Deferral for CO2, 43490-43508 [2011-17256]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Rules and Regulations]
[Pages 43490-43508]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17256]



[[Page 43489]]

Vol. 76

Wednesday,

No. 139

July 20, 2011

Part IV





Environmental Protection Agency





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





Deferral for CO2 Emissions From Bioenergy and Other Biogenic 
Sources Under the Prevention of Significant Deterioration (PSD) and 
Title V Programs; Final Rule

Federal Register / Vol. 76, No. 139 / Wednesday, July 20, 2011 / 
Rules and Regulations

[[Page 43490]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2011-0083; FRL-9431-6]
RIN 2060-AQ79


Deferral for CO2 Emissions From Bioenergy and Other 
Biogenic Sources Under the Prevention of Significant Deterioration 
(PSD) and Title V Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This action defers for a period of three (3) years the 
application of the Prevention of Significant Deterioration (PSD) and 
Title V permitting requirements to biogenic carbon dioxide 
(CO2) emissions from bioenergy and other biogenic stationary 
sources. This action is being taken as part of the process of granting 
the Petition for Reconsideration filed by the National Alliance of 
Forest Owners (NAFO) on August 3, 2010, related to the PSD and Title V 
Greenhouse Gas Tailoring Rule. The result of this action is that during 
this three year period biogenic CO2 emissions are not 
required to be counted for applicability purposes under the PSD and 
Title V permitting programs. State, local, and tribal permitting 
authorities may adopt the deferral at their option but the deferral is 
effective upon publication for the PSD and Title V permit programs that 
are implemented by EPA.

DATES: This action is effective on July 20, 2011.

ADDRESSES: EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2011-0083. All documents in the docket are 
listed in the https://www.regulations.gov index. Although listed in the 
index, some information is not publicly available, e.g., confidential 
business information (CBI) or other information whose disclosure is 
restricted by statute. Certain other material, such as copyrighted 
material, will be publicly available only in hard copy. Publicly 
available docket materials are available either electronically at 
https://www.regulations.gov or in hard copy at the Air Docket, EPA/DC, 
EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC. This 
Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding Federal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Carole Cook, Climate Change Division, 
Office of Atmospheric Programs (MC-6207J), Environmental Protection 
Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone 
number: (202) 343-9334; fax number: (202) 343-2342; e-mail address: 
biodeferralPSD@epa.gov.

SUPPLEMENTARY INFORMATION: Regulated Entities. The Administrator 
determined that this action is subject to the provisions of Clean Air 
Act (CAA) section 307(d). See CAA section 307(d)(1)(V) (the provisions 
of section 307(d) apply to ``such other actions as the Administrator 
may determine''). These are final amendments to existing regulations. 
This action applies to stationary sources that emit biogenic 
CO2.

           Table 1--Examples of Affected Entities by Category
------------------------------------------------------------------------
                                                   Examples of affected
            Category                  NAICS             facilities
------------------------------------------------------------------------
Biomass combustion.............             221  Electric utilities
                                                  burning biomass fuels.
                                            321  Wood products
                                                  manufacturing, and
                                                  wood pellet fuel
                                                  manufacturing.
                                            322  Pulp and paper
                                                  manufacturing.
Municipal solid waste                    562213  Solid waste combustors
 combustion.                                      and incinerators.
Sources/users of biogas........             112  Animal production
                                                  manure management
                                                  operations.
                                         221320  Sewage treatment
                                                  facilities.
                                         562212  Solid waste landfills.
Fermentation processes.........          325193  Ethanol manufacturing.
                                         325411  Medicinal and botanical
                                                  manufacturing.
Other..........................         311/312  Food/Beverage
                                                  processors burning
                                                  agricultural biomass
                                                  residues, using
                                                  fermentation
                                                  processes, or
                                                  producing/using biogas
                                                  from anaerobic
                                                  digestion of waste
                                                  materials.
------------------------------------------------------------------------

    Table 1 of this preamble lists the types of entities that 
potentially could be affected by the deferral covered by this action. 
This list is not intended to be exhaustive, but rather provides a guide 
for readers regarding facilities likely to be affected by this action. 
Note that this rule does not make or infer any policy determination on 
the part of EPA whether any emissions from any of these sources may be 
determined ``fugitive'' emissions for the purposes of accounting and 
applicability under air permitting requirements. Such determinations 
are not within the scope of this rule and are part of the case-by-case 
application and review process established under the regulations 
covering these permitting requirements. If you have questions regarding 
the applicability of this action to a particular facility, consult the 
person listed in the FOR FURTHER INFORMATION CONTACT section of this 
preamble.
    What is the effective date? The final rule is effective on July 20, 
2011. Section 553(d) of the Administrative Procedure Act (APA), 5 
U.S.C. Chapter 5, generally provides that rules may not take effect 
earlier than 30 days after they are published in the Federal Register. 
EPA is issuing this final rule under section 307(d)(1) of the Clean Air 
Act, which states: ``The provisions of section 553 through 557 *** of 
Title 5 shall not, except as expressly provided in this section, apply 
to actions to which this subsection applies.'' Thus, section 553(d) of 
the APA does not apply to this rule. EPA is nevertheless acting 
consistently with the purposes of the underlying APA section 553(d) in 
making this rule effective on July 20, 2011. Section 5 U.S.C. 553(d)(3) 
allows an effective date less than 30 days after publication ``as 
otherwise provided by the agency for good cause found and published 
with the rule.'' As explained below, EPA finds that there is good cause 
for this rule to become effective on July 20, 2011, even through this 
results in fewer than 30 days from the date of publication in the 
Federal Register.
    EPA announced its intent to undertake this rulemaking on January 
12, 2011, in order to provide the Agency time to conduct a detailed 
examination of the science and technical issues associated with 
biogenic CO2 emissions

