposal to address the state legal
problem that the commenter identifes.  As discussed in the final rule,
if some states are not able to take advantage of our mechanism, we
intend to promptly take additional action.  Even if state law problems
remain for some period of time – that is, even if in certain states,
GHG sources at the 100/250 tpy level and higher remain subject to PSD as
a matter of state law for some period of time – we do not believe that
this jeopardizes the applicability of the “administrative necessity”
doctrine, as the commenter asserts.  Nothing in the case law concerning
the “administrative necessity” doctrine suggests that the doctrine
is available only to the extent it allows the agency to fashion a remedy
that will solve the administrative problem in total, to the satisfaction
of every affected party.  Even with some remaining state law problem,
the Tailoring Rule ameliorates administrative burdens resulting from
federal law requirements and shows promise to ameliorate at least a
meaningful amount of the administrative burdens under state law.  

A commenter also asserted that the “administrative necessity”
doctrine was not available because EPA has not moved expeditiously to
initiate streamlining.  (4095)  The commenter emphasized that EPA had
raised the issue of administrative burdens attendant to PSD and title V
applicability to GHGs in the advance notice of proposed rulemaking
(ANPR) concerning regulating GHGs under the CAA, which EPA published by
notice dated July 30, 2008, 73 FR 44354, and asserted that EPA has had
plenty of time since then to complete at least some streamlining
actions, particularly, action involving PTE.  

We disagree with the commenter.  As discussed in the preamble, we
believe that under the “administrative necessity” doctrine, the
agency must, as the first step, make every effort to adjust the
applicable requirements within the statutory constraints, and it is only
if, after the agency does so, that if the agency determines that an
impossible administrative burden remains, then the agency is authorized
to adjust the statutory constraints themselves.  We believe that in the
present context, this means applying whatever streamlining opportunities
are presently authorized and available to GHG sources, and then
determining whether the remaining administrative burdens are impossible
to manage.  However, we do not think that this means that the
availability of the “administrative necessity” doctrine is
conditioned on our taking streamlining action prior to finalizing the
Tailoring Rule.  Resources are scarce, and as a result, it is difficult
for an agency to expend resources (in this case, by conducting
rulemaking on streamlining measures) prior to taking the action that
confirms the need to expend the resources (in this case, by completing
the Tailoring Rule).  Certainly, we see no basis to the commenter’s
assertion that, in effect, the “clock began running” immediately
after publication of the ANPR.  In any event, as explained in the
preamble to this rule, we have taken important steps since publication
of the proposal for the Tailoring Rule to begin streamlining actions.

The commenter also stated that the “administrative necessity”
doctrine was not available because EPA has not explained the amount of
time that it needed to conduct streamlining measures.  We have provided
that information in the preamble.

A commenter also asserted that EPA has not established that it faces a
shortage of funds, time, or technical personnel, and that for this
reason, too, the “administrative necessity” doctrine is not
available.  We disagree.  We describe in the preamble the extraordinary
increase in numbers of sources that will become subject to PSD and title
V permitting requirements, immediately after GHGs become subject to
regulation on January 2, 2011, absent tailoring.  We also describe the
numbers of hours and FTEs, and the attendant financial cost, to
permitting authorities, and we compare that information with the amounts
that permitting authorities currently spend on PSD and title V
permitting.  These figures make clear the enormous increase in
permitting authority obligations absent the Tailoring Rule.

With respect to the comment that the title V fee provisions (which
require states to collect fees sufficient to fund the program) undercut
the administrative necessity doctrine for that program, we have
discussed in the preamble for the final rule the significance of title V
fees for the “administrative necessity” rationale.

With respect to the comment that EPA must take “further steps to
streamline the application of PSD by delaying for another year its
applicability date, by redefining critical applicability requirements
(at least temporarily), and by adjusting the definition of ‘major
source’ in the first phase of the program to avoid initially [sic.]
applicability to small businesses…,” the tailoring schedule we have
established, as described and justified in the preamble addresses these
concerns by limiting PSD and title V to the largest GHG sources in the
near term, but in a manner that is practicable for the stakeholders, and
establishes an appropriate process for addressing expansion of the
program to smaller sources, so that there is no need to delay
applicability by a year.

	We note that many commenters generally agreed with our approach at
proposal, and we appreciate those comments.  One supportive commenter
stated that EPA should rely on only the administrative necessity
doctrine (and not the absurd results doctrine) for the first phase of
the Tailoring Rule because EPA should defer any decisions on whether
application of the statutory thresholds would constitute an absurd
result until it has completed the further proceedings contemplated in
the proposal to streamline implementations of the PSD and title V
programs.  We are not promulgating any permanent exemption from PSD or
title V applicability with this rule, although we may address such
exemptions in future rulemaking.  We believe that the “absurd
results” doctrine supports our action in this rulemaking because we
believe the doctrine may be applied whenever a statutory requirement of
any type, if applied literally, would produce an absurd result.  Thus,
we believe that the “absurd results” doctrines applies even to
statutory provisions related to timing and can therefore justify a delay
or phase-in, as we do in this case. As explained in the preamble, we
believe that the doctrines we cite – the “absurd results,”
“one-step-at-a-time,” and “one-step-at-a-time” – support our
action today both independently of each other and in an integrated
fashion. 

3.3  Comments on the Absurd Results Doctrine

	As with the administrative necessity doctrine, many state (4519, 4864,
4871), industry (3512, 4118, 4243, 4630, 4741, 4749, 4841, 4870, 4871,
4905, 5086, 5088, 5110, 5125, 5129, 5140, 5169, 5179, 5181, 5199, 5236,
5245, 5278, 5312, 5317, 5328, 5343, 5390, 5676, 5715, 5789, 5939, 8545),
environmental (5139), and agricultural (3953, 5062, 5168, 5743)
commenters believe that EPA’s invocation of the absurd results
doctrine is legally uncertain and could (or should) be struck down upon
review, which would lead to reinstatement of the statutory thresholds
for PSD and title V and the permitting overload and paralysis that EPA
hoped to avoid.  Commenters give a number of reasons for this belief
(some of which are the same as for the administrative necessity
doctrine), including the following:

The absurd result doctrine is a narrow and limited doctrine that cannot
support such a wide departure from the statute.  (4118, 4871, 4905,
5110, 5125, 5140, 5168, 5181, 5199, 5278, 5343, 5743)

The EPA cannot use the absurd result doctrine in this case because it
has created the situation though its own discretionary actions which it
now seeks to remedy using this doctrine.  (3512, 3953, 4118, 4243, 4741,
4905, 5062, 5169, 5199, 5236, 5245, 5317, 5328)

The EPA cannot use the absurd result doctrine in this case because a
Chevron analysis in this case stops at step 1 – unambiguous statutory
meaning.  (4741, 5139, 5179, 5715)

The absurd result doctrine allows a court to read a statute in a way
that is not the most ordinary reading, but is a permissible reading, to
avoid an absurdity.  That is, it allows interpretation to narrow the
meaning of a vague term (or, more rarely, broaden the meaning of a vague
term), but it cannot be used as a basis to rewrite the clear meaning of
a statute.  The broad term in this situation is “pollutant,” not the
thresholds.  Thus, “pollutant” should be interpreted to exclude GHGs
in the PSD and title V contexts to avoid the absurdity.  (5676)

The absurd result doctrine requires a perverse outcome that is
demonstrably at odds with Congressional intent, not excessive
fulfillment of that intent.  If EPA is correct to assume that Congress
intended GHGs to be regulated under CAA permitting programs, it must
also assume that Congress intended the application of BACT, title V
permitting, etc.  There is nothing inherently absurd about applying
beneficial programs to the widest array of sources, particularly when
Congress set the thresholds.  (5715)

Under the absurd result doctrine, one must construe the statutory
language to avoid a “literal” interpretation that would frustrate
Congressional intent.  Because EPA established in the proposal preamble
that Congress never intended to subject sources to PSD and title V due
to GHGs, it must construe the CAA to avoid this outcome rather than
rewrite the plain language of the Act.  (3953, 4870, 5140, 5181, 5278,
5317)

According to Griffin v. Oceanic Contractors, Inc., where a statute can
be interpreted to avoid absurd results, it must be so interpreted rather
than relying on judicially created exceptions.  The EPA should consider
alternative approaches (no endangerment finding, no PSD without a NAAQS,
excluding GHGs from "regulated NSP pollutant" classification, use of CAA
sections 115 and 179B) to avoid the absurd result in this case.  (5110,
5140, 5278)

The EPA’s analysis of related cases misapplies the absurd result
doctrine.  The application of this doctrine in this way is not supported
by case law.  (4741, 4870, 5140, 5278, 5312, 5343, 5715)

The absurd result doctrine cannot be applied temporarily, so the
temporary exemption provided by the Tailoring Rule has greater legal
vulnerability than would a permanent exemption.  (3953, 5104)

It is the province of the courts to declare that results are
“absurd,” it is not for EPA to decide.  (3512)

EPA should conclude that PSD and title V permitting are not meant to
apply based on a source’s CO2 or GHG emissions, and cite
Congressional, legislative history, and legal support for their
position.  (3512, 3720, 4298, 5082, 5111, 5318, 5800, 5922)  

	While not entirely opposed to the use of the absurd result doctrine,
one environmental commenter (5306) cautions that it would be advisable
for EPA to defer any decision on whether to invoke that doctrine until
after the first phase of implementation is complete.  (The commenter
supported using the administrative necessity doctrine to justify the
first phase.)  The commenter notes that Congress did not restrict the
PSD or title V programs to a closed category of sources or pollutants
– here, as elsewhere, the CAA provides flexibility to respond to new,
or newly recognized, threats to public health and welfare.  The
commenter states that EPA should be hesitant to conclude that the
application of the CAA’s structure to newly identified problems –
even when awkward and challenging – is “demonstrably at odds” with
Congressional intent until reasonable means of accommodation have been
rigorously examined.

	Some industry (3998, 4298, 5052, 5104, 5111, 5143) and state (3858,
4860, 5057, 5314) commenters agree with EPA’s proposed use of the
absurd result doctrine (if EPA proceeds with applying PSD and title V to
GHGs) on the basis that the statutory thresholds would cause an absurd
result.  The commenters make the following additional points:

The absurd result doctrine can apply when a challenged statutory
application: (1) was unanticipated or unresolved by the legislature; (2)
would not advance the statute’s substantive goals; and (3) would lead
to a harsh or problematic result.  The commenter believes that this
situation clearly applies in this case.  (5143)

The administrative necessity doctrine and the absurd results doctrine
are independent precedents – one may prevail even if the other does
not.  (5052)

The absurd results doctrine will face a lower burden given that EPA
intends to phase in the statutory thresholds.  (5052)

It is correct to apply the absurd result doctrine in this case, but EPA
should exempt GHGs from coverage under this doctrine rather than raise
the thresholds.  (5104)

	However, some of these supportive commenters (3858, 4298, 5052, 5111)
believe that EPA must take additional steps to improve the
administrability of the PSD and title V programs through other means so
as to deviate as little from the statute as possible in order to prevail
in court.

Response:

	Commenters assert that the “absurd results” doctrine is available
only to construe a statutory term in a way that may not be its ordinary
meaning but that nevertheless is a permissible reading, and that the
doctrine is not available when the literal meaning of a statutory
provision is unambiguous.  We do not believe that the “absurd
results” doctrine is limited to the circumstances described by the
commenters, and our reading of the caselaw is that in fact, Courts have
employed the doctrine to construe terms differently than their literal
meaning would provide.  In the preamble, we cite examples.

	More broadly, we believe that our application of the “absurd
results” doctrine to the PSD and title V applicability provisions is
fully consistent with the way that many of the cases have applied the
doctrine.  Many of the cases have applied the doctrine to a statutory
provision that imposes a requirement or a constraint on a specified
group or entity, and, by its terms, describes or defines the group or
entity in broad terms.  In these cases, the Courts have determined that
a literal reading of the description or definition of the group or
entity would sweep in some component, but that applying the requirement
or constraint to that component would be an absurd result.  Accordingly,
the Court interpreted the statutory provision that describes or defines
the group or entity narrowly – even though not in accordance with the
provision’s literal meaning – to exclude that component.  See, e.g.,
 Nixon v. Missouri Municipal League, 541 U.S. 125, 132-33 (2004)  TA \l
"Nixon v. Missouri Municipal League, 541 U.S. 125 (2004)" \s "Nixon v.
Missouri Municipal League, 541 U.S. 125 (2004)" \c 1   (“any entity”
includes private but not public entities); Raygor v. Regents of Univ. of
Minn., 534 U.S. 533, 542-45 (2002)  TA \l "Raygor v. Regents of Univ. of
Minn., 534 U.S. 533, 542-45 (2002)" \s "Raygor v. Regents of Univ. of
Minn., 534 U.S. 533, 542-45 (2002)" \c 1    (“implying a narrow
interpretation of … ‘any claim asserted’ so as to exclude certain
claims dismissed on Eleventh Amendment grounds”); Rowland v. Cal.
Men’s Colony, 506 U.S. 194, 200 (1993) (finding that an artificial
entity such as an association is not a “person” under the statute,
and describing the absurdity doctrine as a “common mandate of
statutory construction”); Green v. Bock Laundry Machine Company, 490
U.S. 504 (1989) (provision in Federal Rule of Evidence that protects
“the defendant” against potentially prejudicial evidence, but not
the plaintiff, refers to only criminal, and not civil, defendants); Watt
v. Alaska, 451 U.S. 259, 266 (1981) (rejecting reliance on plain
statutory language and concluding that the term “minerals” in §
401(a) of the Wildlife Refuge Revenue Sharing Act applies only to
minerals on acquired refuge lands; stating “[t]he circumstances of the
enactment of particular legislation may persuade a court that Congress
did not intend words of common meaning to have their literal effect”);
Train v. Colorado Public Interest Research Group, Inc., 426 U.S. 1, 
23-24 (1976) (prohibition in Federal Water Pollution Control Act against
discharging into navigable waters “pollutants,” which are defined to
include “radioactive materials,” does not apply to three specific
types of radioactive materials).

	Here, the CAA imposes requirements, which are PSD or title V permitting
obligations, on certain entities, which are, for PSD purposes, a
“major emitting facility,” including one that undertakes a
“modification,” and, for title V purposes, a “major source.” 
The CAA defines those terms broadly, and those definitions, by their
literal meaning, (i) include all GHG sources that emit above specified
thresholds or, in the case of a “modification,” all such sources
that make a physical or operational change that results in GHG emissions
above a certain threshold, and (ii) include such GHG sources immediately
after GHGs become subject to regulation under any other CAA provision. 
(As discussed in the preamble, EPA has incorporated these statutory
definitions into its regulations.)  However, subjecting all those GHG
sources at that time to PSD and title V requirements produces absurd
results.  Accordingly, EPA may interpret those terms narrowly to
exclude, at least temporarily, some GHG sources from the terms “major
emitting facility, “modification,” and “major source” (and their
counterpart regulatory terms).  

As EPA explains in the preamble for this rulemaking, each of “major
emitting facility,” “modification,” and “major source”
includes, as part of its definition, four terms, and any one or all four
of those terms may be interpreted – that is, used as the legal
mechanism, or “hook” --  to achieve the overall result of
interpreting “major emitting facility,” “modification,” or
“major source” more narrowly to exclude, at least temporarily, some
of the GHG sources.  Specifically, each provision includes (i) the term
“any … source,” or “a stationary source,” and that term could
be considered not to refer literally to all of the GHG sources; (ii)
either the term “two hundred fifty tons per year” or “100 tons per
year,” or the term “increases the amount,” and those terms could
be considered not to refer literally to the tonnage amount of emissions
from all of the GHG sources; (iii) the term “any air pollutant,” and
that term could be considered not to refer literally to the emissions
from all of the GHG sources; and (iv) the term “subject to regulation
under the CAA” (which we have interpreted “any air pollutant” to
include), and that term could be considered not to refer literally to
the emissions from all of the GHG sources.  As long as any one of those
four terms may be considered not to have its literal meaning as applied
to GHG sources, then the definition as a whole – again, for PSD, the
terms “major emitting facility” or “modifications,” and for
title V, the term “major source” – cannot be considered to apply
to all GHG sources, at least, not for an initial period of time.  

As a result, regardless of the specific legal mechanism, or “hook,”
the end result should be the same as in the many other cases, a few of
which are cited above, in which the courts have considered a similar
problem, and that is that these broadly written definitions of a group
or entity (“major emitting facility,” “modification,” or
“major source”) that is subject to a requirement or constraint (PSD
or title V requirements) should be interpreted narrowly – even though
not in accordance with the literal meaning of the definition – to
exclude some component (smaller GHG sources, at least temporarily) when
necessary to avoid absurd results.

	We reiterate that in the present case, the absurd result is the
enormous increase in permitting actions that would be required as of the
January 2, 2011 “take-effect” date for the LDVR, which increase
would, by overwhelming the PSD and title V permitting processes and
thereby impeding the orderly issuance of both types of permits,
undermine Congress’s goals for both the PSD program (to issue permits
that allow large industrial sources to construct or expand, with
environmental safeguard) and the operating permit program (to issue
permits that promote accountability and enforceability).  This result
occurs because of the literal application of the PSD and title V
applicability provisions to GHG sources, and, for this reason, this case
falls well within the caselaw in which the courts have applied the
“absurd results” doctrine.  In those cases, the courts have declined
to interpret or apply statutory provisions in accordance with their
literal meaning when doing so would undermine the intent of the statute
or lead to absurd or futile results.  Because our application of the
“absurd results” doctrine in this case is consistent with the
caselaw in the manner just described, we disagree with commenters who
state that under the caselaw, we misapply the “absurd results”
doctrine.  

In addition, we disagree with commenters who state that the “absurd
results” doctrine is not available in this case because it was our own
action – promulgation of the endangerment/cause or contribute findings
and the light duty vehicle rule – that, by triggering PSD, created the
absurd results.  We respond to this comment in the preamble.  We also
disagree with those who say the doctrine cannot be applied temporarily;
we believe the doctrine may potentially be applied in any circumstance
in which a statutory requirement, read literally, produces a result that
undermines the purposes of the provision, whether that result is
temporary or not.  We also disagree with commenters who say that the
“absurd results” doctrine does not apply to this case because
Congress’s intent was to apply the PSD and title V programs to the
widest array of sources; rather, as we discuss in the preamble, although
Congress did intend that PSD and title V apply to GHG sources in
general, Congress cannot be said to have intended the literal
application of the statutory provisions to GHG sources – that is, the
100/250 tpy thresholds -- because that would bring in many sources
during the initial period than the permitting authorities could handle. 
For the same reason, we also disagree with commenters who read the
proposal to state that Congress did not intend to apply PSD or title V
to GHG sources.  We disagree with commenters who state that only the
courts may apply the “absurd results” doctrine; we believe that the
doctrine is one of the precepts of statutory construction and EPA should
apply the precepts of statutory construction to interpret the CAA.  We
also disagree with commenters who argue that interpreting the PSD
provisions as being limited to sources that emit pollutants for which
the area in which they are located is designated as attainment or
unclassifiable resolves the “absurd results.”  For the reasons
discussed elsewhere, we disagree that the PSD provisions can or should
be interpreted in that manner.  

3.4  Comments on the Step-by-Step Process

	In the proposal preamble we took comment on a third potential
justification for our proposal – a line of cases that establishes, in
certain situations, the acceptability of a “step-by-step process”
for implementing a statutory requirement.  74 FR 55319.  We received a
few comments on this topic.

Comment:

	An environmental commenter (5122) and an industry commenter (4298)
support the use of the case-by-case justification.  The environmental
commenter (5122) stresses that EPA should make clear that it is not
seeking to avoid its statutory obligations by providing far greater
detail on its future plans for the step-by-step regulation of GHGs. 
This commenter provides additional case citations to support the
viability of this approach.

	A state commenter (2797) does not concur with EPA’s interpretation of
case law.  This commenter believes that EPA stretches the U.S. Supreme
Court opinion related to first steps.

	An industry commenter (5676) states that the cases cited by EPA stand
for a different legal principle than EPA advances to justify the
Tailoring Rule.  The commenter believes that the relevant analogy to
these cases would be EPA deciding to regulate GHG only under some CAA
programs because it believed that these would be sufficient to achieve
its goals – in neither case did the Court excuse compliance with
specific statutory criteria for a limited period.

Response:

We have discussed the “one-step-at-a-time” doctrine in greater
detail, including more extensive discussion of the caselaw, in the
preamble for the final rule than we did at proposal.  In addition, we
discussed in more detail in the preamble for the final rule our future
plans for addressing GHG sources under the PSD and title V programs. 
For the reasons stated in the preamble, we believe that the Tailoring
Rule is fully consistent with the “one-step-at-a-time” doctrine.

 

3.5  Comments on Implementation through Retroactively Limiting Approval
of SIPs and Title V Programs

	In the proposal preamble, we discussed our proposal to implement the
PSD thresholds for GHGs by limiting our approval of the PSD permitting
threshold level provisions and the significance level provisions in the
previously fully approved SIPs of those states with SIP-approved PSD
programs.  74 FR 55342.  We proposed to take this action under authority
of CAA section 301(a), which incorporates the inherent authority of an
agency to reconsider its actions, and Administrative Procedure Act (APA)
section 553.  In the alternative, we proposed to limit our approval of
PSD SIPs through the error correction provisions of CAA section
110(k)(6).  Similarly, we proposed to limit our approval of the title V
permitting threshold level provisions in the previously fully approved
state title v programs, again based on CAA section 301(a) and APA
section 553.  74 FR 55345.

Comment:

	

	Several industry commenters (4095, 4106, 4118, 4691, 4870, 5083, 5058,
5131, 5133, 5137, 5140, 5179, 5181, 5278, 5317, 5713, 6414, 16411) and
state (2729, 4019, 4866, 4989, 5039, 5084) commenters object to our
proposal to limit our approval of previously fully approved SIPs.  The
arguments against the proposed approach include the following:

The EPA has overstated its authority under CAA section 301(a).  The
District Court Circuit (D.C. Circuit) has observed that section
301(a)(1) “does not provide the Administrator with carte blanche
authority to promulgate any rules, on any matter relating to the CAA, in
any manner that the Administrator wishes.”  Where the CAA includes
express provisions – such as section 110(k)(5) (the SIP call
provision) – EPA is required to follow those provisions.  If there was
a mistake in prior SIP approvals as EPA contends, section 110(k)(5) is
EPA’s sole and exclusive mechanism for seeking to correct a SIP that
has been determined to be inadequate.  (4019, 4866, 4870, 5058, 5083,
5131, 5140, 5181, 5278, 5317, 5714)

The EPA’s invocation of 5 U.S.C. 553(e) is legally indefensible.  The
EPA has mentioned no outstanding petition for EPA to revisit its PSD SIP
approvals, so section 553(e) appears to be inapposite.  In addition, CAA
section 307(d)(1)(B) and the penultimate sentence of section 307(d)(1)
expressly state that the provisions of section 553 do not apply to
“the promulgation or revision of an implementation plan by the
Administrator” under CAA section 110(c), which, in practical effect,
is the action EPA proposes here.  Even where section 553(e) applies, it
merely directs agencies to allow parties to seek revisions of rules; it
plainly does not permit agencies to disregard procedural requirements
– whether under the APA or under organic statutes such as the CAA –
that agencies must follow in effecting any such revisions.  (5317, 5714)

The EPA’s CAA section 110(k)(6) justification is flawed because
section 110(k)(6) authority is limited to the correction of technical or
clerical errors made in a SIP approval and does not allow any unilateral
revision by EPA of substantive provisions or any changes to the nature
or terms of a SIP that EPA has approved in the past.  (2797, 4019, 4866,
4870, 4989, 5039, 5083, 5133, 5131, 5140, 5179, 5181, 5279, 5317, 6414)

The type of action EPA wishes to undertake can only be taken through a
SIP call under section 110(k)(5) of the CAA, although that section is
not applicable in this situation because SIPs that incorporate the CAA
applicability thresholds are not inadequate to “comply with any
requirement of the Act.”  (4106, 4691, 4870, 5058, 5140, 5181, 5278,
5317, 6414)

If EPA wishes to pursue its current regulatory strategy, it could amend
the minimum PSD SIP elements in 40 CFR 51.166 and allow states to
develop and submit SIP revisions in accordance with those new
provisions.  (5182, 5317)

The EPA’s retroactive limitation on its prior approval of the SIPs is
not being done to correct a mistake – even EPA does not claim its
approvals were in error at the time it promulgated them.  Rather, the
Agency is trying to change the SIPs now to avoid substantive and timing
problems it has created by its own deliberate actions.  (4870, 5058,
5131, 5140, 5181, 5278, 5317, 6414)

The EPA is not proposing to correct any “error” “in the same
manner” as it made its approval.  The proposed Tailoring Rule in
effect proposes a blanket limitation on all past approvals; EPA is not
issuing an individualized new proposed approval (or disapproval) action
for each SIP that had been the subject of an individual EPA
notice-and-comment SIP approval proceeding.  A SIP call is the proper
procedure to address any alleged inadequacies in state resources. 
(2797, 4989, 5181, 5317)

In Concerned Citizens of Bridesburg v. EPA, 836 F.2d 777 (3d Cir. 1987),
the court held that EPA’s attempt to rescind SIP revisions that EPA
had approved 13 years earlier because EPA claimed its original approval
was in error, when in fact the SIP provisions were no longer consistent
with EPA policy due to an intervening change in that policy, was not an
inadvertent mistake that would justify a unilateral change in disregard
of procedural requirements for SIP revisions.  (This case took place
before enactment of section 110(k) of the CAA.)  See also Detroit
Edison Co. v. EPA, 496 F.2d 244, 248-49 (6th Cir. 1974) (a proposed
clarification by EPA of a SIP several months after promulgation was not
in fact a clarification but a revision because it effected substantive
change).  (4870, 5080, 5140, 5181, 5278, 5317)

The EPA’s invocation of section 110(k)(6) establishes a troubling
precedent that undermines the role of states under the CAA.  The EPA’s
approach is unguided by any standards, criteria, or precedent.  States
and regulated sources would no longer have confidence that they could
rely on approved SIPs, safe from EPA’s revision of those SIPs whenever
the Agency decides – on any grounds it chooses or no grounds at all
– that its prior approval had been an “error.”  Under this
interpretation of section 110(k)(6), EPA could dispense entirely with
SIP calls under section 110(k)(5) and the states’ role in SIP
revisions, which was clearly not what Congress had in mind when it
enacted section 110(k).  The EPA’s approach seriously undermines the
carefully crafted federal-state partnership the CAA creates, which
assigns states the primary role in designing SIPs, while giving EPA a
more limited, reviewing role.  (4870, 5039, 5140, 5181, 5278, 5317)

The EPA's approach to ask states to quickly revise their SIPs to comport
with the increased significance thresholds is likely to be challenged by
activist groups citing the CAA's anti-backsliding provisions, which
limit relaxation in certain rules.  Under EPA’s interpretation of PSD
applicability, once the section 202 rule requires PSD to apply to GHGs,
the existing thresholds contained in SIPs could be alleged by activist
groups to become binding on GHGs under the anti-backsliding arguments
that these groups are currently advancing in various court cases.  Thus,
even if a state wanted to revise its regulations similar to the federal
Tailoring Rule and, thereby, relax the threshold, the anti-backsliding
provision might prevent it.  (5140, 5181, 5278, 5713)

The EPA should exercise all available legal authority to ensure that
SIPs come into conformity with the Tailoring Rule.  Instead of taking no
action other than to limit approval of SIPs, EPA should mandate or
strongly encourage states to revise their PSD rules to reflect the
higher thresholds.  This could be accomplished through an expedited SIP
call or by conditioning section 105 grant funding on appropriate
revisions to the PSD rules in SIP-approved states.  (4691)

The EPA is ignoring the fact that it will take time for the states to
amend their laws and regulations to accommodate the revised
applicability thresholds.  It will be of little help for EPA to quickly
amend the SIP because states will still be bound to implement their
underlying programs until corrections can be made.  For sources, this
means no relief from the statutory thresholds for a lengthy time after
GHGs become regulated.  (4019, 4095, 4866, 5080, 5083, 5084, 5131, 5133,
5140, 5179, 5278, 5317, 16411)

	An industry commenter (4298) supports EPA’s efforts to limit or
conform its prior approvals through CAA sections 301(a)(1) and 110(k)(6)
with respect to applicability thresholds.  However, the commenter
believes EPA should take affirmative steps to ensure that states
immediately either revise their regulations to raise existing lower
thresholds or demonstrate that they have adequate resources and funding
to manage their programs utilizing those existing lower thresholds.

	An environmental commenter (5306) believes that EPA and the states
should collaborate on an expeditious, smooth transition in carrying out
obligations to address GHGs under the PSD and title V programs.  The
commenter believes it is reasonable for EPA to call for a SIP revision
under section 110(k)(5) with an expeditious deadline for states to
submit corrective plan revisions.  Further, according to the commenter,
EPA can ease state adoption of PSD permit program revisions and expedite
EPA’s own review and approval of the states’ adjustments by adopting
model guidelines to help inform state rulemaking.  The commenter
recommends that EPA should promptly start the process with the aim to
complete it by the end of 2010.  The same basic framework and timelines
can apply to the title V permit program and state administration of
corrective adjustments.  See 42 U.S.C. § 7661a(i).

	Many commenters (4019, 5083, 5140, 5179, 5181, 5278, 5317, 5714) raised
the same objections to our proposed use of CAA section 301(a) and APA
section 553 authorities to limit our approval of previously fully
approved title V programs as were summarized above in relation to the
proposed use of these authorities to limit our approval of SIPs.  They
also expressed the same concerns related to the timing of changes to
state title V laws and regulations.  The comments on SIPs related to CAA
section 110(k)(6) do not apply to the proposed action on title V
programs.

Response:

We appreciate these comments.  As explained in the preamble to this
final rule, we are not finalizing our proposal to narrow our approval of
the PSD SIPs or federally approved title V programs.  Instead, it is our
understanding that many states will be able to interpret their PSD SIPs
and title V programs to accommodate the Tailoring Rule.  If some states
are not able to do so, then we may, in the future, take action to
finalize narrowing our approval of SIPs and/or title V programs.  As a
result, we will not respond to these comments in this rulemaking, but
if, in the future, we consider taking action to narrow our approval of
PSD SIPs or title V programs as we proposed, then, in that action, we
would respond to these comments.

Chapter 4.  Comments on Streamlining Options and Tools To Address the
Administrative Burdens of PSD and Title V for GHGs

4.1  General Comments on Permit Streamlining Options for PSD and Title V

	Section VII of the proposal preamble for the Tailoring Rule presents
several PSD and title V permitting streamlining options/tools.  Though
we acknowledged that these techniques could not be fully developed in
the near-term, we committed to aggressively pursuing the development of
these streamlining techniques in the first step of our overall PSD and
title V GHG permitting strategy and solicited comment on our proposed
streamlining techniques as well as other techniques that could be
employed.  This subsection presents the general comments received on the
use of streamlining techniques to mitigate potential PSD and title V
permitting burdens that would be associated with regulating GHGs under
these permitting programs.  

Comment:

Several commenters (2369, 2504, 2797, 3003, 4515, 4691, 4746, 4767,
4800, 5052, 5056, 5079, 5083, 5086, 5131, 5143, 5280, 5301, 5313, 5346,
5347, 5391, 5417, 5740, 8461) support the use of streamlining options
and tools to address the administrative burdens of the PSD and title V
programs for GHGs.  Some supporting commenters gave suggestions about
possible streamlining techniques and/or options, while others expressed
concerns, or provided comments on the timing of our proposed
streamlining options.  Examples of these comments are provided below.

General Support

EPA should consider any and all streamlining including the use of
general permits, permits by rule, electronic permitting, workshops,
on-line electronic compliance tools, and other streamlining options. 
(2369, 5056, 5086, 5391)

A public process should be developed to address permit streamlining
approaches to include general permits, permit by rule, and presumptive
BACT for GHGs.  (5301)

The Agency should continue to pursue efforts to streamline title V and
NSR permitting, including BACT determinations.  (5083)

General Concerns

While streamlining options contemplated by EPA may provide limited
relief, there is still a very real concern that the Tailoring Rule will
significantly increase regulatory and administrative burden (putting
U.S. facilities at a competitive disadvantage) without a corresponding
reduction in emissions.  (5236)  

The streamlining approaches are vague: (1) there is no mechanism
described in the rule for how they will be implemented, and (2) they
have not been proven to work in practice.  For these reasons, the
commenter believes the streamlining options should be evaluated before
the rule is promulgated to determine which approaches are feasible,
after which the satisfactory options can be promulgated through
rulemaking.  (5788)

While EPA has indicated that it intends to reevaluate the requirements
for smaller sources and consider streamlined permitting options such as
general permits, any such options for sources with less than 25,000 tons
of GHG emissions will most likely impose substantial regulatory burdens
with little, if any, environmental benefits.  (5236)

The other NSR Reform flexibility mechanisms designed to lessen the
burden of PSD will not be available to streamline GHG permitting because
they have not been fully adopted into many SIPs and were not designed
with GHGs in mind.  (5143)

	Many commenters made suggestions on the mechanisms and timing to put
streamlining techniques in place.  Examples of these comments are
provided below.

Mechanisms

EPA should implement these options by rule and not guidance as many
states cannot implement EPA guidance (2504).  

EPA should provide equipment specific permitting templates as models for
monitoring, recordkeeping, and reporting requirements.  (4154) 

EPA should develop streamlining techniques for common combustion
sources, such as a boilers and turbines using natural gas fuel to
minimize the amount of application preparation time and agency review
time associated with obtaining permits for these types of sources. 
(5130)  EPA should identify emission units fired with fuels with broad
cross-sector applicability as priority sources for information
compilation and publication.  For example, boiler, process heaters,
reciprocating engines, and combustion turbines should be considered as
high priority sources.  EPA should also identify priority sources based
on fuel type and emission units – e.g., coal, oil and natural gas for
boilers, natural gas for combustion turbines, diesel and natural gas for
reciprocating engines.  (4515, 4691)

Timing

EPA’s proposed streamlining techniques would not be in place in time
to avoid the potentially devastating impact on their U.S. operations. 
(4632, 5417)  One of these commenters added that these techniques will
be less effective than establishing thresholds at more appropriate
levels.  (4632)  

EPA must provide a more detailed explanation of possible
“streamlining” approaches before using them as part of the
justification for adopting the Tailoring Rule.  The streamlining
approaches proposed by EPA are complex and likely to be controversial,
thus, if EPA intends to pursue such ideas it must do so in a more
deliberate and systematic way and in light of previous rulemakings,
remands, and vacaturs.  (5058, 4863, 5064, 5305)  

EPA should have all streamlining techniques finalized by the start of
the program (i.e., before sources are regulated for GHG).  (2797, 4746,
5086, 5347, 5391)

EPA should expeditiously finalize its streamlining options.  (2504,
2797, 8405)

EPA should allow more time to resolve critical implementation issues. 
(5417).  

EPA should install measures to expedite permitting, such as
pre-approving certain equipment or processes.  (3003)  

EPA should make clear that the intent of its proposed approach is to
impose, over time, some type of BACT requirement on all GHG stationary
sources in the U.S. that emit or have the potential to emit GHGs above
250 tpy – that EPA’s streamlining approaches do not offer a complete
or permanent solution to the problems associated with regulating
multitudes of sources under PSD and making even more such sources
subject to title V requirements.  (5317)

EPA should structure a first phase program with minimal impact to the
regulated community, allowing reasonable time for the regulatory
environment surrounding climate change to mature, and during this
period, EPA should work with state and other regulators to eliminate
patchwork regulations, and create a greater focus on cost-effective and
consistent programs to regulate GHG emissions.  (4746, 4951)

EPA should develop a first-phase threshold that reflects a true major
source, but allows enough sources to enter the program so EPA can
evaluate the "pros and cons" of bringing GHG into the PSD and title V
programs is needed.  (4863, 5064, 5305)

EPA should phase in title V requirements over the 5-year renewal process
to even out the workload.  (4154)

Legality of Our Proposed Streamlining Techniques

	Many commenters made general comments about the legality of our
proposed streamlining techniques.  Examples of these comments are given
below.

The "streamlining" procedures that EPA is considering are of
questionable legality and effectiveness (5129, 5179, 5417, 5317) or
conflict with the plain language of the CAA.  (4118, 5140, 5278, 5317)

One of these commenters adds that, as a minimum, EPA should postpone any
actions that may trigger PSD and title V requirements for GHGs until it
has invested the time necessary to conduct a more thorough assessment of
the workability and defensibility of its proposals.  (5317)

Redefining PTE to mean actual emissions would allow many sources to
avoid the classification as "major" emitting facilities, but the statute
specifically defines the PSD and title V applicability thresholds in
terms of PTE.  (5129)  

There is no explicit authority in the CAA's PSD provisions for "general
permits" or "presumptive BACT" determinations.  In fact, as EPA
acknowledges, these options would appear to conflict with the CAA
section 165, which requires a "public hearing" on each PSD permit (5140,
5278, 5129), and section 169, which requires BACT to be determined for
each major source on a "case-by-case" basis (5140, 5278, 5129, 5317). 
Two of these commenters also added that the proposed streamlining
methods conflict with the CAA’s air quality monitoring requirements. 
(5140, 5278)  

It is ironic that EPA proposed in the Tailoring Rule the utilization of
standard permits (i.e., general permits) and permits-by-rule as
streamlining options for PSD and title V permitting considering that EPA
recently proposed to disapprove various aspects of the Texas air
permitting program because EPA was adamantly opposed to the notion of
using standard permits and PBRs to permit major source emissions. 
(5179)

The only possibility of streamlining requires extensive and significant
changes to the actual regulatory framework.  (8025) 

Response:

We agree with those commenters who support using streamlining techniques
to mitigate the potential PSD and title V permitting burdens.  Nothing
in the opposing comments has persuaded us that we should abandon our
streamlining efforts.  To the contrary, the strong support for these
efforts shown by many commenters reinforces our intention, as stated in
the proposal, to move forward with the approaches as an integral part of
our phase-in approach.  However, because the uncertainty surrounding the
streamlining approaches and the concerns expressed by some commenters,
we are not committing to finalize rules on any particular approach, but
we do plan to explore all streamlining options as expeditiously as
possible, beginning immediately and proceeding throughout the phase-in
period, and we encourage permitting authorities to do the same.  We
commit to consider a wide array of possible streamlining measures, and
we commit to propose and take comment on, in the step 3 rulemaking, a
set of those measures that we determine are viable to pursue further.  

For these reasons and since we will need to collect significant
category-specific data for source and emission unit types that have
heretofore generally not been regulated by the CAA (e.g., furnaces,
water heaters, etc.), we are not making a conclusion as to whether any
streamlining options will or will not be feasible for any sources,
especially smaller sources, and/or if a particular option will be
available at a certain time.   

	We disagree, however, with the commenter that suggested that “while
streamlining options contemplated by EPA may provide limited relief,
there is still a very real concern that the Tailoring Rule will
significantly increase regulatory and administrative burden” because
while implementation of steps 1 and 2 – which will cover larger
sources -- will pose implementation challenges, and some of the
streamlining tools could assist with meeting these challenges, we have
assessed the burdens associated with GHG permitting and have established
a phase-in schedule that represents a manageable workload, even in the
absence of streamlining techniques.  In addition, no sources under
50,000 tpy CO2e will be regulated before April 30, 2016.  Thus, we also
disagree with the commenter that stated that “EPA should make clear
that the intent of its proposed approach is to impose, over time, some
type of BACT requirement on all GHG stationary sources in the U.S. that
emit or have the PTE GHGs above 250 tpy.”  

Consistent with our phase-in approach, it is important for us to
consider whether, at some point during the implementation of step 2, it
will become possible to administer GHG permitting programs for
additional sources.  For example, if EPA is able to promulgate measures
that streamline programs to at least some extent, if permitting
authorities increase their resources, or if implementation experience
and more seasoned staff results in more effective use of scarce
permitting resources, then we expect that we will be able to phase-in
the application of PSD and title V to more sources by establishing step
3.  We do not have enough information now to establish a final step 3,
particularly because there will be significant transition occurring in
the GHG permitting programs during steps 1 and 2.  However, we believe
that it will be possible to develop a record on which to base step 3
sometime soon after we begin to implement step 2.  

Therefore, we plan to propose a rule in which we solicit comment on or
propose lower thresholds for PSD and title V applicability, and we
establish an enforceable commitment to finalize a rule in which we
address those matters by July 1, 2012.  In order to provide a year for
permitting authorities and sources to prepare for any additional GHG
permitting action in Step 3, we will establish that step 3 would take
effect on July 1, 2013.  We also commit to explore, between now and the
step 3 proposal, a wide range of streamlining options.  In the proposal,
we will take comment on streamlining approaches we think may be viable
(except to the extent we will have already issued guidance documents
concerning streamlining approaches), and we will address those options
in the final rule. 

In addition, as part of the step 3 action, we may solicit comment on a
permanent exclusion of certain sources from PSD, title V or both, based
on an “absurd results” rationale.  For example, we may make a final
determination that under the “absurd results” doctrine, PSD and/or
title V do not apply to a set of GHG sources that, although above the
statutory thresholds for those programs, are too small and relatively
inconsequential in terms of GHG contribution.  Another type of such
exclusion for the title V program could be for sources that would
otherwise be required to obtain an “empty permit,” that is, for
example, one that would not contain any applicable requirements because
there are none that apply to the source.  If we promulgate a permanent
exclusion, we may conclude that by that time, we will have brought into
the PSD and title V programs the full set of sources that would be
consistent with congressional intent (or, if congressional intent on
that point is unclear, with a reasonable policy consistent with
statutory requirements), and, under those circumstances, we would find
that such a rule brings the tailoring process to a close.  The
application of the “absurd results” rationale for a permanent
exclusion is discussed in more detail in section V.B. of the final rule
preamble.

Regarding those comments about other possible streamlining techniques
that were not part of this proposal, such as NSR reform mechanisms, we
are not making a decision about finalizing these options at this time. 
We would likely want to explore, through a notice and comment process,
which of these measures is viable to pursue further.  These comments,
including any opinions about the legal and policy direction we must take
regarding these streamlining options, will be addressed in the action(s)
where we might apply them.

4.2  Redefining “Potential to Emit”

At proposal, we proposed an approach to establish PTE calculation
methods (and redefining PTE) for various categories of sources that emit
GHGs.  Potential to emit, or PTE, is defined as the maximum capacity of
a source to emit any air pollutant under the source’s physical and
operational design, including legal limitations on emissions or hours of
operation.  Many sources have no legal limitations on operational
conditions that affect their PTE calculation, such as their hours of
operation, and as a result, they are treated as if they operate
continuously (24 hours per day, 7 days per week, totaling 8,760 hours
per year), even when they do not actually do so.  As a result, basing
the applicability thresholds on PTE rather than actual emissions has the
potential of sweeping enormous numbers of sources into permitting
programs that would otherwise not actually emit close to the
applicability thresholds.  Thus, many GHG emission sources will find
that they can establish legally and practically enforceable limits on
their operational parameters to limit their PTE, that will allow them to
avoid major source status, and thus major source permitting.  Sources
that do not operate anywhere near the 8,760 hours per year typically
assumed in PTE calculations and whose actual emissions are below major
source applicability thresholds would be candidates for such PTE limits.

We requested specific comments on experience with limiting PTE by rule
rather than through individual permits, considerations in phasing-in
this approach, and identification of categories that might benefit from
the use of rules limiting PTE.  Comments received are presented in this
subsection.

Comment:

Several commenters (4298, 4513, 4696, 5078, 5079, 5111, 5130, 5183,
5224, 5711, 7026, 8461) support the idea of redefining “potential to
emit.”  The reasons for their support include: 

The option to limit GHG PTE by rule rather than through individual
permits is a good idea.  (5130)  Voluntarily limiting PTE would limit
the PSD and title V programs to sources whose actual emissions are
likely to be greater than the major source threshold for CO2e.  (4691,
5078, 5079)

Allowing sources to refine facilities' PTE to be closer to expected
actual emissions is a good idea, particularly for sources where actual
emissions are demonstrated to be substantially lower than a traditional
calculation of PTE would indicate.  (4696, 5079, 5111, 5711)  This
approach will be consistent with EPA’s GHG Mandatory Reporting Rule
(4696, 8461) and some of the source categories that could benefit from
this approach could be residential and commercial furnaces.  (5711).

If “actual” historical emissions are not used, EPA should reinstate
historic policies for both the PSD and title V programs that allow
sources and states to presume “synthetic minor” status for sources
whose historic emissions are less than 50 percent of “major source”
levels.  A previous title V interpretation allowed a transition period
for permitting title V sources whose historic actual emissions were less
than 50 percent of major source thresholds to be treated as minor
sources, regardless of their PTE.  [See ,e.g., J. Seitz and R. Van
Heuvlin, “Options for Limiting the Potential to Emit (PTE) of a
Stationary Source Under Section 112 and Title V of the Clean Air Act”
(Jan. 16, 1995); J. Seitz, Calculating PTE for Emergency Generators
(Jan. 16, 1995); J. Seitz, Calculating Potential to Emit (PTE) and Other
Guidance for Grain Handling Facilities) (Nov. 14, 1995)].  The commenter
argues that these policies remain sound for both PSD and title V
permitting, are within EPA’s discretion, and will reduce burdens
significantly during the early phases of title V and PSD permitting of
GHG sources.  (5111, 5470)

EPA should evaluate opportunities to interpret and define PTE for GHG
emissions such that they approach, if are not equal to, actual
emissions, similar to EPA’s approach to estimating PTE for emergency
generators which recognizes inherent limitations in how such equipment
is intended to be operated.  (5224)

EPA could establish a rule or policy establishing PTE for GHGs based on
actual emissions, where sources that can demonstrate that their GHG
emissions are below 75 percent of the major source thresholds could be
treated as synthetic minor sources.  (5224)

In crafting PTE definitions, it will be important to allow for the entry
of new technologies.  Taking a functional approach should help in this
regard.  (5711)  

For certain equipment, a commenter supports the proposal to develop
“prohibitory rules” that would preclude operation during a certain
number of days per year, and allowing flexibility by offering a
streamlined method to allow a source to operate for longer hours upon
request to the permitting agency.  (5711)

One commenter supports the proposal to define furnaces and similar
heating equipment to include the thermostat to which they are attached,
which constrains them from operating in warmer weather.  The commenter
also suggests that a similar definition could be used for natural
gas-fired water heaters, both conventional and tankless models, to
recognize their intermittent operation.  Tankless natural gas water
heaters operated in conjunction with solar water heating could be
defined to recognize the operational constraint that keeps the natural
gas heater from turning on during a certain percentage of the time
(based on minimum number of sunny days for example).  (5711)

Any redefinition of PTE should include provisions for crediting existing
facility offsets of GHGs, especially CO2.  (5183)

	Various commenters (3278, 4515, 4691, 5073, 5135, 5198) did not
explicitly support or oppose the idea of redefining “potential to
emit,” but provide suggestions for “redefining PTE.”  These
suggestions include:

EPA should clarify that the proposed Tailoring Rule does not preclude a
source from pursuing a source-specific PTE limitation, as opposed to
general or sector-wide PTE limitations.  If sector-specific PTE is
defined or needs to be defined, EPA could consider average utilization
profiles, especially for the natural gas industry.  (4515, 4691) 

Restrictions based on expected “real-world” operating conditions may
be helpful to some industries, but do not appear to be applicable to
natural gas transmission facilities.  Federal Energy Regulatory
Commission (FERC) requires pipelines to build and operate systems that
are capable of meeting peak demand days, and thus have the potential to
emit far more GHGs than are emitted in practice.  For that reason, FERC
requirements could prevent pipelines from accepting facility-specific
operational limitations, as suggested by EPA, in order to reduce PTE. 
In addition, with the increased use of natural gas as both a heating and
cooling fuel source, natural gas providers are less able than other
industries to take on seasonal limitations.  (4515, 4691)  

Several commenters (3916, 4120, 4238, 4239, 4696, 4860, 4949, 5129,
5306) oppose the idea of redefining “potential to emit.”  The
reasons for their opposition include: 

The statute specifically defines the PSD and title V applicability
thresholds in terms of PTE (4949, 5129, 5306) and any future efforts to
reduce the scope of PSD and title V through re-defining PTE risk running
afoul of the text of the CAA.  (5306)

Alterations to the current practice for calculating PTE will upset
longstanding policies and procedures in NSR permitting guidance and will
affect all of the regulated NSR pollutants.  (3916, 4238, 4239, 4860,
4949)

EPA’s proposal of limiting PTE by undertaking federally enforceable
restrictions on operating hours or design operating parameters could
potentially affect natural gas facilities by contradicting compressor
station’s obligations to its customers under the FERC certificate. 
FERC regulations require compressor stations to be “available” to
meet peak demand as defined in its certificate to ensure that
construction and operation of natural gas facilities are in the
“public convenience and necessity” and are in compliance with all
applicable regulations.  Therefore, the commenter concludes that, unless
EPA has an explicit exemption for such natural gas facilities to exceed
its “redefined” PTE to meet FERC requirements, the EPA tailoring
proposal to redefine the PTE will not be a functional option.  (4120)

Response:   

We are not making any final decisions on redefining PTE at this time. 
We will take these comments into account during the development of any
streamlining techniques during step 3 of our phase-in approach.  

4.3  Presumptive BACT

	The proposal preamble informs that CAA section 165(a)(4) requires that
sources subject to PSD implement BACT for each pollutant subject to
regulation under the CAA, and that CAA section 169(3) requires that BACT
emissions limits be determined on a case-by-case basis that reflects the
use of state-of-the-art demonstrated control technology at the time of
the permit action.  We acknowledge that determining BACT for a
particular source can often be a complicated, resource-intensive,
time-consuming, and sometimes contentious process.  In order to
streamline the BACT process for GHG sources that will be brought into
the PSD program, we proposed a system under which permitting authorities
can make BACT determinations for common types of equipment and sources,
where they can apply those determinations to individual permits with
little to no additional revisions or analysis, known as “presumptive
BACT.”  The proposal preamble solicited comment on the use of
presumptive BACT limits with the PSD program, including our authority to
do so, whether there is a need or value for such an approach, and
suggestions for how such limits could be established, updated, and used
consistently within the requirements of the CAA, or by departing as
little as possible from those requirements.  This subsection presents
comments received on the “presumptive BACT” approach as an option to
streamline the BACT determination requirement under PSD for GHG emission
sources.

Comment:

	Several commenters (3858, 3919, 4120, 4140, 4154, 4238, 4239, 4512,
4521, 4526, 4747, 4860, 4749, 4767, 4800, 4866, 4949, 4989, 5039, 5052,
5058, 5061, 5078, 5079, 5084, 5113, 5130, 5131, 5135, 5198, 5224, 5276,
5280, 5301, 5313, 5338, 5346, 5391, 5711, 5742, 5714, 5922, 6458, 6681,
and 7935) support the use of presumptive BACT as a streamlining option. 
The reasons for their support include:

Presumptive BACT could be a helpful approach to ensuring consistency in
the application of PSD to stationary sources of GHGs.  (5276)

The use of presumptive BACT would be helpful for common combustion
sources such as boilers, process heaters, and combustion turbines
(5130).  

The use of presumptive BACT is justified for the natural gas combustion
sector because of the clean and efficient characteristics of natural gas
and the unavailability of “add-on” control technologies to mitigate
GHGs.  (5058)  

Presumptive BACT for GHG emissions from combustion sources should be
temporarily defined while EPA takes the time to develop essential GHG
guidance through rulemaking.  This will allow states time to make
adjustments to their state rules.  (4521)

Supporting commenters also offer suggestions for implementing the
presumptive BACT streamlining technique or for moving forward with
regulating GHGs without presumptive BACT.  Their suggestions include:

EPA should pursue presumptive BACT determinations by source category
(4747, 4860).  One of the commenter adds that some of the source
categories to include are: emergency units and seasonal combustion
sources such as furnaces.  (4747)

EPA should establish fuel- and technology-specific performance based
(i.e., carbon intensity) presumptive BACT standards for each category of
anticipated major sources.  (EPA has used a similar approach to
establish “presumptive Reasonably Available Control Technology
[RACT]” standards under the Control Techniques Guidelines [CTG]
program under the statute).  Further, the commenter adds that sources
should have the option of applying presumptive BACT or case-by-case
BACT.  Under such a program, consistent with its precedent, EPA should
evaluate a source as it is proposed and should not require a source to
change fuels or alter the basic engineering design as a BACT control
option or alternative.  EPA would retain the authority to update any
presumptive BACT standard as it gains information.  Any future changes
in BACT standards should not apply to sources with applications deemed
complete prior to any changes in the standard.  (4298) 

BACT for GHG emissions should be commercially-accepted, presently in
use, and technologically complete.  The commenter recommends that BACT
apply at the specific source level (i.e., industrial boilers). 
Requiring facilities to install BACT for major modifications at the
facility level would create unnecessary burdens on industrial
facilities.  (5236)

The approach should be flexible enough such that the owner can still
make a case-by-case BACT demonstration for a given project if needed
(4140, 5113, 5130, 5131, 5313, 5714, 5922) or more stringent controls
are warranted (4694, 5314).  Two commenters add that sources must
continue to be allowed the opportunity to address environmental, energy,
and economic considerations.  (5113, 5714)

EPA should recognize and accommodate inherent differences in GHG
emissions from sources within a source category due to different
designs, technologies, and source configurations.  (5224)

EPA should wait until it has obtained sufficient data from the final GHG
Mandatory Reporting Rule to decide which sectors EPA should prioritize
in regards to presumptive BACT.  Presumptive BACT for GHGs and the
traditional BACT review process should rely on the use of sound data to
determine which industrial sources are the largest emitters for GHGs,
for which EPA should prioritize.  (5922) 

EPA should apply cost-effectiveness criteria for GHG emissions in a
manner that reflects commercially available technologies and that is
consistent with carbon prices in existing markets and expected under
currently pending federal legislation.  The commenter believes that, at
the present time, a carbon reduction cost-effectiveness in the range of
approximately $10/ton CO2e would be a reasonable benchmark.  The
cost-effectiveness range should be updated on an ongoing basis as market
prices change, and EPA obtains information regarding the cost of various
carbon reduction strategies and the commercial feasibility of technology
options.  Furthermore, EPA should provide by regulation that the cost
effectiveness range is to be applied by permitting authorities in
evaluating BACT on a case-by-case basis and that control costs exceeding
that range would be presumptively economically infeasible.  (4298)

EPA should set each BACT standard (whether presumptive or case by-case)
on a pollutant-specific basis.  The commenter adds that the
applicability and BACT-setting functions will establish the performance
expectations of each source.  Once the permit’s performance
requirements are so established, then the commenter recognizes that
there may be both economic and environmental benefits of providing the
source the option of meeting the permit requirement by averaging (or
trading) across the full range of GHGs and, as appropriate, across or
outside the facility.  The commenter adds that providing such compliance
flexibility would provide EPA with valuable experience in a transition
to a national emissions trading program because it would develop the
necessary accounting protocols and enforcement tools to underpin such a
program.  (4298)

Compliance flexibility will be critical to the success of the BACT
program (whether presumptive or case-by-case).  The commenter believes
that any facility with equipment subject to BACT should have the option
of demonstrating compliance with the presumptive BACT standard at the
affected equipment on an annual average performance basis.  The
commenter adds that EPA can make a formal finding, subject to notice and
comment, that available offsets exist to provide sufficient cost
containment, and the facility should have the option of purchasing
compliance credits from an EPA-administered reserve credit pool at a
predetermined price that reflects EPA’s upper bound cost-effectiveness
for BACT determinations.  (4298)

Any presumptive BACT mechanism must be subject to an open and
transparent process with ample opportunities for public review and
comment.  (5742)

The BACT determination must include consideration of the intended
purpose and use of a facility.  For example, a facility being
constructed or modified that is intended to serve as a peaking facility
will have different emissions and economic constraints than a baseload
facility, and those factors must be considered in the BACT determination
process.  (5079)

Imposing even “streamlined” individual PSD permits and BACT on
natural gas equipment changes but not on electric resistance equipment
would effectively create a perverse incentive for customers to switch
from natural gas to electric equipment.  To the extent this occurs,
there would cause an overall increase in GHG emissions, contrary to
congressional intent to decrease emissions.  (5711)

Fuel-switching should not be considered as a control technology during
BACT review with regard to new electricity generation facilities.  A
company proposing to build a new natural gas-fired combined cycle
facility should not be required to consider wind generation in a BACT
analysis.  (5079)

EPA should coordinate its thinking on BACT with the U.S. Department of
Energy (DOE) on energy efficiency requirements for various kinds of
energy consuming equipment.  (5338)  

Landfills are particularly suited to presumptive BACT, and BACT for new
sources should be congruent with the applicable NSPS subpart WWW
requirements (5276, 5391) and for existing sources congruent with the
Emission Guideline standards (5276).

BACT should not be used as a means to drive technology development. 
(5079).

EPA and the states must make sure that presumptive BACT determinations
do not become dated, and then the burden would shift to owners and
operators that did not elect one of the presumptive BACT technologies to
demonstrate why none were technically feasible or economically
available.  (5052)

EPA should slow down the promulgation of the rule to allow carbon
capture/storage technology to develop.  (5789)

Because BACT for calcination emissions will be demonstrated to be “no
additional controls,” the only way a lime plant could avoid PSD review
would be to make less lime, thereby eliminating the incentive to invest
in energy efficiency projects.  (5133)  The proposed rule fails to
address emissions from industries that emit CO2 as a byproduct of the
chemical reaction inherent in the process.  Failure to address these
process emissions is significant as more than one-half of GHG emissions
from lime plants come from calcining limestone.  If calcination
emissions are subject to the PSD program, then lime plants will be
discouraged from undertaking energy efficiency projects that would
otherwise reduce GHG emissions.  Energy efficiency projects reduce fuel
consumption, GHG combustion emissions, and emissions of other criteria
pollutants.  However, some of these very same energy efficiency projects
present the potential to increase lime production and, therefore,
increase related calcination emissions.  

EPA can guide the analysis of BACT by providing information that EPA
currently collects in the RACT/BACT/lowest achievable emission rate
(LAER) clearinghouse (RBLC) (such as type of facility, size, other
pollutants, process constraints, region of the country, fuels, etc.),
and sources will have to select one of the presumptive technologies or
demonstrate that none is effective through the customary case-by-case
analysis that is currently performed.  (5052)  EPA should update the
RBLC that is the basis for most (if not all) BACT determinations. 
(4238, 5084)

Consistent with existing policy and regulations, BACT for GHGs should be
limited to the new or modified emission units.  (5079)

Natural gas is not an option for many large sections of the country
because of the absence of infrastructure to deliver natural gas. 
(Commenter provides detailed rationale for this position).  (5052)

BACT reviews should use thermal efficiency as a comparable metric
because it will encourage GHG reductions.  However, many factors affect
thermal efficiency, and all plants experience some degradation in
thermal efficiency over the life of the plant.  

At the current time, Integrated Gasification Combined Cycle (IGCC) is
not yet available as a broad and commercially-demonstrated retrofit BACT
technology.  (4749, 5052, 5079, 5301) 

Carbon Capture and Sequestration (CCS) is not BACT.  (5052, 5224) 
Another commenter agrees that CCS is not BACT currently, although it
might be in the future if it is demonstrated to be technically-feasible.
 (5079)

Presumptive energy efficient BACT measures should include the following
(the commenter appended very extensive information on efficiency
projects): (1) Energy Audits, (2) ENERGY STAR© Products, (3)
Weatherization, (4) Variable Speed/High Efficiency Motors, (5) LED
Traffic Lighting for Municipalities.  (5052) 

Some maintenance measures should be exempt from PSD (5052, 5078, 5079). 
One of these commenters adds that, at a minimum, EPA must identify a
list of activities at power plants that would be presumed to be routine
maintenance, repair, and replacement (RMRR) unless unique conditions
demonstrate otherwise.  (5078)

The tradeoffs between regulating GHGs and criteria pollutants should be
addressed.  For that reason, EPA’s presumptive BACT determinations
must include guidance on the impacts of GHG mitigation on conventional
pollutant levels.  (4515, 4691, 4989, 6458)  

BACT should be allowed the flexibility to obtain emission reductions
from all equipment at the facility as well as from beyond the fenceline
(e.g., compliance on a generating fleet basis, use of emissions offsets,
etc.).  (5078)  

To satisfy the public notice requirements for PSD permits: (1) EPA can
publish BACT guidance and periodic BACT updates in the Federal Register
pursuant to the administrative procedures in section 307 of the CAA for
notice-and-comment rulemaking, (2) permitting authorities can publish in
the newspaper or on their websites lists of sources in the state that
have applied for construction (or title V) permits and/or revisions, as
is currently done by most states, and (3) EPA can publish model permits
which have these BACT alternatives imbedded through notice-and-comment
rulemaking, and sources could opt into the permits by rule just as
current sources utilize general storm water permits and other general
permits under the Clean Water Act (CWA).  (5052)  Another commenter
(5078) adds that presumptive BACT can be developed through
notice-and-comment rulemaking, but permitting authorities should allow
public comment on individual permits as to whether there are significant
case-specific impacts that would require adjustment of BACT for that
particular source.  

Should there be no presumptive BACT established, the EPA should issue
the permit without consideration of a full BACT analysis.  (4120)  The
commenter points out that this does not mean the facility would propose
older and inefficient equipment, rather, it would base presumptive BACT
on existing operational and environmental considerations.  For the
natural gas sector, for example, a permit could be issued without a full
BACT analysis as follows:

BACT for CO2 emissions = Good Combustion Controls.

Considering there are no pilot or commercial demonstration of
end-of-stack CO2 controls (including CCS) for turbines in natural gas
pipeline operations, the BACT for the unit will be good combustion
practices that optimize NOx and carbon monoxide (CO) (which are
by-products of incomplete combustion) with CO2 (which is a product of
complete combustion).  Good Combustion Control Practices involve
parametric monitoring and controlling the operating parameters of the
turbine to ensure the unit continually operates as close to optimum
(minimum emission) conditions as feasible.

BACT for CH4 emissions = Best Management Practices (BMPs) under EPA Gas
Star or company specific programs.

Due to measurement concerns related to fugitive and vented CH4
emissions, the commenter urges the EPA not to prescribe quantitative PSD
limits or standards related to CH4-related emissions.  The commenter
suggests that EPA could instead issue the PSD permit considering work
practice programs.  For CH4 emissions, these could be the company’s
operating practice of reducing GHG emissions through application of BMPs
related to reducing fugitive and vented CH4 emissions or the
industry-wide work practices as outlined in the Natural Gas Star
program.  

Domestic U.S. Offsets = BACT for sources without presumptive BACT.

The commenter supports the use of offsets and the use of domestic U.S.
GHG offsets as a “transitional” solution under the Tailoring Rule
till EPA finalizes presumptive BACT for sources.  Offsets are supported
as part of the nonattainment NSR program and for control of air
pollution from the outer continental shelf activities.  In addition, the
commenter states that using offsets as BACT would produce the same
environmental result at less cost to regulated facilities, because
offset projects can provide lower cost emission reductions than many of
the mitigation options otherwise applicable to large sources.

Some commenters (2504, 2731, 2797, 3306, 3512, 3916, 3858, 3916, 4019,
4106, 4118, 4241, 4512, 4515, 4519, 4555, 4691, 4746, 4749, 4863, 4864,
4866, 4871, 4949, 4951, 4989, 4990, 5041, 5056, 5058, 5059, 5061, 5064,
5073, 5079, 5084, 5085, 5110, 5113, 5123, 5124, 5133, 5139, 5147, 5236,
5301, 5305, 5339, 5340, 5443, 5714, 5742, 5863, 6203, 6458, 6681, 7935,
8025, 8691, 16411) did not explicitly support or oppose the use of
presumptive BACT as a streamlining option, but they did offer
suggestions about the use of BACT and/or presumptive BACT in general. 
Examples of the types of general comments received on presumptive BACT
streamlining options are included in the following bullets:

The preamble does not provide enough detail for meaningful comment on
presumptive BACT.  (5113, 5714)  The commenters support a public and
transparent process to address BACT issues generally and presumptive
BACT specifically and would encourage EPA to provide an opportunity for
this public discussion.

Though the commenter acknowledges that there is an internal workgroup
working on BACT options for industry, the proposed rulemaking does not
address how to establish BACT for sources subject to PSD permitting
requirements for GHG emissions.  The commenter asserts that it is
difficult to assess the economic impacts of the rule without
more-detailed information on what would constitute BACT for the metal
casting industry.  (5236)

Even though the use of presumptive BACT is supported, it is an
insufficient streamlining tool.  The commenter questions whether EPA
will be able to make presumptive BACT determinations in a timely manner
(especially within the next 1-2 years), and is concerned that
presumptive BACT standards will be vulnerable to legal challenge and
resulting delays and uncertainty.  In addition, presumptive BACT would
not alleviate other time-consuming aspects of the PSD permitting
process, such as the requirement for public notice and comment. 
Ultimately, the hope that presumptive BACT will eventually make the PSD
program feasible to administer is no substitute for reasonable limits on
the initial scope of the PSD program.  (4515, 4691)  

The EPA should adhere to the time-tested policies and procedures for
determining BACT and, thus, avoid any requirement to redefine sources in
the industry.  (5131) 

Statements about “presumptive BACT” in the preamble seem
inconsistent with the fact that BACT is by statute supposed to be a
case-by-case analysis, rather than the imposition of national emission
standards.  (16411)

The application of BACT under this rule should not be expanded beyond
the historical definition and interpretation of the "affected source"
(4106, 5124).  BACT analysis should be limited to only those sources or
units which are being installed or modified under a permit.  (4106) 

EPA seems to be suggesting that it could be appropriate, under the
rubric of determining BACT, to tell a source what type of combustion
unit it must build, or what type of fuel it may use, or how it must
engineer its manufacturing operations to reduce demand for the thermal
energy or electricity that the combustion unit will generate.  Such
expansion of the statutory requirement to assure that the BACT is used
for a particular project, into an inquiry by the permitting authority
into whether a plant can be designed or operated more efficiently, or
whether it might be environmentally preferable for the plant to be
proposing a different kind of project, would be inconsistent with
EPA’s statutory authority, long-standing EPA interpretations and
policy, and judicial and Environmental Appeals Board (EAB) decisions. 
(4749)

EPA should temporarily assume the role of establishing “technical
feasibility” for GHG control technologies until commercial
availability becomes a decided issue.  The EPA has held that technically
feasible BACT is technology which is “available” and “applicable
and the states should not assume this role initially to avoid a
patchwork of regulations.  (4106)

Some commenters (4989, 5301, 6681) strongly support the consideration of
energy efficiency improvements as BACT for GHGs and other pollutants to
avoid disincentives for efficiency improvements, especially at power
plants.  Presumptive BACT considerations should also include biomass
projects, energy efficiency projects, and offset projects.  (5301)  

EPA should consider how PSD BACT requirements might be applied and
streamlined for sources subject to regional or state GHG controls and
cap and trade programs.  (4118, 4863, 5064, 5305)

It is incorrect to claim that insufficient information exists to at
least estimate costs and streamlining efficiencies of BACT.  (5139) 

BACT development should be a priority for the Tailoring Rule (4951). 
EPA “recognize[s] that considerable work will be needed to determine
what options exist for controlling GHG emissions from different source
categories and the various types of emitting equipment they use. 
(6203)”  If no BACT definition is provided, it will be difficult to
plan for and budget for projects if a potentially significant expense is
unknown.  (4241)  

Other commenters point out that the fundamental question is, "What is
BACT for GHGs?"  The commenters are concerned that, to date, there is no
answer to this question (3306, 4515, 4691, 4871, 5110, 5137), including
both combustion and non-combustion sources.  In addition, there are no
effective or commonly used add-on controls for removing GHG emissions. 
(4515, 4691, 5123)  

Presumptive BACT should not include CO2 requirements (and CO2 should be
specifically excluded from presumptive BACT requirements), because there
is no BACT for CO2.  (5183)

Examples of the types of comments received presumptive BACT streamlining
options for particular industry sectors are provided in the following
bullets:

Thermal destruction technology and combined heat and power should be
exempt from all PSD and title V requirements.  (5041)

EPA should be consistent in its encouragement of the use of biomass as a
fuel source.  If EPA does not specifically exempt the carbon neutral
emissions from these processes from the applicability determination, it
is likely that fuel switching projects to biomass could trigger PSD
review for CO2, when EPA has been otherwise promoting the use of
renewable fuels.  (4749, 5073, 5313) 

EPA should consider net reductions (i.e. life-cycle analysis) of GHG
emissions when establishing a presumptive BACT for waste-to-energy
operations.  (5305, 5742)  One commenter contends that the direct
emissions from waste-to-energy facilities are more than offset by the
overall GHG reductions that waste-to-energy provides through three
separate mechanisms: 1) by generating electrical power or steam,
waste-to-energy avoids CO2 emissions from fossil fuel- based electrical
generation; 2) combustion of waste in waste-to-energy facilities
eliminates the need for landfill of those wastes and effectively avoids
landfill CH4 emissions; and 3) the recovery of ferrous and nonferrous
metals from municipal solid waste at waste-to-energy facilities is more
energy efficient than production from raw materials.  (5305)  Another
commenter (6458) added that treatment of waste-to-energy as a source of
GHG emissions would be inconsistent with internationally accepted
science and accounting procedures (commenter cited various examples of
where this idea has been embraced).

