process.  For these reasons, we do not believe that the authorization
for fees will allow the permitting authorities either to accelerate
Steps 1 or 2 of the tailoring schedule or to permit a larger number of
sources at those steps.  Step 1 will take effect on January 2, 2011,
Stepstep 2 will take effect on July 1, 2011, and the process for
determining and collecting fees, and then hiring and training personnel
will take at least several years after July 1, 2011.

Moreover, we do not believe that the authorization for fees means that
permitting authorities can reasonably be expected to permit title V
sources at levels below 50,000 tpy CO2e before 2016.  The next level
below 50,000 tpy CO2e for which we have data is 25,000 tpy CO2e, and the
costs to permitting authorities to run their programs at that level
($126 million) is more than double their current costs ($62 million).
We do not consider it reasonable to expect permitting authorities to
more than double their program within the first 6 years of title V
applicability to GHG sources.  That it is not reasonable to expect that
is made even clearer when the permitting authorities’ burdens in
implementing their PSD programs are considered.  The ability of
permitting authorities to impose fees may have more important
implications for subsequent steps, and as we address those subsequent
steps in future rulemakings, we will consider the fees.  EPA’s
approach to fees in this rulemaking is discussed elsewhere.

c.  Other Possible Approaches to Reconciling Literal Reading of Title V
Applicability Provisions and Congressional Intent

Having described how the Chevron framework, accounting for the ”absurd
results” doctrine, applies to title V requirements in this case and
why it supports this Tailoring Rule - under which we expect to apply
title V to more sources, in a step-by-step fashion, over time -- we turn
to the last part of our discussion of this doctrine.  Here, we address
another possible approach suggested by comments, which is that EPA
should apply the title V program only to sources that are subject to
applicable requirements, so that sources should not be required to hold
“empty permits” (e.g., permits issued to a source that is not
subject to any applicable requirement for any pollutant).  To the extent
that commenters argue that the statute requires EPA to adopt a
“no-empty–permits” theory, we disagree.  We believe that although
various provisions of title V indicate that one of title V’s purposes
is to gather a source’s applicable requirements into a single
permitting mechanism, see CAA sections§§ 503(b)(1), 504(a), we do not
read those provisions as expressly limiting, as a matter of Chevron
Stepstep 1, title V to sources with applicable requirements.  The
applicability provisions, by their terms, include sources based on
amount of emissions, and do not include any explicit limits to
applicability based on whether the sources has applicable requirements.
As described previously, we believe that Congress, although clearly
expressing an intent that title V apply to GHG sources generally, did
not express a clear intent as to how title V applies to GHG sources.
The tension between these two sets of provisions, which we identified in
the proposal and commenters further discussed, provides further support
for that conclusion.  Accordingly, we have discretion under Chevron
Stepstep 2 to determine a reasonable approach, consistent with the
statutory requirements, concerning the application of title V to GHG
sources with empty permits.

 We note that to date, we have issued permits to sources without
applicable requirements, albeit on rare occasions.  We have little
reason to believe that the “empty-permits” issue will arise in
Stepssteps 1 and 2 of our tailoring approach because we believe there
will be no “empty permits” in Stepstep 1 or Stepstep 2 or, if there
are, that they will be very few in number.  As stated elsewhere, we
believe that the tailoring approach we adopt in this rulemaking for
Stepssteps 1 and 2 is a reasonable approach that is consistent with
statutory requirements.

We need to gather more information concerning the potential number and
utility of “empty permits” for GHG sources, in light of the fact
that the need for requirements in title V permits will vary based on the
requirements of each SIP, and the fact that some SIPs contain broadly
applicable requirements.  As stated elsewhere, we intend to consider the
issue of the applicability of title V to GHG sources with “empty
permits” in Stepstep 3 of our tailoring approach.  When we do so, we
will further assess the potential for the approach of excluding empty
permits from title V to relieve burden consistent with statutory
requirements.

7.  Additional Rulemaking for the PSD and Title V Programs

	The previous sections 5 and 6 discussed our application of the Chevron
framework, accounting for the “absurd results” doctrine, to the PSD
and title V applicability requirements, respectively.  As another point
in this regard, which is relevant for both PSD and title V purposes, we
also commit to subsequent rulemakings in which we may further address
the “absurd results” doctrine.

Specifically, we will propose or solicit comment on establishing a
further phase-in, that is, a Stepstep 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 further commit to completing another round of rulemaking
addressing smaller sources by April 30, 2016.  Our action in that
rulemaking would take into account the severity of the remaining
problems associated with permitting authority burden and source costs.

While committing to future action, we do not decide in this rule when
the phase-in process will ultimately end, or at what threshold level,
because all that depends on uncertain variables such as our progress in
developing streamlining approaches and on permitting authorities’
progress in developing permitting expertise and acquiring more
resources.  We may continue the phase-in process with further
rulemaking(s) after 2016.  Alternatively, we may make a final
determination through future rulemaking that, under the “absurd
results” doctrine, PSD and/or title V do not apply to GHG sources
that, while small and relatively inconsequential in terms of GHG
contribution, are above the statutory tonnage thresholds for these
programs, and thereby end the phase-in process.  In addition, we may
consider whether to limit title V applicability to GHG sources in order
to minimize the number of GHG sources with “empty” permits.

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

	Having discussed in sections V.B.5, V.B.6, and V.B.7 the reasons for
tailoring the PSD and title V programs, we now describe our rationale
for selecting the specific phase-in schedule in this rule for applying
PSD and title V to GHG-emitting sources.  To reiterate for convenience,
under Step 1 of this schedule, which begins on January 2, 2011, (1i) PSD
applies to the GHG emissions of “anyway” PSD sources, that is,
sources that are subject to PSD anyway due to their emissions of
conventional pollutants and that undertake a modification that results
in an increase of at least 75,000 tpy CO2e; and (2ii) title V applies to
“anyway” title V sources, that is, sources that are subject to title
V anyway due to their emissions of conventional pollutants.  Under Step
2, which begins on July 1, 2011, (1a) sources will be subject to PSD on
account of their GHG emissions if they newly construct and emit at least
100,000 tpy CO2e, or if they are existing sources that emit at least
100,000 tpy CO2e of GHGs and make a modification that results in the
emission of at least 75,000 tpy CO2e; and (2b) existing and new sources
will be subject to title V on account of their GHG emissions if they
emit 100,000 tpy CO2e in GHG emissions.  In addition, EPA intends to
begin another round of rulemaking – Step 3 – in 2011 and commits to
complete it by July 1, 2012.  In that rulemaking, we will propose or
solicit comment on a further phase-in of GHG sources for PSD and title V
applicability, and we may propose or solicit comment on another
application of the “absurd results” doctrine that excludes
categories of sources from PSD or title V.  However, under this rule, in
no event will EPA apply PSD or title V to sources below the 50,000 tpy
CO2e levels in Step step 3, or any other step we might promulgate prior
to April 2016.  In addition, EPA commits to conduct a study, to be
concluded by April 30, 2015, evaluating the status of PSD and title V
applicability to GHG sources, and, based on the study, complete a
rulemaking by April 30, 2016 that addresses another round of a phase-in.

a. Rationale for Step 1

	In Step 1 of our tailoring approach, which begins on January 2, 2011,
PSD and title V requirements will apply to only those sources that are
subject to PSD or title V requirements anyway due to their conventional
pollutants (“anyway” sources) and that, in the case of PSD, make
modifications that result in an increase in GHG emissions of at least
75,000 tpy CO2e.  No sources would become major for PSD or title V under
this step based on their GHG emissions alone.  This section describes
our proposal, comments on the proposal and our response to those
comments, and our rationale for Step 1.

(1) Proposal

In our proposal, we proposed (1i) the application of PSD and title V
requirements to sources that emit at least 25,000 tpy CO2e, (2ii) a PSD
significance level of between 10,000 and 25,000 tpy CO2e, and (3iii) a
commitment to undertake a study to be followed by further rulemaking
after 6 years.  In addition, we solicited comment on the alternative of
limiting PSD and title V applicability to “anyway” sources for at
least the first 6six years.  Under this approach, PSD and title V
applicability would be determined based on non-GHG pollutants, and
without regard to GHGs, but those sources subject to PSD would also be
subject to BACT requirements for GHGs if their GHG emissions exceeded
the significance level established in the final rule, and those sources
subject to title V would be required to include any applicable
requirements for GHGs in their permits.

(2) Comments

Many commenters supported this “anyway”-source approach, and offered
a variety of reasons:  According to the commenters, (1i) this approach
is a better reading of Congress’s intent in the Act and is consistent
with Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1980); (2ii) this
approach would reduce the permitting workload on sources currently
considered minor and focus PSD and title V requirements on large sources
of non-GHG pollutants, as intended by Congress; (3iii) it is appropriate
to base PSD and title V applicability on non-GHG emissions until data on
GHG emissions are available from the mandatory GHG reporting rule;
(4Reporting Rule; (iv) in the initial phase, this approach would be more
straightforward to administer, would provide a more predictable
permitting workload, and would prevent a flood of newly regulated
sources from overburdening state agencies; (5v) this approach would
provide permitting agencies time to develop experience handling GHG
sources and requirements under the PSD and title V programs; (6vi) this
approach would provide EPA and the permitting agencies the time needed
to develop streamlining techniques; (7vii) this approach is consistent
with the “absurd results” and “administrative necessity”
doctrines because the scope of the permitting programs would remain
consistent with both congressionalcCongressional intent and current
administrative practice, but EPA and state agencies would still be
allowed  to begin regulating GHG emissions from existing PSD and title V
sources; and (8viii) sources already required to obtain PSD permits are
best equipped to work through BACT issues with permitting authorities.

Commenters added that if BACT is applied for GHGs GHG due to permit
actions involving non-GHG pollutants, EPA would need to set a
significance threshold for the application of BACT, without which BACT
could apply to very small (e.g., 1 ton) GHG increases associated with
projects that otherwise triggered PSD for increases of non-GHG.

(3) Determination as to Step 1, PSD and Title V Applicability and PSD
Significance Level

After considering the administrative burdens from increased permitting
actions and the need for permitting authorities to have sufficient time
to develop necessary expertise and staffing resources to address that
burden, we have decided in this final action to establish the
“anyway” source approach as Step 1.  Beginning on January 2, 2011,
sources subject to PSD requirements for their conventional pollutants
anyway will be required to apply BACT to their GHG emissions if they
construct or modify and in so doing, emit at least 75,000 tpy CO2e in
GHGs.  Similarly, sources subject to title V requirements anyway due to
their conventional pollutants will be required to meet certain
requirements for their GHGs, as described elsewhere.  These requirements
at Step 1 for PSD and title V will not expire.  On July 1, 2011, a
further phase-in of PSD and title V applicability – Step 2 – will
kick in.

At Step step 1, by definition, all of the covered sources are already
subject to PSD and title V permitting requirements, and will simply be
adding a GHG component to what would be an otherwise occurring
permitting action for conventional pollutants.  These sources include
fossil fuel-fired power plants, petroleum refineries, cement plants,
iron and steel plants, pulp and paper plants, petroleum refineries,
large landfills, and other large industrial sources.  These sources will
need to perform some additional analysis that is unique to GHG emission
units, particularly related to the BACT review and selection process,
but they will likely be able to utilize information developed as part of
other permitting requirements for conventional pollutants, such as
equipment fuel usage and operational parameters.  Also, because these
facilities are familiar with the case-by-case permitting processes,
including all the steps from the application to the final review
process, they will not confront a high PSD or title V learning curve.