[[Page 43491]]

from stationary sources. The Agency intended to complete the rulemaking 
before sources would be subject to the PSD and Title V programs for GHG 
emissions because at that time it was possible that a source could be 
subject to those requirements based on biogenic CO2 
emissions. The Agency determined it could be burdensome for both 
permitting authorities and sources to assess those emissions until our 
detailed examination was complete. In a January 12, 2011, letter to 
several members of Congress, the Administrator wrote, ``No source will 
be subject to the pre-construction permitting requirement solely 
because of its greenhouse gas emissions until after July 1, 2011. With 
the approach of July 1 in mind, I am announcing today that, by that 
date, EPA will complete a rulemaking to defer for three years the 
application of the pre-construction permitting requirement to biomass 
and other biogenic CO2 emissions.''
    One purpose of the 30-day waiting period prescribed in 5 U.S.C. 
553(d) is to give affected parties a reasonable time to adjust their 
behavior and prepare before the final rule takes effect. Whereas here, 
the affected parties are anticipating this rule and requesting the 
flexibility it provides, and any delay in its effectiveness will result 
in uncertainty in the permitting process. In order to ensure that the 
final rule is available to the public by July 1, 2011, the final rule 
will be signed and made available on the EPA Web site. Publication may 
follow one to two weeks after that date. A shorter effective date is 
also consistent with the purposes of APA section 553(d)(1), which 
provides an exception for any action that grants or recognizes an 
exemption or relieves a restriction. Here, this action relieves a 
burden because it defers the applicability of the PSD and Title V 
permitting requirements for biogenic stationary sources for a period of 
three years. Accordingly, we find good cause exists to make this rule 
effective on July 20, 2011, consistent with the purposes of 5 U.S.C. 
553(d)(1) and (3).
    Judicial Review. Under section 307(b)(1) of the CAA, judicial 
review of this final rule is available only by filing a petition for 
review in the U.S. Court of Appeals for the District of Columbia 
Circuit (the Court) by September 19, 2011. Under CAA section 
307(d)(7)(B), only an objection to this final rule that was raised with 
reasonable specificity during the period for public comment can be 
raised during judicial review. CAA section 307(d)(7)(B) also provides a 
mechanism for EPA to convene a proceeding for reconsideration, ``[i]f 
the person raising an objection can demonstrate to EPA that it was 
impracticable to raise such objection within [the period for public 
comment] or if the grounds for such objection arose after the period 
for public comment (but within the time specified for judicial review) 
and if such objection is of central relevance to the outcome of the 
rule.'' Any person seeking to make such a demonstration to us should 
submit a Petition for Reconsideration to the Office of the 
Administrator, Environmental Protection Agency, Room 3000, Ariel Rios 
Building, 1200 Pennsylvania Ave., NW., Washington, DC 20460, with a 
copy to the person listed in the preceding FOR FURTHER INFORMATION 
CONTACT section, and the Associate General Counsel for the Air and 
Radiation Law Office, Office of General Counsel (Mail Code 2344A), 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20004. Note, under CAA section 307(b)(2), the 
requirements established by this final rule may not be challenged 
separately in any civil or criminal proceedings brought by EPA to 
enforce these requirements.
    Acronyms and Abbreviations. The following are acronyms and 
abbreviations of terms used in this preamble.

BACT best available control technology
BAU business as usual
CAA Clean Air Act
CBI confidential business information
CFI Call for Information
CFR Code of Federal Regulations
CH4 methane
CO2 carbon dioxide
CO2e carbon dioxide equivalents
EO Executive Order
EPA U.S. Environmental Protection Agency
FR Federal Register
GHG/GHGs greenhouse gas/greenhouse gases
GWP global warming potential
LULUCF Land-Use, Land-Use Change and Forestry
MSW municipal solid waste
NAFO National Alliance of Forest Owners
NAAQS National Ambient Air Quality Standards
NOX nitrogen oxides
NSPS New Source Performance Standards
NSR New Source Review
NTTAA National Technology Transfer and Advancement Act of 1995
PSD Prevention of Significant Deterioration
PTE potential to emit
RFA Regulatory Flexibility Act
SAB Science Advisory Board
SILs significant impact levels
SIP State Implementation Plan
SMCs significant monitoring concentrations
tpy tons per year
U.S. United States
UMRA Unfunded Mandates Reform Act
UNFCCC United Nations Framework Convention on Climate Change

    Outline. The information presented in this preamble is organized as 
follows:
I. Background
II. Summary of Final Action
    A. Overview of the Final Rule
    B. Legal Authority
    C. Facilities Permitted During Deferral
    D. Mechanism for Deferral and State Implementation
III. Response to Public Comments
    A. Overview of Public Comments
    B. Comments on the Deferral
    C. Comments on Science, Accounting, and Economic Issues
    D. Comments on PSD, Title V and the Tailoring Rule
    E. Comments on the Interim Guidance
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. Background

    On June 3, 2010, EPA published the final Prevention of Significant 
Deterioration (PSD) and Title V Greenhouse Gas Tailoring Rule (herein 
referred to as the Tailoring Rule; 75 FR 31514), setting thresholds for 
GHG emissions that define when permits under these programs are 
required for new and existing industrial facilities. Beginning January 
2, 2011, sources currently subject to PSD or Title V permitting 
programs were required to determine the best available control 
technology (BACT) for their GHG emissions, but only for GHG increases 
of 75,000 short tons per year (tpy) or more of total GHGs, on a carbon 
dioxide equivalents (CO2e) basis and any increase on a mass 
basis. At that time, no sources would be subject to CAA permitting 
requirements due solely to GHG emissions.
    Beginning July 1, 2011, the PSD permitting requirements will for 
the first time cover new construction projects that will emit GHGs of 
at least 100,000 tpy on a CO2e basis even if they do not 
exceed the permitting thresholds for any

[[Page 43492]]

