[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Rules and Regulations]
[Pages 17004-17023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7536]
[[Page 17003]]
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Part V
Environmental Protection Agency
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40 CFR Parts 50, 51, 70, and 71
Reconsideration of Interpretation of Regulations That Determine
Pollutants Covered by Clean Air Act Permitting Programs; Final Rule
Federal Register / Vol. 75 , No. 63 / Friday, April 2, 2010 / Rules
and Regulations
[[Page 17004]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 50, 51, 70, and 71
[EPA-HQ-OAR-2009-0597; FRL-9133-6]
RIN 2060-AP87
Reconsideration of Interpretation of Regulations That Determine
Pollutants Covered by Clean Air Act Permitting Programs
AGENCY: Environmental Protection Agency.
ACTION: Final Action on Reconsideration of Interpretation.
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SUMMARY: EPA has made a final decision to continue applying the
Agency's existing interpretation of a regulation that determines the
scope of pollutants subject to the Federal Prevention of Significant
Deterioration (PSD) program under the Clean Air Act (CAA or Act). In a
December 18, 2008 memorandum, EPA established an interpretation
clarifying the scope of the phrase ``subject to regulation'' found
within the definition of the term ``regulated NSR pollutant.'' After
considering comments on alternate interpretations of this term, EPA has
decided to continue to interpret it to include each pollutant subject
to either a provision in the CAA or regulation adopted by EPA under the
CAA that requires actual control of emissions of that pollutant. Thus,
this action explains that EPA will continue following the
interpretation in the December 18, 2008 memorandum with one exception.
EPA is refining 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.'' In addition, this notice addresses several questions
regarding the applicability of the PSD and Title V permitting programs
to greenhouse gases (GHGs) upon the anticipated promulgation of EPA
regulations establishing limitations on emissions of GHGs from vehicles
under Title II of the CAA. Collectively, these conclusions result in an
EPA determination that PSD and Title V permitting requirements will not
apply to GHGs until at least January 2, 2011.
DATES: This final action is applicable as of March 29, 2010.
FOR FURTHER INFORMATION CONTACT: Mr. David Svendsgaard, Air Quality
Policy Division (C504-03), U.S. Environmental Protection Agency,
Research Triangle Park, NC 27711, telephone number: (919) 541-2380; fax
number: (919) 541-5509, e-mail address: [email protected].
SUPPLEMENTARY INFORMATION:
I. General Information
A. Does this action apply to me?
Entities potentially affected by this action include sources in
various industry groups and State, local, and tribal governments.
B. How is this document organized?
This document is organized as follows:
I. General Information
II. Background
III. This Action
A. Overview
B. Analysis of Proposed and Alternative Interpretations for
Subject to Regulation
1. Actual Control Interpretation
2. Monitoring and Reporting Interpretation
3. State Implementation Plan (SIP) Interpretation
4. Endangerment Finding Interpretation
5. Section 209 Waiver Interpretation
C. Other Issues on Which EPA Solicited Comment
1. Prospective Codification of Interpretation
2. Section 821 of the Clean Air Act Amendments of 1990
3. Timing of When a Pollutant becomes Subject to Regulation
IV. Application of PSD Interpretive Memo to Permitting for GHGs
A. Date by Which GHGs Will Be ``Subject to Regulation''
B. Implementation Concerns
C. Interim EPA Policy To Mitigate Concerns Regarding GHG
Emissions from Construction or Modification of Large Stationary
Sources
D. Transition for Pending Permit Applications
V. PSD Program Implementation by EPA and States
VI. Application of the Title V Program to Sources of GHGs
VII. Statutory Authority
VIII. Judicial Review
II. Background
On December 18, 2008, then-EPA Administrator Stephen Johnson issued
a memorandum setting forth EPA's interpretation regarding which
pollutants were ``subject to regulation'' for the purposes of the
Federal PSD permitting program. See Memorandum from Stephen Johnson,
EPA Administrator, to EPA Regional Administrators, RE: EPA's
Interpretation of Regulations that Determine Pollutants Covered by
Federal Prevention of Significant Deterioration (PSD) Permit Program
(Dec. 18, 2008) (``PSD Interpretive Memo'' or ``Memo''); see also 73 FR
80300 (Dec. 31, 2008) (public notice of Dec. 18, 2008 memo). The Memo
interprets the phrase ``subject to regulation'' to include pollutants
``subject to either a provision in the CAA or regulation adopted by EPA
under the CAA that requires actual control of emissions of that
pollutant,'' while excluding pollutants ``for which EPA regulations
only require monitoring or reporting.'' See Memo at 1. The Memo was
necessary after issues were raised regarding the scope of pollutants
that should be addressed in PSD permitting actions following the
Supreme Court's April 2, 2007 decision in Massachusetts v. EPA, 549
U.S. 497 (2007).
In Massachusetts v. EPA, the Supreme Court held that GHGs,
including carbon dioxide (CO2), fit within the definition of
air pollutant in the CAA. The case arose from EPA's denial of a
petition for rulemaking filed by more than a dozen environmental,
renewable energy, and other organizations requesting that EPA control
emissions of GHGs from new motor vehicles under section 202(a) of the
CAA. The Court found that, in accordance with CAA section 202(a), EPA
was required to determine whether or not emissions of GHGs from new
motor vehicles cause or contribute to air pollution which may
reasonably be anticipated to endanger public health or welfare, or
whether the science is too uncertain to make a reasoned decision.\1\
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\1\ On December 15, 2009, EPA published the final endangerment
and cause or contribute findings for GHGs under section 202(a) of
the CAA. See 74 FR 66495.
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On November 13, 2008, the Environmental Appeals Board (EAB) issued
a decision in a challenge to a PSD permit to construct a new electric
generating unit in Bonanza, Utah. In re Deseret Power Electric
Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13, 2008) (``Deseret'').
The permit was issued by EPA Region 8 in August 2007 and did not
include best available control technology (BACT) limits for
CO2. At the time, the Region acknowledged Massachusetts but
found that decision alone did not require PSD permits to include limits
on CO2 emissions. In briefs filed in the EAB case, EPA
maintained the position that the Agency had a binding, historic
interpretation of the phrase ``subject to regulation'' in the Federal
PSD regulations that required PSD permit limits to apply only to those
pollutants already subject to actual control of emissions under other
provisions of the CAA. Response of EPA Office of Air and Radiation and
Region 8 to Briefs of Petitioner and Supporting Amici (filed March 21,
2008). Accordingly, EPA argued that the regulations contained in 40 CFR
part 75, which require monitoring of CO2 at some sources,
did not make CO2 subject
[[Page 17005]]
to PSD regulation. The order and opinion issued by the EAB remanded the
permit after finding that prior EPA actions were insufficient to
establish a historic, binding interpretation that ``subject to
regulation'' for PSD purposes included only those pollutants subject to
regulations that require actual control of emissions. However, the EAB
also rejected arguments that the CAA compelled only one interpretation
of the phrase ``subject to regulation'' and found ``no evidence of a
Congressional intent to compel EPA to apply BACT to pollutants that are
subject only to monitoring and reporting requirements.'' Thus, the
Board remanded the permit to the Region to ``reconsider whether or not
to impose a CO2 BACT limit in light of the `subject to
regulation' definition under the CAA.'' The Board encouraged EPA to
consider ``addressing the interpretation of the phrase `subject to
regulation under this Act' in the context of an action of nationwide
scope, rather than through this specific permitting proceeding.'' See
Deseret at 63-64.
EPA issued the PSD Interpretive Memo shortly after the Deseret
decision with the stated purpose to ``establish[ ] an interpretation
clarifying the scope of the EPA regulation that determines the
pollutants subject to the Federal Prevention of Significant
Deterioration (PSD) program under the Clean Air Act (CAA or Act)'' by
providing EPA's ``definitive interpretation'' of the definition of the
term ``regulated NSR pollutants'' found at 40 CFR 52.21(b)(50) and
resolving ``any ambiguity in subpart ([iv]) of that paragraph, which
includes `any pollutant that otherwise is subject to regulation under
the Act.' '' See Memo at 1. As the Memo explains, the statute and
regulation use similar language--the regulation defines a regulated NSR
pollutant to include ``[a]ny pollutant that otherwise is subject to
regulation under the Act'' and requires BACT for ``each regulated NSR
pollutant,'' per 40 CFR 52.21(b)(50) and (j), while the Act requires
BACT for ``each pollutant subject to regulation under this [Act],'' per
CAA sections 165(a)(4) and 169. The EAB had determined that ``the
meaning of the term `subject to regulation under this Act' as used in
[CAA] sections 165 and 169 is not so clear and unequivocal as to
preclude the Agency from exercising discretion in interpreting the
statutory phrase'' in implementing the PSD program. See Deseret at 63.
The PSD Interpretive Memo seeks to resolve the ambiguity in
implementation of the PSD program by stating that ``EPA will interpret
this definition of `regulated NSR pollutant' to exclude pollutants for
which EPA regulations only require monitoring or reporting but to
include each pollutant subject to either a provision in the Clean Air
Act or regulation adopted by EPA under the Clean Air Act that requires
actual control of emissions of that pollutant.'' The Memo states that
``EPA has not previously issued a definitive interpretation of the
definition of `regulated NSR pollutant' in section 52.21(b)(50) or an
interpretation of the phrase `subject to regulation under the Act' that
addressed whether monitoring and reporting requirements constitute
`regulation' within the meaning of this phrase.'' The Memo, however,
explains that the interpretation reflects the ``considered judgment''
of then-Administrator Johnson regarding the PSD regulatory requirements
and is consistent with both historic Agency practice and prior
statements by Agency officials. See Memo at 1-2.
The PSD Interpretive Memo is not a substantive rule promulgated
under section 307(d) of the CAA, but rather an interpretation of the
terms of a regulation at 40 CFR 52.21(b)(50).\2\ An interpretive
document is one that explains or clarifies, and is consistent with,
existing statutes or regulation. See National Family Planning and
Reproductive Health Ass'n v. Sullivan, 979 F.2d 227, 236-37 (D.C. Cir.
1992). The PSD Interpretive Memo explains and clarifies the meaning of
the definition of ``regulated NSR pollutant'' in section 52.21(b)(50)
of the existing NSR regulations, and does not alter the meaning of the
definition in any way that is inconsistent with the terms of the
regulation. As a result, EPA concluded that the PSD Interpretive Memo
was an interpretive rule that could be issued without a notice and
comment rulemaking process.
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\2\ The PSD Interpretive Memo also reflects EPA's interpretation
of sections 165(a)(4) and 169(3) of the CAA, which use language
similar to the EPA regulations that are based on these provisions of
the statute. The Memo discusses the Agency's interpretation of the
CAA and concludes that the Agency's interpretation of its
regulations is not precluded by the terms of the CAA.
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However, the PSD Interpretive Memo observed that the adoption of an
interpretation of a rule without a notice and comment process does not
preclude subsequent action by the Agency to solicit public input on the
interpretation. Indeed, given the significant public interest in the
issue addressed in the December 18, 2008 memorandum, EPA subsequently
elected to seek public input on the memorandum and alternative readings
of the regulations.
On December 31, 2008, EPA received a petition for reconsideration
of the position taken in the PSD Interpretive Memo from Sierra Club and
14 other environmental, renewable energy, and citizen organizations.
See Petition for Reconsideration, In the Matter of: EPA Final Action
Published at 73 FR 80300 (Dec. 31, 2008), entitled ``Clean Air Act
Prevention of Significant Deterioration (PSD) Construction Permit
Program; Interpretation of Regulations That Determine Pollutants
Covered by the Federal PSD Permit Program.'' Petitioners argued that
the PSD Interpretive Memo ``was impermissible as a matter of law,
because it was issued in violation of the procedural requirements of
the Administrative Procedures [sic] Act * * * and the Clean Air Act * *
*, it directly conflicts with prior agency actions and interpretations,
and it purports to establish an interpretation of the Act that
conflicts with the plain language of the statute.'' See Petition at 2.
Accordingly, Petitioners requested that EPA reconsider and retract the
PSD Interpretive Memo. Petitioners later amended their Petition for
Reconsideration to include a request to stay the effect of the Memo
pending the outcome of the reconsideration request. Amended Petition
for Reconsideration (filed Jan. 6, 2009).\3\
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\3\ On January 15, 2009, a number of environmental organizations
that filed this Petition for Reconsideration also filed a petition
challenging the PSD Interpretive Memo in U.S. Court of Appeals for
the District of Columbia Circuit. Sierra Club v. E.P.A., No. 09-1018
(D.C. Cir., filed Jan. 15, 2009). Thereafter, various parties moved
to intervene in that action or filed similar petitions challenging
the Memo. The consolidated D.C. Circuit cases have been held in
abeyance pending this reconsideration process. Id., Order (filed
March 9, 2009).
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On February 17, 2009, EPA granted the Petition for Reconsideration,
on the basis of the authority conferred by section 553(e) of the
Administrative Procedure Act (APA), and announced its intent to conduct
a rulemaking to allow for public comment on the issues raised in the
Memo and on any issues raised by the EAB's Deseret opinion, to the
extent they do not overlap with the issues raised in the Memo.\4\
Because the Memo was not a substantive rule promulgated under section
307(d) of the APA, the reconsideration action was not a reconsideration
under the authority of section 307(d)(7)(B) of the CAA. See Letter from
Lisa P. Jackson, EPA Administrator, to David Bookbinder, Chief Climate
Counsel at Sierra Club (Feb. 17, 2009). EPA did not stay the
effectiveness of the PSD Interpretive Memo pending reconsideration, but
the Agency did reiterate that the Memo
[[Page 17006]]
``does not bind States issuing [PSD] permits under their own State
Implementation Plans.'' Id. at 1.
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\4\ Because the grant of reconsideration directed the Agency to
conduct this reconsideration using a notice and comment process, the
proposal did not address the procedural challenge presented in the
Petition for Reconsideration.
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On October 7, 2009 (74 FR 51535), EPA proposed a reconsideration of
the PSD Interpretive Memo that solicited comment on five possible
interpretations of the regulatory phrase ``subject to regulation''--the
``actual control'' interpretation (adopted by the Memo); the
``monitoring and reporting'' interpretation (advocated by Petitioners);
the inclusion of regulatory requirements for specific pollutants in
SIPs (discussed in both the Memo and the Petition for Reconsideration);
an EPA finding of endangerment (discussed in the Memo); and the grant
of a section 209 waiver interpretation (raised by commenters in another
EPA action). EPA also addressed, and requested public comment on, other
issues raised in the PSD Interpretive Memo and related actions that may
influence this reconsideration.
Of the five interpretations described in the proposed
reconsideration notice, EPA expressly favored the actual control
interpretation, which has remained in effect since issuing the
memorandum, notwithstanding the EPA's grant of reconsideration. The
proposal explained that the actual control interpretation best reflects
EPA's past policy and practice, is in keeping with the structure and
language of the statute and regulations, and best allows for the
necessary coordination of approaches to controlling emissions of newly
identified pollutants. While the other interpretations may represent
reasoned approaches for interpreting ``subject to regulation,'' no
particular one is compelled by the statute, nor did the EAB determine
that any one of them was so compelled. Because EPA had overarching
concerns over the policy and practical application of each of the
alternative interpretations, the Agency proposed to retain the actual
control interpretation. Nevertheless, EPA requested comment on all five
of the interpretations.
