6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2009-0517; FRL - _________]

RIN 2060-AP86

Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Final Rule.

SUMMARY:  EPA is tailoring the applicability criteria that determine
which stationary sources and modification projects become subject to
permitting requirements for greenhouse gas (GHG) emissions under the
Prevention of Significant Deterioration (PSD) and title V programs of
the Clean Air Act (CAA or Act).  This rulemaking is necessary because
without it PSD and title V requirements would apply, as of January 2,
2011, at the 100 or 250 tons per year (tpy) levels provided under the
CAA, greatly increasing the number of required permits, overwhelming the
resources of permitting authorities, and severely impairing the
functioning of the programs.  EPA is relieving these resource burdens by
phasing-in the applicability of these programs to GHG sources  This rule
establishes two initial steps of the phase-in.  Step 1 begins on January
2, 2011, and covers only sources and modifications that would otherwise
undergo PSD or title V permitting based on emissions of non-GHG
pollutants.  Step 2 begins on July 1, 2011, and covers large sources of
GHG emissions that emit or have the potential to emit 100,000 tpy carbon
dioxide equivalent (CO2e) or more, and modifications at those sources
that increase net GHG emissions by 75,000 tpy CO2e or more, provided
those sources or modifications also have GHG mass emissions that exceed
the relevant mass-based applicability thresholds.  This rule also
requires EPA to promulgate by July 1, 2012, a step 3 rule that will
consider phasing-in additional sources.  EPA excludes from PSD and title
V permitting for GHG emissions, until at least    April 30, 2016,
sources that are not already subject and that emit less than 50,000 tpy
of CO2e, as well as modifications that do not increase net GHG emissions
by 50,000 tpy CO2e, or more.  EPA will use this time to streamline the
programs for those sources and must complete a study by April 30, 2015,
to assess improvements in administrability of the programs for such
sources, and must complete a rule by April 30, 2016, addressing
additional such sources based on this study.  EPA’s legal basis for
this tailoring rule is its interpretation of the PSD and title V
applicability provisions under the familiar Chevron two-step framework
for interpreting administrative statutes, taking account of the legal
doctrines authorizing agencies to apply statutory requirements in way
that avoids absurd results or administrative impossibility and
authorizing agencies to implement statutory requirements a step at a
time.

DATES:  This action is effective on [INSERT 60 DAY FROM DATE OF
PUBLICATION].

ADDRESSES:  EPA has established a docket for this rulemaking under
Docket ID No. EPA-HQ-OAR-2009-0517.  All documents in the docket are
listed in the   HYPERLINK "http://www.regulations.gov"
www.regulations.gov  index.  Although listed in the index, some
information is not publicly available, e.g., Confidential Business
Information or other information whose disclosure is restricted by
statute.  Certain other material, such as copyrighted material, is not
placed on the Internet and will be publicly available only in hard copy.
 Publicly available docket materials are available either electronically
in   HYPERLINK "http://www.regulations.gov"  www.regulations.gov  or in
hard copy at the EPA Docket Center EPA/DC, EPA West, Room 3334, 1301
Constitution Avenue, Northwest, Washington, D.C.  The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays.  The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the EPA Docket
Center is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT:  Mr. Joseph Mangino, Air Quality Policy
Division, Office of Air Quality Planning and Standards (C504-03),
Environmental Protection Agency, Research Triangle Park, NC 27711;
telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-mail
address:    HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

I.  General Information

A.  Does this action apply to me?

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

Industry Group	NAICSa

Agriculture, fishing, and hunting……………………….

11

Mining………………………………………		21

Utilities (electric, natural gas, other
systems)………………………………………………..

2211, 2212, 2213

Manufacturing (food, beverages, tobacco, textiles,
leather)…………………………….

311, 312, 313, 314, 315, 316

Wood product, paper
manufacturing…………………………………..

321, 322

Petroleum and coal products manufacturing…………………….

32411, 32412, 32419

Chemical manufacturing………………………

3251, 3252, 3253,3254, 3255, 3256,3259

Rubber product manufacturing…………………….

3261, 3262

Miscellaneous chemical
products………………………………………………..

32552, 32592, 32591, 325182, 32551

Nonmetallic mineral product manufacturing…………………….

3271, 3272, 3273, 3274, 3279

Primary and fabricated metal manufacturing…….

3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 3327,
3328, 3329

Machinery manufacturing…………………….

3331, 3332, 3333, 3334, 3335, 3336, 3339

Computer and electronic products manufacturing…………………….

3341, 3342, 3343, 3344, 3345, 4446

Electrical equipment, appliance, and component
manufacturing…………………….

3351, 3352, 3353, 3359

Transportation equipment manufacturing…………………….

3361, 3362, 3363, 3364, 3365, 3366, 3366, 3369

Furniture and related product manufacturing…………………….

3371, 3372, 3379

Miscellaneous manufacturing…………………….

3391, 3399

Waste management and remediation…………………………

5622, 5629

Hospitals/Nursing and residential care
facilities…………………………….

6221, 6231, 6232,6233, 6239

Personal and laundry services………………………………….

8122, 8123

Residential/private households…………………………….

8141

Non-Residential (Commercial)……………………….

Not available.  Codes only exist for private households, construction,
and leasing/sales industries.

a	North American Industry Classification System.

B.  How is this preamble organized?

	The information presented in this preamble is organized as follows:

Outline

I.  General Information

A.  Does this action apply to me?

B.  How is this preamble organized?

C.  Preamble Acronyms and Abbreviations

II.  Overview of the Final Rule

III.  Background

A.  What are greenhouse gases and their sources?

B.  Endangerment Finding and the Light-Duty Vehicle Rule

1.  Endangerment Finding

2.  Light-Duty Vehicle Rule

C.  What are the General Requirements of the PSD Program?

1.  Overview of the PSD Program

2.  General Requirements for PSD

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

1.  Overview of Title V

2.  Title V Permit Requirements

E.  The Interpretive Memorandum

IV.  Summary of Final Actions

A.  How do you define the GHG pollutant for PSD and title V purposes?

1.  GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs

2.  What GWP values should be used for calculating CO2e?

B.  When will PSD and title V applicability begin for GHGs and emission
sources?

1.  What are the Step 1 thresholds, timing and calculation methodology?

2.  What are the Step 2 thresholds, timing and calculation methodology?

3.  What about Step 3?

4.  What about the proposed 6 year exclusion for smaller sources?

5.  When and how will EPA take further action on smaller sources?

C.  How do state, local and tribal area programs adopt the final GHG
applicability thresholds?

D.  How do you treat GHGs for title V permit fees?

E.  Other Actions and Issues

1.  Timing for Permit Streamlining Techniques

2.  Guidance for Best Available Control Technology Determinations

3.  Requests for Higher Category-Specific Thresholds and Exemptions from
Applicability

4.  Transitional Issues including Requests for Grandfathering

V. What is the legal and policy rationale for the final actions?

A. Rationale for our approach to calculating GHG emissions for PSD and
title V applicability purposes

1.  Grouping of GHGs into a Single Pollutant

2.  Identifying Which GHGs are Included in the Group

3.  Determining What GWP Values are to be Used

4.  Use of Short Tons vs. Metric Tons

B. Rationale for Thresholds and Timing for PSD and Title V Applicability
to GHG Emissions Sources

	1.  Overview

2.  Data Concerning Costs to Sources and Administrative Burdens to
Permitting Authorities

3.  Legal Doctrines:  “Absurd Results,” “Administrative
Necessity,” and “Step-at-a-Time”

	4.  The PSD and Title V programs

5.  Application of the “Absurd results” Doctrine for the PSD Program

6.  Application of the “Absurd Results” Doctrine for the Title V
Program

	7.  Additional Rulemaking for the PSD and Title V Programs

8.  Rationale for the Phase-in Schedule for Applying PSD and Title V to
GHG Sources

9.  “Administrative Necessity” Basis for PSD and Title V
Requirements in Tailoring Rule

	10.  “Step-at-a-Time” Basis for Tailoring Rule

C.  Mechanisms for Implementing and Adopting the Tailoring Approach

1.  PSD Approach: Background and Proposal

2.  Rationale for Our Final Approach to Implementing PSD

3.  Other Mechanisms

4.  Codification of Interpretive Memo

5.  Delaying Limited Approvals and Request for Submission of Information
from States Implementing a SIP-Approved PSD Program

6.  Title V Programs

D.  Rationale for Treatment of GHGs for Title V Permit Fees

E.  Other Actions and Issues

1.  Permit Streamlining Techniques

2.  Guidance for Best Available Control Technology Determinations

3.  Requests for Higher Category-Specific Thresholds or Exemptions from
Applicability

4.  Transitional Issues Including Requests for Grandfathering

VI.  What are the economic impacts of the final rule?

A.  What entities are affected by this final rule?

B.  What are the estimated annual benefits to sources due to regulatory
relief from the statutory requirements?

1.  What are annual estimated benefits or avoided burden costs for title
V permits?

2.  What are annual benefits or avoided costs associated with NSR
permitting regulatory relief?

	C.  What are the economic impacts of this rulemaking?

	D.  What are the costs of the final rule for society?

VII.  Comments on Statutory and Executive Orders Reviews

VIII.  Statutory and Executive Orders Reviews

XI.  Statutory Language

C.  Preamble Acronyms and Abbreviations

	The following are abbreviations of terms used in the preamble.

BACT				Best Available Control Technology

CAA or Act		Clean Air Act

CO2e				Carbon Dioxide Equivalent

GHG				Greenhouse Gases

PSD				Prevention of Significant Deterioration

SNPR				Supplemental Notice of Proposed Rulemaking

tpy				Tons Per Year

[COMPLETE LATER.]

II. Overview of the Final Rule

EPA is relieving overwhelming permitting burdens that would, in the
absence of this rule, fall on permitting authorities and sources.  We
accomplish this by tailoring the applicability criteria that determine
which GHG emission sources become subject to the PSD and title V
programs of the CAA.  In particular, EPA is establishing with this
rulemaking a phase-in approach for PSD and title V applicability, and is
establishing the first two steps of the phase-in for the largest
emitters of GHGs.  We also commit to certain follow-up actions regarding
future steps beyond the first two, discussed in more detail below.  Our
legal basis for this rule is our interpretation of the PSD and title V
applicability provisions under the familiar Chevron two-step framework
for interpreting administrative statutes, taking account of three legal
doctrines, both separately and interdependently:  they are what we will
call (i) the “absurd results” doctrine, which authorizes agencies to
apply statutory requirements in way that avoids absurd results, (ii) the
“administrative necessity” doctrine, which authorizes agencies to
apply statutory requirements in a way that avoids impossible
administrative burdens; and (iii) the “step-at-a-time” doctrine,
which authorizes agencies to implement statutory requirements a step at
a time.  This legal basis justifies each of the actions we take with
this rule, both (i) as part of the overall tailoring approach and (ii)
independently of the other actions.

For the first step, which will begin on January 2, 2011, PSD or title V
requirements will apply to sources’ GHG emissions only if the sources
are subject to PSD or title V anyway due to their non-GHG conventional
pollutants.  Therefore, EPA will not require sources or modifications to
evaluate whether they are subject to PSD or title V requirements solely
on account of their GHG emissions.  Specifically, for PSD, Step 1
requires that as of January 2, 2011, the applicable requirements of PSD,
most notably, the best available control technology (BACT) requirement,
will apply to projects that increase net GHG emissions by at least
75,000 tpy CO2e, but only if the project also significantly increases
emissions of at least one non-GHG pollutant.  For the title V program,
only existing sources with, or new sources obtaining, title V permits
for non-GHG pollutants will be required to address GHGs during this
first step.

The second step of the tailoring rule, beginning on July 1, 2011, will
phase-in additional large sources of GHG emissions.  New sources as well
as existing sources not already subject to title V that emit, or have
the potential to emit, at least 100,000 tpy CO2e will become subject to
the PSD and title V requirements.  In addition, sources that emit or
have the potential to emit at least 100,000 tpy CO2e and that undertake
a modification that increases net emissions of GHGs by at least 75,000
tpy CO2e will also be subject to PSD requirements.  For both steps, we
also note that if sources or modifications exceed these CO2e-adjusted
GHG triggers, they are not covered by permitting requirements unless
their GHG emissions also exceed the corresponding mass-based triggers
(i.e., unadjusted for CO2e.)

EPA believes that the costs to the sources and the administrative
burdens to the permitting authorities of PSD and title V permitting will
be manageable at the levels in these initial two steps, and that it
would be administratively infeasible to subject additional sources to
PSD and title V requirements at those times.  However, we also intend to
issue a supplemental notice of proposed rulemaking (SNPR) in 2011, in
which we will propose or solicit comment on a third step of the phase-in
that would include more sources, beginning by July 1, 2013.  In the same
rulemaking, we may propose or solicit comment on a permanent exclusion
from permitting for some category of sources, based on the doctrine of
“absurd results,” within the Chevron framework.  We are establishing
an enforceable commitment that we will complete this rulemaking by July
1, 2012, which will allow for 1 year's notice before step 3 would take
effect.