other pollutant. Modifications at existing facilities that increase GHG 
emissions by at least 75,000 tpy, and any amount on a mass basis, will 
be subject to permitting requirements, even if they do not 
significantly increase emissions of any other pollutant. Operating 
permit requirements will, for the first time, apply to sources based on 
their GHG emissions even if they would not apply based on emissions of 
any other pollutant. Facilities that emit at least 100,000 tpy 
CO2e will be subject to Title V permitting requirements.
    As discussed in the final Tailoring Rule, EPA decided not to 
provide exemptions from applicability determinations (major source and 
major modification) under PSD and Title V for certain GHG emission 
sources, including biogenic emissions. EPA decided instead to address 
the need for tailoring through a uniform threshold-based approach, 
rather than through a collection of various specific exclusions. At 
that time, EPA also noted that it planned to seek further comment on 
how it might address biogenic CO2 emissions under the PSD 
and Title V programs through a future action.
    On July 15, 2010, EPA published a Call for Information (CFI) to 
solicit information and viewpoints from interested parties on 
approaches to accounting for GHG emissions from bioenergy and other 
biogenic sources (75 FR 41173). The purpose of this CFI was to request 
comment on possible accounting approaches for biogenic CO2 
emissions under the PSD and Title V programs, as well as to receive 
data submissions about these sources and their GHG emissions, general 
technical comments on accounting for these emissions, and comments on 
the underlying science that should inform any such accounting approach.
    On August 3, 2010, NAFO petitioned the EPA to reconsider and stay 
the implementation of the PSD and Title V GHG Tailoring Rule. The 
petition alleged that the final Tailoring Rule declared, for the first 
time and without any prior proposal or notice to industry, that EPA 
would count CO2 emissions from combustion of biomass toward 
the applicability thresholds established for the PSD and Title V 
permitting programs of the CAA. Petitioners further alleged that EPA's 
proposed rule had provided for the appropriate and opposite conclusion: 
That CO2 emissions from combustion of biomass should not be 
counted. Petitioners stated that there is near-universal recognition 
that CO2 emitted from combustion of fuels derived from 
biomass should be excluded from GHG regulations because production and 
combustion of such fuels do not increase atmospheric CO2 
levels. Pending reconsideration, petitioners requested that the 
application of the PSD and Title V permitting programs to emissions of 
CO2 from biomass be stayed.
    We considered carefully the petitioners' assertions and noted that 
we also received comments through the CFI supporting the exclusion of 
biogenic CO2 from stationary source permitting requirements. 
Through the CFI, however, EPA also received information supporting the 
position that biogenic CO2 should not be excluded from 
permitting programs, and that the use of certain types of biomass as 
fuel could increase atmospheric CO2 levels. Based on 
consideration of the petitioners' arguments, together with the weight 
of the comments received through the CFI, EPA concluded that the issue 
of accounting for the net atmospheric impact of biogenic CO2 
emissions is complex enough that further consideration of this 
important issue is warranted. Therefore, EPA granted the NAFO petition 
on January 12, 2011.\1\
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    \1\ https://www.epa.gov/NSR/actions.html#mar11.
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    On January 12, 2011, EPA also announced in letters to Members of 
Congress and NAFO its intent to take a number of steps to address the 
issues associated with biogenic CO2 emissions from 
stationary sources. Pursuant to this announcement, on March 21, 2011, 
EPA published a notice of proposed rulemaking to defer for three years 
the application of the PSD and Title V permitting requirements to 
biogenic CO2 emissions from stationary sources (76 FR 
15249). Concurrent with this rulemaking, EPA also issued interim 
guidance entitled, ``Guidance for Determining Best Available Control 
Technology for Reducing Carbon Dioxide Emissions from Bioenergy 
Production'' to help permitting authorities establish a basis for 
concluding that under the PSD Program the combustion of biomass fuels 
can be considered BACT for biogenic CO2 emissions at 
stationary sources until such time as the deferral becomes effective. 
During the three-year deferral period, EPA will conduct a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources, including engaging with Federal 
partners, technical experts, and an independent scientific panel to 
consider technical issues. Based on the feedback from the scientific 
and technical review, EPA will then undertake a rulemaking to determine 
how biogenic CO2 emissions should be treated and accounted 
for in PSD and Title V permitting.
    On April 27, 2011, EPA's Science Advisory Board (SAB) published a 
notice soliciting experts for a peer review of EPA's science and 
technical work on biogenic CO2 emissions. 76 FR 23587. EPA 
intends to provide its study that examines the science and technical 
issues associated with biogenic CO2 emissions from 
stationary sources and accompanying accounting framework to the SAB for 
peer review later in 2011.

II. Summary of Final Action

A. Overview of the Final Rule

    This action defers for a period of three (3) years the 
consideration of CO2 emissions from bioenergy and other 
biogenic sources (hereinafter referred to as ``biogenic CO2 
emissions'') when determining whether a stationary source meets the PSD 
and Title V applicability thresholds, including those for the 
application of BACT. Stationary sources that combust biomass (or 
otherwise emit biogenic CO2 emissions) and construct or 
modify during the deferral period will avoid the application of PSD to 
the biogenic CO2 emissions resulting from those actions. 
This deferral applies only to biogenic CO2 emissions and 
does not affect non-GHG pollutants or other GHGs (e.g., methane 
(CH4) and nitrous oxide (N2O)) emitted from the 
combustion of biomass fuel. Also, this deferral only pertains to 
biogenic CO2 emissions in the PSD and Title V programs and 
does not pertain to any other EPA programs such as the GHG Reporting 
Program.
    EPA recognizes that use of certain types of biomass can be part of 
the national strategy to reduce dependence on fossil fuels, efforts are 
underway at the Federal, State and regional level to foster the 
expansion of renewable resources and promote bioenergy projects when 
they are a way to address climate change, increasing domestic 
alternative energy production, enhancing forest management and creating 
related employment opportunities. We believe part of fostering this 
development is to ensure that those feedstocks with negligible net 
atmospheric impact not be subject to unnecessary regulation. At the 
same time, it is important that EPA have time to conduct its detailed 
examination of the science and technical issues related to accounting 
for biogenic CO2 emissions and therefore have finalized this 
deferral.
    This deferral is intended to be a temporary measure, in effect for 
no more than three years, to allow the Agency time to complete its work 
and

[[Page 43493]]

determine what, if any, treatment of biogenic CO2 emissions 
should be in the PSD and Title V programs. This is not EPA's final 
determination on the treatment of biogenic CO2 emissions in 
those programs. The Agency plans to complete its science and technical 
review and any follow-on rulemakings within the three-year deferral 
period and further believes that three years is ample time to complete 
these tasks. It is possible that the subsequent rulemaking, depending 
on the nature of EPA's determinations, would supersede this rulemaking 
and become effective in fewer than three years.
    Biogenic CO2 emissions are defined as emissions of 
CO2 from a stationary source directly resulting from the 
combustion or decomposition of biologically-based materials other than 
fossil fuels and mineral sources of carbon. Examples of ``biogenic 
CO2 emissions'' include, but are not limited to:

     CO2 generated from the biological 
decomposition of waste in landfills, wastewater treatment or manure 
management processes;
     CO2 from the combustion of biogas collected 
from biological decomposition of waste in landfills, wastewater 
treatment or manure management processes;
     CO2 from fermentation during ethanol 
production or other industrial fermentation processes;
     CO2 from combustion of the biological 
fraction of municipal solid waste or biosolids;
     CO2 from combustion of the biological 
fraction of tire-derived fuel; and
     CO2 derived from combustion of biological 
material, including all types of wood and wood waste, forest 
residue, and agricultural material.
    For stationary sources co-firing fossil fuel and biologically-based 
fuel, and/or combusting mixed fuels (e.g., tire-derived fuels, 
municipal solid waste (MSW)), the biogenic CO2 emissions 
from that combustion are included in this deferral. However, the fossil 
CO2 emissions are not. Emissions of CO2 from 
processing of mineral feedstocks (e.g., calcium carbonate) are also not 
included in this deferral. Various methods are available to calculate 
both the biogenic and fossil portions of CO2 emissions, 
including those methods contained in the GHG Reporting Program (40 CFR 
Part 98). Consistent with the other pollutants in PSD and Title V, 
there are no requirements to use a particular method in determining 
your biogenic and fossil CO2 emissions.