The “anyway”-” source approach has particular appeal during the
first step of the phase-in approach because it begins to apply key PSD
and title V program requirements as soon as January 2, 2011 to large
sources of emissions, but because it applies only to sources that are
already subject to PSD for other pollutants, it can be implemented
efficiently and with an administrative burden that is manageable in the
next 8 months.  We expect that under this approach, the sources and
permitting authorities will still face substantial additional work to
address the GHG emissions.  In addition to the activities discussed
elsewhere, there will be significant and complex policy questions about
how BACT will be implemented for GHGs that must be resolved.  These
issues will include how to determine BACT for GHGs, how to do netting,
and other similar issues.  Even with EPA guidance, many case-specific
policy issues will arise and will have to be resolved by the permitting
authority in the context of a specific permit application.
Nevertheless, with the “anyway” source approach, this work will be
manageable because the associated permitting burden will be limited to
adding a GHG component to each existing permit action for which it will
be required, and will avoid the significantly greater burdens associated
with large numbers of new permit actions that would be required for
sources and modifications that would be subject to PSD for the first
time.  Instead, this “anyway” source approach allows permitting
authorities sufficient time to develop necessary expertise and staffing
resources to address GHG BACT.

We agree with commenters that the establishment of a significance level
– which, in effect, is a BACT threshold -- is appropriate, and we have
decided to establish this level at 75,000 tpy CO2e because, for reasons
discussed later, that is the level that will apply during Stepstep 2.
At this level, the administrative burdens, described later, will be
manageable.  Importantly, we believe a consistent significance level
between Steps 1 and 2, as opposed to a lower significance level in Step
1, will provide for a smoother transition and avoid the problems that
would arise if PSD applied to modifications during Step 1 that PSD would
not apply to in Step 2.  Otherwise, we would create a perverse incentive
for companies to delay such projects until Step 2 to avoid BACT.

We estimate that Step 1 will result in a 23 percent increase in
permitting authority work hours and a $3 million increase – which
amounts to a 25 percent increase from the current program cost of $12
million -- in their annual costs for running PSD programs.  This is
primarily due to the GHG BACT review requirements.  For title V
programs, we estimate a 2 percent increase in permitting authority work
hours and a $1 million increase in the title V annual program costs for
permitting authorities under Step 1 as compared to the current program
cost of $62 million.  These work hours and costs will be needed
primarily to review GHG emissions information, add any GHG-related
requirements to title V revisions and renewal actions that would
otherwise be occurring, respond to comments and petitions from the
public, as well as develop fee requirements and make fee determinations
associated with issuing new or revised title V permits that add
GHG-related information.  For both the PSD and title V programs on a
combined basis, the additional costs for Step 1 will be $4 million,
which amounts to a 5 percent increase in the current combined program
cost of $74 million.

In addition to these workload and monetary costs, permitting authorities
will confront additional burdens before and during Step 1, which we have
not attempted to quantify.  One of the most significant of these is
training staff in the PSD-related areas of GHG emissions calculations
and BACT evaluations.  In addition, permitting staff will need to build
staff expertise and capacity for addressing GHG requirements in
preparation for Step 2, which will begin only 6 months after Step 1; and
in communicating and providing outreach to sources addressing GHG
emissions for the first time.  Based on comments we received on the
proposal from permitting authorities, we believe these additional
training and outreach requirements – for both the PSD and title V
programs -- will add significantly to the permitting authorities’
burden during the initial 6-month period under Step 1.

	We believe that these administrative burdens are substantial but
manageable.  Following this action, permitting authorities will have
only 8 months to prepare for Step 1, when they will need to increase
their resources by 5 percent for both the PSD and title V programs
combined, and be able to implement BACT requirements for GHG sources.
During Step 1, they will need to prepare for Step 2, when, as discussed
later, they will need to process over 900 additional PSD permits each
year and begin to process over 1,100 additional title V permit actions.

We have decided to limit Step 1 to the “anyway” source approach, and
not apply PSD or title V to sources based on their GHG emissions, for
several reasons.  First, we believe that the administrative burdens
described previously are the most that the permitting authorities can
reasonably be expected to manage before and during Step 1.  Tighter PSD
and title V applicability requirements would mean greater administrative
burdens.

Second, we believe that the costs of GHG permitting to the sources, as
described previously, are substantial and as a result, necessitate that
we wait for the permitting authorities to develop the PSD and title V
programs for GHG sources during the first 6 months of 2011 before
subjecting sources to PSD and title V requirements on account of their
GHG emissions.  By July 1, 2011, when Step 2 takes effect, the PSD and
title V programs will be better developed.  For example, the permitting
authorities will have more experience making BACT determinations.  In
addition, by that time, sources will have had more time to prepare for
the permitting processes.  In addition, as suggested by one commenter,
the additional time will allow sources and permitting authorities to
address the current uncertainty surrounding how to measure high-GWP
gases.

Third, we estimate that “anyway” sources account for approximately
65 percent of total national stationary source GHG emissions.  As a
result, limiting Step 1 to these sources will still capture a large
portion of the GHG inventory.

A large number of commenters urged us to leave this “anyway” source
approach in place until such time as we complete an assessment and
conduct further rulemaking, which we proposed would be 6 years from now.
 We are not taking this action; rather, for the reasons discussed next,
we believe it is reasonable to use GHG thresholds to begin to phase in
PSD and title V applicability to additional sources in Step 2.

b.  Rationale for Step 2

(1)  Proposal

We proposed to establish the applicability level for PSD and title V to
GHG sources at 25,000 tpy CO2e, and we proposed a PSD significance level
in the range of 10,000 to 25,000 tpy CO2e.  Our burden estimates at
proposal led us to conclude that at those threshold levels, for the PSD
program, “approximately 400 additional new or modified facilities
would be subject to PSD review in a given year.  These include
approximately 130 new facilities and approximately 270
modifications….” 74 FR 55,331, col. 1.  We estimated that processing
these numbers of additional permits, along with doing the additional
work associated with GHG emissions from sources subject to PSD anyway
due to their conventional emissions, would increase permitting authority
burdens by “approximately 112,000 staff hours at an additional cost of
approximately $8 million.  This workload amount represents an increase
of about 1.3 times, or 32 percent, in the current burden for permitting
authorities on a nationwide basis.”  Id. col. 3.  We concluded that
“this additional burden is manageable,” but that “any threshold
lower than 25,000 tpy CO2e, would create undue administrative
burdens.”  Id.

	For the title V program, we estimated that at a 25,000-tpy CO2e
permitting threshold, “about 13,600 existing facilities” would
become subject to title V, and that to manage the additional workload
associated with permitting those sources and with the other permit
revisions and modifications that would result from the 25,000 tpy CO2e
threshold, permitting authorities would require an additional 492 FTEs,
which would be an estimated 50 percent increase over current title V
staffing levels.  74 FR 55,335, cols. 1-2.

(2)  Comments

We received a significant number of comments from both permitting
authorities and industry representatives that our proposed GHG threshold
of 25,000 tpy CO2e for major source applicability was too low and would
result in an unmanageable amount of permitting actions in the near term.
 Many offered evidence that we severely underestimated both the number
of permitting actions and the per-permit administrative burden, for both
PSD and title V programs.

	Commenters also asserted that the proposed 25,000 tpy threshold is too
low because it will subject small sources (including many small
businesses) to PSD and title V, which is not in keeping with
Congress’s intent to limit PSD and title V to large sources when
Congress set the 100/250 tpy thresholds for the permitting programs.
EPA, in collaboration with the Small Business Administration (SBA),
conducted an outreach meeting designed to exchange information with
small entities that may be interested in these regulations.  The EPA
took this small business outreach effort into account when finalizing
this rule.  Many commenters from this outreach effort said that there
were many more small businesses that would become subject to PSD and
title V due to the proposed permitting thresholds than EPA estimated at
proposal.

Many commenters recommended specific major source thresholds for PSD and
title V, including levels of 25,000 (as proposed), 40,000, 50,000,
100,000, 150,000, 250,000, and 1,000,000 tpy CO2e.  A majority of the
commenters – including both industry and state agency commenters --
recommended major source thresholds of 100,000 tpy CO2e.  However,
several state agency commenters recommended thresholds of 50,000 tpy
CO2e.  Other commenters recommended sector-specific thresholds.  For
example, solid waste industry commenters suggested thresholds of 820,000
tpy CO2e for PSD [which they calculate to be equivalent to the existing
PSD threshold for “municipal solid waste landfill emissions,” i.e.,
250 tpy non-methane organic compounds emissions (NMOC)] and 320,000 tpy
CO2e for title V (calculated to be equivalent to the existing major
source applicability threshold of 100 tpy NMOC).  Other commenters urged
EPA to set the GHG thresholds at levels that correspond to emissions of
conventional pollutants at the 100/250 tpy level.

Many of the commenters that recommended increasing the thresholds cited
EPA’s estimates that a particular threshold would significantly reduce
the number of sources subject to the rule while causing only a slight
reduction in the percentage of GHGs captured.  Several of these
commenters noted that Table VIII-2 in the proposal preamble indicates
that shifting the major source threshold for PSD from 25,000 to 100,000
tpy CO2e would reduce the number of major sources from 13,661 to 4,850
while reducing the coverage of U.S. stationary source GHG emissions by
only about 4 percent.  Other commenters referred to the regulatory
impact analysis (RIA) for the mandatory GHG reporting ruleReporting Rule
to conclude that raising the threshold from 25,000 to 100,000 tpy CO2e
would exclude thousands of entities that, on a combined basis, emit only
one percent of the nation’s GHG emissions.  See the RTCResponse to
Comments document for this final rulemaking for more detailed
description of comments received on our proposed burden assessment.

	Many commenters also recommended specific PSD GHG significance
thresholds, including levels of 10,000 (as proposed), 15,000 (within the
proposed range), 25,000 (also as proposed), 40,000, 50,000, and 100,000,
and 150,000 tpy CO2e, as well as suggesting sector-specific thresholds.
These recommendations were based on the view that we had underestimated
the number of modifications and that the burden of permitting at the
proposed levels would therefore be much worse than we projected.  A
number of the commenters argued that the significance threshold should
be no less than the major source threshold, at whatever level that is
set.  The largest number of commenters recommended a PSD significance
threshold of 100,000 tpy CO2e, although significant numbers also support
25,000 and 50,000 tpy CO2e.

(3)  Rationale for Stepstep 2

	Based on these comments, we reassessed our original burden estimates
from our proposal.  This reassessment is discussed at the beginning of
this section.  We decided that, once this adjustment is taken into
account, the burdens at the proposed 25,000 threshold and the proposed
10,000-25,000 significance levels would be unmanageable.  We therefore
evaluated higher thresholds ranging from a 25,000 tpy CO2e major source
applicability level for PSD and title V to a 50,000, 75,000, or 100,000
tpy CO2e level, with associated PSD GHG significance levels of equal or
lesser magnitude; and we selected the 100,000/75,000 tpy CO2e level.
Central to our decision to promulgate higher thresholds than what we
proposed is our recognition, based on comments and further analysis,
that applying PSD to GHG sources at the statutory or any other threshold
level or significance level that we have considered would result in (1i)
a greater number of sources, and significantly greater number of
modifications than we first estimated becoming subject to those
programs; and (2ii) a greater per-permit cost than we first estimated to
the permitting authority of processing those permit actions.  We
discussed our revised estimates and reasoning at the beginning of this
section.

