[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Rules and Regulations]
[Pages 31514-31608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11974]
[[Page 31513]]
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Part II
Environmental Protection Agency
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40 CFR Parts 51, 52, 70, et al.
Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule; Final Rule
Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Rules
and Regulations
[[Page 31514]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51, 52, 70, and 71
[EPA-HQ-OAR-2009-0517; FRL-9152-8]
RIN 2060-AP86
Prevention of Significant Deterioration and Title V Greenhouse
Gas Tailoring Rule
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: EPA is tailoring the applicability criteria that determine
which stationary sources and modification projects become subject to
permitting requirements for greenhouse gas (GHG) emissions under the
Prevention of Significant Deterioration (PSD) and title V programs of
the Clean Air Act (CAA or Act). This rulemaking is necessary because
without it PSD and title V requirements would apply, as of January 2,
2011, at the 100 or 250 tons per year (tpy) levels provided under the
CAA, greatly increasing the number of required permits, imposing undue
costs on small sources, 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, starting with the largest GHG
emitters. This rule establishes two initial steps of the phase-in. The
rule also commits the agency to take certain actions on future steps
addressing smaller sources, but excludes certain smaller sources from
PSD and title V permitting for GHG emissions until at least April 30,
2016.
DATES: This action is effective on August 2, 2010.
ADDRESSES: EPA has established a docket for this rulemaking under
Docket ID No. EPA-HQ-OAR-2009-0517. All documents in the docket are
listed in the http://www.regulations.gov index. Although listed in the
index, some information is not publicly available, e.g., Confidential
Business Information or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy. Publicly available docket materials are available
either electronically in http://www.regulations.gov or in hard copy at
the EPA Docket Center EPA/DC, EPA West, Room 3334, 1301 Constitution
Avenue, Northwest, Washington, DC. The Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the EPA Docket Center is (202)
566-1742.
FOR FURTHER INFORMATION CONTACT: Mr. Joseph Mangino, Air Quality Policy
Division, Office of Air Quality Planning and Standards (C504-03),
Environmental Protection Agency, Research Triangle Park, NC 27711;
telephone number: (919) 541-9778; fax number: (919) 541-5509; e-mail
address: [email protected].
SUPPLEMENTARY INFORMATION:
I. General Information
A. Does this action apply to me?
Entities affected by this action include sources in all sectors of
the economy, including commercial and residential sources. Entities
potentially affected by this action also include States, local
permitting authorities, and tribal authorities. The majority of
categories and entities potentially affected by this action are
expected to be in the following groups:
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Industry group NAICS \a\
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Agriculture, fishing, and hunting...... 11.
Mining................................. 21.
Utilities (electric, natural gas, other 2211, 2212, 2213.
systems).
Manufacturing (food, beverages, 311, 312, 313, 314, 315, 316.
tobacco, textiles, leather).
Wood product, paper manufacturing...... 321, 322.
Petroleum and coal products 32411, 32412, 32419.
manufacturing.
Chemical manufacturing................. 3251, 3252, 3253, 3254, 3255,
3256, 3259.
Rubber product manufacturing........... 3261, 3262.
Miscellaneous chemical products........ 32552, 32592, 32591, 325182,
32551.
Nonmetallic mineral product 3271, 3272, 3273, 3274, 3279.
manufacturing.
Primary and fabricated metal 3311, 3312, 3313, 3314, 3315,
manufacturing. 3321, 3322, 3323, 3324, 3325,
3326, 3327, 3328, 3329.
Machinery manufacturing................ 3331, 3332, 3333, 3334, 3335,
3336, 3339.
Computer and electronic products 3341, 3342, 3343, 3344, 3345,
manufacturing. 4446.
Electrical equipment, appliance, and 3351, 3352, 3353, 3359.
component manufacturing.
Transportation equipment manufacturing. 3361, 3362, 3363, 3364, 3365,
3366, 3366, 3369.
Furniture and related product 3371, 3372, 3379.
manufacturing.
Miscellaneous manufacturing............ 3391, 3399.
Waste management and remediation....... 5622, 5629.
Hospitals/Nursing and residential care 6221, 6231, 6232, 6233, 6239.
facilities.
Personal and laundry services.......... 8122, 8123.
Residential/private households......... 8141.
Non-Residential (Commercial)........... Not available. Codes only exist
for private households,
construction, and leasing/
sales industries.
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\a\ North American Industry Classification System.
B. How is this preamble organized?
The information presented in this preamble is organized as follows:
Outline
I. General Information
A. Does this action apply to me?
B. How is this preamble organized?
C. Preamble Acronyms and Abbreviations
II. Overview of the Final Rule
III. Background
A. What are GHGs and their sources?
B. Endangerment Finding and the LDVR
1. Endangerment Finding
2. Light-Duty Vehicle Rule
C. What are the general requirements of the PSD program?
1. Overview of the PSD Program
2. General Requirements for PSD
D. What are the general requirements of the Title V operating
permits program?
1. Overview of Title V
2. Title V Permit Requirements
E. The Interpretive Memo
IV. Summary of Final Actions
[[Page 31515]]
A. How do you define the GHG pollutant for PSD and Title V
purposes?
1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs
2. What GWP values should be used for calculating
CO2e?
B. When will PSD and Title V applicability begin for GHGs and
emission sources?
1. What are the Step 1 thresholds, timing, and calculation
methodology?
2. What are the Step 2 thresholds, timing, and calculation
methodology?
3. What about Step 3?
4. What about the proposed 6-year exclusion for smaller sources?
5. When and how will EPA take further action on smaller sources?
C. How do state, local, and tribal area programs adopt the final
GHG applicability thresholds?
D. How do you treat GHGs for purposes of Title V permit fees?
E. Other Actions and Issues
1. Timing for Permit Streamlining Techniques
2. Guidance for BACT Determinations
3. Requests for Higher Category-Specific Thresholds and
Exemptions From Applicability
4. Transitional Issues Including Requests for Grandfathering
V. What is the legal and policy rationale for the final actions?
A. Rationale for Our Approach to Calculating GHG Emissions for
PSD and Title V Applicability Purposes
1. Grouping of GHGs Into a Single Pollutant
2. Identifying Which GHGs Are Included in the Group
3. Use of GWP vs. Mass-Based GHG Thresholds
4. Determining What GWP Values Are To Be Used
5. Use of Short Tons vs. Metric Tons
B. Rationale for Thresholds and Timing for PSD and Title V
Applicability to GHG Emissions Sources
1. Overview
2. Data Concerning Costs to Sources and Administrative Burdens
to Permitting Authorities
3. ``Absurd Results,'' ``Administrative Necessity,'' and ``One-
Step-at-a-Time'' Legal Doctrines
4. The PSD and Title V Programs
5. Application of the ``Absurd Results'' Doctrine for the PSD
Program
6. Application of the ``Absurd Results'' Doctrine for the Title
V Program
7. Additional Rulemaking for the PSD and Title V Programs
8. Rationale for the Phase-in Schedule for Applying PSD and
Title V to GHG Sources
9. ``Administrative Necessity'' Basis for PSD and Title V
Requirements in Tailoring Rule
10. ``One-Step-at-a-Time'' Basis for Tailoring Rule
C. Mechanisms for Implementing and Adopting the Tailoring
Approach
1. PSD Approach: Background and Proposal
2. Rationale for Our Final Approach to Implementing PSD
3. Other Mechanisms
4. Codification of Interpretive Memo
5. Delaying Limited Approvals and Request for Submission of
Information From States Implementing a SIP-Approved PSD Program
6. Title V Programs
D. Rationale for Treatment of GHGs for Title V Permit Fees
E. Other Actions and Issues
1. Permit Streamlining Techniques
2. Guidance for BACT Determinations
3. Requests for Higher Category-Specific Thresholds or
Exemptions From Applicability
4. Transitional Issues Including Requests for Grandfathering
VI. What are the economic impacts of the final rule?
A. What entities are affected by this final rule?
B. What are the estimated annual benefits to sources due to
regulatory relief from the statutory requirements?
1. What are annual estimated benefits or avoided burden costs
for title V permits?
2. What are annual benefits or avoided costs associated with NSR
permitting regulatory relief?
C. What are the economic impacts of this rulemaking?
D. What are the costs of the final rule for society?
E. What are the net benefits of this final rule?
VII. Comments on Statutory and Executive Order Reviews
A. Comments on Executive Order 12866--Regulatory Planning and
Review
B. Comments on the Paperwork Reduction Act
C. Comments on the RFA
D. Comments on the Unfunded Mandates Reform Act
E. Comments on Executive Order 13132--Federalism
F. Comments on Executive Order 13175--Consultation and
Coordination With Indian Tribal Governments
G. Comments on Executive Order 13211--Actions That Significantly
Affect Energy Supply, Distribution, or Use
VIII. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132--Federalism
F. Executive Order 13175--Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045--Protection of Children From
Environmental Health and Safety Risks
H. Executive Order 13211--Actions That Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898--Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
K. Congressional Review Act
L. Judicial Review
IX. Statutory Authority
C. Preamble Acronyms and Abbreviations
The following are abbreviations of terms used in this preamble.
ANPR Advance Notice of Proposed Rulemaking
APA Administrative Procedure Act
AQRVs Air Quality Related Values
BACT Best Available Control Technology
Btu British thermal units
Btu/hr British thermal units per hour
CAA or Act Clean Air Act
CAAAC Clean Air Act Advisory Committee
CAFE Corporate Average Fuel Economy
CH4 Methane
CO Carbon Monoxide
CO2 Carbon Dioxide
CO2e Carbon Dioxide Equivalent
EPA U.S. Environmental Protection Agency
FDA Food and Drug Administration
FIP Federal Implementation Plan
FTEs Full-Time Equivalents
GHG Greenhouse Gas
GHz Gigahertz
GWP Global Warming Potential
HAP Hazardous Air Pollutant
HFCs Hydrofluorocarbons
ICR Information Collection Request
IPCC Intergovernmental Panel on Climate Change
LDVR Light-Duty Vehicle Rule
MACT Maximum Achievable Control Technology
MCL Maximum Contaminant Level
N2O Nitrous Oxide
NAAQS National Ambient Air Quality Standard
NHTSA National Highway Traffic Safety Administration
NMOC Nonmethane Organic Compounds
NOX Nitrogen Oxides
NPDES National Pollutant Discharge Elimination System
NSPS New Source Performance Standard
NSR New Source Review
NTAA National Tribal Air Association
NTTAA National Technology Transfer and Advancement Act
OMB Office of Management and Budget
PFCs Perfluorocarbons
PM Particulate Matter
PSD Prevention of Significant Deterioration
PTE Potential to Emit
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
RTC Response to Comment
SBA Small Business Administration
SBAR Small Business Advocacy Review
SBREFA Small Business Regulatory Enforcement Fairness Act
SF6 Sulfur Hexafluoride
SIP State Implementation Plan
SNPR Supplemental Notice of Proposed Rulemaking
TIP Tribal Implementation Plan
TRS Total Reduced Sulfur
TSD Technical Support Document
tpy Tons Per Year
UMRA Unfunded Mandates Reform Act
UNFCCC United Nations Framework Convention on Climate Change
VOC Volatile Organic Compound
[[Page 31516]]
II. Overview of the Final Rule
EPA is relieving overwhelming permitting burdens that would, in the
absence of this rule, fall on permitting authorities and sources. We
accomplish this by tailoring the applicability criteria that determine
which GHG emission sources become subject to the PSD and title V
programs \1\ of the CAA. In particular, EPA is establishing with this
rulemaking a phase-in approach for PSD and title V applicability, and
is establishing the first two steps of the phase-in for the largest
emitters of GHGs. We also commit to certain follow-up actions regarding
future steps beyond the first two, discussed in more detail later. Our
legal basis for this rule is our interpretation of the PSD and title V
applicability provisions under the familiar Chevron \2\ two-step
framework for interpreting administrative statutes, taking account of
three legal doctrines, both separately and interdependently: They are
what we will call (1) The ``absurd results'' doctrine, which authorizes
agencies to apply statutory requirements differently than a literal
reading would indicate, as necessary to effectuate congressional intent
and avoid absurd results, (2) the ``administrative necessity''
doctrine, which authorizes agencies to apply statutory requirements in
a way that avoids impossible administrative burdens; and (3) the ``one-
step-at-a-time'' doctrine, which authorizes agencies to implement
statutory requirements a step at a time. This legal basis justifies
each of the actions we take with this rule--e.g., each of the first two
steps of the phase-in approach--both (1) as part of the overall
tailoring approach, and (2) independently of each other action we take
with this rule. EPA also has authority for this Tailoring Rule under
CAA section 301(a)(1), which authorizes the Administrator ``to
prescribe such regulations as are necessary to carry out his functions
under [the CAA].''
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\1\ Unless otherwise indicated, references in this preamble to
``title V,'' ``title V requirements,'' the ``title V program,'' and
similar references are to the operating permit provisions in CAA
sections 501-506, and not the ``small business stationary source
technical and environmental compliance assistance program'' under
CAA section 507.
\2\ Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).
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For the first step of this Tailoring Rule, which will begin on
January 2, 2011, PSD or title V requirements will apply to sources' GHG
emissions only if the sources are subject to PSD or title V anyway due
to their non-GHG pollutants. Therefore, EPA will not require sources or
modifications to evaluate whether they are subject to PSD or title V
requirements solely on account of their GHG emissions. Specifically,
for PSD, Step 1 requires that as of January 2, 2011, the applicable
requirements of PSD, most notably, the best available control
technology (BACT) requirement, will apply to projects that increase net
GHG emissions by at least 75,000 tpy carbon dioxide equivalent
(CO2e), but only if the project also significantly increases
emissions of at least one non-GHG pollutant. For the title V program,
only existing sources with, or new sources obtaining, title V permits
for non-GHG pollutants will be required to address GHGs during this
first step.
The second step of the Tailoring Rule, beginning on July 1, 2011,
will phase in additional large sources of GHG emissions. New sources as
well as existing sources not already subject to title V that emit, or
have the potential to emit, at least 100,000 tpy CO2e will
become subject to the PSD and title V requirements. In addition,
sources that emit or have the potential to emit at least 100,000 tpy
CO2e and that undertake a modification that increases net
emissions of GHGs by at least 75,000 tpy CO2e will also be
subject to PSD requirements. For both steps, we also note that if
sources or modifications exceed these CO2e-adjusted GHG
triggers, they are not covered by permitting requirements unless their
GHG emissions also exceed the corresponding mass-based triggers (i.e.,
unadjusted for CO2e.)
EPA believes that the costs to the sources and the administrative
burdens to the permitting authorities of PSD and title V permitting
will be manageable at the levels in these initial two steps, and that
it would be administratively infeasible to subject additional sources
to PSD and title V requirements at those times. However, we also intend
to issue a supplemental notice of proposed rulemaking (SNPR) in 2011,
in which we will propose or solicit comment on a third step of the
phase-in that would include more sources, beginning by July 1, 2013. In
the same rulemaking, we may propose or solicit comment on a permanent
exclusion from permitting for some category of sources, based on the
doctrine of ``absurd results,'' within the Chevron framework. We are
establishing an enforceable commitment that we will complete this
rulemaking by July 1, 2012, which will allow for 1 year's notice before
Step 3 would take effect.
In addition, we commit to explore streamlining techniques that may
well make the permitting programs much more efficient to administer for
GHGs, and that therefore may allow their expansion to smaller sources.
We expect that the initial streamlining techniques will take several
years to develop and implement.
We are also including in this action a rule that no source with
emissions below 50,000 tpy CO2e, and no modification
resulting in net GHG increases of less than 50,000 tpy CO2e,
will be subject to PSD or title V permitting before at least 6 years
from now, April 30, 2016. This is because we are able to conclude at
the present time that the administrative burdens that would accompany
permitting sources below this level will be so great that even the
streamlining actions that EPA may be able to develop and implement in
the next several years, and even with the increases in permitting
resources that we can reasonably expect the permitting authorities to
acquire, it will be impossible to administer the permit programs for
these sources until at least 2016.
Further, we are establishing an enforceable commitment that we will
(1) Complete a study by April 30, 2015, to evaluate the status of PSD
and title V permitting for GHG-emitting sources, including progress in
developing streamlining techniques; and (2) complete further rulemaking
based on that study by April 30, 2016, to address the permitting of
smaller sources. That rulemaking may also consider additional permanent
exclusions based on the ``absurd results'' doctrine, where applicable.
This Tailoring Rulemaking is necessary because without it, PSD and
title V would apply to all stationary sources that emit or have the
potential to emit more than 100 or 250 tons of GHGs per year beginning
on January 2, 2011. This is the date when EPA's recently promulgated
Light-Duty Vehicle Rule (LDVR) takes effect, imposing control
requirements for the first time on carbon dioxide (CO2) and
other GHGs. If this January 2, 2011 date were to pass without this
Tailoring 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. From that point forward, a source
owner proposing to construct any new major source that emits at or
higher than the applicability levels (and which therefore may be
referred to as a ``major'' source) or modify any existing major source
in a way that would increase GHG emissions would need to obtain a
permit under the PSD program that addresses these emissions before
construction or modification could begin. Similarly, title V would
apply to a new or existing source exceeding the 100 tpy
[[Page 31517]]
applicability level in the Act, if the source did not already have a
title V permit.
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 the judicial doctrines
of ``absurd results,'' ``administrative necessity,'' and ``one-step-at-
a-time'' into the Chevron two-step analytical framework for statutes
administered by agencies. Under the U.S. Supreme Court's decision in
Chevron, the agency must, at Step 1, determine whether Congress's
intent as to the specific matter at issue is clear, and, if so, the
agency must give effect to that intent.\3\ If congressional intent is
not clear, then, at Step 2, the agency has discretion to fashion an
interpretation that is a reasonable construction of the statute.
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\3\ Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984).
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To determine congressional intent, the agency must first consider
the words of the statutory requirements, and if their literal meaning
answers the question at hand, then, in most cases, the agency must
implement those requirements by their terms. However, under the
``absurd results'' doctrine, the literal meaning of statutory
requirements should not be considered to indicate congressional intent
if that literal meaning would produce a result that is senseless or
that is otherwise inconsistent with--and especially one that
undermines--underlying congressional purpose. In these cases, if
congressional intent for how the requirements apply to the question at
hand is clear, the agency should implement the statutory requirements
not in accordance with their literal meaning, but rather in a manner
that most closely effectuates congressional intent. If congressional
intent is not clear, then an agency may select an interpretation that
is reasonable under the statute.
Under the ``administrative necessity'' doctrine, Congress is
presumed, at Chevron Step 1, to intend that its statutory directives to
agencies be administrable, and not to have intended to have written
statutory requirements that are impossible to administer. Therefore,
under this doctrine, an agency may depart from statutory requirements
that, by their terms, are impossible to administer, but the agency may
depart no more than necessary to render the requirements administrable.
Under the ``one-step-at-a-time'' doctrine, Congress is presumed at
Chevron Step 1 to have intended to allow the agency to administer the
statutory requirements on a step-by-step basis, as appropriate, when
the agency remains on track to implement the requirements as a whole.
Each of these doctrines supports our action separately, but the three
also are intertwined and support our action in a comprehensive manner.
Here, 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.'' Therefore, we conclude that under the
``absurd results'' doctrine, Congress could not have intended that the
PSD or title V applicability provisions--in particular, the threshold
levels and timing requirements--apply literally to GHG sources as of
that date.
Even so, the PSD and title V provisions and their legislative
history do indicate a clear congressional intent, under Chevron Step 1,
as to whether the two permitting programs applied to GHG sources, and
that the intent was in the affirmative, that the permitting programs do
apply to GHG sources. Our previous regulatory action defining the
applicability provisions made this clear, and we do not reopen this
issue in this rulemaking. Moreover, even if this long-established
regulatory position were not justifiable based on Chevron Step 1--on
the grounds that in fact, congressional intent on this point is not
clear--then we believe that this position, that the statutory
provisions to apply PSD and title V generally to GHG sources, was
justified under Chevron step 2.\4\
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\4\ In this preamble and the response to comments document we
fully address arguments that commenters and others have presented
about congressional intent and coverage of GHGs. We do so to be
fully responsive, even though we believe that this is a settled
matter for which the time for judicial review has passed.
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As to how to apply the PSD program to GHG sources, congressional
intent, as expressed in the various statutory provisions and statements
in the legislative history, is clear that PSD should apply at least to
the largest sources initially, at least to as many more sources as
possible and as promptly as possible over time--consistent with
streamlining actions that we intend to consider coupled with increases
in permitting authority resources--and at least to a certain point.
This is the approach we take in this Tailoring Rule, and because it is
consistent with congressional intent, we believe it is required under
Chevron Step 1. Even if congressional intent were not clear as to how
to apply the PSD requirements to GHG sources, we would have authority
under Chevron Step 2 to establish a reasonable interpretation that is
consistent with the PSD provisions, and we believe that the tailoring
approach so qualifies.
As for title V, the statutory provisions and legislative history,
which of course are different than those concerning the PSD program, do
not express a clear intent as to how title V applies to GHG sources,
which leads our analysis to Chevron Step 2, and here, again, we believe
that the tailoring approach is a reasonable interpretation that is
consistent with the title V provisions.
For both PSD and title V, we intend to use the tailoring approach
to address smaller GHG sources over time, consistent with Congress's
expectations that the programs would not impose undue costs to sources
or undue administrative burdens to permitting authorities. However, we
cannot say at this point how close to the statutory thresholds we will
eventually reach. Because this rule establishes only the first two
phases of the tailoring approach, we do not find it necessary to answer
these questions in this rule, and instead we expect to resolve them
through future rulemaking. We will remain mindful of the concerns that
Congress expressed about including small sources in either program. We
intend to consider the issue of the applicability of title V to GHG
sources without applicable requirements (i.e., ``empty permits'') in
future steps 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.
In addition, because Congress can be said to have intended the PSD
and title
[[Page 31518]]
V programs to apply to GHG sources, the Tailoring Rule is also
justifiable under the ``administrative necessity'' and ``one-step-at-a-
time'' doctrines.
The legal analysis just described justifies each of the actions in
this rule. The first two steps that we promulgate in this rule, which
take effect on January 2, 2011 and July 1, 2011, 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 establish a track
for acquiring additional information and for taking further steps to
address the application of PSD and title V more closely to the literal
statutory levels. We intend to apply them as closely to those levels as
is consistent with congressional intent and administrative imperatives,
in light of the ``absurd results,'' ``administrative necessity,'' and
``one-step-at-a-time'' doctrines, although, as noted previously, we
will consider in future rulemaking how closely to the statutory
thresholds we will be able to implement the PSD and title V programs as
well as what to require with respect to a potentially large number of
sources with empty title V permits.
In this rule, we are adopting regulatory language codifying our
phase-in approach. As we will explain, many state, local and tribal
area programs will likely be able to immediately implement our approach
without rule or statutory changes by, for example, interpreting the
term ``subject to regulation'' that is part of the applicability
provisions for PSD and title V. We ask permitting authorities to
confirm that they will follow this implementation approach for their
programs, and if they cannot, then we 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. Narrowing our approval will ensure
that for federal purposes, GHG sources below the size thresholds we
establish in this Tailoring Rule are not obligated to hold PSD or title
V permits until the states develop and submit revised PSD and title V
programs that EPA approves, either because they adopt our tailoring
approach or because, if they continue to cover smaller GHG sources, the
states have demonstrated that they have adequate resources to
administer those programs.
The thresholds we are establishing are based on CO2e for
the aggregate sum of six greenhouse gases that constitute the pollutant
that will be subject to regulation, which we refer to as GHGs.\5\ These
gases are: CO2, methane (CH4), nitrous oxide
(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs),
and sulfur hexafluoride (SF6). Thus, in this rule, we
provide that PSD and title V applicability is based on the quantity
that results when the mass emissions of each of these gases is
multiplied by the Global Warming Potential (GWP) of that gas, and then
summed for all six gases. However, we further provide that in order for
a source's GHG emissions to trigger PSD or title V requirements, the
quantity of the GHGs must equal or exceed both the applicability
thresholds established in this rulemaking on a CO2e basis
and the statutory thresholds of 100 or 250 tpy on a mass basis.\6\
Similarly, in order for a source to be subject to the PSD modification
requirements, the source's net GHG emissions increase must exceed the
applicable significance level on a CO2e basis and must also
result in a net mass increase of the constituent gases combined.
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\5\ The term ``greenhouse gases'' is commonly used to refer
generally to gases that have heat-trapping properties. However, in
this notice, unless noted otherwise, we use it to refer to
specifically to the pollutant regulated in the LDVR.
\6\ The relevant thresholds are 100 tpy for title V, and 250 tpy
for PSD, except for 28 categories listed in EPA regulations for
which the PSD threshold is 100 tpy.
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We are adopting this rule after careful consideration of numerous
public comments. On October 27, 2009 (74 FR 55292), EPA proposed the
GHG Tailoring Rule. EPA held two public hearings on the proposed rule,
and received over 400,000 written public comments. The public comment
period ended on December 28, 2009. The comments have provided detailed
information that has helped EPA understand better the issues and
potential impacts of this rule, and the final rule described in this
preamble incorporates many of the suggestions we received. We respond
to many of these comments in explaining our rationale for the final
rule, which is described in section V. The final rule adopts many
elements of the proposal but differs from the proposal in several
important respects. We proposed to apply PSD and title V to GHG sources
that emit or have the potential to emit at least 25,000 tpy
CO2e, and we proposed a PSD significance level in a range
between 10,000 and 25,000 tpy CO2e, but based on
consideration of the additional information we received and our further
analysis, we are finalizing the threshold levels in the amounts and on
the schedule described previously. In addition, the mechanism for
state, local, and tribal program implementation has been significantly
changed to reflect the comments received that we needed to develop an
implementation approach that states could adopt under state law more
expeditiously.
The remainder of this notice describes our approach and rationale
in more detail. Following this overview, section III of this preamble
provides background information on the nature of GHG emissions, recent
regulatory developments that affect when and how GHG emissions are
subject to stationary source permitting, and the general requirements
of the PSD and title V programs. Section IV describes in detail the
summary of the key actions being taken in this rule, including the
determination of emissions, the thresholds and timing for the phase-in,
our approach to implementing the phase-in, and the additional future
actions we will take. Section V provides a more detailed description of
each action, explaining the policy and legal rationale and responding
to comments received. Section V begins with our decisions on how to
calculate the mass-based and CO2e-based emissions used in
the phase-in. Section V then turns to our legal and policy rationale
for the first two steps of the phase-in, the 50,000 tpy floor, and the
subsequent study and rulemakings to determine whether and how smaller
sources should be subject to permitting. This section then describes
key implementation issues including the approach to state adoption.
After describing our plans for follow-up on title V fee programs, the
section concludes by describing permit streamlining techniques;
guidance on BACT for the GHG sources that are affected under the first
two steps of the Tailoring Rule phase-in; requests for exemptions; and
transitional issues, including grandfathering. Finally, section VI
describes the expected impacts that will result from the phase-in
approach (i.e., the narrower application of PSD and title V
requirements during the phase-in period) and sections VII and VIII
address administrative requirements.
III. Background
A. What are GHGs and their sources?
Greenhouse gases trap the Earth's heat that would otherwise escape
from the atmosphere into space, and form the
[[Page 31519]]
greenhouse effect that helps keep the Earth warm enough for life.
Greenhouse gases are naturally present in the atmosphere and are also
emitted by human activities. Human activities are intensifying the
naturally occurring greenhouse effect by increasing the amount of GHGs
in the atmosphere, which is changing the climate in a way that
endangers human health, society, and the natural environment.
Some GHGs, such as CO2, are emitted to the atmosphere
through natural processes as well as human activities. Other gases,
such as fluorinated gases, are created and emitted solely through human
activities. As previously noted, the well-mixed GHGs of concern
directly emitted by human activities include CO2,
CH4, N2O, HFCs, PFCs, and SF6. These
six GHGs will, for the purposes of this final rule, be referred to
collectively as ``the six well-mixed GHGs,'' or, simply, GHGs, and
together constitute the ``air pollutant'' upon which the GHG thresholds
in this action are based. These six gases remain in the atmosphere for
decades to centuries where they become well-mixed globally in the
atmosphere. When they are emitted more quickly than natural processes
can remove them from the atmosphere, their concentrations increase,
thus increasing the greenhouse effect. The heating effect caused by the
human-induced buildup of GHGs in the atmosphere is very likely the
cause of most of the observed global warming over the last 50 years. A
detailed explanation of greenhouse gases, climate change and its impact
on health, society, and the environment is included in EPA's technical
support document (TSD) for the endangerment finding final rule (Docket
ID No. EPA-HQ-OAR-2009-0472-11292).
In the United States, the combustion of fossil fuels (e.g., coal,
oil, gas) is the largest source of CO2 emissions and
accounts for 80 percent of the total GHG emissions. Anthropogenic
CO2 emissions released from a variety of sources, including
through the use of fossil fuel combustion and cement production from
geologically stored carbon (e.g., coal, oil, and natural gas) that is
hundreds of millions of years old, as well as anthropogenic
CO2 emissions from land-use changes such as deforestation,
perturb the atmospheric concentration of CO2 and the
distribution of carbon within different reservoirs readjusts. More than
half of the energy related emissions come from large stationary sources
such as power plants, while about a third comes from transportation. Of
the six well-mixed GHGs, four (CO2, CH4,
N2O, and HFCs) are emitted by motor vehicles. In the United
States industrial processes (such as the production of cement, steel,
and aluminum), agriculture, forestry, other land use, and waste
management are also important sources of GHGs.
Different GHGs have different heat-trapping capacities. The concept
of GWP was developed to compare the heat-trapping capacity and
atmospheric lifetime of one GHG to another. The definition of a GWP for
a particular GHG is the ratio of heat trapped by one unit mass of the
GHG to that of one unit mass of CO2 over a specified time
period. When quantities of the different GHGs are multiplied by their
GWPs, the different GHGs can be summed and compared on a
CO2e basis. For example, CH4 has a GWP of 21,
meaning each ton of CH4 emissions would have 21 times as
much impact on global warming over a 100-year time horizon as 1 ton of
CO2 emissions. Thus, on the basis of heat-trapping
capability, 1 ton of CH4 would equal 21 tons of
CO2e. The GWPs of the non-CO2 GHGs range from 21
(for CH4) up to 23,900 (for SF6). Aggregating all
GHGs on a CO2e basis at the source level allows a facility
to evaluate its total GHG emissions contribution based on a single
metric.
B. Endangerment Finding and the LDVR
1. Endangerment Finding
On April 2, 2007, the U.S. Supreme Court found that GHGs are air
pollutants under CAA section 302(g). Massachusetts v. EPA, 549 U.S. 497
(2007). As a result, the Supreme Court found that EPA was required to
determine, under CAA section 202(a), whether (1) GHGs from new motor
vehicles cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare, or (2) the science is
too uncertain to make a reasoned decision. After issuing a proposal and
receiving comment, on December 7, 2009, the Administrator signed two
distinct findings regarding GHGs under CAA section 202(a):
Endangerment Finding: The Administrator found that the
current and projected atmospheric concentrations of the mix of six
long-lived and directly emitted GHGs--CO2, CH4,
N2O, HFCs, PFCs, and SF6 (referred to as ``well-
mixed greenhouse gases'' in the endangerment finding)--are reasonably
anticipated to endanger the public health and welfare of current and
future generations.
Cause or Contribute Finding: The Administrator found that
the emissions of the single air pollutant defined as the aggregate
group of six well-mixed greenhouses gases from new motor vehicles and
new motor vehicle engines contributes to the GHG air pollution that
threatens public health and welfare.
These findings, which were published December 15, 2009 (74 FR 66496),
do not themselves impose any requirements on industry or other
entities. However, they were a prerequisite to finalizing the GHG
standards for light-duty vehicles, described next.
2. Light-Duty Vehicle Rule
The LDVR, 75 FR 25324 (May 7, 2010), is a joint rule between EPA
and the Department of Transportation's National Highway Traffic Safety
Administration (NHTSA) that establishes a national program consisting
of new standards for light-duty vehicles that will reduce GHG emissions
and improve fuel economy. EPA finalized the national GHG emissions
standards under the Act, and NHTSA finalized Corporate Average Fuel
Economy (CAFE) standards under the Energy Policy and Conservation Act,
as amended. The new standards apply to new passenger cars, light-duty
trucks, and medium-duty passenger vehicles, starting with model year
2012. The EPA GHG standards are projected to result in an estimated
combined average emissions level of 250 grams of CO2 per
mile for model year 2016 vehicles. The standards begin with the 2012
model year, with standards increasing in stringency through model year
2016. The standards are a fleet average for each manufacturer, based on
a footprint attribute curve, meaning that the actual target for a
vehicle will vary depending on the size of the vehicle. Under the
footprint-based standards, each manufacturer will have a GHG standard
unique to its fleet, depending on the footprints of the vehicle models
produced by that manufacturer. A manufacturer will have separate
footprint-based standards for cars and for trucks.
The endangerment and contribution findings described previously
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. Under section 202(a), the Administrator has significant
discretion in how to structure the standards that apply to the emission
of the air pollutant at issue here, the aggregate group of six GHGs.
EPA has the discretion under section 202(a) to adopt separate standards
for each gas, a single
[[Page 31520]]
composite standard covering various gases, or any combination of these.
In the LDVR, 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 emission of the single air pollutant, the aggregate group
of six GHGs. EPA did not set any standards for PFCs or SF6,
as they are not emitted by motor vehicles.
C. What are the general requirements of the PSD program?
1. Overview of the PSD Program
The PSD program is a preconstruction review and permitting program
applicable to new major stationary sources and major modifications at
existing major stationary sources. The PSD program applies in areas
that are designated ``attainment'' or ``unclassifiable'' for a National
Ambient Air Quality Standard (NAAQS). The PSD program is contained in
part C of title I of the CAA. The ``nonattainment new source review
(NSR)'' program applies in areas not in attainment of a NAAQS or in the
Ozone Transport Region and is implemented under the requirements of
part D of title I of the CAA. Collectively, we commonly refer to these
two programs as the major NSR program. The governing EPA rules are
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51,
Appendices S and W. There is no NAAQS for CO2 or any of the
other well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore,
unless and until we take further such action, we do not anticipate that
the nonattainment NSR program will apply to GHGs.
The applicability of PSD to a particular source must be determined
in advance of construction or modification and is pollutant-specific.
The primary criterion in determining PSD applicability for a proposed
source is whether the source is a ``major emitting facility,'' based on
its predicted potential emissions of regulated pollutants, within the
meaning of CAA section 169(1) and either constructs or undertakes a
modification. EPA has implemented these requirements in its
regulations, which use somewhat different terminology for determining
PSD applicability, which is whether the source is a ``major stationary
source'' or whether the proposed project is a ``major modification.''
a. Major Stationary Source
Under PSD, a ``major stationary source'' is any source belonging to
a specified list of 28 source categories which emits or has the
potential to emit 100 tpy or more of any pollutant subject to
regulation under the CAA, or any other source type which emits or has
the potential to emit such pollutants in amounts equal to or greater
than 250 tpy. We refer to these levels as the 100/250-tpy thresholds. A
new source with a potential to emit (PTE) at or above the applicable
``major stationary source threshold'' is subject to major source NSR.
These limits originate from section 169 of the CAA, which applies PSD
to any ``major emitting facility'' and defines the term to include any
source that emits or has a PTE of 100 or 250 tpy, depending on the
source category. Note that the major source definition incorporates the
phrase ``subject to regulation,'' which, as described later, will begin
to include GHGs on January 2, 2011, under our interpretation of that
phrase discussed in the recent Interpretive Memo notice. 75 FR 17004,
April 2, 2010.
b. Major Modifications
PSD also applies to existing sources that undertake a ``major
modification,'' which occurs: (1) When there is a physical change in,
or change in the method of operation of, a ``major stationary source;''
(2) the change results in a ``significant'' emission increase of a
pollutant subject to regulation (equal to or above the significance
level that EPA has set for the pollutant in 40 CFR 52.21(b)(23)); and
(3) there is a ``significant net emissions increase'' of a pollutant
subject to regulation that is equal to or above the significance level
(defined in 40 CFR 52.21(b)(23)). Significance levels, which EPA has
promulgated for criteria pollutants and certain other pollutants,
represent a de minimis contribution to air quality problems. When EPA
has not set a significance level for a regulated NSR pollutant, PSD
applies to an increase of the pollutant in any amount (that is, in
effect, the significance level is treated as zero).
2. General Requirements for PSD
This section provides a very brief summary of the main requirements
of the PSD program. One principal requirement is that a new major
source or major modification must apply BACT, which is determined on a
case-by-case basis taking into account, among other factors, the cost
effectiveness of the control and energy and environmental impacts. EPA
has developed a ``top-down'' approach for BACT review, which involves a
decision process that includes identification of all available control
technologies, elimination of technically infeasible options, ranking of
remaining options by control and cost effectiveness, and then selection
of BACT. Under PSD, once a source is determined to be major for any
regulated NSR pollutant, a BACT review is performed for each attainment
pollutant that exceeds its PSD significance level as part of new
construction or for modification projects at the source, where there is
a significant increase and a significant net emissions increase of such
pollutant.\7\
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\7\ We note that the PSD program has historically operated in
this fashion for all pollutants--when new sources or modifications
are ``major,'' PSD applies to all pollutants that are emitted in
significant quantities from the source or project. This rule does
not alter that for sources or modifications that are major due to
their GHG emissions.
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In addition to performing BACT, the source must analyze impacts on
ambient air quality to assure that no violation of any NAAQS or PSD
increments will result, and must analyze impacts on soil, vegetation,
and visibility. In addition, sources or modifications that would impact
Class I areas (e.g., national parks) may be subject to additional
requirements to protect air quality related values (AQRVs) that have
been identified for such areas. Under PSD, if a source's proposed
project may impact a Class I area, the Federal Land Manager is notified
and is responsible for evaluating a source's projected impact on the
AQRVs and recommending either approval or disapproval of the source's
permit application based on anticipated impacts. There are currently no
NAAQS or PSD increments established for GHGs, and therefore these PSD
requirements would not apply for GHGs, even when PSD is triggered for
GHGs. However, if PSD is triggered for a GHG emissions source, all
regulated NSR pollutants which the new source emits in significant
amounts would be subject to PSD requirements. Therefore, if a facility
triggers review for regulated NSR pollutants that are non-GHG
pollutants for which there are established NAAQS or increments, the air
quality, additional impacts, and Class I requirements would apply to
those pollutants.
The permitting authority must provide notice of its preliminary
decision on a source's application for a PSD permit, and must provide
an opportunity for comment by the public, industry, and other
interested persons. After considering and responding to comments, the
permitting authority must issue a final determination on the
construction permit. Usually NSR permits are issued by state or local
air
[[Page 31521]]
pollution control agencies, which have their own permit programs
approved by EPA in their State Implementation Plans (SIPs). In some
cases, EPA has delegated its authority to issue PSD permits to the
state or local agency. In other areas, EPA issues the permits under its
own authority.
D. What are the general requirements of the title V operating permits
program?
1. Overview of Title V
The operating permit requirements under title V are intended to
improve sources' compliance with other CAA requirements. The title V
program is implemented through regulations promulgated by EPA, 40 CFR
part 70, for programs implemented by state and local agencies and
tribes, and 40 CFR part 71, for programs generally implemented by EPA.
In summary, the title V program requires major sources (defined and
interpreted by EPA to include sources that emit or have a PTE of 100
tpy of any pollutant subject to regulation) and certain other sources
to apply for operating permits. Under EPA's long-standing
interpretation, a pollutant, such as a GHG, is ``subject to
regulation'' when it is subject to a CAA requirement establishing
actual control of emissions. Title V generally does not add new
pollution control requirements, but it does require that each permit
contain all pollution control requirements or ``applicable
requirements'' required by the CAA (e.g., New Source Performance
Standard (NSPS), and SIP requirements, including PSD), and it requires
that certain procedural requirements be followed, especially with
respect to compliance with these requirements. ``Applicable
requirements'' for title V purposes include stationary source
requirements, but do not include mobile source requirements. Other
procedural requirements include providing review of permits by EPA,
states, and the public, and requiring permit holders to track, report,
and annually certify their compliance status with respect to their
permit requirements.
2. Title V Permit Requirements
This section provides a brief summary of the requirements of the
title V program that are most relevant to this action. A source
generally must apply for a title V permit within 1 year of first
becoming subject to permitting--for new sources, this is usually within
1 year of commencing operation. The application must include, among
other things, identifying information, a description of emissions and
other information necessary to determine applicability of requirements
and information concerning compliance with those requirements. The
permitting authority uses this information to develop the source's
operating permit.
Title V permits generally contain the following elements: (1)
Emissions limitations and standards to assure compliance with all
applicable requirements; (2) monitoring, recordkeeping, and reporting
requirements, including submittal of a semiannual monitoring report and
prompt reporting of deviations from permit terms; (3) fee payment; and
(4) an annual certification of certification by a responsible official.
The detailed requirements are set forth at 40 CFR 70.6.
In addition to the permit content requirements, there are
procedural requirements that must be followed in issuing title V
permits, including (1) Application completeness determination; (2)
public notice and a 30-day public comment period, including an
opportunity for a public hearing, on draft permits; (3) EPA and
affected state review; and (4) a statement of the legal and factual
basis of the draft permit. The permitting authority must take final
action (issue or deny) on the permit applications within 18 months of
receipt. EPA also has 45 days from receipt of a proposed permit to
object to its issuance, and citizens have 60 days after that to
petition EPA to object to a permit. Permits may also need to be revised
or reopened if new requirements come into effect during the permit
terms or if the source makes changes that conflict with, or necessitate
changes to, the current permit. Permit revisions and re-openings follow
procedural requirements which vary depending on the nature of the
necessary change to the permit.
E. The Interpretive Memo
On December 18, 2008, EPA issued a memorandum, ``EPA's
Interpretation of Regulations that Determine Pollutants Covered by
Federal Prevention of Significant Deterioration (PSD) Permit Program''
(known as the ``Johnson Memo'' or the ``PSD Interpretive Memo,'' and
referred to in this preamble as the ``Interpretive Memo'') that set
forth EPA's interpretation regarding which EPA and state actions, with
respect to a previously unregulated pollutant, cause that pollutant to
become ``subject to regulation'' under the Act. Whether a pollutant is
``subject to regulation'' is important for the purposes of determining
whether it is covered under the federal PSD 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 model year vehicle
may be introduced into commerce. In other words, the compliance
obligation under the LDVR does not occur until a manufacturer may
introduce into commerce vehicles that are required to comply with GHG
standards, which will begin with model year 2012 and will not occur
before January 2, 2011. 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
[[Page 31522]]
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.
IV. Summary of Final Actions
This section describes the specific actions we are taking in this
final rule. It describes the overall tailoring approach for NSR and
title V applicability, the steps we are taking to put it into place,
and future actions that we commit to take. The next section, V,
provides the legal and policy rationale for these actions. In that
section, we provide a description of our rationale and response to
comments for each action, presented in the same order as we describe
the actions here.
A. How do you define the GHG pollutant for PSD and title V purposes?
1. GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs
We are identifying the air pollutant for purposes of PSD and title
V applicability to be the pollutant subject to regulation, which is the
air pollutant for GHGs identified in EPA's LDVR, as well as EPA's
endangerment and contribution findings.\8\ In the LDVR, EPA set
emissions standards under section 202(a) that were ``applicable to
emission'' of a single air pollutant defined as the aggregate sum of
six GHGs. The six GHGs, which are well-mixed gases in the atmosphere,
are CO2, CH4, N2O, HFCs, PFCs, and
SF6. Earlier, EPA made the contribution finding for this
single air pollutant.
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\8\ See 74 FR 66496, 66499, 66536-7. December 15, 2009.
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Furthermore, as proposed, we are using an emissions threshold that
allows all six constituent gases to be evaluated using a common
metric--CO2e. Thus, to determine applicability, a source's
GHG emissions are calculated on a CO2e basis by multiplying
the mass emissions of any of the six GHGs that the source emits by that
gas's GWP and then summing the CO2e for each GHG emitted by
the source. This sum, expressed in terms of tpy CO2e, is
then compared to the applicable CO2e-based permitting
threshold to determine whether the source is subject to PSD and title V
requirements.
In addition, because we are implementing this phase-in through the
term ``subject to regulation,'' the regulatory language is structured
such that the statutory mass-based thresholds (i.e., for PSD, 100/250
tpy for new construction and zero tpy for modifications at a major
stationary source, and for title V, 100 tpy) continue to apply. As a
result, stationary source apply and stationary sources or modifications
that do not meet these thresholds are not subject to permitting
requirements. While technically evaluation of the mass-based thresholds
is the second step in the applicability analysis, from a practical
standpoint most sources are likely to treat this as an initial screen,
so that if they would not trigger PSD or title V on a mass basis, they
would not proceed to evaluate emissions on a CO2e basis. We
have treated evaluation of mass-based thresholds as the initial step in
our descriptions. As applicable, a source would evaluate these mass-
based thresholds by summing each of the six GHGs it emits on a mass
basis (i.e., before applying GWP). We expect that it will be very rare
for a new stationary source or modification to trigger permitting based
on CO2e and not also trigger based on mass alone.
Determining permit program applicability for the GHG ``air
pollutant'' by using the sum-of-six GHGs is based on EPA's
interpretation that the PSD and title V requirements apply to each
``air pollutant'' that is ``subject to regulation'' under another
provision of the CAA. As discussed previously, the final LDVR for GHGs
makes it clear that the emissions standards EPA adopted are standards
applicable to emission of the single air pollutant defined as the
aggregate mix of these six well-mixed GHGs. See LDVR, May 7, 2010, 75
FR 25398-99, section III.A.2.c, and 40 CFR 86.1818-12.\9\ For reasons
explained in more detail in section V, we have determined it is legally
required, and preferable from a policy standpoint, for EPA to use the
same definition of the air pollutant for permitting purposes as that
used in the rule that establishes the control requirements for the
pollutant. We also believe there are implementation advantages for
applying PSD and title V in this way. Thus, this rule establishes that
a stationary source will use the group of six constituent gases for
permitting applicability, rather than treating each gas individually.
Similarly, you will include all six constituent gases because that is
how the air pollutant is defined, even though motor vehicles only emit
four of the six.
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\9\ 40 CFR 86.1818-12(a).
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2. What GWP values should be used for calculating CO2e?
We are requiring that wherever you perform an emissions
calculations involving CO2e for the purposes of determining
the applicability of PSD or title V requirements, you use the GWP
values codified in the EPA's mandatory GHG reporting rule.\10\ This
approach will assure consistency between the values required for
calculations under the reporting rule and for PSD or title V. In
addition, because any changes to Table A-1 of the mandatory GHG
reporting rule regulatory text must go through a rulemaking, this
approach will assure that the values used for the permitting programs
will reflect the latest values adopted for usage by EPA after notice
and comment.
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\10\ Table A-1 to subpart A of 40 CFR part 98--Global Warming
Potentials, 74 FR 56395.
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B. When will PSD and title V applicability begin for GHGs and emission
sources?
Overview
In this action, we establish the first two phases of our phase-in
approach, which we refer to as Steps 1 and 2. We also commit to a
subsequent rulemaking in which we will propose or solicit comment on
establishing a further phase-in, that is, a Step 3, that would apply
PSD and title V to additional sources, effective July 1, 2013, and on
which we commit to take final action, as supported by the record,\11\
by no later than July 1, 2012.
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\11\ Although we commit to propose or solicit comment on lower
thresholds and to take final action on that proposal by July 1,
2012, we cannot, at present, commit to promulgate lower thresholds.
It will not be until the Step 3 rulemaking itself that we will
gather and analyze data and receive comments that determine whether
we have basis for promulgating lower thresholds.
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We also commit to undertaking an assessment of sources' and
permitting authorities' progress in implementing PSD and title V for
GHG sources, and to complete this assessment by 2015. We further commit
to completing another round of rulemaking addressing smaller sources by
April 30, 2016. Our action in that rulemaking would address permitting
requirements for smaller sources, taking into account the remaining
problems concerning costs to sources and burdens to permitting
authorities. Finally, we determine in this action that we will apply
PSD or title V requirements to sources that emit GHGs, or that conduct
modifications that result in increases in emissions of GHGs, in amounts
of less than 50,000 tpy CO2e any earlier than when we take
the required further action to address smaller sources by April 30,
2016.
[[Page 31523]]
Through this process, we will implement the phase-in approach by
applying PSD and title V at threshold levels that are as close to the
statutory levels as possible, and do so as quickly as possible, at
least to a certain point. The level and timing of the thresholds that
we promulgate in future actions will be based on our assessment of the
resulting costs to sources and burdens to permitting authorities, and
that, in turn, will depend on such variables as our progress in
developing streamlining approaches and on permitting authorities'
progress in developing permitting expertise and acquiring more
resources. At this time, we cannot foresee exactly when or in what
manner those developments will occur. Therefore, we cannot promulgate
more components of the tailoring approach beyond what we promulgate in
this action. We can say only that we may continue the phase-in process
with further rulemaking after 2016. Alternatively, we may make a
definitive determination in one of the future rulemaking actions that,
under the ``absurd results'' doctrine, PSD or title V applies only to
certain GHG sources, and does not apply to the remaining GHG sources,
and with that rulemaking, bring this tailoring process to a close.
1. What are the Step 1 thresholds, timing, and calculation methodology?
a. PSD Permitting
Step 1 of the Tailoring Rule phase-in will begin on January 2,
2011. With respect to the PSD program, GHG sources will become subject
to PSD for their GHG emissions if they undergo PSD permitting anyway,
either for new construction or for modification projects, based on
emissions of non-GHG pollutants, in which case they will be subject to
the PSD requirements for GHG if they increase GHG emissions by 75,000
tpy CO2e or more. Under this step, only these sources, which
we refer to as ``anyway'' PSD sources, will become subject to PSD; no
sources will become major sources for PSD purposes or be treated as
undertaking modifications that trigger PSD based solely on their GHG
emissions. As a result, no additional PSD permitting actions will be
necessary solely due to GHG emissions. However, existing or newly-
constructed sources that are determined to be major sources based on
non-GHG emissions are required to conduct a BACT review for their GHG
emissions (from new construction) or emissions increases (from
modifications), if they are subject to PSD due to their non-GHG
emissions from construction or modification actions and each of the
following conditions is met:
(1) The GHG emissions (or net emissions increase) due to the new
construction (or modification) project, calculated as the sum of the
six well-mixed GHGs on a mass basis (no GWPs applied) exceed a value of
0 tpy; and
(2) The GHG emissions (or net emissions increase) due to the new
construction (or modification) project, calculated as the sum of the
six well-mixed GHGs on a CO2e basis (GWPs applied) equal or
exceed a value of 75,000 tpy CO2e.
The purpose of the first condition is to determine whether the GHG
emissions or net emissions increase has resulted in an ``increase in
the amount'' of an air pollutant as required by the Act. Because EPA
has not defined a mass-based regulatory significance level for GHGs,
that level, in effect, is treated as zero. See 40 CFR 52.21(b)(23)(ii)
and 51.166(b)(23)(ii). In practice, this means any amount of new
emissions or an emission increase will exceed the mass-based limit. We
are not, at this time, establishing a significance level based on mass
emissions, and instead we are establishing one based on CO2e
that addresses permitting burdens. The zero mass-based amount applies,
but only as an initial screen to exclude sources or changes that have
no mass increase of GHGs.
b. Title V Permitting
Under Step 1, only sources required to have title V permits for
non-GHG pollutants (i.e., ``anyway'' title V sources) will be required
to address GHGs as part of their title V permitting. That is, no
sources will become major for title V based solely on their GHG
emissions. Note further, however, that the 75,000 tpy CO2e
limit does not apply to title V, so that anyway title V sources must
apply any title V requirements to their GHG emissions. Sources with
title V permits must address GHG requirements when they apply for,
renew, or revise their permits. These requirements will include any GHG
applicable requirements (e.g., GHG BACT requirements from a PSD
process) and associated monitoring, record-keeping and reporting. When
a permit application is otherwise required, they will also need to
identify GHG emissions and other information in that application to the
extent required under 40 CFR 70.5(c) and 71.5(c), including information
necessary to determine applicable requirements.\12\
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\12\ EPA notes, however, that many sources subject to title V
under Steps 1 and 2 will also be subject to the GHG mandatory
reporting rule. For these sources, the emissions description
requirements in the title V regulations will generally be satisfied
by referencing information provided under the reporting rule.
---------------------------------------------------------------------------
2. What are the Step 2 thresholds, timing, and calculation methodology?
a. PSD Permitting
Step 2 will begin July 1, 2011. Under Step 2, anyway PSD sources--
that is, sources already subject to PSD based on non-GHGs and covered
under Step 1 previously--will remain subject to PSD. In addition,
sources with the potential to emit 100,000 tpy CO2e or more
of GHG will be considered major sources for PSD permitting purposes
(provided that they also emit GHGs or some other regulated NSR
pollutant above the 100/250 tpy (mass based) statutory thresholds.
Additionally, any physical change or change in the method of operation
at a major source (including one that is only major due to GHGs)
resulting in a net GHG emissions increase of 75,000 tpy CO2e
or more will be subject to PSD review and requirements with respect to
GHGs (provided that it also results in an increase of GHG emissions on
a mass basis).
Specifically, for purposes of determining whether a GHG emission
source, resulting from either new construction or a physical or
operational change at an existing source, is considered a major source
under PSD, both of the following conditions must be met:
(1) The GHG emission source, which is not major for another
pollutant, emits or has the potential to emit GHG in amounts that equal
or exceed the following, calculated as the sum-of-six well-mixed GHGs
on a mass basis (no GWPs applied):
100 tpy for sources in any of the 28 major emitting
facility source categories listed under PSD, or
250 tpy for any other stationary source.
(2) The GHG emission source emits or has the potential to emit GHGs
in amounts that equal or exceed 100,000 tpy CO2e basis.
For determining whether a modification project at a major
stationary source is subject to PSD review, both of the following
conditions must be met:
(1) The net GHG emissions increase resulting from the project,
calculated as the sum-of-six well-mixed GHGs on a mass basis (no GWPs
applied) equals or exceeds 0 tpy.