B. Legal Authority

1. Applicability of PSD and Title V to Biogenic CO2 
Emissions From Major Stationary Sources
    As currently written, the PSD and Title V regulations apply to 
biogenic CO2 emissions from major sources or major 
modifications at such sources according to the limitation included 
under the definition of ``subject to regulation'' in the State 
Implementation Plan (SIP) regulations at 40 CFR 51.166 and the Title V 
state program regulations at 40 CFR 70.2, as well as the Federal 
Implementation Plan requirements at 40 CFR 52.21 and the Title V 
Federal program regulations at 40 CFR 71.2. Thus, revisions to these 
regulations are necessary to defer application of the PSD and Title V 
programs to such sources of biogenic CO2.
    Stationary sources of air pollutants, including sources of biogenic 
CO2 emissions, are currently subject to PSD requirements if 
they emit more than 100 or 250 tpy of a regulated NSR pollutant other 
than GHGs and have triggered PSD as a result of these emissions, 
subject to the permitting thresholds established in the Final Tailoring 
Rule described below. The 100/250 tpy thresholds previously described 
originate from section 169 of the CAA, which applies PSD to any ``major 
emitting facility'' and defines the term to include any source with a 
potential to emit (PTE) ``any air pollutant'' in an amount over 100 or 
250 tpy, depending on source category.
    EPA's long-standing regulations limit the PSD applicability 
provision that refers to ``any air pollutant'' to refer to any 
``regulated NSR pollutant,'' which in turn includes any air pollutant 
``subject to regulation'' under the CAA. Similarly, under sections 
165(a)(4) and 169(3) of the CAA, the BACT requirement applies to ``each 
pollutant subject to regulation'' under the CAA. As noted in other 
recent EPA actions, GHGs are currently ``subject to regulation'' under 
the CAA; subject, for PSD purposes, to specific limitations reflected 
in the definition of that term that EPA adopted in the Tailoring Rule. 
Thus, emissions of GHGs (including CO2) must be considered 
in determining whether a source is a major emitting facility subject to 
PSD, as a result of construction or modification, and whether the BACT 
requirement applies to GHGs (including CO2 as a component of 
GHGs). In light of the way these regulations are currently written, EPA 
is unable to exclude biogenic CO2 emissions from PSD review 
without amending the regulations.
    With respect to Title V, as noted previously, Title V applies to 
sources, among others, that emit 100 tons per year of specified 
quantities of ``any air pollutant,'' see CAA section 502(a), 501(2)(B) 
and 302(g).
2. Tailoring Rule
a. Rationale and Requirements
    In the Tailoring Rule, EPA codified its interpretation that 
``subject to regulation'' only extends to major sources of air 
pollutants subject to a requirement for actual control of the quantity 
of emissions of that pollutant, and that such a control requirement has 
taken effect and is operative to control, limit or restrict the 
quantity of emissions of that pollutant released from the regulated 
activity, see 75 FR at 31606-07, and further defined ``subject to 
regulation'' such that GHGs are only ``subject to regulation'' under 
certain circumstances defined in the Tailoring Rule.
    In the Tailoring Rule, EPA recognized that if the applicability 
provisions of the PSD and Title V programs were applied literally so 
that PSD and Title V requirements applied to GHG-emitting sources at 
the 100/250 tpy levels provided in the CAA, then the permitting 
authorities would be overwhelmed by the large numbers of permittees and 
many small sources would be unduly encumbered by the permitting 
demands. In light of those impacts, EPA concluded that, as a legal 
matter, Congress did not intend that the PSD and Title V applicability 
requirements be applied literally to all sources emitting GHGs over the 
major source thresholds as of January 2, 2011, the date by which EPA 
determined that GHGs become subject to regulation under the CAA as a 
result of the motor vehicle rule. Instead, EPA concluded that it is 
authorized to tailor those applicability requirements to apply PSD and 
Title V to such sources in a phased-in manner, starting with the 
largest sources first.
    Specifically, in the Tailoring Rule, EPA has implemented these PSD 
and Title V applicability provisions by applying the familiar two-step 
framework for interpreting administrative statutes recognized by the 
Supreme Court in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), 
taking into account certain legal doctrines. Those doctrines, insofar 
as relevant to the Tailoring Rule, are (1) the ``absurd results'' 
doctrine, which authorizes agencies to apply statutory requirements 
differently than a literal reading would indicate, as necessary to 
effectuate congressional intent and

[[Page 43494]]