III. This Action
A. Overview
EPA has made a final decision to continue applying (with one
limited refinement) the Agency's existing interpretation of 40 CFR
52.21(b)(50) that is articulated in the PSD Interpretive Memo. For
reasons explained below, and addressed in further detail in the
document ``Reconsideration of Interpretation of Regulations that
Determine Pollutants Covered by Clean Air Act Permitting Programs:
EPA's Response to Public Comments'', after reviewing the comments, EPA
has concluded that the ``actual control interpretation'' is a
permissible interpretation of the CAA and is the most appropriate
interpretation to apply given the policy implications. However, EPA is
refining its interpretation in one respect to establish 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,
this notice addresses several outstanding questions regarding the
applicability of the PSD and Title V permitting programs to GHGs upon
the anticipated promulgation of EPA regulations establishing
limitations on emissions of GHGs from vehicles under Title II of the
CAA.\5\
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\5\ On September 28, 2009, EPA proposed a rule establishing
emissions standards for new motor vehicles, starting with Model Year
2012, that would reduce GHGs and improve fuel economy from motor
vehicles. This proposal was a joint proposal by EPA and the U.S.
Department of Transportation (DOT), with DOT proposing to adopt
corporate average fuel economy (CAFE) standards for model years 2012
and after. See 74 FR 49453.
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EPA received 71 comments on the proposed reconsideration notice
published on October 7, 2009 (74 FR 51535).\6\ Commenters represented a
range of interests, including State regulatory agencies, corporations
that may need to obtain PSD permits, trade associations representing
various industrial sectors, and environmental and public interest
groups. Commenters representing States and regulated entities generally
expressed support for the actual control interpretation, while
environmental and public interest groups generally favored the
alternative interpretations. States and regulated entities also
supported EPA's proposed action to apply PSD requirements at the point
in time when an actual control requirement becomes effective, with many
entities specifically requesting that EPA interpret ``effective'' to
mean the compliance date of a rule. Environmental stakeholders
supported retaining the position in the existing PSD Interpretive Memo
that PSD requirements apply to a pollutant upon the promulgation of the
relevant requirement for that pollutant.
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\6\ In some cases, a commenter on the proposed reconsideration
of the PSD Interpretive Memo addressed an issue or topic that is
under consideration in the forthcoming PSD and Title V GHG Tailoring
Rule. Accordingly, EPA refers the reader to that rulemaking for EPA
responses to those comments.
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EPA has not been persuaded that the Agency is compelled by the CAA,
the terms of EPA regulations, or prior EPA action to apply any of the
four alternatives to its preferred interpretation described in the
October 7, 2009 notice--monitoring and reporting requirement, EPA-
approved SIP, endangerment finding, or CAA section 209 waiver. EPA has
likewise not been persuaded that all of the alternative interpretations
are precluded by the CAA. However, since Congress has not precisely
spoken to this issue, EPA has the discretion to choose among the range
of permissible interpretations of the statutory language. Since EPA's
interpretation of the regulations is not precluded by the statutory
language, EPA is electing to maintain that interpretation on policy
grounds. EPA has concluded that the ``actual control'' interpretation
is not only consistent with decades of past practice, but provides the
most reasonable and workable approach to developing an appropriate
regulatory scheme to address newly identified pollutants of concern.
Thus, except as to the one element that EPA proposed to modify, EPA is
reaffirming the PSD Interpretive Memo and its establishment of the
actual control interpretation as EPA's definitive interpretation of the
phrase ``subject to regulation'' under the PSD provisions in the CAA
and EPA regulations.
EPA has been persuaded by public comments on the proposed
reconsideration to modify the portion of its interpretation regarding
the timing of when a pollutant becomes subject to regulation under the
CAA and thus covered by the requirements of the PSD permitting program.
Specifically, EPA is modifying its interpretation of 40 CFR
52.21(b)(50) of its regulations, and the parallel provision in 40 CFR
51.166(b)(49), to establish that the PSD requirements will not apply to
a newly regulated pollutant until a regulatory requirement to control
emissions of that pollutant ``takes effect.'' EPA has concluded that
this approach is consistent with the CAA and a reasonable reading of
the regulatory text.
Based on these final determinations, EPA will continue to apply the
interpretation reflected in the PSD Interpretive Memo with one
refinement. For the reasons discussed in more detail below, EPA has not
generally found cause to change the discussion or reasoning reflected
in the Memo. As a result, EPA does not see a need to either withdraw or
re-issue the Memo. However, this notice refines one paragraph of that
memorandum to reflect EPA's current view that a pollutant becomes
subject to regulation
[[Page 17007]]
at the time the first control requirements applicable to a pollutant
take effect. Public comments raised several questions regarding the
application of the PSD program and Title V permits to GHGs that EPA did
not specifically raise in the October 7, 2009 proposed notice of
reconsideration. Some of these comments raised significant issues that
the Agency recognizes the need to address at this time to ensure the
orderly transition to the regulation of GHGs under these permitting
programs. Thus, this notice reflects additional interpretations and EPA
statements of policy on topics not discussed in the October 7, 2009
notice. These interpretations and polices have been developed after
careful consideration of the public comments submitted to EPA on this
action and related matters. In subsequent actions, EPA may address
additional topics raised in public comments on this action that the
Agency did not consider necessary to address at this time.
Regarding GHGs, EPA has concluded that PSD program requirements
will apply to GHGs upon the date that the anticipated tailpipe
standards for light-duty vehicles (known as the ``LDV Rule'') take
effect. Based on the proposed LDV Rule, those standards will take
effect when the 2012 model year begins, which is no earlier than
January 2, 2011. While the LDV Rule will become ``effective'' for the
purposes of planning for the upcoming model years as of 60 days
following publication of the rule, the emissions control requirements
in the rule do not ``take effect''-- i.e., requiring compliance through
vehicular certification before introducing any Model Year 2012 into
commerce--until Jan. 2, 2011, or approximately 9 months after the
planned promulgation of the LDV Rule. Furthermore, as EPA intends to
explain soon in detail in the final action on the PSD and Title V GHG
Tailoring Rule (known as the ``Tailoring Rule''),\7\ in light of the
significant administrative challenges presented by the application of
the PSD and Title V requirements for GHGs (and considering the
legislative intent of the PSD and Title V statutory provisions), it is
necessary to defer applying the PSD and Title V provisions for sources
that are major based only on emissions of GHGs until a date that
extends beyond January 2, 2011.
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\7\ The proposed ``Tailoring Rule'' can be found at 74 FR 55291
(Oct. 27, 2009).
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B. Analysis of Proposed and Alternative Interpretations for Subject to
Regulation
1. Actual Control Interpretation
EPA has concluded that the ``actual control'' interpretation (as
articulated in the PSD Interpretive Memo) is permissible under the CAA
and is preferred on policy grounds. Thus, EPA will continue to
interpret the definition of ``regulated NSR pollutant'' in 40 CFR
52.21(b)(50) to exclude pollutants for which EPA regulations only
require monitoring or reporting but to include each pollutant subject
to either a provision in the CAA or regulation promulgated by EPA under
the CAA that requires actual control of emissions of that pollutant. As
discussed further below, EPA will also interpret section 51.166(b)(49)
of its regulations in this manner. This interpretation is supported by
the language and structure of the regulations and is consistent with
past practice in the PSD program and prior EPA statements regarding
pollutants subject to the PSD program. The CAA is most effectively
implemented by making PSD emissions limitations applicable to
pollutants after a considered judgment by EPA (or Congress) that
particular pollutants should be subject to control or limitation. The
actual control interpretation promotes the orderly administration of
the permitting program by allowing the Agency to first assess whether
there is a justification for controlling emissions of a particular
pollutant under relevant criteria in the Act before applying the
requirements of the PSD permitting program to a pollutant.
Because the term ``regulation'' is susceptible to more than one
meaning, there is ambiguity in the phrase ``each pollutant subject to
regulation under the Act'' \8\ that is used in both sections 165(a)(4)
and 169(3) of the CAA. As discussed in the Memo, the term
``regulation'' can be used to describe a rule contained in a legal
code, such as the Code of Federal Regulations, or the act or process of
controlling or restricting an activity. The primary meaning of the term
``regulation'' in Black's Law Dictionary (8th Ed.) is ``the act or
process of controlling by rule or restriction.'' However, an
alternative meaning in this same dictionary defines the term as ``a
rule or order, having legal force, usu. issued by an administrative
agency or local government.'' The primary meaning in Webster's
dictionary for the term ``regulation'' is ``the act of regulating: The
state of being regulated.'' Merriam-Webster's Collegiate Dictionary 983
(10th Ed. 2001). Webster's secondary meaning is ``an authoritative rule
dealing with details of procedure'' or ``a rule or order issued by an
executive authority or regulatory agency of a government and having the
force of law.'' Webster's also defines the term ``regulate'' and the
inflected forms ``regulated'' and ``regulating'' (both of which are
used in Webster's definition of ``regulation'') as meaning ``to govern
or direct according to rule'' or to ``to bring under the control of law
or constituted authority.'' Id.
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\8\ The CAA requires BACT for ``each pollutant subject to
regulation under this Act.'' See CAA 165(a)(4), 169(3). The United
States Code refers to ``each pollutant regulated under this
chapter,'' which is a reference to Chapter 85 of Title 42 of the
Code, where the CAA is codified. See 42 U.S.C. 7475(a)(4), 7479(3).
For simplicity, this notice generally uses ``the Act'' and the CAA
section numbers rather than the U.S. Code citation.
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The PSD Interpretive Memo reasonably applies a common meaning of
the term ``regulation'' to support a permissible interpretation that
the phrase ``pollutant subject to regulation'' means a pollutant
subject to a provision in the CAA or a regulation issued by EPA under
the Act that requires actual control of emissions of that pollutant.
Public comments have not demonstrated the dictionary meanings of the
term ``regulation'' described in the Memo are no longer accepted
meanings of this term. In light of the different meanings of the term
``regulation,'' EPA has not been persuaded by public comments that the
CAA plainly and unambiguously requires that EPA apply any of the other
interpretations described in the October 7, 2009 notice. Moreover, the
Memo carefully explains how the actual control interpretation is
consistent with the overall context of the CAA in which sections
165(a)(4) and 169(3) are found. After consideration of public comment,
EPA continues to find this discussion persuasive. The ``subject to
regulation'' language appears in the BACT provisions of the Act, which
themselves require actual controls on emissions. The BACT provisions
reference the New Source Performance Standards (NSPS) and other control
requirements under the Act, which establish a floor for the BACT
requirement. See 42 U.S.C. 7479(3). Other provisions in the CAA that
authorize EPA to establish emissions limitations or controls on
emissions provide criteria for the exercise of EPA's judgment to
determine which pollutants or source categories to regulate. Thus, it
follows that Congress expected that pollutants would only be regulated
for purposes of the PSD program after: (1) The EPA promulgated
regulations requiring control of a particular
[[Page 17008]]
pollutant on the basis of considered judgment, taking into account the
applicable criteria in the CAA, or (2) EPA promulgates regulations on
the basis of Congressional mandate that EPA establish controls on
emissions of a particular pollutant, or (3) Congress itself directly
imposes actual controls on emissions of a particular pollutant. In
addition, considering other sections in the Act that require reasoned
decision-making and authorize the collection of emissions data prior to
establishing controls on emissions, it is also consistent with the
Congressional design to require BACT limitations for pollutants after a
period of data collection and study that leads to a reasoned decision
to establish control requirements. Public commenters did not
demonstrate that it was erroneous for EPA to interpret the PSD
provisions in this manner, based on the context of the Act.
Furthermore, the actual control interpretation is consistent with
the terms of the regulations EPA promulgated in 2002.\9\ EPA continues
to find the reasoning of the PSD Interpretive Memo to be persuasive.
The structure and language of EPA's definition of ``regulated NSR
pollutant'' at 40 CFR 52.21(b)(50) supports the actual control
interpretation. The first three parts of the definition describe
pollutants that are subject to regulatory requirements that mandate
control or limitation of the emissions of those pollutants, which
suggests that the use of ``otherwise subject to regulation'' in the
fourth prong of the definition also intended some prerequisite act or
process of control. The definition's use of ``subject to regulation''
should be read in light of the primary meanings of ``regulation''
described above, which each use or incorporate the concept of control.
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\9\ See 67 FR 80186-80289.
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One commenter stated that EPA's suggestion that its proposed
interpretation will allow for a more practical approach to determining
whether emissions of air pollutants endanger health and human welfare
amounts only to a policy preference. The commenter argued that EPA's
policy preference should be subordinate to statutory language and
Congressional intent. Another commenter made similar comments and
stated that EPA cannot avail itself of additional, non-statutory de
facto extensions of time to fulfill its statutory obligations.
Where the governing statutory authority is susceptible to more than
one interpretation, it is not impermissible for EPA to apply policy
preferences when determining which interpretation to apply, so long as
the interpretation EPA elects to follow is a permissible one. The PSD
Interpretive Memo provides a persuasive explanation for why the
interpretation reflected in that memorandum is consistent with the
terms of the CAA and Congressional intent. In this instance, EPA's
policy preferences are fully consistent with that intent. As explained
above, Congress intended for EPA to gather data before establishing
controls on emissions and to make reasoned decisions.
EPA continues to prefer the actual control interpretation because
it ensures an orderly and manageable process for incorporating new
pollutants into the PSD program after an opportunity for public
participation in the decision making process. Several commenters who
supported EPA's proposal to continue applying the ``actual control''
interpretation identified these considerations as important reasons
that EPA should continue doing so. EPA agrees with these comments. As
discussed persuasively in the PSD Interpretive Memo, under this
interpretation, EPA may first assess whether there is a justification
for controlling emissions of a particular pollutant under relevant
criteria in the Act before imposing controls on a pollutant under the
PSD program. In addition, this interpretation permits the Agency to
provide notice to the public and an opportunity to comment when a new
pollutant is proposed to be regulated under one or more programs in the
Act. It also promotes the orderly administration of the permitting
program by providing an opportunity for EPA to develop regulations to
manage the incorporation of a new pollutant into the PSD program, for
example, by promulgating a significant emissions rate (or de minimis
level) for the pollutant when it becomes regulated. See 40 CFR
52.21(b)(23). Furthermore, this interpretation preserves the Agency's
ability to gather data on pollutant emissions to inform their judgment
regarding the need to establish controls on emissions without
automatically triggering such controls. This interpretation preserves
EPA's authority to require control of particular pollutants through
emissions limitations or other restrictions under various provisions of
the Act, which would then trigger the requirements of the PSD program
for any pollutant addressed in such an action.
Some commenters who opposed the actual control interpretation
argued that this deliberate approach leads to ``analysis paralysis''
and is subject to political manipulation. The commenter further noted
that the case-by-case BACT requirement does not contemplate waiting
years for EPA to conduct analyses and ``develop'' control options;
rather, BACT must be based on control options that are available. Then,
permitting agencies are to make ``case-by-case'' determinations
``taking into account energy, environmental, and economic impacts and
other costs,'' thereby ensuring that the decision is informed by the
available solutions, their efficacy and costs.