(2) The net GHG emissions increase resulting from the project,
calculated as the sum-of-six well-mixed GHGs on a
[[Page 31524]]
CO2e basis (GWPs applied) equals or exceeds 75,000 tpy
CO2e.
The purpose of the first condition in both of these determinations
is to confirm whether the GHG emissions or emissions increase have
exceeded, on a mass-basis, the statutory major source thresholds (where
the source is not otherwise major) and mass-based statutory
significance level for GHGs, which, as noted previously, is 0 tpy. See
40 CFR 52.21(b)(23)(ii) and 51.166(b)(23)(ii).
As an example of how the mass-based test would apply, consider a
modification project that results in a 5 tpy increase of GHG emissions
on a mass basis, associated with a high-GWP GHG gas (for example,
SF6, with a GWP value of 23,900), but also results in a 100
tpy reduction in CO2 emissions (assume no other
contemporaneous increases or decreases of GHG). In this example, there
would be a net decrease of GHG emissions on a mass basis (5 tpy-100 tpy
= -95 tpy). Because there is no mass-based increase of GHG, this
project does not trigger PSD, despite the fact that the net GWP-
adjusted emissions increase of SF6 in this example would
equal 119,500 tpy of CO2e and the project would thus exceed
75,000 tpy CO2e.
b. Title V Permitting
Under Step 2, ``anyway'' title V sources--that is, sources already
subject to title V based on non-GHGs and that are covered under Step 1
previously--will continue to be subject to title V. In addition, GHG
emission sources that equal or exceed the 100,000 tpy CO2e
threshold will be required to obtain a title V permit if they do not
already have one. It is important to note that the requirement to
obtain a title V permit will not, by itself, result in the triggering
of additional substantive requirements for control of GHG. Rather,
these new title V permits will simply incorporate whatever applicable
CAA requirements, if any, apply to the source being permitted. Both of
the following conditions need to be met in order for title V to apply
under Step 2 to a GHG emission source:
(1) An existing or newly constructed source emits or has the
potential to emit GHGs in amounts that equal or exceed 100 tpy
calculated as the sum of the six well-mixed GHGs on a mass basis (no
GWPs applied).
(2) An existing or newly constructed source emits or has the
potential to emit GHGs in amounts that equal or exceed 100,000 tpy
calculated as the sum of the six well-mixed GHGs on a CO2e
basis (GWPs applied).
3. What about Step 3?
In this rule, EPA establishes an enforceable commitment to complete
another rulemaking no later than July 1, 2012, in which we will propose
or solicit comment on a Step 3 of the phase-in and may also consider
other approaches that may result in the permanent exclusion of a
category of sources from PSD or title V requirements, under the Chevron
framework, taking account of the ``absurd results'' doctrine.
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, later in this
preamble.
4. What about the proposed 6-year exclusion for smaller sources?
The tailoring proposal contemplated at least a 6-year exclusion
from permitting for small sources. This proposed exclusion was based on
the overwhelming numbers of permitting actions at small sources and the
need for time for permitting authorities to secure resources, hire and
train staff, and gain experience with GHG permitting for new types of
sources and technologies. It was also based on the time needed for EPA
to develop, and for states to adopt, streamlining measures to reduce
the permitting burden (e.g., concerning PTE, presumptive BACT, or
general permits). We therefore proposed such an exclusion, and proposed
that it would last 6 years--5 years to complete a required study
evaluating permitting burden and assessing the effect of streamlining
measures or techniques in reducing this burden, plus an additional year
to complete a final rulemaking that would phase in additional sources
as appropriate based on the study.
We are finalizing the 6-year exclusion, and for reasons described
later, are establishing that in no event will sources below 50,000 tpy
CO2e be subject to PSD or title V permitting during the 6-
year period, nor will modifications be subject to PSD unless they
increase emissions by 50,000 tpy CO2e or more. The exclusion
will last until we take the action described later to address smaller
sources, which is required by April 30, 2016. The exclusion provides
certainty that, before this date, EPA will not act to cover
[[Page 31525]]
sources and modifications below these thresholds, including during the
required Step 3 rulemaking that will occur in 2012. In effect, this
means that Step 3 will establish a major source threshold and
significance level no lower than 50,000 tpy CO2e. This does
not necessarily mean we will cover sources below this level on April
30, 2016. It simply means that the provision we are adopting would
assure that EPA does not cover such sources any sooner than that.
5. When and how will EPA take further action on smaller sources?
As we proposed, we are establishing 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 the results of this study to serve as the basis for an
additional rulemaking that would take further action to address small
sources. Similar to the enforceable commitment to act on Step 3, we are
making an enforceable commitment to complete this rulemaking by April
30, 2016.
We cannot predict at this time what form that final action will
take. It could function as a Step 4, bringing in additional sources
based on, for example, streamlining actions, increased permitting
authority resources, and experienced and more efficient permitting
staff; and it could further indicate that we intend to follow-up with a
Step 5 to bring in more sources. Alternatively, it could also function
as a final step excluding certain sources permanently based on our
application of the Chevron framework, taking account of the ``absurd
results'' doctrine, and subjecting the remaining sources to permitting.
However, whatever final action we take would explain any necessary
changes to the Step 3 thresholds and would supersede the 6-year
exclusion for sources and modifications below 50,000 tpy
CO2e.
C. How do state, local and tribal area programs adopt the final GHG
applicability thresholds?
We are finalizing our proposed approach to change the definition of
``major stationary source'' in the PSD implementing regulations, and
the ``major source'' definition in the title V implementing regulations
to tailor the application of these permitting programs to GHG
emissions. We are also finalizing a significance level for GHG
emissions for purposes of defining a major modification under the PSD
program, and add an exclusion from PSD and title V permitting for GHG
emissions, until we complete a rulemaking required by April 30, 2016,
for any sources that are not already subject to PSD and title V
permitting and that emit less than 50,000 tpy of CO2e.
As explained earlier, we are adopting thresholds that phase in the
applicability of GHG permitting over a specified time period. In
adopting regulatory changes to implement these thresholds, we follow an
approach that is substantively the same as the approach proposed, but
takes a different form for purposes of revisions to our PSD and title V
regulations. Specifically, in this final rule, for our regulations, in
conjunction with the definitions of ``major stationary source'' and
``major modification'' (for PSD) and ``major source'' (for title V), we
are adopting a definition of the term ``subject to regulation.''
Moreover, we are defining this term so that GHG emissions from sources
above the threshold are treated as subject to regulation, and therefore
the sources that emit them are subject to PSD and title V. We are not
finalizing the approach we proposed, which was to revise the numerical
thresholds in the definitions so that GHG sources would have a higher
threshold. Although we are defining the term ``subject to regulation,''
we recognize that from a substantive standpoint, our tailoring approach
entails interpreting the definitions of ``major emitting facility,''
``major modification,'' and ``major source'' to phase in the
applicability of PSD and title V, as applicable, to GHG sources, and it
makes no difference whether we interpret those definitions through a
definition of the term ``subject to regulation,'' revising the
numerical thresholds, or revising other terms in those definitions.
We are adopting definitions of the term ``subject to regulation''
to implement the tailoring approach because that will facilitate rapid
implementation of the final rules by states. Under this approach,
states may not need to undertake a regulatory or legislative action
before implementing the final rule. These states would be able to
establish their interpretations of the term ``subject to regulation''
used in existing state rules before January 2, 2011, which is the date
that the LDVR and permitting requirements would take effect, and
thereby exempt sources below the threshold from PSD and title V as a
matter of both federal and state law. We are also codifying in this
definition EPA interpretations discussed in our recent action
``Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by Clean Air Act Permitting Programs'' (75 FR 17704)
to provide a complete picture of the meaning of this phrase as it
applies to all air pollutants.
Because we are finalizing the rule in a manner that will allow most
states to rapidly implement the final rule, and because our recent
action on the Interpretive Memo allowed for a longer transition time
than we anticipated at proposal, we are delaying final action on our
proposal to issue limited approvals for SIP-approved PSD programs and
part 70 operating permit programs.\13\ Instead, we are requesting that
states submit information to the appropriate EPA Regional Administrator
by August 2, 2010 so that we may determine whether it is still
necessary to finalize any of our proposed limited approvals for any
SIP-approved PSD and part 70 title V state programs. In that letter,
states should explain whether they will apply the meaning of the term
``subject to regulation'' established by EPA in this action in
implementing both their PSD and part 70 title V permitting programs,
and if so, whether the state intends to do so without undertaking a
regulatory or legislative process. If a state must revise its statutes
or regulations to implement this rule, we ask that it provide an
estimate of the time to adopt final rules in its letter to the Regional
Administrator. If a state chooses not to apply the approach reflected
in this rule, the letter should address whether the state has
alternative authority to implement the final rule's tailoring approach
or some other approach that is at least as stringent, but which also
addresses the expected shortfalls in personnel and funding that would
exist if the state carried out permitting at thresholds lower than
those in the final rules. For any state that is unable or unwilling to
apply the permitting thresholds in the final rules, and otherwise is
unable to demonstrate adequate personnel and funding, or alternate
authority to permit GHG emissions sources consistent with the final
rules, EPA will move forward with finalizing a limited approval of the
state's permitting program. By the same token, if we do not receive a
letter from
[[Page 31526]]
a state in response to this request by August 2, 2010, we will be
obliged to move forward with finalizing a narrowing of our approval of
the existing SIP or title V program.
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\13\ In the alternative, we also proposed to use our 110(k)(6)
error correction authority to revise SIP-approved PSD programs.
---------------------------------------------------------------------------
We also ask any state that currently lacks authority to issue PSD
or title V permits to any GHG emissions sources 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. For any state that lacks the ability to issue
PSD or title V permits for GHG emissions sources consistent with the
final rule, we intend to undertake a separate action to call for
revisions to these programs. We also intend to move quickly to impose a
Federal Implementation Plan (FIP) for PSD through 40 CFR 52.21, and use
our federal title V authority to ensure that GHG sources will be
permitted consistent with the final rules. Our request for information
from states is discussed further in section V.C.
D. How do you treat GHGs for purposes of title V permit fees?
We are not amending the title V regulations for fees at this time,
including any of the provisions specifying the presumptive minimum fee.
We are also not, at this time, calling for each state, local or tribal
program to submit new fee adequacy demonstrations as a result of
increased GHG permitting workload during Steps 1 and 2. However, as
described in section VI.D the statutory and regulatory requirement to
collect fees sufficient to cover all reasonable (direct and indirect)
costs required to develop and administer title V programs still
applies. Therefore, we are recommending that each program review its
resource needs for GHG-emitting sources and determine if the existing
fee approaches will be adequate. If those approaches will not be
adequate, we suggest that state, local and tribal agencies 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 will closely monitor approved title V programs during implementation
of 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. In developing alternative approaches,
we note the value of approaches that do not require a per-ton fee for
GHG and therefore do not require a GHG inventory to develop. Finally,
we offer to work with permitting authorities that request our
assistance with developing fee approaches.
E. Other Actions and Issues
This section describes other actions we intend to take in the
future related to GHG permitting in addition to the actions that we are
promulgating with this final rule. This section also responds to
commenters' suggestions that we undertake certain additional actions in
this rule, which we decline to do.
1. Timing for Permit Streamlining Techniques
As described at proposal, we intend to develop a series of
streamlining approaches as an integral part of our phase-in approach.
The approaches we described at proposal included: (1) Defining PTE for
various source categories, (2) establishing emission limits for various
source categories that constitute presumptive BACT, (3) establishing
procedures for use of general permits and permits-by-rule, (4)
establishing procedures for electronic permitting, and (5) applying
lean techniques to establish more efficient permitting processes. Taken
as a whole, these techniques have the potential to obviate the
applicability of PSD and title V requirements for some GHG-emitting
sources; promote more efficient treatment of GHG-emitting sources that
will already be subject to PSD and title V; and allow the expeditious
expansion of PSD and title V applicability to more GHG-emitting sources
while protecting those sources and the permitting authorities from
undue expenses.
As a result, we fully intend to move forward expeditiously with
developing streamlining approaches. However, for reasons discussed in
section V.E, we do not expect to develop and implement any of these
approaches before Step 2 begins. Moreover, we generally expect that
each of the first three--which are the most far-reaching--will take
several years to implement because we will need to undertake notice and
comment rulemaking to develop them, and then the permitting authorities
will need to adopt them through the appropriate state or local
processes. We commit to explore a wide range of possible approaches
before the Step 3 rulemaking, and, in that rulemaking, to propose those
that we think may be viable once we have had time to gather and review
key supporting data, and once the states and we have key implementation
experience that can inform our thinking. Because the streamlining
approaches generally carry uncertainty--as demonstrated by comments we
received raising legal and policy concerns, as discussed later, that we
will have to address--we cannot commit with this action to adopt any
streamlining actions in particular, nor to adopting them on any
particular schedule. However, we intend to pursue streamlining options
as expeditiously as possible, beginning immediately and proceeding
throughout the phase-in period, and we encourage permitting authorities
to do the same.
2. Guidance for BACT Determinations
Through this final rule we are not amending our regulations or
issuing guidance on BACT for GHGs. As described in our proposal, we
recognize the need to develop and issue technical and policy guidance
for permitting of GHGs, and we plan to accomplish it through a separate
effort that will involve stakeholder input. This effort is already
underway; in addition to comments EPA received on the proposed
Tailoring Rule related to GHG BACT guidance and information needs, EPA
received a suite of recommendations from the Clean Air Act Advisory
Committee (CAAAC) to which EPA is actively responding. This includes
technical guidance and database tools that EPA anticipates issuing by
June 2010, and policy guidance that will be issued by the end of 2010.
Thus, this important information will be available to support
permitting agencies in their BACT determinations at the time that the
GHGs become a regulated NSR pollutant, once the LDVR takes effect in
January 2011. EPA is confident that these measures will help support a
smooth transition to permitting emissions of GHGs.
3. Requests for Higher Category-Specific Thresholds and Exemptions From
Applicability
EPA has decided not to provide 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. Commenters requested several applicability
exemptions with respect to GHGs from, for example, agricultural
sources, residential sources, small businesses, energy-intensive
industrial processes (e.g., aluminum, steel, cement, glass, and pulp
and paper manufacturers), lime production, semiconductor production,
poultry production, solid waste landfills, biomass combustion/biogenic
emissions, fugitive emissions, and pollution control projects. For
reasons explained in section V.E, we have
[[Page 31527]]
decided to address the need for tailoring through a uniform threshold-
based approach, rather than through a collection of various specific
exclusions.
4. Transitional Issues Including Requests for Grandfathering
For reasons explained in section V.E, EPA has determined that
transitional issues for pending applications and permitted sources are
adequately addressed by existing requirements and the amount of lead
time provided before permitting requirements apply to GHGs under this
rule and the March 29, 2010 final action regarding the Interpretive
memo. This rule does not contain any additional exemptions or
grandfathering provisions addressing the transition to PSD and title V
permitting for GHGs.
We are not promulgating an exemption for 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. Any PSD permits issued to such
Step 1 sources on or after January 2, 2011 will need to address GHGs.
This action makes no change to the position we expressed on this issue
on April 2, 2010.
Final PSD permits issued before January 2, 2011 need not be
reopened or amended to incorporate requirements for GHGs that take
effect after the permit is issued. A source that is authorized to
construct under a PSD permit but has not yet begun actual construction
on January 2, 2011 may begin actual construction after that date
without having to amend the previously-issued PSD permit to incorporate
GHG requirements, provided the permit has not expired.
Sources that are not subject to PSD permitting requirements until
Step 2 need not obtain a PSD permit addressing GHGs in order to
continue any actual construction that begins before July 1, 2011, when
such a source was not a major stationary source required to obtain a
PSD permit. However, Step 2 sources that begin actual construction in
Step 2 may do so only after obtaining a PSD permit.
The title V permitting regulations already include a robust set of
provisions to address the incorporation of new applicable requirements
and other transitional considerations. 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 an
earlier time at the discretion of the permitting authority. 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. Where additional applicable requirements become
applicable to a source after it submits its permit application, but
prior to release of a draft permit, the source is obligated to
supplement its application. Permitting authorities may also ask for
additional information during the processing of an application. In
addition, where a source that already has a title V permit 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 3 or more years remaining and the applicable
requirements will be in effect prior to the date the permit is due to
expire.
V. What Is the Legal and Policy Rationale for the Final Actions?
In this section, we describe the legal and policy rationale for our
action, including our rationale for the following: (1) Our approach to
calculating GHG emissions for PSD and title V applicability purposes,
(2) our approach to establishing the thresholds and timing of PSD and
title V applicability to GHG emissions sources; (3) how state, local,
and tribal area programs adopt the final GHG applicability thresholds;
(4) treatment of GHGs for title V permit fees; (5) future activities,
including streamlining actions. We present the rationale description in
the following five subsections, corresponding to the basic presentation
of the approach in section IV.
A. Rationale for Our Approach to Calculating GHG Emissions for PSD and
Title V Applicability Purposes
1. Grouping of GHGs Into a Single Pollutant
In this section, we explain our treatment of the air pollutant at
issue for purposes of PSD and title V, such that sources that emit that
pollutant in the requisite quantities become subject to PSD and/or
title V requirements. We explain our rationale for treating the GHG air
pollutant as a combined group of six GHGs instead of six separate air
pollutants defined by each individual GHG, and our rationale for
including all six of the GHGs in that group. We also define the GHG
metric to use for comparison to the applicability thresholds.
We proposed to identify the air pollutant as the aggregate group of
the six GHGs that comprise the GHG pollutant, and to use a GHG metric
for the applicability thresholds based on CO2e. 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. Historically, the PSD and title V regulatory
provisions do not, in the first instance, define the ``air pollutant''
to which they apply, but rather rely for the definition of the
pollutant on a cross-reference to the regulatory provision under
another part of the Act that establishes the emission standards or
limits for that pollutant that in turn causes the pollutant to be
subject to regulation under PSD and title V permitting. As an example,
the pollutant ``total reduced sulfur'' (TRS) is a pollutant comprised
of the sum of multiple compounds that was originally defined under the
NSPS, subpart BB, Standards of Performance for Kraft Pulp Mills, which
then caused it to be subject to regulation under the PSD program. The
actual compounds that define the pollutant TRS are identified in the
NSPS. The PSD program regulations did not introduce its own independent
definition of TRS, but instead relied on the definition as contained in
the Kraft Pulp Mills NSPS.
However, at the time of our proposal, the endangerment and cause or
contribute findings had not been completed and the LDVR for GHGs had
not been finalized. Thus, there was no final agency action defining the
``air pollutant'' consisting of GHGs to be considered ``subject to
regulation.'' 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, col. 1. 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 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
because--
[t]hese six GHGs as a class comprise the air pollutant that is the
subject of the
[[Page 31528]]
endangerment finding and companion contribution finding and
constitute the air pollutant that is regulated by the light-duty
vehicle rule through measures that address the components of that
air pollutant that are emitted from the mobile sources. Thus,
although the CAA section 202(a) proposal establishes controls only
with respect to four GHGs, as a legal matter, the proposal covers
the entire set of GHGs that as a class are the single ``air
pollutant'' in the proposed endangerment and contribution findings.
74 FR 55329 col. 1.
We also solicited comment on whether we should identify the GHG
metric in a different way, such as addressing each GHG constituent
compound individually or including (whether individually or as a group)
only those four GHG constituent compounds for which reductions would
occur through the emission standards or limits proposed in the LDVR.
A minority of the comments on our proposal addressed this issue.
Some commenters supported combining the individual GHGs as one
pollutant for purposes of determining permitting applicability, and
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 particulate matter (PM).
On the other hand, a significant number of commenters also raised
concerns about grouping the individual GHGs into one metric. Some of
these commenters argued that grouping 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), individual GHGs do not
interact or combine to create a pollutant of concern, and EPA has not
established a ``GHG'' NAAQS that supports the definition of the
pollutant as a group. Some were concerned that regulating the GHGs as a
group would increase the likelihood that a source will trigger
permitting requirements, adding that this is unnecessary and would
conflict with the ``absurd results'' and ``administrative necessity''
doctrines because it would lead to larger numbers of sources becoming
subject to permitting. Some commenters opposing grouping suggested that
we should explore regulating each of the GHG pollutants on an
individual mass basis rather than collectively because in their view,
it is reasonable and feasible to regulate and control emissions of each
of the listed pollutants, other than CO2, at the 100/250 tpy
thresholds, or less if deemed necessary, in accordance with the
established mechanisms of the Act and doing so would lead to a better
environmental result. Finally, some commenters argued that
disaggregating the pollutants would also allow for more appropriate
technology review.
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, col. 1. We believe that this approach is
both compelled by the statute and reflects the preferable policy
approach.
As more fully discussed elsewhere in this rulemaking, the PSD
requirements apply to a ``major emitting facility'' that undertakes
construction or ``modification.'' CAA sections 165(a), 169 (2)(C). The
term ``major emitting facility'' is defined as, in general, a source
that emits 100 or 250 tons of ``any air pollutant,'' CAA section
169(1), and, similarly, the term ``modification'' is defined as a
physical or operational change that results in the increased or new
emissions of ``any air pollutant.'' CAA sections 169(2)(C), 111(a)(4).
Through regulation, we have interpreted the term ``any air pollutant,''
as found in both the terms ``major emitting facility'' and
``modification,'' more narrowly to mean any ``regulated NSR
pollutant,'' and we further define this term to include any pollutant
that is ``subject to regulation under the Act.'' 40 CFR
52.21(b)(50)(iv), 52.21.(b)(2).\14\
---------------------------------------------------------------------------
\14\ By the same token, CAA section 165(a)(4) requires that a
source subject to PSD impose best available control technology for
``each pollutant subject to regulation under this chapter'' that the
source emits.
---------------------------------------------------------------------------
Similarly, as discussed elsewhere, the title V requirements apply
to a ``major source,'' which is defined, in general, as any source that
emits at least 100 tpy of ``any air pollutant.'' CAA sections 502(a),
501(2)(B), 302(j). EPA has interpreted the term ``any air pollutant''
narrowly so that applies only with respect to air pollutants that are
subject to regulation under the CAA. Memorandum from Lydia N. Wegman,
Deputy Director, Office of Air Quality Planning and Standards, U.S.
EPA, ``Definition of Regulated Air Pollutant for Purposes of Title V''
(Apr. 26, 1993).
Based on these provisions, the key issue for present purposes in
determining whether a source is subject to PSD (because it qualifies as
a major emitting facility that undertakes construction or modification)
or title V is whether the pollutant or pollutants that the source emits
comprise the ``air pollutant'' that is ``subject to regulation'' under
the Act.
The phrase ``subject to regulation under the Act,'' by its terms,
identifies the air pollutant that is subject to PSD and title V as the
same air pollutant that is identified in the regulatory action under
another provision of the Act. The term is a simple cross-reference. It
carries no implication that EPA, in identifying the pollutant to which
PSD or title V apply, may redefine the pollutant that is regulated
elsewhere in the Act. Whatever the pollutant is that is regulated
elsewhere, it is that pollutant to which PSD and title V apply.
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, CH4, N2O, SF6, HFCs,
and PFCs.\15\ Because it is this pollutant that is regulated under the
LDVR, it is this pollutant 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.
---------------------------------------------------------------------------
\15\ The applicability provision of the LDVR is found in 40 CFR
86.1818-12(a).
---------------------------------------------------------------------------
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,'' (74 FR 66536), and these well-mixed GHGs are defined to
include CO2, CH4, N2O, SF6,
HFCs, and PFCs.
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
[[Page 31529]]
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 ``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. Many of
these same comments have already been addressed in the contribution
finding and Response to Comment (RTC) document for that action, and
those responses apply equally here.
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 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. This is because
the phase-in approach addresses 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 had 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; rather, 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 comment 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.
We also believe that the additional flexibility resulting from the
sum-of-six GHG metric will provide substantially more opportunities for
sources to address emission increases of GHGs than they would have had
under an individual gas based metric, and, thereby, possibly reduce
their permitting burden through multi-gas mitigation strategies. We
disagree with the comment that isolating BACT review on sources that
emit a single GHG necessarily leads to better environmental results
than it would for sources that undergo a combined review for all six
gases. To the contrary, given that Congress built in considerations of
energy, environmental, and economic impacts into the BACT requirement,
we think that allowing consideration of those factors across six gases
will likely result in decisions that more appropriately account for
those impacts at the source.
2. Identifying Which GHGs Are Included in the Group
As discussed previously, we proposed to include the combination of
six well-mixed GHGs as the air pollutant that triggers PSD and title V
applicability: CO2, CH4, N2O,
SF6, HFCs, and PFCs. Some commenters supported including all
six. They cite the proposed contribution findings that identify the
pollutant through the sum-of-six construct, and they 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.
However, a substantial number of commenters, mainly from industry
sectors who also disagree with grouping the GHGs together, contend that
only the constituent gases that are actually subject to controls under
the LDVR should be included in determining applicability under the
Tailoring Rule. Some of these commenters believe that only the three
compounds (CO2, CH4, N2O) for which
the LDVR contains emissions standards or caps should be considered in
the GHG metric for permitting, while others would also add HFCs (which
are included in a credit flexibility arrangement under the LDVR) for a
total of four GHGs. These commenters argued that PSD is not triggered
for all six GHGs by the LDVR because under the proposed PSD
[[Page 31530]]
interpretation in the Interpretive Memo, actual emission controls under
the Act are required to trigger PSD obligations for a given pollutant.
They also argue that including all six would conflict with EPA's
rationale for the Tailoring Rule by leading to larger numbers of
sources subject to permitting, thereby increasing the harm that EPA
says it wants to avoid. They further assert that the EPA cannot
exercise its discretion to widen the scope of PSD and title V
applicability to six GHGs when it is relying on the judicial doctrines
of ``absurd results'' and ``administrative necessity'' to narrow PSD
and title V applicability. They explain that in their view, those
doctrines apply only when EPA has taken all steps possible to narrow
the scope of PSD and title V and thereby avoid the administrative
problems that force it to rely on those doctrines.
There were a few comments on whether to include specific gases as
part of the sum-of-six grouping. Several commenters representing
sectors that have significant SF6 usage specifically argue
that SF6 should not be included as a GHG, at least at this
time, because there are no known SF6 controls, it is not
clear how PTE would be calculated from such facilities, and EPA has not
addressed the economic burden that regulation of these facilities would
create. A solid waste industry commenter 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.
We disagree with commenters who suggest that because the LDVR
actually reduces only four of the six GHGs, EPA may apply PSD and title
V to only those four GHGs. It is true that the LDVR standard 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 this 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. Similar to our rationale for addressing the
group of six GHGs as one pollutant for PSD and title V applicability
purposes, we must adhere to the definition of applicability, cited
previously, in the final LDVR for GHGs and include CO2,
CH4, N2O, SF6, HFCs, and PFCs. We do
not have discretion to select only a subset of these gases in defining
our GHG threshold metric for the permitting applicability purposes. See
LDVR, May 7, 2010, 75 FR 25398-99, section III.A.2.c. (discussing EPA's
exercise of discretion under section 202(a) in setting emissions
standards applicable to emission of the single air pollutant).
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, 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.
For similar reasons, we disagree with commenters who specifically
suggest SF6 emissions should not be included in the
applicability metric for GHGs. As we have stated earlier in this
section, our selection of the GHG metric is driven by the definition of
the ``air pollutant'' as defined in the LDVR, and in consideration of
the final GHG endangerment finding. SF6 is specifically
included as one of the ``well-mixed greenhouse gases'' in the
definition of air pollutant in the contribution finding, and is
included in the definition of the air pollutant in the LDVR for which
that rule is applicable. We do not believe we have the discretion to
define the ``air pollutant'' differently for PSD and title V
applicability purposes than the definition of the ``air pollutant''
that is regulated elsewhere. In any event, including SF6
emissions based on the thresholds finalized in this rulemaking does not
add an excessive administrative burden for permitting authorities.
Based on our threshold evaluation study, we estimate that less than 40
sources of SF6 nationwide would exceed the 100,000 tpy
CO2e threshold. Furthermore, SF6 is a high GWP
gas and, as discussed elsewhere, we have included a mass-based trigger
for high GWP gases that will likely have the effect of further reducing
this count.
For the same reasons, 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 commenters 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.
3. Use of GWP vs. Mass-Based GHG Thresholds
For the reasons discussed previously, we are determining permit
program applicability based on the sum-of-six well-mixed gases that
comprise the GHG air pollutant. This section discusses our use of both
the CO2e metric and mass emissions of the GHGs for
applicability purposes.
Under our proposal, 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 in tpy
CO2e. We received comments on this aspect of the proposed
metric. Several commenters explicitly support the use of GWP and the
CO2e metric for GHG emissions. These commenters believe EPA
has the authority to select an appropriate metric to measure GHGs in
the PSD program, and policy considerations support the choice of GWP.
Some of them note that GWP is a widely-used metric which employs
internationally-recognized conversion factors to compare GHGs based
upon their climate properties, and some add that states and local areas
that have climate action plans for GHG reductions use CO2e.
Some of these commenters believe this metric will ensure a
[[Page 31531]]
standard measure across all permitting agencies and 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.
On the other hand, some commenters oppose the use of GWP and
CO2e, believing that thresholds should be based on
individual mass-based emissions for each GHG. Some of these commenters
felt that EPA has no discretion to ignore the metric for regulation
established by Congress for PSD in section 169 of the Act. Some
commenters were also concerned 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. Finally, a commenter was concerned that
use of GWP would complicate implementation because GWP values can
sometimes change.
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. Most commenters 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. Commenters supporting this approach felt that it would be
unlawful to apply PSD when GHGs are below the statutory thresholds, or
when there is not a net emissions increase. Others added that 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. Additionally, one commenter observed that a dual
threshold is consistent with phasing in the Tailoring Rule and is an
effective way to address the current uncertainty surrounding how to
measure high-GWP gases such as SF6. In contrast, a few
commenters stated they do not support a dual threshold, primarily on
the grounds that there is no benefit to the added complexity.
After considering these comments, we have decided to adopt
applicability thresholds in the final rule 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 metric used in the
mandatory GHG 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 to 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 finalized 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. As explained in the RTC document, 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 described how we expect this provision to be implemented
in practice.
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 in the next section, 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
[[Page 31532]]
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.
4. Determining What GWP Values Are To Be Used
At proposal, we proposed to link the calculation of CO2e
for GHGs to GWP values in EPA's ``Inventory of U.S. Greenhouse Gas
Emissions and Sinks'' (GHG Inventory). See, e.g., proposed 40 CFR
51.166(b)(58). Numerous commenters expressed concerns about this
proposal on various grounds, including the following:
The EPA should follow the proper notice-and-comment
procedures and the requirements of the Information Quality Act 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.
The EPA cannot tie the definition of GWP to the GHG
Inventory because it is a non-regulatory document that may be changed
without notice-and-comment rulemaking. Before EPA uses a new GWP, that
GWP must be subject to notice and comment to comply with the
requirements of CAA section 307 and the Administrative Procedure Act
(APA).
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. The EPA needs to
ensure that applicability and compliance with limits continue to be
based on the GWP that existed when the determination was made or the
limit was established.
The EPA should 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.
Commenters added that it is important to ensure that all permitting
agencies are using the same calculations for the determination of
CO2e for GHGs.
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 by permitting authorities and allows sources to 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.\16\ EPA also recognized similar
potential implementation issues in developing its final mandatory GHG
reporting rule, and codified in the regulatory text for that rule the
GWP values to be used in reporting GHGs as part of that final
rulemaking.
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\16\ 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 plan to propose a change to GWP values, we will
work with permitting authorities as necessary to provide guidance to
sources on transitional issues.
---------------------------------------------------------------------------
For these reasons, we have decided to follow the approach in the
mandatory GHG 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 mandatory GHG reporting rule. 74 FR 56395, Table
A-1 to subpart A of 40 CFR part 98--Global Warming Potentials. Any
changes to Table A-1 of the mandatory GHG reporting rule regulatory
text must go through an appropriate regulatory process. In this manner,
the values used for the permitting programs will reflect the latest
values adopted for usage by EPA after a regulatory process and will be
consistent with those values used in the EPA's mandatory GHG reporting
rule. Furthermore, the lead time for adopting changes to that rule will
provide a transition time to address implementation concerns raised by
commenters.
5. Use of Short Tons vs. Metric Tons
We proposed that the GHG metric would be expressed in terms of
English (or short) tons, rather than metric (or long) tons. A few
commenters support using short tons for this purpose. Others prefer the
use of metric tons, and most of them note that the mandatory GHG
reporting rule is based on metric tons and believe that the Tailoring
Rule should be consistent with that rule. These commenters believe that
using different units in the two rules would be confusing and could
result in sources that are not subject to the mandatory GHG reporting
rule becoming subject to PSD. Some of the commenters add that various
``cap and trade'' legislative proposals also quantify GHGs in metric
tons. A few other commenters recommend that EPA harmonize the
applicability thresholds established under the Tailoring Rule and the
mandatory GHG reporting rule without expressing a preference for short
or metric tons.
We are finalizing our proposal to use short tons because 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 of fuel, British thermal units
(Btu), 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 reporting rule uses metric tons, but this
does not create an inconsistency between permitting programs and the
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 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 reporting rule are based on
actual emissions, while the PSD and title V programs thresholds are
based on PTE. 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
[[Page 31533]]
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.
B. Rationale for Thresholds and Timing for PSD and Title V
Applicability to GHG Emissions Sources
In this subsection, we describe our legal and policy rationale for
our determinations concerning PSD and title V applicability to GHG
emissions sources. This subsection includes: (1) An overview of our
rationale; (2) data concerning costs to sources and administrative
burdens to permitting authorities; (3) a review of the Chevron legal
framework and the ``absurd results,'' ``administrative necessity,'' and
``one-step-at-a-time'' doctrines, as well as a review of how those
doctrines fit into the Chevron framework; (4) an overview of the
relevant PSD and title V requirements and their legislative history;
(5) our application of the ``absurd results'' doctrine for tailoring
the PSD requirements; (6) our application of the ``absurd results''
doctrine for tailoring the title V requirements; (7) our plans to issue
further rulemaking that will address the ``absurd results'' basis for
both PSD and title V requirements; (8) our rationale for the phase-in
schedule for applying PSD and title V to GHG sources; (9) our
application of the ``administrative necessity'' basis for tailoring the
PSD and title V requirements; and (10) our application of the ``one-
step-at-a-time'' basis for tailoring the PSD and title V requirements.
1. Overview
Under the familiar Chevron two-step approach to construction of
agency-administered statutes, the agency must first, at Chevron Step 1,
determine whether Congress's intent in a particular provision on a
specific question is clear; and if so, then the agency must follow that
intent. If the intent of the provision is not clear, then the agency
may, under Chevron Step 2, fashion a reasonable interpretation of the
provision. The best indicator of congressional intent is the literal
meaning of the provision and generally, according to the case law, if
the literal meaning addresses the specific question, then the agency
should follow the literal meaning.
However, the courts have developed three doctrines relevant here
that authorize departure from a literal application of statutory
provisions. The first is the ``absurd results'' doctrine, which
authorizes such a departure if the literal application would produce a
result that is inconsistent with congressional intent, and particularly
if it would undermine congressional intent. The judicial doctrine of
``administrative necessity'' authorizes an agency to depart from
statutory requirements if the agency can demonstrate that the statutory
requirements, as written, are impossible to administer. The ``one-step-
at-a-time'' doctrine authorizes an agency, under certain circumstances,
to implement a statutory requirement through a phased approach. Each of
the three doctrines fits into the Chevron framework for statutory
construction because each of the three is designed to effectuate
congressional intent.
To apply the statutory PSD and title V applicability thresholds
literally to sources of GHG emissions would bring tens of thousands of
small sources and modifications into the PSD program each year, and
millions of small sources into the title V program. These extraordinary
increases in the scope of the permitting programs would mean that the
programs would become several hundred-fold larger than what Congress
appeared to contemplate. Moreover, the great majority of additional
sources brought into the PSD and title V programs would be small
sources that Congress did not expect would need to undergo permitting
and that, at the present time, in the absence of streamlined permit
procedures, would face unduly high permitting costs. Further, again at
the present time, in the absence of streamlined permit procedures the
administrative strains would lead to multi-year backlogs in the
issuance of PSD and title V permits, which would undermine the purposes
of those programs. Sources of all types--whether they emit GHGs or
not--would face long delays in receiving PSD permits, which Congress
intended to allow construction or expansion. Similarly, sources would
face long delays in receiving title V permits, which Congress intended
to promote enforceability. For both programs, the addition of enormous
numbers of additional sources would provide relatively little benefit
compared to the costs to sources and the burdens to permitting
authorities. In the case of PSD, the large number of small sources that
would be subject to control constitute a relatively small part of the
environmental problem. In the case of title V, a great many of the
sources that would be newly subject to permit requirements would have
``empty'' permits, that is, permits that do not include any applicable
requirements, and that therefore serve relatively little purpose. For
these reasons, the ``absurd results'' doctrine applies to avoid a
literal application of the thresholds at this time. By the same token,
the impossibility of administering the permit programs brings into play
the ``administrative necessity'' doctrine. This doctrine also justifies
not applying the PSD or title V applicability threshold provisions
literally to GHG sources at this time.
The situation presented here is exactly the kind that the ``absurd
results,'' ``administrative necessity,'' and ``one-step-at-a-time''
doctrines have been developed to address. Separately and
interdependently, they authorize EPA and the permitting authorities to
tailor the PSD and title V applicability provisions through a phased
program as set forth in this rule, and to use the initial period of
phase-in to develop streamlining measures, acquire expertise, and
increase resources, all of which would facilitate applying PSD and
title V on a broader scale without overburdening sources and permitting
authorities. In this manner, the phased approach reconciles the
language of the statutory provisions with the results of their
application and with congressional intent.
2. Data Concerning Costs to Sources and Administrative Burdens to
Permitting Authorities
This final action concerning applicability of PSD and title V to
GHG-emitting sources, including the decisions on timing for the
selected permitting thresholds, is based on our assessments of both the
costs to the regulated sources to comply with PSD and title V
permitting requirements and the administrative burdens to the
permitting authorities to process PSD and title V permit actions for
GHG-emitting sources. This section provides a summary of our cost and
administrative burden assessments of permitting that would be required
in the absence of any tailoring as well as under various tailoring
options.
Our estimates of costs to the sources and administrative burdens to
the permitting authorities from PSD and title V applicability for GHG
emissions are based on labor and cost information from the existing
Information Collection Requests (ICRs) for PSD and title V
programs.\17\ We apply the same basic
[[Page 31534]]
methodology used for the proposal, which incorporates information on
numbers and types of affected sources and estimated permitting actions.
We evaluate administrative burdens in terms of staffing needs, time for
processing permits, and monetary costs, and we make some judgments
about how those burdens would affect the permitting authorities'
ability to effectively manage and administer their programs with the
addition of GHG emission sources. We present the administrative burden
data for applying PSD and title V requirements at the literal statutory
thresholds--that is, the 100/250 tpy levels for PSD (and 0 tpy for
modifications) and the 100 tpy level for title V--as well as at other
thresholds, which range from 25,000 tpy CO2e to 100,000 tpy
CO2e. We have significantly revised upwards our assessments
of costs to sources and administrative burdens since proposal, and we
summarize later our reasons for doing so. We also present significant
comments concerning administrative burdens, and our responses to those
comments.
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\17\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds;'' Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
In the next section, concerning legal and policy rationale for our
actions, we discuss how these data on costs to the sources and
administrative burdens to the permitting authorities informed our
decisions that PSD and title V requirements should not, at present, be
applied to GHG-emitting sources under the literal terms of the
statutory thresholds as well as our decisions concerning what
thresholds to apply for Steps 1 and 2 of the applicability phase-in
approach and the applicability floor of 50,000 tpy CO2e.
a. Costs to Sources
As we did at proposal, we have estimated costs to the sources of
complying with PSD and title V starting from the data in the ICRs. We
recognize that the sizes of the sources, as measured by their
emissions, that would be swept into the PSD and title V programs would
vary greatly, and that their permitting costs would vary as well. For
example, their PSD permitting costs would depend on the amount and
types of their emissions and their control requirements. Accordingly,
we have determined average costs, as described later.
For PSD, at proposal, we estimated that on average, an industrial
source would incur costs of $84,500 to prepare the PSD application and
receive the permit, and on average, a commercial or residential source
would incur costs of 20 percent that amount, or $16,900. 74 FR 55337
col. 3 to 55339 col. 3. For this action, we retain the same burden
estimates for an average industrial source. This type of source would
need 866 hours, which would cost $84,500, to prepare the application
and the PSD permit. However, based on comments received, we have
determined that a more accurate estimate for an average commercial or
residential source is 70 percent of that amount of time that an
industrial source would need, up from our proposal of 20 percent. Thus,
an average commercial or residential source would need 606 hours, which
would cost $59,000, to prepare the PSD application and receive the
permit. We are increasing this time over what we proposed because we
now recognize that virtually all commercial and residential sources
will have no experience with the PSD permitting process, and therefore
will face a significant learning curve that will entail more time to
complete the application, develop control recommendations, and take the
other required steps. We believe this learning period could extend from
2 to possibly 4 years or more from the date that the sources become
subject to PSD requirements, depending on the type and actual number of
new sources that come in for permitting. In addition, we expect that in
many cases, draft PSD permits for GHGs will receive comments from
various stakeholders, from citizens groups to equipment vendors, who
will seek to participate in the permit process, and that all this could
add to the hours that the permittee will need to invest in the
process.\18\ The actual costs to sources to install BACT controls,
while still uncertain at this point, would likely add additional costs
across a variety of sources in a sector not traditionally subject to
such permitting requirements.
---------------------------------------------------------------------------
\18\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
For title V, at proposal, we estimated that on average, an
industrial source would incur costs of approximately $46,400 to prepare
the title V application and receive the permit, and on average, a
commercial or residential source would incur costs of 10 percent that
amount, or almost $5,000. 74 FR 55338 col. 1 to 55339 col. 3. For this
action, we retain the same burden estimates for an average industrial
source. This type of source would need 350 hours, which would cost
$46,400, to prepare the application and the title V permit. However, we
have determined that a more accurate estimate for an average commercial
or residential source is 50 percent of that amount of time that an
industrial source would need, up from our proposal of 10 percent. Thus,
an average commercial or residential source would need about 175 hours,
which would cost $23,200, to prepare the title V application and
receive the permit. This increase is due to the same reasons as with
the PSD program just discussed. We now recognize that virtually all
commercial and residential sources will have no experience with the
title V permitting process and, therefore, will face a significant
learning curve that will entail more time to assess, for the first
time, their GHG emissions (because such sources are not covered by
EPA's mandatory GHG reporting rule), complete the application, respond
to permitting authority comments, meet other title V administrative
requirements, and respond to interested stakeholders.\19\
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\19\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
b. Administrative Burdens to Permitting Authorities
(1) Estimated Permitting Authority Burden at Proposal
As at proposal, we estimated the administrative burdens to the
permitting authorities at the various threshold levels for PSD or title
V applicability as follows. First, for a particular threshold level, we
estimated the number of GHG-emitting sources that would be subject to
PSD requirements because they would undertake new construction or
modification, and the number of existing sources that would be subject
to title V requirements. Second, we estimated the average additional
administrative burden and cost of each PSD permitting action and each
title V permitting action for the GHG-emitting sources. Third, we
multiplied those two estimates, and the product is the additional
administrative burden at the particular threshold level. We employed
the same methodology for this final rule, but, as discussed later, and
described in more detail in our final burden analysis,\20\ we have
updated several key assumptions since the proposal as a
[[Page 31535]]
result of our consideration of comments received.
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\20\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
First, we present the administrative burdens at the statutory
levels for PSD and title V applicability. At proposal, for the PSD
program, we estimated the administrative burdens that would result from
applying PSD at the 100/250 tpy major emitting facility threshold
levels in two ways, as described in this section. We stated that at
present, 280 sources are subject to PSD each year, both for new
construction and modifications. This figure served as the baseline from
which to calculate increases in administrative burdens due to
permitting GHG-emitting sources.
The first method that we used to calculate the administrative
burdens to the permitting authorities was in terms of workload hours,
which we then converted to monetary costs. To make the workload
calculation, we first estimated the number of GHG-emitting sources that
would become subject to PSD through new construction and modification.
Based on our GHG threshold data analysis, we estimated that almost
41,000 new and modified sources per year would become subject to PSD
review. We first calculated the number of new sources that would become
subject to PSD. To do this, we estimated growth rates for the various
sectors, and then applied those growth rates to the numbers of sources
in those sectors. We then calculated the number of modifications. To do
this, we first assumed that each year, two percent of sources that meet
or exceed the threshold levels for PSD applicability due to their
conventional pollutants undertake modifications. We then calculated the
number of sources that would meet or exceed the threshold levels for
PSD applicability due to their GHG emissions, and applied the same
assumption that two percent of them would undertake modifications. In
this manner, we estimated the number of modifications of GHG-emitting
sources that would become subject to PSD.
We noted that currently, 280 PSD permits are issued each year, but
that applying PSD to GHG-emitting sources at the 100/250 tpy statutory
threshold levels would cause an increase in permits of more than 140-
fold. The reason for the extraordinary increase in PSD applicability
lies simply in the fact that it takes a relatively large source to
generate emissions of conventional pollutants in the amounts of 100/250
tpy or more, but many sources combust fossil fuels for heat or
electricity, and the combustion process for even small quantities of
fossil fuel produces quantities of CO2 that are far in
excess of the sources' quantities of conventional pollutants and that,
for even small sources, equal or exceed the 100/250 tpy levels.
Based on the 140-fold increase in permits, we then estimated the
per-permit burden on permitting authorities. As we stated in the
proposal:
We estimated the number of workload hours and cost a permitting
authority would expend on each new source and each modification. We
based these estimates on the workload hours and cost for processing
permits for new sources of non-GHG emissions, which we derived from
labor and cost information from the existing ICRs for PSD programs.
The ICRs show that permitting authorities expend 301 hours to permit
a new or modified industrial source * * *.
We then made assumptions for number of workload hours and costs
for new sources of GHG emissions. We assumed that permitting new
industrial GHG sources that emit in excess of the 250-tpy threshold
would be of comparable complexity to permitting non-GHG emitting
industrial sources that are subject to PSD. Thus, for these sources,
we assumed that permitting authorities would expend the same number
of workload hours and costs, on a per-permit basis, as they do for
non-GHG emitting industrial sources. On the other hand, for
commercial and residential GHG sources that emit GHGs above the 250-
tpy threshold (and as a result would be subject to the requirements
of the PSD permitting program at this threshold level), we assumed
that the workload hours and cost for permitting these sources would
be significantly less than--only 20 percent of--the hours and cost
necessary to prepare and issue initial PSD permits or permit
modifications for industrial GHG sources. This 20-percent estimate
amounts to 60 hours of permitting authority time per residential or
commercial permit.
Based on these assumptions, the additional annual permitting
burden for permitting authorities, on a national basis, is estimated
to be 3.3 million hours at a cost of $257 million to include all GHG
emitters above the 250-tpy threshold.
74 FR 55301 col. 2.
Note that at the proposal, in calculating the PSD administrative
burdens that would occur each year due to GHG emissions, we did not
undertake separate calculations for the administrative burdens
associated with permitting obligations stemming from the GHG emissions
of the 280 sources already subject to PSD permitting requirements due
to their conventional pollutants. In effect, we treated these 280
sources are part of the over 40,000 sources that would become subject
to PSD due to their GHG emissions.
The second way that we evaluated the burden on permitting
authorities was by reviewing a study conducted by state and local air
permitting agencies. As we said in the preamble:
In addition to conducting our burden analysis, we also reviewed
summary information from state and local air permitting agencies
regarding additional resources and burden considerations if GHG
sources that emit above the 100/250-tpy thresholds were subjected to
the PSD and title V programs. This information covered 43 state and
local permitting agencies, representing programs from different
regions of the country and various permitting program sizes (in
terms of geographic and source population coverage) * * *. This
information showed significant burdens projected by permitting
agencies with adding sources of GHG emissions in terms of staffing,
budget, and other associated resource needs. Importantly, the
agencies based their analysis on the assumption that, for purposes
of determining whether a source is major, its emissions would be
calculated on an actual emissions (``actuals'') basis, and not on a
PTE basis. On an actuals basis, the agencies estimated a 10-fold
increase in the number of permits.
Specifically, the agencies estimated that:
Assuming, again, that number of permits was to increase
by 10-fold (based on actual emissions), the resulting workload would
require an average of 12 more [full-time equivalents (FTEs)] per
permitting authority at an estimated cost of $1 million/year;
Without the additional FTEs, the average processing
time for a permit would increase to 3 years, which is three times
the current average processing time;
Permitting authorities would need 2 years on average to
add the necessary staff;
Permitting authorities would also need, on average,
eight additional enforcement and judicial FTEs;
Ninety percent of permitting agencies would need to
train their staff in all aspects of permitting for sources of GHG
emissions.
A quarter of permitting agencies were currently under a
hiring freeze.
We went on to explain that this state survey significantly
underestimated the administrative burdens:
It is important to reiterate that the state and local permitting
information on burden was based on the number of additional
facilities subject to PSD because their emissions of GHGs exceed the
100/250-tpy thresholds at actual emissions rates, not PTE-based
emissions rates. However, the PSD applicability requirements are
based on PTE. By adjusting the increase in number of permits to
account for GHG sources that exceed the 100/250-tpy applicability
thresholds based on their PTE emissions, EPA estimated a 140-fold
increase in numbers of PSD permits, much more than the 10-fold
increase estimated by the states based on actual emissions.
74 FR 55301 col. 2-3.
In addition to PSD, we also estimated title V burdens at the
statutory threshold. At proposal, for the title V program, we estimated
the administrative burdens that would result from applying title V
requirements at the 100 tpy major
[[Page 31536]]
source threshold level in the same two ways as for PSD, as follows. The
first method was to calculate the administrative burdens in terms of
workload hours, which we then converted to monetary costs. To make the
workload calculation, we first estimated the number of existing GHG-
emitting sources that would become subject to title V. Based on our GHG
threshold data analysis, we estimated that approximately 6 million
sources would become subject to title V. Compared to the 14,700 title V
permits currently issued, this would be an increase in permits of more
than 400-fold. We noted, in addition, that most of the 14,700 sources
already subject to title V also emit GHGs and may be affected as well.
We then described the type of work that the permitting authorities
would need to do for these GHG-emitting sources--the six million that
would become newly subject to title V and most of the 14,700 that are
already subject to title V--as follows. Note at the outset that the
permitting authorities' workload is greater for sources newly subject
to title V than for existing sources that seek a revised or renewed
permit. As EPA noted in the preamble:
[T]he [ ] permits [for the 6 million new sources] would need to
include any requirements for non-GHGs that may apply to the source,
such as provisions of an applicable SIP. For any such requirements,
permitting authorities would also need to develop terms addressing
the various compliance assurance requirements of title V, including
monitoring, deviation reporting, six-month monitoring reports, and
annual compliance certifications.
Adding to the burden described above would be the burden to add
GHG terms to the 14,700 existing title V permits. While, in general,
existing title V permits would not immediately need to be revised or
reopened to incorporate GHG (because as noted above, there are
generally not applicable requirements for GHGs that apply to such
sources), permitting authorities may face burdens to update existing
title V permits for GHG under two possible scenarios: (1) EPA
promulgates or approves any applicable requirements for GHGs that
would apply to such a source, which would generally require a permit
reopening or renewal application, or (2) the source makes a change
that would result in an applicable requirement for GHGs to newly
apply to the source, such as PSD review, which would generally
require an application for a permit revision. Permitting authorities
will also need to process permit renewal applications, generally on
a five-year cycle, and such renewals would need to assure that the
permit properly addresses GHG. Finally they would have to process
title V applications for new sources (including all the PSD sources
previously discussed).
74 FR 55302 cols. 2-3.
In light of those demands, we estimated the per-permit burden on
permitting authorities as follows. Note, at the outset, that as with
PSD, we based the workload hours on information in ICRs for industrial
sources, and we then assumed that the workload for commercial and
residential sources would be the indicated percentage of the workload
for industrial sources:
As with PSD, we have quantified the extent of the administrative
problem that would result in workload hours and cost on the basis of
information concerning hours and costs for processing existing title
V permits that is indicated on ICRs. However, we recognize that more
than 97 percent of these new sources would be commercial and
residential sources. We estimate that for permitting authorities,
the average new commercial or residential permit would require 43
hours to process, which is 10 percent of the time needed for the
average new industrial permit. For an average existing permit, which
permitting authorities would need to process through procedures for
significant revisions and permit renewals, adding GHG emissions to
the permit would result in, we estimate, 9 additional hours of
processing time, which is 10 percent of the amount of time currently
necessary for processing existing permits. We estimate that the
total nationwide additional burden for permitting authorities for
title V permits from adding GHG emissions at the 100-tpy threshold
would be 340 million hours, which would cost over $15 billion.
74 FR 55302 col. 3.
As with PSD, the second way that we evaluated the burden on
permitting authorities at the statutory threshold was by reviewing a
study conducted by state and local air permitting agencies of the
burden of applying title V to existing GHG-emitting sources at the 100
tpy statutory threshold level. As we said in the preamble to the
proposed rule:
[W]e also reviewed summary information from state and local
permitting agencies, which showed significant burdens associated
with adding GHGs in their title V programs in terms of staffing,
budget, and other associated resource needs.\21\ Again, note that
the permitting agencies based their estimates on numbers of permits
that would be required from sources subject to the 100-tpy title V
applicability threshold on an actuals--not PTE--basis. Based on that
level, the agencies assumed a 40-fold increase in numbers of
permits, and estimated that:
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\21\ ``NACAA Summary on Permitting GHGs Under the Clean Air
Act''; Memorandum from Mary Stewart Douglas, National Association of
Clean Air Agencies to Juan Santiago, EPA/OAQPS, September 3, 2009.
