Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 55292-55365 [E9-24163]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 74, Number 206 (Tuesday, October 27, 2009)]
[Proposed Rules]
[Pages 55292-55365]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-24163]



[[Page 55291]]

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Part II





Environmental Protection Agency





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



Prevention of Significant Deterioration and Title V Greenhouse Gas 
Tailoring Rule; Proposed Rule

Federal Register / Vol. 74, No. 206 / Tuesday, October 27, 2009 / 
Proposed Rules

[[Page 55292]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2009-0517; FRL-8966-7]
RIN 2060-AP86


Prevention of Significant Deterioration and Title V Greenhouse 
Gas Tailoring Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to tailor the major source applicability 
thresholds for greenhouse gas (GHG) emissions under the Prevention of 
Significant Deterioration (PSD) and title V programs of the Clean Air 
Act (CAA or Act) and to set a PSD significance level for GHG emissions. 
This proposal is necessary because EPA expects soon to promulgate 
regulations under the CAA to control GHG emissions and, as a result, 
trigger PSD and title V applicability requirements for GHG emissions. 
If PSD and title V requirements apply at the applicability levels 
provided under the CAA, State permitting authorities would be paralyzed 
by permit applications in numbers that are orders of magnitude greater 
than their current administrative resources could accommodate. On the 
basis of the legal doctrines of ``absurd results'' and ``administrative 
necessity,'' this proposed rule would phase in the applicability 
thresholds for both the PSD and title V programs for sources of GHG 
emissions. The first phase, which would last 6 years, would establish a 
temporary level for the PSD and title V applicability thresholds at 
25,000 tons per year (tpy), on a ``carbon dioxide equivalent'' 
(CO2e) basis, and a temporary PSD significance level for GHG 
emissions of between 10,000 and 25,000 tpy CO2e. EPA would 
also take other streamlining actions during this time. Within 5 years 
of the final version of this rule, EPA would conduct a study to assess 
the administrability issues. Then, EPA would conduct another 
rulemaking, to be completed by the end of the sixth year, that would 
promulgate, as the second phase, revised applicability and significance 
level thresholds and other streamlining techniques, as appropriate.

DATES: Comments. Comments must be received on or before December 28, 
2009. Under the Paperwork Reduction Act, comments on the information 
collection provisions are best assured of having full effect if the 
Office of Management and Budget (OMB) receives a copy of your comments 
on or before November 27, 2009.
    Public Hearing: If anyone contacts us requesting to speak at a 
public hearing on or before November 16, 2009, we will hold a public 
hearing approximately 30 days after date of publication in the Federal 
Register.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2009-0517 by one of the following methods:
     https://www.regulations.gov. Follow the online instructions 
for submitting comments. Attention Docket ID No. EPA-HQ-OAR-2009-0517.
     E-mail: a-and-r-docket@epa.gov. Attention Docket ID No. 
EPA-HQ-OAR-2009-0517.
     Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-
2009-0517.
     Mail: EPA Docket Center, EPA West (Air Docket), Attention 
Docket ID No. EPA-HQ-OAR-2009-0517, U.S. Environmental Protection 
Agency, Mailcode: 2822T, 1200 Pennsylvania Avenue, NW., Washington, DC 
20460. Please include a total of 2 copies. In addition, please mail a 
copy of your comments on the information collection provisions to the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget (OMB), Attn: Desk Officer for EPA, 725 17th Street, NW., 
Washington, DC 20503.
     Hand Delivery: U.S. Environmental Protection Agency, EPA 
West (Air Docket), 1301 Constitution Avenue, Northwest, Room 3334, 
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2009-0517. 
Such deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0517. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through https://www.regulations.gov or e-mail. The https://www.regulations.gov Web site 
is an ``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through https://www.regulations.gov, your e-mail address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, avoid any form of encryption, and be 
free of any defects or viruses. For additional information about EPA's 
public docket, visit the EPA Docket Center homepage at https://www.epa.gov/epahome/dockets.htm.
    Docket. All documents in the docket are listed in the https://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in https://www.regulations.gov or in hard copy at the Air and Radiation 
Docket and Information Center, EPA/DC, EPA West Building, Room 3334, 
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is 
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding 
legal holidays. The telephone number for the Public Reading Room is 
(202) 566-1744, and the telephone number for the Air Docket is (202) 
566-1742.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Mangino, Air Quality Policy 
Division, Office of Air Quality Planning and Standards (C504-03), 
Environmental Protection Agency, Research Triangle Park, NC 27711; 
telephone number: (919) 541-9778; fax number: (919) 541-5509; e-mail 
address: mangino.joseph@epa.gov.
    To request a public hearing, please contact Pam Long, Air Quality 
Planning Division, Office of Air Quality Planning and Standards (C504-
03), Environmental Protection Agency, Research Triangle Park, NC 27711; 
telephone number: (919) 541-0641; fax number: (919) 541-5509 no later 
than November 16, 2009 to request a hearing.

SUPPLEMENTARY INFORMATION:

[[Page 55293]]

I. Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

APA Administrative Procedure Act
ANPR Advance Notice of Proposed Rulemaking
APA Administrative Procedure Act
AQRV Air Quality Related Value
BACT Best Available Control Technology
CAA Clean Air Act
CAM Compliance Assurance Monitoring
CBI Confidential Business Information
CFR Code of Federal Regulations
CH4 Methane
CO2 Carbon Dioxide
CO2e Carbon Dioxide Equivalent
CO Carbon Monoxide
EG Emission Guidelines
EPA U.S. Environmental Protection Agency
FERC Federal Energy Regulatory Commission
FIP Federal Implementation Plan
FLM Federal Land Manager
FTC Federal Trade Commission
FTE Full-Time Equivalent
GHG Greenhouse Gas
GWP Global Warming Potential
HAP Hazardous Air Pollutant
HFC Hydrofluorocarbon
HFE Hydrofluorinated Ether
ICR Information Collection Request
IPCC Intergovernmental Panel on Climate Change
MWCs Municipal Waste Combustion Facilities
NAAQS National Ambient Air Quality Standard
NESHAP National Emission Standards for Hazardous Air Pollutants
NOD Notice of Deficiency
NOX Nitrogen Oxides
NSPS New Source Performance Standard
NSR New Source Review
OMB Office of Management and Budget
OTAQ Office of Transportation and Air Quality
PFC Perfluorocarbon
ppm Parts Per Million
PSD Prevention of Significant Deterioration
PTE Potential to Emit
RIA Regulatory Impact Analysis
SBA Small Business Administration
SO2 Sulfur Dioxide
SF6 Sulfur Hexafluoride
SIP State Implementation Plan
Tg Teragrams
TIP Tribal Implementation Plan
tpy Tons Per Year
UNFCCC United Nations Framework Convention on Climate Change

