Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 17004-17023 [2010-7536]
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Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations
5509, e-mail address:
svendsgaard.dave@epa.gov.
ENVIRONMENTAL PROTECTION
AGENCY
SUPPLEMENTARY INFORMATION:
40 CFR Parts 50, 51, 70, and 71
I. General Information
[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
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AGENCY: Environmental Protection
Agency.
ACTION: Final Action on Reconsideration
of Interpretation.
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–
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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
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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
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
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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Federal Register / Vol. 75, No. 63 / Friday, April 2, 2010 / Rules and Regulations
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
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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 thenAdministrator 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.
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
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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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
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
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).
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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III. This Action
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
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.
EPA has not been persuaded that the
Agency is compelled by the CAA, the
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
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.
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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‘‘does not bind States issuing [PSD]
permits under their own State
Implementation Plans.’’ Id. at 1.
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.
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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
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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 lightduty 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.
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
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 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.
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
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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 decisionmaking 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.
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, nonstatutory 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
9 See
67 FR 80186–80289.
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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
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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 ‘‘caseby-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
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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
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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.
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
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).
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17009
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
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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
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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
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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
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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 EPAApproved 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
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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
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17011
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
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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
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
11 Notably, the legislative record refers to ‘‘State’’
emission limit, and makes no note of this State
emission limitation having broader applicability.
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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
12 See
74 FR 56259 (Oct. 30, 2009).
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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
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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
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
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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 wellestablished 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.
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.
revised interpretation of the CAA described in this
notice.
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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 newlyregulated 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
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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
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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
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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
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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
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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
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‘‘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
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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
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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).
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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
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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.
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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
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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
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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
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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 GHGspecific 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
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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,
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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
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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.
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
14 The increments for emissions of the various
oxides of nitrogen are expressed as concentrations
of nitrogen dioxide (NO2).
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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
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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
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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
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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
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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.
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
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.
16 Wegman Memo at 5.
PO 00000
Frm 00021
Fmt 4701
Sfmt 9990
17023
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
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.]
BILLING CODE 6560–50–P
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.
E:\FR\FM\02APR4.SGM
02APR4
Agencies
[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Rules and Regulations]
[Pages 17004-17023]
From the Federal Register Online via the Government Printing 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: svendsgaard.dave@epa.gov.
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\9\ See 67 FR 80186-80289.
---------------------------------------------------------------------------
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\
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\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. 19