---------------------------------------------------------------------------
The resulting workload would require an average of 57
more FTEs per permitting agency at an estimated cost of $4.6
million/year;
Without the additional FTEs, the average processing
time for a permit would increase to almost 10 years, which is 20
times the current average permit processing time;
Permitting authorities would need 2 years on average to
add the necessary staff;
On average, permitting authorities would need 29
additional enforcement and judicial staff;
Eighty percent of permitting authorities would need to
train their staff in all aspects of permitting for sources of GHG
emission.
A quarter of permitting agencies were currently under a
hiring freeze.
As with PSD, we added that this state survey significantly
underestimated the administrative burdens:
It is important to reiterate that, as with PSD, the state and
local information on projected permitting burden is based on the
number of additional facilities subject to title V because their
emissions of GHGs exceed the 100-tpy thresholds at actual emissions
rates, not the PTE-based emissions rates. However, the title V
applicability requirements are based on PTE. As noted elsewhere in
this preamble, the state and local agencies estimated a 40-fold
increase in numbers of title V permits based on the amount of GHG
sources' actual emissions. By adjusting the summary estimates
provided by the state and local agencies to account for GHG sources
that exceed the 100-tpy threshold based on their PTE emissions, EPA
estimated that the average permitting authority would need 570 more
FTEs to support its title V permitting program.
74 FR 55302 col. 3--55303 col. 1.
(2) Revisions to Proposal Estimates of Permitting Authority Burden
We received numerous comments from state and local authorities
stating that EPA had underestimated the administrative burden on the
permitting authorities in the proposal. State and local authorities
stated that in particular, EPA underestimated the number of
modifications and the amount of time it would take permitting
authorities to process permits, particularly for commercial and
residential sources. Based on the comments and additional analysis that
we have conducted in response, we are revising in several respects our
estimates of the administrative burdens for applying PSD and title V at
the statutory threshold levels.
First we present revisions to our analysis regarding the burdens at
the statutory levels. Before we present those changes, we want to note
a revision to our methodology that affected our estimate of the number
of permits currently issued under existing programs. We are revising
upwards the number of sources that are already subject to PSD
permitting requirements anyway for their conventional pollutants,
which, as discussed previously, we refer to as ``anyway'' sources. This
revision has implications
[[Page 31537]]
both for (1) the number of sources that would become subject to PSD due
to their GHG emissions; and also (2) the baseline number of sources
already subject to PSD, which we use to compare the amount of increases
in administrative burden due to permitting GHG sources. At proposal, we
stated that 280 sources each year are subject to PSD due to their new
construction or modifications. However, upon further analysis, we have
realized that this figure is too low because it includes only sources
that have emissions of one or more NAAQS pollutants at the 100/250 tpy
thresholds and that are located in areas of the country that are
designated attainment or unclassifiable for all of those pollutants,
and thus are not designated nonattainment for any of those NAAQS
pollutants. We estimate that another 520 sources have emissions of one
or more NAAQS pollutants at the 100/250 tpy thresholds and are located
in areas of the country that are nonattainment for at least one of
those NAAQS pollutants. Some of these 520 sources may also emit one or
more pollutants at the 100/250 tpy level for which their area is
designated attainment or unclassifiable, and therefore may be subject
to PSD for those pollutants. Accordingly, the correct number of
``anyway'' sources subject to PSD each year is the 280 sources that are
located in areas that are attainment or unclassifiable for each
pollutant that the sources emit at the 100/250 tpy level, plus at least
some of the 520 sources that are located in areas that are
nonattainment for at least one of the NAAQS pollutants that the sources
emit at or above the 100/250 tpy threshold. In the absence of data on
the number of nonattainment NSR permits that do not have a PSD
component, and because we expect this to be a small number, we have
assumed for purposes of this action, that each of the 520 sources is
subject to PSD for at least one pollutant, so that we will consider all
800 sources as subject to PSD. Of this number, we estimate that 70
percent, or 560 sources will undergo a modification, while the
remaining 240 permitting actions will involve new construction. Of the
modifications, we assume that 80 percent, or 448, would become subject
to additional requirements due to their GHG emissions because those
projects have combustion-related activities that would likely emit GHGs
in the requisite quantities. Our estimate of 80 percent of modification
activities significantly involving combustion activities is based on a
review of a random sample of PSD permits. In total we estimate that 688
sources, either upon new construction or modification, would need to
add GHG requirements to their otherwise required PSD permitting action.
We should also note that in this rulemaking we are justifying our
conclusions about permitting authority administrative burdens on the
basis of their PSD and title V cost as calculated on both a separate
basis and a combined basis. That is, we believe that the administrative
burdens of the PSD program justify our tailoring approach for the PSD
requirements, and the administrative burdens of the title V program
justify our tailoring approach for the title V requirements, but in
addition, the administrative burdens of both programs on a combined
basis justify the tailoring approaches. Viewing the administrative
burdens on a combined basis provides a useful perspective because most
permitting authorities have a single organizational unit that is
responsible for both the PSD program and the title V program, and in
many cases, the same employees work on both programs. In addition, in
some jurisdictions, permitting authorities issue a single, merged
permit that includes both PSD and title V requirements. For these
reasons, considering administrative burdens on a combined PSD and title
V basis, offers a more accurate picture of the issues these agencies
will face in transitioning to GHG permitting.
Turning to the revisions to our burden estimates that we made as a
result of public comment, we begin by noting that many commenters
believed that we significantly underestimated the administrative
burdens associated with the proposed thresholds 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 elsewhere on
the methodology used in the analysis.) Several state and local agencies
provided estimates of the increased number of permits and/or staff that
would be required under the thresholds we proposed that were higher
than our original estimates. Specifically, commenters recommended that
we increase the estimated administrative burdens for PSD permits by
anywhere from 100 percent to over 2,000 percent; and that we increase
the burdens for title V permits by anywhere from 29 percent to 240
percent. Many commenters indicated that EPA has not adequately
accounted for ``synthetic minor'' sources or modification projects,
stating that many such sources and projects 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. Numerous
commenters also stated that the EPA has underestimated the rate of
major modifications for GHGs under PSD. Some commenters assert that we
underestimated the number of permits required for specific industry
sectors, including the oil and gas production industry, the natural gas
transmission industry, the semiconductor industry, the wood products
industry, the brick industry, and landfills. Some of the state and
local commenters also believe that we have overestimated their ability
to hire and train sufficient staff to administer GHG permitting.
We are persuaded by the data and arguments provided by the many
commenters who believe EPA underestimated the number of permitting
actions and the burdens of each action, and thus the overall
administrative burdens associated with permitting GHG sources.
Accordingly, we have reevaluated our assessment of these administrative
burdens, for both the PSD and title V programs. In conducting this
reevaluation, we considered arguments made by the commenters, as well
as any actual data they provided, and then we determined whether and
how to modify various aspects of our detailed assessment of the
burdens. Based on this consideration we have substantially revised
upwards our estimate of administrative burdens, based on the analysis
included in the final docket for this rulemaking.\22\ The revisions
affect two elements of our analysis by showing: (1) A substantial
increase in the number of PSD and title V permits that will occur at a
given threshold, and (2) an increase in the average burden estimate for
each such permit.
---------------------------------------------------------------------------
\22\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
Regarding the increase in our estimate of the number of projects
that will occur, we estimated an increase in both PSD and title V
permit actions, though the greatest changes were for PSD. At proposal,
we estimated that, if PSD requirements were to apply to GHG sources at
the 100/250 tpy statutory levels, 40,496 projects--consisting of 3,299
projects at industrial sources and 37,197 projects at commercial or
[[Page 31538]]
residential sources--would need PSD permits each year. Some of these
projects involve the construction of an entirely new source, but the
majority of these are modifications. We now estimate that at the 100/
250 tpy levels, 81,598 projects would become subject to PSD each year.
These projects include 26,089 actions at industrial sources and 55,509
at commercial and residential sources. We describe our calculation of
this 81,598 amount in a TSD.\23\ The great majority of these 81,598
projects that would become subject to PSD are modifications. We base
these estimates on the assumption that the significance levels would be
100 tpy regardless of category.
---------------------------------------------------------------------------
\23\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------
Our estimate of the number of PSD modifications is where we made
our most significant upward revisions from our proposal, based on
comments. Our doubling of the estimated PSD permitting actions--from
40,496 at proposal to 81,598--results from three separate adjustments
we made to our estimates at proposal of the number of permit actions
that would result from applying PSD to GHG sources. Two of these
increased the number of major modifications, and one of these increased
the number of major sources and modifications. The most significant
adjustment, and one that was raised by multiple commenters, was that we
undercounted the number of major modification projects at existing
major sources because we did not include the existing projects that
avoid major PSD review by either taking ``synthetic minor'' limits or
by netting out for conventional pollutants, but that would not be able
to avoid PSD through those mechanisms for GHGs.
We agree that the ability and procedures for sources to achieve
reductions, or minimize increases, due to GHGs through adoption of
enforceable limits or through netting out are not well established at
this point. We believe that there will be numerous instances,
particularly for combustion-related projects, where it will not be
possible for sources to achieve the same level of reductions for
CO2 emissions as they do for emissions of nitrogen oxides
(NOX), for example, simply because there are not as many
proven control techniques that can reduce CO2 emissions to
the same degree as NOX. Also, more research will be
necessary in 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. Therefore, we adjusted our
count of major modification permits under PSD upward to account for
this.
The second change to the number of permits concerns the general
modification rate of 2 percent that we applied at proposal, based on
historical experience across all pollutant types. Commenters provided
information that suggest that this 2 percent figure is an underestimate
for GHG sources because their emissions of CO2 are high and
accumulate quickly from various changes involving combustion units.
Therefore, a greater percentage of their physical or operational
changes will result in GHG emissions in excess of the significance
levels that we identified at proposal. In light of these comments, we
reviewed the source populations and pollutant mix within the various
populations, and determined that we should revise our general
modification rate to 4 percent for GHG sources. This 4 percent rate was
obtained by dividing the current annual major NSR permit actions
involving modifications by the 14,700 existing sources. We have revised
our burden analysis accordingly. Again, the burden analysis in the
docket describes our basis for these calculations in more detail.
The third adjustment to the number of permits involves our estimate
of the number of sources with PTE that is greater than the various
thresholds considered. This affects the number of major sources at the
statutory thresholds, which we used to estimate the number of PSD and
title V major sources, but also has an effect on the number of major
modifications because the number of modifications depends on the size
of the population of major sources. Commenters provided evidence that
our estimates of capacity utilization (which, as described previously,
we use for estimating potential-to-emit based on data for actual
emissions) for the general manufacturing source category (referred to
as ``unspecified stationary combustion'' in our analysis) and for the
oil and gas industry were not accurate. In our proposal, our estimated
range for capacity utilization for ``unspecified stationary
combustion'' varied from 70 to 90 percent depending on manufacturing
category. For the oil and gas industry, our estimate was 90 percent. We
received comments indicating that these utilization rates are higher
than what is normally achieved in real-world conditions, particularly
for smaller manufacturing type facilities. Accordingly, in this action,
we are using a 50 percent capacity utilization rate for both of these
source categories, which better reflects what can be deemed reasonable
operation under normal conditions for facilities in these source
categories. This adjustment increased the overall number of affected
facilities at various threshold levels and we have revised our burden
analysis accordingly.
A few commenters asserted that we underestimated the number of
residential homes, commercial buildings, and retail stores that would
be subject to permitting requirements because these commenters believed
the estimate in EPA's TSD was based on actual emissions from space
heating equipment rather than PTE. We wish to clarify that our
threshold analysis estimates for the number of residential and
commercial sources (as well as all other sources) did use a PTE basis.
To calculate the PTE amount for these sources, we extrapolated from the
actual emissions data for the residential and commercial sources.
Specifically, we assumed that a typical residential facility operates
its fuel combustion sources at only 10 percent of its capacity and a
typical commercial facility operates at only 15 percent of its
capacity. Based on these assumptions, we multiplied residential actual
emissions by a factor of 10, and commercial actual emissions by a
factor of 6.6 to obtain PTE-based estimates. 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 methodology was reasonable for these
types of sources and we did not adjust it in response to this comment.
Information on the development of these estimates is provided in our
Technical Support Document for Greenhouse Gas Emissions Thresholds
Evaluation.
The second source of upward revisions to our administrative burden
estimate is that we are increasing the estimated average cost to
permitting authorities of issuing each PSD and title V permit at the
statutory thresholds. At proposal, we estimated that for PSD permits,
permitting authorities would expend, on average, 301 hours to permit an
industrial source of GHG emissions, and 20 percent of that time, or 60
hours to permit a commercial or residential source. After estimating
that amount of workload, we went on to estimate the monetary cost to
permitting authorities of that workload. Similarly, for title V
permits, we estimated at proposal that permitting authorities would
expend 10 percent of the number of hours needed to process an
industrial permit in order
[[Page 31539]]
to process a commercial or residential permit for GHG sources.
We received comments from both permitting authorities and sources
asserting that our methodology underestimated the administrative burden
on grounds that (1) Our methodology fails to recognize that when a
source triggers PSD for conventional pollutants, additional labor hours
would be required to issue BACT for GHGs; (2) our estimate of 60 hours
(versus 301 hours) to issue PSD permits to commercial and residential
sources of GHGs is unrealistically low; (3) our estimate failed to
account for the increase in the complexity of permits for criteria
pollutants due to (i) increases in criteria pollutant emissions
becoming newly subject to BACT at sources that are major only for GHGs,
which will result in increased permitting and (ii) BACT controls for
criteria pollutants (e.g., an oxidizer for VOCs) may result in
significant GHG emissions, triggering an additional BACT determination;
and (4) our methodology failed to account for the significant
additional PSD and title V burdens due to sources that obtain federally
enforceable permit limits on GHGs in order to become ``synthetic
minors'' and thereby avoid PSD (and possibly also title V).
Based on these comments and our own reassessment of permitting
actions created by the addition of GHGs, we have revised upwards in
several ways our estimate of the additional per-permit costs of
applying PSD and title V to GHG sources, including the following: First
we have added an estimate of the additional permitting cost for adding
a GHG component to ``anyway'' PSD and title V permitting actions for
conventional pollutants. We estimated this burden based on information
in the comments together with our own judgment about how to adjust the
burden numbers contained in the current supporting statements for our
approved permitting ICRs. These adjustments are found in our revised
burden estimate document.
Second, we have raised the per-permit burden hours for commercial
and residential sources for PSD and title V. At proposal, our estimates
were based on the fact that many of these permits will be technically
simpler due to such factors as a lower number of emissions points,
simpler processes, and less required modeling. However, commenters
pointed out that, until EPA streamlines its permitting procedures,
there are many permitting activities that represent a fixed cost, such
as public notice, hearing, and response to comment activities. In
addition, we agree, as commenters pointed out, that many of these
sources will need significantly more permitting authority staff time to
assist them in the permit application and preparation process because
of their lack of experience with these requirements. In addition,
permitting authorities will have little, if any, experience in
permitting commercial and residential sources, and therefore will face
a learning curve that will entail more time to take permitting action.
In addition, we expect that in many cases PSD and title V permit
applications for GHGs will receive comments from various stakeholders,
from citizens groups to equipment vendors, who will seek to participate
in the permit process, and responding and revising permits accordingly
will add to the hours that the permitting authority will spend.
As a result, we raised the PSD per-permit hours for various steps
in the permitting process, as described in the burden estimate
document. While we continue to estimate that permitting authorities
will expend, on average, 301 hours to issue a PSD permit to an
industrial source, and that this would cost $23,243, we now recognize
that a permitting authority would expend 70 percent of that time or 210
hours, to permit a commercial or residential source, which would cost
$16,216. Similarly, for title V, while we continue to estimate that
permitting authorities will expend, on average, 428 hours to issue a
title V permit to an industrial source, and that this would cost
$19,688, we now recognize that a permitting authority would expend 50
percent of the time, or 214 hours, to permit a commercial or
residential source, which would cost $9,844.
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; and 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 to issuing a
``synthetic minor'' permit, as compared to a PSD or title V permit.
(3) Revised Burden Estimates at Statutory Thresholds Based on the
revisions just described, we estimate that in all, if sources that emit
GHGs become subject to PSD at the 100/250 tpy levels, permitting
authorities across the country would face over $1.5 billion in
additional PSD permitting costs each year. This would represent an
increase of 130 times the current annual burden hours under the NSR
major source program for permitting authorities. The permitting
authorities would need a total of almost 10,000 new FTEs to process PSD
permits for GHG emissions.
In addition, we estimate that in all, if sources that emit GHGs
become subject to title V at the 100 tpy level, permitting authorities
across the country would incur about 1.4 billion additional work hours,
which would cost $63 billion. We estimate that most of this work would
be done over a 3 year period, which would amount to 458 million in
additional work hours, and $21 billion in additional costs, on an
annual basis over that 3-year period.
We also note that the survey of state and local permitting
authorities described in the proposed rulemaking continues to shed
light on the extent of the administrative burdens, including staffing,
budget, and other associated resource needs, as projected by the
permitting authorities. As noted previously, that survey concluded that
application of the PSD requirements to GHG-emitting sources at the
level of 100/250 tpy or more of actual emissions would, without
additional FTEs, increase the average processing time for a PSD permit
from one to 3 years. The survey further concluded that application of
the title V requirements to GHG-emitting sources at the level of 100
tpy or more of actual emissions would, without additional FTEs,
increase the average processing time for
[[Page 31540]]
a title V permit from 6 months to 10 years. As we noted at proposal,
this survey assumed a ten-fold increase in the number of PSD permits
and a 40-fold increase in the number of title V permits due to GHG-
emitting sources, but those assumptions were severely underestimated
because they were based on actual emissions. At proposal, our
calculations, which were based on potential emissions, indicated a 140-
fold increase in PSD permits and a more than 400-fold increase in title
V permits. In this rulemaking, we recognize that even our estimates at
proposal were severely underestimated. We now recognize that the number
of PSD permits will be about twice what we estimated at proposal, and
the average processing time for both PSD and title V permits will be
two or three times greater than what we estimated at proposal. The
survey of state and local permitting authorities provided other useful
information as well, including the fact that it would take the
permitting authorities 2 years, on average, to hire the staff necessary
to handle a ten-fold increase in PSD permits and a 40-fold increase in
title V permits, and that 90 percent of their staff would need
additional training in all aspects of permitting for GHG sources.
(4) Revised Estimates of Administrative Burdens at Various Threshold
Levels
In order to determine the appropriate PSD and title V applicability
level for GHG sources, we not only estimated the burden at the
statutory thresholds, as described previously, but we also estimated
the number of sources, number of permitting actions, and amount of
administrative burden at various applicability levels for both PSD and
title V, based on the revised methodology described previously, that we
used to estimate the administrative burdens of applying PSD and title V
at the statutory levels. This information is summarized in Table V-1.
Note that Table V-1 also includes, in the last column, the
administrative burdens, described previously, associated with the 100/
250 tpy thresholds.
Table V-1--Coverage and Burden Information
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``Anyway'' source
Current program approach 75k 100k Major source 100k Major source 100k Major source 50k Major source 25k Major source 100/250 Major, 100
\1\ major mod. 100k major mod. 75k major mod. 50k major mod. 50k major mod. 25k major mod. mod.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Major Sources......... 15,000............ 15,000............ 15,550............ 15,550............ 15,550............ 18,500............ 22,500............ 6,118,252.
Number of Newly Major GHG N/A............... 0................. 550............... 550............... 550............... 3,500............. 7,500............. 6,105,913.
Sources.
Number of PSD New Construction 240............... 240............... 242............... 242............... 242............... 243............... 250............... 19,889.
Actions.
Number of PSD Modification 448............... 448............... 468............... 1,363............. 2,257............. 2,354............. 9,645............. 62,284.
Actions at Covered major
sources.
Permitting Authority Cost to Run $12M/yr........... $15M/yr........... $15M/yr........... $36M/yr........... $57M/yr........... $59M/yr........... $229M/yr.......... $1.5B/yr.
PSD programs.
Permitting Authority Work Hours 150,795........... 185,195........... 192,055........... 461,450........... 730,544........... 764,781........... 2.97 M............ 19.7 M.
to Run PSD programs \2\.
Permitting Authority Cost to Run $62M/yr........... $63M/yr........... $67M/yr........... $69M/yr........... $70M/yr........... $88M/yr........... $126M/yr.......... $21 B/yr.
Title V Programs.
Permitting Authority Work Hours 1.35 M............ 1.38 M............ 1.46 M............ 1.49 M............ 1.53 M............ 1.92 M............ 2.74 M............ 460 M.
to Run Title V Programs.
Annual Total Cost to Run PSD and $74M/yr........... $78M/yr 5% $82M/yr 11% $105M/yr 42% $127M/yr 72% $147M/yr 99% $355M/yr 380% $22.5 B/yr 30,305%
Title V Programs and percent increase (once increase. increase. increase. increase. increase. increase.
increase in cost over current states adopt).
program.
% GHG emissions covered \3\..... 0................. 65%............... 67%............... 67%............... 67%............... 70%............... 75%............... 78%.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: (1) As explained in the preamble, ``current program'' figures for PSD permits also reflect NSR permits in nonattainment areas that we assume include a PSD component for at least one
pollutant. (2) Number of FTEs may be calculated as work hours divided by 2,000 hours. (3) Percent of national GHG stationary source emissions emitted from sources that would be considered
major for GHG emissions under each threshold scenario.
As described in the TSD, we considered several different major
source/major modification threshold combinations. We chose the
combinations to reflect representative, incremental steps along the
possible range. Because it is time- and resource- intensive to develop
estimates for a given step, we chose intervals that best reflect
representative points within the range, given those time and resource
constraints. Here, we discuss key observations about some of the
combinations that we assessed. As the table indicates, under the
current PSD and title V programs, approximately 15,000 sources qualify
as major PSD sources for at least one pollutant and therefore meet the
applicability thresholds. Of these, approximately 668 sources are
subject to PSD requirements each year for at least one pollutant--240
because they undertake new construction, and 448 because they undertake
modifications. The permitting authorities' administrative burdens for
the NSR program are 153,795 work hours, and $12 million. For the title
V program, the 15,000 sources are, for the most part already permitted,
and therefore need revised permits as required and renewal permits on a
5-year schedule. The permitting authorities' title V administrative
burdens on an annual basis are 1,349,659 work hours and $62 million.
The first threshold Table 1 describes--and which, as discussed
later, we are adopting for Step 1--is the
[[Page 31541]]
``anyway'' source approach. Under this approach, (i) PSD applies to the
GHG emissions from projects that are subject to PSD anyway as new
sources or major modifications due to their emissions of non-GHG
pollutants and that result in an increase (or, in the case of
modifications, a net increase) of at least 75,000 tpy CO2e;
and (ii) title V applies to what we will call ``anyway'' title V
sources, that is, sources that are subject to title V anyway due to
their emissions of non-GHG pollutants. Under this approach, the number
of sources subject to PSD each year--including new construction and
modifications--is the same as under the current program, but the
permitting authorities will need to address GHG emissions as part of
those permitting actions each year and, to do so, will require, each
year, 34,400 additional workload hours costing an additional $3
million. For title V, we estimate that the number of title V sources
that require permitting actions will, on average, be the same each
year, but permitting authorities will need to address GHG requirements
for some of them; as a result, permitting authorities will need, each
year, 27,468 additional work hours costing $1 million in additional
funding.
Another threshold described in Table V-1 is the one we are adopting
under Step 2, as described later, under which (i) sources will be
subject to PSD on account of their GHG emissions if they newly
construct and emit at least 100,000 tpy CO2e, or if they are
existing sources that emit at least 100,000 tpy CO2e of GHGs
and make a modification that results in a net emissions increase of at
least 75,000 tpy CO2e; and (ii) existing sources will be
subject to title V due to their GHG emissions if they emit 100,000 tpy
CO2e in GHG emissions. Under this approach, which we will
call the 100,000/75,000 approach, we estimate that each year, compared
to current levels, the permitting authorities will need to issue GHG
permits to two additional sources that newly construct and to 915
additional sources that undertake modifications. Doing so will require
310,655 additional workload hours costing an additional $24 million,
compared to the current program. For title V, an additional 190 sources
will require new title V permits each of the first 3 years, and the
permitting authorities' associated costs will be 141,322 work hours and
$7 million more than the current program.
The last approach we will describe here may be called the 50,000/
50,000 approach, which, as discussed later, we adopt as the floor for
thresholds during the first 6 years after promulgation. Under this
approach, (i) sources will be subject to PSD on account of their GHG
emissions if they newly construct and emit at least 50,000 tpy
CO2e, or if they are existing sources that emit at least
50,000 tpy CO2e of GHGs and make a modification that results
in a net emissions increase of at least 50,000 tpy CO2e; and
(ii) existing sources will be subject to title V on account of their
GHG emissions if they emit 50,000 tpy CO2e in GHG emissions.
Under this approach, each year, the permitting authorities will need to
issue GHG permits to 3 additional sources that newly construct and
1,900 that undertake modifications above current permitting levels.
Doing so will require 613,986 additional workload hours costing $47
million, compared to the current program. For title V, an additional
1,189 sources will require new title V permits each of the first 3
years and the permitting authorities' associated costs will be 568,017
work hours and $26 million more than the current program.
We present the remaining entries in the table to illustrate how the
cost and burden estimates vary with increasing or decreasing thresholds
relative to those selected in this rule. These variations are important
in understanding how alternative thresholds would compare to the ones
selected. We also include entries reflecting the baseline (current
program without GHG permitting) and the burdens if we immediately
implemented the full statutory thresholds on January 2, 2011, without
tailoring or streamlining.
3. ``Absurd Results,'' ``Administrative Necessity,'' and ``One-Step-at-
a-Time'' Legal Doctrines
a. Introduction and Summary
Having described the factual underpinnings of our action, which are
the costs to sources and administrative burdens to permitting
authorities, we now describe the legal underpinnings. They involve the
framework for analyzing agency-administered statutes, as established by
the U.S. Supreme Court in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837,
842-43 (1984). In this case, Chevron framework must take into account
the ``absurd results,'' ``administrative necessity,'' and ``one-step-
at-a-time'' legal doctrines. We believe that each of these doctrines
provides independent support for our action, but in addition, the three
doctrines are directly intertwined and can be considered in a
comprehensive and interconnected manner. Moreover, although each of the
three doctrines pre-date the 1984 Chevron decision, in which the U.S.
Supreme Court established the framework for construing agency-
administered statutes, each fits appropriately into the Chevron
framework.\24\
---------------------------------------------------------------------------
\24\ Although we set out an analysis of how the three doctrines
fit into the Chevron framework, we note that even if the doctrines
are viewed independently of the Chevron framework, they support this
action.
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To reiterate, for convenience, the statutory provisions at issue:
Congress, through the definition of ``major emitting facility,''
applied the PSD program to include ``any * * * source [that] emit[s],
or ha[s] the potential to emit, one hundred [or, depending on the
source category two hundred fifty] tons per year or more of any air
pollutant.'' CAA sections 165(a), 169(1). In addition, Congress,
through the definition of ``modification,'' applied the PSD program to
include ``any physical change in, or change in the method of operation
of, a stationary source which increases the amount of any air pollutant
emitted by such source or which results in the emission of any air
pollutant not previously emitted.'' CAA sections 165(a), 169(2)(C),
111(a)(4). Similarly, Congress, through the definition of ``major
source,'' specified that the title V program includes ``any stationary
facility or source of air pollutants which directly emits, or has the
potential to emit, one hundred tons per year or more of any air
pollutant.'' CAA sections 502(a), 501(2)(B), 302(j). EPA, through long-
established regulatory action, in the case of PSD, and long-established
guidance, in the case of title V, has interpreted these definitions
narrowly so that they apply only with respect to air pollutants that
are subject to regulation under the CAA.
Applying these definitions by their terms, as interpreted narrowly
by EPA, to GHG sources at the present time would mean that the PSD and
title V programs would apply to an extraordinarily large number of
small sources, the sources would incur unduly high compliance costs,
and permitting authorities would face overwhelming administrative
burdens. As a result, we believe Congress did not intend for us to
follow this literal reading, and instead, with this action, we chart a
course for tailoring the applicability provisions of the PSD program
and the title V program by phasing them in over time to the prescribed
extent.
For our authority to take this action, we rely in part on the
``absurd results'' doctrine, because applying the PSD and title V
requirements literally (as previously interpreted narrowly by
[[Page 31542]]
EPA) would not only be inconsistent with congressional intent
concerning the applicability of the PSD and title V programs, but in
fact would severely undermine congressional purpose for those programs.
We also rely on the ``administrative necessity'' doctrine, which
applies because construing the PSD and title V requirements literally
(as previously interpreted narrowly by EPA) would render it impossible
for permitting authorities to administer the PSD provisions. The
tailoring approach we promulgate in this action is consistent with both
doctrines. It is also consistent with a third doctrine, the ``one-step-
at-a-time'' doctrine, which authorizes administrative agencies under
certain circumstances to address mandates through phased action.
Our discussion of the legal bases for this rule is organized as
follows: In this section V.B.3, we provide an overview of the three
doctrines and describe how they fit into the Chevron framework for
statutory construction. In section V.B.4, we discuss the PSD and title
V programs, including each program's relevant statutory provisions,
legislative history, and regulatory history. In sections V.B.5 and
V.B.6 we discuss the ``absurd results'' approach for PSD and title V,
respectively, that we are finalizing in our action. In section V.B.7.,
we discuss additional rulemaking in which we may consider exempting
certain categories of sources from PSD and title V under the ``absurd
results'' doctrine. In section V.B.8, we discuss the legal and policy
rationale for the phase-in schedule that we are adopting for applying
PSD and title V to GHG sources. In section V.B.9 we discuss the
``administrative necessity'' approach for PSD and title V,
respectively. In section V.B.10, we discuss the third legal basis for
our action, the ``one-step-at-a-time'' doctrine.
b. The ``Absurd Results'' Doctrine
Turning first to the ``absurd results'' doctrine, we note at the
outset that we discussed the doctrine at length in the notice of
proposed rulemaking, and we incorporate by reference that discussion,
although we make some refinements to that discussion in this preamble.
The starting point for EPA's interpretation of the PSD and title V
applicability provisions and reliance on the ``absurd results''
doctrine is the familiar Chevron two-step analysis. We discuss this
analysis in greater detail later, but in brief, in interpreting a
statutory provision, an agency must, under Chevron Step 1, determine
whether Congress's intent on a particular question is clear; if so,
then the agency must follow that intent. If the intent of the provision
is not clear, then the agency may, under Step 2, fashion a reasonable
interpretation of the provision. Chevron U.S.A. Inc. v. NRDC, 467 U.S.
837, 842-43 (1984).
The courts consider the best indicator of congressional intent to
be the plain meaning of the statute. However, the U.S. Supreme Court
has held that the literal meaning of a statutory provision is not
conclusive ``in the `rare cases [in which] the literal application of a
statute will produce a result demonstrably at odds with the intentions
of the drafters' * * * [in which case] the intention of the drafters,
rather than the strict language, controls.'' United States v. Ron Pair
Enterprises, 489 U.S. 235, 242 (1989). This doctrine of statutory
interpretation may be termed the ``absurd results'' doctrine.
Although, as just noted, the U.S. Supreme Court has described the
``absurd results'' cases as ``rare,'' in that case the Court seemed to
be referring to the small percentage of statutory-construction cases
that are decided on the basis of the doctrine. The DC Circuit, in
surveying the doctrine over more than a century of jurisprudence,
characterized the body of law in absolute numbers as comprising
``legions of court decisions.'' In re Franklyn C. Nofziger, 925 F.2d
428, 434 (DC Cir. 1991). Indeed, there are dozens of cases, dating from
within the past several years to well into the 19th century,\25\ in
which the U.S. Supreme Court has applied the ``absurd results''
doctrine to avoid the literal application of a statute, or if not so
holding, has nevertheless clearly acknowledged the validity of the
doctrine. Some of the more recent of these cases include: Logan v.
United States, 552 U.S. 23, 36-37 (2007) (``[s]tatutory terms, we have
held, may be interpreted against their literal meaning where the words
`could not conceivably have been intended to apply' to the case at hand
[citation omitted]''); Nixon v. Missouri Municipal League, 541 U.S.
125, 132-33 (2004) (``any entity'' includes private but not public
entities); Raygor v. Regents of Univ. of Minn., 534 U.S. 533, 542-45
(2002) (``implying a narrow interpretation of * * * `any claim
asserted' so as to exclude certain claims dismissed on Eleventh
Amendment grounds''); United States v. X-Citement Video, Inc., 513 U.S.
64, 69 (1994) (rejecting a literal interpretation of the statutory term
``knowingly'' on grounds that Congress could not have intended the
``positively absurd'' results that some applications of such an
interpretation would produce, ``[f]or instance, a retail druggist who
returns an uninspected roll of developed film to a customer ``knowingly
distributes'' a visual depiction and would be criminally liable if it
were later discovered that the visual depiction contained images of
children engaged in sexually explicit conduct''); 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''); United States v. Ron Pair Enterprises, 489 U.S. 235,
242 (1989) (the plain meaning of a statutory provision is not
conclusive ``in the `rare cases [in which] the literal application of a
statute will produce a result demonstrably at odds with the intentions
of the drafters' * * * [in which case] the intention of the drafters,
rather than the strict language, controls''); 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); Public Citizen v. United States Dep't of
Justice, 491 U.S. 440, 453-54 (1989) (rejecting a broad,
straightforward reading of the term ``utilize,'' on grounds that a
literal reading would appear to require the absurd result that all of
FACA's restrictions apply if a President consults with his own
political party before picking his Cabinet, and such a reading ``was
unmistakably not Congress' intention''); Watt v. Alaska, 451 U.S. 259,
266 (1981) (rejecting reliance on plain statutory language and
concluding that the term ``minerals'' in section 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
[[Page 31543]]
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);
Jackson v. Lykes Bros. S.S. Co., 386 U.S. 731, 735 (1967) (refusing to
distinguish between a longshoreman hired by ``an independent stevedore
company'' and one hired by ``the shipowner * * * to do exactly the same
kind of work,'' despite the clear terms of the Act, and stating: ``[w]e
cannot hold that Congress intended any such incongruous, absurd, and
unjust result in passing this Act,'' when the Act was ``designed to
provide equal justice to every longshoreman similarly situated'');
Lynch v. Overholser, 369 U.S. 705, 710, (1962) (statutory construction
is not confined to the ``bare words of a statute''); United States v.
Bryan, 339 U.S. 323, 338 (1950) (``Despite the fact that the literal
language would encompass testimony elicited by the House Committee in
its questioning of respondent relative to the production of the records
of the association, the Court will not reach that result if it is
contrary to the congressional intent and leads to absurd conclusions.
And we are clearly of the opinion that the congressional purpose would
be frustrated if the words, ``in any criminal proceeding,'' were read
to include a prosecution for willful default under R.S. Sec.
102.'').\26\
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\25\ For early cases in which the U.S. Supreme Court applied the
``absurd results'' doctrine, see Holy Trinity Church v. U.S., 143
U.S. 457, 516-17 (1892) (``any alien'' does not include a foreign
pastor; Court stated, ``It is a familiar rule, that a thing may be
within the letter of the statute and yet not within the statute,
because not within its spirit, nor within the intention of its
makers * * *. If a literal construction of the words be absurd, the
Act must be construed as to avoid the absurdity''); Chew Heong v.
United States, 112 U.S. 536, 555 (1884) (rejecting a literal
interpretation of treaty that would have prevented the re-entry of a
person into the U.S. upon the ground that he did not possess a
certificate which did not exist prior to his departure, and which
could not possibly have been issued); Heyenfeldt v. Daney Gold
Mining Co., 93 U.S. 634, 638 (1877) (statutory language expressly
referred to past land sales and dispositions, ``but evidently they
were not employed in this sense, for no lands in Nevada had been
sold or disposed of by any act of Congress,'' and the language of
the statute ``could not * * * apply to past sales or dispositions,
and, to have any effect at all, must be held to apply to the
future'').
\26\ For other U.S. Supreme Court cases, see Utah Junk Co. v.
Porter, 328 U.S. 39, 44 (1946) (``literalness may strangle
meaning''); Markham v. Cabell, 326 U.S. 404, 409 (1945) (``The
policy as well as the letter of the law is a guide to decision.'');
United States v. American Trucking Associations, Inc. 310 U.S. 534
(1940) (the term ``employees'' in the Federal Motor Carrier Act, is
limited to employees whose activities affect safety); C.V. Sorrels
v. U.S., 287 U.S. 435, 446-49 (1932) (provisions of National
Prohibition Act that criminalize possessing and selling liquor do
not apply if defendant is entrapped; Court declines to apply the
``letter of the statute'' because doing so ``in the circumstances
under consideration is foreign to its purpose''); United States v.
Katz, 271 U.S. 354, 362 (1926) (holding that the statutory words
``no person'' refer only to persons authorized under other
provisions of the Act to traffic alcohol, thus rejecting a literal
application of general terms descriptive of a class of persons made
subject to a criminal statute); Hawaii v. Mankichi, 190 U.S. 197,
212-14 (1903) (refusing to adopt a literal application of the
``Newlands resolution'' which would have entitled every criminal in
the State of Hawaii convicted of an offense between 1898-1900 to be
set at large, as ``surely such a result could not have been within
the contemplation of Congress'').
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The DC Circuit has also handed down numerous decisions that applied
the absurd results doctrine to avoid a literal interpretation or
application of statutory provisions or that have acknowledged the
doctrine. Some of the most recent ones include: Arkansas Dairy
Cooperative Ass'n, Inc., v. U.S. Dep't of Agriculture, 573 F.3d 815 (DC
Cir. 2009) (rejecting the canon of construction that presumes that
Congress is aware of existing law pertinent to the legislation that it
enacts, when in this case, the presumption that Congress was aware of
the Departments definition of ``hearing'' would lead to ``the absurd
result that Congress intended to impose a requirement with which the
Secretary could not comply;'' stating: ``Courts, `in interpreting the
words of a statute, [have] some scope for adopting a restricted rather
than a literal or usual meaning of its words where acceptance of that
meaning would lead to absurd results * * * or would thwart the obvious
purpose of the statute * * *.' '' (quoting In re Trans Alaska Pipeline
Rate Cases, 436 U.S. 631, (1978)); Buffalo Crushed Stone, Inc. v.
Surface Transportation Board, 194 F.3d 125, 129-30 (DC Cir. 1999)
(regulation of Surface Transportation Board providing that if a notice
of exemption ``contains false or misleading information, the use of the
exemption is void ab initio'' does not apply to a notice containing
false information when declaring the notice void ab initio would
undermine the goals of the governing statute; a conflict between the
``literal application of statutory language'' and maintaining the
integrity of the regulatory scheme should be resolved by construing the
text in accordance with its purpose); Mova Pharm. Corp. v. Shalala, 140
F.3d 1060, 1068-69 (DC Cir. 1998) (as discussed later, describes the
``absurd results'' doctrine in the context of the Chevron framework for
statutory construction; invalidates a Food and Drug Administration's
(FDA) regulation designed to remedy what the FDA described as the
absurd result of a literal application of the statutory provisions
governing FDA approval of successive generic drug applications, on
grounds that ``[i]n effect, the FDA has embarked upon an adventurous
transplant operation in response to blemishes in the statute that could
have been alleviated with more modest corrective surgery;'' states that
``[t]he rule that statutes are to be read to avoid absurd results
allows an agency to establish that seemingly clear statutory language
does not reflect the ``unambiguously expressed intent of Congress,''
Chevron, 467 U.S. at 842, and thus to overcome the first step of the
Chevron analysis''); Environmental Defense Fund v. EPA, 82 F.3d 451,
468-69 (DC Cir. 1996) (although Act requires that a federal action
conform to the SIP that is currently in place, EPA may instead require
conformity to a revised implementation plan that state commits to
develop; ``[t]his is one of those rare cases * * * [that] requires a
more flexible, purpose-oriented interpretation if we are to avoid
`absurd or futile results.' ''); American Water Works Ass'n v. EPA, 40
F.3d 1266, 1271 (DC Cir. 1994) (holding that EPA's interpretation of
the term ``feasible'' so as to require a treatment technique instead of
a maximum contaminant level (MCL) for lead is reasonable; the court
stated: ``Indeed, where a literal reading of a statutory term would
lead to absurd results, the term simply `has no plain meaning * * * and
is the proper subject of construction by the EPA and the courts.' If
the meaning of `feasible' suggested by the NRDC is indeed its plain
meaning, then this is such a case; for it could lead to a result
squarely at odds with the purpose of the Safe Drinking Water Act.''
(quoting Chem. Mfrs. Ass'n v. Natural Res. Def. Council, Inc., 470 U.S.
116, 126 (1985)) (citation omitted); In re Nofziger, 925 F.2d 428, 434-
35 (DC Cir. 1991) (provision authorizing payment of attorney fees to
the subject of an investigation conducted by an independent counsel of
the Department of Justice only if ``no indictment is brought'' against
such individual does not preclude payment of attorney fees when an
indictment is brought but is determined to be invalid).
c. The ``Administrative Necessity'' Doctrine
In the proposed rulemaking, we also described in detail the
``administrative necessity'' doctrine, 74 FR 55311 col. 3 to 55318 col.
3, and we incorporate that discussion by reference into this notice.
Under this doctrine, if a statutory provision, however clear on its
face, is impossible for the agency to administer, then the agency is
not required to follow the literal requirements, and instead, the
agency may adjust the requirements in as refined a manner as possible
to assure that the requirements are administrable, while still
achieving Congress's overall intent. The DC Circuit set out the
doctrine of ``administrative necessity'' in a line of cases that most
prominently includes Alabama Power v. Costle, 636 F.2d 323 (DC Cir.
1980). The Court cited the doctrine most recently in New York v. EPA,
443 F.3d 880, 884, 888 (DC Cir. 2006).
As we stated in the proposed rulemaking, ``We believe that the
``administrative necessity'' case law establishes a three-step process
under which an administrative agency may, under the appropriate
circumstances, in
[[Page 31544]]
effect revise statutory requirements that the agency demonstrates are
impossible to administer so that they are administrable.'' 74 FR 55315
col. 1. Specifically:
[T]he three steps are as follows: When an agency has identified
what it believes may be insurmountable burdens in administering a
statutory requirement, the first step the agency must take is to
evaluate how it could streamline administration as much as possible,
while remaining within the confines of the statutory requirements.
The second step is that the agency must determine whether it can
justifiably conclude that even after whatever streamlining of
administration of statutory requirements (consistent with those
statutory requirements) it conducts, the remaining administrative
tasks are impossible for the agency because they are beyond its
resources, e.g., beyond the capacities of its personnel and funding.
If the agency concludes with justification that it would be
impossible to administer the statutory requirements, as streamlined,
then the agency may take the third step, which is to phase in or
otherwise adjust the requirements so that they are administrable.
However, the agency must do so in a manner that is as refined as
possible so that the agency may continue to implement as fully as
possible Congressional intent.
74 FR 55315 cols. 1-2.
It should also be noted that we believe the administrative burdens
encountered by the state and local permitting authorities are fully
relevant under the ``administrative necessity'' doctrine. Although the
case law that discusses the doctrine focuses on federal agencies (see
74 FR 55312-14), under the CAA, state and local agencies are EPA's
partners in implementing provisions of the CAA, and have primary
responsibility for implementing the PSD program. They generally adopt
EPA's PSD requirements in their SIPs, as required under CAA section
110(a)(2)(C); and they generally adopt EPA's title V requirements in
their title V programs, as required under CAA section 502(d). They
issue the PSD and title V permits and are responsible in the first
instance for enforcing the terms of the permits. In all these respects,
the law that the state and local permitting authorities administer is
both federal and state law. Under certain circumstances, EPA may become
responsible for permit issuance and enforcement in the first instance,
but even then, EPA may, and frequently has, delegated those duties to a
state, in which case, the state implements federal law directly. Thus,
although the PSD and title V programs are federal requirements, for the
most part, it is the states that implement those programs. For this
reason, the administrative burdens that the states face in implementing
the programs are relevant in determining the applicability of the
``administrative necessity'' doctrine.
d. ``One-Step-at-a-Time'' Doctrine
In addition to the ``absurd results'' and ``administrative
necessity'' doctrines, another judicial doctrine supports at least part
of EPA's Tailoring Rule, and that is the doctrine that agencies may
implement statutory mandates one step at a time, which we will call the
``one-step-at-a-time'' doctrine. In the notice of proposed rulemaking,
we also described this doctrine and recent case law applying it. 74 FR
55319 col. 1-3. As we noted, that the U.S. Supreme Court recently
described the doctrine in Massachusetts v. EPA, 549 U.S. 497, 524
(2007), as follows: ``Agencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop;'' and instead
they may permissibly implement such regulatory programs over time,
``refining their preferred approach as circumstances change and as they
develop a more nuanced understanding of how best to proceed.'' We
assume familiarity with our discussion in the proposal, but we expand
upon it here to review the case law in greater detail and to highlight
certain components of the doctrine that are particularly relevant to
the Tailoring Rule. The roots of the doctrine go back at least to the
DC Circuit's 1979 decision in United States Brewers Association, Inc.
v. EPA, 600 F.2d 974 (DC Cir. 1979). There, the Court considered a
challenge to EPA's guidelines for managing beverage containers, which
EPA was required to promulgate under the Resource Conservation and
Recovery Act of 1976 (RCRA). RCRA gave EPA one year to promulgate the
guidelines. EPA promulgated a partial set of guidelines, started two
others, and was challenged before the year was out by petitioners who
objected to the initial guideline, saying it fell short of the
statutory mandate. The Court upheld the initial guideline, stating:
``Under these circumstances we think the question of whether the Agency
has fully satisfied the mandate of the statute is not fit for judicial
review at this time, when the Agency, still well within the one-year
period granted by statute, is deeply involved in the process of
formulating rules designed to carry out the congressional mandate. The
Agency might properly take one step at a time.'' States Brewers
Association, Inc. v. EPA, 600 F.2d at 982.
The Court addressed the doctrine at greater length in National
Association of Broadcasters v. FCC, 740 F.2d 1190, 1209-14 (DC Cir.
1984). There, the Court noted that under certain statutory schemes,
step-by-step agency action might not be authorized; but the Court
emphasized that when it is authorized, it may offer significant
benefits; and the Court went on to delineate some of the circumstances
under which its use is justified. In that case, the Court held that
Federal Communications Commission (FCC) acted reasonably in making a
spectrum allocation decision that granted direct broadcast satellite
service priority use of a gigahertz (GHz) band in 5-years time, and--
although acknowledging that fixed service users that were, at that
time, using that band, would have to relocate to other bands--in
postponing the details of the fixed service relocation to future
proceedings. The Court described in some detail ``[t]he circumstances
under which * * * [an] agency may defer resolution of problems raised
in a rulemaking,'' as follows:
The requisite judgment is in essence a pragmatic one. In an
ideal world, of course, agencies would act only after comprehensive
consideration of how all available alternatives comported with a
well-defined policymaking objective, and in some circumstances,
statutes indeed mandate that agencies proceed by only such a course
* * *. But administrative action generally occurs against a shifting
background in which facts, predictions, and policies are in flux and
in which an agency would be paralyzed if all the necessary answers
had to be in before any action at all could be taken * * *. We have
therefore recognized the reasonableness of [an agency's] decision to
engage in incremental rulemaking and to defer resolution of issues
raised in a rulemaking even when those issues are ``related'' to the
main ones being considered * * *. At the same time, [an agency]
cannot `restructure [an] entire industry on a piecemeal basis'
through a rule that utterly fails to consider how the likely future
resolution of crucial issues will affect the rule's rationale * * *.
Drawing a line between the permissible and the impermissible in
this area will generally raise two questions. First the agency will
likely have made some estimation, based upon evolving economic and
technological conditions, as to the nature and magnitude of the
problem it will have to confront when it comes to resolve the
postponed issue. With regard to this aspect of the agency's
decision, as long as the agency's predictions about the course of
future events are plausible and flow from the factual record
compiled, a reviewing court should accept the agency's estimation *
* *. Second, once the nature and magnitude of the unresolved issue
is determined, the relevant question is whether it was reasonable,
in the context of the decisions made in the proceeding under review,
for the agency to have deferred the issue to the future. With
respect to that question, postponement will be most easily justified
when an agency acts against a background of rapid technical and
social change and when
[[Page 31545]]
the agency's initial decision as a practical matter is reversible
should the future proceedings yield drastically unexpected results.
In contrast, an incremental approach to agency decision making is
least justified when small errors in predictive judgments can have
catastrophic effects on the public welfare or when future
proceedings are likely to be systematically defective in taking into
account certain relevant interests * * *.
740 F.2d at 1210-11 (citations omitted).
In City of Las Vegas v. Lujan, 891 F.2d 927 (DC Cir. 1989), the
Court suggested that one component of upholding partial agency
compliance with a statutory directive is evidence that the agency was
on track for full compliance. There, the Court upheld the Department of
Interior's decision to list the population of desert tortoises living
north and west of the Colorado River (the ``Mojave'' population) as
endangered species, but not the nearby population living south and east
of the river (the ``Sonoran'' population). The agency explained that
the Mojave population faced certain threats that the Sonoran population
did not, and the Court found nothing to fault in that reasoning. The
Court added: ``Since agencies have great discretion to treat a problem
partially, we would not strike down the listing if it were a first step
toward a complete solution, even if we thought it `should' have covered
both the Mojave and Sonoran populations.'' City of Las Vegas v. Lujan,
891 F.2d 927, 935 (DC Cir. 1989) (footnote omitted).
In Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d 455 (DC Cir.
1998), the DC Circuit added another component to the ``one-step-at-a-
time'' doctrine: While reiterating that ``ordinarily, agencies have
wide latitude to attack a regulatory problem in phases and that a
phased attack often has substantial benefits,'' id. at 471, the Court
went on to uphold partial agency action even when that action was long-
delayed. There, the relevant statute was the Overflights Act, which
required the Federal Aviation Administration (FAA) to reduce aircraft
noise from sightseeing tours in Grand Canyon National Park, and
established the goal of ``substantial restoration of natural quiet and
experience of the park.'' The statute required the agency to develop a
plan to implement the statutory requirements within 120 days after
enactment, and report to Congress within 2 years after the date of the
plan as to the plan's success. In fact, the FAA did not develop,
through rulemaking, a plan until ten years after enactment, and when it
did, it acknowledged that the plan was only a partial one, and that it
would need two more rules and another ten years to meet the statutory
goal of substantial restoration. Although recognizing that the
Overflights Act did not establish an explicit timetable for meeting the
statutory goal, the Court stated that ``[t]he language of the
Overflights Act does manifest a congressional concern with expeditious
agency action,'' and described the agency's action variously as
``tardy,'' ``undeniably slow,'' and ``slow and faltering.'' Id. at 476-
77. Even so, the Court upheld the FAA's action against different
challenges from appellants and intervenors that (i) the agency acted
unreasonably in not promulgating a complete plan to meet the statutory
goal, instead of promulgating just the first step; and (ii) the agency
acted unreasonably in not waiting until it had a complete plan before
promulgating the first step. The Court stated: ``We agree that it would
be arbitrary and capricious for an agency simply to thumb its nose at
Congress and say--without any explanation--that it simply does not
intend to achieve a congressional goal on any timetable at all * * *,''
but went on to emphasize that the FAA's rule was the first of three
that the agency assured would achieve the statutory goal. The Court
cited City of Las Vegas v. Lujan, discussed previously, for the
proposition that ``a court will not strike down agency action `if it
were a first step toward a complete solution.' '' Grand Canyon Air Tour
Coalition v. F.A.A., 154 F.3d 455, 477-78 (DC Cir. 1998).\27\
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\27\ For other cases, see Arizona Public Service Co. v. EPA, 562
F.3d 1116, 1125-26 (10th Cir. 2009); General American Transp. Corp.
v. ICC, 872 F.2d 1048, 1058 (DC Cir. 1989); Hazardous Waste
Treatment Council v. EPA, 861 F.2d 277, 287 (DC Cir. 1988); Western
Union International, Inc. v. FCC, 725 Fl2d 732, 754 (DC Cir. 1984).
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e. Consistency of Doctrines With Chevron Framework
Although the formation of the ``absurd results,'' ``administrative
necessity,'' and ``one-step-at-a-time'' doctrines pre-date the Chevron
two-step analysis for construing statutes that Congress has authorized
an agency to administer, we believe that the doctrines can be
considered very much a part of that analysis, and courts have continued
to apply them post-Chevron. Under Chevron Step 1, an agency must
determine whether ``Congress has directly spoken to the precise
question at issue.'' If so, ``the court, as well as the agency, must
give effect to the unambiguously expressed intent of Congress.''
However, if ``the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.''
Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-42 (1984).
Thus, Step 1 under Chevron calls for determining congressional
intent for the relevant statutory directive on the specific issue
presented. To determine Congress's intent, the agency must look first
to the statutory terms in question, and generally interpret them
according to their literal meaning, within the overall statutory
context, and perhaps with reference to the legislative history. If the
literal meaning of the statutory requirements is clear then, absent
indications to the contrary, the agency must take it to indicate
congressional intent and must implement it. Even if the literal meaning
of the statutory requirements is not clear, if the agency can otherwise
find indications of clear congressional intent, such as in the
legislative history, then the agency must implement that congressional
intent.
The DC Circuit has indicated that the ``absurd results'' doctrine
fits into the Chevron Step 1 analysis in the following way: Recall that
in the cases in which the courts have invoked this doctrine, the
literal meaning of the statutory requirements has been clear, but has
led to absurd results. This can occur when the literal meaning, when
applied to the specific question, conflicts with other statutory
provisions, contradicts congressional purpose as found in the
legislative history--and, in particular, undermines congressional
purpose--or otherwise produces results so illogical or otherwise
contrary to sensible public policy as to be beyond anything Congress
would reasonably have intended. See United States v. Ron Pair
Enterprises, 489 U.S. 235, 242-43 (1989); Griffin v. Oceanic
Contractors, Inc., 458 U.S. 564, 571 (1982).