II. General Information

A. Does this action apply to me?

    Entities affected by this proposed action include sources in all 
sectors of the economy, including commercial and residential sources. 
Entities potentially affected by this proposed action also include 
States, local permitting authorities, and tribal authorities. The 
majority of categories and entities potentially affected by this action 
are expected to be in the following groups:

------------------------------------------------------------------------
             Industry Group                          NAICS\a\
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Agriculture, fishing, and hunting......  11.
Mining.................................  21.
Utilities (electric, natural gas, other  2211, 2212, 2213.
 systems).
Manufacturing (food, beverages,          311, 312, 313, 314, 315, 316.
 tobacco, textiles, leather).
Wood product, paper manufacturing......  321, 322.
Petroleum and coal products              32411, 32412, 32419.
 manufacturing.
Chemical manufacturing.................  3251, 3252, 3253, 3254, 3255,
                                          3256, 3259.
Rubber product manufacturing...........  3261, 3262.
Miscellaneous chemical products........  32552, 32592, 32591, 325182,
                                          32551.
Nonmetallic mineral product              3271, 3272, 3273, 3274, 3279.
 manufacturing.
Primary and fabricated metal             3311, 3312, 3313, 3314, 3315,
 manufacturing.                           3321, 3322, 3323, 3324, 3325,
                                          3326, 3327, 3328, 3329.
Machinery manufacturing................  3331, 3332, 3333, 3334, 3335,
                                          3336, 3339.
Computer and electronic products         3341, 3342, 3343, 3344, 3345,
 manufacturing.                           4446.
Electrical equipment, appliance, and     3351, 3352, 3353, 3359.
 component manufacturing.
Transportation equipment manufacturing.  3361, 3362, 3363, 3364, 3365,
                                          3366, 3369.
Furniture and related product            3371, 3372, 3379.
 manufacturing.
Miscellaneous manufacturing............  3391, 3399.
Waste management and remediation.......  5622, 5629.
Hospitals/Nursing and residential care   6221, 6231, 6232, 6233, 6239.
 facilities.
Personal and laundry services..........  8122, 8123.
Residential/private households.........  8141.
Non-Residential (Commercial)...........  Not available. Codes only exist
                                          for private households,
                                          construction and leasing/sales
                                          industries.
------------------------------------------------------------------------
\a\ North American Industry Classification System.

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

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

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

    1. Submitting CBI. Do not submit this information to EPA through 
https://www.regulations.gov or e-mail. Clearly mark the part or all of 
the information that you claim to be CBI. For CBI information in a disk 
or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM 
as CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2. Send or deliver information 
identified as CBI only to the following address: Roberto Morales, OAQPS 
Document Control Officer (C404-02), U.S. EPA, Research Triangle Park, 
NC 27711, Attention Docket ID No. EPA-HQ-OAR-2009-0517.
    2. Tips for preparing your comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a

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Code of Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

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

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

E. How is the preamble organized?

    The information presented in this preamble is organized as follows:

I. Preamble Glossary of Terms and Abbreviations
II. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
    C. What should I consider as I prepare my comments for EPA?
    D. How can I find information about a possible public hearing?
    E. How Is the preamble organized?
III. Overview of Proposed Rule
IV. Background
    A. What are greenhouse gases and their sources?
    B. What are the general requirements of the PSD program?
    C. What are the general requirements of the title V operating 
permits program?
    D. What is the current treatment of GHG emissions under the 
title V and PSD programs and what future actions may change that 
treatment?
V. What would be the administrative burdens of implementing PSD and 
title V at the current permitting thresholds?
    A. PSD Implications
    B. Title V Implications
    C. ANPR Comments
VI. What is the legal rationale for this proposed Action?
    A. ``Absurd Results'' Doctrine
    B. ``Administrative Necessity'' Doctrine
    C. Step-by-Step Process
    D. What were the ANPR comments received on GHG tailoring options 
for regulating GHG emissions under PSD and title V?
VII. Streamlining options and tools To address the administrative 
burdens of PSD and title V for GHGs
    A. Permit Streamlining Techniques for PSD and Title V
    B. Implementation of Streamlining Techniques and Overall 
Approach To Administering PSD and Title V Programs
    C. Strategies for Obtaining GHG Reductions From Sources Under 
the Proposed GHG Permit Thresholds
VIII. Description and Rationale of Proposed Action
    A. Proposed Permitting Thresholds for GHGs
    B. What is the definition of the GHG pollutant for the proposed 
permitting thresholds?
    C. What is the rationale for selecting the proposed GHG 
permitting thresholds for PSD?
    D. What is the rationale for selecting the proposed first-phase 
GHG permitting threshold for title V?
    E. how will EPA assess the GHG permitting thresholds in the 
first phase of the tailoring program, and how will epa develop the 
second phase?
IX. What would be the economic impacts of the proposed rule?
    A. What entities are affected by this rule?
    B. What are the estimated benefits to small sources due to 
regulatory relief?
    C. What are the economic impacts of this rulemaking?
    D. What are the costs of the proposed rule for society?
X. What implementation issues are related to this proposal?
    A. CAA Provisions Concerning SIP Requirements for PSD Programs, 
State Submittal Requirements, and EPA Action
    B. What PSD-Specific implementation considerations are there?
    C. What title V-Specific implementation issues are there?
    D. GHGs and title V permit fees
    E. Implementation assistance and support
XI. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Determination Under Section 307(d)
XII. Statutory Authority