EPA should provide special considerations for the oil & gas production
and chemical and refining industries through separate rulemakings with
opportunity for notice and comment, in lieu of the PSD permit-by-permit
BACT approach.  (4106)

There is considerable uncertainty as to what constitutes BACT for the
manufacturing sector.  For example, what viable technology exists for
GHG control?  Would BACT have to be developed for each of the GHGs or
would it require a net certain percentage reduction?  The commenter
welcomes the opportunity to work with other interested stakeholders in
establishing BACT for their industry to advocate the following: (1)
Ensuring GHG BACT requirements are technically feasible and cost
effective; (2) Maintaining current source definitions; (3) BACT is
equipment/project specific and not facility-wide; (4) Allowing
netting-out provision, including ability to use offsite "offsets;" (5)
Modified "top-down" BACT analysis; (6) Expedited development of GHG
Presumptive-BACT standards; and (7) PSD GHG trigger/permit applicability
based on current conventional pollutant PSD Program.  (8691)

Modern NG facilities should be presumed to comply with BACT or should be
exempt from BACT analysis.  (4515, 4691, 4749)  Natural gas pipeline
combustion units minimize GHG emissions to the greatest extent feasible,
and therefore already satisfy BACT standards.  (4515, 4691)  Gas-fired
engines, such as those used in pipeline compressor stations, are
designed to operate at an optimal level of efficiency given other
engineering and regulatory constraints that apply to pipelines.  (4515,
4691)  Altering the horsepower of these engines could upset a delicate
balance between pipe size and compression levels that allow interstate
pipelines to operate cost-effectively.  (4515, 4691)  Requiring a PSD
permitting process for GHGs would not yield any significant
environmental benefit because there is no available add-on control
technology (e.g., CCS technology is still years from being widely
available), using electric pumps would result in higher emissions in
most parts of the country, and firing with biogas is technically
infeasible (4515, 4691, 4749).  Moreover, consideration of these
alternatives would lead permitting authorities to engage in dubious
second-guessing of natural gas pipeline design and engine selection,
potentially leading to redefinition of the source in a way that is
inconsistent with the language of the CAA and past practice in PSD
proceedings.  (4515, 4691) 

One of these commenters adds that BACT for GHGs must take into account
the demands of the marketplace for flexible power generation.  This
would include: (1) Flexible technologies that can start up and be
brought online quickly where peak demand is unpredictable; (2)
trade-offs between criteria pollutants and GHG control; and (3)
development of new technology  such as the use of IGCC (or any other
technology) when coal has been selected as the fuel for a source. 
(5147) 

Presumptive BACT or general permits for fossil-fired generating units
should provide for, and focus on, measures that only address CO2, and
not all six of the GHGs (which would require a wide range of reduction
measures).  (5313)

Implementation of GHG emission controls at small installation sites of
engines and gas turbines with a multitude of unique application
requirements is a function of two aspects (3512): (1) efficiency of the
work performed at each unique site, and (2) the fuel used.  To try to
address this GHG BACT issue for these small sites, the commenter makes
following general comments and observations concerning GHG BACT related
issues:

The local/state GHG BACT review should not redefine the type of source
being permitted or prime mover technology being proposed.  A control
technology must be feasible within the design elements and process
configuration proposed, including the prime technology and fuel types
chosen by the permittee.

Not all biofuels are created equally when it comes to GHG impact. 
EPA’s recent “Renewable Fuel Standard 2” clearly showed
significant differences in the GHG impacts of various renewable fuels
based on the lifecycle analysis completed.

If the agency chooses to institute presumptive BACT analysis for GHG
emissions from ethanol production facilities, the creation of an
agency/industry advisory group to identify and develop realistic and
cost-effective tools for the implementation is absolutely needed. 
(4555)

EPA should establish a collaborative process in developing BACT for CO2
management, for entities which are already engaged in “best
practice” management of CO2.  (4990)  In addition, the impact of the
application of BACT to facilities that currently sell certain off-gas
streams to processors that remove and purify the CO2 and place it into
commercial applications should be addressed.  (4990)

Streamlining should be developed for landfills.  EPA should carefully
develop presumptive BACT that initially aligns with current regulations,
citing in particular, the NSPS for landfills that was carefully
developed to reduce non-methane organic compound(s) (NMOC[s]), but also
effectively reduces CH4 emissions.  Commenter continues that at a later
date, presumptive BACT can be updated as EPA's re-evaluation of the
landfill NSPS is completed and any resultant rulemaking finalized and
asserts this approach should minimize unnecessary impacts to the
landfill industry.  (4863)

	Examples of particular presumptive BACT streamlining mechanism
suggestions submitted by commenters include the following:

In the absence of a GHG technologies database, EPA should develop
industry-specific BACT guidelines along with the rule.  (2731, 4989)

EPA should develop BACT templates at least for larger sources to
streamline the permitting process.  (5147)  

Guiding principles should be developed to frame the development of GHG
BACT and these principles should consider and/or state that: 

Limiting the definition of the affected source such that unaffected
sources/operations are not subject to BACT.  Barring
downstream/debottlenecking effects, increases of GHGs at a single source
within a unit should not subject an entire unit to BACT review.  This
approach is identical to that already employed for other criteria
pollutants (5124).

Fundamental redesign of a unit should not be an option under BACT.  BACT
is the application of a control technology.  The redesign of a unit to
utilize different fuels or to require a different process design falls
outside of the scope of a control technology.  For example, BACT reviews
should not force utilities and other combustion sources to “fuel
switch” from coal to natural gas, which would have significant
economic impacts throughout the country.  EPA should continue to defer
to regulatory and operational considerations in determining BACT for
GHGs.  (4515, 4691, 5058, 5079, 5085 5124, 5123, 5224) 

Questions such as "why does this unit need to be built?" and "why does
the design capacity need to be at X level?" are not within the purview
of the BACT analysis (5124).  For example, it should not be appropriate
for EPA, under the rubric of determining BACT, to tell a source what
type of combustion unit it must build, or what type of fuel it may use,
or how it must engineer its operations to reduce demand for the thermal
energy or electricity that the combustion unit will generate.  (16411) 
Commenters believe that such expansion of the statutory requirement to
assure that BACT is used for a particular project, into an inquiry by
the permitting authority into whether a plant can be designed or
operated more efficiently, or whether it might be
environmentally-preferable for the plant to be proposing a different
kind of project, would be inconsistent with EPA’s statutory authority,
long-standing EPA interpretations and policy, and judicial and EAB
decisions.

Energy efficiency will be central to BACT.  At this time, there are
virtually no "end-of-pipe" control technologies for GHGs.  BACT
requirements should not force unproven or uneconomical technology, such
as CCS.  (5124)

Various commenters (2797, 4860, 5062, 5081, 5141, 5143, 5306, 5082,
5143, 5337, 7935, 8015) oppose the use of presumptive BACT as a
streamlining option.  Examples of general reasons provided by commenters
for opposing presumptive BACT as a streamlining option include the
following:

Presumptive BACT may not be an effective means to address permitting
burden concerns because the insufficiently flexible permitting scheme
requires a flexible BACT analysis, appropriate to the particulars of a
specific tool and process configurations and technologies.  For that
reason, it is unlikely that presumptive BACT could play a constructive
role in addressing these deep and fundamental concerns, at least in the
near term.  (5143)

EPA should not decide the BACT absent a notice-and-comment rulemaking. 
In the proposed rulemaking EPA does not address how to set the BACT for
sources subject to the PSD and permitting requirements.  (5062)  

EPA statements in the rule preamble about "presumptive BACT" seem
inconsistent with the fact that BACT is by statute supposed to be a
case-by-case analysis, rather than the imposition of national emission
standards.  (5141, 5306, 8015)  Case-by-case BACT determination affords
flexibility to consider a range of case-specific factors, such as
available control options and collateral cost, energy, and environmental
impacts.  (5141)  The diversity of process technologies within industry
creates a range of case-specific factors that would likely interfere
with identification of a presumptive BACT approach that would achieve
the desired streamlining and permit efficiency.  (5141)  One of
commenters is also concerned that EPA seems to be suggesting that it
could be appropriate, under the rubric of determining BACT, to tell a
source what type of combustion unit it must build, or what type of fuel
it may use, which would be inconsistent with EPA's statutory authority,
longstanding EPA interpretations and policy, and judicial and EAB
decisions.  (8015)  One of these commenters added that presumptive BACT
may therefore only be imposed on the basis of source - and
pollutant-specific demonstrations of necessity such that: (1) The PSD
provisions do not contemplate the use of presumptive BACT; and (2)
presumptive BACT is considered only under limited circumstances.  (5306)

Establishing presumptive BACT raises various concerns (5082): 

Would the presumptive BACT undergo public scrutiny?

How would presumptive BACT be established for a pollutant with no
currently available feasible control technology options? 

How would you establish BACT for combustion devices when reducing CO2
and reducing CO (another PSD pollutant) are mutually exclusive?

How will EPA reconcile PSD permits where BACT for CO is catalytic
conversion, which consequently causes increases in CO2 emissions and
cannot by definition be BACT for CO2?

How will EPA resolve BACT for energy efficiency projects at single
combustion sources which necessarily mean increases in CO2 because to
increase energy efficiency requires more efficient combustion resulting
in more CO2 emissions per hour than inefficient combustion?

Under PSD, would we have to consider inefficient combustion as a means
of reducing CO2 from a combustion source because that would result in
the lowest emissions limitation achievable in practice?

It will dampen the technology forcing aspects of case-by-case BACT
determinations.  (4860, 5081, 7935)  

It does not address the largest sources that would be brought under the
Tailoring Rule.  (2797)  

	Examples of the type of comments received on particular industry sector
presumptive BACT streamlining concerns submitted by commenters include
the following:

The use of presumptive BACT may cause several problems for the
semiconductor industry:

To date, there are no BACT determinations for GHGs for the semiconductor
industry.  Moreover, even if in the near future there are BACT
determinations for combustion sources, it is unlikely that there will be
any near term BACT determinations for control of PFCs used in
manufacturing.  Because the semiconductor industry’s use of PFCs is
unique, the determination of BACT for PFCs will likely be slow and time
consuming, at least at first.  (5143) 

It is impossible for the fast moving semiconductor manufacturing
industry to plan ahead and design the necessary controls when it is
unknown if those controls will later be deemed to be compliant with BACT
standards.  Since BACT would be determined case-by-case, it is also not
feasible for the semiconductor industry association to identify common
BACT solutions for all of its operations, since the BACT review would be
performed by different state and local agencies for semiconductor
industry association member companies’ different locations.  (5143)

Since the actions to reduce PFC emissions in the semiconductor industry
have been voluntary, the abatement devices are not incorporated into
local or state air permits; therefore, they would not be federally
“enforceable” to limit the potential to emit of these GHGs.  (5143) 

Most of the abatement devices used to control PFCs are point-of-use
devices (e.g., burn boxes) which are connected by interlocks into each
separate manufacturing tool.  As such, not only are there potentially
hundreds of tools that will be replaced numerous times over a 5-year
period, but there are a similar number of abatement devices in use. 
Because the devices are connected to each tool, and hundreds are spread
throughout the manufacturing facility, the application of periodic or
compliance assurance monitoring (CAM) to these devices under title V
would be a huge administrative burden.  Similarly, compliance testing
would be problematic and expensive because these devices are neither
designed, nor manufactured, with traditional sampling locations or
ports.  Finally, because the devices are connected to the tools they
support, as the tools are changed out, the control devices also will be
changed frequently.  As such, it will be challenging for permitting
agencies to respond to changes of this nature.  (5143)

The use of presumptive BACT could be tremendously damaging to the
Energy-Intensive Trade-Exposed (EITE) industry.  Process emissions are
inherent in the underlying chemical reactions, and by and large they can
only be changed by a change in the process itself – in which case the
operation becomes a different type of operation.  EITEs have powerful
economic incentives to manage energy and emissions using things like
recycled materials, cogeneration or combined heat and power systems,
process improvements, and fuel switching.  The use of the most efficient
production processes, and maximizing energy efficiencies are already an
integral part of the production processes in the EITE industry, and
should not be addressed through a regulation which includes presumptive
BACT.  (5337) 

	Opposing commenters (4238, 4239, 4860) also gave suggestions about how
to address presumptive BACT.  These suggestions include:

If EPA is to pursue presumptive BACT determinations, a commenter (4860)
recommends that: (1) presumptive BACT determinations should be limited
to a small number of source categories; 2) timely guidance regarding
presumptive BACT by source category should be issued by EPA; and (3)
that BACT determinations should be revisited by EPA on a predefined
schedule of not more than 5 years.

If EPA believes that predefining the technology is the best approach,
then EPA should develop a NSPS instead.  (4238, 4239)  

Response:  

Since many commenters had differences of opinion as to whether and how
we should move forward on the use of “presumptive BACT” as a
streamlining option, including policy and legal concerns, we are not
finalizing this option at this time.  We would likely want to explore,
through a notice and comment process, if this measure is viable to
pursue further.  These comments, including as any concerns expressed by
commenters about this approach, will be addressed in the action(s) where
we might apply this streamlining option.

Nevertheless, we want to clarify that while the BACT provisions clearly
contemplate that the permitting authority evaluate control strategies on
a case-by-case basis, EPA recognizes the need to develop and share
policy guidance and technical information for sources and permitting
authorities as they begin to permit sources of newly regulated
pollutants, such as GHGs.  When applied in a practical matter, this
additional EPA guidance and technical information should reduce the time
and resource needs when evaluating BACT for newly regulated pollutants. 
For that reason, section IV.E.2 of the final rule preamble discusses
details of the current efforts underway to issue BACT guidance.  

Thus, while BACT will remain a case-by-case assessment, as it always has
been under the PSD program, EPA is confident that this guidance
development effort will help support a smooth transition to permitting
emissions of GHGs.  Furthermore, EPA will continue to work to provide
the most updated information and support tools to allow permitting
authorities to share and access the most updated information on GHG BACT
determinations as they are made once permitting of GHGs begins.  EPA
remains committed to involving stakeholders in the upcoming efforts to
develop guidance to help to permitting authorities in making BACT
determinations for sources of GHGs.  

4.4  General Permits and Permits-by-Rule

	The proposal preamble notes that we have limited experience in
developing general permits and permits-by-rule under the PSD program
because of the predominance of the case-by-case BACT determination
process.  In contrast, we note that, in the title V program, general
permits are specifically authorized under CAA section 504(d) and are
widely-used.  40 CFR 70.6(d) specifically authorizes the use of general
permits covering numerous similar sources under the title V program, and
40 CFR 70.7(h) stipulates the public participation requirements.  We
acknowledged that the process for a general permit can take anywhere
from 2 to 3 years to be fully developed.  Additionally, at proposal, we
sought comment on the use of general permits within the PSD and title V
programs.  Comments received on the use of general
permits/permits-by-rule to streamline permitting under PSD and title V
are presented in this subsection.

Comment:

Various commenters (2997, 3278, 4154, 4298, 4515, 4526, 4691, 4860,
4863, 4940, 5078, 5079, 5111, 5130, 5135, 5198, 5280, 5306, 5313, 5329,
5711, 7026, 7935) support the use of general permits and/or
permits-by-rule to streamline the permitting process.  Some of the
reasons for their support include:

The general permits and/or a permit-by-rule option would serve to
streamline the process and reduce both administrative burden and
potential permitting delay.  (4154, 4515, 4691, 4863, 5130, 5329, 5711,
7026, 7935)  Some of these commenters added that this would be
particularly helpful for semiconductor facilities (5329) and common
types of control devices such as boilers, process heaters, and
combustion turbines (4154, 5130) as well as commercial and residential
natural gas appliances and equipment (5711).

General permits and permits-by-rule are adequate streamlining options,
but case-by-case review and the development of a site-specific permit,
even if there is a general permit that would cover the site in question,
should always remain an option.  (4940, 5079)

EPA should issue a standard general PSD permit for very small GHG
emission sources that will effectively allow these permits to be issued
within 30 to 90 days.  (5417).

General permits may prove useful in administration of a title V program
for sources subject to title V solely by virtue of their GHG emissions. 
(4515, 4691, 5306) 

Commenters (3278, 4298, 4515, 4526, 4691, 4860, 4863, 4990, 5111, 5313,
5711) also provide comments on and suggestions for developing general
permits and/or permits-by-rule.  These suggestions include:

Use of general permits should be limited to a small list of source
categories and that these general permits should contain output based
emission limitations wherever possible.  (4860)  

Using PTE limits and/or permits by rule for smaller or limited-use
sources, such as emergency generators or Heating, Ventilation, & Air
Conditioning (HVAC) equipment where there are practical and/or legal
limitations on hours of operation or other key factors in determining a
facility’s true PTE.  (5078, 5079)

These general rules could take the form of operational limitations,
provided such limitations provide a streamlined method to allow a source
to operate for longer hours or at a greater throughput upon request to
the permitting agency, and provided such limitations do not apply to
energy efficiency and pollution control improvements.  (4298)

Recognizing that a sector-by-sector general permit would take time to
develop, perhaps in the first 3 years of the first phase, a general PSD
permit for GHG can simply have a few requirements, such as mimicking any
requirements from EPA's mandatory reporting program, a listing of Class
I National Parks with distances from the facility, and a generalized
discussion of BACT (4863).  The commenter adds that at this stage, BACT
can be efficiency measures used by the project to reduce energy.  (4863)

For a limited period, initiate blanket use of general permits for
“urgent” (necessary to avoid a material adverse affect on health and
safety) and “small” (less than 100,000 metric tpy CO2e) projects,
and a moratorium on GHG permits for all other projects.  This would
maximize streamlining, diminish adverse economic impacts (and reduce the
likelihood of litigation from permitted sources), and allow more time
for the Clean Air Act Advisory Committee (CAAAC) Climate Change Work
Group to formulate a legally robust and administratively streamlined set
of procedures.  (4526)

General permits will violate the text of the CAA if we move from a
case-by-case BACT determination basis to a presumptive BACT system.  For
that reason, this commenter would like general permits to only be
imposed on the basis of source- and pollutant-specific demonstrations of
necessity such that: (1) the PSD provisions do not contemplate the use
of general permits, and (2) general permits are considered only under
limited circumstances.  (5306, 5711)  One of the commenters adds that
for gas-burning sources, general permits should only be applied to those
sources that could not be excluded from the PSD program under EPA's
proposed approach.  Even then, it should serve simply as a checklist of
generally accepted technology that sources should consult to make sure
they were not behind the times.  (5711)

Permits-by-rule should be allowed to exempt sources from NSR pollutant
requirements for PSD because small sources captured in the program under
the initial definition and subjected to PSD/title V permitting
requirements might not later be considered a PSD/title V source with a
revision of the definition for PTE.  (3278)

General permits could easily be developed for different categories of
landfills, which should ease the burden on smaller sites that are
currently not in the title V program.  (4863)

The EPA should develop an affirmative designation for sources that use
administrative controls to remain below the “major source”
threshold, e.g. a facility that has the potential to emit enough CO2 to
be required to obtain a permit, but sets limits on operating hours or
other controls to ensure that the facility stays below the permitting
threshold.  Such an affirmation of administrative control could either
be in the form of a general permit, permit-by-rule, or as a
self-declaration kept on record at the affected site.  (4990)  

Allow for a variance from a general permit on a case-by-case basis where
an alternate standard is warranted.  (5313)

Employing general permits would require a fundamental change to the PSD
program (4515, 4691) because: 

General permits, while well-established, have typically been used for
minor source NSR permits and a limited number of title V operating
permits, not PSD, mainly because the CAA’s PSD provisions require
case-by-case determinations of BACT.  

States would need to revise their SIPs to adopt this more expedient
process for PSD.  

General permits must also include presumptive BACT, which could take
years to develop.   

The paucity of technical and economic data and other supporting
information related to GHG BACT will result in a significant number of
challenges during the required public review process.  Such legal
challenges could delay permits for months or years.

EPA should consider issuing national model PSD permits for GHG sources
that contain a menu of options of potential BACT measures that sources
can adopt to streamline permitting.  If a source elects one of these
options, then it can forgo case-by-case BACT review by adopting a
presumptive BACT that already has been subject to public participation,
thereby alleviating the burden of public comment on its decision. 
Because such general permits already will have been subject to public
comment upon adoption of the general permit into a state’s law,
additional public comment will not be required and the burden to
regulators and the regulated community would be reduced.  (5111)

In order to streamline permit issuance by eliminating case-by-case
public participation requirements, the commenter urges EPA to
immediately commence rulemaking on a national general permit for title V
sources pursuant to which an affected entity would provide notice of
applicability of the general permit to its operations and operate under
that national permit.  Since title V fees do not apply by law to
pollutants other than pollutants regulated under a NAAQS, NSPS or
National Emission Standards for Hazardous Air Pollutants (NESHAPs),
pursuant to section 502(b) (3) (B) (ii) of the CAA, state and local
authorities would be relieved of the considerable burden of issuing
title V permits to entities for whom they would have no authority to
levy permitting fees, and the notices would provide national and local
authorities the ability to track major sources of GHGs.  (5111)

Some commenters (4863, 5139, 6414) did not explicitly support or oppose
the use of general permits and/or permits by rule as a streamlining
option.  However, these commenters had comments on the use of general
permits and/or permits by rule, including: 

EPA’s argument that it should be allowed to redefine “potential to
emit” as “actually emitting” is not justified in this instance, as
the permits themselves could be streamlined by including legally and
practically enforceable general limits on operational parameters. 
(5139)

EPA has proposed to disapprove elements of the commenter’s state’s
air permitting program where a key component of the minor source
permitting program is the use of general permits or permits-by-rule,
because of the assumption that these minor source programs have
systematically been utilized inappropriately to authorize major sources
and circumvent major NSR requirements.  The commenter believes that EPA
now proposing to use these very same mechanisms to authorize major
sources will be confusing to some, but perhaps a signal that a more
rational policy has been adopted by others.  (6414)

Some commenters (5082, 7935) oppose the use of general permits and/or
permits by rule as a permitting streamlining option.  Their reasons for
opposition include:

If GHGs were to become subject to control requirements, many sources
would be applying for title V permits at the same time.  As a result,
permitting authorities would face unrealistic title V permit processing
demands.  Such demands would likely make it impossible for authorities
to act on title V applications within 18 months, as generally required,
which could ignite a wave of litigation over missed deadlines.  (5082)

General permits cannot substitute for the case-by-case analyses required
under PSD provisions because general permits do not allow for
facility-specific conditions.  (7935)

Response:  

Since commenters echoed many of our concerns about why it will take time
to put these measures in place and many commenters had differences of
opinion as to whether and how we should move forward on these
approaches, including policy and legal concerns, we are not finalizing
the general permits and permits-by-rule streamlining options at this
time.  We would likely want to explore, through a notice and comment
process, which of these measures is viable to pursue further.  These
comments, including any opinions about the legal and policy direction we
must take regarding these streamlining options, will be addressed in the
action(s) where we might apply them.

4.5  Electronic Permitting

	The proposal preamble for the Tailoring Rule acknowledges that the use
of electronic permitting is growing across the U.S. as more states
implement new or upgraded systems.  We believe that the use of
electronic permitting (in addition to the use of general permits) could
assist in addressing some of the administrative burdens that may occur
due to GHG emission sources being added to the PSD and title V programs.
 Comments received on electronic permitting as an option to streamline
the PSD and title V permitting process are presented in this subsection.

Comment:

Some commenters (5079, 5711) support the use of electronic permitting as
a streamlining option.  These commenters state that electronic
permitting could: 

Help streamline the PSD program for sources already considered major
sources for conventional pollutants, as well as those that would be
brought into the program for GHG emissions by reducing the time, cost
and resources expended by permitting agencies and applicants to obtain a
PSD permit.  (5711)

Help where data entry may be used for multiple compliance programs, such
as a consistent data platform between PSD and GHG Mandatory Reporting
Rule requirements.  (5711)

Various commenters (2504, 4238, 4239, 5082, 5135, 5198) oppose the use
of electronic permitting as a streamlining option.  The reasons for
their opposition include:

EPA should not address electronic permitting as part of the Tailoring
Rule.  EPA should do so in a separate rulemaking and only after a
careful evaluation of how such rules impact individual states.  (2504) 

Electronic permitting approaches would not be helpful until states have
gained some experience implementing the new requirements into their PSD
and title V permitting programs.  (4238, 4239) 

The commenters’ states attempted the use of electronic permitting and
that the effort was unsuccessful and resulted in a significant loss of
money and time.  (5135, 5198)

EPA has not demonstrated how electronic permitting of major sources of
GHG will reduce the amount of time required for permitting or how it
"streamlines" the permitting process.  Therefore, the commenter states
that EPA should not rely on this "potential" streamlining" method to
mitigate the absurdities that will result from EPA's regulation of GHGs.
 (5082)

Response:  

Even though electronic permitting is a streamlining approach that does
not require rulemaking or state adoption, this approach will require
implementation experience with GHG that is not now available.  We expect
that at least 1 year of implementation experience (of the type we will
gain starting in 2011) would be required, plus at least an additional
year to extrapolate that experience to small sources and put this
approach into effect.  For that reason, we are not able, at this time,
to presume that this approach will ease any burden prior to the planned
rulemaking for step 3 (i.e., later half of 2011, to promulgate by July
2012, effective July 2013).  These comments, including as any concerns
expressed by commenters about this approach, will be addressed in the
action(s) where we might apply this streamlining option.

4.6  “Lean” Techniques for Permit Process Improvement

	The proposal preamble describes “lean” techniques as referring to a
collection of process improvement principles, methods, and tools
designed to help organizations identify and eliminate non-value-added
activity (“waste”), in order to meet customer needs better, more
quickly, and more efficiently.  In the context of air permitting, we
assert that “lean” improvement events typically focus on eliminating
administrative process waste (e.g., backlogs in permitting, document
errors, unnecessary rework on documents, delays associated with
transmission of documents between various parties that develop and
approve them).  We acknowledge that many states employ “lean”
techniques to improve air permitting and other agency processes and
believe that similar and improved “lean” techniques could be
employed as a streamlining option/tool for GHG PSD and title V
permitting purposes.  This subsection presents comments on the use of
“lean” techniques as a streamlining option/tool for GHG PSD and
title V permitting.

Comment:

One commenter (5711) expresses explicit support for the use of
“lean” techniques for permit process improvement.  The commenter
believes that lean permitting may reduce procedural waste by reducing or
eliminating permit backlogs, errors, unnecessary redrafting of
documents, and delays due to transmitting documents among the parties
that develop and approve them.  (5711)

A few commenters (2504, 4238, 4239) oppose the use of “lean”
techniques for permit process improvement.  The reasons for their
opposition include:

EPA should not address “lean” as part of the Tailoring Rule.  EPA
should do so in a separate rulemaking and only after a careful
evaluation of how such rules impact individual states.  (2504)  

“Lean” approaches would not be helpful until states have gained some
experience implementing the new requirements into their PSD and title V
permitting programs.  (4238, 4239)

Response:  

Even though “lean” permitting is another streamlining approach that
does not require rulemaking or state adoption, this approach will
require implementation experience with GHG that is not now available. 
We expect that at least 1 year of implementation experience (of the type
we will gain starting in 2011) would be required, plus at least an
additional year to extrapolate that experience to small sources and put
this approach into effect.  For that reason, we are not able, at this
time, to presume that this approach will ease any burden prior to the
planned rulemaking for step 3 (i.e., later half of 2011, to promulgate
by July 2012, effective July 2013).  These comments, including as any
concerns expressed by commenters about this approach, will be addressed
in the action(s) where we might apply this streamlining option.

Chapter 5.  Comments on the Proposed Definition of the GHG Pollutant

5.1  Comments on the Compounds Included in the Definition of the GHG
Pollutant

	

	We proposed to identify the GHG metric to be used for determining PSD
and title V permitting applicability as the group of six GHGs summed on
a CO2e basis.  The six constituent GHGs included in the proposed metric
were CO2, CH4, N2O, SF6, HFCs, and PFCs.  Absent a definition of
“greenhouse gases” under another regulatory provision that we could
cross-reference, we proposed to define “greenhouse gases” for
permitting purposes as “the single air pollutant that is comprised of
the group of six GHGs, as proposed in the [CAA] section 202(a)
endangerment and contribution findings.”  74 FR 55329.  The six
well-mixed GHGs identified in the proposed contribution finding were
CO2, CH4, N2O, SF6, HFCs, and PFCs.  In the proposal, we further
recognized that the LDVR for GHGs, as it was proposed, would result in
reductions of only four of the gases, not all six, because only four are
emitted by vehicles.  However, we concluded that if the endangerment and
cause and contribute findings and LDVR were finalized as proposed, then
the air pollutant for purposes of PSD and title V applicability would be
a single air pollutant that is the aggregate mix of the group of six
GHGs.

	It is worth noting overall that a majority of the proposal comments did
not speak to or show a preference for or against the proposed GHG metric
for the purposes of determining applicability under the PSD and title V
programs.  Below we summarize our responses to those comments that
specifically showed support for or opposition to the proposed metric. 
For more information regarding the rationale for the GHG metric, see
section V.A. of the preamble to the rule.

Comment:

	Various state commenters (4239, 4860, 7935, 8025, 4866) and public
advocacy groups (5306) express support for listing the six compounds
identified by EPA as GHGs.  Generally, commenters in support of
including all six of the well-mixed GHGs in the threshold metric cite
the same reasons they provided in support of grouping the individual
GHGs together:  namely, the contribution findings that identify the
pollutant as “the combined mix of six key, directly emitted,
long-lived and well-mixed GHGs.”  See 74 FR 66496, 66516, 66536
(December 15, 2009).  They also emphasize that EPA, in order to protect
the public, has to control all the GHGs it has regulated and reduce the
overall impact of the mix of six GHGs.  One fuels sector commenter
(2369) generally agrees with EPA’s proposed GHG metric to define the
“air pollutant” as the class of six GHGs.

	A significant number of industrial commenters contend that only the
GHGs actually subject to controls under the LDVR should be defined as
GHGs under the Tailoring Rule.  Some of these commenters (4122, 4298,
4318, 4522, 4523, 4952, 4992, 5038, 5052, 5080, 5089, 5111, 5114, 5128,
5137, 5257, 5317, 5327, 5328, 5601, 5741, 5788, 6459, 8301) believe that
only the three compounds (CO2, N2O, and CH4) for which the LDVR contains
limits should be considered GHGs, while others (3306, 4020, 4095, 4106,
4118, 5058, 5059, 5140, 5181, 5278, 5714, 5276) would also add HFCs
(which are included in a credit flexibility arrangement under the LDVR)
for a total of four GHGs.  

The commenters present some or all of the following arguments for
reducing the number of compounds included in the definition of GHG:

PSD is not triggered for all six GHGs by the LDVR, even under EPA’s
theory of the statute, because under the proposed PSD Interpretation,
actual emission controls under the CAA – not simply an endangerment
finding – are required to trigger PSD obligations for a given
pollutant (citing 74 FR 51535, 51539-51541, 51544).  (4122, 4318, 4522,
4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601,
5741, 6459, 8301)

Including all six would conflict with the “absurd results” and
“administrative necessity” doctrines because it would lead to larger
numbers of sources subject to permitting, increasing the harm that EPA
says it wants to avoid.  The EPA cannot both widen the scope of the
applicability to six GHGs at its discretion and rely on these judicial
doctrines, which apply only where the EPA has availed itself of all
reasonable discretion to minimize the harm.  (4122, 4318, 4522, 4523,
4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741,
6459, 8301)

The LDVR must dictate how the subject GHGs are regulated and any other
result is arbitrary and, therefore, does not pass muster under section
307(d) of the Act.  (4118) 

	An operator of waste-to-energy facilities (2371) recommends that the
Tailoring Rule require the measurement of the same emissions as the GHG
Mandatory Reporting Rule (40 CFR part 98) in determining which of the
six GHGs to measure for specific source categories.  The commenter also
suggests that the Tailoring Rule state that emissions should be
determined according to the methods of GHG Mandatory Reporting Rule, or
an equivalent method, in order to avoid unintentional noncompliance. 
State commenters 4521 and 5338 also recommend that chemicals listed as
GHGs should be consistent with those listed in the GHG Mandatory
Reporting Rule.

	Some commenters raise the issue of regulating black carbon or similar
short-lived climate forcers as GHGs subject to permitting: 

One environmental commenter (5311) agrees with EPA’s decision to
exclude black carbon for purposes of the Endangerment Finding for now
but would like EPA to move forward expeditiously to list black carbon as
a GHG and establish appropriate regulation in the near future because:

Black carbon is a potent, short-lived climate forcer that contributes
significantly to climate change.  

Reducing these emissions is among the most effective strategies to
mitigate global warming in the immediate future, particularly for
slowing Arctic warming.

Scientific evidence makes clear that black carbon meets all of the
requirements of the endangerment and contribution tests under section
202(a) of the CAA.

Some state commenters (4239, 4860, 7935) also encourage EPA to consider
adding black carbon and other short-lived climate forcers to the list of
GHGs. 

	One fuels sector commenter (2369) (who generally agrees with EPA’s
proposal to define the “air pollutant” as the class of six GHGs)
also suggests the alternative of defining the regulated pollutants in
the LDVR as “GHG emissions from Light Duty Vehicles,” similar to the
approach taken for municipal solid waste (MSW) landfills where the
pollutant defined for the NSPS is “emissions from MSW landfills.” 
The commenter believes this approach would prevent triggering PSD and
title V requirements for stationary sources as a result of the LDVR.

	A solid waste industry commenter (5276) asserts that the Tailoring Rule
should confirm that CH4 and N2O will not be regulated under PSD or title
V because these pollutants are only emitted in miniscule amounts from
automobiles.  The commenter believes that EPA’s failure to consider
the significance of each automobile GHG individually is inconsistent
with purpose of the CAA requirement to determine whether an air
pollutant contributes to an air pollution concern before regulating it. 
At a minimum, the commenter asks EPA to consider using the Tailoring
Rule to avoid the PSD and title V regulation of CH4 and N2O emissions
from landfills until it can address the emission of those pollutants
from stationary sources more directly through notice and comment
rulemaking.

	One commenter (6457) notes that EPA has previously stated that the
“single designated pollutant” at MSW landfills is landfill gas
(LFG), and not individual GHG components.  For that reason, the
commenter believes that emissions from municipal solid waste landfills
would not be separately regulated under the NSR/PSD or title V programs
solely on the basis of the individual components of LFG consisting of
CH4 or CO2.  Because the pollutant emitted from landfills is not
considered to be any one of the gases subject to the Tailoring Rule (or
the Endangerment Finding), the commenter does not read either of these
rules as foreclosing voluntary reductions of LFG at non-NSPS regulated
landfills (often undertaken to generate carbon offsets for sale).

Response:  

We appreciate the commenters’ responses and support for the GHG metric
we proposed.  After considering these comments, and taking into account
other related actions that have occurred since proposal, we have
determined that PSD and title V permitting program requirements will
apply, as proposed, to the “single air pollutant that is comprised of
the group of six GHGs.”  74 FR 55329.  We believe that this approach
is both compelled by the statute and reflects the preferable policy
approach.  We describe in full our rationale for this approach in
section V.A of the preamble for the final rulemaking.  

We disagree with commenters who suggest that because the LDVR actually
regulates only four of the six GHGs, EPA may apply PSD and title V to
only those four GHGs.  It is true that the LDVR for the single air
pollutant that is comprised of the aggregate of six GHGs consists of
individual standards for only four particular constituents of the single
air pollutant—which are emissions limits or caps for three GHGs (CO2,
CH4, and N2O) and an emission crediting option for one GHG (HFCs) –but
it does not dictate that only those four compounds are subject to
regulation for permitting purposes.  Although the LDVR results in
reductions only with respect to four specific GHGs, as a legal matter
the LDVR standard covers the entire set of GHGs that as a class are the
single “air pollutant” in the contribution finding.  

EPA’s conclusion that the pollutant subject to regulation is the
single pollutant comprised of the six individual gases, and not the four
individual constituents, is dictated by the interrelationship between
the endangerment and contribution findings and the requirement to set
standards under section 202(a), and not the endangerment finding itself.
 We agree with commenters that the endangerment and contribution
findings do not by themselves define the pollutant or make GHGs subject
to regulation.  Specifically, as detailed below, our conclusion on as to
what pollutant is subject to regulation is dictated by our obligation to
regulate under section 202(a) the air pollutant for which EPA made the
cause or contribute finding. 

The Administrator found that emissions from new motor vehicles and new
motor vehicle engines of the single air pollutant defined as the
aggregate group of these same six GHGs contribute to the air pollution
and hence to the threat of climate change.  These findings require EPA
to issue standards under section 202 (a) “applicable to emission” of
the “air pollutant” that EPA found causes or contributes to the air
pollution that endangers public health and welfare.  The final emissions
standards satisfy this requirement for GHGs from light-duty vehicles –
in the LDVR, EPA determined that the final emissions standards in that
rule are “standards applicable to the emission” of the single “air
pollutant” defined as the aggregate group of six GHGs.  EPA also
interpreted section 202(a) as providing the Administrator with
significant discretion in how to structure the standards that apply to
the emission of the air pollutant at issue, the aggregate group of six
GHGs.  EPA has the discretion under section 202(a) to adopt separate
standards for each gas, a single composite standard covering various
gases, or any combination of these.  In the LDVR rulemaking EPA
finalized separate standards for N2O and CH4, and a CO2 standard that
provides for credits based on reductions of HFCs, as the appropriate way
to issue standards applicable to emissions of the single air pollutant,
the aggregate group of six GHGs.  EPA did not set any standards for
perfluorocarbons (PFCs) or sulfur hexafluoride (SF6) as they are not
emitted by motor vehicles.  EPA determined that this combination of
standards satisfied its obligation to set emissions standards applicable
to emissions of the single air pollutant for this group of motor
vehicles.  In addition, EPA did not define the regulated pollutants in
the LDVR as “GHG emissions from Light Duty Vehicles,” similar to the
approach taken for MSW landfills where the pollutant defined for the
NSPS is “emissions from MSW landfills,” because the definition of
pollutants in the LDVR is out of the scope of this rulemaking.  The fact
that EPA exercised its discretion in how to structure the standards for
the aggregate group of six GHGs does not change that the standards are
applicable to emission of the single air pollutant defined as the
aggregate group of the six GHGs.  [See 75 FR 25398 (May 7, 2010).] 

As explained in the preamble to this final rule, we must adhere to the
definition of air pollutant as established in the endangerment finding
and the final LDVR for GHGs, which includes CO2, CH4, N2O, HFCs, PFCs,
and SF6.  We do not have discretion to select only a subset of these
gases in defining our GHG threshold metric for permitting applicability
purposes.  

For the same reasons, we disagree that this approach is inconsistent
with the Agency’s final action in “EPA’s Interpretation of
Regulations that Determine Pollutants Covered by Federal Prevention of
Significant Deterioration (PSD) Permit Program.”  While it is the
case, that only four constituent gases are reduced by the LDVR, the
‘air pollutant” that is controlled, and thus “subject to
regulation,” is the group of six, and it is this “air pollutant”
to which PSD and title V apply.   

We also disagree with commenters who suggested that including all six
GHGs in determining permitting applicability would conflict with our
“absurd results” and “administrative necessity” rationale for
the phase-in periods and applicability thresholds for GHGs.  Even if we
did have discretion to identify the air pollutant for PSD and title V
purposes as consisting of only four of the six well-mixed GHGs, we do
not believe that doing so would have any meaningful impact on the
administrative burdens that are at the heart of our reliance on the
“absurd results” and “administrative necessity” doctrines.  The
number of additional permitting actions and amount of additional
permitting burden resulting from including all six GHGs, rather than
four, in the definition is minimal.  This is because the administrative
burden of GHG permitting is dominated by CO2 and CH4 emission sources. 
For example, with a major source threshold set at 100,000 tpy CO2e, the
combined population of sources that would be major for N2O, HFCs, PFCs,
and SF6 accounts for fewer than two percent of the GHG sources that
would remain covered.

In regards to the few commenters that suggested the Tailoring Rule
should only include the GHGs for source categories that are required to
be reported under the EPA’s Mandatory Reporting Rule for GHGs, we also
disagree.   The Tailoring Rule addresses the permitting requirements
under PSD and title V programs for GHGs and, as described above, these
requirements must address the single pollutant subject to regulation as
defined in the LDVR.  We cannot identify different subsets of individual
GHGs for different source categories, and there are no categorical
exclusions under the final Tailoring Rule that would exempt specific
emission sources (see section V.E.3 of the preamble to the final rule
for EPA’s rationale regarding requests for exemptions).  Also, it is
worth noting that the Mandatory Reporting Rule for GHGs generally does
indeed require the reporting of all six of the primary GHGs – as well
as other fluorinated gases – that are included in the sum-of-six GHG
metric used in the Tailoring Rule; however, in some cases the rule
identifies where the current lack of a specific GHG measurement
technique may result in some specific GHGs not being reported by a
specific source category.  The GHG Tailoring Rule does not establish the
GHG measurement techniques for determining the amount of GHG emissions
released at a source; sources will need to verify what GHG measurement
techniques are acceptable for use by contacting their applicable
permitting authority.  It is likely that the same or similar techniques
as identified in the GHG Mandatory Reporting Rule will be required, but
this should be confirmed with the applicable permitting authority.

We disagree with the commenters who suggest we include black carbon and
other short-lived climate forcers to the list of GHGs as well as with
those asking for an exclusion of CH4 and N2O.  The definition of the air
pollutant, as cited in the LDVR, includes CH4 and N2O and does not
include black carbon or other short-lived gases.  

We also disagree with the commenter who states that we should have
defined the air pollutant as “GHG emissions from LDVs,” similar to
the approach taken for municipal solid waste (MSW) landfills where the
pollutant defined for the NSPS is “emissions from MSW landfills.” 
In addition to the reasons noted above, including the definition of the
air pollutant being outside the scope of this rulemaking, we find our
action on landfills not to be instructive (56 FR 24468, 24473; May 30,
1991).  As we explained in that action, EPA found that the complex
mixture of the constituent gases which emanated from landfills
endangered public health and welfare based on a number of concerns. 
Under section 111(b)(1)(A), we determined that this category of sources
– MSW landfills - caused or contributed significantly to air pollution
which may reasonably be anticipated to endanger public health or
welfare.

The term “air pollution” as used in section 111 and various other
CAA provision generally refers to an ambient concentration of some
compound or set of compounds.  In most cases the ambient concentrations
of a compound are the result of emissions from a variety of sources, and
can include both anthropogenic and non-anthropogenic sources of
emissions.  For example, ambient concentrations of PM are a form of air
pollution, and the PM in the ambient air results from emissions from
many different source categories.

For MSW landfills, the air pollution at issue was unique in that it was
defined as the emissions from MSW landfills, making the air pollution at
issue a source specific definition.  This was done because the impacts
on public health or welfare were in part tied to these specific
emissions (e.g. welfare effects were tied to landfill odors and off-site
explosions from pollutant migration), not simply a broader air pollution
where MSW emissions played just one part.  56 FR 24468, 24473 (May 30,
1991).  Since the air pollution was defined this way, the category
clearly caused or significantly contributed to this air pollution.  It
was the unique, source specific nature of the definition of the air
pollution that led to the result that the air pollutant emitted by the
MSW landfills was also defined as emissions from MSW landfills. 
Accordingly, it was the specific mixture, which emanates solely from
landfills, that we were concerned about. 

As discussed above, the endangerment finding here is of a different
nature.  Specifically, the Administrator determined that the air
pollution was atmospheric levels of the combination of six GHGs.  This
air pollution was not limited to any one source of GHGs, but was defined
as the atmospheric concentrations of these gases, irrespective of
sources. Unlike MSW landfills, EPA did not define the air pollution in
terms of emissions from a specific source category, but instead defined
it in terms of the atmospheric concentrations irrespective of any one
source category.  See 74 FR 66496, 66516-523 (December 15, 2009).   The
endangerment to public health and welfare came from this total
atmospheric concentration of GHGs, not from a subset reflecting just
emissions from one source category.  EPA rejected suggestions that it
should define the air pollution in terms of a subset of the GHGs in the
atmosphere, such as the emissions from new motor vehicles.  Id at 66521,
and Endangerment RTC Volume 9, at p.16.  The air pollutant was defined
in the same manner as the air pollution, irrespective of source
category, and was not limited to emissions from new motor vehicles.  Id.
at 66536-41.  Of course, EPA focused on the emissions of this air
pollutant coming from new motor vehicles, as that was required to
determine whether emissions from these sources caused or contributed to
the atmospheric air pollution.  However the air pollutant was defined in
the same way as the air pollution, without reference to any specific
source.  Thus, the GHG endangerment and contribution findings did not
follow the somewhat unique approach to defining the air pollution that
was used in listing MSW landfills under section 111, and the agency
decisions in the MSW landfill listing does not provide a basis for
defining air pollutant here different than the air pollutant and the air
pollution defined in the GHG endangerment and contribution findings.   

Moreover, the proposed approach would appear to circumvent the
requirement that an air pollutant regulated under the CAA be subject to
PSD permitting as it would give the Agency authority to avoid this
result simply by issuing source specific definitions of a pollutant even
where the air pollutant is of general concern.

	With respect to landfills, we also disagree with commenters that
because we designated the pollutant in the landfills NSPS as LFGs that
the only regulated NSR pollutant emitted from them is LFGs.  Nothing in
that rulemaking suggests that other pollutants meeting the definition of
regulated NSR pollutant (e.g. NOx from flaring) would not also be
covered.  

Arguments that certain individual constituents should not have been
included under the LDVR (CH4 and N2O) because they are emitted in small
amounts are beyond the scope of this rulemaking.  Rather their inclusion
was the subject of the endangerment and cause or contribute finding and
the LDVR and are properly addressed there.  Questions as to the impact
that the LDVR has on the availability of reductions of GHGs at landfills
for use as offsets or credits is also beyond the scope of this
rulemaking and we are not addressing those issues at this time.  

5.2  Comments on Use of GWP and the CO2e Metric

	As noted previously, we proposed to identify the GHG metric as the
group of the six GHGs, on a CO2e basis.  Specifically, this means that a
source’s emissions of all six GHGs would be combined into a single
metric by multiplying the mass of each individual GHG (in tpy) by its
GWP value, and summing these products to determine the total emissions
of the GHG pollutant expressed in terms of tpy CO2e.  We received
comments on many aspects of the proposed metric.  In our proposal
preamble discussion of GHG metric, EPA also raised the possibility of
including a limitation in the metric to address the prospect (expected
to occur only rarely) that high-GWP gases could be emitted in quantities
less than statutory thresholds for PSD and title V but nevertheless
exceed the proposed thresholds in terms of CO2e.

5.2.1  General Support and Opposition to the CO2e Metric

Comment:

	Several commenters (3916, 4154, 4518, 4747, 4886, 5306, 5311, 5347,
5922, 8025) explicitly support the use of GWP and the CO2e metric for
GHG emissions.  These commenters make the following points in support:

The EPA has the discretion and authority to select an appropriate metric
to measure GHGs in the PSD program, and policy considerations support
the choice of GWP.  (5306)

The GWP is a widely-used metric which employs internationally-recognized
conversion factors to compare GHGs based upon their climate properties. 
(4518, 5306, 5347)

This approach provides for an inherent balancing among the GHGs,
possibly minimizing PSD reviews.  (3916)

This will lead to a more effective system for permitting authorities and
create more opportunities to reduce emissions over the full class of
GHGs, rather than focusing on reducing individual GHGs.  (4866)

States and local areas that have climate action plans for GHG reductions
use CO2e.  (4518, 5347)

The use of CO2e ensures a standard measure across all permitting
agencies.  (4518)

However, even though one commenter agrees that using GWPs sensibly
focuses on the characteristic that endangers the public health and
welfare (i.e., the potential to cause global warming), this state
commenter (4742) believes that there is no reason that EPA should select
carbon dioxide equivalency over another metric.  The commenter
recommends that EPA consider adopting a unit of measurement that would
eliminate the need to adjust the numeric thresholds in the statute.  In
addition, another supportive commenter (4518) believes that the proposal
underestimates CH4’s heat-trapping potency relative to the other GHGs.
 Because CH4 has an atmospheric lifetime of approximately one decade
instead of 100 years like other GHGs, its GWP value (which is derived
based on a warming potential over 100 years per the IPCC methodology) is
relatively lower than the more persistent GHGs.  The commenter believes
that this is a missed opportunity to get significant, near-term
emissions reductions.  

Several state (4519, 4864, 5081) and industrial commenters (4020, 4095,
4747, 5082, 5086, 5183, 5276, 5391, 6457) oppose the use of GWP and CO2e
in setting the thresholds for GHGs, and most of these believe that
thresholds should be based on individual mass-based emissions for each
GHG.  Specific reasons for this opposition include the following:

Two industry commenters (4095, 5082) do not believe EPA has any
discretion to ignore the metric for regulation established by Congress
for PSD in section 169 of the Act. 

A state commenter (5081) suggests that regulating each of the GHGs
individually on a mass basis provides a better, more immediate
environmental result and is a more appropriate approach under the
administrative necessity doctrine.

An industry commenter (5183) states that facilities will face enough
challenges without introducing requirements to consider intensity
multipliers or other factors beyond the simple NSR threshold levels, and
that a facility which emits less than an established threshold level
should not trigger PSD or title V requirements, regardless of the type
and intensity of the emission. 

Two solid waste industry commenters (5086, 5391) state that an
individual mass-based emissions metric without GWP would be consistent
with the GHG Mandatory Reporting Rule and the current landfill-specific
PSD regulation based on NMOC.  

Some state (4864), solid waste industry (5391), and semiconductor
industry (5143, 5417) commenters are concerned that the CO2e metric
relies on GWP assumptions that could change with periodic updates to the
scientific literature.  Commenter 5391 adds that GWP is therefore a
variable, and EPA cannot grant permits that include variables.  (See
additional comments on this topic below.)

An industry commenter (5276) contends that the use of CO2e will
complicate the implementation of BACT because sources that trigger PSD
will be required to install BACT for each regulated pollutant, not for
CO2e.  As a result, a source that exceeds the threshold primarily due to
its CO2 emissions would be forced to install BACT for all other
individual GHGs, regardless of how minor those other emissions may be. 
The commenter states that EPA should provide further analysis on how the
single GHG-based metric approach is representative and equitable for all
sources impacted by the proposed rule.

One commenter (6457) supports elevated thresholds, but believes that
these thresholds as applied to CH4 should be expressed on a mass basis
because a 25,000 tpy threshold on a CO2e basis would effectively lower
the threshold for CH4 emissions to approximately 1,000 tpy, which would
potentially extend PSD and title V requirements to hundreds of small
facilities such as landfills, farm manure digesters, coal mine fugitive
emissions, non-uniform oil/gas system components, and small wastewater
treatment facilities that could not afford the administrative and
compliance costs.  This permitting need would overwhelm state and local
permitting authorities.

Some industry commenters (4298, 5111, 7026) recommend using a
combination approach based on the mass emissions of each synthetic GHG
(PFC, HFC, and SF6) and the CO2e or other equivalent emissions of each
naturally occurring GHG (CO2, CH4, and N2O).  Industry commenters 4298
and 5111 argue that for sources of PFC, HFC, and SF6, which each have
low mass emissions, there is no justification under the avoidance of
“absurd results” and “administrative necessity” doctrines to
group these pollutants or use an equivalency metric to evaluate title V
and PSD applicability because they would rarely trigger applicability
based on their mass emissions at the statutory thresholds.

	Without necessarily opposing the use of GWP, state commenters 4239 and
7935 recommend that EPA consider using a mass basis for individual GHGs
because it may be feasible to regulate and control emissions of each
GHG, other than CO2, at the 100/250 tpy thresholds (or less if deemed
necessary) according to the established mechanisms of the CAA.  

An industry commenter (4298) suggested that an alternative approach for
calculating global warming equivalency could be based on N2O (i.e.,
N2Oe), which would yield emission ranges that would fall far closer to
the statutory threshold levels than if a CO2e approach is used.  The
commenter notes that an N2Oe approach applied to a major source
threshold of 100 tpy would be only slightly less stringent than the
proposed threshold of 25,000 tpy CO2e (i.e., 100 tpy N2O is equivalent
to 29,600 tpy CO2).  The commenter adds that, to the extent that an N2Oe
approach would exclude sources from PSD that EPA feels should be subject
to GHG standards, EPA has the option to promulgate NSPS for such
sources.

Response:  

After considering these comments, we have decided to adopt applicability
thresholds based on a CO2e metric for the sum-of-six well-mixed gases,
and also to adopt an additional mass-based threshold for the sum-of-six
gases as discussed in the proposal.  First, as discussed in the previous
section, we have explained why the appropriate pollutant for PSD
purposes is the single pollutant GHG, which is composed of the six
well-mixed gases.  Regarding the CO2e metric, we continue to believe
there are a number of advantages, as laid out in the proposal, to a CO2e
measure that would not be available if we used only a mass-based metric.
 These include:  (1) a CO2e metric, by incorporating the GWP values,
best addresses the relevant environmental endpoint, which is radiative
forcing of the GHGs emitted; (2) when combined with a sum-of-six gases
approach, the CO2e metric best allows for consideration of their
combined effects when sources emit any one or combination of the six
well-mixed GHGs; (3) a cumulative CO2e metric is consistent with the
applicability metric used in the mandatory reporting rule and other
related rules and guidelines; and (4) a CO2e metric allows more
flexibility for designing and implementing control strategies that
maximize reductions across multiple GHGs.  We recognize the tension
between the mass-based metric in the statute and the CO2e-based metric
we are adopting in this rule, but as discussed later, we will address
this by also retaining the mass-based metric.  Moreover, given our need
to tailor our approach for covering sources of GHGs, we believe that the
considerations driving our choice to also use a CO2e-based metric are
appropriate for defining the phase-in and allow for permitting resources
to be directed at those sources and modifications that have the greatest
impact on radiative forcing of the GHGs emitted.  	

We recognize the concern of commenters who stated that we cannot ignore
the statutory thresholds based on the mass-based emissions of an air
pollutant as described under CAA section 169(1).  As we mentioned in the
proposal, because both the PSD and title V statutory thresholds are
expressed on a mass basis—i.e., tons of a pollutant with no weighting
values applied—we were concerned from a legal standpoint that the
metric proposed (CO2e) could have the effect of subjecting to PSD or
title V requirements a source whose emissions fall below the statutory
threshold limits on a strictly mass basis, but whose CO2e-based
emissions exceed the CO2e thresholds we establish under the Tailoring
Rule.  As an example, in rare instances it is possible that a source may
emit only a non-CO2 GHG in very small amounts, on a mass basis, but one
that carries a very large GWP.  In this case, it is possible that the
source may emit the GHG in amounts that fall below the PSD and/or title
V statutory applicability threshold (100 or 250 tpy, as applicable) on a
mass basis, but exceed the 100,000 CO2e PSD and title V applicability
thresholds for step 2 in this action.  Under these circumstances,
without a mass-based threshold, the source would trigger PSD and title V
for its CO2e emissions even though its GHG mass emissions would not, in
fact, exceed the statutory triggers.  

Upon review of the comments pertaining to this issue and further
analysis of the legal and programmatic implications, we are adopting a
two-part applicability process, for both major source applicability
determinations for GHGs under PSD and title V and for determining if a
net increase has occurred in PSD applicability determinations for
modifications.  We accomplish this two-step applicability approach by
continuing to rely on the existing mass-based applicability provisions
in the current regulations, and by including new regulatory provisions
that add a definition of "subject to regulation" that in turn includes
the phase-in thresholds.  Similarly, for PSD modification reviews and
associated netting analyses, the same two-step process must be used. 
Our summary in section IV.A of the preamble describes how we expect this
provision to be implemented in practice. 

Regarding concerns raised by one commenter that applying a CO2e-based
threshold to methane sources will create an overwhelming permitting
burden, we have carefully considered the impact of our final GHG
threshold selection under step 2 of the phase-in on the administrative
permitting burden that is created, including specifically the inclusion
of the applicable methane sources mentioned in the comment.  As
discussed in more detail in Section V.B of the preamble to the final
rule, we have decided upon a higher GHG threshold than was proposed,
100,000 tpy CO2e instead of 25,000 tpy CO2e for major source
applicability, and we believe that there will not be an overwhelming
permitting burden created for states as result of our step 2 thresholds,
inclusive of any CH4 sources affected at the step 2 threshold.  While,
there may be some newly permitted CH4 sources under step 2, such as
additional landfills and underground coal mines, we believe that these
additional sources, which we estimate at less than 300 total, will not
result in a number of permitting actions that will overwhelm permitting
authorities.  

We acknowledge that the possibility of changing GWP values is a downside
to the use of CO2e for the GHG metric, and we address this comment later
in this chapter, where we discuss our plan to codify GWP values.  By
codifying GWP, any changes will be manageable, and, in our judgment,
will not outweigh the benefits of a CO2e-based approach.  We also
acknowledge that a CO2e-based approach may appear to complicate the BACT
review and implementation process.  However, we disagree with the
commenter’s ultimate conclusion that BACT will be required for each
constituent gas rather than for the regulated pollutant, which is
defined as the combination of the six well-mixed GHGs.  To the contrary,
we believe that, in combination with the sum-of-six gases approach
described above, the use of the CO2e metric will enable the
implementation of flexible approaches to design and implement mitigation
and control strategies that look across all six of the constituent gases
comprising the air pollutant (e.g., flexibility to account for the
benefits of certain CH4 control options, even though those options may
increase CO2).  Moreover, we believe that the CO2e metric is the best
way to achieve this goal because it allows for tradeoffs among the
constituent gases to be evaluated using a common currency.  We also note
that any BACT analysis conducted at a facility would have to take into
account the cost of control and accordingly disagree that grouping the
constituent gases into a single pollutant will lead to the imposition of
controls that are not cost effective.  

	We do not agree also with the commenter who suggested an N2O-based
equivalent metric.  There is little evidence of this approach being used
anywhere in formal national GHG emissions reporting mechanisms, GHG
emission trading regimes, or state and local GHG reporting programs. 
However, CO2e is a universally recognized and utilized metric for
estimating and reporting GHG emissions, with well established protocols
for applying GWP values based on CO2 equivalency.  We find no reason to
divert from this well-established metric for permitting purposes. 
Similarly, we have chosen to follow the same GWP values that are adopted
in EPA’s final GHG Mandatory Reporting Rule, which are based on the
100-year time horizon; these GWP values are well established in
international and national GHG reporting mechanisms and we see no reason
to divert from those values for permitting program purposes either.

5.2.2  Comments on Combining the Six GHGs into a Single Metric

Comment:

	Most commenters who submitted comments during the public comment period
did not speak to or show a preference for or against the combination of
the six GHGs into a single metric, and there were some who agreed with
the metric we proposed.  Of those commenters that specifically support
the combining of the individual GHGs as one pollutant for purposes of
determining permitting applicability, they stated that it is not
uncommon for EPA to recognize ‘collective’ air pollutants comprised
of many individual compounds based upon shared threats to health and
welfare, including such EPA-created group pollutants as sulfur oxides,
nitrogen oxides, volatile organic compounds (VOCs), and PM.  One state
commenter (4742) agrees that EPA has substantial discretion to regulate
pollutants collectively, and believes that this seems particularly
appropriate with respect to GHGs.

A smaller number of commenters (many who also oppose including all six
of the proposed GHGs) (2797, 4122, 4298, 4318, 4522, 4523, 4952, 4992,
5038, 5052, 5080, 5089, 5111, 5114, 5128, 5143, 5257, 5317, 5327, 5328,
5601, 5741, 6459, 7026, 8301) specifically oppose the proposal to
combine all six GHGs into a single metric for permitting purposes, for
some of the same reasons:

Regulating all six GHG as a group will increase the likelihood that a
source will trigger permitting requirements.  The LDVR dictates how
these GHGs will be regulated, and any other result is arbitrary and,
therefore, does not pass muster under section 307(d) of the Act.  (4118)

Grouping all six GHGs is not appropriate because GHGs are not like other
air pollutants that are comprised of numerous substances of concern
(e.g., VOCs and PM).  Since GHGs do not interact or combine to create a
pollutant of concern, and EPA has not established a GHG NAAQS, GHGs
should be regulated individually and treated in the same way as under
the LDVR.  (2797, 5328)

The EPA should not regulate CO2 the same as the other GHGs because the
other gases have higher GWP and are more potent.  (2797)

Defining the six GHGs as a single pollutant is unnecessary and would
expand the scope of the statute.  (7026)

Response: 

After considering these comments, and taking into account other related
actions that have occurred since proposal, we have determined that PSD
and title V permitting program requirements will apply, as proposed, to
the “single air pollutant that is comprised of the group of six
GHGs.”  74 FR 55329.  See the discussion under section 5.1 regarding
which compounds are included in the definition of the GHG pollutant.  We
believe that this approach is both compelled by the statute and reflects
the preferable policy approach.  As more fully discussed in the
preamble, under the plain language of section 169(1) a PSD major
emitting facility is one that emits 100 or 250 tpy of “any air
pollutant.”  Through regulation we have reasonably limited the scope
to this provision to those tonnages of any “regulated NSR
pollutant,” which includes any pollutant that is “subject to
regulation under the Act.”  40 CFR 52.21(b)(50)(iv).  This same
limitation exists in the definitions of major modification and BACT.  40
CFR 52.21(b)(2) and (b)(12).  This regulatory limitation reflects the
statutory directive that BACT is required for “each pollutant subject
to regulation under this chapter.”  42 U.S.C. 7475(a)(4).  

Based on these provisions, the sole question in determining what a BACT
analysis must cover is what pollutant is “subject to regulation.” 
This phrase carries with it no suggestion that the Agency may subdivide
or otherwise change a pollutant that is regulated elsewhere in the Act. 
Instead, it carries with it a dictate that BACT be applied to the air
pollutant which the Administrator has determined elsewhere to regulate. 
As described below, this air pollutant, in the case of GHGs, is the
aggregate mix of the six constituent gases identified in the
contribution finding which led to the promulgation of the LDVR, and is
the air pollutant that the various LDVR emission standards address. 
This same logic regarding the definition of a pollutant “subject to
regulation” applies to the determination of whether a source is a
major stationary source of a “regulated NSR pollutant.”  Thus, we
also read the definition of major emitting facility at CAA section 169
to be guided by the same requirement to define the “regulated NSR
pollutant” that is “otherwise subject to regulation” to be the
same air pollutant that is actually regulated elsewhere under the Act. 
If, as here, that regulation considers the aggregate emissions of
several compounds to be a single air pollutant, the same single air
pollutant is a regulated NSR pollutant.  As noted above, the statutory
definition of major emitting facility covers “any pollutant.”  As
the LDVR and associated contribution finding have defined the aggregate
group of the six GHGs to be the single “air pollutant,” they must be
considered as such in determining if “any pollutant” is emitted
above the provided thresholds. 

Similar to our discussion in section 5.1 above, since the time of our
proposal, we have finalized both the Contribution Finding and the LDVR
for GHGs.  The final LDVR for GHGs specifies, in the rule’s
applicability provisions, the air pollutant subject to control as the
aggregate group of the six GHGs, including CO2, N2O, CH4, HFCs, PFCs,
and SF6.   Because it is this pollutant that is regulated under the
LDVR, it is this pollutant that to which PSD and title V apply. 
Specifically, the applicability provision in the LDVR provides a clear
reference to the definition of the single pollutant comprised of the
aggregate group of the six well-mixed GHGs, which makes clear PSD and
title V applicability depends on the same sum-of-six GHG construct.  We
must follow this construct of the aggregate group of the six gases and
do not have discretion to interpret the GHG “air pollutant”
differently for the purposes of PSD or title V.  We note that many of
the comments opposed to aggregating the six GHGs in this rule were
already addressed in the final Contribution Finding.  See, e.g., 74 FR
66541.

Of course, because the LDVR follows the Contribution Finding, this 
construct of the pollutant as the aggregate group of the six gases is
also consistent with the definition of the air pollutant in the final
Contribution Finding for GHGs (see 74 FR 66496, 66499, 66536-7, December
15, 2009).  There, the Administrator defined the air pollutant as the
“aggregate group of the same six…greenhouse gases” (see,
specifically, 74 FR 66536), and these well-mixed GHGs are defined to
include CO2, CH4, N2O, HFCs, PFCs, and SF6.  

Moreover, even if we had discretion to identify the GHGs air pollutant
differently in the permitting programs than in the LDVR, we believe it
is reasonable to identify the GHGs air pollutant through the sum-of-six
construct for the same reasons why we adopted that definition in the
contribution finding and for additional reasons noted below specific to
the permit programs.  The term “air pollutant” is defined under CAA
section 302(g) as “any air pollution agent or combination of such
agents, including any physical, chemical, biological, radioactive…
substance or matter which is emitted into or otherwise enters the
ambient air.”  Under this definition, EPA has broad discretion to
identify an air pollutant, including, as appropriate, treating a
combination of air pollutant agents as a single air pollutant.  Here, we
think that the six well-mixed gases are appropriately combined into a
single air pollutant because, as noted in the contribution findings,
they share several important attributes:  Each of the six gases -- 

Is directly emitted (and is not formed by secondary processes in the
atmosphere)

Is long-lived in the atmosphere after it is emitted 

Is sufficiently long-lived that it becomes “well-mixed,” which means
that its concentration is essentially uniform in the atmosphere (as
opposed to having significant local/regional variation); and 

Has well understood atmospheric properties (e.g., radiative forcing).

See 74 FR 66516-66518.

In addition, treating the six GHGs as a single air pollutant is
consistent with the actions of international scientific bodies.  For
example, the Intergovernmental Panel on Climate Change (IPCC) considers
in various reports how the six gases drive human-induced climate change
and how that affects health, society, and the environment.  Similarly,
the United Nations Framework Convention on Climate Change (UNFCCC)
requires reporting of these six gases and the commitments under the
UNFCCC and Kyoto Protocol are based on the combined emissions of these
six gases.  Finally, as discussed later, it is standard practice to
compute the “carbon dioxide (CO2) equivalency” of aggregate
emissions using GWP.  

We disagree with commenters who argued that grouping all six GHGs is not
appropriate because GHGs are not like other air pollutants that are
comprised of numerous substances of concern (e.g., VOCs and PM).  First,
as noted previously, we are following the approach to a single air
pollutant comprised of the aggregate of the six GHGs initially adopted
in the Contribution Finding and followed in the LDVR.  We note that many
of the comments opposed to aggregating the six GHGs in this rule were
already addressed in the final Contribution Finding.  See, e.g., 74 FR
66541.

In addition to the reasons described in the endangerment and
contribution findings, there are CAA permitting programmatic and policy
advantages to using the sum-of-six construct for the GHG air pollutant
for PSD and title V applicability purposes.  We believe now, as we did
at proposal, that the benefits in using the cumulative group of GHGs
outweigh any implementation advantages to using an individual-GHG-based
metric.  The advantages to sum-of-six definition include that it may --
(1) allow significantly more flexibility to sources for designing and
implementing control strategies that maximize reductions across multiple
GHGs and would also likely align better with possible future regulations
that allow for such flexibility; (2) more effectively support possible
future offsets or trading mechanisms that involve different source
categories and different compositions of GHG emissions; and (3) could
better accommodate and harmonize with future regulations because it
establishes one class of pollutants that includes individual components
that may, in turn, become subject to specific emission standards under
future regulatory efforts.  

We also disagree with commenters who believe that aggregating the GHGs
under one GHG metric for permitting applicability purposes would lead to
an excessive amount of source permitting activity or would increase the
likelihood for a source to trigger applicability.  This is because the
phase-in approach addresses the overwhelming permitting burdens
associated with permitting of GHGs.  It does so by designing our
applicability thresholds to allow for a manageable amount of new
permitting actions based on the emissions from sources using the
sum-of-six metric.  If we based applicability on individual gases,
(assuming, again, that we have authority to deviate from the definition
of “air pollutant” as used in the LDVR), we would still need to
determine what level of permitting is manageable and appropriate based
on thresholds on an individual gas basis and would expect that the final
rule would result in the same levels of remaining burden.  Accordingly,
unless the permitting program were being implemented at the statutory
thresholds, the effect of a decision to aggregate or not aggregate would
not reduce workload; it would simply shift work from permitting
facilities that trigger based on combined GHGs to those that trigger
based on individual GHGs.  Although we acknowledge that this may affect
applicability for a particular source, we disagree with the commenter
that doing so would conflict with our conclusions based on the “absurd
results” or “administrative necessity” doctrines.  By using a
consolidated and weighted measurement, we are able to direct the limited
administrative resources to those new sources and modifications with the
greatest impact on GHG emissions. 

5.2.3  Comments on Linking the Definition of CO2e to EPA’s
“Inventory of U.S. Greenhouse Gas Emissions and Sinks”

Comment:

	Numerous commenters express concerns about the proposal to link the
definition of CO2e [see, e.g., proposed 40 CFR 51.166(b)(58)] to EPA’s
“Inventory of U.S. Greenhouse Gas Emissions and Sinks” because that
document may change from year to year.  This document includes
information about applicable GWPs and guidance on calculating emissions
in terms of CO2e.  Representative comments include the following:

One commenter (4518) believes it is important to ensure that all
permitting agencies are using the same calculations for the
determination of CO2e for GHGs.  The commenter notes that EPA’s
document, which is updated annually, should address this issue, provided
this information is provided in annual guidelines for permitting
agencies.

One fuels industry commenter (8459) states that EPA should follow the
proper notice and comment procedures and the requirements of the IQA for
the relevant technical underpinnings of the proposal.  The EPA relies
upon the GWPs of the IPCC without providing the supporting data for
review, and it is inappropriate to use this as a basis for this rule
without first making all the raw data available for public inspection
and comment.

A utility and natural gas industry commenter (4749) asserts that EPA
cannot tie the definition to a non-regulatory document that may be
changed without notice and comment rulemaking.  This and other industry
commenters (4106, 5140, 5181, 5278) contend that before EPA utilizes a
new GWP, that GWP must be subject to notice and comment to comply with
the requirements of CAA section 307 and the APA.

Two solid waste industry commenters (5086, 5391) state that EPA should
include guidelines in the rule for how the Agency will evaluate and
adopt or reject changes to the international GWP standard and how it
will apply the standard to PSD and title V permits.