We are also including in this action a rule that no source with
emissions below 50,000 tpy CO2e, and no modification resulting in net
GHG increases of less than 50,000 tpy CO2e, will be subject to PSD or
title V permitting before at least 6 years from now, April 30, 2016.
This is because we are able to conclude at this time that the
administrative burdens that would accompany permitting sources below
this level will be so great that, absent significant streamlining
actions that EPA will need time to develop and implement, or else absent
significant resource constraints that the permitting authorities will
need time to implement, it will be impossible to administer the permit
programs for these sources until at least 2016.  We commit to explore
streamlining techniques that may well make the permitting programs much
more efficient to administer for GHGs, and that therefore may allow
their expansion to smaller sources, but we expect that those techniques
will take several years to develop and implement.

Further, we are establishing an enforceable commitment that we will (i)
complete a study by April 30, 2015, to evaluate the status of PSD and
title V permitting for GHG-emitting sources, including progress in
developing streamlining techniques; and (ii) complete further rulemaking
based on that study by April 30, 2016 to address the permitting of
smaller sources.  That rulemaking may also consider additional permanent
exclusions based on the “absurd results” doctrine, where applicable.

This rulemaking is necessary because without it, PSD and title V would
apply to all stationary sources that emit or have the potential to emit
more than 100 or 250 tons of GHGs per year beginning on January 2, 2011.
 This is the date when EPA’s recently promulgated Light Duty Vehicle
Rule (LDVR) takes effect, imposing control requirements for the first
time on CO2 and other GHGs.  If this January 2, 2011 date were to pass
without this rule being in effect, PSD and title V requirements would
apply at the 100/250 tpy applicability levels provided under a literal
reading of the CAA as of that date.  From that point forward, a source
owner proposing to construct any new major source that emits at or
higher than the applicability levels (and which therefore may be
referred to as a “major” source) or modify any existing major source
in a way that would increase GHG emissions would need to obtain a permit
under the PSD program that addresses these emissions before construction
or modification could begin.  Similarly, for title V, a new or existing
source exceeding the 100 tpy applicability level in the Act would be
required to get a title V permit, if it did not already have one.

Under these circumstances, many small sources would be burdened by the
costs of the individualized PSD control technology requirements and
permit applications that the PSD provisions, absent streamlining,
require.  Additionally, state and local permitting authorities would be
burdened by the extraordinary number of these permit applications, which
are orders of magnitude greater than the current inventory of permits
and would vastly exceed the current administrative resources of the
permitting authorities.  Permit gridlock would result with the
permitting authorities able to issue only a tiny fraction of the permits
requested.

These impacts – the costs to sources and administrative burdens to
permitting authorities – that would result from application of the PSD
and title V programs for GHG emissions at the statutory levels as of
January 2, 2011 are so severe that they bring the judicial doctrines of
“absurd results,” “administrative necessity,” and
“step-at-a-time” into the Chevron two-step analytical framework for
statutes administered by agencies.  Under Chevron, the agency must, at
step 1, determine whether Congress’s intent as to the specific matter
at issue is clear, and, if so, the agency must give effect to that
intent.  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.  To determine congressional intent, the
agency must first consider the words of the statutory requirements, and
if their plain meaning answers the question at hand, then, in most
cases, the agency must implement those requirements by their terms.
However, under the “absurd results” doctrine, the plain meaning of
statutory requirements should not be considered to indicate
congressional intent if the plain 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 is clear, the agency should implement the statutory
requirements not in accordance with their plain meaning, but rather in a
manner that most closely effectuates congressional intent; and if
congressional intent is not clear, then an agency may select an
interpretation that is reasonable under the statute.  Similarly, under
the “administrative necessity” doctrine, Congress is presumed, at
Chevron step 1, not to have intended to have written statutory
requirements that are impossible to administer, but rather to have
intended that requirements be implemented in manner that is
administrable.  Therefore, under this doctrine, an agency may depart
from statutory requirements that, by their terms, are impossible to
administer, but the agency may depart no more than necessary to render
the requirements administrable.  Under the “step-at-a-time”
doctrine, Congress is presumed at Chevron step 1 to have intended to
allow the agency to administer the statutory requirements on a
step-by-step basis, as appropriate, when the agency remains on track to
iComplement the requirements as a whole.  Each of these doctrines
supports our action separately, but the three also are intertwined and
support our action in a comprehensive manner.

Here, we have determined, through analysis of burden and emissions data
as well as consideration of extensive public comment, that the costs to
sources and administrative burdens to permitting authorities that would
result from application of the PSD and title V programs for GHG
emissions at the statutory levels as of January 2, 2011 should be
considered “absurd results.”  Therefore, we conclude that under the
“absurd results” doctrine, Congress could not have intended that the
statutory levels apply as of that date, and instead that Congress
intended some type of ameliorative alternative.  The “administrative
necessity” doctrine supports our conclusion as well because the
administrative burdens of attempting to comply with the statutory
thresholds as of January 2, 2011 would be impossible to bear, and for
this reason, too, Congress could not have intended that the statutory
levels apply as of that date.

Under these circumstances, congressional intent as to how to apply PSD
and title V to GHG sources may be considered to be unclear.  If so, EPA
has authority to develop an interpretation that is reasonable under the
statute, and the tailoring approach so qualifies.  In the alternative,
congressional intent may be considered to be clear – with the possible
exceptions described below – that PSD and title V requirements should
apply to GHG sources as closely to the statutory levels as possible, and
as quickly as possible, while assuring that affected sources and
permitting authorities can manage their permitting requirements.  The
tailoring rule is the approach that best effectuates this intent.  As a
result, the tailoring rule is valid under Chevron step 1, as informed by
the “absurd results,” “administrative necessity,” and
“step-at-a-time” doctrines.  Even so, we acknowledge that it may not
be clear whether Congress would have intended that PSD and title V apply
to the smallest GHG sources – those  at or near the statutory levels
-- and we intend to resolve this issue through future rulemaking.  In
addition, with respect to title V, we acknowledge that it may not be
clear whether Congress intended that large numbers of GHG sources be
required to hold permits that do not have applicable requirements –
which we will call “empty permits” – and we intend to resolve this
issue, too, in future rulemaking.

The legal analysis just describes justifies each of the actions in this
rule.  The first two steps that we promulgate in this rule, which take
effect on January 2, 2011 and July 1, 2011, are  constitute the most
that permitting authorities can reasonably be expected to do by those
times.  Similarly, the 50,000 tpy floor that we promulgate through at
least April 30, 2016 is reasonable because the information we have
available now shows that it constitutes the most that permitting
authorities can reasonably be expected to do by that date.  Finally, the
study and two additional rulemakings – to take effect by July 1, 2013
and April 30, 2016 -- to which we commit in this rule establish a track
for acquiring additional information and for taking further steps to
address the application of PSD and title V more closely to the literal
statutory levels.  We intend to apply them as closely to those levels as
is consistent with congressional intent and administrative imperatives,
in light of the “absurd results,” “administrative necessity,”
and “step-at-a-time” doctrines, although, as noted above, we may
consider in future rulemaking whether to conclude that Congress did not
intend that the programs apply to the smallest sources or, for title V,
sources with empty permits.

We are adopting regulatory language codifying our phase-in approach.  As
we will explain, many state, local and tribal area programs will likely
be able to immediately implement our approach without rule or statutory
changes for example, by, interpreting the term ”subject to
regulation” that is part of the applicability provisions for PSD and
title V.  We ask permitting authorities to confirm that they will follow
this implementation approach for their programs, and if they cannot,
then we will ask them to notify us so that we can take appropriate
follow-up action to narrow our federal approval of their programs before
GHGs become subject to regulation for PSD and title V programs on
January 2, 2011.  This will ensure that our approvals do not federally
obligate states to implement these programs for GHG until they
demonstrate that they have adequate resources to do so by undertaking
necessary programmatic, statutory, and/or regulatory changes at the
state, local or tribal level.

The thresholds we are establishing are based on CO2e for the aggregate
sum of six greenhouse gases that constitute the pollutant that will be
subject to regulation, which we refer to as GHGs.  These gases are:
CO2, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).  Thus, in this
rule, we provide that PSD and title V applicability is based on the
quantity that results when the mass emissions of each of these gases is
multiplied by the Global Warming Potential (GWP) of that gas, and then
summed for all six gases.  However, we further provide that in order for
a source’s GHG emissions to trigger PSD or title V requirements, the
quantity of the GHGs must exceed both the applicability thresholds
established in this rulemaking on a CO2e basis and the statutory
thresholds of 100 or 250 tpy on a mass basis.  Similarly, in order for a
source to be subject to the PSD modification requirements, the
source’s net GHG emissions increase must exceed the applicable
significance level on a CO2e basis and must also result in a net mass
increase of the constituent gases combined.

We are adopting this rule after careful consideration of numerous public
comments.  On October 27, 2009 (74 FR 55292), EPA proposed the GHG
tailoring rule.  EPA held two public hearings on the proposed rule, and
received over 400,000 written public comments.  The public comment
period ended on December 28, 2009.  The comments have provided detailed
information that has helped EPA understand better the issues and
potential impacts of this rule, and the final rule described in this
preamble incorporates many of the suggestions we received.  We respond
to many of these comments in explaining our rationale for the final
rule, which is described in section V.  The final rule adopts many
elements of the proposal but differs from the proposal in several
important respects.  We proposed to apply PSD and title V to GHG sources
that emit or have the potential to emit at least 25,000 tpy CO2e, and we
proposed a PSD significance level in a range between 10,000 and 25,000
tpy CO2e, but based on consideration of the additional information we
received and our further analysis, we are finalizing the threshold
levels on the schedule described previously.  In addition, the mechanism
for state, local and tribal program implementation has been
significantly changed to reflect the comments received that we needed to
develop an implementation approach that states could adopt under state
law more expeditiously.

	The remainder of this notice describes our approach and rationale in
more detail.  Following this overview, section III of this preamble
provides background information on the nature of GHG emissions, recent
regulatory developments that affect when and how GHG emissions are
subject to stationary source permitting, and the general requirements of
the PSD and title V programs.  Section IV describes in detail the
summary of the key actions being taken in this rule, including the
determination of emissions, the thresholds and timing for the phase-in,
our approach to implementing the phase-in, and the additional future
actions we will take.  Section V provides a more detailed description of
each action, explaining the policy and legal rationale and responding to
comments received, beginning with our decisions on how to calculate the
mass-based and CO2e-based emissions used in the phase-in, followed by
our legal and policy rationale for the first two steps of the phase-in,
the 50,000 tpy floor, and the subsequent study and rulemakings to
determine whether and how smaller sources should be subject to
permitting.  This section then describes key implementation issues
including the approach to state adoption.  After describing our plans
for follow-up on title V fee programs, the section concludes by
describing permit streamlining techniques; guidance on BACT for the GHG
sources that are affected under the first two steps of the tailoring
rule phase-in; requests for exemptions; and transitional issues,
including grandfathering.  Finally, section VI describes the expected
impacts that will result from the phase-in approach (i.e, the narrower
application of PSD and title V requirements during the phase-in period)
and section VII addresses administrative requirements.

III. Background

A.  What are greenhouse gases and their sources?

GHGs trap the Earth’s heat that would otherwise escape from the
atmosphere into space, and forms the greenhouse effect that helps keep
the Earth warm enough for life.  Greenhouse gases are naturally present
in the atmosphere and are also emitted by human activities.  Human
activities are intensifying the naturally occurring greenhouse effect by
increasing the amount of GHGs in the atmosphere, which is changing the
climate in a way that endangers human health, society, and the natural
environment.

Some GHGs such as CO2 are emitted to the atmosphere through natural
processes as well as human activities.  Other gases, such as fluorinated
gases, are created and emitted solely through human activities.  As
previously noted, the well-mixed GHGs of concern directly emitted by
human activities include CO2, CH4, N2O, HFCs, PFCs, and SF6.  These six
GHGs will, for the purposes of this final rule, be referred to
collectively as "the six well-mixed GHGs,” or, simply, GHGs. and
together constitute the “air pollutant” upon which the GHG
thresholds in this action are based.  These six gases remain in the
atmosphere for decades to centuries where they become well-mixed
globally in the atmosphere.  When they are emitted more quickly than
natural processes can remove them from the atmosphere, their
concentrations increase, thus increasing the greenhouse effect.  The
heating effect caused by the human-induced buildup of GHGs in the
atmosphere is very likely the cause of most of the observed global
warming over the last 50 years.  A detailed explanation of climate
change and its impact on health, society, and the environment is
included in EPA's technical support document for the endangerment
finding final rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292).