III. Overview of Proposed Rule

    EPA is proposing to tailor the major source applicability 
thresholds for GHG emissions under the PSD and title V programs of the 
CAA by setting first-phase levels under both programs, setting a first-
phase PSD significance level \1\ for GHG emissions, undertaking efforts 
to streamline administrability of the programs, and committing to an 
assessment of administrability within 5 years and a second-phase 
rulemaking within 6 years.
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    \1\ ``Significant levels'' for regulated NSR pollutants are 
commonly called ``significance levels'' or ``significance 
thresholds,'' and these terms are used interchangeably for purposes 
of this proposed action.
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    This proposal is necessary because EPA expects soon to promulgate 
regulations under the CAA to control GHG emissions from light-duty 
motor vehicles and, as a result, trigger PSD and title V applicability 
requirements for GHG emissions. When the light-duty vehicle rule is 
finalized, the GHGs subject to regulation under that rule would become 
immediately subject to regulation under the PSD program, meaning that 
from that point forward, prior to constructing any new major source or 
major modifications that would increase GHGs, a source owner would need 
to apply for, and a permitting authority would need to issue, a permit 
under the PSD program that addresses these increases. Similarly, for 
title V it would mean that any new or existing source exceeding the 
major source applicability level for those regulated GHGs, if it did 
not have a title V permit already, would have 1 year to submit a title 
V permit application.
    If PSD and title V requirements apply at the applicability levels 
provided under the CAA, many small sources would be burdened by the 
costs of individualized PSD control technology requirements and permit 
applications. In addition, State permitting authorities would be 
paralyzed by enormous numbers of these permit applications; the numbers 
are orders of magnitude greater than the current inventory of permits 
and would vastly exceed the current administrative resources of the 
permitting authorities. Based on the long-established judicial 
doctrines of

[[Page 55295]]

``absurd results'' and ``administrative necessity,'' this proposed rule 
would phase in PSD and title V applicability. As the first phase, this 
rule would establish applicability thresholds for both the PSD and 
title V programs at the level of 25,000 tpy CO2e, and would 
establish a PSD significance level of between 10,000 and 25,000 tpy 
CO2e. This rule also marks the beginning of a concerted 
effort by EPA to streamline administration of the PSD and title V 
programs as much as possible and as quickly as possible. In addition, 
EPA commits that, within 5 years of promulgating the first phase, EPA 
will conduct a study of the permitting authorities' ability to 
administer the programs going forward, and then, within a year, conduct 
rulemaking for the second phase of the program. This second phase will 
either confirm the first-phase permitting levels or establish revised 
ones or other streamlining techniques. EPA also proposes to identify as 
the pollutant subject to PSD and title V for applicability purposes the 
group of up to six GHG emissions, each one weighted for its global 
warming potential, that are included in regulations for their control 
under the CAA. EPA also proposes to conform its action on PSD State 
implementation plans (SIPs) and title V programs to match the proposed 
Federal applicability requirements.
    More specifically, following this overview, section IV of this 
preamble provides background information as to the nature of GHG 
emissions and the general requirements of the PSD and title V programs. 
Currently, PSD applies to sources that emit at least 100 or 250 
(depending on the source category) tpy of pollutants subject to 
regulation under the CAA, and title V generally applies to sources that 
emit at least 100 tpy of pollutants subject to regulation under the 
CAA. Currently, PSD and title V requirements apply on the basis of 
emissions applicability thresholds that are pollutant-specific mass 
emissions rates expressed in tpy. Under PSD, construction of a 
stationary source that has the potential to emit (PTE) a regulated NSR 
pollutant in an amount exceeding 100 or 250 tpy (depending on the 
source category) (the ``major stationary source'' threshold, in the 
terminology of EPA regulations) triggers PSD permitting requirements. 
PSD permitting requirements are also triggered if a major stationary 
source undertakes a modification that is projected to increase 
emissions of a regulated NSR pollutant above an emissions threshold 
(the ``significance level''). For any particular pollutant, this level 
is zero unless and until EPA establishes one on the basis of de minimis 
emissions or administrative necessity. Under title V, a source with 
emissions exceeding a ``major source'' emissions threshold--generally 
100 tpy on a PTE basis--triggers title V permitting requirements.
    It should be noted that, as further explained in the background 
section, there are no geographic areas currently designated 
``nonattainment'' for GHG pollutants; as a result, this action affects 
only the PSD program, and we are not proposing to amend the 
``nonattainment NSR'' provisions of our major NSR program at this time, 
nor are we proposing to amend any provisions that affect minor NSR 
permitting.
    Section IV of this preamble further describes the current and 
expected future treatment of GHG emissions for applicability purposes 
under those PSD and title V programs. In particular, section IV 
describes the light-duty motor vehicle rule, which EPA recently 
proposed and expects to promulgate by the end of March 2010, and which 
will control GHG emissions from certain mobile sources. Under EPA's 
current interpretation of PSD and title V applicability requirements, 
promulgation of this motor vehicle rule will trigger the applicability 
of PSD and title V requirements for stationary sources that emit GHGs.
    In section V of this preamble, EPA describes the administrative 
burdens on permitting authorities if the requirements of PSD and title 
V programs are triggered without having this tailoring rule in place. 
In short, without this tailoring rule, the administrative burdens would 
be immense, and they would immediately and completely overwhelm the 
permitting authorities. Without this tailoring rule, permitting 
authorities would receive approximately 40,000 PSD permit applications 
each year--currently, they receive approximately 300--and they would be 
required to issue title V permits for approximately some six million 
sources--currently, their title V inventory is some 15,000 sources. 
These increases are measured in orders of magnitude. We estimate the 
additional resource burdens in full-time equivalents (FTEs) and time 
delays in processing permits, but the sheer numbers of additional 
permits by themselves paint the picture of the overwhelming 
administrative burdens.
    In section VI of this preamble, we describe the legal rationale for 
this tailoring rule. The judicial doctrine of ``absurd results'' 
authorizes departure from a literal application of statutory provisions 
if it would produce a result that is inconsistent with other statutory 
provisions or congressional intent, and particularly one that would 
undermine congressional purposes. The judicial doctrine of 
``administrative necessity'' authorizes an agency to depart from 
statutory requirements if the agency can demonstrate that the statutory 
requirements, as written, are impossible to administer. However, the 
agency must first attempt to mitigate administrative problems through 
techniques consistent with the statutory requirements, and, if variance 
from the statutory requirements nevertheless is necessary to allow 
administrability, the variance must be limited as much as possible.
    As discussed in section VI of this preamble, to apply the statutory 
PSD and title V applicability thresholds to sources of GHG emissions 
would bring tens of thousands of small sources and modifications into 
the PSD program each year, and millions of small sources into the title 
V program. This extraordinary increase in the scope of the permitting 
programs, coupled with the resulting burdens on the small sources and 
on the permitting authorities, were not contemplated by Congress in 
enacting the PSD and title V programs. Moreover, the administrative 
strains would lead to multi-year backlogs in the issuance of PSD and 
title V permits, which would undermine the purposes of those programs. 
Sources of all types--whether they emit GHGs or not--would face long 
delays in receiving PSD permits, which Congress intended to allow 
construction or expansion. Similarly, sources would face long delays in 
receiving title V permits, which Congress intended to promote 
enforceability. For these reasons, the absurd results doctrine applies 
to avoid a literal application of the thresholds.
    By the same token, the impossibility of administering the permit 
programs brings into play the administrative necessity doctrine. This 
doctrine also justifies EPA to avoid a literal application of the 
threshold provisions.
    Instead, these doctrines authorize EPA to apply the PSD and title V 
applicability provisions through a phased program. The first phase 
would establish the applicability thresholds at the 25,000-tpy levels 
and vigorously develop streamlining measures that would facilitate 
applying PSD and title V on a broader scale with overburdening sources 
and administrators. In this manner, the phased approach reconciles the 
language of the statutory provisions with the results of their 
application and with congressional intent.