avoid absurd results; (2) the ``administrative necessity'' doctrine, 
which authorizes agencies to apply statutory requirements in a way that 
avoids impossible administrative burdens; and (3) the ``one-step-at-a-
time'' doctrine, which authorizes agencies to implement a regulatory 
scheme in a deliberate, step-wise fashion. See 75 FR 31541-31579.
    Under Chevron, the agency must, at step 1, determine whether 
Congress' intent as to the specific matter at issue is clear, and, if 
so, the agency must give effect to that intent. 467 U.S. at 842. If 
congressional intent is not clear, then, at step 2, the agency has 
discretion to fashion an interpretation that is a reasonable 
construction of the statute. 467 U.S. at 865. To determine 
congressional intent, the agency must first consider the words of the 
statutory requirements, and if their literal meaning answers the 
question at hand, then, in most cases, the agency must implement those 
requirements by those terms.
    However, under the ``absurd results'' doctrine, the literal meaning 
of statutory requirements should not be considered to indicate 
congressional intent if that literal meaning would produce a result 
that is senseless or that is otherwise inconsistent with -- and 
especially one that undermines -- underlying congressional purpose. In 
these cases, if congressional intent for how the requirements apply to 
the question at hand is clear, the agency should implement the 
statutory requirements not in accordance with their literal meaning, 
but rather in a manner that most closely effectuates congressional 
intent. If congressional intent is not clear, then an agency may select 
an interpretation that is reasonable under the statute.
    Under the ``administrative necessity'' doctrine, Congress is 
presumed, at Chevron step 1, to intend that its statutory directives to 
agencies be administrable, and not to have intended to have written 
statutory requirements that are impossible to administer. Therefore, 
under this doctrine, an agency may depart from statutory requirements 
that, by their terms, are impossible to administer, but the agency may 
depart no more than necessary to render the requirements administrable.
    In addition to the ``absurd results'' and ``administrative 
necessity'' doctrines, another judicial doctrine supports at least part 
of EPA's Tailoring Rule, and that is the doctrine that agencies may 
implement statutory mandates one step at a time, which we will call the 
``one-step-at-a-time'' doctrine. The U.S. Supreme Court recently 
described the doctrine in Massachusetts v. EPA, 549 U.S. 497, 524 
(2007), as follows: ``Agencies, like legislatures, do not generally 
resolve massive problems in one fell regulatory swoop;'' and instead 
they may permissibly implement such regulatory programs over time, 
``refining their preferred approach as circumstances change and as they 
develop a more nuanced understanding of how best to proceed.''
    In the Tailoring Rule, EPA closely considered the burdens to the 
permitting authorities of applying PSD and Title V to GHG-emitting 
sources. For example, EPA calculated, on a national basis, the workload 
that GHG permit applications would entail, and compared that to the 
existing workload of permitting authorities. EPA concluded that 
permitting authorities would be overwhelmed by permit applications if 
the PSD and Title V applicability thresholds were applied literally as 
of January 2, 2011, to the GHG emissions from stationary sources. In 
addition, EPA calculated the cost to the sources of permitting 
requirements and concluded that many small sources would become subject 
to unduly high expenses.
    Accordingly, in applying the Chevron analytical framework, in 
conjunction with the absurd results and administrative necessity 
doctrines, EPA concluded that Congress intended that PSD and Title V 
apply to the GHG emissions from stationary sources, but that, in light 
of the burdens to the permitting authority and the costs to the sources 
of determining applicability of permitting requirements by applying the 
statutory thresholds to GHG emissions, the application of the 
permitting programs should be phased in, starting with the largest 
sources of GHG emissions first. EPA also concluded that the calculation 
for determining which sources emit the ``largest'' amount of GHG 
emissions should be based on the amount of GHG pollutant emitted in 
tons per year, weighted by the global warming potential (GWP) of the 
particular GHG pollutant.
    Accordingly, in the Tailoring Rule, EPA established two steps to 
implement PSD and Title V. At step 1, beginning January 2, 2011, 
sources currently subject to PSD or Title V permitting programs were 
required to determine the BACT for their GHG emissions, but only for 
GHG increases of 75,000 short tons per year (tpy) or more of total 
GHGs, on a CO2e basis and any increase on a mass basis. At 
that time, no sources would be subject to CAA permitting requirements 
due solely to GHG emissions. At step 2, beginning July 1, 2011, the PSD 
permitting requirements will for the first time cover new construction 
projects that will emit GHG emissions of at least 100,000 tpy on a 
CO2e basis (and 250 tons on a mass basis) even if they do 
not exceed the permitting thresholds for any other pollutant. 
Modifications at existing facilities that emit at that level and 
increase GHG emissions by at least 75,000 tpy CO2e and by any amount on 
a mass basis will be subject to permitting requirements, even if they 
do not significantly increase emissions of any other pollutant.
    In addition, EPA committed to promulgate by July 1, 2012, another 
rulemaking--in effect, step 3 of the Tailoring Rule--that would 
consider whether to reduce the thresholds further. EPA also committed 
to promulgate another rulemaking after that, by April 1, 2016, that 
would consider still further action. As EPA stated in the Tailoring 
Rule, part of the purpose of the phase-in approach embodied in the 
Tailoring Rule is to allow permitting authorities time to acquire 
additional resources and to allow EPA time to develop streamlining 
methods and thereby enable the application of PSD and Title V to more 
sources in subsequent rulemakings.
    As noted previously, in the Tailoring Rule, EPA determined that the 
amount of each GHG emitted by a facility should be calculated by 
reference to the weight of the GHG emissions, in tons of 
CO2e per year for determining if GHGs were ``subject to 
regulation'' for a particular facility and project. The Tailoring Rule 
proposal referenced EPA's Inventory of U.S. Greenhouse Gas Emissions 
and Sinks (Inventory) \2\ submitted annually to the United Nations 
Framework Convention on Climate Change (UNFCCC), for the applicable GWP 
values and guidance on how to calculate a source's GHG emissions in tpy 
CO2e. 75 FR 31514-31608. The Inventory includes emissions of 
the six GHGs in terms of CO2e units. By linking the 
calculation of CO2e for GHGs to GWP values, a facility could 
evaluate its total GHG emissions contribution based on a single metric. 
We solicited comment on the benefits and limitations of this proposed 
metric.
---------------------------------------------------------------------------

    \2\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2008,'' U.S. Environmental Protection Agency, EPA 430-R-10-006 
(April 15, 2010). https://www.epa.gov/climatechange/emissions/usinventoryreport.html.
---------------------------------------------------------------------------

    While we referred to the Inventory for GWP identification purposes 
only, several commenters appeared to misunderstand our intent, claiming 
that the Inventory excludes CO2 emitted from biomass. These 
commenters

[[Page 43495]]