Under these circumstances, the agency must not take the literal
meaning to indicate congressional intent. As the DC Circuit has
explained, ``where a literal reading of a statutory term would lead to
absurd results, the term `simply has no plain meaning * * * and is the
proper subject of construction by the EPA and the court.' '' American
Water Works Assn v. EPA, 40 F.3d 1266, 1271 (DC Cir. 1994) (quoting
Chemical Manufacturers' Association v. NRDC, 470 U.S. 116, 126 (1985)).
Under these circumstances, if the agency can find other indications of
clear congressional intent, then the agency must implement that intent.
See United States v. Ron Pair Enterprises, 489 U.S. 235, 242-43 (1989).
This may mean implementing the statutory terms, albeit not in
accordance with their literal meaning,
[[Page 31546]]
but in a way that achieves a result that is as close as possible to
congressional intent. As the DC Circuit said in Mova Pharm. Corp. v.
Shalala, 140 F.3d 1060 (DC Cir. 1998):
The rule that statutes are to be read to avoid absurd results
allows an agency to establish that seemingly clear statutory
language does not reflect the ``unambiguously expressed intent of
Congress,'' * * * and thus to overcome the first step of the Chevron
analysis. But the agency does not thereby obtain a license to
rewrite the statute. When the agency concludes that a literal
reading of a statute would thwart the purposes of Congress, it may
deviate no further from the statute than is needed to protect
congressional intent * * *. [T]he agency might be able to show that
there are multiple ways of avoiding a statutory anomaly, all equally
consistent with the intentions of the statute's drafters * * *. In
such a case, we would move to the second stage of the Chevron
analysis, and ask whether the agency's choice between these options
was ``based on a permissible construction of the statute.''
Otherwise, however, our review of the agency's deviation from the
statutory text will occur under the first step of the Chevron
analysis, in which we do not defer to the agency's interpretation of
the statute.
Id. at 1068 (quoting Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842,
843 (1984) (citations omitted)).
The ``administrative necessity'' doctrine is not as well developed
as the ``absurd results'' doctrine, so that the courts have not had
occasion to explicitly describe how the doctrine fits into the Chevron
analytical framework. However, we think that a reasonable approach, in
line with the DC Circuit's approach to the ``absurd results'' doctrine
as just described, is as follows: Recall that under the
``administrative necessity'' doctrine, an agency is not required to
implement a statutory provision in accordance with the literal
requirements when doing so would be impossible, but the agency must
nevertheless implement the provision as fully as possible. Placed in
the context of the Chevron framework, we think that that the
``administrative necessity'' doctrine is based on the premise that
inherent in the statutory design is the presumption that Congress does
not intend to impose an impossible burden on an administrative agency.
See Alabama Power v. Costle, 636 F.2d 323, 357 (DC Cir. 1980)
(describing the ``administrative necessity'' approach as one of the
``limited grounds for the creation of exemptions [that] are inherent in
the administrative process, and their unavailability under a statutory
scheme should not be presumed, save in the face of the most unambiguous
demonstration of congressional intent to foreclose them'').
Therefore, if the literal meaning of a statutory directive would
impose on an agency an impossible administrative burden, then that
literal meaning should not be considered to be indicative of
congressional intent. Rather, congressional intent should be considered
to achieve as much of the statutory directive as possible. As a result,
the agency must adopt an approach that implements the statutory
directive as fully as possible. This is consistent with the DC
Circuit's holding in Mova Pharm. Corp that if congressional intent is
clear, but the plain meaning of a statute does not express that intent,
then the agency must, under Chevron Step 1, select an interpretation
that most closely approximates congressional intent. Mova Pharm. Corp,
140 F.3d at 1068.\28\
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\28\ We recognize that we described the relationship between the
Chevron framework and the ``administrative necessity'' doctrine
somewhat differently in the proposal, 74 FR 55312, and that, after
further analysis, we are refining our view of that relationship as
described previously.
---------------------------------------------------------------------------
The ``one-step-at-a-time'' doctrine fits into the Chevron framework
in much the same manner that the ``administrative necessity'' doctrine
does. That is, inherent in the statutory design is the presumption that
Congress intended an agency, under certain circumstances, to implement
the statutory requirements in a one-step-at-a-time fashion, as long as
the agency stays on a path towards full implementation.
Under all of the circumstances described previously, congressional
intent is clear--whether it is indicated by the plain language or
otherwise--and as a result, the agency must follow that intent under
Chevron Step 1. On the other hand, the agency may determine that
congressional intent on the specific issue is not clear. In these
cases, the agencies should proceed to Chevron Step 2 and select an
interpretation or an application that is a permissible construction of
the statute. This situation generally occurs when the statutory
provisions are ambiguous or silent as to the specific issue, and there
are no other indications of clear congressional intent. In addition, in
some cases in which the literal meaning of the statutory provision,
when applied to the specific question, leads to an absurd result--and,
therefore, the statutory provision should be considered not to have a
plain meaning--there may be no other indications of clear congressional
intent. Under all these circumstances, the agency is authorized, under
Chevron Step 2, to develop and implement a construction of the statute
that the courts will uphold as long as it is reasonable.
As noted previously, the DC Circuit, has pointed out that this
situation may also occur when the literal language leads to an absurd
result, and, in attempting to implement congressional intent, the
agency is ``able to show that there are multiple ways of avoiding a
statutory anomaly, all equally consistent with the intentions of the
statute's drafters * * *. In such a case, we would move to the second
stage of the Chevron analysis, and ask whether the agency's choice
between these options was `based on a permissible construction of the
statute.' '' Mova Pharm. Corp, 140 F.3d at 1068. As the U.S. Supreme
Court has recently said, although in a context different than ``absurd
results,'' ``In the end, the interpretation applied by EPA ``governs if
it is a reasonable interpretation of the statute--not necessarily the
only possible * * * interpretation, nor even the interpretation deemed
most reasonable by the courts.'' Entergy Corp. v. Riverkeeper, Inc.,
129 S.Ct. 1498. 1505 (2009).
As a related matter, although the courts have described Chevron
Step 2 as requiring that the agency's policy be ``a permissible
construction of the statute,'' see Mova Pharm. Corp, 140 F.3d at 1068
(quoting Chevron, 467 U.S. at 842-43), if the statutory requirements
cannot be read literally because doing so would produce ``absurd
results,'' then the agency's policy need not be completely consistent
with those particular requirements. The policy must still, in order to
be upheld, be consistent with Congress's actions, but those actions
should be considered to afford the agency broad discretion considering
that both the statutory terms cannot be considered dispositive and
underlying congressional intent is not clear. As the U.S. Supreme Court
has recently said, although in a context different than ``absurd
results,'' In the end, the interpretation applied by the agency governs
if it is a reasonable interpretation of the statute--not necessarily
the only possible * * * interpretation, nor even the interpretation
deemed most reasonable by the courts.'' Entergy Corp. v. Riverkeeper,
Inc., 129 S.Ct. 1498. 1505 (2009).
There is another aspect of the ``administrative necessity''
doctrine worth noting in this context: The doctrine applies when (i) a
literal application of the statutory directive to the case at hand is
impossible for the agency to administer; and (ii) even so, either
Congress clearly intended the statutory directive to apply to the case
[[Page 31547]]
at hand or, if Congress did not clearly intend that, then the agency
reasonably construes the statute to apply the statutory directive to
the case at hand. In contrast, if Congress did not intend the statutory
directive to apply to the case at hand, or if congressional intent is
uncertain and the agency considers another approach to be reasonable,
then the ``administrative necessity'' doctrine would not apply. As a
result, the agency would not be required to implement the statutory
directive to the case at hand at all, much less in a more administrable
fashion.
f. Interconnectedness of the Legal Doctrines
Although we believe that each of the ``absurd results,''
``administrative necessity,'' and ``one-step-at-a-time'' doctrines
provide independent support for our action, we also believe that in
this case, the three doctrines are intertwined and form a comprehensive
basis for EPA's tailoring approach. As just discussed, each of the
three doctrines is tied into the Chevron analytical framework because
each is designed to give effect to underlying intent. As discussed
previously, each of the three doctrines comes into play in this case
because a literal reading of the PSD and title V applicability
provisions results in insurmountable administrative burdens. Those
insurmountable administrative burdens--along with the undue costs to
sources--must be considered ``absurd results'' that would undermine
congressional purpose for the PSD and title V programs. Under the
``absurd results'' doctrine, EPA is authorized not to implement the
applicability provisions literally--that is, not to implement them as
applying on the January 2, 2011 date that PSD and title V are triggered
to all GHG sources at or above the statutory thresholds--but instead to
tailor them in a manner consistent with congressional intent. That
means applying the PSD and title V requirements through a phase-in
approach to as many sources as possible and as quickly as possible,
starting with the largest sources, as EPA does with this Tailoring
Rule,\29\ at least to a certain point. By the same token, the
insurmountable administrative burdens bring into play the
``administrative necessity'' doctrine, under which EPA is, again,
authorized not to implement the applicability provisions literally, but
instead to apply them in a manner consistent with administrative
resources. This also means phasing them in through the approach in the
Tailoring Rule. Finally, the ``one-step-at-a-time'' doctrine, which
authorizes incremental action by agencies to implement statutory
requirements under certain circumstances, provides further support for
the phased tailoring approach in the Tailoring Rule.
---------------------------------------------------------------------------
\29\ As discussed later, EPA may, in future rulemaking, make a
final determination that under the ``absurd results'' doctrine,
Congress did not intend for EPA to apply PSD to very small sources,
that is, those, with emissions at or near the 100/250 tpy statutory
levels.
---------------------------------------------------------------------------
g. Application of Chevron Approach
The Chevron analytical approach, and the three legal doctrines at
issue here, apply to this action in the following manner: To reiterate,
for convenience, the statutory provisions at issue: Congress, through
the definition of ``major emitting facility,'' applied the PSD program
to include (i) ``any * * * stationary sources of air pollutants which
emit or have the potential to emit, one hundred [or, depending on the
source category, two hundred fifty] tons per year or more of any air
pollutant,'' CAA sections 165(a), 169(1); and (ii) and such sources
that undertake a physical or operational change that ``increases the
amount of any air pollutant emitted'' by such sources, CAA sections
165(a), 169(2)(C), 111(a)(4).\30\ Similarly, Congress, through the
definition of ``major source,'' specified that the title V program
includes ``any stationary facility or source of air pollutants which
directly emits, or has the potential to emit, one hundred tons per year
or more of any air pollutant.'' CAA sections 502(a), 501(2)(B), 302(j).
EPA, through long-established regulatory action, in the case of PSD,
and long-established interpretation, in the case of title V, has
interpreted these definitions so that they apply only with respect to
air pollutants that are subject to regulation under the CAA.
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\30\ A physical or operational change is treated as a
``modification'' that is subject to PSD if it either ``increases the
amount of any air pollutant emitted'' by the source or ``results in
the emission of any air pollutant not previously emitted.'' For
convenience, unless otherwise indicated, when we refer to changes
that ``increase[ ] the amount of any air pollutant emitted,'' we
mean both to those types of changes and changes that ``result[ ] in
the emission of any air pollutant not previously emitted.''
---------------------------------------------------------------------------
For each of these applicability provisions, the approach under
Chevron is as follows: Under Chevron Step 1, we must determine whether
Congress expressed an intention on the specific question, which is
whether the PSD or title V applicability provisions apply to GHG
sources. Said differently, the specific question is whether, in the
case of PSD, Congress intended that the definitions of ``major emitting
facility'' and ``modification'' apply, respectively, to all GHG sources
that emit at least 100 or 250 tpy or GHGs and to all physical or
operational changes by major emitting facilities that ``increase[ ] the
amount'' of GHGs; and, in the case of title V, whether the definition
of ``major source'' applies to all GHG sources that emit at least 100
tpy GHGs.
To determine intent, we must first examine the terms of the statute
in light of their literal meaning. Here, the literal reading of each
provision covers GHG sources. For PSD, a GHG source that emits at least
100 or 250 tpy GHGs literally qualifies as ``stationary source [ ] of
air pollutants which emit[s] or ha[s] the potential to emit, one
hundred [or two hundred fifty] tons per year or more of any air
pollutant [subject to regulation under the CAA].'' CAA section 169(1).
For modifications, a physical or operational change that increases the
amount of GHG emissions qualifies as a ``modification'' because it
``increases the amount of any air pollutant emitted'' by the source.
Similarly, for title V, a GHG source that emits at least 100 tpy GHGs
literally qualifies as ``any stationary facility or source of air
pollutants which directly emits, or has the potential to emit, one
hundred tons per year or more of any air pollutant [subject to
regulation under the CAA].'' CAA sections 502(a), 501(2)(B), 302(j).
Although each definition is clear that it applies to GHG sources as
a general matter, applying each definition in accordance with its
literal meaning to all GHG sources at the specified levels of emissions
and at the present time--in advance of the development of streamlining
methods and greater permitting authority expertise and resources--would
create undue costs for sources and impossible administrative burdens
for permitting authorities. These results are not consistent with other
provisions of the PSD and title V requirements, and are inconsistent
with--and, indeed, undermine--congressional purposes for the PSD and
title V provisions. Accordingly, under the ``absurd results'' doctrine,
neither the PSD definition of ``major emitting facility'' or
``modification'' nor the title V definition of ``major source,'' should
be applied literally to all GHG sources, and therefore none should be
considered to have a literal meaning with respect to its application to
all GHG sources.
In analyzing the provisions of each definition more closely, we
believe that each has four terms, any one of which could be considered
not to have its literal meaning, in this respect. 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
[[Page 31548]]
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,'' \31\ 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 literally to GHG sources.
Because we read the terms together, as integral parts of each
definition as a whole, we do not think that the choice of which of
those four terms within each definition cannot be considered to apply
literally to GHG sources has substantive legal effect. In other words,
we believe that any one of these terms, or all of them together as part
of each definition as a whole, should be considered not to apply
literally in the case of GHG sources.
---------------------------------------------------------------------------
\31\ 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.
---------------------------------------------------------------------------
Having determined that each definition does not have a literal
meaning with respect to the applicability of PSD or title V applies to
all GHG sources, we must next inquire as to whether Congress has
nevertheless expressed an intent on that question through other means.
We discuss the statutory terms and legislative history of the PSD and
title V provisions in more detail later, but for now it suffices to say
that on the issue of whether PSD and title V apply to GHG sources, we
believe that congressional intent is clear, and that is to apply PSD
and title V to GHG sources generally. We believe that this intent is
clear from the broad phrasing of the applicability provisions--as noted
earlier, the definitions apply by their terms to GHG source generally,
even though the definitions should not be applied literally to all GHG
sources--the fact that the various components of the PSD and title V
programs can be readily applied to GHG sources, and the fact that the
two programs can readily accommodate at least some GHG sources. As a
result, we believe that as a matter of Chevron Step 1, PSD and title V
generally apply to GHG sources. Our previous regulatory action defining
the applicability provisions made this clear, and we do not reopen this
issue in this rulemaking. Moreover, even if this long-established
regulatory position were not justifiable based on Chevron step 1--on
the grounds that in fact, congressional intent on this point is not
clear--then we believe that this position, that the statutory
provisions to apply PSD and title V generally to GHG sources, was
justified under Chevron step 2.\32\
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\32\ In this preamble and the response to comments document we
fully address arguments that commenters and others have presented
about congressional intent and coverage of GHGs. We do so to be
fully responsive, even though we believe that this is a settled
matter for which the time for judicial review has past.
---------------------------------------------------------------------------
On the issue of how to apply PSD to GHG sources, including the
specific threshold levels and the timing, we believe that Congress
could be considered to have expressed a clear intent that GHG sources
be included in the PSD program at as close to the statutory thresholds
as possible, and as quickly as possible, and at least to a certain
point, all as consistent with the need to assure that the PSD program
does not impose undue costs on sources or undue administrative burdens
on the permitting authorities. Under this view, EPA would be required
at Chevron Step 1 to adopt the Tailoring Rule because, by phasing in
PSD applicability, it most closely gives effect to Congress's intent.
Under these circumstances, EPA is authorized to exercise its expert
judgment as to the best approach for phasing in the application of PSD
to GHG sources.
Even so, we recognize that it could be concluded that on the issue
of how to apply PSD to GHG sources, congressional intent is unclear.
Under these circumstances, EPA has the discretion at Chevron Step 2 to
adopt the Tailoring Rule because it is a reasonable interpretation of
the statutory requirements (remaining mindful that the applicability
requirements cannot be applied literally). Under the Tailoring Rule,
EPA seeks to include as many GHG sources in the permitting programs at
as close to the statutory thresholds as possible, and as quickly as
possible, although we recognize that we ultimately may stop the phase-
in process short of the statutory threshold levels.
As for title V, we believe that taken together, the various
statutory requirements and statements in the legislative history do not
evidence a clear congressional intent for how title V is to be applied
to GHG sources. As discussed later, the relevant title V requirements
and statements in legislative history differ from PSD, not least
because they include provisions that concern empty permits that point
in different directions. As a result, here, too, EPA has the discretion
at Chevron Step 2 to adopt the Tailoring Rule as a reasonable
interpretation of the statutory requirements. Alternatively, even if
the statute does express a clear intent as to title V that, similar to
PSD, title V requirements must be phased in as closely to the statutory
threshold as possible and as quickly as possible, this Tailoring Rule
is consistent with that intent.
It should also be noted that although EPA has concluded that
applying the PSD and title V applicability provisions literally in the
case of GHG sources would produce ``absurd results'' and therefore is
not required, this conclusion has no relevance for applying other CAA
requirements--such as the requirements concerning endangerment and
contribution findings under CAA section 202(a)(1) or emission standards
for new motor vehicles or new motor vehicle engines under CAA section
202--to GHGs or GHG sources. EPA's conclusions with respect to the PSD
and title V applicability requirements are based on the specific terms
of those requirements, other relevant PSD and title V provisions, and
the legislative history of the PSD and title V programs.
Within the context of the Chevron framework, the ``administrative
necessity'' doctrine applies as follows: Under the doctrine, Congress
is presumed to intend that the PSD and title V applicability
requirements be administrable. Here, those applicability requirements,
if applied to GHG sources in accordance with their literal meaning,
would be impossible to administer. Accordingly, under Chevron Step 1,
it is consistent with congressional intent that EPA and the permitting
authorities be authorized to implement the applicability requirements
in a manner that is administrable, that is, through the tailoring
approach.
As for the ``one-step-at-a-time'' doctrine, we believe it applies
within the Chevron framework in conjunction with the ``absurd results''
and ``administrative necessity'' doctrines. As we discuss elsewhere,
the PSD and title V applicability provisions by their terms require
that sources at or above the 100/250 tpy thresholds comply with PSD and
title V requirements at the time those requirements are triggered,
which
[[Page 31549]]
is when GHGs become subject to regulation. Therefore, if the literal
meaning of the applicability provisions as applied to GHG sources were
controlling--that is, if it reflected congressional intent--it would
foreclose use of the one-step-at-a-time doctrine to implement a phase-
in approach. However, the literal meaning is not controlling because--
in light of the absurd results, including the insurmountable
administrative burdens, that would result from the literal meaning--
congressional intent is not to require the application of the PSD and
title V requirements to all GHG sources at or above the statutory
thresholds at the time that GHGs become subject to regulation. Instead,
as described previously, we consider congressional intent for the
applicability provisions, as applied to GHG sources, either (i) to be
clear that PSD and title V should be phased in for GHG sources as
quickly as possible, or (ii) to be unclear, so that EPA may reasonably
choose to phase PSD and title V in for those sources in that manner.
Under either view, congressional intent for PSD and title V
applicability to GHG sources accommodates the ``one-step-at-a-time''
approach.
4. The PSD and Title V Programs
Having discussed both the factual underpinnings and, immediately
above, the legal underpinnings for our tailoring approach, we now
discuss the PSD and title V programs themselves, including, for each
program, the key statutory provisions, their legislative history, and
the relevant regulations and guidance documents through which EPA has
implemented the provisions. We start with the PSD program.
a. The PSD program
(1) PSD Provisions
Several PSD provisions are relevant for present purposes because of
the specific requirements that they establish and the window that they
provide into congressional intent. These provisions start with the
applicability provisions, found in CAA sections 165(a) and 169(1),
which identify the new sources subject to PSD, and CAA section
111(a)(4), which describes the modifications of existing sources that
are subject to PSD. CAA section 165(a) provides:
No major emitting facility on which construction is commenced
after August 7, 1977, may be constructed in any area to which this
part applies unless--
(1) A permit has been issued for such proposed facility in
accordance with this part setting forth emission limitations for
such facility which conform to the requirements of this part;
(2) The proposed permit has been subject to a review in
accordance with this section * * *, and a public hearing has been
held with opportunity for interested persons including
representatives of the Administrator to appear and submit written or
oral presentations on the air quality impact of such source,
alternatives thereto, control technology requirements, and other
appropriate considerations;
* * * * *
(4) The proposed facility is subject to the best available
control technology for each pollutant subject to regulation under
this chapter emitted from, or which results from, such facility * *
*.
The term ``major emitting facility'' is defined, under CAA section
169(1) to include:
* * * stationary sources of air pollutants which emit, or have
the potential to emit, one hundred tons per year or more of any air
pollutant from [28 listed] types of stationary sources. * * * Such
term also includes any other source with the potential to emit two
hundred and fifty tons per year or more of any air pollutant. This
term shall not include new or modified facilities which are
nonprofit health or education institutions which have been exempted
by the State.
As for modification of existing sources, CAA section 169(1)(C)
provides that the term ``construction,'' as used in CAA section 165(a)
(the PSD applicability section) ``includes the modification (as defined
in section 111(a)(4)) of any source or facility.'' Section 111(a)(4),
in turn, provides:
The term ``modification'' means any physical change in, or
change in the method of operation of, a stationary source which
increases the amount of any air pollutant emitted by such source or
which results in the emission of any air pollutant not previously
emitted.
As interpreted by EPA regulations, these provisions, taken
together, provide that new stationary sources are subject to PSD if
they emit at the 100/250-tpy thresholds air pollutants that are subject
to EPA regulation, and that existing stationary sources that emit such
air pollutants at the 100/250-tpy thresholds are subject to PSD if they
undertake a physical or operational change that increases their
emissions of such air pollutants by any amount.
Other provisions of particular relevance are the requirements for
timely issuance of permits. The permitting authority must ``grant[ ] or
den[y] [any completed permit application] not later than one year after
the date of filing of such completed application.'' CAA section 165(c).
In addition, the PSD provisions articulate ``the purposes of [the
PSD program],'' which are to balance environmental protection and
growth. CAA section 160. One of the purposes, in subsection (1), is
specifically ``to protect public health and welfare,'' and another, in
subsection (3), is ``to insure that economic growth will occur in a
manner consistent with the preservations of existing clean air
resources.''
The PSD provisions also include detailed procedures for
implementation. Most relevant for sources of GHG are the provisions
that the proposed permit for each source must be the subject of a
public hearing with opportunity for interested persons to comment, CAA
section 165(a)(2), and each source must be subject to BACT, as
determined by the permitting authority on a source-by-source basis, CAA
section 165(a)(4), 169(3).
(2) PSD Legislative History
The legislative history of the PSD provisions, enacted in the 1977
CAA Amendments, makes clear that Congress was largely focused on
sources of criteria pollutants: primarily sulfur dioxide, PM,
NOX, and carbon monoxide (CO). This focus is evident in the
basic purpose of the PSD program, which is to safeguard maintenance of
the NAAQS. See S 95-127 (95th Cong., 1st Sess.), at 27.
Congress designed the PSD provisions to impose significant
regulatory requirements, on a source-by-source basis, to identify and
implement BACT and, for criteria pollutant, to also undertake certain
studies. Congress was well aware that because these requirements are
individualized to the source, they are expensive. Accordingly, Congress
designed the applicability provisions (i) to apply these requirements
to industrial sources of a certain type and a certain size--sources
within 28 specified source categories and that emit at least 100 tpy--
as well as all other sources that emit at least 250 tpy, and, by the
same token, (ii) to exempt other sources from these requirements.\33\
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\33\ Coverage of modifications by the PSD program was addressed
by a technical amendment which added a cross reference in section
169 to section 111. The legislative history of this provision is
scant and there is no suggestion that Congress would have
contemplated sweeping in large number of changes from smaller
sources through the addition of this provision.
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Although Congress required that CAA requirements generally apply to
``major emitting facilities,'' defined as any source that emits or has
the potential to emit 100 tpy of any pollutant, Congress applied PSD to
only sources at 100 tpy or higher in 28 specified industrial source
categories, and at 250 tpy or
[[Page 31550]]
more in all other source categories. This distinction was deliberate:
According to Sen. McClure, Congress selected the 28 source categories
after reviewing an EPA study describing 190 industrial source
categories. 122 Cong. Rec. 24521 (July 29, 1976) (statement by Sen.
McClure).
Congress also relied on an EPA memorandum that identified the range
of industrial categories that EPA regulated under its regulations that
constituted the precursor to the statutory PSD program,\34\ and listed
both the estimated number of new sources constructing each year and the
amount of pollution emitted by the ``typical plant'' in the category.
The memorandum was prepared by B.J. Steigerwald, Director of the Office
of Air Quality Planning and Standards and Roger Strelow, EPA's
Assistant Administrator for Air and Waste Management (``Steigerwald-
Strelow memorandum''). The Steigerwald-Strelow memorandum makes clear
that the 100 tpy cut-off for the 28 listed sources categories, and the
250 tpy cut-off for all other sources, was meaningful; that is, there
were a large number of sources below those cut-offs that Congress
explicitly contemplated would not be included in the PSD program. Id.
at 24548-50.
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\34\ Beginning in 1974, EPA implemented a program that required
sources of certain NAAQS pollutants seeking to construct in
attainment or unclassifiable areas to implement emission controls
for the purpose of preventing deterioration in the ambient air
quality in those areas. This program was the precursor to the PSD
program Congress enacted in 1977.
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Consistent with this, the legislative history on the Senate side
also specifically identified certain source categories that Senators
believed should not be covered by PSD. The Senate bill language limited
PSD to sources of 100 tpy or more in 28 listed source categories, and
to any other categories that the Administrator might add. Sen. Muskie
stated that the Senate bill excluded ``houses, dairies, farms,
highways, hospitals, schools, grocery stores, and other such sources.''
123 Cong. Rec. 18021 (June 8, 1977) (statement of Sen. Muskie). Sen.
McLure's list of excluded source categories were ``[a] small gasoline
jobber, or a heating plant at a community college, [which] could have
the potential to emit 100 tons of pollution annually.'' 122 Cong. Rec.
24548-49 (July 29, 1976) (statement of Sen. McClure). The Senate
Committee Report included a comparable list, and in describing it,
concisely articulated the cost-conscious basis for the line-drawing:
``[the PSD] procedure * * * must include an effective review-and-permit
process. Such a process is reasonable and necessary for very large
sources, such as new electrical generating plants or new steel mills.
But the procedure would prove costly and potentially unreasonable if
imposed on construction of storage facilities for a small gasoline
jobber or on the construction of a new heating plant at a junior
college, each of which may have the potential to emit 100 tons of
pollution annually.'' S. Rpt. 95-127 at 96-97.
The enacted legislation differs from the Senate bill by replacing
the authorization to EPA to include by regulation source categories in
addition to the listed 28 source categories with an inclusion of all
other sources if they exceed 250 tpy, and with an authorization for the
states to exempt hospitals and educational institutions. But Congress's
overall intention remains clear, as the DC Circuit described in Alabama
Power: ``Congress's intention was to identify facilities which, due to
their size, are financially able to bear the substantial regulatory
costs imposed by the PSD provisions and which, as a group, are
primarily responsible for emissions of the deleterious pollutants that
befoul our nation's air * * *. [With respect to] the heating plant
operating in a large high school or in a small community college * * *
[w]e have no reason to believe that Congress intended to define such
obviously minor sources as `major' for the purposes of the PSD
provision.'' \35\ 636 F.2d at 353-54.
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\35\ Note that although Congress specifically authorized the
states to exempt ``nonprofit health or education institutions'' from
the definition of ``major emitting facility,'' this statement by the
DC Circuit should be taken as the Court's view that Congress did not
design PSD to cover sources of the small size described.
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A particularly important indication of congressional intent to
limit the PSD program it was designing to larger sources comes in
considering the emissions profile of the small-sized boilers. Congress
focused closely on identifying which sources with emissions in excess
of 100 tpy should not be subject to PSD even though they are subject to
CAA requirements generally. But Congress viewed a large set of sources
as emitting below 100 tpy and therefore not included in the PSD
program. Chief among these sources, in terms of absolute numbers of
sources, were small boilers. The Steigerwald-Strelow memorandum
identified two categories of these boilers, differentiated by size. The
first ranges in size from 10 to 250 x 10 \6\ Btu per hour (Btu/hr), and
has a ``typical plant'' size of 10 \7\ Btu/hr, with ``BACT emissions
from typical plant'' of 53 tpy, and a total of 1,446 sources in the
category. The second category ranges in size from 0.3 to 10 x 10 \6\
Btu/hr, and has a ``typical plant'' size of 1.3 x 10 \6\ Btu/hr, with
``BACT emissions from typical plant'' of 2 tpy, and a total of 11,215
sources in the category. The memorandum discusses these two categories
in the context of explaining which source categories exceed a size of
100 tpy--and therefore would be subject to PSD if a 100 tpy threshold
were set--by stating, ``Fortunately, most truly small boilers and
typical space heating operations would not be covered.'' 122 Cong. Rec.
24549 (July 29, 1976).
The legislative history also provides a window into the scope of
the program that Congress anticipated and related administrability
concerns. According to the Steigerwald-Strelow memorandum, the number
of new sources each year whose ``BACT emissions from typical plant''
exceed 100 for the 28 listed source categories and 250 for all other
source categories is less than 100 per year. Although the Steigerwald-
Strelow memorandum does not attempt to estimate the number of
modifications, it appears that based on this information, Congress had
reason to expect the total size of the PSD program to be measured in
the hundreds or perhaps thousands of permits each year. A program of
this size would be manageable by EPA and the permitting authorities.
(3) PSD Regulatory History: Regulations Concerning the Definition of
``Major Stationary Source''
For present purposes, the regulatory history of the PSD program is
most noteworthy because it shows that since the inception of the
program following the 1977 CAA Amendments, EPA has interpreted the
statutory PSD applicability provisions to apply more narrowly--to any
air pollutant subject to regulation--than their literal meaning (``any
air pollutant''). EPA's initial rulemaking implementing the PSD
program, which was proposed and finalized in 1977-1978, made explicit
that the entire PSD program applied to only pollutants regulated under
the Act. 43 FR 26380, 26403, 26406 (June 19, 1978) (promulgating 40 CFR
51.21(b)(1)(i)). In 1979-1980, EPA revised the PSD program to conform
to Alabama Power v. Costle, 636 F.2d 323 (DC Cir. 1980). 44 FR 51924
(September 5, 1979) (proposed rule); 45 FR 52676 (August 7, 1980)
(final rule). In this rulemaking, EPA did not disturb the pre-existing
provisions that limited the applicability of the PSD program to
[[Page 31551]]
regulated air pollutants.\36\ In 1996 EPA proposed, and in 2002
finalized, a set of amendments to the PSD provisions that included
revisions to conform with the 1990 CAA Amendments, which, in relevant
part, exempted hazardous air pollutants (HAPs) from PSD, under CAA
section 112(b)(6). See 61 FR 38250 (July 23, 1996), 67 FR 80186
(December 31, 2002). In the preamble to the final rule, EPA noted that
based on a request from a commenter, EPA was amending the regulations
to ``clarify which pollutants are covered under the PSD program.'' EPA
accomplished this by promulgating a definition for ``regulated NSR
pollutant,'' which listed categories of pollutants regulated under the
Act, and by substituting that defined term for the phrase ``pollutants
regulated under the Act'' that was previously used in various parts of
the PSD regulations. 67 FR 80240. The definition of ``regulated NSR
pollutant'' includes several categories of pollutants (including, in
general, NAAQS pollutants and precursors, pollutants regulated under
CAA section 111 NSPS, Class I or II substances regulated under CAA
title VI) and a catch-all category, ``[a]ny pollutant that otherwise is
subject to regulation under the Act.'' E.g., 40 CFR 52.21(b)(50). As in
the previous rulemakings, EPA did not address the difference between
the definition of ``major emitting facility'' and its regulatory
approach or indicate that it had received comments on this issue. While
the definition of ``major modification'' in the PSD regulations has
changed over time with respect to how emission increases are
calculated, the regulatory history with respect to pollutant coverage
parallels that of major emitting facility.
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\36\ As noted elsewhere in this notice, in Alabama Power, the DC
Circuit noted that the definition of ``major emitting facility''
under CAA section 169(1) could apply to air pollutants not regulated
under other provisions of the Act, and discussed the contrast of
this broad definition to the narrower application of the BACT
provisions. 636 F.2d at 352-53 & n. 60. In its rulemaking notices
responding to Alabama Power, EPA discussed at length certain issues,
such as the applicability of NSR to pollutants emitted below the
``major'' thresholds, that are based on the reference in ``major
emitting facility'' to ``any air pollutant.'' However, throughout
its discussion, EPA interpreted that reference as ``any regulated
air pollutant,'' again without specifically acknowledging the
difference or without acknowledging the above-noted statements in
Alabama Power. See 45 FR 52710-52711. EPA did not indicate that it
had received comments on this issue.
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We recount this regulatory history as background information. We
are not reconsidering or reopening these regulations to the extent they
interpret the definition of ``major emitting facility'' and
``modification'' narrowly to be limited to pollutants subject to
regulation under the Act.
b. Title V Program
Having reviewed the key statutory provisions, their legislative
history, and the relevant administrative interpretations for the PSD
program, we now do the same for the title V program.
(1) Title V Provisions
The key title V provisions for present purposes start with the
applicability provisions, which are found in CAA sections 502(a),
501(2)(B), and 302(j). These provisions provide that it is unlawful for
any person to operate a ``major source'' without a title V permit,
section 502(a), and define a ``major source'' to include ``any major
stationary facility or source of air pollutants which directly emits,
or has the potential to emit, one hundred tons per year or more of any
air pollutant.'' CAA sections 501(2)(B) and 302(j). As noted elsewhere,
these provisions, taken together and as interpreted by EPA, provide
that stationary sources are subject to title V if they emit at the 100-
tpy threshold air pollutants that are subject to EPA regulation.
In addition, although title V does not have a set of provisions
describing its purpose, it is clear from its provisions and its
legislative history, discussed later, that its key goal is to gather
into one permitting mechanism the CAA requirements applicable to a
source and impose conditions necessary to assure compliance with such
requirements, and thereby promote the enforceability of CAA
requirements applicable to the covered sources. Section 503(b)(1)
requires that the source's permit application contain a compliance plan
describing how the source will ''comply with all applicable
requirements'' of the CAA, and section 504(a) requires that ``[e]ach
permit issued under [title V] shall include * * * such * * * conditions
as are necessary to assure compliance with applicable requirements of
[the Act].'' See H.R. Rep. No. 101-490, at 351 (1990) (``It should be
emphasized that the operating permit to be issued under this title is
intended by the Administration to be the single document or source of
all of the requirements under the Act applicable to the source.'').
Importantly, title V is replete with provisions designed to make
the permitting process as efficient and smooth-running as possible,
including the expeditious processing of permit applications and the
timely issuance of permits. Section 503(c) requires that ``the
permitting authority shall approve or disapprove a completed
application * * * and shall issue or deny the permit, within 18 months
after the date of receipt thereof * * *.'' Section 502(b)(6) requires
the permitting authority to develop ``adequate, streamlined, and
reasonable procedures for expeditiously determining when applications
are complete, for processing such applications, for public notice * * *
and for expeditious review of permit actions, including * * * judicial
review in State court of the final permit action by [specified
persons].'' Section 502(b)(7) includes a ``hammer'' provision designed
to reinforce timely permit issuance, which is that the permitting
authority's program must include:
To ensure against unreasonable delay by the permitting
authority, adequate authority and procedures to provide that a
failure of such permitting authority to act on a permit application
or permit renewal application (in accordance with the time periods
specified in [CAA] section 503 * * *) shall be treated as a final
permit action solely for purposes of obtaining judicial review in
State court of an action brought by any person referred to in
paragraph (6) to require that action be taken by the permitting
authority on such application without additional delay.
Section 502(b)(8) requires the permit program to include ``[a]uthority
and reasonable procedures consistent with the need for expeditious
action by the permitting authority on permit applications and related
matters, to make available to the public [certain permit-related
documents]''. Section 502(b)(9) requires a permit revision to
incorporate requirements promulgated after issuance of the permit, but
only if the permit is for a major source and has a term of 3 or more
years remaining. In addition, the revision must occur ``as
expeditiously as practicable.'' Section 502(b)(10) requires the permit
program to include operational flexibility provisions that ``allow
changes within a permitted facility * * * without requiring a permit
revision, if the changes are not modifications * * * and * * * do not
exceed the emissions allowable under the permit * * *.''
In addition, title V includes a comprehensive and finely detailed
implementation schedule that mandates timely issuance of permits while
building in EPA and affected state review, public participation, and
timely compliance by the source with reporting requirements. Following
the date that sources become subject to title V, they have 1 year to
submit their permit applications. CAA section 503(c). As noted
previously, the permitting authority then has 18 months to issue or
deny the permit. CAA section 503(c). Permitting authorities must
provide an opportunity for public comment and a hearing. CAA section
502(b)(6). If the permitting authority proposes to issue
[[Page 31552]]
the permit, the permitting authority must submit the permit to EPA, and
notify affected states, for review. CAA section 505(a)(1). EPA then has
45 days to review the permit and, if EPA deems it appropriate, to
object to the permit. CAA section 505(b)(1). If EPA does object, then
the permitting authority must, within 90 days, revise it to meet the
objections, or else EPA becomes required to issue or deny the permit.
CAA section 505(c). If EPA does not object, then, within 60 days of the
close of the 45-day review period, any person may petition EPA to
object, and EPA must grant or deny the petition within 60 days. CAA
section 505(b)(2). If a permit is issued, it must include a permit
compliance plan, under which the permittee must ``submit progress
reports to the permitting authority no less frequently than every 6
months,'' and must ``periodically (but no less frequently than
annually) certify that the facility is in compliance with any
applicable requirements of the permit, and [ ] promptly report any
deviations from permit requirements to the permitting authority.'' CAA
section 503(b).
(2) Title V Legislative History
The legislative history of title V, enacted by Congress in the 1990
CAA Amendments, indicates the scope of the program that Congress
expected: Congress expected the program to cover some tens of thousands
of sources, which would approximate the scope of the permit program
under the Clean Water Act. The Senate Committee on Environment and
Public Works stated:
EPA estimates that the new permit requirements will cover about
8,200 major sources that emit 100 tons per year or more of criteria
pollutants (which are regulated under SIPs). In addition, many
smaller sources are (or, as EPA promulgates additional regulations,
will be) covered by new source performance standards under section
111 of the Act, hazardous air pollutant standards under section 112
of the Act, and nonattainment provisions of this legislation. By
comparison, under the Clean Water Act, some 70,000 sources receive
permits, including more than 16,000 major sources. Although many air
pollution sources have more emission points than water pollution
sources, the additional workload in managing the air pollution
permit system is estimated to be roughly comparable to the burden
that States and EPA have successfully managed under the Clean Water
Act.
S. Rep. 101-228, at 353 (1990).\37\ Sen. Mitchell, the Senate Majority
Leader, stated that he expected ``over 10,000 permits [to] * * * be
issued under this program.'' 136 Cong. Rec. S3239-03 (March 27, 1990).
Others in Congress had similar estimates. See, e.g., 136 Cong. Rec.
S3166 (``thousands and thousands of permit applications * * * will be
required to be submitted'') (statement of Sen. Nickles).
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\37\ The House Committee on Energy and Commerce acknowledged
that it was ``uncertain about the magnitude of permit applications
likely to be submitted under the bill initially and thereafter in
each State or to EPA,'' H. Rep. 101-490 p. 346.
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Furthermore, the legislative history indicates that Congress did
not contemplate that large numbers of very small sources would be
subject to title V's requirements.\38\ This becomes clear by reviewing
the legislative history of a companion piece of legislation to the
operating permits provisions that Congress enacted into CAA section
507, which is the ``Small business stationary source technical and
environmental compliance assistance program.'' CAA section 507. Under
this provision, sources that, among other things, ``are not major
stationary source[s]'' and that emit less than 50 tpy of any regulated
pollutant, as well as less than 75 tpy or all regulated pollutants, are
eligible for assistance under CAA section 507. CAA section 507(c)(1).
The House Committee Report described this provision--including what
types of sources it expected this provision to benefit--as follows:
\38\ Title V can apply to certain small businesses in some
circumstances. Under CAA sections 502(a) and 501(2)(A), title V
applies to major sources of HAPs, which includes sources that may
emit as little as 10 tpy of a single HAP, and which may include some
dry cleaners and other small businesses. In addition, under CAA
section 502(a), title V applies to area sources subject to standards
under CAA sections 111 or 112 (or required to have a PSD or
nonattainment NSR permit), unless the Administrator exempts those
sources from title V because compliance would be impracticable,
infeasible, or unnecessarily burdensome.
New section [507] is a small source/small business provision
added by the Committee. It seeks to help small businesses to comply
with the problems that are likely to occur under the Act as amended
by this bill. For purposes of this section, small businesses or
small emitters are defined as sources that are emitting 100 tons or
less per year and that have a number of employees that would qualify
them for assistance from the Small Business Administration (SBA). As
we look to the future of environmental protection under the Act, we
take special steps here to ensure that it is possible for these
small businesses to comply with minimum hassle and in recognition of
the problems that are unique to them. Such small businesses include
printers, furniture makers, dry cleaners, and millions of other
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small businesses in this country.
House Committee Report, H.R. 101-590, at 354. In this manner, the House
Committee Report made clear that it expected ``millions of * * * small
businesses''--including ``printers, furniture makers, dry cleaners''
and many others--to benefit from the CAA section 507 small source/small
business program, but Congress did not expect them to become subject to
the operating permit requirements of title V because their emissions
fell below 100 tpy, which is, in general, the threshold for title V
applicability as a ``major source.''
The legislative history of title V confirms that Congress viewed a
principal purpose of title V as providing a vehicle to compile the
requirements applicable to the source. As the report of the House
Committee on Energy and Commerce (``House Committee Report'') stated,
``It should be emphasized that the operating permit to be issued under
this title is intended by the Administration to be the single document
or source of all of the requirements under the Act applicable to the
source.'' H.R. Rep. No. 101-490, at 351 (1990). Combined with the
source's reporting requirements, this compilation of applicable
requirements would facilitate public awareness of a source's
obligations and compliance and would facilitate compliance and
enforcement.
On the Senate side, Sen. Chafee, one of the floor managers of the
bill, made a similar point:
The permits will serve the very useful function of gathering and
reciting in one place--the permit document itself--all of the duties
imposed by the Clean Air Act upon the source that holds the permit.
This would clearly be an improvement over the present system, where
both the source and EPA must search through numerous provisions of
state implementation plans and regulations to assemble a complete
list of requirements that apply to any particular plant * * *.
Once these permits are in place, plant managers will be better
able to understand and to follow the requirements of the Clean Air
Act. At the same time, EPA will be better able to monitor how well
each plant is complying with those requirements. This is a highly
sensible approach for all concerned.
136 Cong. Rec. S213 (January 24, 1990) (statement of Sen. Chafee).
Sen. Lieberman made a similar statement. 136 Cong. Rec. 3172-73 (March
26, 1990) (statement of Sen. Lieberman). Thus, a central purpose of the
title V permit program is to compile all the requirements applicable to
the source into a single place, the permit. Implicit in this purpose is
that the sources subject to title V will have applicable requirements
to be compiled. As Sen. Chafee directly stated, ``[T]he vast majority
of these permit applications will * * *, in all likelihood, only codify
the existing requirements of the applicable State implementation
plan.''
[[Page 31553]]
136 Cong. Rec. S2720 (March 20, 1990) (statement of Sen. Chafee).
More broadly, the legislative history also indicates congressional
concern about the costs of permitting for small businesses, and a
determination to minimize those costs to the extent possible. This
concern is reflected in several provisions of title V. For example,
section 502(a) authorizes EPA to exempt all or part of a source
category--except for any major source from the title V permit program
if EPA ``finds that compliance with [title V] requirements is
impracticable, infeasible, or unnecessarily burdensome on such
categories.'' Similarly, the permit fee provisions include a
presumptive minimum fee amount, but authorize an exemption from that
presumptive amount upon a showing that a lesser amount will meet
overall fee requirements, CAA section 502(b)(3)(B)(iv). One of the
drafters of this provision, Rep. Wyden, explained that its purpose was
to preserve the flexibility of states to impose lower fees of small
businesses:
I note that the provision on fees allows reductions for small
sources where appropriate. The state has some flexibility, under the
general permit fee provisions, to adjust fee levels for any source
so long as the average fee charged meets the statutory minimum.
136 Cong. Rec. H12884 (Oct. 26, 1990) (statement of Rep. Wyden). See,
e.g., 136 Cong. Rec. H2559 (May 21, 1990) (statement of Rep. Wyden)
(discussing need to ``help small businesses through the air permit
labyrinth'').
The legislative history also indicates that Congress was deeply
concerned both about the need not to burden sources generally with
undue costs and to assure the administrability of the title V program,
and as a result, was determined to make the program as smooth-running
as possible. These goals are reflected in many of the title V
requirements, as discussed previously. See, e.g., CAA section 502(b)(6)
(requiring ``adequate, streamlined, and reasonable procedures for
expeditiously determining when applications are complete, for
processing such applications, for public notice * * * and for
expeditious review of permit actions); CAA section 502(b)(7) (includes
a ``hammer'' provision designed to reinforce timely permit issuance);
CAA section 502(b)(9)-(10) (limiting circumstances under which permit
revision is required; requiring revision to occur ``as expeditiously as
practicable;'' including operational flexibility provisions).
The legislative history confirms that these provisions were
designed to reduce costs to sources and promote administrability. The
``Chafee-Baucus Statement of Senate Managers'' for the bill explained
the purpose of the CAA section 502(b)(6) requirement for ``[a]dequate,
streamlined, and reasonable procedures for expeditious[ ]'' permit
actions as follows:
[M]uch concern has been expressed that this new permitting
process will unduly delay the proper functioning of many sources,
and we intend to mitigate any delay by directing that the process be
expeditious.
In addition to this general directive for expeditious
processing, we mandate in new section 503 that permitting
authorities approve or reject permit applications within certain
specified time periods following filing. In this fashion, we have
taken explicit steps to protect against undue delays.
136 Cong. Rec. S16941 (statement of Sen. Chafee). The same statement
explained that the permit revision procedures of CAA section 502(b)(9)
reflect a--
careful effort to ensure that the permit program works effectively
and efficiently. Succinctly, this provision accommodates two
competing concerns. On the one hand, it is important to ensure that
permit requirements remain up-to-date as the provisions of the Clean
Air Act are developed and new requirements are imposed. On the other
hand, it also is important to be sure that we do not reduce the
permit program to a shambles by requiring sources to engage in a
continuous process of revising their permits as these new
requirements are imposed.
136 Cong. Rec. 16942 (Oct. 27, 1990) (Chafee-Baucus statement of Senate
Managers) (statement of Sen. Chafee).
In addition, these concerns were at the bottom of the following
statement by Sen. Chafee, in which he described how the bill's drafters
had revised it in response to a concern by industry that an earlier
version of the bill would have put undue costs on industry:
We have also heard concerns from industry that S. 1630 would
burden sources unduly by requiring them to submit--along with their
permit applications--plans explaining how they intend to comply with
all requirements of the Clean Air Act that apply to them.
But, Mr. President, we emphatically do not intend to burden
industry with preparation and submission of unnecessary compliance
plans. The substitute clarifies that any compliance plans would
address only those matters by which the sources would comply with
new requirements imposed by this act as it is finally signed into
law. These plans would not need to address compliance with any
existing Clean Air Act requirements, unless the source is in
violation of those requirements.
136 Cong. Rec. S2107 (March 5, 1990) (statement of Sen. Chafee).
As another indication of congressional concern over
administrability, Congress recognized that at the beginning of the
program, large numbers of permit applications might overwhelm the
permitting authorities. To protect against this, Congress included in
CAA section 503(c) a phase-in schedule for permitting authorities to
act on the initial set of permit applications. Under 503(c), permitting
authorities were not required to act on the initial set of permit
applications within 18 months after it received the application, but
rather could act on one-third of them on an annual basis over a 3-year
period. Sen. Chafee, in describing an early version of this provision--
which would have allowed permitting authorities to phase in the
submission of permit applications--explained that its purpose was ``to
avoid a logjam of permit applications[,] * * * ensure that [regulatory]
gridlock can be avoided, and [ensure] that the permitting process will
work with a minimum of disruption and delay.'' 136 Cong. Rec., S2106
(March 5, 1990) (statement of Sen. Chafee).
(3) Title V Regulatory History
As with PSD, for present purposes, the regulatory history of the
title V program is most noteworthy because it shows that beginning
shortly after the inception of the program following the 1990 CAA
Amendments, EPA has interpreted the statutory title V applicability
provisions to apply more narrowly--to any air pollutant subject to
regulation--than their literal meaning (``any air pollutant''). As
discussed previously, title V applies to any ``major source,'' defined,
as relevant here, under CAA sections 501(2)(B) and 302(j), as ``any
stationary facility or source of air pollutants which directly emits,
or has the potential to emit, one hundred tons per year or more of any
air pollutant * * *.'' EPA's regulations mirror the CAA definitional
provisions. 40 CFR 70.2.
However, since 1993, EPA has interpreted the applicability
provisions more narrowly. At that time, which was shortly after title V
was enacted, EPA issued a guidance document making clear that it
interprets this requirement to apply to sources of pollutants ``subject
to regulation'' under the Act. Memorandum from Lydia N. Wegman, Deputy
Director, Office of Air Quality Planning and Standards, U.S. EPA,
``Definition of Regulated Air Pollutant for Purposes of Title V'' (Apr.
26, 1993) (Wegman Memorandum). The interpretation in this memorandum
was based on: (1) EPA's reading of the definitional chain for ``major
source'' under title V, including the definition of ``air pollutant''
under section 302(g) and
[[Page 31554]]
the definition of ``major source'' under 302(j); (2) the view that
Congress did not intend to require a variety of sources to obtain title
V permits if they are not otherwise regulated under the Act (see also
CAA section 504(a), providing that title V permits are to include and
assure compliance with applicable requirements under the Act); and (3)
consistency with the approach under the PSD program.
While the specific narrow interpretation in the Wegman Memorandum
of the definition of ``air pollutant'' in CAA section 302(g) is in
question in light of the holding in Massachusetts v. EPA, 549 U.S. 497,
533 (2007) (finding this definition to be ``capacious''), we believe
that the overall rationale for our interpretation of the applicability
of title V remains sound. EPA continues to maintain its interpretation,
consistent with CAA sections 302(j), 501, 502 and 504(a), that the
provisions governing title V applicability for ``a major stationary
source'' can only be triggered by emissions of pollutants subject to
regulation. This interpretation is based primarily on the purpose of
title V to collect all regulatory requirements applicable to a source
and to assure compliance with such requirements, see, e.g., CAA section
504(a), and on the desire to promote consistency with the approach
under the PSD program.
In the Tailoring Rule notice of proposed rulemaking, EPA
acknowledged the Wegman Memorandum and affirmed the memorandum's
continued viability, stating that ``EPA continues to maintain this
interpretation.'' 74 FR 55300, col. 3, fn. 8; see also 75 FR 17022-23
(Interpretive Memo reconsideration).
As with PSD, we recount this regulatory history as background
information, and we are not reconsidering or re-opening this
interpretation of the definition of ``major source'' narrowly to be
limited to pollutants subject to regulation under the Act.
5. Application of the ``Absurd Results'' Doctrine for the PSD Program
Having reviewed the factual background, legal doctrines, and the
key components of the PSD and title V programs, we now turn towards
interpreting the PSD and title V requirements in accordance with the
Chevron framework, accounting for the applicable legal doctrines. We
begin with the ``absurd results'' doctrine, and apply it first to the
PSD requirements.
In this action, we finalize, with some refinements, the ``absurd
results'' basis we proposed. Specifically, we are revising our
regulations to limit PSD applicability to GHG emitting sources by
revising the regulatory term, ``regulated NSR pollutant,'' and although
our revised regulations do not accord with a literal reading of the
statutory provisions for PSD applicability, which are incorporated into
the definition of ``major emitting facility'' and ``major
modification,'' we have concluded that based on the ``absurd results''
doctrine, a literal adherence to the terms of these definitions is not
required. Even so, we believe Congress did intend that PSD apply to GHG
sources as a general matter. Further, we may apply PSD to GHG sources
in a phased-in manner, as we do through the tailoring approach, because
either congressional intent is clear on that issue and the tailoring
approach best reflects it, or congressional intent is unclear and the
tailoring approach is a reasonable interpretation of the statute.
a. Congressional Purpose for the PSD Program
To reiterate, for convenience, CAA section 169(1) defines a ``major
emitting facility'' to include ``any * * * source[] [that] emit[s], or
ha[s] the potential to emit, [depending on the source category], one
hundred [or two hundred fifty] tons per year or more or more of any air
pollutant.'' CAA section 169(1); and a ``modification'' as any physical
or operational change in ``a stationary source which increases the
amount of any air pollutant emitted by such source,'' CAA section
169(2)(C), 111(a)(4). We also reiterate that, as discussed above,
beginning with our initial rulemaking in 1977-1978 to implement the PSD
program, we have interpreted these definitions more narrowly by reading
into them the limitation that a source is subject to PSD only if the
air pollutants in question are ``subject to regulation under the Act.''
40 CFR 51.166(b)(49)(iv). EPA is not re-opening this interpretation in
this regulation in this action.
Under the current interpretation of the PSD applicability
provision, EPA's recent promulgation of the LDVR will trigger the
applicability of PSD for GHG sources at the 100/250 tpy threshold
levels as of January 2, 2011. This is because PSD applicability hinges
on the definition of ``major emitting facility,'' which, under EPA's
long-standing narrowing interpretation, but absent further tailoring,
applies PSD to sources of any air pollutant subject that is subject to
regulation under another provision of the CAA. EPA's promulgation of
the LDVR means that GHGs will become subject to regulation on the date
that the rule takes effect, which will be January 2, 2011.