While this analysis may sometimes take more time than the commenter
would prefer, a deliberative and orderly approach to regulation is in
the public interest and consistent with Congressional intent. It would
be premature to impose the BACT requirement on a particular pollutant
if neither EPA nor Congress has made a considered judgment that a
particular pollutant is harmful to public health and welfare and merits
control.
Once the Agency has made a determination that a pollutant should be
controlled using one or more of the regulatory tools provided in the
CAA and those controls take effect, EPA agrees that a BACT analysis
must then be completed based on available information. As the commenter
points out, the BACT process is designed to determine the most
effective control strategies achievable in each instance, considering
energy, environmental, and economic impacts. Thus, EPA agrees that the
onset of the BACT requirement should not be delayed in order for
technology or control strategies to be developed. Furthermore, EPA
agrees with the commenter that delaying the application of BACT to
enable development of guidance on control strategies is not necessarily
consistent with the BACT requirement. The BACT provisions clearly
contemplate that the permitting authority will develop control
strategies on a case-by-case basis. Thus, EPA is not in this final
action relying on the need to develop guidance for BACT as a
justification for choosing to continue applying the actual control
interpretation. However, in the absence of guidance on control
strategies from EPA and other regulatory agencies, the BACT process may
be more time and resource intensive when applied to a new pollutant.
Under a mature PSD permitting program, successive BACT analyses
establish guidelines and precedents for subsequent BACT determinations.
However, when a new pollutant is regulated, the first permit applicants
and permitting authorities that are faced with determining BACT for a
new
[[Page 17009]]
pollutant must invest more time and resources in making an assessment
of BACT under the statutory criteria. Given the potentially large
number of sources that could be subject to the BACT requirement when
EPA regulates GHGs, the absence of guidance on BACT determinations for
GHGs presents a unique challenge for permit applicants and permitting
authorities. EPA intends to address this challenge in part by
deferring, under the Tailoring Rule, the applicability of the PSD
permitting program for sources that would become major based solely on
GHG emissions. EPA is also developing guidance on BACT for GHGs.
Several commenters expressed concern with EPA's explanation that
the actual control interpretation best reflects EPA's past practice.
One commenter argued that the Deseret decision rejects the idea that
``past policy and practice'' is a sufficient justification for EPA's
preferred interpretation. In addition, several commenters argued that
the memorandum was in fact not consistent with past EPA practice, based
on their interpretation of a statement made in the preamble to a rule
which promulgated PSD regulations in 1978.
While the record continues to show that the actual control
interpretation is consistent with EPA's historic practice, EPA agrees
that continuity with past practice alone does not justify maintaining a
position when there is good cause to change it. In this case, however,
EPA has not found cause to change an interpretation that is consistent
with Congressional intent and supported by the policy considerations
described earlier. Thus, EPA is not retaining the actual control
interpretation simply to maintain continuity with historic practice.
The record reflects that EPA's past practice was grounded in a
permissible interpretation of the law and supported by rational policy
considerations. Commenters have not otherwise persuaded EPA to change
its historic practice in this area.
A review of numerous Federal PSD permits shows that EPA has been
applying the actual control interpretation in practice--issuing permits
that only contained emissions limitations for pollutants subject to
regulations requiring actual control of emissions under other portions
of the Act. Furthermore, in 1998, well after promulgation of the
initial CO2 monitoring regulations in 1993, EPA's General
Counsel concluded that CO2 would qualify as an ``air
pollutant'' that EPA had the authority to regulate under the CAA, but
the General Counsel also observed that ``the Administrator has made no
determination to date to exercise that authority under the specific
criteria provided under any provision of the Act.'' \10\ The 1978
Federal Register notice promulgating the initial PSD regulations stated
that pollutants ``subject to regulation'' in the PSD program included
``any pollutant regulated in Subchapter C of Title 40 of the Code of
Federal Regulations.'' Commenters argue this statement illustrates that
EPA has in fact applied the PSD BACT requirement to any pollutant
subject to only a monitoring requirement codified in this portion of
the Code of Federal Regulations. However, this comment overlooked the
discussion in the PSD Interpretive Memo regarding the differing
meanings of the term ``regulation'' and ``regulate.'' The 1978 preamble
did not amplify the meaning of the term ``regulated in.'' Thus,
commenters have not demonstrated that EPA had concluded in 1978 that
monitoring requirements equaled ``regulation'' within the meaning of
sections 165(a)(4) and 169(3) of the CAA, nor have commenters provided
any examples of permits issued by EPA after 1978 that demonstrate EPA's
interpretation was inconsistent with the practice described in the PSD
Interpretive Memo.
---------------------------------------------------------------------------
\10\ Memorandum from Jonathan Z. Cannon, General Counsel to
Carol M. Browner, Administrator, entitled EPA's Authority to
Regulate Pollutants Emitted by Electric Power Generation Sources
(April 10, 1998).
---------------------------------------------------------------------------
Therefore, EPA affirms that the actual control interpretation
expressed in the PSD Interpretive Memo continues be the operative
statement for the EPA interpretation of the meaning of the regulatory
phrase ``subject to regulation'' within the Federal PSD rules.
2. Monitoring and Reporting Interpretation
EPA is not persuaded that the monitoring and reporting
interpretation is compelled by the CAA, and the Agency remains
concerned that application of this approach would lead to odd results
and make the PSD program difficult to administer. EPA continues to find
the reasoning of the PSD Interpretive Memo persuasive.
The monitoring and reporting interpretation would make the
substantive requirements of the PSD program applicable to particular
pollutants based solely on monitoring and reporting requirements
(contained in regulations established under section 114 or other
authority in the Act). This approach would lead to the perverse result
of requiring emissions limitations under the PSD program while the
Agency is still gathering the information necessary to conduct research
or evaluate whether to establish controls on the pollutant under other
parts of the Act. Such a result would frustrate the Agency's ability to
gather information using section 114 and other authority and make
informed and reasoned judgments about the need to establish controls or
limitations for particular pollutants. If EPA interpreted the
requirement to establish emissions limitations based on BACT to apply
solely on the basis of a regulation that requires collecting and
reporting emissions data, the mere act of gathering information would
essentially dictate the result of the decision that the information is
being gathered to inform (whether or not to require control of a
pollutant). Many commenters representing State permitting agencies and
industry groups agree with the policy arguments advanced by EPA and
others that EPA's critical information gathering activities will be
constrained, with likely adverse environmental and public health
consequences, if monitoring requirements are necessarily associated
with the potentially significant implementation and compliance costs
and resource constraints of the PSD program. Commenters expressed
concern that without the ability to gather data or investigate
unregulated pollutants, for fear of triggering automatic regulation
under the CAA, EPA will not have the flexibility to review the validity
of controlling new pollutants.
EPA agrees that a monitoring and reporting interpretation would
hamper the Agency's ability to conduct monitoring or reporting for
investigative purposes to inform future rulemakings involving actual
emissions control or limits. In addition, it is not always possible to
predict when a new pollutant will emerge as a candidate for regulation.
In such cases, the Memo's reasoning is correct in that EPA would be
unable to promulgate any monitoring or reporting rule for such a
pollutant without triggering PSD under this interpretation.
An environmental organization disagreed with the proposed notice of
reconsideration, and commented that EPA has issued monitoring and
reporting regulations for CO2 in 40 CFR part 75, promulgated
pursuant to section 821 of the 1990 CAA Amendments. The commenter felt
that these monitoring and reporting rules are ``regulation'' in that
they are contained in a legal code, have the force of law, and bring
the subject matter under the control of law and the EPA. Furthermore,
the commenter says that EPA itself has characterized these
[[Page 17010]]
monitoring and reporting requirements as ``regulations.'' In contrast,
another commenter argued that an agency's interpretation of a statute
should focus first on the ordinary dictionary meaning of the terms used
and that monitoring emissions does not fit within any of the types of
activities understood to constitute ``regulation'' of those emissions
in the ordinary meaning of that term. Each of these commenters focuses
on only one of the two potential meanings of the term ``regulation''
described above.
The commenter that favors the ``monitoring and reporting''
interpretation appears to focus only on the dictionary meanings that
describe a rule contained in a legal code. The commenter has not
demonstrated that it is impermissible for EPA to construe the CAA on
the basis of another common meaning of the term ``regulation.'' In the
context of construing the Act, the EAB observed in the Deseret case
that a plain meaning could not be ascertained from looking solely at
the word ``regulation.'' The Board reached this conclusion after
considering the dictionary definitions of the term ``regulation'' cited
above. See Deseret slip op. at 28-29. EPA continues to find the
reasoning of the EAB and the PSD Interpretive Memo to be persuasive.
The EAB found ``no evidence of Congressional intent to compel EPA to
apply BACT to pollutants that are subject only monitoring and reporting
requirements.'' See Deseret at 63.
Comments have not convincingly shown that Congress clearly intended
to use the term ``regulation'' in section 165(a)(4) and 169(3) to
describe any type of rule in a legal code. Some commenters presented
alternative theories of Congressional intent regarding the BACT
provisions, but they have not persuasively demonstrated that the
interpretation of Congressional intent based on the context of the CAA
described in the PSD Interpretive Memo is erroneous.
For example, one commenter opposed to EPA's proposed action
commented that the PSD Interpretive Memo ignores the Congressionally-
established purpose of PSD to protect public health and welfare from
actual and potential adverse effects. See CAA section 160(1).
Specifically, this commenter stated that to limit application of BACT
until after control requirements are in place following an endangerment
finding ignores the broad, protective purpose of the PSD program. The
commenter said that the emphasis on ``potential adverse effect[s]''
distinguishes PSD the requirement from the National Ambient Air Quality
Standards (NAAQS) and NSPS programs, which require that EPA make an
endangerment finding before establishing generally applicable standards
such as the NSPS or motor vehicle emissions standards. According to
this commenter, BACT's case-by-case approach provides the dynamic
flexibility necessary to implement an emission limitation appropriate
to each particular source. This commenter feels that the PSD program's
ability to address potential adverse effects is hindered by the
position that an endangerment determination and actual control limits
must be first established.
EPA does not agree that the terms of section 160 cited by the
commenter compel EPA to read sections 165(a)(4) and 169(3) to apply to
a pollutant before the Agency has established control requirements for
the pollutant. Section 160(1) describes PSD's purpose to ``protect
public health and welfare from any actual or potential adverse effect
which in the Administrator's judgment may reasonably be anticipated to
occur from air pollution.'' Thus, this goal contemplates an exercise of
judgment by EPA to determine that an actual or potential adverse effect
may reasonably be anticipated from air pollution. In that sense, this
goal is consistent with NAAQS and NSPS programs, which contemplate that
regulation of a pollutant will not occur until a considered judgment by
EPA that a substance or source category merits control or restriction.
The commenter has not persuasively established that the ``potential
adverse effect'' language in section 160(1) makes this provision
markedly different than the language used in sections 108(a)(1)(A) and
111(b)(1)(A). All three sections use the phrase ``may reasonably be
anticipated.'' Furthermore, section 160 contains general goals and
purposes and does not contain explicit regulatory requirements. The
controlling language in the PSD provisions is the ``subject to
regulation'' language in sections 165(a)(4) and 169(3). As discussed
earlier, the ``actual control'' interpretation is based on a common and
accepted meaning of the term ``regulation.'' To the extent the goals
and purpose in section 160 are instructive as to the meaning of other
provisions in Part C of the Act, section 160(1) is just one of several
purposes of the PSD program that Congress specified. The Act also
instructs EPA to ensure that economic growth occurs consistent with the
preservation of existing clean air resources. See CAA section 160(3).
EPA's interpretation is consistent with this goal because it allows EPA
to look at the larger picture by coordinating control of an air
pollutant under the PSD program with control under other CAA
provisions.
EPA finds the logic of the PSD Interpretive Memo more persuasive.
The Memo considers the full context of the CAA, including the health
and welfare criteria that generally must be satisfied to establish
control requirements under other parts of the Act, information
gathering provisions that contemplate data collection and study before
pollutants are controlled, and requirements for reasoned decision
making. While some commenters presented arguments for why it might be
possible or beneficial to apply the BACT requirement before a control
requirement is established for a pollutant elsewhere under the Act,
these arguments do not demonstrate that the contextual reading of the
CAA described in the Memo is erroneous. Thus, the comments have at most
provided another permissible reading of the Act, but they do not
demonstrate that EPA must require BACT limitations for pollutants that
are not yet controlled but only subject to data collection and study.
EPA continues to believe that the monitoring and reporting
interpretation is inconsistent with past agency practice because, as
the Memo notes, ``EPA has not issued PSD permits containing emissions
limitations for pollutants that are only subject to monitoring and
reporting requirements,'' including CO2 emissions. Further,
the Memo determines that the monitoring and reporting interpretation is
not required under the 1978 preamble language, explaining that the
preamble language could be interpreted in a variety of ways and ``did
not specifically address the issue of whether a monitoring or reporting
requirement makes a pollutant `regulated in' [Subpart C of Title 40] of
the Code of Federal Regulations.'' See Memo at 11-12. Commenters have
not demonstrated that the Agency specifically intended, through this
statement, to apply the PSD requirements to pollutants that were
covered by only a monitoring and reporting requirement codified in this
part of the CFR.
One commenter questioned EPA's basis for rejecting the monitoring
and reporting interpretation because they believe EPA has not
identified a pollutant other than CO2 that would be affected
by the monitoring and reporting interpretation. However, EPA's GHG
Reporting Rule covers six GHGs, not just CO2. Further, EPA
has promulgated regulations that require monitoring of oxygen
(O2) in the stack of a boiler under certain circumstances.
See 40
[[Page 17011]]
CFR 60.49Da(d). These examples help demonstrate why monitoring and
reporting requirements alone should not be interpreted to trigger PSD
and BACT requirements.
For the reasons discussed above, EPA affirms the Memo's rejection
of the monitoring and reporting interpretation for triggering PSD
requirements for a new pollutant.
3. State Implementation Plan (SIP) Interpretation
In discussing the application of the actual control interpretation
to specific actions under the CAA, the PSD Interpretive Memo rejects an
interpretation of ``subject to regulation'' in which regulatory
requirements for a particular pollutant in the EPA-Approved State
Implementation Plan (SIP) for a single State would ``require regulation
of that pollutant under the PSD program nationally.'' (Hereinafter,
referred to as the ``SIP interpretation.'') In this action, EPA affirms
and supplements the rationale for rejecting the SIP interpretation
provided in the PSD Interpretive Memo and the reconsideration proposal.
Since the meaning of the term ``subject to regulation'' is ambiguous
and susceptible to multiple interpretations, the SIP interpretation is
not compelled by the structure and language of the Act. Furthermore,
there would be negative policy implications if EPA adopted this
interpretation.
The Memo reasons that application of the SIP interpretation would
convert EPA's approval of regulations applicable only in one State into
a decision to regulate a pollutant on a nationwide scale for purposes
of the PSD program. The Memo explains that the establishment of SIPs is
better read in light of the ``cooperative federalism'' underlying the
Act, whereby Congress allowed individual States to create and apply
some regulations more stringently than Federal regulations within its
borders, without allowing individual States to set national regulations
that would impose those requirements on all States. See Ellis v.
Gallatin Steel Co., 390 F.3d 461, 467 (6th Cir. 2004). In rejecting the
SIP interpretation, the Memo also explains that EPA adopted a similar
position in promulgating the NSR regulations for fine particulate
matter (or ``PM2.5''), without any public comments opposing
that position. See Memo at 15-16.