requested that, in calculations of emissions for determining 
applicability of PSD and Title V, EPA exempt emissions from biogenic 
activities or biomass combustion or oxidation activities, including 
solid waste landfills, waste-to-energy projects, fermentation 
processes, combustion of renewable fuels, ethanol manufacturing, 
biodiesel production, and other alternative energy production that uses 
biomass feedstocks (e.g., crops or trees). In particular, these 
commenters urged that EPA exclude emissions from biomass combustion in 
determining the applicability of PSD to such sources based on the 
notion that such combustion is ``carbon neutral'' (i.e., that 
combustion or oxidation of such materials would cause no net increase 
in GHG emissions on a lifecycle basis).
b. Treatment of Biogenic Emissions
    In response, when finalizing the Tailoring Rule, we acknowledged 
the role that biomass or biogenic fuels and feedstocks could play in 
reducing anthropogenic GHG emissions, and did not dispute the 
commenters' observations that many state, Federal, and international 
rules and policies treat biogenic and fossil sources of CO2 
emissions differently (75 FR 31514). Regarding commenters' claims that 
the Inventory excludes CO2 emissions from biomass, EPA noted 
that the Inventory does not exclude these emissions (see section II.A.2 
of the preamble to the proposed deferral rule). Rather, they are 
included in the Land-Use, Land-Use Change and Forestry (LULUCF) Sector 
rather than the Energy Sector to avoid double-counting at the national 
scale. The narrow reference to the use of the Inventory's GWP values 
for estimating GHG emissions was provided to offer consistent guidance 
on how to calculate these emissions and not as an indication, direct or 
implied, that biomass emissions would be excluded from permitting 
applicability merely by association with the national inventory, see 74 
FR 55351, under the definition for ``carbon dioxide equivalent.''
    We determined that our application of the ``absurd results,'' 
``administrative necessity,'' and one-step-at-a-time legal rationales 
supporting the Tailoring Rule, based on the expected overwhelming 
permitting burdens in its absence, did not provide sufficient basis to 
exclude emissions of CO2 from biogenic sources in 
determining permitting applicability provisions at that time. We 
reasoned that such an exclusion alone, while reducing burdens for some 
sources, would not address the overwhelming permitting burdens, and a 
threshold-based approach would still be needed. At that time, we had 
not examined burdens with respect to specific source categories 
impacted by the rule and thus had not analyzed the administrative 
burden of permitting projects that specifically involve biogenic 
CO2 emissions taking account of the threshold-based 
approach. Commenters also did not provide information to demonstrate 
that an overwhelming permitting burden would still exist, justifying a 
temporary exclusion for biomass sources.
    In the final Tailoring Rule, we indicated that the decision not to 
provide this type of an exclusion at that time did not foreclose EPA's 
ability to either (1) provide this type of exclusion at a later time 
with additional information about overwhelming permitting burdens due 
to biomass sources, or (2) provide another type of exclusion or other 
treatment based on some other rationale. Although we did not take a 
final position, we noted that some commenters' observations about a 
different treatment of biomass combustion warranted further exploration 
as a possible rationale.
    Therefore, although we did not establish a permanent exclusion from 
PSD or Title V applicability based on specific characteristics of 
biogenic CO2, we indicated our intent to seek further 
comment on how we might address emissions of biogenic CO2 
under the PSD and Title V programs through a future action.
    We further noted that, while not promulgating an applicability 
exclusion for biogenic emissions and biomass fuels or feedstocks in the 
final Tailoring Rule, flexibility exists to apply the existing 
regulations and policies regarding BACT in ways that take into account 
their net effects on atmospheric GHG concentrations. Without prejudging 
the outcome of our process to seek comment on whether and how we might 
address emissions of biogenic carbon under the PSD and Title V programs 
through a future action, we indicated that this issue warranted further 
exploration.
    As mentioned earlier in the preamble, in order to explore the issue 
further following the promulgation of the Tailoring Rule, on July 15, 
2010, EPA solicited views from the public through a CFI on approaches 
to accounting for biogenic CO2 emissions, on the means to 
estimate and measure CO2 emissions from a variety of 
biogenic CO2 sources and other information on biogenic 
sources that may be affected but not identified in the CFI.
    With promulgation of the Tailoring Rule we committed to issue 
technical and policy guidance for permitting of GHGs. Subsequently, the 
information gathered from stakeholders in response to the CFI provided 
diverse perspectives on treatment of biogenic CO2 emissions 
in pre-construction and operating permit reviews, including many 
requests to exclude, either partially or wholly, biogenic 
CO2 sources from PSD applicability determinations and BACT 
analyses on the basis of Inventory results and other considerations. On 
November 10, 2010, EPA issued the draft ``PSD and Title V Permitting 
Guidance for Greenhouse Gases'' which provides the basic information 
that permit writers and applicants need to address GHG emissions in 
permits. Within the November guidance, EPA acknowledged the numerous 
stakeholder comments on biogenic CO2 BACT analyses and 
provided general guidance to permitting authorities to consider 
environmental, energy, and economic benefits that may accrue from the 
use of certain types of biomass (e.g., biogas from landfills for energy 
generation), consistent with existing air quality standards. We also 
committed to provide more detailed technical and policy guidance early 
in 2011 for completing step 4 of a ``top-down'' BACT analysis for GHG 
emissions from certain types of biomass sources to enable permitting 
authorities to simplify and streamline BACT determinations for such 
sources. EPA provided interim guidance on this topic in March 2011, 
concurrent with the proposal of this rule to assist permitting 
authorities before the deferral becomes effective.\3\
---------------------------------------------------------------------------

    \3\ ``Guidance for Determining Best Available Control Technology 
for Reducing Carbon Dioxide Emissions from Bioenergy Production,'' 
U.S. EPA Office of Air and Radiation, March 2011. (https://www.epa.gov/nsr/ghgdocs/bioenergyguidance.pdf)
---------------------------------------------------------------------------

    Noting that a variety of Federal and state policies have recognized 
that some types of biomass can be part of a national strategy to reduce 
dependence on fossil fuels and to reduce emissions of GHGs, EPA has 
determined that it is appropriate for permitting authorities to account 
for both existing Federal and state policies and their underlying 
objectives in evaluating the environmental, energy and economic 
benefits of biomass fuel. Based on these considerations, permitting 
authorities might determine that the use of certain types of biomass 
alone meets the BACT requirement for GHGs.
    As described in the Background section of this preamble, NAFO 
petitioned the EPA on August 3, 2010 to reconsider and stay the 
implementation of the PSD and Title V GHG Tailoring Rule. Pending 
reconsideration, petitioners requested that the application of the PSD 
and Title V

[[Page 43496]]