But absent tailoring, the January 2, 2011 trigger date for GHG PSD
applicability will subject an extraordinarily large number of sources,
more than 81,000, to PSD each year, an increase of almost 300-fold. And
the great majority of these new sources will be small commercial or
residential sources. We believe that for many reasons, this result is
contrary to congressional intent for the PSD program, and in fact would
severely undermine what Congress sought to accomplish with the program.
As a result, under our Chevron analysis, accounting for the ``absurd
results'' doctrine, the statutory definition for ``major emitting
facility'' (as interpreted narrowly to include ``subject to
regulation'') should not be read to apply to all GHG sources at or
above the 100/250 tpy threshold as of the January 2, 2011 date. Rather,
the definitions of ``major emitting facility'' and ``modification''
should be tailored so that they apply to GHG sources on a phased-in
basis, with the largest sources first, as we describe in this rule.
As explained previously, Chevron Step 1 calls for a determination
of congressional intent, and the courts consider the best indicator of
congressional intent to be the plain meaning of the statute. However,
the U.S. Supreme Court has held that the literal meaning of a statutory
provision is not conclusive ``in the `rare cases [in which] the literal
application of a statute will produce a result demonstrably at odds
with the intentions of the drafters' * * * [in which case] the
intention of the drafters, rather than the strict language, controls.''
United States v. Ron Pair Enterprises, 489 U.S. 235, 242 (1989). To
determine whether ``the intentions of the * * * drafters'' differ from
the result produced from ``literal application'' of the statutory
provisions in question, the courts may examine the overall context of
the statutory provisions, including whether there are related statutory
provisions that either conflict or are consistent with that
interpretation; and the legislative history to see if it exposes what
the legislature meant by the terms in question. In addition, the courts
may examine whether a literal application of the provisions produces a
result that the courts characterize variously as absurd, futile,
strange, or indeterminate, and therefore so illogical or otherwise
contrary to sensible public policy as to be beyond anything Congress
would reasonably have intended. In such cases, the literal language
cannot be said to reflect the intention of the drafters, and
[[Page 31555]]
therefore does not control. See United States v. Ron Pair Enterprises,
489 U.S. 235, 242-43 (1989); Griffin v. Oceanic Contractors, Inc., 458
U.S. 564, 571 (1982).
Here, applying the definitions of ``major emitting facility'' and
``modification'' literally (as EPA has interpreted them more narrowly)
at the present time--in the absence of streamlining measures or
additional permitting authority resources, and without tailoring--would
be contrary to congressional purpose for the PSD provisions, as found
in the statutory provisions and legislative history, especially in
light of the impact from applying those definitions literally. Congress
established the PSD program in large measure because it was concerned
that around the country, industrial development, which was confronting
barriers to locating in nonattainment areas (that is, areas that do not
meet the NAAQS), would attempt to locate in clean air areas (that is,
attainment areas or unclassifiable areas), but that as a consequence,
the clean air areas would see their air quality deteriorate to the
point where they, too, would no longer meet the NAAQS. The end result
would be the spread of environmental and health problems to those
formerly clean air areas, as well as more barriers to further
industrial development. With these concerns in mind, Congress designed
the PSD program to require newly constructing or modifying sources in
areas with air quality that meets the NAAQS (or that is unclassifiable)
to analyze their emissions of NAAQS pollutants and to implement
controls as needed to assure that those emissions do not significantly
deteriorate air quality. Many of the PSD requirements, and much of the
discussion in the legislative history, reflect these aspects of the PSD
program. E.g., CAA sections 162, 163, 164, 165(a)(3), 165(d)(2),
165(e), 166; see generally H. Rep. 95-294, 95th Cong., 1st Sess. (1977)
103-78.
Congress also designed the PSD program to impose controls on non-
NAAQS pollutants, through the requirement under CAA section 165(a)(4)
that the source be ``subject to the best available control technology
for each pollutant subject to regulation under this chapter emitted
from, or which results from, such facility.'' For example, when
Congress enacted the PSD provisions in 1977, sources emitting HAPs were
required to implement BACT for those pollutants, although in the 1990
CAA Amendments, Congress redesigned CAA section 112, which includes the
requirements for HAPs, and excluded HAPs from PSD. CAA section
112(b)(6).
Congress was keenly aware that the PSD program needed to serve two
purposes: Protect the environment and promote economic growth. Congress
explicitly identified these two goals in the ``purposes'' section of
the PSD provision, CAA section 160, and various PSD requirements
clearly reflect them. For example, to protect economic growth, the PSD
program expedites the permit process to include a 1-year limitation on
the time that the permitting authority has act on permit applications.
To protect the environment, in addition to including many provisions
that focus on NAAQS pollutants, the PSD program requires that the
preconstruction permit impose emission limits that reflect BACT for
each pollutant subject to regulation under another CAA provision. CAA
section 165(a)(4). This BACT provision also makes clear, by its terms,
that although Congress designed the PSD program largely with NAAQS
pollutants in mind, Congress also intended that sources subject to PSD
control the emissions of their other pollutants as well. The DC Circuit
has recognized the twin goals of environmental protection and economic
development that underlie PSD, and has upheld EPA interpretations of
the PSD program that reflect a balancing of those goals. See, e.g., New
York v. EPA, 413 F.3d 3, 27 (DC Cir.), rehearing en banc den. 431 F.3d
801 (2005).
Congress was also keenly aware that the PSD analyses and controls
that it was mandating had to be implemented on a source-by-source
basis, and that this process would be expensive for sources. As a
result, Congress intended to limit the PSD program to large industrial
sources because it was those sources that were the primary cause of the
pollution problems in question and because those sources would have the
resources to comply with the PSD requirements. Congress's mechanism for
limiting PSD was the 100/250 tpy threshold limitations. Focused as it
was primarily on NAAQS pollutants, Congress considered sources that
emit NAAQS pollutants in those quantities generally to be the large
industrial sources to which it intended PSD to be limited.
That Congress paid careful attention to the types and sizes of
sources that would be subject to the PSD program and designed the
thresholds deliberately to limit the program's scope is evident from
the legislative history. Several Senate floor statements and the
Committee Report made clear that PSD should not apply to small sources.
As discussed later, Congress scrutinized information that EPA provided
as to types and sizes of sources, found largely in the Steigerwald-
Strelow memorandum. Sen. Muskie stated that the Senate bill excluded
``houses, dairies, farms, highways, hospitals, schools, grocery stores,
and other such sources.'' 123 Cong. Rec. 18021 (June 8, 1977)
(statement of Sen. Muskie). Sen. McClure stated that PSD should be
limited to ``industrial plants of significant impact,'' and should
exclude ''[a] small gasoline jobber, or a heating plant at a community
college, [which] could have the potential to emit 100 tons of pollution
annually.'' 122 Cong. Rec. 24548-49 (July 29, 1976) (statement of Sen.
McClure). The Senate Committee Report mirrored Sen. McClure's
statement, and concisely articulated the cost-related basis for the
line-drawing: ``[The PSD] procedure * * * must include an effective
review-and-permit process. Such a process is reasonable and necessary
for very large sources, such as new electrical generating plants or new
steel mills. But the procedure would prove costly and potentially
unreasonable if imposed on construction of storage facilities for a
small gasoline jobber or on the construction of a new heating plant at
a junior college, each of which may have the potential to emit 100 tons
of pollution annually.'' S. Rpt. 95-127 at 96-97.
The DC Circuit had occasion, in Alabama Power, to acknowledge this
legislative history. ``Congress's intention was to identify facilities
which, due to their size, are financially able to bear the substantial
regulatory costs imposed by the PSD provisions and which, as a group,
are primarily responsible for emissions of the deleterious pollutants
that befoul our nation's air.'' Alabama Power, 636 F.2d at 353. The
Court added, ``Though the costs of compliance with [the PSD]
requirements are substantial, they can reasonably be borne by
facilities that actually emit, or would actually emit when operating at
full capacity, the large tonnage thresholds specified in section
169(1).''. Id. at 354.
It is not too much to say that applying PSD requirements literally
to GHG sources at the present time--in the absence of streamlining or
increasing permitting authority resources and without tailoring the
definition of ``major emitting facility'' or ``modification''--would
result in a program that would have been unrecognizable to the Congress
that designed PSD. Congress intended that PSD be limited to a
relatively small number of large industrial sources.
[[Page 31556]]
Without phasing in PSD and title V applicability to GHG sources so as
to allow the development of streamlining methods and increases in
permitting authority resources, the PSD program would expand by January
2, 2011, from the current 280 sources per year to almost 82,000
sources, virtually all of which would be smaller than the sources
currently in the PSD program and most of which would be small
commercial and residential sources. Until EPA could develop
streamlining methods, all of the sources that would become newly
subject to PSD--whether they be larger or smaller sources, whether
industrial or commercial/residential sources--would have to undergo
source-specific BACT determinations for their GHG emissions, as well as
their emissions of conventional pollutants in amounts in excess of the
significance levels. We estimate that the commercial and residential
sources--the great majority of which are small business--would each
incur, on average, almost $60,000 in PSD permitting expenses. This
result would be contrary to Congress's careful efforts to confine PSD
to large industrial sources that could afford these costs.
A closer look at the legislative history confirms the view that
Congress did not expect PSD to apply to large numbers of small sources,
including commercial and residential sources, and instead expected the
100/250 tpy thresholds to limit PSD's applicability to larger sources.
As noted previously, Congress relied on an EPA memorandum--the
Steigerwald-Strelow memorandum--that identified the range of industrial
categories that EPA regulated under its program that constituted the
precursor to the statutory PSD program, and listed both the estimated
number of new sources constructing each year and the amount of
pollution emitted by the ``typical plant'' in the category. The
Steigerwald-Strelow memorandum makes clear that the 100 tpy cut-off for
the 28 listed sources categories, and the 250 tpy cut-off for all other
sources, would exclude from PSD a large number of sources. 122 Cong.
Rec. 24548-50 (July 29, 1976). However, virtually all, if not all, of
the sources in half the 28 source categories emit CO2 in
quantities that equal or exceed the 100 tpy threshold, and almost all
of the sources in the remaining categories emit CO2 in
quantities that equal or exceed the 100 tpy threshold. Therefore,
applying the ``major emitting facility'' definition to GHG sources, in
the absence of streamlining methods and without tailoring, would, as a
practical matter, vitiate much of the purpose of the 100 tpy cut-off
for industrial sources.\39\
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\39\ Specifically, of the 28 source categories under CAA section
169(1), information available to EPA indicates that all of the
sources in the following categories emit at least 100 tpy of
CO2 annually: fossil-fuel fired steam electric plants of
more than 250 million Btu per hour heat input, Portland Cement
plants, primary zinc smelters, iron and steel mill plants, primary
aluminum ore reduction plants, municipal incinerators capable of
charging more than 50 tons of refuse per day, nitric acid plants,
petroleum refineries, lime plants, primary lead smelters, fossil-
fuel boilers of more than 250 Btus per hour heat input. In addition,
all but a few kraft pulp mills and glass fiber processing plants
emit at least 100 tpy CO2 annually. Our information is
incomplete with respect to the remaining source categories, but with
the possible exception of petroleum storage and transfer facilities
with a capacity exceeding three hundred thousand barrels, we suspect
that virtually all sources emit at least 100 tpy CO2
annually. See ``Technical Support Document for Greenhouse Gas
Emissions Thresholds Evaluation''; Office of Air Quality Planning
and Standards; March 29, 2010.
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Most telling, in this regard, is the small-sized boilers, which the
Steigerwald-Strelow memorandum describes, in terms of size, pollutants
emitted, and numbers of sources, as follows: The memorandum identified
two categories of these boilers, differentiated by size. The first
ranges in size from 10 to 250 x 10\6\ Btu/hr, and has a ``typical
plant'' size of 10\7\ Btu/hr, with ``BACT emissions from typical
plant'' of 53 tpy, and a total of 1,446 sources in that category. The
second category ranges in size from 0.3 to 10 x 10\6\ Btu/hr, and has a
``typical plant'' size of 1.3 x 10\6\ Btu/hr, with ``BACT emissions
from typical plant'' of 2 tpy, and a total of 11,215 sources in the
category. That memorandum makes clear that EPA did not believe that
sources in these two categories--and especially the smallest one--would
be subject to PSD under a 100 tpy threshold, by stating, ``Fortunately,
most truly small boilers and typical space heating operations would not
be covered.'' 122 Cong. Rec. 24549 (July 29, 1976). However, these data
and conclusions were all based on emissions of NAAQS pollutants, the
amounts of which placed these boilers well below the PSD threshold
limitations. In general, most boilers of these small sizes are fired
with natural gas, and a natural gas boiler greater than 0.5 x 10\6\
Btu/hr emits at least 250 tpy CO2. Therefore, if the
CO2 emissions of these small boilers are considered--as
would occur by applying the definition of ``major emitting facility''
to GHG sources without tailoring--then most of them would in fact be
subject to PSD. Again, this result would directly contravene Congress's
intention to limit PSD to ``industrial plants of significant impact.''
122 Cong. Rec. 24548-49 (statement of Sen. McClure).
Perhaps the most compelling reason why applying the PSD program to
GHG sources without tailoring, and before the development of
streamlining methods, would be inconsistent with congressional intent,
is that the resulting program would prove unadministrable. Although the
legislative history of the PSD program does not reveal much explicit
congressional focus on administrability issues, the Steigerwald-Strelow
Memorandum, which identifies the source categories and numbers of
sources that were before Congress as it considered PSD, suggests that
the program that Congress fashioned could be expected to cover at most
a few thousand sources each year. This appears to be approximately the
size of the program that EPA administered before the 1977 CAA
Amendments, so that it seems reasonable to assume that Congress
expected the PSD program it enacted to be within EPA's and the states'
administrative capacities.
Moreover, the Alabama Power court stressed the importance of
administrability concerns: Most importantly, the Court held that EPA,
in interpreting the ``modification'' provisions that apply PSD to
physical or operational changes by major emitting facilities that
``increase the amount of any air pollutant emitted,'' CAA section
111(a)(4), may ``exempt from PSD review some emission increases on
grounds of de minimis or administrative necessity,'' and went on to
state that in establishing the exemption thresholds, ``[t]he Agency
should look at the degree of administrative burden posed by enforcement
at various de minimis threshold levels.'' 636 F.2d at 400,405. In
addition, the Court based its holding that potential-to-emit for
purposes of the applicability thresholds should be defined as emissions
at full capacity with implementation of control equipment, in part on
its view that with this definition, the number of sources subject to
PSD would be manageable:
Though the costs of compliance with section 165 requirements are
substantial, they can reasonably be borne by facilities that
actually emit, or would actually emit when operating at full
capacity, the large tonnage thresholds specified in section 169(1).
The numbers of sources that meet these criteria, as we delineate
them, are reasonably in line with EPA's administrative capability.
Alabama Power, 636 F.2d at 354. However, applying PSD to GHG sources
before streamlining and without tailoring would increase the size of
the PSD program at least an order of magnitude beyond what Congress
seems
[[Page 31557]]
to have expected, which would have been far beyond the ``administrative
capability'' that Alabama Power described EPA as having.
Beyond this disconnect with congressional expectations, what is
most important is that the extraordinarily large number of permit
applications would overwhelm permitting authorities and slow their
ability to process permit applications to a crawl. Our best estimate at
present is that permitting authorities would need to process almost
82,000 permit applications per year, compared to, at most, 800 in the
current PSD program. The total additional workload, in work hours, for
PSD permits would be more than 19.5 million more work hours, compared
to 150,795 work hours for the current PSD program, and the total
additional costs would be over $1.5 billion, compared with $12 million
for the current PSD program.
At proposal, we noted that the states had estimated that the influx
of permit applications that would result from applying the 250 tpy
threshold at actual emissions would, without additional resources,
result in permitting delays of 3 years. In fact, as we noted at
proposal, a literal reading of the PSD requirements would require their
application at the 250 tpy PTE level, which would result in ten times
more permit applications than were assumed when the states made the 3-
year estimate. Further, our current estimates of the numbers of sources
that would be subject to PSD requirements are about twice what we
estimated at proposal, as described elsewhere. Moreover, our estimate
of the number of hours that permitting authorities would need to
process a permit application from a source in the commercial or
residential sector--which is, by far, the largest single sector--is
three and one-half times as long as we estimated at proposal. And under
a literal reading of the PSD applicability provisions as applied to GHG
sources, the permitting authorities would be required to implement a
program of this size beginning on January 2, 2011, less than 9 months
from now. We received many comments from states and industry raising
concerns about the cost to sources and administrative burdens of PSD
permitting if the statutory threshold were to apply for GHG emissions.
One commenter estimated a cost of over $5 billion and the dedication of
over 17,000 FTEs to this effort.
We consider it difficult to overstate the impact that applying PSD
requirements literally to GHG sources as of January 2, 2011--before
streamlining or increasing permitting resources and without tailoring--
would have on permitting authorities and on the PSD program, and we are
concerned that this impact could adversely affect national economic
development. The number of PSD permits that would be required from such
an approach is far beyond what the PSD program has seen to date. It is
clear throughout the country, PSD permit issuance would be unable to
keep up with the flood of incoming applications, resulting in delays,
at the outset, that would be at least a decade or longer, and that
would only grow worse over time as each year, the number of new permit
applications would exceed permitting authority resources for that year.
Because PSD is a preconstruction program, during this time, tens of
thousands of sources each year would be prevented from constructing or
modifying. In fact, it is reasonable to assume that many of those
sources will be forced to abandon altogether plans to construct or
modify. As a result, a literal application of the PSD applicability
provisions to GHG sources would slow construction nationwide for years,
with all of the adverse effects that this would have on economic
development.
The remedies for this scenario would be for permitting authorities
to increase their PSD funding by over 100-fold, from $12 million to
over $1.5 billion, or the development by EPA and the permitting
authorities of streamlining techniques. But it is not possible for
permitting authorities to increase their funding to those levels in the
foreseeable future, partly because of the sheer magnitude of those
levels and partly because of the financial challenges that states
currently face. And, for the reasons discussed later, although
streamlining offers genuine promise to improve the manageability of the
PSD workload, streamlining cannot do so in the very near term and, in
any event, the extent to which it can do so has not yet come into
focus.
So clear are at least the broad outlines of this picture that EPA
did not receive any substantive comments arguing that permitting
authorities could in fact administer the PSD program with the
applicability requirements applied literally to GHG sources beginning
in the very near future.\40\ Every permitting authority that addressed
this issue in their comments on the proposed Tailoring Rule stated
unequivocally that it could not administer the PSD program at the
statutory levels. To cite a few examples (each of which considered both
the PSD and title V programs together): NACAA, which represents air
pollution control agencies in 53 states and territories, stated it ``*
* * agrees with the EPA that immediately attempting to implement the
PSD and title V programs using the statutory thresholds meets the test
for invoking the administrative necessity and absurd results
doctrines.'' Similarly, the California Air Resources Board stated that
it ``* * * concurs with the United States, EPA that if more appropriate
applicability thresholds [as opposed to the statutory thresholds] are
not set for GHG it will not be administratively possible to implement
these [the PSD and tile V] permitting programs.'' All other state and
local permitting agencies that commented on the proposed tailoring
provided similar comments that they would not have the adequate staff
capacity or resources to be able to successfully administer their
permitting programs with the addition of GHG emission sources at the
statutory thresholds for PSD and title V.
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\40\ EPA did receive a smaller number of comments that asserted
in conclusory fashion that permitting authorities could administer
the 100/250 tpy levels.
---------------------------------------------------------------------------
It is the many-year delays in permit issuance and the consequent
chilling of economic development that provide perhaps the clearest
indication that applying the PSD applicability provisions to GHG
sources without tailoring produces absurd results. These effects would
undermine one of Congress's central purposes in establishing the PSD
program, which was to promote development in clean air areas by large
industrial sources (as long as they included environmental safeguards).
As discussed previously, this goal is manifest in the structure of the
PSD provisions, and Congress even went so far as to make this goal
explicit in the purposes section of the PSD provisions.
Moreover, at the present time, there is relatively little
environmental benefit in subjecting large numbers of small GHG sources
to the expensive, source-by-source PSD permitting requirements. They
represent a relatively small share of the GHG inventory and the control
options available to them, at present, are limited. As a result,
approaches other than source-by-source permitting presently offer more
promise for generating emissions reductions in an efficient manner.
These approaches, which may be developed through both federal and state
efforts, include requirements, incentives, and educational outreach to
promote efficiency improvements to boilers and furnaces and energy
efficient operations, including, for example, weatherization programs.
For all these reasons, interpreting the definition of ``major
emitting facility''
[[Page 31558]]
and ``modification'' literally--that is, as EPA has interpreted them
more narrowly, but without tailoring and before the program
requirements can be streamlined or permitting authority resources can
be increased--would produce results that are not consonant with, and,
in fact, would severely undermine, Congress's purpose for the PSD
program. These results may fairly be characterized as the type of
absurd results that support our view that the literal terms of the PSD
applicability provisions do not indicate congressional intent for how
those provisions should applied to GHG sources.
b. Congressional Intent for the Applicability Provisions
(1) Congressional Intent for Whether and How PSD Applies to GHG Sources
Several of the PSD provisions and statements in the legislative
history are particularly important in determining whether and how the
PSD program should apply to GHG sources, as discussed elsewhere:
(1) The applicability provisions, under CAA section 165(a) and
169(1). These provisions are written broadly, and although, as we
explain above, they cannot be read literally to apply to GHG sources at
or above the 100/250 tpy, they nevertheless can be read to indicate
that directionally, Congress intended that PSD be applied inclusively.
(2) The various PSD provisions that identify the pollutants subject
to PSD. Compare, e.g., CAA sections 162, 163, 164, 165(a)(3),
165(d)(2), 165(e), and 166 (NAAQS pollutants) with CAA sections
165(a)(3)(C), 165(a)(4) (other pollutants). These provisions indicate
that a major purpose of the PSD program is to control NAAQS pollutants,
but that the program also covers non-NAAQS pollutants.
(3) The requirement that permitting authorities act on PSD
applications within 1 year. CAA section 165(c). This provision
indicates that Congress anticipated the PSD program would be of a size
that would allow permitting authorities to meet this deadline.
(4) The purpose provision. CAA section 160. This provision makes
clear that PSD is designed both to protect public health and welfare
and to promote economic growth.
(5) In addition, we consider important the legislative history
indicating the Congress intended PSD to apply to large industrial
sources because they were the primary source of the air pollution
problems and they have the resources to manage the demands of the PSD
permitting process; and that, by the same token, Congress expected that
small sources would not be subject to PSD. The legislative history does
not specifically mention GHG sources.
Looking at these provisions and the legislative history together, we
think Congress can be said to have intended that the PSD program apply
to GHG sources as a general matter. The most important indication of
congressional intent in this regard is the applicability provisions,
which provide, in part, that PSD applies to (i) ``any * * * source[
that] emit[s], or ha[s] the potential to emit [the specified quantity]
of any air pollutant,'' CAA section 169(1); and (ii) to any such source
that undertakes a physical or operational change that ``increases the
amount of any air pollutant emitted.'' CAA section 169(2)(C),
111(a)(4). These terms are quite broad, and should be read to include
GHG sources and GHGs. See Massachusetts v. EPA, 549 U.S. 497, 533
(2007) (``Because greenhouse gases fit well within the Clean Air Act's
capacious definition of `air pollutant,' we hold that EPA has the
statutory authority to regulate the emission of such gases from new
motor vehicles.''). Moreover, including GHG sources--under certain
circumstances--is consistent with the PSD provisions that refer to
other pollutants, establish the time-frame for acting on PSD
applications, and establish the overall purpose of the program. In
addition, including GHG sources--again, under certain circumstances--is
consistent with the legislative history that PSD be limited to sources
that cause a meaningful part of the air pollution problem and have the
resources to manage the PSD requirements. No PSD provision explicitly
imposes any limitation of PSD to large industrial sources, and
Congress's reasoning for focusing on large industrial sources--which
was that these sources are best suited to handle the resource -
intensive analyses required by the PSD program--could extend to GHG
sources under certain circumstances (that is, large sources first, and
smaller sources after streamlining methods are developed). Similarly,
as discussed previously, it is reasonable to read into Congress's
intent that the PSD program be limited to a size that permitting
authorities would be able to administer, but it is consistent with that
reading to recognize that the permitting authorities could take certain
steps--including adoption of streamlining measures and ramping up
resources--that would allow them to handle a higher volume of
permitting. Finally, we find nothing in the PSD provisions or
legislative history that would indicate congressional intent to exclude
GHG sources. Accordingly, we believe that Congress must be said to have
intended an affirmative response for whether PSD applies to sources of
GHGs as a general matter. Our previous regulatory action defining the
PSD applicability provisions made this clear, and we do not reopen this
issue in this rulemaking. Moreover, even if this long-established
regulatory position were not justifiable based on Chevron Step 1--on
the grounds that in fact, congressional intent on this point is not
clear--then we believe that this position, that the statutory
provisions to apply PSD to GHG sources in general, was justified under
Chevron Step 2.
As to how PSD applies to GHG sources, although, for reasons
discussed previously, the 100/250 tpy threshold provision, which
establishes the scope of PSD applicability, should not be read as
applying literally to GHG sources--and as a result, the applicability
provision as a whole cannot be said to have a plain meaning as to the
scope of coverage of GHG sources--we believe that the applicability
provisions and legislative history nevertheless indicate a
congressional intent for how PSD should apply to GHG sources. That is
to apply PSD to as many sources as possible as quickly as possible, at
least to a certain point. We believe that this intent can be inferred
from the inclusiveness of the applicability provision, combined with
the legislative history that focuses on Congress's desire to include in
the PSD program sources that have the resources to comply with the
requirements and, as the Court in Alabama Power recognized, Congress's
concern about administrability. That is, at first, PSD may apply to the
largest GHG sources because they may be expected to have the resources
to comply with PSD's requirements and permitting authorities may be
expected to accommodate those sources; and over time, with streamlining
and increases in permitting authority resources, PSD may apply to more
GHG sources. As discussed later, the tailoring approach is consistent
with congressional intent in this regard.
We recognize the tension between the applicability provisions,
which are inclusive, and the statements in the legislative history that
express Congress's expectation that PSD be limited to large industrial
sources. At least to a point, the applicability provisions and these
statements can be reconciled by recognizing that the reason why
Congress expected that PSD would be limited to large industrial sources
was that Congress recognized that PSD applied on a source-by-source
basis, that this would be costly to
[[Page 31559]]
sources, and that only the large industrial sources could afford those
costs. Taking certain actions--including streamlining PSD
requirements--can render PSD more affordable and thereby allow its
application to smaller sources in a more cost-effective manner. In this
way, PSD's inclusive applicability provisions can be reconciled with
the narrower scope Congress expected, and this is part of the reason
why we characterize congressional intent as being consistent with
phasing in the applicability of PSD to GHG sources through the
tailoring approach.\41\
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\41\ Reconciling the applicability provisions with the
statements in the legislative history in this manner is also
consistent with the U.S. Supreme Court's view that the Clean Air Act
has inherent flexibility, as it stated in Massachusetts v. EPA, 549
U.S. 497, 532 (2007):
While the Congresses that drafted Sec. 202(a)(1) might not have
appreciated the possibility that burning fossil fuels could lead to
global warming, they did understand that without regulatory
flexibility, changing circumstances and scientific developments
would soon render the Clean Air Act obsolete. The broad language of
Sec. 202(a)(1) reflects an intentional effort to confer the
flexibility necessary to forestall such obsolescence. See
Pennsylvania Dept. of Corrections v. Yeskey, 524 U. S. 206, 212
(1998) (``[T]he fact that a statute can be applied in situations not
expressly anticipated by Congress does not demonstrate ambiguity. It
demonstrates breadth'' (internal quotation marks omitted)).
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On the other hand, if Congress cannot be said to have expressed an
intent as to the manner and scope of PSD applicability to GHG sources,
then, under Chevron Step 2, EPA may apply a reasonable interpretation
of the applicability provisions to determine the scope of coverage of
GHG sources that is consistent with the statutory requirements. The
Tailoring Rule is a reasonable interpretation under Chevron Step 2. It
is consistent with (1) The applicability provisions, recognizing that
as we have seen, those provisions cannot be applied literally under
these circumstances,\42\ (2) the provisions described above concerning
which pollutants the PSD provisions cover and the timetable for
permitting authority action on PSD applications; (3) the purpose
provisions of PSD, and the accompanying legislative history, because it
protects public health and welfare without inhibiting economic
development; and (4) the legislative history indicating Congress
intended that PSD be limited to sources that cause a meaningful part of
the problem and can manage its requirements, because it will expand
PSD's applicability only after streamlining methods and greater
permitting authority resources will allow for such an expansion in an
orderly manner.
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\42\ For the reasons discussed above, we believe that Step 2 of
the Chevron framework, which authorizes the exercise of agency
discretion as long as the agency remains consistent with a
reasonable construction of the statute, does not require a literal
construction of the statute in a case such as this one, in which the
``absurd results'' doctrine applies so that the statutory
requirements cannot be read literally.
---------------------------------------------------------------------------
(2) Criteria for Establishing Phase-in Schedule
The specific phase-in schedule under the tailoring approach will
depend on several things. The first is our progress in developing
streamlining methods that will render the permitting authority workload
more manageable by taking some sources off the table (through
regulations or guidance interpreting PTE), and by allowing for more
efficient permit processing (through general permits and presumptive
BACT). At the same time, streamlining techniques will lower permitting
costs to sources or even eliminate some sources' obligations to obtain
permits altogether. The second is the time that permitting authorities
need to ramp up their resources in an orderly and efficient manner to
manage the additional workload. The third is information we have as to
the sources' abilities to meet the requirements of the PSD program and
the permitting authorities' ability to process permits in a timely
fashion. That information will be based on the real-world experience
the permitting authorities will accumulate as they proceed to process
permit application for the larger GHG sources.
Thus, under our present approach, we will develop streamlining
techniques, we expect the permitting authorities to ramp up resources
in response to the additional demands placed upon them in the first two
steps, and we will gather real-world information about the GHG
permitting process; and based on all that, we will address expanding
the PSD program in a step-by-step fashion to include more sources over
time. We intend to follow this process to establish both the PSD
applicability thresholds and, as we describe next, the significance
levels.
(3) Criteria for Establishing Significance Levels \43\
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\43\ It should be noted that strictly speaking, we do not, in
our drafting of the regulatory revisions that are part of this
rulemaking, establish a significance level for GHG emissions based
on CO2e. Rather, we establish an applicability criteria
for determining whether GHGs are subject to regulation with respect
to the particular source. We explain our approach in more detail in
the Response to Comments document. Throughout this preamble, we
refer to this action, for convenience, as a significance level.
---------------------------------------------------------------------------
The criteria for establishing the significance levels are the same
as for establishing the ``major emitting facility'' thresholds. As
noted previously, under the applicable CAA sections, any physical or
operational change at a stationary source that ``increases the amount
of any air pollutant emitted by such source'' or that results in the
emission of a new pollutant is treated as a ``modification'' that is
subject to PSD requirements. Although the CAA, by its terms, treats as
an ``increase'' any amount of emissions that is greater than zero, the
DC Circuit held in Alabama Power v. Costle that EPA may establish a
threshold--called the significance level--on de minimis grounds for the
amount of any particular pollutant that may be increased. 636 F.2d at
400.
Of particular importance, the Court in Alabama Power indicated that
EPA may rely on administrative considerations to establish significance
levels. Id. To reiterate, the Court held that ``EPA does have
discretion, in administering the statute's `modification' provision, to
exempt from PSD review some emission increases on grounds of de minimis
or administrative necessity.'' 636 F.2d at 400. The Court added a more
detailed exposition of its views in a subsequent part of its opinion,
where it discussed the BACT provision, under CAA section 165(a)(4), and
the Court made clear that those views applied as well to the
``modification'' provision. There, the Court invalidated an EPA
regulation that established a 100- and 250-tpy exemption from the BACT
requirement. Both the BACT provision and the modification provision
apply by their terms to all emissions from a source, but the Court
stated that each provision must be read to incorporate an exemption
based on de minimis or administrative considerations, and explained:
We understand that the application of BACT requirements to the
emission of all pollutants from a new facility, no matter how
miniscule some may be, could impose severe administrative burdens on
EPA, as well as severe economic burdens on the construction of new
facilities. But the proper way to resolve this difficulty is to
define a de minimis standard rationally designed to alleviate severe
administrative burdens, not to extend the statutory 100 or 250-ton
threshold to a context where Congress clearly did not apply it. Just
as for the applicability of PSD to modifications, the de minimis
exemption must be designed with the specific administrative burdens
and specific regulatory context in mind. This the Agency has failed
to do. We do not hold that 100 tons per year necessarily exceeds a
permissible de minimis level; only that the Agency must follow a
rational approach to determine what level of emission is a de
minimis amount.
A rational approach would consider the administrative burden
with respect to each statutory context: what level of emission is de
minimis for modification, what level de minimis for application of
BACT. Concerning
[[Page 31560]]
the application of BACT, a rational approach would consider whether
the de minimis threshold should vary depending on the specific
pollutant and the danger posed by increases in its emission. The
Agency should look at the degree of administrative burden posed by
enforcement at various de minimis threshold levels. It is relevant
that our decision requires the Agency, in its evaluation of
emissions of facilities, to take into account the facility's air
pollution controls. It may also be relevant, though it is certainly
not controlling, that Congress made a judgment in the Act that new
facilities emitting less than 100 or 250 tons per year are not
sizeable enough to warrant PSD review.
Id. at 405. As just quoted, the Court acknowledged the 100 and 250 tpy
thresholds for a major emitting facility, and did not indicate whether
the modification exemption level could exceed those statutory levels,
but nevertheless, the Court made clear that EPA may ``consider the
administrative burden'' associated with modifications to establish an
exemption level for modifications.
EPA has established significance levels for various pollutants,
generally relying on a de minimis basis. See, e.g., 45 FR 52676, 52705-
52710 (August 7, 1980). In these actions, EPA generally established the
level based on the triviality of the amount of emissions excluded. To
this point, we have not attempted to determine de minimis--that is,
trivial--levels for GHGs. Instead, in this rulemaking, EPA is
establishing a phase-in schedule for significance levels based on the
Chevron framework, accounting for the ``absurd results,''
``administrative necessity,'' and ``one-step-at-a-time'' doctrines. It
is not necessary to establish a permanent de minimis level in this
rulemaking. For one thing, the Court in Alabama Power explicitly
authorized an administrative basis for significance levels. Moreover,
were EPA to establish a de minimis level, that amount could be below--
perhaps even well below--the ``major emitting facility'' thresholds
established in this rulemaking on grounds of ``administrative
necessity'' and the other doctrines. Accordingly, at present, if we
were to establish a permanent significance level on a de minimis basis,
that level could result in too many small sources being required to
submit permit applications while the phase-in is occurring. This would
give rise to the same problems concerning undue costs to the sources
and administrative burdens for the permitting authorities for which we
are fashioning a remedy. Accordingly, the significance levels we
establish with this action are the lowest levels that sources and
permitting authorities can reasonably be expected to implement at the
present time in light of the costs to the sources and the
administrative burdens to the permitting authorities.
c. Other Possible Approaches to Reconciling a Literal Reading of PSD
Applicability Provisions and Congressional Intent
Commenters have suggested another approach to reconciling the
inconsistency between the definition of ``major emitting facility'' and
congressional intent. They urge that the ``major emitting facility''
definition should be applied so that only sources that emit NAAQS
pollutants, for which the area is designated attainment or
unclassifiable, in the requisite quantities would be subject to PSD,
and sources would not be subject to PSD based solely on their emissions
of non-NAAQS pollutants or a NAAQS pollutant for which an area has been
designated nonattainment. Some commenters argue that this approach is
mandated by several of the PSD provisions, read together or at least
that the relevant statutory provisions are ambiguous and that this
approach is a reasonable reading of them. Under this approach, we would
not need to phase in the application of PSD by lowering the
applicability threshold for GHG emitters.
Specifically, many commenters have questioned whether EPA has the
authority to regulate GHGs under the PSD provisions. Although the
specific lines of reasoning vary somewhat from one commenter to
another, in general, they based their arguments largely on CAA sections
161 and 165(a). Under CAA section 161:
In accordance with the policy of section 101(b)(1), each
applicable implementation plan shall contain emission limitations
and such other measures as may be necessary, as determined under
regulations promulgated under this part, to prevent significant
deterioration of air quality in each region (or portion thereof)
designated pursuant to section 107 as attainment or unclassifiable.
Commenters point out that section 107 applies only to NAAQS pollutants
and directs that areas be designated as attainment, nonattainment, or
unclassifiable on a pollutant-by-pollutant basis. Under CAA section
165(a), a ``major emitting facility'' cannot be constructed ``in any
area to which this part applies'' unless it meets certain requirements.
According to some commenters, these provisions, read together, limit
PSD's applications to only NAAQS pollutants that are emitted from
sources in areas that are designated attainment or unclassifiable for
those pollutants. Other comments make a similar point, except to state
that PSD applies more broadly to pollutants with a local, ambient
impact.
Some commenters go on to take the position that NAAQS pollutants
for which the area is designated attainment or unclassifiable are the
only pollutants that can be regulated under any provision of the PSD
requirements; while others take the position that once PSD is triggered
for a source on the basis of its NAAQS pollutants, then other, non-
NAAQS, pollutants may be regulated under certain PSD provisions, in
particular, the BACT provision under CAA section 165(a)(4). These
commenters agree, however, that emissions of GHGs, by themselves,
cannot trigger PSD applicability. Finally, some commenters state that
even if the PSD provisions cannot be read by their terms to preclude
GHGs from triggering PSD, then they can be read to authorize EPA to
determine that GHG emissions do not trigger PSD.
We recognize, as we have said elsewhere, that a major purpose of
the PSD provisions is to regulate emissions of NAAQS pollutants in an
area that is designated attainment or unclassifiable for those
pollutants. However, we do not read CAA sections 161 and the ``in any
area to which this part applies'' clause in 165(a), in the context of
the PSD applicability provisions, as limiting PSD applicability to
those pollutants. The key PSD applicability provisions are found in
sections 165(a) and 169(1). Section 165(a) states, ``No major emitting
facility on which construction is commenced after August 7, 1977, may
be constructed in any area to which this part applies unless [certain
requirements are met].'' A ``major emitting facility'' is defined,
under CAA section 169(1), as ``any * * * stationary source[s] which
emit[s], or ha[s] the potential to emit, one hundred [or, depending on
the source category, two hundred fifty] tons per year or more of any
air pollutant.'' As discussed elsewhere, EPA has long interpreted the
term ``any air pollutant'' to refer to ``any air pollutant subject to
regulation under the CAA,'' and for present purposes, will continue to
read the ``subject to regulation'' phrase into that term.
Although section 165(a) makes clear that the PSD requirements apply
only to sources located in areas designated attainment or
unclassifiable, it does not, by its terms, state that the PSD
requirements apply only to pollutants for which the area is designated
attainment or unclassifiable. Rather, section 165(a) explicitly states
that the PSD requirements apply more broadly to any pollutant that is
subject to regulation. Moreover, another
[[Page 31561]]
requirement in CAA section 165(a) also applies to air pollutants
broadly. Under CAA section 165(a)(3), one of the requirements for
securing a preconstruction permit is to demonstrate that the source's
emissions ``will not cause, or contribute to, air pollution in excess
of any (A) maximum allowable increase or maximum allowable
concentration for any pollutant in any area [to which the PSD
requirements apply], (B) [NAAQS] in any air quality control region, or
(C) any other applicable emission standard or standard of performance
under this chapter.'' As just quoted, subparagraph (C), by its terms
clearly applies to non-NAAQS pollutants. This is because it refers to
(1) ``any other applicable emission standard,'' which distinguishes it
from subparagraph (B) and therefore from NAAQS pollutants; and (2)
``any * * * standard of performance under this chapter,'' which refers
to standards of performance under section 111, several of which are for
non-NAAQS pollutants. See, e.g., 40 CFR 60.33c(a) ``municipal solid
waste landfill emissions.'' By the same token, CAA section 110(j)
specifically contemplates that a source required to hold a permit under
title I of the Act, which includes a PSD permit, demonstrate that the
source complies with ``standards of performance,'' which may include
requirements for pollutants other than NAAQS.
In addition, CAA section 163(a)(4) includes as a PSD requirement
that ``the proposed facility is subject to the best available control
technology for each pollutant subject to regulation under this chapter
emitted from, or which results from, such facility.'' Section
163(a)(4)'s broad reference to ``each pollutant subject to regulation
under this chapter'' clearly indicates that it applies to non-NAAQS
pollutants, as long as they are regulated under other provisions of the
Act.\44\ The DC Circuit, in Alabama Power v. Costle, 636 F.2d 323, 361
n.90 (DC Cir. 1980) indicated that, under the law applicable at the
time the Court handed down the decision in 1980, PSD applies to
HAPs.\45\
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\44\ We find no support for the proposition raised by some
commenters that this provision is limited to ``NAAQS'' pollutants.
To the contrary, ``under this chapter'' unambiguously signals an
intent to cover any pollutant regulated under the Act. Had Congress
intended a narrower focus, they would have specified ``any NAAQS
pollutant'' or any pollutant subject to regulation under this Part
(PSD).
\45\ In the 1990 CAA Amendments, Congress added section
112(b)(6), which provides that PSD ``shall not apply to pollutants
listed under this section,'' that is, HAPs.
---------------------------------------------------------------------------
In addition, PSD requirements are part of SIPs, and although SIPs
generally are limited to provisions that implement the NAAQS, and
therefore generally are limited to controlling NAAQS pollutants (or
non-NAAQS pollutants that affect ambient air quality), see generally
CAA section 110, Congress explicitly required SIPs to include
requirements to protect visibility, under CAA section 169A-B. See CAA
sections 110(a)(2)(D)(i)(II), 169A(b)(2)(A). Congress took much the
same approach with the PSD program, which was to require that PSD
requirements be included in the SIPs, but to explicitly require that
PSD apply to non-NAAQS pollutants.
These provisions--sections 165(a)(3), 165(a)(4), and 110(j)--all
indicate by their terms that PSD requirements apply to non-NAAQS
pollutants. As such, they lend credence to our view that Congress
intended the PSD applicability provisions to include GHG sources. At
the very least, they demonstrate that Congress certainly knew how to
specifically describe certain air pollutants--e.g., ``air pollution in
excess of * * * any other applicable emission standard or standard of
performance under this chapter,'' CAA section 165(a)(3)(C)--which
indicates that its decision not to specifically describe air pollutants
in the applicability provisions suggests an intent to cover air
pollutants broadly.
To return to sections 161 and the ``in any area to which this part
applies'' phrase in 165(a), which commenters rely on as the cornerstone
of their argument, commenters in effect take the position that Congress
intended the geographic references in these provisions--that is, the
references to areas designated as attainment or unclassifiable--to
limit the scope of the permitting provisions. We think it unpersuasive
that Congress would have taken such an indirect, and silently implied,
route to limit the scope of the permitting provisions. As noted
previously, the permitting provisions apply broadly by their terms. Had
Congress intended to limit PSD permitting in the manner urged by
commenters, it certainly could have done so directly, such as by
limiting PSD permitting to ``any pollutant for which an area is
designated attainment or unclassifiable.'' Indeed, Congress did so in
other PSD provisions, discussed previously. Similarly, in other
sections of the CAA, Congress also directly limited the scope of
pollutant applicability by specifying which pollutants are or are not
subject to the provision. See, e.g., section 111(d) (performance
standards for existing sources apply only to pollutants other than
NAAQS or HAPs), section 112(a)(1) (applying air toxics requirements in
section 112 to sources that emit above the specified tonnage thresholds
of ``hazardous air pollutants'').
In addition, although section 161 requires that SIPs contain
emission limitations and other measures as necessary to prevent
significant deterioration in areas designated as attainment or
unclassifiable, it does not by its terms limit SIPs to only those
measures.
Most broadly, we read the PSD provisions and their legislative
history to evidence Congress's intent that PSD apply throughout the
country to large sources that undertake new construction or
modifications, and that Congress's overall purpose was to assure that,
as the industrial stock of the nation turned over, it would become
cleaner for all air pollutants emitted. Greenhouse gas sources, as a
general matter, fit readily into this overall vision. At the time that
Congress enacted the PSD provisions in 1977, every area of the nation
was designated attainment or unclassifiable for at least one air
pollutant, and that has remained the case to the present time.
Accordingly, at all times, PSD has applied in every area of the
country. The PSD requirements clearly cover all air pollutants emitted
by the source, and provide a process for reviewing those emissions and
determining BACT for them under CAA section 165(a)(4). It is true that
at the time Congress adopted the PSD provisions, it was primarily
concerned about the NAAQS pollutants--or, as some commenters assert,
pollutants with local, ambient impact--because those pollutants
represented a major component of the air pollution problems it was
aware of and was addressing. But its overall purpose was broad enough
to cover additional pollutants; the process it enacted for establishing
BACT was broad enough to encompass additional pollutants; and the
applicability provisions it established were phrased broadly enough to
encompass additional pollutants, see section 169(1). As a result, we
believe that the PSD applicability provisions, which, again, refer to,
as we have interpreted them, ``any air pollutant [subject to regulation
under the CAA],'' should be seen as ``capacious'' and therefore
encompass GHG sources, in much the same manner as the U.S. Supreme
Court viewed the definition of ``air pollutant'' to be ``capacious''
and therefore encompass GHGs. Massachusetts v. EPA, 549 U.S. 497, 533
(2007).
In addition, it should not be overlooked that we have applied PSD
to
[[Page 31562]]
non-NAAQS pollutants since the inception of the program over 30 years
ago. For example, prior to the 1990 CAA Amendments, PSD applied to HAPs
regulated under CAA section 112; and over the years, EPA has
established significance levels for fluorides, sulfuric acid mist,
hydrogen sulfide, TRS, reduced sulfur compounds, municipal waste
combustor organics, municipal waste combustor metals, municipal waste
combustor acid gases, and municipal solid waste landfill emissions, see
40 CFR 51.166(b)(23)(i); and EPA has proposed a significance level for
ozone depleting substances. See 61 FR 38307 (July 23, 1996). Of course,
the basis for all these actions is PSD's applicability to these non-
NAAQS air pollutants. We are not aware that EPA's actions in
establishing significance levels for these pollutants gave rise to
challenges on grounds that the PSD provisions do not apply to them. As
the U.S. Supreme Court recently stated in upholding an EPA approach in
another context: ``While not conclusive, it surely tends to show that
the EPA's current practice is a reasonable and hence legitimate
exercise of its discretion * * * that the agency has been proceeding in
essentially this fashion for over 30 years.'' Entergy Corp. v.
Riverkeeper, Inc., 129 S.Ct. 1498, 1509 (2009) (citations omitted).
Finally, we note that excluding GHG sources from PSD applicability
would create inequitable results. Consider the hypothetical case of two
sources that construct in the same area, each of which emits the same
amount of GHGs, and that amount is large enough to trigger PSD
applicability. Assume that the first one, but not the second, also
emits NAAQS pollutants amounts large enough to trigger PSD
applicability. If GHG sources are excluded from PSD applicability, then
the first of those sources, but not the second, would be subject to PSD
requirements for its GHG emissions. Similarly, consider the
hypothetical case of two sources that emit identical amounts of the
same NAAQS pollutant and identical amounts of GHGs, all amounts of
which are large enough to trigger PSD applicability requirements.
Assume that the first source constructs in an area that is an
attainment or unclassifiable area for the NAAQS pollutant that it
emits, and that the second source constructs in an area that is not an
attainment or unclassifiable area for that NAAQS pollutant. Here again,
if GHG sources are excluded from PSD applicability, then the first of
those sources, but not the second, would be subject to PSD requirements
for its GHG emissions. These results are inequitable and would create
an uneven playing field and for this reason, too, support our view that
the PSD applicability provisions apply to GHG sources.
Accordingly, we reject the argument that section 165 must be, or
may reasonably be, limited in scope to pollutants for which an area has
been designated as attainment or unclassifiable. Rather, the PSD
applicability provision--the definition of ``major emitting facility''
in CAA section 169(1)--applies by its terms (as we have interpreted
them narrowly through regulation) to sources emitting any air pollutant
subject to regulation, and is not limited to any NAAQS air pollutant.
Our research has not disclosed any explicit statements in the
legislative history that Congress intended to limit PSD applicability
to sources of NAAQS pollutants.
6. Application of the ``Absurd Results'' Doctrine for the Title V
Program
Having discussed the application of the Chevron framework, taking
account of the ``absurd results'' doctrine, for the PSD applicability
requirements, we now turn towards applying the same approach to the
title V applicability requirements. Because of the parallels between
the PSD and title V applicability provisions, much of the discussion
later parallels the previous discussion of PSD. As with PSD, we
finalize, with some refinements, the ``absurd results'' basis we
proposed. Specifically, we are revising our regulations to limit title
V applicability to GHG emitting sources by revising the regulatory
term, ``major source,'' and although our revised regulations do not
accord with a literal reading of the statutory provisions for title V
applicability, which are incorporated into the statutory definition of
``major source,'' we have concluded that based on the ``absurd
results'' doctrine, a literal adherence to the terms of this definition
is not required. Rather, we may apply title V to GHG sources in a
phased-in manner, as we do through the tailoring approach, because
although congressional intent is clear that title V applies to GHG
sources in general, congressional intent is unclear on the question of
how title V applies, and the tailoring approach is a reasonable
interpretation of the statute.
To reiterate, for convenience, the title V applicability provisions
provide that after the effective date of a title V program, it is
unlawful for any person to operate a ``major source'' without a title V
permit (CAA section 502(a), and define a ``major source'' to include
``any major stationary facility or source of air pollutants which
directly emits, or has the potential to emit, one hundred tons per year
or more of any air pollutant.'' CAA sections 501(2)(B) and 302(j).
Under the current interpretation of the title V applicability
provisions, EPA's recent promulgation of the LDVR will trigger the
applicability of title V for GHG sources at the 100 tpy threshold
levels as of January 2, 2011. This is because title V applicability
hinges on the definition of ``major source,'' which, under EPA's long-
standing narrowing interpretation, but absent further tailoring,
applies title V to sources of any air pollutant that is subject to
regulation under another provision of the CAA. EPA's promulgation of
the LDVR means that GHGs will become subject to regulation on the date
that the rule takes effect, which will be January 2, 2011.
But absent tailoring, the January 2, 2011 trigger date for GHG PSD
applicability will see an extraordinarily large number of sources--some
6.1 million--become subject to title V, an increase of over 400-fold
over the 14,700 sources that currently are subject to title V. The
great majority of these will be small commercial or residential
sources.
We believe that for many reasons, this result is contrary to
congressional intent for the title V program, and in fact would
severely undermine what Congress sought to accomplish with the program.
As a result, under Chevron, accounting for the ``absurd results''
doctrine, the statutory definition for ``major source'' (as EPA has
already narrowed it to refer to any air pollutant ``subject to
regulation'') should not be read to apply to all GHG sources at or
above the 100 tpy threshold as of the January 2, 2011 date. Rather, the
definition of ``major source'' should be tailored so that it applies to
GHG sources on a phased-in basis, with the largest sources first, as we
describe in this rule.
a. Congressional Intent for the Title V Program
As we said, previously, in a similar circumstance involving the PSD
program, applying title V requirements to GHG sources without tailoring
the definition of ``major source''--and, as discussed later, without
streamlining the title V requirements or allowing for time for
permitting authorities to ramp up resources--would result in a program
unrecognizable to the Congress that enacted title V, and one that would
be flatly unadministrable. Without tailoring, the PSD program would
expand from the current 14,700 sources to some 6.1 million, with the
great
[[Page 31563]]
majority of the sources being small commercial and residential sources
that not only have never been permitted before, but that in many cases
have no applicable requirements under the CAA to include in the permit.
In the next several sections, we will describe some of the specific
ways that this literal application of title V would not only differ
from, but would undermine, congressional intent. But the big picture is
readily drawn: The influx of millions of permit applications would do
nothing less than overwhelm the program Congress finely crafted for
thousands of sources, with its multi-step deadlines measured in days
and months, its multiple mandates for expeditious permit processing,
its nuanced limitations on the need for permit revisions, its efforts
to save smaller sources permit fees. Regulatory gridlock, precisely
what Congress strove to avoid, would result.
Most visibly, interpreting the applicability provisions literally
to include GHG sources at the 100 tpy level immediately would revise
the program from what Congress envisioned in three major ways, the
legislative history of each of which was discussed previously:
It would immediately expand the program to cover several-
hundred-fold more sources than Congress anticipated.
It would immediately expand the program to cover very
small sources that Congress expected would not be included in the
program.
It would immediately expand the program so that a large
number of sources have empty permits, that is, permits without
applicable requirement, and undermine the implementation of the program
for sources with applicable requirements.
Revising the program in this way through a literal interpretation
of the applicability provisions--without tailoring the applicability
requirements and without streamlining the program requirements--is
clearly inconsistent with Congress's conception of the program's scope,
and these inconsistencies are foundational. Most importantly, the
program that would result would be unduly costly to sources and
impossible for permitting authorities to implement, and therefore would
frustrate the purposes that Congress intended to achieve with the
program that it did design.
As discussed previously, Congress was fully aware that with the
title V program, it was subjecting sources and permitting authorities
to additional costs and administrative burdens, and it was fully aware
of concerns that absent careful design, the program could become a
formula for regulatory gridlock. Determined to make the program
workable, Congress crafted the provisions to be efficient and workable.