A number of commenters (4020, 4120, 4515, 4691, 5073, 5140, 5141, 5181,
5278, 5417) are concerned that an annual update of GWP would create a
moving target for sources conducting applicability determinations and
assessing compliance with minor NSR and PSD emission limits.  According
to the commenters, this type of enforcement jeopardy creates substantial
uncertainty and will chill investment in more efficient technologies. 
The commenters assert that, at a minimum, EPA needs to ensure that
applicability and compliance with limits continues to be based on the
GWP that existed when the determination was made or the limit was
established.  One of the commenters provides two alternatives to address
the issue of changing GWPs, along with several GHG calculation
scenarios:

“Freeze” the GWP at the current values by incorporating those values
into the regulation.  The EPA could still revise the “NSR” GWP, but
would have to revise the regulation to do so.

Allow the GWP to change as more research becomes available, but ensure
that the new values are not used retroactively.  This policy requires:

A date on which a revised GWP becomes effective (e.g., 30 days after the
date the new Inventory is issued).

A transition discussion in the preamble to the final rule and, as
needed, transition language in the final rule.  The transition would
ensure that the new GWP:

Would not apply to any complete applications submitted prior to the
effective date of the revised GWP.

Would not be used to revisit past applicability determinations.

Would be used for future applicability determinations, including
recalculation of past emissions increases and decreases as part of
determining the net emissions increase.

Some commenters (5143, 5417) have concerns about complications arising
from fluctuating GWPs and the fact that new materials may be added to
the IPCC list when it is revised, creating a change in a company’s
emissions even if its operations did not change.  This is a particular
concern to semiconductor manufacturers because they use fluorinated
materials (currently unlisted), which are a key focus in GHG regulation
and likely to be listed in the future.

One energy sector commenter (5742) believes that current GWPs reflecting
the current scientific consensus should be used in calculating CO2e,
specifically the GWPs specified in the IPCC Fourth Assessment Report
(AR4).  Using outdated factors strictly for consistency with a
soon-to-expire international agreement to which the U.S. is not even a
party results in incorrect emissions projections, which is particularly
problematic in a GHG regulatory scheme where investment decisions with
potentially long-term consequences will be made based on outdated
science.

One commenter (4948) suggests that EPA revise the definition of CO2e to
reference the GHG Mandatory Reporting Rule for methods of calculating
GHG emissions.  The commenter indicates that if the GHG Mandatory
Reporting Rule does not address a facility’s GHG emissions, then the
inventory and sinks document could be used as the reference.

Response:  

We agree with commenters who suggested we should codify, either in the
Tailoring Rule or through reference to codified values in another
rulemaking, the GWP values to be used in permitting analyses.  We agree
that this approach provides certainty as to which GWP values need to be
used and permitting authorities and sources can plan appropriately for
possible changes in the GWP values.  As mentioned in the comments,
recommended GWP values from IPCC can change over time.  While this is
infrequent – the last such changes were in 2007 – when it occurs,
there are generally significant lag times in universal adoption of new
values because of inconsistencies that could be created in national
inventories and emission reporting mechanisms.  In a regulatory setting,
such as in the permitting programs, this could potentially create
significant implementation issues, such as when a GWP change occurs
while a permit action is in progress.  EPA also recognized similar
potential implementation issues in developing its final Mandatory
Reporting Rule for GHGs, and codified in the regulatory text for that
rule the GWP values to be used in reporting GHGs as part of that final
rulemaking.

For these reasons, we have decided to follow the approach in the GHG
Mandatory Reporting Rule and require that for PSD and title V permitting
requirements, wherever emissions calculations are performed, that
permitting authorities and sources use GWP values that are codified in
EPA rules.  We will establish the GWP values for PSD and title V rules
based on a cross-reference to the values that are codified in the
EPA’s GHG Mandatory Reporting Rule [Reference:  Table A-1 to Subpart A
of 40 CFR part 98 – Global Warming Potentials, 74 FR 56395].  Any
changes to Table A-1 of the GHG Mandatory Reporting Rule regulatory text
must go through a notice-and-comment regulatory process.  In this
manner, the values used for the permitting programs will reflect the
latest values adopted for usage by EPA after a formal regulatory process
and will be consistent with those values used in the EPA’s GHG
Mandatory Reporting Rule.  Furthermore, the lead time for adopting
changes to that rule will provide a transition time to address
implementation concerns raised by commenters.

As noted above, we have decided to follow the approach in the EPA’s
final GHG Mandatory Reporting Rule and require that for PSD and title V
permitting requirements, wherever emissions calculations are performed,
permitting authorities and sources use GWP values that are codified in
that rule.  We believe that maintaining consistency with the GHG
Mandatory Reporting Rule in terms of what GWP values to use will provide
a necessary level of certainty for both sources and permitting
authorities.  

We also disagree with commenters who believe that, by updating the GWP
values, this will necessarily result in shifting compliance
obligations.   Permitting authorities should be able to write BACT
limits referencing the regulations in effect at the time.

5.2.4  Comments on the Use of Dual Thresholds for Pollutants that Do Not
Exceed the Statutory Thresholds but Do Exceed the CO2e Thresholds

Comment:

In our proposal preamble discussion of GHG metric, EPA raised the
possibility of including a limitation in the metric to address the
prospect (expected to occur only rarely) that high-GWP gases could be
emitted in quantities less than statutory thresholds for PSD and title V
but nevertheless exceed the proposed thresholds in terms of CO2e.  	Most
commenters (2369, 4120, 4122, 4298, 4318, 4515, 4523, 4691, 4747, 4952,
4992, 5038, 5078, 5079, 5080, 5089, 5111, 5114, 5128, 5236, 5257, 5280,
5317, 5327, 5601, 5741, 6459, 8301, 8545) on this subject support a dual
threshold under which a source would be subject to title V or PSD only
if its GHG emissions exceeded both the statutory thresholds on an actual
tonnage basis and the tailored thresholds on a CO2e basis.  Specific
comments include the following:

It would be unlawful to apply PSD when GHGs are below the statutory
thresholds.  With respect to netting, a source should not trigger PSD
requirements unless there is a net emissions increase.  (4122, 4318,
4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5236, 5257, 5317, 5327,
5601, 5741, 6459, 8301)

The complexity of accounting for emissions according to both mass and
GWP should be manageable, and is not a reason to ignore the role of
mass-based emission rates in determining the applicability of PSD
requirements.  (4120, 4515, 4691)

A dual threshold is consistent with the phasing in of the Tailoring Rule
and is an effective way to address the current uncertainty surrounding
how to measure high-GWP gases.  The commenters recommend that SF6 and
other high-GWP gases not trigger PSD in such small quantities during the
first phase because measurement is too uncertain and SF6’s high GWP
will magnify potential measurement errors.  (5078, 5079)

For modifications to be considered major under PSD, the net emissions
increase would have to be greater than 100 tpy on a mass emissions basis
(for each individual GHG) and greater than 25,000 tpy CO2e of combined
GHG emissions.  (2369)

State commenter 8025 does not support a dual threshold trigger that
incorporates the actual mass tonnage and the GHG GWP thresholds,
believing that there is no benefit to the added complexity.

Response:  

	As discussed in more depth in section V.A of the preamble, we recognize
the concern of commenters who stated that we cannot ignore the statutory
thresholds based on the mass-based emissions of an air pollutant as
described under section 169 of the Act.  As we mentioned in the
proposal, because the PSD and title V statutory thresholds are expressed
on a mass basis – i.e., straight tons of a pollutant with no weighting
values applied – we were concerned from a legal standpoint that the
metric proposed (CO2e) could have the effect of subjecting to PSD or
title V requirements a source whose emissions fall below the statutory
threshold limits on a strictly mass basis, but whose CO2e-based
emissions exceed the CO2e thresholds we establish under the Tailoring
Rule.  Although we feel this hypothetical situation would rarely occur,
mainly in instances where a source emits only a non-CO2 GHG with a high
GWP value in very small amounts, we believe we are required to address
this occurrence in the final rule.

Upon review of the comments pertaining to this issue and further
analysis of the legal and programmatic implications, we are now
requiring a two-part applicability process, for both major source
applicability determinations for GHGs under PSD and title V and for
determining if significance levels have been exceeded in the PSD
applicability determinations.  While the regulation we are promulgating
today does not contain tonnage thresholds on a mass basis for GHGs, by
implementing this tailoring approach through the term "subject to
regulation" we achieve the result described above, that is that to be a
major stationary source a source must emit 100/250 tpy on a mass basis
of some regulated pollutant and for a major modification to occur there
must be an emissions increase on a mass basis.   The rule achieves this
result because all that the CO2 e based thresholds do is determine if
GHGs are "subject to regulation" at a specific source.   If GHGs are
determined to be subject to regulation at a specific source then GHGs
would be considered "regulated NSR pollutants" within the meaning of
51.166(b) (49) or 52.21(b)(50).

Assuming that GHGs are determined to be a regulated NSR pollutant, this
does not mean that PSD automatically applies.   Rather, the remaining
regulatory structure, which is unaffected by this action, would then
come into play.   This includes the definition of "major stationary
source" at 52.21 (b)(1) and 51.166(b)(1), which requires that a source
emits 100/250 tpy (on a mass basis) of a "regulated NSR pollutant"
before a source is a major stationary source.   It also includes the
definition of "major modification" at 52.21(b)(2) and 51.166(b)(2) which
requires that before a modification occurs there be a "significant net
emissions increase", also determined on a mass basis.  

By way of example, assume that a new source wanting to construct after
July 1, 2011 will have the potential to emit 10tpy of sulfur
hexafluoride (SF6) but have no other emissions.   First the source
would determine if it emitted a "regulated NSR pollutant" by using the
formula specified in 51.166(b)(48) or 51.21(b)(49) (as applicable).  
In this case by using the specified formula we would determine that the
source emits 239,000 tons of CO2e ((10 ton SF6) x 23,900 (GWP of SF6)).
  Because this exceeds the 100,000 tpy (CO2e) threshold for new sources
after July 1, 2011 specified in the regulation, GHGs would be "subject
to regulation" for this source and would constitute a "regulated NSR
pollutant."

The source, however, would not be a major stationary source, and thus
not subject to PSD.   This is because the source only emits 10 tpy
(mass basis) of a regulated NSR pollutant (GHGs) which is below the
major source threshold of 100/250 tpy (mass basis).  Both determinations
would be based on the sum-of-six GHGs.  Additional explanation of how to
implement this approach is provided in section IV.A of the preamble.

5.2.5  Comments on the Use of English versus Metric Tons for GHG Metric

Comment:

	

	We proposed that the GHG metric would be expressed in terms of English
(or short) tons, rather than metric (or long) tons.  The existing
applicability thresholds for PSD and title V are in terms of English
tons.

	Some state commenters (4238, 4239) support using English tons rather
than metric tons, but several commenters (4513, 4526, 4864, 4951, 5130,
5147, 5224, 5314, 5305, 5338, 5351, 8461, 8546) prefer metric tons for
this purpose.  Most of the latter commenters note that the GHG Mandatory
Reporting Rule is based on metric tons and believe that the Tailoring
Rule should be consistent.  Specific comments include: 

Use of the same units will avoid confusion.  (5305).

In addition to the GHG Mandatory Reporting Rule, various “cap and
trade” legislative proposals quantify GHGs in metric tons.  The 10
percent difference between short tons and metric tons will cause
significant confusion, complexity, and burden for states and sources. 
(4106 and 5040).

If the difference between the units of the Tailoring Rule and the GHG
Mandatory Reporting Rule is retained, a site that would not be subject
to the GHG Mandatory Reporting Rule could be subject to PSD, which is
not in keeping with EPA’s intent to apply the Tailoring Rule only to
“major sources.”  (4951)

The EPA should be consistent and use the same units (i.e., metric tpy
CO2e) in this rule and for all future GHG rules.  (5351)

The proposed rule is not clear as to whether it is based on English or
metric tons.  (8546)

Other state (4521, 4989, 5061), industry (4298, 4801), and military
(4747) commenters say that EPA should harmonize the applicability
thresholds established under the proposed Tailoring Rule and the GHG
Mandatory Reporting Rule to utilize the same units (i.e., either English
tons or metric tons).

An industry commenter (5922) recommends that EPA change the GHG
Mandatory Reporting Rule to require that data be collected in English
tons to promote consistency.

Response: 

Short tons are the standard unit of measure for both the PSD and title V
permitting programs and the basis for the threshold evaluation to
support this rulemaking.  Calculation inputs for PSD are typically
prepared in English units (e.g., pounds [lbs] of fuel, million British
thermal units [MMBtu’s], etc.) which is the common convention for all
PSD analyses and the units of the statutory thresholds under the Act.  

It is true that the GHG Mandatory Reporting Rule uses metric tons, but
this does not create an inconsistency between permitting programs and
the GHG Mandatory Reporting Rule because the two rules already use
different applicability approaches.  Although we originally proposed
25,000 tpy as the major source level for permitting programs, which was
similar to the threshold in the GHG Mandatory Reporting Rule, we decided
to adopt substantially higher thresholds in the final rule. 
Furthermore, even if the numbers were similar, the thresholds used for
the GHG Mandatory Reporting Rule are based on actual emissions, while
the PSD and title V programs are based on potential to emit.  Therefore,
we are less persuaded by arguments for consistency, and believe it is
more important for ease of permit program implementation to ensure that
GHG emissions calculations for PSD and title V will build on the same
set of input variables used to develop short ton-based estimates for
non-GHG pollutants.  Thus, the use of short tons should actually
facilitate the development of the GHG emission estimate.  It would
likely be more confusing to require a multi-pollutant PSD applicability
analysis to present emissions information using different units for
different pollutants, as would be the case if we required metric tons
for GHG but continue to use short tons for every other pollutant. 
Finally, we do not expect this choice to introduce additional complexity
because the conversion between short tons and metric tons is a very
simple calculation.  Therefore, based on these considerations we are
requiring that short tons be used as the basis for emission calculations
used to meet PSD and title V permitting requirements. 	

Chapter 6.  Comments on Permitting Thresholds

6.1  Comments on Administrative Burden and Sources Impacted under the
Statutory Thresholds 

	At proposal, we discussed the impacts that we projected would occur if
the PSD and title V programs were implemented for GHGs at the statutory
thresholds of 100/250 tpy.  We received many comments on these projected
impacts, which are addressed below.

Comment:

Most commenters, including industrial (3512, 3513, 3906, 4020, 4123,
4741, 4794, 4870, 4903, 5088, 5104, 5110, 6201, 8545, 16411),
agricultural (3917, 4572, 5245, 5602, 5743), state (4522), and other
(3277, 5342) commenters, agree with EPA that the immediate imposition of
the statutory major source thresholds for PSD and title V would
overwhelm both programs, to the detriment of facilities; federal, state,
and local permitting authorities; and the nation as a whole.  Some of
these commenters (4020, 4522, 4903, 5104, 6201) also believe that we
underestimated the number of sources that would be subject to these
programs at the statutory thresholds, asserting for example that many
more residential homes, commercial buildings, and retail stores than
estimated would be subject because the estimate in EPA’s Technical
Support Document (TSD) was based on actual emissions from space heating
equipment rather than PTE.  Some agricultural sector commenters (5245,
5602) provided examples of the types of small agricultural operations
(with no experience in air permitting) that would be subject at the
statutory thresholds.  

Numerous commenters believe that the statutory thresholds will become
applicable, despite the Tailoring Rule, if EPA goes forward with
regulation of stationary sources of GHGs under the Act.  These
commenters give one or more of the following reasons:

States will require time to revise their laws and regulations to reflect
the Tailoring Rule.  Thus, the statutory thresholds will apply
immediately and remain applicable during this interim period.  Some
states may choose not to conform their programs to the Tailoring Rule
thresholds.  (3720, 3953, 4019, 4095, 4515, 4524, 4691, 4864, 4866,
4903, 5058, 5084, 5113, 5123, 5143, 5168, 5181, 5276, 5343, 5714, 5800,
7935, 8015, 8459, 16411)

The Tailoring Rule is legally uncertain and thresholds may revert to the
statutory levels.  (3277, 3513, 4095, 4123, 4864, 5074, 5342, 5743,
8400)

The thresholds will return to the statutory levels after the initial
phase of tailored thresholds, development of streamlining approaches,
and EPA study.  (3917, 3953, 4572, 5056, 5186, 5245, 5602, 5743, 5789,
8521)

Three state commenters state that the additional workload and backlog
will significantly delay or jeopardize economically critical PSD
programs in their states.   (2504, 4312, 4871)

One state commenter argues that it is very likely that their permitting
programs will grind to a halt because they will not have state authority
to issue permits addressing GHGs but will be required to by federal
statute.   (4949)

One state commenter opines that their state will be in jeopardy of not
meeting its statutorily imposed time frame for the issuance of title V
and PSD permits under the proposed rule.   (5307)

The proposed rule would negatively impact their state government,
because their state constitution requires a balanced budget.   The
recession has resulted in diminished revenues and increased needs for
social services and implementing the proposed rule could further
undermine critical state programs.   (3906)

It is unacceptable that regulating GHGs under the CAA will render it
impossible for permitting authorities to meet the CAA section 165(c)
requirement to process PSD permit applications within 12 months.   EPA
must do more to lessen the impact of PSD on state agencies and
stationary sources under the proposal.   (5082)

Response:

We agree with the many commenters indicating that applying permitting
requirements to GHG sources at the statutory thresholds in the near term
would be an overwhelming administrative burden for permitting
authorities.  In this final action we address this situation through a
common sense, phased-in approach to GHG applicability that makes the
permitting process for GHG sources administratively feasible.  The legal
and policy rationale for this approach to burden in the final rule is
described in detail in section V.B. of the final preamble.

We disagree with commenters who stated we underestimated the number of
residential and/or commercial facilities that would be subject at the
statutory thresholds of 100 and 250 tpy because we based those emissions
on an ‘actuals’ basis instead of a PTE basis.  In fact, our
threshold analysis estimates for the residential and commercial sectors
(as well as all other sectors) are based on a PTE basis.  We used a
significant adjustment to reflect PTE in the residential and commercial
sectors, assuming that a residential facility operates its fuel
combustion sources only at 10 percent of capacity and commercial
facilities only at 15 percent of their capacity.  Based on these
assumptions, we adjusted residential actual emissions upward by a factor
of 10, and commercial actual emissions by a factor of 6.6 to obtain
PTE-based estimates in order to determine the number of buildings in
these sectors that would exceed a particular GHG threshold.  There is
very little information available on the capacity utilization rates of
fuel combustion equipment at different types of residential and
commercial facilities, but we believe our estimate is within a
reasonable range of what would be expected at these types of facilities.
 Information on the development of these estimates is provided in our
Technical Support Document for Greenhouse Gas Emissions Thresholds
Evaluation. 

	In this final action we have addressed the concerns raised by some of
the commenters on the time period necessary for states and local
permitting authorities to amend or revise their laws and regulations,
and the uncertain prospect of the statutory thresholds coming into
effect if the state and local permitting authorities did not have time
to make those changes.  There will be no permitting requirements for GHG
stationary sources prior to January 2, 2011 as a result of the final
reconsideration of the PSD Interpretive Memo’s interpretation of
“subject to regulation.”  After this date, based on the actions
established through this final Tailoring Rule, we are a requiring a
multi-step, phased-in approach for permitting GHGs at stationary sources
utilizing an implementation mechanism for states and local agencies that
allows them to rely on EPA’s interpretation of the “subject to
regulation” language codified under this final action.  By utilizing
this mechanism, we believe most states will be able to readily implement
the phased-in approach to GHG permitting required by this rulemaking,
which does not allow the GHG threshold levels for permitting
applicability to drop below 50,000 tpy CO2e at least until April 30,
2016.  We ask permitting authorities to confirm that they will follow
this implementation approach for their programs, and if they cannot,
then we will ask them to notify us so that we can take appropriate
follow-up action to narrow our federal approval of their programs before
GHGs become subject to regulation for PSD and title V programs on
January 2, 2011.  This will ensure that our approvals do not federally
obligate states to implement these programs for GHG until they
demonstrate that they have adequate resources to do so by undertaking
necessary programmatic, statutory, and/or regulatory changes at the
state, local or tribal level.

We have also stated in this final action that there will not be an
automatic sunset provision to the statutory threshold levels at the end
of any of the phase-in steps and a general exclusion for sources less
than 50,000 tpy CO2e will not end until such time as EPA undertakes
rulemaking action in 2016 to reflect the 5-year implementation study
results.  We believe this action provides certainty to both permitting
authorities and sources as they plan ahead to address GHG permitting
requirements.

We are confident in the legal basis for the final Tailoring Rule, which
is described in more detail in section V of the preamble to the final
rule and in our response to comments on the legal basis for the final
rule summarized in Chapter 3 of the this RTC.

6.2  Comments on the Administrative Burden and Sources Impacted under
the Proposed Thresholds

	At proposal, we estimated the administrative burden that would result
from regulation of GHGs under the PSD and title V programs at the
proposed thresholds.  We received numerous comments on these estimated
burdens and the types of sources that would be impacted, which are
addressed below.

Comment:

	Many commenters provided comments on the administrative burden that
would result from the proposed thresholds for PSD and title V major
sources and PSD significance.  Many commenters address these thresholds
generally, while some gave specific comments on one or more of the
thresholds individually. 

	One state commenter agrees with the EPA’s administrative burden
estimates.  (8803)

	Numerous state commenters (2504, 2797, 3858, 3915, 3916, 3918, 4154,
4238, 4512, 4521, 4694, 4864, 4871/5063, 4949, 4989, 5039, 5061, 5084,
5135, 5198, 5307, 5314, 5339, 5524, 7935, 19144) indicate that the
administrative burden at the proposed thresholds will be excessive, and
many of these commenters (2504, 2797, 3916, 3918, 4154, 4512, 4864,
4949, 4989, 5307, 5313, 5314, 5339, 5672, 5744) believe that EPA has
significantly underestimated these administrative burdens.  According to
some state commenters (3858, 3916, 4521, 4531), EPA also has
overestimated permitting authorities’ ability to hire and train
sufficient staff to implement GHG permitting.  These commenters state
that they do not have the staff currently, nor do they have the budget
to hire additional staff to shoulder the increased burden.  

	A number of state commenters provide estimates of the impact on their
permitting programs that would occur under the proposed thresholds:

Approximately 130 new PSD major sources and 90 new title V sources. 
(4019)

Coal-fired units, natural gas-fired units, Nos. 1-4 fuel oil units, Nos.
5-6 fuel oil units, and wood-fired units will be substantially smaller
than what has historically been subject to major source permitting. 
(4519)

Current list of approximately 150 operating permit sources would
increase by approximately 360 to a total of 510 sources, and a title V
threshold of 50,000 tons of CO2e would result in approximately 180 new
sources.  (4860)

There could be over 30 new title V permits issued in one source category
(natural gas compressors) alone.  (5061)

The number of new or modified PSD sources projected to be over the
proposed 25,000 tpy CO2e annually would be approximately 20.  The number
of new title V permits under the proposed threshold would be
approximately 165.  (19144)

The number of facilities subject to title V would increase by 45 percent
to 115 percent, adding from 66 to 163 new facilities to their current
roster of 142 title V sources, and PSD actions would increase from 3-4
per year to 70 per year.  (6681)

Thirty additional permitting FTEs would be needed for the oil and gas
industry alone for title V permits due to GHGs, with this estimate only
including permitting staff and not taking into account other agency
staff needed.  At least 150 FTEs would be needed to handle PSD
permitting with a significance level of 10,000 tpy.  (2797)

The state would need to issue new title V permits to 50 additional
facilities, which is a substantial administrative task.  (4154)

Ninety percent (283) of 314 currently permitted title V sources would
need modification and 522 of the 2,448 synthetic minor and small
permitted sources that are currently not title V sources would trigger
the major source threshold (with 48 of these needing title V permits and
the other 474 able to become synthetic minors) (4864).  The commenter
believes that there may be many other sources that currently do not have
permits that would be above the major source threshold for title V, such
as 75-115 active landfills and hundreds of inactive landfills. 
Regarding PSD permitting, the commenter estimates that, in addition to
about 6 PSD permits per year presently, a significance level of 25,000
tpy would result in 28 NSR actions for title V sources and 96 NSR
actions for synthetic minor and small permitted sources, with an unknown
number for currently unpermitted sources.

There will be 578 permit actions in the state as a result of the
Tailoring Rule and of these actions, 119 would be major stationary
source permit actions.  (4949)

There will be a doubling of PSD work and an increase of 69 percent for
title V work.  (5339)

The increase in title V permit workload should be close to EPA's
estimate of a factor of two and that an additional eight projects per
year will trigger PSD permit requirements due to GHG emissions, which
represents an increase in workload of about a factor of four.  (8747)

Title V sources in their state will increase from the current level of
685 to 942 (38 percent increase) based on PTE, and from 685 to 784 (14
percent increase) based on allowable emissions (5135/5198).  The
commenter estimates current staffing levels for operating permits would
need to increase by at least 50 percent.  The commenter also estimated a
600-638 percent increase in PSD permits per year, with current staffing
levels needed to increase at least 6-fold, adding an additional 42 FTE
employees.  

A doubling and possibly a tripling of the number of PSD permits the
state issues per year will occur.  (5528)

The number of regulated sources will increase at least two-fold and
perhaps more.  (5307)

Workload and costs will be two to three times higher than that estimated
by EPA.  (4512)

A 29 percent increase in the title V permitting workload as well as an
increase in synthetic minor permitting will occur because many of the
sources newly subject to title V and PSD will seek synthetic minor
permit limits to reduce their PTE instead of submitting a title V
application.  (3916) 

There will be at least 75 new title V sources at a threshold of
25,000 tpy CO2e and at least 15 new title V sources at 50,000 tpy CO2e.
 (5039)

	Numerous industry (3512, 3859, 3998, 4018, 4106, 4113, 4241, 4298,
4368, 4515, 4632, 4691, 4692, 4749, 4865, 4370, 4903, 5052, 5056, 5059,
5073, 5083, 5085, 5086, 5111, 5133, 5136, 5140, 5141, 5143, 5181, 5275,
5278, 5303, 5328, 5329, 5351, 5391, 5417, 5425, 5708, 5711, 5729, 5740,
5770, 5773, 5787, 6141, 7125, 7213, 8015, 8283, 8303, 8396, 8459, 8581,
8584, 16411), agricultural (8013), government agency (5367), and other
(5346, 5444) commenters also contend that EPA significantly
underestimated the administrative burden associated with the proposed
thresholds (some providing data) and/or that the administrative burden
under the proposed thresholds would still overwhelm the states and
result in significant permitting delays and uncertainty for sources. 
Many of these commenters indicate that our estimate of the number of
sources that would be subject to permitting is too low, and some add
that we have underestimated the per-permit effort required.  (More
detail on these comments is given in section 6.3 on the methodology used
in the analysis.)  Representative comments include the following:

The proposed thresholds would not make PSD requirements for GHGs
administratively feasible or cure the absurd results because EPA has
underestimated the number of affected sources.  (4749)

Even if EPA's estimates are correct these figures still represent a
significantly increased permitting burden for 	the states.  (5328, 8013)

The EPA’s underestimation means that the proposed thresholds are not
at “the level closest to the statutory levels that permitting
authorities can reasonably administer during this initial phase.” 
(4515, 4691)

The manpower demand for the GHG regulatory requirements along with the
strict state hiring practices and training requirements would slow the
permitting process, thus stifling construction and much needed
investments at a time when the economy is struggling to recover and
unemployment rates continue to rise.  (5328, 5367, 8015)

The EPA should revisit the justification for the proposed thresholds on
the basis of more detailed sector-by-sector data.  (4515, 4691)

Projects that actually improve energy efficiency could be delayed
because of the way calculations must be carried out to determine whether
a significant emissions increase will result from the project.  For
example, if there is a project that would reduce CO2 emissions overall,
but the project involves a new emissions unit (as defined in the
regulations), then the significance threshold may be exceeded based on
the potential emissions of the new unit, and the project would be
delayed due to PSD permitting.  (4241)

Although plantwide applicability limits (PALs) might be useful in some
cases, it is likely that many routine changes would still trigger permit
revision requirements.  (5143, 5417)

The proposed thresholds would cause many small and possibly closed
landfills to be newly subject to PSD requirements and would also
adversely influence potential plans by existing landfills to convert
landfill flares into landfill-gas-to-renewable-energy projects.  (5086,
5391)

The proposed thresholds and associated permitting delays will impede the
ability of the natural gas (NG) sector to build the infrastructure
necessary to support the anticipated increase in demand, which will be
particularly problematic in the rapidly-developing Appalachian region
where the coal industry is expected to be negatively impacted by GHG
regulation.  (4749, 6141)

The semiconductor manufacturing industry’s business depends upon
developing and bringing new products to market regularly and quickly,
often requiring modifications to existing factories to do so.  There
will be a tremendous risk that many of the permits would not be issued
rapidly enough to allow for these changes.  Clearly, such a situation
provides a competitive advantage to facilities located outside the U.S.
that are able to make rapid changes without delay.  (5141, 5143, 5329,
5417)

Some commenters indicate that EPA underestimated the number permits
required for specific industry sectors (often providing data), including
the oil and gas production industry (4749), the NG transmission industry
(4515, 4691, 6141), the semiconductor industry (5141, 5143, 5329, 5417),
the wood products industry (4903), the brick industry (5073), and
landfills (4368, 5086, 5391).

Response:

We agree with the many commenters that believe EPA underestimated the
permitting actions, and thus the administrative burden, associated with
the proposed thresholds.  Since the proposal, we have reevaluated our
assessment of the potential permitting actions and administrative
burdens related to the inclusion of GHG emission sources, both for the
PSD and title V programs, at the proposed thresholds and for other
options.  Based on this re-evaluation, which is described in detail in
the TSD contained in the public docket for this final rulemaking,
“Summary of Methodology and Data Used to Estimate Burden Relief and
Evaluate Resource Requirements at Alternative Greenhouse Gas (GHG)
Permitting Thresholds,” we determined a number of reasons for our
underestimate of permitting actions in the proposal and have
substantially revised our estimate of permitting actions accordingly. 
Based on these revisions, we are now finalizing significantly higher
applicability thresholds than what was in our proposal, occurring in a
multi-step phase in process.

	

We identified three main reasons for our underestimate of permitting
activity under the proposed GHG thresholds.  (Please refer to section
V.B.2 of the preamble for the final rule and the burden analysis TSD
mentioned in the previous paragraph above for further explanation of our
final burden assumptions and changes from the proposal.)  The most
significant reason for underestimation, and raised by multiple
commenters, was that we did not fully account for the number of major
modification projects at existing major sources because we did not
capture the number of existing projects that avoid major PSD review (by
either taking limits—synthetic based modifications—or by netting
out) for existing pollutants but that would not be able to avoid PSD for
GHGs (at either the 10,000 or 25,000 tpy CO2e significance levels). 
Currently we estimate the population of these types of minor
modifications at about 23,000, almost 9,000 of which we now estimate
under our revised burden analysis would be subject to major PSD review
at the proposed 25,000 CO2e PSD significance levels.  In comparison,
this is significantly higher than our original estimate of 273
modifications under PSD due to GHG emissions in the proposal.    

Second, our proposed general modification rate (2 percent of major
source population) used to estimate modifications at newly major GHG
sources does not appear to have caught the extent to which facility
level changes may quickly surpass the proposed significance levels for
CO2 (e.g., multiple changes involving combustion units can aggregate to
a 10,000 or 25,000 CO2e significance level threshold fairly quickly). 
In reassessing this modification rate, we determined that we had not
fully accounted for all PSD modifications relative to the major source
population in calculating this modification rate.  Based on this
reassessment we have revised our general modification rate to 4 percent
which is used to estimate the annual modification activity at newly
major GHG sources. 

Third, we believe our estimate of capacity utilization used for
estimating PTE-based emissions for the general manufacturing source
category (referred to as ‘unspecified stationary combustion’ in the
GHG threshold analysis TSD) and the oil and gas industry was not
accurate.  In our proposal, the range for capacity utilization for
‘unspecified stationary combustion’ varied from 70 to 90 percent
depending on manufacturing category, and for the oil and gas industry we
used 90 percent.  Based on comments received indicating that these
utilization rates are higher than what is normally achieved in
real-world conditions, particularly for smaller manufacturing type
facilities, we used a 50 percent capacity utilization rate for both of
these source categories. We believe that these assumptions better
reflect what can be deemed reasonable operation under normal conditions
for facilities in these source categories.

	

We recognize commenter concerns on the potential for serious delays in
the permitting process as a result of a possible excessive influx of
permitting actions due to newly permitting GHG emission sources at our
proposed thresholds.  One of our goals in selecting the proposed
thresholds for GHG permitting was to ensure that the PSD and title V
permitting programs were not severely disrupted to the point they were
not operating effectively and in a timely basis due to the addition of
GHG permitting requirements.  For our finalization of this rule we have
addressed these concerns through both our reassessment of the burden as
described above (and the resulting GHG applicability thresholds selected
for the final rule) and through now applying a multi-step phase-in
process.  See section IV of the preamble for the final rule for a full
explanation of the steps in the phase-in approach and the final
applicability thresholds that are to be used in each step. 

The end result of the adjustment to our burden estimates described above
 is that our estimates of PSD and title V permitting actions increased
significantly at the proposed GHG threshold levels, to a level that we
believe our proposed GHG thresholds for applicability are not consistent
with the goal of avoiding a permitting burden that would overwhelm the
capacity of permitting authorities to effectively implement their
programs.  Therefore, for this final action we are establishing a
multi-step, phase-in approach that contains significantly higher GHG
starting point threshold levels (i.e., a 100,000 tpy CO2e major source
threshold for PSD and title V and a 75,000 tpy CO2e PSD significance
level in step 2).  

In addition to establishing higher GHG applicability thresholds for step
2 of the Tailoring Rule phase-in, we have defined a step 1 to the
phase-in process that applies only to sources that currently have, or
would otherwise be subject to, PSD or title V permitting requirements
under the CAA for other non-GHG pollutants.  That is, no source under
the step 1 phase, which extends from January 2, 2011 to June 30, 2011,
would trigger permitting requirements for PSD or title V solely based on
their GHG emissions.  We believe the combined effect of the GHG
applicability triggers and the phased-in schedule for their
implementation finalized in steps 1 and 2 of the final rule will result
in an administrative and permitting burden that is manageable for both
permitting authorities and sources in this near term and that will
address concerns of commenters regarding excessive delays in permitting
due to the permitting of GHG emission sources.   

We appreciate the comments by individual states in which they describe
the increases in their workload that they anticipate.  This information
generally confirmed that our proposal underestimated the amount of
administrative burden, and proved useful to us in recalculating the
amount of the burden.  Data on a nationwide basis was the comprehensive
that was available because we did not have a full set of data from each
state, and as a result, we made the final burden estimates on a
nation-wide basis, as opposed to attempting to do so on a state-by-state
basis.

Comment:

	A number of commenters (3512, 4123, 4368, 4746, 4863, 4903, 4951, 5052,
5064, 5073, 5086, 5104, 5137, 5140, 5181, 5236, 5245, 5276, 5278, 5305,
5342, 5391, 5712, 6201, 6457, 7129, 8283, 8459, 16411) believe the
proposed 25,000 tpy CO2e threshold is too low, representing smaller
sources, rather than larger sources, which is not in keeping with
congressional intent.  Comments include the following:

A CO2 emissions rate of 25,000 tpy corresponds to a relatively small
combustion source, perhaps as low as a 4 megawatt (MW) boiler or engine.
 If BACT is applied, the corresponding NOx emission levels may be as low
as 2 tpy, far below the 100/250 tpy levels in PSD or title V.  (4746,
4863, 5064, 5276, 5305)

The proposed threshold of 25,000 tpy would still capture many small
businesses.  A California Air Resources Board (CARB) list of businesses
and other entities that have the PTE over 25,000 tpy of CO2e includes
dairies, breweries, wineries, landfills, universities, food production
plants and packing companies, water pollution control plants, paper
plants, pharmaceutical factories, military installations, irrigation
facilities, and farms, among others.  (5140, 5181, 5278, 7129)

The thresholds should be set at levels that correspond to Congressional
intent to impose regulation only on sources that are “major,” i.e.,
of a size in the range of 100/250 tpy of conventional pollutants such as
NOx, VOCs, and particulate matter.  (3512, 4746, 4863, 4903, 5086, 5276,
5305, 5342, 5391, 6457)  Some commenters add the following rationale:

This approach would obviate the need for the administrative necessity
argument since permitting authorities would not be overwhelmed.  (3512,
4746)

This approach could be used in EPA’s planned first phase to evaluate
the pros and cons of bringing GHGs into the PSD and title V programs,
and the thresholds could be changed later if necessary to capture more
sources or CO2e.  (4746)

This approach would be consistent with the doctrines of administrative
necessity and absurd results, which require EPA to remain as true to
original Congressional intent as possible.  (5276)

The D.C. Circuit, in rejecting an approach to PSD applicability under
which the heating plant of a large high school or a small community
college would be subjected to PSD, stated:  “We have no reason to
believe that Congress intended to define such obviously minor sources as
“major” for the purposes of the PSD provision.”  Alabama Power,
636 F.2d at 354.  There simply is no basis for EPA’s assertion that
small boilers and other small sources are the type of facilities that
Congress intended to be addressed through the PSD program.  This
commenter provides Congressional Record citations to support this
position.  (4903)

The threshold should be consistent with existing clean air standards,
such as NSPS and NESHAP.  (4951)

The EPA should establish appropriate sector-specific thresholds,
including much higher thresholds for landfills which will be
disproportionately impacted by the proposed thresholds.  The EPA already
has established unique, landfill-specific PSD thresholds for NMOC, and
should establish GHG thresholds for landfills that are consistent with
the current PSD thresholds and regulate a comparable portion of the
solid waste management sector.  (4368, 5086, 5305, 5391)

A 10 tpy NOx source (which is major in extreme nonattainment areas)
roughly equates to 100,000 tpy CO2e (4746).  Commenter 4903 presents
several calculations relating NOx and CO emissions to CO2e emissions
from boilers (NG and wood-fired) and lime kilns, along with the major
modification implications of these differences (i.e., that the proposed
GHG thresholds would bring much smaller sources into the system than
under the current system based on criteria pollutants).

More than 90 percent of public power systems (i.e., not-for-profit
municipal and other state and local community-owned electric utilities)
qualify as small businesses under the Small Business Act and Small
Business Regulatory Enforcement Fairness Act (SBREFA), yet approximately
88 percent of the association’s more than 2,000 members with
generation facilities will be subject to the PSD during the first phase
of the proposed rule.  (5052)

A large turkey or broiler operation could be subject to permitting at a
25,000 tpy threshold, and many medium-sized operations would be subject
at a threshold of 10,000 tpy.  (5254)

The threshold levels should be low enough to cover the vast majority of
public utility power generation sites, the medium and larger petroleum
refineries, and the medium and larger industrial sites; but high enough
to not include the many inconsequential gas compression, landfill,
petroleum drilling and production, and small power generation sites.

Response:

Based on these comments, we reassessed our original burden estimates
from our proposal.  This reassessment is discussed in our previous
response.  After all adjustments were factored in, we determined the
burdens at the proposed 25,000 threshold and the proposed 10,000-25,000
significance levels would be unmanageable.  For example, our
reassessment of PSD program burden to the permitting authorities at the
25,000 tpy CO2e major source/significance level shows an annual increase
of $217 million (this is approximately a 1,800 percent increase over
current permitting authority annual burden for the major NSR program). 
For title V, the estimated increase under our final burden analysis at a
25,000 tpy CO2e represents an approximate 100 percent increase ($64
million annually) in annual program costs to permitting authorities.  At
that level, too many sources – many more than we thought at
proposal – would be subject to high permitting costs.  

Therefore, in this final action we address this situation through a
common sense, phased-in approach to GHG applicability that makes the
permitting process for GHG sources administratively feasible.  The first
step of the phase-in approach, involving “anyway” sources, applies
key PSD and title V program requirements as soon as January 2, 2011 to
large sources of emissions, but because it applies only to sources that
are already regulated under the CAA for other pollutants, it can be
implemented efficiently and with an administrative burden that is
manageable within the first half of 2011.  Limiting step 1 to these
sources will still capture a large portion of the GHG inventory.  See
section IV of the final preamble for more detail on the implementation
process for step 1.

For step 2, we evaluated higher thresholds ranging from a 25,000 tpy
CO2e major source applicability level for PSD and title V to a 50,000,
75,000, or 100,000 tpy CO2e level, with associated PSD GHG significance
levels of equal or lesser magnitude; we selected the 100,000/75,000 tpy
CO2e level.  We believe that the sources that will become subject to PSD
and title V requirements at the 100,000/75,000 tpy CO2 levels will be
able to accommodate the additional costs of permitting.  For the most
part, these sources will be of a comparable size and activity level as
those sources that are already subject to those requirements.  These
source categories include fossil fuel-fired power plants, petroleum
refineries, cement plants, iron and steel plants, and petroleum
refineries, in addition to other large industrial type source
categories.  A full description of the type of sources that we expect
will have GHG emissions that exceed the 100,000 tpy CO2 threshold is
provided in the “Technical Support Document for Greenhouse Gas
Emissions Thresholds Evaluation” located in the public docket for this
rulemaking.

We are not acting on commenters’ requests for special thresholds for
particular industries for the same reasons that we are not acting on
requests for exemptions from permitting requirements for particular
industries, as discussed in the preamble.

6.3  Comments on the Methodology Used to Evaluate Burden

Comment:

	A number of commenters fundamentally disagree with the methodology EPA
used to develop the proposed thresholds, often stating that EPA’s
proposal was arbitrary and capricious.  These comments include the
following:

One agricultural commenter asserts that the way EPA has set the
thresholds is scientifically uncertain, based on practical concerns and
speculation rather than competent evidence; thus, they are arbitrary and
capricious.  The EPA must obtain, review, and analyze the data from the
GHG Mandatory Reporting Rule (which does not take effect for over a
year) to determine if the proposed thresholds are rational and
reasonably related to a regulatory purpose.  (5062)

One fuels sector commenter maintains that the proposed GHG emission
thresholds are not supported by an adequate analysis of the effects that
GHG emissions at the proposed threshold levels would have on the
environment; that is, the record does not demonstrate that the
substantial additional burdens and costs associated with such a rule
would be justified by the environmental benefits that might be realized
through imposition of the rule.  (5199)

Other fuels sector commenters state that EPA’s proposed thresholds are
arbitrary and capricious because there is no health and/or welfare basis
for the cut-offs.  On a global scale, U.S. sources with 25,000 tpy of
GHG emissions are just as de minimis as sources with 250 tpy of GHG
emissions.  Further, EPA has not justified why it selected a 25,000 tpy
CO2e threshold when a threshold such as 150,000 tpy level would exclude
significantly more sources from the programs while reducing emissions
coverage by only a very small percentage.  Finally, the proposal’s
assumption of a 2 percent modification rate, which underlies its
selection of the proposed significance level, is arbitrary and
capricious because it is merely assumed without reasonable explanation. 
(4870, 5058)

Industry groups make many of the same points, adding that EPA has not
provided a rational basis for selecting a 25,000 tpy major source
threshold as compared with higher thresholds, and that EPA has not
provided sufficient information on the analysis performed for the public
to meaningfully comment.  (5140, 5181, 5278)

A utility industry commenter states that the Administrator made the
Endangerment Finding based on science as required by the CAA, but no
scientific studies were cited as to why the proposed thresholds are
appropriate.  Nowhere in the Act is EPA specifically authorized to
consider the administrative implications, as was done in this case.  In
addition, EPA acknowledges that the 25,000 tpy level may not be adequate
to achieve the necessary reduction goals, and the rule will be modified
after 6 years of study to determine what the appropriate level should
be, which is an unprecedented approach for a substance that has been
found to endanger public health and welfare.  (5312)

An industry commenter is concerned that (1) EPA has performed no
analysis of the types of sources affected by the categorical exemption
created by the proposed thresholds, (2) EPA provides no analysis
indicating that sources that emit over 25,000 tpy of GHGs are more
financially able to address such emissions or that sources below such a
threshold level are less financially able to address GHG emissions, and
(3) EPA has not analyzed whether sources over 25,000 tpy are technically
capable of emission reductions and those under this limit are not
technically capable - or that certain technologies are more available at
various threshold levels.  (4095)

An industry commenter claims that it is arbitrary for EPA to choose the
higher thresholds it has proposed based almost entirely on Agency
resource constraints, without consideration of costs and impacts on
industry and the broader economy.  (3512)

An environmental group asserts that the analyses EPA used to set the
significance thresholds in the proposal violate the administrative
precedents for setting “de minimis” thresholds that were used to set
the significance thresholds for other pollutants.  (5139)

EPA has provided no authority within the statute for arbitrarily raising
the “major source” definition which is clearly, unambiguously and
plainly stated by Congress in CAA section 302(j).  (2997)

A commenter questions whether the proposed thresholds were influenced by
similar thresholds established or suggested by other federal, state,
and/or regional GHG initiatives, usually in the context of GHG reporting
rather than actual controls.  The commenter states that such other
programs should not have any bearing on the objective of this
rulemaking, which is to avoid unmanageable workload increases and
permitting gridlock.  (4515, 4691)

Response:

We disagree with commenters that the basis for the thresholds is based
merely on practical concerns and speculation rather than evidence.  We
discuss at length our basis, from both a legal and policy perspective,
for establishing the GHG thresholds, for both major sources and
significance levels, in section V of the preamble, including why we did
not use the de minimis basis for setting GHG significance levels.  We
believe through our burden analysis and consideration of different
threshold options we have collected a substantial amount of evidence to
undertake the tailoring steps outlined in this action.  We generally
considered costs to sources, and we have concluded that sources that
will be subject to our Tailoring Rule steps 1 and 2 are already subject
to PSD or title V, or are of similar size or close in size to sources
that are already subject to PSD or title V, and that as a result, those
sources can be expected to bear the costs of permitting.  We also
considered administrative burdens to permitting authorities.   Please
refer to the RIA for the final rulemaking, contained in the public
docket, for more detail on the assessment of impacts of this rulemaking.

We have also made significant improvements to the analysis from our
proposal, based in large part in response to comments received on the
proposal, and believe we have a strong technical basis for threshold
selection. However, we recognize that currently there is limited
information available on facility-level GHG emissions nationwide,
particularly on smaller sources that have not been subject to permitting
requirements for conventional pollutants, and that data obtained from
the EPA’s GHG Mandatory Reporting Rule may provide additional
information that could help inform us on decisions for threshold
development for step 3 of the phase-in period.  We will be carefully
analyzing information that results from the GHG Mandatory Reporting Rule
as it becomes available for this purpose.  

	

Regarding comments that we did not consider environmental benefits
relative to imposed burdens of the PSD and title V programs due to GHG
permitting, it is important to note that the basis of this action is to
relieve excessive and unmanageable administrative burden from permitting
authorities so that these programs can continue to function properly and
effectively, and, as appropriate, costs to sources.  There are no
environmental performance standards attached to the selection of the
applicability thresholds required by this rulemaking, and as such, there
is no cost-benefit criteria involved.  Similarly, there is no health or
welfare basis for the selection of the applicability thresholds since
the basis for the threshold selections is based on legal concepts
involving program administration, and, as appropriate, costs to sources.
 In addition, we did not consider environmental benefits in or “absurd
results” analysis.  

	

We disagree with commenters that we should have considered the costs to
reduce emissions by sources at different thresholds.  Decisions on
reasonable and available reduction strategies and controls are part of
the actual BACT review process under PSD.  The Tailoring Rule does not
impose costs related to emission reduction requirements and thus we did
not differentiate between such costs and threshold options as it relates
to developing the final GHG applicability thresholds.  We did consider
whether the sources that will become subject to PSD and title V
requirements will be able to accommodate the additional costs of
permitting, and concluded that, for the most part, these sources that
will become subject to PSD and title V at Tailoring Rule steps 1 and 2
will be of a comparable size and activity level, or close to the size
and activity level, as those sources that are already subject to PSD and
title V, and therefore can be expected to manage those costs.  We will
continue to monitor permitting costs to sources and administrative
burdens on permitting authorities in future rulemakings under the
tailoring approach.

Comment:

	Numerous industry (4298, 4515, 4567, 4691, 4749, 4870, 4903, 5052,
5086, 5110, 5111, 5133, 5140, 5181, 5278, 5417, 5711, 5740, 5773, 5787,
16411), state (3278, 3916, 4989, 5328, 5528, 8025) and other (10432)
commenters are critical of specific aspects of EPA's methodology,
asserting that the methodology and assumptions underestimated the
administrative burden associated with GHG permitting.  While these
comments typically were directed to the proposed thresholds, they could
apply more generally to the analysis at any threshold level.  The
following comments are representative of those asserting that
methodology underestimated the administrative burden:

The EPA’s estimate of 60 hours to process a new major source PSD
permit for GHGs in the commercial and residential category is extremely
low.  (4989, 5417, 5711, 8025)  

Even for PSD permits issued for criteria pollutants, it is not uncommon
for a permit to require a thousand or more hours of processing time and
synthetic minor permits to take between 300 and 500 hours.  (4989)

The commercial and residential category PSD permits may require 20
percent less technical time for review than the industrial source
category, but these sources will also draw significantly more public
comment and debate than the industrial category because they are located
where people live.  There will be no time savings when the public
participation process and local politics are factored in.  (8025)

Because state and local permitting authorities would be making the
complex determinations necessary in any PSD permitting action for GHG
sources for the first time, it is likely that there would be a
substantial increase in processing time.  (5417)

Because state and local authorities have no experience permitting
sources of GHGs (particularly BACT), it is not reasonable to assume that
the workload hours for PSD permitting of industrial GHG sources would be
comparable to that of non-GHG industrial sources.  (4515, 4691, 4749,
5328, 5417) 

Commenters 4515, 4691 and 4749 add that establishing BACT for GHGs on a
case-by-case basis is likely to be contentious and time consuming given
the lack of precedent, the keen interest, and the need to collect
supporting economic and operational data.  In addition, the initial PSD
permits for GHGs will be heavily litigated by both applicants and third
parties.  

Commenter 5417 notes that EPA recognized the difficulties and
complexities inherent in quantifying GHG emissions in the electronics
industry when it elected to postpone finalizing the electronics portion
of the GHG Mandatory Reporting Rule.  As a result, there are currently
no agreed-upon methods for quantifying emissions from semiconductor and
other electronics sources.  Forcing state and local authorities to make
these determinations in the first instance for purposes of determining
threshold questions of permit applicability and demonstrating compliance
via monitoring, recordkeeping, and reporting will add substantially more
delay to the permitting process.

Commercial and residential category title V permits will not experience
a 90 percent savings of time over industrial sources because the title V
program has certain standard time requirements (i.e., preparation of the
permit, administrative overhead, newspaper publication, etc.) that are
required regardless of the size or type of source.  Even though the
sources may be simpler, they will be in areas where more people live so
there will greater public participation and local political processes
(i.e. zoning, district disputes, etc.).  In addition, most permitting
authorities have streamlined their permitting process such that there is
no more efficiency to be gained in the system.  (8025)

The EPA incorrectly concludes that when a source triggers PSD for
conventional pollutants, no additional work would be required to cover
GHGs as well.  (5110, 5711)

There will be an increase in non-PSD permitting work and an increase in
the number and complexity of permits for criteria pollutants because:
(1) increases in criteria pollutant emissions that would not have been
subject to PSD BACT will now become subject to BACT because the source
will be major for GHGs, and (2) many BACT decisions result in a greater
use of energy to power control devices and as a result, applicants may
propose less stringent controls for criteria pollutants because of
potential GHG emissions.  (5528)

The EPA underestimated the administrative burden associated with GHG
permitting because BACT controls for criteria pollutants (e.g., an
oxidizer for VOC) may result in significant GHG emissions, triggering an
additional BACT determination.  (3278)

The EPA has not accounted for the burden of PSD review for other CAA
pollutants “subject to regulation” (such as criteria pollutants)
once a source becomes a major source due solely to GHG emissions. 
(4298, 5111, 5367, 5740)

The EPA did not account for the additional recordkeeping systems that
would be needed to record applicability analyses and determinations that
PSD is not triggered (e.g., “reasonable possibility” analyses and
recordkeeping).  (4298, 5110, 5111)

The EPA has not accounted for the costs due to delays in permitting due
to depleted state, local, and tribal resources.  (5740)

The EPA has not accounted for the burden for complying with BACT. 
(5110)

The EPA does not consider the permit fee for a PSD permit.  (10432)

The EPA does not adequately account for many previously “minor
facilities” that would become major under the rule.  (4515, 4691) 

The EPA has not considered existing “synthetic minor” sources.  Many
such sources will not be able to keep GHGs below the proposed
thresholds, and those who could do so may not be able to establish
enforceable synthetic minor limits because GHGs are not yet defined as
“pollutants” in many permitting regulations.  (5417)

Commenter 8461 inquires whether sources will have the option of
operating under a synthetic minor permit if they agree to permit
conditions that limit emissions.  (8461)

The EPA has not accounted for the significant title V burden for
sources that want to obtain synthetic minor source status to avoid PSD
(and possibly also title V) by assuming federally enforceable permit
limits on GHGs.  (3916, 5052)

The EPA's analysis omitted the impact from increased demands for
“minor source” NSR permits to restrict emissions below major
source/modification levels.  (4749, 4903)

The EPA has failed to account for sources that will be required to
consider GHGs in minor NSR permitting.  (5140, 5181, 5278, 5773)

The EPA has underestimated the rate of major modifications for GHGs
under PSD.  The EPA has provided no justification for the assumed 2
percent modification rate, and current modification rates for criteria
pollutants are an inappropriate basis for estimation.  Some commenters
provide sector-specific data.  (4515, 4567, 4691, 4749, 5052, 5133,
5140, 5181, 5278)

While few new major utility plants are expected, the demand for
electricity is predicted to grow, and thus, significant modifications
will become necessary.  (5052)

Most power plant changes will increase the efficiency of facilities to
produce power and those changes could lead to increased utilization and
increases in GHGs.  (5052)

Most industrial sources are specifically designed to ensure that current
PSD thresholds are not exceeded by using add-on control technologies,
netting, or other compliance strategies.  Since these approaches are
difficult to apply to GHG emissions and add another as yet untested
variable in the engineering design analysis, the rate at which
facilities become subject to PSD is likely to be much higher for GHGs
than for non-GHG pollutants.  (4515, 4691, 4749)

Essentially any project that directly or indirectly affects generation
would trigger PSD requirements for coal-fired electric generating units
and large industrial facilities.  For example, at an 800 MW coal-fired
electric generating unit with an 85 percent capacity factor, a 0.0035
percent increase in generation would cause a “significant” emissions
increase at the proposed level of 25,000 tpy.  (5328)

Because combustion sources are typically replaced more often than
process lines, and given EPA’s narrow interpretation of the routine
maintenance, repair, and replacement exclusion, it is likely that a
significantly higher rate of modification would apply when considering
GHG emissions.  (5140, 5181, 5278)

The Regulatory Impact Analyses (RIA) does not add any rationale or
transparency to EPA’s use of a 2 percent modification rate.  The RIA
addresses only new sources using an approach based on growth rates for
various industry sectors, which does not account for the variety and
types of modifications that routinely require permit analysis and would
easily be more frequent than the assumed growth rate.  (5140, 5181,
5278)

Indirect costs such as modification and approval of SIPs are not
covered.  (5787)

Some industry commenters (5140, 5278) provide comprehensive lists of the
component burdens that they believe EPA is required to estimate in order
to determine the burdens caused by applicability of PSD based solely on
GHG emissions: 

The number of major sources that will exist based solely on GHG
emissions.  (4870, 5140, 5181, 5278)

The number of new major sources that will be built or otherwise created
each year (e.g., through expansion), including the burdens associated
with PSD permitting for GHGs and for any other PSD pollutant the source
emits above significance levels.  (4870, 5140, 5181, 5278)

The number of major modifications that will trigger PSD based on another
pollutant but will now require BACT for significant GHG emissions
increases and the associated burden of BACT determination and
installation.  (4870, 5140, 5181, 5278)

The number of major modifications at sites that would be major only due
to GHGs, but that now will be subject to PSD review and BACT for
projects causing significant increases in criteria pollutants.  (4870,
5181) 

The number of major modifications that will trigger PSD based on GHG
emissions increases alone, including the burdens associated with
obtaining PSD permits for GHGs and for any other PSD pollutant the
source emits in significant amounts.  (4870, 5140, 5181, 5278)

The number of sources that must accept permit limits or otherwise
restrict operations to avoid triggering PSD, including the cost of
obtaining and the ongoing administrative burdens associated with these
minor NSR permits.  (4870, 5140, 5181, 5278)

The number of sources that would trigger the requirement to keep 5 or 10
years of emissions records because, although PSD is not triggered, there
is a reasonable possibility that PSD could be triggered.  (4870, 5140,
5181, 5278)

One solid waste industry commenter (5086) believes the TSD is inadequate
because it lacks applicable data on landfills and its calculations of
emissions from landfills are not transparent.  The commenter alleged the
following specific inadequacies:

Tables are missing for MSW landfills and onsite industrial landfills
showing the impact a 25,000 CO2e will have on the industry and the
number of facilities affected by the proposed rule.  

The TSD is not transparent with respect to the assumptions used by EPA
in evaluating the impacts on landfills, e.g., EPA states that landfill
covers are capable of oxidizing CH4 without qualifying the degree of
oxidation that occurs or how the Agency derived a value.  

The EPA does not provide or explain the values used in calculating the
amount of emissions assumed to be biogenic, and in addition, EPA should
explain how each of these assumptions relates to the way that these
emissions will actually be treated for GHG emissions calculations under
the PSD program.  

The only data that can be evaluated are the 2008 U.S. GHG Inventory
data; however these data were not collected by landfills and submitted
to EPA, but were calculated by the Agency from waste generation data
from other government entities that may or may not represent the
industry.  

Based on these perceived inadequacies in the TSD, the commenter believes
EPA does not have adequate data to determine the regulatory impact of
the GHG Tailoring Rule on landfills specifically or the solid waste
industry sector in general.  The commenter contends that such data must
be collected, published, and subjected to industry comment before EPA
can establish viable threshold limits for landfills.

Response:

Based on comments received from both permitting authorities and affected
sources, and our own reassessment of permitting actions created by the
addition of GHGs, we have made a number of improvements to our
permitting burden assessment to support the final rulemaking.  Please
refer to the final burden analysis TSD referenced earlier in this
Chapter for a full description of our final assessment and assumptions
for determining the burden associated with PSD and title permitting
actions due to GHGs.  

The basis for the burden analysis is administrative costs for permitting
authorities and sources, and while based on the ICR-based average costs
for permitting conventional pollutants under the PSD and title V
programs, we believe that this approach provides our best estimate of
costs associated with permitting GHGs.  We recognize, as many of the
commenters do above, that there are significant uncertainties in
predicting the costs associated with permitting GHGs, since there is no
historical record to refer to.  In reality, administrative costs may end
up being lower or higher, depending on the particular source, the
complexity of the emission units involved, the amount of public review
involved, and other variables that arise on a case-by-case basis. 
However, by using the ICR costs, we believe we included all key elements
of the administrative cost component of the permit process, which in
turn allowed us to evaluate the relative burden of different thresholds
considered for the final rule.

In response to comments that we need to account for a possible BACT GHG
review for permits that would otherwise be undergoing BACT review for
conventional pollutants, in our final burden analysis we have now added
specific line item burdens for permitting actions related to adding a
GHG component to otherwise occurring PSD and title V permitting actions
for conventional pollutants.  In our proposal we had not explicitly
associated an additional burden with these occurrences.  

	

We have also raised the per-permit burden hours for commercial and
residential sources for PSD and title V to reflect numerous comments
from permitting authorities that we had significantly underestimated the
amount of effort that would be required for these newly permitted source
categories.  Specifically, we raised the PSD per-permit hours from 60
hrs to 210 hrs for new commercial and residential sources, and for title
V we raised the per-permit hours from 43 hours to 214 hours.  We agree
with commenters that many of these sources will need significantly more
permitting authority staff time to assist them with the permit
application and preparation process because of their lack of experience
with these requirements and also to respond to public review and comment
on these permits as one of the commenter’s suggested.  The complete
description of the basis for these revisions is included in the burden
analysis TSD contained in the public docket.  EPA-HQ-OAR-2009-0517.  We
appreciate the various comments pointing out particular ways in which
our estimates at proposal were underestimated.  These comments justify
our overall conclusion about the need to raise our burden estimates.  We
believe it is appropriate to conduct the burden estimate on the basis of
nationwide average costs, based on the information in the ICRs, because
this approach affords a comprehensive assessment of costs for all
sources in all areas.

We also agree with commenters who believe our proposal estimate of
modifications did not fully address the numbers of modification projects
that may become subject to PSD review under various thresholds.  As
mentioned in a previous response, one the most significant improvements
to our burden analysis was that we developed a better assessment of the
number of existing projects that avoid major PSD review (by either
taking limits—synthetic based modifications—or by netting out) for
existing pollutants but that would not be able to avoid PSD for GHGs. 
In addition, based on our reassessment of burden for the final analysis,
we have revised our general modification rate to 4 percent to estimate
the annual modification activity at newly major GHG sources.  We
recognize this modification rate is still based on projects involving
conventional pollutants, but we believe through the applicability steps
defined for GHG permitting in this final action, large sources similar
to those undergoing permitting now will be most affected and that the 4
percent modification rate represents a reasonable estimate of the annual
occurrences of modifications.  The basis for these improvements to our
estimates of modifications is explained in the burden analysis TSD
contained in the public docket.  EPA-HQ-OAR-2009-0517.

	

We disagree with the commenters that suggest we did not include PSD
review costs for non-GHG pollutants that may become subject to PSD
review because a source becomes major solely for its GHG emissions.  The
average cost for new PSD permits that we used in our burden analysis
represents an average across permits that include different numbers and
combinations of covered pollutants.  Therefore, we believe this estimate
provides a reasonable representation of the multi-pollutant PSD reviews
that may result when a source becomes major solely for GHGs.   

We did not include a specific permit fee as part of our estimate of
source burden in estimating burden relief as part of the RIA prepared
for the final rule.   There is no regulatory requirement that sets these
fees and their use and amount varies across permitting authorities. 
Because of the inconsistency in its use, we did not have sufficient
basis to determine the incremental additional burden relief that would
come from sources that did not have to pay these fees because they would
not be subject to PSD review.    

We disagree with commenters who suggested that by basing our estimates
on the numbers of newly constructing and modifying sources with high
enough emissions to qualify as major emitting facilities, we failed to
account for the costs of sources that seek “synthetic minor” permits
to avoid PSD, and possibly title V, requirements.  In fact, our
methodology includes sources that might take such limits as newly-major
sources for their GHG emissions; therefore we count the full
administrative burden associated with a PSD permit and a title V permit
for those sources.  In effect, we assume that such sources would go
through PSD or title V permitting, rather than take “synthetic
minor” limits.  We take this approach because although we suspect that
there may, in fact, be significant synthetic minor activity, we do not
have data that would allow us to determine whether, and how many of,
these sources will be able to adopt “synthetic minor” limits or
restrict their operations to obtain minor source permitting status.  Nor
do we have data on the amount of the administrative burden that would
fall on any particular permitting authority to establish a “synthetic
minor” limit, except that we understand that the amount varies widely
across states.  As a result, we opted to include these sources in our
analysis as sources receiving a PSD or title V permit.  Therefore, to
the extent that synthetic minor activity occurs, our estimate would
already have included the burden for that activity.  In fact, our
estimate would have overestimated the burden to the extent that a
permitting authority would have less administrative costs issuing a
“synthetic minor” permit, than issuing a PSD or title V permit.

We did not, as one commenter indicated, include indirect costs to
permitting authorities such as modification and approval of SIPs. 
However, we believe that with the implementation process as revised from
proposal and as described in detail in section V.C of the preamble, that
the final process will facilitate more rapid adoption and implementation
of the Tailoring Rule by states through interpretation of language in
existing state regulations.  Therefore substantial changes to SIPs will
not likely be necessary for many permitting authorities.  Refer to the
preamble section V.C for further explanation on the implementation
process and how it will work for PSD and title V programs. 

As noted in the RIA for the final rule, and as raised by commenters on
the proposal, we did not estimate burdens for complying with BACT, such
as the costs for controls or mitigation strategies to reduce GHG
emissions.  Control costs are not part of the administrative burden to
permitting authorities which was a key consideration in the
determination of final threshold levels for applicability.  In addition,
it was not necessary to consider the relevance of BACT control costs for
sources for purposes of this rule.  We established the levels of steps 1
and 2 of this rule based on administrative burdens to permitting
authorities, coupled with a general sense that affected sources could
comply with the costs because they are generally of about the same size,
or close to the same size, as sources already subject to PSD.  Further,
if BACT control costs are relevant, then they must be considered in
establishing the appropriate level of BACT controls.  In any event, BACT
control costs are unknown at this point, as there has been no experience
in permitting GHG sources to date, and we do not have sufficient
information to determine what these costs may be based on a case-by-case
PSD review basis.   However, as the RIA states, this rulemaking does not
impose new economic impacts on any sources, but instead is a regulatory
relief for smaller GHG emission sources.  The lack information on BACT
control costs therefore actually discounts the amount of relief that is
estimated in the RIA.   

With respect to the suggestion by some commenters that we account for
the costs to sources resulting from permitting delay due, in turn, to
depleted state, local and tribal resources, we would like to clarify
that we have not attempted to quantify these costs  and in fact,, we do

not have any information about what those costs might be.   However, we
have recognized that the likelihood of long permitting delays absent
tailoring will be damaging to sources and potentially to the national
economy and this is a key reason why the “absurd results” doctrine
applies and justifies the Tailoring Rule.

With respect to  the number of sources that would trigger the
requirement to keep 5 or 10 years of emissions records because there is
a reasonable possibility that PSD could be triggered, we currently do
not have sufficient information to determine how many sources might have
a reasonable possibility to trigger PSD based on GHG permitting. 
However, as we have stated previously and in the RIA for this rule, this
rulemaking does not impose new economic impacts on any sources, but
instead is a regulatory relief for smaller GHG emission sources.

In response to the solid waste industry commenter, we have corrected the
Technical Support Document for Greenhouse Gas Emissions Thresholds
Evaluation, included in the public docket to the final rule, to include
the summary tables showing the landfill totals at the different emission
threshold levels evaluated.  The proposal contained the facility counts
for landfills in the appendix A to the original threshold study;
however, they were not summarized in the upfront portions of the TSD. 
The threshold TSD is based on the landfill emissions data that was used
in support of the EPA’s GHG Mandatory Reporting Rule and references
the applicable supporting documents from the docket for that rulemaking.

We believe the GHG Mandatory Reporting Rule dataset represents the most
comprehensive national statistics on landfill generation rates
available, and provides our best assessment of the number of landfills
that would exceed different GHG emission thresholds based on the
potential to generated CH4 emissions.  In addition, the proposed rule
solicited comments specifically on our assessment of permitting burden,
including any quantified data that could be used to better evaluate our
estimates of affected facilities.  We believe this request provided
adequate notice and opportunity for affected sectors of the economy,
including the waste sector, to provide alternative data for us to
consider.  

6.4  Comments on Recommended Thresholds

6.4.1  Comments Recommending a Non-GHG Trigger

Comment:

	Many state (3858, 4519, 4694, 8025, 8471), industry (3512, 3998, 4106,
4118, 4120, 4122, 4298, 4318, 4515, 4523, 4555, 4632, 4691, 4749, 4870,
4903, 4934, 4992, 5038, 5052, 5058, 5059, 5078, 5079, 5080, 5086, 5089,
5111, 5112, 5113, 5114, 5124, 5128, 5130, 5131, 5138, 5140, 5180, 5199,
5224, 5257, 5275, 5276, 5278, 5301, 5327, 5345, 5391 5601, 5714, 5741,
5774, 5939, 6459, 8301, 8545), and agricultural (5062, 5183) commenters
support basing PSD and title V applicability on emissions of non-GHG
pollutants, at least during the first phase of the GHG permitting
program.  Under this approach, PSD and title V applicability would be
determined as it is now, without regard to GHGs.  However, sources
subject to PSD as a result of non-GHG emissions would be subject to BACT
requirements for GHGs if their GHG emissions exceed the significance
level established in the final rule, and sources subject to title V
based on non-GHG emissions would be required to include any applicable
requirements for GHGs in their permits (although some of these
commenters argue that no PSD or title V requirements should apply to
GHGs under any circumstances).  The following are representative
comments in support of this approach:

This is a better (or only legally permissible) reading of the
Congress’s intent in the Act and is consistent with Alabama Power v.
Costle.  (4120, 4515, 4691, 4870, 4903, 4934, 5052, 5058, 5078, 5086,
5111, 5112, 5113, 5138, 5140, 5180, 5199, 5278, 5345, 5391, 5714, 5939,
8471, 8545)

EPA should define “source” for purposes of the proposed rule and the
first phase as being limited to those facilities that are or become
subject to title V or PSD requirements under the existing 100/250 tpy
for criteria pollutants.   (5183)

This would reduce the permitting workload on sources currently
considered minor and focus PSD on large sources of non-GHG pollutants as
intended by Congress.  (3998, 4515, 4691, 4749, 5391)

This approach is preferable because EPA has underestimated the number of
sources that may be subject to PSD based on GHGs (e.g., in the oil and
natural gas industry), so the proposed approach would have greater
impacts than EPA predicted.  (4749)

EPA should wait for data from the GHG Mandatory Reporting Rule and, in
the meantime, use non-GHG emissions as the trigger for PSD.  (4106,
4120)

A non-GHG trigger would provide time to study the impacts of non-CO2
GHGs and to develop specific thresholds.  (4694)

In the initial phase, this would be more straightforward to administer,
would provide a more predictable permitting workload, and would prevent
a flood of newly regulated sources from overburdening state agencies. 
(2369, 3858, 4120, 4515, 4519, 4691, 5058, 5086, 5391)

This can be used as a permanent approach to prevent an unmanageable
broadening of the scope of the PSD program and to streamline and add
clarity to the PSD and Title V permitting processes.  (4298, 5078, 5131,
5714, 5774, 8545)

This would provide permitting agencies time to develop experience
handling GHGs under the PSD and title V programs.  (4515, 4691, 5058,
5276)

This would provide EPA and the permitting agencies an opportunity to
develop streamlining techniques.  (4515, 4691, 5058)

This is an effective way to address the current uncertainty about how to
measure high-GWP gases such as SF6 (and the fact that high GWP will
magnify potential measurement errors).  (5079)

This satisfies the administrative necessity and absurd results doctrines
because the scope of the program would remain consistent with both
Congressional intent and current administrative practice, but still
allow EPA and state agencies to begin regulating GHG emissions from
existing PSD and title V sources.  (4515, 4691, 5276)

This would remove the need to invoke the doctrines of absurd results and
administrative necessity.  (4118, 4120, 4515, 4691, 5180)

This would capture most major GHG emitters without adding a large
administrative burden on permitting agencies.  (5180, 5301)

Sources already required to obtain PSD permits are best equipped to work
through BACT issues with permitting authorities.  (5180)

U.S. fuel ethanol plants should only become subject to the PSD or title
V program if the facility is also subject to that program for non-GHG
regulated pollutants.  (4555)

Some commenters (5278, 5140) note that even if EPA adopts the NAAQS
prerequisite requirement for PSD applicability, EPA would still need to
establish a significance level for GHGs to define the level of emissions
at which the requirement to apply BACT for GHGs would become applicable.
 Without a defined significance level, any increase in GHG emissions
would be subject to BACT.  The commenters believe that EPA could set a
significance level for GHGs without reference to the statutory major
source thresholds, as they would no longer be relevant because the
sources for which a GHG BACT analysis would be conducted would by
definition be “major emitting facilities” by virtue of their
emissions of a NAAQS pollutant. 