In the United States, the combustion of fossil fuels (e.g., coal, oil,
gas) is the largest source of CO2 emissions and accounts for 80 percent
of the total GHG emissions.  More than half of the energy related
emissions come from large stationary sources such as power plants, while
about a third come from transportation.  Of the six well-mixed GHGs,
four (CO2, CH4, N2O, and HFCs) are emitted by motor vehicles.  In the
United States industrial processes (such as the production of cement,
steel, and aluminum), agriculture, forestry, other land use, and waste
management are also important sources of GHGs.

Different GHGs have different heat-trapping capacities.  The concept of
GWP was developed to compare the heat-trapping capacity and atmospheric
lifetime of one GHG to another.  The definition of a GWP for a
particular GHG is the ratio of heat trapped by one unit mass of the GHG
to that of one unit mass of CO2 over a specified time period.  When
quantities of the different GHGs are multiplied by their GWPs, the
different GHGs can be summed and compared on a CO2e basis.  For example,
CH4 has a GWP of 21, meaning each ton of CH4 emissions would have 21
times as much impact on global warming over a 100-year time horizon as 1
ton of CO2 emissions.  Thus, on the basis of heat-trapping capability, 1
ton of CH4 would equal 21 tons of CO2e.  The GWPs of the non CO2 GHGs
range from 21 (for CH4) up to 23,900 (for SF6).  Aggregating all GHGs on
a CO2e basis at the source level allows a facility to evaluate its total
GHG emissions contribution based on a single metric.

B.  Endangerment Finding and the Light-Duty Vehicle Rule

1.  Endangerment Finding

On April 2, 2007, the United States Supreme Court found that GHGs are
air pollutants under CAA section 302(g).  Massachusetts v. EPA, 549 U.S.
497 (2007).  As a result, the Supreme Court found that EPA was required
to determine, under CAA section 202(a), whether (a) GHGs from new motor
vehicles cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare, or (b) the science is
too uncertain to make a reasoned decision.  After issuing a proposal and
receiving comment, on December 7, 2009, the Administrator signed two
distinct findings regarding GHGs under CAA section 202(a):

Endangerment Finding:  The Administrator found that the current and
projected atmospheric concentrations of the mix of six long-lived and
directly emitted GHGs—CO2, CH4, N2O, HFCs, PFCs, and SF6 (referred to
as “well-mixed greenhouse gases” in the endangerment finding)–are
reasonably anticipated to endanger the public health and welfare of
current and future generations.

Cause or Contribute Finding:  The Administrator found that the emissions
of the single air pollutant defined as the aggregate group of six
well-mixed greenhouses gases from new motor vehicles and new motor
vehicle engines contribute to the GHG air pollution that threatens
public health and welfare.

These findings, which were published December 15, 2009 (74 FR 66496), do
not themselves impose any requirements on industry or other entities.
However, they were a prerequisite to finalizing the GHG standards for
light-duty vehicles, described next.

2.  Light-Duty Vehicle Rule

The light-duty vehicle rule, signed on April 1, 2010 is a joint rule
between EPA and the Department of Transportation’s National Highway
Traffic Safety Administration (NHTSA) that establishes a national
program consisting of new standards for light-duty vehicles that will
reduce greenhouse gas emissions and improve fuel economy.  EPA finalized
the national GHG emissions standards under the Act, and NHTSA finalized
Corporate Average Fuel Economy (CAFE) standards under the Energy Policy
and Conservation Act, as amended.  The new standards apply to new
passenger cars, light-duty trucks, and medium-duty passenger vehicles,
starting with model year 2012.  The EPA GHG standards are projected to
result in an estimated combined average emissions level of 250 grams of
CO2 per mile for model year 2016 vehicles.  The standards begin with the
2012 model year, with standards increasing in stringency through model
year 2016.  The standards are a fleet average for each manufacturer,
based on a footprint attribute curve, meaning that the actual target for
a vehicle will vary depending on the size of the vehicle.  Under the
footprint-based standards, each manufacturer will have a GHG standard
unique to its fleet, depending on the footprints of the vehicle models
produced by that manufacturer.  A manufacturer will have separate
footprint-based standards for cars and for trucks

 The endangerment and contribution findings described above require EPA
to issue standards under section 202 (a) “applicable to emission” of
the air pollutant that EPA found causes or contributes to the air
pollution that endangers public health and welfare.  The final emissions
standards satisfy this requirement for GHGs from light-duty vehicles.
Under section 202(a) the Administrator has significant discretion in how
to structure the standards that apply to the emission of the air
pollutant at issue here, the aggregate group of six GHGs.  EPA has the
discretion under section 202(a) to adopt separate standards for each
gas, a single composite standard covering various gases, or any
combination of these.  In the LDVR, EPA finalized separate standards for
nitrous oxide and methane, and a CO2 standard that provides for credits
based on reductions of HFCs, as the appropriate way to issue standards
applicable to emission of the single air pollutant, the aggregate group
of six GHGs.  EPA did not set any standards for PFCs or SF6, as they are
not emitted by motor vehicles.

C.  What are the general requirements of the PSD program?

1. Overview of the PSD Program

The PSD program is a preconstruction review and permitting program
applicable to new major stationary sources and major modifications at
existing major stationary sources.  The PSD program applies in areas
that are designated “attainment” or “unclassifiable” for a
National Ambient Air Quality Standard (NAAQS).  The PSD program is
contained in part C of title I of the CAA.  The "nonattainment new
source review (NSR)" program applies in areas not in attainment for a
NAAQS or in the Ozone Transport Region and is implemented under the
requirements of part D of title I of the CAA.  Collectively, we commonly
refer to these two programs as the major NSR program.  The governing EPA
rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51,
appendices S and W.  There is no NAAQS for CO2 or any of the other
well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore, unless
and until we take further such action, we do not anticipate that the
"nonattainment" major NSR program will apply to GHGs.

The applicability of PSD to a particular source must be determined in
advance of construction or modification and is pollutant-specific.  The
primary criterion in determining PSD applicability for a proposed source
is whether the source is a “major emitting facility,”, based on its
predicted potential emissions of regulated pollutants, within the
meaning of CAA section 169(1) and either constructs or undertakes a
modification.  EPA has implemented these requirements in its
regulations, which use somewhat different terminology for determining
PSD applicability, which is whether the source is a “major stationary
source” or whether the proposed project is a “major modification.”

a. Major Stationary Source

Under PSD, a "major stationary source" is any source belonging to a
specified list of 28 source categories which emits or has a potential to
emit (PTE) of 100 tpy or more of any pollutant subject to regulation
under the CAA, or any other source type which emits or has the PTE such
pollutants in amounts equal to or greater than 250 tpy.  We refer to
these levels as the 100/250-tpy thresholds.  A new source with a PTE at
or above the applicable “major stationary source threshold" is subject
to major source NSR.  These limits originate from section 169 of the
CAA, which applies PSD to any “major emitting facility” and defines
the term to include any source that emits or has a PTE of 100 or 250
tpy, depending on the source category.  Note that the major source
definition incorporates the phrase “subject to regulation,” which,
as described later, will begin to include GHGs on January 2, 2011, under
our interpretation of that phrase discussed in the recent Interpretive
Memo notice.  75 FR 17004.

b. Major Modifications

PSD also applies to existing sources that undertake a "major
modification," which occurs:  (1) when there is a physical change in, or
change in the method of operation of, a "major stationary source;" (2)
the change results in a "significant" emission increase of a pollutant
subject to regulation (equal to or above the significance level that EPA
has set for the pollutant in 40 CFR 52.21(b)(23)); and (3) there is a
“significant net emissions increase” of a pollutant subject to
regulation that is equal to or above the significance level (defined in
40 CFR 52.21(b)(23)).  Significance levels, which EPA has promulgated
for criteria pollutants and certain other pollutants, represent a de
minimis contribution to air quality problems.  When EPA has not set a
significance level for a regulated NSR pollutant, PSD applies to an
increase of the pollutant in any amount (that is, in effect, the
significance level is treated as zero).

2.  General Requirements for PSD

This section provides a very brief summary of the main requirements of
the PSD program.  One principal requirement is that a new major source
or major modification must apply BACT, which is determined on a
case-by-case basis taking into account, among other factors, the cost
effectiveness of the control and energy and environmental impacts.  EPA
has developed a “top-down” approach for BACT review, which involves
a decision process that includes identification of all available control
technologies, elimination of technically infeasible options, ranking of
remaining options by control and cost effectiveness, and then selection
of BACT.  Under PSD, once a source is determined to be major for any
regulated NSR pollutant, a BACT review is performed for each attainment
pollutant that exceeds its PSD significance level as part of new
construction or for modification projects at the source, where there is
a significant increase and a significant net emissions increase of such
pollutant.

In addition to performing BACT, the source must analyze impacts on
ambient air quality to assure that no violation of any NAAQS or PSD
increments will result, and must analyze impacts on soil, vegetation,
and visibility.  In addition, sources or modifications that would impact
Class I areas (e.g., national parks) may be subject to additional
requirements to protect air quality related values (AQRVs) that have
been identified for such areas.  Under PSD, if a source proposes to
locate within 100 kilometers of a Class I area, the Federal Land Manager
is notified and is responsible for evaluating a source’s projected
impact on the AQRV’s and recommending either approval or disapproval
of the source’s permit application based on anticipated impacts.
There are currently no NAAQS or PSD increments established for GHGs, and
therefore these PSD requirements would not apply for GHGs, even when PSD
is triggered for GHGs.  However, if PSD is triggered for a GHG emissions
source, all regulated NSR pollutants which the new source emits in
significant amounts would be subject to PSD requirements.  Therefore, if
a facility triggers review for regulated NSR pollutants that are non-GHG
pollutants for which there are established NAAQS or increments, the air
quality, additional impacts, and Class I requirements would apply to
those pollutants.

The permitting authority must provide notice of its preliminary decision
on a source's application for a PSD permit, and must provide an
opportunity for comment by the public, industry, and other interested
persons.  After considering and responding to comments, the permitting
authority must issue a final determination on the construction permit.
Usually NSR permits are issued by state or local air pollution control
agencies, which have their own permit programs approved by EPA in their
SIP.  In some cases, EPA has delegated its authority to issue PSD
permits to the state or local agency.  In other areas, EPA issues the
permits under its own authority.

D. What are the general requirements of the Title V Operating Permits
Program?

1. Overview of Title V

The operating permit requirements under title V are intended to improve
sources' compliance with other CAA requirements.  The title V program is
implemented through regulations promulgated by EPA, 40 CFR part 70, for
programs implemented by state and local agencies and tribes, and 40 CFR
part 71, for programs generally implemented by EPA.

In summary, the title V program requires major sources (defined and
interpreted by EPA to include sources that emit or have PTE of 100 tpy
of any pollutant subject to regulation) and certain other sources to
obtain operating permits.  Under EPA’s long-standing interpretation, a
pollutant, such as a GHG, is “subject to regulation” when it is
subject to a CAA requirement establishing actual control of emissions.
Title V generally does not add new pollution control requirements, but
it does require that each permit contain all existing pollution control
requirements or “applicable requirements” required by the CAA (e.g.,
New Source Performance Standard (NSPS), and State Implementation Plan
(SIP) requirements, including PSD), and it requires that certain
procedural requirements be followed, especially with respect to
compliance with these requirements.  "Applicable requirements" for title
V purposes include stationary source requirements, but do not include
mobile source requirements.  Other procedural requirements include
providing review of permits by EPA, states, and the public, and
requiring permit holders to track, report, and annually certify their
compliance status with respect to their permit requirements.

2. Title V Permit Requirements

This section provides a brief summary of the requirements of the title V
program that are most relevant to this action.  A source generally must
apply for a title V permit within 1 year of first becoming subject to
permitting – for new sources, this is usually within 1 year of
commencing operation.  The application must include identifying
information, a description of emissions and other information necessary
to determine applicability of requirements and information concerning
compliance with those requirements.  The permitting authority uses this
information to develop the source's operating permit.

Title V permits generally contain the following elements:  (1) emissions
limitations and standards to assure compliance with all applicable
requirements; (2) monitoring, recordkeeping, and reporting requirements,
including submittal of a semiannual monitoring report and prompt
reporting of deviations from permit terms; (3) fee payment; and (4) an
annual certification of certification by a responsible official.  The
detailed requirements are set forth at 40 CFR 70.6.

In addition to the permit content requirements, there are procedural
requirements that must be followed in issuing title V permits, including
(1) application completeness determination; (2) public notice and a
30-day public comment period, including an opportunity for a public
hearing, on draft permits; (3) EPA and affected state review; and (4) a
statement of the legal and factual basis of the draft permit.  The
permitting authority must take final action (issue or deny) on the
permit applications within 18 months of receipt.  EPA also has 45 days
from receipt of a proposed permit to object to its issuance, and
citizens have 60 days after that to petition EPA to object to a permit.
Permits may also need to be revised or reopened if new requirements come
into effect during the permit terms or if the source makes changes that
conflict with, or necessitate changes to, the current permit.  Permit
revisions and re-openings follow procedural requirements which vary
depending on the nature of the necessary change to the permit.