permitting programs to emissions of CO2 from biomass be 
stayed.
    Based on consideration of the petitioners' arguments, together with 
the weight of the comments received on the CFI, EPA concluded that the 
issue of accounting for the net atmospheric impact of biogenic 
CO2 emissions is complex enough that further consideration 
of this important issue is warranted. Therefore, EPA granted the 
petition on January 12, 2011.
    However, EPA did not grant the request for an administrative stay 
of the Tailoring Rule, because the rule is critical for making overall 
implementation of the PSD program feasible. Furthermore, an 
administrative stay of the statements in the preamble of the Tailoring 
Rule that describe EPA's initial determination not to exempt emissions 
of CO2 from biomass would not provide the requested relief 
of excluding emissions of CO2 from biomass from the PSD and 
Title V permitting programs. The effect of a stay of this or any other 
aspect of the Tailoring Rule would be to return to the legal regime 
that existed before EPA's issuance of a final Tailoring Rule. As no 
exemption for emissions of CO2 from biomass existed prior to 
the final rule, an administrative stay would not result in an exemption 
from the requirements of PSD and Title V.
3. Rationale in Support of Interim Biomass Deferral
a. Regulation at This Time Is Not Justified
    Since finalizing the Tailoring Rule, EPA has gathered additional 
information concerning biomass through the CFI and in response to the 
proposal for this rule. The information collected to this point 
underscores the complexity and uncertainty associated with accounting 
for biogenic emissions of CO2 and indicates that at present 
attempting to determine the net carbon cycle impact of particular 
facilities combusting particular types of biomass feedstocks would 
require extensive analysis and would therefore entail extensive 
workload requirements by many of the permitting authorities. In 
contrast to other sources of GHG emissions, these uncertainties and 
complexities are exacerbated because of the unique role and impact 
biogenic sources of CO2 have in the carbon cycle. Further, 
methodologies are not sufficiently developed to assure that various 
permitting authorities would be able to perform the necessary 
calculations reasonably and consistently to determine the net 
atmospheric impact in many, if not all, instances.
    The extensive workload requirements required to understand the net 
biogenic CO2 emissions from bioenergy facilities and other 
sources of biogenic CO2 emissions, as part of the PSD and 
Title V permit process, including specifically how to measure and 
account for biogenic CO2 emissions, would unnecessarily 
strain the resources of the affected permitting authorities and result 
in delays in processing permits for other applicants. Moreover, at 
present, devoting these limited permitting authority resources to 
biomass sources would not be productive in light of the possibility 
that EPA may ultimately determine that the utilization of some or all 
biomass feedstocks for bioenergy has a negligible (or de minimis), 
negative, or positive net impact on the carbon cycle.
    Therefore, the information EPA has collected since promulgating the 
Tailoring Rule indicates that it is consistent with the rationale of 
the Tailoring Rule for affected permitting authorities to defer on a 
temporary basis biogenic CO2 emissions from PSD and Title V 
applicability. During this deferral, EPA will conduct a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources, which will include a peer review by 
the SAB, and resolve technical issues in order to account for biogenic 
CO2 emissions in ways that are scientifically sound and also 
manageable in practice.
    As noted previously, EPA based the Tailoring Rule on the extreme 
administrative burdens to permitting authorities, and undue costs to 
sources, that would result from a literal application of the PSD and 
Title V 100/250 tpy statutory thresholds, as of January 2, 2011, when 
those requirements first applied to GHGs. EPA reasoned that, in 
accordance with the Chevron analytical framework for statutory 
construction, taking into account the ``absurd results'' and 
``administrative necessity'' lines of cases, Congress did not intend 
that the PSD and Title V requirements apply at the 100/250 tpy 
statutory thresholds to GHG-emitting sources as of January 2, 2011, but 
rather that those requirements could be limited, at least initially, 
through a phase-in approach, to higher-emitting sources.
    Just as the extensive workload of processing permit applications 
from sources below the Tailoring Rule thresholds justified exempting 
those sources at least from the initial steps in the Tailoring Rule 
phase-in program, so too the extensive workload associated with 
analyzing and accounting for biogenic CO2 emissions as part 
of processing permit applications from biomass facilities justifies 
exempting those sources for a period of time, in the affected states, 
pending EPA's development of a consistent and practical framework for 
determining net carbon cycle impacts. The three-year deferral EPA is 
finalizing in this action is reasonable to allow time for the 
development of the accounting framework and subsequent rulemaking.
    In effect, this deferral is a step back from the Tailoring Rule's 
approach but the decision to defer the applicability of PSD and Title V 
to biogenic CO2 emissions is nonetheless supported, in part, 
on the same rationale as EPA used to justify the Tailoring Rule's 
phase-in approach. This action constitutes a refinement of the approach 
EPA has taken to regulate GHG emissions from stationary sources through 
a phased-in approach, based on an evolving understanding of the 
complexities, uncertainties, and nuances associated with biogenic 
emissions.
    An alternative way to reduce the permitting burden would be to 
apply PSD and Title V to all facilities with biogenic CO2 
emissions that emit at or above the Tailoring Rule thresholds, but 
without making any effort to take into account net carbon cycle 
impacts. However, we believe that it is conceivable that as a result of 
the scientific examination of biogenic CO2 emissions, we 
could conclude that the net carbon cycle impact for some biomass 
feedstocks is trivial, negative, or positive. Accordingly, this could 
result in regulation of sources with trivial or positive impacts on the 
net carbon cycle, as previously discussed. To avoid this outcome, given 
our current state of knowledge, we believe a case-by-case net carbon 
cycle impact analysis would be required in the course of reviewing each 
permit application. This burden would be in addition to the currently 
existing burden associated with obtaining a PSD or Title V permit. In 
light of the permitting burdens assessed in the Tailoring Rule, adding 
to that burden in many states would frustrate the goals we sought to 
accomplish in the Tailoring Rule to ensure that the PSD and Title V 
programs can be administered in each state.
    Furthermore, given the potential that the utilization of at least 
some biomass feedstocks may have a negligible impact on the net carbon 
cycle, engaging in this type of burdensome analysis may not be an 
optimal use of the limited resources of PSD and Title V permitting 
authorities. The additional scientific examination being undertaken by 
the EPA could ultimately conclude that

[[Page 43497]]