Response:

We agree with commenters who suggest that in order to effectively
address administrative necessity concerns and transitional issues
related to GHG permitting that we consider an initial step in the final
Tailoring Rule that would focus primarily on the largest sources of GHGs
that already have or would be otherwise be coming in for PSD and title V
permits for conventional pollutants.  See section V.B. of the preamble
to the final rule for a comprehensive discussion on our final legal and
policy rationale for establishing this initial phase-in step.  After
considering the increased permitting actions based on our final burden
analyses and the need for permitting authorities and sources to have
sufficient time to develop necessary expertise and staffing resources to
address that burden, we have decided in the final action to establish a
first step in the tailoring approach – referred to as “Step 1” in
the preamble - that would limit GHG applicability to only those sources
that would otherwise be coming in for PSD and title V permits for
conventional pollutants, or what we refer to in the preamble as
“anyway” sources.  No sources would become major for PSD or title V
under this step based solely on their GHG emissions alone.  A full
description and our rationale for establishing this initial phase-in
step in provided in section V of the final preamble.

	

This “anyway” source approach has particular appeal during this, the
first step of the phase-in approach because it begins to apply key PSD
and title V program requirements as soon as January 2, 2011 to large
sources of emissions.  Because it applies only to sources that are
already regulated under the CAA for other pollutants, it can be
implemented efficiently and with an administrative burden that is
manageable in the next eight months.  Under this approach, the sources
and permitting authorities will still face substantial additional work
due to the GHG emissions.

We agree with commenters that the establishment of a GHG significance
level under the PSD program – which, in effect, is a BACT review
threshold -- is appropriate for this initial step, and we have decided
to establish this level at 75,000 tpy CO2e.  At this level, the
administrative burdens will be manageable and very small increases in
GHG emissions, such as those that might result from very minor increases
in fuel consumption at a facility, will not be subject to BACT review. 
Importantly, we believe a consistent significance level between steps 1
and 2, as opposed to a lower significance level in step 1, will provide
for a smoother transition and avoid the problems that would arise if PSD
applied to modifications during step 1 that PSD would not apply to in
step 2.  

Additionally, we estimate that facilities meeting the non-GHG
applicability threshold account for approximately 65 percent of total
national stationary source GHG emissions.  

6.4.2  Comments Recommending Specific Thresholds 

	Numerous commenters suggest specific levels for the GHG thresholds, if
EPA goes ahead with regulating GHGs under the CAA.  In some cases, the
comments address the thresholds together, while other comments address a
specific threshold.  In this section, we first address comments on PSD
and title V applicability thresholds (along with PSD significance levels
where the commenters combined comments on these thresholds), then
address specific comments on PSD significance levels.  

Comments on Applicability Thresholds:

	

	We proposed major source GHG applicability thresholds of 25,000 tpy
CO2e for both the PSD and title V programs and a possible range for the
PSD GHG significance level of between 10,000 and 25,000 tpy CO2e.  We
provided our rational for these preferences in the proposal, but we also
asked for comments for alternatively higher or lower thresholds than
these levels.  Commenters recommended specific major source thresholds
for PSD and title V, including levels ranging from 25,000 tpy CO2e (as
proposed) up to 1,000,000 tpy CO2e.  A majority of the commenters
recommended major source thresholds of 100,000 tpy CO2e, including both
industry and state agency commenters.  However, several state agency
commenters recommended thresholds of 50,000 tpy CO2e.  Other commenters
recommended sector-specific thresholds.  Overall, we received many
comments recommending higher thresholds for these programs due to
increased permitting burdens, which are summarized below with our
responses.

Lower than 10,000 tpy.  

In response to EPA’s request for comments on the lower ends of the
applicability thresholds that were evaluated for the proposal (74 FR
55332), one refinery industry trade association commenter (3757, 3968),
who states general opposition to the proposed Tailoring Rule, reports
that lowering the major source threshold below 10,000 tpy CO2e would
have minimal effect on its members because even a small furnace in a
refinery has a PTE greater than 10,000 tpy, although lowering it would
ease the burden indirectly by spreading the responsibility for achieving
GHG emission cuts across a larger population of sources.  The same
commenter also states that lowering the significance level would have a
large impact on refiners, since very small projects could trigger PSD
for CO2e, while remaining very far beneath the significance level for
other criteria pollutants. The same commenter questions why thresholds
are being determined at this time since there will be more information
in about a year or so as a result of EPA’s GHG Mandatory Reporting
Rule.   

25,000 tpy.  

Citizen commenter 5455 supports EPA setting the level at 25,000 tpy
CO2e.

State commenter 5338 suggests that EPA set the level at 25,000 tpy for
both a major stationary source and as the emission rate for an emissions
increase triggering PSD.  

State commenter 8803 agrees with the thresholds proposed by EPA.

State commenter 5314 supports EPA’s proposed 25,000 tpy threshold, but
only if current PSD requirements are streamlined and only if EPA
authorizes a phase-in of implementation over period of 5 years.  If EPA
is not willing to implement a 5 year phase-in period, then this
commenter supports a significantly higher threshold.  

 One fuels sector commenter (2369) agrees that the permitting threshold
should be the same for title V and PSD permitting so as not to burden
the title V program with additional "hollow" permits and that threshold
should be no less than 25,000 tpy.

Two agricultural commenters (4572, 5168) agree with EPA that a threshold
level of 25,000 tpy for permitting would reduce the adverse impacts on
agriculture over the statutory thresholds (although they are troubled
that thresholds may revert to the statutory levels after the first phase
of the program).

An industry group, 5120, generally supports an increase to 25,000 tpy
for PSD and title V requirements.

Utility industry commenter 5078 supports a temporary applicability
threshold for PSD and title V of a minimum of 25,000 tpy CO2e, and
preferably higher, in order to avoid the overwhelming the administrative
capacity of permitting agencies, avoid delays in the issuance of permits
to all sources, and avoid the applicability to thousands or millions of
relatively small sources.

Utility industry commenter 5180 supports finalizing the applicability
threshold for title V at 25,000 tpy CO2e.  The commenter believes that
the absurd results and administrative necessity doctrines are more
compelling for title V (with over 6 million sources newly subject at the
statutory threshold) than for PSD (for which the absurdity and
administrative burden can be avoided by interpreting PSD to be triggered
only by NAAQS pollutants).  The commenter asserts that Congress clearly
did not intend for title V to be the exercise in futility that would
result from so many “hollow” permits.

A military commenter (4747) recommends that the major source threshold
for GHGs in the title V program be set at a level consistent with the
GHG Mandatory Reporting Rule, in this case, that would be 25,000 metric
tons CO2e or 27,550 short tons CO2e.

Higher, but unspecified, level

	Some state commenters (2504, 3918) believe EPA underestimated the
workload associated with the proposed thresholds and should consider
setting the thresholds at a higher level in the first phase and later
phase in the proposed levels.

	One government agency commenter (5367) suggests that EPA consider
setting the applicability thresholds at a higher level at the beginning
of the program with a schedule to phase in a 50,000 tpy CO2e (actual
emissions not potential) threshold.  The commenter suggests that setting
the early PSD and title V programs at a level that that would
correspond to the number of sources that are currently subject to title
V or PSD under the current CAA regulated air pollutant thresholds would
provide time for compliance assistance providers and permitting agencies
to gear up for an increased workload and provide time for source and
staff education.  In addition, the commenter questions basing the
permitting programs on the same applicability level as the GHG Mandatory
Reporting Rule because until the required reports are filed and analyzed
from these sources, no one knows the real impact of these levels as
applicability levels for PSD and title V.

	Industry commenters 3998, 4801, and 5041 recommend that EPA consider a
much higher limit than 25,000 tpy that is based on a more realistic
determination of the number of current and future small facilities that
will be potentially affected by any GHG regulations.  

40,000 tpy

	

	A fuels sector commenter (5705) recommends raising GHG applicability
threshold to 40,000 tpy so that the number of [PSD] permits remains
similar to the recent 280 permits.  Based on extrapolating EPA data, the
commenter believes that a 40,000 tpy threshold would still represent
66.5 percent of GHG emissions, or only 1.5 percent less than EPA's
proposed 25,000 tpy threshold.  

50,000 tpy

A few industry commenters (3720, 4298, 5800) suggest EPA consider a
step-down approach for phasing in permitting, starting at 50,000 tpy of
CO2e to reduce the workload during the first year following promulgation
and help states issue permits within required time frames.  They cite
EPA estimates that the difference in GHG emissions captured between the
25,000 and 50,000 tpy CO2e thresholds is only 3 percent, but twice as
many facilities would be permitted at 25,000 tpy, including commercial
facilities and hospitals.  (Commenter 5277 also cites these figures.) 
Also, they think the threshold could be lowered to 25,000 tpy once
streamlining techniques have been developed and implemented.

State commenters 2797, 4238, 4694, 4860, 5039, 5084, 7935 support an
initial threshold level of 50,000 tpy because it will result in a
sustainable workload.  According to these state commenters, the
technical and administrative costs would be enormous at 25,000 tpy, and
a higher threshold level would decrease the administrative burden.  Some
of these commenters add that the thresholds could be tightened in later
years if warranted.

Some industry commenters (5040, 5130, 5277, 5303, 5922) believe the
thresholds should be at least 50,000 tpy CO2e to offer regulatory
relief to smaller sources (including residential and commercial) and
reduce administrative burdens on permitting authorities.  Commenter 5277
believes that EPA must adopt a higher threshold to comport with CAA
section 160(3), which says that a purpose of PSD is to “insure that
economic growth will occur in a manner consistent with the preservation
of existing clean air resources.”  Commenter 5130 recommends that the
major source threshold (and the major modification threshold) be raised
to 50,000 metric tpy based on emissions of 40 tpy of NOx from a
well-designed boiler that achieves NOx emissions of 0.08 lbs/MMBtu heat
input.

Utility commenter 7026 recommends PSD major source and significance
thresholds for naturally-occurring GHG pollutants (CO2, N2O and CH4) of
50,000 tpy CO2e for each individual pollutant because this would only
minimally reduce the percentage of GHG emissions covered while
substantially reducing the number of affected sources and the overall
administrative burden.  (For title V, the commenter recommends a
threshold of 100,000 tpy CO2e for each of the three pollutants.) 

One manufacturing commenter (4241) prefers major source thresholds
matching the GHG Mandatory Reporting Rule, i.e., 25,000 tpy of CO2e
actual emissions in the prior calendar year, but, if the threshold must
be based on PTE, the commenter requests thresholds of 50,000 tpy CO2e.

100,000 tpy

Numerous state commenters recommend a threshold of 100,000 tpy or higher
(3858, 3915, 4019, 4512, 4519, 4521, 4866, 4989, 5336, 6681).  These
state commenters think only a small fraction of covered entities would
be lost over the proposed approach.  Some of these commenters
recommended approaches for subsequently adjusting the threshold:  

The EPA should review the threshold after 3 years to see if it should be
changed based on the information obtained under the GHG Mandatory
Reporting Rule and after reviewing state and local programs progress in
implementing the programs.  (4989 and 5336)

The EPA should raise the threshold level to 100,000 tpy CO2e for all
sources until the year 2015, and then lower it.  (4866)

An SBA commenter (4867) recommends that EPA raise the applicability
threshold to 100,000 tpy and the significance threshold to 50,000 tpy. 
The commenter also suggests that EPA consider longer phase-in periods
for these applicability and significance thresholds to apply.  Industry
commenter (4794) agrees with these SBA recommendations.

One commenter (5346) notes that increasing the threshold and
significance levels from 25,000 tpy to 100,000 tpy CO2e would do a lot
to reduce the administrative burden while achieving nearly equivalent
environmental benefits.

Utilities/utility groups (4122, 4318, 4523, 4952, 4992, 5038, 5080,
5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 5773, 6459, 8301) assert
that the major source (and significance) thresholds should be no lower
than 100,000 tpy for the following reasons:

There is no bright-line threshold level above which permitting would
become clearly un-administrable and below which it would be clearly
administrable.  

The EPA could easily have determined that raising the major-source
threshold to 100,000 tpy and the significance level above 25,000 tpy
would involve no significant impact to the environment but would avoid
burdening thousands of sources.

The EPA could have set higher thresholds and not “lose” any of the
large power plants or most of the large manufacturing facilities.  

Commenter (5317) adds that, had EPA conducted even a limited
cost-benefit analysis, it would have concluded that a 25,000-tpy
threshold (as compared to a higher threshold such as 100,000 tpy) will
impose significant costs on power companies, manufacturing industries,
and the economy yet produce no significant increased coverage in
emissions.  Based on information in the proposal preamble, a threshold
of 100,000 tpy would reduce the number of permits by two thirds while
reducing the percentage of GHGs regulated by only 4 percent.  (Other
commenters who cited these same preamble figures: 4298, 4903, 5169,
5300, 5367, 5742, 8283, 8545, 16411)

Other utility commenters (4567, 5113, 5773) who support a 100,000 tpy
threshold for the same basic reasons as the previous commenters, cite
the RIA for the GHG Mandatory Reporting Rule and conclude that the
difference between the 25,000 tpy and 100,000 tpy thresholds is
thousands of entities that combined emit only 1 percent of the
nation’s GHG emissions.  Commenter 5773 thinks the 100,000 tpy
threshold will lower the number of minor sources that will have to get
enforceable restrictions to lower their PTE.

Utility commenter 5809 believes that a threshold of 100,000 tpy will
further streamline the process.

Another utility industry commenter (4745) believes that 100,000 tpy for
new and modified sources is closer to a threshold that would remove
smaller sources from unnecessary regulatory review, but EPA should take
the time necessary to study this issue in detail.  This commenter notes
that at proposed thresholds:

Small sources of conventional pollutants would have to conduct BACT
reviews for these conventional pollutants because they are major for
GHG.

Existing minor sources such as NG peaking combustion turbines and NG
boilers in commercial buildings would be major based on PTE so that no
additional combustion sources could be installed at these sources
without GHG BACT review. 

One utility group commenter (5052) provides aggregate calculations for
the predicted effect of 100,000 tpy and 50,000 tpy for the public
utilities sector (i.e., not-for-profit municipal and other state and
local community-owned electric utilities):

100,000 tpy – total CO2 PTE not covered at this threshold would be 5
percent of 2007 emissions from public utilities and 263 facilities would
be below threshold (out of total of  more than 2,000 facilities in
sector)

50,000 tpy – total CO2 PTE not covered would be less than 2 percent of
2007 emissions and 150 facilities would be below the threshold

One industry commenter (4106) states that the major source and PSD
significance levels should be established at 100,000 metric tons per
year or higher. 

Some commenters (5145, 5224, 5886) believe that setting a threshold
level for GHGs at 100,000 tpy would do little detriment to EPA’s
objectives and would protect more entities from the burden of
regulation.

Some industry commenters (8015, 16411) recommend an initial threshold
for GHGs of at least 100,000 tpy, which would still pull in many
fossil-fuel combustion sources that would not be considered major for
any other pollutant.

One fuels sector commenter (5351) suggests that using either PTE of not
less than 100,000 metric tons CO2e or 25,000 metric tons CO2e of actual
emissions as the threshold for regulation under this rule would achieve
appropriate balance between protecting human health and the environment
and the economic health of business and industry and their ability to
sustain and grow jobs in this nation.

One commenter 4513 suggests that if EPA must use PTE, it should finalize
a threshold not less than 100,000 metric tons CO2e.  (4513)

An industry commenter (6458) recommends EPA consider alternative major
source and significance levels for different source categories, starting
at 100,000 tpy.  The commenter thinks this will significantly reduce
administrative burden with minor impact on the number of sources
covered.  The commenter does not believe these levels should be set at
the GHG Mandatory Reporting Rule levels (25,000 tpy), as PSD has
substantially more beneficial environmental impact than simply reporting
emissions.

One fuels sector commenter (5711) believes a more appropriate PSD
threshold level would be 100,000 tpy PTE for all natural gas combustion
sources, in particular for sources that use natural gas for space
heating.  The commenter gives the following reasons:

The threshold should not be influenced by pending legislation (i.e., the
Waxman-Markey bill, House of Representatives [H.R.] 2454), which is
legally irrelevant to the question of which emission level is most
consistent with the purposes of the PSD program as adjusted by the
doctrine of absurd results.  Further, the 25,000 threshold in the
pending legislation is in metric tons and based on actual emissions.

The EPA’s estimates of the difference in the number of permits and
percentage of GHG emissions covered at 100,000 tpy and 25,000 tpy fail
to establish any clear justification for setting an emissions threshold
at 25,000 tons and thereby increasing the workload of an already
overburdened program.

The proposed threshold is too restrictive for sources that burn natural
gas and in particular for commercial and residential facilities because:
(1) Use of PTE grossly overestimates the actual emissions of commercial
and residential facilities that burn gas for space heating; and (2)
Requiring residential and commercial NG users to obtain PSD and title V
permits and to apply as yet undetermined BACT will likely cause these
customers to switch to electric equipment and appliances, which will
cause an overall net increase in emissions.  A life-cycle or source
energy analysis demonstrates that it takes at least double the amount of
NG combusted at a power plant to serve the same load that can be served
by combusting natural gas directly at the customer’s site.  Emissions
of N2O, SO2, and CO2 will be even higher if the regional mix of
generation includes coal-fired power plants.

Utility commenter 7026 recommends that title V permitting be triggered
only if a new source’s emissions for CO2e from CO2, N2O, and CH4
exceed 100,000 tpy.  The commenter opposes requiring sources to submit
a title V renewal application that accounts for GHG emissions unless and
until the sources are subject to GHG emissions standards through
stationary source regulations or PSD permit conditions.  The commenter
adds that monitoring and reporting requirements are already defined in
the GHG Mandatory Reporting Rule.  The commenter adds that increasing
the threshold from 25,000 tpy to 100,000 tpy minimally reduces the
percentage of GHG emissions covered by the program, while substantially
reducing the administrative burden.  (For PSD major source and
significance thresholds, the commenter recommends a threshold of 50,000
tpy CO2e for each of the three pollutants.)

Some industry (4630, 5111, 5335, 5740) and government agency (5367)
commenters state that thresholds should be no lower than or be equal to
100,000 tpy.

Energy sector commenter 5742 suggests 100,000 tpy because EPA should not
establish the threshold and significance level at the same level as that
set by the GHG Mandatory Reporting Rule (25,000 tpy), as PSD would
involve substantially more than simply reporting emissions.

Industry commenter 5300 states that if EPA adopts a 25,000 tpy
threshold, which is roughly equivalent to only 40 tpy of NOx,
manufacturers who have worked hard to achieve and maintain non-major
source status under both the PSD and title V programs will lose their
non-major source status and become subject to the PSD provisions for
major modifications and the requirement to obtain the title V permit
they worked so hard to legitimately avoid. 

Industry commenter 5147 contends that a threshold of 100,000 tpy or
greater should be applied per emissions unit to allow for common
efficiency improvement projects to move forward without triggering PSD,
while ensuring that when significant investments are made in energy
producing equipment, there is review for BACT.

Industry commenter 4298 supports 100,000 tpy title V major source
thresholds for CO2, CH4 and N2O because the empty nature of the title V
requirement itself – in the absence of actual applicable requirements
to control GHG emissions – provides EPA with a sound argument for
avoiding the absurd, costly, and time-consuming result of a paperwork
requirement that has no corresponding environmental benefit.  The
commenter adds that there is no reason for consistency between the title
V and PSD thresholds.

One ceramics industry commenter (5077) proposes that the title V major
source applicability threshold should be set at 100,000 tons CO2e
because almost all stationary sources that emit 100,000 tons CO2e or
greater would already be subject to the title V permitting program,
thereby reducing the regulatory burden on the regulated community as
well as permitting agencies.

Industry commenter 5169 believes that a threshold of 100,000 tpy would
be in line with the intent of the PSD program in 1977 – to cover major
emitters that are financially able to bear the regulatory costs and are
collectively responsible for most of the nation’s air pollution.

100,000 to 150,000 tpy

	A utility and natural gas industry commenter (4749) recommends that EPA
increase the major source threshold to between 100,000 and 150,000 tpy
(and the PSD significance level to higher than 25,000 tpy and up to
50,000 tpy).  The commenter (4749) notes that EPA’s emission data show
that these thresholds would still cause the PSD program to apply to the
facilities responsible for the majority of GHG emissions and still
capture more facilities than are currently subject to PSD, but the
additional facilities represent a more manageable permitting workload
than at the proposed levels.

One fuels sector commenter (5056) states the proposed thresholds are too
low to successfully implement a PSD and a title V permitting program
without creating burdensome requirements on state regulatory agencies
and the regulated community.  The commenter encourages EPA to raise the
applicability threshold to between 50,000 and 100,000 tpy until the EPA
has a better understanding of the real impacts to states and the
regulated community.

150,000 tpy

	Some commenters (4691, 5059, 5181, 5199, 19139) state that the PSD and
title V emission threshold for new sources should be no less than
150,000 tpy (and the significance level for modifications should be no
less than 50,000 tpy or 75,000 tpy [19139]).  One or more of these
commenters make the following points:

These thresholds are based on the relative size of capacity upgrades
that trigger PSD under the current program and the number of affected
facilities at different thresholds in this industry sector.  

Higher alternative thresholds achieve the objective of defining
thresholds that are at a “level closest to the statutory levels that
permitting authorities can reasonably administer during this initial
phase.”  

These thresholds would include the largest sources, capture a
significant amount of the national GHG inventory, and include additional
sources not otherwise subject to PSD – while minimizing the potential
for a significant and administratively infeasible surge in PSD
permitting workload for the initial phase.  Commenter 4691 provides
calculations to support these numbers.

An additional factor for the NG industry is that EPA has announced that
it will strictly interpret source aggregation rules, which will force
more aggregation and result in higher emission counts.

Setting lower threshold levels likely will adversely impact the
maintenance and development of natural gas pipeline infrastructure,
which is inconsistent with the intent of the GHG Tailoring Rule –
lowering the total emissions of GHGs into the atmosphere.  (19139) 

A 25,000 tpy threshold would have a crippling effect on the NG industry.

	Other industry commenters (5073, 5712) contend that the threshold level
for PSD should be 150,000 tpy (with significance level between 50,000
and 100,000 tpy) to avoid regulating sources that should not be
regulated.  Commenter 5073 believes that these thresholds would include
the largest sources, capture a significant amount of the national GHG
inventory, and still likely include some additional sources not
otherwise subject to PSD, while minimizing the potential for a
significant and administratively infeasible surge in PSD permitting
workload for the initial phase.

100,000 – 250,000 tpy

	One state commenter (6183) suggests that the first level be from
100,000 to 250,000 tpy, then decreased yearly by 25,000 tpy so that the
fiscal impact of GHG regulation can be minimized.

250,000 tpy

	An electric and NG utility (5082) believes that the title V and PSD
major source level for CO2 should be set at no less than 250,000 tpy
based on the PTE for CO2 of a 250 MMBtu/hr fossil fuel-fired boiler,
which is a listed source under section 169 of the CAA as a major source
when it meets the lower PSD threshold of 100 tpy.

	An industry commenter (5077) proposes that the PSD major source
applicability threshold should be set at 250,000 tpy CO2e.  The
commenter states that most stationary sources that emit 250,000 tpy CO2e
or more would already be subject to the PSD program for criteria
pollutants, and raising the threshold to this level would reduce the
regulatory burden on industry and permitting agencies alike while at the
same time target the largest and most pertinent sources for emission
reductions through the implementation of BACT as appropriate.

	Another industry commenter (5712) recommends that the threshold start
at 250,000 tpy (150,000 tpy significance level) for the first phase,
which should be implemented over a 5-year timeframe while information is
obtained to determine whether a second phase is needed.  If the second
phase is proven to be needed, then a threshold level of 150,000 tpy
(100,000 tpy significance level) could be used.

1,000,000 tpy

	One utility group (4567) believes that a threshold level of 1 million
tpy CO2e would be the most appropriate major source threshold for GHGs. 
However, since EPA did not propose thresholds as high as this, they
support 100,000 tpy CO2e instead.

	One industry commenter (5111) believes it may be necessary during the
first phase to only apply PSD to sources that emit 1,000,000 tons of
GHGs per year.

	One state commenter (4786) requests that EPA stage thresholds in such a
way that only sources that are truly “major” trigger PSD and title V
initially, which they assert would require that EPA establish an initial
applicability threshold much higher than 25,000 tpy CO2e.  They suggest
that the first year start with a 1,000,000 tpy CO2e threshold, where
after 2 years, it could be cut in half to 500 tpy CO2e, and then after
another 2 years, could be cut again to 250,000 tpy CO2e or lower. 
(4786)

Sector-Specific Thresholds

	Some commenters suggest different thresholds for the 28 source
categories listed in section 169(1) of the CAA (which have a PSD major
source threshold of 100 tpy)  and the unlisted source categories (which
have a PSD threshold of 250 tpy):

One environmental group (5311) suggests that EPA apply the statutory 100
tpy applicability threshold to the 28 listed source categories, while
maintaining its proposed 25,000 tpy CO2e applicability threshold for all
other sources during the first phase of implementation.

Industry commenter 4801 recommends that EPA establish a PSD GHG
emissions threshold of 25,000 metric tons for the 28 listed source
categories and 60,000 metric tons for other sources because this is
consistent with the ratio of the 100/250 ton threshold established by
the CAA for the listed 28 source categories and all other sources.   

	Solid waste industry commenters (4863, 5305, 5391) note that EPA
already has established unique, landfill-specific PSD thresholds for
“municipal solid waste landfill emissions,” measured as NMOC, and
contend that EPA should establish GHG thresholds for landfills that are
consistent with the current PSD thresholds and regulate a comparable
portion of the solid waste management sector.  The commenters provide
calculations and suggest the following GHG thresholds:

A PSD major source applicability threshold of 820,000 tpy CO2e (4863,
5391) or 745,080 metric tpy CO2e (5305) to be consistent with 250 tpy
NMOC.

A PSD major modification significance threshold of 160,000 tpy CO2e
(5391) or 149,016 metric tpy CO2e (5305) to be consistent with 50 tpy
NMOC as specified in existing PSD regulations.

A title V major source threshold of 320,000 tpy CO2e to be consistent
with 100 tpy NMOC (or 160,000 tpy CO2e to be consistent with 50 tpy NMOC
based on the NSPS for MSW landfills).  (5391)

In addition, commenter 5391 contends that higher thresholds for
landfills are particularly important because of the role that landfills
can play in developing renewable energy projects from LFG, and because
it has been recognized that landfills can provide indirect GHG emission
reduction benefits.  Lower thresholds could have the effect of
discouraging existing permitted landfills from applying for permits to
convert from flare-based systems to gas-to-energy systems for fear of
triggering lengthy, burdensome, expensive, and uncertain PSD major
source or major modification review.

	Some other commenters suggest a similar approach for determining GHG
thresholds that correspond to existing thresholds: 

Use a combustion device, such as a boiler, and determine its CO2 level
when operating at the criteria pollutant major source threshold (100
tpy) for NOx.  Using this approach, a boiler operating at a level of 12
parts per million (ppm) NOx (at the high end of BACT) and fueled with
natural gas, would yield CO2 emissions of approximately 777,000 tpy.

Establish a CO2 level that would be equivalent to the title V extreme
nonattainment area major source threshold of 10 tpy.  The NOx 10 tpy
level roughly equates to about 100,000 tpy CO2.

Establish a threshold at 300,000 tpy of CO2 based on the amount of heat
input (fuel) required to emit 250 tons of NOx from natural gas turbine
systems.  If the threshold were based on comparability with SO2
emissions, the appropriate CO2 threshold would be more than 1 million
tons of CO2.  (3512)

	A glass industry commenter (4771) states that EPA should tailor the
threshold to the circumstances of each industry.  For the flat glass
industry, the commenter suggests 300,000 tpy or higher (based on
additional analysis), or alternatively that flat glass plants that use
natural gas should be excluded from GHG regulation.  The commenter
indicates that a threshold of 300,000 tpy would ensure that EPA is
targeting the large sources of CO2 and other regulated pollutants.  The
commenter recommends that EPA reevaluate the impact on the number of
sources covered at higher thresholds up to 300,000 tpy using updated,
industry specific information.

Response:

Based on numerous comments from both state and local permitting
authorities, small business representatives, and industry commenters, we
have reassessed our original burden estimates from our proposal and have
decided to finalize higher GHG permitting thresholds than the 25,000 tpy
CO2e major source threshold identified in the proposal (see response
above regarding burden reassessment at 25,000 tpy CO2e threshold).  In
section V.B of the preamble to the final rule, we discuss at length our
basis, from both a legal and policy perspective, for establishing the
GHG thresholds in the final rule, for both major sources and
significance levels.  In addition, as mentioned in response to general
comments on burden above, we describe the basis and assumptions for our
final permitting burden estimates, which ultimately informed our
decisions on GHG threshold selection, in the burden analysis TSD
contained in the public docket for the final rule (Summary of
Methodology and Data Used to Estimate Burden Relief and Evaluate
Resource Requirements at Alternative Greenhouse Gas (GHG) Permitting
Thresholds). Following are some key points from discussion relevant to
the comments above.

After step 1, which involves a non-GHG permit prerequisite (where a
major GHG threshold does not apply), we determined that a 100,000 tpy
CO2e major source threshold level, and a 75,000 tpy CO2 significance
level, produce a level of permitting activity at step 2 in the tailoring
process that is administratively feasible.  We further concluded and are
finalizing with this action that the GHG threshold for both PSD and
title V programs should be no less than 50,000 tpy CO2, at least through
to April 30, 2016 at which time a follow-up rulemaking will be finalized
to establish any further reductions or changes to the GHG permitting
thresholds.

	

Based on our final burden analysis, we have decided to set our final
step 2 thresholds at 100,000 tpy CO2e for major source applicability
under PSD and title V and at a 75,000 tpy CO2 significance level for
PSD.  Overall, we estimate that the almost 900 additional PSD permitting
actions (virtually all of which would be modifications) per year at
these levels will result in an approximately a $21 million increase
(from step 1) in states’ annual costs for running PSD programs.  In
addition, we estimate that the 1,000 additional title V permit actions
will cause the total title V burden for permitting authorities to
increase by $6 million annually from step 1.  This total increase in
permit program burdens of $27 million represents a 34 percent increase
over the $78 million in total cost of PSD and title V programs at step
1.  We consider this a substantial increase particularly because step
2’s start date of July 1, 2011 is only 6 months after step 1’s start
date of January 2, 2011.  What’s more, step 1 will entail a
substantial increase in permitting authority obligations, so that adding
the costs of step 1 and step 2 together -- $31 million – means that
permitting authorities will be required to increase their permitting
resources by approximately 42 percent between now and step 2.  In
addition to the administrative burdens we have been able to monetize, we
must be mindful that permitting authorities will incur other burdens,
including the significant support and outreach activities by permitting
staff for the many newly permitted sources.  We believe that any lower
thresholds in this timeframe, whether in the PSD and title V
applicability levels or in the significance level, would give rise to
administrative burdens that are not manageable by the permitting
authorities.  Additionally, although not a basis for our decision on the
step 2 phase-in levels, we estimate that facilities meeting the step 2
major source applicability thresholds account for approximately 67
percent of total national stationary source GHG emissions. 

Central to our decision to promulgate higher thresholds than what we
proposed is our recognition, based on comments and further analysis,
that applying PSD to GHG sources at the statutory or any other threshold
level or significance level that we considered would result in (i) a
greater number of sources, and significantly greater number of
modifications than we first estimated becoming subject to those
programs; and (ii) a greater per-permit cost than we first estimated to
the permitting authority of processing those permit actions.  A detailed
discussion of our revised estimates and reasoning for our final
threshold selections is provided in Section V of the preamble to the
final rule.  Similarly, because the administrative burdens at the
100,000/75,000 level are manageable, we do not believe that higher
threshold levels are justifiable for step 2.  Specifically, at the
100,000/100,000 level – which would entail a 100,000 tpy CO2e
significance level, rather than a 75,000 tpy CO2e level – permitting
sources would need to handle only 20 additional modifications beyond
current levels, and thus would not incur substantial additional costs.  

EPA has decided not to take final action on requests for exemptions from
applicability determinations (major source and major modification) under
title V and PSD for certain GHG emission sources, emission activities,
or types of emissions at this time.  For similar reasons, we have
decided not to take final action on requests to establish
categorical-specific applicability thresholds as requested by some of
the commenters above.  Although some commenters requested several
applicability exemptions with respect to GHGs, we have decided to
address the need for tailoring through a uniform threshold-based
approach, rather than through a collection of various specific
exclusions.  Our uniform threshold approach achieves the same
result—i.e., permitting programs that are not overwhelmed due to the
influx of GHG permitting—and does so in a way that will be simpler to
administer, covering all key GHG source categories, while achieving the
program objectives.  In establishing our thresholds, we generally took
into account the same factors – including costs to sources and
administrative burdens to sources, amount of GHG emissions from sources
– covered at various levels – as the commenters used as the basis
for their suggestions.

We recognize the concern of commenters who believe that, under our
proposed applicability threshold, a large number of ‘hollow’ permits
might be created under title V for GHG.  During step 1, permitting for
GHGs is only required if the source is otherwise subject to permitting
for its emissions of non-GHGs, meaning that those sources will be
subject to existing substantive applicable requirements for non-GHGs
(e.g., NSPS, MACT, and SIP requirements, including PSD).  Thus, there
should be no, or at least no additional, “empty permits” during 

step 1.  For step 2, it is possible that sources that become subject to
title V requirements for GHG emissions may not be subject to other
requirements, but our assessment suggests that this is very unlikely. 
We estimate that virtually all of the 550 newly-major sources in step 2
will be subject to applicable requirements under the CAA because they
are from categories that have been traditionally subject to regulations,
such as smaller industrial sources from already regulated categories,
large landfills, and oil/gas/coal production.  Even the approximately 50
newly-subject commercial sources in step 2, which we estimate to be
comprised of very large hospitals, are likely to be covered by standards
for medical waste incinerators.  In addition, we expect these sources
may well be subject to SIP requirements.  Thus we do not expect any, or
at most very few, “empty permits” during step 2. 

Comments on the Significance Level:

	We proposed a PSD significance level range for consideration and
comment of 10,000 to 25,000 tpy CO2e.  We received many comments
recommending specific significance levels, ranging from 10,000 tpy to
150,000 tpy CO2e, which are summarized below.

No level specified

	

	In response to an EPA inquiry (74 FR 55334), one refinery industry
commenter (3757, 3968) indicates that lowering the significance level
would have a very large impact through increased permitting fees,
consulting costs, and the high cost of control devices.  

One commenter (4518) does not believe that there is a clear basis for
the proposed significance level.  The commenter makes the following
points:

The EPA stated that it normally uses 20 percent of NSPS in the
establishment of a significance level, but the proposed significance
level (10,000 to 25,000 tpy) is 40-100 percent of NSPS.  

With the proposed significance level, a modification that results in a
10,000 tpy increase in GHG would trigger permitting requirements, but a
new facility that emits 10,000 tpy would not.  

Since the EPA has no health data on which to base significance levels
for GHG emissions, different options need to be weighed.  

The EPA could not set a significance level for the initial phase, so the
default significance level of 0 would apply.  

In selecting a significance level the EPA should be careful not to make
it easier for a facility to get around the permitting rules by simply
choosing a permit for a new operation rather than a modification permit.
 It is not clear if permitting agencies will have the personnel to
investigate if a new permit application is applied to a new operation or
modification of an existing one.  

There should be a modification permit option for stationary sources that
uses technology and/or best practices to reduce GHGs below the 25,000
tpy threshold. 

10,000 tpy

	One state commenter (3916) indicates that the PSD threshold should be
set at 10,000 tpy CO2e.  The commenter reasons that if the significance
level were set at 25,000 tpy, an existing source with a PTE of greater
than 25,000 tpy could add another 24,999 tpy of potential emissions
without triggering a PSD review. 

	Citizen commenter 5455 supports EPA setting the significance level for
GHGs at 10,000 tpy CO2e.

15,000 metric tpy

	An industry commenter (4801) urges EPA to establish the GHG
significance level at 15,000 metric tons because the amount of natural
gas combustion needed to achieve this level of GHG emissions would be
consistent with the established significance level of 40 tpy of NOx
emissions.

20,000 tpy

	Commenter 4526 supports a significance level of 20,000 metric tons of
CO2e per year during the 5-year phase 1 period to distinguish it from
the major source applicability threshold.  

25,000 tpy

	Some state (2792, 4238, 4239, 5338), industry (2369, 4241, 4555, 6203),
and union (5342) commenters suggest adoption of a 25,000-tpy
significance level:

The EPA could revisit this level at the 5-year review period and
establish a lower threshold if the original estimates are found to be
accurate.  (4238, 4239)

State commenter 2797 notes that this would be the same as the major
source threshold, which would avoid PSD permitting for GHGs at sources
that are major for a conventional pollutant but minor for GHGs.

State commenter 2797 indicates that a significance threshold level of
10,000 tpy is too low and would force schools and apartment buildings
that would not otherwise be considered major to be subject to major
source permitting.  

Fuels sector commenter 2369 adds that if EPA determines during the
proposed 5-year evaluation period that a 10,000 tpy significance level
is appropriate, sources should have at least 18 months advanced notice
to plan for these changes.

Industry commenter 6203 suggests 25,000 tpy to preserve jobs. 
Alternatively, if EPA sets the significance level at a lower amount, EPA
could set a much higher significance level for industries manufacturing
energy efficiency products because energy efficiency will play a
critical role in addressing climate change and reduction of GHGs.

Union commenter 5342 supports a 25,000 tpy significance level because
there is merit in maintaining consistency on the type and size of
facilities covered by the PSD and title V permit requirements.  A 25,000
tpy significance level appears more than adequate to provide effective
GHG management without creating unwieldy new permitting requirements for
many small sources.

	Other industry commenters (2371, 4020, 4112, 4632, 5079, 5124, 5133,
5180, 5236, 5277, 5300, 5303, 5345, 5347) recommend a significance level
of at least 25,000 tpy, but would prefer a higher level:

Commenter 4112 believes that the PSD significance level for GHGs should
be no lower than 25,000 tpy.

A utility group (5079) recommends a significant emissions rate of at
least 25,000 tpy and preferably higher.  The commenter included three
examples (with calculations) of situations where PSD permitting at the
25,000 tpy level could discourage energy efficiency upgrades and
investments at fossil fuel-fired power plants:

A NG combined cycle facility that undergoes a steam turbine upgrade to
improve efficiency.  Based on a pre-modification utilization rate of 50
percent, a post-modification increase in utilization of 4 percent would
trigger the 25,000 tpy CO2e threshold, while being well below the
thresholds for NOx and CO (< 3 tpy combined).  Utilization would have to
increase to over 80 percent to reach the NOx threshold.  (Utilization
may increase as a result of improved efficiency, and grid-wide GHG
emissions would be expected to go down.)  

Efficiency upgrades at a number of turbines will increase the capacity
of the units,, which will increase total fuel consumption per unit by
almost 500,000 million British Thermal Unit (Btu) per year at a constant
utilization rate but reduce GHG emissions per megawatt hour (MWh). 
Example calculations for a 200 MW turbine unit at 94 percent utilization
show an increase of over 25,000 tpy CO2e, but only 2 tpy NOx and 1.3 tpy
CO.

The California Energy Commission is considering an application to
repower a portion of an aging NG-fired plant to more-efficient combined
cycle generation, which will significantly reduce GHG emissions per MWh.
 However, with the significant increase in utilization that would likely
occur as this plant displaces generation at less efficient plants, GHG
emissions from the facility could go up very significantly (while
reducing grid-wide GHG emissions) without reaching the threshold for
NOx.

A utility industry commenter (5180) recommends a significance level of
at least 25,000 tpy, but based on the de minimis principle rather than
absurd results or administrative necessity.  (The commenter couples this
with interpreting PSD to be triggered only by an increase in emissions
of a NAAQS pollutant.)  The commenter cites the examples provided by
Commenter 5079 and the potential for such beneficial projects to be
foregone due to the uncertainty surrounding BACT for GHGs to suggest a
substantially higher significance level (e.g., 100,000 tpy).

A utility industry commenter (5345) and fuels sector commenter (5124)
believe that the significance level should be set no lower than 25,000
metric tpy.

An industry commenter (5277) believes the significance threshold should
be at least 25,000 tpy to avoid permitting gridlock that would threaten
to indefinitely delay needed business investment, and additional
analysis is required to determine whether a higher limit is necessary.

An operator of waste-to-energy facilities (2371) supports a significance
threshold of no less than 25,000 tpy in Phase I of the program, given
that the financial impact of the rule on industry has yet to be
determined, as the technology that plants triggering the PSD threshold
will have to install is not yet been specified.

An aluminum association commenter (4020) believes that, at the very
least, EPA should make the thresholds for PSD significance equivalent to
the proposed major stationary source threshold of 25,000 tpy CO2e to
help mitigate the impacts of the proposed rule.  The commenter would
prefer a higher threshold of 100,000 tpy CO2e to further relieve the
administrative burden caused by regulation of GHG under the CAA.

An industry commenter (5133) asserts that if the significance level is
less than 25,000 tpy, EPA is likely to capture thousands of additional
minor activities that the PSD program was not intended to regulate.  For
example, a lime plant that performs routine maintenance by adjusting the
burner flame could exceed a CO2 significance level of 10,000 tpy. 
Increased permitting likely to flow from a lower significance threshold
will further delay the permitting time, impose excessive costs on
industry and permitting agencies, and delay or preclude environmentally
beneficial projects.

An industry commenter (5300) believes the significance level for
triggering PSD requirements for modifications at existing major
stationary sources should be no less than 25,000 tpy because there is a
rough parity between 25,000 tpy CO2 emissions and 40 tpy NOx emissions
from natural gas-fired combustion units.

A coating industry commenter (5347) reports that a 10,000 tpy CO2e
significance level could potentially increase the number of coating
facilities impacted by 35 percent based on actual emissions.  If EPA
requires emissions be based on a facilities’ PTE, this estimate would
be higher.  Because EPA did not perform an analysis on the 15,000 tpy
CO2e or even the 20,000 tpy CO2e level, this commenter believes EPA’s
proposed range of 10,000 – 25,000 tpy CO2e is arbitrary.  The
commenter opines that EPA should set the threshold at no less than
25,000 tpy CO2e and perhaps higher and that the threshold be based on
actual emissions.  (5347)

No lower than major source threshold (no level specified)

One state commenter (4864) and one fuels sector commenter (5711) state
that EPA should set the significance level equal to the applicability
thresholds for new sources.  The fuels sector commenter (5711) believes
that no other result is legally defensible under the doctrine of absurd
results, particularly because EPA’s analysis shows that the
administrative burden for permitting a modification would be the same as
for permitting a new source, but (because existing sources have less
design and construction freedom) BACT would be expected to be less
stringent and result in less environmental benefit.  In addition, this
commenter notes that there is precedence for this approach – EPA set
the significance level for CO equal to the major source threshold.  

40,000 tpy

	A fuels sector commenter (5705) who recommends a major source threshold
of 40,000 tpy also recommends that the significance level for PSD be
raised to the same level to be consistent.  If EPA retains the 25,000
tpy major source thresholds for PSD and title V, the commenter
recommends that the significance level be 25,000 tpy as well. 

50,000 tpy

Some fuels sector commenters (4515, 4691, 5059, 5181, 5199) state that
the significance level for modifications should be no less than 50,000
tpy (and the PSD and title V emission threshold for new sources should
be no less than 150,000 tpy).  

A utility and natural gas industry commenter (4749) recommends a PSD
significance level of greater than 25,000 tpy up to 50,000 tpy (and a
major source threshold between 100,000 and 150,000 tpy). 

A utility industry commenter (5301) states that 50,000 tpy significance
threshold would be more in line with the current PSD significance
thresholds for other regulated pollutants (e.g., NOx) for natural
gas-fired RICE and combustion turbines used for electrical generation
peak shaving and natural gas transmission and storage, while lower
significance levels could potentially trigger PSD for modifications of
existing RICE and combustion turbines.  Industry commenter 5130
similarly recommends that the major modification thresholds (and the
major source threshold) be raised to 50,000 metric tpy based on
emissions of 40 tpy of NOx from a well-designed boiler that achieves NOx
emissions of 0.08 lbs/MMBtu heat input.

An electric and NG utility (5082) believes the PSD significance level
should be 50,000 tpy, based on 20 percent of the commenter’s
suggested major source level of at least 250,000 tpy.

Utility commenter 7026 recommends PSD significance (and major source)
thresholds for naturally-occurring GHG pollutants (CO2, N2O and CH4) of
50,000 tpy CO2e for each individual pollutant because this would only
minimally reduce the percentage of GHG emissions covered while
substantially reducing the number of affected sources and the overall
administrative burden.

An SBA commenter (4867) recommends that EPA raise the significance
threshold to 50,000 tpy (and the applicability threshold to 100,000
tpy).  The commenter also suggests that EPA consider longer phase-in
periods for these applicability and significance thresholds to apply. 
Industry commenter (4794) agrees with these SBA recommendations.

Industry commenters 4771 and 5922 recommend a significance level of
50,000 tpy.

Between 50,000 to 100,000 tpy

	An industry commenter (5073) says that the PSD significance level
should be 50,000 to 100,000 tpy, which (along with an major source
threshold of 150,000 tpy) would include the largest sources, capture a
significant amount of the national GHG inventory, and still likely
include some additional sources not otherwise subject to PSD, while
minimizing the potential for a significant and administratively
infeasible surge in PSD permitting workload for the initial phase.

100,000 tpy

	Several commenters (4567, 4745, 4903, 5052, 5077, 5113, 5335, 5367,
5712, 5742, 5809, 16411) assert that the PSD significance level should
be no lower than 100,000 tpy.  Their rationale included the following
points:

A utility group (4567) contends that at 25,000 tpy, challenges from
citizen groups could bring corporate maintenance programs to a halt.

Utility commenter 4745 suggests 100,000 tpy, but requests that EPA take
time to study what the appropriate level should be.

Utilities 5052 and 5113 believe the major source thresholds should be
100,000 tpy and assert that there is no policy rationale to support a
lower significance level, while a higher level will reduce the number of
facilities that must apply for a PSD permit and help to alleviate some
of the burden.  Government agency commenter 5367 similarly believes that
this higher significance level would prevent the unintended consequences
and economic burden of the rule as written.

Commenter 5052 adds that a lower significance level would achieve no
environmental benefit because there is no available retrofit BACT for
GHG modifications.

Energy sector commenter 5742 suggests 100,000 tpy because EPA should not
establish the threshold and significance level at the same level as that
set by the GHG Mandatory Reporting Rule (25,000 tpy), as PSD would
involve substantially more than simply reporting emissions.

Steel industry commenter 5712 contends that the significance level
should be 100,000 tpy (with threshold level for PSD of 150,000 tpy) to
avoid regulating sources that should not be regulated.

Ceramics industry commenter 5077 believes that selecting this
significance level would reduce the regulatory burden on industry and
permitting agencies alike while at the same time target the largest and
most pertinent sources for emission reductions. 

150,000

	An industry commenter (5712) recommends that the significance level
start at 150,000 tpy (250,000 tpy applicability threshold) for the
first phase, which should be implemented over a 5-year timeframe while
information is obtained to determine whether a second phase is needed. 
If the second phase is proven to be needed, then a significance level of
100,000 tpy (150,000 tpy applicability threshold) could be used.

Higher, but unspecified, level

State commenter 7935 recommends a PSD significance level that would not
expand the number of sources subject to PSD requirements beyond current
levels, noting that the 10,000 tpy PSD significance threshold would
cause too many administrative burdens for them.

State commenter 3278 believes the proposed thresholds would cause
conflicts with criteria pollutant BACT requirements for certain types of
sources.  For example, if a source modifies with a 50 tons VOC increase,
BACT for that VOC increase is a thermal oxidizer, resulting in a
significant increase in GHG and an additional BACT requirement.  The
commenter recommends the PSD significance level for GHGs be set higher
than 25,000 tpy or else exemptions be provided for industries using
combustion techniques for controlling regulated NSR Pollutants.

Response:

As mentioned in our responses above regarding general applicability
thresholds, our reassessment of PSD modification actions was the primary
basis for choosing a higher significance level in this final action than
was proposed.  We describe the rationale behind selecting the GHG
significance level in more detail in section V.B of the preamble to the
final rule.  As that description makes clear, in establishing the
significance levels, we generally considered the same factors that
commenters suggested.  Our final burden analysis describing the impacts
of different possible significance levels considered, and upon which our
final rationale is based, is contained in the public docket for the
final rulemaking (see Docket No. EPA-HQ-OAR-2009-0517).  As noted above,
we made a number of corrections to our estimates of modification, the
most significant being the consideration of minor modification
activities for conventional pollutants that would become major PSD
actions for GHGs.  In addition, we received numerous comments from both
permitting authorities and industry indicating that we underestimated
the burdens associated with the proposed significance level range of
10,000 to 25,000 tpy CO2e.  For this final action, we have established
the PSD GHG significance level at 75,000 tpy CO2e, for both steps 1 and
2, to avoid creating excessive and unmanageable burden on the permitting
authorities. 

6.4.3  Comments on the PTE Basis for Thresholds

	Consistent with the PSD and title V statutes and implementing
regulations, we proposed that the major source and significance
thresholds would be based on a source’s PTE for GHGs.  We received
several comments on this basis for the thresholds, which are summarized
below.

Comment:

	A number of industry (3720, 4020, 4119, 4298, 4524, 4632, 4684, 5052,
5056, 5111, 5236, 5280, 5351, 5705, 5712, 5714, 5800, 16411),
agricultural (3917, 5062, 5074, 5245), and government agency (4867,
5367) commenters express or imply concern that using PTE for determining
applicability will bring in many sources that have actual emissions well
below the thresholds.  These commenters typically prefer the use of
actual emissions, which would be consistent with the GHG Mandatory
Reporting Rule, spare thousands of smaller sources from PSD and title V
permitting, and eliminate regulatory burden for both source and
permitting authority.  Representative comments include the following:

Space heating applications in commercial buildings and other seasonal
activities may become subject to permitting based on PTE even though
actual emissions are significantly lower than the threshold.  The TSD
suggests that commercial buildings operate at 15 percent of capacity. 
(3720, 4524, 5705, 5800)

As it did for the residential and commercial sectors, EPA needs to make
an upward adjustment for industrial sectors to convert actual emissions
to PTE because combustion equipment is sized to satisfy short-term
demand due to the variability in weather and production.  (5140, 5278)

Farms use propane or natural gas-fired heaters, as well as small motors
and engines, which are often used intermittently or only during
emergencies.  Thus PTE is ill-suited for farms, and EPA should define
PTE consistent with actual emissions from normal and customary use of
equipment.  The EPA should work with USDA and livestock producers to
develop a meaning for PTE for such equipment.  (5074)

Applicability should be consistent with the GHG Mandatory Reporting
Rule.  Many sources are below the 25,000 metric ton actual emission
threshold in the GHG Mandatory Reporting Rule but over the English
ton/PTE level proposed in the Tailoring Rule, which is exacerbated by
the fact that the GHG Mandatory Reporting Rule includes GHG emissions
only from combustion units, while the proposed Tailoring Rule includes
GHGs from all emitting activities at a source.  (4632, 4684, 4867, 5052,
5236, 5245, 5351)

Sources with actual emissions below 75-90 percent of the major source
threshold should have significantly more than 1 year to submit their
significant minor applications, which would allow permitting authorities
to use their scarce resources to address the largest emitters first, and
to make sure these sources are appropriately permitted before moving on
to smaller sources.  (4298)

Response:

In section III of the preamble, we discuss the basic requirement for
using PTE in applicability determinations for both PSD and title V
programs.  Under PSD, a "major stationary source" is any source
belonging to a specified list of 28 source categories which emits or has
a PTE 100 tpy or more of any pollutant subject to regulation under the
CAA, or any other source type which emits or has the PTE such pollutants
in amounts equal to or greater than 250 tpy.  Likewise, the title v
program defines “major source” to be “any stationary facility or
source of air pollutants which directly emits, or has the PTE, one
hundred tpy or more of any air pollutant.”  Therefore, we based our
emission estimates, and thus the resultant number of affected facilities
at different GHG emissions thresholds, for all sectors (not just
residential and commercial) on a PTE basis.  The basis for the PTE
estimates is described in the Technical Support Document for Greenhouse
Gas Emissions Thresholds Evaluation contained in the public docket. 

We do agree with commenters that there may be source categories and
emission unit types, such as space heating units that only operate
seasonally, that lend themselves to consideration of redefining PTE. 
However, as we stated in the proposal, any such determinations will need
to be done through a careful review of specific source categories and
emission units, and likely through rulemaking actions.  As described in
greater detail in section V.E.1 of the preamble, we intend to assess
streamlining options, tools, and guidance, including possibly
alternative definitions of PTE for some categories, to reduce the costs
to sources and permitting authorities of GHG permitting.  The
development and implementation of these techniques will be an integral
part of our strategy during the phase-in period, and we plan to
undertake streamlining actions as quickly as possible.  Technical
information gathered during steps 1 and 2 will impact our step 3
rulemaking, which will provide an opportunity for us to use that
experience and data to begin to propose streamlining approaches that
need notice and comment rulemaking.  In addition, it may be possible for
some sources to adopt federally enforceable limits that more closely
represent their operational limits and actual emission levels, similar
to such limits taken now for minor source permitting actions related to
conventional, non-GHG pollutants.  However, these actions will need to
be developed through consultation with the applicable permitting
authority. 

6.4.4  Comments Recommending Alternative Approaches to Applicability

Comment:

	Several commenters suggested alternative approaches to applicability as
summarized below:

A utility commenter (5052) supports using the historic “synthetic
minor policy” under which it was presumed that sources with actual
emissions less than 50 percent of major source thresholds are minor
sources.  The commenter believes this policy significantly assisted
states by removing the need to permit thousands of sources.  

One state commenter (3915) recommends that EPA consider limiting GHG
applicability to a smaller group, perhaps by performing a study to
identify who the actual big polluters are and tailoring the numbers so
as to only capture the main offenders. 

State commenter 4866 recommends two alternative approaches:

A two-step approach, first looking at a source’s criteria pollutants
for the 100/250 tpy threshold.  Only if a source is considered major for
criteria pollutants would GHG emissions be reviewed for PSD/title V
applicability.

A two-tiered approach based on a source’s GHG emissions.  Sources that
fall under the 40 CFR 98.2(a)(1) of the GHG Mandatory Reporting Rule
Requirements would trigger PSD with 25,000 tons of CO2e and all other
source categories would trigger PSD with 100,000 tons of CO2e.   

State commenter 3278 recommends the inclusion of additional tiers of
applicability, with different emission levels for establishing a title V
major source and a PSD major source.  

A utility and natural gas industry commenter (4749) suggests that EPA
consider a phased implementation that would apply to new sources
initially and address existing sources later, which would allow
permitting authorities to ramp up resources and allow time to develop
and provide to states guidance on GHG PSD for existing sources.  The
commenter (4749) points out that this approach has been used in EPA’s
regulatory process for section 316(b) of the CWA.

Several commenters (4208, 4228, 4514, 4525, 5144, 5706, 6202, 6270,
6460) recommend that EPA separate criteria pollutant (and other non-GHG
pollutants) applicability under PSD from applicability for GHGs, such
that exceeding the threshold for GHGs would not trigger PSD for criteria
pollutants.  The commenters suggest that the same approach could be
applied to title V, whereby GHG emissions alone would not cause a
facility to be a regulated entity under title V.

State commenters 4864 and 5339 suggest that EPA treat GHGs similarly to
112(r) pollutants and not require title V permits solely based on GHG
emissions.  [Section 112(r) establishes the program to prevent
accidental release of hazardous substances, under which EPA has created
the list of substances subject to the program (i.e., “section 112(r)
pollutants”).]

Industry commenter 5147 suggests that EPA set the significance level
based on the emissions per unit of power or steam produced, not based on
a pure tons per year level.  This is appropriate for GHG emissions
because the overall goal is to reduce emissions per unit of power or
steam generated.  If EPA adopts this approach, there would be a level
playing field for all utilities and industrial sources creating
incentives to produce power on the lowest CO2 basis.

Industry commenter 5340 urges EPA to allow offset credits submitted by a
facility to be counted in determining the GHG emissions of a source for
purposes of the PSD and title V programs.  Under this approach, new
facilities will be able to obtain and submit offset credits to avoid
triggering the PSD and title V applicability thresholds.  In addition,
existing facilities will be able to submit offset credits to avoid
triggering the PSD significance level when undergoing a modification,
i.e., by applying the reductions represented by the offset credits
against emissions associated with the modification.

Some semiconductor industry commenters (5141, 5143) opine that different
triggering thresholds should be established for combustion gas GHG
emissions and non-combustion gas GHG emissions, especially for the PFCs
emitted in small volumes as part of a dynamically evolving toolset and
process configuration.  The commenters do not suggest specific
thresholds.

Response:

We agree with commenters who suggested alternatives on the general basis
of a phased approach, initially causing only the largest sources of GHG
emissions to become subject to PSD and title V permitting requirements,
because it would be more successfully implemented.  We recognized that,
on the basis of these programs being administratively feasible to
implement, a phased approach that results in a manageable number of
permitting actions was necessary.  Therefore, as part of this final
action we have adopted a 2-step approach for the initial phases of the
tailoring process as described earlier in this RTC and at greater length
in section V of the final preamble for the rule.  We believe this 2-step
process addresses many of the concerns raised by commenters regarding
perceived permitting burdens and at the same time includes program
coverage of the largest GHG emitting sources. 

We do agree with the commenter that suggests there may be opportunities
to establish minor source permits for GHG emission sources, and nothing
in this rulemaking precludes consideration and application of existing
minor source permitting process.   However, we believe more research
will be necessary on the type of emission units and processes resulting
in GHG emissions, and how they operate over a wide range of utilization
patterns at a variety of source categories, before permitting
authorities will be able to establish procedures and rules for
developing minor source permit limitations.  

Many of the specific alternatives for applicability determinations
mentioned by commenters, however, are not viable options from both a
legal or programmatic standpoint.  For example, sources that would be
required to apply for title V permits solely as a result of being
subject to requirements under section 112(r) are not required to apply
for such permits because CAA section 112(r)(F)(7) contains an explicit
exemption from title V applicability for such sources.  There is no
comparable exclusion in the Act for GHG sources from title V
applicability.  Alternatives that differentiate applicability by source
category type, either based on the GHG Mandatory Reporting Rule or other
criteria, were not considered consistent with the objective of
establishing uniform applicability criteria based on the legal concepts
of administrative necessity and absurd results as described in section V
of the final rule preamble.  We also disagree with a suggested
alternative that only affects new sources initially, since this would in
effect exclude GHG review of any PSD actions, such as modification
activity, at existing sources and any revisions to existing title V
permits based on GHG-related requirements.  The concepts of applying
offset credits from unrelated or offsite projects, and the use of
emission indices instead of straight tonnage amounts for applicability
determinations, are currently not allowed under the PSD regulations and
were not considered as a means to address administrative necessity
concerns under this rulemaking.  

6.4.5  Comments on the Proposed Phasing of the Thresholds

	We proposed the Tailoring Rule as a phased program to bring GHGs into
the PSD and title V permitting programs.  The higher thresholds for GHGs
discussed above are the first phase of our tailoring program.  We also
committed to evaluate the effectiveness of this first phase and take
other steps to improve the administrability of the permitting programs
for GHGs within 5 years from the effective date of the final Tailoring
Rule.  Finally, we proposed to promulgate within 6 years a follow-up
rulemaking that will establish a second phase of the tailoring program,
i.e., either to confirm the continued use of the GHG permitting
thresholds implemented in the first phase, or promulgate alternative GHG
permitting thresholds or other streamlining techniques.  We received
some comments on our proposed phasing of the thresholds, which are
addressed below.

Comment:

	A number of state (4238, 4239, 8025, 8803), industry (2371, 4950, 5052,
5280, 5712), environmental (5139, 5306, 5448), and union (5342)
commenters give at least qualified support to EPA’s proposal to phase
in GHG regulation by subjecting the only largest sources to regulation
in the initial phase.  Examples of specific comments on EPA’s proposed
phasing in of the proposed thresholds include the following:

Some state commenters (4238, 4239, 8025, 8803) support EPA’s approach
to provide a first phase of five years with a sixth year to complete
additional rulemaking.  

One of the state commenters (8025) adds that 3 years is too short a
period as it may take regulatory or legislative action to accomplish any
streamlining efforts and that would not be enough time to determine
whether the rule has provided any benefit – it may be that
streamlining will produce nothing new, and it would be irresponsible at
that point to continue on toward the statutory thresholds. 

State commenters 4238, 4239, and 8025 do not support the alternative
option of a “step down” approach in which thresholds are reduced in
regular predetermined step-down levels, because this is an uncertain and
potentially arbitrary exercise.

A union commenter (5342) supports the intent and purpose of EPA’s
proposal to evaluate the effectiveness of the PSD Tailoring Rule over a
5-year period, and will then make recommendations for potential changes
to applicability thresholds.

One industry commenter opines that EPA will need time to implement its
proposed streamlining approaches and that 3 years would not allow EPA
sufficient time to do that.  The commenter states that, even if EPA
finalizes higher GHG title V and PSD applicability thresholds than
proposed, EPA will still have a difficult time to complete all of the
activities required for the implementation and evaluation of the initial
phase of the GHG program within 5 years.  (5280)

One environmental group (5306) supports the phased approach on the basis
of “administrative necessity” because it will allow EPA to begin
regulating the largest sources of GHGs quickly, while collecting more
information about smaller sources, as well as more fully considering
streamlining options for subsequent phases.

Two environmental group commenters (5139, 5448) support EPA’s stated
intent to ensure that NSR is fully-implemented immediately for the
largest polluters in order to maximize pollution reductions.

One fuels sector commenter (5711) supports a phased-in approach, but not
if it leads to imposing the statutory 100/250 tpy thresholds – or
thresholds lower than 25,000 tpy – on residential and commercial
natural gas customers.  The commenter states that phase 2 should still
use higher thresholds for residential and commercial customers,
depending on results of the streamlining tools developed in phase 1.

One fuels sector commenter (2369) supports the 5-year time frame, but
suggests that to avoid overburdening regulatory agencies and sources
during the 5-year evaluation period, permitting should be required only
for those sources that would be required to permit without consideration
of GHG emissions.

An operator of waste-to-energy facilities (2371) supports the phased
approach, given that the financial impact of the rule on industry has
yet to be determined because the technology that plants triggering the
PSD threshold will have to install is not yet been specified.  This
commenter adds that EPA will be able to adjust the PSD significance
threshold, as needed, based on more accurate information such as the
results of Phase I, and the results of other GHG control regulations and
legislation.

One industry commenter (4950) agrees that only large emitters should
have to meet the permitting requirements in the initial phase, but is
concerned about the impact the cost of large emitters’ compliance will
have on downstream end users, such as the retail industry.

An industry commenter (5712) states that only currently regulated PSD
facilities should be regulated at first to maintain the current status
quo.  Other larger facilities should be considered after 5 years at
lower triggers and only after everything is validated related to the
need to regulate.

An industry commenter (5052) believes that the history of the CAA
demonstrates a phasing of regulations by pollutants and by industry,
which is consistent with the approach that EPA has proposed for GHGs. 
The commenter presents an extensive history of air pollution laws in the
U.S. from 1955 forward and of the implementation of ozone depleting
substances (ODS) controls to illustrate that air pollution control has
always been incremental and pragmatic.

	An environmental group commenter (5139) (who supports the intent to
implement NSR immediately for the larges sources) states that EPA has
failed to demonstrate that 6 years are necessary to study and implement
NSR for sources emitting less than 25,000 tpy.  The commenter states
that while EPA discusses predictions of the effect of implementing
individual streamlining measures and maintains that none of them alone
would be sufficient to overcome the claimed administrative logjam, EPA
never analyzes why it cannot administer the permitting programs as
required if all of its proposals are implemented simultaneously.  The
commenter makes the following points in support of this position: 

Under title V of the Act, major facilities are not required to submit
title V permits until 1 year after they become subject to the
permitting program.  The EPA’s analysis is flawed because it has not
analyzed what combined effect the full implementation of its
streamlining proposals during that period would have to reduce the cost,
complexity, and number of title V permits that would have to be
submitted at that time.  

The issue of BACT for GHGs has been in the forefront of EPA
consideration since the Massachusetts v. EPA decision (i.e., since April
2007), and EPA has made considerable progress on this issue aided by
thousands of public comments.  While the definition and application of
BACT for GHGs will be significantly refined and expanded in coming years
(as is the case for all other air pollutants as well), EPA is incorrect
to claim that insufficient information exists to at least estimate costs
and streamlining efficiencies of BACT and/or general permitting
requirements.  

The EPA suggests that calculations of GHG emissions from commercial and
residential sources should be based on actual usage rather than their
PTE, but EPA’s argument that it should be allowed to redefine PTE as
“actually emitting” is not justified because the permits themselves
could be streamlined by including legally and practically enforceable
general limits on operational parameters.  But regardless of whether
streamlining occurs through general rulemaking or a simplified permit
process, EPA fails to explain why the cost and time savings that could
be achieved if such measures were adopted and combined with other
streamlining procedures cannot work together so that NSR for GHGs can be
implemented for all sources as required by law.  The commenter asserts
that EPA should not adopt a 6-year time frame for sources below
25,000 tpy, but rather should move as expeditiously as possible to
fully implement the NSR program to achieve all available pollution
reductions as the statute and common sense require.

	A state commenter (4521) recommends that EPA to delay GHG permitting
until there is accurate monitoring and reporting data available.  The
commenter believes that states should be given additional time (at least
1 year after March 2011, but more appropriately, 3 years for which there
is ample precedent) to assess the reporting data and plan for any
additional permitting needs.

	One commenter (4518) states that the basis of the 5 year period is
unclear – it is not clear if all operating permits expire after 5
years and then need to be renewed, or if permits are simply reviewed
every 5 years.  The commenter believes that if permits expire after 5
years, and then undergo a speedy renewal process, then a 5-year period
for the first phase is sufficient since all operating permits will
either be newly issued or renewed within the period.  However, the
commenter is concerned that many permitting agencies have delays in
their permitting process and that permitting agencies would need to hire
a significant number of permit engineers in order to meet the permitting
requirements, which could take up to 2 years.

	The commenter (4518) also believes that EPA should explain what kind of
oversight will be ongoing within the initial phase.  The commenter notes
that EPA may need to work closely with permitting agencies to monitor
the permit process within each permitting agency to determine compliance
with standard procedures as established by the EPA, and funding will be
an important issue, particularly within the initial phase of the
process.  The EPA has indicated a willingness to assist permitting
agencies with the establishment of e-permitting applications and other
means of streamlining the permit application process, which the
commenter believes should prove useful.  Although facilities will have
to supply information on estimates of GHG emissions for renewal of
permits, the commenter contends that it is not clear if the rules for
calculating estimates will change, or if there will be less deviation
allowed for these estimates.  The commenter believes that this could
prove to be a critical point regarding the significance level, and for
new facilities and modifications that result in GHG emissions that are
close to the threshold.

Response:

We agree with commenters who support the phased-in approach of the GHG
Tailoring Rule.  Our final action reflects a multi-step process that we
believe will create a manageable workload for the increase in permitting
actions that will occur due to the regulation of GHG emission sources
under the PSD and title V programs.  In our final action we do not
include any automatic reversion to the statutory thresholds for GHGs;
instead, we have established the initial steps of a multi-step phase-in
of lower applicability thresholds with a commitment for further
regulatory activity and review for any lower GHG threshold adoption.  We
believe this process will provide substantial opportunity for permitting
authorities and sources to establish enough experience and information,
and to provide significant real-world feedback to EPA, so as to better
inform decisions on future phase-in steps.  For complete discussion of
the legal and policy rationale behind our phased-in approach, including
the basis for the chosen thresholds and time periods under steps 1 and 2
and the need for further study on the implications of adding smaller GHG
sources, please refer to section V.B of the preamble.