E.  The Interpretive Memorandum

 On December 18, 2008, EPA issued a memorandum, "EPA's Interpretation of
Regulations that Determine Pollutants Covered by Federal Prevention of
Significant Deterioration (PSD) Permit Program" (known as the “Johnson
Memo” or the “PSD Interpretive Memo,” and referred to in this
preamble as the “Interpretive Memo”) that set forth EPA’s
interpretation regarding which EPA and state actions, with respect to a
previously unregulated pollutant, cause that pollutant to become
“subject to regulation” under the Act.  Whether a pollutant is
“subject to regulation” is important for the purposes of determining
whether it is covered under the federal PSD and title V permitting
programs.  The Interpretive Memo established that a pollutant is
“subject to regulation” only if it is subject to either a provision
in the CAA or regulation adopted by EPA under the CAA that requires
actual control of emissions of that pollutant (referred to as the
“actual control interpretation”).  On February 17, 2009, EPA granted
a petition for reconsideration on the Interpretive Memo, and announced
its intent to conduct a rulemaking to allow for public comment on the
issues raised in the memorandum and on related issues.  EPA also
clarified that the Interpretive Memo would remain in effect pending
reconsideration.

On March 29, 2010, EPA published a notice conveying its decision to
continue applying (with one limited refinement) the Interpretive
Memo’s interpretation of “subject to regulation”
(“Interpretation of Regulations that Determine Pollutants Covered by
Clean Air Act Permitting Programs“).  See 75 FR 17004.  EPA concluded
that the “actual control interpretation” is the most appropriate
interpretation to apply given the policy implications.  However, we
refined our interpretation in one respect: we established that PSD
permitting requirements apply to a newly regulated pollutant at the time
a regulatory requirement to control emissions of that pollutant “takes
effect” (rather than upon promulgation or the legal effective date of
the regulation containing such a requirement).  In addition, based on
the anticipated promulgation of the LDVR, we stated that the GHG
requirements of the vehicle rule would take effect on January 2, 2011,
because that is the earliest date that a 2012 model year vehicle may be
introduced into commerce.  In other words, the compliance obligation
under the LDVR does not occur until a manufacturer may introduce into
commerce vehicles that are required to comply with GHG standards, which
will begin with model year 2012 and will not occur before January 2,
2011.  We also reiterated EPA’s interpretation that the 100 tpy major
source threshold for title V is triggered only by pollutants “subject
to regulation” under the Act, and we defined and applied that term for
title V purposes in the same way that we did for PSD purposes.  That is,
we stated that a pollutant is “subject to regulation” if it is
subject to a CAA requirement establishing “actual control of
emissions;” that a pollutant is considered “subject to regulation”
for title V purposes when such a requirement “takes effect.”;”
and, based on the anticipated promulgation of the LDVR, that the GHG
requirements of the vehicle rule would take effect on January 2, 2011.

On April 1, 2010, we finalized the LDVR as anticipated, confirming that
manufacturer certification can occur no earlier than January 2, 2011.
Thus, under the terms of the final notice for the Interpretive Memo,
GHGs become subject to regulation on that date, and PSD and title V
program requirements will also begin to apply upon that date.

IV. Summary of Final Actions

This section describes the specific actions we are taking in this final
rule.  It describes the overall tailoring approach for NSR and title V
applicability, the steps we are taking to put it into place, and future
actions that we commit to take. The next section, V, provides the legal
and policy rationale for these actions.  In that section, we provide a
description of our rationale and response to comments for each action,
presented in the same order as we describe the actions below.

A. How do you define the GHG pollutant for PSD and title V purposes?

1.  GHG Pollutant Defined as the Sum-of-Six Well-Mixed GHGs

We are identifying the air pollutant for purposes of PSD and title V
applicability to be the pollutant subject to regulation, which is the
air pollutant for GHGs identified in EPA’s LDVR, as well as EPA’s
endangerment and contribution findings.  In the LDVR, EPA set emissions
standards under section 202(a) that were “applicable to emission” of
a single air pollutant defined as the aggregate sum of six greenhouses
gases.  The six GHGs, which are well-mixed gases in the atmosphere, are:
 CO2, CH4, N2O, HFCs, PFCs, and SF6.  Earlier, EPA made the contribution
finding for this single air pollutant.

Furthermore, as proposed, we are using an emissions threshold that
allows all six constituent gases to be evaluated using a common metric
– CO2e.  Thus, to determine applicability, a source's GHG emissions
are calculated on a CO2e basis by multiplying the mass emissions of any
of the six GHGs that the source emits by that gas’s GWP and then
summing the CO2e for each GHG emitted by the source.  This sum,
expressed in terms of tpy CO2e, is then compared to the applicable
CO2e-based permitting threshold to determine whether the source is
subject to PSD and title V requirements.

In addition, because we are implementing this phase-in through the term
“subject to regulation” the rule is structured such that the
statutory mass-based thresholds (i.e. 100/250 tpy) and 0 tpy for
modifications at a major stationary source apply and  stationary sources
or modifications that do not meet these thresholds are not subject to
permitting requirements.  While technically evaluation of the mass-based
thresholds is the second step in the applicability analysis, from a
practical standpoint most source are likely to treat this as an initial
screen and not evaluate emissions on a CO2 e basis if they would not
trigger PSD on a mass basis and we have treated it as such in our
descriptions below.  As applicable, a source would evaluate these
mass-based thresholds by summing each of the six GHGs it emits on a mass
basis (i.e., before applying GWP).  We expect that it will be very rare
for a new stationary source or modification to trigger permitting based
on CO2e and not also trigger based on mass alone.

 Determining permit program applicability for the GHG “air
pollutant” by using the sum-of-six GHGs is based on EPA’s
interpretation that the PSD and title V requirements apply to each
“air pollutant” that is “subject to regulation” under another
provision of the CAA.  As discussed previously, the final LDVR for GHGs
makes it clear that the emissions standards EPA adopted are standards
applicable to emission of the single air pollutant defined as the
aggregate mix of these six well-mixed greenhouse gases.  See April 1,
2010 Preamble, II.A.2.c., pp 153-4., and 40 CFR §86.1818-12.  For
reasons explained in more detail in section V, we have determined it is
legally required, and preferable from a policy standpoint, for EPA to
use the same definition of the air pollutant for permitting purposes as
that used in the rule that establishes the control requirements for the
pollutant.  We also believe there are implementation advantages for
applying PSD and title V in this way.  Thus, this rule establishes that
a stationary source will use the group of six constituent gases for
permitting applicability, rather than treating each gas individually.
Similarly, you will include all six constituent gases because that is
how the air pollutant is defined, even though motor vehicles only emit
four of the six.

2.  What GWP values should be used for calculating CO2e?

We are requiring that wherever you perform an emissions calculations
involving CO2e for the purposes of determining the applicability of PSD
or title V requirements, you use the GWP values codified in the EPA’s
GHG mandatory reporting rule [Reference:  Table A-1 to Subpart A of Part
98 – Global Warming Potentials, FR, Vol.74, No. 209, p. 56395].  This
approach will assure consistency between the values required for
calculations under the mandatory reporting rule and for PSD or title V.
In addition, because any changes to Table A-1 of the mandatory GHG
reporting rule regulatory text must go through a rulemaking, this
approach will assure that the values used for the permitting programs
will reflect the latest values adopted for usage by EPA after notice and
comment.

B.  When will PSD and title V applicability begin for GHGs and emission
sources?

Overview

	In this action, we establish the first two phases of our phase-in
approach, which we refer to as steps 1 and 2.  We also commit to a
subsequent rulemaking in which we will propose or solicit comment on
establishing a further phase-in, that is, a step 3, that would apply PSD
and title V to additional sources, effective July 1, 2013, and on which
we commit to take final action, as supported by the record, by no later
than July 1, 2012.

We also commit to undertaking an assessment of sources’ and permitting
authorities’ progress in implementing PSD and title V for GHG sources,
and to complete this assessment by 2015.  We further commit to
completing another round of rulemaking addressing smaller sources by
April 30, 2016.  Our action in that rulemaking would address permitting
requirements for smaller sources, taking into account the remaining
problems concerning costs to sources and burdens to permitting
authorities.  Finally, we determine in this action that we will apply
PSD or title V requirements to sources that emit GHGs, or that conduct
modifications that result in increases in emissions of GHGs, in amounts
of less than 50,000 tpy CO2e any earlier than when we take the required
further action to address smaller sources by April 30, 2016.

Through this process, we will implement the phase-in approach by
applying PSD and title V at threshold levels that are as close to the
statutory levels as possible, and do so as quickly as possible.  The
level and timing of the thresholds that we promulgate in future actions
will be based on our assessment of the resulting costs to sources and
burdens to permitting authorities, and that, in turn, will depend on
such variables as our progress in developing streamlining approaches and
on permitting authorities’ progress in developing permitting expertise
and acquiring more resources.  At this time, we cannot foresee exactly
when or in what manner those developments will occur.  Therefore, we
cannot promulgate more components of the tailoring approach beyond what
we promulgate in this action.  We can say only that we may continue the
phase-in process with further rulemaking after 2016.  Alternatively, we
may make a definitive determination in one of the future rulemaking
actions that, under the “absurd results” doctrine, PSD or title V
applies only to certain GHG sources, and does not apply to the remaining
GHG sources, and with that rulemaking, bring this tailoring process to a
close.

1.  What are the Step 1 thresholds, timing and calculation methodology?

a. PSD Permitting

Step 1 of the tailoring rule phase-in will begin on January 2, 2011.
With respect to the PSD program, GHG sources will become subject to PSD
for their GHG emissions if they undergo PSD permitting anyway, either
for new construction or for modification projects, based on emissions of
non-GHG pollutants, in which case they will be subject to the PSD
requirements for GHG if they increase GHG emissions by 75,000 tpy CO2e
or more.  Under this step, only these sources, which we refer to as
“anyway” PSD sources, will become subject to PSD; no sources will
become major sources for PSD purposes or be treated as undertaking
modifications that trigger PSD based solely on their GHG emissions.  As
a result, no additional PSD permitting actions will be necessary solely
due to GHG emissions.  However, existing or newly-constructed sources
that are determined to be major sources based on non-GHG emissions are
required to conduct a BACT review for their GHG emissions (from new
construction) or emissions increases (from modifications), if they are
subject to PSD due to their non-GHG emissions from construction or
modification actions and each of the following conditions is met:

1)  The GHG emissions (or net emissions increase) due to the new
construction (or modification) project, calculated as the sum of the six
well-mixed GHGs on a mass basis (no GWPs applied) exceed a value of 0
tpy; and

2)  The GHG emissions (or net emissions increase) due to the new
construction (or modification) project, calculated as the sum of the six
well-mixed GHGs on a CO2e basis (GWPs applied) equal or exceed a value
of 75,000 tpy CO2e.

The purpose of the first condition is to determine whether the GHG
emissions or net emissions increase has resulted in an “increase in
the amount” of an air pollutant as required by the Act.  Because EPA
has not defined a mass-based regulatory significance level for GHGs,
that level, in effect, is treated as zero.  See 40 CFR §§ 52.21
(b)(23)(ii) and 51.166 (b)(23)(ii).  In practice, this means any amount
of new emissions or an emission increase will exceed the mass-based
limit.  We are not, at this time, establishing a significance level
based on mass emissions because we have established one based on CO2e
that addresses permitting burdens.  Thus, the mass-based step will be
used only to exclude sources that have no mass increase of GHGs.  At
this time, we are not establishing a significance level on a mass
emissions basis.

b. Title V Permitting

Under step 1, only sources required to have title V permits for non-GHG
pollutants (i.e., “anyway” title V sources) will be required to
address GHGs as part of their title V permitting.  That is, no sources
will become major for title V based solely on their GHG emissions.  Note
further, however, that the 75,000 tpy CO2e limit does not apply to title
V, so that anyway title V sources must apply any title V requirements to
their GHG emissions regardless of the amount of those emissions.
Sources with title V permits must address GHG requirements when they
apply for, renew, or revise their permits.  These requirements will
include any GHG applicable requirements (e.g., GHG BACT requirements
from a PSD process) and associated monitoring, record-keeping and
reporting.  When a permit application is otherwise required, they will
also need to identify GHG emissions and other information in that
application to the extent required under 40 CFR §§ 70.5(c) and
71.5(c), including information necessary to determine applicable
requirements.