EPA continues to believe that the CAA and EPA's implementing
regulations are intended to provide States flexibility to develop and
implement SIPs to meet the air quality goals of their individual State.
Each State's implementation plan is a reflection of the air quality
concerns in that State, allowing a State significant latitude in the
treatment of specific pollutants of concern (or their precursors)
within its borders based on air quality, economic, and other
environmental concerns of that State. As such, pollutant emissions in
one State may not present the same problem for a State a thousand miles
away. As expressed in the PSD Interpretive Memo, EPA continues to have
concerns that the SIP interpretation would improperly limit the
flexibility of States to develop and implement their own air quality
plans, because the act of one State to establish regulatory
requirements for a particular pollutant would drive national policy. If
EPA determined that a new pollutant becomes ``subject to regulation''
nationally within the meaning of section 165 based solely on the
provisions of an EPA-approved SIP, then all States would be required to
subject the new pollutant to PSD permitting whether or not control of
the air pollutant was relevant for improving that State's air quality.
Whether one State, five States, or 45 States make the decision that
their air quality concerns are best addressed by imposing regulations
on a new pollutant, EPA does not think those actions should trump the
cooperative federalism inherent in the CAA. While several States may
face similar air quality issues and may choose regulation as the
preferred approach to dealing with a particular pollutant, EPA is
concerned that allowing the regulatory choices of some number of States
to impose PSD regulation on all other States would do just that.
Some commenters support the SIP interpretation, and fault the
Agency's rejection of the interpretation by stating that neither the
Act, nor the Memo, provides a basis for a position that regulation by a
single State is not enough to constitute ``regulation under the Act''
on a nationwide basis for purpose of section 165. Petitioners and
another commenter also assert that CO2 is already ``subject
to regulation under the Act'' and take the position that any
requirement EPA adopts and approves in an implementation plan makes the
covered pollutant ``subject to regulation under the Act'' because it is
approved by the EPA ``under the Act,'' and because it becomes
enforceable by the State, by EPA and by citizens ``under the Act'' upon
approval.
EPA disagrees with the Petitioner and with this commenter that this
reasoning necessarily means that a pollutant regulated in one SIP
approved by EPA must automatically be regulated through the PSD program
nationally. In fact, Congress demonstrated intent, in the language and
structure of the Act, for SIP requirements to have only a local or
regional effect.
In section 102(a) of the CAA, Congress directs EPA to encourage
cooperative activities among States, and the adoption of uniform State
and local laws for the control of air pollution ``as practicable in
light of the varying conditions and needs.'' This language informs the
issue of whether SIP requirements have nationwide applicability in two
ways. First, there would be no need for EPA to facilitate uniform
adoption of standards in different air quality control regions, if the
regulation of an air pollutant by one region would automatically cause
that pollutant to be regulated in another region. Second, Congress
bounded its desire to promote uniformity by recognizing that addressing
local air quality concerns may preempt national uniformity of
regulation.
Indeed, section 116 of the CAA grants States the right to adopt
more stringent standards than the uniform, minimum requirements set
forth by EPA. See 42 U.S.C. 7416. The legislative history of the 1977
CAA Amendments shows that Congress understood that States may adopt
different and more stringent standards then the Federal minimum
requirements. See, e.g., 122 Cong. Rec. S12456 (daily ed. July 26,
1976) (statement of Sen. Randolph) (``[T]he States are given latitude
in devising their own approaches to air pollution control within the
framework of broad goals. * * * The State of West Virginia has
established more stringent requirements than those which, through the
Environmental Protection Agency, are considered as adequate * * *'');
122 Cong. Rec. S12458 (daily ed. July 26, 1976) (statement of Sen.
Scott) (``The States have the right, however, to require higher
standards, and they should have under the police powers.'') Congress
could not have intended States to have latitude to implement their own
approaches to air pollution control, and simultaneously, require that
air pollutants regulated by one State automatically apply in all other
States.
Importantly, the legislative history also shows that Congress
intended to limit the EPA's ability to disapprove a State's decision to
adopt more stringent requirements in setting forth the criteria for
approving State submissions under section 110. This intent is supported
by the following passage:
State implementation plans usually contain a unified set of
requirements and frequently do not make distinctions between the
controls needed to achieve one kind of
[[Page 17012]]
ambient standard or another. To try to separate such emission
limitations and make judgments as to which are necessary to
achieving the national ambient air quality standards assumes a
greater technical capability in relating emissions to ambient air
quality than actually exists.
A federal effort to inject a judgment of this kind would be an
unreasonable intrusion into protected State authority. EPA's role is
to determine whether or not a State's limitations are adequate and
that State implementation plans are consistent with the statute.
Even if a State adopts limits which may be stricter than EPA would
require, EPA cannot second guess the State judgment and must enforce
the approved State emission limit.\11\
---------------------------------------------------------------------------
\11\ Notably, the legislative record refers to ``State''
emission limit, and makes no note of this State emission limitation
having broader applicability.
123 Cong. Rec. S9167 (daily ed. June 8, 1977) (statement of Sen.
Muskie).
This Congressional intent is reflected within the statutory
language. Under section 110(k)(3), the EPA Administrator ``shall
approve'' a State's submittal if it meets the requirements of the Act,
and under section 110(l) ``shall not'' approve a plan revision ``if the
revision would interfere with any other applicable requirement of this
Act.'' Courts have similarly interpreted this language to limit EPA's
discretion to approve or disapprove SIP requirements. See, e.g., State
of Connecticut v. EPA, 656 F.2d 902, 906 (2d. Cir. 1981) (``As is
illustrated by Congress's use of the word `shall,' approval of an SIP
revision by the EPA Administrator is mandatory if the revision has been
the subject of a proper hearing and the plan as a whole continues to
adhere to the requirements of section 110(a)(2)'') (referencing Union
Electric Co. v. EPA, 427 U.S. 246, 257 (1976); and Mission Indus., Inc.
v. EPA, 547 F.2d 123 (1st Cir. 1976)). These provisions of the statute
do not establish any authority or criteria for EPA to judge the
approvability of a State's submission based on the implications such
approval would have nationally. The absence of such authority or
criteria in the applicable standard argues against nationwide
applicability of SIP requirements and the SIP interpretation.
Moreover, under section 307(b) of the CAA, Congress assigns review
of specific regulations promulgated by EPA and ``any other nationally
applicable regulations promulgated or final action taken, by the
Administrator under this Act'' only to the U.S. Court of Appeals for
the District of Columbia Circuit (``D.C. Circuit''). In contrast, ``the
Administrator's action in approving and promulgating any implementation
plan under Section 110 * * * or any other final action of the
Administrator under this Act * * * which is local or regionally
applicable may be filed only in the United States Court of Appeals for
the appropriate circuit.'' 42 U.S.C. 7607(b) (emphasis added). Thus,
Congress set forth its intended applicability of these regulations in
assigning judicial venue and clearly articulated that requirements in a
SIP are generally ``local or regionally applicable.''
Even if the Act could be read to support EPA review of the national
implications of State SIP submissions, such an approach would be
undesirable for policy reasons. As highlighted in the reconsideration
proposal, one practical effect of allowing State-specific concerns to
create national regulation is that EPA's review of SIPs would likely be
much more time-consuming, because EPA would have to consider each
nuance of the SIP as a potential statement of national policy. Thus,
EPA would have heightened oversight of air quality actions in all
States--even those regarding local and State issues that are best
decided by local agencies. EPA approval of SIPs would be delayed, which
would in turn, delay State's progress toward improving air quality.
And, EPA would be required to defend challenges to the approval of a
SIP with national implications in the D.C. Circuit Court of Appeals
rather than the local Circuit Court of Appeals. The potential increased
burden of reviewing and approving SIPs to analyze the national
implications of each SIP, and the associated delay in improving air
quality, creates a compelling policy argument against adoption of the
SIP interpretation.
Petitioners also fault EPA's reliance on Connecticut v. EPA, 656
F.2d 902 (2d Cir. 1981) and assert that this case has nothing to do
with the issue of whether a pollutant is ``subject to regulation under
the Act.'' In the PSD Interpretive Memo, EPA cited Connecticut to
support the notion that while a State is free to adopt air quality
standards more stringent than required by the NAAQS or other Federal
law provisions, Congress precludes those stricter requirements from
applying to other States. The Agency agrees with commenter that the
circumstances involved in that case are not directly analogous, but,
nevertheless, the case supports the inference that EPA has drawn from
it. The Court concluded that ``[n]othing in the Act, however, indicates
that a State must respect its neighbor's air quality standards (or
design its SIP to avoid interference therewith) if those standards are
more stringent than the requirements of Federal law.'' If a State is
not required to respect the more stringent requirements of a
neighboring State in developing its own implementation plan, then by
inference, the State would also not be compelled to follow the more
stringent standards.
In sum, after reconsidering the legal and policy issues, EPA
declines to adopt the SIP interpretation.
4. Endangerment Finding Interpretation
The PSD Interpretive Memo states that the fourth part of the
regulated NSR pollutant definition (``[a]ny pollutant that otherwise is
subject to regulation'') should not be interpreted ``to apply at the
time of an endangerment finding.'' See Memo at 14 (hereinafter,
referred to as the ``endangerment finding interpretation.''). After
considering public comments, EPA is affirming the position expressed in
the PSD Interpretative Memo that an endangerment finding alone does not
make the requirements of the PSD program applicable to a pollutant. EPA
maintains its view that the terms of EPA's regulations and the relevant
provisions of the CAA do not compel EPA to conclude that an air
pollutant becomes ``subject to regulation'' when EPA finds that it
endangers public health or welfare without contemporaneously
promulgating control requirements for that pollutant.
As explained in EPA's Endangerment and Cause or Contribute Findings
for GHGs under section 202(a) of the CAA, there are actually two
separate findings involved in what is often referred to as an
endangerment finding. 74 FR 66496 (Dec. 15, 2009). The first finding
addresses whether air pollution may reasonably be anticipated to
endanger public health or welfare. The second finding involves an
assessment of whether emissions of an air pollutant from the relevant
source category cause or contribute to this air pollution. In this
notice, EPA uses the phrase ``endangerment finding'' to refer to EPA
findings on both of these questions. The EPA interpretation described
here applies to both findings regardless of whether they occur together
or separately.
As explained in the proposed reconsideration, an interpretation of
``subject to regulation'' that does not include endangerment findings
is consistent with the first three parts of the definition of
``regulated NSR pollutant'' in section 52.21(b)(50) of EPA's
regulations. Unlike the first three parts of the definition, an
endangerment finding does not itself contain any restrictions (e.g.,
regarding the level of air pollution or emissions or use). Moreover,
two parts of the definition involve actions that can occur only after
[[Page 17013]]
an endangerment finding of some sort has taken place. In other words,
other parts of the definition already bypass an endangerment finding
and apply the PSD trigger to a later step in the regulatory process.
Specifically, under the first part of that definition, PSD
regulation is triggered by promulgation of a NAAQS under CAA section
109. However, in order to promulgate NAAQS standards under section 109,
EPA must first list, and issue air quality criteria for a pollutant
under section 108, which in turn can only happen after EPA makes an
endangerment finding and a version of a cause or contribute finding, in
addition to meeting other requirements. See CAA sections 108(a)(1) and
109(a)(2). Thus, if EPA were to conclude that an endangerment finding,
cause or contribute finding, or both would make a pollutant ``subject
to regulation'' within the meaning of the PSD provisions, this would
read all meaning out of the first part of the ``regulated NSR
pollutant'' definition because a pollutant would become subject to PSD
permitting requirements well before the promulgation of the NAAQS under
section 109. See 40 CFR 52.21(b)(50)(i).
Similarly, the second part of the definition of ``regulated NSR
pollutant'' includes any pollutant that is subject to a standard
promulgated under section 111 of the CAA. Section 111 requires the EPA
Administrator to list a source category, if in his or her judgment,
``it causes, or contributes significantly to, air pollution which may
reasonably be anticipated to endanger public health or welfare.'' See
CAA section 111(b)(1)(A). After EPA lists a source category, it
promulgates NSPS for that source category. For a source category not
already listed, if EPA were to list it on the basis of its emissions of
a pollutant that was not previously regulated, and such a listing made
that pollutant ``subject to regulation'' within the meaning of the PSD
provisions, this chain of events would result in triggering PSD
permitting requirements for that pollutant well in advance of the point
contemplated by the second prong of the regulated NSR pollutant
definition. See 40 CFR 52.21(b)(50)(ii).
Furthermore, as discussed in the Memo, waiting to apply PSD
requirements at least until the actual promulgation of control
requirements that follow an endangerment finding is sensible. The Memo
explains that when promulgating the final regulations establishing the
control requirements for a pollutant, EPA often makes decisions that
are also relevant to decisions that must be made in implementing the
PSD program for that pollutant. See Memo at 14. For example, EPA often
does not make a final decision regarding how to identify the specific
pollutant subject to an NSPS standard until the NSPS is issued, which
occurs after both the endangerment finding and the source category
listing.
Public comments echoed these concerns. One commenter said that
subjecting the pollutant to PSD requirements, including imposition of
BACT emission limits, before the Agency has taken regulatory action to
establish emission controls would turn the CAA process on its head.
Another commenter indicated that triggering PSD review upon completion
of an endangerment finding, but potentially before the specific control
requirement that flows directly from the endangerment finding, clearly
undermines the orderly process created by Congress for regulation of
new air pollutants. A third commenter added that establishing controls
without having a standard to be achieved leads to uncertainty in the
permitting program.
In further support of EPA's interpretation that an endangerment
finding does not make an air pollutant ``subject to regulation'' is the
fact that an endangerment finding is not a codified regulation; it does
not contain any regulatory text. The PSD Interpretive Memo explains,
and numerous commenters agree, that an endangerment finding should not
be construed as ``regulating'' the air pollutant(s) at issue because
there is no actual regulatory language applicable to the air pollutant
at this time in the Code of Federal Regulations. Rather, the finding is
a prerequisite to issuing regulatory language that imposes control
requirements. This is true even if the endangerment finding is a
``rule'' for purposes of administrative processes; that does not alter
the fact that there is no regulation or regulatory text attached to the
endangerment finding itself. Since an endangerment finding does not
establish ``regulation'' within the common meaning of the term applied
by EPA, EPA does not believe the CAA compels EPA to apply PSD
requirements to a pollutant on the basis of an endangerment finding
alone.
EPA's interpretation is also consistent with the Supreme Court's
decision in Massachusetts. In its decision, the Court acknowledged that
EPA ``has significant latitude as to the manner, timing, content and
coordination'' of the regulations that would result from a positive
endangerment finding under section 202(a). See 549 U.S. at 532. Just as
EPA has discretion regarding the timing of the section 202(a) control
regulations that would flow from an endangerment finding under that
section, it also has some discretion regarding the timing of the
triggering of PSD controls that the statute requires based on those
section 202(a) regulations. EPA has reasonably determined that PSD
controls should not precede any other control requirements. Some
commenters cited Massachusetts in support of EPA's position.