	We disagree with the one commenter that does not believe that our
proposed five-year evaluation study is necessary to evaluate
implementation issues for smaller sources.  We believe, as we did at
proposal, that this time is necessary to adequately examine the
permitting authorities’ progress in implementing the PSD and title V
programs for GHG sources as well as EPA’s and the permitting
authorities’ progress in developing streamlining methods.  As we
discussed in the proposal, and reiterate in this final action, we do not
have sufficient information at this time to determine the applicability,
effectiveness and legal viability of the various permitting streamlining
techniques proposed.  For reasons discussed in more detail in
section V.E.1 of the final preamble regarding streamlining, we are not
now able to determine how such techniques will be implemented or whether
they will prove viable or effective.  We agree with the commenter that
these measures may reduce the scope, cost, and complexity of these
programs, but there is considerable uncertainty as to the extent of this
effect.  EPA will first need to collect and analyze small source data
that we do not currently have – because these are sources that EPA has
not traditionally regulated – in order to assess which of these
techniques are viable or effective for such sources.  In general, EPA
will then need to conduct notice-and-comment rulemaking to establish the
approaches, and that rulemaking will need to address various legal and
policy aspects of these approaches.  After that, the permitting
authorities will need some time to adopt the streamlining techniques as
part of their permitting programs. Throughout this entire phase-in
process, EPA will be interacting with permitting authorities to obtain
feedback on the real-world implementation. 

	As we proposed, we are establishing in the final rule an enforceable
commitment to act within 5 years to complete a study projecting the
administrative burdens that remain for small sources after permitting
authorities have had time to secure resources, hire and train staff, and
gain experience with GHG permitting for new types of sources and
technologies, and after EPA has had time to develop (and states have had
time to adopt) streamlining measures to reduce the permitting burden for
such sources.  We will use this study to serve as the basis for an
additional rulemaking that would take further action to address small
sources.  And to clarify for the commenter that suggested that the 5
year study period is linked somehow to the operating permit expiration
and renewal process, we did not consider the operating permit cycle as a
basis for the 5 year study period.  



Chapter 7.  Comments on the Economic Impacts of the Proposed Rule

7.1  Economic/Societal Impacts and the Regulatory Impacts Analysis of
the Rule

	

	Section IX of the proposal preamble (74 FR 55337, October 27, 2009)
presents EPA’s assessment of the economic impacts of the proposed
rule, including the expected benefits and costs of the proposed rule on
affected entities.  At proposal, we concluded that the proposed rule
lifts, for a period of 6 years, the burden to obtain a title V operating
permit required by the CAA for smaller sources of GHGs and the burden of
PSD requirements for smaller new or modifying sources of GHGs.  We also
concluded that, for larger GHG sources, there are no direct economic
burdens or costs as a result of the proposed rule, because requirements
to obtain a title V operating permit or to adhere to PSD requirements of
the CAA are already mandated by the CAA and by existing rules and are
not imposed as a result of the proposal.

	At proposal, we conducted an RIA that provided the details of the
benefits of regulatory relief that smaller GHG sources will experience
in terms of costs avoided as a result of the proposal and the potential
for social costs in terms of foregone environmental benefits during this
6-year period.  We concluded that the proposal would provide relief to
small entities (as defined by industry category for stationary sources
by the SBA definition).  

	We also assessed the social costs of the proposal.  The social costs
represent the foregone environmental benefits that would occur if
regulatory relief were offered to small sources of GHG emission sources,
as proposed.  These benefits are those attributed to title V and PSD
permitting programs in general.  We acknowledged at proposal that it was
not possible at the time to quantify these social costs, but stated that
the universe of possible emissions that would be regulated by sources
excluded under the Tailoring Rule is small compared to those that would
remain subject to title V and PSD permitting.  We also expressed our
interest in continuing to use regulatory and non-regulatory tools for
reducing emissions from smaller GHG sources because we believe that
these tools will likely result in more efficient and cost-effective
regulation than would case-by-case permitting.

	Comments received on the economic and societal impacts of the proposed
rule and our RIA are presented in this subsection.

Comment:

Several commenters (2504, 2797, 3278, 3512, 3607, 3741, 3858, 3859,
3860, 3906, 3915, 3916, 3998, 4020, 4021,4106, 4122, 4123, 4123, 4154,
4209, 4210, 4238, 4241, 4318, 4512, 4519, 4521, 4522, 4523, 4555, 4574,
4632, 4667, 4745, 4747, 4749, 4770, 4771, 5169, 4794, 4859, 4862, 4864,
4865, 4866, 4867, 4868, 4871/5063/5605, 4903, 4949, 4950, 4952, 4953,
4989, 4991, 4992, 5005, 5038, 5045, 5056, 5059, 5073, 5080, 5082, 5083,
5089, 5104, 5110, 5114, 5128, 5135, 5136, 5140, 5141, 5142, 5143, 5148,
5179, 5184, 5198, 5215, 5224, 5236, 5243, 5245, 5257, 5258, 5276, 5277,
5278, 5279, 5280, 5304, 5307, 5315, 5317, 5327, 5328, 5329, 5336, 5337,
5339, 5340, 5343, 5344, 5346, 5347, 5351, 5367, 5392, 5411, 5417, 5444,
5449, 5451, 5452, 5453, 5454, 5504, 5525, 5573, 5601, 5602, 5603, 5605,
5606, 5607, 5708, 5712, 5713, 5729, 5741, 5743, 5767, 5769, 5771, 5784,
5785, 5787, 5789, 5803, 5808, 5844, 5884, 5885, 5922, 6141, 6201, 6203,
6359, 6491 7125, 7127, 7128, 7130, 7131, 7132, 7133, 7134, 7136, 7192,
7203, 7204, 7212, 7294, 7295, 7295, 7935, 7961, 7986, 7993, 8015, 8071,
8089, 8212, 8272, 8300, 8301, 8303, 8322, 8396, 8400, 8401, 8405, 8521,
8533, 8581, 8584, 8585, 8803, 10432, 14710, 15050, 15051, 16411) express
concern about the economic impacts of the proposed rule on industry and
the overall U.S. economy/society (including costs passed on to the
general public).  These commenters state that EPA’s effort to regulate
GHG emissions will impose too great a burden on businesses in America,
given the status of our economy (especially if regulated under the CAA).
 Specific impacts listed by commenters include added costs (including
increased energy costs) and permitting delays that hamper the business
sector’s ability to create jobs, grow, and modify, thus delaying
recovery from the recession.  Several commenters believe that jobs will
be lost.  Other commenters express concern that businesses will be
forced to relocate overseas (causing leakage of jobs and emissions),
which would ultimately negatively affect the environment because they
would be relocating to countries that do not have the restrictions and
requirements found in the United States.  Some commenters contend that
the proposed rule will not deliver regulatory relief to small entities
as intended as sources will still be subject to state laws and minor
NSR. 

Several of these commenters express concern over the proposed rule’s
impact on industry and the economy as a whole.  A sample of
representative comments is presented in the following bullets:

The commercial/industrial community may not remain economically viable
if it must absorb another costly and complex layer of environmental
regulation, especially in this period of economic hardship when many
firms are barely holding on.  Jobs could be lost and local economies
could suffer.  (5351, 5573, 5767, 7128)  Regulation of GHGs is an
unfunded mandate that will cause prices to rise by approximately 17
percent for U.S. firms, making U.S. goods uncompetitive and costing
jobs.  (5712)

The requirements would slow down or stop many proposed new businesses or
the expansion of existing ones and impose a heavy, costly blanket of
regulation at this particularly ill-chosen time.  The inability for
industries to increase production by adding more equipment in a short
time would hinder their ability to meet customer needs and would stifle
productivity and true job growth.  (3860, 4770, 5712, 5713, 5789) 
Economic growth will be stifled because of the delay associated with:

Permitting for sources/modifications that previously were not subject to
PSD (up to 12 to 18 months).  (4241, 5329)

The backlog of permits at state agencies overwhelmed by the increased
permitting load.  (4770, 5343, 5524, 5573, 5672, 5713, 5744, 5884) 
Alternatively, the government will have to expand, throwing our country
further into debt.  (5573)

Litigation over permits.  (7131)

Regulation of GHGs puts U.S. businesses at an economic disadvantage with
no demonstrated environmental benefit.  (3915, 4521, 4667, 4864,
4871/5063/5605, 5179, 5789, 7986)  Controlling GHGs in the manner
proposed by EPA may have some beneficial effects on air quality, but
will have little to no measurable effects on climate, and great
detrimental effects on the economy and our standard of living.  (5307)

Regulating GHG emissions will increase energy costs (especially natural
gas), hurting all industry sectors.  (5179, 5607, 5729, 6491)

Companies will be forced to redirect resources – that could have been
used for growth and investment – for regulatory compliance efforts. 
Additionally, these regulations will result in production cuts, reduced
consumer spending, increased unemployment, higher energy costs, and
ultimately a much slower economy.  (5789)

Changing the emissions standards is an expensive proposition for
businesses.  This is a time of extreme economic uncertainty and many
companies cannot afford to alter their internal systems or make costly
operational modifications in order to comply with drastic rule changes. 
(4209)

Many facilities below the 25,000 tpy threshold will nevertheless be
affected, as sources over the Tailoring Rule‘s thresholds and
significance levels will likely pass their compliance costs through to
end users through increased prices.  For many end users, increased
costs, including energy costs, could be the difference between staying
in business and closing up shop.  (4950, 5110, 7128)  The proposed
regulation will cost American consumers a staggering amount of money. 
(5136)

Title V permitting entails significant costs and paperwork but does
little, if anything, to reduce CO2 and GHG emissions.  (3915, 4521,
4632, 4864, 4871/5063/5605, 7986)

Uncertainty is a significant impediment to economic recovery right now,
and the proposed GHG rule only adds to this sense of uncertainty. 
(4123, 5884)  The rule will certainly be challenged in court, adding to
uncertainty around business expansion.  (5713)

The proposed PSD/title V GHG Tailoring Rule would result in economic
disruption and subject regulated industries to significant business
investment and legal compliance risks.  (4106)

Regulation of GHGs under the CAA will discourage projects meant to
improve efficiency or otherwise make current businesses more
environmentally-friendly.  (4667, 5344, 16411)

Even if new green jobs are created, they would be more than offset by
job losses in the traditional energy sector and across all existing
sectors.  (3860, 5729)

Several commenters (0331, 3953, 4512, 4632, 4749, 4771, 4786,
4871/5063/5605, 5038, 5073, 5142, 5245, 5411, 5602, 5743, 5785, 5922,
6141, 7295) express concerns regarding the economic impact that they
believe the proposed Tailoring Rule would have on specific
industries/affected entities.  Representative comments are presented in
the following bullets:

Agricultural sector:  

Permitting costs, “citizen suits,” and the uncertainty associated
with the proposed rule are very concerning.  Many local economies rely
heavily on the livestock industry.  (4632, 5245, 5602, 5743)

Some agricultural commenters (3953, 4512, 5602) include the following
footnote to their concerns regarding the burden their industry would
face if title V fees were imposed on emissions of GHGs from livestock: 
“Section 424 of the FY 2010 Interior-Environment Appropriations Act
prohibits the expenditure of funds to promulgate or implement any
regulation requiring title V permits based on biological processes from
livestock.  Thus, for at least FY 2010, livestock producers will not be
required to obtain title V permits based on emissions from livestock.”

Oil and gas industry:  The industry and associated jobs will move
overseas where emission restrictions are significantly less stringent or
do not exist, therefore resulting in a net increase in global GHG
emissions and an increase in our country’s dependence on foreign oil. 
(4871/5063/5605)

Refining, production, and energy industry as a whole:  The proposed rule
would have a major impact on energy supply, fuel prices, and energy
security for the entire country.  (7295)  It will increase the
country’s reliance on imported energy.  (5607)

Natural gas industry:  The demand for natural gas is expected to
increase due to GHG regulations, and the natural gas industry will need
to significantly expand its transmission infrastructure, especially in
the Appalachian region.  The proposed PSD provisions would affect the
construction and modification of interstate natural gas pipelines and
supporting facilities, and the title V provisions would affect a number
of existing natural gas pipeline facilities and potentially affect the
smaller facilities associated with the well heads and gathering
pipelines.  Permitting delays and uncertainty could worsen an already
ailing economy in the region, which will be facing major negative
economic impacts from the expected effect of GHG regulation on the coal
industry in Appalachia.  In addition, permitting delays may discourage
the use of larger compressor stations in favor of smaller ones, with the
result that the economies of aggregation would be lost and a far larger
environmental footprint and greater GHG emissions would result.  (4749,
6141)

Rural electric cooperatives:  Because they are not-for-profit,
cooperatives will be forced to pass along all costs of meeting any new
requirements to their consumer-owners.  Such increased costs for
electric power, particularly in rural areas served by cooperatives, have
negative impacts on economic development and jobs.  (4122, 4318, 4523,
4992, 5038, 5080, 5089, 5114, 5128, 5327, 5601, 5741, 6459, 8301) 
Because cooperatives have a disproportionate amount of fossil-fuel fired
generation when compared to the electric utility industry as a whole,
these negative impacts could be disproportionately higher for rural
electric cooperatives and their consumer-owners.  (5038)

Ethanol industry:  The 25,000 tpy GHG emissions threshold would force
every commercial-scale ethanol plant in Iowa to obtain a title V permit,
adding economic and regulatory burden to ethanol producers following one
of the most challenging periods in the 30-year history of the modern
ethanol industry.  Because of their low emissions of conventional
pollutants, the vast majority of today’s ethanol plants qualify for a
synthetic minor source permit, not the more burdensome title V permit. 
(5142)

Rubber and tire manufacturing industry:  Growth will be stifled, which
is contrary to the intent of the statute.  The tire manufacturing
industry is a trade sensitive industry, and the cost (direct
transactional costs, the cost of delay, the regulatory uncertainty and
its affect on the company’s ability to raise capital, and the cost of
BACT) would increase at U.S. plants relative to foreign competitors in
the global rubber manufacturing industry.  Such competitive disadvantage
would move production from the United States to other countries which
have less stringent GHG controls, resulting in carbon “leakage” such
that total global emissions will increase.  (5922)

Flat glass industry:  The industry already employs many methods to
increase fuel burning efficiency and optimize the use of scrap glass
which helps to reduce the GHG emissions from the glass melting furnace
(4771).  Increased costs at U.S. plants (as listed in the previous
bullet) will result in carbon leakage and an increase in net global GHG
emissions.  (4771, 5169)  

Semiconductor manufacturing:  The United States will lose jobs in this
sector, and become more dependent on non-U.S. semiconductor suppliers
for the chips that are the ‘building blocks" of the electronics
industry.  These chips help enable new and greener technologies and
support the creation of green technology and green energy jobs.  (5411) 
The industry must be able to predict potential regulatory requirements
in order to effectively design future processes and controls (which are
developed over a 10-year period or longer) to meet its regulatory
obligations and remain a leader in the highly competitive semiconductor
industry.  The proposed regulation of GHGs would be potentially
devastating to U.S. operations due to the inherent delay and regulatory
uncertainty and the reversal of years of planning and extensive
resources devoted to managing regulatory obligations.  (5417)

Brick manufacturing:  An expensive and lengthy major NSR permitting
process will further damage the industry’s potential to recover during
these difficult economic times.  (5073)

Commercial real estate sector:  The Tailoring Rule will affect property
values and operating costs.  (5785)

Homebuilding sector:  The cost to homebuilders of raw materials,
commodities (such as concrete and glass), and energy will increase
substantially because the industries that supply the housing industry
will be subject to these CAA permitting obligations.  (4794, 5104, 6201,
6203)  One of the commenters (5104) provides several pages explaining
the impact of the proposed rule on the ability of individuals to afford
to buy homes and the impact on home energy costs.  The commenter
estimates that between 337,000 and 1.57 million households would be
priced out of the home buying market, and an increase in energy costs of
from about $200 a year to about $1,200 a year.

California’s transformation of the electric generator system to
greater reliance on renewable generation:  The federal permit gridlock
that could result from the proposed rule has the potential to interfere
with California’s transformation, which could retard, rather than
facilitate, reductions in GHG emissions from the electricity sector. 
(4786)

Low-income households:  Higher energy prices fall disproportionately on
low-income households since they spend a larger percentage of their
income on energy. (5789)

Several commenters express concern about the “leakage” of jobs and
GHG emissions to outside the United States, resulting in a net increase
in GHG emissions (4667, 4771, 4859, 4871/5063/5605, 5082, 5169, 5224,
5302, 5337, 5922, 7134, 8089, 8303, 8581, 10432).  As set out in the
bullets above, this concern was specifically noted for the oil and gas
industry (4871/5063/5605), the tire manufacturing industry (5922), and
the flat glass industry (4771, 5169).  One commenter (5337) opines that
the implications of leakage are complex and reach beyond the immediate
economic harm to the regulating country, and that such leakage also
presents a threat to international trade relations and to international
agreements on limiting GHGs.  The commenter cites an interagency report
(The Effects of H.R. 2454 on International Competitiveness and Emission
Leakage in Energy-Intensive Trade-Exposed Industries (December 2, 2009))
which was completed as part of the consideration of proposed cap and
trade legislation, and notes that it identifies which industrial sectors
are most vulnerable to leakage.  The commenter suggests that this report
provides a workable and well supported list of industries that should be
exempted from PSD regulation of GHGs, which should be supplemented with
an “individual showing” process for additional sectors to qualify
for a leakage-protecting exemption.  This commenter strongly encourages
EPA to exempt the entire industrial sector from GHG regulation under
PSD.  Another commenter (5169) provides a figure illustrating a detailed
rebate system included in the Waxman-Markey and Boxer-Kerry bills to
prevent leakage for energy-intensive industries (Waxman-Markey; S. 1733,
Boxer-Kerry).

Several state commenters address the economic impacts of the rule.  All
of these state commenters are concerned over the increased costs that
would result to their states.  (2797, 3858, 3916, 4154, 4238, 4521,
4786, 4989, 4871/5063/5605, 5135, 5148, 5198, 5339, 7935, 8803) 
According to state commenters, at a time when state budgets are being
cut and fee revenue is down, agencies are laying off staff, implementing
furloughs, reducing salaries, enacting hiring freezes, and taking other
cost-reducing measures, the ability to increase staff and obtain
additional resources simply does not exist and will not exist for the
foreseeable future.  (4989, 5135, 5198, 19144)

Several other commenters (5179, 5258, 5346, 7961) express concern that
the proposed Tailoring Rule will have an adverse affect on a specific
state’s economy (sometimes disproportionately to other states).  One
commenter (5258) states that the proposed changes will severely affect
the manufacturing industry, specifically in New Hampshire.  Similarly,
another commenter (7961) is concerned that Kansas, which is fuel
intensive and reliant on agriculture and its complements, would find
itself disproportionately harmed by the proposed GHG regulations.  Three
commenters (5140, 5179, 5278) address potential effects on Texas.  An
industry group representing refining, petroleum, and electric generation
industries in Texas (5278) indicates that if GHGs are addressed in the
permit-by-permit manner EPA proposes in the Tailoring Rule, these
industries, and Texas industry overall, will be disproportionately
affected because of Texas’ status as a major energy and chemical
producer.  Another commenter (5179) notes regulation of GHG emissions
under the CAA would significantly harm the Texas chemical industry and
Texas manufacturing as a whole.  The commenter asserts that chemicals
are the number one export from Texas with over $30 billion annually and
are the top Texas manufacturing sector, and account for 60 percent of
the U.S. chemical production.  A third commenter (5140) indicates that
it would not be economically viable to spend the approximately $4.6
billion necessary to permit newly subject sources pursuant to regulation
under the CAA in Texas.  The group feels that to the extent that
industry does not leave the state to avoid permitting costs, the costs
of regulation may be passed on to consumers in the form of increased
energy costs.  The commenter estimates that, in Texas alone, increased
energy costs will result in a loss of $12 to $16.6 billion in Gross
State Product (GSP) per year by 2020 and $44.3 to $52.2 billion by 2030.
 [Texas Advisory Panel on Federal Environmental Regulations, Comments on
the Environmental Protection Agency’s Proposed Endangerment and Cause
or Contribute Findings for Greenhouse Gases under Section 202(a) of the
Clean Air Act (June 23, 2009) at p. 21] 

Several commenters (5124, 5140, 5181, 5191, 5278, 6609) assert that
EPA’s proposed rule offers no relief to regulated entities obligated
to comply with state law and minor NSR permitting requirements. 
Implementation-related comments from these commenters and other 

commenters, and EPA’s response to implementation-related concerns,
are presented in Chapter 8 of this document.  

Many commenters (2371, 3512, 3858, 4095, 4106, 4122, 4298, 4318, 4319,
4521, 4522, 4523, 4684, 4745, 4747, 4770, 4862, 4865,8545, 4952, 4992,
5038, 5062, 5063/5605, 5073, 5080, 5082, 5083, 5085, 5086, 5089, 5110,
5111, 5114, 5124, 5128, 5133, 5137, 5139, 5140, 5141, 5143, 5179, 5181,
5183, 5224, 5257, 5277, 5278, 5279, 5280, 5317, 5327, 5337, 5339, 5342,
5343, 5347, 5367, 5390, 5417, 5601, 5718, 5741, 5773, 5787, 5858, 5886,
6459, 8015, 8283, 8301, 8400, 8459, 10432) believe that EPA’s RIA
understates the impact of the proposed rule or that EPA’s analysis is
insufficient or flawed.  Comments on specific aspects of EPA’s
methodology for estimating the burden of the proposed rule are addressed
in section 6.3 of this document.  Examples of the broader comments on
the RIA are presented below.

Numerous commenters contend (2371, 3858, 4095, 4106, 4122, 4318, 4521,
4522, 4523, 4745, 4770, 4862, 4870, 4952, 4992, 5038, 5062, 5063/5605,
5073, 5080, 5082, 5083, 5085, 5089, 5110, 5114, 5140, 5128, 5133, 5137,
5143, 5179, 5181, 5257, 5277, 5278, 5317, 5324, 5327, 5337, 5342, 5343,
5367, 5390, 5601, 5741, 5787, 5886, 6459, 8283, 8301, 8459, 8545) that
EPA has not fulfilled its requirement to fully evaluate the impacts of
regulating GHGs under the CAA, which necessitates a full RIA of the
burden on regulated entities (and state permitting authorities), and an
opportunity for the public to comment on such analysis.  The commenters
believe that the proposed rule fails to provide a comprehensive analysis
of the regulatory burdens created by PSD and title V for GHGs in that
the RIA solely focuses on the avoided permitting costs for sources of
GHG emissions when compared to statutory thresholds and does not
evaluate the newly imposed costs for sources above the proposed
thresholds and significance levels.  In addition, they assert that the
RIA is inadequate because it contains no assessment of the policy or
economic consequences of regulating the remaining sources under PSD and
title V.  Representative comments enlarging on this theme are summarized
below:

The RIA is incorrect in stating that “larger sources” of GHGs will
not be economically impacted because requirements to obtain a title V
operating permit or to adhere to PSD requirements are already mandated
by existing rules and are not imposed as a result of this proposed
rulemaking.  (5083, 5110)  The EPA's assertion that larger sources will
not experience an impact stands in contrast to its statement in the
section 202 proposed rule that the regulatory impacts of the PSD and
title V obligations would be addressed in the Proposed Tailoring Rule. 
(5083)

The EPA has provided no assessment of the implications of its actions
for large stationary sources, such as power plants and manufacturing
facilities, or for the nation’s economy.  Such an impact analysis is
required because EPA could have chosen not to regulate GHGs at all. 
(2371, 3858, 4095, 4122, 4318, 4521, 4522, 4523, 4745, 4862, 4870, 4952,
4992, 5038, 5080, 5082, 5085, 5089, 5110, 5114, 5128, 5137, 5179, 5181,
5257, 5277, 5317, 5327, 5337, 5342, 5343, 5601, 5741, 6459, 8301, 8545) 
This violates section 307(d) of the Act and the APA.  (4870, 5181) 
Because EPA did not analyze these impacts for the LDVR, it must do so
under the Tailoring Rule.  (5181)

The EPA has failed to satisfy its obligations under the CAA and
administrative law to assess and solicit comment on the full range of
impacts of its proposed regulation of GHG emissions under the CAA.  This
is more than a procedural flaw in EPA’s rulemaking process – it is a
failure to assess the true impacts of its actions and to consider less
burdensome and costly alternatives to regulating GHGs under the CAA. 
(4122, 4318, 4522, 4523, 4952, 4992, 5038, 5080, 5089, 5114, 5128, 5257,
5317, 5327, 5601, 5741, 6459, 8301)  The EPA must not regulate in an
arbitrary way, something it does when it fails to “consider all of the
relevant factors and demonstrate a reasonable connection between the
facts on the record and the resulting policy choice.”  Small Refiner
Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 519 (D.C. Cir. 1983)
(quoting Sierra Club v. Costle, 647 F.2d 298, 323 (D.C. Cir. 1981)). 
The EPA’s assessment of the impacts of regulating GHGs under the CAA
is so clearly deficient that there is no question that it is arbitrary
under the CAA and basic principles of administrative law.  (5317)

A comprehensive RIA is needed to determine the economic impact on
mid-sized and small businesses with process emissions that would
otherwise avoid the PSD program.  (5083, 5133, 5143, 5367)

The EPA has failed to assess costs and benefits associated with
“leakage” of jobs and GHGs emissions.  (5337, 8459)

EPA’s analysis must address individual industrial sectors that would
be impacted by regulation of GHGs under the CAA.  (5143)

The analysis should include the impact of applying minor NSR to GHGs. 
As written, SIP-approved minor NSR programs will be affected by the
proposed regulation.  While, as EPA states in the proposal, it is true
that the CAA does not require minor NSR programs to address non-NAAQS
pollutants, the facts are that states have adopted applicability
provisions identical to the PSD program for minor NSR.  The EPA has
approved those programs as part of SIPs – SIPs that EPA deemed
“necessary to attain and maintain” a NAAQS pursuant to section 110. 
Given this approval and federalizing of the state regulations, EPA
cannot now claim that minor NSR implications are irrelevant to this
action.  To the extent EPA interprets the Act and its PSD regulations to
require that PSD be triggered based on a non-NAAQS pollutant, EPA cannot
ignore the implications for SIP-approved minor NSR programs using the
same language.  As a practical matter, EPA needs to address and resolve
the enormous and unreasonable burden imposed by regulating GHGs under
state minor NSR programs.  (5140, 5181, 5278)

The costs for a PSD permit (in actual fees, consulting fees, and cost of
lost time) should be included in any assessment and EPA should justify
that each cost (and the total cost) is reasonable, based on
environmental benefit.  (5073)

The EPA has a duty to conduct an RIA of the effect the proposed
revisions to 40 CFR 51 and 52 have on stationary sources of GHGs as
required in section 317(2) (sic) of the CAA (but it has failed to meet
this obligation.  (5082) [Note: Section 317(a)(4) would apply to this
PSD rulemaking.] 

The proposed Tailoring Rule fails to recognize a source’s regulatory
costs and burdens.  Sources must spend considerable time and resources
on planning, analysis, design, maintenance and operational plans,
training, standard operating procedures, etc. to manage ongoing
regulatory obligations in addition to monitoring, recordkeeping, and
reporting requirements typically specified in permits to demonstrate
compliance.  Similar expenditures and resources are necessary to ensure
compliance with potential regulatory requirements for continuing changes
in equipment and operations.  Even newly permitted title V sources of
GHGs, which EPA erroneously states “would be issued permits that do
not include any applicable requirements,” would be subject to
burdensome title V requirements (e.g., compliance certification,
deviation reporting, annual or semi-annual monitoring reporting) and
more stringent monitoring (including CAM) under 40 C.F.R. part 64),
recordkeeping, and reporting than would otherwise be required to
demonstrate compliance with non-GHG applicable requirements under
existing minor source permits.  (5417)

If EPA elects to interpret CAA section 165 to automatically require PSD
permits for GHGs, then it must fully consider all the costs that stem
from that interpretation.  Absent full consideration of those costs, the
Tailoring Rule (and EPA's related LDVR and Reconsideration Rule) will be
arbitrary and capricious.  See American Iron & Steel Inst. v. EPA, 115
F.3d 979, 997 (D.C. Cir. 1997) (remanding because EPA "adopted a cost
estimate that can only be described as fanciful" and "failed to address
whether the measure is cost-justified").  (5277)

The EPA is effectively playing a shell game with respect to its
statutory obligation to provide a thorough RIA to accompany its
proposal.  The EPA’s strategy will render such a rule vulnerable to
legal challenge.  A rule that fails to address relevant comments may be
held arbitrary and capricious (American Mining Congress v. EPA).  (4862)

EPA needs to quantify the costs to federal, state, and local governments
and the regulated community, assess the benefits associated with
reduction of GHG emissions, and show that the benefits to U.S. citizens
of such regulations outweigh the costs.  (5063/5605)

	One commenter (5139) believes that EPA’s cost-benefit analysis is
seriously flawed because EPA generally characterizes the foregone
benefits of reducing GHGs as negligible, while the savings achieved
through eliminating compliance with the CAA for sources below the
proposed thresholds are extremely large.  Even though EPA acknowledges
the numerous, significant uncertainties involved in its assumptions
throughout this rulemaking, it is somehow able to set precise price tags
on the administrative burdens purportedly avoided by “small” sources
that would be exempted from compliance by the Tailoring Rule.  EPA
claims that these sources would save some $52 billion and $1.15 billion,
respectively, in title V and PSD permitting costs.  Yet, EPA says that
it simply cannot estimate the other side of the coin: “It is not
possible at this time to quantify the social costs of avoided BACT.” 
The EPA compounds the error by combining this assertion with
contradictory claims that the allegedly unquantifiable benefits of
compliance “are likely to be small,” and that, “while it is
extremely difficult to measure the degree of improved compliance, if
any, that would be foregone [by not requiring title V permits], we
expect that they would be negligible.” 

Some commenters (4770, 5328, 5390, 8015, 8283, 8400) believe that EPA
should perform a thorough analysis of the potential cost and economic
impacts of applying PSD and title V to GHGs at the statutory thresholds.
 Some of these commenters believe this is necessary because if the
Tailoring Rule does not survive legal scrutiny, the statutory thresholds
for PSD and title V must be implemented (4770, 5328, 5390, 8015, 8400). 
A commenter (5390) indicates that this analysis should encompass the
significant adverse consequences that will be faced by industry,
including, in particular, potentially millions of newly regulated
sources that are small businesses with small capital improvement
budgets, small profit margins, and almost no tolerance for increased
regulatory costs.

Response:

Some of the comments discussed above disagree with the assertion that
the proposed Tailoring Rule provides “regulatory relief”.  Other
comments contend that the Tailoring Rule as proposed: (1) has a
significant economic burden on industry, the U.S. economy, and society,
(2) hampers businesses ability to create, grow, and modify operations
delaying recovery from the recession, (3) may result in movement of
industry overseas contributing to leakage of jobs and emissions, and (4)
negatively impacts specific domestic industry, commercial, agriculture,
waste, and energy sectors significantly and some business sectors
disproportionately.  Numerous comments outlined above assert that the
RIA completed for proposal was inadequate for the following reasons: (1)
the RIA did not consider impacts to large sources that will be required
to comply with title V and NSR permitting when GHG emissions are
regulated, (2) the RIA underestimated the number of sources affected at
the proposal threshold/significance levels of <25,000 CO2 equivalent
(CO2e),  (3) the RIA failed to estimate or underestimated the costs for
sources to obtain permits and to comply with NSR BACT requirements and
for permitting authorities to process permits, and (4) the RIA
overstates the benefits of regulating sources of GHGs.  A number of
comments state that EPA must analyze the full impacts of the Tailoring
Rule to comply with CAA section 307(d) and the APA.  

EPA has carefully considered the comments addressing the issue of
whether the Tailoring Rule is a “regulatory relief” rule, and we are
not persuaded that we erred in concluding that the effect of the
Tailoring Rule is to provide regulatory relief to a large number of
sources of GHG for a period of up to six years.  This final rule will
provide relief from title V permitting to over 6 million sources of GHG
in this country in total.  Likewise tens of thousands of sources
potentially subject to PSD permitting requirements annually for GHG will
have regulation postponed for a period of up to 6 years under this rule,
followed by an additional required rule addressing the period beyond 6
years.  While larger sources of GHG may be required to obtain title V
permits or modify existing permits and to comply with PSD requirements,
these burdens result not from the Tailoring Rule but rather from the CAA
requirement to apply PSD to each pollutant subject to regulation, which
is triggered when the Light Duty Vehicle Rule takes effect.  To clearly
illustrate this, consider what would occur if EPA did not complete the
Tailoring Rule.  Sources would not be relieved of the requirement to
obtain permits addressing each pollutant subject to regulation when they
construct or modify, nor would they be relieved of their obligation to
obtain title V permits.  Instead, these requirements would simply apply
to a much larger population of sources and modifications, and would lead
to the absurd results and severe impairment to program implementation
that this rule is designed to address.

In response to comments that the Tailoring Rule will: (1) have a
significant economic burden on industry, the U.S. economy, and society,
(2) hamper businesses ability to create, grow, and modify operations
delaying recovery from the recession, (3) may result in movement of
industry overseas contributing to leakage of jobs and emissions and (4)
negatively impact specific domestic industry, commercial, agriculture,
waste, and energy sectors significantly and some sectors
disproportionately, the EPA responds that this Tailoring Rule does not
impose regulatory burdens on any entities.  This Tailoring Rule lifts
the burden of title V and PSD permitting for over six million title V
sources in total and tens of thousands of new and modifying PSD sources
annually. This rule does not impose regulatory requirements on any
entities, but rather provides regulatory relief to sources of GHG and
permitting authorities.  This final rule provides permitting thresholds
for sources of GHG that exceed levels contained in the CAA and these
levels are phased in steps based upon application of the administrative
necessity and absurd results doctrines as explained in the preamble for
the rule section V.B.   The EPA carefully considered comments provided
in setting the threshold levels for the final rule that exceed the
levels proposed.  For step 1 that is effective from January 2, 2011
through June 30, 2011, only sources required to undergo title V or PSD
permitting based upon non-GHG air pollutants are required to obtain an
operating permit or PSD permit to include GHG emissions.  Step 2,
effective from July 1, 2011 until such time as EPA acts on a rule to
amend it (which for reasons described above, we assume is June 30, 2013
for the purposes of this analysis), requires larger sources emitting GHG
above 100,000 CO2e tpy to obtain a title V permit (if they do not
already have one) and to comply with PSD requirements when they are
newly constructed or modify in a way that increases emissions by more
than a 75,000 CO2e tpy significance level.   Thereafter, EPA makes an
enforceable commitment to consider a possible step 3 to further lower
thresholds below 100,000 CO2e tpy and/or permanently exclude some
sources from the program(s), but only after a regulatory process is
conducted addressing administrative necessity and absurd results
considerations based upon the actual permitting experiences in the first
two steps of the phase-in. In addition, EPA provides a deferral of
permitting until we take required action in April 2016 for sources and
modifications that emit below 50,000 CO2e tpy.  The deferral will end
when a required study is conducted of the permitting process for sources
of GHG and EPA acts, based on the study, to promulgate a rule that
describes the additional GHG permitting requirements beyond 2016.  The
EPA notes that the threshold/significance levels established in the
final rule substantially exceed those proposed.  In the 6 years
following promulgation of this rule, the EPA estimates that compared to
baseline estimates that do not include the effects of this rule, over
six million sources of GHG emissions in total will be allowed to
continue to operate without a title V operating permit.  During this
period, tens of thousands of new sources or modifying sources each year
will not be subject to PSD requirements for GHG.  For this large number
of smaller sources, this rule alleviates the regulatory burden
associated with obtaining an operating or PSD permit or complying with
NSR BACT requirements.  Therefore, this final action may be considered
beneficial to these small sources because it provides relief from
regulation that would otherwise be required.  

With regards to comments received that the RIA should have been a more
comprehensive analysis to include the larger sources of GHG that will be
required to obtain permits when GHG are regulated, the EPA maintains as
previously explained that there are no direct economic burdens or costs
as a result of this rule for these sources.  Requirements for larger GHG
sources to obtain title V or PSD permits are already mandated by the Act
and by existing rules and are not imposed as a result of the Tailoring
Rule.  Thus the economic impacts for larger sources of GHG do not occur
because of this Tailoring Rule.  To include these larger sources in the
RIA would actually be an inaccurate assessment of how this rule affects
sources and would ignore the fact that this rule is regulatory relief.

Regarding comments that EPA underestimated the number of sources
affected at the proposal threshold/significance levels of 25,000 CO2e,
failed to estimate or underestimated the costs for sources to obtain
permits and to comply with NSR BACT requirements and for permitting
authorities to process permits and overstated the benefits of regulating
sources of GHGs, the EPA did make improvements and modifications to the
RIA completed for this final rule.  As previously discussed the
threshold levels finalized in this rule were revised substantially
upward.  Based upon comments, EPA modified estimates of the number of
sources affected at various threshold levels upward.  EPA also improved
the burden estimates associated with obtaining permits for sources and
permitting authorities in response to comments.  After consideration of
the burden imposed by the proposed rule with these improved estimates
for affected sources, the EPA modified the steps of the phase-in period
to include two initial steps, described previously that are higher, and
therefore cover fewer sources and are less burdensome than the proposal
threshold of 25,000 CO2e tpy emissions.  EPA also increased the
threshold below which permitting would not apply for six years from
25,000 to 50,000 tpy CO2e.  After the initial two step period, EPA has
committed to consider lower thresholds but only down to 50,000 tpy CO2e,
and only after a regulatory process that uses information gathered on
actual permitting activity during the first two steps of the phase-in
period.  The RIA conducted for the final rule also incorporates
improvements in our estimates of the number of sources affected at
alternative thresholds and improved estimates of the costs of obtaining
permits by sources and processing permits by permitting authorities. The
EPA acknowledges that the regulatory relief associated with the control
costs due to BACT requirements for PSD new and modifying sources is not
included in the RIA for the final rule due to the lack of sufficient
data about the nature of those requirements.  However, it is the case
that, as it relates to burden, those estimates would simply increase the
amount of regulatory relief associated with this final rule.  For more
information about the economic analysis conducted for the final rule,
see the “Regulatory Impact Analysis for the Final Prevention of
Significant Deterioration and Title V Greenhouse Gas Tailoring Rule”
EPA 452/R-10-003 included in the docket for this rulemaking.   

7.2  Regulatory Flexibility Analysis 

	The Regulatory Flexibility Act (RFA) generally requires an agency to
prepare a RFA of any rule subject to notice and comment rulemaking
requirements under the APA or any other statute unless an agency
certifies that the rule will not have a significant economic impact on a
substantial number of small entities.  After considering the economic
impacts of our Tailoring Rule proposal, we certified that it would not
have a significant economic impact on a substantial number of small
entities.  We concluded at proposal that, since our proposal relieves
the regulatory burden on small entities, it will not have a significant
impact on a substantial number of small entities under both the title V
and PSD permitting programs.  

At proposal, and as noted previously, EPA certified that the proposed
rule would not have a significant impact on a substantial number of
small entities and therefore we concluded that we were not obligated to
convene a formal Small Business Advocacy Review Panel (SBARP). 
Nonetheless, because we were, and are, aware that many small entities
may be interested in the various GHG rulemakings that were under
development and the potential impacts of the statutory imposition of PSD
requirements that may occur as a result of these rulemakings, we, in
collaboration with the SBA, conducted an outreach meeting designed to
exchange information with small entities.  The outreach effort was
organized and led by representatives from EPA’s OAQPS within the OAR,
EPA’s OPEI, the OIRA within the OMB, and the OA of the SBA. 
Documentation of this meeting, which includes a summary of the advice
and recommendations 

received from the SERs identified for the purposes of this process can
be obtained in the docket for this rulemaking.  (See Docket No.
EPA-HQ-OAR-2009-0517-19130).  

Comments received on RFA SBREFA requirements and the small business
impacts anticipated by the proposed Tailoring Rule are presented in this
subsection.

Comment:

Several commenters (3513, 3698, 3720, 3757, 3859, 3906, 4095, 4630,
4632, 4684, 4693, 4865, 4867, 4870, 4950, 5052, 5056, 5058, 5073, 5083,
5085, 5088, 5104, 5110, 5111, 5136, 5140, 5145, 5181, 5183, 5184, 5236,
5277, 5278, 5236, 5279, 5343, 5344, 5367, 5449, 5705, 5715, 5771, 5801,
5886, 6201, 6880, 7127, 7134, 7961, 8015, 8071, 8322, 8400, 14710) state
that regulation of GHGs under the CAA will result in additional and
significant regulatory burden on many small businesses and sources. 
Additionally, several of these commenters express that EPA failed to
conduct an adequate analysis of the effects that the proposed Tailoring
Rule will have on small entities as required under RFA SBREFA (including
EPA’s failure to conduct the required SBARP) and other statutes and
EOs.  

Some of these commenters specifically comment on the adverse effect that
regulation of GHGs under the CAA will have on small facilities/entities,
with and without the Tailoring Rule.  Examples of the types of comments
received are summarized below.

Some commenters indicate that certain industrial sectors include many
small businesses that would be adversely impacted even at the thresholds
of the proposed Tailoring Rule.  These include companies that explore
and produce domestic oil and gas (5056), the baking industry (5303),
small refiners (3757, 3968, 5705), concrete paver producers (5088), the
housing industry  (5104/6201), more than 100 small brick manufacturers
(4867), 400-500 small foundries (4867), 150 small pulp and paper mills
(4867), over 100 small coal mines (4867), 80 small lime manufacturers
(4867), 350 small municipal utilities (4867), more than 40 small
electric cooperatives (4867), and at least 16 small petroleum refineries
(4867).  Some of these 1,200+ small entities report that they will be
required to obtain title V permits for the first time solely because of
their GHG emissions.  (4867)

A number of commenters note that the Tailoring Rule defers small source
regulation, but does not permanently exempt small sources from
permitting requirements.  The commenters are concerned about the impacts
on small entities that will occur when the temporary thresholds under
the Tailoring Rule revert to the statutory levels (if that ultimately
occurs).  (3906, 4684, 4870, 5104/6201, 5110, 5236, 5343)  Some of the
commenters elaborated as follows:

Expanding the PSD and title V programs by reverting to the statutory
thresholds will result in precisely the same "absurd results" that led
EPA to promulgate the Tailoring Rule.  The 2008 report, A Regulatory
Burden: The Compliance Dimension of Regulating CO2 as a Pollutant
indicates that 1.2 million or more buildings would be subject to PSD at
the 250 tpy threshold level, many of which are previously-unregulated
establishments (e.g., office buildings, warehouses, health care
facilities).  Permitting under PSD could cost these newly-regulated
buildings an average of $125,120 (using EPA estimates from the
Information Collection Request [ICR] for the proposed rule), and that is
before factoring in the cost of installing BACT equipment.  (5110)

One industry commenter (5104/6201) provides several pages of examples of
how the building industry has already implemented a number of voluntary
initiatives to reduce the overall GHG emission contributions associated
with energy use, such as improving energy efficiency and incorporating
green building practices into the mainstream.  The Tailoring Rule
responds to the commenter’s concerns and gives a measure of critically
needed relief to the homebuilding industry from the repercussions of PSD
and title V permitting.  However, the commenter expresses concern that
this relief be made as permanent as possible.

Other representative comments related to the impacts of GHG regulation
under the CAA and the Tailoring Rule include the following:

Any attempt to require PSD permitting for GHGs would impose significant
costs on regulated entities, not relieve them.  EPA repeatedly asserts
that the Proposed Rule would "lift" costs on small entities and impose
no new costs on large entities.  That theory is incorrect with respect
to PSD permitting.  (5277)

Despite EPA’s intention, the proposed threshold for the GHG Tailoring
Rule will include substantially more small sources of GHG emissions than
will be included in the 25,000 ton threshold for EPA’s recently
promulgated GHG reporting rule.  (4632)

Even with the raised 25,000-ton threshold, a large number of small
businesses will be ensnared.  According to comments submitted by the SBA
(4867), over 1,200 small businesses will not be provided relief by the
Tailoring Rule from the "absurd results" created by EPA‘s efforts to
regulate GHGs under the CAA.  (5110)

EPA is giving inadequate consideration to the significant resource
burdens on small business owners and regulatory agencies, absent
evidence that there will be a corresponding environmental benefit.  The
commenter does not agree that a program that will potentially subject
new small business sources to PSD and title V requirements in the
short-term is the same as "providing regulatory relief."  The "cost
saving" noted by EPA is similarly incorrect.  The direct economic
impacts will be felt by the businesses throughout the U.S., both small
and large.  (5367)

The proposed rule will have a negative effect on the “economic
resurgence” of small businesses through the triggering of regulation
of millions of stationary sources.  (8400)

Regulatory approval is already a serious hurdle for small businesses,
and this ruling would put in even greater burden on them.  (5771)

Based on the language of the CAA, small businesses with GHG emissions
from 250 to 25,000 tpy could find themselves trying to figure out what
compliance and enforcement regulations apply.  (3859)  Even though the
EPA and larger environmental groups state that they will not press for
expansion of federal power over small manufacturers through the court
system, smaller sources will have significant exposure to civil
liability.  (3513)

Sources such as agricultural, residential, and small businesses (as
defined by the SBA) should be exempted from this rule during the first
5-7 years to allow EPA and permitting authorities time to gain
experience with the program.  Many small businesses do not have the
money or resources to spend on environmental consultants to assist them
in calculating their GHG emissions and do all the other cumbersome
paperwork that will be required under this proposal, including
determining BACT, doing the modeling required for the NAAQS, as well as
the increment modeling.  Small businesses and service providers must be
provided with education, resources, and tools to help them understand
whether and how they will be impacted by the rule and how they can
report and comply.  Without this time and resource consideration,
implementation of this rule as written will cause undue hardships for
small businesses.  (5367)

The estimated costs for a title V permit are unduly burdensome for small
businesses subject to the rule.  This is particularly true because the
title V permit does not necessarily ensure reduction of GHG emissions or
provide any additional environmental benefit.  (5236)

As noted above, several commenters provide that EPA, in considering the
economic impacts, failed to conduct an adequate analysis of the effects
that the proposed Tailoring Rule will have on small entities as required
under RFA SBREFA (including EPA’s failure to conduct the required
SBARP).  Examples of the types of comments received are presented below.

	Several commenters contend that EPA has not met the requirements of the
RFA by not conducting an adequate analysis of the impacts of the
proposed rule on small businesses and/or by not convening an SBARP for
the proposed Tailoring Rule (or for the other related GHG rulemakings). 
(3757, 3968, 4095, 4630, 4632, 4648, 4684, 4693, 4867, 4870, 5052, 5062,
5073, 5085, 5088, 5111, 5140, 5145, 5181, 5236, 5278, 5343, 5705, 5715,
5886)

It is clear that the LDVR directly triggers regulatory impacts for small
entities.  If this were not true, EPA would not need the GHG Tailoring
Rule.  (4630, 4867, 4870, 5181)  Nevertheless, EPA declined to take
comment on the potential impacts of the LVDVR on small businesses, and
directed comment on this issue to the Tailoring Rule.  Now, EPA deflects
any substantive consideration of the issue by concluding that the
Tailoring Rule relieves regulatory burden.  Thus, EPA has deflected its
obligations under sections 603 and 604 of the RFA.  (4630)  The EPA
cannot state on the one hand that it was not obligated to address the
PSD burdens raised in the LDVR and on the other claim that it is not
required to conduct an RFA in this rule because it “relieves” the
burdens on small entities.  (4870, 5181)

EPA has no legal basis to avoid conducting a SBAR panel.  Although there
are rare situations where an agency may have a legitimate reason for not
conducting the small business impact analysis required by the RFA (which
in this case would include a SBAR panel), none of those situations are
present here.  (4867)

The EPA should have convened as many as four separate SBARPs to evaluate
the impact of the GHG rulemakings on small entities, including SBARPs
for the Endangerment Finding, the LDVR, the Tailoring Rule, and (even if
for none of the individual rules) for the combined GHG rulemakings. 
This new regulatory program should not have been launched without the
benefit of a thorough review of the potential small entity impacts, as
required by the RFA.  (4648, 4693, 5145, 5715, 5886)

The EPA should initiate a SBARP to examine the economic impact in detail
before a final rule is published.  (3757, 3968)

The EPA should convene a separate SBAR panel for each primary industry
sector likely to be affected by GHG regulation.  (4684)

By not convening an SBARP, EPA has lost its best opportunity to learn
how its new GHG rules would actually affect small businesses, small
communities, and small non-profit associations.  (5088)

Although EPA has undertaken some outreach efforts in lieu of convening
an SBARP(s), these efforts are insufficient to meet the requirements of
the RFA or to estimate the economic impact of this rule on small
businesses, which will be significant in many cases.  (3757, 3968, 4867,
5052, 5073, 5140, 5278)  The EPA's use of section 609(c) of the RFA to
justify consultation with Office of Management and Budget (OMB) and SBA,
with input from outreach to small entities, instead of convening an
SBARP is a misreading of the RFA.  (4867)

Although the Tailoring Rule defers small-source regulation, it does not
exempt small sources from regulation.  Since EPA has now legally
committed itself to small-source regulation under PSD and title V, it is
obligated to examine the effects on small sources now, not at some point
in the future.  The commenter states that the fact that EPA does not
know the precise character of small-source regulation at this point is
no defense.  EPA could conduct an evaluation of various alternative
regulatory scenarios.  (5343)

	Some commenters specifically indicate that EPA was incorrect in
certifying under the RFA that regulating GHGs under the CAA will not
have “a significant economic impact on a substantial number of small
entities.”  These commenters sometimes referred to the proposed
Tailoring Rule, sometimes to the LDVR, sometimes to the Endangerment
Finding, and sometimes to the combination of these rulemakings which EPA
has advanced in coordination.  (3757, 3968, 4867, 5073, 5088, 5133,
5181, 5705)  Some commenters elaborated on this point as follows:

The EPA has offered little or no information to support this
certification with respect to small business refiners.  The commenter
disagrees with EPA’s certification and suggests that such a peremptory
dismissal of possible economic impact is primarily intended to obviate
the need for a SBARP that would otherwise be required under SBREFA. 
(3757, 3968, 5705)

The EPA’s RFA certifications for the three GHG rule proposals lack a
factual basis and are improper.  It is clear that the GHG rules are
likely to have a significant economic impact on a large number of small
entities, including small businesses, small communities, and small
non-profit associations who will be affected either immediately or in
the near-term.  Over 1,200 small entities and their representatives have
informed the SBA that their anticipated GHG emissions will exceed the
25,000 tpy CO2e threshold; accordingly, they will immediately become
subject to PSD and title V permitting requirements for GHGs.  Some of
these 1,200+ small entities (e.g., brick manufacturers) report that they
will be required to obtain title V permits for the first time solely
because of their GHG emissions.  The EPA estimates the cost of obtaining
a first-time title V permit for industrial facilities at $46,350 per
permit, and new PSD permits are estimated to cost $84,530 per permit. 
These estimates do not include the costs of project delays and potential
operational modifications required by permitting authorities.  In total,
these costs may exceed 3 percent of annual operating expenditures for
some small entities (e.g., electrical distribution cooperatives).  Under
EPA’s RFA Guidance, rules with 3 percent or greater economic impact on
more than 1,000 small entities are presumed to be ineligible for
certification under the RFA.  Had EPA thoroughly analyzed the potential
reach of the GHG permitting requirements on small entities, it would
have learned that the GHG Tailoring Rule will not benefit a substantial
number (over 1,200) of small entities.  (4867)

The EPA’s RFA certification for the LDVR states that the SBREFA
review of the potential impacts on small entities of regulating GHG
emissions under the PSD program would occur in the context of the
Tailoring Rule.  However, the Tailoring Rule lacks any analysis of the
costs of regulating GHGs under the PSD program and the impact of those
costs on small businesses.  Instead, the analysis in the rule focuses
exclusively on avoided costs.  (5133)

The EPA neglected to consider the millions of small businesses,
hospitals, schools, small government entities, and others that will be
dramatically impacted by the rule’s unprecedented and direct effect on
small entities, because the rule imposes these burdens in the first
instance (as a result of the LDVR), is ineffective to change state law,
and will inevitably be struck down by the courts.  Moreover, even at the
25,000 tpy threshold level, numerous small businesses will be affected
by this rule.  (4870, 5181)

Response:

The RFA generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements under the APA or any other statute unless the agency
certifies that the rule will not have a significant economic impact on a
substantial number of small entities subject to the rule.  If a covered
agency, such as EPA, is unable to certify a rule at proposal, they must
conduct a SBAR panel.

If an agency certifies that the rule at issue does not have a
significant impact on a substantial number of small entities (SISNOSE),
the agency is not required to undertake any regulatory flexibility
analyses or conduct a SBAR panel.  5 U.S.C. section 605(b). 

EPA disagrees with commenters that assert EPA must undergo an SBAR panel
to determine how much more relief EPA could potentially give.  The SBAR
panel is required only when EPA is unable to certify no SISNOSE. 
EPA’s certification of this action is fully supported by the RFA, and
accordingly EPA was not required to undertake RFA analyses such as the
SBAR panel or regulatory flexibility analyses.

Agencies can properly certify a rule when the rule does not impose
burdens on regulated entities, as the “relevant economic impact [is]
the impact of compliance with the proposed rule on regulated small
entities.”  Mid-Tex Elec. Co-Op., Inc. v. FERC, 773 F.2d 327, 342-343
(D.C. Cir. 1985) (emphases added).  Courts have refused to “convert
every rulemaking process into a massive exercise in economic modeling”
by requiring a full RFA analysis.  Cement Kiln Recycling Coalition v.
EPA, 255 F.3d 855, 869 (D.C. Cir. 2001).

This rule does not impose any new regulatory requirements or burdens on
any small entities.  Instead, this rule is designed to relieve potential
burdens associated with applying for title V and PSD permits.  Because
there is no new impact associated with this rule, EPA is able to certify
that there is no SISNOSE for this rule.  Contrary to the assertions of
some commenters, the RFA does not require that EPA consider multiple
rules in the context of an RFA analysis for an individual rule, as to do
so would require the type of “massive exercise in economic modeling”
that courts have rejected.  EPA is only require to consider the new
impacts of the 

specific rule in question on the small entities subject to regulatory
requirements of the rule under consideration. 

Although the RFA does not apply to this action, EPA recognized that some
small entities were concerned about the potential indirect impacts of
the statutory imposition of PSD requirements that may occur given the
various EPA rulemakings concerning GHG emissions.  In the interest of
providing small entities a forum to express their concerns in addition
to the opportunity provided in the notice and comment process, EPA used
the discretion afforded to it under section 609(c) of the RFA to consult
with OMB and SBA, with input from outreach to small entities, regarding
the potential impacts of PSD regulatory requirements on small entities
that might occur as EPA considers regulations of GHGs. 

EPA, in collaboration with the SBA, conducted an outreach meeting
designed to exchange information with small entities that may be
interested in these regulations.  The outreach effort was organized and
led by representatives from EPA’s OAQPS within the OAR, EPA’s OPEI,
the OIRA within the OMB, and the Office of Advocacy of the SBA. 
Documentation of this meeting, which includes a summary of the advice
and recommendations received from the SERs identified for the purposes
of this process, can be obtained in the docket for this rulemaking. 
(See Docket No. EPA-HQ-OAR-2009-0517-19130).  

The EPA took this small business outreach effort into account when
finalizing this rule.  Many commenters from this outreach effort said
that there were many more small businesses that would subject to PSD and
title V due to the proposed permitting thresholds than EPA estimated at
proposal.  Based upon these comments and others received regarding the
threshold, the EPA increased the threshold and significance levels from
the proposal levels to levels at or above those recommended by SBA.  The
final Tailoring Rule provides permitting thresholds for sources of GHG
that exceed levels contained in the CAA and these levels are phased in
steps based upon application of the administrative necessity and absurd
results doctrines as explained in the preamble for the rule in preamble
section V.B.  For step 1 that is effective from January 2, 2011 through
June 30, 2011, only sources required to undergo title V or PSD
permitting based upon non-GHG air pollutants are required to obtain an
operating permit or PSD permit to include GHG emissions.  Step 2,
effective from July 1, 2011 until such time as EPA acts on a rule to
amend it (which for reasons described above, we assume is June 30, 2013
for the purposes of this analysis), requires larger sources emitting GHG
above 100,000 CO2e tpy to obtain a title V permit (if they do not
already have one) and to comply with PSD requirements when they are
newly constructed or modify in a way that increases emissions by more
than a 75,000 CO2e tpy significance level.  Thereafter, EPA makes an
enforceable commitment to consider a possible step 3 to further lower
thresholds below 100,000 CO2e tpy and/or permanently exclude some
sources from the program(s), but only after a regulatory process is
conducted addressing administrative necessity and absurd results
considerations based upon the actual permitting experiences in the first
two steps of the phase-in.  In addition, EPA provides a deferral of
permitting until we take required action in April 2016 for sources and
modifications that emit below 50,000 CO2e tpy.  The deferral will end
when a required study is conducted of the permitting process for sources
of GHG and EPA acts, based on the study, to promulgate a rule that
describes the additional GHG permitting requirements beyond 2016.  In
the 6 years following promulgation of this rule, the EPA estimates that
compared to baseline estimates that do not include the effects of this
rule, over six million sources of GHG emissions in total will be allowed
to continue to operate without a title V operating permit.  During this
period, tens of thousands of new sources or modifying sources each year
will not be subject to PSD requirements for GHG.  . During this period,
tens of thousands of new sources or modifying sources each year will not
be subject to PSD requirements for GHG.  For this large number of
smaller GHG sources – some of which are small businesses, governments
or other small entities – this rule, this rule alleviates the
regulatory burden associated with obtaining an operating or PSD permit
or complying with NSR BACT requirements.  Therefore, this final action
should be considered beneficial to these small sources that are small
entities because it provides relief from regulation that would otherwise
be required.

Section 609(c) of the RFA allows agencies to, in their discretion, apply
the provisions of the RFA that address SBAR panels to a rule that “the
agency intends to certify… but the agency believes may have a greater
than de minimis impact on a substantial number of small entities.”  5
U.S.C. § 609(c) (emphasis added).  EPA does not believe that the use of
this discretion requires a rigid application of the entirety of section
609(c).  Instead, agencies may pick and choose elements of the SBAR
panel process to apply as they deem appropriate for the rule at issue. 

EPA believes that section 609(c) of the RFA authorizes agencies to
engage in outreach similar to that of a formal SBAR panel where, as in
this action, the RFA would not otherwise apply due to the certification
of the rule.  EPA maintains that this action does not create new
significant impacts for small entities, and EPA’s use of 609(c) does
not indicate otherwise.  As indicated by the word “may,” an agency
has discretion to invoke this provision in a variety of circumstance and
is not limited to those situations where it is certain that a rule has a
greater than de minimis impact. 

EPA is not required to take into account effects beyond those caused by
the Tailoring Rule for the purposes of the RFA.  No permitting
requirements are imposed by this final Tailoring Rule. Instead, this
final Tailoring Rule offers regulatory relief to over an estimated six
million sources of GHG emissions that would otherwise be required to
obtain a title V permit and tens of thousands of sources of GHG
emissions subject to PSD permitting requirements that would otherwise be
required statutorily to obtain permit.  The RFA does not require that an
agency complete a regulatory flexibility analysis or conduct an SBAR
panel where the rule does not have any negative impact on small entities
subject to the rule.

Accordingly, EPA maintains that it has fully complied with the
requirements of the Regulatory Flexibility Act in this action.  Because
this rule does not create new significant impacts for a substantial
number of small entities, EPA has statutory authority to certify this
rule under the RFA.  Thus, EPA was not required to conduct an SBAR panel
or any regulatory flexibility analyses for this action.  

Chapter 8.  Implementation Issues

8.1  Comments on EPA’s Mechanism for Implementing and Adopting the
Tailoring Approach

This section concerns comments received on the proposal’s approach to
adopting the Tailoring Rule within our regulations and by state, local
and tribal permitting authorities.  

Comment:

Many commenters argue that EPA has not addressed the need for states to
adopt the Tailoring Rule into state regulations before it can take
effect.  Before the Tailoring Rule could apply, states will need time to
amend their SIPs from the 100 or 250 tpy statutory thresholds to the
thresholds in the Tailoring Rule (4118, 4243, 4298, 4515, 4691, 4903,
5084, 5140, 5143, 5276, 5278, 5317, 5417, 5789, 6414, 7935, 8015,
16411).  In addition, states run the risk of being sued if they issue
permits to sources that emit more than 100/250 tpy of GHGs before the
state law and regulations are amended for this purpose (5133). 
Similarly, sources that emit more than 100/250 tpy of GHGs may be
subject to state enforcement actions or third-party suits, which would
produce inequality in treatment of sources in SIP-approved states versus
other states (4243).  Other commenters add that the Tailoring Rule
adjustments of emissions thresholds will directly conflict with their
state’s existing laws and implementation plans (5085, 7294).  Thus,
some of these commenters suggest that:

EPA should clarify whether the current statutory thresholds for PSD and
title V apply until the SIP is revised.  (5063)

EPA could modify the Tailoring Rule to assure that state programs do not
apply to the smaller sources of GHGs.  (16411)  

EPA should disapprove state SIPs that require PSD permits for
sources/modifications below the Tailoring Rule thresholds (5922, 8015). 
One commenter adds that EPA has enough information to conclude that
states would not have adequate resources to implement their state PSD
programs if the threshold for GHGs is 100/250 tpy.  Thus, EPA can
disapprove state SIPs to the extent they require PSD permits for
sources/modifications below the thresholds established in the Tailoring
Rule.  Failure to disapprove such SIPs would create great confusion for
sources and generate permitting gridlock (and “absurd results”) that
EPA is trying to avoid (5922).

EPA should issue a Notice of Deficiency (NOD), under CAA section
502(i)(1), and a SIP call, under CAA section 110(k)(5), to all states
concurrent with the final Tailoring Rule, unless a state can demonstrate
that it has commenced and is committed to finalizing any changes
necessary under state law to make it consistent with the Tailoring Rule
(4298).  Issuing a NOD and a SIP call in this manner is necessary to
maintain an even playing field among the states.  The commenter believes
that EPA should not finalize any action that would trigger GHG
permitting until each state program has been amended (4298).  In
addition, one commenter (4515/4691) supports the use of a SIP call under
section 110(k)(5) of the CAA or the conditioning of section 105 grant
funding to force appropriate revisions in SIP approved states.  

EPA should use every available legal tool to ensure that the Tailoring
Rule requirements are incorporated into SIPs (4196).  One commenter adds
that EPA should establish an expeditious deadline for states to submit
corrective plan revisions (5306).  According to the commenter, EPA can
ease state adoption of PSD permit program revisions and expedite EPA
review and approval of the states’ adjustments by adopting model
guidelines to help inform state rulemaking, and EPA should complete this
process by the end of 2010.  The same basic framework and timelines can
apply to the title V permit program and state administration of
corrective adjustments.  Here, too, EPA can promptly issue a notice of
deficiency and call for expeditious corrective action.  See 42 U.S.C.
7661a(i).  (5306).

EPA must defer regulating GHGs until states have time to amend their
rules and laws and submit amended SIPs to EPA, and EPA has finalized
approval of the SIP revisions (3720, 4106, 4118, 4524, 4903, 5800). 
Deferring application of PSD to GHGs until SIPs are revised, one
commenter adds (4903), would be consistent with Congress’s intent in
the CAA Amendments of 1977, where EPA was given two years “to propose
regulations for increments or other means for preventing significant
deterioration” for four criteria pollutants (pollutants subject to
NAAQS) for which the legislation did not supply increments.  Those
regulations then would not go into effect for another year.  Then at
that point, “revision of SIPs would begin.”  Additionally, PSD
“[r]egulations for new ambient air quality standards are to be
followed within two years by measures to prevent significant
deterioration.”  H.R. Rep. 95-564 at 151.

	Other commenters state that while EPA has proposed to essentially
change the meaning and application of federal law, EPA cannot amend the
statutes and rules in effect at the state level (3720, 4524, 5133, 5317,
5743, 5789, 5800, 6414, 8283, 16411) as EPA proposed.  Sources will
still be subject to state-specific regulations (4243, 5343, 16411) and
by specifically using the proposed Tailoring Rule’s revised thresholds
a state will be in violation of its own SIP and thus the CAA (4631,
5318, 6491, 7961).  In addition, the Tailoring Rule does not require
states to change laws or regulations to conform to the thresholds set by
the rule (3935, 4095, 5743).  Some states could conclude, based on their
own individual legal opinion, that they cannot follow the same
"administrative necessity" approach that EPA is adopting (5789, 6414,
8283) because they feel that EPA is relaxing the statutory thresholds
without appropriate authority (7961).  Moreover, one commenter argues
the state law issues mentioned above make the Tailoring Rule ineffective
practically and thus legally vulnerable because the “administrative
necessity” doctrine cannot be justified (4095).  

Other commenters argue EPA’s proposal is likely to encourage a
confusing patchwork of inharmonious federal and state regulations, since
states have the authority to be more stringent than the EPA and thus to
decide not to change their state regulations to implement the Tailoring
Rule (3720, 3935, 4518, 4524, 5140, 5168, 5278, 5743, 5789, 5800, 6414,
8015, 8283, 16411) or may wait to revise their laws until it becomes
clear that whatever final rule emerges has survived judicial review
(5317).  One commenter adds, however, that it is important for states to
strive for  GHG emissions reductions and that this can be achieved by
offering incentives to institute best practices and technologies to
reduce GHG emissions to levels that are below the 25,000 tpy CO2e
threshold (4518). ).  Another commenter said the proposed rule lacks an
appropriate coordinating plan with state governments regarding their
respective SIPs for the PSD program.  (4555)

Response:

In response to these concerns, we are adding another mechanism to
implement the tailoring approach for PSD, and that is to adopt a
definition  within our PSD regulations, of the phrase “subject to
regulation,” as found within the phrase “any regulated NSR
pollutant,” which, in turn, is part of the definitions of “major
stationary source” and “major modification.”  To implement this
mechanism, we are defining the phrase “subject to regulation” so
that the GHGs emitted by sources that fall below the thresholds or scope
established in steps 1 and 2 are not treated as “subject to
regulation,” and therefore do not trigger PSD for the sources that
emit them.  As discussed in section V.B.3. of the preamble to the final
rule published in the Federal Register, the term “subject to
regulation” is one of four terms that should be considered not to
apply literally in the case of GHG sources. 

To understand this approach, it is useful to return to the definition of
“major stationary source,” which, again, is central to PSD
applicability.  The definition, quoted previously, employs the term
“regulated NSR pollutant,” which is a defined term.  The definition
incorporates many other elements as well (e.g., the 100/250 threshold
requirements), but for convenience, we quote it as follows:  a “major
stationary source” is “[a]ny … source[] of air pollutants, which
emits, or has the potential to emit, [depending on the source category,
either] 100 [or 250] tons per year or more of any air pollutant that is
subject to regulation under the Clean Air Act.”  40 CFR
51.166(b)(1)(i(a)-(b).  Applying our definition of “subject to
regulation” to exclude GHG sources that emit below specified
thresholds, the definition may now be paraphrased as follows:  A
“major stationary source” is any source of air pollutants, which
emits, or has the potential to emit, depending on the source category,
either 100 or 250 tpy or more of any air pollutant subject to regulation
under the CAA, except that the source’s GHGs are considered to be
subject to regulation under the CAA only to the extent indicated under
steps 1 and 2 of the Tailoring Rule, e.g., for step 2, only if the
source’s GHG emissions exceed the threshold established in step 2.  We
adopt the same approach for the definition of the regulatory term
“major modification.” 

Although EPA is codifying its regulations to apply the phrase “subject
to regulation” in this manner, we have been advised that states may be
able to adopt our approach without having to undertake a rulemaking
action to revise their SIP regulations or without requiring an act of
the state legislature.  Instead, it is our understanding that states may
adopt our approach by interpreting the term “subject to regulation”
reflected in their regulations to have the same meaning that we are
assigning to that term in our regulations in this rulemaking.  This is
particularly – although not exclusively -- the case in a state that
has taken the position, or determines now, that the state’s definition
of “subject to regulation,” or, more broadly, “regulated NSR
pollutant” or “major stationary source” or “major modification,
is intended to be interpreted in a way that tracks the meanings that EPA
has assigned to these phrases.  Such states can adopt the meaning of
“subject to regulation” that we establish in this rule by January 2,
2011, and thereby avoid the situation in which, as a matter of state
law, GHG-emitting sources above the 100 or 250 tpy thresholds become
subject to PSD by that date.  The following explains our basis for
concluding that states may apply EPA’s approach under existing
regulations that use the term “subject to regulation.” 

On December 18, 2008, EPA issued the Interpretive Memorandum,
establishing EPA’s interpretation of the definition “regulated NSR
pollutant” found at 40 CFR 52.21(b)(50).  EPA intended this memorandum
to resolve ambiguity in subpart (iv) of this definition, which includes
“any pollutant that otherwise is subject to regulation under the
Act.”  Specifically, the memorandum stated that EPA will interpret the
definition of “regulated NSR pollutant” to exclude pollutants for
which EPA regulations only require monitoring or reporting but 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.  

After reconsidering this interpretation through a formal
notice-and-comment process, EPA refined its interpretation to establish
that the PSD permitting requirements will not apply to a newly regulated
pollutant until a regulatory requirement to control emissions of that
pollutant “takes effect.”  75 FR 17704.  Importantly, as stated
previously, because the term “regulated NSR pollutant” is embedded
within the definition of “major stationary source,” this
interpretation effectively defines which major stationary sources are
subject to PSD permitting.  As a result, for example, EPA explained that
PSD and title V permitting requirements for GHGs will not apply to GHGs
until at least January 2, 2011, following the anticipated promulgation
of EPA regulations requiring control of GHG emissions under title II of
the CAA.  Id.  

	

	In the RTC document for EPA’s reconsideration of the PSD
interpretative memorandum, we stated that,  

Absent a unique requirement of state law, EPA believes that state laws
that use the same language that is contained in EPA’s PSD program
regulations at 52.21(b)(50) and 51.166(b)(50) are sufficiently
open-ended to incorporate greenhouse gases as a regulated NSR pollutant
at the appropriate time consistent with EPA’s interpretation of these
regulations (emphasis added).  (Docket ID No.
EPA-HQ-OAR-2009-0597-0128).  