We now estimate that the 25,000/25,000 tpy level would result in 250
additional PSD permit actions for new construction (either for GHG-only
sources or additions to otherwise occurring permits) and an additional
9,200 PSD permits for modifications each year (compared to our estimate
at proposal of 130 for new construction and 270 for modifications).
This level of permitting would require an additional 2,815,927 work
hours, or 1,400 FTEs (compared to our estimate at proposal of 112,000
additional work hours, or 57 FTEs); and would cost an additional $217
million each year (compared to our estimate at proposal of an additional
$8 million).  See 74 FR 55,331 (proposal).  This $217 million amount
represents approximately a 1,800 percent increase over current
permitting authority annual cost of $12 million for the major NSR
programs

	For title V, under our final burden analysis at a 25,000 tpy CO2e
threshold, we estimate a $64 million annual increase in program costs to
permitting authorities to add GHG emission sources, which reflects a
greater than 100 percent increase over current programs costs of $62
million.  We estimate that this increased burden would result in the
need for almost 700 new FTEs nationwide at permitting authorities
(compared to our estimate at proposal of 492 additional FTEs, or about a
50 percentperent increase in existing program size).  This increase in
burden is due to an estimated annual increase of 2,500 new title V
permits, over 9,500 permit revisions, and over 2,600 permit renewal
actions due to GHG emission sources.  These additional title V actions
compare to current annual program actions of approximately 50 new title
V permits, 1,394 significant revisions, and 3,267 permit renewals.

	Based on this information, we have decided not to finalize our proposal
to apply a 25,000 tpy CO2e applicability threshold to GHG sources at the
time that PSD and title V take effect.  At that level, too many sources
– many more than we thought at proposal – would be subject to high
permitting costs.  In addition, permitting at that level and at that
time would not be administratively feasible.  The resulting increase in
the number of PSD and title V permitting actions and workload would
create insurmountable resource demands for permitting agencies in the
near term, which would jeopardize the functioning of these permitting
programs.  We are mindful that not only would the permitting programs
have to bear the costs that our estimates are able to monetize, but they
would also incur burdens associated with hiring and training staff to
make and implement GHG BACT determinations, GHG emissions evaluations,
and other evaluations required under the PSD program for a wide variety
of formerly unpermitted sources, including significant numbers and types
of small manufacturing and commercial or residential establishments.
They would also incur burdens associated with reviewing applications,
citizen comment and petitions, and the need to communicate and provide
outreach to new categories of sources, including, again, significant
numbers and types of small manufacturing and commercial or residential
sources.  Thus, the increased administrative burdens at the
25,000/25,000 tpy CO2e levels are so great that we have concluded that
they would not be consistent with the goals of avoiding absurd results
that contravene congressionalCongressional intent, including avoiding a
permitting burden that would overwhelm the capacity of permitting
authorities to effectively implement their programs.

Based on our revised burden analysis, in this final action, we have
decided to establish a multi-step, phase-in approach that contains a
significantly higher initial threshold level.  We have determined that a
100,000 tpy CO2e major source threshold level for PSD and title V
purposes, and a 75,000 tpy CO2e significance level, produce a level of
permitting activity that would certainly be an increase over current
workload, but that would be administratively feasible by July 1, 2011.
As a result, we have decided to finalize these thresholds as Step 2.

In reaching this conclusion, we needed to consider both the sources’
abilities to manage the permitting process and the permitting
authorities’ capacity to address newly-major sources as expeditiously
as possible.  As to the former, sources subject to Stepstep 2 will, for
the most part, continue to include the “anyway” sources subject to
Stepstep 1.  In addition, we estimate that Stepstep 2 will include about
500 additional sources that are not already subject to permitting.  Most
of them will become subject to PSD and title V because of fuel burning.
In order to meet the 100,000/75,000 threshold, they will have to burn a
significant quantity of fuel, and that means they will be a significant
size.  In general, these sources include municipal or commercial
landfills that are large, but not large enough to be covered by the
NSPSnew source performance standards, pulp and paper facilities,
electronics manufacturing plants, chemical production plants, and
beverage producers.  Although these sources have not been subject to PSD
permitting before, some of them have already been subject to minor
source permitting, and so will have some familiarity with the permitting
process.  In addition, in general, these sources are in source
categories that have larger sources that are already subject to PSD and
title V.  As a result, they are in industries that have experience in
the permitting process.  Because of their relatively large size and
access to knowledge about the permitting processes, we believe these
sources will be able to manage the permitting requirements.

As to the permitting authorities’ capacity to handle the Stepstep 2
workload, we note first that our Stepstep 1 approach does not cover
newly-major sources.  As a result, the Stepstep 2 threshold and timing
has to be established in a way that takes into account permitting
authority challenges in addressing many sources and categories that
would be subject to major source permitting for the first time.

	We considered the various PSD and title V threshold applicability and
significance level options in our final burden analysis, summarized in
Table VI-1, including levels at 50,000 CO2e, and 100,000 CO2e.  As Table
VI-1 indicates, we estimate that a 100,000 tpy CO2e major source
applicability threshold would result in approximately 550 sources
becoming newly classified as major sources for PSD based on their GHG
emissions, while a 50,000 tpy CO2e threshold would result in 3,500 newly
classified major sources.

	We then considered the impact on both PSD and title V programs of
different PSD significance level options for GHGs.  The choice of a PSD
significance level has a direct impact on title V burdens because PSD
permit requirements resulting from modification activities will result
in required title V permit revisions.  We developed PSD and title V
burden estimates based on significance levels of 50,000 tpy, 75,000 tpy
and 100,000 tpy CO2e, combined with a major source applicability level
of 100,000 tpy CO2e.

At a 50,000 tpy CO2e significance level, we estimated an annual increase
of approximately 1,800 PSD permitting actions and almost 2,000
additional title V permitting actions, as compared to Step 1.  At a
75,000 tpy CO2e significance level, we estimated an annual increase of
approximately 900 PSD permitting actions and just over 1,000 additional
title V permitting actions as compared to Step 1.  At a 100,000 tpy CO2e
significance level we estimated an annual increase of approximately 25
PSD permitting actions and 210 additional title V permitting actions as
compared to Step 1.  For title V, under these different scenarios, the
major source applicability level of 100,000 tpy CO2e results in
approximately 200 new permits annually, but, as noted, the choice of
significance levels affects the number of required permit revisions.

	Based on this information, we have decided to set our final Step 2
thresholds at 100,000 tpy CO2e for major source applicability under PSD
and title V and at a 75,000 tpy CO2e significance level for PSD.
Overall, we estimate that the almost 900 additional PSD permitting
actions (virtually all of which would be modifications) per year at
these levels will result in an approximately a $21 million increase
(from Step 1) in states’ annual costs for running PSD programs.  In
addition, we estimate that the 1,000 additional title V permit actions
will cause the total title V burden for permitting authorities to
increase by $6 million annually from Step 1.  This total increase in
permit program burdens of $27 million represents a 34 percent increase
over the $78 million in total cost of PSD and title V programs at Step
1.  We consider this a substantial increase particularly because Step
2’s start date of July 1, 2011 is only 6 months after Step 1’s start
date of January 2, 2011.  What’s more, Step 1 will entail a
substantial increase in permitting authority obligations, so that adding
the costs of Step 1 and Step 2 together - $31 million ––- means that
permitting authorities will be required to increase their permitting
resources by approximately 42 percent between now and Step 2.  In
addition to the administrative burdens we have been able to monetize, we
must be mindful that permitting authorities will incur other burdens,
including the significant support and outreach activities by permitting
staff for the many newly permitted sources.  We believe that any lower
thresholds in this timeframe, whether in the PSD and title V
applicability levels or in the significance level, would give rise to
administrative burdens that are not manageable by the permitting
authorities.

Although the burdens at the 100,000 tpy CO2e/75,000 tpy CO2e levels are
steep, we consider them manageable.  Step 2 permitting for GHGs will
mostly involve source categories in which some sources have
traditionally been subject to permitting, which should render applying
even the new GHG requirements more manageable.  These source categories
include fossil fuel-fired power plants, petroleum refineries, cement
plants, iron and steel plants, and petroleum refineries, in addition to
other large industrial type source categories.  A full description of
the type of sources that we expect will have GHG emissions that exceed
the 100,000 tpy CO2e threshold is provided in the “Technical Support
Document for Greenhouse Gas Emissions Thresholds Evaluation” located
in the public docket for this rulemaking.  In addition, because Step 2
does not begin until July 1, 2011, permitting authorities have about 14
months to prepare for it.

	In addition, we believe that the sources that will become subject to
PSD and title V requirements at the 100,000/75,000 tpy CO2e levels will
be able to accommodate the additional costs of permitting.  For the most
part, these sources will be of a comparable size and activity level as
those sources that are already subject to those requirements.

	Because the administrative burdens at the 100,000/75,000 tpy CO2e level
are as heavy as the permitting authorities can reasonably be expected to
carry, adopting these threshold levels is consistent with our legal
basis under the “absurd results” doctrine.  Under this basis, we are
reconciling the statutory levels with congressional intent by requiring
that the PSD and title V requirements be applied to GHG sources at
levels as close as possible to the statutory thresholds, and as quickly
as possible, in light of costs to sources and administrative burdens.

	Because the administrative burdens at the 100,000/75,000 tpy CO2e level
are manageable, we do not believe that higher threshold levels are
justifiable for Step 2.  Specifically, at the 100,000/100,000 level –
which would entail a 100,000 tpy CO2e significance level, rather than a
75,000 tpy CO2e level – permitting sources would need to handle only
20 additional modifications beyond current levels, and thus would not
incur substantial additional costs.  By the same token, we disagree with
commenters who suggested that we needed to set permanent GHG permitting
thresholds for major sources at a rate equivalent to the amount of GHGs
GHG that would be emitted by conventional pollutants at the 100 and 250
tpy level in order to meet the legal bases of the “absurd results”
and “administrative necessity” doctrines.  These levels would likely
be well above 300,000 tpy CO2e, depending on fuel types and assumptions
regarding the relative emissions of GHGs compared to the conventional
pollutants.  Our data show that none of the levels above 100,000/75,000
tpy CO2e would result in significant increases in administrative
burdens.  As a result, establishing these levels would not apply PSD or
title V requirements to GHG sources as quickly as possible, and thus
would not be consistent with our approach in the Tailoring Rule.