However, if title V were to apply to GHG sources at the 100 tpy
level, until EPA could develop streamlining methods, all of these
sources newly subject to title V would need to apply for permits. We
estimate that the commercial and residential sources would incur, on
average, expenses of $23,175, while an industrial source would incur
expenses of $46,350, to prepare a permit application and receive a
permit. The great majority of these sources would be small commercial
and residential sources of the type that Congress did not expect would
be included in title V. For example, as discussed above, the
legislative history of title V, including both the permit program under
CAA sections 501-506 and the ``small business stationary source
technical and environmental compliance assistance program'' under CAA
section 507, indicated that Congress did not expect that ``printers,
furniture makers, dry cleaners, and millions of other small
businesses'' would become subject to title V. House Committee Report,
H.R. 101-590, at 354. These sources generally do not have the potential
to emit conventional pollutants at or above the 100 tpy threshold.\46\
However, many do have the potential to emit GHGs above that threshold.
Many printers and furniture makers use a variety of combustion
equipment that has the potential to emit at least 100 tpy
CO2, and many commercial dry cleaners have gas-fired driers
that have the potential to emit at least 100 tpy of CO2. All
told, there are in fact ``millions of * * * small businesses'' that
would become subject to title V--of the 6.1 million sources that would
become subject to title V, the great majority are small businesses--if
the title V applicability provisions are applied literally to GHG
sources.
---------------------------------------------------------------------------
\46\ As noted previously, the fact that some small sources are
subject to title V because they are ``major sources'' of HAPs or
certain area sources and therefore are covered under CAA sections
502(a) and 501(2)(A) does not alter the conclusion from the
legislative history that Congress did not expect large numbers of
small sources to become subject to title V. The fact that Congress
authorized the Administrator to exempt area sources from the title V
program where compliance with title V would be ``impracticable,
infeasible, or unnecessarily burdensome'' reinforces the conclusion
that Congress did not intend the program to be ``impracticable,
infeasible or unnecessarily burdensome'' for small sources.
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Moreover, the overall cost to all 6.1 million sources--before the
development of streamlining methods--would be a staggering $49 billion
per year over a 3 year period. Imposing burdens of this magnitude on
these sources--individually and in total--would of course be contrary
to Congress's efforts to minimize the expenses of title V, especially
to small sources. The magnitude of the costs is, in a sense, heightened
because a great many of these sources will not have applicable
requirements to include in their permits; therefore, much of the costs
will produce relatively little benefit.
Yet, the most important reason why applying the title V program to
GHG sources without tailoring, and before the development of
streamlining methods, would be inconsistent with congressional intent,
is that the resulting program would prove unadministrable. Adding some
6.1 million permit applications to the 14,700 that permitting
authorities now handle would completely overwhelm permitting
authorities, and for all practical purposes, bring the title V
permitting process to a standstill.
The costs to permitting authorities of this multi-million-source
program would again be staggering. On average, and without
streamlining, a permitting authority would expend 214 hours, which
would cost $9,844, to issue a permit to a commercial or residential
source; and 428 hours, which would cost $19,688, to issue a permit to
an industrial source. In all, permitting authorities would face over
$21 billion in additional permitting costs each year due to GHGs,
compared to the current program cost of $62 million each year.
Beyond this disconnect with congressional expectations as to scope
of the program, the extraordinarily large number of permit applications
would overwhelm permitting authorities and slow their ability to
process permit applications to a crawl. As described at proposal, the
survey of permitting authorities conducted by NACAA found that a
literal application of the title V applicability provisions to all GHG
sources would result in permitting delays of some 10 years. However, as
we further noted at proposal, this estimate was based on the assumption
that the applicability threshold would be 100 tpy based on actual
emissions; in fact, the applicability threshold would be 100 tpy based
on PTE, which would sweep in many more sources. Moreover, as stated
elsewhere, we currently estimate the amount of per-permit work hours
for permitting authorities in processing title V permit applications to
be several times higher than what we estimated at proposal. As with
PSD, such a program would be beyond anything within our experience, and
it is difficult to give a meaningful estimate
[[Page 31564]]
for how long the permitting process would take for each permit on
average. But it is clear that the period would be many years longer
than even the 10 years estimated by NACAA.
In addition, applying title V to all GHG sources without tailoring
would be in tension with a specific CAA requirement, that of CAA
section 503(c), which imposes a time limit of 18 months from the date
of receipt of the completed permit application for the permitting
authority to issue or deny the permit. It would be impossible for
permitting authorities to meet this statutory requirement if their
workload increases from some 14,700 permits to 6.1 million, and without
streamlining. Instead, as just noted, permit applications would face
multi-year delays in obtaining their permits.
Moreover, these delays would undermine the overall statutory design
that promotes the smooth-running of the permitting process, and the
underlying purpose of the title V program itself. As noted elsewhere,
Congress intended through title V to facilitate sources' compliance
with their CAA obligations by establishing an operating permit program
that requires the source to combine all of its CAA requirements, and
explain how it will assure compliance with such requirements. Congress
established a comprehensive process to implement the operating permit
program. Through this process, following the date that sources become
subject to title V, they have 1 year to submit their permit
applications. CAA section 503(c). As noted, the permitting authority
then has 18 months to issue or deny the permit. CAA section 503(c).
Permitting authorities must provide an opportunity for public comment
and a hearing. CAA section 502(b)(6). If the permitting authority
proposes to issue the permit, the permitting authority must submit the
permit to EPA for review, and notify affected states. CAA section
505(a)(1). EPA then has 45 days to review the permit and, if EPA deems
it appropriate, to object to the permit. CAA section 503(b)(1). If EPA
does object, then the permitting authority must, within 90 days, revise
it to meet the objections, or else EPA becomes required to issue or
deny the permit. CAA section 503(c). If EPA does not object, then,
within 60 days of the close of the 45-day review period, any person may
petition EPA to object, and EPA must grant or deny the petition within
60 days. CAA section 505(b)(2). This set of applicant, permitting
authority, and EPA actions and deadlines establishes the process for
the prompt and efficient issuance of operating permits for the
appropriate universe of sources.
But at least for an initial period, until resources could be ramped
up and streamlining methods could be developed, the extraordinary
numbers of these permit applicants would sweep aside this carefully
constructed program, and instead, backlog the permit authorities. This
initial period would last for many years. As discussed elsewhere, it
would take several years to develop and apply streamlining measures--in
particular, general permits--and during that time, the permit backlog
would grow so large that it would take many more years for permitting
authorities to catch up by raising the requisite funds and hiring and
training the necessary employees.
What's more, only a fraction of these millions of sources newly
covered by title V will be subject to any CAA requirements due to their
GHG emissions, and we suspect that a larger number will not be subject
to any CAA requirements at all. As a result, for most of these sources,
although they would need to apply for and receive a permit, there would
be no applicable requirements to include in the permit and thus the
exercise would not improve compliance.
The picture that emerges from a literal application of title V's
requirements to all GHG sources--at the 100 tpy level, beginning on
January 2, 2011--shows multi-year delays in issuance of all permits,
for both the sources that have applicable requirements and that
Congress clearly intended the program to cover, and for the millions of
sources that may not be subject to any applicable requirements. In
short, this literal interpretation would apply title V to millions of
sources that Congress did not expect be covered, and the ensuing
administrative burdens--at least initially--would impede the issuance
of permits to the thousands or perhaps tens of thousands of sources
that Congress did expect be covered. This is the type of ``absurd
results'' from a literal application of statutory provisions that the
courts have held should be avoided. And even beyond all that, the sheer
magnitude of the numbers involved--millions of permits requiring
thousands of FTEs at a cost to the permitting authorities of billions
of dollars, all this beginning immediately at the time that GHGs become
subject to regulation--makes clear that this result of a literal
application of the title V provisions to GHG sources cannot be what
Congress intended.
b. EPA's Reconciliation of Applicability Provisions With Congressional
Intent
For the reasons just described, we should not consider the literal
meaning of the applicability provisions to be determinative of
congressional intent as to the applicability of title V to all GHG
sources; rather, we should examine other provisions of the statute and
the legislative history to determine congressional intent on that
question. If congressional intent is clear, we must adopt and implement
an applicability approach that is as close as possible to congressional
intent; and if congressional intent is not clear, then we must select
an interpretation that is reasonable and consistent with the statutory
requirements. This section explains EPA's view of congressional intent
for the applicability of the title V program to GHG sources and the
principles and approach EPA is using for tailoring. In addition, we
also respond to other approaches that were suggested by commenters.
To determine congressional intent, we consider the statutory
provisions and legislative history, and this analysis is similar to
that for PSD. The most important title V provisions and legislative
history for this purpose are the following:
(1) The applicability provisions themselves, which, as we have
interpreted them, apply title V to all sources that emit at least 100
tpy of any air pollutant subject to regulation. CAA sections 502(a),
501(2)(B), 302(j). Although we do not believe these provisions should
be applied literally to GHG sources, their broad phrasing indicates,
directionally, a congressional intent towards inclusiveness of sources
in title V, including GHG sources.
(2) The provisions for general permits, CAA section 504(d); and
title V fees, CAA section 502(b)(3)(A). These provisions give title V
an important measure of flexibility as to its scope. The explicit
authorization of general permits means that title V may be applied to
more sources and more efficiently, thereby saving costs to both source
and permitting authority. The requirements for permit fees provide a
mechanism for permitting authorities to, over time, develop their
programs to cover more sources. In this sense, these provisions could
be construed to indicate congressional intent to apply title V
inclusively, to the extent that permitting authorities can accommodate
additional sources through general permits and permit fees.
(3) The detailed procedural requirements--including time periods,
such as the 18-month time period for action on permit applications--for
title V permit processing. CAA sections 503, 505. Although these
requirements are consistent with applying title V to GHG sources--in
the sense that at least in
[[Page 31565]]
theory, there is nothing intrinsic to GHG sources that would mean that
permitting authorities could not comply with these requirements--these
requirements cast doubt on whether Congress can be said to have
intended that title V cover the many small GHG sources (at least
immediately) in light of the risk that including all those sources in
title V would strain the process.
(4) The provisions and legislative history concerning applicable
requirements, which indicate that a purpose of title V is to include
sources' applicable requirements in their permits. CAA sections
503(b)(2), 504(a). These provisions, and the accompanying legislative
history, discussed previously, suggest an intent to include within
title V GHG sources that have applicable requirements, but may also
suggest that Congress would not have intended to include in title V the
large numbers of GHG sources that have ``empty permits,'' at least
where their inclusion would undermine implementation of the program for
sources with applicable requirements.
(5) The small-business-assistance provisions of section 507 and the
legislative history of title V--both the permitting program and the
small-business-assistance program--concerning the scope of the
permitting program and small businesses. These indicate that Congress
intended title V to cover some tens of thousands of sources, and did
not intend that title V apply to small businesses. These provisions and
legislative history suggest that Congress did not intend for title V to
apply to include large numbers of small GHG sources.
Finally, the legislative history of title V does not explicitly mention
GHG sources, which could suggest that Congress did not have occasion to
focus on whether and how title V would apply to GHG sources.
With all this, we believe that Congress had a clear intent on the
question of whether title V generally applies to GHG sources, and that
was that it does. As with PSD, the most important indication of
congressional intent in this regard is the applicability provisions,
which provide, in part, that title V applies to ``any stationary
facility or source of air pollutants which directly emits, or has the
potential to emit, [the requisite quantity] of any air pollutant.'' CAA
sections 502(a), 501(2)(B), 302(j). This term is quite broad, and
should be read to include GHG sources. See Massachusetts v. EPA, 549
U.S. 497, 533 (2007) (``Because greenhouse gases fit well within the
Clean Air Act's capacious definition of `air pollutant,' we hold that
EPA has the statutory authority to regulate the emission of such gases
from new motor vehicles.''). Moreover, including GHG sources--under
certain circumstances--is consistent with the various statutory
provisions and statements in the legislative history described
previously.
In the alternative, if it is concluded that Congress did not
express a clear intent on that question, then, under Chevron Step 2,
EPA exercises its discretion to conclude that title V applies to GHG
sources as a general matter. This is a reasonable policy because
applying the title V program to at least the larger GHG sources will
assure promote accountability and enforceability for those sources,
which is a key goal of the title V program, and will not impose
obligations that are beyond the resources of those sources or
insurmountable burdens on the permitting authorities. This policy is a
reasonable interpretation of the statutory provisions for the same
reasons just discussed.
As to the question of how title V applies to GHG sources, we
believe that Congress cannot be said to have expressed a clear intent.
A central aspect of how title V is to apply to GHG sources concerns
``empty permits,'' and on this aspect, some of the above-described
provisions and statements in the legislative history point in different
directions. This is particularly true of, on the one hand the title V
applicability provisions, which apply by their terms inclusively and,
on the other hand, the requirement that sources include applicable CAA
requirements in their permits, and the statements in the legislative
history indicating that Congress intended title V to cover sources
subject to other CAA requirements.
Because Congress cannot be said to have expressed an intent as to
the manner and scope of title V applicability to GHG sources, then,
under Chevron Step 2, EPA may apply a reasonable interpretation of the
applicability provision to determine the scope of coverage of GHG
sources that is consistent with the statutory requirements. The
Tailoring Rule qualifies as such an interpretation. The Tailoring Rule
in effect reads the applicability provisions not to apply title V to
GHG sources at or above the 100 tpy level, but instead to apply title V
to as many of the GHG sources at or above that level as possible and as
quickly as possible, starting with the largest sources first, that is
consistent with both the permitting authorities' ability to administer
the program and with a sensible imposition of costs to sources. This
tailoring approach is consistent with the inclusive direction of the
applicability provision, the flexibility in title V's scope that is
inherent in the provisions authorizing general permits and requiring
permit fees, the detailed process requirements, and the legislative
history that focuses on Congress's concern about costs to sources and
administrability. With the tailoring approach, over time, more sources
may be included in title V, consistent with those provisions and
legislative history. This reconciles the inclusiveness of the
applicability provisions with Congress's expectations of a more limited
scope for the title V program.\47\ However, as part of the tailoring
approach, we recognize that we may at some point determine that it is
appropriate to exclude certain sources, such as the smallest of the GHG
sources. In addition, we intend to address the issue of sources with
``empty permits'' in a later rulemaking, as discussed previously.
---------------------------------------------------------------------------
\47\ As with PSD, this way of reconciling the PSD applicability
provisions with Congress's expectations for a narrower PSD program
is consistent with the U.S. Supreme Court's view that the CAA should
be read to include ``regulatory flexibility, [without which]
changing circumstances and scientific developments would soon render
the Clean Air Act obsolete.'' Massachusetts v. EPA, 549 U.S. 532.
---------------------------------------------------------------------------
The specific phase-in schedule will depend on the following: We
will gather information about the permitting authorities' ability to
process permits, and we will develop streamlining techniques. Based on
that information, we will address expanding the title V program in a
step-by-step fashion to include more sources over time. Each step will
be based on our assessment of the permitting authorities' and sources'
ability to comply with their respective obligations under the title V
program.
We recognize that the availability of permit fees to support title
V permit actions creates a potentially important source of resources,
and that this has implications for the permitting authorities' ability
to implement the title V program for sources of GHGs. At least in
theory, permitting authorities could assess and collect sufficient fees
to support hiring and training sufficient personnel so that they could
expand their programs to match the expansion in the number of sources
covered by the program.
Even so, title V fees cannot be considered a panacea that will
resolve all resource problems that permitting authorities will have,
for several reasons. Permitting authorities will likely be constrained
as to the rate in which they can increase fees in light of
[[Page 31566]]
the costs to sources. As indicated elsewhere, at least at the outset of
the program before streamlining techniques have been developed, a
literal application of the title V applicability provisions to GHG
sources would, on average, cost each industrial source $46,400 and each
commercial or residential source $23,200 to complete the permit
application and take other associated actions; and it would cost each
permitting authority, on average, $19,688 to process the industrial
source permit and $9,844 to process the commercial or residential
source permit. Particularly in light of the high costs to sources of
applying for a permit, it is not likely that permitting authorities
would be able to pass on to the sources in the form of fees, the
entirety of the permitting authorities' own high costs for processing
those permits, at least not right away. Even to the extent it would be
possible to raise permit fees, permitting authorities would have to
undergo a process to assess, impose, and collect those fees, and then
hire and train personnel. The survey from the state and local agencies
described previously forecast a 2-year period for hiring and training,
without counting time for the fee process. For these reasons, we do not
believe that the authorization for fees will allow the permitting
authorities either to accelerate Steps 1 or 2 of the tailoring schedule
or to permit a larger number of sources at those steps. Step 1 will
take effect on January 2, 2011, Step 2 will take effect on July 1,
2011, and the process for determining and collecting fees, and then
hiring and training personnel will take at least several years after
July 1, 2011.
Moreover, we do not believe that the authorization for fees means
that permitting authorities can reasonably be expected to permit title
V sources at levels below 50,000 tpy CO2e before 2016. The
next level below 50,000 tpy CO2e for which we have data is
25,000 tpy CO2e, and the costs to permitting authorities to
run their programs at that level ($126 million) is more than double
their current costs ($62 million). We do not consider it reasonable to
expect permitting authorities to more than double their program within
the first 6 years of title V applicability to GHG sources. That it is
not reasonable to expect that is made even clearer when the permitting
authorities' burdens in implementing their PSD programs are considered.
The ability of permitting authorities to impose fees may have more
important implications for subsequent steps, and as we address those
subsequent steps in future rulemakings, we will consider the fees.
EPA's approach to fees in this rulemaking is discussed elsewhere.
c. Other Possible Approaches to Reconciling Literal Reading of Title V
Applicability Provisions and Congressional Intent
Having described how the Chevron framework, accounting for the
``absurd results'' doctrine, applies to title V requirements in this
case and why it supports this Tailoring Rule--under which we expect to
apply title V to more sources, in a step-by-step fashion, over time--we
turn to the last part of our discussion of this doctrine. Here, we
address another possible approach suggested by comments, which is 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'' (e.g., 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 permitting
mechanism, see CAA sections 503(b)(1), 504(a), we do not read those
provisions as expressly limiting, as a matter of Chevron Step 1, 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
previously, 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 elsewhere, 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 elsewhere, 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.
7. Additional Rulemaking for the PSD and Title V Programs
The previous sections 5 and 6 discussed our application of the
Chevron framework, accounting for the ``absurd results'' doctrine, to
the PSD and title V applicability requirements, respectively. As
another point in this regard, which is relevant for both PSD and title
V purposes, we also commit to subsequent rulemakings in which we may
further address the ``absurd results'' doctrine.
Specifically, we will propose or solicit comment on establishing a
further phase-in, that is, a Step 3, that would apply PSD and title V
to additional sources, effective July 1, 2013, and on which we commit
to take final action, as supported by the record, by no later than July
1, 2012. We further commit to completing another round of rulemaking
addressing smaller sources by April 30, 2016. Our action in that
rulemaking would take into account the severity of the remaining
problems associated with permitting authority burden and source costs.
While committing to future action, we do not decide in this rule
when the phase-in process will ultimately end, or at what threshold
level, because all that depends on uncertain variables such as our
progress in developing streamlining approaches and on permitting
authorities' progress in developing permitting expertise and acquiring
more resources. We may continue the phase-in process with further
rulemaking(s) after 2016. Alternatively, we may make a final
determination through future rulemaking that, under the ``absurd
results'' doctrine, PSD and/or title V do not apply to GHG sources
that, while small and relatively inconsequential in terms of GHG
contribution, are above
[[Page 31567]]
the statutory tonnage thresholds for these programs, and thereby end
the phase-in process. In addition, we may consider whether to limit
title V applicability to GHG sources in order to minimize the number of
GHG sources with ``empty'' permits.
8. Rationale for the Phase-In Schedule for Applying PSD and Title V to
GHG Sources
Having discussed in sections V.B.5, V.B.6, and V.B.7 the reasons
for tailoring the PSD and title V programs, we now describe our
rationale for selecting the specific phase-in schedule in this rule for
applying PSD and title V to GHG-emitting sources. To reiterate for
convenience, under Step 1 of this schedule, which begins on January 2,
2011, (1) PSD applies to the GHG emissions of ``anyway'' PSD sources,
that is, sources that are subject to PSD anyway due to their emissions
of conventional pollutants and that undertake a modification that
results in an increase of at least 75,000 tpy CO2e; and (2)
title V applies to ``anyway'' title V sources, that is, sources that
are subject to title V anyway due to their emissions of conventional
pollutants. Under Step 2, which begins on July 1, 2011, (1) sources
will be subject to PSD on account of their GHG emissions if they newly
construct and emit at least 100,000 tpy CO2e, or if they are
existing sources that emit at least 100,000 tpy CO2e of GHGs
and make a modification that results in the emission of at least 75,000
tpy CO2e; and (2) existing and new sources will be subject
to title V on account of their GHG emissions if they emit 100,000 tpy
CO2e in GHG emissions. In addition, EPA intends to begin
another round of rulemaking--Step 3--in 2011 and commits to complete it
by July 1, 2012. In that rulemaking, we will propose or solicit comment
on a further phase-in of GHG sources for PSD and title V applicability,
and we may propose or solicit comment on another application of the
``absurd results'' doctrine that excludes categories of sources from
PSD or title V. However, under this rule, in no event will EPA apply
PSD or title V to sources below the 50,000 tpy CO2e levels
in Step 3, or any other step we might promulgate prior to April 2016.
In addition, EPA commits to conduct a study, to be concluded by April
30, 2015, evaluating the status of PSD and title V applicability to GHG
sources, and, based on the study, complete a rulemaking by April 30,
2016 that addresses another round of a phase-in.
a. Rationale for Step 1
In Step 1 of our tailoring approach, which begins on January 2,
2011, PSD and title V requirements will apply to only those sources
that are subject to PSD or title V requirements anyway due to their
conventional pollutants (``anyway'' sources) and that, in the case of
PSD, make modifications that result in an increase in GHG emissions of
at least 75,000 tpy CO2e. No sources would become major for
PSD or title V under this step based on their GHG emissions alone. This
section describes our proposal, comments on the proposal and our
response to those comments, and our rationale for Step 1.
(1) Proposal
In our proposal, we proposed (1) the application of PSD and title V
requirements to sources that emit at least 25,000 tpy CO2e,
(2) a PSD significance level of between 10,000 and 25,000 tpy
CO2e, and (3) a commitment to undertake a study to be
followed by further rulemaking after 6 years. In addition, we solicited
comment on the alternative of limiting PSD and title V applicability to
``anyway'' sources for at least the first 6 years. Under this approach,
PSD and title V applicability would be determined based on non-GHG
pollutants, and without regard to GHGs, but those sources subject to
PSD would also be subject to BACT requirements for GHGs if their GHG
emissions exceeded the significance level established in the final
rule, and those sources subject to title V would be required to include
any applicable requirements for GHGs in their permits.
(2) Comments
Many commenters supported this ``anyway''-source approach, and
offered a variety of reasons: According to the commenters, (1) This
approach is a better reading of Congress's intent in the Act and is
consistent with Alabama Power v. Costle, 636 F.2d 323 (DC Cir. 1980);
(2) this approach would reduce the permitting workload on sources
currently considered minor and focus PSD and title V requirements on
large sources of non-GHG pollutants, as intended by Congress; (3) it is
appropriate to base PSD and title V applicability on non-GHG emissions
until data on GHG emissions are available from the mandatory GHG
reporting rule; (4) in the initial phase, this approach 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; (5) this approach would
provide permitting agencies time to develop experience handling GHG
sources and requirements under the PSD and title V programs; (6) this
approach would provide EPA and the permitting agencies the time needed
to develop streamlining techniques; (7) this approach is consistent
with the ``absurd results'' and ``administrative necessity'' doctrines
because the scope of the permitting programs would remain consistent
with both congressional intent and current administrative practice, but
EPA and state agencies would still be allowed to begin regulating GHG
emissions from existing PSD and title V sources; and (8) sources
already required to obtain PSD permits are best equipped to work
through BACT issues with permitting authorities.
Commenters added that if BACT is applied for GHGs due to permit
actions involving non-GHG pollutants, EPA would need to set a
significance threshold for the application of BACT, without which BACT
could apply to very small (e.g., 1 ton) GHG increases associated with
projects that otherwise triggered PSD for increases of non-GHG.
(3) Determination as to Step 1, PSD and Title V Applicability and PSD
Significance Level
After considering the administrative burdens from increased
permitting actions and the need for permitting authorities to have
sufficient time to develop necessary expertise and staffing resources
to address that burden, we have decided in this final action to
establish the ``anyway'' source approach as Step 1. Beginning on
January 2, 2011, sources subject to PSD requirements for their
conventional pollutants anyway will be required to apply BACT to their
GHG emissions if they construct or modify and in so doing, emit at
least 75,000 tpy CO2e in GHGs. Similarly, sources subject to
title V requirements anyway due to their conventional pollutants will
be required to meet certain requirements for their GHGs, as described
elsewhere. These requirements at Step 1 for PSD and title V will not
expire. On July 1, 2011, a further phase-in of PSD and title V
applicability--Step 2--will kick in.
At Step 1, by definition, all of the covered sources are already
subject to PSD and title V permitting requirements, and will simply be
adding a GHG component to what would be an otherwise occurring
permitting action for conventional pollutants. These sources include
fossil fuel-fired power plants, petroleum refineries, cement plants,
iron and steel plants, pulp and paper plants, petroleum refineries,
large
[[Page 31568]]
landfills, and other large industrial sources. These sources will need
to perform some additional analysis that is unique to GHG emission
units, particularly related to the BACT review and selection process,
but they will likely be able to utilize information developed as part
of other permitting requirements for conventional pollutants, such as
equipment fuel usage and operational parameters. Also, because these
facilities are familiar with the case-by-case permitting processes,
including all the steps from the application to the final review
process, they will not confront a high PSD or title V learning curve.
The ``anyway'' source approach has particular appeal during 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, but because it applies only to sources that are
already subject to PSD for other pollutants, it can be implemented
efficiently and with an administrative burden that is manageable in the
next 8 months. We expect that under this approach, the sources and
permitting authorities will still face substantial additional work to
address the GHG emissions. In addition to the activities discussed
elsewhere, there will be significant and complex policy questions about
how BACT will be implemented for GHGs that must be resolved. These
issues will include how to determine BACT for GHGs, how to do netting,
and other similar issues. Even with EPA guidance, many case-specific
policy issues will arise and will have to be resolved by the permitting
authority in the context of a specific permit application.
Nevertheless, with the ``anyway'' source approach, this work will be
manageable because the associated permitting burden will be limited to
adding a GHG component to each existing permit action for which it will
be required, and will avoid the significantly greater burdens
associated with large numbers of new permit actions that would be
required for sources and modifications that would be subject to PSD for
the first time. Instead, this ``anyway'' source approach allows
permitting authorities sufficient time to develop necessary expertise
and staffing resources to address GHG BACT.
We agree with commenters that the establishment of a significance
level--which, in effect, is a BACT threshold--is appropriate, and we
have decided to establish this level at 75,000 tpy CO2e
because, for reasons discussed later, that is the level that will apply
during Step 2. At this level, the administrative burdens, described
later, will be manageable. 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. Otherwise, we
would create a perverse incentive for companies to delay such projects
until Step 2 to avoid BACT.
We estimate that Step 1 will result in a 23 percent increase in
permitting authority work hours and a $3 million increase--which
amounts to a 25 percent increase from the current program cost of $12
million--in their annual costs for running PSD programs. This is
primarily due to the GHG BACT review requirements. For title V
programs, we estimate a 2 percent increase in permitting authority work
hours and a $1 million increase in the title V annual program costs for
permitting authorities under Step 1 as compared to the current program
cost of $62 million. These work hours and costs will be needed
primarily to review GHG emissions information, add any GHG-related
requirements to title V revisions and renewal actions that would
otherwise be occurring, respond to comments and petitions from the
public, as well as develop fee requirements and make fee determinations
associated with issuing new or revised title V permits that add GHG-
related information. For both the PSD and title V programs on a
combined basis, the additional costs for Step 1 will be $4 million,
which amounts to a 5 percent increase in the current combined program
cost of $74 million.
In addition to these workload and monetary costs, permitting
authorities will confront additional burdens before and during Step 1,
which we have not attempted to quantify. One of the most significant of
these is training staff in the PSD-related areas of GHG emissions
calculations and BACT evaluations. In addition, permitting staff will
need to build staff expertise and capacity for addressing GHG
requirements in preparation for Step 2, which will begin only 6 months
after Step 1; and in communicating and providing outreach to sources
addressing GHG emissions for the first time. Based on comments we
received on the proposal from permitting authorities, we believe these
additional training and outreach requirements--for both the PSD and
title V programs--will add significantly to the permitting authorities'
burden during the initial 6-month period under Step 1.
We believe that these administrative burdens are substantial but
manageable. Following this action, permitting authorities will have
only 8 months to prepare for Step 1, when they will need to increase
their resources by 5 percent for both the PSD and title V programs
combined, and be able to implement BACT requirements for GHG sources.
During Step 1, they will need to prepare for Step 2, when, as discussed
later, they will need to process over 900 additional PSD permits each
year and begin to process over 1,100 additional title V permit actions.
We have decided to limit Step 1 to the ``anyway'' source approach,
and not apply PSD or title V to sources based on their GHG emissions,
for several reasons. First, we believe that the administrative burdens
described previously are the most that the permitting authorities can
reasonably be expected to manage before and during Step 1. Tighter PSD
and title V applicability requirements would mean greater
administrative burdens.
Second, we believe that the costs of GHG permitting to the sources,
as described previously, are substantial and as a result, necessitate
that we wait for the permitting authorities to develop the PSD and
title V programs for GHG sources during the first 6 months of 2011
before subjecting sources to PSD and title V requirements on account of
their GHG emissions. By July 1, 2011, when Step 2 takes effect, the PSD
and title V programs will be better developed. For example, the
permitting authorities will have more experience making BACT
determinations. In addition, by that time, sources will have had more
time to prepare for the permitting processes. In addition, as suggested
by one commenter, the additional time will allow sources and permitting
authorities to address the current uncertainty surrounding how to
measure high-GWP gases.
Third, we estimate that ``anyway'' sources account for
approximately 65 percent of total national stationary source GHG
emissions. As a result, limiting Step 1 to these sources will still
capture a large portion of the GHG inventory.
A large number of commenters urged us to leave this ``anyway''
source approach in place until such time as we complete an assessment
and conduct further rulemaking, which we proposed would be 6 years from
now. We are not taking this action; rather, for the reasons discussed
next, we believe it is reasonable to use GHG thresholds to begin to
phase in PSD and title V applicability to additional sources in Step 2.
[[Page 31569]]
b. Rationale for Step 2
(1) Proposal
We proposed to establish the applicability level for PSD and title
V to GHG sources at 25,000 tpy CO2e, and we proposed a PSD
significance level in the range of 10,000 to 25,000 tpy
CO2e. Our burden estimates at proposal led us to conclude
that at those threshold levels, for the PSD program, ``approximately
400 additional new or modified facilities would be subject to PSD
review in a given year. These include approximately 130 new facilities
and approximately 270 modifications * * *.'' 74 FR 55331, col. 1. We
estimated that processing these numbers of additional permits, along
with doing the additional work associated with GHG emissions from
sources subject to PSD anyway due to their conventional emissions,
would increase permitting authority burdens by ``approximately 112,000
staff hours at an additional cost of approximately $8 million. This
workload amount represents an increase of about 1.3 times, or 32
percent, in the current burden for permitting authorities on a
nationwide basis.'' Id. col. 3. We concluded that ``this additional
burden is manageable,'' but that ``any threshold lower than 25,000 tpy
CO2e, would create undue administrative burdens.'' Id.
For the title V program, we estimated that at a 25,000-tpy
CO2e permitting threshold, ``about 13,600 existing
facilities'' would become subject to title V, and that to manage the
additional workload associated with permitting those sources and with
the other permit revisions and modifications that would result from the
25,000 tpy CO2e threshold, permitting authorities would
require an additional 492 FTEs, which would be an estimated 50 percent
increase over current title V staffing levels. 74 FR 55335, cols. 1-2.
(2) Comments
We received a significant number of comments from both permitting
authorities and industry representatives that our proposed GHG
threshold of 25,000 tpy CO2e for major source applicability
was too low and would result in an unmanageable amount of permitting
actions in the near term. Many offered evidence that we severely
underestimated both the number of permitting actions and the per-permit
administrative burden, for both PSD and title V programs.
Commenters also asserted that the proposed 25,000 tpy threshold is
too low because it will subject small sources (including many small
businesses) to PSD and title V, which is not in keeping with Congress's
intent to limit PSD and title V to large sources when Congress set the
100/250 tpy thresholds for the permitting programs. 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 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 become subject to PSD and title V due to the proposed permitting
thresholds than EPA estimated at proposal.
Many commenters recommended specific major source thresholds for
PSD and title V, including levels of 25,000 (as proposed), 40,000,
50,000, 100,000, 150,000, 250,000, and 1,000,000 tpy CO2e. A
majority of the commenters--including both industry and state agency
commenters--recommended major source thresholds of 100,000 tpy
CO2e. However, several state agency commenters recommended
thresholds of 50,000 tpy CO2e. Other commenters recommended
sector-specific thresholds. For example, solid waste industry
commenters suggested thresholds of 820,000 tpy CO2e for PSD
[which they calculate to be equivalent to the existing PSD threshold
for ``municipal solid waste landfill emissions,'' i.e., 250 tpy
nonmethane organic compounds (NMOC)] and 320,000 tpy CO2e
for title V (calculated to be equivalent to the existing major source
applicability threshold of 100 tpy NMOC). Other commenters urged EPA to
set the GHG thresholds at levels that correspond to emissions of
conventional pollutants at the 100/250 tpy level.
Many of the commenters that recommended increasing the thresholds
cited EPA's estimates that a particular threshold would significantly
reduce the number of sources subject to the rule while causing only a
slight reduction in the percentage of GHGs captured. Several of these
commenters noted that Table VIII-2 in the proposal preamble indicates
that shifting the major source threshold for PSD from 25,000 to 100,000
tpy CO2e would reduce the number of major sources from
13,661 to 4,850 while reducing the coverage of U.S. stationary source
GHG emissions by only about 4 percent. Other commenters referred to the
regulatory impact analysis (RIA) for the mandatory GHG reporting rule
to conclude that raising the threshold from 25,000 to 100,000 tpy
CO2e would exclude thousands of entities that, on a combined
basis, emit only one percent of the nation's GHG emissions. See the RTC
document for this final rulemaking for more detailed description of
comments received on our proposed burden assessment.
Many commenters also recommended specific PSD GHG significance
thresholds, including levels of 10,000 (as proposed), 15,000 (within
the proposed range), 25,000 (also as proposed), 40,000, 50,000, and
100,000, and 150,000 tpy CO2e, as well as suggesting sector-
specific thresholds. These recommendations were based on the view that
we had underestimated the number of modifications and that the burden
of permitting at the proposed levels would therefore be much worse than
we projected. A number of the commenters argued that the significance
threshold should be no less than the major source threshold, at
whatever level that is set. The largest number of commenters
recommended a PSD significance threshold of 100,000 tpy
CO2e, although significant numbers also support 25,000 and
50,000 tpy CO2e.
(3) Rationale for Step 2
Based on these comments, we reassessed our original burden
estimates from our proposal. This reassessment is discussed at the
beginning of this section. We decided that, once this adjustment is
taken into account, the burdens at the proposed 25,000 threshold and
the proposed 10,000-25,000 significance levels would be unmanageable.
We therefore 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; and we
selected the 100,000/75,000 tpy CO2e level. 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 have considered would result in (1) a
greater number of sources, and significantly greater number of
modifications than we first estimated becoming subject to those
programs; and (2) a greater per-permit cost than we first estimated to
the permitting authority of processing those permit actions. We
discussed our revised estimates and reasoning at the beginning of this
section.
We now estimate that the 25,000/25,000 tpy level would result in
250 additional PSD permit actions for new construction (either for GHG-
only sources or additions to otherwise occurring permits) and an
additional 9,200 PSD permits for modifications
[[Page 31570]]
each year (compared to our estimate at proposal of 130 for new
construction and 270 for modifications). This level of permitting would
require an additional 2,815,927 work hours, or 1,400 FTEs (compared to
our estimate at proposal of 112,000 additional work hours, or 57 FTEs);
and would cost an additional $217 million each year (compared to our
estimate at proposal of an additional $8 million). See 74 FR 55331
(proposal). This $217 million amount represents approximately a 1,800
percent increase over current permitting authority annual cost of $12
million for the major NSR programs.
For title V, under our final burden analysis at a 25,000 tpy
CO2e threshold, we estimate a $64 million annual increase in
program costs to permitting authorities to add GHG emission sources,
which reflects a greater than 100 percent increase over current program
costs of $62 million. We estimate that this increased burden would
result in the need for almost 700 new FTEs nationwide at permitting
authorities (compared to our estimate at proposal of 492 additional
FTEs, or about a 50 percent increase in existing program size). This
increase in burden is due to an estimated annual increase of 2,500 new
title V permits, over 9,500 permit revisions, and over 2,600 permit
renewal actions due to GHG emission sources. These additional title V
actions compare to current annual program actions of approximately 50
new title V permits, 1,394 significant revisions, and 3,267 permit
renewals.
Based on this information, we have decided not to finalize our
proposal to apply a 25,000 tpy CO2e applicability threshold
to GHG sources at the time that PSD and title V take effect. At that
level, too many sources--many more than we thought at proposal--would
be subject to high permitting costs. In addition, permitting at that
level and at that time would not be administratively feasible. The
resulting increase in the number of PSD and title V permitting actions
and workload would create insurmountable resource demands for
permitting agencies in the near term, which would jeopardize the
functioning of these permitting programs. We are mindful that not only
would the permitting programs have to bear the costs that our estimates
are able to monetize, but they would also incur burdens associated with
hiring and training staff to make and implement GHG BACT
determinations, GHG emissions evaluations, and other evaluations
required under the PSD program for a wide variety of formerly
unpermitted sources, including significant numbers and types of small
manufacturing and commercial or residential establishments. They would
also incur burdens associated with reviewing applications, citizen
comment and petitions, and the need to communicate and provide outreach
to new categories of sources, including, again, significant numbers and
types of small manufacturing and commercial or residential sources.
Thus, the increased administrative burdens at the 25,000/25,000 tpy
CO2e levels are so great that we have concluded that they
would not be consistent with the goals of avoiding absurd results that
contravene congressional intent, including avoiding a permitting burden
that would overwhelm the capacity of permitting authorities to
effectively implement their programs.
Based on our revised burden analysis, in this final action, we have
decided to establish a multi-step, phase-in approach that contains a
significantly higher initial threshold level. We have determined that a
100,000 tpy CO2e major source threshold level for PSD and
title V purposes, and a 75,000 tpy CO2e significance level,
produce a level of permitting activity that would certainly be an
increase over current workload, but that would be administratively
feasible by July 1, 2011. As a result, we have decided to finalize
these thresholds as Step 2.
In reaching this conclusion, we needed to consider both the
sources' abilities to manage the permitting process and the permitting
authorities' capacity to address newly-major sources as expeditiously
as possible. As to the former, sources subject to Step 2 will, for the
most part, continue to include the ``anyway'' sources subject to Step
1. In addition, we estimate that Step 2 will include about 500
additional sources that are not already subject to permitting. Most of
them will become subject to PSD and title V because of fuel burning. In
order to meet the 100,000/75,000 threshold, they will have to burn a
significant quantity of fuel, and that means they will be a significant
size. In general, these sources include municipal or commercial
landfills that are large, but not large enough to be covered by the
NSPS, pulp and paper facilities, electronics manufacturing plants,
chemical production plants, and beverage producers. Although these
sources have not been subject to PSD permitting before, some of them
have already been subject to minor source permitting, and so will have
some familiarity with the permitting process. In addition, in general,
these sources are in source categories that have larger sources that
are already subject to PSD and title V. As a result, they are in
industries that have experience in the permitting process. Because of
their relatively large size and access to knowledge about the
permitting processes, we believe these sources will be able to manage
the permitting requirements.
As to the permitting authorities' capacity to handle the Step 2
workload, we note first that our Step 1 approach does not cover newly-
major sources. As a result, the Step 2 threshold and timing has to be
established in a way that takes into account permitting authority
challenges in addressing many sources and categories that would be
subject to major source permitting for the first time.
We considered the various PSD and title V threshold applicability
and significance level options in our final burden analysis, summarized
in Table VI-1, including levels at 50,000 CO2e and 100,000
CO2e. As Table VI-1 indicates, we estimate that a 100,000
tpy CO2e major source applicability threshold would result
in approximately 550 sources becoming newly classified as major sources
for PSD based on their GHG emissions, while a 50,000 tpy
CO2e threshold would result in 3,500 newly classified major
sources.
We then considered the impact on both PSD and title V programs of
different PSD significance level options for GHGs. The choice of a PSD
significance level has a direct impact on title V burdens because PSD
permit requirements resulting from modification activities will result
in required title V permit revisions. We developed PSD and title V
burden estimates based on significance levels of 50,000 tpy, 75,000 tpy
and 100,000 tpy CO2e, combined with a major source
applicability level of 100,000 tpy CO2e.
At a 50,000 tpy CO2e significance level, we estimated an
annual increase of approximately 1,800 PSD permitting actions and
almost 2,000 additional title V permitting actions, as compared to Step
1. At a 75,000 tpy CO2e significance level, we estimated an
annual increase of approximately 900 PSD permitting actions and just
over 1,000 additional title V permitting actions as compared to Step 1.
At a 100,000 tpy CO2e significance level we estimated an
annual increase of approximately 25 PSD permitting actions and 210
additional title V permitting actions as compared to Step 1. For title
V, under these different scenarios, the major source applicability
level of 100,000 tpy CO2e results in approximately 200 new
permits annually, but, as noted, the choice of significance levels
affects the number of required permit revisions.
[[Page 31571]]
Based on this information, 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 CO2e
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
$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.
Although the burdens at the 100,000 tpy CO2e/75,000 tpy
CO2e levels are steep, we consider them manageable. Step 2
permitting for GHGs will mostly involve source categories in which some
sources have traditionally been subject to permitting, which should
render applying even the new GHG requirements more manageable. 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 CO2e
threshold is provided in the ``Technical Support Document for
Greenhouse Gas Emissions Thresholds Evaluation'' located in the public
docket for this rulemaking. In addition, because Step 2 does not begin
until July 1, 2011, permitting authorities have about 14 months to
prepare for it.
In addition, we believe that the sources that will become subject
to PSD and title V requirements at the 100,000/75,000 tpy
CO2e 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.
Because the administrative burdens at the 100,000/75,000 tpy
CO2e level are as heavy as the permitting authorities can
reasonably be expected to carry, adopting these threshold levels is
consistent with our legal basis under the ``absurd results'' doctrine.
Under this basis, we are reconciling the statutory levels with
congressional intent by requiring that the PSD and title V requirements
be applied to GHG sources at levels as close as possible to the
statutory thresholds, and as quickly as possible, in light of costs to
sources and administrative burdens.
Because the administrative burdens at the 100,000/75,000 tpy
CO2e 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. By the same token, we disagree with
commenters who suggested that we needed to set permanent GHG permitting
thresholds for major sources at a rate equivalent to the amount of GHGs
that would be emitted by conventional pollutants at the 100 and 250 tpy
level in order to meet the legal bases of the ``absurd results'' and
``administrative necessity'' doctrines. These levels would likely be
well above 300,000 tpy CO2e, depending on fuel types and
assumptions regarding the relative emissions of GHGs compared to the
conventional pollutants. Our data show that none of the levels above
100,000/75,000 tpy CO2e would result in significant
increases in administrative burdens. As a result, establishing these
levels would not apply PSD or title V requirements to GHG sources as
quickly as possible, and thus would not be consistent with our approach
in the Tailoring Rule.
We estimate that facilities meeting the Step 2 major source
applicability thresholds account for approximately 67 percent of total
national stationary source GHG emissions. Many commenters felt that
this should be an important basis for our selection of a threshold,
stating that there is no significant loss in GHG emissions coverage of
source categories at the 100,000 tpy CO2e threshold, and in
some cases arguing that as a result, we should set the level even
higher. We agree that it is important that the coverage in Step 2
represents 86 percent of the coverage at full implementation of the
statutory 100/250 thresholds.
c. Rationale for EPA's Plan Beyond Step 2
EPA commits that after Step 2, EPA will begin another rulemaking in
2011 and complete it by July 1, 2012, and in that rulemaking take
comment on a further phase-in of GHG sources for PSD and title V
applicability (Step 3). However, under this rule, in no event will EPA
apply PSD or title V to sources below the 50,000 tpy CO2e
levels prior to 2016. In addition, EPA commits to conduct a study, to
be concluded by April 30, 2015, evaluating the status of PSD and title
V applicability to GHG sources, and, based on the study, complete a
rulemaking by April 30, 2016, that addresses another round of a phase-
in.
(1) Proposal
In our proposal, we noted that following implementation of the
first phase of PSD and title V applicability to GHG sources, generally
at the 25,000 tpy CO2e threshold, additional action would be
required over time to assure full compliance with the statute. We did
not establish more steps in the schedule, but we did commit to conduct
a study, to be completed by 5 years after promulgation, evaluating the
status of PSD and title V applicability to GHG sources, and, based on
the study, complete a rulemaking by 6 years after promulgation that
addressed an additional step of the phase-in.
(2) Comments
A number of commenters supported the proposal's overall approach to
phase in the permitting of GHGs, mainly because this approach will
allow permitting of the largest sources of GHGs immediately while
collecting more information about smaller sources and more fully
considering streamlining options for subsequent phases. Many of these
commenters made clear that they do not support implementation of the
statutory 100/250 tpy thresholds, even through a phase-in approach. On
the other hand, one commenter asserted that EPA has failed to
demonstrate that
[[Page 31572]]
it needs 6 years to study and implement NSR and title V for sources
emitting less than 25,000 tpy. The commenter contends that EPA has not
analyzed, among other things, what combined effect the full
implementation of its streamlining proposals in the 15 months before
the due-date for title V permit applications would be to reduce the
cost, complexity, and number of title V permit applications that would
have to be submitted.
(3) Rationale for Further Steps
We agree with commenters who support a phased-in approach to the
Tailoring Rule. Our final action reflects a multi-step process that we
believe will facilitate a manageable expansion of PSD and title V
applicability, as appropriate, to GHG-emitting sources. In our final
action, we have established the initial two steps of a multi-step
phase-in of lower threshold applicability with a commitment to take
further regulatory activity to consider adopting lower thresholds. 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.
With this overall phase-in approach in mind, in this final rule,
EPA includes an enforceable commitment to undertake a notice-and-
comment rulemaking that would begin with an SNPR that we expect to be
issued in 2011 and that we commit will be finalized in 2012. The notice
will propose or solicit comment on further reductions in the
applicability levels. This rulemaking will take effect by July 1, 2013,
and therefore, in effect, constitute Step 3. In this action, we are
committing to a rulemaking for Step 3, but are not promulgating Step 3,
because it is important to allow EPA and the permitting authorities to
gain experience permitting sources under Steps 1 and 2, and to allow
time to develop streamlining methods, before attempting to determine
what would be the next phase-in levels for PSD and title V
applicability. While committing to future action, we do not decide in
this rule when the phase-in process will ultimately end, or at what
threshold level, because all that depends on uncertain variables such
as our progress in developing streamlining approaches and on permitting
authorities' progress in developing permitting expertise and acquiring
more resources. We may continue the phase-in process with further
rulemaking(s) after 2016. Alternatively, we may make a final
determination through future rulemaking that, under a Chevron analysis,
accounting for the ``absurd results'' doctrine, PSD and/or title V do
not apply to GHG sources that, while small and relatively
inconsequential in terms of GHG contribution, are above the statutory
tonnage thresholds for these programs, and thereby end the phase-in
process.
In addition, in this action, we are determining that in no event--
whether through Step 3 or a subsequent step--will we apply PSD or title
V to sources at the 50,000/50,000 tpy CO2e level or lower
prior to May 1, 2016. We have several reasons for making this
determination at this time. Most importantly, our examination of the
expected burdens to the permitting authorities of applying PSD and
title V to GHG sources convinces us that extending the permitting
programs to sources at or below the 50,000/50,000 tpy CO2e
level within 6 years of promulgation would result in prohibitively
heavy burdens. This threshold option would result in close to 2,000
additional annual PSD permitting actions per year over the current
program and more than 1,000 over Step 2, including both new
construction and modifications. For title V, we estimated an increase
of over 1,000 new title V permits (all newly permitted sources because
of GHG emissions) over 2,000 permit revisions per year over the current
program, and about 980 new title V permits and 900 permit revisions
more than the Step 2 amounts.
These increases, which could occur between 2013 and 2016 under our
approach depending on the outcome of the Step 3 rulemaking, represent
very substantial additions to the permitting program. In terms of cost,
we estimate that these additional actions would result in a $73 million
per year increase in joint PSD and title V program costs over the
current programs--which is almost a doubling of costs--and $42 million
annual cost increase over Step 2 for the current programs. We believe
that it would take permitting authorities some time to adjust to this
workload. This is particularly true because at the 50,000/50,000 tpy
CO2e level, smaller sources--including ones not previously
subject to permitting requirements--will become subject to PSD and
title V. It will take some time for both the permitting authorities and
the sources to absorb these new obligations.
Importantly, the next lower cut-off--below 50,000 tpy
CO2e for the major threshold level--is the 25,000/25,000 tpy
CO2e level. For the reasons discussed previously, this level
is clearly not manageable within the first 6 years after this action.
This applicability level would bring in over 7,000 sources that would
be newly subject to title V permitting and result in close to 10,000
new PSD permitting actions. This would result in a 380 percent increase
over current program costs for PSD and title V to run these programs.
Based on comments we received from state and local permitting agencies
on our proposed Tailoring Rule, these levels of permitting activities
would far exceed the administrative capabilities of the permitting
agencies for at least the near future. Thus, the 6-year exclusion is
necessary to provide these agencies and their permittees certainty that
this will not occur.
We recognize that at present, we do not have data that would allow
us to compile administrative burden estimates for specific levels
between the 50,000/50,000 and 25,000/25,000 tpy CO2e levels
we assessed. However, it is clear that the burdens begin to rise
sharply below the 50,000/50,000 tpy CO2e level. To
reiterate, the combined PSD and title V administrative burdens at the
50,000/50,000 tpy CO2e level cost almost twice as much as
the current programs, but the burdens at the 25,000/25,000 tpy
CO2e level cost almost four times as much as the current
programs. As a result, we conclude that dropping the level below
50,000/50,000 tpy CO2e too soon would quickly expose the
permitting authorities to unacceptably high burdens.
As a further reason for concluding that we will not reduce
thresholds beyond 50,000/50,000 tpy CO2e during the first 6
years, we recognize that the PSD permitting process in particular
carries important ramifications for the permitting authorities and the
affected sources. If we have underestimated the permitting burden or
the ability of states to respond to their additional workload, then
permitting backlogs will result, and PSD permit issuance will be
delayed, and sources seeking a PSD permit will not be able to construct
or modify. If this were to happen on a large enough scale, it could
have potentially serious consequences for the national economy.
Moreover, we need to be mindful that the best information we
currently have as to permitting authority burdens represents a national
average, as described previously. Our information at the individual
state and local level, where permitting occurs, is not as robust.
Accordingly, we recognize that a particular state may encounter
permitting costs that are higher than average, and this may result in
permitting backlogs in that state, with
[[Page 31573]]
the consequence that sources in that state will face long delays in
constructing or modifying. Similarly, even if a particular state's
costs are in line with the national average, that state may not be able
to find the additional resources to cover those costs as readily as
other states. For this reason, too, sources in that state could face
long delays in constructing or modifying.
Beyond the administrative burdens to permitting authorities, we
recognize that the costs of PSD and title V permitting to sources may
be high, and we are not inclined to allow their imposition at this time
on sources smaller than the 50,000/50,000 tpy CO2e
threshold. At that level, the permitting programs will apply to a
significant number of newly permitted sources, including a variety of
small manufacturing, commercial and residential categories. The next
level that we have analyzed is the 25,000/25,000 tpy CO2e
threshold. At that level, more than 7,000 more sources would become
subject to PSD each year--almost all due to modifications--and another
4,000 sources would become subject to title V each year. These sources
would be even smaller than those that already will have become subject
to PSD and title V due to their GHG emissions. We do not think it
reasonable to subject more of those types of sources, and smaller ones,
to permitting costs within the next 6 years.
Finally, we note that moving from a 50,000 tpy CO2e
threshold to 25,000 tpy CO2e will increase the emissions
coverage of GHG stationary sources from 70 percent to 75 percent
nationwide, which we consider to be a relatively small amount.
We recognize that our progress in developing streamlining methods
will be a key determinant to the ability of permitting authorities to
administer, and sources to comply with, PSD and title V at GHG emission
levels below 50,000/50,000 tpy CO2e. Although we commit to
pursue streamlining, we cannot predict our progress. This uncertainty
may be problematic for stakeholders, primarily permitting authorities
and industry. That is, permitting authorities will face uncertainty in
planning the scope of their programs over the next few years, and
industry will face uncertainty as to what new construction projects and
modifications will be subject to PSD for GHGs. By determining now that
for the next 6 years we will not impose PSD requirements below a floor
at the 50,000/50,000 tpy CO2e level, we add a measure of
needed certainty.
We also recognize that selecting a level that is too high or
keeping a level for too long means that some sources may construct or
modify without implementing BACT level controls, and this could result
in additional emissions of GHGs. We need to be vigilant and to protect
against this outcome. Even so, all things considered, we believe that
our determination not to apply the PSD or title V permitting
requirements to sources below the 50,000/50,000 tpy CO2e
level for the first 6 years also represents a reasonable balancing of
protection of the environment with promotion of economic development.
This type of balancing is consistent with our authority under the PSD
provisions.
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 GHGs 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, Maximum Achievable Control
Technology (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.
In this action, EPA is also finalizing its proposal to commit to
conduct an assessment of the threshold levels--to be completed in 2015,
5 years after this action--that will 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. We further commit to undertake
another round of rulemaking--beginning after the assessment is done,
and to be completed by April 30, 2016--to address smaller sources.