Because the state regulations that include EPA’s definition of the
term “subject to regulation” in the reconsideration of the PSD
interpretive memorandum are “sufficiently open-ended to incorporate
greenhouse gases as a regulated pollutant,” those state regulations
are also sufficiently open-ended to incorporate the further refinement
to the meaning of the phrase “subject to regulation” that we make in
this rulemaking.

	

	By the same token, EPA has historically interpreted certain state
SIP-approved programs as sufficiently open-ended such that the rules
provide for the “automatic assumption for the responsibility for
review” of new pollutants before the general deadline for states to
revise their PSD programs.  See, e.g., 52 FR at 24682.  Conversely, we
have also read federal rules and state rules approved in SIPs to provide
for the automatic removal of a pollutant when such pollutant is no
longer “subject to regulation.”  For example, the 1990 CAA
amendments exempted HAPs listed in Section 112(b)(1) from the PSD
requirements.  See CAA section 112(b)(6).  Following passage of the
amendments, EPA issued “New Source Review (NSR) Program Transitional
Guidance“, a memorandum from John S. Seitz, Director, Office of Air
Quality Planning and Standards to Regional Air Division Directors on
March 11, 1991.  In that guidance, EPA interpreted its PSD regulations
to automatically cease to apply to listed HAPs (with some noted
exceptions), and implicitly stated that a state with an open-ended
SIP-approved PSD rule could also take the position that its SIP-approved
rule automatically ceased to regulate HAPs.  

	

	After reviewing these past practices in the PSD permitting program, and
EPA’s prior statements regarding pollutants subject to the PSD
program, we conclude that states with SIP-approved rules that contain
the same language as used in 40 CFR 52.21(b)(50) or 40 CFR
51.166(b)(49), or that otherwise have sufficiently open-ended PSD
regulations, would be able to implement our Tailoring Rule approach to
permitting by interpreting their regulations, and without needing to
promulgate a regulation or seek state legislative action.  This is
particularly – although not exclusively -- the case for states that
take the position that they intend their rules to apply in the same
manner as EPA's counterpart rules.  If states adopt this reading of
their regulations, GHG sources falling below the specified cutoffs would
not be emitting pollutants “subject to regulation” within the
definition of “regulated NSR pollutant” and therefore would not be
subject to PSD permitting as a major stationary source or for making a
major modification.

  

During our consideration of this action, we participated in
teleconferences with one local and six state permitting authorities to
discuss this issue of whether they could implement the proposed rule
without the need for state law or regulation changes or a revision of
the provisions of state law that are a part of the SIP.  We specifically
discussed whether defining the phrase “subject to regulation” would
better facilitate state incorporation of the limitations in this final
rule.  The state and local agencies participating in the calls generally
agreed that defining the phrase “subject to regulation” would,
compared to our proposed approach, better facilitate state incorporation
of the limitations in the final rule in states with regulations that
mirror the existing federal rules, or in states whose rules are
otherwise sufficiently open-ended to incorporate the limitations in the
final rule by interpretation.  Participants from each agency also
indicated that their rules contain the term “subject to regulation”
and that term has not been previously interpreted in ways that would
preclude application of the meaning assigned to the term by EPA.  We
therefore concluded it is likely the state rules are sufficiently
open-ended to apply EPA’s approach by interpretation (although some
states indicated they may elect to pursue rulemaking in addition to or
instead of interpretation).  Accordingly, we selected the “subject to
regulation” regulatory approach as the mechanism for implementing the
final rule.

  

	As just described, we selected the “subject to regulation”
mechanism because it most readily accommodated the needs of States to
expeditiously revise – through interpretation or otherwise -- their
state rules.  Even so, it is important to recognize that this mechanism
has the same substantive effect as the mechanism we considered in the
proposed rule, which was revising numerical thresholds in the
definitions of major stationary source and major modification.  Most
importantly, although we are codifying the “subject to regulation”
mechanism, that approach is driven by the needs of the states, and our
action in this rulemaking should be interpreted to rely on any of
several legal mechanisms to accomplish this result.  Thus, our action in
this rule should be understood as revising the meaning of several terms
in these definitions, including:  (i) the numerical thresholds, as we
proposed; (ii) the term, “any source,” which some commenters
identified as the most relevant term for purposes of our proposal; (iii)
the term, “any air pollutant; or (iv) the term, “subject to
regulation.”  The specific choice of which of these constitutes the
nominal mechanism does not have a substantive legal effect because each
mechanism involves one or another of the components of the terms
“major stationary source” -- which embodies the statutory term,
“major emitting facility” -- and “major modification,” which
embodies the statutory term, “modification,” and it is those
statutory and regulatory terms that we are defining to exclude the
indicated GHG-emitting sources.

	Our final action also differs from the proposal in the specific
regulatory mechanism by which we tailor the definition of “major
source” for title V permit programs, but is a logical outgrowth of our
proposed rule.  EPA proposed to implement tailoring for GHGs under title
V by excluding sources of GHGs from the general definition of “major
source” under 40 CFR 70.2 and 71.2, and adding a separate definition
of “major source” with tailored thresholds for sources of GHGs.  In
response to comments, particularly from states concerned with
implementation of the proposed approach under state law, EPA is adopting
an approach in the final rule that 1) amends the definition of “major
source” by codifying EPA’s longstanding interpretation that
applicability for a “major stationary source” under CAA sections
501(2)(B) and 302(j) and 40 CFR 70.2 and 71.2 is triggered by sources of
pollutants “subject to regulation,” and 2) adding a definition of
“subject to regulation.”  Further, we are delaying our action to
move forward with limiting our previous approval of existing state part
70 programs.

	

	We finalize this alternative approach to address concerns similar to
those we received with respect to state implementation of SIP-approved
PSD programs.  Specifically, we received comments that the mechanism we
proposed would not address the significant administrative and
programmatic considerations associated with permitting GHGs under title
V, because the 100 tpy threshold would continue to apply as a matter of
state law.  Commenters stated that states would need to undertake a
regulatory and/or legislative process to change the threshold in their
state laws which they could not complete before the laws would otherwise
require issuance of operating permits to GHGs sources.  After
considering the commenters’ concerns, we are finalizing an approach
designed to address the state law concerns for states.  As a result, it
is unnecessary to move forward at this time with our proposed approach
to limit approval of existing part 70 programs in many states.

  

	EPA’s approach involves the interrelationship of terms within the
part 70 definition of “major source” in title V and EPA’s
implementing regulations, and EPA’s historical practice of
interpreting the term “any air pollutant” in the “major stationary
source” component of that definition.  EPA believes the approach in
the final rule will allow many states to adopt the final rule through
interpretation of existing state laws.  Specifically, paragraph (3)
within the definition of “major source” found in 40 CFR 70.2 and
71.2 defines a major source as a “a major stationary source of air
pollutants, as defined in section 302 of the Act, that directly emits or
has the potential to emit, 100 tpy or more of any air pollutant…” 
The EPA previously articulated the Agency’s interpretation that the
regulatory and statutory definitions of “major source” under title
V, including the term “any air pollutant,” applies to pollutants
“subject to regulation.”  EPA recently re-affirmed this position in
EPA’s Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by Clean Air Act Permitting Programs.  75 FR 17704,
17022-23 (April 2, 2010), the Interpretive Memorandum Reconsideration
Final Action.  

	

	Accordingly, under our long-established policy, states historically
have interpreted the term “any air pollutant” under the title V
definition of “major source” to mean any pollutant “subject to
regulation” under the Act.  Thus, as a matter of established
interpretation, EPA and states effectively read the definition of
“major source” under title V to include a source “…that directly
emits or has the potential to emit, 100 tpy or more of any air pollutant
subject to regulation under the Act”  [emphasis added].  By amending
our regulations to expressly include and define “subject to
regulation” to implement our tailoring for GHGs under title V, we are
seeking to enable states to adopt and implement this approach through a
continued interpretation of the phrase “any air pollutant” within
the “major source” definition, without the need for changes to state
regulations or statutes.  States may be able to track EPA’s approach
to tailoring for GHG permitting without regulatory or statutory changes,
for example, where a state has taken the position, or determines now,
that the state’s interpretation of “major source,” “subject to
regulation” and/or “any air pollutant” is intended to track
EPA’s interpretation. 

	

	Thus, EPA is adding the phrase “subject to regulation” to the
definition of “major source” under 40 CFR 70.2 and 71.2.  EPA is
also adding to these regulations a definition of “subject to
regulation.”  Under the part 70 and part 71 regulatory changes
adopted, the term “subject to regulation,” for purposes of the
definition of “major source,” has two components.  The first
component codifies the general approach EPA recently articulated in the
“Reconsideration of Interpretation of Regulations That Determine
Pollutants Covered by Clean Air Act Permitting.”  75 FR 17704.  Under
this first component, a pollutant “subject to regulation” is defined
to mean a pollutant 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 and that has taken effect under the CAA. 
See id. at 17022-23; Wegman Memo at 4-5.  To address tailoring for GHGs,
EPA includes a second component of the definition of “subject to
regulation,” specifying that GHGs are not subject to regulation for
purposes of defining a major source, unless as of July 1, 2011, the
emissions of GHGs are from a source emitting or having the potential to
emit 100,000 tpy of GHGs on a CO2e basis.

	

	As explained previously, we find no substantive difference between the
alternative mechanisms for implementing GHG tailoring in the final rule.
 Whether we add GHG thresholds directly to the definition of “major
source” (as we proposed), or alternatively, expressly add and define
the term “subject to regulation,” both approaches revise the
definition of “major source” to implement the GHG Tailoring Rule. 
Accordingly, we adopt the later approach to facilitate state
implementation of the final rule through an interpretation of existing
state part 70 programs.  Similar to our explanation previously for PSD,
while we adopt the “subject to regulation” mechanism for
implementing GHG tailoring in the final rule, the thrust of our
rulemaking is to apply the title V definition of “major source” –
which includes the statutory term, “major stationary source” - to
GHG sources by treating only GHG sources that emit at levels above the
steps 1 and 2 thresholds as meeting that definition.  Further, we
believe that our action may reasonably be construed to revise any of
several terms in that definition, including (i) the numerical
thresholds, as we proposed; (ii) the term “any air pollutant,” (iii)
the term “a major stationary source,” (iv) the term “subject to
regulation,” which, as discussed previously, our regulations graft
into the definition of “major source.”  We believe that the specific
choice of which term constitutes the legal mechanism does not have a
substantive legal effect because each mechanism involves one of the
components of the regulatory term “major source” – which embodies
the meaning of the statutory term, “major source” -- and it is that
term that we are interpreting to tailor title V applicability for
GHG-emitting sources.  Thus, while the “subject to regulation”
mechanism facilitates expeditious implementation by states, and we are
therefore revising our regulations to adopt this approach, we otherwise
find no substantive difference between the alternative mechanisms we may
use to finalize the proposed rule.

Further, similar to our revised approach for addressing state
SIP-approved PSD programs, we are delaying our action to limit our
previous approvals for state part 70 operating permit programs.  In our
proposed rule, we explained our concern that states lack adequate
personnel and resources to carry out part 70 operating permit programs
for GHG sources that emit or have the potential to emit 100 tpy of GHGs.
 Accordingly, we proposed to use our general rulemaking authority under
section 301(a) of the CAA and APA section 553 to limit our prior
approval of state operating permit programs.  This limited approval
action would have had the effect of applying CAA permitting requirements
only to sources that exceed the permitting thresholds established in
this rule for the phase-in, because only those sources would be covered
by the federally approved part 70 programs.  74 FR at 55345.  As
discussed previously, we are proceeding with a slightly revised approach
to address concerns similar to those raised with our proposed approach
for addressing SIP-approved PSD permit programs.  Because we now
recognize that, like the PSD program, many states will be able to
implement the final rules without the need to revise their existing part
70 operating permit programs, we are delaying further action on our
proposal to limit approval of existing part 70 programs until we better
understand how permitting authorities will implement our final rule.

  

In addition to the information requested previously on SIP-approved PSD
permit programs, we ask each state to submit a letter to the appropriate
EPA Regional Administrator no later than 60 days after promulgation
detailing the state’s plan for permitting of GHG sources under the
state’s part 70 program.  In that letter, states should explain
whether they will adopt an interpretation of the terms “major
source” or any of its component terms – “a major stationary
source,” “any air pollutant,” or “subject to regulation,” or
the numeral thresholds -- that is consistent with EPA’s regulatory
interpretation of the these terms as codified at 40 CFR 70.2, and
whether the state intends to adopt the interpretation without
undertaking a regulatory or legislative process.  This approach may be
available, for example, where a state has taken the position, or
determines now, that the state’s interpretation of these terms is
intended to track EPA’s interpretation, resulting in title V
permitting for sources of GHGs as described in EPA’s regulations
adopted in this rule.  If a state must revise its title V regulations or
statutes to implement the interpretation, we ask that it provides an
estimate of the time to adopt final rules or statutes in its letter to
the EPA Regional Administrator.  If a state chooses not to (or cannot)
adopt our interpretation, the letter should address whether the state
has alternative authority to implement the GHG tailoring approach or
some other approach that is at least as stringent, but which also
addresses the expected shortfalls in personnel and funding and delays in
permitting that would exist if the state carried out permitting under
part 70 program thresholds lower than those adopted by EPA in this final
rule.  For any state that is unable or unwilling to adopt the permitting
thresholds in the final rules, and otherwise is unable to demonstrate
adequate personnel and funding, EPA will move forward with finalizing a
narrowed limited approval of the state’s existing part 70 program.  If
we do so, then we will respond in that action to comments on our
proposal.  

In our proposed rule, we also noted that a handful of part 70 operating
permit programs may include provisions that would not require operating
permits for any source of GHG emissions because, for example, the
programs may apply only to pollutants specifically identified in the
program provisions, and the provisions do not specifically identify
GHGs.  In these cases, states may be unable to interpret their
regulatory provisions to interpret the term “any pollutant” to
include pollutants “subject to regulation.”  We indicated that we
intended to take separate action to identify these programs, and to take
regulatory action to correct this deficiency.  Accordingly, we ask any
state or local permitting agency that does not believe its existing part
70 regulations convey authority to issue title V permits to GHG sources
consistent with the final rule to notify the EPA Regional Administrator
by letter as to whether the state intends to undertake rulemaking to
revise its rules consistent with these applicability thresholds.  This
notification should be done no later than the previously described
letter regarding adoption of the Tailoring Rule, and could be combined
with similar notifications we request regarding the PSD program.  We
intend to undertake a separate regulatory action to address part 70
programs that lack the ability to issue operating permits for GHG
sources consistent with the final rule.  We also intend to use our
federal title V authority to ensure that GHG sources will be permitted
consistent with the final rule.  Also, while EPA does not believe NODs,
authorized under section 502(i) of the Act and §70.10(b), are needed at
this time, EPA will review the information submitted by states in
response to this final rule, work with them to adopt the tailoring rule,
and undertake oversight actions, if appropriate, which may include
issuing NODs.

Comment:

Several commenters question the legal merits of EPA’s
“retroactive” reinterpretation of SIPs (3720, 4524, 5083, 5133,
5140, 5181, 5278, 5800).  For example, courts may not agree that EPA may
circumvent the procedural requirements of SIP calls and public notice
and comment by withdrawing prior approvals of any GHG threshold below
EPA’s 25,000 tpy (5133) and even if EPA could rely on the SIP
“correction” provision in section 110(k), there is no similar
provision for EPA to “correct” an error in its original approval of
a title V program (5140, 5181, 5278).  In addition, this plan disrupts
the normal, orderly process of revision of state programs (5133) and
this contravenes settled law on the roles of EPA and the states in SIP
planning (5181).  Furthermore, if a state wanted to fix its SIP after
the fact, relaxing the CAA rules would fall under the CAA’s
“antibacksliding” provision (4631, 5318, 6491, 7961).  Such a
retroactive effort would call into question the validity of permits
issued and invite litigation.  Two commenters (5140, 5278) also contend
that EPA’s proposed approach to program revisions is problematic
because the requirement to obtain a permit is a source obligation, so if
EPA’s approach is invalid, the sources will be liable for failure to
obtain a permit.  Sources are also at risk of citizen suits under
federal law for failure to hold required permits.  While a source may
raise the proposed rule as a defense to a citizen suit, a court that
believes EPA was not authorized to retroactively revise its SIP
approvals could similarly disregard the proposed rule.  EPA’s proposed
rule thus puts sources at an unacceptable risk of enforcement through
citizen suits.  

Response:

Because we now anticipate that many states will be able to implement our
tailoring approach through interpretation of the term “subject to
regulation,” and without the need to revise their SIPs, we are
delaying further action on our proposal to limit our approval of SIPs
until we better understand how permitting authorities will, in fact,
implement our tailoring approach.  For this purpose, we ask each state
to submit a letter to the appropriate EPA Regional Administrator no
later than 60 days after publication of this rule in the Federal
Register.  In that letter, the state should explain whether it will
apply EPA’s meaning of the term “subject to regulation” and if so,
whether the state intends to incorporate that meaning of the term
through interpretation, and without undertaking a regulatory or
legislative process.  If a state must undertake a regulatory or
legislative process, then the letter should provide an estimate of the
time needed to adopt the final rules.  If a state chooses not to adopt
EPA’s meaning by interpretation, the letter should address whether the
state has alternative authority to implement either our tailoring
approach or some other approach that is at least as stringent, whether
the state intends to use that authority.  If the state does not intend
to interpret or revise its SIP to adopt the tailoring approach or such
other approach, then the letter should address the expected shortfalls
in personnel and funding that will arise if the state attempts to carry
out PSD permitting for GHG sources under the existing SIP and
interpretation.  

For any state that is unable or unwilling to adopt the tailoring
approach by January 2, 2011, and that otherwise is unable to demonstrate
adequate personnel and funding, we will move forward with finalizing our
proposal to limit our approval of the existing SIP.  Although we
received comments questioning our authority to limit approval as
proposed, using our general rulemaking and section 110(k)(6)
authorities, we are not responding to those comments at this time.  We
will address these comments in any final action we take to implement a
limited approval.

In our proposed rule, we also noted that a handful of EPA-approved SIPs
fail to include provisions that would apply PSD to GHG sources at the
appropriate time.  This is generally because these SIPs specifically
list the pollutants subject to the SIP PSD program requirements, and do
not include GHGs in that list, rather than include a definition of NSR
regulated pollutant that mirrors the federal rule, or because the state
otherwise interprets its regulations to limit which pollutants the state
may regulate.  At proposal, we indicated that we intended to take
separate action to identify these SIPs, and to take regulatory action to
correct this SIP deficiency.

  

We ask any state or local permitting agency that does not believe its
existing SIP provides authority to issue PSD permits to GHG sources to
notify the EPA Regional Administrator by letter, and to do so no later
than 60 days after publication of this rule in the Federal Register. 
This letter should indicate whether the state intends to undertake
rulemaking to revise its rules to apply PSD to the GHG sources that will
be covered under the applicability thresholds in this rulemaking, or
alternatively, whether the state believes it has adequate authority
through other means to issue federally-enforceable PSD permits to GHG
sources consistent with this final rule.  For any State that lacks the
ability to issue PSD permits for GHG sources consistent with this final
rule, we intend to undertake a separate action to issue a SIP call,
under CAA section 110(k)(5).  As appropriate, we may also impose a FIP
through 40 CFR  52.21 to ensure that GHG sources will be permitted
consistent with this final rule.

8.2  Transitional Issues

This section involves comments concerning transitional issues, including
commenter requests for grandfathering exemptions from GHG permitting
requirements; commenter requests for clarification on whether and when
permits and applications must be revised, reopened or otherwise updated
to address GHG emissions after the Tailoring Rule takes effect; and
commenter requests for delays in the effective “trigger” date of the
Tailoring Rule.

8.2.1  Requests for “Grandfathering” and for Exemptions from
Revision, Reopening or Update Requirements for Application and Permits

Comment:

Several commenters ask that existing permits be exempted from having to
consider GHG emissions in PSD and title V permitting after the Tailoring
Rule is finalized.  They suggest that EPA not require sources with valid
PSD (5079) or title V (4120, 5059, 5079, 5224) permits to seek revised
permits for GHGs. 

Several commenters would also like us to grandfather sources that have
no permits at the time the new GHGs requirements come into effect.  They
recommend that facilities that have been determined not to need PSD
permits before the effective date of GHG regulation and that exceed the
thresholds for GHG emissions, but not for criteria pollutants, not be
required to apply for PSD permits (5113).  Another commenter thinks that
EPA should grandfather facilities that may not be title V facilities
now, but would become subject to title V due to GHG thresholds.  (3282) 

	Other commenters would like us to grandfather permit applications that
were submitted prior to the effective date (or when GHG emissions are
first subject to regulation) of the Tailoring Rule from any requirement
to address GHGs in the application, and by extension, the permit
(because the application is the basis for the permit).  They believe it
would be unduly burdensome and impose unreasonable additional costs and
delay to reopen PSD and title V permit applications already submitted to
address GHG emissions if the sources are working in good faith under the
existing regulatory process (4515, 4691, 4786, 5147, 5224, 5277, 5341,
5711, 5742, 6458).  Some of these commenters (4208, 4228, 4514, 4525,
4903, 5144, 5706, 5742, 5773, 6202, 6270, 6458, 6460) add that there is
no information currently available as to what BACT will look like for
GHG emissions, while one commenter (5277) adds that this would slow PSD
and other permitting to a crawl due to low staff numbers, hiring
freezes, and lack of training opportunity for permitting staff.  For
these reasons, some of these commenters recommend that:

EPA require sources that have already submitted a complete PSD permit
application before the applicable PSD triggering date for GHGs (and
irrespective of when any completeness determination is made) to have the
application evaluated, and its permit issued, on the basis of the PSD
requirements in effect at the time the application was submitted. 
(4122, 4318, 4522, 4523, 4749, 4992, 5038, 5080, 5089, 5113, 5114, 5128,
5257, 5317, 5327, 5601, 5741, 6459, 8025, 8301).  Some of these
commenters believe this approach would be consistent with the
administrative law principle that legislative rules cannot have
retroactive effect unless expressly authorized by Congress [citing,
e.g., Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208-09 (1988)].  

EPA should add that neither the application nor the final permit would
need to address GHGs (5317) and that the permit applications would be
final and should not be reopened to address GHG emissions.  (5113) 

EPA should clarify that GHG permitting is not required for applications
received before the effective date of the Tailoring Rule, assuming the
permit has not been issued, and that EPA should delay permitting until
at least October 1, 2011.  (5341)  

Facilities should be grandfathered (4515, 4691, 4770, 5180, 5199, 5277,
5301, 5711, 6458) because EPA has provided similar exclusions in the
past when the rules of the NSR program changed (4515, 4691, 5180, 5277,
5711) (e.g., comment 5277 cites the PM-10 surrogate policy, 40 CFR
52.21(i)(1)(x) and two guidance documents as examples of past practices
EPA has used for grandfathering) and EPA could use the “administrative
necessity” doctrine to confirm that only new permit applications are
impacted.  If a PSD or title V permit application is submitted and is
administratively complete before the date on which PSD or title V begins
to apply to a pollutant, then that application should not be subject to
any requirements for that pollutant nor should the application be
considered as incomplete on the ground that it did not address that
pollutant (5199)

Various commenters ask EPA to clarify that if a source with a final PSD
permit has not commenced construction by the time GHGs become subject to
regulation, they should not be required to submit new permit
applications to address the new GHGs requirements.  They recommend that
EPA allow permitted sources that commence construction within 18 months
from the date when GHGs become subject to regulation (or any earlier
date required by the SIP) not be required to seek a revised PSD permit
for GHGs (5078, 5079) or be required to obtain a PSD permit solely due
to their GHGs emissions (5180).  One commenter (5224) requests that EPA
confirm that construction projects that have not commenced when the LDVR
goes into effect, where all the applicable permitting has been
initiated/completed, are exempt from having to revise their PSD permit
application.  

	Other commenters would like us to grandfather minor sources from the
new GHG requirements (4122, 4318, 4522, 4523, 4691, 4749, 4992, 5038,
5080, 5089, 5114, 5128, 5257, 5301, 5317, 5327, 5601, 5741, 6459, 8301).
 They recommend that EPA provide that any source that is not “major”
and that has submitted a complete “minor NSR” application before the
applicable PSD triggering date for GHGs have that application evaluated,
and its permit issued, on the basis of the minor NSR requirements in
effect at the time the application was submitted (4122, 4318, 4522,
4523, 4691, 4749, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327,
5601, 5741, 6459, 8301).  One commenter adds that this would be
consistent with, for example, the 1980 PSD Regulations, which exempted
all sources not subject to the pre-existing PSD regulations if they
obtained all permits required by the applicable SIP before the date of
promulgation of the new PSD regulations (and commenced construction
within 18 months of the date of promulgation) (4691).  

One commenter, 4298, requests that EPA implement a generous transition
policy for sources with actual emissions below the PTE thresholds.  The
commenter adds that any “state-enforceable limits that are enforceable
as a practical matter” should be explicitly recognized as limiting
PTE, without the need to eventually upgrade such requirements to
“federal enforceability” in a permit.  

Many commenters request, in general, that EPA clarify transitional and
timing issues associated with the Tailoring Rule.  

EPA must adopt reasonable transition provisions and this is consistent
with EPA past practice.  (4122, 4318, 4522, 4523, 4749, 4992, 5038,
5080, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301)  The
commenters provide many examples where EPA has provided such transition
considerations in the past.  

At a minimum, any new GHG rules should provide a transition period and
allow greater phase-in to reduce economic disruption and ease state
administration of permits, suggesting the transition should extend to
March 2012.  (4106) 

General comments and questions, specific to the transition for the PSD
program:

EPA should consider provisions in the final rule that would allow an
orderly transition of GHG regulation under the PSD program (4120, 4749).
 If not, the Tailoring Rule might still yield an unworkable program.

The final Tailoring Rule should clarify at which stage ongoing projects'
PSD reviews must consider GHGs.  (5079)

EPA should consider not requiring approval of PSD permits between
approval of the Tailoring Rule and the date the state approves the GHG
thresholds in their rules (5338) to allow time for the state to
incorporate the new thresholds into their rules.

What will the requirement be for a facility that has a PSD permit
underway with the appropriate regulatory authority?  Must the PSD
application be rewritten to include a review of GHG emissions from the
proposed project and then resubmitted to the regulator for review
(4747)?  

General comments, specific to the transition for the title V program:

For sources with existing title V permits:

Incorporate GHG references and the GHG monitoring rule requirements into
their title V permits at the time the permit is normally up for renewal.
 (2797, 5084, 5443, 5528, 6681) 

Incorporate the GHG provisions when their permit is up for renewal, but
not before the first year of GHG reporting data for year 2010 is
submitted in early 2011.  The data will be better and will avoid the
need for companies to prepare the data twice.  (5705)

Permits should not be required to address GHGs before renewals even if
they undergo a modification.  (4749)

How must a source amend the permit to incorporate GHGs?  Should the
source assume that the provisions for “reopening for cause” at 40
CFR 70.7(f)(1)(i) apply?  

Permits should not be required to comply with the new GHGs provisions
until the source undertakes a PSD modification or consider a phased-in
approach with a higher major source threshold for title V initially than
that for PSD.  The same "administrative necessity" and "absurd results"
legal doctrines that EPA relies on for the proposal as a whole would
also apply to these types of title V-specific tailoring approaches. 
(7935)  

GHGs limits (and any associated monitoring, recordkeeping, reporting, or
testing requirements) should not be included in title V permits because
there are no applicable requirements that place limits or require
controls of GHGs in the CAA.  (4749)

For sources that become subject to title V for the first time:

Require application submittal one year after they become subject to
regulation.  (2797, 5084, 5443, 5528, 6681)

Sources subject under step 2 should submit applications one year after
the effective date of step 2.  (2797, 5084, 5443, 5528, 6681)  

Where title V permitting for GHGs is required EPA should eliminate
states’ discretion to require permit applications any sooner than 1
year after commencing operation.  (4298)  

EPA should clarify that sources in states with merged PSD and title V
permit programs should apply for the permit prior to construction. 
(4298)

Authority should be given to the states to call for 20 percent of the
new required title V applications for sources over 25,000 tpy CO2e every
year over a 5-year period.  If not, all of the renewal applications will
be due together 5 years later, and every 5 years thereafter.  (8747)  

EPA should provide the maximum legally defensible amount of time to pass
between the issuance of the LDVR and the date GHGs become regulated
pollutants.  (5338) 

Response:

We partially addressed transitional issues for PSD permitting in our
April 2, 2010 final action on reconsideration of the Interpretive Memo. 
75 FR 17021.  This action addressed the applicability of PSD permitting
requirements for GHGs to pending PSD permit applications that were (or
will be) submitted prior to January 2, 2011 based on emissions of
pollutants other than GHGs.  However, we have not yet addressed the
questions raised by public comments concerning sources that obtain PSD
permits, minor NSR permits, or determinations that no such permits are
needed prior to the step 1 period set forth in this rule.  We have also
not yet addressed questions about the applicability of PSD permitting
requirements for sources that are not currently required to submit an
application for a PSD permit but that could be required to do so in step
2 of the phase-in established in this action.  In addition, our April 2,
2010 action did not address transitional issues concerning the
application of the title V provisions to GHGs.

1.  Transition for PSD Permit Applications Pending When Step 1 Begins

In our action on April 2, 2010, EPA explained that the Agency did not
see grounds to establish a transition provision for pending PSD permit
applications because we had determined that PSD permitting requirements
would not apply for GHGs for another 9 months.  We explained that permit
applications submitted prior to April 2, 2010 should in most cases be
issued prior to January 2, 2011 and, thus, effectively have a transition
period of 9 months to complete processing before PSD requirements become
applicable to GHGs.  We also observed that, in the case of any PSD
permit application review that cannot otherwise be completed within the
next 9 months based on the requirements for pollutants other than GHGs,
it should be feasible for permitting authorities to begin incorporating
GHG considerations into permit reviews in parallel with the completion
of work on other pollutants without adding delay to permit processing. 
Additional discussion of EPA’s reasons for not developing transition
provisions for PSD permit applications that are pending on January 2,
2011 are provided in the April 2, 2010 notice.  75 FR 17021-22.

For these same reasons, we continue to feel that a transition period is
not warranted to incorporate GHG requirements into any PSD permit
applications that are pending when step 1 of the permitting phase-in
begins for those sources that would otherwise need to obtain a PSD
permit based on emissions of pollutants other than GHGs.  Thus, this
action makes no change to the position we expressed on this particular
issue in the April 2, 2010 notice.  In this final rule on tailoring the
PSD program to address GHGs, we have determined that the additional
burden of incorporating GHG requirements into PSD permits for the
sources already required to obtain such permits is manageable in the
step 1 period.  Thus, this rule has added no additional requirements or
limitations that would justify deferring the establishment of pollution
controls for this category of GHG sources once PSD permitting
requirements are initially triggered for GHGs.

2.  PSD Permits Issued Prior to Step 1	

EPA has not historically required PSD permits to be updated or reopened
after they are issued in the absence of an action by the applicant to
change the physical or operational characteristics of the source
described in the permit application.  EPA’s PSD permitting regulations
contain no provisions that address the modification or amendment of a
PSD permit or require a PSD permit to be reopened or modified on the
basis of new PSD permitting requirements that take effect after the
final permit is issued.  Since PSD permits are construction permits, EPA
has not required updates to PSD permits in the same manner as is
typically required for operating permits that incorporate a variety of
applicable requirements (such as title V permits and NPDES permits under
the CWA).  In addition, unlike operating permits, PSD permits are not
required to be renewed.  However, if construction under a PSD permit is
not commenced in a timely manner or is discontinued for an extended
period, a PSD permit may expire if an extension is not requested or
justified.  See, 40 CFR 52.21(r)(2); 40 CFR 124.5(g).

With respect to the application of PSD permitting requirements for GHGs
beginning on January 2, 2011, we do not see any cause to deviate from
our historical practice of not requiring PSD permits to be reopened or
amended to incorporate requirements that take effect after the permit is
issued.  Thus, we are not promulgating any new rules or requirements
pertaining to PSD permits issued prior to Step 1 of the phase-in
described in this rule.  There is no mandatory requirement to reopen a
previously issued PSD permit to incorporate GHG requirements that were
not applicable at the time the permit was issued.  

A major source that obtains a PSD permit prior to January 2, 2011 will
not be required under EPA regulations to reopen or revise the PSD permit
to address GHGs in order for such a source to begin or continue
construction authorized under the permit.  Our current PSD permitting
regulations provide that “[n]o new major stationary source or major
modification to which the requirements of paragraphs (j) through (r)(5)
of this section apply shall begin actual construction without a permit
that states the major stationary source or major modification will meet
those requirements.”  40 CFR 51.166(a)(7)(iii); 40 CFR
52.21(a)(2)(iii).  The term “begin actual construction” generally
means “initiation of physical onsite construction activities on an
emissions unit which are of a permanent nature” and includes
activities such as “installation of building supports and foundations,
laying underground pipework and construction of permanent storage
structures.”  40 CFR 51.166(b)(11); 40 CFR 52.21(b)(11).  A source
that begins actual construction authorized under a PSD permit prior to
January 2, 2011 will not be in violation of the prohibition described
previously if it continues construction after that date.  This portion
of the regulation precludes only beginning construction without the
appropriate preconstruction permit and does not require a permit to be
updated to continue actual construction that has already begun.  

Furthermore, a source that is authorized to construct under a PSD permit
but has not yet begun actual construction on January 2, 2011 may still
begin actual construction after that date without having to amend the
previously-issued PSD permit to incorporate GHG requirements.  Sections
51.166(a)(7)(iii) and 52.21(a)(2)(iii) require “a permit that states
that the major stationary source or major modification will meet those
requirement,” which refers to the “requirements in paragraphs (j)
through (r)(5)” referenced earlier in those provisions.  EPA construes
this language to describe a permit that meets the requirements of
paragraph (j) through (r)(5) that are in effect at the time the permit
is issued.  Permitting and licensing decisions of regulatory agencies
must generally reflect the law in effect at the time the agency makes a
final determination on a pending application.  See Ziffrin v. United
States, 318 U.S. 73, 78 (1943); State of Alabama v. EPA, 557 F.2d 1101,
1110 (5th Cir. 1977); In re: Dominion Energy Brayton Point, LLC, 12
E.A.D. 490, 614-616 (EAB 2006); In re Phelps Dodge Corp., 10 E.A.D. 460,
478 n. 10 (EAB 2002).  

 

Thus, a source may begin actual construction on or after January 2, 2011
under a PSD permit that authorized construction to begin prior to
January 2, 2011 because such a permit states that the source will meet
the requirements of paragraphs (j) through (r)(5) of these regulations
(or state equivalents) that were in effect at the time the permit was
issued.  However, this would not be the case if the permit has expired
because the applicant has discontinued construction or failed to
commence construction by the necessary date.  See, 40 CFR 52.21(r)(2). 

This approach is consistent with EPA’s practice when the
preconstruction permitting requirements change by virtue of the
designation of an area as a nonattainment area after a PSD permit is in
issued.  In transitional guidance issued by EPA in 1991, EPA explained
that “the area designation in effect on the date of permit issuance by
the reviewing agency determines which regulations (part C or D) apply to
that permit.”  Memorandum from John S. Seitz, Director OAQPS, New
Source Review (NSR) Program Transitional Guidance, page 6 (Mar. 11,
1991).  This memorandum explained further that “where a source
receives a PSD or other permit prior to the date the area is designated
as nonattainment, the permit remains in effect” as long as the sources
meets the conditions necessary to prevent the permit from expiring.  Id.
at 6. 

 

This approach does not apply if the source engages in a major
modification after January 2, 2011 that is not authorized by the
previously issued permit.  Once step 1 of the phase-in begins, if the
PSD requirements for GHGs are applicable to a previously-permitted
source that engages in a major modification not covered by the permit,
such a source will need obtain a new PSD permit to authorize the
modification and that permit may need to include GHG requirements
depending on the level of increase in GHGs that results from the
modification.

 

3.  Additional Sources for Which PSD Applies in Step 2

In light of the terms of existing PSD regulations and the lead time
provided in this action for sources that will first become subject to
PSD permitting in step 2, we do not believe there is presently a need to
establish transition provisions for sources that will be required to
obtain PSD permits for the first time in step 2 of the phase-in.  As
described previously, under our current PSD permitting regulations, a
new major stationary source or major modification may not begin actual
construction without a PSD permit that meets the applicable
preconstruction permitting requirements.  40 CFR 51.166(a)(7)(iii); 40
CFR 52.21(a)(2)(iii).

Since a permit must be obtained before a major source may begin actual
construction, the major source preconstruction permitting requirements
in sections 51.166 and 52.21 of the regulation do not generally apply to
a source that begins actual construction at a time when it was not a
major source required to obtain a PSD permit.  One exception, however,
is the unique circumstance when a source becomes a major source solely
by virtue of the relaxation of an enforceable limitation on the
source’s potential to emit.  40 CFR 51.166(r)(2); 40 CFR 52.21(r)(4). 
But absent these circumstances, PSD preconstruction permitting
requirements do not generally preclude a source from continuing actual
construction that began before the source was a source required to
obtain a PSD permit.  Thus, a source that began actual construction
under the authorization of any previously required minor source or state
construction permit is not required to meet any PSD preconstruction
permitting requirement that becomes applicable after actual construction
begins unless the source engages in a major modification after PSD
permitting requirements are applicable.  Likewise, a PSD permit is not
required after a source begins actual construction based on a valid
determination (by the source or the permitting authority) that the
source need not obtain either a major PSD permitting requirements or and
minor NSR permit.  Based on these provisions in existing regulations,
EPA will not require any sources to which PSD permitting requirements
begin to apply in step 2 to obtain a PSD permit to continue construction
that actually begins before step 2 begins.

However, we will expect phase 2 sources that begin actual construction
in phase 2 (i.e., beginning July 1, 2011) to do so only after obtaining
a PSD permit in accordance with sections 52.21, 51.166, or any
applicable state regulation that meets the requirements of section
51.166.  We recognize the potential for the triggering of step 2 to
result in a change in status where a project may legally have begun
actual construction before step 2 but did not do so and would then need
a PSD permit.  However we also note that we are providing over a year of
lead time before PSD permitting requirements become applicable to step 2
sources.  If projects would be adversely affected by this change in
status, this lead time affords an opportunity for sources planning such
projects to secure appropriate minor NSR permits (which generally take
less than a year to issue), non-applicability determinations, etc. in
time to avoid such a change in status.  If a new or modified source that
would become newly subject to PSD in step 2 plans to begin actual
construction before step 2, it has more than a year to obtain the
applicable preconstruction approvals and begin actual construction. 
Likewise, a step 2 source that does not anticipate the ability to begin
actual construction before step 2 begins should have enough lead time to
submit a PSD permit application and obtain the necessary permit without
significantly delaying the project further.  Therefore, we do not think
it is necessary or appropriate to promulgate a transition provision that
would exempt step 2 sources from PSD permitting requirements that will
apply based on construction that begins after step 2 takes effect.

This approach for step 2 sources that have obtained a minor source
construction permit or non-applicability determination differs from the
approach described previously for source that obtained a PSD permit
prior to step 1.  As described previously, a step 1 source that is
authorized to begin actual construction before January 2, 2011 under a
previously-issued PSD permit may begin actual construction under that
permit after January 2, 2011 without modifying the PSD permit to address
GHGs.  However, a step 2 source that was not required to obtain a PSD
permit before Step 2 begins would need to obtain a PSD permit addressing
GHGs if it has not yet begun actual construction prior to step 2, even
if the source had obtained any preconstruction approvals that were
necessary to authorize construction prior to step 2.  This is because
such a step 2 source that begins actual construction after step 2 would
likely be doing so without having any permit meeting the requirements of
paragraphs (j) through (r)(5) of section 52.21, 51.166, or a state
equivalent.  A source that has obtained only a minor source permit prior
to step 2 but that begins actual construction after July 1, 2011 would
violate the requirements of section 52.21(a)(2)(iii), 51.166(a)(7)(iii),
or a state equivalent, unless the source took care to ensure that it was
authorized to construct under a PSD permit or could demonstrate that the
source’s minor source construction permit makes clear that requirement
of paragraphs (j) through (r)(5) of sections 52.21, 51.166, or a state
equivalent would be met by the source even though such a permit was not
nominally a PSD permit.  This difference in approach for non-PSD sources
is driven by the terms of sections 52.21(a)(2)(iii) and
51.166(a)(7)(iii).  Since we have not provided any prior notice that we
might be considering revisions to sections 52.21 and 51.166 to address
this topic, we are unable to revise the regulations in this action to
achieve the same result for non-PSD sources as for PSD sources. 
Furthermore, this difference in approach is not unreasonable since
non-PSD sources will not trigger permitting for GHG until step 2 (only
anyway PSD source trigger in step 1).  Thus sources will have until July
1, 2010, an additional 6 months of lead time, to prepare for the
transition described here.  

EPA has previously promulgated exemptions that have authorized some
sources that were not previously subject to the PSD regulations to
commence construction on the basis of minor source permits after the
date new PSD requirements have took effect in 1978 and 1980.  See e.g.,
40 CFR 52.21(i)(1)(iv)-(v).  There is a notable distinction between
these provisions, which use the term “commence construction,” and
the terms of sections 52.21(a)(2)(iii) and 51.166(a)(7)(iii), which use
the term “begin actual construction.”  Commence construction is
defined more broadly than begin actual construction to include obtaining
all necessarily preconstruction approvals and either beginning actual
on-site construction or entering into binding contracts to undertake a
program of actual construction.  40 CFR 52.21(b)(9); 40 CFR
51.166(b)(9).  The term commence construction is also defined in the
CAA.  42 USC 7479(2)(A).  Among other purposes, the term “commence
construction” is generally used in the Act and EPA regulations to
distinguish construction activities that are exempt from new PSD
permitting requirements from those that are not.  See e.g., 42 USC
7475(a); 40 CFR 52.21(i)(1)(i)-(v).  In the absence an explicit
exemption in the CAA or the PSD regulations that uses the term
“commence construction,” we do not believe we can use the date a
source “commences construction” under a minor source construction
permit approval as a demarcation point for step 2 sources that may
continue ongoing construction activities without having to obtain a PSD
permit based on emissions of GHGs.  Since we did not provide prior
notice of an intention to adopt transition provisions applicable to this
situation, we are unable to adopt such an exemption in this action that
applies the term commence construction in this context.  Consequently,
the approach described previously applies the term “begin actual
construction” based on the language in sections 52.21(a)(2)(iii) and
51.166(a)(7)(iii).

4.  Transitional Issues for Title V Permitting

	Since the title V permitting regulations already include a robust set
of provisions to address the incorporation of new applicable
requirements and other transitional considerations, we do not see
grounds to establish unique transition or grandfathering provisions for
GHGs in this action.  Furthermore, since the purpose of title V is to
collect all regulatory requirements applicable to a source and ensure
compliance, we do not believe special exemptions for GHG requirements
are likely to be justified.  The existing title V rules do not provide
any exemptions that relieve the obligation to incorporate all applicable
requirements into a title V permit.  However, the title V regulations
contain numerous provisions that allow a reasonable period of time for
incorporating new applicable requirements or applying for a title V
permit that was not previously required.  Transitional issues for
incorporation of GHG requirements into title V permitting generally
involve questions in the following categories:  (1) permit application
requirements for sources not previously subject to title V that will
become subject to title V requirements in step 2 of the phase-in; (2)
the need for updates or amendments to title V permit applications that
are pending when GHGs become subject to regulation in step 1 of the
phase-in; and (3) the incorporation of new applicable requirements for
GHGs into existing permits for sources currently subject to title V.  

With respect to the first category, a title V source applying for the
first time must submit its permit application within 12 months after the
source “becomes subject to the [operating] permit program” or such
earlier time that the permitting authority may require (see section
70.5(a)(1)).  Sources not otherwise subject to title V can become major
sources subject to title V due to emissions of GHG no sooner than July
1, 2011.  If a source becomes “subject to the [operating] permit
program” on July 1, 2011, then its permit application under the title
V operating permit program would typically have to be submitted no later
than July 1, 2012.  The title V program has traditionally provided
significant flexibility to state programs in setting deadlines for
permit application submittal, consistent with the statutory
requirements, and EPA does not believe, as several commenters suggested,
that it is appropriate or necessary to limit state discretion in this
regard in this action, provided the state’s deadlines are consistent
with the statutory requirements.  Also in this final rule, EPA has
reduced the number of sources that will potentially be subject to title
V as a result of GHG emissions in step 2, compared to the proposal,
because we believe permitting additional sources in step 2 would
overwhelm the permitting process and be contrary to congressional
intent, thus, helping states to manage the transition to permitting GHG
sources.  In the prospective step 3 rulemaking, we will continue to
consider approaches to phasing-in title V applicability for sources of
GHG emissions, which will also potentially help states with transitional
issues, consistent with congressional intent. 

There are also existing regulations relevant for the second category of
GHG transition issues, where sources currently subject to title V have
title V permit applications pending with a permitting authority as of
January 2, 2011.  Where additional applicable requirements become
applicable to a source after it submits its application, but prior to
release of a draft permit, the source is obligated to supplement its
permit application.  See 40 CFR 70.5(b); 71.5(b).  Furthermore, title V
permits are generally required to contain provisions to assure
compliance with all applicable requirements at the time of permit
issuance.  See CAA section 504(a); 40 CFR 70.6(a)(1); 71.6(a)(1).  If a
permitting authority determines that additional information is necessary
to evaluate or take final action on an application (e.g., because of
uncertainty over whether a draft permit assures compliance with all
applicable requirements), it may, and should, request additional
information from the source in writing and set a reasonable deadline for
a response.  See 40 CFR 70.5(a)(2); 71.5(a)(2).  

Likewise, the existing title V regulations provide sufficient transition
for the third category of issues, where a source has additional
GHG-related applicable requirements (such as the terms of a PSD permit)
that must be incorporated into its existing title V permit.  Where a
source is required to obtain a PSD permit, the source must apply for a
title V permit or permit revision within 12 months of commencing
operation or on or before such earlier date as the permitting authority
may establish (or prior to commencing operation if an existing title V
permit would prohibit the construction or change in operation).  See 40
CFR 70.5(a)(1)(ii); 71.5(a)(1)(ii); see also sections 70.7(d) and (e);
71.7(d) and (e) (permit modifications).  In addition, where a source
becomes subject to additional applicable requirements, the permitting
authority is required to reopen the permit to add those applicable
requirements if the permit term has three or more years remaining and
the applicable requirements will be in effect prior to the date the
permit is due to expire.  See 40 CFR 70.7(f)(1)(i); 71.7(f)(1)(i).  

Finally, EPA notes that the existing title V regulations require sources
to furnish permitting authorities, within a reasonable time, any
information the permitting authority may request in writing to determine
whether cause exists for modifying, revoking, and reissuing, or
terminating the permit, and for other reasons, and further provide that
permitting authorities shall reopen and revise permits if EPA or the
permitting authority determine that the permit must be revised or
revoked to assure compliance with applicable requirements.  See sections
70.6(a)(6)(v);71.6(a)(6)(v) and sections 70.7(f)(1)(iv); 71.7(f)(1)(iv).

Thus, EPA believes that the existing title V regulations provide an
adequate regulatory framework for managing the transition to
incorporating GHG requirements in title V permits and additional
specific exemptions or transition rules for title V are not currently
warranted.

8.2.2  Requests for Delays in Implementation 

Comment:

Several commenters assert that EPA has discretion to delay the
implementation of GHG permitting as described in the proposal in various
ways using various mechanisms under the “absurd results” and
“administrative necessity” doctrines.  Examples of the types of
comments received include the following:

If EPA has the legal authority to defer regulation for sources emitting
equal to or less than 25,000 tpy of GHGs, then by implication, EPA also
would have the authority to exempt sources above 25,000 tpy of GHG
emissions, if it is necessary to do so to avoid “absurd results”
(4771, 4863, 5305, 5922) and “administrative infeasibility.”  (4771,
5922)

EPA should delay promulgation of the final automotive emission CO2 rule,
now scheduled for March 2010, to ensure that EPA’s proposed BACT
guidance is available for public comment, and that states are in
position to implement PSD and BACT reviews pursuant to EPA’s final
guidance.  In the mean time, the companion CAFE rule that will be issued
by NHTSA in March 2010 will require equivalent CO2 emission limits on
new automobiles as the final automotive emission CO2 rule.  (5342)

EPA can finalize just the CAFE standards to allow time to formulate an
efficient approach to stationary source regulation without sacrificing
expected light-duty vehicle efficiency improvements.  (5714)  

EPA should delay promulgation of the GHG emission standards portion of
the Motor Vehicle GHG rule until mitigating measures are lawfully in
place.  There is little environmental benefit from regulating GHGs under
this rule and the fact that the timing of the Motor Vehicle GHG Rule is
discretionary means that the PSD Tailoring Rule cannot be justified
under the “absurd results” or “administrative necessity”
doctrine.  (4870) 

EPA has an obligation to respond to the remand from Massachusetts v.
EPA, but EPA retains significant discretion on taking action concerning
regulation of GHGs under the CAA (4771, 5131, 5183, 5300, 5343, 6414,
7131, 8283) and regarding timing of rules based on this remand (4870,
5318, 6414, 8283).  Two commenters add that the Court of Appeals for the
District of Columbia (“D.C. Circuit”) has already denied a petition
to compel EPA action in response to Massachusetts v. EPA  (5278, 5140). 
For that reason:

EPA has clear legal authority to defer promulgation of section 202 GHG
emission standards and thereby avoid the need for the PSD Tailoring Rule
altogether, even now that the Agency has proceeded to finalize the
endangerment and cause or contribute findings under CAA section 202
(4870).  One commenter (5318) adds that EPA needs to conduct further
evaluation of the numerous legal questions surrounding the Tailoring
Rule and evaluate the impact on state and local permitting authorities
in order to insure that the Unfunded Mandates Reform Act (UMRA) of 2005
is not violated.

EPA is well-justified in deferring action on a CAA GHG regulatory
program to provide a reasonable period of time for EPA, states, and
regulated entities to prepare for such a program, given the enormous
difficulties of regulating GHGs under the CAA (5131), and to ensure that
its regulatory program in fact will not create more problems than it
solves (5343).  One commenter adds that EPA should take the time to
gather adequate public input on this plan and carefully examine all of
the consequences of this action (7131).

EPA should simply defer regulating GHG emissions under the PSD and title
V programs to allow Congress the time and opportunity to develop a GHG
regulatory mechanism outside the CAA.  Congress never contemplated, and
certainly never intended, that GHG emissions be regulated under the CAA.
 (5300)

Various commenters state that a delay is necessary to evaluate legal
questions and to accommodate inevitable legal challenges because the
court system needs to test the legality of the Tailoring Rule (5184,
5504, 5524, 5606, 5785, 8015) and the endangerment finding, and as such,
EPA should consider suspending implementation of this proposed rule
(4555).

Several commenters believe that a delay is also necessary to give
everyone time to prepare for the new GHGs requirements because: 

EPA has not given the states sufficient time to revise their SIPs for
GHG permitting (2504, 3278, 3858, 3916, 3918, 4019, 4238, 4239, 4515,
4519, 4521, 4630, 4694, 4691, 4860, 4864, 4866, 4871, 4989, 5061, 5063,
5073, 5081, 5084, 5142, 5304, 5314, 5338, 5339, 5343, 5443, 5528, 6679,
7296, 7935, 8747, 16411).  

EPA must delay the rule at least for more than six months (2504, 3278,
3918, 4019, 4238, 4239, 4860, 4864, 4866, 4871, 4989, 5061, 5081, 5084,
5314, 5339, 5443, 5528, 6679, 6681, 7296, 7935) until more programmatic
systems have been developed (4555, 5143) and to give states sufficient
time to: (1) revise their regulations (3307, 4515, 4524, 4691, 5134,
5711, 16411), (2) contribute to the development of BACT (5342) or any
other guidance (4863, 5276, 5305), (3) train personnel about the new PSD
and BACT requirements (4515, 4691, 5342), (4) prepare for the massive
influx in permit requests (4863, 5184, 5305, 5504, 5606, 5785, 8015),
and (5) allow for an orderly transition and avoid economic disruption
(4749, 5276, 5301, 16411).  

EPA must allow for enough time to resolve all implementation issues. 
(3858, 5143)  

A deferral of 4-5 years is necessary to resolve implementation issues. 
(16411)

It can take up to 2 years to change state rules, hire, and train new
people (4154, 4519, 4521, 5061, 5135, 5443, 5711, 7296) and SIP approval
of a state rule takes between 12 to 20 months.  (3858)  

EPA’s suggestion to use emergency rulemaking procedures is unworkable
because there must be an imminent threat to public health, safety, or
the environment (4521), adjustments to thresholds and fees under this
rule do not rise to that threat level, and such rules can only stay in
place for 90 days and can be renewed only once.  (4521)  

Sources will need sufficient time to collect CO2 emissions data for
title V renewal applications that may be due shortly after this rule
takes effect.  (3757, 3968) 

The lack of BACT guidance remains a massive obstacle to successful
implementation of this rule no matter what applicability thresholds are
adopted.  (3282)

Thus, concerning timing, some of these commenters recommend that:

EPA should allow states 12 months before this rule applies to major PSD
sources.  (4863, 5228, 5305)

EPA should allow for a 1- (5314) to 2-year (4515/4691) extension of the
implementation of these requirements, starting from the date that the
vehicle GHG standards become effective.  (4515, 4691, 5314) 

EPA should extend the applicability date for both programs to no sooner
than 1 year after the effective date of any rule making GHGs a regulated
NSR pollutant.  (4767, 4800)

EPA should phase-in the title V program over 5 years.  (4767, 4800)

EPA should delay applicability for GHGs other than CO2 for at least
another year from when the vehicle GHG standards become effective to
allow EPA and the states to further understand the workload and title V
applicability to pollutants with high GWP.  (5134)

EPA should wait until the GHG Mandatory Reporting Rule data is available
in order to perform a more thorough evaluation of the impacted universe
(4903, 5339) and to minimize the burden on firms seeking permits (4513).

EPA should allow the implementation of this rule to begin with
certification of MY 2012 vehicles.  (3918, 4019, 4238, 4864, 4866, 5057,
5084, 6681), providing 15 months for states to take the necessary
actions to implement the rule.  

EPA should postpone any actions that may trigger PSD and title V until
it has conducted a thorough assessment of the workability and
defensibility of the proposed streamlining techniques (5317) or has
developed an effective means of streamlining implementation (4862, 4903,
5142, 5183, 5773, 16411).  For example, EPA stated in the preamble of
the Tailoring Rule that it would take 3 to 4 years to develop and
implement the various potential techniques needed to “streamline”
and reduce the burden of PSD and title V permitting (16411).  

EPA must provide an implementation timeframe for the establishment of
control technologies for reducing CO2 emissions.  (5142)

EPA should allow a 3- to 5-year phase-in of the Tailoring Rule to allow
sources the time necessary to make emissions reductions and avoid PSD
applicability.  (3278)  

At a minimum, a title V application for a major sources of GHG emissions
(but a minor source of criteria and HAPs) should not be due any earlier
than one year after the first substantive compliance date of any GHG
requirement applicable to that source (e.g., NSPS).  (4871)

EPA clearly has not mapped out a process for implementation that will
foster a climate of investment and regulatory certainty.  It is not
clear the control technology for BACT for GHG is commercially-viable,
and the interrelation of other EPA regulations, such as the GHG
Mandatory Reporting Rule, and companion provisions within the proposed
Tailoring Rule, are unclear.  (4862)

	Other commenters request a delay in order to develop an adequate impact
assessment:

EPA needs to conduct an adequate impact evaluation (0331, 4018, 4123,
5145, 5318, 5451, 5744, 5787, 5886, 7136, 8585, 15050), including the
economic consequences (8272), and the burdens and unforeseen
consequences of these rules (2831).  

EPA needs to further evaluate the impact on state and local permitting
authorities in order to insure that UMRA of 2005 is not violated. 
(5304, 5524)

EPA should conduct a comprehensive analysis (including convening a SBAR
panel) of the impacts of this rule (5088, 5771, 5789, 5236) as well as
the other GHG rules (including the endangerment finding) on all small
businesses (4867).

Members of Congress and agency officials should evaluate the effect that
the proposed regulation will have on local environmental and economic
initiatives (4768) because there are alternative approaches that would
be less expensive, less burdensome, and more economically sound.  

Various commenters believe EPA should delay or stop implementation of
GHG regulation until Congress completes their current debate on GHG
regulation because:

Curbing GHG pollution should be fully debated by Congress and,
therefore, the rulemaking should be delayed until impact projections can
be made (7128) or it is determined that it is the policy of the U.S. to
regulate GHGs (5784).

The CAA is not the appropriate tool for addressing the regulation of GHG
emissions and that the Agency should delay long enough to allow Congress
to take action.  (4771, 5169, 5573, 14710)  

EPA should withdraw the proposed rule and publish a Federal Register
notice announcing (what they feel is)  more reasonable interpretation of
the overall applicability of the PSD program that excludes GHGs.  (5140,
5278) 

EPA should abandon or defer the Tailoring Rule and GHG regulation under
the CAA.  (4990, 5056, 5074, 5085, 5142).

Congress can use this delay to: (1) consider necessary and meaningful
climate legislation/public policy (3307, 3607, 4021, 4903, 5088, 5141,
5258, 5525, 5713, 5803, 8071), (2) alleviate the burden of this
regulation on EPA (3607), (3) develop an implementation plan that can be
agreed upon (5072).  One commenter recommends that EPA should withdraw
and re-propose the Tailoring Rule after Congress fully considers the
policy and economic implications of the Tailoring Rule (5141).  

EPA should withdraw the Tailoring Rule as it is conceived on a legally
precarious theory and agriculture will inevitably be subject to CAA
permitting.  At the very least, EPA should delay action until Congress
finishes work on GHG regulation.  (5303)

It should be Congress, not the Agency that develops such a
“breathtaking” scope of regulation.  (4861)

Congress is already considering climate change legislation and will
provide a more comprehensive response to climate change and GHG
emissions.  (5076, 5103)

Congress can pass compromise climate legislation alleviating the burden
on the EPA.  (5803)

	One commenter (7295) did not request a delay, but did state that
changes this significant should, at a minimum, be debated by Congress
and should not be decided unilaterally by EPA.  Another commenter that
did not specifically request a delay or hold on the rule opines that, if
EPA implements the NSR and title V programs for GHGs, the applicability
of these programs should only be considered interim and should
“sunset” upon the commencement of a GHG program enacted by Congress
(7076).

	Several commenters believe that a delay is needed to allow time (1) for
the American public to review the Tailoring Rule proposal (3741, 4123,
4209, 4631, 4953, 5184, 5454, 5767, 5784, 7131), (2) for EPA to clarify
why the Tailoring Rule is needed, and (3) for EPA to clearly and
accurately explain its costs (5784).

	Various commenters believe delays are necessary to give Congress,
scientists, and the public time to evaluate the science behind these
rulemakings. 

Appropriate scientific and regulatory documentation of the environmental
or climate change benefits is needed to support the Tailoring Rule and
Congress needs to enact a law allowing what we proposed.  (5787)

EPA should consider scientific facts regarding GHGs on the health of our
citizens and the effect on global warming.  (4120)

The recent allegations of bias and lack of peer-reviewed science on the
part of the IPCC mean that all underlying data supporting the findings
in the IPCC report should be available for review by EPA and the science
community.  (5607)  

Response:

Many of the changes we have made to the Tailoring Rule since proposal,
discussed in this and other sections of the RTC and in the preamble for
the final rule, address many of the specific concerns that prompted the
commenters’ to request delays in implementation (e.g., we increased
the GHG applicability threshold for step 2 from 25,000 to 100,000 tpy
CO2e and made other changes with respect to GHG applicability, compared
to proposal, which effectively limits the number of sources potentially
subject to permitting during the early stages of implementation).

With respect to the endangerment/cause or contribute findings under CAA
section 202(a), congressional intent is clear that, as we stated in
making the findings and the Supreme Court held in Massachusetts v. EPA,
we are precluded from considering factors other than the science based
factors relevant to determining the health and welfare effects of the
air pollution in question.  Accordingly,  EPA determined that under
Massachusetts v. EPA, 549 U.S. 497 (2007) we were  precluded from
deferring or foregoing the findings due to concern over impacts on
stationary sources affected by PSD or title V requirements.  See 74 FR
at 66496, 66500-01 (“Taken as a whole, the Supreme Court’s decision
clearly indicates that policy reasons do not justify the Administrator
avoiding taking further action on the questions here.”); see also
Massachusetts v. EPA, 549 U.S. at 533; see also 74 FR at 66515-16
(December 9, 2009).  (The Administrator “must base her decision about
endangerment on the science, and not on the policy considerations about
the repercussions or impact of such a finding).  Moreover, as EPA also
noted, “EPA has the ability to fashion a reasonable and common-sense
approach to address greenhouse gas emissions and climate change.”  74
FR at 66516.

Regarding the timing of the LDVR, Congress’s intent was that 
endangerment/cause or contribute findings under section 202(a) would in
fact lead to control of the air pollutants from new motor vehicles and
new motor vehicle engines contributing to the harm.  The primary goal of
section 202(a) is to achieve such reductions by requiring that EPA adopt
emissions standards, and as a result, proceeding with the LDVR is
consistent with that goal.  In contrast, deferring the LDVR and thereby
delaying achievement of the public health and welfare benefits Congress
expected and required under section 202(a) would run directly counter to
what Congress intended under section 202(a) -- EPA issuing emissions
standards to address the public health and welfare problems that were
identified, not EPA refusing to do so.

Moreover, we have compelling reasons to proceed with the LDVR, in the
manner that we did.  As we stated in the LDVR, in response to similar
comments that we were not obligated to conduct that rulemaking, or to
conduct it at the time that we did: 

	Some of the comments relating to the stationary source permitting
issues suggested that EPA should defer setting GHG standards for new
motor vehicles to avoid … [adverse] stationary source permitting
impacts.  EPA is issuing these final GHG standards for light-duty
vehicles as part of its efforts to expeditiously respond to the Supreme
Court’s nearly three year old ruling in Massachusetts v. EPA, 549 U.S.
497 (2007).  In that case, the Court held that greenhouse gases fit
within the definition of air pollutant in the Clean Air Act, and that
EPA is therefore compelled to respond to the rulemaking petition under
section 202(a) by determining whether or not emissions 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.  The Court further ruled
that, in making these decisions, the EPA Administrator is required to
follow the language of section 202(a) of the CAA.  The Court stated that
under section 202(a), "[i]f EPA makes [the endangerment and cause or
contribute findings], the Clean Air Act requires the agency to regulate
emissions of the deleterious pollutant."  549 U.S. at 534.  As discussed
above, EPA has made the two findings on contribution and endangerment.
74 FR 66496 (December 15, 2009).  Thus, EPA is required to issue
standards applicable to emissions of this air pollutant from new motor
vehicles. 

	The Court properly noted that EPA retained "significant latitude" as to
the "timing ... and coordination of its regulations with those of other
agencies" (id.).  However it has now been nearly three years since the
Court issued its opinion, and the time for delay has passed.  In the
absence of these final standards, there would be three separate federal
and state regimes independently regulating light-duty vehicles to
increase fuel economy and reduce GHG emissions: NHTSA’s CAFE
standards, EPA’s GHG standards, and the GHG standards applicable in
California and other states adopting the California standards. This
joint EPA-NHTSA program will allow automakers to meet all of these
requirements with a single national fleet because California has
indicated that it will accept compliance with EPA’s GHG standards as
compliance with California's GHG standards.  74 FR at 49460.  California
has not indicated that it would accept NHTSA’s CAFE standards by
themselves.  Without EPA’s vehicle GHG standards, the states will not
offer the federal program as an alternative compliance option to
automakers and the benefits of a harmonized national program will be
lost.  California and several other states have expressed strong concern
that, without comparable federal vehicle GHG standards, the states will
not offer the federal program as an alternative compliance option to
automakers.  Letter dated February 23, 2010 from Commissioners of
California, Maine, New Mexico, Oregon and Washington to Senators Harry
Reid and Mitch McConnell (Docket EPA-HQ-OAR-2009-0472-11400).  The
automobile industry also strongly supports issuance of these rules to
allow implementation of the national program and avoid “a myriad of
problems for the auto industry in terms of product planning, vehicle
distribution, adverse economic impacts and, most importantly, adverse
consequences for their dealers and customers.”  Letter dated March 17,
2010 from Alliance of Automobile Manufacturers to Senators Harry Reid
and Mitch McConnell, and Representatives Nancy Pelosi and John Boehner
(Docket EPA-HQ-OAR-2009-0472-11368).  Thus, without EPA’s GHG
standards as part of a federal harmonized program, important GHG
reductions as well as benefits to the automakers and to consumers would
be lost.165 In addition, delaying the rule would impose significant
burdens and uncertainty on automakers, who are already well into
planning for production of MY 2012 vehicles, relying on the ability to
produce a single national fleet.  Delaying the issuance of this final
rule would very seriously disrupt the industry’s plans  

75 FR 25,402 cols. 1-3 (May 7, 2010) (footnote omitted).

With respect to both the endangerment/cause or contribute findings and
the LDVR, it would  require speculation and conjecture to defer – or,
certainly, to forego altogether -- the findings or LDVR until EPA
completed streamlining the PSD and title V requirements on grounds that
doing so would allow full compliance in the future with all PSD and
Title V statutory provisions.  That is the gist of commenters argument
– that EPA should defer or forego issuance of the findings and the
LDVR to avoid causing an absurd result from implementation of the
separate PSD and title V programs.  Underlying this claim is the
assumption that this would allow EPA to avoid the absurd results.  As we
discuss elsewhere in this rulemaking, there is no basis at this point to
determine that streamlining will ultimately allow full compliance with
the PSD and title V requirements.  Rather, it is possible that EPA may
conclude that none of the available streamlining techniques will allow
all GHG sources at the statutory thresholds to comply with PSD and title
V requirements in a manner that does not impose undue costs on the
sources or undue administrative burdens on the permitting authorities. 
Under these circumstances, EPA may then permanently exclude GHG source
categories from PSD or title V applicability under the absurd results
doctrine.  Moreover, it may well take many years before EPA is in a
position to come to a conclusion about the extent to which streamlining
will be effective and therefore be able to come to a conclusion as to
whether any source categories should be permanently excluded from PSD or
title V applicability.  In our rulemaking today, we describe what
actions we expect to take in the first six years after PSD and title V
are triggered for GHG sources, and we may well be in a situation in
which we continue to evaluate streamlining measures and PSD and title V
applicability to GHG sources after this six-year period.  

Accordingly, deferring the endangerment/cause or contribute findings and
LDVR until such time that PSD and title V streamlining would allow full
implementation of these programs at the  statutory limits would serve
only to delay the benefits of the LDVR, as well as the benefits that
come from phasing in implementation of the PSD program to cover larger
sources first. It would rely on an assumption that is unfounded at this
point, that is, that such full compliance will be required at some point
in the future.  Delaying the emissions benefits of the LDVR and the
related emissions benefits from partial implementation of the PSD
program fails to implement Congress’ intent that the
endangerment/cause or contribute findings “shall” lead to emissions
standards for new motor vehicles contributing to the endangerment, and
related emissions controls for the same air pollutant under the PSD
program.  EPA need not determine at this time what approach would be
appropriate if there was a determination that full compliance with PSD
and Title V would in fact occur at some point in the future.  In this
case, absent such a determination, it would be improper to rely on
speculation of such a future possibility as a basis under section 202(a)
to defer or forego issuance of the LDVR on the grounds that EPA should
defer or forego the LDVR to avoid causing an absurd result.  Likewise
there is no basis to defer proceeding at this time with the streamlining
of the PSD and title V programs.

With respect to the PSD and title V applicability requirements, as we
discuss elsewhere, we believe that Congress expressed a clear intent to
apply PSD and title V to GHG sources and that the phase-in approach
incorporated in the Tailoring Rule is fully appropriate.  Proceeding now
with the endangerment/contribution findings and LDVR, even if phasing-in
of the PSD and title V programs is required, is consistent with our
interpretation of the PSD and title V applicability requirements. 
Delaying the endangerment/contribution findings or LDVR, and thereby
delaying the triggering of PSD and title V requirements for GHG sources,
would lead to the loss of a practicable opportunity to implement the PSD
and title V requirements in important part, and thereby lead to the loss
of important benefits.  As discussed elsewhere, promulgating the LDVR
and applying the PSD and title V requirements to the largest GHG
sources, as we do in this Tailoring Rule, is practicable because the
sources that would be affected by the initial implementation steps we
promulgate in this rule are able to bear the costs and the permitting
authorities are able to bear the associated administrative burdens. 
Promulgating the LDVR now provides important advantages because the
sources that would be affected by the initial steps are responsible for
most of the GHG emissions from stationary sources.  

It should also be noted that as discussed elsewhere in this rulemaking,
our ability to develop appropriate streamlining techniques for PSD and
title V requirements is best done within the context of actual
implementation of the permitting programs, and not in isolation of them.
 That is, because the great majority of GHG sources have not been
subject to PSD and title V requirements, we will need to rely on the
early experience in implementing the permitting requirements for the
very large sources that initially will be subject to those requirements
in order to develop streamlining techniques for smaller sources.  It is
the real world experience gained from this initial phase that will allow
EPA to develop any further modifications that might be necessary.  This
would not and could not occur if the LDVR were delayed indefinitely or
permanently, so that PSD and title V requirements were not triggered. 
It is unrealistic to expect that delaying action until a future
Tailoring Rule could resolve all of the problems identified in this
rulemaking, absent any real world implementation experience.  