We estimate that facilities meeting the Step 2 major source
applicability thresholds account for approximately 67 percent of total
national stationary source GHG emissions.  Many commenters felt that
this should be an important basis for our selection of a threshold,
stating that there is no significant loss in GHG emissions coverage of
source categories at the 100,000 tpy CO2e threshold, and in some cases
arguing that as a result, we should set the level even higher.  We agree
that it is important that the coverage in Stepstep 2 represents 86
percent of the coverage at full implementation of the statutory 100/250
thresholds.

c.  Rationale for EPA’s Plan Beyond Step 2

	EPA commits that after Step 2, EPA will begin another rulemaking in
2011 and complete it by July 1, 2012, and in that rulemaking take
comment on a further phase-in of GHG sources for PSD and title V
applicability (Step 3).  However, under this rule, in no event will EPA
apply PSD or title V to sources below the 50,000 tpy CO2e levels prior
to 2016.  In addition, EPA commits to conduct a study, to be concluded
by April 30, 2015, evaluating the status of PSD and title V
applicability to GHG sources, and, based on the study, complete a
rulemaking by April 30, 2016 that addresses another round of a phase-in.

(1)  Proposal

In our proposal, we noted that following implementation of the first
phase of PSD and title V applicability to GHG sources, generally at the
25,000 tpy CO2e threshold, additional action would be required over time
to assure full compliance with the statute.  We did not establish more
steps in the schedule, but we did commit to conduct a study, to be
completed by 5 years after promulgation, evaluating the status of PSD
and title V applicability to GHG sources, and, based on the study,
complete a rulemaking by 6 years after promulgation that addressed an
additional step of the phase-in.

(2)  Comments

	A number of commenters supported the proposal’s overall approach to
phase in the permitting of GHGs, mainly because this approach will allow
permitting of the largest sources of GHGs immediately while collecting
more information about smaller sources and more fully considering
streamlining options for subsequent phases.  Many of these commenters
made clear that they do not support implementation of the statutory
100/250 tpy thresholds, even through a phase-in approach.  On the other
hand, one commenter asserted that EPA has failed to demonstrate that it
needs 6 years to study and implement NSR and title V for sources
emitting less than 25,000 tpy.  The commenter contends that EPA has not
analyzed, among other things, what combined effect the full
implementation of its streamlining proposals in the 15 months before the
due-date for title V permit applications would be to reduce the cost,
complexity, and number of title V permit applications that would have to
be submitted.

(3)  Rationale for Further Steps

We agree with commenters who support a phased-in approach to the GHG
Tailoring Rule.  Our final action reflects a multi-step process that we
believe will facilitate a manageable expansion of PSD and title V
applicability, as appropriate, to GHG-emitting sources.  In our final
action, we have established the initial two steps of a multi-step
phase-in of lower threshold applicability with a commitment to take
further regulatory activity to consider adopting lower thresholds.  We
believe this process will provide substantial opportunity for permitting
authorities and sources to establish enough experience and information,
and to provide significant real-world feedback to EPA, so as to better
inform decisions on future phase-in steps.

With this overall phase-in approach in mind, in this final rule, EPA
includes an enforceable commitment to undertake a notice-and-comment
rulemaking that would begin with an SNPR a supplemental notice of
proposed rulemaking that we expect to be issued in 2011 and that we
commit will be finalized in 2012.  The notice will propose or solicit
comment on further reductions in the applicability levels.  This
rulemaking will take effect by July 1, 2013 and therefore, in effect,
constitute Step 3.  In this action, we are committing to a rulemaking
for Step 3, but are not promulgating Step 3, because it is important to
allow EPA and the permitting authorities to gain experience permitting
sources under Steps 1 and 2, and to allow time to develop streamlining
methods, before attempting to determine what would be the next phase-in
levels for PSD and title V applicability.  While committing to future
action, we do not decide in this rule when the phase-in process will
ultimately end, or at what threshold level, because all that depends on
uncertain variables such as our progress in developing streamlining
approaches and on permitting authorities’ progress in developing
permitting expertise and acquiring more resources.  We may continue the
phase-in process with further rulemaking(s) after 2016.  Alternatively,
we may make a final determination through future rulemaking that, under
a Chevron analysis, accounting for the “absurd results” doctrine,
PSD and/or title V do not apply to GHG sources that, while small and
relatively inconsequential in terms of GHG contribution, are above the
statutory tonnage thresholds for these programs, and thereby end the
phase-in process.

In addition, in this action, we are determining that in no event –
whether through Step 3 or a subsequent step – will we apply PSD or
title V to sources at the 50,000/50,000 tpy CO2e level or lower prior to
May 1, 2016.  We have several reasons for making this determination at
this time.  Most importantly, our examination of the expected burdens to
the permitting authorities of applying PSD and title V to GHG sources
convinces us that extending the permitting programs to sources at or
below the 50,000/50,000 tpy CO2e level within 6 years of promulgation
would result in prohibitively heavy burdens.  This threshold option
would result in close to 2,000 additional annual PSD permitting actions
per year over the current program and more than 1,000 over Step 2,
including both new construction and modifications.  For title V, we
estimated an increase of over 1,000 new title V permits (all newly
permitted sources because of GHG emissions) over 2,000 permit revisions
per year over the current program, and about 980 new title V permits and
900 permit revisions more than the Step 2 amounts.

These increases, which could occur between 2013 and 2016 under our
approach depending on the outcome of the Stepstep 3 rulemaking,
represent very substantial additions to the permitting program.  In
terms of cost, we estimate that these additional actions would result in
a $73 million per year increase in joint PSD and title V program costs
over the current programs – which is almost a doubling of costs –
and $42 million annual cost increase over Step 2 for the current
programs.  We believe that it would take permitting authorities some
time to adjust to this workload.  This is particularly true because at
the 50,000/50,000 tpy CO2e level, smaller sources – including ones not
previously subject to permitting requirements – will become subject to
PSD and title V.  It will take some time for both the permitting
authorities and the sources to absorb these new obligations.

Importantly, the next lower cut-off – below 50,000 tpy CO2e for the
major threshold level – is the 25,000/25,000 tpy CO2e level.  For the
reasons discussed previously, this level is clearly not manageable
within the first 6 years after this action.  This applicability level
would bring in over 7,000 sources that would be newly subject to title V
permitting and result in close to 10,000 new PSD permitting actions.
This would result in a 380 percent increase over current program costs
for PSD and title V to run these programs.  Based on comments we
received from state and local permitting agencies on our proposed
Tailoring Rule, these levels of permitting activities would far exceed
the administrative capabilities of the permitting agencies for at least
the near future.  Thus, the 6-year exclusion is necessary to provide
these agencies and their permittees certainty that this will not occur.

We recognize that at present, we do not have data that would allow us to
compile administrative burden estimates for specific levels between the
50,000/50,000 and 25,000/25,000 tpy CO2e levels we assessed.  However,
it is clear that the burdens begin to rise sharply below the
50,000/50,000 tpy CO2e level.  To reiterate, the combined PSD and title
V administrative burdens at the 50,000/50,000 tpy CO2e level cost almost
twice as much as the current programs, but the burdens at the
25,000/25,000 tpy CO2e level cost almost four times as much as the
current programs.  As a result, we conclude that dropping the level
below 50,000/50,000 tpy CO2e too soon would quickly expose the
permitting authorities to unacceptably high burdens.

As a further reason for concluding that we will not reduce thresholds
beyond 50,000/50,000 tpy CO2e during the first 6 years, we recognize
that the PSD permitting process in particular carries important
ramifications for the permitting authorities and the affected sources.
If we have underestimated the permitting burden or the ability of states
to respond to their additional workload, then permitting backlogs will
result, and PSD permit issuance will be delayed, and sources seeking a
PSD permit will not be able to construct or modify.  If this were to
happen on a large enough scale, it could have potentially serious
consequences for the national economy.

Moreover, we need to be mindful that the best information we currently
have as to permitting authority burdens represents a national average,
as described previously.  Our information at the individual state and
local level, where permitting occurs, is not as robust.  Accordingly, we
recognize that a particular state may encounter permitting costs that
are higher than average, and this may result in permitting backlogs in
that state, with the consequence that sources in that state will face
long delays in constructing or modifying.  Similarly, even if a
particular state’s costs are in line with the national average, that
state may not be able to find the additional resources to cover those
costs as readily as other states.  For this reason, too, sources in that
state could face long delays in constructing or modifying.

Beyond the administrative burdens to permitting authorities, we
recognize that the costs of PSD and title V permitting to sources may be
high, and we are not inclined to  allow their imposition at this time on
sources smaller than the 50,000/50,000 tpy CO2e threshold.  At that
level, the permitting programs will apply to a significant number of
newly permitted sources, including a variety of small manufacturing,
commercial and residential categories.  The next level that we have
analyzed is the 25,000/25,000 tpy CO2e threshold.  At that level, more
than 7,000 more sources would become subject to PSD each year – almost
all due to modifications – and another 4,000 sources would become
subject to title V each year.  These sources would be even smaller than
those that already will have become subject to PSD and title V due to
their GHG emissions.  We do not think it reasonable to subject more of
those types of sources, and smaller ones, to permitting costs within the
next 6 years.

Finally, we note that moving from a 50,000 tpy CO2e threshold to 25,000
tpy CO2e will increase the emissions coverage of GHG stationary sources
from 70 percent to 75 percent nationwide, which we consider to be a
relatively small amount.

 We recognize that our progress in developing streamlining methods will
be a key determinant to the ability of permitting authorities to
administer, and sources to comply with, PSD and title V at GHG emission
levels below 50,000/50,000 tpy CO2e.  Although we commit to pursue
streamlining, we cannot predict our progress.  This uncertainty may be
problematic for stakeholders, primarily permitting authorities and
industry.  That is, permitting authorities will face uncertainty in
planning the scope of their programs over the next few years, and
industry will face uncertainty as to what new construction projects and
modifications will be subject to PSD for GHGs.  By determining now that
for the next 6 years we will not impose PSD requirements below a floor
at the 50,000/50,000 tpy CO2e level, we add a measure of needed
certainty.

We also recognize that selecting a level that is too high or keeping a
level for too long means that some sources may construct or modify
without implementing BACT level controls, and this could result in
additional emissions of GHGs.  We need to be vigilant and to protect
against this outcome.  Even so, all things considered, we believe that
our determination not to apply the PSD or title V permitting
requirements to sources below the 50,000/50,000 tpy CO2e level for the
first 6 years also represents a reasonable balancing of protection of
the environment with promotion of economic development.  This type of
balancing is consistent with our authority under the PSD provisions.

We also raised the issue of “hollow” or “empty” permits in
discussing our rationale for why it may make sense to delay title V
permitting under our proposal.  We were concerned that many title V
permits for GHG sources would contain no applicable requirements, and
their issuance would therefore be of little value and would not be the
best use of scarce resources.  Several commenters agreed that
implementing title V for GHGs GHG will, at least initially, require
“empty permits” to be issued to GHG sources because such sources
will not be subject to “substantive” requirements, and that this
would not be the best use of scarce resources.