We disagree with the commenter who asserted that we do not need 6
years to study and implement PSD and title V for smaller sources. 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 and effectiveness of the various permitting streamlining
techniques. For reasons discussed in more detail in section V.E.1
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. We do commit
in this action to fully investigate, propose, and evaluate permit
streamlining techniques to determine where they may have applications,
how they would be applied, and whether they can withstand legal
challenge. Even for
[[Page 31574]]
those techniques that may ultimately be deemed viable, there is a
significant time period necessary for rulemaking and state adoption,
all of which could take up to 3 years or more. We also note that we
will be required to complete our study of the effectiveness of these
techniques within 5 years, meaning that, in order to complete it in
time, we will essentially need to begin the study as soon as relevant
data are starting to become available. Finally, the sixth year, in
which EPA must complete rulemaking, requires proposal and promulgation
of a rule within 1 year, which is an ambitious schedule. Therefore we
believe that 6 years is appropriate for this type of effort. We also
have received a substantial number of comments from permitting
authorities that agreed with our 5-year timeframe, or a greater
timeframe, to get more prepared for permitting smaller sources.
d. Other Comments on ``Absurd Results'' Doctrine
We received other comments on our application of the ``absurd
results'' doctrine, which we respond to in the RTC document. One
comment was overarching, and so we respond to it here: Commenters have
asserted that under the ``absurd results'' doctrine, EPA does not have
authority to, or at least should not, promulgate the endangerment/cause
or contribute findings (which we will sometimes refer to as the
``findings'') or the LDVR because doing so would trigger the PSD and
title V requirements, which in turn would give rise to ``absurd
results''. According to commenters, under the ``absurd results'' case
law, EPA is obliged to avoid taking any action that would trigger
absurd results and in this case that means foregoing the endangerment/
cause or contribute findings and/or the LDVR, or at least deferring
finalizing them until EPA has time to streamline PSD and title V
requirements so as to avoid ``absurd results''. Commenters made the
related comment that if we promulgate the LDVR, and thereby trigger
PSD, we cannot rely on the ``absurd results'' doctrine because it is
our own actions--the promulgation of the LDVR--that will have given
rise to the ``absurd results,'' and under those circumstances, the
doctrine is not available.
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.\48\
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\48\ 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.
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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 a 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).\49\ 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.
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\49\ 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.
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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
[[Page 31575]]
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.
Instead of delaying the LDV rule 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
our rulemaking today, 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
[[Page 31576]]
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 Sec.
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.
9. ``Administrative Necessity'' Basis for PSD and Title V Requirements
in Tailoring Rule
EPA believes that the ``administrative necessity'' doctrine, within
the Chevron framework, also justifies this rulemaking. Applying the
applicability requirements of the PSD and title V programs according to
a literal reading of their terms (as EPA has narrowed them in the past
through interpretation) to GHG sources beginning on the January 2, 2011
date that regulation of GHGs takes effect would sweep so many sources
into those programs as to render the programs impossible for the
permitting authorities to administer. Although streamlining the PSD and
title V programs offers some promise to improve the administrability of
the programs, given the time needed to implement such streamlining, the
step-by-step expansion of PSD and title V requirements to GHG sources
that we are promulgating is the most that the permitting authorities
can reasonably be expected to administer.
This section discusses the application of the ``administrative
necessity'' doctrine. Our views concerning this doctrine remain similar
to what we said at proposal, except that in this rulemaking we place
the doctrine more clearly in the Chevron analytical framework, we
revise our assessment of the administrative burdens due to new analysis
we have conducted and information we have received since proposal, and
we make certain revisions to the tailoring approach.\50\ This analysis
and information, as well as the revisions to the tailoring approach,
have already been presented previously, in the discussion of the
``absurd results'' basis. In addition, it is not necessary to reiterate
the lengthy discussion of the ``administrative necessity'' doctrine
that we included in the proposal or the factual data presented
previously; as a result, this section briefly highlights the
conclusions we have reached about the application of this doctrine.
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\50\ In addition, we base our reliance on the ``administrative
necessity'' doctrine on the administrative burdens to the permitting
authorities of permitting smaller GHG sources, but not on the
relatively small amount of GHG emissions associated with the smaller
sources. See Alabama Power v. Costle, 636 F.2d 323, 357 (DC Cir.
1980) (establishing the ``administrative necessity'' doctrine as
``inherent in the administrative process'' and presumptively
available under the statutory scheme, absent clear congressional
intent to the contrary; but adding that in contrast, ``there exists
no general administrative power to create exemptions to statutory
requirements based upon the agency's perceptions of costs and
benefits'').
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As noted previously, under the PSD and title V applicability
provision--read literally, as we have long interpreted them--EPA's
recent promulgation of the LDVR will trigger the applicability of PSD
and title V for GHG sources at the 100/250 tpy and 100 tpy threshold
levels, respectively, as of January 2, 2011. This is because PSD
applicability hinges on the definition of ``major emitting facility''
and title V applicability hinges on the definition of ``major
sources,'' and those terms, read literally, and under EPA's long-
standing narrowing interpretation, apply PSD and title V, respectively,
to sources of any air pollutant that is subject to regulation under
another provision of the CAA. EPA's promulgation of the LDVR means that
GHGs will become subject to regulation on the date that the rule takes
effect, which will be January 2, 2011.
Absent tailoring, the January 2, 2011 trigger date for GHG PSD
applicability will give rise to an extraordinarily large number of PSD
permitting actions--we estimate more than 81,000 per year--representing
an increase of almost 300-fold over the current 280 PSD permitting
actions each year. In addition, over 6 million sources will become
subject to title V, an increase of
[[Page 31577]]
more than 400-fold over the 14,700 sources that currently are subject
to title V. The permitting authorities will find it impossible to
administer programs of these sizes as of that date.
All this results from a literal application of the PSD and title V
applicability provisions to GHG sources. However, under Chevron, we
must interpret and apply statutory requirements on the basis of
congressional intent. Although the literal meaning of the statutory
provisions is the first and generally the best indicator of
congressional intent, there are cases in which that is not so. As
discussed previously, we believe that as a general matter, statutory
directives should be considered to incorporate Congress's intent that
they be administrable, and we believe that this proposition is implicit
in the ``administrative necessity'' doctrine that the DC Circuit has
established and that we believe applies here. See Alabama Power v.
Costle, 636 F.2d 323, 356-57 (DC Cir. 1980). This doctrine authorizes
EPA to undertake a process for rendering the PSD and title V
requirements administrable. Indeed, the Court in Alabama Power
established this doctrine specifically in the context of the PSD
provisions, including, in particular, the modification provision. As
noted elsewhere, the Court held that EPA may ``consider the
administrative burden'' associated with applying PSD for emissions
increases, and establish significance levels designed to avoid ``severe
administrative burdens on EPA, as well as severe economic burdens'' on
sources. Id. at 405.
As we said in the proposal, we read the case law to establish a
three-step approach for implementing the ``administrative necessity''
doctrine: An agency is not required to adhere to literal statutory
requirements if the agency, as the first step, makes every effort to
adjust the requirements within the statutory constraints, but concludes
with justification--at the second step--that it would be impossible to
comply with the literal reading of the statute. Under those
circumstances, the agency may--at the third step--develop what is in
effect a compliance schedule with the statutory requirements, under
which the agency will implement the statute as much as administratively
possible and as quickly as administratively possible. See 74 FR 55315--
55316.
a. First Step of the ``Administrative Necessity'' Analysis:
Streamlining
In the proposed rulemaking, EPA discussed at length the prospect of
streamlining both PSD and title V. EPA described ``several potentially
useful tools available in the streamlining toolbox for the PSD
permitting threshold level, the PSD significance level, and the title V
permitting threshold,'' specifically:
For the PSD permitting threshold level and significance level,
there are at least three such tools: The first is interpreting the
definition of ``potential to emit'' so that the amount of a source's
emissions that counts in determining whether it qualifies as a major
source and therefore is above the permitting threshold requirements
is closer to the amount of its emissions when it is in actual
operation, rather than the amount of emissions that the source would
emit if it were operating continuously. Narrowing the definition of
PTE is a potentially extremely important tool in this context
because identifying the amount of a source's emissions as closer to
its actual emissions in this manner would mean that very large
numbers of residential and commercial sources would have
significantly lower emissions and would fall below the statutory
threshold requirements for triggering PSD. Second, EPA believes it
may be able to develop programs involving general permits, under
which large numbers of similarly situated sources would each be
covered by essentially the same permit established through a
regulatory action by the permitting authority. This approach could
achieve economies of scale and thereby reduce administrative burden.
Third, EPA believes it may be able to streamline the single most
time-consuming element of the PSD permit program, which is the
determination of BACT as required under CAA Sec. 165(a)(4), by
establishing presumptive BACT levels for certain source categories
that comprise large numbers of sources. As for title V, as discussed
below in detail, EPA believes that defining ``potential to emit'' to
reflect more closely a source's actual operation and developing a
program of general permits could streamline the administration of
title V permits.
74 FR 55315 col. 2-3.
At proposal we stated that we would, and we still commit to,
vigorously pursue development of these streamlining measures, and, as
indicated in our discussion of streamlining methods in section V.E.1
and in response to comments, we have already begun developing those
measures. For example, as described elsewhere, we have done much work--
both with stakeholders and in-house--to begin to develop
recommendations for what controls would qualify as BACT for various
industries. This work is important as a foundation for developing
presumptive BACT, which is a potentially efficient streamlining
measure.
However, it is not possible for us or the state and local
permitting authorities to develop and implement streamlining techniques
by the time that PSD and title V are triggered for sources emitting
GHGs--January 2, 2011--or shortly thereafter. Developing streamlining
methods would entail acquiring more information about the affected
industry, may entail rulemaking, and would likely entail some type of
public review of proposals for streamlining even if not done through
rulemaking. As discussed in section V.E, we do not expect that we could
complete all those steps for meaningful streamlining measures within 2
years.
b. Second Step of the ``Administrative Necessity'' Analysis:
Demonstration of Administrative Impossibility
With no streamlining measures available at the time that PSD and
title V would apply to sources of GHGs or shortly thereafter, under the
second step of the ``administrative necessity'' analysis, we must
determine whether implementation of the statutory requirements at that
time would be administratively impossible for the permitting
authorities. We are mindful that the DC Circuit has cautioned that this
showing is a high hurdle. See 74 FR 55317.
Even so, we believe there is no question that a literal application
of the PSD and title V programs to GHG sources as of January 2, 2011
would be flatly impossible for the state and local permitting
authorities to administer for at least an initial period of time.\51\
The key facts have been recounted previously, and no more than a brief
recitation is necessary here. On the PSD side, annual permit
applications would increase by over 300-fold, from 280 to almost
82,000; costs to the permitting authorities would increase more than
100-fold, from $12 million to $1.5 billion; and the permitting
authorities would need to hire, train, and manage 9,772 FTEs. For title
V, total permit applications would increase by over 400-fold, from
14,700 to 6.1 million; costs to the permitting authorities would
increase from $62 million to $21 billion; and the permitting
authorities would need to hire, train, and manage 229,118 FTEs.
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\51\ We recognize that in a few states, we are the permitting
authority. We do not think that this changes the calculation of
administrative burdens. We do not believe that we could reasonably
be expected to adjust our budget to accommodate the large new
permitting burdens, and even if we could, the administrative burdens
would remain in most of the rest of the nation where it is the state
or local agencies that bear permitting responsibility.
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We have elaborated upon these burdens elsewhere in this notice.
They bespeak an impossible administrative task. It is not hyperbole to
say that if these administrative responsibilities are not considered
impossible within the
[[Page 31578]]
meaning of the ``administrative necessity'' doctrine, then it is
difficult to imagine what would be considered impossible.
c. Third Step of the ``Administrative Necessity'' Analysis: Tailoring
Under the third step of the ``administrative necessity'' analysis,
we must demonstrate that the steps we intend to take towards
implementation of the statutory requirements are the most that can be
done during the indicated time frames, in light of administrative
resources. In this manner, we adhere most closely to the statutory
requirements. See 74 FR 55318. This amounts to establishing a schedule
for phasing in PSD and title V applicability to GHG sources. Because
this step is based on the administrative resources of the permitting
authorities, our analysis is similar, and leads to the same
conclusions, as we described previously concerning the ``absurd
results'' basis. That is, we believe that our tailoring approach--
including Step 1, to be implemented as of January 2, 2011; Step 2, to
be implemented as of July 1, 2011; the additional rulemaking that we
commit to finalize by July 1, 2012, and that will address further
threshold reductions as a Step 3; the study and subsequent rulemaking
to address smaller sources by April 30, 2016; and the determination not
to lower the threshold below 50,000/50,000 tpy CO2e before
April 30, 2016 at the earliest--is the most that we can do to expand
the PSD and title V programs, based on administrative resources and the
information we currently have about the prospects for streamlining and
increasing permitting resources.
As noted previously, at some point in the process of additional
rulemaking, we may conclude under the ``absurd results'' doctrine that
we will not apply PSD or title V to GHG sources below a certain size
level. The same conclusion may be supportable under the
``administrative necessity'' doctrine if we decide, based on the
information available to us, that even with all of the streamlining
that we are able to accomplish and even with a significant expansion of
permitting resources, it may not be administratively feasible to
implement PSD or title V to sources below that level. See Alabama Power
v. Costle, 636 F.2d at 358 (acknowledging, in discussing the
``administrative necessity'' doctrine, that ``[c]ategorical exemptions
from the clear commands of a regulatory statute [are] sometimes
permitted,'' although emphasizing that such exemptions ``are not
favored'').
In addition, as noted above, in a subsequent rulemaking, we may
conclude that title V should not apply to GHG sources with ``empty
permits,'' under the ``absurd results'' doctrine. The basis for this
conclusion could be a determination that (1) although the applicability
provisions apply by their terms to sources on the basis of their
emissions, and without regard to whether the sources would hold ``empty
permits,'' those provisions cannot be read literally under the ``absurd
results'' doctrine; and (2) it is not clear whether Congress intended
that title V apply to such sources, and EPA has reasonably determined,
under Chevron Step 2, that title V does not. If we come to that
conclusion, then, at that point in time, the ``administrative
necessity'' doctrine would remain relevant for title V purposes only if
it is necessary, for administrative reasons, to phase in the
application of title V to GHG sources that have applicable
requirements, and that therefore do not have ``empty permits.'' This is
because the ``administrative necessity'' doctrine is relevant only when
a statutory directive, read literally, imposes impossible
administrative obligations, and Congress may be presumed to have
intended that the directive be administrable. The ``administrative
necessity'' doctrine would not come into play if it is concluded either
that under the ``absurd results'' doctrine Congress did not intend the
statutory directive or that, under that doctrine, Congress's intent was
not clear and EPA reasonably decided that the directive does not apply.
10. ``One-Step-at-a-Time'' Basis for Tailoring Rule
In addition to the ``absurd results'' and ``administrative
necessity'' doctrines, the ``one-step-at-a-time'' judicial doctrine,
within the Chevron framework, supports EPA's Tailoring Rule. The case
law under this doctrine, described previously, indicates that the
doctrine justifies an agency's step-by-step approach under the
following circumstances or conditions: (1) The agency's ability to
comply with a statutory directive depends on facts, policies, or future
events that are uncertain; (2) the agency has estimated the extent of
its remaining obligation; (3) the agency's incremental actions are
structured in a manner that is reasonable in light of the
uncertainties; and (4) the agency is on track to full compliance with
the statutory requirements. EPA's Tailoring Rule fulfills each of those
four.
First, as the DC Circuit stated in National Association of
Broadcaster v. FCC, 740 F.2d 1190, 1210 (DC Cir. 1984) (``National
Association of Broadcasters''), incremental agency action is most
readily justifiable ``against a shifting background in which facts,
predictions, and policies are in flux and in which an agency would be
paralyzed if all the necessary answers had to be in before any action
at all could be taken.'' Those circumstances are present here, and so
is that fact that the task at hand is extraordinarily demanding. As
discussed previously, EPA and the permitting authorities' progress in
implementing the PSD and title V programs for GHG sources will depend
in large measure on the development of streamlining measures and
increases in permitting authorities' resources, and those things carry
some uncertainty and in any event, under the best of circumstances,
cannot have much impact for at least several years. It will take EPA
that long to develop streamlining measures, and it will take permitting
authorities that long to begin to raise money and hire and train FTEs.
Second, as the Court stated in National Association of
Broadcasters, ``the agency [should] ma[k]e some estimation, based upon
evolving economic and technological conditions, as to the nature and
magnitude of the problem it will have to confront when it comes to
[undertake the remaining steps]'' and that estimation must be
``plausible and flow from the factual record compiled.'' Id. at 1210.
Here, EPA has done this by estimating the number of PSD and title V
permits and the costs of issuing them, and has provided as much
information as possible about the development of streamlining methods
and permitting authority resources.
Third, again as the Court stated in National Association of
Broadcasters, it must be ``reasonable, in the context of the decisions
made in the proceeding under review, for the agency to have deferred
the issue to the future. With respect to that question, postponement
will be most easily justified when an agency acts against a background
of rapid technical and social change and when the agency's initial
decision as a practical matter is reversible should the future
proceedings yield drastically unexpected results.'' Id. at 1211. Here,
our tailoring approach is reasonable in light of changes in permitting
authority capacity that may occur with the development of streamlining
methods and increased resources. In addition, the first two steps that
EPA promulgates today are reasonable initial steps that we expect to
build on by lowering thresholds, as appropriate, in the future. We have
no reason to suspect that we may need to reverse either of the first
[[Page 31579]]
two steps. Having received and analyzed extensive comment on the number
of permitting actions to expect and on permitting authority resources,
we consider it unlikely that we would need to establish a higher
threshold level than what we have established in Steps 1 and 2. In
addition, if we were to adopt an ``empty permits'' approach for title
V, we would not need to reverse either of Steps 1 and 2, as explained
above.
Finally, as the DC Circuit stated in Grand Canyon Air Tour
Coalition v. F.A.A., 154 F.3d 455, 477-78 (DC Cir. 1998), the Courts
will accept an initial step towards full compliance with a statutory
mandate, as long as the agency is headed towards full compliance, and
we believe that the doctrine is applicable here. EPA intends to require
full compliance with the CAA applicability provisions of the PSD and
title V programs, but we believe that in the case of GHG-emitting
sources, by application of the ``absurd results'' doctrine or the
``administrative necessity'' doctrine, full compliance with the
applicability provisions does not necessarily mean full compliance with
the literal terms of those provisions.\52\ Rather, as we have explained
elsewhere, in the case of GHG sources, full compliance may mean
compliance with higher levels that are consistent with congressional
intent, under the ``absurd results'' doctrine, or that are within the
reach of permitting authorities in light of their administrative
constraints, under the ``administrative necessity'' doctrine. This
rulemaking constitutes a package of initial steps towards that full
compliance, and, seen in that light, is supported by the ``one-step-at-
a-time'' doctrine.
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\52\ For reasons explained elsewhere, our reference to the
literal terms of the applicability provisions means the literal
terms of the definition of ``major emitting facility'' for PSD and
``major source'' for title V, as EPA has narrowed those definitions
to refer to ``any pollutant'' that is subject to regulation under
the CAA.
---------------------------------------------------------------------------
Even if the doctrine were found to apply only when an agency is
committed to fully implementing statutory requirements according to
their literal terms, we believe that the steps we promulgate in this
notice would be considered valid under the one-step-at-a-time doctrine.
This is because even if we are incorrect about the applicability of the
``absurd results'' and ``administrative necessity'' doctrines, so that
GHG sources are required to comply with the literal terms of the PSD
and title V applicability provisions, the ``one-step-at-a-time''
doctrine would allow PSD and title V applicability to be phased in, and
the first two steps we promulgate in this notice would be upheld as
reasonable initial steps toward full compliance with the literal terms
of the CAA. As we have described elsewhere, there is little question
but that sources and permitting authorities cannot reasonably be
expected to comply with or implement PSD and title V applicability
requirements in the near term--by January 2, 2011 and July 1, 2011--
except to the limited extent described under Steps 1 and 2. Nor is
applicability of the PSD and title V requirements at levels below
50,000 tpy CO2e reasonable before 6 years from promulgation
of this rule, as discussed elsewhere. If further steps resulting in
full compliance with the literal terms of the applicability provisions
of PSD and title V were required, it would be reasonable for those
steps to occur in the future, as part of the rulemaking to be completed
by the sixth year after promulgation, to which EPA commits itself as
part of this action, or as part of subsequent actions. See Grand Canyon
Air Tour, 891 F.2d at 476-77 (upholding agency action as a step towards
full compliance with statutory mandate when the agency expected full
compliance to occur some 20 years after the deadline in the statute).
C. Mechanisms for Implementing and Adopting the Tailoring Approach
In this section, we discuss three issues related to adoption of the
tailoring approach within our regulations and by permitting agencies.
The first is the regulatory mechanism for implementing the tailoring
approach--that is, the specific way we are revising the PSD and title V
applicability provisions to incorporate the tailoring approach--and our
rationale. The second is the process by which state or local permitting
authorities may incorporate the tailoring approach into their PSD SIP
and title V permit programs. Finally, we discuss our reasons for
delaying action on our proposal to limit approval of both SIP-approved
PSD programs and title V programs, and we request certain information
from states on both of their programs and their actions in response to
this rule.
In brief, we proposed to exempt sources emitting GHGs below certain
threshold levels from the definition of the regulatory terms ``major
stationary source'' and ``major modification'' in PSD programs and the
definition of the regulatory term ``major source'' in title V programs.
We further proposed to effectuate this change in SIP-approved PSD
programs (as included in SIPs) and EPA-approved part 70 title V
programs by limiting our prior approval of those programs to the
revised applicability thresholds for GHGs.\53\ These changes would have
the effect of putting the higher thresholds adopted under the Tailoring
Rule in place in states PSD and title V programs as a matter of federal
law. However, state commenters expressed concern that they would not be
able to adopt the Tailoring Rule under state laws on an expeditious
basis. To address this, our final action differs from our proposed rule
in the way we incorporate the limitations promulgated in this Tailoring
Rule into the ``major stationary source,'' ``major modification'' and
``major source'' definitions. This approach relies on further defining
the term ``subject to regulation'' and although this approach is not
substantively different in effect from the proposed rule, it will
facilitate more rapid adoption and implementation of the Tailoring Rule
by states through interpretation of language in existing state
regulations. We believe these differences are a logical outgrowth of
our proposed rule. We are also delaying action on our proposed limited
approval of EPA-approved PSD programs and part 70 title programs to
determine how each state will implement the final rules.
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\53\ In the alternative, we also proposed to use our section
110(k)(6) error correction authority to revise SIP-approved PSD
program. We are also delaying action on this proposal.
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1. PSD Approach: Background and Proposal
Under CAA section 165(a), no ``major emitting facility'' may
construct or modify unless it receives a preconstruction permit that
meets the requirements of the PSD program. CAA section 169(1) defines a
major emitting facility as ``any * * * source[]'' in one of 28
specified source categories that ``emit[s], or ha[s] the potential to
emit, one hundred tons per year or more of any air pollutant;'' or
``any other source with the potential to emit two hundred and fifty
tons per year or more of any air pollutant.'' EPA's regulations replace
the term ``major emitting facility'' with the term ``major stationary
source'' and define the term as ``[a]ny of * * * [28 types of]
stationary sources of air pollutants which emits, or has the potential
to emit, 100 tons per year or more of any regulated NSR pollutant'' or
``any stationary source which emits, or has the potential to emit 250
tons per year or more of a regulated NSR pollutant.'' 40 CFR
51.166(b)(1)(i)(a)-(b). The term ``regulated NSR pollutant'' is defined
to include, among other things,
[[Page 31580]]
``any * * * air pollutant that otherwise is subject to regulation under
the Clean Air Act.'' 40 CFR 51.166(b)(50). Note that the regulatory
definition in effect interprets the statutory definition more narrowly
to read ``one hundred [or two hundred and fifty] tons per year or more
of any air pollutant subject to regulation under the Clean Air Act''
(emphasis added).
Similarly, under the statute, a modification occurs if there is a
physical change or change in the method of operation ``which increases
the amount of any air pollutant emitted * * * .'' CAA section 165(a),
169(2)(c), and 111(a)(4). As with the major stationary source
definition, we have limited coverage of the modification provision to
physical changes or changes in the method of operation that result a
significant net emissions increase in emissions of a ``regulated NSR
pollutant.'' 40 CFR 51.166(b)(2)(i).
Our proposed rule revised the definition of ``major stationary
source to (1) exempt GHG from the regulated NSR pollutants that, if
emitted by a source in the 100 or 250 tpy quantities, would cause the
source to qualify as a ``major stationary source,'' and (2) add a
specific threshold at which a source that emits a specified quantity of
GHGs (at proposal, that quantity was 25,000 tpy CO2e) would
qualify as a ``major stationary source.'' 74 FR 55351, proposed 40 CFR
51.166(b)(1)(i)(a), (b), and (d). We also proposed a significance
threshold, which is the amount of an increase needed to trigger PSD for
a modification or to require BACT for a new source, at a level between
10,000 and 25,000 tpy CO2e. 74 FR 55351; 40 CFR
51.166(b)(23)(i).
Additionally, we recognized that it may take some time before
states could change their SIP-approved PSD programs and that as a
result, absent additional action on our part, GHG-emitting sources
would remain subject to the 100 or 250 tpy thresholds, and subject to a
zero significance threshold for major modifications as a matter of
federal law. To address this issue, we proposed to narrow our previous
approval of those SIPs. The effect of our proposal would be that EPA
would have approved the SIP PSD programs only to the extent they apply
PSD and requirements to GHG sources at or above the thresholds
established in the Tailoring Rule (which, generally, were 25,000 tpy
CO2e), and EPA would have taken no action on the SIP PSD
programs to the extent they apply PSD requirements to GHG sources below
that threshold. We relied on the authority of the APA and the general
authority of CAA section 301 and, in the alternative, on the error
correction mechanism under CAA section 110(k)(6). Our limited approval
would revise existing EPA-approved SIP PSD programs to authorize
permitting under the CAA only for GHG sources at the appropriate
levels.
In response to our proposed approach, we received numerous comments
from state and local permitting agencies expressing significant
concern. They observed that our proposed approach could meet its
objectives to avoid applying PSD requirements to small sources under
federal law, but would not succeed in avoiding the application of PSD
requirements to those small sources under state law. The commenters
explained that, although EPA was changing federal PSD applicability
thresholds; for GHG-emitting sources to incorporate the tailoring
approach, and limiting the scope EPA approval of SIPs consistent with
these thresholds, the state rules containing the originally-approved
SIP thresholds would continue to apply as a matter of state law. As
commenters explained, for the most part, the laws and regulations
states adopt to implement federal PSD programs mirror EPA's
regulations, so that the state laws, apply PSD to sources that emit air
pollutants subject to regulation at the 100/250 tpy threshold.
Commenters reasoned that, until the states can change their state laws,
the 100/250 tpy thresholds will continue to apply as a matter of state
law, even though the higher thresholds apply as a matter of federal
law.
Importantly, these commenters emphasized, their state process
requires that they promulgate a rulemaking, or in some cases, a
legislative change, to incorporate the higher thresholds for GHG
sources in their SIPs. These processes would require many months and in
some cases as long as 2 years. As a result, sources that emit GHGs
below the federally established levels in the final rule, but at above
the 100/250 tpy levels in state laws and rules, would still be required
to obtain PSD permits under state law. As a result, states, in
attempting to implement state permitting requirements, would be faced
with the same administrative difficulties that EPA recognized in the
proposed rule as impossible. Commenters emphasized that this situation
was untenable.
In addition to the state comments just described, we received
comments that took issue with our view that we were in effect revising
the numerical thresholds for PSD applicability as the legal mechanism
for the tailoring approach. They asserted that in fact, our mechanism
consisted of interpreting the term ``any source'' to exclude small GHG-
emitting sources. Other commenters objected to our proposed mechanism
of narrowing our previous SIP approval, arguing that this mechanism was
without legal basis.
2. Rationale for Our Final Approach To Implementing PSD
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, 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., 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 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
[[Page 31581]]
definition of the regulatory term ``major modification.''
Although EPA is revising 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 state 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 Memo, 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 subparagraph (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 Interpretive
Memo 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 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 agency 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.
[[Page 31582]]
3. Other Mechanisms
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: (1) The numerical thresholds, as we
proposed; (2) the term, ``any source,'' which some commenters
identified as the most relevant term for purposes of our proposal; (3)
the term, ``any air pollutant; or (4) 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.\54\
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\54\ 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.''
---------------------------------------------------------------------------
4. Codification of Interpretive Memo
As noted previously, we recently affirmed and refined our
interpretation of the term ``subject to regulation'' as it applies
broadly to the PSD program through a formal notice and comment process.
``Interpretation of Regulations that Determine Pollutants Covered by
Clean Air Act Permitting Programs,'' 75 FR 17004. In the proposal
associated with that action, we requested comment on whether we should
codify our interpretation in the regulatory text. 74 FR 51535, 51547
(October 7, 2009). We elected not to codify our interpretation in the
final action on reconsideration of the Interpretive Memo because we
concluded such an action was not necessary and that it was important to
apply the refined interpretation immediately. 75 FR 17015. However, in
the RTC document for that action, we indicated that we had not ruled
out the option of codifying our interpretation at a later time. Since
we are otherwise adopting a definition of ``subject to regulation'' in
this rule as the mechanism for implementing the phase-in, it makes
sense in this final rule to codify the interpretation reflected in the
Interpretive Memo and the final action on reconsideration at the same
time to bring clarity to our rules. Specifically, the definitions of
the term ``subject to regulation'' contain a paragraph that reflects
our existing interpretation of that term (i.e., prior to adopting the
provisions that implement the phase-in). Codification of the
Interpretive Memo in this action makes sense to ensure the regulations
reflect a complete picture of the meaning of ``subject to regulation''
applied by EPA. We also are moving existing exceptions (e.g., section
112 HAPs) to a new paragraph within the definition of ``subject to
regulation.'' This minor reorganization of these regulations is not
intended to effect any change in how they are to be implemented, but
merely simplifies and clarifies the regulations by clearly delineating
different terms and concepts.
This codification of this interpretation of ``subject to
regulation'' from the reconsideration for the Interpretive Memo is not
necessary to assure the effectiveness of the interpretation, and it
does not disturb states' existing authority to adopt the definition
through interpretation of their existing rules. Codifying our existing
interpretation in this action will ensure that parties reading the
regulations have a full understanding of how EPA applies the PSD
program requirements. Since the interpretation described in the
Interpretive Memo and the April 2, 2010 final action are otherwise
applicable at this time, the particular time sensitivity discussed in
the latter action is not the same for this final action tailoring the
PSD requirements.
5. Delaying Limited Approvals and Request for Submission of Information
From States Implementing a SIP-Approved PSD Program
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 August 2, 2010. 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 CAA 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
[[Page 31583]]
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
August 2, 2010. 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.
6. Title V Programs
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) adds 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 are finalizing 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 GHG
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 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.'' Memorandum. 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 Memo 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 Memorandum 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 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
[[Page 31584]]
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
(1) The numerical thresholds, as we proposed; (2) the term ``any air
pollutant,'' (3) the term ``a major stationary source,'' (4) 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
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 August 2, 2010
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 numerical
thresholds--that is consistent with EPA's regulatory interpretation of
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 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.
D. Rationale for Treatment of GHGs for Title V Permit Fees
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.'' \55\ 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 GHGs 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
[[Page 31585]]
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.
---------------------------------------------------------------------------
\55\ The fee provisions are set forth in CAA section 502(b)(3)
and in our regulations at 40 CFR 70.9 and 71.9.
---------------------------------------------------------------------------
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 40 CFR 70.9(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 40 CFR 70.4(i)(3) or issue a notice of
deficiency under the process described in 40 CFR 70.10(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 GHGs. Currently under the statute and
our rules, the presumptive minimum is based on a subset of air
pollutants (i.e., VOCs, 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 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
[[Page 31586]]
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 GHGs, 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 GHGs. 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 GHGs 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 GHGs. 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 40 CFR 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 this preamble, 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.
E. Other Actions and Issues
1. Permit Streamlining Techniques
In our proposal, we stated that while we were phasing-in permitting
requirements, we would make a concerted effort to assess and implement
streamlining options, tools, and guidance to reduce the costs to
sources and permitting authorities of GHG permitting. We recognized
that the development and implementation of these techniques should be
an integral part of our strategy during the phase-in period, and we
stated that we would undertake as many streamlining actions as
possible, as quickly as possible. We discussed several streamlining
techniques in particular, including: (1) Defining PTE for various
source categories, (2) establishing emission limits for various source
categories that constitute presumptive BACT, (3) establishing
procedures for use of general permits and permits-by-rule, (4)
establishing procedures for electronic permitting, and (5) establishing
``lean'' techniques for permit process improvements. The first three of
these approaches have the potential to have the greatest impact in
reducing the numbers of sources subject to PSD or title V (the
definition of PTE) or of reducing permitting costs (presumptive BACT
and general permits or permits-by-rule).
In our proposal, we also described the timing for development and
implementation of these streamlining techniques. We explained that each
of the first three techniques would generally take 3-4 years to develop
and implement, and therefore would be of limited use in the near-term.
This time frame is necessary because 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.
We received several comments on streamlining techniques. In
general, the comments indicate widespread support for our pursuit of
streamlining approaches, but some commenters were
[[Page 31587]]
concerned that one or more of EPA's identified streamlining options
were complex, vague, ineffective, and questionable legally. Noting our
proposal to phase in permitting, in part to allow more time to develop
streamlining options for smaller sources, some commenters suggested
that we should delay permitting for larger sources for the same
reasons. We disagree. Such a delay is not justified under our legal
basis for this rule. 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. On the other hand, we
do agree with these commenters that, absent streamlining, applying PSD
and title V requirements to the much larger number of small sources
would lead to absurd results and administrative impossibility. The
sources for whom the phase-in delays applicability are precisely the
sources that have the greatest need for streamlining measures, and thus
the greatest need for a deferral while we develop and implement
streamlining options.
In addition, commenters generally echoed many of our concerns about
why it will take time to put these measures in place, and no commenter
presented any information to suggest that our 3-4 year estimate for the
PTE, presumptive BACT, and general permit measures was invalid.
For these three techniques, we continue to believe that as we noted
at proposal, we will require collection of 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.), which could take up to 1 year. Moreover, commenters had
differences of opinion as to whether and how we should move forward on
these approaches, and some raised policy and legal issues that we would
likely want to explore through a notice and comment process in order to
assess which of these measures are viable to pursue further.\56\ Even
if a rulemaking were done expeditiously, it would likely require 1
year. Finally, unlike lean and electronic permitting, these approaches,
once finalized by EPA, will likely require additional time of up to 2
years for states to adopt. Thus, it is clear that these approaches will
not be in place in time to ease any burden prior to the planned
rulemaking for Step 3.
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\56\ We do not attempt to address or resolve the various
opinions about what legal or policy direction we must take regarding
any of these streamlining options. The proper forum for doing that
will be in the action(s) where we apply a given option. Nonetheless,
our RTC document provides additional detail about the options we
described and what commenters said about our proposed options. In
addition, the comments themselves can be accessed in the docket for
this action.
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Some commenters did observe that the fourth and fifth techniques,
lean and electronic permitting, could, at least theoretically, become
available sooner. However, these commenters also noted that successful
design and implementation of these approaches will require
implementation experience with GHG permitting that is not now
available. We expect that for the lean and electronic permitting
techniques, at least 1 year of implementation experience (of the type
that we will gain starting in 2011) would be required, plus at least an
additional year to extrapolate that experience to small sources and put
these approaches into effect for small source permitting. Thus, we do
not think the lean and electronic permitting would be in place before
the beginning of 2013. Moreover, a handful of commenters questioned
whether lean and/or electronic permitting would alleviate significant
burden. Thus we are not able, at this time, to presume that these
approaches will ease any burden prior to the planned rulemaking for
Step 3.
It is also important to note that, as a practical matter, while
these efforts to streamline the program for small sources are underway,
EPA and states will also be devoting a significant amount of their
permitting resources and expertise to implementing the PSD and title V
programs for the GHG-emitting sources covered under Steps 1 and 2. We
have established these steps in a manner that they will be feasible for
EPA and state/local/tribal authorities, but even so, they will not only
consume current permitting authority resources, but they will also
require substantial additional resources. As a result, the efforts to
develop and implement streamlining techniques will have to compete with
the work necessary to administer existing programs. For example, during
the remainder of 2010, as described elsewhere in this notice, EPA
permitting program resources will, in addition to continuing to
administer programs for non-GHG pollutants, be used to conduct at least
the following GHG-related activities in addition to streamlining: (1)
Develop BACT and other information and guidance for implementing
programs for sources covered by Step 1, followed by additional guidance
and information for sources covered by Step 2; (2) review and act on
information we receive regarding state adoption of GHG permitting
requirements, which may entail narrowing of previous SIP approvals or
processing of other programmatic revisions; and (3) propose and
finalize measures to address programs with deficiencies in GHG
coverage. As the beginning of Step 2 nears, we will also begin to
receive and process the first applications for permits that will
incorporate GHG requirements (i.e., those that will be issued after
January 2, 2011). States seeking to implement streamlining approaches
will face similar competition for permitting resources.
These time frames and resource considerations for streamlining
confirm the approach to phase-in that we are taking in this rule. First
and foremost, they make clear that it will not be possible to have
streamlining measures in place in time for either Step 1 or Step 2.
Therefore our selection of threshold for those steps is not built on
assumptions that streamlining will remove some or all of the burden
during those steps.
Second, they make clear that, while no significant streamlining can
be in place by the time we must begin to develop the Step 3 rule (i.e.,
latter half of 2011, to promulgate by July 2012, effective July 2013),
it is likely that by that time EPA and states will have had an
opportunity to gain implementation experience that could serve as the
basis for beginning to implement streamlining techniques that do not
require rulemaking or state adoption (e.g., lean and electronic
permitting). It is also likely that we will have had an opportunity to
gather technical information--which we have already begun to gather--
for certain source and emissions unit categories that would be
necessary to support proposal of PTE or presumptive BACT approaches for
those categories. We expect that the Step 3 rulemaking will provide an
opportunity for us to use that experience and data to begin to propose
streamlining approaches that need notice and comment rulemaking. We can
also begin to take into account any burden reductions from possible
early streamlining efforts--that is, through lean and electronic
permitting--in the establishment of Step 3.
Third, it is clear that the potential availability of streamlining
measures does not call into question our decision that in no event will
we broaden PSD and title V applicability to cover GHG-emitting sources
below the 50,000 tpy CO2e level prior to July 2016, as
discussed elsewhere. EPA cannot now
[[Page 31588]]
predict the resources that will be required to implement PSD and title
V programs for GHG-emitting sources once various streamlining
techniques are ultimately completed. This is uncertain not only because
we need data and implementation experience with GHG permitting during
Steps 1, 2, and 3 that we can apply to estimates for small sources, but
also because, as comments indicate, there is a broad range of legal and
policy issues to consider in crafting the streamlining approaches we
ultimately adopt. We have presented an initial assessment of options
and obtained views of commenters both supporting and opposing them, and
it is the result of these future actions, whose outcomes are uncertain
at this time, that will ultimately determine the extent to which
streamlining approaches will allow for the administration of PSD and
title V programs for numerous small sources. Thus, while we are
optimistic that we can craft workable, common-sense solutions, we
nonetheless, believe it is important to preserve our small source
exclusion until we have not only had time to put the streamlining
approaches in place, but also have had time to assess the burdens that
remain, before we bring in additional sources below the 50,000 tpy
CO2e levels. We believe that the 6-year timeframe will
require a sustained intensive effort by EPA and states to develop,
adopt, and implement streamlining techniques, and will require EPA to
then evaluate those techniques and complete a rulemaking concerning PSD
and title V applicability to small-sources based on that evaluation. In
this manner, the 6-year period will give us the necessary time to make
the best decisions about the actions we should take beyond Step 3.
While comments make clear that there are issues to be addressed,
nothing in the 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 at
proposal, to move forward with these approaches as an integral part of
our phase-in approach. Moreover, notwithstanding the competition for
GHG permitting resources and expertise, we believe it is critical that
we move forward expeditiously. As noted previously, we are already
taking a first step by initiating permitting for larger sources,
beginning January 2011, that will begin to provide valuable
implementation experience. This experience can be useful in allowing
states to begin implementing early streamlining measures, like lean and
electronic permitting, which do not require EPA action. We have also
already begun, and will continue, developing data necessary to support
possible rulemakings addressing approaches such as PTE, presumptive
BACT, and/or general permits. We expect to be able to use these data to
support possible rulemakings on these topics, as appropriate, at about
the same time as our Step 3 rulemaking. There may also be available
streamlining options that were not described in our proposal that
warrant further consideration. Because of the uncertainty surrounding
such approaches, 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.
2. Guidance for BACT Determinations
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. 7475(a)(4); 42 U.S.C. 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 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 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 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
[[Page 31589]]
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.\57\
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.''
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\57\ 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 three times
a year, normally in Washington, DC. 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.
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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 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 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 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 permitting authorities in making
BACT determinations for sources of GHGs.
3. Requests for Higher Category-Specific Thresholds or Exemptions From
Applicability
Although we did not propose any categorical exemptions, many
commenters requested 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
as follows:
Source Categories. Many commenters requested various exemptions or
exclusions from source applicability for GHGs under both PSD and title
V permitting, either during the phase-in period or permanently, citing
anticipated burdens, societal costs, and differences in emission
characteristics. Commenters representing non-traditional sources or
source categories (sources that have not historically been required to
get permits) requested exemptions from permitting based on GHG
emissions, including agricultural sources, residential sources, and
small businesses. In general, these commenters sometimes, but not
always, cited ``absurd results'' and ``administrative necessity''
arguments in their exemption requests.
Several commenters from sectors that consume a great deal of energy
in their industrial processes and that are subject to international
competitiveness, such as aluminum, steel, cement, glass, pulp and
paper, and other manufacturers, requested that they be exempt from
permitting under this final rule. These commenters state that we have
not carefully considered the environmental and economic consequences of
this action because if we had, we would have exempted them for several
reasons, including (1) other countries typically exempt similar sources
from GHG cap
[[Page 31590]]
and trade programs because the industries are making significant energy
efficiency improvements even in the absence of GHG regulation, and (2)
permitting such sources may cause many facilities to move to countries
that have less regulation or no regulation for GHGs.
Other industry groups cited unique characteristics of their
emissions, or the quantities in which they are emitted, that they
argued should justify exclusion or unique thresholds. Semiconductor
production facilities asked for exemptions, arguing that combustion-
related GHG emissions are different from their GHG emissions, which
result from the use of high-GWP industrial gases, such as PFCs, with
higher GWP values that are more likely to trigger permitting
requirements at relatively low tpy values. One lime production
commenter stated that EPA could encourage energy efficiency projects at
its plants by excluding calcination and other process emissions,
arguing that these emissions are a relatively small portion of the
national inventory that will have no material effect on air quality and
global warming. Another commenter requested that EPA exclude emissions
from poultry production (natural bird respiration) from permitting
consideration because the IPCC excludes them from its GHG emission
estimates. Representatives of the landfill industry pointed to the
relationship between current statutory thresholds that apply to their
regulated emissions, primarily NMOC, and the equivalent amount of GHG
emissions this corresponds to. They argued for a source-category
specific threshold that is at least equivalent to their current NMOC
threshold, or roughly 750,000 tpy CO2e according to their
estimate.
Although the proposal for the Tailoring Rule generally addressed
how the statutory requirements for major source applicability (100/250
tpy 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 exemptions 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. 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 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.
Regarding the specific concerns about the need for a small business
exclusion, we note that the Office of Advocacy of the SBA made several
recommendations on the proposal to address concerns about large numbers
of small businesses becoming subject to the permit programs. For
example they recommended that EPA adopt major source thresholds of
100,000 tpy and major modification thresholds of 50,000 tpy
CO2e. They also recommended that we adopt an interpretation
of the effective date of the LDVR to provide additional time to
prepare. We took action consistent with the latter recommendation in
the Interpretive Memo, and we are taking action consistent with the
former recommendation in this rule (although the threshold for
modifications we are adopting is higher, for reasons explained
previously). We are finalizing 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. We anticipate that virtually all small businesses not
already subject to PSD and title V would be excluded under this
approach. Similarly, 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.
Biomass Combustion/Biogenic Emissions. Several commenters request
that EPA exempt emissions from biogenic activities or biomass
combustion or oxidation activities, including solid waste landfills,
waste-to-energy projects, fermentation processes, combustion of
renewable fuels, ethanol manufacturing, biodiesel production, and other
alternative energy production that uses biomass feedstocks (e.g., crops
or trees). For example, commenters urged that EPA exclude emissions
from biomass combustion in determining the applicability of PSD to GHGs
based on the notion that such combustion is ``carbon neutral'' (i.e.,
that combustion or oxidation of such materials would cause no net
increase in GHG emissions on a lifecycle basis). Some commenters oppose
the exemption of biogenic/biomass activities, claiming the lack of a
valid scientific basis for treating these GHG emissions differently
than other GHG emissions and expressing concern that we should not
assume all biomass combustion is carbon neutral.
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
[[Page 31591]]
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. We note that EPA's technical support document for the
endangerment finding final rule (Docket ID No. EPA-HQ-OAR-2009-0472-
11292) states that ``carbon dioxide has a very different life cycle
compared to the other GHGs, which have well-defined lifetimes. Instead,
unlike the other gases, CO2 is not destroyed by chemical,
photolytic, or other reaction mechanisms, but rather the carbon in
CO2 cycles between different reservoirs in the atmosphere,
ocean, land vegetation, soils, and sediments. There are large exchanges
between these reservoirs, which are approximately balanced such that
the net source or sink is near zero.''
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 Advance Notice of Proposed
Rulemaking (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 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.
Fugitive Emissions. Numerous commenters believe that fugitive GHG
emissions should be excluded from major source determinations, citing
difficulties in measuring or estimating such emissions. Others believe
EPA did not address fugitive emissions in the proposal and they ask for
clarification of the treatment of fugitive GHGs in applicability
determinations under PSD and title V. Some of these commenters state
that EPA has not undertaken a rulemaking under CAA section 302(j) for
any source category of fugitive GHGs, so they should not be included.
Several commenters representing the solid waste disposal industry
requested exemptions for fugitive emissions for landfills and waste-to-
energy projects, pointing out that current practice under PSD is for
fugitive emissions from certain landfills to not be counted toward
major source determinations.
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 apply. Regarding the comment that a CAA
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.
Pollution Control Projects. Other commenters request exemptions for
pollution control projects from PSD major modification requirements,
particularly projects that increase the efficiency or thermal
performance of a unit or facility, resulting in emission reductions on
a pounds/megawatt-hour or production basis. The current PSD rules do
not exclude pollution control 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, and the case law makes clear that we could adopt a
permanent exclusion in the future.\58\ To the extent
[[Page 31592]]
that the commenters seek an exclusion for pollution control 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.
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\58\ 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 pollution control projects,
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.
---------------------------------------------------------------------------
4. Transitional Issues Including Requests for Grandfathering
In the Tailoring Rule proposal, we did not discuss or specifically
ask for comment on any provisions to address the transition from a
permitting regime that does not incorporate GHGs to one that does, such
as ``grandfathering'' provisions or similar approaches that would
exempt previously issued permits or pending applications from having to
incorporate requirements for GHGs. We nonetheless received several
public comments that addressed a variety of transitional issues. One
group of comments addresses situations prior to permit issuance where a
PSD or title V application is either administratively complete or more
generally being processed prior to the trigger date for GHG permitting
(``in process'' applications). Another group of comments addresses
situations where a PSD or title V permit is issued prior to the GHG
trigger date and the commenters request that the application and/or
permit be exempt from any requirements for updates related to GHGs
after permit issuance.
With respect to PSD, many commenters requested that we adopt a
``grandfathering'' approach to applicability to exempt projects that
have administratively complete PSD or minor NSR permit applications
pending when the GHG permitting requirements go into effect. Several
commenters urged us to promulgate transition provisions (without
specifically using the term ``grandfathering''), pointing out that we
have provided transition periods for revising pending PSD permits, in
the past, when new PSD rules were issued (e.g., in late 1970s and
1980). These commenters assert that GHG requirements will cause more
disruption than those previous rule changes. Several commenters asked
that PSD applications be evaluated on the basis of the PSD requirements
effective when the application is submitted and if submitted prior to
the trigger date, then the application and permit would not need to
address GHGs. Several commenters also asked that PSD sources with a
valid permit that commences construction within 18 months of the
trigger date not be required to seek a revised PSD permit for GHGs.
Similarly, several commenters asked that PSD permits issued prior to
the GHG trigger date not be required to be reopened only for the
purpose of addressing GHG emissions. Additional commenters asked that
we clarify that sources or projects not be required to obtain PSD
permits if they obtained a determination that PSD did not apply (a
``non-applicability'' determination) prior to the GHG trigger date.
Finally, many commenters also requested ``grandfathering'' for title V
so that existing title V applications and permits do not need to be
amended, revised, or resubmitted to address GHGs after they become
``subject to regulation.'' Other commenters asked that transition
provisions for title V be provided in the final action that would be
similar to those requested for PSD.
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.
a. 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.
While we do not provide for grandfathering of PSD applications, we
do note that there are more than 7 months left before GHG BACT
requirements will be triggered at anyway sources for projects that
increase GHG emissions by more than 75,000 tpy CO2e and more
than a year before the requirements would be triggered at sources
solely because of emissions of GHGs (more than 100,000 tpy of
CO2e). We intend to work constructively and affirmatively
with permitting authorities to use this time to ensure expeditious
processing of pending permits and to further assure that the triggering
of BACT requirements at such sources will not result in adverse impacts
on pending projects. We have separately described our plans to
expeditiously issue GHG
[[Page 31593]]
BACT guidance, but we understand that for pending projects that will be
permitted soon after January 2, 2011, an opportunity for earlier
engagement with EPA on BACT issues would be beneficial for permitting
authorities to issue these permits without delay.
Therefore, following the issuance of this rule, we will contact
permitting authorities that have pending PSD permit applications to
identify those applications with a reasonable likelihood that final
issuance will occur after January 2, 2011, and therefore will be
required to contain GHG BACT limits. We will then work closely with
those permit agencies to provide technical, legal, or policy assistance
to help prepare BACT analysis and provide additional support as
necessary to expedite permitting for those pending applications.
Similarly, when EPA is the permitting authority, we will provide
assistance to applicants with pending permits to ensure that GHG
permitting decisions are made promptly, and that administrative
processes move forward expeditiously.
b. 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 National Pollutant Discharge Elimination System (NPDES)
permits under the Clean Water Act). 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
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 (March 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 source
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 to 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.
c. 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
[[Page 31594]]
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 40 CFR 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 PTE. 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 Step 2 sources that begin actual
construction in Step 2 (i.e., beginning July 1, 2011) to do so only
after obtaining a PSD permit in accordance with 40 CFR 52.21 or 51.166,
or any applicable state regulation that meets the requirements of 40
CFR 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 40 CFR 52.21 or
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 40 CFR 52.21(a)(2)(iii)
or 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 40 CFR
52.21 or 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 40 CFR
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 40 CFR 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, at the present time, we see no indication
that this difference in approach is 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, 2011,
an additional 6 months of lead time (for a total of more than 14
months), to prepare for the transition described here. Nevertheless, we
recognize that the transition to the increased coverage of new sources
and modifications that occurs in July will represent an unusual
occurrence that may have unanticipated impacts. For this reason it is
important to note that nothing in this rule forecloses our ability to
further address such impacts, as necessary, by adopting rule changes or
using other available tools.
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 40 CFR 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 U.S.C. 7479(2)(A). Among
[[Page 31595]]
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 U.S.C. 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 40 CFR
52.21(a)(2)(iii) and 51.166(a)(7)(iii).
d. 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 40
CFR 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.
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) and
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 40 CFR
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 40 CFR
70.6(a)(6)(v); 71.6(a)(6)(v) and 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.
VI. What are the economic impacts of the final rule?
This section of the preamble examines the economic impacts of the
final rule including the expected benefits and costs for affected
sources and permitting authorities. The final rule uses a phased-in
approach for requiring sources of GHG emissions to comply with title V
operating permit and PSD statutory requirements, essentially lifting
this burden for the phase-in period for a large number of smaller
sources of GHG. Thus, this rule provides regulatory relief rather than
regulatory requirements for these smaller GHG sources. For larger
sources of GHGs that will be required to obtain title V permits and/or
comply on PSD requirements, there are no direct economic burdens or
costs as a result of this final rule, because these requirements are
not imposed as a result of this rulemaking. Statutory requirements to
obtain a title V operating permit or to adhere to PSD requirements are
already mandated by the CAA and by existing rules, not by this rule.
Similarly, this rule will impose costs to society in the form of
foregone environmental benefits resulting from GHG emission reductions
that, absent this rule, might otherwise
[[Page 31596]]
have occurred at sources deferred from permitting during the phase-in
period.
The RIA conducted for this final rule provides details of the
benefits or regulatory relief that smaller GHG sources will experience
in terms of costs avoided as a result of this final rule and the
potential for social costs in terms of foregone environmental benefits
during this 6-year period. Complete details of the RIA conducted for
this final rule may be found in the document ``Regulatory Impact
Analysis for the Final Prevention of Significant Deterioration and
Title V Greenhouse Gas Tailoring Rule,'' in the docket for this
rulemaking.
This rulemaking 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 section V.B. For Step 1,
which 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 (referred to as the ``anyway''
threshold). Step 2, effective from July 1, 2011, until such time as EPA
acts on a rule to amend it (which for reasons described previously, we
assume is June 30, 2013, for the purposes of this analysis), will phase
in title V permit requirements for larger sources emitting GHG above
100,000 tpy CO2e (if they do not already have one) and phase
in for such sources, PSD requirements when they are newly constructed
or modify in a way that increases emissions by more than a 75,000 tpy
CO2e significance level. Step 2 is referred to as the
100,000 tpy CO2e threshold. Thereafter, EPA makes an
enforceable commitment to consider a possible Step 3 to further lower
thresholds below 100,000 tpy CO2e 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 tpy CO2e.
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. 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.