2.  What are the Step 2 thresholds, timing and calculation methodology?

a. PSD Permitting

Step 2 will begin July 1, 2011.  Under step 2, anyway PSD sources - that
is, sources already subject to PSD based on non-GHGs and covered under
step 1 above - will remain subject to PSD.  In addition, sources with
the potential to emit 100,000 tpy CO2e or more of GHG will be considered
major sources for PSD permitting purposes (provided that they also emit
GHGs or some other regulated NSR pollutant above the 100/250 tpy (mass
based) statutory thresholds.  Additionally, any physical change or
change in the method of operation at a major source (including one that
is only major due to GHGs) resulting in a net GHG emissions increase of
75,000 tpy CO2e or more will be subject to PSD review and requirements
with respect to GHGs (provided that it also results in an increase of
GHG emissions on a mass basis).

  Specifically, for purposes of determining whether a GHG emission
source undertaking construction is considered a major source under PSD,
the following conditions must be met:

1)  The GHG emissions at a newly constructed source which is not major
for another pollutant, calculated as the sum-of- six well-mixed GHGs on
a mass basis (no GWPs applied):

equal or exceed 100 tpy (in actual emissions or potential to emit) for
sources in any of the 28 major emitting facility source categories
listed under PSD, or

equal or exceed 250 tpy (in actual emissions or potential to emit) for
any other stationary source.

2)  The GHG emissions at a newly constructed source, calculated as the
sum-of-six well-mixed GHGs on a mass basis (GWPs applied) equal or
exceed 100,000 tpy CO2e (on an actual or potential to emit basis).

For determining whether a modification project at a major stationary
source is subject to PSD review, the following conditions must be met:

1)  The net GHG emissions increase resulting from the project,
calculated as the sum of-six well-mixed GHGs on a mass basis (no GWPs
applied) equals or exceeds 0 tpy.

2)  The net GHG emissions increase resulting from the project,
calculated as the sum-of-six well-mixed GHGs on a CO2e basis (GWPs
applied) equals or exceeds 75,000 tpy CO2e.

The purpose of the first condition in both determinations above is to
confirm whether the GHG emissions or emissions increase have exceeded,
on a mass-basis, the statutory major source thresholds (where the source
is not otherwise major) and mass-based statutory significance level for
GHGs, which, as noted above, is 0 tpy.  See 40 CFR § 52.21 (b)(23)(ii)
and 51.166 (b)(23)(ii).

As an example of how the mass-based test would apply, consider a
modification project that results in a 5 tpy increase of GHG emissions
on a mass basis, associated with a high-GWP GHG gas (for example, SF6,
with a GWP value of 23,900), but also results in a 100 tpy reduction in
CO2 emissions (assume no other contemporaneous increases or decreases of
GHG).  In this example, there would be a net decrease of GHG emissions
on a mass basis (5 tpy – 100 tpy = -95 tpy).  Because there is no
mass-based increase of GHG, this project does not trigger PSD, despite
the fact that the net GWP-adjusted emissions increase of SF6 in this
example would equal 119,500 tpy of CO2e and the project would thus
exceed 75,000 tpy CO2e.

b. Title V Permitting

Under step 2, “anyway” title V sources - that is, sources already
subject to title V based on non-GHGs and that are covered under step 1
above - will continue to be subject to title V.  In addition, GHG
emission sources that equal or exceed the 100,000 tpy CO2e threshold
will be required to obtain a title V permit if they do not already have
one.  It is important to note that the requirement to obtain a title V
permit will not, by itself, result in the triggering of additional
substantive requirements for control of GHG.  Rather, these new title V
permits will simply incorporate whatever applicable CAA requirements, if
any, apply to the source being permitted.  The following conditions need
to be met in order for title V to apply under step 2 to a GHG emission
source.

For determining whether a GHG emission source is subject to permitting
under title V:

1)  The GHG emissions at an existing or newly constructed source,
calculated as the sum of the six well-mixed GHGs on a mass basis (no
GWPs applied), equal or exceed 100 tpy (on an actual emission or PTE
basis).

2)  The GHG emissions at an existing or newly constructed source,
calculated as the sum of the six well-mixed GHGs on a mass basis (GWPs
applied), equal or exceed a value of 100,000 tpy CO2e (on an actual
emission or PTE basis)

3.   What about Step 3?

In this rule, EPA establishes an enforceable commitment to complete
another rulemaking no later than July 1, 2012, in which we will propose
or solicit comment on a step 3 of the phase-in and may also consider
other approaches that may result in the permanent exclusion of a
category of sources from PSD or title V requirements, under the Chevron
framework, taking account of the “absurd results” doctrine.

Consistent with our phase-in approach, it is important for us to
consider whether, at some point during the implementation of step 2, it
will become possible to administer GHG permitting programs for
additional sources.  For example, if EPA is able to promulgate measures
that streamline programs to at least some extent, if permitting
authorities increase their resources, or if implementation experience
and more seasoned staff results in more effective use of scarce
permitting resources, then we expect that we will be able to phase-in
the application of PSD and title V to more sources by establishing step
3.  We do not have enough information now to establish a final step 3,
particularly because there will be significant transition occurring in
the GHG permitting programs during steps 1 and 2.  However, we believe
that it will be possible to develop a record on which to base step 3
sometime soon after we begin to implement step 2.

Therefore, we plan to propose a rule in which we solicit comment on or
propose lower thresholds for PSD and title V applicability, and we
establish an enforceable commitment to finalize a rule in which we
address those matters by July 1, 2012.  In order to provide a year for
permitting authorities and sources to prepare for any additional GHG
permitting action in Step 3, we will establish that Step 3 would take
effect on July 1, 2013.  We also commit to explore between now and the
step 3 proposal, a wide range of streamlining options.  In the proposal,
we will take comment on streamlining approaches we think may be viable
(except to the extent we will have already issued guidance documents
concerning streamlining approaches), and we will address those options
in the final rule.

In addition, as part of the step 3 action, we may solicit comment on a
permanent exclusion of certain sources from PSD, title V or both, based
on an “absurd results” rationale.  For example, we may make a final
determination that under the “absurd results” doctrine, PSD and/or
title V do not apply to a set of GHG sources that, although above the
statutory thresholds for those programs, are too small and relatively
inconsequential in terms of GHG contribution.  Another type of such
exclusion for the title V program could be for sources that would
otherwise be required to obtain an “empty permit,” that is, one that
would not contain any applicable requirements because there are none
that apply to the source or any applicable GHG requirements, depending
on the approach taken.  It is possible that in promulgating such an
exclusion, we may conclude that it brings into the PSD and title V
programs the full set of sources that would be consistent with
congressional intent, and, if so, we would find that such a rule brings
the tailoring process to a close.  The application of the “absurd
results” rationale for a permanent exclusion is discussed in more
detail in the next section.

4.  What about the proposed 6 year exclusion for smaller sources?

The tailoring proposal contemplated at least a six-year exclusion from
permitting for small sources.  This proposed exclusion was based on the
overwhelming numbers of permitting actions at small sources and the need
for time for permitting authorities to secure resources, hire and train
staff, and gain experience with GHG permitting for new types of sources
and technologies.  It was also based on the time needed for EPA to
develop, and for states to adopt, streamlining measures to reduce the
permitting burden (e.g., concerning PTE, presumptive BACT, or general
permits,).  We therefore proposed such an exclusion, and proposed that
it would last 6 years – 5 years to complete a required study
evaluating permitting burden and assessing the effect of streamlining
measures or techniques in reducing this burden, plus an additional year
to complete a final rulemaking that would phase in additional sources as
appropriate based on the study.

	We are finalizing the six-year exclusion, and for reasons described
below, are establishing that in no event will sources below 50,000 tpy
CO2e be subject to PSD or title V permitting during the 6-year period,
nor will modifications be subject to PSD unless they increase emissions
by 50,000 tpy CO2e or more.  The exclusion will last until we take the
action described later to address smaller sources, which is required by
April 30, 2016.  The exclusion provides certainty that, before this
date, EPA will not act to cover sources and modifications below these
thresholds, including during the required step 3 rulemaking that will
occur in 2012.  In effect, this means that step 3 will establish a major
source threshold and significance level no lower than 50,000 tpy CO2e.
This does not necessarily mean we will cover sources below this level on
April 30, 2016.  It simply means that the provision we are adopting
would assure that EPA does not cover such sources any sooner than that.

5.  When and how will EPA take further action on smaller sources?

As we proposed, we are establishing an enforceable commitment to act
within 5 years to complete a study projecting the administrative burdens
that remain for small sources after permitting authorities have had time
to secure resources, hire and train staff, and gain experience with GHG
permitting for new types of sources and technologies, and after EPA has
had time to develop (and states have had time to adopt) streamlining
measures to reduce the permitting burden for such sources.  We will use
this study to serve as the basis for an additional rulemaking that would
take further action to address small sources.  Similar to the
enforceable commitment to act on step 3, we are making an enforceable
commitment to complete this rulemaking by April 30, 2016,

We cannot predict at this time what form that final action will take.
It could function as a step 4, bringing in additional sources based on,
for example, streamlining actions, increased permitting authority
resources, and experienced and more efficient permitting staff; and it
could further indicate that we intend to follow-up with a step 5 to
bring in more sources.  Alternatively, it could also function as a final
step excluding certain sources permanently based on our application of
the Chevron framework, taking account of the “absurd results”
doctrine, and subjecting the remaining sources to permitting.  However,
whatever final action we take would explain any necessary changes to the
step 3 thresholds and would supersede the 6-year exclusion for sources
and modifications below 50,000 tpy CO2e.

C.  How do state, local and tribal area programs adopt the final GHG
applicability thresholds?

We are finalizing our proposed approach to change the definition of
“major stationary source” in the PSD implementing regulations, and
the “major source” definition in the title V implementing
regulations to tailor the application of these permitting programs to
GHG emissions.  We also finalize a significance level for GHG emissions
for purposes of defining a major modification under the PSD program, and
add an exclusion from PSD and title V permitting for GHG emissions,
until we complete a rulemaking required by April 30, 2016, for any
sources that are not already subject to PSD and title V permitting and
that emit less than 50,000 tpy of CO2e.

	As explained earlier, we are adopting thresholds that phase in the
applicability of GHG permitting over a specified time period.  In
adopting regulatory changes to implement these thresholds, we follow an
approach that is substantively the same as the approach proposed, but
takes a slightly different form.  Specifically, we are explicitly
codifying the phrase “subject to regulation” in our implementing
regulations, instead of revising the “major stationary source” and
“major source” definitions by incorporating the tailoring rules
numerical thresholds directly into the definitions.  Under this
mechanism, we interpret the term “subject to regulation” so that GHG
emissions from sources above the threshold are treated as subject to
regulation, and therefore the sources that emit them are subject to PSD;
while GHG emissions from sources below the threshold are not treated as
subject to regulation, and therefore the sources that emit them are not
subject to PSD.  We are finalizing this alternative regulatory approach
to facilitate rapid adoption and implementation of the final rules by
states.  These states would be able to establish their interpretation of
“subject to regulation” by January 2, 2011, which is the date that
the tailoring rule would take effect, and thereby, at that time, exempt
sources below the threshold from PSD as a matter of both federal and
state law.  We are also finalizing this definition consistent with our
statements in our recent action “Reconsideration of Interpretation of
Regulations that Determine Pollutants Covered by Clean Air Act
Permitting Programs” (75 FR 17704) to better inform readers of our
existing interpretation of this phrase as it applies to all air
pollutants.  States may not need to undertake a regulatory or
legislative action before implementing the final rule.

Because we finalize the rule in a manner that will allow most states to
rapidly adopt and implement the final rule, and because our recent
action on the Interpretive Memo allowed for a longer transition time
than we anticipated at proposal, we are delaying final action on our
proposal to issue limited approvals for SIP-approved PSD programs and
part 70 operating permit programs.  Instead, we are requesting that
states submit information to the appropriate Regional Administrator by
[INSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER] so that
we may determine whether it is still necessary to finalize any of our
proposed limited approvals for any SIP-approved PSD and Part 70 title V
state programs.  In that letter, states should explain whether they will
adopt EPA’s regulatory interpretation of the term “subject to
regulation” in implementing both their PSD and part 70 title V
permitting programs, and if so, whether the state intends to adopt the
interpretation without undertaking a regulatory or legislative process.
If a state must revise its statutes or regulations to implement the
interpretation, we ask states to provide an estimate of the time to
adopt final rules in its letter to the Regional Administrator.  If a
state chooses not to adopt our interpretation, the letter should address
whether the state has alternative authority to implement the final
rule’s tailoring approach or some other approach that is at least as
stringent, but which also addresses the expected shortfalls in personnel
and funding that would exist if the state carried out permitting at
thresholds lower than those in the final rules.  For any state that is
unable or unwilling to adopt the permitting thresholds in the final
rules, and otherwise is unable to demonstrate adequate personnel and
funding, or alternate authority to permit GHG emissions sources
consistent with the final rules, EPA will move forward with finalizing a
limited approval of the state’s permitting program.  By the same
token, if we do not receive a letter from a state in response to this
request by [date], we will be obliged to move forward with finalizing a
narrowing of our approval of the existing SIP.