[[Page 55296]]

    In section VII of this preamble, we describe the streamlining 
techniques--short of limiting the applicability of PSD and title V to 
higher-emitting sources--that may be available to improve 
administrability. These techniques range from defining ``potential to 
emit''--which is the basis for calculating the statutory thresholds--to 
be closer to actual emissions, to general permits and presumptive best 
available control technology (BACT), which is the principal control 
requirement under the PSD program. Although these techniques offer 
promise over the long term to improve administrability, they cannot be 
in place by March 2010, when we expect PSD and title V requirements to 
be triggered for GHG emitters, or within a several-year period 
thereafter. Accordingly, this tailoring rule is necessary at this time.
    In section VIII of this preamble, we describe in detail our 
proposed tailoring rule. For the PSD program, we are proposing to 
establish, as the first phase, the GHG ``major stationary source'' 
emissions applicability threshold level at 25,000 tpy on a 
CO2e basis. That is, sources that emit at this level or 
higher would be considered ``major stationary sources'' and therefore 
would become subject to PSD requirements when they construct or modify. 
We are also proposing to establish in this first phase a PSD 
``significance level'' emissions rate for GHGs and are proposing a 
range for that value of 10,000 to 25,000 tpy CO2e for 
comment. The ``significance'' level is important for determining 
whether existing sources that make physical or operational changes 
become subject to PSD and for determining whether sources that are 
subject to PSD for other pollutants are also subject to PSD for their 
GHG emissions.
    As further described in section VIII of this preamble, for the 
title V operating permits program, we are also proposing to establish 
the GHG emissions applicability threshold level at 25,000 tpy 
CO2e for this first phase. That is, sources that emit at 
this level or higher would be considered ``major sources'' and 
therefore would become subject to title V requirements.
    As further described in section VIII of this preamble, as an 
integral part of the tailoring rule, EPA proposes to commit to 
complete, within 5 years of a final rule, a study to evaluate the 
actual administrative burden resulting from the proposed GHG permitting 
thresholds and possible other thresholds, and the progress of 
developing streamlining techniques and augmentation of permitting 
authorities' resources. In addition, EPA commits to propose and 
promulgate a rulemaking--informed by the study--within 6 years from the 
effective date of a final version of this rulemaking (i.e., 1 year from 
the completion of the study) that would establish the second phase, 
which would either reaffirm the GHG permitting thresholds, promulgate 
alternative thresholds, adopt other streamlining techniques, and/or 
take other action consistent with the goal of expeditiously meeting CAA 
requirements in light of the administrative burden that remains at that 
time.
    During this first phase of the tailoring program, EPA proposes to 
make a concerted effort to assess and implement streamlining options, 
tools, and guidance--some of which we describe in section VII of this 
preamble--to reduce the administrative burden on permitting authorities 
when implementing PSD and title V for GHGs. EPA proposes to undertake 
as many of these streamlining actions as possible and to do so as 
quickly as possible. In addition, for larger sources that would be 
subject to PSD and title V requirements during the first phase, EPA 
intends to work closely with the stakeholders to develop efficient 
methods for implementing those requirements. For smaller sources for 
which PSD and title V requirements would not apply during the first 
phase due to the increase in the major source applicability threshold, 
EPA intends to identify cost-effective opportunities available as soon 
as possible to achieve GHG reductions through means other than PSD and 
title V (e.g., energy efficiency and other appropriate measures).
    Section VIII of this preamble further describes our proposal to 
define the relevant pollutants as the group of up to six GHG emissions 
that have been regulated for control, calculated on the basis of global 
warming potential (GWP).\2\
---------------------------------------------------------------------------