 	We believe that the amount of resources that would be spent on, and
the limited value that would result from, “empty permits” does
warrant consideration under the Chevron analysis, taking account of the
“absurd results” doctrine.  Therefore, we intend to consider the
role of “empty permits” when we undertake future rulemaking.
However, we believe the issue of “empty permits” has limited or no
relevance to the first two steps of the phase- in that we are
promulgating in this rule.  During Stepstep 1, permitting for GHGs is
only required if the source is otherwise subject to permitting for its
emissions of non-GHGs.  Those sources very likely will be subject to
existing substantive applicable requirements for non-GHGs (e.g., NSPS,
Maximum Achievable Control Technology (MACT), and SIP requirements,
including PSD).  Thus, there should be no, or at least no additional,
“empty permits” during Stepstep 1.  For Stepstep 2, it is possible
that sources that become subject to title V requirements for GHG
emissions may not be subject to other requirements, but our assessment
suggests that this is very unlikely.  We estimate that virtually all of
the 550 newly-major sources in Stepstep 2 will be subject to applicable
requirements under the CAA because they are from categories that have
been traditionally subject to regulations, such as smaller industrial
sources from already regulated categories, large landfills, and
oil/gas/coal production.  Even the approximately 50 newly-subject
commercial sources in Stepstep 2, which we estimate to be comprised of
very large hospitals, are likely to be covered by standards for medical
waste incinerators.  In addition, we expect these sources may well be
subject to SIP requirements.  Thus, we do not expect any, or at most
very few “empty permits” during Stepstep 2.

In later stages of implementation (e.g., prospective Stepstep 3) or in
the event that we permit smaller, non-traditional sources of GHGs that
have never otherwise been subject to major source permitting, there
would be a greater potential for “empty permits” to be issued under
title V.  Cognizant of this, we intend to further explore in the
rulemaking for Stepstep 3 “empty permit” theories under the
“absurd results” rationale that may serve to permanently narrow the
scope of title V to exclude sources that would potentially be required
to obtain an “empty permit” due to GHG emissions.

In this action, EPA is also finalizing its proposal to commit to conduct
an assessment of the threshold levels – to be completed in 2015, 5
years after this action -- that will examine the permitting
authorities’ progress in implementing the PSD and title V programs for
GHG sources as well as EPA’s and the permitting authorities’
progress in developing streamlining methods.  We further commit to
undertake another round of rulemaking - beginning after the assessment
is done, and to be completed by April 30, 2016 ––- to address
smaller sources.

We disagree with the commenter who asserted that we do not need 6 years
to study and implement PSD and title V for smaller sources.  As we
discussed in the proposal, and reiterate in this final action, we do not
have sufficient information at this time to determine the applicability
and effectiveness of the various permitting streamlining techniques.
For reasons discussed in more detail in section V.E.1 regarding
streamlining, we are not now able to determine how such techniques will
be implemented or whether they will prove viable or effective.  We agree
with the commenter that these measures may reduce the scope, cost, and
complexity of these programs, but there is considerable uncertainty as
to the extent of this effect.  We do commit in this action to fully
investigate, propose, and evaluate permit streamlining techniques to
determine where they may have applications, how they would be applied,
and whether they can withstand legal challenge.  Even for those
techniques that may ultimately be deemed viable, there is a significant
time period necessary for rulemaking and state adoption, all of which
could take up to 3 years or more.  We also note that we will be required
to complete our study of the effectiveness of these techniques within 5
years, meaning that, in order to complete it in time, we will
essentially need to begin the study as soon as relevant data are
starting to become available.  Finally, the sixth year, in which EPA
must complete rulemaking, requires proposal and promulgation of a rule
within 1 year, which is an ambitious schedule.  Therefore we believe
that 6 years is appropriate for this type of effort.  We also have
received a substantial number of comments from permitting authorities
that agreed with our 5-year timeframe, or a greater timeframe, to get
more prepared for permitting smaller sources.

d.  Other Comments on “Absurd Results” Doctrine

	We received other comments on our application of the “absurd
results” doctrine, which we respond to in the RTCResponse to Comments
document.  One comment was overarching, and so we respond to it here:
Commenters have asserted that under Some commenters argued that the
“absurd results” doctrine, EPA does not have authority to, or at
least should not, promulgate the endangerment/cause or contribute
findings (which we will sometimes refer to as the “findings”) or the
LDVR because doing so would trigger the PSD and title V requirements,
which in turn would give rise to “absurd results”.  According to
commenters, under the “absurd results” caselaw, EPA is obliged to
avoid taking any action that would trigger absurd results and in this
case that means foregoing the endangerment/cause or contribute findings
and/or the LDVR, or at least deferring finalizing them until EPA has
time to streamline PSD and title V requirements so as to avoid “absurd
results”.  Commenters made the related comment that if we promulgate
the LDVR, and thereby trigger PSD, we cannot rely on the “absurd
results” doctrine because it is our own actions – the promulgation
of the LDVR -- that will have given rise to the “absurd results,”
and under those circumstances, the doctrine is not available.

	The comments that EPA had no authority to promulgate, or should not
have promulgated, the endangerment/cause or contribute findings or the
LDVR at the times that EPA did are not relevant to this rule, the
Tailoring Rule.  EPA has already promulgated the findings and the LDVR,
and the LDVR triggers PSD and title V applicability, as we have seen.
These comments would have been relevant only to the proposed findings
and LDVR, and we are not, in this rulemaking, revisiting or reopening
the findings or the LDVR.

Commenters claim that if EPA promulgates the LDVR, the “absurd
results” doctrine will no longer apply to the Tailoring Rule because
it will have been EPA’s own action – promulgation of the LDVR –
that gives rise to the “absurd results”.  We disagree for several
reasons.  For one thing, commenters have not cited caselaw, and our
research has disclosed none, in which a court specifically addressed a
similar situation and issued a holding along the lines of what
commenters urge.  Moreover, commenters’ approach would be punitive
because the absurd results would occur absent this rule going final.
Such an outcome would be counter to the purpose of the doctrine.  That
is, it would mean that PSD and title V would apply  could not be applied
because EPA had other approaches for resolving the problems raised by
applying PSD to GHG sources by their terms – at the statutory levels,
as of January 2, 2011 – with all the adverse consequences described
elsewhere.  	.  In any event, and although we are particular, the
commenters insisted that we were not obligated to respond to these
comments on the merits, they are incorrect on the merits, for the
reasons that follow.  This discussion should not be viewed as reopening
the endangerment/cause or contribute findings or the LDVR because, as
stated previously, we are not  reconsidering or reopening those two
actions in this rule.

In determining and implementing congressional intent, it is important
that  the statutory provisions at issue be considered together – (1)
the obligation to make a determination on endangerment and contribution
under CAA section 202(a); (2) if  affirmative endangerment/cause or
contribute findings are made,  the obligation to promulgate standards
applicable to the emission of any air pollutant from new motor vehicles
or new motor the light-duty vehicle engines under CAA section 202(a);
and (3) the PSD and title V applicability provisions.  The most
appropriate reading, and certainly a reasonable reading, is that we are
required to take the action we have taken, and are taking with this
rule, and that is to issue the findings, promulgate the LDVR, and
promulgate the Tailoring Rule.  Our approach gives effect to as much of
Congress’s intent for each of these provisions, and the CAA as whole,
as possible.  rule, and had we not done so, we would not have triggered
PSD; or at the least, we could have delayed issuing the light-duty
vehicle rule for some period of time, during which we could develop
streamlining measures and permitting authorities could ramp up resources
and thereby minimize the need for tailoring when we did promulgate the
light-duty vehicle rule.

With respect to the endangerment/cause or contribute findings under CAA
section 202(a), congressional intent is clear that, as we stated in
making the findings and the Supreme Court held in Massachusetts v. EPA,
we are precluded from considering factors other than the science based
factors relevant to determining the health and welfare effects of the
air pollution in question.  Accordingly,  EPA determined that under
Massachusetts v. EPA, 549 U.S. 497 (2007) we were precluded from
deferring or foregoing the findings due to concern over impacts on
stationary sources affected by PSD or title V requirements.  See 74 FR
at 66496, 66500-01 (“Taken as a whole, the Supreme Court’s decision
clearly indicates that policy reasons do not justify the Administrator
avoiding taking further action on the questions here.”); see also
Massachusetts v. EPA, 549 U.S. at 533; see also 74 FR at 66515-16
(December 9, 2009).  (The Administrator “must base her decision about
endangerment on the science, and not on the policy considerations about
the repercussions or impact of such a finding).  Moreover, as EPA also
noted, “EPA has the ability to fashion a reasonable and common-sense
approach to address greenhouse gas emissions and climate change.”  74
FR at 66516.

Regarding the timing of the LDVR, Congress’s intent was that
endangerment/cause or contribute findings under section 202(a) would in
fact lead to control of the air pollutants from new motor vehicles and
new motor vehicle engines contributing to the harm.  The primary goal of
section 202(a) is to achieve such reductions by requiring that EPA adopt
emissions standards, and as a result, proceeding with the LDVR is
consistent with that goal.  In contrast, deferring the LDVR and thereby
delaying achievement of the public health and welfare benefits Congress
expected and required under section 202(a) would run directly counter to
what Congress intended under section 202(a) - EPA issuing emissions
standards to address the public health and welfare problems that were
identified, not EPA refusing to do so.

Moreover, we have compelling reasons to proceed with the LDVR, in the
manner that we did.  As we stated in the LDVR, in response to similar
comments	These commenters also commented during the light-duty vehicle
rulemaking that we were not obligated to conduct that rulemaking, or to
conduct it at the time that we did:

.  We believe that our response there suffices for here, as well:

	Some of the comments relating to the stationary source permitting
issues suggested that EPA should defer setting GHG standards for new
motor vehicles to avoid … [adverse] stationary source permitting
impacts.  EPA is issuing these final GHG standards for light-duty
vehicles as part of its efforts to expeditiously respond to the Supreme
Court’s nearly three year old ruling in Massachusetts v. EPA, 549 U.S.
497 (2007).  In that case, the Court held that greenhouse gases fit
within the definition of air pollutant in the Clean Air Act, and that
EPA is therefore compelled to respond to the rulemaking petition under
section 202(a) by determining whether or not emissions from new motor
vehicles cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare, or whether the science
is too uncertain to make a reasoned decision.

	The Court further ruled that, in making these decisions, the EPA
Administrator is required to follow the language of section 202(a) of
the CAA.  The Court stated that under section 202(a), "[i]f EPA makes
[the endangerment and cause or contribute findings], the Clean Air Act
requires the agency to regulate emissions of the deleterious pollutant."
 549 U.S. at 534.  As discussed above, EPA has made the two findings on
contribution and endangerment.  74 FR 66496 (December 15, 2009).  Thus,
EPA is required to issue standards applicable to emissions of this air
pollutant from new motor vehicles.