We also ask any state that currently lacks authority to issue PSD or
title V permits to any GHG emissions sources to notify the Regional
Administrator by letter as to whether the state intends to undertake
rulemaking to revise their rules consistent with these applicability
thresholds.  For any state that lacks the ability to issue PSD or title
V permits for GHG emissions sources consistent with the final rule, we
will undertake a separate action to call for revisions to these
programs.  We will also move quickly to impose a FIP for PSD through 40
CFR section 52.21, and use our federal title V authority to ensure that
GHG sources will be permitted consistent with the final rules.  Our
request for information from states is discussed further in section V.C.

D.  How do you treat GHGs for title V permit fees?

We are not amending the title V regulations for fees at this time,
including any of the provisions specifying the presumptive minimum fee.
We are also not, at this time, calling for each state, local or tribal
program to submit new fee adequacy demonstrations as a result of
increased GHG permitting workload during steps 1 and 2.  However, as
described in section VI.D the statutory and regulatory requirement to
collect fees sufficient to cover all reasonable (direct and indirect)
costs required to develop and administer title V programs still applies.
 Therefore we are recommending that each program review its resource
needs for GHG-emitting sources and determine if the existing fee
approaches will be adequate.  If those approaches will not be adequate,
we suggest that state, local and tribal agencies should be proactive in
raising fees to cover the direct and indirect costs of the program or
develop other alternative approaches to meet the shortfall.  We will
closely monitor approved title V programs during the first two steps of
the Tailoring Rule to ensure that the added workload from incorporating
GHGs into the permit program does not result in fee shortfalls that
imperil operating permit program implementation and enforcement.  In
developing alternative approaches, we note the value of approaches that
do not require a per-ton fee for GHG and therefore do not require a GHG
inventory to develop.  Finally we offer to work with permitting
authorities that request our assistance with developing fee approaches,

E.  Other Actions and Issues

This section describes other actions we intend to take in the future
related to GHG permitting in addition to the actions that we are
promulgating with this final rule.  This section also responds to
commenters’ suggestions that we undertake additional actions in this
rule, which we decline to do.

1.  Timing for Permit Streamlining Techniques

As described at proposal, we intend to develop a series of streamlining
approaches as an integral part of our phase-in approach.  The approaches
we described at proposal included:  (1) defining PTE for various source
categories, (2) establishing emission limits for various source
categories that constitute presumptive BACT, (3) establishing procedures
for use of general permits and permits-by-rule, (4) establishing
procedures for electronic permitting, and (5) applying lean techniques
to establish more efficient permitting processes.  Taken as a whole,
these techniques will obviate the applicability of PSD and title V
requirements for some GHG-emitting sources; promote more efficient
treatment of GHG-emitting sources that will already be subject to PSD
and title V; and allow the expeditious expansion of PSD and title V
applicability to more GHG-emitting sources while protecting those
sources and the permitting authorities from undue expenses.

As a result, we fully intend to move forward expeditiously with these
approaches.  However, for reasons discussed in section VI.E, we do not
expect to develop and implement any of these approaches before step 2
begins.  Moreover, we generally expect that each of the first three –
which are the most far-reaching -- will take several years to implement
because we will need to undertake notice and comment rulemaking to
develop them, and then the permitting authorities will need to adopt
them through the appropriate state or local processes.  We commit to
explore a wide range of possible approaches before the step 3
rulemaking, and, in that rulemaking, to propose those that we think may
be viable once we have had time to gather and review key supporting
data, and once the states and we have key implementation experience that
can inform our thinking.  Because the streamlining approaches generally
carry uncertainty - as demonstrated by comments we received raising
legal and policy concerns, as discussed below, that we will have to
address - we are not committing with this action to adopt streamlining
actions on any particular schedule.  However, we intend to pursue all
streamlining options as expeditiously as possible, beginning immediately
and proceeding throughout the phase-in period, and we encourage
permitting authorities to do the same.

2.  Guidance for Best Available Control Technology Determinations

Through this final rule we are not amending our regulations or issuing
guidance on BACT for GHGs.  As described in our proposal, we recognize
the need to develop and issue technical and policy guidance for
permitting of GHGs, and we plan to accomplish it through a separate
effort that will involve stakeholder input.  This effort is already
underway; in addition to comments EPA received on the proposed Tailoring
Rule related to GHG BACT guidance and information needs, EPA received a
suite of recommendations from the Clean Air Act Advisory Committee
(CAAAC) to which EPA is actively responding.  This includes technical
guidance and database tools that EPA anticipates issuing by June 2010,
and policy guidance that will be issued by the end of 2010.  Thus, this
important information will be available to support permitting agencies
in their BACT determinations at the time that the GHGs become a
regulated NSR pollutant, once the light-duty vehicle rule takes effect
in January 2011.  EPA is confident that these measures will help support
a smooth transition to permitting emissions of GHGs.

3.  Requests for Higher Category-Specific Thresholds and Exemptions from
Applicability

   EPA has decided not to provide exemptions from applicability
determinations (major source and major modification) under title V and
PSD for certain GHG emission sources, emission activities, or types of
emissions at this time.  Commenters requested several applicability
exemptions with respect to GHGs from, for example, agricultural sources,
residential sources, small businesses, energy-intensive industrial
processes (e.g., aluminum, steel, cement, glass, and pulp and paper
manufacturers), lime production, semiconductor production, poultry
production, solid waste landfills, biomass combustion/biogenic
emissions, fugitive emissions, and pollution control projects.  For
reasons explained in section VI.E, we have decided to address the need
for tailoring through a uniform threshold-based approach, rather than
through a collection of various specific exclusions.

4.  Transitional Issues including Requests for Grandfathering

For reasons explained in section V.E, EPA has determined that
transitional issues for pending applications and permitted sources are
adequately addressed by existing requirements and the amount of lead
time provided before permitting requirements apply to GHGs under this
rule and the April 2, 2010 final action regarding the Interpretive memo.
 This rule does not contain any additional exemptions or grandfathering
provisions addressing the transition to PSD and title V permitting for
GHGs.

We are not promulgating an exemption for PSD permit applications that
are pending when step 1 of the permitting phase-in begins for those
sources that would otherwise need to obtain a PSD permit based on
emissions of pollutants other than greenhouse gases.  Any PSD permits
issued to Phase 1 sources on or after January 2, 2010 will need to
address GHGs.  This action makes no change to the position we expressed
on this issue on April 2, 2010.

 	Final PSD permits issued before January 2, 2011 need not be reopened
or amended to incorporate requirements for GHGs that take effect after
the permit is issued.  A source that is authorized to construct under a
PSD permit but has not yet begun actual construction on January 2, 2011
may begin actual construction after that date without having to amend
the previously-issued PSD permit to incorporate GHG requirements,
provided the permit has not expired.

Sources that are not subject to PSD permitting requirements until Step 2
need not obtain a PSD permit addressing GHGs in order to continue any
actual construction that begins before July 1, 2011, when such a source
was not a major stationary source required to obtain a PSD permit.
However, Phase 2 sources that begin actual construction in phase 2 may
do so only after obtaining a PSD permit.

The title V permitting regulations already include a robust set of
provisions to address the incorporation of new applicable requirements
and other transitional considerations.  A title V source applying for
the first time must submit its permit application within 12 months after
the source becomes subject to the operating permit program or an earlier
time at the discretion of the permitting authority.  Where a source is
required to obtain a PSD permit, the source must apply for a title V
permit or permit revision within 12 months of commencing operation or on
or before such earlier date as the permitting authority may establish.
Where additional applicable requirements become applicable to a source
after it submits its permit application, but prior to release of a draft
permit, the source is obligated to supplement its application.  In
addition, where a source that already has a title V permit becomes
subject to additional applicable requirements, the permitting authority
is required to reopen the permit to add those applicable requirements if
the permit term has three or more years remaining and the applicable
requirements will be in effect prior to the date the permit is due to
expire.

V.  What is the legal and policy rationale for the final actions?

In this section, we describe the legal and policy rationale for our
action, including our rationale for the following:  (A) our approach to
calculating GHG emissions for PSD and title V applicability purposes,
(B) our approach to establishing the thresholds and timing of PSD and
title V applicability to GHG emissions sources; (C) how state, local,
and tribal area programs adopt the final GHG applicability thresholds;
(D) treatment of GHGs for title V permit fees; (E) future activities,
including streamlining actions.  We present the rationale description in
five subsections below, corresponding to presentation of the approach in
section V.

A.   Rationale for Our Approach to Calculating GHG Emissions for PSD and
Title V Applicability Purposes

1.   Grouping of GHGs into a Single Pollutant

	In this section, we explain our treatment of the air pollutant at issue
for purposes of PSD and title V, such that sources that emit that
pollutant in the requisite quantities become subject to PSD and/or title
V requirements.  We explain our rationale for treating the GHG air
pollutant as a combined group of six greenhouse gases instead of six
separate air pollutants defined by each individual greenhouse gas, and
our rationale for including all six of the GHGs in that group.  We also
define the GHG metric to use for comparison to the applicability
thresholds.

	We proposed to identify the air pollutant as the aggregate group of
these six GHGs, and to use a GHG metric for the applicability thresholds
based on CO2e.  The summed CO2e emissions would then be compared to the
applicable permitting threshold to determine whether the source is
subject to PSD and title V requirements.  Historically, the PSD and
title V regulatory provisions do not, in the first instance, define the
“air pollutant” to which they apply, but rather rely for the
definition of the pollutant on a cross-reference to the regulatory
provision under another part of the Act that establishes the emission
standards or limits for that pollutant that in turn causes the pollutant
to be subject to regulation under PSD and title V permitting.  As an
example, the pollutant ‘total reduced sulfur’ (TRS) is a pollutant
comprised of the sum of multiple compounds that was originally defined
under the NSPS, Subpart BB, Standards of Performance for Kraft Pulp
Mills, which then caused it to be subject to regulation under the PSD
program.  The actual compounds that define the pollutant TRS are
identified in the NSPS.  The PSD program regulations did not introduce
its own independent definition of TRS, but instead relied on the
definition as contained in the Kraft Pulp Mills NSPS.

However, at the time of our proposal, the endangerment and cause or
contribute findings had not been completed and the LDVR for GHGs, had
not been finalized.  Thus there was no final agency action defining how
GHGs were to be considered “subject to regulation”.  Absent a
definition of “greenhouse gases” under another regulatory provision
that we could cross-reference, we proposed to define “greenhouse
gases” for permitting purposes as “the single air pollutant that is
comprised of the group of six GHGs, as proposed in the [CAA] section
202(a) endangerment and contribution findings.”  74 FR 55,329, col. 1.
 The six well-mixed GHGs identified in the proposed contribution finding
were: CO2, CH4, N2O, SF6, HFCs, and PFCs.

 In the proposal, we further recognized that the LDVR for GHGs, as it
was proposed, would result in reductions of only four of the gases, not
all six, because only four are emitted by vehicles.  However, we
concluded that if the LDVR were finalized as proposed, then the air
pollutant for purposes of PSD and title V applicability would be a
single air pollutant that is the aggregate mix of the group of six GHGs
because –

[t]hese six GHGs as a class comprise the air pollutant that is the
subject of the endangerment finding and companion contribution finding
and constitute the air pollutant that is regulated by the light-duty
vehicle rule through measures that address the components of that air
pollutant that are emitted from the mobile sources.  Thus, although the
CAA section 202(a) proposal establishes controls only with respect to
four GHGs, as a legal matter, the proposal covers the entire set of GHGs
that as a class are the single “air pollutant” in the proposed
endangerment and contribution findings.

74 FR 55,329 col. 1.

 We also solicited comment on whether we should identify the GHG metric
in a different way, such as addressing each GHG constituent compound
individually or including (whether individually or as a group) only
those four GHG constituent compounds for which reductions would occur
through the emission standards or limits proposed in the LDVR.

A majority of the proposal comments did not speak to or show a
preference for or against grouping the six well-mixed GHGs for the
purposes of determining applicability under the PSD and title V
programs.  Of those commenters that specifically support the combining
of the individual GHGs as one pollutant for purposes of determining
permitting applicability, they stated that it is not uncommon for EPA to
recognize ‘collective’ air pollutants comprised of many individual
compounds based upon shared threats to health and welfare, including
such EPA-created group pollutants as sulfur oxides, nitrogen oxides,
volatile organic compounds (VOCs), and particulate matter (PM).