    \2\ The Intergovernmental Panel on Climate Change (IPCC) 
describes GWP as an index, based upon radiative properties of well-
mixed GHGs, measuring the radiative forcing of a unit mass of a 
given well-mixed greenhouse gas in the present-day atmosphere 
integrated over a chosen time horizon, relative to that of 
CO2. The GWP represents the combined effect of the 
differing times these gases remain in the atmosphere and their 
relative effectiveness in absorbing outgoing thermal infrared 
radiation. (Intergovernmental Panel on Climate Change (IPCC), 
Glossary of Terms used in the IPCC Fourth Assessment Report, WG1). 
https://www.ipcc.ch/
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    Section IX of this preamble describes the burden and economic 
impacts of the proposed rule.
    Section X of this preamble discusses implementation issues related 
to this proposal. These include conforming EPA approval of the PSD 
programs in SIPs and EPA approval of the State title V programs to be 
consistent with the proposed applicability threshold levels. By way of 
background, as soon as EPA promulgates a rule regulating for control of 
GHG emissions--which we expect to occur with the proposed light-duty 
motor vehicle rule, scheduled for promulgation at the end of March 
2010--stationary sources will become subject to PSD and title V 
requirements. The major source thresholds for PSD and title V, 
significance level for PSD, and identification of GHGs subject to PSD 
and title V as proposed in this tailoring rule would each take effect 
immediately in the Federal PSD program (codified at 40 CFR 52.21) and 
in the Federal operating permits program (codified at 40 CFR 71), as 
applicable. To conform EPA action on PSD SIPs and State title V 
programs, EPA intends to limit its previous approval of those SIPs and 
title V programs to cover only the permitting of sources of GHG 
emissions at or above the proposed threshold levels. EPA will take no 
action on--that is, EPA will not disapprove--the PSD SIPs and title V 
programs to the extent they require permitting of GHG emitters at 
levels below the proposed thresholds. EPA proposes to take this action 
by virtue of its authority to reconsider its previous regulatory 
actions. Section X of this preamble also explains how we propose to 
address the treatment of GHGs in the fee programs under title V.

IV. Background

A. What are greenhouse gases and their sources?

    Gases that trap heat in the atmosphere are often called GHGs. Some 
GHGs such as carbon dioxide (CO2) are emitted to the 
atmosphere through natural processes as well as human activities. Other 
gases, such as fluorinated gases, are created and emitted solely 
through human activities. The primary GHGs of concern directly emitted 
by human activities include CO2, methane (CH4), 
nitrous oxide (N2O), hydrofluorocarbons (HFCs), 
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). 
These six primary GHGs will, for the purposes of this proposal, be 
referred to collectively as ``the six primary GHGs.'' These six gases, 
once emitted, remain in the atmosphere for decades to centuries. Thus, 
they become well-mixed globally in the atmosphere and their 
concentrations accumulate when emissions exceed the rate at which 
natural processes remove them from the atmosphere. The heating effect 
caused by the human-induced buildup of GHGs

[[Page 55297]]

in the atmosphere is very likely the cause of most of the observed 
global warming over the last 50 years. A detailed explanation of 
climate change and its impact on health, society, and the environment 
is included in EPA's technical support document for the endangerment 
finding proposal (Docket ID No. EPA-HQ-OAR-2009-0171-0137).\3\
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    \3\ ``Document for Endangerment and Cause or Contribute Findings 
for Greenhouse Gases under Section 202(a) of the Clean Air Act,'' 
Climate Change Division, Office of Atmospheric Programs, U.S. 
Environmental Protection Agency, Washington, DC. April 17, 2009.
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    In the U.S., the combustion of fossil fuels (e.g., coal, oil, gas) 
is the largest source of CO2 emissions and accounts for 80 
percent of total GHG emissions. More than half the energy-related 
emissions come from large stationary sources such as power plants, 
while about a third come from transportation. Of the six primary GHGs, 
four (CO2, CH4, N2O, and HFCs) are 
emitted by motor vehicles. Industrial processes (such as the production 
of cement, steel, and aluminum), agriculture, forestry, other land use, 
and waste management are also important sources of GHG emissions in the 
U.S. These emissions are inventoried at a national level by EPA in the 
Inventory of U.S. Greenhouse Gas Emissions and Sinks.\4\
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    \4\ For additional information about the Inventory of U.S. 
Greenhouse Gas Emissions and Sinks, and for more information about 
GHGs, climate change, climate science, etc., see EPA's climate 
change Web site at https://www.epa.gov/climatechange/.
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    Different GHGs have different heat-trapping capacities. It is 
useful to compare them to each other through the use of the 
CO2e metric. This metric incorporates both the heat-trapping 
ability and atmospheric lifetime of each GHG and can be used to adjust 
the quantities, in tpy, of all GHGs relative to the GWP of 
CO2. When quantities of the different GHGs are multiplied by 
their GWPs, the different GHGs can be summed and compared on a 
CO2e basis. Depending on which GWP values are used, the 
calculated GHG emissions on a CO2e basis will vary. 
Throughout this preamble, we are applying the GWP values established by 
the Intergovernmental Panel on Climate Change (IPCC) in its Second 
Assessment Report (SAR) (IPCC 1996).\5\ For example, CH4 has 
a GWP of 21, meaning each ton of CH4 emissions would have 21 
times as much impact on global warming over a 100-year time horizon as 
1 ton of CO2 emissions. Thus, on the basis of heat-trapping 
capability, 1 ton of CH4 would equal 21 tons of 
CO2e. The GWPs of the six primary GHGs range from 21 (for 
CH4) up to 23,900 (for SF6). Aggregating all GHGs 
on a CO2e basis at the source level allows a facility to 
evaluate its total GHG emissions contribution based on a single metric. 
For a complete list of the applicable GWP values for each GHG, please 
refer to EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks.
---------------------------------------------------------------------------

    \5\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2007,'' U.S. Environmental Protection Agency, EPA 430-R-09-004, 
April 15, 2009. Table 1-2, p. 1-6. https://www.epa.gov/climatechange/emissions/usinventoryreport.html.
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B. What are the general requirements of the PSD program?