This decision does potentially have environmental consequences in
the form of higher emissions during the 6-year period of time
(generally because emissions increases would have been lower if BACT
were applied). These consequences are limited due to the fact that
sources between 100/250 and 100,000 tpy CO2e account for an
estimated 11 percent of the six directly emitted GHG nationally from
industrial, commercial, and residential source categories, while
representing over 95 percent of the total number of sources potentially
requiring an operating or PSD permit for GHG under current permitting
thresholds in the CAA. Moreover, requiring such a large number of small
sources to obtain permits for the first time would overtax the
permitting authorities' abilities to process new permits and would
therefore interfere with any such benefits actually being achieved.
Moreover, reductions from these small sources will still be occurring,
notwithstanding the fact that permitting requirements would not apply
to them. These smaller sources of GHGs will be the focus of voluntary
emission reduction programs and energy efficiency measures that lead to
reductions in GHGs. We will also reevaluate this decision after a 6-
year period and complete a study of the implications for those sources
and permitting authorities of permitting smaller GHG sources beyond
2016.
In reaching the preceding decisions for this final rule, we
carefully considered comments received on the Tailoring Rule proposal.
We received several comments specifically on our description of the
impacts of this rule. Most of these comments disagreed with our
assertion that the rule is a ``relief'' rule. Others assert that we
should have prepared a more comprehensive RIA than prepared for the
rule proposal. Those commenting contend: (1) We understated the burdens
of the rule while overstating its relief at proposal; (2) we
erroneously omitted the impacts for ``larger sources'' of GHGs from the
proposal RIA and should have recognized the burden to ``larger
sources'' due to other GHG actions; (3) the economic impacts the rule
will have on industry and the U.S. economy and society in general will
be burdensome, especially given the current state of the economy; and
(4) we need to propose a full RIA or a complete estimation of impacts
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 6 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 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 requirements to apply PSD and title V to each pollutant subject to
regulation, which are triggered when the LDVR 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 asserting that the RIA completed for
proposal of this rulemaking: (1) Understated the burdens of the rule
and overstated the benefits, (2) did not fully recognize the rule will
be burdensome, especially given the current state of the economy; and
(3) does not consider a complete estimation of impacts to comply with
the APA and CAA section 307(d) and needs to correct flawed or erroneous
[[Page 31597]]
assumptions, EPA did make improvements and modifications to the RIA
completed for this final rule. 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.
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 in
section V, that are higher, and therefore cover fewer sources and are
less burdensome than the proposal threshold of 25,000 tpy
CO2e emissions. EPA also increased the threshold below which
permitting would not apply for 6 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.
Finally, with regard to comments 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 provides regulatory relief.
A. What entities are affected by this final rule?
As previously stated, this final rule does not itself result in the
application of permitting requirements to any industrial, commercial,
or residential entities. Entities affected by this rule are those who
experience regulatory relief due to the higher thresholds and deferred
applicability set forth in this rule. This action increases the
threshold to obtain a title V and PSD permitting from statutory CAA
levels using a phased-in step process as previously discussed. As Table
VI-1 shows, this action lifts permitting requirements for over six
million potential title V sources in total and tens of thousands of
potential PSD new sources annually that would be otherwise required by
the CAA to obtain permits. Under Step 1, over six million title V
sources in total and approximately 20 thousand new PSD sources per year
will not be required to obtain permits. Under Step 2, requiring sources
over a 100,000 tpy CO2e to obtain a permit, over six million
title V sources in total and approximately 19.9 thousand new PSD
sources per year will obtain regulatory relief. While the threshold
approach differs for Steps 1 and 2 of the phase-in plan, the estimated
number of sources affected does not differ greatly as shown in Table
VI-1. Sectors experiencing this regulatory relief include electricity,
industrial, energy, waste treatment, agriculture, commercial and
residential.
Table VI-1--Estimated Number of Affected Sources Experiencing Regulatory Relief 1, 2
----------------------------------------------------------------------------------------------------------------
Number of sources experiencing regulatory relief
-----------------------------------------------------------------------
Sector Step 1 Anyway Step 2 100,000 tpy
-----------------------------------------------------------------------
Title V New PSD Title V New PSD
----------------------------------------------------------------------------------------------------------------
Electricity............................. 285 93 285 33
Industrial.............................. 170,910 604 170,654 599
Energy.................................. 2,588 48 2,536 44
Waste Treatment......................... 3,358 2 3,165 1
Agriculture............................. 37,351 299 37,351 299
Commercial.............................. 1,355,921 12,041 1,355,870 12,039
Residential............................. 4,535,500 6,915 4,535,500 6,915
-----------------------------------------------------------------------
Totals.............................. 6,105,913 20,002 6,105,361 19,930
----------------------------------------------------------------------------------------------------------------
% Emissions Covered \3\................. 13%
11%
----------------------------------------------------------------------------------------------------------------
Notes: (1) Number of sources is determined on a PTE basis. Estimates for title V are the total number of sources
expected to experience regulatory relief. PSD sources are annual estimates of newly constructed facilities and
do not include modifications at existing facilities that may also be subject to PSD requirements. (2) See
appendices to ``Regulatory Impact Analysis of the Final Prevention of Significant Deterioration and Title V
Greenhouse Gas Tailoring Rule'' for more details of how thresholds and sources affected are developed. (3)
Percentage of emissions covered represent estimated actual emissions from sources expected to experience
regulatory relief as a percentage of total stationary source GHG emissions.
B. What are the estimated annual benefits to sources due to regulatory
relief from the statutory requirements?
EPA estimated the annual benefits (avoided costs) to sources of GHG
emissions and permitting authorities anticipated from this final rule.
In addition, an accounting of the benefits from this action as measured
by avoided permit processing costs for state, local, and tribal
permitting authorities is provided. These benefits or avoided costs
relate specifically to permit burden costs postponed for smaller
sources of GHG emissions otherwise required to obtain an operating
permit under title V or required to modify an existing permit to
address GHG
[[Page 31598]]
emissions. Avoided costs shown also include permit burdens for
additional PSD permits postponed for new or modifying smaller sources
of GHG, as well as the avoided costs to state, local and tribal
permitting authorities. We are providing an illustrative monetary
estimate of statutory permitting requirements to show the magnitude of
the savings that hypothetically result from this rulemaking. While we
believe it is impossible to implement these permit requirements by
January 2, 2011, for the reasons laid out in this preamble, it is
useful to understand the scale of what the burden may have been. For
sake of simplicity, we refer to this illustrative monetary estimate as
the monetized benefits of the regulatory relief presented by this
rulemaking or regulatory relief benefits for brevity.
These benefit estimates do not consider avoided emission control
costs associated with PSD requirements for potential BACT requirements.
Estimates for BACT are unavailable at this time because of the
difficulty predicting the results of the BACT process as it would be
applied to new pollutants and classes of sources for which there is no
previous BACT experience on which to rely.
1. What are annual estimated benefits or avoided burden costs for title
V permits?
Table VI-2 shows that the estimated annual title V benefits to
sources and to permitting authorities in terms of avoided information
collection cost resulting from this final action to be approximately
$70,535 million under Step 1 of the phase-in. These avoided costs
become $70,520 million annually under Step 2 of the phase-in. where
permitting is required for sources at or above the 100,000 tpy
CO2e threshold. Under the anyway threshold Step 1,
approximately $49,457 million in regulatory relief will accrue to
sources and approximately $21,078 million to permitting authorities
annually in the form of avoided permit processing costs. With the
100,000 tpy CO2e threshold for phase-in Step 2, these annual
regulatory relief benefits are expected to be quite similar at $49,447
million for sources of GHG emissions and $21,072 million for permitting
authorities. Industrial sources permitting costs are estimated to be
$46.4 thousand per permit for a new permit and $1.7 thousand for a
permit revision. The EPA estimates that over tens of thousands of
industrial sources per year will avoid incurring these permitting costs
under Steps 1 and 2 of the phase-in period. The cost for a permit for
new commercial and residential sources is estimated to be $23.2
thousand per permit with approximately 2 million of these permits
avoided annually.
State, local, and tribal permitting authorities will also benefit
in terms of avoided permitting administrative costs of over $21 billion
as a result of the decisions final in this action. For industrial
sources, the cost for permitting authorities to process a new
industrial title V permit is approximately $19.7 thousand per permit
and $1.8 thousand for a permit revision. Similarly, permitting
authority avoided permit processing costs are approximately $9.8
thousand per permit for a new commercial or residential title V permit.
All estimates are stated in 2007 dollars.
Table VI-2--Annual Title V Regulatory Relief for Sources and Permitting Authorities 1, 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Step one anyway Step two 100,000 tpy CO2e
Cost per permit -----------------------------------------------------------------------
Activity (2007$) Number of Avoided costs Number of Avoided costs
permits (millions 2007$) permits (millions 2007$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources:
New Industrial............................................ $46,350 71,829 $3,329 71,657 $3,321
New Commercial/Residential................................ 23,175 1,985,948 46,024 1,985,930 46,024
Permit revisions due to GHG............................... 1,677 61,836 104 60,921 102
-----------------------------------------------------------------------------------------
Source Total.......................................... ................ 2,119,613 49,457 2,118,508 49,447
Permitting Authority:
New Industrial............................................ 19,688 71,829 1,414 71,657 1,410
New Commercial/Residential................................ 9,844 1,985,948 19,550 1,985,930 19,550
Permit revisions due to GHG............................... 1,840 61,836 114 60,921 112
-----------------------------------------------------------------------------------------
Permitting Authority Total............................ ................ 2,119,613 21,078 2,118,508 21,072
=========================================================================================
Total Title V Regulatory Relief................... ................ ................ 70,535 ................ 70,520
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Sums may not add due to rounding.
\1\ Annual title V avoided costs estimates represent information collection costs for one third of the total number of title V sources obtaining
regulatory relief shown in Table VI-1 potentially requiring permits or permit revisions for GHG.
\2\ More details on these estimated regulatory relief benefits are available in the appendices to the ``Regulatory Impact Analysis for the Final
Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.''
2. What are annual benefits or avoided costs associated with NSR
permitting regulatory relief?
Table VI-3 summarizes the estimated annual permit burden costs
avoided by sources and permitting authorities for PSD permitting due to
this Tailoring Rule. The benefits associated with avoided cost of
compliance for BACT for these sources is not included in these
estimates due to a lack of available data. The estimated avoided burden
or reporting and recordkeeping cost that would occur absent this rule
for new industrial sources to obtain permits is estimated to be $84.5
thousand for a modifying PSD industrial source and $59.2 thousand for a
modifying commercial or multi-family residential source. New PSD
sources will also be required to obtain a title V permit increasing
these costs to $130.9 thousand per permit for new industrial sources
and to $82.3 thousand per permit for new commercial or multi-family
residential sources. (Note the title V costs for these new PSD sources
have been included in title V estimates shown in Table VI-2.) New and
modifying sources avoid approximately $5.5 billion annually in PSD
permitting costs with this rule under the phase-in Step 1 threshold.
Under the phase-in Step 2, 100,000 tpy CO2e threshold and
75,000 tpy CO2e significance level, this avoided PSD
permitting cost estimate
[[Page 31599]]
becomes $5.4 billion annually. State, local, and tribal permitting
authorities are expected to avoid about $1.51 billion annually in
administrative expenditures associated with postponing PSD program
requirements for these GHG sources under Step 1 and $1.49 billion under
Step 2. All estimates are shown in 2007 dollars.
Table VI-3--Annual PSD Regulatory Relief for Sources and Permitting Authorities 1, 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Step one anyway Step two 100,000 tpy threshold,
------------------------------------ 75,000 significance level
Activity Cost per permit -----------------------------------
(2007$) Number of Avoided costs Number of Avoided costs
permits (millions 2007$) permits (millions 2007$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources:
New Industrial............................................ $84,530 26,089 $2,205 25,174 $2,128
New Commercial/Residential................................ 59,152 55,509 3,283 55,505 3,283
-----------------------------------------------------------------------------------------
Source Total.......................................... ................ 81,598 5,489 80,679 5,411
Permitting Authority:
New Industrial............................................ 23,243 26,089 606 25,174 585
New Commercial/Residential................................ 16,216 55,509 900 55,505 900
-----------------------------------------------------------------------------------------
Permitting Authority Total............................ ................ 81,598 1,506 80,679 1,485
=========================================================================================
Total Title V Regulatory Relief................... ................ ................ 6,995 ................ 6,896
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Sums may not add due to rounding.
\1\ All estimates are based upon PTE. Regulatory relief shown represents annual estimates of PSD permitting costs avoided under Steps 1 and 2 of the
phase-in period.
\2\ More details on these estimated regulatory relief benefits are available in the appendices to the ``Regulatory Impact Analysis for the Final
Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule.''
C. What are the economic impacts of this rulemaking?
This final rulemaking does not impose economic burdens or costs on
any sources or permitting authorities, but should be viewed as
regulatory relief for smaller GHG emission sources and for permitting
authorities. Although sources above the thresholds set in this rule
will become subject to permitting on January 2, 2011, those impacts are
not attributable to the present rulemaking. Rather they are mandated by
the CAA and existing regulations and automatically take effect
independent of this action.
In addition to considering the regulatory relief expected for
affected entities as a result of this final rule, the EPA considered
the impact of this rulemaking to small entities (small businesses,
governments and non-profit organizations) as required by the Regulatory
Flexibility Act (RFA) and the Small Business Regulatory Enforcement
Fairness Act (SBREFA). For informational purposes, the RIA includes the
SBA definition of small entities by industry categories for stationary
sources of GHG and potential regulatory relief from title V and NSR
permitting programs for small sources of GHG. Since this rule does not
impose regulatory requirements but rather lessens the regulatory burden
of the CAA requirements to smaller sources of GHG, no economic costs
are imposed upon small sources of GHG as a result of this final rule.
Rather this action provides regulatory relief for small sources. These
avoided costs or benefits accrue because small sources of GHG are not
required to obtain a title V permit and new or modifying small sources
of GHG are not required to meet PSD requirements. Some of the small
sources benefitting from this action are small entities, and these
entities will benefit from the regulatory relief finalized by this
rule. For discussion of comments received and EPA responses regarding
small entities impacts, see section VII of this preamble.
D. What are the costs of the final rule for society?
EPA examined the social costs of this final rule. These social
costs represent the foregone environmental benefits that will occur as
a result of the regulatory relief offered to sources of GHG emissions.
This action is one of regulatory relief since it increases the
emissions thresholds for the title V and PSD programs, as they apply to
sources of GHG emissions, to levels above those in the CAA. In this
preamble section, the benefits or avoided regulatory costs of such
relief are discussed, but there is also a social cost imposed by such
relief, because this rule may forego some of the possible benefits
associated with title V and PSD programs for sources of GHG emissions
below the permitting thresholds established. These benefits are those
attributed to title V and PSD permitting programs in general. These
benefits are based upon the relevance of these programs to
policymaking, transparency issues, and market efficiency, and therefore
are very difficult to quantify and monetize. For title V, they include
the benefits of improved compliance with CAA requirements that stem
from (1) Improved clarity regarding applicability of requirements, (2)
discovery and required correction of noncompliance prior to receiving a
permit, (3) improving monitoring, recordkeeping, and reporting
concerning compliance status, (4) self-certification of compliance with
applicable requirements initially and annually, and prompt reporting of
deviations from permit requirements, (5) enhanced opportunity for the
public to understand and monitor sources' compliance obligations, and
(6) improved ability of EPA, permitting authorities, and the public to
enforce CAA requirements. However, it is important to remember that a
title V permit generally does not add new requirements for pollution
control itself, but rather collects all of a facility's applicable
requirements under the CAA in one permitting mechanism. Therefore, the
compliance benefits above are less when title V permits contains few or
no CAA applicable requirements. During the initial steps of the phase-
in plan established under this action, we expect that the vast majority
of sources excluded from title V would be sources that have no CAA
applicable
[[Page 31600]]
requirements for GHG emissions and few or no requirements for other
pollutants because their emissions of those pollutants are so small.
For this reason, while it is extremely difficult to measure the degree
of improved compliance, if any, that would be foregone, or to quantify
the social costs that would be imposed, we expect that they would be
small. We will be evaluating this issue further during subsequent
phases.
For PSD, the primary social cost imposed by the Tailoring Rule
stems from the foregone benefit of applying BACT to the tens of
thousands of small new sources and modifications that will be below our
final thresholds during the first steps of the phase-in. This social
cost potentially weighs against the cost savings described previously
that stem (in part) from avoiding the administrative and control costs
of applying BACT to these sources. The BACT requirement assures that
new and modified sources, when they increase their emissions are using
state-of-the-art emission controls and affords the public an
opportunity to comment on the control decision. It does not prohibit
increases but it assures that such controls are applied. Delaying the
BACT requirement for numerous small sources during the first steps of
the phase-in for this final rule could allow increases from these
smaller sources that are greater than they would be if BACT were
applied. A detailed analysis of this difference is beyond the scope of
this rule, because we do not have detailed information on the universe
of these tens of thousands of small PSD actions, the candidate BACT
technologies for each of them, how permitting authorities would make
the BACT decisions, and how the BACT limit would compare to what would
otherwise be installed absent BACT.
It is not possible at this time to quantify the social costs of
avoided BACT. However, we note 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 PSD. The sources
excluded in these first two steps of the phase-in plan of this action
comprise only 11 percent of total stationary source GHG emissions,
while 67 percent remain subject to regulation. Furthermore, we expect
the emissions differences due to BACT controls for such sources to be
relatively small due to the lack of available capture and control
technologies for GHG at such sources that are akin to those that exist
for conventional pollutants and sources, as well as the likelihood that
even in the absence of BACT such sources would already be installing
relatively efficient GHG technologies to save on fuel costs. Thus,
while potential benefits would be foregone by excluding smaller sources
from the permitting programs, these benefits are likely to be small.
Under the Tailoring Rule, we will be working during the 6-year period
to greatly improve our understanding of both the administrative costs
of regulating and the social costs of not regulating smaller sources
under PSD and title V, and we will be relying on that information to
support our future threshold analyses called for under the action.
In reaching the decisions for this Tailoring Rule, the EPA
recognizes that GHG emissions can remain in the atmosphere for decades
to centuries, meaning that their concentrations become well-mixed
throughout the global atmosphere regardless of emission origin, and
their effects on climate are long lasting and significant. A detailed
explanation of climate change and its impact on health, society, and
the environment is included in EPA's TSD for the endangerment finding
action (Docket ID No. EPA-HQ-OAR-2009-0171). The EPA recognizes the
importance of reducing climate change emissions for all sources of GHG
emissions including those sources afforded regulatory relief in this
rule and plans to address potential emission reductions from these
small sources using voluntary and energy efficiency approaches.
Elsewhere, we have discussed EPA's interest in continuing to use
regulatory and/or 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.
E. What are the net benefits of this final rule?
The net benefits of this GHG tailoring rule represent the
difference between the benefits and costs of this rule to society. As
discussed in this preamble, this rule is one of regulatory relief and
the benefits to society are estimates the regulatory relief (avoided
permit burden costs) to sources and permitting authorities for Steps 1
and 2 of the phase-in period. The social costs of the rule are the
foregone environmental benefits in the form of potential GHG emission
reductions that could occur during the phase-in period and are
discussed qualitatively.
This rulemaking provides regulatory relief for a phase-in period to
smaller sources of GHG by phasing in the statutory permitting threshold
at levels above statutory requirements. This final rule establishes
thresholds and PSD significance levels for Steps 1 and 2 of the phase-
in period (the 2.5 year period between January 2, 2011 and July 1,
2013), commits to considering a further Step 3, and indicates floor
title V and PSD threshold levels from July 1, 2013 through April 30,
2016. The net benefits of the final rule for Steps 1 and 2 are
$193,598+B-C million for the 2 and one-half year period where B denotes
the unquantified benefits and C the quantified costs of this final
rule. These unquantified benefits of this rule include the avoided PSD
BACT costs for new and modifying sources. The unquantified costs
previously discussed relate to the foregone environment benefits or GHG
emission reductions that might be possible during the 2.5 year Step 1
and 2 phase-in period. These estimates are subject to significant
uncertainties that are discussed at length in the Regulatory Impact
Analysis for the Prevention of Significant Deterioration and Title V
GHG Tailoring Rule contained in the docket to this final rule. All
dollar estimates shown are based upon 2007$.
Table VI-4--Net Benefits of the Rule for Steps 1 and 2 of the Phase-in
Period
------------------------------------------------------------------------
Final rule amounts
(millions of 2007$)
------------------------------------------------------------------------
Benefits--Regulatory Relief:
Sources
Title V \1\................................... $123,624
PSD \2\....................................... $13,567
---------------------
Total Source Regulatory Relief............ $137,190
Permitting Authority:
[[Page 31601]]
Title V \1\................................... $52,684
PSD \2\....................................... $3,724
Total Permitting Authority................ $56,407
=====================
Total Regulatory Relief................... $193,598+B
Costs--Foregone GHG Emission Reductions
Title V & PSD................................. C
Net Benefits \3\.................................. $193,598+B-C
------------------------------------------------------------------------
Benefits represent regulatory relief for sources with the annual
potential to emit below the thresholds shown.
B--Unquantified benefits of the rule include regulatory relief from
BACT requirements for PSD sources.
C--Unquantified social costs of tailoring rule represents economic
value of foregone environmental benefits (potential GHG emission
reductions) during Step 1 and 2 of the phase-in period. Foregone GHG
emission reductions are not known at this time.
\1\ Reflects estimates of regulatory relief or avoided permit burden
costs for title V GHG sources and permitting authorities.
\2\ Shows estimates of regulatory relief or avoided permit burden costs
for GHG PSD sources and permitting authorities.
\3\ Includes one-half year of Step 1 (anyway threshold), 2 years of Step
2 (100,000 threshold).
VII. Comments on Statutory and Executive Order Reviews
In this section, we provide responses to comments we received for
various Executive Orders.
A. Comments on Executive Order 12866--Regulatory Planning and Review
At proposal, EPA prepared an analysis of the potential costs and
benefits associated with EPA's Tailoring Rule proposal in an RIA.
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 Executive Order 12866. Some of these
commenters maintain that Executive Order 12866 directs EPA to submit to
the Office of Management and Budget (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. The commenters believe that 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 Executive Order 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.
The EPA has prepared a revised RIA assessing the benefits and costs
of the final Tailoring Rule to support this rulemaking in accordance
with Executive Order 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 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 Rule. 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 6 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.
B. Comments on the Paperwork Reduction Act
At proposal, we stated in the preamble that we did not believe that
the proposal would impose any new information collection burden. We
concluded that the proposed action would reduce costs incurred by
sources and permitting authorities relative to the costs that would be
incurred if EPA did not revise the rule and provided estimates of those
reduced costs. Further, we stated that, despite our estimated burden
reductions, it was unnecessary for us to submit a new ICR to the OMB
because 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) had
already been approved under the provisions of the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. and was assigned OMB control number 2060-
0003 and OMB control number 2060-0336, respectively.
However, several commenters disagree that it was unnecessary for us
to submit a new ICR for the proposed action. These commenters believe
that (1) prior approval of an ICR for the PSD and title V programs
ignores the fact that there would be an increase in the paperwork
burden as a result of applying PSD and title V permitting requirements;
and (2) 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.
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 Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and was assigned
OMB control number 2060-0003 and OMB control number 2060-0336,
respectively, still applies.
[[Page 31602]]
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.
C. Comments on the RFA
At proposal, EPA certified that the proposed rule would not have a
significant impact on a substantial number of small entities and
therefore we are not obligated to convene a formal Small Business
Advocacy Review (SBAR) panel. This certification was based upon the
fact that the proposed action would relieve the regulatory burden
associated with the major PSD and title V operating permits programs
for new or modified major sources that emit GHGs, including small
businesses. Nevertheless, EPA was aware at proposal that many small
entities would be interested in the various GHG rulemakings currently
under development and might have concerns about the potential impacts
of the statutory imposition of PSD requirements that may occur as a
result of the group of EPA actions, notwithstanding the relief provided
to small businesses by the Tailoring Rule. For these reasons, and in
collaboration with the SBA, EPA 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 Office of Air Quality Planning and Standards
within the Office of Air and Radiation, EPA's Office of Policy
Economics and Innovation, the Office of Information and Regulatory
Affairs within OMB, and the Office of Advocacy of the SBA. This meeting
was conducted on November 17, 2009 in Arlington, VA, and documentation
of this meeting, which includes a summary of the advice and
recommendations received from the small entity representatives
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.)
During the comment period, several commenters alleged that EPA
inappropriately limited its RIA and RFA/SBREFA analysis, and that had
we done a comprehensive analysis, we would not have been able to
certify that any of the proposed rules will not have a significant
economic impact on a ``substantial number of small entities.'' Thus
they conclude that EPA failed to prepare and publicize an initial
regulatory flexibility analysis (IRFA). Additional commenters stated
that EPA's failure to conduct an IRFA to assess the full costs of the
effects of its interpretation of PSD applicability in the proposed
Tailoring Rule violates a host of statutes and Executive Orders
requiring analysis and public review of regulatory burdens. These
commenters conclude that EPA should have convened one or more SBAR
Panels.
We are not persuaded that we should have taken into account effects
beyond those caused by the Tailoring Rule when we made our
certification of no significant economic impact on a substantial number
of small entities for this rule. 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. For more
discussion of RFA issues, please see the RTC document.
D. Comments on the Unfunded Mandates Reform Act
At proposal, EPA asserted that the Tailoring Rule does not impose
unfunded mandates on any entities including sources and permitting
authorities. Since the proposed Tailoring Rule is one of regulatory
relief, it alleviates the burden of adhering to statutorily required
permitting thresholds and does not impose regulatory requirements.
Some commenters on the proposed rule assert that EPA has failed to
comply with the requirements of the Unfunded Mandates Reform Act
(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 1
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 did not account for the billions of dollars that permitting
authorities and stationary sources will soon be required to spend once
PSD is triggered for GHGs. Additionally, a few commenters contend that
the EPA underestimated the impacts to public utilities which are owned/
operated by local governments and also to state regulatory agencies.
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
has determined that 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.
E. Comments on Executive Order 13132--Federalism
Some comments received on the proposed rule assert that federalism
concerns were ignored, in violation of Executive Order 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 Executive Order 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.
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
[[Page 31603]]
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.
However, since this rule finalizes burden reducing thresholds that
will not otherwise apply to the PSD and title V programs, we are aware
that a few states may have to amend their SIPs to incorporate these new
thresholds if they do not incorporate federal rules by reference and
cannot adopt our approach through interpretation. Executive Order 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.
F. Comments on Executive Order 13175--Consultation and Coordination
With Indian Tribal Governments
The National Tribal Air Association (NTAA) 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 NTAA 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 NTAA, 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.
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 with
tribes 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.
G. Comments on Executive Order 13211--Actions That Significantly Affect
Energy Supply, Distribution, or Use
Other commenters assert that EPA's analysis under Executive Order
13211 is insufficient because it addresses only smaller sources. These
commenters contend 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 (due to the need for
a source to convert from coal to natural gas to meet BACT).
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 specific 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.
VIII. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
Under section 3(f)(1) of Executive Order 12866 (58 FR 51735,
October 4, 1993), this action is an ``economically significant
regulatory action'' because it is likely to have an annual effect on
the economy of $100 million or more. Accordingly, EPA submitted this
action to the OMB for review under Executive Order 12866 and any
changes made in response to OMB recommendations have been documented in
the docket for this action.
In addition, EPA prepared an analysis of the potential costs and
benefits associated with this action. This analysis is contained in the
RIA for this final rule. A copy of the analysis is available in the
docket for this action and the analysis is briefly summarized in
section VII of this preamble.
This rule uses a phased-in approach for requiring larger sources of
GHG emissions to comply with title V operating permit and PSD statutory
requirements, essentially lifting this burden for a period of at least
6 years for a large number of sources of GHG. Thus, this rule provides
regulatory relief rather than regulatory requirements for these GHG
sources. For sources of GHG that will be required to obtain title V
permits and/or comply with PSD requirements, there are no direct
economic burdens or costs as a result of this final rule, because these
requirements are not imposed as a result of this rulemaking. Statutory
requirements to obtain a title V operating permit or to adhere to PSD
requirements are already mandated by the CAA and by existing rules, not
by this rule. As a result, this Tailoring Rule annual effect on the
economy will be positive because it will result in billions of dollars
of regulatory relief during the phase-in period.
B. Paperwork Reduction Act
This action does not impose any new information collection burden.
Instead, this action will significantly reduce costs incurred by
sources and permitting authorities relative to the costs that would be
incurred if EPA did not revise the rule. Based on our revised GHG
threshold data analysis, we estimate that over 80,000 new and modified
facilities per year would be subject to PSD review based on applying a
GHG emissions threshold of 100/250 tpy using a CO2e metric.
This is compared to 280 PSD permits currently issued per year, which is
an increase of more than 280-fold. Similarly, for title V, we estimate
that over six million new sources would be affected at the 100-tpy
threshold for GHGs using the CO2e metric. By increasing the
volume of permits by over 400 times, the administrative burden would be
unmanageable without this rule.
However, OMB has previously approved the information collection
[[Page 31604]]
requirements contained in the existing regulations for PSD (see, e.g.,
40 CFR 52.21) and title V (see 40 CFR parts 70 and 71) under the
provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and
has assigned OMB control number 2060-0003 and OMB control number 2060-
0336. The OMB control numbers for EPA's regulations in 40 CFR are
listed in 40 CFR part 9.
C. Regulatory Flexibility Act
The 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. Small entities
include small businesses, small organizations, and small governmental
jurisdictions.
For purposes of assessing the impacts of this final action on small
entities, small entity is defined as: (1) A small business that is a
small industrial entity as defined in the U.S. SBA size standards (see
13 CFR 121.201); (2) a small governmental jurisdiction that is a
government of a city, county, town, school district, or special
district with a population of less than 50,000; or (3) a small
organization that is any not-for-profit enterprise that is
independently owned and operated and is not dominant in its field.
After considering the economic impacts of this final rule on small
entities, I certify that this final action will not have a significant
economic impact on a substantial number of small entities. In
determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604.
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if the rule
relieves regulatory burden, or otherwise has a positive economic effect
on all of the small entities subject to the rule.
We have therefore concluded that this final rule will relieve the
regulatory burden for most affected small entities associated with the
major PSD and title V operating permits programs for new or modified
major sources that emit GHGs, including small businesses. This is
because this rule raises the major source applicability thresholds for
these programs for the sources that emit GHGs. As a result, the program
changes provided in this rule are not expected to result in a
significant economic impact on a substantial number of small entities.
D. Unfunded Mandates Reform Act
This rule does not contain a federal mandate that may result in
expenditures of $100 million or more for state, local, and tribal
governments, in the aggregate, or the private sector in any 1 year.
Only those few states whose permitting authorities do not implement the
federal PSD and title V rules by reference in their SIPs will have a
small increase in burden. These states will have to amend their
corresponding SIPs to incorporate the new applicability thresholds,
since the burden reducing thresholds that we are finalizing with this
rule will not otherwise apply to the PSD and title V programs. Thus,
this rule is not subject to the requirements of sections 202 or 205 of
UMRA.
This rule is also not subject to the requirements of section 203 of
UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments. As discussed
earlier, this rule is expected to result in cost savings and an
administrative burden reduction for all permitting authorities and
permittees, including small governments.
E. Executive Order 13132--Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. These final amendments will
ultimately simplify and reduce the burden on state and local agencies
associated with implementing the PSD and title V operating permits
programs, by providing that a source whose GHG emissions are below the
proposed levels will not have to obtain a PSD permit or title V permit.
Thus, Executive Order 13132 does not apply to this action.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and state and local
governments, EPA specifically solicited comment on the proposed rule
from state and local officials.
F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
Subject to the Executive Order 13175 (65 FR 67249, November 9,
2000) EPA may not issue a regulation that has tribal implications, that
imposes substantial direct compliance costs, and that is not required
by statute, unless the federal government provides the funds necessary
to pay the direct compliance costs incurred by tribal governments, or
EPA consults with tribal officials early in the process of developing
the proposed regulation and develops a tribal summary impact statement.
EPA has concluded that this action may have tribal implications.
However, it will neither impose substantial direct compliance costs on
tribal governments, nor preempt tribal law. There are no tribal
authorities, currently issuing major NSR permits; however, this may
change in the future.
EPA consulted with tribal officials early in the process of
developing this regulation to allow them to have meaningful and timely
input into its development by publishing an ANPR that included GHG
tailoring options for regulating GHGs under the CAA. (73 FR 44354, July
30, 2008) As a result of the ANPR, EPA received several comments from
tribal officials on differing GHG tailoring options presented in the
ANPR which were considered in the proposal and this final rule.
Additionally, we also specifically solicited comment from tribal
officials on the proposed rule (74 FR 55292, October 27, 2009).
G. Executive Order 13045--Protection of Children From Environmental
Health and Safety Risks
EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997)
as applying only to those regulatory actions that concern health or
safety risks, such that the analysis required under section 5-501 of
the Executive Order has the potential to influence the regulation. This
action is not subject to Executive Order 13045 because it does not
establish an environmental standard intended to mitigate health or
safety risks.
H. Executive Order 13211--Actions That Significantly Affect Energy
Supply, Distribution, or Use
This action is not a ``significant energy action'' as defined in
Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not
likely to have a significant adverse effect on the supply,
distribution, or use of energy. Further, we have concluded that this
rule is not likely to have any adverse energy effects
[[Page 31605]]
because this action would not create any new requirements for sources
in the energy supply, distribution, or use sectors.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
This action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.
J. Executive Order 12898--Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
EPA has concluded that it is not practicable to determine whether
there would be disproportionately high and adverse human health or
environmental effects on minority and/or low income populations from
this rule. This rule is necessary in order to allow for the continued
implementation of permitting requirements established in the statute.
Specifically, without this rule, the CAA permitting programs (PSD and
title V) would become overwhelmed and unmanageable by the millions of
GHG sources that would become newly subject to them. This would result
in severe impairment of the functioning of these programs with
potentially adverse human health and environmental effects nationwide.
Under this rule and the legal doctrines of ``absurd results,''
administrative necessity, and one-step-at-a-time, EPA is ensuring that
the CAA permitting programs continue to operate by limiting their
applicability to the maximum number of sources the programs can
possibly handle. This approach is consistent with congressional intent
as it allows PSD applicability to at least the largest sources
initially, at least to as many more sources as possible, and as
promptly as possible over time. By doing so, this rule allows for the
maximum degree of environmental protection possible while providing
regulatory relief for the unmanageable burden that would otherwise
exist. Therefore, we believe it is not practicable to identify and
address disproportionately high and adverse human health or
environmental effects on minority populations and low income
populations in the United States under this final rule.
K. Congressional Review Act
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by
SBREFA, generally provides that before a rule may take effect, the
agency promulgating the rule must submit a rule report, which includes
a copy of the rule, to each House of the Congress and to the
Comptroller General of the United States. EPA will submit a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States prior to publication of the rule in the Federal Register.
A major rule cannot take effect until 60 days after it is published in
the Federal Register. This action is a ``major rule'' as defined by 5
U.S.C. 804(2). This rule will be effective August 2, 2010.
L. Judicial Review
Under section 307(b)(1) of the Act, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the District of Columbia Circuit by August 2, 2010. Any such judicial
review is limited to only those objections that are raised with
reasonable specificity in timely comments. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
Under section 307(b)(2) of the Act, the requirements of this final
action may not be challenged later in civil or criminal proceedings
brought by us to enforce these requirements. Pursuant to section
307(d)(1)(V) of the Act, the Administrator determines that this action
is subject to the provisions of section 307(d). Section 307(d)(1)(V)
provides that the provisions of section 307(d) apply to ``such other
actions as the Administrator may determine.'' This action finalizes
some, but not all, elements of a previous proposed action--the
Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule Proposed Rule (74 FR 55292, October 27, 2009).
IX. Statutory Authority
The statutory authority for this action is provided by sections
307(d)(7)(B), 101, 111, 114, 116, and 301 of the CAA as amended (42
U.S.C. 7401, 7411, 7414, 7416, and 7601). This action is also subject
to section 307(d) of the CAA (42 U.S.C. 7407(d)).
List of Subjects
40 CFR Part 51
Environmental protection, Administrative practice and procedure,
Air pollution control, Carbon dioxide, Carbon dioxide equivalents,
Greenhouse gases, Hydrofluorocarbons, Intergovernmental relations,
Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping
requirements, Sulfur hexafluoride.
40 CFR Part 52
Environmental protection, Administrative practice and procedure,
Air pollution control, Carbon dioxide, Carbon dioxide equivalents,
Greenhouse gases, Hydrofluorocarbons, Intergovernmental relations,
Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping
requirements, Sulfur hexafluoride.
40 CFR Part 70
Environmental protection, Administrative practice and procedure,
Air pollution control, Carbon dioxide, Carbon dioxide equivalents,
Greenhouse gases, Hydrofluorocarbons, Intergovernmental relations,
Methane, Nitrous oxide, Perfluorocarbons, Reporting and recordkeeping
requirements, Sulfur hexafluoride.
40 CFR Part 71
Environmental protection, Administrative practice and procedure,
Air pollution control, Carbon dioxide, Carbon dioxide equivalents,
Greenhouse gases, Hydrofluorocarbons, Methane, Nitrous oxide,
Perfluorocarbons, Reporting and recordkeeping requirements, Sulfur
hexafluoride.
[[Page 31606]]
Dated: May 13, 2010.
Lisa P. Jackson,
Administrator.
0
For reasons stated in the preamble, title 40, chapter I of the Code of
Federal Regulations is amended as set forth below.
PART 51--[AMENDED]
0
1. The authority citation for part 51 continues to read as follows:
Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.
Subpart I--[Amended]
0
2. Section 51.166 is amended:
0
a. By adding paragraph (b)(48);
0
b. By revising paragraph (b)(49)(iv); and
0
c. By adding paragraph (b)(49)(v).
The revisions and additions read as follows:
Sec. 51.166 Prevention of significant deterioration of air quality.
* * * * *
(b) * * *
(48) Subject to regulation means, for any air pollutant, that the
pollutant is subject to either a provision in the Clean Air Act, or a
nationally-applicable regulation codified by the Administrator in
subchapter C of this chapter, that requires actual control of the
quantity of emissions of that pollutant, and that such a control
requirement has taken effect and is operative to control, limit or
restrict the quantity of emissions of that pollutant released from the
regulated activity. Except that:
(i) Greenhouse gases (GHGs), the air pollutant defined in Sec.
86.1818-12(a) of this chapter as the aggregate group of six greenhouse
gases: Carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride, shall not be subject to
regulation except as provided in paragraphs (b)(48)(iv) through (v) of
this section.
(ii) For purposes of paragraphs (b)(48)(iii) through (v) of this
section, the term tpy CO2 equivalent emissions
(CO2e) shall represent an amount of GHGs emitted, and shall
be computed as follows:
(a) Multiplying the mass amount of emissions (tpy), for each of the
six greenhouse gases in the pollutant GHGs, by the gas's associated
global warming potential published at Table A-1 to subpart A of part 98
of this chapter--Global Warming Potentials.
(b) Sum the resultant value from paragraph (b)(48)(ii)(a) of this
section for each gas to compute a tpy CO2e.
(iii) The term emissions increase as used in paragraphs (b)(48)(iv)
through (v) of this section shall mean that both a significant
emissions increase (as calculated using the procedures in (a)(7)(iv) of
this section) and a significant net emissions increase (as defined in
paragraphs (b)(3) and (b)(23) of this section) occur. For the pollutant
GHGs, an emissions increase shall be based on tpy CO2e, and
shall be calculated assuming the pollutant GHGs is a regulated NSR
pollutant, and ``significant'' is defined as 75,000 tpy CO2e
instead of applying the value in paragraph (b)(23)(ii) of this section.
(iv) Beginning January 2, 2011, the pollutant GHGs is subject to
regulation if:
(a) The stationary source is a new major stationary source for a
regulated NSR pollutant that is not GHGs, and also will emit or will
have the potential to emit 75,000 tpy CO2e or more; or
(b) The stationary source is an existing major stationary source
for a regulated NSR pollutant that is not GHGs, and also will have an
emissions increase of a regulated NSR pollutant, and an emissions
increase of 75,000 tpy CO2e or more; and,
(v) Beginning July 1, 2011, in addition to the provisions in
paragraph (b)(48)(iv) of this section, the pollutant GHGs shall also be
subject to regulation:
(a) At a new stationary source that will emit or have the potential
to emit 100,000 tpy CO2e; or
(b) At an existing stationary source that emits or has the
potential to emit 100,000 tpy CO2e, when such stationary
source undertakes a physical change or change in the method of
operation that will result in an emissions increase of 75,000 tpy
CO2e or more.
(49) * * *
(iv) Any pollutant that otherwise is subject to regulation under
the Act as defined in paragraph (b)(48) of this section.
(v) Notwithstanding paragraphs (b)(49)(i) through (iv) of this
section, the term regulated NSR pollutant shall not include any or all
hazardous air pollutants either listed in section 112 of the Act, or
added to the list pursuant to section 112(b)(2) of the Act, and which
have not been delisted pursuant to section 112(b)(3) of the Act, unless
the listed hazardous air pollutant is also regulated as a constituent
or precursor of a general pollutant listed under section 108 of the
Act.
* * * * *
PART 52--[AMENDED]
0
3. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
Subpart A--[Amended]
0
4. Section 52.21 is amended:
0
a. By adding paragraph (b)(49);
0
b. By revising paragraph (b)(50)(iv); and
0
c. By adding paragraph (b)(50)(v).
The revisions and additions read as follows:
Sec. 52.21 Prevention of significant deterioration of air quality.
* * * * *
(b) * * *
(49) Subject to regulation means, for any air pollutant, that the
pollutant is subject to either a provision in the Clean Air Act, or a
nationally-applicable regulation codified by the Administrator in
subchapter C of this chapter, that requires actual control of the
quantity of emissions of that pollutant, and that such a control
requirement has taken effect and is operative to control, limit or
restrict the quantity of emissions of that pollutant released from the
regulated activity. Except that:
(i) Greenhouse gases (GHGs), the air pollutant defined in Sec.
86.1818-12(a) of this chapter as the aggregate group of six greenhouse
gases: Carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride, shall not be subject to
regulation except as provided in paragraphs (b)(49)(iv) through (v) of
this section.
(ii) For purposes of paragraphs (b)(49)(iii) through (v) of this
section, the term tpy CO2 equivalent emissions
(CO2e) shall represent an amount of GHGs emitted, and shall
be computed as follows:
(a) Multiplying the mass amount of emissions (tpy), for each of the
six greenhouse gases in the pollutant GHGs, by the gas's associated
global warming potential published at Table A-1 to subpart A of part 98
of this chapter--Global Warming Potentials.
(b) Sum the resultant value from paragraph (b)(49)(ii)(a) of this
section for each gas to compute a tpy CO2e.
(iii) The term emissions increase as used in paragraphs (b)(49)(iv)
through (v) of this section shall mean that both a significant
emissions increase (as calculated using the procedures in paragraph
(a)(2)(iv) of this section) and a significant net emissions increase
(as defined in paragraphs (b)(3) and (b)(23) of this section) occur.
For the pollutant GHGs, an emissions increase shall be based on tpy
CO2e, and shall be calculated assuming the pollutant GHGs is
a regulated NSR pollutant, and ``significant'' is defined as 75,000 tpy
CO2e instead of applying the value in paragraph (b)(23)(ii)
of this section.
[[Page 31607]]
(iv) Beginning January 2, 2011, the pollutant GHGs is subject to
regulation if:
(a) The stationary source is a new major stationary source for a
regulated NSR pollutant that is not GHGs, and also will emit or will
have the potential to emit 75,000 tpy CO2e or more; or
(b) The stationary source is an existing major stationary source
for a regulated NSR pollutant that is not GHGs, and also will have an
emissions increase of a regulated NSR pollutant, and an emissions
increase of 75,000 tpy CO2e or more; and,
(v) Beginning July 1, 2011, in addition to the provisions in
paragraph (b)(49)(iv) of this section, the pollutant GHGs shall also be
subject to regulation
(a) At a new stationary source that will emit or have the potential
to emit 100,000 tpy CO2e; or
(b) At an existing stationary source that emits or has the
potential to emit 100,000 tpy CO2e, when such stationary
source undertakes a physical change or change in the method of
operation that will result in an emissions increase of 75,000 tpy
CO2e or more.
(50) * * *
(iv) Any pollutant that otherwise is subject to regulation under
the Act as defined in paragraph (b)(49) of this section.
(v) Notwithstanding paragraphs (b)(50)(i) through (iv) of this
section, the term regulated NSR pollutant shall not include any or all
hazardous air pollutants either listed in section 112 of the Act, or
added to the list pursuant to section 112(b)(2) of the Act, and which
have not been delisted pursuant to section 112(b)(3) of the Act, unless
the listed hazardous air pollutant is also regulated as a constituent
or precursor of a general pollutant listed under section 108 of the
Act.
* * * * *
0
5. A new Sec. 52.22 is added to read as follows:
Sec. 52.22 Enforceable commitments for further actions addressing the
pollutant greenhouse gases (GHGs).
(a) Definitions.
(1) Greenhouse Gases (GHGs) means the air pollutant as defined in
Sec. 86.1818-12(a) of this chapter as the aggregate group of six
greenhouse gases: Carbon dioxide, nitrous oxide, methane,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
(2) All other terms used in this section shall have the meaning
given in Sec. 52.21.
(b) Further action to regulate GHGs under the PSD program.
(1) Near term action on GHGs. The Administrator shall solicit
comment, under section 307(b) of the Act, on promulgating lower GHGs
thresholds for PSD applicability. Such action shall be finalized by
July 1, 2012 and become effective July 1, 2013.
(2) Further study and action on GHGs.
(i) No later than April 30, 2015 the Administrator shall complete a
study projecting the administrative burdens that remain with respect to
stationary sources for which GHGs do not constitute a regulated NSR
pollutant. Such study shall account, among other things, for permitting
authorities ability to secure resources, hire and train staff;
experiences associated with GHG permitting for new types of sources and
technologies; and, the success of streamlining measures developed by
EPA (and adopted by the states) for reducing the permitting burden
associated with such stationary sources.
(ii) Based on the results of the study described in paragraph
(b)(2)(i) of this section, the Administrator shall propose a rule
addressing the permitting obligations of such stationary sources under
Sec. 52.21 and Sec. 51.166 of this chapter. The Administrator shall
take final action on such a rule no later than April 30, 2016.
(iii) Before completing the rule described in paragraph (b)(2)(ii)
of this section, the Administrator shall take no action to make the
pollutant GHGs subject to regulation at stationary sources that emit or
have the potential to emit less than 50,000 tpy CO2e, or for
physical changes or changes in the method of operations at stationary
sources that result in an emissions increase of less than 50,000 tpy
CO2e (as determined using the methodology described in Sec.
52.21(b)(49)(ii).)
PART 70--[AMENDED]
0
6. The authority citation for part 70 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
0
7. Section 70.2 is amended:
0
a. By revising the introductory text of paragraph (2) of the definition
for ``major source''; and
0
b. By adding a definition for ``Subject to regulation'' in alphabetical
order.
The revision and addition read as follows:
Sec. 70.2 Definitions.
* * * * *
Major source * * *
(2) 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 subject to regulation
(including any major source of fugitive emissions of any such
pollutant, as determined by rule by the Administrator). The fugitive
emissions of a stationary source shall not be considered in determining
whether it is a major stationary source for the purposes of section
302(j) of the Act, unless the source belongs to one of the following
categories of stationary source:
* * * * *
Subject to regulation means, for any air pollutant, that the
pollutant is subject to either a provision in the Clean Air Act, or a
nationally-applicable regulation codified by the Administrator in
subchapter C of this chapter, that requires actual control of the
quantity of emissions of that pollutant, and that such a control
requirement has taken effect and is operative to control, limit or
restrict the quantity of emissions of that pollutant released from the
regulated activity. Except that:
(1) Greenhouse gases (GHGs), the air pollutant defined in Sec.
86.1818-12(a) of this chapter as the aggregate group of six greenhouse
gases: carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride, shall not be subject to
regulation unless, as of July 1, 2011, the GHG emissions are at a
stationary source emitting or having the potential to emit 100,000 tpy
CO2 equivalent emissions.
(2) The term tpy CO2 equivalent emissions
(CO2e) shall represent an amount of GHGs emitted, and shall
be computed by multiplying the mass amount of emissions (tpy), for each
of the six greenhouse gases in the pollutant GHGs, by the gas's
associated global warming potential published at Table A-1 to subpart A
of part 98 of this chapter--Global Warming Potentials, and summing the
resultant value for each to compute a tpy CO2e.
* * * * *
0
8. A new Sec. 70.12 is added to read as follows:
Sec. 70.12 Enforceable commitments for further actions addressing
greenhouse gases (GHGs).
(a) Definitions.
(1) Greenhouse Gases (GHGs) means the air pollutant as defined in
Sec. 86.1818-12(a) of this chapter as the aggregate group of six
greenhouse gases: carbon dioxide, nitrous oxide, methane,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
(2) All other terms used in this section shall have the meaning
given in Sec. 70.2.
(b) Further action to regulate GHGs under the title V program.
(1) Near term action on GHGs. The Administrator shall solicit
comment,
[[Page 31608]]
under section 307(b) of the Act, on promulgating lower GHGs thresholds
for applicability under Sec. 70.2. Such action shall be finalized by
July 1, 2012 and become effective July 1, 2013.
(2) Further study and action on GHGs.
(i) No later than April 30, 2015 the Administrator shall complete a
study projecting the administrative burdens that remain with respect to
stationary sources for which GHGs do not constitute a pollutant subject
to regulation. Such study shall account, among other things, for
permitting authorities ability to secure resources, hire and train
staff; experiences associated with GHG permitting for new types of
sources and technologies; and, the success of streamlining measures
developed by EPA (and adopted by the states) for reducing the
permitting burden associated with such stationary sources.
(ii) Based on the results of the study described in paragraph
(b)(2)(i) of this section, the Administrator shall propose a rule
addressing the permitting obligations of such stationary sources under
Sec. 70.2. The Administrator shall take final action on such a rule no
later than April 30, 2016.
(iii) Before completing the rule described in paragraph (b)(2)(ii)
of this section, the Administrator shall take no action to make the
pollutant GHGs subject to regulation at stationary sources that emit or
have the potential to emit less than 50,000 tpy CO2e (as
determined using the methodology described in Sec. 70.2.)
PART 71--[AMENDED]
0
9. The authority citation for part 71 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
Subpart A--[AMENDED]
0
10. Section 71.2 is amended:
0
a. By revising the introductory text of paragraph (2) of the definition
for ``major source''; and
0
b. By adding a definition for ``Subject to regulation'' in alphabetical
order.
The revision and addition read as follows:
Sec. 71.2 Definitions.
* * * * *
Major source * * *
(2) 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 subject to regulation
(including any major source of fugitive emissions of any such
pollutant, as determined by rule by the Administrator). The fugitive
emissions of a stationary source shall not be considered in determining
whether it is a major stationary source for the purposes of section
302(j) of the Act, unless the source belongs to one of the following
categories of stationary source:
* * * * *
Subject to regulation means, for any air pollutant, that the
pollutant is subject to either a provision in the Clean Air Act, or a
nationally-applicable regulation codified by the Administrator in
subchapter C of this chapter, that requires actual control of the
quantity of emissions of that pollutant, and that such a control
requirement has taken effect and is operative to control, limit or
restrict the quantity of emissions of that pollutant released from the
regulated activity. Except that:
(1) Greenhouse gases (GHGs), the air pollutant defined in Sec.
86.1818-12(a) of this chapter as the aggregate group of six greenhouse
gases: carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride, shall not be subject to
regulation unless, as of July 1, 2011, the GHG emissions are at a
stationary source emitting or having the potential to emit 100,000 tpy
CO2 equivalent emissions.
(2) The term tpy CO2 equivalent emissions
(CO2e) shall represent an amount of GHGs emitted, and shall
be computed by multiplying the mass amount of emissions (tpy), for each
of the six greenhouse gases in the pollutant GHGs, by the gas's
associated global warming potential published at Table A-1 to subpart A
of part 98 of this chapter--Global Warming Potentials, and summing the
resultant value for each to compute a tpy CO2e.
0
11. A new Sec. 71.13 is added to subpart A to read as follows:
Sec. 71.13 Enforceable commitments for further actions addressing
Greenhouse Gases (GHGs)
(a) Definitions.
(1) Greenhouse Gases (GHGs) means the air pollutant as defined in
Sec. 86.1818-12(a) of this chapter as the aggregate group of six
greenhouse gases: carbon dioxide, nitrous oxide, methane,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
(2) All other terms used in this section shall have the meaning
given in Sec. 71.2.
(b) Further action to regulate GHGs under the title V program.
(1) Near term action on GHGs. The Administrator shall solicit
comment, under section 307(b) of the Act, on promulgating lower GHGs
thresholds for applicability under Sec. 71.2. Such action shall be
finalized by July 1, 2012 and become effective July 1, 2013.
(2) Further study and action on GHGs.
(i) No later than April 30, 2015, the Administrator shall complete
a study projecting the administrative burdens that remain with respect
to stationary sources for which GHGs do not constitute a pollutant
subject to regulation. Such study shall account, among other things,
for permitting authorities ability to secure resources, hire and train
staff; experiences associated with GHG permitting for new types of
sources and technologies; and, the success of streamlining measures
developed by EPA (and adopted by the states) for reducing the
permitting burden associated with such stationary sources.
(ii) Based on the results of the study described in paragraph
(b)(2)(i) of this section, the Administrator shall propose a rule
addressing the permitting obligations of such stationary sources under
Sec. 71.2. The Administrator shall take final action on such a rule no
later than April 30, 2016.
(iii) Before completing the rule described in paragraph (b)(2)(ii)
of this section, the Administrator shall take no action to make the
pollutant GHGs subject to regulation at stationary sources that emit or
have the potential to emit less than 50,000 tpy CO2e, (as
determined using the methodology described in Sec. 71.2.)
[FR Doc. 2010-11974 Filed 6-2-10; 8:45 am]
BILLING CODE 6560-50-P