For the foregoing reasons, EPA affirms that the prerequisite act of
making an endangerment finding, a cause or contribute finding, or both,
does not make a pollutant ``subject to regulation'' for the purposes of
the PSD program. This interpretation applies to both steps of the
endangerment finding--the finding that air pollution may reasonably be
anticipated to endanger public health or welfare, and the finding that
emissions of an air pollutant from a particular source category causes
or contributes to this air pollution--regardless of whether the two
findings occur together or separately. As explained above, EPA believes
that there are strong legal and policy reasons for rejecting the
endangerment finding interpretation.
5. Section 209 Waiver Interpretation
EPA is affirming its position that an Agency decision to grant a
waiver to a State under section 209 of the CAA does not make the PSD
program applicable to pollutants that may be regulated under State
authority following a grant of such a waiver. For the reasons discussed
below, the granting of a waiver does not make the pollutants that are
regulated by a State after obtaining a section 209 waiver into
pollutants regulated under the CAA. Furthermore, EPA is also affirming
the position that PSD requirements are not applicable to a pollutant in
all States when a handful of States besides the one obtaining the
waiver adopt identical standards under section 177 of the CAA that are
then approved into State SIPs by EPA.
As explained in the proposal, neither the PSD Interpretive Memo nor
the Petition for Reconsideration raise the issue of whether a decision
to grant a waiver under the section 209 of the CAA triggers PSD
requirements for a pollutant regulated by a State after obtaining a
waiver. EPA received comments in response to the notice of an
application by California for a CAA section 209 waiver to the State of
California to adopt and enforce GHG emission standards for new motor
vehicles that suggested that arguments might be made that the grant of
the waiver made GHGs subject to regulation
[[Page 17014]]
across the country for the purposes of PSD. See 74 FR 32744, 32783
(July 8, 2009). Those commenters requested that EPA state clearly that
granting the California Waiver did not render GHGs subject to
regulation under the CAA, while others commented that the question of
when and how GHGs should be addressed in the PSD program or otherwise
regulated under the Act should instead be addressed in separate
proceedings. At that time, EPA stated that these interpretation issues
were not a part of the waiver decision and would be more appropriately
addressed in another forum.
In the proposed reconsideration notice, EPA proposed to affirm the
following position that EPA previously explained to Congress: ``a
decision to grant a waiver under section 209 of the Act removes the
preemption of State law otherwise imposed by the Act. Such a decision
is fundamentally different from the decisions to establish requirements
under the CAA that the Agency and the [EAB] have considered in
interpreting the provisions governing the applicability of the PSD
program.'' Letter from Lisa P. Jackson, EPA Administrator, to Senator
James M. Inhofe (March 17, 2009). Specifically, EPA proposed to find
that neither the CAA nor the Agency's PSD regulations make the PSD
program applicable to pollutants that may be regulated by States after
EPA has granted a waiver of preemption under section 209 of the CAA.
Accordingly, EPA said that the Agency's decision to grant a section 209
waiver to the State of California to establish its own GHG emission
standards for new motor vehicles does not trigger PSD requirements for
GHGs.
Several commenters disagreed with EPA's proposed position on the
section 209 waiver provisions, and assert that EPA's granting of the
waiver results in ``actual control.'' According to these commenters,
even under EPA's interpretation of ``subject to regulation,''
CO2 is now subject to BACT. One of these commenters argues
that EPA's granting of a waiver is an EPA regulatory action that
``controls'' CO2 by allowing California and 10 other States
to ``regulate'' CO2 under the Act. Another one of these
commenters states that 10 States used section 177 of the CAA to adopt
the California Standards into their SIPs, thus making these provisions
enforceable by both EPA and citizens under the CAA. See, e.g., 42
U.S.C. 7413; 42 U.S.C. 7604(a)(1), (f)(3). EPA has not been persuaded
to change its proposed position based on these comments.
EPA does not disagree that the regulations promulgated by the State
pursuant to the waiver will require control of emissions and thus
constitute ``regulation'' of GHGs under the meaning applied by EPA.
However, the principal issue here is whether this regulation occurs
under the authority of the Clean Air Act (i.e., ``under the Act.'').
In the proposed reconsideration notice, EPA explained that a waiver
granted under CAA section 209(b)(1) simply removes the prohibition
found in section 209(a) that forbids States from adopting or enforcing
their own standards relating to control of emissions from new motor
vehicles or new motor vehicle engines. Thus, the grant of the waiver
does not lead to regulation ``under the Act'' because it simply allows
California to exercise the same authority to adopt and enforce State
emissions standards for new motor vehicles that California could have
exercised without the initial prohibition in section 209(a). Several
other commenters agreed with EPA's position and reasoning. They
explained that a waiver constitutes a withdrawal of Federal preemption
that allows a State to develop its own State standards to regulate
vehicle emissions; the waiver does not transform these State standards
into Federal standards. Other supporting commenters also assert that
there is nothing in the legislative history that supports a conclusion
that Congress intended section 209 waivers to result in application of
PSD requirements. The opposing comments have not convincingly
articulated a mechanism through which EPA's action granting the waiver
in fact requires control of emissions (as opposed to the States action
under State law). If EPA granted the waiver alone and the State
ultimately decided not to implement its regulation, there would be no
control requirement in effect under the CAA.
As explained in the proposed reconsideration notice, EPA also finds
it instructive that enforcement of any emission standard by the State
after EPA grants a section 209 waiver would occur pursuant to State
enforcement authority, not Federal authority. EPA would continue to
enforce the Federal emission standards EPA promulgates under section
202. EPA does not enforce the State standard. EPA only conducts testing
to determine compliance with the Federal standard promulgated by EPA
and any enforcement would be for violation of EPA standards, not the
State standards. As one commenter noted, CAA section 209(b)(3) provides
that where a State has adopted standards that have been granted a
waiver ``compliance with such State standards shall be treated as
compliance with applicable Federal standards for purposes of this
subchapter,'' but does not say that such State standards actually
become the Federal standards. Accordingly, EPA finds the absence of
legislative history supporting the contrary position, and the language
in section 209(b)(3) instructive as Congress clearly recognized the co-
existence of the Federal and State standards. This shows Congress did
not intend that State regulations replace, or transform State standards
into Federal regulations ``under the Act.'' EPA agrees with supporting
commenters' conclusions summarized here, and is not persuaded to change
the proposed position.
EPA has also concluded that the adoption of identical standards by
several States under section 177 does not make a pollutant covered by
those standards ``subject to regulation under the Act'' in all States.
Like section 209, section 177 only grants States authority to regulate
under State authority by removing Federal preemption. Adoption of
California standards by other States does not change the fact that
those standards are still State standards enforced under State law and
Federal law is approved in a SIP. However, EPA agrees that when a State
adopts alternate vehicle standards into its SIP pursuant to section
177, and EPA approves the SIP, these standards become enforceable by
EPA and citizens under the CAA. Nonetheless, EPA does not agree that
this compels an interpretation that any pollutant included in an
individual State SIP requirement becomes ``subject to regulation'' in
all States under the CAA. As discussed earlier, EPA rejects the theory
that a regulation of a pollutant in one or more States in an EPA-
approved implementation plan necessarily makes that pollutant subject
to regulation in all States. Such an approach is inconsistent with the
fundamental principle of cooperative federalism embodied in the CAA.
In summary, EPA concludes that neither the act of granting a
section 209 waiver of preemption for State emission standards nor the
EPA-approval of standards adopted into a SIP pursuant to section 177
makes a pollutant ``subject to regulation under the Act'' in all States
for the purposes of the PSD program.
C. Other Issues on Which EPA Solicited Comment
1. Prospective Codification of Interpretation
Through the proposed reconsideration notice, EPA requested comment
on whether the Agency should codify its final interpretation of the
``subject to regulation'' in the statute and regulation
[[Page 17015]]
by amending the Federal PSD rules at 40 CFR 52.21. EPA received a
number of comments both in support of and opposing codification.
EPA does not believe it is necessary to codify its interpretation
in the regulatory text. EPA feels it is important to promptly
communicate and apply these final decisions regarding the applicability
of the PSD program in light of recent and upcoming actions related to
GHGs. More specifically, EPA recently finalized the ``Mandatory
Reporting of Greenhouse Gases'' rule (known as the ``Reporting
Rule''),\12\ which added monitoring requirements for additional GHGs
not covered in the Part 75 regulations. Further, EPA is poised to
finalize by the end of March 2010 the LDV Rule that will establish
controls on GHGs that take effect in Model Year 2012, which starts as
early as January 2, 2011. Thus, these actions make it important that
EPA immediately apply its final interpretation of the PSD regulations
on this issue (as refined in this action). Furthermore, even if EPA
modified the text of the Federal rules, many States may continue to
proceed under an interpretation of their rules. EPA thus believes
overall implementation of PSD permitting programs is facilitated by
this notice that describes how existing requirements in Federal
regulations at 40 CFR 52.21 are interpreted by EPA and how similar
State provisions may be interpreted by States.
---------------------------------------------------------------------------
\12\ See 74 FR 56259 (Oct. 30, 2009).
---------------------------------------------------------------------------
Likewise, EPA does not believe it is necessary to re-issue the PSD
Interpretive Memorandum. The Agency has not identified any legal
requirement for the Agency to re-issue an interpretive rule after a
process of reconsideration. No comparable procedure is required after
the reconsideration of substantive rule. In the latter situation, a
notice of final action is sufficient to conclude the reconsideration
process and an Agency may simply decline to revise an existing
regulation that remains in effect. EPA has therefore concluded that
this notice of final action is sufficient to conclude the
reconsideration process initiated on February 17, 2009 and that there
is no need to re-issue the entire memorandum in order for EPA to
continue applying the interpretation reflected therein, as refined in
this notice.
2. Section 821 of the Clean Air Act Amendments of 1990
In the October 7, 2009 notice, EPA also solicited comment on the
question of whether section 821 of the Clean Air Act Amendments of 1990
is part of the Clean Air Act. EPA indicated that the Agency was
inclined against continuing to argue that section 821 was not a part of
the CAA, as the Office of Air and Radiation and Region 8 had done in
briefs submitted to the EAB in the Deseret matter. This question bears
on the determination of whether the CO2 monitoring
requirements in EPA's Part 75 regulations are requirements ``under the
Act.'' In the proposed reconsideration notice, EPA explained that it
would be necessary to resolve whether or not the CO2
monitoring and reporting regulations in Part 75 were promulgated
``under the Act'' if EPA adopted the monitoring and reporting
interpretation. EPA received public comments on both sides of this
issue, with one environmental organization pressing EPA to drop the
position that section 821 is not a part of the CAA and several industry
parties requesting that EPA affirm it.
EPA has not yet made a final decision on this question, and it is
not necessary for the Agency to do so at this time. Since EPA is not
adopting the monitoring and reporting interpretation, the status of
section 821 is not material to the question of whether and when
CO2 is ``subject to regulation under the Act.'' Because
there are currently no controls on CO2 emissions, the
pollutant is not ``subject to regulation.'' Given that the provisions
in Part 75 do not ``regulate'' emissions of CO2, it is
unnecessary determine whether such provisions are ``under the Act'' or
not to determine PSD applicability. Furthermore, the promulgation of
EPA's Reporting Rule makes this issue even less material. In that rule,
which became effective in December 2009 and required monitoring to
begin in January of this year, EPA established monitoring and reporting
requirements for CO2 and other GHGs under sections 114 and
208 of the CAA. Thus, there can be no dispute that monitoring and
reporting of CO2 (as well as other GHGs) is now occurring
under the CAA, regardless of the status of section 821 of the 1990
amendments. At this point, the section 821 issue would only become
relevant if a court were to find that the monitoring and reporting
interpretation is compelled by the CAA and a party subsequently seeks
to retroactively enforce such a finding against sources that had not
obtained a PSD permit with any limit on CO2 emissions. If
this situation were to arise, EPA will address the section 821 issue as
necessary.
3. Timing of When a Pollutant Becomes Subject to Regulation
The October 7, 2009 notice also solicited comment on whether the
interpretation of ``subject to regulation'' should also more clearly
identify the specific date on which PSD regulatory requirements would
apply. In the PSD Interpretive Memo, EPA states that the language in
the definition of ``regulated NSR pollutant'' should be interpreted to
mean that the fourth part of the definition should ``apply to a
pollutant upon promulgation of a regulation that requires actual
control of emissions.'' See Memo at 14. After evaluating the underlying
statutory requirement in the CAA and the language in all parts of the
regulatory definition more closely, EPA proposed to modify its
interpretation of the fourth part of the definition with respect to the
timing of PSD applicability. The Agency proposed to interpret the term
``subject to regulation'' in the statute and regulation to mean that
PSD requirements apply when the regulations addressing a particular
pollutant become final and effective.
Based on public comments and other considerations raised in the
proposal, EPA has determined that it is necessary to refine the portion
of the PSD Interpretive Memo that addresses the precise point in time
when a pollutant becomes subject to regulation for purposes of the PSD
program. As a result, while the Memo is otherwise unchanged by the
reconsideration proceeding, this final notice will adjust the first
paragraph of section II.F of the Memo (bottom of page 14) to reflect
EPA's conclusion that it is more appropriate and consistent with the
reasoning of the Memo to construe EPA regulations and the CAA to make a
pollutant subject to PSD program requirements when the first controls
on a pollutant take effect. This refines the approach proposed in the
October 7, 2009 notice.
Like the PSD Interpretive Memorandum itself, the refinement to
EPA's interpretation described in this final notice is an
interpretation of the regulation at 40 CFR 52.21 and the CAA provisions
that provide the statutory foundation for EPA's regulations. The
refinement reflected in this notice explains, clarifies, and is
consistent with existing statutes and the text of regulatory provisions
at 40 CFR 52.21(b)(50)(ii) through (iv). Some commenters argued that
courts have limited an Agency's ability to fundamentally change a long-
standing, definitive, and authoritative interpretation of a regulation
\13\ without
[[Page 17016]]
engaging in a notice and comment rulemaking. See, e.g., Alaska
Professional Hunters Association v. FAA, 177 F.3d 1030, 1033-34 (D.C.
Cir. 1999); Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d
579, 586 (D.C. Cir. 1997). Since EPA's interpretation of the PSD
program regulations is unchanged in most respects by this action, it is
not clear that the particular refinement to that interpretation that
EPA is making in this action would invoke the doctrine described in
these cases. Even if this refinement is viewed as a fundamental change,
EPA has completed the revision reflected in this action after a notice
and comment process. Furthermore, since EPA initiated a process of
reconsidering and soliciting comment on the PSD Interpretive Memo
within three months of its issuance, the memorandum had not yet become
particularly well-established or long-standing. See MetWest Inc. v.
Secretary of Labor, 560 F.3d 506, 511 n.4 (D.C. Cir. 2009). Thus, the
doctrines reflected in these cases do not preclude the action EPA has
taken here to refine its interpretation of the regulations.
---------------------------------------------------------------------------
\13\ To EPA's knowledge, no court has required a rulemaking
procedure when the Agency seeks to issue or change its
interpretation of a statute. Nevertheless, EPA has completed this
notice and comment proceeding before deciding to adopt the revised
interpretation of the CAA described in this notice.
---------------------------------------------------------------------------
The regulatory language of 40 CFR 52.21(b)(50)(iv) does not specify
the exact time at which the PSD requirements should apply to pollutants
in the fourth category of the definition of ``regulated NSR
pollutant.'' In the PSD Interpretive Memo, EPA states that EPA
interprets the language in this definition to mean that the fourth part
of the definition should ``apply to a pollutant upon promulgation of a
regulation that requires actual control of emissions.'' See Memo at 14.