1. Overview of the PSD Program
    The PSD program is a preconstruction review and permitting program 
applicable to ``new major stationary sources'' and ``major 
modifications'' at existing major stationary sources, in the 
terminology of EPA's implementing regulations. The PSD program applies 
in areas meeting the health-based National Ambient Air Quality 
Standards (NAAQS) or for which there is insufficient information to 
determine whether they meet the NAAQS (``unclassifiable'' areas). The 
PSD program is contained in part C of title I of the CAA. The 
``nonattainment NSR'' program applies in areas not meeting the NAAQS 
and in the Ozone Transport Region, and is implemented under the 
requirements of part D of title I of the CAA. Collectively, we also 
commonly refer to these two programs as the major NSR program. The 
governing EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 
52.24, and part 51, appendices S and W. There is no NAAQS for 
CO2 or any of the other primary GHGs, nor does EPA plan to 
promulgate one; therefore, we do not anticipate that the 
``nonattainment'' major NSR program will apply to GHGs.
    The applicability of the PSD program to a particular source must be 
determined in advance of construction or modification and is pollutant-
specific. The primary criterion in determining PSD applicability is 
whether the proposed project is sufficiently large (in terms of its 
emissions) to be a major stationary source or major modification, both 
of which are described below.
a. Major Stationary Sources
    Under PSD, a ``major stationary source'' is any source type 
belonging to a specified list of 28 source categories which emits or 
has a PTE of 100 tpy or more of any pollutant subject to regulation 
under the CAA, or any other source type which emits or has the 
potential to emit such pollutants in amounts equal to or greater than 
250 tpy. See, e.g., 40 CFR 52.21(b)(1). We may refer to these levels as 
the 100/250-tpy thresholds. A new source with a PTE at or above the 
applicable ``major stationary source threshold'' amount is subject to 
major NSR. These limits originate from section 169 of the CAA, which 
applies PSD to any ``major emitting facility'' \6\ and defines the term 
to include any source with a PTE of 100 or 250 tpy, depending on source 
category.
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    \6\ EPA's regulations employ the term ``major stationary 
source'' in lieu of ``major emitting facility.'' e.g., 40 CFR 
52.21(a)(2)(i), (b)(1)(i).
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b. Major Modifications
    PSD applies to not only new construction but also to existing 
sources that undertake a ``major modification,'' which is defined in 
terms of the following three criteria:
    (1) A physical change in, or change in the method of operation of, 
a ``major stationary source'' must occur;
    (2) The change must result in an increase in emissions that is 
``significant,'' that is, equal to or above the significance level 
defined for the pollutant in question, e.g., in 40 CFR 52.21(b)(23)); 
and
    (3) The increase in emissions resulting from the change must be a 
significant net emissions increase. In other words, when the increase 
from the project is added to other contemporaneous increases or 
decreases in actual emissions at the source, the net emissions increase 
must be significant (equal to or above the significance level defined, 
e.g., in 40 CFR 52.21(b)(23)).
    Generally, significance levels for PSD are pollutant-specific 
emissions rates. For example, the significance level for emissions of 
nitrogen oxides (NOX) is 40 tpy. See, e.g., 40 CFR 
52.21(b)(23)(i). However, for a regulated NSR pollutant for which no 
specific significance level is listed, PSD applies to ``any increase.'' 
See, e.g., 40 CFR 52.21(b)(23)(ii). Thus, if GHGs were to become 
subject to regulation and PSD review, and no significance levels for 
GHGs had been established, the default value would be ``zero.''
    EPA has promulgated significance levels for criteria pollutants and 
certain other pollutants, which EPA generally based on levels that 
represent a de minimis contribution to air quality problems. For 
example, for certain pollutants regulated under the new source 
performance standards (NSPS), EPA generally based significance levels 
at 20 percent of the NSPS. These concentrations were compared to 
available health and welfare data to assure that significant adverse 
effects

[[Page 55298]]

were avoided.\7\ To this point, EPA has not established a significance 
level for GHGs, and we currently do not have an adequate supporting 
record to establish a similar health and welfare-based de minimis level 
for significance for GHGs.
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    \7\ EPA established significance levels for hazardous air 
pollutants on a similar basis, but subsequently, in the 1990 Clean 
Air Act Amendments, Congress mooted them by exempting hazardous air 
pollutants from PSD, under CAA section 112(b)(6).
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2. General Requirements for PSD
    Under the PSD program, one of the principal requirements is that a 
new major source or major modification must apply BACT, which is 
determined on a case-by-case basis taking into account, among other 
factors, the cost and effectiveness of the control. EPA has developed a 
``top-down'' approach for BACT review which involves a decision process 
that includes identification of all available control technologies, 
elimination of technically infeasible options, ranking of remaining 
options by control and cost effectiveness, and then selection of BACT. 
Under PSD, once a source is determined to be major for any regulated 
pollutant, a BACT review is performed for each attainment pollutant 
whose emissions exceed its PSD significance level as part of new 
construction or modification projects at the source.
    In addition to performing a BACT review, the source must analyze 
the impact of the project on ambient air quality to assure that no 
violation of any NAAQS or PSD increments will result, and must analyze 
impacts on soil, vegetation, and visibility. Sources or modifications 
that would impact Class I areas (e.g., national parks) may be subject 
to additional requirements to protect air quality related values 
(AQRVs) that have been identified for such areas. Under PSD, if a 
source proposes to locate within 100 kilometers of a Class I area, the 
Federal Land Manager (FLM) is notified and is responsible for 
evaluating a source's projected impact on the AQRVs and recommending 
either approval or disapproval of the source's permit application based 
on anticipated impacts. There are currently no NAAQS or PSD increments 
established for GHGs, and therefore these PSD requirements would not 
apply to GHG emissions sources, even when PSD is triggered for GHG 
emissions sources. However, as noted previously, if PSD is triggered 
for a GHG emissions source, all regulated NSR pollutants which the new 
source emits in significant amounts would be subject to PSD 
requirements. Therefore, if a facility triggers review for regulated 
NSR pollutants that are non-GHG pollutants for which there are 
established NAAQS or increments, the air quality, additional impacts, 
and Class I requirements would apply to those pollutants.
    When the reviewing authority reaches a preliminary decision to 
authorize construction of a proposed new major source or major 
modification, it must provide notice of the preliminary decision and an 
opportunity for comment by the general public, industry, and other 
interested persons. After considering and responding to the comments, 
the reviewing authority may issue a final determination on the 
construction permit in accordance with the PSD regulations.
    Usually NSR permits are issued by State or local air pollution 
control agencies. In these cases, State and local air pollution control 
agencies may have their own permit programs that are approved by EPA in 
the SIP or they may be delegated the authority to issue permits on 
behalf of EPA. In some areas, the EPA issues the permits.
3. Minor NSR Program
    The permitting program for minor stationary sources is addressed by 
section 110(a)(2)(C) of the CAA. We commonly refer to this program as 
the minor NSR program. A minor stationary source means a source whose 
PTE is lower than the major source applicability threshold for a 
particular pollutant as defined in the applicable nonattainment major 
NSR program or PSD program. As with nonattainment NSR requirements, the 
CAA does not require that minor source programs apply to GHGs because 
there are no NAAQS for GHGs.