A smaller but significant number of commenters opposed the grouping of
the individual GHGs into one metric.  Some of these commenters argued
that grouping GHGs is not appropriate because GHGs are not like other
air pollutants that are comprised of numerous substances of concern
(e.g., VOCs and PM), individual GHGs do not interact or combine to
create a pollutant of concern, and EPA has not established a ‘GHG’
NAAQS that supports the definition of the pollutant as a group.  Some
were concerned that regulating as a group would increase the likelihood
that a source will trigger permitting requirements, adding that this is
unnecessary and would conflict with the “absurd results” and
“administrative necessity” doctrines because it would lead to larger
numbers of sources subject to permitting.  Some commenters opposing
grouping suggested that we should explore regulating each of the GHG
pollutants on an individual mass basis rather than collectively.  One
commenter added that, in their view, it is reasonable and feasible to
regulate and control emissions of each of the listed pollutants, other
than carbon dioxide, at the 100/250 tpy thresholds, or less if deemed
necessary, in accordance with the established mechanisms of the Act.
Finally, some commenters argued that disaggregating the pollutants would
also allow for more appropriate technology review.

	After considering these comments, and taking into account other related
actions that have occurred since proposal, we have determined that PSD
and title V permitting program requirements will apply, as proposed, to
the “single air pollutant that is comprised of the group of six
GHGs.”  74 FR 55,329, col. 1.  We believe that this approach is both
compelled by the statute and reflects the preferable policy approach.
As more fully discussed elsewhere in this package, under the plain
language of section 169(1) PSD a major emitting facility is one that
emits 100 or 250 tons of “any air pollutant.”  Through regulation we
have reasonably limited the scope to this provision to those tonnages of
any “regulated NSR pollutant,” which includes any pollutant that is
“subject to regulation under the Act.”  40 CFR 52.21(b)(50)(iv).
This same limitation exists in the definition of major modification and
BACT.  See 52.21.(b)(2),(  ).  This regulatory limitation reflects the
statutory directive that BACT is required for “each pollutant subject
to regulation under this chapter.”  42 USC 7475 (a)(4).

Based on these provisions, the sole question in determining what a BACT
analysis must cover is what pollutant is “subject to regulation.”
This phrase caries with it no suggestion that the Agency may subdivide
or otherwise change a pollutant that is regulated elsewhere in the Act.
Instead, it carries with it a dictate that BACT be applied to the air
pollutant which the Administrator has determined elsewhere to regulate.
As described below, this air pollutant, in the cases of GHGs, is the
aggregate mix of the six constituent gases identified in the
contribution finding, which led to the promulgation of the LDVR, and is
the air pollutant that the various LDVR emission standards address.
This same logic regarding the definition of a pollutant “subject to
regulation” applies to the determination of whether a source is a
major stationary source of a “regulated NSR pollutant.”  Thus, we
also read the definition of major emitting facility at CAA 169 to be
guided by the same requirement to defines the “regulated NSR
pollutant” that is “otherwise subject to regulation” to be the
same air pollutant that is actually regulated elsewhere under the Act.
If, as here, that regulation considers the aggregate emissions of
several compounds to be a single air pollutant, the same single air
pollutant is a regulated NSR pollutant.  As noted above, the statutory
definition of major emitting facility covers “any pollutant.”  As
the LDVR and associated contribution finding have defined the aggregate
group of the six greenhouse gases to be the single “air pollutant”,
they must be considered as such in determining if “any pollutant” is
emitted above the provided thresholds.

Since the time of our proposal, both the contribution finding and the
LDVR for GHGs have become final.  The final LDVR for GHGs specifies, in
the rule’s applicability provisions, the air pollutant subject to
control as the aggregate group of the six GHGs, including CO2, CH4, N2O,
SF6, HFCs, and PFCs.   The applicability provision in the LDVR now
provides us a clear reference to the definition of the single pollutant
comprised of the aggregate group of the six well-mixed GHGs and affirms
that PSD and title V applicability should use sum-of-6 GHG construct for
applicability.  Based upon the previous analysis, we must follow this
construct of the aggregate group of the six gases and do not have
discretion to interpret the GHG ‘air pollutant’ differently for the
purposes of PSD permitting.

This construct of the pollutant as the aggregate group of the six gases
is also consistent with the definition of the air pollutant in the final
contribution finding for GHGs [see 74 FR 66496, 66499, 66536-7 (December
15, 2009)].  In the final contribution finding the Administrator defined
the air pollutant for contribution finding as the “aggregate group of
the same six… greenhouse gases” (see specifically, 74 FR 66536).
The well-mixed greenhouse gases are defined under the final contribution
finding as these six greenhouse gases:  CO2, CH4, N2O, SF6, HFCs, and
PFCs.  Again, these six GHGs as a class comprise the air pollutant that
is the subject of the contribution finding and therefore are the single
air pollutant that is regulated by the LDVR through measures that
address the components of that air pollutant that are emitted from the
mobile sources.  For these reasons, the pollutant “subject to
regulation” is the aggregate group of the six and we feel compelled to
use this combined pollutant for purposes of regulation under the PSD
program.

Similarly, for title V, "major stationary source" status under CAA
sections 501(2)(B) and 302(j) is triggered by the emissions of the
requisite amount of "any air pollutant . . . . ."  Further, as discussed
in more detail elsewhere in this rulemaking, EPA interprets this trigger
to apply to any air pollutant "subject to regulation."  See Johnson Memo
Reconsideration.  As noted above, EPA has treated the aggregate group of
six greenhouse as the "air pollutant" regulated under the Act.  Thus,
the aggregate group constitutes the "air pollutant" for title V
applicability purposes.

Moreover, even if we had discretion to approach the air pollutant
differently in the permitting programs, we would choose not to, for the
same reasons we adopted the single air pollutant approach in the
contribution finding, and for additional considerations noted below
specific to the permit programs.  Congress provided EPA broad discretion
to determine, as an initial matter, an appropriate combination of air
pollutant agents that should be treated as a single air pollutant.  As
noted in the contribution findings, the important common attributes
shared by the six greenhouse gases are that each (see 74 FR
66516-66518):

Is directly emitted (not formed by secondary processes in the
atmosphere)

Is long-lived in the atmosphere after they are emitted

Is sufficiently long-lived the greenhouse gas that it becomes
“well-mixed,” which means that its concentration is essentially
uniform in the atmosphere (as opposed to having significant
local/regional variation)

Has well understood atmospheric properties (e.g., radiative forcing)

In addition, grouping the six greenhouse gases is consistent with the
focus of climate science—their effects are considered as a group in
the Intergovernmental Panel on Climate Change (IPCC) reports (i.e., the
IPCC reports assess the climate change effects on health, society, and
the environment as a result of human-induced climate change driven by
the group of GHGs).  It is also consistent with the focus of climate
policy—the United Nations Framework Convention on Climate Change
(UNFCCC) requires reporting of these six gases; the commitments under
the UNFCCC and Kyoto Protocol are based on the combined emissions of
these six gases.  Finally, it is standard practice to compute the
“carbon dioxide (CO2) equivalency” of aggregate emissions using
GWPs.  All of these common attributes and factors are relevant to the
air pollution for which GHGs are agents—in other words, they are all
related to increased atmospheric concentrations of the mix of six GHGs
and climate change science and policy.  Thus, they are a reasonable
basis upon which to decide that it is appropriate to define the air
pollutant as the combination of these six GHGs that share these
attributes.

We disagree with commenters who argued that grouping all six GHGs is not
appropriate because GHGs are not like other air pollutants that are
comprised of numerous substances of concern (e.g., VOCs and PM).  First,
as noted above, we are following the approach to a single air pollutant
comprised of the aggregate of the six greenhouse gases initially adopted
in the contribution finding and followed in the LDVR.  Many of these
same comments have already been addressed in the contribution finding
and response to comments document, which is included in the RTC for this
action, and those responses apply equally here.

In addition to the reasons described in the endangerment and
contribution findings, there are CAA permitting programmatic and policy
advantages to using the GHG air pollutant for permitting applicability.
We believe now, as we did at proposal, that the benefits in using the
cumulative group of GHGs outweigh any implementation advantages to using
an individual-GHG-based metric.  We recognize a number of advantages in
the use of aggregate construction of the GHG metric, including that it:
(1) could allow significantly more flexibility to sources for designing
and implementing control strategies that maximize reductions across
multiple GHGs and would also likely align better with possible future
regulations that allow for such flexibility; (2) could more effectively
support possible future offsets or trading mechanisms that involve
different source categories and different compositions of GHG emissions;
 and (3) could better accommodate and harmonize with future regulations
by having one pollutant class that includes any of the components of
which may become subject to specific emission standards under future
regulatory efforts.

We disagree with commenters who believe that by aggregating the GHGs
under one GHG metric for permitting applicability purposes would lead to
an excessive amount of source permitting activity.  This is because the
phase-in approach addresses overwhelming permitting burdens associated
with permitting of greenhouse gases.  It does so by designing our
applicability thresholds to allow for a manageable amount of new
permitting actions based on the emissions from sources using the
sum-of-6 metric.  If we based it on individual gases, (assuming we were
not compelled to follow the LDVR), we would still need to determine what
level of permitting is manageable and appropriate based on thresholds on
an individual gas basis and would expect that the final rule would
result in the same levels of remaining burden based on the
administrative necessity and the absurd results concepts.  Accordingly,
unless the permitting program were being implemented at the statutory
thresholds, the effect of a decision to aggregate or not aggregate would
not reduce workload; it would simply shift work from permitting
facilities that trigger based on combined GHGs to those that trigger
based on individual GHGs.  Although we acknowledge that this would
affect applicability for a particular source, we disagree with the
commenter that doing so would conflict with the absurd results or
administrative necessity doctrines.  In light of limited resources, by
using a consolidated and weighted measurement we are able to direct
these limited resources to those new sources and modifications with the
greatest impact on GHG emissions.

We also believe that the additional flexibility resulting from the
sum-of-six GHG metric will provide substantially more opportunities for
sources to address emission increases of GHGs than they would have had
under an individual gas based metric, possibly reducing their permitting
burden through multi-gas mitigation strategies.  We disagree with the
comment that isolating control technology review on a single GHG leads
to better results than a combined review for all six gases.  To the
contrary, given that Congress built in considerations of energy,
environmental, and economic impacts into the BACT requirement, we think
that allowing consideration of those factors across six gases will
likely result in decisions that more appropriately account for those
impacts at the source.

2.  Identifying Which GHGs are Included in the Group

Most commenters did not raise any issues or propose alternatives to the
use of the proposed GHG metric as it relates to inclusion of all six
well-mixed GHGs.  We did receive some comments that explicitly supported
the inclusion of all six of the well-mixed GHGs identified in the GHG
metric for determining applicability.  Those in support of including all
six of the well-mixed GHGs in the threshold metric cite the same reasons
they provided in support of grouping the individual GHGs together:
namely, the final contribution findings that identify the pollutant as
“the combined mix of six key, directly emitted, long-lived and
well-mixed greenhouse gases”.  See 74 FR, 66496, 66516, 66,536 (Dec.
15, 1990).  They also emphasize that EPA, in order to protect the
public, has to control all the greenhouse gases it has regulated and
reduce the overall impact of the mix of six greenhouse gases.

However, a substantial number of commenters, mainly from industry
sectors who also disagreed with grouping the GHGs together, contend that
only the constituent gases that are actually subject to controls under
the LDVR should be included in determining applicability under the
Tailoring Rule.  Some of these commenters believe that only the three
compounds (CO2, CH4, N2O) for which the LDVR contains emissions
standards or caps should be considered in the GHG metric for permitting,
while others would also add HFCs (which are included in a credit
flexibility arrangement under the LDVR) for a total of four GHGs.  Such
commenters argued that PSD is not triggered for all six GHGs by the LDVR
because under the proposed PSD interpretation in “EPA’s
Interpretation of Regulations that Determine Pollutants Covered by
Federal Prevention of Significant Deterioration (PSD) Permit Program”,
actual emission controls under the Act are required to trigger PSD
obligations for a given pollutant.  They also argued that including all
six would conflict with the “absurd results” and “administrative
necessity” doctrines because it would lead to larger numbers of
sources subject to permitting, increasing the harm that EPA says it
wants to avoid, and further asserted that the EPA cannot both widen the
scope of the applicability to six GHGs at its discretion and rely on
these judicial doctrines, which apply only where the EPA has availed
itself of all reasonable discretion to minimize the harm

There were a few comments on whether to include specific gases as part
of the sum-of-six grouping.  Several commenters representing sectors
that have significant SF6 usage specifically argue that SF6 should not
be included as a GHG, at least at this time, because there are no known
SF6 controls, it is not clear how PTE would be calculated from such
facilities, and EPA has not addressed the economic burden that
regulation of these facilities would create.  A solid waste industry
commenter asserts that the Tailoring Rule should confirm that CH4 and
N2O will not be regulated under PSD or title V because these pollutants
are only emitted in miniscule amounts from automobiles.