However, after continuing to consider the underlying statutory
requirement in the CAA and the language in all parts of the regulatory
definition more closely, EPA proposed in the October 7, 2009 notice to
modify its interpretation of the fourth part of the definition with
respect to the timing of PSD applicability. In the proposed notice of
reconsideration, EPA observed that the term ``subject to regulation''
in the statute and regulation is most naturally interpreted to mean
that PSD requirements apply when the regulations addressing a
particular pollutant become final and effective. In addition, EPA
expressed a desire to harmonize the application of the PSD requirements
with the limitation in the Congressional Review Act (CRA) that a major
rule cannot take effect until 60 days after it is published in the
Federal Register.
In this final notice on reconsideration, based on information
provided in public comments, EPA is refining its interpretation of the
time the PSD requirements will apply to a newly-regulated pollutant.
Under the PSD program, EPA will henceforth interpret the date that a
pollutant becomes subject to regulation under the Act to be the point
in time when a control or restriction that functions to limit pollutant
emissions takes effect or becomes operative to control or restrict the
regulated activity. As discussed further below, this date may vary
depending on the nature of the first regulatory requirement that
applies to control or restrict emissions of a pollutant.
Several public comments observed that a date a control requirement
becomes ``final and effective'' and the date it actually ``takes
effect'' may differ. Some commenters supported these points with
reference to Federal court decisions that suggest the date that the
terms of a regulation become effective can take more than one form. In
one case involving the Congressional Review Act, the United States
Court of Appeals for the Federal Circuit observed that the date a
regulation may ``take effect'' in accordance with the CRA is distinct
from the ``effective date'' of the regulation. See Liesegang v. Sec'y
of Veterans Affairs, 312 F.3d 1368, 1374-75 (Fed. Cir. 2002), amended
on reh'g in part on other grounds, 65 Fed. Appx. 717 (Fed. Cir. 2003).
In this opinion, the court observed that ``[t]he ordinary meaning of
`take effect' is `[t]o be in force; go into operation' '' Id. at 1375
(quoting Black's Law Dictionary at 1466 (7th ed. 1999). Based on this,
the court reasoned that the CRA does not ``change the date on which the
regulation becomes effective'' but rather ``only affects the date when
the rule becomes operative.'' Id. In another case, the Second Circuit
Court of Appeals described a distinction between the date a rule may
``take effect'' under the CRA, the ``effective date'' for application
of the rule to regulated manufacturers, and the ``effective date'' for
purposes of modifying the Code of Federal Regulations. See Natural
Resources Defense Council v. Abraham, 355 F.3d 179, 202 (2d Cir. 2004).
The Office of the Federal Register (OFR) uses the term ``effective
date'' to describe the date that amendments in a rulemaking document
affect the current Code of Federal Regulations. See Federal Register
Document Drafting Handbook, at p. 2-10 (Oct. 10, 1998). However, OFR
draws a contrast between such a date and the compliance or
applicability date of a rule, which is described as ``the date that the
affected person must start following the rule.'' Id. at 2-11. Thus, the
``effective date'' of a regulation is commonly used to describe the
date by which a provision in the Code of Federal Regulations is enacted
as law, but it is not necessarily the same as the time when provision
enacted in the Code of Federal Regulations is operative on the
regulated activity or entity. The latter may be described as the
``compliance,'' ``applicability,'' or ``takes effect'' date.
The terms of the CAA also recognize a similar distinction in some
instances. CAA section 112(i)(3)(A) provides that ``after the effective
date of any emissions standard, limitation or regulation promulgated
under this section and applicable to a source, no person may operate
such source in violation of such standard, limitation, or regulation
except, in the case of an existing source, the Administrator shall
establish a compliance date or dates for each category or subcategory
of existing sources, which shall provide for compliance as
expeditiously as practicable, but in no event later than 3 years after
the effective date of such standard.'' Another example in section 202
of the Act is discussed in more detail below.
Another formulation may be found in Section 553(c) of the APA (5
U.S.C. 553(c)), which provides, with some exceptions, that ``[t]he
required publication or service of a substantive rule shall be made not
less than 30 days before its effective date.'' The APA does not define
the term ``effective date'' or make precisely clear whether it is
referring to the date a regulation has the force of law or the date by
which a regulatory requirement applies to a regulated entity or
activity. The APA also separately recognizes the concept of finality of
Agency action for purposes of judicial review. See 5 U.S.C. 704.
In the October 7, 2009 notice, EPA did not clearly distinguish
between the various forms of the date when a regulatory requirement may
become effective. One commenter observed that the EPA analysis in the
proposed reconsideration notice appeared to blur the distinction
between the ``effective date'' set by EPA and the date that Congress
allows a regulation to become effective under the CRA. EPA in fact
discussed all of these concepts in its notice, with part of the
discussion focused on the date a regulation becomes ``final'' and
``effective'' and a part on when a regulation may ``take effect'' under
the CRA. EPA viewed these forms of the date when a regulation becomes
``effective'' to be essentially the same, but the case law
[[Page 17017]]
suggests that administrative agencies do not necessarily need to
harmonize the date that regulatory requirements take effect with the
``effective date'' of a regulation, meaning the date a regulation has
the force of law and amends the Code of Federal Regulations. Since
these are distinct concepts, the effective date of a regulation for
purposes of amending the CFR may precede the date when a regulatory
requirement ``takes effect'' or when a regulated entity must comply
with a regulatory requirement. A regulation may ``take effect''
subsequent to its stated ``effective date'' where it has been published
in final form but does not require immediate implementation by the
agency or compliance by regulated entities.
The key issue raised by EPA in the October 7, 2009 notice was
determining which date should be determined by EPA to be the date when
a pollutant becomes ``subject to regulation'' and, thus, the date when
the requirements of the PSD permitting program apply to that pollutant.
In recognition of the distinction between the ``effective date'' of the
regulation for purposes of amending the CFR and the point at which a
regulatory restriction may ``take effect,'' EPA has considered whether
it is permissible to construe sections 165(a)(4) and 169(3) of the CAA
to mean that a pollutant becomes ``subject to regulation'' at the point
that a regulatory restriction or control ``takes effect.'' In the
October notice, EPA observed that the use of ``subject to'' in the Act
suggests that PSD requirements are intended to be triggered when those
standards become effective for the pollutant. EPA also said that no
party is required to comply with a regulation until it has become final
and effective. Prior to that date, an activity covered by a rule is not
in the ordinary sense ``subject to'' any regulation. Regardless of
whether one interprets regulation to mean monitoring or actual control
of emissions, prior to the effective date of a rule there is no
regulatory requirement to monitor or control emissions.
The same reasoning applies to the date that a regulation ``takes
effect,'' as that term is used in the judicial decisions described
above. Regulated entities are not required to comply with a regulatory
requirement until it takes effect. Prior to the date a regulatory
requirement takes effect, the activity covered by a rule is not in the
ordinary sense subject to any regulation.
As discussed in the PSD Interpretive Memo, as used in the context
of the PSD provisions in EPA regulations and the CAA, EPA interprets
the term ``regulation'' in the context of sections 165(a)(4) and 169 of
the CAA to mean the act or process of controlling or restricting an
activity. This interpretation applies a common meaning of the term
regulation reflected in dictionaries.
Thus, EPA agrees with commenters that the term ``subject to
regulation'' used in both the CAA and EPA's regulations may be
construed to mean the point at which a requirement to control a
pollutant takes effect. The CAA does not necessarily preclude
construing a pollutant to become subject to regulation upon the
promulgation date or the date that a regulation becomes final and
effective for purposes of amending the CFR or judicial review. However,
EPA has been persuaded by public comments that the phrase ``subject to
regulation'' may also be interpreted to mean the date by which a
control requirement takes effect.
Indeed, EPA has concluded that the latter interpretation is more
consistent with the actual control interpretation reflected in the PSD
Interpretive Memo. As one commenter observed, a regulation would have
to have become actually effective, in the sense that actual legal
obligations created by the regulation have become currently applicable
for regulated entities and are no longer merely prospective
obligations, before that regulation could make a pollutant subject to
actual control. Another commenter noted that a regulated entity has no
immediate compliance obligations and cannot be held in violation of the
regulation until a legal obligation becomes applicable to them on the
``takes effect'' date. Thus, based on this reasoning, EPA has decided
that it will construe the point at which a pollutant becomes ``subject
to regulation'' within the meaning of section 52.21(b)(50)(iv) of EPA's
regulations to be when a control or restriction is operative on the
activity regulated. EPA agrees with commenters that there is generally
no legally enforceable obligation to control a pollutant when a
regulation is promulgated or, in some instances, even when a regulation
becomes effective for some purposes.
Thus, EPA currently interprets the time that a pollutant becomes a
``regulated NSR pollutant'' under section 52.21(b)(50)(iv) to be the
time when a control or restriction on emissions of the pollutant takes
effect or becomes operative on the regulated activity. Given EPA's
conclusion that this is a permissible interpretation of the ``subject
to regulation'' language in sections 165(a)(4) and 169(3) of the CAA,
EPA will also interpret other parts of section 52.21(b)(50) to make a
pollutant a regulated NSR pollutant on the date that a control
requirement takes effect, provided such an interpretation is not
inconsistent with the existing language of the regulations.
EPA does not agree with several commenters who suggested that EPA
determine that a pollutant does not become subject to regulation until
the time that an individual source engages in the regulated activity.
EPA does not believe such a reading is consistent with the ``subject to
regulation'' language in the CAA. Even if no source is actually engaged
in the activity, once a standard or control requirement has taken
effect, no source may engage in the regulated activity without
complying with the standard. At this point, the regulated activity and
the emissions from that activity are controlled or restricted, thus
being subject to regulation within the common meaning of the term
regulation used in EPA's regulations and section 165(a)(4) and 169(3)
of the CAA.
Likewise, EPA does not agree with commenters who argued that a
pollutant does not become subject to regulation until the date when a
source must certify compliance with regulatory requirements or submit a
compliance report. In some instances, a compliance report or
certification of compliance may not be required until well after the
point that a regulation operates to control or restrict the regulated
activity. Thus, EPA does not feel that it would be appropriate as a
general rule to establish the date when a source certifies compliance
or submits its compliance report as the date that a pollutant becomes
subject to regulation.
Since the fourth part of the definition of ``regulated NSR
pollutant'' functions as a catch-all provision, it may cover a variety
of different types of control requirements established by EPA under the
CAA. These different types of regulations may contain a variety of
different mechanisms for controlling emissions and have varying amounts
of lead time before controls take effect under the particular
regulatory framework. Thus, whenever the Agency adopts controls on a
new pollutant under a portion of the CAA covered by the fourth part of
the definition, EPA anticipates that it will be helpful to States and
regulated sources for EPA to identify the date when a new pollutant
becomes subject to regulation. In section IV.A of this notice, EPA
provides such an analysis for the forthcoming LDV Rule that is
anticipated to establish the first controls on GHGs.
EPA has also concluded that it is appropriate to extend the
reasoning of this interpretation across all parts of the definition of
the term ``regulated NSR
[[Page 17018]]
pollutant.'' The reasoning described above is equally applicable to the
regulation of additional pollutants under the specific sections of the
Act delineated in the first three parts of the definition of
``regulated NSR pollutant.'' While the date a control requirement may
take effect could vary across sections 109, section 111, and Title VI,
EPA does not see any distinction in the applicability of the legal
reasoning above to these provisions of the CAA. There should be less
variability among rules promulgated under the same statutory section,
so EPA does not expect that it will be necessary for EPA to identify
the date that a new pollutant becomes subject to regulation each time
EPA regulates a new pollutant in a NAAQS or NSPS. EPA can more readily
identify the specific dates when controls under such rules take effect.
By way of example, the NSPS under section 111 of the Act preclude
operation of a new source in violation of such a standard after the
effective date of the standard. See 42 U.S.C. 7411(e). Thus, the
control requirements in an NSPS take effect on the effective date of
the rule. Once such a standard takes effect and operates to preclude
operations in violation of the standards, then EPA interprets the
statute and EPA's PSD regulations to also require that the BACT
requirement apply to a pollutant that is subject to NSPS. Consistent
with the October 7, 2009 proposal, EPA has determined that the existing
language in section 52.21(b)(50)(ii) of its regulations may be
construed to apply to a new pollutant upon the effective date of an
NSPS. This part of the definition covers ``[a]ny pollutant that is
subject to any standard promulgated under section 111 of the Act.'' See
40 CFR 52.21(b)(50)(ii). While the word ``promulgated'' appears in this
part of the definition, this term modifies the term ``standard'' and
does not directly address the timing of PSD requirements. Under the
language in this part of the definition, the PSD requirements apply
when a pollutant becomes ``subject to'' the underlying standard, which
is ``promulgated under'' section 111 of the Act. Thus, this language
can be interpreted to make an NSPS pollutant a regulated NSR pollutant
upon the effective date of an NSPS. EPA did not receive any public
comments that opposed reading this portion of the definition to invoke
PSD requirements upon the effective date of an NSPS. This can logically
be extended to be consistent with the general view described above that
the time a pollutant becomes subject to regulation is the time when a
control requirement ``takes effect.'' As discussed above, the effective
date of an NSPS is also that date when the controls in an NSPS ``take
effect.''
Likewise, under section 169(a)(3) of the Act, a source applying for
a PSD permit must demonstrate that it will not cause or contribute to a
violation of the NAAQS in order to obtain the permit. Once a NAAQS is
effective with respect to a pollutant, the standard operates through
section 169(a)(3) of the Act and section 52.21(k) of EPA's regulations
to preclude construction of a new source that would cause or contribute
to a violation of such standard.
Using the effective date of a NAAQS to determine when a pollutant
covered by a NAAQS becomes a regulated NSR pollutant is more consistent
with EPA's general approach for determining when a new NAAQS applies to
pending permit applications. EPA generally interprets a revised NAAQS
that establishes either a lower level for the standard or a new
averaging time for a pollutant already regulated to apply upon the
effective date of the revised NAAQS. Thus, unless EPA promulgates a
grandfathering provision that allows pending applications to apply
standards in effect when the application is complete, a final permit
decision issued after the effective date of a NAAQS must consider such
a NAAQS. As described above, the effective date of the NAAQS is also
the date a NAAQS takes effect through the PSD permitting program to
regulate construction of a new or modified source.
Since a NAAQS covering a new pollutant would operate through the
PSD permitting program to control emissions of that pollutant from the
construction or modification of a major source upon the effective date
of the NAAQS, a NAAQS covering a new pollutant takes effect on the
effective date of the regulation promulgating the NAAQS. EPA does not
agree with one commenter's suggestion that such a NAAQS would not take
effect until the time a State first promulgates limitations for the
pollutant in a SIP. Under section 165(a)(3) of the Act and the Federal
PSD permitting regulations at 52.21(k), to obtain a PSD permit, a major
source must demonstrate that the proposed construction will not cause
or contribute to a violation of a NAAQS. Due to these requirements, the
PSD program operates to incorporate the NAAQS as a governing standard
for permitting construction of large sources. Thus, under the Federal
PSD program regulations at least, a new pollutant covered by a NAAQS
becomes subject to regulation at a much earlier date. These PSD
provisions require emissions limitations for the NAAQS pollutant before
construction at a major source may commence and thereby function to
protect the NAAQS from new source construction and modifications of
existing major sources in the SIP development period before a
completion of the planning process necessary to determine whether
additional standards for a new NAAQS pollutant need to be developed.