At its core, commenters’ argument is that EPA should delay (if not
forego altogether) doing anything to address GHG emissions and the
problems they cause until it can do so in a way that does not cause any
implementation challenges, even if that delay results in continued
endangerment to public health and welfare.  EPA does not take such a
myopic view of its duties and responsibilities under the CAA.  Congress
wrote the CAA to, among other things, promote the public health and
welfare and the productive capacity of the population. CAA section
101(b)(1).  EPA’s path forward does just this.  Thus, proceeding with
the endangerment/cause or contribute findings, the LDVR, and with PSD
and title V through the phase-in approach of the Tailoring Rule
maximizes the ability of EPA to achieve the Congressional goals
underlying sections 202(a) and the PSD and title V provisions, and the
overarching CAA goal of protecting public health and welfare.  Congress
called for EPA (1) to determine whether emissions from new motor
vehicles contribute to air pollution that endangers, (2) if that the
determination is affirmative, to issue emissions standards for new motor
vehicles to address the endangerment, and (3) to implement the PSD and
title V program to address similar emissions in their permitting program
as another tool to address the air pollutant at issue.  Delaying both
the LDVR and PSD/title V implementation, as commenters have called for,
would run directly counter to these Congressional expectations. 
Commenters’ calls for deferral or foregoing of the findings or LDVR
are generally phrased in a conclusory fashion, and do not demonstrate
how EPA could take the required CAA actions concerning GHGs while
remaining within the requirements of each of the various CAA provisions,
and achieving the overall goals of the CAA.  As such the comments do not
provide a valid basis for the deferral of agency action they suggest. 

Comment:

Some commenters contend EPA has the discretion to choose a date besides
the “effective date” of the rule as the date where a pollutant
becomes “subject to regulation” or on which compliance requirements
would apply (5088, 5124).  This date can be the “first compliance
date” instead of the “effective date” of the rule because: (1)
neither the statute, nor its accompanying regulations, mandate the
specific trigger date(s) and the long-held judicial doctrines of absurd
results and administrative necessity support even agency action that
would deviate from statutory language, if such action is necessary to
avoid results contrary to Congressional intent or due to administrative
necessity (4298), (2) it is reasonable for EPA to interpret the timing
of “subject to regulation” (based on section 165(a)(4) of the CAA
(5143, 5147)) to start at the time emission control requirements are
actually applied to a regulated entity (4862, 5058, 5110, 5111, 5134,
5181, 5236, 5390, 5922) and (3) the complexity of adapting the existing
permitting programs to GHGs justifies this definition (4693, 4867,
5180).  For these reasons, some commenters have different
recommendations on what the “first compliance date” should be for
regulating GHGs under the PSD and title V programs.  They suggest:

January 2, 2011 (the first date on which a 2012 model year vehicle can
be produced) because only after the “first substantive compliance
date” would the new standard be enforceable in a manner that
“actually controls” and reduces emissions of GHGs (4298, 5180).  One
commenter adds that no automobile will be subject to control before
January 2, 2001, and compliance certification will not be needed until
March 2013 for the 2012 MY.  (5111)  

October 1, 2011 (the start date of the first model year to which the
rules apply) because, if EPA does go ahead with the LDVR (which most of
these commenters do not support), EPA should recognize that PSD and
title V would not be triggered until the LDVR “takes effect.” 
(4122, 4318, 4522, 4523, 4952, 4992, 5038, 5058, 5080, 5089, 5114, 5128,
5317, 5327, 5342, 5601, 5741, 5922, 6459, 8301)

No specific date, but they say that "actual control" of GHGs under the
section 202 rule does not occur until: (1) such time as model year 2012
vehicles are certified (4693, 4867), (2) the date when manufacturer
fleets must comply with the attribute-based standard created by the
regulation for the control of CO2 (5134), or (3) the point in time at
which compliance with other MY 2012 GHG standards is considered to
occur.  (4862, 5110, 5134, 5181, 5236, 5390) 

Response:

On December 18, 2008, EPA issued a memorandum, "EPA's Interpretation of
Regulations that Determine Pollutants Covered by Federal Prevention of
Significant Deterioration (PSD) Permit Program" (known as the “Johnson
Memo” or the “PSD Interpretive Memo,” and referred to in the
preamble of this final rule as the “Interpretive Memo”) that set
forth EPA’s interpretation regarding which EPA and state actions, with
respect to a previously unregulated pollutant, cause that pollutant to
become “subject to regulation” under the Act.  Whether a pollutant
is “subject to regulation” is important for the purposes of
determining whether it is covered under the federal PSD and title V
permitting programs.  The Interpretive Memo established that a pollutant
is “subject to regulation” only if it is subject to either a
provision in the CAA or regulation adopted by EPA under the CAA that
requires actual control of emissions of that pollutant (referred to as
the “actual control interpretation”).  On February 17, 2009, EPA
granted a petition for reconsideration on the Interpretive Memo, and
announced its intent to conduct a rulemaking to allow for public comment
on the issues raised in the memorandum and on related issues.  EPA also
clarified that the Interpretive Memo would remain in effect pending
reconsideration.

On March 29, 2010, EPA signed a notice conveying its decision to
continue applying (with one limited refinement) the Interpretive
Memo’s interpretation of “subject to regulation”
(“Interpretation of Regulations that Determine Pollutants Covered by
Clean Air Act Permitting Programs“).  See 75 FR 17004.  EPA concluded
that the “actual control interpretation” is the most appropriate
interpretation to apply given the policy implications.  However, we
refined our interpretation in one respect: we established that PSD
permitting requirements apply to a newly regulated pollutant at the time
a regulatory requirement to control emissions of that pollutant “takes
effect” (rather than upon promulgation or the legal effective date of
the regulation containing such a requirement).  In addition, based on
the anticipated promulgation of the LDVR, we stated that the GHG
requirements of the vehicle rule would take effect on January 2, 2011,
because that is the earliest date that a 2012 MY vehicle may be
introduced into commerce.  In other words, the compliance obligation
under the LDVR does not occur until a manufacturer may introduce into
commerce vehicles that are required to comply with GHG standards, which
will begin with MY 2012 and will not occur before January 2, 2011.  We
also reiterated EPA’s interpretation that the 100 tpy major source
threshold for title V is triggered only by pollutants “subject to
regulation” under the Act, and we defined and applied that term for
title V purposes in the same way that we did for PSD purposes.  That is,
we stated that a pollutant is “subject to regulation” if it is
subject to a CAA requirement establishing “actual control of
emissions;” that a pollutant is considered “subject to regulation”
for title V purposes when such a requirement “takes effect”; and,
based on the anticipated promulgation of the LDVR, that the GHG
requirements of the vehicle rule would take effect on January 2, 2011.

On April 1, 2010, we finalized the LDVR as anticipated, confirming that
manufacturer certification can occur no earlier than January 2, 2011. 
Thus, under the terms of the final notice for the Interpretive Memo,
GHGs become subject to regulation on that date, and PSD and title V
program requirements will also begin to apply upon that date.

8.3  Requests for Specific Exemptions/Deferrals from Applicability

	Although we did not propose any categorical exemptions, many commenters
request exemptions from major source and major modification
applicability determinations under title V and PSD for certain types of
GHG-emitting sources or certain types of GHG emissions.  

8.3.1  Source Categories

Comment:

Many commenters request complete and permanent exemptions from the
applicability or other requirements of the permitting rules with respect
to GHG emissions as set forth in the proposal with respect to a wide
variety of sources, source categories, and types of emissions.

Requests for exemptions for small sources, such as farms, homes, and
other residential or commercial buildings:

Smaller sources such as residential homes (4522), commercial buildings
(4522), retail stores (4522), small space heaters (4522), and pool
houses (4522) should be exempt from GHG permitting.  Another commenter
believes that sources such as agricultural, residential, and small
businesses (as defined by the SBA) should be exempted from this rule
during the first 5-7 years to allow EPA and permitting authorities time
to gain experience with the program (5367).  In addition, small
businesses and service providers must be provided with education,
resources, and tools to help small business owners understand whether
and how they will be impacted by the rule and how they can report and
comply (5367).

Four commenters (3953, 4572, 5168, 5743) state that EPA anticipates at
some future date to require the “absurd results” of having entities
emitting more than 100 or 250 tpy of GHG to comply with PSD and title V
permitting requirements.  Thus, under the Tailoring Rule, it presumably
is not a question of if permitting will be applied to farms, ranches and
other small entities, but a question of when such requirements will be
applied.  The distinction between exemption and deferral for such
entities becomes important when considering that PSD is a
pre-construction program because exempt entities can begin building, but
deferred entities may not be on as solid legal ground.  Thus, small
entities like farms and ranches will not escape PSD or title V
requirements, even with the Tailoring Rule. 

The semiconductor industry should be exempt (5141, 5143), including
solar and LED (8640); or at least defer action on the semiconductor
industry pending further study of alternatives for this industry (8460)
because:

PSD is ill-suited to regulate GHG from the semiconductor industry. 
(8640) 

These sources have a small contribution to the total GHG inventory,
comprising only 0.1 percent of the total U.S. inventory of GHG.  (5141,
5143, 8640)

The industry is making substantial efforts to reduce GHG emissions under
a partnership with EPA.  (5143)

Significant competitiveness issues for this industry to be permitted
(5141, 5143, 8640).  It is not realistic for this industry to be subject
to PSD permitting considering the substantial lead time needed to
conduct monitoring and prepare an application (8640).

The high GWP factors for the GHGs emitted by this industry will burden
them with permitting.  (5141, 5143)

For the semiconductor industry, short of an outright exemption, one
commenter (5141) urges EPA to adopt other approaches to minimize
burdens.  At a minimum, such approaches should include a deferral until
streamlining mechanisms become available, or a separate regulatory
regime for the high GWP emissions, and different thresholds, especially
for PFCs, which may trigger permitting at low volumes.

Energy-intensive trade-exposed (EITE) industries, industries that
consume a great deal of energy and that are subject to intense
international competitiveness should be exempted pending further
analysis of the impacts on those industries, and pending international
agreements covering industrial GHG emissions (4771, 5169, 5737).  If not
exempted, regulation of the manufacturing/industrial sector, or at least
the EITE producers should be delayed until the “second phase” of
regulation, after 6 years (5737).  EPA has not carefully considered the
environmental and economic consequences of this action because if we
had, we would have exempted them for several reasons, including that
other countries typically exempt similar sources from GHG cap and trade
programs because the industries are making significant energy efficiency
improvements absent GHG regulation, and because permitting such sources
may cause many facilities to move to countries that have less regulation
or no regulation for GHGs.  

Regulation of the glass manufacturing industry will not achieve CO2
emission reductions for the foreseeable future.  Process emissions
account for 20-30 percent of emissions, but there are no substitute raw
materials to reduce emissions.  Glass manufacturers already use
low-carbon fuels and recycle scrap glass to the extent possible.  (4771,
5169)  In addition, glass products (e.g., windows and windshields) are
often used to meet specified energy efficiency standards, and are used
in solar cells.  (4771)

The PSD program should exclude calcination emissions to encourage energy
efficiency projects (5133).  It is pointless to subject process
emissions to the PSD program because it is already known that BACT for
calcination emissions is no additional controls and fuel costs alone are
sufficient to ensure that new and modified kilns will utilize the most
energy efficient designs that are economically and technologically
available.  In addition, because less than 5 percent of the U.S.’s GHG
emissions are from industrial process emissions, exclusion of
calcination emissions from the PSD program will not have a material
effect on air quality or global warming.

Commenter 4112 requests that EPA exclude from the PSD significance
analysis those GHG emissions resulting from incidental combustion where
the process creates heat and the emissions are de minimis.  The
commenter states that their operations include carbon activation and
reactivation processes that are conducted in heated units where the
primary fuel is natural gas and the carbon being processed, or in the
case of regeneration, a combination of natural gas and the adsorbates on
the spent carbon.  In the activation process it is necessary to burn
some of the carbon to activate it.  The fact that the process creates
heat that is used in the activation is not controllable from a GHG
reduction perspective.

Commenter 4112 requests that EPA exclude process-based emissions similar
to the GHG Mandatory Reporting Rule.  The GHG Mandatory Reporting Rule
does not require sources within the general stationary fuel combustion
source category to monitor and report process-based emissions because
EPA recognized that such process emissions are negligible.  See 40 CFR
98, subpart C.

  

Natural respiration from poultry should be excluded from GHG regulation
applicability determinations because: (1) the U.S. agricultural sector
was responsible for less than 6 percent of total U.S.GHG emissions and
less than a tenth of that 6 percent (7.6 percent) was attributable to
poultry production, (2) approximately 90-93 percent of GHG emissions
from poultry farms are attributable to natural bird respiration or
breathing (only 7-10 percent is associated with poultry litter) and the
IPCC itself has excluded natural respirations from consideration in its
methodology for estimating GHG emissions (5245).

EPA should clarify how it will address GHG emissions from the solid
waste management sector, such as fugitive emissions, biogenic emissions,
and "common control” (5391).  EPA should be consistent with NSPS
applicability determinations that exclude landfills that closed prior to
November 8, 1987 (4951).  The 25,000-tpy threshold will cause many old
closed landfills to be brought into this rule, while the GHG Mandatory
Reporting Rule exempts landfills that were closed prior to 1980 (4951).

Commenter 8461 inquires whether EPA is planning on exemptions for GHGs
used or emitted from military, warfare, and security operations.

Small electric generating units should not become subject to PSD or
title V (4122, 4318, 4523, 4992, 5080, 5038, 5089, 5114, 5128, 5257,
5317, 5327, 5601, 5741, 5788, 6459, 8301).  EPA did not seriously
consider the impacts on small entities that emit above the 25,000-tpy
threshold, which may include, among many others, small municipal
electric utilities, small rural electric cooperative generators,
automobile service centers, and small diesel generators in rural or
remote areas.  These smaller facilities have more in common with
commercial establishments EPA proposes defer over the long term, also
citing SBA concerns over small entities that emit more than 25,000 tpy
of CO2. 

Emergency generators should be exempt or EPA should increase the
applicability thresholds sufficiently to ensure that they do not become
subject to the GHG requirements because:

Some generators may feel the need to accept a limit on hours of
operation to avoid PSD or title V requirements, and that could impair
communities’ ability to obtain a reliable supply of electricity in
emergency situations.  (4122, 4318, 4523, 4749, 4770, 4992, 5080, 5038,
5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301)

Emissions from these emergency generation units are truly negligible
including those generating units that meet the “black start”
definition except where those units run more than 1,000 hours.  (4122,
4318, 4523, 4992, 5038, 5052, 5080, 5089, 5114, 5128, 5257, 5327, 5601,
5741, 6459, 8301)

Becoming subject to PSD and BACT requirements could jeopardize their
ability to meet the Nuclear Regulatory Commission (NRC) Reliability and
Availability requirements, which would place nuclear power plants at
risk of not being able to perform in emergency situations and thus not
complying with their NRC-required Emergency and Security Plans.  (5788) 

Research and development facilities, including national labs involved in
defense and homeland security should be exempt from the GHG
requirements, especially minor GHG emissions from research activities,
to avoid confusion with EPA’s GHG Mandatory Reporting Rule.  (8546)

The EPA should defer regulation of SF6 in the transmission of
electricity until the second phase of the PSD permit program because
there are no known SF6 controls and SF6 is used to prevent arcing and
death.  If SF6 is regulated, it should be controlled through BMPs –
possession stewardship and good tank recycling practices for SF6
delivery, use, and return of tanks.  (5052)

Response:

Although the proposal for the Tailoring Rule generally addressed how the
statutory requirements for major source applicability (100/250
thresholds) could be phased-in in ways that would offer relief to
traditional and non-traditional sources, such as residences, farms,
small business, and semiconductor manufacturers, it did so by
establishing relatively high CO2e thresholds during the early
implementation period and lowering the thresholds over time as
streamlining mechanisms become available to reduce administrative
burdens.  We did not propose any permanent exemptions of any kind or
temporary exemption based on source category.  Also, note that the
proposal discussed energy efficiency, process efficiency improvements,
recovery and beneficial use of process gases, and certain raw material
and product changes in the context of short-term, low-cost means of
achieving GHG emission reductions for small-scale stationary sources,
but not in the context of exemptions.

  

As discussed previously, we are still considering whether permanent
exemptions from the statute are justified for GHG permitting based on
the “absurd results” legal doctrine.  However, we do not have  a
sufficient basis to take final action at this time to promulgate any of
the suggested exclusions on the grounds, described previously, suggested
by the commenters.  We did not propose any sort of permanent exclusion
based on an interpretation of the statutory provisions of PSD or title
V.  Regardless of any arguments about the legality and advisability from
a policy or economic standpoint of such exclusions, we would need to
propose a PSD and/or title V specific legal and policy rationale that
fits within the CAA, to specify details regarding our implementation
approach, and to provide an opportunity for public comment before
adopting any such exclusion.  Therefore we are not doing so here.  We
note, however, that nothing in this rule forecloses the opportunities we
may have to explore such options in the future.  Therefore, we are
taking no action in this rule on these various commenters’ requests
for exclusions.

 

Some commenters also recommended that we create exclusions for their
particular source categories for the specific purpose of avoiding
overwhelming permitting burdens.  We did solicit comment on alternative
approaches to burden relief in the proposal.  Some commenters suggested
that the “administrative necessity” or “absurd results”
rationale, each of which would be based on extraordinary administrative
burdens, could be used to create at least temporary exclusions that
would allow more sources to escape permitting than what we proposed. 
However, commenters have not, to date, provided specific information
about the costs and administrative burdens associated with permitting
their source categories.  In addition, we have finalized steps 1 and 2
using the threshold-based approach, which applies the various legal
doctrines, in the context of the Chevron framework, in a way that
effectively exempts all small sources during this part of the phase-in,
while assuring the administrability of the permitting programs for the
sources that remain subject to them.  Furthermore, specifically with
respect to high GWP gases as discussed previously, we are maintaining
the statutory mass-based threshold, and this should address
commenters’ concerns regarding the inclusion of those gases. 
Therefore, we reiterate that we are not finalizing any such exclusions
in this rule and, as noted above, we are not taking final action in the
commenters’ requests for exclusions. 

Concerning the comment that we did not take appropriate economic and
environmental considerations into account for this rulemaking action, we
disagree.  The approach we finalize in this notice for steps 1 and 2
minimizes economic burdens by limiting permitting to the largest GHG
emission sources.  We further note that the PSD program as applied to
the sources that are covered in steps 1 and 2 contains an express
requirement to take energy, environmental, and economic considerations
into account when making control technology (i.e., BACT) decisions and
accordingly many of the concerns about control costs will be able to be
accounted for in that analysis.  Also, EPA, in collaboration with the
SBA, conducted an outreach meeting with small entities to brief them on
the Tailoring Rule and its environmental and economic impacts and to
seek advice and recommendations from them on the proposal.  (See Docket
No. EPA-HQ-OAR-2009-0517-19130).  

Several commenters were concerned that the proposal defers, rather than
exempts,  permitting at the statutory thresholds (100/250 tpy), and
thus, that small sources will eventually be subject to permitting that
those thresholds.  In response, we do not have adequate information at
this time to conclude that the statutory thresholds will ever be
administrable for permitting GHG sources, so the commenters are
premature in assuming that the statutory thresholds will apply to any
particular source categories, or anyone, in the future.  We explain in
the preamble for the final rule how we will address smaller sources in a
future rulemaking based on the 5-year study – we explain that in no
event will sources below 50,000 tpy CO2e be subject to PSD or title V
permitting, nor will PSD modification be triggered for emission
increases below 50,000 tpy CO2e, during the 6-year period ending April
30, 2016, which is the date by which we have committed to complete a
rulemaking action based on the 5-year study to determine exemptions or
appropriate thresholds for GHG permitting after step 3.  See section
IV.B.2.b.5 of the preamble for the final rule.

We are not prepared at this time to exempt closed landfills, as one
commenters suggested, for the same reasons we have not decided to exempt
open landfills, or other source categories, at this time.  Landfills
continue to generate GHGs after they stop accepting new solid waste, and
thus, they continue to be stationary sources potentially subject to
permitting under the applicability provisions of title V.  Also, the
higher GHG thresholds for step 2 in the final rule – we proposed
25,000 tpy CO2e and finalize 100,000 tpy CO2e – will potentially
result in fewer landfills needing permits during step 2, including less
potential for closed landfills to meet the applicability thresholds.

8.3.2  Biogenic Emissions and Combustion of Biomass

Several commenters request that EPA exempt emissions from biogenic
activities or biomass combustion or oxidation activities from PSD or
title V applicability determinations.

Comment:

Biogenic CO2 emissions should be exempted from the PSD program (2371,
4770, 8015, 8283) or not be counted towards the applicability thresholds
for PSD and title V permitting requirements (4122, 4241, 4318, 4523,
4667, 4749, 4951, 4992, 5038, 5070, 5075, 5080, 5089, 5114, 5124, 5126,
5128, 5257, 5279, 5280, 5300, 5303, 5317, 5327, 5335, 5346, 5601, 5741,
5742, 5922, 6459, 8301, 8283, 8395) because:

GHG emissions that result from biogenic activities are "carbon neutral"
(4122, 4241, 4318, 4523, 4667, 4749, 4951, 4992, 5038, 5040, 5070, 5080,
5089, 5114, 5128, 5257, 5280, 5300, 5301, 5303, 5317, 5327, 5601, 5741,
6459, 8015, 8283, 8301, 16411) or should be considered (5124) “carbon
neutral” and thus outside the scope and intent of the PSD and title V
programs.  This approach:

Has been widely accepted by scientists and regulators in both the U.S.
and Europe (4667, 5070, 5303, 16411).  Commenter 4667 cites various
domestic and international policies. 

Would create an important incentive for companies to try to use
biomass-based fuels where possible, with the dual benefits of reducing
atmospheric GHG loadings as compared to fossil-fuel combustion and
increasing the use of renewable energy.  (5335, 16411)

Is clearly aligned with the agency's policy goals of promoting
renewable/sustainable industrial operations with low-carbon or carbon
neutral footprints and "biogenic activities" should encompass everything
from fermentation processes to the combustion of renewable fuels,
including ethanol manufacturing, biodiesel production, and other
alternative energy production based on biomass feedstocks.  (5124)

Would not be arbitrary and capricious for EPA to do (5040), because EPA
would not be imposing PSD on a source’s CO2 emissions if those
emissions do not have the potential to degrade air quality (i.e.,
increase atmospheric CO2 concentrations).  (5335, 5040)

EPA has acknowledged that the guidance on how to calculate a source’s
GHG emissions in tpy CO2e and referenced directly by the proposed rule
language, excludes CO2 emitted from the CO2 neutral biomass.  (4667,
5303) 

Only anthropogenic stationary emissions should count towards the major
source or significance thresholds (4863, 5064, 5276, 5305, 6458).  If
EPA does not differentiate between biogenic and anthropogenic CO2
emissions, sources whose CO2 emissions are largely biogenic, such as
landfills (e.g., landfills that generate less than 300 scfm of LFG) and
publicly owned treatment works (POTWs), would easily trigger any
threshold, regardless of the facility's size (4746, 5064, 5276, 5305,
6458).  

If landfills must count CO2 in determining whether PSD or title V is
triggered, it would discourage efforts by landfills to either flare CH4
or combust it to produce electricity – projects that reduce GHG
emissions overall.  (5276)

Several commenters add that: (1) this approach is consistent with both
proposed federal and state regulations for reducing GHGs (they cite
various examples) (4746, 4863), (2) in the RIA of the Tailoring Rule,
EPA recognizes that CO2 emissions from landfills and the combustion of
LFG do not constitute anthropogenic GHG emissions and these emissions
were not counted in the study that formed the basis of the proposed rule
(5276), (3) biogenic CO2 emissions are not included in national and
international inventories (5276, 6458), (4) the Clean Development
Mechanism of the Kyoto Protocol does not include CO2 from biogenic
sources as an emission (6458), (5) inclusion of biogenic emissions may
adversely affect efforts to develop new renewable resources (4746), (6)
it would be premature to regulate process CO2e emissions from wastewater
treatment since they are not well understood (4746).  

The inclusion of biogenic GHGs in the PSD program is contradictory to
the objectives of climate change control and requiring additional title
V permits and BACT measures for net GHG reducers such as waste-to-energy
sources will discourage the expansion of renewable sources.  The
contribution of waste-to-energy facilities to GHG reductions should be
recognized as it is in climate change legislation such as House Bill
2454 and Senate Bill 1733.  (2371)

Including biogenic emissions in the applicability determination would
dramatically increase the number of facilities subject to regulation
(5742), especially for PSD in the forest products industry (4667, 8015)
and will potentially undermine the biofuels and bioenergy industries,
widely recognized as having a key role to play in a low carbon future
(4667, 5742).  In addition, combustion of biomass may be discouraged if
shifting to renewable or low-carbon fuels (or installation of equipment
necessary to burn such fuels) could be deemed to trigger PSD
requirements (4122, 4318, 4523, 4749, 4992, 5038, 5080, 5089, 5114,
5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301).  One commenter adds
that fossil carbon and anthropogenic emissions of CH4 are the primary
drivers behind global increases in atmospheric CO2 concentrations and
thus these emissions should be the focus of any GHG regulation.  (5742)

Emissions from yeast fermentation during bread making are carbon-neutral
and should not be counted as industrial emissions for purposes of GHG
regulation.  (5303)

Sugarcane is an annual crop and bagasse is a by-product of the sugarcane
harvest.  Thus, bagasse is a renewable biomass fuel and as a fuel, it is
carbon-neutral.  (5280)

Biogenic CO2 should be exempt from permitting because there is a
precedent under the PSD program for EPA to exclude a class of compounds
that would otherwise be regulated (4667, 8283).  For example, EPA has
logically determined PSD applicability on a functional basis when: (1)
EPA, by regulation excluded certain compounds, which are in fact
"volatile" and "organic," from the definition of VOCs for purposes of
applying the PSD regulations, including applicability thresholds, (2)
faced with the fact that ambient air quality standards (and therefore
attainment areas) are defined for ozone, whereas it is the emission of
ozone precursors, especially VOCs that can cause nonattainment of the
ozone NAAQS, EPA applied the major-source thresholds to VOC emissions
rather than to ozone emissions.  (8283)  

The GHG Mandatory Reporting Regulation excludes biogenic emissions from
basic threshold criteria for report applicability, except where they are
captured and sold for commercial use.  (4241, 4122, 4318, 4523, 4749,
4992, 5038, 5080, 5089, 5114, 5124, 5128, 5257, 5280, 5317, 5327, 5346.
5601, 5741, 6459, 8301, 8395).

Excluding these emissions is consistent with domestic and international
standards (4122, 4318, 4523, 4667, 4749, 4992, 5038, 5080, 5089, 5114,
5128, 5257, 5303, 5317, 5327, 5335, 5601, 5741, 6459, 8301).

One commenter adds source owners should be allowed to consider net GHG
emissions from biomass fuels when determining a facility's PTE for
PSD/title V applicability purposes (5279).  

In addition, EPA could require the GWP of biomass CO2 emissions to be
zero due to CO2 neutrality (4667).  If biogenic CO2 emissions are not
excluded or GWP considered zero then EPA should: (1) allow public
comment on any revised “Inventory of U.S. Greenhouse Gas Emissions and
Sinks,” since this guidance affects the calculation of these
thresholds (5126) and (2) give CO2e credit against a source’s baseline
CO2 emissions for those facilities that convert and use CH4 emissions
from landfills as an energy source in the production of renewable fuels
(5075).  

Furthermore, two commenters would like us to exempt renewable energy
facilities: (1) that do not trigger the PSD thresholds for criteria
pollutants (3918) to further align this concept with EPA's policy goals
of promoting alternative/renewable energy (5124).  Providing an
exemption from GHG PSD would give industry more regulatory certainty
under which to plan and execute projects, provide more stability to the
market, and reduce industry's burden in meeting regulatory GHG
obligations (5124).

Nevertheless, several commenters would like EPA to clarify in the final
Tailoring Rule that biogenic CO2 emissions trigger the BACT statutory
requirements (5311) or are not exempt from the Tailoring Rule (4860,
5519, 6673, 10376) because:

There is scientific evidence refuting the notion that biomass combustion
is categorically carbon neutral (5311, 6673, 10376) and thus exempting
biogenic CO2 emissions from BACT would violate the Act (5311).  For
example, the DOE reports that CO2 emissions from biomass burning were at
least 7000 million tpy in 2002 and so EPA must regulate power plants
that burn biomass (10376).  In addition, the projected growth in CO2
emissions from biomass burning is at least 700 million tpy by 2020
(about 11 percent of total U.S. GHG emissions) (6673).

There is no valid scientific basis for differentiating CO2 emissions
from biomass combustion from CO2 emissions from other forms of electric
power production (6673).  EPA’s exemption of biomass combustion CO2
from the GHG Mandatory Reporting Rule is based on an outdated and
unsupportable “assumption” that this activity is “carbon neutral
(4860, 6673).”  The “carbon neutral” myth stems in part from a
“critical accounting error” in the Kyoto protocols.  This error has
been incorporated into the structure of EPA’s GHG Mandatory Reporting
Rule and wholly undermines efforts to curb GHG emissions from power
production.  In fact, it promotes biomass power production and makes
climate change worse.  For these reasons, the Tailoring Rule should not
compound this error by exempting biogenic CO2 emissions form
applicability determinations.  

The IPCC recommended that biomass burning be exempt because those
emissions may be double-counted in both the land-use category as well as
the energy category (5519, 10376).  However, regulatory systems do not
take into account land-use and thus biomass-burning emissions should not
be exempt (5519, 10376). 

	For these reasons a commenter recommends that:

Facilities should be required to calculate emissions of biogenic CO2 in
accordance with the GHG Mandatory Reporting Rule (5311). 

EPA, either in regulations or in a guidance document, should develop a
policy addressing when biomass may constitute a “clean fuel” within
the meaning of BACT, since biomass may play an important role in
combating climate change (5311).

Several other commenters simply asked for clarification:

EPA should clarify whether biogenic CO2 is a GHG, provide a clear
definition of biogenic CO2, and indicate how, if all, it is counted in
CO2e determinations (4239, 4860, 4864). 

EPA should clarify its treatment of emissions from the combustion of
biomass (5338). Another asks if emissions from fermentation are included
in the PSD and title V applicability determinations (3916)? 

Response:

The proposed Tailoring Rule did not address this issue of exemptions for
biomass combustion or biogenic emissions.  We are mindful of the role
that biomass or biogenic fuels and feedstocks could play in reducing
anthropogenic GHG emissions, and we do not dispute the commenters’
observations that many state, federal, and international rules and
policies treat biogenic and fossil sources of CO2 emissions differently.
 

Nevertheless, we have determined that our application of the “absurd
results,” “administrative necessity,” and one-step-at-a-time legal
rationales that support this rule, which are based on the overwhelming
permitting burdens described previously, does not provide sufficient
basis to exclude emissions of CO2 from biogenic sources in determining
permitting applicability provisions at this time.  This is because such
an exclusion alone, while reducing burdens for some sources, would not
address the overwhelming permitting burdens described above, and a
threshold-based approach would still be needed.  As noted above, we have
not examined burdens with respect to specific categories and thus we
have not analyzed the administrative burden of permitting projects that
specifically involve biogenic CO2 emissions taking account of the
threshold-based approach, nor did the commenters provide information to
demonstrate that an overwhelming permitting burden would still exist,
justifying a temporary exclusion for biomass sources. 

At the same time, the decision not to provide this type of an exclusion
at this time does not foreclose EPA’s ability to either (1) provide
this type of an exclusion at a later time when we have additional
information about overwhelming permitting burdens due to biomass
sources, or (2) provide another type of exclusion or other treatment
based on some other rationale.  Although we do not take a final position
here, we believe that some commenters’ observations about a different
treatment of biomass combustion warrant further exploration as a
possible rationale.  Therefore, although we did not propose any sort of
permanent exclusion from PSD or title V applicability based on lifecycle
considerations of biogenic CO2, we plan to seek further comment on how
we might address emissions of biogenic carbon dioxide under the PSD and
title V programs through a future action, such as a separate ANPR.  This
action would seek comment on how to address biogenic carbon under PSD
and title V, the legal and policy issues raised by options regarding
implementation.  We will provide an opportunity for public comment
before adopting any final approach. 

We further note that, while we are not promulgating an applicability
exclusion for biogenic emissions and biomass fuels or feedstocks, there
is flexibility to apply the existing regulations and policies regarding
BACT in ways that take into account their lifecycle effects on GHG
concentrations.  This topic has already been explored by the CAAAC
workgroup on BACT issues related to GHGs that recently provided
recommendations to EPA.  These recommendations are located in the public
docket for this rulemaking and at   HYPERLINK
"http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf" 
http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf . 
While that group was unable to come to a consensus on how biomass-based
emissions should be treated, it provided us with information that we
will consider as we issue guidance on BACT.  As previously discussed, we
plan to issue BACT guidance later this year, but are not doing so as
part of this rulemaking.  Without prejudging the outcome of our process
to seek comment whether and how we might address emissions of biogenic
carbon under the PSD and title V programs through a future action, this
issue warrants further exploration in the BACT context as well, and we
plan to fully explore it and take action if appropriate. 

8.3.3  Fugitive Emissions  

Comment:

EPA has provided no clarity as to how fugitive emissions of GHGs are to
be measured or considered in applicability threshold calculations (4106,
4122, 4317, 4318, 4523, 4770, 4992, 5038, 5080, 5089, 5137, 5114, 5128,
5183, 5257, 5317, 5327, 5343, 5601, 5715, 5741, 6459, 8301).  Fugitive
emissions present unique problems of measurement, quantification and
control (5145, 5715).  In addition, even though difficult to quantify,
fugitive emissions of GHGs with large GWP may be significant in
determining whether the applicability threshold has been met (4122,
4318, 4523, 4770, 4992, 5038, 5080, 5089, 5114, 5128, 5257, 5317, 5327,
5601, 5741, 6459, 8301).  For these reasons, some commenters suggest
that EPA exclude fugitive emissions of GHGs for all sources (4298, 4903,
4951, 5052, 5111, 5224, 5715) or sources that have to do a PSD
applicability determination (4122, 4318, 4523, 4770, 4992, 5038, 5080,
5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301) because:

Excluding fugitive emissions would: (1) reduce the burden on regulators
and regulated entities (4298, 5111, 5715), (2) have little, if any,
environmental impact (4298, 5111), (3) serve the purpose of the
Tailoring Rule (5715).  If fugitive emissions are included in
applicability determinations, the proposed GHG thresholds would be
rendered meaningless (5715).  In addition, EPA currently exempts a major
source or a major modification form PSD if it would be major only for
fugitive emissions, to the extent quantifiable, and if the stationary
source or modification does not belong to any [of the listed] categories
(5715).

The source categories listed in 40 CFR 52.21(b)(1)(iii) and (i)(vii) and
40 CFR 70.2 (definition of major source) (subsection (2)) may present a
limited exception to this rule (4298, 5111).  Since EPA has not
undertaken rulemaking under section 302(j) for any source category of
fugitive GHG emissions, EPA should not count fugitive GHG emissions
until there has been a rulemaking to determine the feasibility and
advantages of doing so.  (5111, 5224)  

In the July 2008 ANPR, EPA acknowledges that fugitive emissions do not
count toward determining if a source is a major source.  (4106)

Concerning fugitive emissions, EPA should clarify:

Whether, and in which cases, fugitive emissions of GHGs are to be
included to determine PSD applicability for those categories of sources
listed under 40 CFR 52.21(b)(1)(iii).  (4122, 4318, 4523, 4770, 4992,
5080, 5038, 5089, 5114, 5128, 5257, 5317, 5327, 5601, 5741, 6459, 8301)

EPA should not consider fugitive emissions for non-listed source
categories.  (5343 8545)

The treatment of emissions from the combustion of fugitive emissions. 
In the absence of clarity, this state assumes that the existing guidance
on fugitives applies to GHG emissions.  (5338)

Which GHG emission sources are covered in a facility’s PTE for GHG
with regards to stack-level emissions versus fugitives and in terms of
source categories and size.  (4864)

Fugitive CH4 emissions should be exempted because: 

Fugitive CH4 emissions pose a conflict with pending climate change
legislation that provides for emission offsets from the reduction of CH4
from underground coal mining.  Application of BACT requirements would
eliminate this potentially large source of domestic emission offsets. 
(5342)

Fugitives are difficult, and potentially impossible to account for.  If
EPA reconsiders the Fugitive Emissions Rule, coal mine fugitives may
need to be counted in determining a significant emissions increase and,
as EPA has determined in other rulemakings, CH4 emissions from
post-mining operations cannot be accurately measured and would be
similarly difficult to control.  (5145)

Until EPA identifies a standard measurement methodology for fugitive CH4
emissions (4691) it will be impossible to ensure that PSD permits for
fugitive and vented CH4 emissions are consistently enforced or based on
accurate data.  Commenters (4120, 4749, 5301) add that this is
especially true for emissions from Oil & Gas systems and that the GHG
Mandatory Reporting Rule does not require measurement of such emissions
because of the significant challenge in monitoring and measuring such
emissions.  If EPA rejects this recommendation and decides that fugitive
and CH4 emissions should be considered in the initial phase of PSD for
GHGs, commenter (4691) urges EPA to issue guidance for proper
quantification of these emissions for purposes of determining
applicability and establishing BACT, and that this guidance should be
provided before the requirements take effect (4691).

Fugitive emissions from natural gas transmission, storage, and
distribution should not count toward the PSD major source applicability
threshold because they are not part of the 28 listed PSD source
categories (4120, 5711).  Only combustion related CO2e emissions should
be considered in the threshold determination (4120).

Fugitive emissions from landfills should be excluded from major source
determinations (4863, 5276, 5305) because:

EPA (in a 1994 memorandum) has previously made a determination that if a
landfill Gas Collection and Control System (GCCS) could be reasonably
designed to collect the landfill's gas emissions, then the emissions are
not fugitive and should not be counted toward regulatory compliance,
such as major source status.  (5305) 

Existing federal regulations for MSW landfills do not count fugitive
emissions (i.e., CH4, non-CH4 organic compounds, and VOC) for
applicability purposes and the GHG Tailoring Rule should do the same to
maintain consistency.  (5086)

	However, one commenter (4951) opines that the Tailoring Rule appears to
count fugitive emissions when determining applicability (with proposed
thresholds which correspond to as little as 200 scfm of LFG), and adds
that while this is consistent with the GHG Mandatory Reporting Rule, it
is unclear how the Tailoring Rule would quantify these emissions
because:

The Landfill Gas Emission Model (LandGEM) that the GHG Mandatory
Reporting Rule used to estimate landfills gas (LFG) generation has an
EPA acknowledged error of 30 to 400 percent and that this level of error
is unacceptable when the model results are applied to possible PSD and
title V applicability.  The commenter adds that the error for closed
landfills could be even higher (4951).

MSW landfills are not included in the source categories where fugitive
emissions must be counted and were not subject to an NSPS or NESHAPS as
of August 7, 1980, and as such, fugitive emissions of regulated criteria
pollutants from MSW landfills, which include NMOCs and VOCs from LFG,
would not be counted toward PSD and title V applicability thresholds
(4951).

Response:

In the proposal, EPA did not offer any specific guidance or discuss
exemptions for fugitive emissions of GHGs.  Commenters did not suggest
that a fugitive exemption would address the overwhelming permitting
burdens described previously, or that it was necessary to specifically
tailor GHG applicability through the use of a fugitive emissions
exclusion for categories that would otherwise be required to include
them.  

We do agree with commenters who stated that we should clarify how to
count fugitives in determining applicability under this rule.  In
response, we note that we are not taking final action with respect to
commenters’ request, and we are not finalizing any special rules for
fugitive emissions related to GHG.  Thus, EPA's rules related to the
treatment of fugitives would continue to apply to GHG, the same as they
apply to other air pollutants.  

Despite multiply requests for implementation guidance, including
guidance on measurement of fugitive GHG for various industries, we are
not including such guidance in the final rule at this time.  Such
guidance is beyond the scope of this rulemaking, which concerns adopting
GHG applicability thresholds that mitigate untenable administrative
burdens that would apply at the statutory thresholds that apply absent
this rulemaking, rather than about gathering detailed technical
information on measurement techniques for particular source categories
or finalizing other implementation guidance relevant to those source
categories.  The Mandatory GHG reporting rules rule sought to establish
measurement requirements applicable to many of these source categories,
or may do so in the future (e.g., that rule is being revised to address
GHG from underground mining and a few other source categories at this
time) but that was never the primary intent of this rulemaking action. 
See section 8.4 of this RTC for more on emission calculation requests
for guidance on implementation issues, including monitoring and emission
calculation.

Regarding the comment that a section 302(j) rulemaking is required
before fugitive emissions may be counted, we disagree.  As we read
section 302(j), once EPA has established by rule that fugitive emissions
are to be counted for a specific source category, nothing in section
302(j) requires EPA to conduct new rulemaking to allow for the counting
of additional pollutants from that category.  We read section 302(j) as
imposing an obligation to determine if fugitive emission generally
should be counted from a source or source category and not requiring
that EPA list both source categories and relevant pollutants.  Indeed,
our practice in listing categories has not been to limit the pollutants
to which the listing applies.  Therefore, we are applying our existing
rules and policies for fugitive emissions for GHG as we would any other
pollutant.  

8.3.4  Pollution Control Projects 

Comment:

 

	Many commenters request exemptions or deferrals (temporary exemptions)
from major source determinations for GHG emissions that would result in
emissions reductions for GHGs or for other regulated air pollutants,
including pollution control projects, energy efficiency projects, and
generally, the installation of control devices or use of cleaner fuels: 

EPA should not discourage installation of control devices that may be
used to lower conventional pollutants even if collateral GHG emission
increases result.  (4122, 4318, 4523, 4745, 4749, 4770, 4992, 5080,
5038, 5089, 5114, 5128, 5224, 5257, 5301, 5317, 5327, 5601, 5741, 6459,
8301)

If EPA does not exempt or defer from major source determinations,
projects that would result in emissions reduction for GHGs or other
regulated air pollutants, such as pollution control projects, EPA may
create an untenable situation of "control devices that require control
devices"  (5124)

EPA should evaluate whether energy efficiency projects should trigger
PSD permitting for GHGs.  Some energy efficiency projects will benefit
the environment by reducing overall GHG emissions, but still trigger PSD
permitting for GHGs due to direct, unit-level emissions.  EPA can
promote energy efficiency and reduce administrative permitting burdens
by allowing permitting agencies to consider the overall GHG emissions
impact of energy efficiency projects.  This makes sense for because it
makes no environmental difference where GHG emissions (or reductions)
occur – whether at the same unit, the same facility or even in the
same state.  (5277)

EPA should exempt projects from BACT (without imposing operational
limits) that: (1) improve efficiency or thermal performance and deliver
net emission reductions when measured on an output basis (e.g.,
production level or electricity generated), or (2) control GHG or
criteria pollutant emissions.  A similar exemption for emission controls
is provided under the NSPS regulations at 40 CFR 60.14(e)(5).  If EPA
declines to follow this approach, at a minimum, EPA should state that:
(1) any increases in criteria pollutants from GHG control devices are
presumed to be so minimal that it would not be cost effective to control
them, and thus, additional controls to capture criteria pollutants are
presumptively unnecessary, and (2) it is presumed that it would not be
cost-effective to control any increase in GHG emissions resulting from
criteria pollutant controls, and thus, additional controls to capture
GHGs are presumptively unnecessary.  (4298) Furthermore, if a project:

Increases the efficiency or thermal performance of a unit or facility,
such that the resulting intensity of all emissions is reduced on a
pounds per gross megawatt hour or production basis, then that project
should not trigger the “major modification” provisions of PSD.  

Is specifically for the collection of a GHG, then a “control project
exemption” should apply and exempt any ancillary emissions from the
implementation of the control project from triggering PSD on the grounds
that it provides a “net environmental benefit.”  A carbon control
exemption will also be necessary to encourage investment in carbon
capture and sequestration projects at existing units.  To the extent EPA
determines that such exemptions cannot be provided under the existing
CAA, the commenter urges EPA to encourage Congress to enact appropriate
authorizing legislation.  

EPA should defer GHG permitting for sources already subject to state
climate programs, to offshore oil and gas development, and to clean fuel
projects.  EPA should provide special consideration for the energy
intensive and trade exposed refining and chemical industries, as well as
the onshore oil & gas production industry by developing alternative
regulatory approaches in lieu of the PSD/title V GHG Tailoring Rule. 
(4106)

Emissions from the combustion of tire-derived fuel (TDF) (or at least
the natural rubber portion of TDF) should not be counted towards
applicability because TDF is used in lieu of alternatives that emit
higher levels of GHG emissions.  TDF is primarily used in biomass
boilers in order to stabilize the combustion process or in cement kilns,
pulp and 

paper mill boilers and electric utility boilers in lieu of other
traditional fuels, which are likely to emit more GHG emissions.  (5922)

Response:  

The current PSD rules do not exclude pollution control or similar
projects from being considered a physical change or change in the method
of operation that would – if it resulted in a significant net
emissions increase -- constitute a major modification, nor does case law
suggest that we could adopt a permanent exclusion in the future.  To the
extent that the commenters seek an exclusion for pollution control or
similar projects that relies solely on “absurd results” or
“administrative necessity” for reasons similar to those described
previously for other requested exclusions, we take no action on this
request in this rulemaking.  Although such an exclusion may have
positive features, it would not address the overwhelming permitting
burdens that justify the tailoring approach.

8.3.5  Indirect Emissions

Comment:

EPA should specifically state that indirect GHGs emissions, such as
transportation or off-site electricity generation, are not evaluated as
a part of the PSD major source/major modification process or for title V
major source thresholds (5124, 16411).  As with the existing PSD
program, indirect emissions should be analyzed and addressed during the
permitting process for projects related directly to these sources
(5124).  Lacking state preemption, states may include such emissions in
their determinations (5124).  The regulation of indirect GHG emission
has not been considered in the context of BACT, offsets, etc., and
consequently cannot be allowed unless and until EPA has done a thorough
analysis of the consequences of this approach (5124).  

Response:

The CAA requires that PSD review includes a detailed air quality impact
assessment to determine if there is a violation of a NAAQS or of a PSD
increment, and this may involve secondary emissions (sometimes called
“indirect emissions”) in limited cases, but the CAA does not require
any secondary emissions to count for applicability purposes.  See 40 CFR
52.21(k) and 52.21(b)(18).  In the proposed Tailoring Rule, EPA
explained that since there are no NAAQS or PSD increments for GHGs,
ambient impact assessment would not be a requirement for GHG, and we
have not changed this policy in the final rule.  Also, the Act generally
does not require mobile source emissions to count for PSD or title V
applicability determinations and we have not revised any provisions that
address such requirements as part of this rulemaking action.

8.4  PSD and Title V Permitting Implementation Issues and Questions

8.4.1  General Suggestions, Comments, or Questions

Comment:

Various commenters provide suggestions or comments regarding
implementation of the Tailoring Rule.  They state that:

EPA’s methodology for determining GHG emissions in the Tailoring Rule
does not take into account that not all fuel gas use is associated with
combustion.  The commenter has a proprietary carbon manufacturing
process that scavenges carbon from flammable gases and incorporates the
carbon into their product.  This process is actually a form of carbon
sequestration according to the commenter; however, the Tailoring Rule
would incorrectly include all carbon that is incorporated in their
product as CO2 emissions to the atmosphere.  (4859)

EPA should acknowledge (under the Tailoring Rule) the importance of
lifecycle analysis in achieving GHG management objectives by encouraging
and not discouraging the production of recycled and used fuel sources. 
Commenter makes some suggestions on how EPA could do that (e.g., by
crediting re-refiners with the emissions reduced as a result of not
burning the product as a fuel source, exempt recycling facilities). 
(5066)

EPA should clarify that the definitions of “facility” under the GHG
Mandatory Reporting Rule and the Tailoring Rule differ and the GHG
Mandatory Reporting Rule definition should not be precedential for
purposes of interpreting the scope of “stationary source” under PSD
and title V.  (5224)

EPA should do a one source determination for school districts,
residential and commercial buildings, and portable concrete, asphalt,
and aggregate crushing plants.  (3916)

EPA should clarify that motor vehicle, nonroad engines, and nonroad
vehicle emissions do not need to be accounted for in assessing major
source status under PSD or title V.  (5224)

EPA should consider a waiver of penalties for first-time mistakes that
are made in calculating a threshold.  (4684)

EPA implementation support should address source types or emission units
that cut across sectors, e.g., boilers, process heaters, reciprocating
engines, and combustion turbines by fuel type, rather than specific
sectors or source categories.  (4691)  

EPA should create a website for the Tailoring Rule similar to the
website for the GHG Mandatory Reporting Rule.  (3916)

EPA should promulgate a list of projects that it considers to be routine
or non-routine (4866).  One government agency (4867) states that EPA
needs to explain more clearly how it will apply the GHG significance
threshold to routine operational changes and clarify how PSD
modifications could be triggered by such operational changes. 

EPA should address what triggers PSD for utilities.  (4866)

EPA should make clear in the final rulemaking that PSD and title V are
not subject to the “once in, always in” policy that has been applied
to sources regulated under section 112 of the CAA.  (4749, 4515/4691,
3917)

EPA should allow offset credits to be counted in determining the GHG
emissions for purposes of the PSD and title V programs.  Under this
approach, new facilities would be able to obtain and submit offset
credits to avoid triggering the PSD and title V applicability
thresholds.  In addition, existing facilities would be able to submit
offset credits to avoid triggering the PSD significance level when
undergoing a modification.  (5340)

EPA must answer the following questions about GHG BACT determination:
(1) Will fuel switching be considered part of BACT, such as requiring a
coal power plant to consider natural gas alternatives or co-firing?; (2)
Will BACT determination include “redefining the source” such as
evaluating Integrated Gasification Combined Cycle as an alternative to
traditional coal power plants?; (3) How does one consider tradeoffs in
pollutant controls, such as an SO2 scrubber reducing the efficiency of a
coal power plant and thus requiring more CO2 emissions per unit of power
produced?; and (4) What is an acceptable CO2 ambient air impact for PSD
evaluation and how will one evaluate other impacts of CO2 as required by
PSD rules.  (5061)

Before PSD applies to GHGs, EPA needs to address the unique
characteristics of GHGs which, in some cases, will create a direct
conflict with other pollutants when making BACT determinations.  (4515,
4691, 5059, 6681)  For example, increasing the efficiency of an engine
can have the unintended consequence of increasing emissions of
conventional pollutants, such as NOx.  (4515, 4691)  One commenter added
that EPA must include a broad review of identified GHG BACT for the
various industries to ensure it will not directly conflict with other
criteria pollutants being emitted by the same source.  (4515, 4691,
5056)  For these reasons, EPA should weigh this difficult technical
issue as a factor that favors a more limited scope for the  PSD and
title V programs (either through higher thresholds or the use of non-GHG
pollutants as a “trigger” for PSD requirements for GHGs).  (4515,
4691)  

EPA should authorize investment in offset credits as a means of
compliance with BACT requirements.  (5340)  Under this approach, offset
credits could contribute to reducing a source’s emissions to the level
of the required BACT emissions limitation.  (5340)  One commenter added
that EPA should allow offset credits to be considered part of the
“source” for purposes of applicability and significance
determinations as well as BACT requirements under the PSD program.  The
definition of “source” should be interpreted to include any GHG
offsets held by the source.  This will increase demand for offset
credits, which will drive investment into low-carbon technology and
efficient carbon-reduction projects throughout the economy.  Moreover,
offsets would produce the same environmental result at lower cost. 
(4749)

Several commenters believe that EPA should determine, under the CAA,
that NSPS in the short-term represents BACT until GHG technologies are
developed (2504, 3916, 4019, 4512, 4521, 4864, 5084, 5339, 5443, 7935,
8025).  Some of these commenters state that: (1) this will prevent
hollow permits at the outset and the approach will result in researched
controls established by industry group.  (5339)  Another commenter
(7935) added that we should implement this approach by focusing on the
source categories with the highest levels of GHG emissions.  

	In addition, several commenters request clarification for the following
implementation issues and questions (3003, 4747, 15947):

Has BACT or LAER been determined?  (3003)

What will be the nature of the secondary impact analysis required under
PSD for GHGs?  (4866)

Will CO2e offsets be required and will they be limited to the immediate
air basin?  (3003)

How will visibility impact analyses, required in PSD, be conducted? 
(4863)

Will an air quality analysis be required for GHGs and what will it look
like?  (4866)

How GHG emissions are calculated?  (3916)

Will CEMS be required for major CO2e emission sources?  If so, what is
the maximum emission level in parts per million by volume (ppmv) for
these units?  (3003)

Is the R&D facility definition in the proposed rule the same as in the
CAA?  (8691)

Under the current PSD and title V program, engine testing emissions are
treated as stationary sources.  Will they receive the R&D exclusion as
in 40 CFR 98.2(a) (5)?  (8691)

Are refrigerants included in facility-wide title V considerations? 
(8691)

One military commenter states that under PSD, there is a significance
level for fluorides of 3 tpy but there is no discussion in the proposed
Tailoring Rule about whether fluorinated GHGs are covered in this
threshold.  (4747)

What are the permit conditions regarding GHG emissions that will need to
be added to a title V permit renewal if the facility has not made a
significant modification requiring a GHG BACT analysis?  (3916) 

How are agricultural operations handled under this rule?  (4866)

Can districts phase-in over a 3- to 5-year period the title V permit
submissions for newly captured facilities and major sources?  (3003)

Response:

	EPA appreciates the suggestions and general comments as to what parts
of the PSD and title V permitting programs should be clarified before
permitting of GHGs commences.  Several of the requests for clarification
or questions are specifically addressed in the preamble to the final
Tailoring Rule or in the BACT guidance, Source Category Exemptions, or
other sections of this RTC.  Other of these comments are requests for
specific guidance or determinations that are beyond the scope of the
Tailoring Rule (e.g., source-specific determinations, appropriate
monitoring, emission calculations for particular GHG sources). 
Furthermore, since these issues were not specifically addressed in the
proposal of the Tailoring Rule, we do not have a sufficient record upon
which to make such decisions at this time.  However, a few
clarifications may be helpful:

EPA is currently preparing PSD technical and policy guidance for GHG and
expects to issue it by the end of 2010.

As explained in the proposed Tailoring Rule, LAER does not apply to
GHGs.

No “once-in always-in” policies with respect to title V or PSD
applicability are addressed with respect to GHGs in this final rule.

The use of CO2 offsets in PSD programs are not addressed in this final
rule.

Questions about how to determine GHG emissions for permitting
applicability purposes with respect to specific categories of GHG
sources are beyond the scope of this rule.  However, the proposal
clarified that such calculations must be based on a source’s PTE and
that implementation of the Mandatory GHG reporting Rule will produce
information, including facility-level GHG emissions data, that will help
permitting authorities to address GHG emissions for specific source
categories in their programs.  Also, see section 8.4.4 of this RTC for
more on monitoring and other methods of calculating emissions.  

We are not finalizing any exemption for PSD or title V for R&D emissions
for engine testing or for any other source category.

The categories of HFCs and PFCs are fluorinated GHGs, included in the
group of six pollutants regulated under this final Tailoring Rule; these
fluorinated GHGs are contained in many refrigerants in common usage
today.  

Fluorinated GHGs are GHGs covered under the Tailoring Rule, while
fluorides are a separate category of regulated NSR pollutants not
addressed by the Tailoring Rule.  

The title V permit conditions that will be included in any particular
permit are source-specific and determined by the permitting authority at
the time the permit is issued.

The CAA requires all operating permitting programs in existence for
three years or more to issue all permits within 18 months of submittal
of a timely and complete permit application and we are not finalizing
any variation from this requirement for GHG sources in this final rule.

8.4.2  General Requests for Guidance

Comment:

	

	Several commenters ask EPA to provide guidance on various issues
related to GHG permitting.  They request that:

EPA provide guidance on identifying and quantifying sources covered by
title V, similar to the general and sector-specific applicability
guidance provided with the Mandatory Reporting of Greenhouse Gases Rule.
 (5079)  

EPA issue guidance to permitting authorities on title V general permits
to ensure a manageable, consistent, and efficient program.  (4515, 4691)

EPA provide guidance for industries that do not have specific emission
factors for GHGs.  (3278, 5073)  One of these commenters recommends
delaying implementation for industries for which emission factors are
not available to allow time to develop these emission factors.  (3278)

EPA provide guidance to the states.  (4747, 4860, 5063, 5336, 5338) 
This guidance should include or be for:

Standardized general permits for certain source categories.  (4747,
4860) 

Permits-by-Rule language.  (4860)

How states should fund the program through fees and on seeking federal
funding for state and local agencies under section 105 or 103 of the
CAA.  (4860)

How facilities should calculate their GHG emissions to determine if they
fall under PSD and title V programs.  (5336) 

How to handle PSD permit applications that are in process when the
Tailoring Rule becomes effective.  (5338) 

EPA immediately commence work on a PSD and additional title V “white
paper” guidance to handle GHG aspects of permitting including
provisions for a one-time listing of annual emission targets for title V
facilities under cap and trade, as well as the permit revision routes to
be followed for title V permit modifications dealing with GHG, etc. 
4863)

EPA issue specific guidance to potential sources and permitting
authorities of when administrative limitations to PTE are appropriate. 
(5078, 5079)  

EPA produce a guide that explains how the 25,000 tpy threshold
calculation is done, and the types of businesses that would likely be
covered or not covered.  (4684)

EPA establish a toll-free phone number for small businesses to call and
inquire whether they are covered or not (without fear of enforcement). 
(4684) 

EPA specify a calculation method for determining GHG emissions for PSD
and title V permits; BACT guidance (including applicability triggering
of BACT); and permit transition considerations.  (8461) 

EPA (1) publish a Case Study for each permit example for source
categories expected to trigger PSD and title V requirements for GHGs in
phase 1 (which could be included on their website); (2) hold Case Study
review seminars in each EPA Region for state regulatory staff on a
semi-annual, then annual basis; (3) advertise the notice and comment
period for select permit applications on EPA’s website, including the
EPA implementation assistance and support material, and invite comments
from interested parties.  (4526)  

EPA’s BACT guidance development process should involve all
stakeholders and should be more transparent.  (4512, 4515, 4691, 4866,
4951, 4691, 5110, 5863, 6681, 16411)

GHG BACT guidance is needed since GHG do not have well established
industrial BACT beyond efficiency improvements.  In addition, the BACT
refinement effort is further complicated by the use of a single CO2e
pseudo-pollutant which is really six different constituents that could
possibly lead to six different BACT determinations for a single source. 
(4519, 4746, 4863, 4949, 5064, 5305)  One of these commenters requests
clarification on how a BACT evaluation will be done for a stack emitting
multiple GHGs and whether the applicant should do one BACT analysis
using CO2e, or would they do separate BACT analyses for each of the
individual GHGs?  (4519)  

Additional time provided to develop BACT guidance that is necessary to
fully evaluate the economic impact of regulating GHG emissions under the
PSD and title V programs.  Currently, the CAAAC’s Climate Change
Workgroup is struggling to develop BACT guidance for source categories
that emit the most GHG emissions.  According to the commenter, only
after BACT is evaluated will EPA have information necessary to fully
analyze the economic impact of the rule.  (5133)

The CAAAC’s BACT guidance document should, at a minimum, include the
following criteria:  (1) BACT requirements that are equipment and
project specific; (2) BACT requirements should be based on what is
available at the time of permit issuance; (3) BACT must be
cost-effective and technically feasible; and (4) EPA must ensure that
permit issuance is not delayed.  (5346)

EPA’s BACT procedures summarized by the Climate Change Workgroup
provide for the evaluation of innovative technologies – they believe
that there is a bias against innovative technology built in to the
current process because it eliminates all but “demonstrated”
technologies as being feasible control options under BACT.  (5728)

EPA provide sector-specific guidance on BACT which includes finalizing a
document that addresses BACT determinations entitled "New Source Review
Workshop Manual: Prevention of Significant Deterioration and
Nonattainment Permitting (Draft, October 1990)."  (5078, 5079)  One
commenter adds that EPA should evaluate the applicability of the current
“top-down BACT” approach many states currently follow for criteria
pollutants (and their precursors) and provide initial guidance to states
on how such an approach would be applicable to BACT determination for
emissions of GHGs.  (4239) 

EPA develop practical guidance on BACT standards (3858, 4512, 4154,
4238, 4239, 4521, 4866, 4949, 4989, 5039, 5061, 5084, 5135, 5198, 6681,
7935), with the opportunity for stakeholder input if not formal
comments, prior to implementation of this rule in early-to-mid 2010
(5079).  

EPA’s BACT guidance include thermal efficiency degradation factors
when establishing the BACT limit.  (5079)

EPA prepare white papers that provide guidance on a range of control
technologies and measures that can be applied in a cost-effective manner
for major stationary source categories, such as power plants, cement
kilns, glass furnaces, and other sources.  (4512, 6681)  

EPA issue a white paper to define real world potential for boilers in
high schools and hospitals so that permits are reviewed and issued based
on realistic emission estimates.  (4512)

EPA provide guidance for computing GHG emissions for any sources that
are not in EPA’s GHG Mandatory Reporting Rule but are covered in the
PTE calculation.  (4864)

EPA provide timely and sufficient guidance to states to assist them in
implementing comprehensive PSD and title V GHG permitting programs. 
(4238, 4239)

EPA address ties to other CAA programs, such as the CAM Rule.  (4691)

In addition, several commenters would like EPA to harmonize the
Tailoring Rule with the GHG Mandatory Reporting Rule (2371, 3306, 4862,
4951): 

Because the GHG Mandatory Reporting Rule does not impose reporting
requirements on combustion of biomass but the PSD does, there is
ambiguity over whether biomass combustion is regulated under the
Tailoring Rule.  If EPA does not harmonize the PSD program and the GHG
Mandatory Reporting Rule, regulators will run the risk of reversing
established policies, which will increase regulatory uncertainty, and
force regulation of stationary sources for which they lack comprehensive
reporting.  (4862)

EPA should reference the methodologies contained in the GHG Mandatory
Reporting Rule (74 FR 56259) for calculation methods in the Tailoring
Rule.  This would eliminate any potential inconsistencies between the
two rulemakings.  (3306)  

EPA can link the schedule for enforcements under the GHG Tailoring Rule
to the schedule for the GHG Mandatory Reporting Rule by waiving
enforcement action for sources that fail to comply with the rule prior
to the March 2011 initial reporting deadline under 40 CFR part 98. 
(2371)  

Response:

	In general, these comments raise implementation issues that are beyond
the scope of this rule, which is generally limited to tailoring the PSD
and title V applicability requirements.  EPA will address the issues
raised in these comments as it moves forward with implementing PSD and
title V for GHG sources.

	Concerning the request for harmonizing the Tailoring Rule with the GHG
Mandatory Reporting Rule, we have harmonized them in this final rule to
some extent, in that both rules adopt the same group of six GHGs. 
However, this action does not preclude us from further harmonizing this
rule in the future after a notice and comment process.  For more on BACT
guidance, see section 8.4.5 of this RTC; for more on Biomass, see
section 8.3.2 of this RTC; for more on methodologies for calculating
emissions, including those required by the Mandatory GHG Reporting Rule,
see section 8.4.4.

 

Concerning the interplay between the Tailoring Rule and the CAM rule,
EPA did not propose any revisions to any regulations to treat GHGs any
differently than any other regulated air pollutants for purposes of CAM
and that approach is the approach of the final rule.  The CAM rule,
under 40 CFR part 64, adds monitoring designed to provide a reasonable
assurance of compliance in cases where underlying monitoring (e.g.,
monitoring imposed through a PSD permit) for an active control device
(e.g., a scrubber) does not meet certain CAM monitoring criteria.  Also,
CAM applies on a pollutant-specific basis at each emission unit located
at a major source that has a title V permit and provided certain
emission thresholds at met or exceeded.  CAM is normally determined as
part of a title V permitting action, including during initial permit
issuance or as part of a significant permit revision.  A more-detailed
explanation of CAM is beyond the scope of this rulemaking. 

Lastly, EPA did not propose to link any schedules for enforcement under
the Tailoring Rule to such schedules under the GHG Mandatory Reporting
Rule, and we are not specifically addressing this issue in the final
rule because it is beyond the scope of the rule.  However, because the
final rule delays the applicability of the Tailoring Rule until January
2, 2011, the final rule will likely mitigate the commenter’s concern
to some extent, compared to the proposal, which would have triggered
applicability upon the promulgation of the final rule. 

8.4.3  General Suggestions or Comments for Specific Sectors

Comment:

Various commenters offer suggestions and comments for specific sectors
potentially subject to the Tailoring Rule.  They state that:

For the semiconductor and other electronics facilities:  It would be
especially difficult for a facility to operate under title V and PSD
programs, which require close tracking of emission levels to determine
if permit thresholds are exceeded, when EPA and state regulatory
agencies have not determined the relevant emission measurement and
quantification methods for semiconductor and other electronics
facilities.  Even EPA recognized the difficulties and complexities
inherent in quantifying GHG emissions in the semiconductor manufacturing
industry when it elected to postpone finalizing the electronics portion
of the GHG Mandatory Reporting Rule.  (5329)

For the Public Owned Treatment Works (POTWs) Facilities EPA could
achieve better results for limiting GHG emissions at POTWs by providing
incentives for utilities to increase energy efficiency, to reuse
bio-solids and biogas generated through the wastewater treatment process
as fuel, and to adjust treatment processes when viable, rather than
instituting PSD permit requirements.  (5336)

For Landfills 

EPA should clarify and streamline the common control determination
process for landfills associated with LFG energy production (4154,
5391).  One commenter adds that separately-owned LFG control and or
treatment operations should not be considered to be under "common
control" of the landfill owner/operator for purposes of PSD and title V
permitting, and emphasizes that this is particularly true when the
landfill can operate independently from a renewable energy recovery
project.  According to this commenter, EPA should, among other things,
(1) define a separate class of parties engaged in the treatment and/or
combustion of LFG, either on-site or off-site, that will bear compliance
responsibility under the Landfill NSPS; and (2) create an option by
which a landfill owner/operator may transfer compliance responsibilities
to a collection, control or treatment system owner/operator, consistent
with the parties' contractual provisions, through a certification
procedure.  Finally, this commenter also believes EPA should narrowly
prescribe the circumstances under which compliance responsibility may
transfer to a third party under the NSPS for landfills, so that landfill
owners/operators would have meaningful opportunities and flexibility to
maximize the value of beneficial use projects involving LFG (5391).

EPA should reconsider the allowable amounts for CH4 oxidation for older,
closed landfills.  Because these sites generate such low quantities of
LFG, the capacity for the cover soils to oxidize the CH4 is
significantly higher than for active or recently closed facilities.  For
landfills that have been closed for more than 20 years, CH4 oxidation of
up to 100 percent should be allowed, and more recently closed facilities
should be allowed a sliding scale.  (4951)

In addition to generating CH4 through breakdown of waste in a landfill,
a portion of the carbon is stored in the landfill and thus, landfilling
provides storage capacity for carbon through this sequestration.  This
quantity of sequestered carbon should be considered as GHG regulations
progress.  At a minimum, sequestration of other biogenic carbon should
be allowed as part of the net calculations that landfills use to
determine their contribution of GHG to the environment.  (4951)

For Electric Utilities and Transmission and Distribution (T&D)
Facilities:

EPA should clarify that it does not intend to regulate mobile sources of
emissions from electric utilities (i.e., fleet vehicles, customer
service vehicles, service vehicles, and emergency or outage management
vehicles).  (5052)

EPA should clarify that it does not intend to regulate emissions from
the office buildings of Transmission and Distribution (“T&D”)
utilities which do not burn fossil fuels (coal or gas) directly.  The
commenter notes that the final rule on GHG reporting did not cover fleet
vehicles or T& D facilities with no generation by excluding the
reporting of SF6 emissions, and believes that the same decision should
be made for the Tailoring Rule.  If not, EPA should at least delay or
determine as de minimis electric utility office buildings without
generation such as, but not limited to, bill paying centers, customer
relations buildings, or storage areas with transmission equipment that
might contain SF6 canisters or tanks that function as true storage
areas.  The commenter believes that regulation of these de minimis
sources of non-CO2 GHGs should be postponed until phase 2 or 3 of the
PSD and title V permitting programs since no control technology has been
identified and the NAAQS process has not been established.  (5052)

EPA should delay PSD and title V for any extraneous GHGs (e.g., nitric
acid, water vapor, or any other de minimis GHGs) at power plants. 
(5052)

EPA should not require additional CO reduction controls if a 250-ton
threshold triggers PSD CO regulation (5052).  This commenter considers
CO as an extraneous de minimis GHG that should not be regulated in the
future (5052).

Response:

Many of the requests for special consideration for these source
categories were considered by EPA in the context of our response to
request for deferrals, exemptions, or particular major source thresholds
for the categories, and we decided not to take final action on any such
special treatment at this time.  Instead, we have decided to adopt
higher applicability thresholds that will apply to all source categories
and phase-in the permitting requirements such that only the largest
sources in any category will be permitted first.  Nevertheless, we have
committed to further consider which sources should be permitted or
exempted in the prospective step 3 rulemaking or the rulemaking
associated with the 5-year study.  Also, several of questions raised by
the commenters are directly or indirectly addressed in the preamble to
the final rule or elsewhere in this response to comments (e.g.,
treatment of biogenic emissions for landfills, secondary or indirect
emissions from electrical generation).