	The Court properly noted that EPA retained "significant latitude" as to
the "timing ... and coordination of its regulations with those of other
agencies" (id.).  However it has now been nearly three years since the
Court issued its opinion, and the time for delay has passed.  In the
absence of these final standards, there would be three separate federal
and state regimes independently regulating light-duty vehicles to
increase fuel economy and reduce GHG emissions: NHTSA’s CAFE
standards, EPA’s GHG standards, and the GHG standards applicable in
California and other states adopting the California standards.  This
joint EPA-NHTSA program will allow automakers to meet all of these
requirements with a single national fleet because California has
indicated that it will accept compliance with EPA’s GHG standards as
compliance with California's GHG standards.  74 FR at 49460.  California
has not indicated that it would accept NHTSA’s CAFE standards by
themselves.  Without EPA’s vehicle GHG standards, the states will not
offer the federal program as an alternative compliance option to
automakers and the benefits of a harmonized national program will be
lost.  California and several other states have expressed strong concern
that, without comparable federal vehicle GHG standards, the states will
not offer the federal program as an alternative compliance option to
automakers.  Letter dated February 23, 2010 from Commissioners of
California, Maine, New Mexico, Oregon and Washington to Senators Harry
Reid and Mitch McConnell (Docket EPA-HQ-OAR-2009-0472-11400).  The
automobile industry also strongly supports issuance of these rules to
allow implementation of the national program and avoid “a myriad of
problems for the auto industry in terms of product planning, vehicle
distribution, adverse economic impacts and, most importantly, adverse
consequences for their dealers and customers.”  Letter dated March 17,
2010 from Alliance of Automobile Manufacturers to Senators Harry Reid
and Mitch McConnell, and Representatives Nancy Pelosi and John Boehner
(Docket EPA-HQ-OAR-2009-0472-11368).  Thus, without EPA’s GHG
standards as part of a federal harmonized program, important GHG
reductions as well as benefits to the automakers and to consumers would
be lost.165 In addition, delaying the rule would impose significant
burdens and uncertainty on automakers, who are already well into
planning for production of MY 2012 vehicles, relying on the ability to
produce a single national fleet.  Delaying the issuance of this final
rule would very seriously disrupt the industry’s plans

	Instead of delaying the LDV rule and losing the benefits of this rule
and the harmonized national program, EPA is directly addressing concerns
about stationary source permitting in other actions that EPA is taking
with regard to such permitting.  That is the proper approach to address
the issue of stationary source permitting, as compared to delaying the
issuance of this rule for some undefined, indefinite time period.

75 FR 25,402 cols. 1-3____ (May 7, 2010) (footnote omitted).

With respect to both the endangerment/cause or contribute findings and
the LDVR, it would require speculation and conjecture to defer – or,
certainly, to forego altogether - the findings or LDVR until EPA
completed streamlining the PSD and title V requirements on grounds that
doing so would allow full compliance in the future with all PSD and
title V statutory provisions.  That is the gist of commenters argument
– that EPA should defer or forego issuance of the findings and the
LDVR to avoid causing an absurd result from implementation of the
separate PSD and title V programs.  Underlying this claim is the
assumption that this would allow EPA to avoid the “absurb results”.
As we discuss elsewhere in this rulemaking, there is no basis at this
point to determine that streamlining will ultimately allow full
compliance with the PSD and title V requirements.  Rather, it is
possible that EPA may conclude that none of the available streamlining
techniques will allow all GHG sources at the statutory thresholds to
comply with PSD and title V requirements in a manner that does not
impose undue costs on the sources or undue administrative burdens on the
permitting authorities.  Under these circumstances, EPA may then
permanently exclude GHG source categories from PSD or title V
applicability under the absurd results doctrine.  Moreover, it may well
take many years before EPA is in a position to come to a conclusion
about the extent to which streamlining will be effective and therefore
be able to come to a conclusion as to whether any source categories
should be permanently excluded from PSD or title V applicability.  In
our rulemaking today, we describe what actions we expect to take in the
first 6 years after PSD and title V are triggered for GHG sources, and
we may well be in a situation in which we continue to evaluate
streamlining measures and PSD and title V applicability to GHG sources
after this 6-year period.

Accordingly, deferring the endangerment/cause or contribute findings and
LDVR until such time that PSD and title V streamlining would allow full
implementation of these programs at the  statutory limits would serve
only to delay the benefits of the LDVR, as well as the benefits that
come from phasing in implementation of the PSD program to cover larger
sources first.  It would rely on an assumption that is unfounded at this
point, that is, that such full compliance will be required at some point
in the future.  Delaying the emissions benefits of the LDVR and the
related emissions benefits from partial implementation of the PSD
program fails to implement Congress’ intent that the
endangerment/cause or contribute findings “shall” lead to emissions
standards for new motor vehicles contributing to the endangerment, and
related emissions controls for the same air pollutant under the PSD
program.  EPA need not determine at this time what approach would be
appropriate if there was a determination that full compliance with PSD
and title V would in fact occur at some point in the future.  In this
case, absent such a determination, it would be improper to rely on
speculation of such a future possibility as a basis under section 202(a)
to defer or forego issuance of the LDVR on the grounds that EPA should
defer or forego the LDVR to avoid causing an absurd result.  Likewise
there is no basis to defer proceeding at this time with the streamlining
of the PSD and title V programs.

With respect to the PSD and title V applicability requirements, as we
discuss elsewhere, we believe that Congress expressed a clear intent to
apply PSD and title V to GHG sources and that the phase-in approach
incorporated in the Tailoring Rule is fully appropriate.  Proceeding now
with the endangerment/contribution findings and LDVR, even if phasing-in
of the PSD and title V programs is required, is consistent with our
interpretation of the PSD and title V applicability requirements.
Delaying the endangerment/contribution findings or LDVR, and thereby
delaying the triggering of PSD and title V requirements for GHG sources,
would lead to the loss of a practicable opportunity to implement the PSD
and title V requirements in important part, and thereby lead to the loss
of important benefits.  As discussed elsewhere, promulgating the LDVR
and applying the PSD and title V requirements to the largest GHG
sources, as we do in this Tailoring Rule, is practicable because the
sources that would be affected by the initial implementation steps we
promulgate in this rule are able to bear the costs and the permitting
authorities are able to bear the associated administrative burdens.
Promulgating the LDVR now provides important advantages because the
sources that would be affected by the initial steps are responsible for
most of the GHG emissions from stationary sources.

It should also be noted that as discussed elsewhere in this rulemaking,
our ability to develop appropriate streamlining techniques for PSD and
title V requirements is best done within the context of actual
implementation of the permitting programs, and not in isolation of them.
 That is, because the great majority of GHG sources have not been
subject to PSD and title V requirements, we will need to rely on the
early experience in implementing the permitting requirements for the
very large sources that initially will be subject to those requirements
in order to develop streamlining techniques for smaller sources.  It is
the real world experience gained from this initial phase that will allow
EPA to develop any further modifications that might be necessary.  This
would not and could not occur if the LDVR were delayed indefinitely or
permanently, so that PSD and title V requirements were not triggered.
It is unrealistic to expect that delaying action until a future
tailoring rule could resolve all of the problems identified in this
rulemaking, absent any real world implementation experience.

At its core, commenters’ argument is that EPA should delay (if not
forego altogether) doing anything to address GHG emissions and the
problems they cause until it can do so in a way that does not cause any
implementation challenges, even if that delay results in continued
endangerment to public health and welfare.  EPA does not take such a
myopic view of its duties and responsibilities under the CAA.  Congress
wrote the CAA to, among other things, promote the public health and
welfare and the productive capacity of the population.  CAA §101(b)(1).
 EPA’s path forward does just this.  Thus, proceeding with the
endangerment/cause or contribute findings, the LDVR, and with PSD and
title V through the phase-in approach of the Tailoring Rule maximizes
the ability of EPA to achieve the Congressional goals underlying
sections 202(a) and the PSD and title V provisions, and the overarching
CAA goal of protecting public health and welfare.  Congress called for
EPA (1) to determine whether emissions from new motor vehicles
contribute to air pollution that endangers, (2) if that the
determination is affirmative, to issue emissions standards for new motor
vehicles to address the endangerment, and (3) to implement the PSD and
Title V program to address similar emissions in their permitting program
as another tool to address the air pollutant at issue.  Delaying both
the LDVR and PSD/title V implementation, as commenters have called for,
would run directly counter to these Congressional expectations.
Commenters’ calls for deferral or foregoing of the findings or LDVR
are generally phrased in a conclusory fashion, and do not demonstrate
how EPA could take the required CAA actions concerning GHGs while
remaining within the requirements of each of the various CAA provisions,
and achieving the overall goals of the CAA.  As such the comments do not
provide a valid basis for the deferral of agency action they suggest.

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

EPA believes that the “administrative necessity” doctrine, within
the Chevron framework, also justifies this rulemaking.  Applying the
applicability requirements of the PSD and title V programs according to
a literal reading of their terms (as EPA has narrowed them in the past
through interpretation) to GHG sources beginning on the January 2, 2011
date that regulation of GHGs takes effect would sweep so many sources
into those programs as to render the programs impossible for the
permitting authorities to administer.  Although streamlining the PSD and
title V programs offers some promise to improve the administrability of
the programs, given the time needed to implement such streamlining, the
step-by-step expansion of PSD and title V requirements to GHG sources
that we are promulgating is the most that the permitting authorities can
reasonably be expected to administer.

This section discusses the application of the “administrative
necessity” doctrine.  Our views concerning this doctrine remain
similar to what we said at proposal, except that in this rulemaking we
place the doctrine more clearly in the Chevron analytical framework, we
revise our assessment of the administrative burdens due to new analysis
we have conducted and information we have received since proposal, and
we make certain revisions to the tailoring approach.  This analysis and
information, as well as the revisions to the tailoring approach, have
already been presented previously, in the discussion of the “absurd
results” basis.  In addition, it is not necessary to reiterate the
lengthy discussion of the “administrative necessity” doctrine that
we included in the proposal or the factual data presented previously; as
a result, this section  briefly highlights the conclusions we have
reached about the application of this doctrine.

	As noted previously, under the PSD and title V applicability provision
– read literally, as we have long interpreted them -- EPA’s recent
promulgation of the LDVR light-duty vehicle rule will trigger the
applicability of PSD and title V for GHG sources at the 100/250 tpy and
100 tpy threshold levels, respectively, as of January 2, 2011.  This is
because PSD applicability hinges on the definition of “major emitting
facility” and title V applicability hinges on the definition of
“major sources,” and those terms, read literally, and under EPA’s
long-standing narrowing interpretation, apply PSD and title V,
respectively, to sources of any air pollutant that is subject to
regulation under another provision of the CAA.  EPA’s promulgation of
the LDVRlight-duty vehicle rule means that GHGs will become subject to
regulation on the date that the rule takes effect, which will be January
2, 2011.

	Absent tailoring, the January 2, 2011 trigger date for GHG PSD
applicability will give rise to an extraordinarily large number of PSD
permitting actions – we estimate more than 81,000 per year –
representing an increase of almost 300-fold over the current 280 PSD
permitting actions each year.  In addition, over 6 million sources will
become subject to title V, an increase of more than 400-fold over the
14,700 sources that currently are subject to title V.  The permitting
authorities will find it impossible to administer programs of these
sizes as of that date.

	All this results from a literal application of the PSD and title V
applicability provisions to GHG sources.  However, under Chevron, we
must interpret and apply statutory requirements on the basis of
congressional intent.  Although the literal meaning of the statutory
provisions is the first and generally the best indicator of
congressional intent, there are cases in which that is not so.  As
discussed previously, we believe that as a general matter, statutory
directives should be considered to incorporate Congress’s intent that
they be administrable, and we believe that this proposition is implicit
in the “administrative necessity” doctrine that the D.C. Circuit has
established and that we believe applies here.  See Alabama Power v.
Costle, 636 F.2d 323, 356-57 (D.C. Cir. 1980).  This doctrine authorizes
EPA to undertake a process for rendering the PSD and title V
requirements administrable.  Indeed, the Court in Alabama Power
established this doctrine specifically in the context of the PSD
provisions, including, in particular, the modification provision.  As
noted elsewhere, the Court held that EPA may “consider the
administrative burden” associated with applying PSD for emissions
increases, and establish significance levels designed to avoid “severe
administrative burdens on EPA, as well as severe economic burdens” on
sources.  Id. at 405.