The timing when the NAAQS operates in this manner under SIP-approved
programs is potentially more nuanced and depends on whether State laws
are sufficiently open-ended to call for application of a new NAAQS as a
governing standard for PSD permits upon the effective date. EPA
believes that State laws that use the same language as in EPA's PSD
program regulations at 52.21(k) and 51.166(k) are sufficiently open-
ended and allow such a NAAQS to ``take effect'' through the PSD program
upon the effective date of the NAAQS. Notwithstanding this complexity
in SIP-approved programs, the applicability of the Federal PSD program
regulations to a new NAAQS pollutant upon the effective date of the
NAAQS is sufficient to determine that a new pollutant is subject to
regulation on this date.
In the October 7, 2009 notice, EPA observed that one portion of its
existing regulations was not necessarily consistent with this reading
of the CAA. For the first class of pollutants described in the
definition of ``regulated NSR pollutant,'' the PSD requirements apply
once a ``standard has been promulgated'' for a pollutant or its
precursors. See 40 CFR 52.21(b)(50)(i). The use of ``has been'' in the
regulation indicates that a pollutant becomes a ``regulated NSR
pollutant,'' and hence PSD requirements for the pollutant are
triggered, on the date a NAAQS is promulgated. Thus, EPA observed in
the October 7, 2009 notice that it may not be possible for EPA to read
the regulatory language in this provision to make PSD applicable to a
NAAQS pollutant upon the effective date of the NAAQS. EPA did not
propose to modify the language in 40 CFR 52.21(b)(50)(i) in the October
2009 notice because EPA had not yet reached a final decision to
interpret the CAA to mean that a pollutant is subject to regulation on
the date a regulatory requirement becomes effective. Since EPA was not
proposing to establish a NAAQS for any additional pollutants, the
timing of PSD applicability for a newly identified NAAQS pollutant did
not appear to be of concern at the time. No public comments on the
October 2009 notice addressed this issue. Since EPA is now
[[Page 17019]]
adopting a variation of the proposed interpretation with respect to the
timing of PSD applicability, EPA believes it will be appropriate to
propose a revision of the regulatory language in section
52.21(b)(50)(i) at such time as EPA may consider promulgation of a
NAAQS for an additional pollutant. Until that time, EPA will continue
to apply the terms of section 52.21(b)(50)(i) of the regulation. This
is permissible because, even though EPA believes the better reading of
the Act is to apply PSD upon the date that a control requirement
``takes effect,'' the Agency has not determined in this action that the
CAA precludes applying PSD requirements upon the promulgation of a
regulation that establishes a control requirement (as a NAAQS does
through the PSD provisions).
IV. Application of PSD Interpretive Memo to PSD Permitting for GHGs
A. Date by Which GHGs Will Be ``Subject to Regulation''
Although the PSD Interpretive Memo and this reconsideration reflect
a broad consideration of the most appropriate legal interpretation and
policy for all pollutants regulated under the CAA, the need to clarify
this issue as a general matter has been driven by concerns over the
effects of GHG emissions on global climate and the contention made by
some parties in permit proceedings that EPA began regulating
CO2 as early as the promulgation of monitoring and reporting
requirements in EPA's Part 75 rules to implement section 821 of the CAA
Amendments of 1990. The vast majority of public comments on the October
7, 2009 notice focused on the regulation of GHGs under the PSD program.
As a result, EPA recognizes that it is critically important at this
time for the Agency to make clear when the requirements of the PSD
permitting program for stationary sources will apply to GHGs. For the
reasons discussed below, GHGs will initially become ``subject to
regulation'' under the CAA on January 2, 2011, assuming that EPA issues
final GHG emissions standards under section 202(a) applicable to model
year 2012 new motor vehicles as proposed. As a result, with that
assumption, the PSD permitting program would apply to GHGs on that
date. However, the Tailoring Rule, noted above, proposed various
options for phasing in PSD requirements for sources emitting GHGs in
various amounts above 100 or 250 tons per year. Since EPA has not yet
completed that rulemaking, today's action concludes only that, under
the approach envisioned for the vehicle standards, GHGs would not be
considered ``subject to regulation'' (and no source would be subject to
PSD permitting requirements for GHGs) earlier than January 2, 2011. The
final Tailoring Rule will address the applicability of PSD requirements
for GHG-emitting sources that are not presently subject to PSD
permitting.
EPA's determination that PSD will begin to apply to GHGs on January
2, 2011 is based on the following considerations: (1) The overall
interpretation reflected in the PSD Interpretive Memo; (2) EPA's
conclusion in this notice that a pollutant becomes subject to
regulation when controls ``take effect,'' and (3) the assumption that
the agency will establish emissions standards for model year 2012
vehicles when it completes the proposed LDV Rule.
As proposed, the LDV Rule consists of two kinds of standards--fleet
average standards determined by the emissions performance of a
manufacturer's fleet of various models, and separate vehicle standards
that apply for the useful life of a vehicle to the various models that
make up the manufacturer's fleet. CAA section 203(a)(1) prohibits
manufacturers from introducing a new motor vehicle into commerce unless
the vehicle is covered by an EPA-issued certificate of conformity for
the appropriate model year. Section 206(a)(1) of the CAA describes the
requirements for EPA issuance of a certificate of conformity, based on
a demonstration of compliance with the emission standards established
by EPA under section 202 of the Act. A certification demonstration
requires emission testing, and must be done for each model year.
The certificate covers both fleet average and vehicle standards,
and the manufacturer has to demonstrate compliance with both of these
standards for purposes of receiving a certificate of conformity. The
demonstration for the fleet average is based on a projection of sales
for the model year, and the demonstration for the vehicle standard is
based on emissions testing and other information.
Both the fleet average and vehicle standards in the LDV Rule will
require that automakers control or limit GHG emissions from the
tailpipes of these vehicles. As such, they clearly constitute
``regulation'' of GHGs under the interpretation in the PSD Interpretive
Memo. This view is consistent with the position originally expressed by
EPA in 1978 that a pollutant regulated in a Title II regulation is a
pollutant subject to regulation. See 42 FR at 57481. However, the
regulation of GHGs will not actually take effect upon promulgation of
the LDV Rule or on the effective date of the LDV Rule when the
provisions of the rule are incorporated into the Code of Federal
Regulations.
Under the LDV Rule, the standards for GHG emissions are not
operative until the 2012 model year, which may begin as early as
January 2, 2011. In accordance with the requirements of Title II of the
CAA and associated regulations, vehicle manufacturers may not introduce
a model year 2012 vehicle into commerce without a model year 2012
certificate of conformity. See CAA section 203(a)(1). A model year 2012
certificate only applies to vehicles produced during that model year,
and the model year production period may begin no earlier than January
2, 2011. See CAA section 202(b)(3)(A) and implementing regulations at
40 CFR 85.2302 through 85.2305. Thus, a vehicle manufacturer may not
introduce a model year 2012 vehicle into commerce prior to January 2,
2011.
There will be no controls or limitations on GHG emissions from
model year 2011 vehicles. The obligation on an automaker for a model
year 2012 vehicle would be to have a certificate of conformity showing
compliance with the emissions standards for GHGs when the vehicle is
introduced into commerce, which can occur on or after January 2, 2011.
Therefore, the controls on GHG emissions in the Light Duty Rule will
not take effect until the first date when a 2012 model year vehicle may
be introduced into commerce. In other words, the compliance obligation
under the LDV Rule does not occur until a manufacturer may introduce
into commerce vehicles that are required to comply with GHG standards,
which will begin with MY 2012 and will not occur before January 2,
2011. Since CAA section 203(a)(1) prohibits manufacturers from
introducing a new motor vehicle into commerce unless the vehicle is
covered by an EPA-issued certificate of conformity for the appropriate
model year, as of January 2, 2011, manufacturers will be precluded from
introducing into commerce any model year 2012 vehicle that has not been
certified to meet the applicable standards for GHGs.
This interpretation of when the GHG controls in the LDV Rule take
effect, and therefore, make GHGs subject to regulation under the Act
for PSD purposes, is consistent with the statutory language in section
202(a)(2) of the CAA. This section provides that ``any regulation
prescribed under paragraph (1) of this subsection (and
[[Page 17020]]
any revision thereof) shall take effect after such period as the
Administrator finds necessary to permit the development and application
of the requisite technology, giving appropriate consideration to the
cost of compliance within such period.'' See 42 U.S.C. 7521(a)(2)
(emphasis added). The final LDV Rule will apply to model years 2012
through 2016. The time leading up to the introduction of model year
2012 is the time that EPA ``finds necessary to permit the development
and application of the requisite technology, giving appropriate
consideration to the cost of compliance within such period.'' Model
year 2012 is therefore when the GHG standards in the rule ``take
effect.''
EPA does not agree with several commenters who have suggested that
the GHG standards in the proposed LDV Rule would not take effect until
October 1, 2011. The latter date appears to be based on how the
National Highway Traffic Safety Administration (NHTSA) determines the
beginning of the 2012 model year under the Energy Policy and
Conservation Act (EPCA). Under EPCA, a more stringent CAFE standard
must be prescribed by NHTSA at least 18 months before the beginning of
the model year. For purposes of this EPCA provision, NHTSA has
historically construed the beginning of the model year to be October 1
of the preceding calendar year. See 49 U.S.C. 32902(g)(2); 74 FR 49454,
49644 n.447 (Sep. 28, 2009). Although EPA has endeavored to harmonize
its section 202(a) standards with the NHTSA CAFE standards, EPA's
standards are promulgated under distinct legal authority in the CAA.
Thus, the section 202(a) standards promulgated in the LDV Rule are not
subject to EPCA or NHTSA's interpretation of when a model year begins
for purposes of EPCA. Under EPA's planned LDV Rule, model year 2012
vehicles may be introduced into commerce as early as January 2, 2011.
Although as a practical matter, some U.S. automakers may not begin
introducing model year 2012 vehicles into commerce until later in 2011,
they may nevertheless do so as early as January 2, 2011 under EPA's
regulations. Consistent with the discussion above, EPA construes the
phrase ``subject to regulation'' in section 165(a)(4) and 169(3) of the
Act to mean that the BACT requirement applies when controls on a
pollutant first apply to a regulated activity, and not the point at
which an entity first engages in the regulated activity. In this
instance, the regulated activity is the introduction of model year 2012
vehicles into commerce. As of January 2, 2011, a manufacturer may not
engage in this activity without complying with the applicable GHG
standards.
Likewise, EPA does not agree with commenters who argued that EPA
should not consider the GHG controls in the LDV Rule to take effect
until automakers have to demonstrate compliance with the fleet average
standards at the end of the model year, based on actual vehicle model
production. As discussed above, the LDV Rule includes both fleet
average standards and vehicle standards that apply to individual
vehicles throughout their useful lives. As discussed above, both of
these standards for GHG emissions are operative on model year 2012
vehicles introduced into commerce on or after January 2, 2011. Thus,
controls on GHG emissions from automobiles will take effect prior to
the date that a manufacturer must demonstrate compliance with the fleet
average standards. The fact that the manufacturer demonstrates final
compliance with the fleet average at a later date, based on production
for the entire year, does not change the fact that their conduct was
controlled by both the fleet average and the vehicle standards, and
subject to regulation, prior to that date.
B. Implementation Concerns
A substantial number of commenters requested that EPA defer
application of the PSD program requirements to GHGs based on various
practical implementation considerations, and several of these comments
argued that the CAA affords EPA the discretion to set an implementation
date based on such concerns. EPA agrees that application of PSD program
requirements to GHGs presents several significant implementation
challenges for EPA, States and other entities that issue permits, and
the sources that must obtain permits. Indeed, many of the public
comments have illustrated the magnitude of the challenge beyond what is
described in the proposed notice on reconsideration of the PSD
Interpretive Memo and the proposed Tailoring Rule.
In recognition of the substantial challenges associated with
incorporating GHGs into the PSD program, EPA's preference would be to
establish a specific date when the PSD permitting requirements
initially apply to GHGs based solely on these practical implementation
considerations. However, EPA has not been persuaded that it has the
authority to proceed in this manner. While EPA may have discretion as
to the manner and time for regulating GHG emissions under the CAA, once
EPA has determined to regulate a pollutant in some form under the Act
and such regulation is operative on the regulated activity, the terms
of the Act make clear that the PSD program is automatically applicable.
Nonetheless, given the substantial magnitude of the PSD
implementation challenges presented by the regulation of GHGs, EPA
proposed in the Tailoring Rule to at least temporarily limit the scope
of GHG sources covered by the PSD program to ensure that permitting
authorities can effectively implement it. EPA based the proposal
primarily on two legal doctrines: The ``absurd results'' doctrine,
which EPA proposed to apply on the basis that Congress did not envision
that the PSD program would apply to the many small sources that emit
GHGs; and the ``administrative necessity'' doctrine, which EPA proposed
to apply because of the extremely large administrative burdens that
permitting authorities would confront in permitting the GHG sources. In
comment on that action, as well as in comments on the PSD Interpretive
Memo reconsideration proposal, EPA received numerous suggestions that
it is necessary to limit the scope of sources covered at the time GHGs
become subject to regulation. Commenters further stated that it is
necessary to select a ``trigger date'' for GHG permitting that takes
into account the time needed for permitting authorities to adopt any
scope-limiting measures (including the need to amend State law), to
secure the necessary additional financial and other resources, and to
hire and train the staff needed to respond to the increase in
permitting workload. These comments make clear that more time will be
needed beyond January 2, 2011 before permitting of many GHG stationary
sources can begin. Thus, EPA will be taking additional action in the
near future in the context of the Tailoring Rule to address GHG-
specific circumstances that will exist beyond January 2, 2011.
C. Interim EPA Policy To Mitigate Concerns Regarding GHG Emissions From
Construction or Modification of Large Stationary Sources
While EPA has concluded that GHGs will not become subject to
regulation (and hence the PSD BACT requirement will not apply to them)
earlier than January 2, 2011, permitting authorities that issue permits
before January 2, 2011 are already in a position to, and should, use
the discretion currently available under the BACT provisions of the PSD
program to promote technology choices for control of criteria
pollutants that will also facilitate the reduction of GHG emissions.
More specifically, the CAA
[[Page 17021]]
BACT definition requires permitting authorities selecting BACT to
consider the reductions available through application of not only
control methods, systems, and techniques, but also through production
processes, and requires them to take into account energy,
environmental, and economic impacts. Thus, the statute expresses the
need for a comprehensive review of available pollution control methods
when evaluating BACT that clearly requires consideration of energy
efficiency. The consideration of energy efficiency is important because
it contributes to reduction of pollutants to which the PSD requirements
currently apply and have historically been applied. Further, although
BACT does not now apply to GHG, BACT for other pollutants can, through
application of more efficient production processes, indirectly result
in lower GHG emissions.
Neither the statute nor EPA regulations specify precisely how to
address energy efficiency in BACT determinations, nor has EPA fully
articulated how to take climate considerations into account under the
``energy, environmental, and economic impacts'' considerations of BACT.