C. What are the general requirements of the title V operating permits 
program?

1. Overview of Title V
    The title V operating permits program was added to the CAA by 
Congress in 1990. The operating permits program requirements under 
title V are intended to improve sources' compliance with the 
requirements of the CAA. In summary, the title V program requires major 
sources (generally defined as sources that actually emit or have the 
potential to emit 100 tpy) and certain other sources to obtain 
operating permits that: Consolidate all CAA requirements into a single 
document; provide for review of these documents by EPA, States, and the 
public; and require permit holders to track, report, and annually 
certify their compliance status with respect to their permit 
requirements.
    Title V will be triggered for GHG emissions when EPA regulates them 
for control under another provision of the CAA. Section 502(a) of the 
Act sets forth the sources required to obtain operating permits under 
title V. These sources include: (1) Any affected source subject to acid 
rain rules under title IV of the Act; (2) any major source; (3) any 
source required to have a permit under part C or D (PSD/NSR) of title I 
of the Act; (4) ``any source subject to section 111 [NSPS] or section 
112 [NESHAP];'' and (5) any other source designated by rule. See also 
40 CFR 70.3(a) and 71.3(a). The requirements of section 502(a) are 
primarily implemented through the operating permit program rules at 40 
CFR part 70, which sets out the minimum requirements for title V 
operating permit programs administered by State, local, and tribal 
permitting authorities (57 FR 32261; July 21, 1992); and part 71, the 
Federal operating permit program requirements that apply where EPA or a 
delegate agency authorized by EPA to carry out a Federal permit program 
is the title V permitting authority (61 FR 34228, July 1, 1996).
    Title V generally does not add new substantive requirements for 
pollution control, but it does require that each permit contain all of 
a facility's ``applicable requirements'' under the CAA, and that 
certain procedural requirements be followed, especially with respect to 
compliance with these requirements. ``Applicable requirements'' for 
title V purposes include all stationary source requirements, but do not 
include mobile source requirements.
2. Title V Permit Requirements
    When a source becomes subject to title V, it must apply for a 
permit within 1 year of the date it became subject. The application 
must include identifying information, a description of emissions and 
other information necessary to determine applicability of CAA 
requirements, identification and certification of the source's 
compliance status with these requirements (including a schedule to come 
into compliance for any requirements for which the source is currently 
out of compliance), a statement of the methods for determining 
compliance, and other information. The permitting authority then uses 
this information to issue the source a permit to operate, as 
appropriate. A title V source may not operate without a permit, except 
that if it has submitted a complete application, the submission acts as 
a ``shield'' that

[[Page 55299]]

authorizes it to operate while awaiting issuance of its permit.
    Title V permits must contain the following main elements: (1) 
Emissions standards to assure compliance with all applicable 
requirements; (2) a duration of no more than 5 years, after which the 
permit must be renewed; (3) monitoring, recordkeeping, and reporting 
requirements necessary to assure compliance, including a semiannual 
report of all required monitoring and a prompt report of each deviation 
from a permit term; (4) provisions for payment of permit fees as 
established by the permitting authority such that total fees collected 
are adequate to cover the costs of developing and implementing the 
program; and (5) a requirement for an annual compliance certification 
by a responsible official at the source. An additional specific 
monitoring requirement, compliance assurance monitoring (CAM), also 
applies to some emissions units operating at major sources with title V 
permits. The CAM rule requires source owners to design and conduct 
monitoring of the operation of add-on control devices used to control 
emissions from moderately large emissions units. Source owners use the 
monitoring data to evaluate, verify, and certify the compliance status 
for applicable emissions limits. The CAM rule is implemented in 
conjunction with the schedule of the operating permits program. While 
these are the main elements relevant to a discussion of GHGs, there are 
numerous other permit content requirements and optional elements, as 
set forth in the title V regulations at 40 CFR 70.6.
    In addition to the permit content requirements, there are 
procedural requirements that permitting authorities (typically States) 
must follow in issuing title V permits, including (1) determining and 
notifying the applicant that its application is complete; (2) providing 
public notice and a 30-day public comment period on the draft permit, 
as well as the opportunity for a public hearing; (3) giving notice to 
EPA and affected States; and (4) preparing and providing to any 
requester a statement of the legal and factual basis of the draft 
permit. The permitting authority must take final action on permit 
applications within 18 months of receipt. EPA also has 45 days from 
receipt of a proposed permit to object to its issuance, and citizens 
have 60 days to petition EPA to object. Permits may also need to be 
revised or reopened if new requirements come into effect or if the 
source makes changes that conflict with, or necessitate changes to, the 
current permit. Permit revisions and reopenings follow procedural 
requirements which vary depending on the nature of the necessary 
changes to the permits.

D. What is the current treatment of GHG emissions under the title V and 
PSD programs and what future actions may change that treatment?