	As we said in the proposal, we read the caselaw to establish a
three-step approach for implementing the “administrative necessity”
doctrine:  An agency is not required to adhere to literal statutory
requirements if the agency, as the first step, makes every effort to
adjust the requirements within the statutory constraints, but concludes
with justification – at the second step – that it would be
impossible to comply with the literal reading of the statute.  Under
those circumstances, the agency may – at the third step – develop
what is in effect a compliance schedule with the statutory requirements,
under which the agency will implement the statute as much as
administratively possible and as quickly as administratively possible.
See 74 FR 55315 – 55316,315/1 – 55,316/3.

a. First Step of the “Administrative Necessity” Analysis:
Streamlining

	In the proposed rulemaking, EPA discussed at length the prospect of
streamlining both PSD and title V.  EPA described “several potentially
useful tools available in the streamlining toolbox for the PSD
permitting threshold level, the PSD significance level, and the title V
permitting threshold,” specifically:

For the PSD permitting threshold level and significance level, there are
at least three such tools:  The first is interpreting the definition of
"potential to emit" so that the amount of a source's emissions that
counts in determining whether it qualifies as a major source and
therefore is above the permitting threshold requirements is closer to
the amount of its emissions when it is in actual operation, rather than
the amount of emissions that the source would emit if it were operating
continuously.  Narrowing the definition of PTE is a potentially
extremely important tool in this context because identifying the amount
of a source's emissions as closer to its actual emissions in this manner
would mean that very large numbers of residential and commercial sources
would have significantly lower emissions and would fall below the
statutory threshold requirements for triggering PSD.  Second, EPA
believes it may be able to develop programs involving general permits,
under which large numbers of similarly situated sources would each be
covered by essentially the same permit established through a regulatory
action by the permitting authority.  This approach could achieve
economies of scale and thereby reduce administrative burden.  Third, EPA
believes it may be able to streamline the single most time-consuming
element of the PSD permit program, which is the determination of BACT as
required under CAA §165(a)(4), by establishing presumptive BACT levels
for certain source categories that comprise large numbers of sources.
As for title V, as discussed below in detail, EPA believes that defining
"potential to emit" to reflect more closely a source's actual operation
and developing a program of general permits could streamline the
administration of title V permits.

74 FR 55,315 col. 2-3.

	At proposal we stated that we would, and we still commit to, vigorously
pursue development of these streamlining measures, and, as indicated in
our discussion of streamlining methods in section V.E.1 and in response
to comments, we have already begun developing those measures.  For
example, as described elsewhere, we have done much work – both with
stakeholders and in-house -- to begin to develop recommendations for
what controls would qualify as BACT for various industries.  This work
is important as a foundation for developing presumptive BACT, which is a
potentially efficient streamlining measure.

	However, it is not possible for us or the state and local permitting
authorities to develop and implement streamlining techniques by the time
that PSD and title V are triggered for sources emitting GHGs – January
2, 2011 -- or shortly thereafter.  Developing streamlining methods would
entail acquiring more information about the affected industry, may
entail rulemaking, and would likely entail some type of public review of
proposals for streamlining even if not done through rulemaking.  As
discussed in section VI.E, we do not expect that we could complete all
those steps for meaningful streamlining measures within 2 years.

b.  Second Step of the “Administrative Necessity” Analysis:
Demonstration of Administrative Impossibility

	With no streamlining measures available at the time that PSD and title
V would apply to sources of GHGs or shortly thereafter, under the second
step of the “administrative necessity” analysis, we must determine
whether implementation of the statutory requirements at that time would
be administratively impossible for the permitting authorities.  We are
mindful that the D.C. Circuit has cautioned that this showing is a high
hurdle.  See 74 FR 55,317/3.

	Even so, we believe there is no question that a literal application of
the PSD and title V programs to GHG sources as of January 2, 2011 would
be flatly impossible for the state and local permitting authorities to
administer for at least an initial period of time.  The key facts have
been recounted previously, and no more than a brief recitation is
necessary here.  On the PSD side, annual permit applications would
increase by over 300-fold, from 280 to almost 82,000; costs to the
permitting authorities would increase more than 100-fold, from $12
million to $1.5 billion; and the permitting authorities would need to
hire, train, and manage 9,772 FTEs.  For title V, total permit
applications would increase by over 400-fold, from 14,700 to 6.1
million; costs to the permitting authorities would increase from $62
million to $21 billion; and the permitting authorities would need to
hire, train, and manage 229,118 FTEs.

	We have elaborated upon these burdens elsewhere in this notice.  They
bespeak an impossible administrative task.  It is not hyperbole to say
that if these administrative responsibilities are not considered
impossible within the meaning of the “administrative necessity”
doctrine, then it is difficult to imagine what would be considered
impossible.

c.  Third Step of the “Administrative Necessity” Analysis:
Tailoring

	Under the third step of the “administrative necessity” analysis, we
must demonstrate that the steps we intend to take towards implementation
of the statutory requirements are the most that can be done during the
indicated time frames, in light of administrative resources.  In this
manner, we adhere most closely to the statutory requirements.  See 74 FR
55318/2.  This amounts to establishing a schedule for phasing in PSD and
title V applicability to GHG sources.  Because this step is based on the
administrative resources of the permitting authorities, our analysis is
similar, and leads to the same conclusions, as we described previously
concerning the “absurd results” basis.  That is, we believe that our
tailoring approach – including Stepstep 1, to be implemented as of
January 2, 2011; Stepstep 2, to be implemented as of July 1, 2011; the
additional rulemaking that we commit to finalize by July 1, 2012, and
that will address further threshold reductions as a Stepstep 3; the
study and subsequent rulemaking to address smaller sources by April 30,
2016; and the determination not to lower the threshold below
50,000/50,000 tpy CO2e before April 30, 2016 at the earliest -  is the
most that we can do to expand the PSD and title V programs, based on
administrative resources and the information we currently have about the
prospects for streamlining and increasing permitting resources.

	As noted previously, at some point in the process of additional
rulemaking, we may conclude under the “absurd results” doctrine that
we will not apply PSD or title V to GHG sources below a certain size
level.  The same conclusion may be supportable under the
“administrative necessity” doctrine if we decide, based on the
information available to us, that even with all of the streamlining that
we are able to accomplish and even with a significant expansion of
permitting resources, it may not be administratively feasible to
implement PSD or title V to sources below that level.  See Alabama Power
v. Costle, 636 F.2d at 358 (acknowledging, in discussing the
“administrative necessity” doctrine, that “[c]ategorical
exemptions from the clear commands of a regulatory statute [are]
sometimes permitted,” although emphasizing that such exemptions “are
not favored”).

	In addition, as noted above, in a subsequent rulemaking, we may
conclude that title V should not apply to GHG sources with “empty
permits,” under the “absurd results” doctrine.  The basis for this
conclusion could be a determination that (1i) although the applicability
provisions apply by their terms to sources on the basis of their
emissions, and without regard to whether the sources would hold “empty
permits”, those provisions cannot be read literally under the
“absurd results” doctrine; and (2ii) it is not clear whether
Congress intended that title V apply to such sources, and EPA has
reasonably determined, under Chevron Stepstep 2, that title V does not.
If we come to that conclusion, then, at that point in time, the
“administrative necessity” doctrine would remain relevant for title
V purposes only if is necessary, for administrative reasons, to phase
-in the application of title V to GHG sources that have applicable
requirements, and that therefore do not have “empty permits.””.
This is because the “administrative necessity” doctrine is relevant
only when a statutory directive, read literally, imposes impossible
administrative obligations, and Congress may be presumed to have
intended that the directive be administrable.  The “administrative
necessity” doctrine would not come into play if it is concluded either
that under the “absurd results” doctrine Congress did not intend the
statutory directive or that, under that doctrine, Congress’s intent
was not clear and EPA reasonably decided that the directive does not
apply.

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

	In addition to the “absurd results” and “administrative
necessity” doctrines, the “one-step-at-a-time” judicial doctrine,
within the Chevron framework, supports EPA’s Tailoring Rule.  The
caselaw under this doctrine, described previously, indicates that the
doctrine justifies an agency’s step-by-step approach under the
following circumstances or conditions: (1i) the agency’s ability to
comply with a statutory directive depends on facts, policies, or future
events that are uncertain; (2ii) the agency has estimated the extent of
its remaining obligation; (3iii) the agency’s incremental actions are
structured in a manner that is reasonable in light of the uncertainties;
and (4iv) the agency is on track to full compliance with the statutory
requirements.  EPA’s Tailoring Rule fulfills each of those four.

	First, as the D.C. Circuit stated in National Association of
Broadcaster v. FCC, 740 F.2d 1190, 1210 (D.C. Cir. 1984) (“National
Association of Broadcasters”), incremental agency action is most
readily justifiable “against a shifting background in which facts,
predictions, and policies are in flux and in which an agency would be
paralyzed if all the necessary answers had to be in before any action at
all could be taken.”  Those circumstances are present here, and so is
that fact that the task at hand is extraordinarily demanding.  As
discussed previously, EPA and the permitting authorities’ progress in
implementing the PSD and title V programs for GHG sources will depend in
large measure on the development of streamlining measures and increases
in permitting authorities’ resources, and those things carry some
uncertainty and in any event, under the best of circumstances, cannot
have much impact for at least several years.  It will take EPA that long
to develop streamlining measures, and it will take permitting
authorities that long to begin to raise money and hire and train FTEs.

	Second, as the Court stated in National Association of Broadcasters,
“the agency [should] ma[k]e some estimation, based upon evolving
economic and technological conditions, as to the nature and magnitude of
the problem it will have to confront when it comes to [undertake the
remaining steps]” and that estimation must be “plausible and flow
from the factual record compiled.”  Id. at 1210.  Here, EPA has done
this by estimating the number of PSD and title V permits and the costs
of issuing them, and has provided as much information as possible about
the development of streamlining methods and permitting authority
resources.

	Third, again as the Court stated in National Association of
Broadcasters, it must be “reasonable, in the context of the decisions
made in the proceeding under review, for the agency to have deferred the
issue to the future.  With respect to that question, postponement will
be most easily justified when an agency acts against a background of
rapid technical and social change and when the agency’s initial
decision as a practical matter is reversible should the future
proceedings yield drastically unexpected results.”  Id. at 1211.
Here, our tailoring approach is reasonable in light of changes in
permitting authority capacity that may occur with the development of
streamlining methods and increased resources.  In addition, the first
two steps that EPA promulgates today are reasonable initial steps that
we expect to build on by lowering thresholds, as appropriate, in the
future.  We have no reason to suspect that we may need to reverse either
of the first two steps.  Having received and analyzed extensive comment
on the number of permitting actions to expect and on permitting
authority resources, we consider it unlikely that we would need to
establish a higher threshold level than what we have established in
Stepssteps 1 and 2.  In addition, if we were to adopt an “empty
permits” approach for title V, we would not need to reverse either of
Stepssteps 1 and 2, as explained above.