	We disagree with commenters who suggest that the LDVR for GHGs
constrains EPA’s authority to regulate only the four individual GHGs
emitted by motor vehicles.  The fact that the LDVR standard for the
single air pollutant that is comprised of the aggregate of six
greenhouse gases consists of individual standards for particular
constituents of the single air pollutant -- emissions limits or caps for
three GHGs (CO2, CH4, and N2O) and an emission crediting option for one
GHG (HFCs) -- does not dictate that only those four compounds are
subject to regulation for permitting purposes.  Although the LDVR may
result in reductions only with respect to four specific GHGs, as a legal
matter the LDVR standard covers the entire set of GHGs that as a class
are the single “air pollutant” in the contribution finding.  Similar
to our rationale for addressing the group of six GHGs as one pollutant
for PSD and title V applicability purposes, we must adhere to the
definition of applicability, cited previously, in the final LDVR for
GHGs and include CO2, CH4, N2O, SF6, HFCs, and PFCs.  We do not have
discretion to select only a subset of these gases in defining our GHG
threshold metric for the permitting applicability purposes.  Also, see
discussion at III.B.2, and in EPA’s LDVR concerning its exercise of
discretion under section 202(a) in setting emissions standards
applicable to emission of the single air pollutant.  [April 1, 2010
Preamble, II.A.2.c, pp 153-4.]

For the same reasons we disagree that this approach is inconsistent with
the Agency’s final action in “EPA’s Interpretation of Regulations
that Determine Pollutants Covered by Federal Prevention of Significant
Deterioration (PSD) Permit Program.”  While it is the case, that only
four constituent gasses are reduced by the LDVR, the pollutant that is
controlled, and thus “subject to regulation” is the group of six.

We also disagree with commenters that suggested including all six GHGs
in determining permitting applicability would conflict with our
“absurd results” and “administrative necessity” bases for the
phase-in periods and applicability thresholds for GHGs.  Even if we did
have discretion to address a subset of the six well-mixed GHGs, we do
not believe that the exclusion of some gases is necessary to address
administrative necessity concerns or to avoid an absurd results
scenario.  For our final action, we are phasing-in applicability
thresholds based on the sum of all six well-mixed GHGs that are fully
consistent with both the administrative necessity and absurd results
arguments that we base our tailoring action on.  We have carefully
developed these thresholds based on a consistent definition of the
pollutant with the LDVR GHG and to avoid creating an overwhelming number
of permitting actions that would be unmanageable for permitting
authorities and sources.  Moreover, the solution offered by commenters
– regulating four rather than six gases – would make little
difference in addressing overwhelming permitting burdens.  The number of
additional permitting actions and amount of additional permitting burden
resulting from including all six GHGs, rather than four, in the
definition is minimal.  The administrative burden of GHG permitting is
dominated by CO2 and CH4 emission sources.  For example, with a major
source threshold set at 100,000 tpy CO2e, the combined population of
sources that would be major for N2O, HFCs, PFCs, and SF6 accounts for
fewer than two percent of the GHG sources that would remain covered.

For similar reasons, we disagree with commenters who specifically
suggest SF6 emissions should not be included in the applicability metric
for GHGs.  As we have stated earlier in this section, our selection of
the GHG metric is driven by the definition of the air pollutant as
defined in the LDVR, and in consideration of the final GHG endangerment
finding.  SF6 is specifically included as one of the ‘well-mixed
greenhouse gases” in the definition of air pollutant in the
contribution finding, and is included in the definition of the air
pollutant in the LDVR for which that rule is applicable.  We cannot
identify different subsets of individual GHGs for different source
categories.  Moreover, including SF6 emissions based on the thresholds
finalized in this rulemaking does not add an excessive administrative
burden for permitting authorities; based on our threshold evaluation
study we estimate that less than 40 sources of SF6 nationwide would
exceed the 100,000 tpy CO2e threshold.  Furthermore, specifically with
respect to high GWP gases, as discussed elsewhere, we have included a
mass-based trigger that will likely have the effect of further reducing
this count.  We believe that the inclusion of these SF6 sources is
entirely consistent with the definition of the air pollutant subject to
regulation, as based on the LDVR definition for applicability and
described above, and there is no basis for exclusion of these sources
due to administrative necessity concerns or absurd result arguments.
Similarly, we disagree with the commenters who suggest we include black
carbon and other short-lived climate forcers to the list of GHGs and
those asking for an exclusion of CH4 and N2O.  The definition of the air
pollutant, as cited in the LDVR, includes CH4 and N2O and does not
include black carbon or other short-lived gases.

3. Determining What GWP Values are to be Used

	Numerous commenters expressed concerns about the proposal to link the
calculation of CO2e for GHGs to GWP values in (see, e.g., proposed 40
CFR 51.166(b)(58)) EPA’s “Inventory of U.S. Greenhouse Gas Emissions
and Sinks” because that document may change from year to year.
Representative comments include the following:

It is important to ensure that all permitting agencies are using the
same calculations for the determination of CO2e for GHGs.  Use of
EPA’s document, which is updated annually, should address this issue,
provided this information is provided in annual guidelines for
permitting agencies.

The EPA should follow the proper notice and comment procedures and the
requirements of the Information Quality Act (IQA) for the relevant
technical underpinnings of the proposal.  The EPA relies upon the GWPs
of the IPCC without providing the supporting data for review, and it is
inappropriate to use this as a basis for this rule without first making
all the raw data available for public inspection and comment.

The EPA cannot tie the definition of GWP to a non-regulatory document
that may be changed without notice and comment rulemaking.  Before EPA
uses a new GWP, that GWP must be subject to notice and comment to comply
with the requirements of CAA section 307 and the APA.

An annual update of GWP would create a moving target for sources
conducting applicability determinations and assessing compliance with
minor NSR and PSD emission limits.  The EPA needs to ensure that
applicability and compliance with limits continue to be based on the GWP
that existed when the determination was made or the limit was
established.

The EPA should freeze the GWP at the current values by incorporating
those values into the regulation.  The EPA could still revise the
“NSR” GWP, but would have to revise the regulation to do so.

We agree with commenters who suggested we should codify, either in the
tailoring rule or through reference to codified values in another
rulemaking, the GWP values to be used in permitting analyses so that
there is certainty as to which GWP values need to be used and permitting
authorities and sources can plan appropriately for possible changes in
the GWP values.  As mentioned in the comments, recommended GWP values
from IPCC can change over time.  While this is infrequent – the last
such changes were in 2007—when it occurs, there are generally
significant lag times in universal adoption of new values because of
inconsistencies that could be created in national inventories and
emission reporting mechanisms.  In a regulatory setting, such as in the
permitting programs, this could potentially create significant
implementation issues, such as when a GWP change occurs while a permit
in progress.  EPA also recognized similar potential implementation
issues in developing its final mandatory reporting rule for GHGs, and
codified in the regulatory text the GWPs values to be used in reporting
GHGs as part of that final rulemaking.

For this reason, we have decided to follow the approach in the mandatory
reporting rule and require that for PSD and title V permitting
requirements, wherever emissions calculations are performed, that
permitting authorities and sources use GWP values that are codified in
EPA rules.  For consistency with the mandatory reporting rule, we will
establish the GWP values for PSD and title V rules based on a
cross-reference to the values that are codified in the EPA’s GHG
mandatory reporting rule [Reference:  Table A-1 to Subpart A of Part 98
– Global Warming Potentials, FR, Vol.74, No. 209, p. 56395].  Any
changes to Table A-1 of the mandatory GHG reporting rule regulatory text
must go through a proposal and comment regulatory process.  In this
manner, the values used for the permitting programs will reflect the
latest values adopted for usage by EPA after a formal regulatory process
and will be consistent with those values used in the EPA’s GHG
mandatory reporting rule.  Furthermore, the lead time for adopting
changes to that rule will provide a transition time to address
implementation concerns raised by commenters.

4. Use of Short Tons vs. Metric Tons

	We proposed that the GHG metric would be expressed in terms of English
(or short) tons, rather than metric (or long) tons.  Among those who
commented specifically on this topic, a few commenters support using
short tons for this purpose, but others prefer the use of metric tons.
Most of the latter commenters note that the GHG Reporting Rule is based
on metric tons and believe that the Tailoring Rule should be consistent.
 These commenters believe that using different units in the two rules
would be confusing and could result in sources that are not subject to
the GHG Reporting Rule being subject to PSD.  Some of the commenters add
that various “cap and trade” legislative proposals also quantify
GHGs in metric tons.  A few other commenters recommend that EPA
harmonize the applicability thresholds established under the Tailoring
Rule and the GHG Reporting Rule without expressing a preference for
short or metric tons.

	Short tons are the standard unit of measure for both the PSD and title
V permitting programs and the basis for the threshold evaluation to
support this rulemaking.  Calculation inputs for PSD are typically
prepared in English units (e.g., lbs of fuel, MMBtu’s, etc.) which is
the common convention for all PSD analyses and the units of the
statutory thresholds under the Act.  We do recognize that the GHG
mandatory reporting rule uses metric tons.  However, we note that this
does not create an inconsistency between permitting programs and the
reporting rule, because the two rules already use different
applicability approaches.  Although we originally proposed 25,000 tpy as
the major source level for permitting programs, which was similar to the
threshold in the reporting rule, we decided to adopt substantially
higher thresholds in the final rule.  Furthermore, even if the numbers
were similar, the thresholds used for the permitting programs are based
on actual emissions, while the PSD and title V programs are based on
potential to emit.  Therefore, we are less persuaded by arguments for
consistency, and believe it is more important for ease of permit program
implementation to ensure that GHG emissions calculations for PSD and
title V will build on the same set of input variables used to develop
short-ton based estimates for non-GHG pollutants.  Thus, the use of
short tons should actually facilitate the development of the GHG
emission estimate.  It would likely be more confusing to require a
multi-pollutant PSD applicability analysis to present emissions
information using different units for different pollutants, as would be
the case if we required metric tons for GHG but continue to use short
tons for every other pollutant.  Finally, we do not expect this choice
to introduce additional complexity because the conversion between short
tons and metric tons is a very simple calculation.  Therefore, based on
these considerations we are requiring that short tons be used as the
basis for emission calculations used to meet PSD and title V permitting
requirements.

B.  Rationale for Thresholds and Timing for PSD and Title V
Applicability to GHG Emissions Sources

	In this subsection, we describe our legal and policy rationale for our
determinations concerning PSD and title V applicability to GHG emissions
sources, including the following parts:  (1) an overview of our
rationale; (2) data concerning costs to sources and administrative
burdens to permitting authorities; (3) a review of the Chevron legal
framework and the “absurd results,” “administrative necessity,”
and “step-at-a-time” doctrines, as well as a review of how those
doctrines fit into the Chevron framework; (4) an overview of the
relevant features of the PSD and title V programs; (5) our application
of the “absurd results” doctrine for tailoring the PSD requirements;
(6) our application of the “absurd results” doctrine for tailoring
the title V requirements; (7) our plans to issue further rulemaking that
will address the “absurd results” basis for both PSD and title V
requirements; (8) our rationale for the phase-in schedule for applying
PSD and title V to GHG sources; (9) our application of the
“administrative necessity” basis for tailoring the PSD and title V
requirements; and (10) our application of the “step-at-a-time” basis
for tailoring the PSD and title V requirements.

1.  Overview

Under the familiar Chevron two-step approach to construction of
agency-administered statutes, the agency must first, at step 1,
determine whether Congress's intent in a particular provision on a
specific question is clear; and if so, then the agency must follow that
intent.  If the intent of the provision is not clear, then the agency
may, under step 2, fashion a reasonable interpretation of the provision.
 The best indicator of congressional intent is the plain meaning of the
provision and generally, according to the caselaw, if the plain meaning
addresses the specific question, then the agency must follow the plain
meaning.  ..

However, the courts have developed three doctrines relevant here that
authorize departure from a literal application of statutory provisions.
The first is the “absurd results” doctrine, which authorizes such a
departure if it would produce a result that is inconsistent with
congressional intent, and particularly if it would undermine
congressional intent.  The judicial doctrine of “administrative
necessity” authorizes an agency to depart from statutory requirements
if the agency can demonstrate that the statutory requirements, as
written, are impossible to administer.  The “step-at-a-time”
doctrine authorizes an agency, under certain circumstances, to implement
a statutory requirement through a phased approach.

Each of the three doctrines fits into the Chevron framework for
statutory construction because each of the three is designed to
effectuate congressional intent.  Moreover, each of the doctrines
generally points to similar conclusions.  For example, under the
“absurd results” doctrine, the agency may vary from the statutory
requirements only to the extent necessary, if congressional intent is
clearly expressed, to adhere to that intent, or if congressional intent
is not clearly expressed, to reasonably interpret the statute.  In the
case of the “administrative necessity” doctrine, the agency must
first attempt to mitigate administrative problems through techniques
consistent with the statutory requirements, and, if variance from the