    This section of the preamble describes the current treatment of GHG 
emissions under the PSD and title V programs--under which GHG emissions 
are not included for purposes of determining applicability--including 
recent regulatory and legal developments related to this action, and 
then describes what future action may change that treatment.
1. Regulation of GHGs Under the CAA
a. The Massachusetts U.S. Supreme Court Decision
    On April 2, 2007, in Massachusetts v. EPA, 549 U.S. 497 (2007), the 
U.S. Supreme Court held that GHGs are air pollutants covered by the 
CAA. Therefore, the Court further held that GHG emissions are subject 
to CAA section 202(a) under which the Administrator must determine 
whether or not emissions of GHGs from new motor vehicles or motor 
vehicle engines 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. This 
decision resulted from a petition for rulemaking under section 202(a) 
filed by more than a dozen environmental, renewable energy, and other 
advocacy organizations. As a result of this decision, EPA decided to 
issue an advance notice of proposed rulemaking (ANPR), discussed later 
in this preamble, soliciting comment on how GHG emissions should be 
regulated under the CAA.
b. The EPA ANPR
    On July 30, 2008, EPA published an ANPR in the Federal Register 
entitled, ``Regulating Greenhouse Gas Emissions under the CAA.'' 73 FR 
44354, July 30, 2008. This ANPR presented information relevant to, and 
solicited public comment on how to respond to, the U.S. Supreme Court's 
decision in Massachusetts v. EPA, holding that GHGs are air pollutants 
subject to the CAA. The notice reviewed the various CAA provisions 
(including the PSD and title V requirements) that may be applicable to 
sources of GHGs, examined the issues that regulating GHGs under those 
provisions may raise, provided information regarding potential 
regulatory approaches and technologies for reducing GHG emissions, and 
raised issues relevant to possible legislation and the potential for 
overlap between legislation and CAA regulation.
    In addition, the notice described and solicited comment on 
petitions the EPA had received to regulate GHG emissions from ships, 
aircraft, and nonroad vehicles such as farm and construction equipment. 
Finally, the notice discussed several other actions concerning 
stationary sources for which EPA has received comment regarding the 
regulation of GHG emissions, including promulgation of performance 
standards or guidelines under CAA section 111 for new and existing 
sources in various source categories. The EPA included options for 
phasing in the PSD program and title V programs to mitigate burdens 
that would occur if GHGs were to be regulated under the CAA and 
solicited comments on those actions. Section V.C of this preamble 
summarizes some of the substantive comments received on the ANPR. In 
issuing the ANPR, EPA made clear that it believed that the best way to 
address the problems posed by GHG emissions would be through 
legislation directly addressing GHG emissions, rather than through use 
of the tools in the CAA.
2. Current Applicability of the PSD Program to Sources of GHG Emissions
    As explained earlier in this preamble, EPA treats sources as 
subject to PSD requirements only if they emit ``regulated NSR 
pollutants'' at specified threshold levels. Currently, EPA does not 
consider GHG emissions to be ``regulated NSR pollutants'' under the PSD 
program because GHG emissions have not, thus far, been subject to 
regulation requiring control under the CAA. As discussed later in this 
preamble, EPA is in the process of reviewing its approach to PSD 
applicability and is in the process of developing a rulemaking--the 
light-duty motor vehicle rule--that will trigger PSD applicability for 
GHG emissions.
a. PSD Interpretive Memorandum
    EPA is currently reconsidering the PSD Interpretive Memorandum 
(previously referred to as the ``Johnson Memorandum''), which describes 
the circumstances under which EPA considers a pollutant subject to PSD 
requirements. See memorandum (in docket for this rulemaking) from 
Administrator Stephen L. Johnson to Regional Administrators, ``EPA's 
Interpretation of Regulations that Determine Pollutants Covered by 
Federal Prevention of Significant Deterioration (PSD) Permit Program,'' 
December 18, 2008. The PSD

[[Page 55300]]

Interpretive Memorandum followed a decision by the Environmental 
Appeals Board (EAB) in In re Deseret Power Electric Cooperative, on 
November 13, 2008. PSD Appeal No. 07-03 (EAB 2008) (In re Deseret). 
There, the Board remanded a PSD permit that EPA Region VIII issued on 
August 30, 2007, to Deseret Power Electric Cooperative, authorizing the 
latter to construct a new waste-coal-fired electric generating unit 
near its existing Bonanza Power Plant, in Bonanza, Utah. The primary 
issue before the Board was whether the permit had to include BACT 
limits for CO2, which depended on whether CO2 
meets the definition of a ``regulated NSR pollutant'' under 40 CFR 
52.21(b)(50), which in turn interprets the provisions in CAA sections 
165 and 169 that apply the BACT requirement to ``each pollutant subject 
to regulation'' under the CAA. The Board rejected arguments by the 
petitioner, the Sierra Club, that the CAA compelled a broad 
interpretation of the phrase ``subject to regulation,'' which, 
according to the petitioner, required EPA to apply BACT to pollutants 
as long as they are subject to monitoring and reporting requirements. 
Currently, and since 1993, sources covered by the Acid Rain program 
have been required to monitor and report CO2 emissions 
pursuant to the CAA. The Board also rejected the view advanced by the 
EPA offices involved in the case--Region VIII and the Office of Air and 
Radiation--that EPA had already established an interpretation of 
``subject to regulation,'' which was that this term authorized BACT 
only for pollutants subject to actual regulatory controls. 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.'' In re Deseret, slip op. at 63.
    On December 18, 2008, EPA's then-Administrator Stephen Johnson 
issued a memorandum establishing an interpretation clarifying the scope 
of the PSD program under the CAA (the PSD Interpretive Memorandum). 
This memorandum interprets the definition of ``regulated NSR 
pollutant'' to include each pollutant subject to either a provision in 
the CAA or regulation adopted by EPA under the CAA that requires actual 
control of emissions of that pollutant, and to exclude pollutants for 
which EPA regulations only require monitoring or reporting.
    On February 17, 2009, EPA Administrator Lisa Jackson responded to 
an amended petition for reconsideration dated January 6, 2009, filed on 
behalf of the Sierra Club and other parties (petitioners), seeking 
reconsideration of the PSD Interpretive Memorandum. In Administrator 
Jackson's response, she granted the petition for reconsideration in 
order to allow for public comment on issues raised in the memorandum 
and stated that EPA will also seek public comment on any issues raised 
by the opinion of the EAB with regard to the In re Deseret decision (as 
discussed in the PSD Interpretive Memorandum), to the extent they are 
not coextensive with the issues raised in the memorandum. However, 
Administrator Jackson made clear that the current interpretations in 
the PSD Interpretive Memorandum remain in effect during the 
reconsideration process.
    Because the PSD Interpretive Memorandum concerns PSD applicability, 
its reconsideration will identify the circumstances under which GHG 
emissions are treated as ``subject to regulation under the CAA'' and, 
therefore, are ``regulated NSR pollutants.'' Once GHG emissions are 
considered ``regulated NSR pollutants,'' PSD program requirements for 
existing thresholds (100/250 tpy) are triggered. The PSD Interpretive 
Memorandum reconsideration is being addressed in a proposed rule 
published in the Federal Register on