Further, while EPA's BACT guidance for currently regulated pollutants
has addressed some facets of these issues, EPA believes that, given the
potential importance of the indirect GHG benefits, it will be useful
for EPA to summarize this guidance and further clarify it as necessary
in order to further illustrate where PSD permitting authorities should
be using existing BACT authority for pollutants that are presently
regulated in ways that can indirectly address concerns about GHG
emissions from large stationary sources. EPA is developing such
guidance and plans to issue it in the near future.
D. Transition for Pending Permit Applications
Some commenters requested that EPA address the question of how the
application of PSD requirements to GHGs will affect applications for
PSD permits that are pending on the date GHGs initially become
``subject to regulation.'' These commenters generally asked that EPA
establish an exclusion for any PSD permit application that was
submitted in complete form before the date on which PSD begins to apply
to GHGs.
In light of EPA's conclusion that pollutants become subject to
regulation for PSD purposes when control requirements on that pollutant
take effect and that such requirements will not take effect for GHGs
until January 2, 2011 if EPA finalizes the proposed LDV Rule as
anticipated, EPA does not see any grounds to establish a transition
period for permit applications that are pending before GHGs become
subject to regulation. As a general matter, permitting and licensing
decisions of regulatory agencies must 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, in the absence
of an explicit transition or grandfathering provision in the applicable
regulations (and assuming EPA finalizes the LDV Rule as planned), each
PSD permit issued on or after January 2, 2011 would need to contain
provisions that satisfy the PSD requirements that will apply to GHGs as
of that date.
Under certain circumstances, EPA has previously allowed proposed
new major sources and major modifications that have submitted a
complete PSD permit application before a new requirement becomes
applicable under PSD regulations, but have not yet received a final and
effective PSD permit, to continue relying on information already in the
application rather than immediately having to amend applications to
demonstrate compliance with the new PSD requirements. In such a way,
these proposed sources and modifications were ``grandfathered'' or
exempted from the new PSD requirements that would otherwise have
applied to them.
For example, EPA adopted a grandfathering provision when it changed
the indicator for the particulate matter NAAQS from total suspended
particulate matter (TSP) to particulate matter less than 10 microns
(PM10). The Federal PSD regulations at 40 CFR 52.21(i)(1)(x) provide
that the owners or operators of proposed sources or modifications that
submitted a complete permit application before July 31, 1987, but did
not yet receive the PSD permit, are not required to meet the
requirements for PM10, but could instead satisfy the requirements for
TSP that were previously in effect.
In addition, EPA has allowed some grandfathering for permit
applications submitted before the effective date of an amendment to the
PSD regulations establishing new maximum allowable increases in
pollutant concentrations (also known as PSD ``increments''). The
Federal PSD regulations at 40 CFR 52.21(i)(10) provide that proposed
sources or modifications that submitted a complete permit application
before the effective date of the increment in the applicable
implementation plan are not required to meet the increment requirements
for PM10, but could instead satisfy the increment requirements for TSP
that were previously in effect. Also, 40 CFR 52.21(i)(9) provides that
sources or modifications that submitted a complete permit application
before the provisions embodying the maximum allowable increase for
nitrogen oxides (NOX) \14\ took effect, but did not yet
receive a final and effective PSD permit, are not required to
demonstrate compliance with the new increment requirements to be
eligible to receive the permit.
---------------------------------------------------------------------------
\14\ The increments for emissions of the various oxides of
nitrogen are expressed as concentrations of nitrogen dioxide
(NO2).
---------------------------------------------------------------------------
Under the particular circumstances presented by the forthcoming
application of PSD requirements to GHGs, EPA does not see a
justification for adopting an explicit grandfathering provision of the
nature described above. Permit applications submitted prior to the
publication of this notice should in most cases be issued prior to
January 2, 2011 and, thus, effectively have a transition period of nine
months to complete processing before PSD requirements become
applicable. Additional time for completion of action on applications
submitted prior to the onset of PSD requirements for GHGs therefore
does not appear warranted to ensure a smooth transition and avoid
delays for pending applications. To the extent any pending permit
review cannot otherwise be completed within the next nine 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 any additional delay to permit
processing.
Furthermore, the circumstances surrounding the onset of
requirements for GHGs are distinguishable from prior situations where
EPA has allowed grandfathering of applications that were deemed
complete prior to the applicability new PSD permitting requirements.
First, this action and the PSD Interpretive Memo do not involve a
revision of the PSD permitting regulations but rather involves
clarifications of how EPA interprets the existing regulatory text. This
action articulates what has, in most respects, been EPA's longstanding
practice. It has been EPA's consistent position since
[[Page 17022]]
1978 that regulation of a pollutant under Title II triggers PSD
requirements for such a pollutant. See 42 FR 57481. Thus, permitting
authorities and permit applicants could reasonably anticipate that
completion of the LDV Rule would trigger PSD and prepare for this
action. Many commenters interpreted EPA's October 7, 2009 notice as
proposing to trigger PSD requirements within 60 days of the
promulgation of the LDV Rule rather than the January 2, 2011 date that
EPA has determined to be the date the controls in that rule take
effect. Second, there are presently no regulatory requirements in
effect for GHGs. On the other hand, at the time EPA moved from using
TSP to using PM10 as the indicator for the particulate matter NAAQS,
grandfathered sources were still required to satisfy PSD requirements
for particulate matter based on the TSP indicator. Likewise, when EPA
later updated the PSD increment for particulate matter to use the PM10
indicator, the grandfathered sources were still required to demonstrate
that they would not cause or contribute to a violation of the
particulate matter increment based on TSP. In the case of the adoption
of the NO2 increment, grandfathered sources were still
required to demonstrate that they would not cause or contribute to a
violation of the NO2 NAAQS. In contrast, for GHGs, there are
no measures currently in effect that serve to limit emission of GHGs
from stationary sources.
For these reasons, EPA does not intend to promulgate a transition
or grandfathering provision that exempts pending permit applications
from the onset of GHG requirements in the PSD program. As discussed
above, in the absence of such a provision, PSD permits that are issued
on or after January 2, 2011 (in accordance with limitations promulgated
in the upcoming Tailoring Rule) will be required to contain provisions
that fulfill the applicable program requirements for GHGs.
V. PSD Program Implementation by EPA and States
Consistent with the PSD Interpretive Memo, the refined
interpretation reflected in this notice (that a pollutant subject to
actual control becomes subject to regulation at the time such controls
take effect) is an interpretation of the language in 40 CFR
52.21(b)(50) of EPA's regulations. EPA will apply the PSD Interpretive
Memo, with the refinement described above, when implementing the
Federal permitting program under 40 CFR 52.21. Furthermore, EPA will
expect that States that implement the Federal PSD permit program under
delegation from an EPA Regional Office will do the same.
In addition, EPA will apply the interpretation reflected in this
notice and the PSD Interpretive Memo in its oversight of existing State
programs and review and approval of new program submissions. Many
States implement the PSD program pursuant to State laws that have been
approved by EPA as part of the SIP, pursuant to a determination by EPA
that such laws meet the PSD program criteria set forth in 40 CFR
51.166. The EPA regulation setting forth PSD program requirements for
SIPs also includes the same definition of the term ``regulated NSR
pollutant'' as the Federal program regulation. See 40 CFR
51.166(b)(49). Because this regulation uses the same language as
contained in 40 CFR 52.21 and the same considerations apply to
implementation of the PSD program under State laws, EPA will interpret
section 51.166(b)(49) in the same manner as section 52.21(b)(50).
However, in doing so, EPA will be mindful that permitting authorities
in SIP-approved States have some independent discretion to interpret
State laws, provided those interpretations are consistent with minimum
requirements under the Federal law.
To the extent approved SIPs contain the same language as used in 40
CFR 52.21(b)(50) or 40 CFR 51.166(b)(49), SIP-approved State permitting
authorities may interpret that language in State regulations in the
same manner reflected in the PSD Interpretive Memo and this notice.
However, EPA will not seek to preclude actions to address GHGs in PSD
permitting actions prior to January 2, 2011 where a State permitting
authority feels it has the necessary legal foundation and resources to
do so.
EPA has not called on any States to make a SIP submission that
addresses the interpretive issues addressed in this notice and the PSD
Interpretive Memo. As long as States are applying their approved
program regulations consistent with the minimum program elements
established in 40 CFR 51.166, EPA does not believe it will be necessary
to issue a SIP call for all States to address this issue. However,
permitting authorities in SIP-approved States do not have the
discretion to apply State laws in a manner that does not meet the
minimum Federal standards in 40 CFR 51.166, as interpreted and applied
by EPA. Thus, if a State is not applying the PSD requirements to GHGs
for the required sources after January 2, 2011, or lacks the legal
authority to do so, EPA will exercise its oversight authority as
appropriate to call for revisions to SIPs and to otherwise ensure
sources do not commence construction without permits that satisfy the
minimum requirements of the Federal PSD program.
To enable EPA to assess the consistency of a State's action with
any PSD program requirements for GHGs, States should ensure that the
record for each PSD-permitting decision addresses whether the State has
elected to follow EPA's interpretation or believes it is appropriate to
apply a different interpretation of State laws that is nonetheless
consistent with the requirements of EPA's PSD program regulations. In
light of additional actions to be taken by EPA in the Tailoring Rule,
States that issue permits in the near term may want to preserve the
discretion to modify their approach after other EPA actions are
finalized. In light of this contingency, one option States may consider
is to establish that the State will not interpret its laws to require
PSD permits for sources that are not required to obtain PSD permits
under EPA regulations.
VI. Application of the Title V Program to Sources of GHGs
Although the PSD Interpretive Memorandum and the October 7, 2009
proposed reconsideration notice addressed only PSD permitting issues,
EPA received several comments on the proposed reconsideration that also
addressed the application of Title V permitting requirements to GHGs.
Most of these comments urged EPA to apply the same approach for
determining major source applicability for Title V permitting that EPA
applies to PSD. EPA has in fact been following the PSD approach in many
respects. As with the PSD program, currently GHGs are not considered to
be subject to regulation and have not been considered to trigger
applicability under Title V. EPA discussed this in the preamble to the
proposed Tailoring Rule as described below. See 74 FR at 55300 n.8.
Title V requires, among other things, that any ``major source''--
defined, as relevant here, under CAA sections 302(j) and 501(2)(b), 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 * * *''--apply for a Title V permit. EPA
interprets this requirement to apply to sources of pollutants ``subject
to regulation'' under the Act. EPA previously articulated its
interpretation that this Title V permitting requirement applies to
``pollutants subject to regulation'' in a 1993 memorandum from EPA's
air
[[Page 17023]]
program. 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
Memo''). EPA continues to maintain this interpretation. 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 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 Memo of the definition of ``air
pollutant'' in CAA section 302(g) is in question in light of
Massachusetts (finding this definition to be ``sweeping''), EPA
believes the core rationale for its 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 applying this interpretation under Title V, the Wegman Memo also
explains that EPA does not consider CO2 to be a pollutant
subject to regulation based on the monitoring and reporting
requirements of section 821 of the Clean Air Act Amendments of 1990. As
articulated in numerous orders issued by EPA in response to petitions
to object to Title V permits, EPA views the Title V operating permits
program as a vehicle for ensuring that air quality control requirements
are appropriately applied to facility emission units and that
compliance with these requirements is assured. See, e.g., In the Matter
of Fort James Camas Mill, Petition No. X-1999-1 at 3-4 (Dec. 22, 2000);
In the Matter of Cash Creek Generation, LLC, Petition Nos. IV-2008-1 &
IV-2008-2 at 2 (Dec. 15, 2009). The Wegman Memo points out that section
821 involves reporting and study of emissions, but is not related to
actual control of emissions. Since the reporting requirements of
section 821 have no connection to existing air quality control
requirements, it is appropriate not to treat them as making
CO2 ``subject to regulation'' for purposes of Title V. Cf.
Section 504(b) (providing EPA authority to specify requirements for
``monitoring and analysis of pollutants regulated under this Act.'').
EPA has not previously explicitly considered the question of when a
pollutant becomes ``subject to regulation'' under this established
interpretation of the Title V requirements.\15\ EPA received comments
in this reconsideration proceeding specifically on the question of when
a pollutant becomes subject to regulation for purposes of Title V. In
light of these comments, and the decision to adopt a ``takes effect''
approach for PSD, EPA believes it is appropriate to address this issue
for Title V with respect to GHG.
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\15\ The preamble to the proposed Tailoring Rule implicitly
assumed that a pollutant will become ``subject to regulation'' for
PSD and Title V at the same time (and, in one case, suggests that
time will be on promulgation of the LDV Rule). The latter statement
was based on the interpretation in the current PSD Interpretive
Memorandum, but failed to note that EPA had proposed to change that
interpretation in the October 7, 2009 notice (signed the same day as
the proposed Tailoring Rule). See 74 FR at 55300 and 55340-41.
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EPA is mindful of the different purposes for the PSD and Title V
programs under the statute. While PSD results in substantive control
requirements as necessary to meet air quality goals, Title V is focused
on identifying, collecting, and assuring compliance with other Act
requirements (including PSD), and generally does not itself result in
new control requirements. Nevertheless, as reflected in the Wegman
Memo, the two programs have historically followed the same approach for
determining when a pollutant is ``subject to regulation.'' \16\ EPA
believes that a ``takes effect'' approach to the triggering of new
pollutants is desirable and appropriate for Title V, for many of the
reasons described above for PSD. EPA is therefore generally inclined to
follow the approach adopted today for PSD, and concludes that GHGs are
``subject to regulation,'' for purposes of determining whether a source
of GHGs is a ``major source'' for Title V, no earlier than the date on
which a control requirement for GHGs ``takes effect.'' EPA currently
anticipates that the LDV Rule will be the first control requirement for
GHGs to take effect. Under this approach, as with PSD, if the LDV Rule
takes effect as of January 2, 2011, a source that is not currently
subject to Title V for its GHG emissions could become so no earlier
than January 2, 2011.\17\
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\16\ Wegman Memo at 5.
\17\ This date is also when EPA expects the first CAA control
program addressing GHGs at stationary sources (i.e., the PSD
program) to be in place.
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Finally, as with PSD, EPA expects that, beyond January 2, 2011,
there will remain significant administrative and programmatic
considerations associated with permitting of GHGs under Title V. In
light of this, as discussed above with regard to PSD permitting, EPA
will be further addressing in the final Tailoring Rule (to be
promulgated in the near future) the manner in which sources can become
subject to Title V as a result of their GHG emissions.
VII. Statutory Authority
The statutory authority for this action is provided by section 553
of the Administrative Procedure Act (5 U.S.C. 553) and the Clean Air
Act (CAA), as amended (42 U.S.C. 7401 et seq.). Relevant portions of
the CAA include, but are not necessarily limited to, sections 101, 165,
169, 301, 302, 307, 501, 502, and 504 (42 U.S.C. 7401, 7475, 7479,
7601, 7602, 7607, 7661, 7661a, and 7661d).
VIII. Judicial Review
This action is a nationally applicable final action under section
307(b) of the Act. As a result, any legal challenges to this action
must be brought to the United States Court of Appeals for the District
of Columbia Circuit by June 1, 2010.
Dated: March 29, 2010.
Lisa P. Jackson,
Administrator.
[FR Doc. 2010-7536 Filed 4-1-10; 8:45 a.m.]
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