such resources could have been more effectively utilized to target 
CO2 emissions that clearly have a detrimental impact on the 
net carbon cycle. Establishing a three-year deferral period for 
biogenic CO2 emissions will enable EPA to consider the 
results of the detailed examination of the science of these emissions 
and undertake a rulemaking to determine the best way to account for 
biogenic CO2 emissions when determining PSD applicability.
    Another important reason for the three-year deferral period is to 
allow sufficient time to consider the unique characteristics and 
attributes of biogenic CO2 feedstocks, as opposed to other 
sources of GHG, using the results from the detailed examination 
mentioned previously, within both the state permitting agencies and 
affected facilities. While the interim BACT guidance described 
previously will help alleviate some of this burden before the deferral 
becomes effective, we expect that more and more diverse users of 
biomass combustion or other biogenic CO2 sources are likely 
to be affected under step 2 of the Tailoring Rule because, under step 
2, these sources can trigger permitting requirements based solely on 
their GHG emissions with no prerequisite requirement that they 
otherwise trigger PSD or Title V permitting requirements for a non-GHG 
pollutant. We believe, absent the deferral period and the completion of 
EPA's full analysis of the unique technical issues associated with 
these diverse facilities emitting biogenic CO2, that it 
would be particularly challenging for many of the permitting 
authorities and facilities to process permits involving these 
emissions. Also, as described elsewhere in this preamble, this interim 
deferral is intended to temporarily exclude biogenic CO2 
emissions from the definition of ``subject to regulation,'' as that 
term was defined for purposes of the Tailoring Rule, for a period of 
three years, while EPA further considers, through notice and comment 
rulemaking, the approach to accounting for these emissions on a 
permanent basis.
b. One-Step-at-a-Time Doctrine
    EPA relied, in part, on the ``one-step-at-a-time'' doctrine, which 
authorizes agencies to implement statutory requirements a step at a 
time, in finalizing the Tailoring Rule. 75 FR 31514, 31578 (June 3, 
2010). As described in the Tailoring Rule and earlier in the preamble, 
the case law recognizing the ``one-step-at-a-time'' doctrine, within 
the Chevron framework, justifies an agency's step-by-step approach 
under the following circumstances or conditions: (1) The agency's 
ability to comply with a statutory directive depends on facts, 
policies, or future events that are uncertain; (2) the agency has 
estimated the extent of its remaining obligation; (3) the agency's 
incremental actions are structured in a manner that is reasonable in 
light of the uncertainties; and (4) the agency is on track to full 
compliance with the statutory requirements.
    In the proposed rule, EPA stated in footnote 13 that the ``one-
step-at-a-time'' doctrine was not relevant to this rulemaking. This 
statement was made without explanation. One commenter (EPA-HQ-OAR-2011-
0083-0084) stated ``[b]ased on EPA's statements in the Tailoring Rule, 
which does rely on the `one-step-at-a-time' doctrine, it appears that 
the doctrine would apply equally well to EPA's decision to delay 
regulation of biogenic CO2 emissions under the PSD and Title 
V programs.'' For the reasons stated below, EPA now agrees that, 
because of the complexity and uncertainty of the science associated 
with accounting for biogenic sources of CO2, the interim 
deferral of the PSD and Title V program for such emissions would be a 
reasonable exercise of the ``one-step-at-a-time'' doctrine.
    First, as the DC Circuit stated in National Association of 
Broadcasters v. FCC, 740 F.2d 1190, 1210 (DC Cir. 1984) (``National 
Association of Broadcasters''), incremental agency action is most 
readily justifiable ``against a shifting background in which facts, 
predictions, and policies are in flux and in which an agency would be 
paralyzed if all the necessary answers had to be in before any action 
at all could be taken.'' Those circumstances are present here, and so 
is the fact that the task at hand is extraordinarily demanding. As 
discussed previously, EPA is in the process of conducting a detailed 
examination of the science associated with biogenic CO2 
emissions from stationary sources to better understand their role on 
the carbon cycle and to develop an accounting framework for use by 
permitting authorities and sources. This examination will include 
discussion with partners and scientists both inside and outside the 
Federal government, as well as engagement with the Science Advisory 
Board, to consider technical issues that the Agency must resolve in 
order to account for biogenic CO2 emissions in ways that are 
scientifically sound and also manageable in practice.
    Second, as the Court stated in National Association of 
Broadcasters, ``the agency [should] ma[k]e some estimation, based upon 
evolving economic and technological conditions, as to the nature and 
magnitude of the problem it will have to confront when it comes to 
[undertake the remaining steps]'' and that estimation must be 
``plausible and flow from the factual record compiled.'' Id. at 1210. 
Here, EPA has done this by deferring the applicability of PSD and Title 
V to biogenic emissions of CO2 from stationary sources for 
only as long as necessary for EPA to complete the needed scientific 
study of these emissions, develop an accounting framework, and as 
appropriate conduct rulemaking specific to the unique nature and 
characteristics of these emission sources.
    In order to explore the issues further following the promulgation 
of the Tailoring Rule, on July 15, 2010, EPA solicited views from the 
public through the CFI on approaches to accounting for biogenic 
CO2 emissions, including whether some or all of a source's 
biogenic CO2 emissions could be discounted based on a 
determination that they are canceled out by the CO2 
absorption associated with growing the fuel (75 FR 41173). Also, we 
solicited information on the means to estimate and measure 
CO2 emissions from a variety of biogenic CO2 
sources that typically have not been part of emission inventories 
(e.g., CO2 from landfills, livestock management, and 
fermentation processes), as well as information on other biogenic 
sources that may be affected but which were not identified specifically 
in the CFI.
    With promulgation of the Tailoring Rule, we committed to issue 
technical and policy guidance for permitting of GHGs. Subsequently, the 
information gathered from stakeholders in response to the CFI provided 
diverse perspectives on treatment of biogenic CO2 emissions 
in pre-construction and operating permit reviews, including many 
requests to exclude, either partially or wholly, biogenic 
CO2 sources from PSD applicability determinations and BACT 
analyses on the basis of Inventory results and other considerations.
    Third, again as the Court stated in National Association of 
Broadcasters, it must be ``reasonable, in the context of the decisions 
made in the proceeding under review, for the agency to have deferred 
the issue to the future. With respect to that question, postponement 
will be most easily justified when an agency acts against a background 
of rapid technical and social change and when the agency's initial 
decision as a practical matter is reversible should the future 
proceedings yield drastically unexpected results.'' Id. at 1211. Here,

[[Page 43498]]

our deferral is reasonable in light of the technical and scientific 
questions that are raised by biogenic emissions from stationary 
sources, which will be addressed by EPA's ongoing study, development of 
an accounting framework, and any subsequent rulemaking. As explained in 
the proposal and elsewhere in the preamble to this final rule, EPA 
believes it has the authority to exclude biogenic CO2 
emissions from the PSD and Title V requirements for the proposed three-
year deferral period and will be exploring whether a permanent 
exemption is appropriate for at least some and perhaps all types of 
feedstocks.
    However, the possibility also remains that more detailed 
examination of the science of biogenic CO2 will demonstrate 
that the utilization of some biomass feedstocks for bioenergy 
production will have a significant impact on the net carbon cycle, 
making literal application of the PSD program requirements to such 
emissions, consistent with the Tailoring Rule, necessary to fulfill 
congressional intent. Thus, EPA is finalizing only a temporary, rather 
than a permanent, deferral of PSD requirements for such sources at this 
time. EPA notes that the issue of subsequent applicability of the PSD 
and Title V programs to facilities that may be permitted during the 
deferral period is discussed in more detail in section II.C.
    Finally, as the DC Circuit stated in Grand Canyon Air Tour 
Coalition v. F.A.A., 154 F.3d 455, 477-78 (DC Cir. 1998), the Courts 
will accept an initial step towards full compliance with a statutory 
mandate, as long as the agency is headed towards full compliance, and 
we now believe that the doctrine is applicable here.
    As we have described in the CFI, the preamble to the proposed 
deferral and elsewhere in the preamble for this final rule, there is 
little question as to the complexity in accounting for and 
understanding the impact of biogenic CO2