8.4.4  General Suggestions or Comments on Emissions Monitoring, Public
Participation, and Funding

Comment:

Two commenters provide specific suggestions or comments regarding
emissions monitoring in response to the Tailoring Rule.  They state
that:

EPA should establish monitoring exemptions to address GHG emissions
monitoring, including compliance issues arising under the CAM rule. 
(4515/4691) 

To determine emissions: (1) physical measurements rather than only using
empirical determinations should be allowed; (2) temperature, pressure,
or variations in gravity which use mass and weight should also be
allowed since the metric related calculations seem to be oversimplified,
(3) the most efficient engines should be supported regardless of the
emissions produced, instead than supporting various fuels and combustion
techniques, (4) EPA should clarify whether it supports the development
of higher efficiency engines; and (5) emissions should be based on the
optimal ratio of CO and CO2 produced during combustion, rather than
using raw quantities.  Any exemptions to CO emissions that currently
exist should also apply to CO2 emissions.  (15947)

Concerning public participation, one commenter suggests that in order to
ensure technical support documents are based on the most complete and
substantial information from sources as possible, operators and industry
stakeholders should be included in the development and review of support
documents, and technical and cost information should be peer-reviewed
and based on technically supportable references.  The commenter is
especially concerned that limited information (e.g., projections on
technology performance or cost) provided by one or two sources could
result in biased support documents.  (4515/4691)

	Several commenters request funding assistance from the federal
government to assist state and tribal governments.  They state that:

Even with the Tailoring Rule there is likely to be a significant
increase in workload for permitting authorities (3919).  Consequently,
EPA should seek federal funding assistance for permitting authorities,
at least as a stop-gap measure as states work to develop new regulations
and seek the needed additional resources (3919).  Another commenter adds
EPA should provide the states with additional funds to implement the
Tailoring Rule, including increased funds in the first year of
implementation to cover the cost of synthetic minor permitting.  They
request that funding be sufficient to support new staff, training, and
outreach (3916).  

EPA should provide funding for inspection and enforcement or this rule
would be another unfunded mandate.  (5063, 6681) 

EPA should increase CAA section 105 program funding and provide for the
collection of title V fees for GHGs.  (7935)

The final rule should include CO2 presumptive emission fees that are
lower than the fees for criteria pollutants, since source emissions of
CO2 are typically 100 to 1000 times higher than emissions of criteria
pollutants from the same source.  (4154) 

Tribal air grant funding should be increased to more accurately reflect
the air quality-related needs of tribes across the nation, and allow
these same tribes the opportunity to implement the Act’s PSD and title
V programs.  (8803)

Response:

	EPA would like to thank the commenters for their suggestions and
general comments and we may consider them in our future deliberations.

Concerning monitoring and other methods for calculating GHG emissions,
the establishment of monitoring requirements or exemptions is beyond the
scope of this rule.  We note that the GHG Mandatory Reporting Rule
contains GHG monitoring requirements and detailed GHG emission
calculation protocols for many different source categories.  [See, e.g.,
40 CFR part 98, Subpart C – General Stationary Fuel Combustion
Sources].  In addition, the GHG Mandatory Reporting Rule may be amended
in the future to add monitoring requirements and emission calculation
protocols for additional source categories.  If the GHG Mandatory
Reporting Rule does not specify particular monitoring or emission
calculation methods for your processes, then state and local permitting
authorities will take the lead in authorizing appropriate calculation
methods as part of the permitting process.  Also, under PSD and title V,
permitting authorities retain authority to require monitoring or other
approaches for calculating emissions for compliance purposes, and EPA
takes no action in this rule on commenter’s request to exempt GHG
sources from such requirements. 

In the proposal, EPA explained that we support energy efficiency or
other measures to reduce GHG emissions, and we continue to do so.

Concerning public participation, EPA has conducted public outreach in
the development of this rule and has to-date sought the input of the
public, including industry, environmental groups, and state and local
agencies, and others.  We remain committed to meeting all statutory
requirements for public participation, including the requirements of the
APA, and to conducting other outreach as may be appropriate to help
inform our decisions.

Concerning funding issues, issues related to any grants EPA may issue to
state and local or tribal agencies are beyond the scope of this rule,
but we appreciate the feedback nevertheless.  EPA also directs the
commenters to our response on issues related to title V fees below,
which are an important mechanism for funding air quality permitting
programs under the CAA.

8.4.5  PSD-Specific Implementation Issues

Comment:

	Various commenters provide suggestions or comments regarding
implementation issues related to the PSD program.  They state that:

EPA needs to make every effort to modify or clarify its regulations and
policy concerning the determination of a source’s “potential to
emit” GHGs.  According to the commenter, EPA has asserted in the past
that it has substantial discretion in determining such details of the
PSD program, and the courts have agreed.  Additionally, the commenter
believes that it is clear from existing regulations, that EPA also
should reinforce explicitly that the GHG emissions to be assessed are
those from the source itself, and not those from activities like
transportation or off-site electricity generation that have some
connection with the source.  (4903)

EPA should not consider GHGs in determining if a modification at an
existing source is a major modification and therefore subject to PSD
review (6458).  According to this commenter, if “significant’
increases in GHGs are used to determine if a change at an existing
facility is a major modification, existing plants will not be able to
make modifications or changes that, for instance, improve
energy/operational efficiency, increase electrical generation capacity
or reduce maintenance without the change being considered a major
modification because there are no GHG limits that could be lowered to
net out of PSD review and that this would effectively foreclose existing
plants from make any substantial improvements.  If this is not possible,
a commenter suggests that EPA should clearly indicate in the regulations
how “contemporaneous” increases and decreases of GHGs will be
addressed with respect to changes in GHG emissions that took place
before they became regulated under the PSD rules (4903). 

EPA should consider a major modification under PSD to occur when the net
emissions increase would be greater than 100 tpy on a mass emission
basis for the individual gas (e.g., CO2, HFCs, N2O, and CH4) and greater
than 25,000 tpy CO2e of combined GHG emissions.  EPA could evaluate the
need to move back to the currently proposed significance level and
provide a basis for the proposed value based on the 5 years of gathering
information/review.  (3306)

EPA should clarify if sources can be excluded from PSD, under existing
regulations, due to changes at a facility that merely result in the
increased utilization of a unit or increased fuel burning or burning of
an alternative fuel, provided the unit was capable of accommodating that
change (4903, 16411).  See 40 CFR 52.21(b)(2)(iii)(e) - (f).  Since EPA
has identified combustion sources like boilers as the primary units that
will be affected by or will trigger PSD permitting for GHGs, see 74 FR
55,334, there will be an increased number of questions about whether
increases in fuel consumption or fuel-switching at those units are
exempted from being a PSD major modification (4903).  The commenter
(4903) encourages EPA to reinforce the interpretation it applied to
those exemptions from the definition of modification soon after they
were promulgated so that, so long as a unit itself (not including
peripheral equipment) is capable of burning a fuel, or is capable of
burning greater quantities of a fuel, the increased emissions associated
with fuel switching or increased utilization are not counted in
determining a “net emissions increase,” regardless of whether other
changes at a facility made the fuel switching or increased rate of
operation necessary or more desirable.  

EPA needs to clarify how debottlenecking projects will be treated and
how projects must be aggregated for PSD applicability purposes.  (4903,
16411)

EPA should develop a standard evaluation process to determine if best
practices and technologies have been incorporated in the case-by-case
review of new or modified facilities that trigger PSD permitting
requirements, otherwise there may be wide variations between permitting
agencies, even agencies located in the same state.  It might be better
to have streamlined standard reviews by source categories.  (4518, 8531)
 

EPA should clarify whether PSD requirements for GHG sources trigger
additional environmental impact and air quality analyses.  (4691)

EPA should clarify how GHG emissions thresholds apply to routine
operational changes that may trigger PSD major modification procedures
(4867).  Another asks how major modification is determined for GHGs
(5124)?

EPA should exclude GHG emissions from that portion of the PSD definition
of “significant” that defines a 1 µg/m3 impact within a Class I
area as significant, because GHGs are emitted from combustion sources in
amounts orders of magnitude higher than criteria pollutant emissions
(see 40 CFR 52.21(b)(23)(iii)) (4692).  For sources located within
10 km of a Class 1 area, this criterion would require a PSD permit for
combustion sources so small they are exempt from both minor permit NSR
and title V permits (4692).

Since GHGs are global pollutants, EPA should (6457):

Recognize “carbon offsets” from off-site reduction, destruction,
avoidance or sequestration of GHG as a legitimate method of netting
on-site GHG from regulated major emitting facilities for purposes of
PSD/NSR (or title V) applicability, thresholds, or emissions analysis. 
Under current law, the federal CAA does not prevent EPA from doing so.

Create a trading system for GHG emissions, which can be readily
distinguished from the trading programs in the Clean Air Interstate Rule
(CAIR) and NOx SIP Call that were recently invalidated by federal courts
on the grounds that those programs failed to adequately account for
inter-airshed transfers and resulting concentrations of pollutants in
upwind airsheds, which may have posed a localized risk to health and
welfare.  

Consider on- or off-site carbon reduction projects in determining the
appropriate technology standard (BACT, LAER, RACT, etc.) applicable to
regulated stationary sources under various provisions of the CAA. 

EPA should be explicit on how the PSD major modification threshold is
determined.  For ubiquitous industrial emissions sources such as process
heaters, and in light of the very low GHG thresholds EPA has proposed,
the commenter supports the current regulatory practice of determining
changes in emissions as "actual to future actual" and not "actual to
potential.”  The commenter supports the "actual to future actual"
regulations as the more reasoned approach to applying NSR to GHG
emissions and requests EPA to specifically document this approach in the
final regulations. (5124)

Response:  

EPA appreciates these comments.  They are beyond the scope of this rule,
which is generally limited to tailoring the PSD and title V
applicability requirements.  EPA will address the issues raised in these
comments as it moves forward with implementation of PSD requirements for
GHG sources.

Because many of the comments concerned BACT, it should be noted that the
CAA requires that a PSD permit contain, among other things, emissions
limits based on the BACT for each pollutant subject to regulation under
the Act emitted from the source that triggers PSD.  42 U.S.C. section
7475(a)(4); 42 U.S.C. section 7479(3).  BACT is defined as follows:

(3)  The term "best available control technology" means an emission
limitation based on the maximum degree of reduction of each pollutant
subject to regulation under this Act emitted from or which results from
any major emitting facility, which the permitting authority, on a
case-by-case basis, taking into account energy, environmental, and
economic impacts and other costs, determines is achievable for such
facility through application of production processes and available
methods, systems, and techniques, including fuel cleaning, clean fuels,
or treatment or innovative fuel combustion techniques for control of
each such pollutant.  In no event shall application of "best available
control technology" result in emissions of any pollutants which will
exceed the emissions allowed by any applicable standard established
pursuant to section 111 or 112 of this Act.  Emissions from any source
utilizing clean fuels, or any other means, to comply with this paragraph
shall not be allowed to increase above levels that would have been
required under this paragraph as it existed prior to enactment of the
Clean Air Act Amendments of 1990.

42 U.S.C. § 7479(3).

Thus, the BACT process is designed to determine the most effective
control strategies achievable in each instance, considering energy,
environmental, and economic impacts.  However, the case-by-case nature
of BACT, together with the range of factors and technologies that must
be considered, presents a challenge in determining BACT for newly
regulated pollutants.  When a new pollutant is regulated, the first
permit applicants and permitting authorities that are faced with
determining BACT for a new pollutant will likely need to invest more
time and resources in gathering and analyzing information necessary to
make an assessment of BACT under the statutory criteria.  Once the PSD
permitting program matures with respect to the new pollutant, successive
BACT analyses will establish precedents that can inform subsequent BACT
determinations.  While the BACT provisions clearly contemplate that the
permitting authority evaluate control strategies on a case-by-case
basis, EPA recognizes the need to develop and share policy guidance and
technical information for sources and permitting authorities as they
begin to permit sources of newly regulated pollutants, such as of GHGs. 
When applied in a practical manner, this additional EPA guidance and
technical information should reduce time and resource needs when
evaluating BACT for newly regulated pollutants.

As described in the proposed GHG Tailoring Rule, EPA intends to compile
and make available technical and background information on GHG emission
factors, control technologies and measures, and measurement and
monitoring methodologies for key GHG source categories.  We expressed
our intent to work closely with stakeholders in developing this
supporting information and to ensure this information is available in
sufficient time to assist permitting agencies in their BACT
determinations.  The proposal took comment on what other types of
support or assistance EPA can provide to initially help air pollution
control agencies with the permitting of GHGs.

Commenters on the proposed GHG Tailoring Rule generally supported EPA
providing technical information and policy guidance for sources of GHGs.
 Several commenters specifically requested guidance to clarify
GHG-related issues, such as how to compute CO2e emissions, how to
evaluate emissions of CO2 from biomass fuel, and whether an air quality
analysis will be required for GHGs.  Additionally, commenters requested
that EPA issue “white papers” and other tools that would provide
information on a range of control technologies and measures for major
stationary source categories, such as power plants, cement kilns, glass
furnaces, and other sources.  Many of these commenters further requested
that EPA provide an opportunity for stakeholder input on the guidance,
and a few commenters insisted that permitting for sources of GHGs should
not begin prior to issuing final guidance.

Consistent with our commitment at proposal to involve all stakeholders
in our guidance development, EPA called upon the CAAAC in September
2009, to provide assistance and recommendations for what types of
guidance and technical information would be helpful.  Specifically, our
charge to the CAAAC was “… to discuss and identify the major issues
and potential barriers to implementing the PSD Program under the CAA for
greenhouse gases … [and] focus initially on the BACT requirement,
including information and guidance that would be useful for EPA to
provide concerning the technical, economic, and environmental
performance characteristics of potential BACT options.”  This charge
also requested the CAAAC to “identify and discuss approaches to enable
state and local permitting authorities to apply the BACT criteria in a
consistent, practical and efficient manner.”

At its October 6, 2009 meeting, the CAAAC established a Climate Change
Work Group, made up of 35 representatives from a variety of industries,
state and local governments, and environmental and public health
non-profit organizations, organized under CAAAC’s Permits, New Source
Review and Toxics Subcommittee.  The Work Group initially focused its
attention on the procedure for evaluating BACT and decided that the
process and criteria for determining BACT for criteria pollutants
represented a workable and acceptable framework for GHGs.  The Work
Group also recommended a second phase, in which the Work Group would
consider member proposals regarding possible alternative or
supplementary approaches to applying the PSD program to GHG sources. 

In February 2010, the CAAAC completed work on the first phase of its
effort and sent EPA a list of recommendations that highlighted areas of
the BACT determination process that are in need of technical and policy
guidance.  For more information, see the Interim Phase I Report on
Issues related to BACT for GHGs, February 3, 2010 that is located in the
public docket for this rulemaking and at   HYPERLINK
"http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf"
http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf . 
In response we are working on a number of fronts to develop technical
information, guidance, and training to assist states in permitting large
stationary sources of GHGs, including identifying GHG control measures
for different industries.  EPA is currently working with states on
technical information and data needs related to BACT determinations for
GHGs.  This includes developing the EPA Office of Research and
Development GHG Mitigation Strategies Database, enhancing the
RACT/BACT/LAER Clearinghouse to include GHG-specific fields, and
preparing technical information on sector-based GHG control measures. 
Also, EPA is actively developing BACT policy guidance for GHGs that will
undergo notice and comment and will culminate in training courses for
state, local and tribal permitting authorities.  The results of all of
these efforts will roll out over the remainder of 2010.  EPA currently
awaits the Work Group’s recommendations from its second phase of
deliberations, which is underway as of the date of this notice.

EPA does not agree with some commenters’ suggestion that EPA should
delay permitting of any sources until final BACT guidance is issued.  As
discussed in the final action on reconsideration of the Interpretive
Memo, delaying the application of BACT to enable the development of
guidance or control strategies is not consistent with the BACT
requirements.  63 FR at 17008.  Furthermore, as just described, EPA
expects such a delay to be unnecessary because EPA will soon begin
providing technical information to inform BACT decisions, and will
continue to provide additional guidance prior to the date that GHG
permitting begins.  However, even in the absence of such guidance, a
delay would not be justified under the legal doctrines of “absurd
results” and “administrative necessity.”  While implementation of
the BACT requirement during steps 1 and 2 will pose implementation
challenges, EPA has assessed the burden associated with GHG permitting
with consideration given to these challenges, and has established a
phase-in schedule that represents a manageable workload.

Thus, while BACT is a case-by-case assessment, EPA is confident that
this guidance development effort will help support a smooth transition
to permitting emissions of GHGs.  Furthermore, EPA will continue to work
to provide the most updated information and support tools to allow
permitting authorities to share and access the most updated information
on GHG BACT determinations as they are made once permitting of GHGs
begins.  EPA remains committed to involving stakeholders in the upcoming
efforts to develop guidance to help to permitting authorities in making
BACT determinations for sources of GHGs.  

8.4.6  Title V-Specific Implementation Issues

8.4.6.1  General Comments or Suggestions

Comment:

EPA should clarify the status of facilities with existing title V
permits, whether:

The requirement to obtain a title V permit where none was previously
needed would require the newly permitted facility to include all
pollutants into a title V permit or whether the minor sources could
remain outside of the title V permit.  (4990).

Will the GHG requirements be added to existing permits or will they be
required to be in a new and separate permit.  The commenter recommends
that EPA make the new requirements additions to existing permits, rather
than a separate permit.  (4990)

Response:

We did not propose to revise the title V regulations to treat GHGs any
differently within title V permits and we are not finalizing any such
changes at this time.  Concerning the scope of the permit, the current
rules specify that when any regulated air pollutants, including GHGs,
trigger major source status, all emission units and all regulated air
pollutants at those emissions units must be included in the permit
application.  Also, permits for major sources must include all
applicable requirements at all emissions units, while certain permits
for minor sources may be limited in scope with respect to applicable
requirements.  See 40 CFR 70.5(c)(3)(i) and 70.3(c)(1).  In the preamble
to the final rule we discussed the future consideration of certain
“hollow permit” theories for limiting the applicability for the
permitting rules in the future but we are taking no action on that
approach at this time.  See more on this under section 8.4.6.2.

Concerning the comment that EPA allows permitting authorities to add new
GHG permit requirements as additions to permits, rather than as a
separate permit, we are not requiring such an approach at this time. 
The permit rules allow permitting authorities to either issue a single
permit or multiple permits to a single major source provided all the
applicable requirements at the facility are covered by the permit or
collection of permits, and we are not changing this discretion for
permitting authorities at this time.  

8.4.6.2  Hollow Permits

Comment:

	Several commenters assert that permitting agencies would spend a lot of
time and money to process the permits of applicants (3858) who have
essentially nothing to report, because there are no applicable GHGs
requirements under the CAA (4692, 5143, 5179, 5417, 5808, 8545) and
these sources have no other obligations under the Act (5129).  For that
reason, it would seem that the D.C. Circuit might be receptive to EPA's
adopting a scheme to provide relief from title V for these sources
(8545).  However, if “hollow” permits are created or would be
created, two commenters suggest that EPA could: (1) include the GHG
Mandatory Reporting Rule as an applicable requirement under title V to
prevent this from happening (4747), or (2) provide model permit language
for the first round of title V permits (5338) to facility the issuance
of all the new permits.  

	One commenter has concerns about how compliance assurance measures
would be established in title V permits for the semiconductor industry
given that there are no applicable requirements.  Even the GHG Mandatory
Reporting Rule has been deferred for semiconductor manufacturers, and
the commenter contends that establishment of reporting and monitoring
requirements outside of the GHG Mandatory Reporting Rule on a patchwork
basis through state-administered title V permitting programs would
undermine the Tailoring Rule and also the efforts by the semiconductor
industry to establish voluntary GHG emissions reporting and reduction
goals on a worldwide basis through the World Semiconductor Council. 
(5143)

	

Response: 

Many commenters argued that EPA should apply the title V program only to
sources that are subject to applicable requirements, so that sources
should not be required to hold empty permits (i.e., permits issued to a
source that is not subject to any applicable requirement for any
pollutant).  To the extent that commenters argue that the statute
requires EPA to adopt a “no-empty–permits” theory, we disagree. 
We believe that although various provisions of title V indicate that one
of title V’s purposes is to gather a source’s applicable
requirements into a single permit, see CAA sections 503(b)(1), 504(a),
we do not read those provisions as expressly limiting title V to sources
with applicable requirements.  We also note that to date, we have issued
permits to sources without applicable requirements, albeit on rare
occasions.  We believe that the tailoring approach we adopt in this
rulemaking best reconciles the statutory provisions with congressional
intent.

We also raised the issue of “hollow” or “empty” permits in
discussing our rationale for why it may make sense to delay title V
permitting under our proposal.  We were concerned that many title V
permits for GHG sources would contain no applicable requirements, and
their issuance would therefore be of little value and would not be the
best use of scarce resources.  Several commenters agreed that
implementing title V for GHG will, at least initially, require “empty
permits” to be issued to GHG sources because such sources will not be
subject to “substantive” requirements, and that this would not be
the best use of scarce resources. 

 

	We believe that the amount of resources that would be spent on, and the
limited value that would result from, “empty permits” does warrant
consideration under the Chevron analysis, taking account of the
“absurd results” doctrine.  Therefore, we intend to consider the
role of “empty permits” when we undertake future rulemaking. 
However we believe the issue of “empty permits” has limited or no
relevance to the first two steps of the phase in that we are
promulgating in this rule.  During step 1, permitting for GHGs is only
required if the source is otherwise subject to permitting for its
emissions of non-GHGs.  Those sources very likely will be subject to
existing substantive applicable requirements for non-GHGs (e.g., NSPS,
MACT, and SIP requirements, including PSD).  Thus, there should be no,
or at least no additional, “empty permits” during step 1.  For step
2, it is possible that sources that become subject to title V
requirements for GHG emissions may not be subject to other requirements,
but our assessment suggests that this is very unlikely.  We estimate
that virtually all of the 550 newly-major sources in step 2 will be
subject to applicable requirements under the CAA because they are from
categories that have been traditionally subject to regulations, such as
smaller industrial sources from already regulated categories, large
landfills, and oil/gas/coal production.  Even the approximately 50
newly-subject commercial sources in step 2, which we estimate to be
comprised of very large hospitals, are likely to be covered by standards
for medical waste incinerators.  In addition, we expect these sources
may well be subject to SIP requirements.  Thus, we do not expect any, or
at most very few “empty permits” during step 2.

In later stages of implementation (e.g., prospective step 3) or in the
event that we permit smaller, non-traditional sources of GHGs that have
never otherwise been subject to major source permitting, there would be
a greater potential for “empty permits” to be issued under title V. 
Cognizant of this, we intend to further explore in the rulemaking for
step 3 “empty permit” theories under the “absurd results”
rationale that may serve to permanently narrow the scope of title V to
exclude sources that would potentially be required to obtain an “empty
permit” due to GHG emissions.

Concerning the request for EPA to develop model language for hollow
permits, EPA reiterates that it does not expect many, if any, such
permits to be issued under the approach of this final rule and further
notes that no title V permit, even a “hollow” one, would be a
completely blank slate.  Each title V permit must include the title V
administrative requirements, such as fee payment requirements, title
V’s recordkeeping, reporting and monitoring requirements, and
procedures of applying for permit revisions or permit renewals.  Because
each state, local or tribal title V program is unique, permit language
would depend on the requirements of the EPA-approved title V program. 
As such, the state, local, or tribal agency would be in the best
position to develop such model language based on the specific
requirements of their approved permit program, if such language is
deemed necessary.

8.4.6.3  Application Shield 

Comment:

Several commenters request that EPA address the issue of the title V
Application Shield in the proposed rulemaking (3003, 4298, 4860) because
section 502 of the CAA states that it is unlawful for a source to
operate except in compliance with an operating permit (4860) and upon
triggering GHG applicability, all the sources that become subject to
operating permit requirements will not have the required permit pursuant
to the CAA or state regulations.  Therefore, they will not be shielded
from enforcement or be able to certify compliance.  For these reasons,
two commenters ask EPA to:

Clarify whether “shields” would be granted to newly captured
facilities even if a title V permit application is determined to be
incomplete?  (3003)

Implement a uniform national policy, with respect to the treatment of
synthetic minor permit applications that extends permit shield
protections afforded to major sources that have applied for title V
permits to sources that have applied for synthetic minor status.  In the
event a synthetic minor permit is not ultimately issued, sources should
have at least six months to submit an administratively complete title V
permit application without penalty.  (4298)

Response:  

The title V regulations offer two types of “shields” for sources, an
application shield and a permit shield.  Application shields protect
sources from a violation for operating without a permit, provided they
submit a timely and complete permit application by the applicable
deadline; this is a mandatory element of state title V program.  See 40
CFR 70.7(b) and section 503(d) of the Act.  The title V regulations
generally provide that a permitting authority must determine that an
application is incomplete with 60 days following receipt or the
application will be deemed complete.  See 40 CFR 70.5(a)(2).  Where a
permitting authority seeks additional information regarding an
application previously determined or deemed complete, the application
shield continues to apply so long as the source meets any deadlines set
by the permitting authority for submission of additional information. 
See 40 CFR 70.5(a)(2); 70.7(b).  Permit shields protect sources from a
violation for not meeting the terms of an applicable requirement,
provided the source meets the terms and conditions of the applicable
requirement that are included in the permit; this provision is an
optional element for state title V programs.  See 40 CFR 70.6(f)(1)(i)
and section 504(f) of the Act.  The EPA did not propose to revise the
title V regulations with respect to these shields as part of the
proposal for the Tailoring Rule and we have not finalized any such
provisions.  Thus, these shields are available in permitting for GHGs to
the same extent that they are available with respect to other
pollutants.

8.4.6.4  Title V Fees  

Comment:

  

A few commenters support EPA’s position that it is not necessary to
amend the federal regulations to establish presumptive fees that account
for GHG emissions or to mandate revisions to fee regulations in states
that did not adopt the presumptive fee approach because:

Current fees on traditional “regulated pollutants” emitted from
sources newly covered by title V should suffice to cover the costs of
permitting.  In fact, they believe that EPA should go further than it
proposes and prohibit presumptive and/or supplementary fees for GHG
emissions.  (4298)

Applying the current "presumptive fee" of $43.75/ton for GHG emissions
would impose an insurmountable financial burden on a large number of
companies (5300) and thus EPA should eliminate or severely limit the
title V fees that states can collect for GHG emissions (4745, 5300,
5773).  However, they assert that EPA should not leave this to state
discretion (4745, 5300) since this will cause an unsatisfactory
patchwork of state approaches (5300). 

EPA has used its discretion under section 502(b)(3) of the CAA to
establish presumptive fees for GHGs and has left the fee adequacy
requirement to each state.  (4120)

	Other commenters disagree with EPA’s suggestion that states should
not charge for GHG emissions and/or increase the fees of other
pollutants to cover the cost of regulating GHG emissions because:

This approach unfairly punishes existing sources and brings in no
additional revenue from new sources triggering PSD and title V
permitting for the first time.  These new sources will continue to need
permit modifications and renewals after the first permit issuance, and
states and local agencies will need to continue to cover the cost of
these permit actions over time.  (4521)

EPA lacks any credible support for its assumption that a 50 percent
increase in resources is needed and achievable to fund the expanded
resources required by state permitting authorities.  (4630) 

Several commenters state that any effort to increase fees for GHGs will
be contentious because: 

Many regulated sources such as coal-fired power plants and refineries in
their state already pay the maximum title V fee.  (5135)  

Many states are subject to statutory limitations on title V fee
increases and existing fees are likely to be insufficient to address the
increasing workload.  (4691, 5063)

Pending federal GHG legislation would potentially negate the need for
such an increase.  (5135)  

Many states are prohibited from collecting fees for CO2e by their
authorizing legislation or it could take, like in this state, 3 years to
get fee change authorization.  (8025)

Given the status of the economy, certain states will not be able to
raise fees on businesses.  (5301) 

The potential that states can charge a fee for administering the program
could significantly impact the economics of regulated sources.  (3757)  

The CAA is very clear in section 502(b)(3)(B)(ii) that permitting
authorities may not levy title V permit fees on any regulated pollutant
for which a NAAQS, NSPS, or NESHAP has not been established (5052).  The
commenter (5052) also notes that this section also caps permit fees at
4,000 tpy of that regulated pollutant.

Given that legislative and regulatory changes are needed, the timing of
the influx of permit applications will precede their state’s ability
to collect fees and obtain additional resources.  (4238, 5135)

For these reasons, several commenters ask EPA to:

Clearly detail permitting agencies' authority to collect fees under this
program (7935), and provide such agencies with general guidance and
recommendations for fee structure (4555, 5056, 7935).  One commenter
adds that EPA should develop a range of recommended fees for the title V
program so that the states do not have to develop an independent cost
analysis (4866).  

Clarify if there will be a separate fee in $/ton for GHG and criteria
pollutants.  (2493, 2505)

Modify its part 70 rules to adopt presumptive title V fees that are
tailored to the GHG program.  (4864, 5057, 5084)  

Establish a presumptive minimum title V fee that includes the additional
cost related to the inclusion of GHGs in title V permits to ensure that
adequate funding is available to implement this rule.  (3278, 4989)

Monitor closely state GHG programs to ensure fees are reasonable,
appropriate and dedicated to the GHG program (4106, 4120, 4238, 4555,
4691, 5056).  Fees should not be used for general revenues by the states
(4106, 4120).

Ensure that any relief given for fees should apply to all sources
regardless of size.  (5082)

Clarify for CO2 if there will be a cap on fees per pollutant similar to
the acid rain rule.  (2493, 2505) 

Response:

The title V program requires permitting authorities to collect fees
“sufficient to cover all reasonable (direct and indirect) costs
required to develop and administer [title V] programs.”   To meet this
requirement, permitting authorities either collect an amount not less
than a minimum amount specified in our rules (known as the
“presumptive minimum”), or may collect a different amount (usually
less than the presumptive minimum).  We did not propose to change the
title V fee regulations in our notice of proposed rulemaking for this
action, nor did we propose to require new fee demonstrations when title
V programs begin to address GHGs.  However, we did recommend that each
state, local or tribal program review its resource needs for GHG and
determine if the existing fee approaches will be adequate.  If those
approaches will not be adequate, we suggested that states should be
proactive in raising fees to cover the direct and indirect costs of the
program or develop other alternative approaches to meet the shortfall. 
We are retaining this proposed approach, and are not changing our fee
regulations as part of this final action establishing steps 1 and 2 of
the phase-in.  However, we are offering some additional clarification of
our fee approach during these steps in response to comments we received
on this issue.  Additional discussion of fees will be included as part
of subsequent actions establishing step 3 and beyond.

 

A few state commenters suggested that EPA should modify part 70 to adopt
a presumptive minimum fee (or range for such fee) for GHGs, some of whom
suggested that current fees may be insufficient to cover the costs of
their program.  It is important to clarify that altering the presumptive
minimum would only affect those states that chose to charge the
presumptive minimum fee to sources.  Most states – including some of
the commenters asking EPA to raise the presumptive minimum -- collect a
lower amount that is not based on the presumptive minimum, but rather,
relies on another fee schedule that it developed and EPA approved as
adequate to cover costs.  Therefore, it is useful to first discuss our
approach to programs that have fee schedules resulting in a different
amount before discussing our approach to the presumptive minimum.

Because of the added GHG title V permitting workload described elsewhere
in this notice, any state that will not, under its current fee
structure, collect fees adequate to fund the permitting of GHG sources
must alter its fee structure in order to meet the requirement that fees
be adequate to cover costs.  Changes may not be required in every
instance; circumstances will vary from state to state.  For example a
state may see increases in revenue from newly-covered sources (based on
emissions of pollutants already subject to fees) that fully cover the
state’s increased costs, or a state may be over-collecting fees now
and could use the surplus to offset the increased costs.  Nonetheless,
in many cases, we think states will need to adjust their fee structures
to cover the costs of GHG permitting in order to meet the requirements
of the Act and our regulations.

 

For this reason, although we are not calling for new fee demonstrations
at this time, we plan to closely monitor state title V programs during
the first two steps of the Tailoring Rule to ensure that the added
workload from incorporating GHGs into the permit program does not result
in fee shortfalls that imperil operating permit program implementation
and enforcement, whatever the basis of the states’ fee schedule.  As
described in the proposal, such fee oversight by EPA may involve fee
audits under the authority of section70.9(b)(5) to ensure that adequate
fees are collected in the aggregate to cover program costs, with
emphasis on whether the additional GHG workload is being appropriately
funded.  Also, EPA retains the ability to initiate a program revision
under section70.4(i)(3) or issue a notice of deficiency under the
process described in section70.10(b) to address fee adequacy issues,
which may be uncovered during a fee audit.  By relying on existing
oversight measures, we are ensuring that the fee requirements are met
with a minimum of disruption to existing programs at a time when they
will already be facing significant challenges related to GHG permitting.

Turning to the minority of states that do use the presumptive minimum,
we did not propose to change the presumptive minimum calculation method
to account for GHG.  Currently under the statute and our rules, the
presumptive minimum is based on a subset of air pollutants (i.e., VOC,
NAAQS pollutants except for CO, and pollutants regulated under the NSPS
and MACT standards promulgated under sections 111 and 112 of the Act,
respectively) that does not include GHGs.  The amount is specified on a
per-ton basis and changes with inflation (it is currently set at
$43.75/ton), but does not apply to emissions over 4,000 tpy of a given
pollutant from a given source.  We noted several difficulties in
applying the presumptive minimum to GHG, including the large amounts of
GHG emissions relative to other pollutants and the need for better data
to establish a GHG-specific amount.  Noting that GHGs are not currently
included in the Act’s list of pollutants to which the presumptive fee
applies, we also invited comment on whether we should raise the fee for
listed pollutants to cover the added cost of GHG permitting.

A few state commenters asked us to set a presumptive fee for GHGs, which
we take to mean we should add GHGs to the list of pollutants to which a
presumptive fee would apply.  However, many commenters noted that the
current presumptive minimum fee is unreasonable for GHGs because GHGs
are emitted in greater quantities than the pollutants currently subject
to presumptive fees, which would result in excessive fees.  These
commenters believe that EPA needs to limit the fees that states can
charge for GHGs.  Moreover, one commenter read the statute to prohibit
us from listing GHGs in the presumptive fee calculation in the first
place.  Several commenters disagreed with the idea of instead increasing
the presumptive fee for other pollutants to cover the cost of regulating
GHGs, some of whom believed that this would unfairly punish existing
sources or would bring in no new revenue from sources triggering title V
for the first time.

After considering these comments, we remain disinclined, as we were at
proposal, to change the presumptive fee calculation regulations.  While
there is some support for changing the regulations, the comments confirm
the challenges in doing so.  While we expressly rejected charging the
full presumptive cost per ton amount for GHG, we also did not propose
language to establish a different amount just for GHG, to establish
whether a different tpy cap would apply, or to assess whether GHGs could
even be added to the list.  Thus, many commenters were very concerned
about whether the full $43.75 or the 4000 tpy cap would apply to GHG if
we listed it as a regulated pollutant for fee purposes.  Furthermore, we
noted at proposal, and commenters did not disagree, that more data would
be needed to establish the appropriate basis for the GHG presumptive
minimum.  We are not taking a final position in this notice on whether
the statute is amenable to including GHG in the presumptive fee
calculation currently, but these comments illustrate some of the
difficulties of such an approach.

  

At the same time, we are not increasing the presumptive minimum for
other pollutants already included in the fee calculation.  We disagree
with the commenter who said such an approach would bring in no new
revenue from newly-subject sources.  Many of the newly subject sources
would emit already-included pollutants.  If new revenue from these
pollutants were insufficient, and because the Act does not specify how
the shortfall must be addressed, the amount of any projected shortfall
could be made up by increasing fees on these pollutants.  In fact, the
projected shortfall could be addressed without having to inventory GHG
emissions from title V sources, since the emissions of already-included
pollutants are well-known.  We also note that, although some commenters
are concerned that failing to assess fees for GHGs directly would be
unfair, the statute does not provide that the presumptive fee be
proportional to each type of pollutant or be proportionally allocated to
all sources.  Rather, the presumptive fee approach provides a backstop
for states that do not wish to adopt a more tailored approach. 
Nonetheless, we have decided not to increase the presumptive fee amounts
for other pollutants because we lack information about the extent to
which shortfalls exist due to GHG permitting, and which mix of sources
and fees is appropriate for addressing any such shortfall in a state. 
This decision also provides greater flexibility to states and minimizes
disruption to existing programs. 

We note that, contrary to the statements of some commenters, the CAA
provisions allowing for a presumptive fee calculation do not override
the basic requirement that fees be adequate to cover costs.  As noted
previously, we expect states to see a revenue increase from emissions of
listed pollutants at newly-major sources for GHG, and it is also
possible that the presumptive minimum may currently be resulting in
over-collection of fees in a state.  Thus, a state continuing to use the
presumptive minimum may not have a shortfall.  However, if states using
the presumptive minimum approach do have a revenue shortfall due to GHG
permitting, the statute requires the shortfall to be addressed.  The EPA
has had, and will continue to have, the ability to require states that
use the presumptive minimum to increase their fees if the presumptive
minimum results in a revenue shortfall that imperils operating permit
program implementation and enforcement.  Thus, although we are not
changing the presumptive minimum in our regulations, we plan to follow
the same oversight approach for states using the presumptive minimum as
for those collecting less based on a resource demonstration.  As
described previously, this approach may involve fee audits with emphasis
on whether the additional GHG workload is being appropriately funded,
and other appropriate follow-up. 

Consistent with our proposal, EPA is not modifying its own part 71 fee
structure (which closely mirrors the presumptive minimum) in order to
charge an additional fee for GHG.  EPA must revise its fee schedule if
the schedule does not reflect the costs of program administration.  We
have not determined that the existing fee structure will be inadequate
to fund the part 71 programs costs during the first two phases of
permitting GHGs as set forth in this action.  However, we are required
to review the fee schedule every 2 years, and make changes to the fee
schedule as necessary to reflect permit program costs.  40 CFR
71.9(n)(2).  Thus we will continue to examine the increases in part 71
burden due to GHG permitting, the current revenue collection, and the
increases in revenue from newly-subject part 71 sources, and will adjust
the part 71 fee approach accordingly.

Finally, several state and industry commenters asked EPA to provide
guidance and recommendations for an appropriate GHG fee structure.  We
note that title V grants permitting authorities considerable discretion
in charging fees to sources for title V purposes and does not require or
prohibit fees specifically for GHGs, provided the states collect fees in
the aggregate that are sufficient to cover all the direct and indirect
program costs.  In responding to requests for guidance, we do not wish
to limit state discretion.  For example, some commenters suggest that
EPA prohibit emissions-based fees for GHG or cap the amount that can be
collected, while others suggest we provide a range of acceptable fees. 
We are concerned that, given the wide variety of fee approaches that
states now take, providing specific guidance may be disruptive, rather
than helpful, to states.

On the other hand, we recognize that it will initially be difficult for
states to establish an appropriate emissions fee for GHG.  As noted
previously, there are currently limited data available for establishing
such a fee, and, due to the large quantities of GHG emissions, such a
fee may only amount to a few cents per ton.  At the same time, as noted
in the proposal, a number similar to that used for other pollutants
(e.g., the presumptive minimum of approximately $45/ton of GHG) would be
inappropriate because it would likely result in huge over-collection. 
Because of this challenge, we note that section 70.9(b)(3) allows the
state to charge fees to individual sources on any basis (e.g., emission
fee, application fee, service-based fees, or others, in any
combination).  While most states use emissions-based fees, there is
merit to considering all the available fee bases to address increased
GHG workload, including approaches that do not require a GHG emissions
inventory for fee purposes.  For example, where it is possible to
estimate a revenue shortfall as a percentage of fee revenue, it may be
appropriate to simply attach a percentage-based surcharge to each
source’s fee to match that shortfall.  Similarly, where the shortfall
could be estimated as a total dollar amount, a flat surcharge could be
added to each source’s fee to address the shortfall.  

These suggestions should not be read to indicate that EPA prefers any
particular approach, or that EPA rejects a cost per ton approach. 
Rather, they illustrate that it is possible to address a revenue
shortfall without establishing a GHG per-ton fee.  While the EPA is
declining to recommend specific approaches in the preamble of this final
rule, we are committed to assisting states in implementing the fee
requirements for GHG.  Therefore, we will work with any state that
requests assistance from EPA in developing a workable fee approach.  EPA
recognizes that states need time to adopt new fee structures, collect
fees, and hire additional permitting staff, and has taken these issues
into consideration in adopting this final rule.

Chapter 9.  Comments on Statutory and Executive Order Reviews

Section XI of the proposal preamble for the Tailoring Rule sets out
EPA’s obligations under EOs 12866, 13045, 13132, 13175, 13211, and
12898; the PRA; the RFA; the UMRA; and the National Technology Transfer
and Advancement Act (NTTAA); and EPA’s conclusions and actions
performed (where necessary) to meet those obligations for the proposed
Tailoring Rule.  Comments received on EPA’s obligations under these
statutory and Executive Order (EO) reviews and EPA’s actions in
response to those obligations are presented in this Chapter.  Specific
comments related to RFA SBREFA are presented in Chapter 7, section 7.2.

9.1  General Comment

Comment:

One commenter (5052) notes that it filed comments with EPA and SBA on
December 1, 2009 to help provide data on small business implications and
asks that these comments be considered under SBREFA, UMRA, and EO 12866.
 (These comments are in the docket for this action, Docket ID No.
EPA-HQ-OAR-2009-0517-5052.8.)  

Response:

We have considered all comments on the proposed action for this final
rule.  

9.2  Executive Order 12866 – Regulatory Planning and Review

Comment:

Several commenters state that EPA’s failure to estimate the full costs
of the effects of its interpretation of PSD applicability in the
proposed Tailoring Rule violates EO 12866 (3513, 4095, 4862, 4870, 5052,
5058, 5062, 5083, 5110, 5140, 5181, 5183, 5278, 5279, 5317, 5343, 5886,
8015, 8513).  Some of these commenters (4095, 5052, 5083, 5181, 5317)
maintain that EO 12866 directs EPA to submit to OMB new significant
regulations under consideration by the EPA.  These commenters assert
that, in the section 202 rule, EPA failed to analyze the effect on
stationary sources in the cost benefit analysis and there is no
indication that EPA included these impacts in its submission to OMB. 
According to the commenters, in EPA’s proposal for this rulemaking,
EPA has similarly failed to analyze the costs and benefits of triggering
PSD for stationary sources.  The commenters assert that without this key
information, OMB could not fully review the impacts of the proposed
rule.  According to one commenter (4095), EPA’s failure to account for
known costs that will occur as a direct result of the promulgation of
the proposed rule in conjunction with the section 202 rule violates
several applicable requirements of EO 12866, including sections 6(B)(ii)
and 6(C)(iii), which require assessments of the potential costs and
benefits of the regulatory action and “reasonably feasible
alternatives to the planned regulation, identified by the Agencies or
the public . . .” thereby violating both the APA and CAA section
307(d) because they deprive businesses and permitting authorities alike
of a meaningful opportunity to comment on the rule.

Response:

	The EPA has prepared a revised RIA assessing the benefits and costs of
the final Tailoring Rule to support this rulemaking in accordance with
EO 12866 as was done with the proposal for this rulemaking.  Similarly,
the RIA completed for this action is subject to review by an
inter-agency review panel that includes the President’s OMB as was the
case with the proposal RIA.  Further, the RIA completed for this final
rule fully assesses the known benefits and costs associated with the
tailoring rulemaking.  This final rule is one of regulatory relief from
statutory requirements in which a large number of sources of GHGs will
be relieved of the burden of title V and PSD permitting for a period of
at least six years.  This final rule will provide relief from title V
permitting to over 6 million sources of GHG in this country.  Likewise,
tens of thousands of sources potentially subject to PSD permitting
requirements for GHGs will have regulation postponed for a period of at
least 6 years.  While larger sources of GHG may still be required to
obtain title V permits or modify existing permits and to comply with PSD
requirements, these burdens result from existing statutory requirements,
not from this final Tailoring Rule.

9.3  Paperwork Reduction Act

Comment:

Some commenters (4095, 4870, 5058, 5083, 5140, 5181, 5183, 5278, 16411)
believe EPA has failed to comply with its obligations under the PRA. 
Although EPA asserts that the PRA’s requirement for creation and OMB
review and approval of an ICR does not apply because of prior approval
of an ICR for the PSD program, this ignores the fact that there would be
a huge increase in the paperwork burden as a result of applying PSD and
title V permitting requirements to sources that are “major” only
because of their GHG emissions.  One commenter (5181) maintains that the
Paperwork Reduction Act (PRA) requires the EPA to seek approval from the
OMB prior to engaging in rulemaking that will involve information
collection requirements.  EPA may not “conduct or sponsor the
collection of information unless in advance of the adoption or revision
of the collection of information…  The Director [of OMB] has approved
the proposed collection of information.”  Contrary to the PRA’s
clear mandate, the EPA neglected to submit this proposed rule to OMB for
approval on the basis that “this action does not impose any new
information collection burden.”  Rather, EPA claims that “this
proposed action would significantly reduce costs incurred by sources and
permitting authorities relative to the costs that would be incurred if
EPA did not revise the rule.”  Finally, according to the commenter, it
is not an answer that EPA has previously submitted the PSD and title V
regulations to OMB under the PRA and has received approval based on
existing criteria pollutant emissions.  Those approvals were based on
the burdens created at that time, not the dramatic expansion of the
program that EPA proposes in this rulemaking (even with the lower
thresholds, doubling the number of title V subject sources).  According
to the commenter (5181), unless EPA resubmits the information collection
approval request to OMB with a proper and fully inclusive analysis, EPA
will lack authority to collect information from stationary sources for
PSD and title V GHG emissions permitting.  

Response:

	As we stated in the proposal, this is a burden relief rule and as such
it does not impose any new requirements for the NSR or title V programs
that are not currently required.   For that reason, we concluded that
for purposes of this rule it was unnecessary for us to submit a new ICR
to the OMB and that the ICR contained in the existing regulations for
PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 70 and 71)
that had already been approved under the provisions of the PRA, 44
U.S.C. 3501 et seq. and was assigned OMB control number 20600003 and OMB
control number 20600336, respectively, still applies.

Nevertheless, we understand that once GHGs are regulated under the PSD
and title V programs, there might be an increase in the overall
paperwork burden for these programs.   EPA will have to assess this
possible burden during the normal course of 3-year renewal ICR process.

9.4  Regulatory Flexibility Act

For discussion of RFA issues, please see section 7.2 of this RTC.

9.5  Unfunded Mandates Reform Act

Comment:

Some commenters (4095, 4512, 4870, 5052, 5058, 5083, 5110, 5140, 5181,
5278, 5312, 10432) on the proposed rule assert that EPA has failed to
comply with the requirements of UMRA, pursuant to which EPA must assess
the effects of the Proposed Rule on state, local, and tribal governments
and the private sector.  Specifically, these commenters state that
section 202 of the UMRA requires EPA to prepare a written statement,
including a cost-benefit analysis, for proposed rules with “federal
mandates” that may result in expenditures to state, local, and tribal
governments, in the aggregate, or to the private sector, of $100 million
or more in any one year.  According to the commenters, in concluding
that “the revisions would ultimately reduce the PSD and title V
program administrative burden that would otherwise occur in the absence
of this rulemaking,” EPA completely failed to account for the billions
of dollars that permitting authorities and stationary sources will soon
be required to spend once PSD is triggered for GHGs.  One commenter
(5052) asserts that EPA failed to adequately study the proposed rules
costs and operational impacts on unfunded mandates as required by UMRA. 
The commenter contends that the EPA grossly underestimated the impacts
to public utilities which are owned/operated by local governments and
also to state regulatory agencies.  One commenter (5312) alleges that
implementation of PSD and title V at the statutory thresholds would
generate permit fees at levels adequate to support those programs.  If,
however, EPA imposes a threshold of 25,000 tpy for the first 5 years,
this will wall off new sources of revenue from smaller emitters and,
essentially, impose an unfunded mandate on the various state air
agencies because the they will not be able to attract, hire, train, and
utilize the additional staff necessary to carry out the rule. 
Commenters 5304 and 5524 opine that EPA needs to further evaluate the
impact on state and local permitting authorities in order to insure that
UMRA of 2005 is not violated.  

Response:

The EPA has carefully considered the comments on unfunded mandates
expressed by commenters to the proposed rule.  The EPA did complete a
RIA for the final rule assessing the benefits and costs of the Tailoring
Rule, including any unfunded mandates.  As previously discussed, the
Tailoring Rule is one of regulatory relief because it increases the GHG
emissions threshold for NSR and title V permitting substantially above
otherwise statutory requirements.  As such, the EPA asserts this
Tailoring Rule does not impose unfunded mandates on any entities.  This
RIA of the final rule incorporates the extensive changes made in this
final rule, including increased threshold levels for title V and PSD
above those contained in the proposed rule.  While we also incorporated
improved estimates of the costs for sources to obtain permits and for
permitting authorities to process permits, they do not change our
conclusion that this final rule does not impose unfunded mandates on any
entities.  

9.6  Executive Order 13132 – Federalism

Comment:

Some comments (4095, 5058, 5083, 5715) received on the proposed rule
assert that federalism concerns were ignored, in violation of EO No.
13132.  According to the commenters, EPA cannot maintain that the
Tailoring Rule "will not have a substantial direct effect on the states,
on the relationship between the national government and the states, or
on the distribution of power and responsibilities between various levels
of government," such that EO No. 13132 does not apply.  Some of these
commenters assert that the proposed rulemaking would require radical
changes in state laws, interjects GHGs into permit programs never once
conceived for that purpose (any more than was EPA's), requires massive
staff hiring at state agencies, and rewrites SIPs in place for years or
even decades.

Response:

As we stated previously, this is a burden relief rule and as such it
does not impose any requirements for the NSR or title V programs that
are not currently required.  In addition, this action does not interject
GHGs into the permit programs, nor does it change state laws or SIPs to
impose any new permitting requirements.  Instead, this action will
significantly reduce the burden and costs incurred by sources and
permitting authorities relative to the burden and costs that would be
incurred if EPA did not revise the permitting provisions to account for
higher applicability thresholds for GHG emissions.  While we are aware
that a few states will have to amend their SIPs to incorporate these new
thresholds if they do not implement the federal PSD and title V rules by
reference in their SIPs, EO 13132 is still not implicated by this rule
because it finalizes burden reducing thresholds that would not otherwise
apply to the PSD and title V programs.    

9.7  Executive Order 13175 – Consultation and Coordination with
Indian Tribal Governments

Comment:

A commenter asserts that the proposed rule violates EO 13175 (5058). 
Another commenter (8803) supports EPA’s proposed rule but requests
that tribal air grant funding be increased to reflect the air
quality-related needs of tribes across the nation, and to allow these
tribes the opportunity to implement the CAA’s PSD and title V
programs.  The commenter states that, not only are tribes eligible for
section 103 grant funding to conduct air quality monitoring, emissions
inventories, and other studies and assessments, but they may also obtain
section 105 grant funding to implement CAA regulatory programs. 
According to the commenter, tribes are facing many of the same
air-related issues that neighboring state and local jurisdictions are
facing, but are significantly underfunded to address such issues.

Response:

	The Agency is aware and concerned about the resource needs for the
tribal air program and we are working to see how grant funding might be
increased in the future.  Nevertheless and for the purpose of the
permitting programs, we want to clarify that tribes that develop Tribal
Implementation Plans (TIPs) can charge for permits and tribes with
delegation or authorization would develop permit fee programs under
their authority (e.g., Navajo’s permit fee program for their delegated
title V permit program) to fund both the NSR and title V programs.  For
these reasons, there are a number of ways we would like to work to
address the funding concern, including encouraging delegation or
authorization of permitting programs and having model codes available
for tribes that want to do TIPs for NSR and title V permitting.

9.8  Executive Order 13211 – Actions That Significantly Affect Energy
Supply, Distribution, or Use

Comment:

A few commenters assert that the proposed rule violates EO 13211. 
(5058, 5317)  One commenter (5317) asserts that EPA’s analysis under
EO 13211 is insufficient because it addresses only smaller sources.  The
commenter contends that EPA has not meaningfully examined the energy
implications of its proposed actions and interpretations of the CAA. 
The commenters disagree with EPA’s conclusion that the imposition of
costly PSD obligations on power plants would have no impact on power
supply, distribution, or use, when those plants will have had no time to
prepare for compliance and no idea what BACT may be for GHG emissions. 
Other commenters opine that the adoption of BACT for some industries
newly-subject to PSD permitting requirements for GHGs could involve
fuel-switching, and increased energy costs (e.g., due to the need for a
source to convert from coal to natural gas to meet BACT).  (4515, 4691,
5058, 5079, 5085 5123, 5124, 5179, 5607, 5729, 6491)

Response:

Again, this action is a burden relief rule and as such it does not
create any new requirements for sources in the energy supply,
distribution, or use sectors.  For the purpose of the BACT
determinations for GHGs, the long-standing top-down BACT selection
process still applies.  Under the CAA and EPA’s implementing
regulations, BACT is still an emission limitation based on the maximum
degree of emission reduction achievable through application of
production processes and available methods, systems, and techniques that
considers energy, environmental, and economic impacts.  In other words,
BACT determinations for GHGs will still have to consider energy,
environmental and economic feasibility for the various control
technologies under consideration before selecting a particular
technology as BACT for a particular source.  For that reason, what BACT
may be for GHG emissions will vary by source, and the technology that is
ultimately selected has to be one that is feasible based on the current
energy, environmental and economic impacts that the planned technology
might have.  Thus, we do not believe that this action is likely to have
a significant adverse effect on the supply, distribution, or use of
energy.

Chapter 10.  Miscellaneous Comments

This Chapter of the document contains comments that are relevant but not
specifically-germane to what was proposed for the Tailoring Rule and/or
do not fit under Chapters 2 through 9 of this document.

Comment:

The United States Department of Agriculture (USDA) should take the lead
in addressing GHG issues related to agriculture.  This commenter
provides several reasons for their position (e.g., knowledge,
agriculture regulation experience).  (5074)

Response:

The purpose of this rulemaking is to tailor the applicability criteria
that determine which stationary sources and modification projects become
subject to permitting requirements for GHG emissions under the PSD and
title V programs of the CAA.  For that reason, EPA is the lead on any
GHG issues related to the CAA.  Nevertheless, any GHG issues related to
a specific sector, such as the agriculture sector, will likely be
addressed through notice and comment rulemaking and the USDA, as well as
all other stakeholders, will be involved in this process.  

Comment:

A utility representative and utility group (5113, 5714) notes that, in
the Tailoring Rule proposal preamble, EPA states that “sources covered
by the Acid Rain program have been required to monitor and report CO2
emissions pursuant to the CAA” (citing 74 FR 55300).  The commenter
(5113) points out that the monitoring and reporting requirements that
EPA refers to are required by section 821 of Public Law Number 101-549,
which is not part of the CAA.  The commenter (5113) requests that in the
final rule, when EPA refers to section 821 monitoring and reporting
requirements, it should clarify that these requirements are not part of
the CAA.

Response:

	We have not referenced the Acid Rain program monitoring provisions in
the final rule.  In addition, we have not made a final decision whether
section 821 of the CAA Amendments of 1990 is part of the CAA.  As we
stated in the final rule titled:  “Reconsideration of Interpretation
of Regulations to Determine Pollutants Covered by Clean Air Act
Permitting Programs (75 FR 17004), in the October 7, 2009 proposal
notice of this rule, EPA also solicited comment on the question of
whether section 821 of the CAA Amendments of 1990 is part of the Clean
Air Act.  EPA indicated that the Agency was inclined against continuing
to argue that section 821 was not a part of the CAA, as the Office of
Air and Radiation and Region 8 had done in briefs submitted to the EAB
in the Deseret matter.  This question bears on the determination of
whether the CO2 monitoring requirements in EPA’s Part 75 regulations
are requirements ‘‘under the Act.’’  In the proposed
reconsideration notice, EPA explained that it would be necessary to
resolve whether or not the CO2 monitoring and reporting regulations in
Part 75 were promulgated ‘‘under the Act’’ if EPA adopted the
monitoring and reporting interpretation.  EPA received public comments
on both sides of this issue, with one environmental organization
pressing EPA to drop the position that section 821 is not a part of the
CAA and several industry parties requesting that EPA affirm it.  EPA has
not yet made a final decision on this question, and it is not necessary
for the Agency to do so at this time.  Since EPA is not adopting the
monitoring and reporting interpretation, the status of section 821 is
not material to the question of whether and when CO2 is ‘‘subject to
regulation under the Act.’’  Because there are currently no controls
on CO2 emissions, the pollutant is not ‘‘subject to
regulation.’’  Given that the provisions in Part 75 do not
‘‘regulate’’ emissions of CO2, it is unnecessary to determine
whether such provisions are ‘‘under the Act’’ or not to
determine PSD applicability.  Furthermore, the promulgation of EPA’s
GHG Mandatory Reporting Rule makes this issue even less material.  In
that rule, which became effective in December 2009 and required
monitoring to begin in January of this year, EPA established monitoring
and reporting requirements for CO2 and other GHGs under sections 114 and
208 of the CAA.  Thus, there can be no dispute that monitoring and
reporting of CO2 (as well as other GHGs) is now occurring under the CAA,
regardless of the status of section 821 of the 1990 amendments.  At this
point, the section 821 issue would only become relevant if a court were
to find that the monitoring and reporting interpretation is compelled by
the CAA and a party subsequently seeks to retroactively enforce such a
finding against sources that had not obtained a PSD permit with any
limit on CO2 emissions.  If this situation were to arise, EPA will
address the section 821 issue as necessary.

Comment:

One commenter (8531) states that EPA should clarify when the FLM should
be notified of PSD permit actions.   In the discussion of General
Requirements for PSD, on page 55298, in order to align with EPA and FLM
guidance, the commenter recommends that the sentence reads: "Under PSD,
if a source's proposed project may impact a Class I area, the Federal
Land Manager (FLM) is notified and is responsible for evaluating a
source's projected impact on the AQRVs..."   The commenter states that
the FLAG 2000 Report, consistent with EPA guidance, does not use a
bright line test of 100 kilometers in determining when to notify the
FLM.   The significance of the impact to AQRVs is more important than
the distance of the source.   The commenter states that the requested
change allows for the use of the most current FLM guidance for notifying
the FLM of PSD permit actions.   In addition, the requested change
allows the FLM to carry out its affirmative responsibility of protecting
Class I area.

Response:

	We agree with the commenter when he states that the significance of the
impact to AQRVs is more important than the distance of the source to a
Class I area.  We should not have specified a distance in the preamble
of the proposed rule.  For that reason, we are amending the text in the
preamble of the final rule to state, as the commenter suggested, that:
“Under PSD, if a source's proposed project may impact a Class I area,
the FLM is notified and is responsible for evaluating a source's
projected impact on the AQRVs...."   

Comment:

Several commenters (0523, 1157, 3607, 3741, 4021, 4123, 5184, 5312,
5318, 5454, 5766, 5803, 7136, 8534) requested that EPA extend the period
of public comment.  

One industry commenter (0523) requested a 30 day extension to the public
comment period for the proposed PSD and title V GHG Tailoring Rule.  The
proposed rule requests comment on an array of issues, many of which
require detailed analysis and consideration.  The commenter stated that
they believe that the proposed 60 day comment deadline is wholly
inadequate to assess implications, review background documentation, and
develop comments substantiated with technical data and facts, especially
in the midst of the holiday season.  The commenter stated that until GHG
related mobile source regulations are promulgated, EPA is under no
obligation to promulgate GHG regulations for stationary sources and that
a 30 day extension would allow those who wish to comment additional time
to consider the rulemaking and develop a thoughtful response well before
the mobile source regulations are promulgated.  

One manufacturing association commenter representing a group of 20
industry associations (1157) submitted, on November 18, 2009, a request
to EPA to extend until January 28, 2010, the public comment period for
the Tailoring Rule.  The commenter states that the associations should
be given the opportunity to fully evaluate the consequences of the GHG
rulemakings, develop data and analyses, and formulate appropriate
comments.  The commenter further states that the current comment period
is simply insufficient to allow the associations a fair opportunity to
do so.  The request for extension of the comment period was denied by
EPA on November 25, 2009.

On December 22, 2009, the commenter submitted another request for an
extension.  (5766)  

The commenter summarizes the request in the following paragraph:  

"To ensure an adequate and complete record for the GHG rulemakings, to
give commenters a fair and full opportunity to analyze the proposals
individually and collectively, and given the close timing and
inter-relatedness of the rulemakings, the Associations respectfully
request that either:  (1) EPA and NHTSA extend the public comment
deadline for the Motor Vehicle GHG Rule until December 28, 2009, and
that EPA extend the public comment deadlines for both the GHG Tailoring
Rule and the PSD Interpretive Memo Reconsideration until January 28,
2010; or alternatively (2) that EPA consider comments submitted in the
GHG Tailoring Rule to be submitted in both the PSD Interpretive Memo
Reconsideration and Motor Vehicle GHG Rule dockets, and vice-versa.  The
Associations believe that a failure to grant this reasonable request
would be arbitrary and capricious."

Response:

	As we stated in the letter of November 25, 2009; we were not able to
extend the comment period of the Tailoring Rule or any of the other
proposed actions related to GHGs due to the importance of proceeding
with these actions.  However, we did clarify that, as we have done in
the past, we would consider, to the extent possible, any comments that
arrived after the close of the comment period.  

Comment:

One academic commenter (3003) suggests that EPA use the University of
California dataset of GHG emissions available either through the Climate
Registry or the CARB.  These data include GHG emissions data from
on-site stationary combustion and will soon be third-party certified and
may be useful to EPA.  If the commenter already collects these data for
other purposes, it should not be difficult for the commenter to comply
with the GHG Mandatory Reporting Rule requirements if applicable.  

Response:

	We thank this commenter for their suggestion, but we believe that the
GHG data we are collecting under the GHG Mandatory Reporting Rule is the
data most useful for the Agency at this time. 

 

Comment:

State commenter 3915 expresses concern over the proposed implementation
periods.  They state, “If EPA intends to reduce CO2 significance
levels to current PSD levels, then it should be done now, thereby
creating only one period of chaos and panic instead of two separated by
5 years.   According to the commenter, if EPA does not intend to reduce
the significance levels, then that should be made clear now or this rule
promulgation postponed until EPA is more certain on the path forward and
can justify it.” 

Response:

	We disagree with this commenter.  As we have stated in the preamble of
this final Tailoring Rule, this rulemaking is necessary because without
it, PSD and title V would apply to all stationary sources that emit or
have the PTE more than 100 or 250 tons of GHGs per year beginning on
January 2, 2011.  This is the date when EPA’s recently promulgated
LDVR takes effect, imposing control requirements for the first time on
CO2 and other GHGs.  If this January 2, 2011 date were to pass without
this rule being in effect, PSD and title V requirements would apply at
the 100/250 tpy applicability levels provided under a literal reading of
the CAA as of that date.  Under these circumstances, many small sources
would be burdened by the costs of the individualized PSD control
technology requirements and permit applications that the PSD provisions,
absent streamlining, require.  Additionally, state and local permitting
authorities would be burdened by the extraordinary number of these
permit applications, which are orders of magnitude greater than the
current inventory of permits and would vastly exceed the current
administrative resources of the permitting authorities.  Permit gridlock
would result with the permitting authorities able to issue only a tiny
fraction of the permits requested.  

	These impacts – the costs to sources and administrative burdens to
permitting authorities – that would result from application of the
PSD and title V programs for GHG emissions at the statutory levels as of
January 2, 2011 are so severe that they bring into play the judicial
doctrines of “absurd results” and “administrative necessity.” 
The “absurd results” doctrine authorizes departure from a literal
application of statutory provisions if such an application would produce
a result that is inconsistent with, and especially a result that
undermines congressional intent.  The “administrative necessity”
doctrine authorizes an agency to depart from statutory requirements if
the agency can demonstrate that those requirements, as written, are
impossible to administer.  The departure from the statutory provisions
must be no greater than necessary to effectuate congressional intent, in
the case of the “absurd results” doctrine, and administrative
imperatives, in the case of the “administrative necessity” doctrine.
 

	

	We have determined, through analysis of burden and emissions data as
well as consideration of extensive public comment, that the costs to
sources and administrative burdens to permitting authorities that would
result from application of the PSD and title V programs for GHG
emissions at the statutory levels as of January 2, 2011 should be
considered “absurd results” that are contrary to congressional
intent for each program.  Similarly, the administrative burdens are so
great as to render compliance with the literal provisions of the PSD and
title V permitting programs administratively impossible under the
“administrative necessity” doctrine.  The phase-in approach that we
promulgate with this rulemaking is consistent with congressional intent
and administrative imperatives because it will implement the statute as
closely to the literally prescribed levels as possible and as soon as
possible, while still assuring that permitting authorities and affected
sources can manage their permitting requirements.

	

	In particular, the first two steps that we promulgate in this rule,
which take effect on January 2, 2011 and July 1, 2011, are consistent
with congressional intent and administrative imperatives because they
constitute the most that permitting authorities can reasonably be
expected to do by those times.  Similarly, the 50,000 tpy floor that we
promulgate through at least April 30, 2016 is reasonable because the
information we have available now shows that it constitutes the most
that permitting authorities can reasonably be expected to do by that
date.  Finally, the study and two additional rulemakings – to take
effect by July 1, 2013 and April 30, 2016 -- to which we commit in this
rule are also consistent with congressional intent and administrative
imperatives because they establish a track for acquiring additional
information and for taking further steps to apply PSD and title V more
closely to the literal statutory levels.  Although we cannot say whether
or when we would ultimately apply the PSD and title V programs at the
literal statutory thresholds, we can say that we intend to apply them as
closely to those levels as is consistent with congressional intent and
administrative imperatives, consistent with the “absurd results” and
“administrative necessity” doctrines.  

Comment:

One commenter asserts that to the extent that the rule works a
discriminatory hardship against Midwestern coal-burning sources, it also
imposes an economic hardship against the lower income populations in
that region.  The commenter believes that by using an environmental
regulation to selectively create an economic harm, EPA is raising
serious issues of environmental justice.  (5312)

Response:

	As we stated in the previous chapter, this is a burden relief rule and
as such it does not impose any requirements for the NSR or title V
programs that are not currently required.  In addition, this action does
not interject GHGs into the permit programs, nor does it change state
laws or SIPs to impose any new permitting requirements.  Instead, this
action will significantly reduce the burden and costs incurred by
sources and permitting authorities relative to the burden and costs that
would be incurred if EPA did not revise the permitting provisions to
account for higher applicability thresholds for GHG emissions.  For
these reasons, we disagree with this commenter when he states that the
rule might work a discriminatory hardship against Midwestern
coal-burning sources. 

 Note, that at least one petition for reconsideration on the
endangerment/contribution findings raises the same arguments related to
the timing of decisions and absurd results.  As noted before, EPA is
carefully evaluating all the pending petitions for reconsideration.

 We do not believe that this term is ambiguous with respect to the need
to cover GHG sources under either the PSD or title V program, only with
respect to what sources of GHG should be covered under the circumstances
presented here.

 While it is the case that the section 111 listing was based in part on
ozone impacts from the VOCs emitted by landfills, VOCs were already
regulated under the CAA.  This is because the ozone precursors found in
landfill gases are already covered by the regulated NSR pollutant VOC. 
Therefore, EPA's designation of the problem as the source specific
emissions from landfills did not result in other sources of VOCs, which
impacted ozone generally, to be unregulated. However, if we were to
define the GHG air pollutant as only those gases emitted by LDVs, as the
commenter suggests, this would result in other sources of GHGs being
unregulated.    

 See 40 CFR 86.1818-12(a)  Greenhouse gas emission standards for
light-duty vehicles, light-duty trucks, and medium-duty passenger
vehicles.  (“Applicability.  This section contains standards and other
regulations applicable to the emission of the air pollutant defined as
the aggregate group of six greenhouse gases: carbon dioxide, nitrous
oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.”).

 We note that our approach does not entirely avoid the possibility that
a GWP change can occur while a permit is in progress although it will
ensure advance notice of such a change.  In the event that we propose a
change to GWP values, we will work with permitting authorities as
necessary to provide guidance to sources on transitional issues.  

 EPA does not believe that section 609(c) of the RFA offers agencies a
chance to circumvent the panel process where they do not intend to
certify that the rule does not have a SISNOSE, and EPA remains committed
to holding SBAR panels where contemplated by the RFA.

 We also think that this approach better clarifies our long standing
practice of interpreting open-ended SIP regulations to automatically
adjust for changes in the regulatory status of an air pollutant, because
it appropriately assures that the Tailoring Rule applies to both the
definition of “major stationary source” and “regulated NSR
pollutant.”  

 Memorandum from Lydia N. Wegman, Deputy Director, Office of Air Quality
Planning and Standards, U.S. EPA, to Air Division Directors,
“Definition of Regulated Air Pollutant for Purposes of Title V”
(April 26, 1993) (Wegman Memo).

 See 549 U.S. 497, 533 (2007).

 See Commonwealth of Mass. v EPA, No. 03-1361 (D.C. Cir. Jun. 26, 2008)

	 Note, that at least one petition for reconsideration on the
endangerment/contribution findings raises the same arguments related to
the timing of decisions and absurd results.  As noted before, EPA is
carefully evaluating all the pending petitions for reconsideration.

	 On June 24, 2005, the United States Court of Appeals for the District
of Columbia Circuit vacated the portions of the 2002 and 1992 NSR rules
that pertained to PCP, among other provisions.  In response to this
Court action, on June 5, 2007, EPA removed these provisions from the NSR
regulations.  (See 72 FR 32526).  These provisions were added as part
of EPA’s NSR improvement rule that was issued on December 31, 2002.

	 See page 55298 of the October 27, 2009 proposed Tailoring Rule.

 The CAAAC is a senior-level policy committee established in 1990 to
advise the U.S. EPA on issues related to implementing the CAA Amendments
of 1990.  The committee is chartered under the Federal Advisory
Committee Act and has been renewed every 2 years since its creation. 
The membership is approximately 40 members and experts representing
state and local government, environmental and public interest groups,
academic institutions, unions, trade associations, utilities, industry,
and other experts.  The CAAAC meets 3 times a year, normally in
Washington, D.C.  It provides advice and counsel to EPA on a variety of
important air quality policy issues.  The committee has formed several
subcommittees to provide more detailed discussion and advice on many
technical issues.

	 The fee provisions are set forth in CAA section 502(b)(3) and in our
regulations at 40 CFR 70.9 and 71.9.

  PAGE   \* MERGEFORMAT  v 

  PAGE   \* MERGEFORMAT  1