Finally, as the D.C. Circuit stated in Grand Canyon Air Tour Coalition
v. F.A.A., 154 F.3d 455, 477-78 (D.C. Cir. 1998), the Courts will accept
an initial step towards full compliance with a statutory mandate, as
long as the agency is headed towards full compliance, and we believe
that the doctrine is applicable here.  EPA intends to require full
compliance with the CAA applicability provisions of the PSD and title V
programs, but we believe that in the case of GHG-emitting sources, by
application of the “absurd results” doctrine or the
“administrative necessity” doctrine, full compliance with the
applicability provisions does not necessarily mean full

compliance with the literal terms of those provisions.  Rather, as we
have explained elsewhere, in the case of GHG sources, full compliance
may mean compliance with higher levels that are consistent with
congressional intent, under the “absurd results” doctrine, or that
are within the reach of permitting authorities in light of their
administrative constraints, under the “administrative necessity”
doctrine.  This rulemaking constitutes a package of initial steps
towards that full compliance, and, seen in that light, is supported by
the “one-step-at-a-time” doctrine.

	Even if the doctrine were found to apply only when an agency is
committed to fully implementing statutory requirements according to
their literal terms, we believe that the steps we promulgate in this
notice would be considered valid under the one-step-at-a-time doctrine.
This is because even if we are incorrect about the applicability of the
“absurd results” and “administrative necessity” doctrines, so
that GHG sources are required to comply with the literal terms of the
PSD and title V applicability provisions, the “one-step-at-a-time”
doctrine would allow PSD and title V applicability to be phased in, and
the first two steps we promulgate in this notice would be upheld as
reasonable initial steps toward full compliance with the literal terms
of the CAA.  As we have described elsewhere, there is little question
but that sources and permitting authorities cannot reasonably be
expected to comply with or implement PSD and title V applicability
requirements in the near term – by January 2, 2011 and July 1, 2011 -
except to the limited extent described under Steps steps 1 and 2.  Nor
is applicability of the PSD and title V requirements at levels below
50,000 tpy CO2e reasonable before 6 years from promulgation of this
rule, as discussed elsewhere.  If further steps resulting in full
compliance with the literal terms of the applicability provisions of PSD
and title V were required, it would be reasonable for those steps to
occur in the future, as part of the rulemaking to be completed by the
sixth year after promulgation, to which EPA commits itself as part of
this action, or as part of subsequent actions.  See Grand Canyon Air
Tour, 891 F.2d at 476-77 (upholding agency action as a step towards full
compliance with statutory mandate when the agency expected full
compliance to occur some 20 years after the deadline in the statute).

C.  Mechanisms for Implementing and Adopting the Tailoring Approach

In this section, we discuss three issues related to adoption of the
tailoring approach within our regulations and by permitting agencies.
The first is the regulatory mechanism for implementing the tailoring
approach – that is, the specific way we are revising the PSD and title
V applicability provisions to incorporate the tailoring approach – and
our rationale.  The second is the process by which state or local
permitting authorities may incorporate the tailoring approach into their
PSD SIP and title V permit programs.  Finally, we discuss our reasons
for delaying action on our proposal to limit approval of both
SIP-approved PSD programs and title V programs, and we request certain
information from states on both of their programs and their actions in
response to this rule.

In brief, we proposed to exempt sources emitting GHGs below certain
threshold levels from the definition of the regulatory terms “major
stationary source” and “major modification” in PSD programs and
the definition of the regulatory term “major source” in title V
programs.  We further proposed to effectuate this change in SIP-approved
PSD programs (as included in SIPs) and EPA-approved part 70 title V
programs by limiting our prior approval of those programs to the revised
applicability thresholds for GHGs.  These changes would have the effect
of putting the higher thresholds adopted under the Tailoring Rule in
place in states PSD and title V programs as a matter of federal law.
However, state commenters expressed concern that they would not be able
to adopt the Tailoring Rule under state laws on an expeditious basis.
To address this, our final action differs from our proposed rule in the
way we incorporate the limitations promulgated in this Tailoring Rule
into the “major stationary source,” “major modification” and
“major source” definitions.  This approach relies on further
defining the term “subject to regulation” and although this approach
is not substantively different in effect from the proposed rule, it will
facilitate more rapid adoption and implementation of the Tailoring Rule
by states through interpretation of language in existing state
regulations.  We believe these differences are a logical outgrowth of
our proposed rule.  We are also delaying action on our proposed limited
approval of EPA-approved PSD programs and part 70 title programs to
determine how each state will implement the final rules.

1.  PSD Approach:  Background and Proposal

Under CAA section §165(a), no “major emitting facility” may
construct or modify unless it receives a preconstruction permit that
meets the requirements of the PSD program.  CAA section §169(1) defines
a major emitting facility as “any … source[]” in one of 28
specified source categories that “emit[s], or ha[s] the potential to
emit, one hundred tons per year or more of any air pollutant;” or
“any other source with the potential to emit two hundred and fifty
tons per year or more of any air pollutant.”  EPA’s regulations
replace the term “major emitting facility” with the term “major
stationary source” and define the term as “[a]ny of … [28 types
of] stationary sources of air pollutants which emits, or has the
potential to emit, 100 tons per year or more of any regulated NSR
pollutant” or “any stationary source which emits, or has the
potential to emit 250 tons per year or more of a regulated NSR
pollutant.”  40 CFR 51.166(b)(1)(i)(a)-(b).  The term “regulated NSR
pollutant” is defined to include, among other things, “any … air
pollutant that otherwise is subject to regulation under the Clean Air
Act.”  40 CFR 51.166(b)(50).  Note that the regulatory definition in
effect interprets the statutory definition more narrowly to read “one
hundred [or two hundred and fifty] tons per year or more of any air
pollutant subject to regulation under the Clean Air Act” (emphasis
added).

Similarly, under the statute, a modification occurs if there is a
physical change or change in the method of operation “which increases
the amount of any air pollutant emitted …. . .” CAA section 165(a),
169(2)(c), and 111(a)(4).  As with the major stationary source
definition, we have limited coverage of the modification provision to
physical changes or changes in the method of operation that result a
significant net emissions increase in emissions of a “regulated NSR
pollutant.”  40 CFR 51.166(b)(2)(i).

Our proposed rule revised the definition of “major stationary source
to 1) exempt GHG from the regulated NSR pollutants that, if emitted by a
source in the 100 or 250 tpy quantities, would cause the source to
qualify as a “major stationary source,” and 2) add a specific
threshold at which a source that emits a specified quantity of GHGs (at
proposal, that quantity was 25,000 tpy CO2e) would qualify as a “major
stationary source.”  74 FR 55,351, proposed 40 CFR 51.166(b)(1)(i)(a),
(b), and (d).  We also proposed a significance threshold, which is the
amount of an increase needed to trigger PSD for a modification or to
require BACT for a new source, at a level between 10,000 and 25,000 tpy
CO2e.  74 FR 55351; 40 CFR 51.166(b)(23)(i).

Additionally, we recognized that it may take some time before states
could change their SIP-approved PSD programs and that as a result,
absent additional action on our part, GHG-emitting sources would remain
subject to the 100 or 250 tpy thresholds, and subject to a zero
significance threshold for major modifications as a matter of federal
law.  To address this issue, we proposed to narrow our previous approval
of those SIPs.  The effect of our proposal would be that EPA would have
approved the SIP PSD programs only to the extent they apply PSD and
requirements to GHG sources at or above the thresholds established in
the Tailoring Rule (which, generally, were 25,000 tpy CO2e), and EPA
would have taken no action on the SIP PSD programs to the extent they
apply PSD requirements to GHG sources below that threshold.  We relied
on the authority of the APA and the general authority of CAA section
§301 and, in the alternative, on the error correction mechanism under
CAA section 110(k)(6).  Our limited approval would revise existing
EPA-approved SIP PSD programs to authorize permitting under the CAA only
for GHG sources at the appropriate levels.

In response to our proposed approach, we received numerous comments from
state and local permitting agencies expressing significant concern.
They observed that our proposed approach could meet its objectives to
avoid applying PSD requirements to small sources under federal law, but
would not succeed in avoiding the application of PSD requirements to
those small sources under state law.  The commenters explained that,
although EPA was changing federal PSD applicability thresholds; for
GHG-emitting sources to incorporate the tailoring approach, and limiting
the scope EPA approval of SIPs consistent with these thresholds, the
state rules containing the originally- approved SIP thresholds would
continue to apply as a matter of state law.  As commenters explained,
for the most part, the laws and regulations states adopt to implement
federal PSD programs mirror EPA’s regulations, so that the state laws,
apply PSD to sources that emit air pollutants subject to regulation at
the 100/250 tpy threshold.  Commenters reasoned that, until the states
can change their state laws, the 100/250 tpy thresholds will continue to
apply as a matter of state law, even though the higher thresholds apply
as a matter of federal law.  	Importantly, these commenters emphasized,
their state process requires that they promulgate a rulemaking, or in
some cases, a legislative change, to incorporate the higher thresholds
for GHG sources in their SIPs.  These processes would require many
months and in some cases as long as 2 years.  As a result, sources that
emit GHGs below the federally established levels in the final rule, but
at above the 100/250 tpy levels in state laws and rules, would still be
required to obtain PSD permits under state law.  As a result, states, in
attempting to implement state permitting requirements, would be faced
with the same administrative difficulties that EPA recognized in the
proposed rule as impossible.  Commenters emphasized that this situation
was untenable.

In addition to the state comments just described, we received comments
that took issue with our view that we were in effect revising the
numerical thresholds for PSD applicability as the legal mechanism for
the tailoring approach.  They asserted that in fact, our mechanism
consisted of interpreting the term “any source” to exclude small
GHG-emitting sources.  Other commenters objected to our proposed
mechanism of narrowing our previous SIP approval, arguing that this
mechanism was without legal basis.

2.  Rationale for Our Final Approach to Implementing PSD

In response to these concerns, we are adding another mechanism to
implement the tailoring approach for PSD, and that is to adopt a
definitioninterpret, within our PSD regulations, the phrase “subject
to regulation,” as found within the phrase “any regulated NSR
pollutant,” which, in turn, is part of the definitions of “major
stationary source” and “major modification.”  To implement this
mechanism, we are defining the phrasecodifying in our regulations an
interpretation of “subject to regulation” so that the GHGs emitted
by sources that fall below the thresholds or scope established in
Stepssteps 1 and 2 are not treated as “subject to regulation,” and
therefore do not trigger PSD for the sources that emit them.  As
discussed in section V.B.3., the term “subject to regulation” is one
of four terms that should be considered not to apply literally in the
case of GHG sources.

To understand this approach, it is useful to return to the definition of
“major stationary source,” which, again, is central to PSD
applicability.  The definition, quoted previously, employs the term
“regulated NSR pollutant,” which is a defined term.  The definition
incorporates many other elements as well (e.g., the 100/250 threshold
requirements), but for convenience, we quote it as follows:  a “major
stationary source” is “[a]ny … source[] of air pollutants, which
emits, or has the potential to emit, [depending on the source category,
either] 100 [or 250] tons per year or more of any air pollutant that is
subject to regulation under the Clean Air Act.”  40 CFR
51.166(b)(1)(i)(a)-(b).  Applying our definition of “subject to
regulation” to exclude GHG sources that emit below specified
thresholds, the definition may now be paraphrased as follows:  A
“major stationary source” is any source of air pollutants, which
emits, or has the potential to emit, depending on the source category,
either 100 or 250 tpytons per year or more of any air pollutant subject
to regulation under the CAA, except that the source’s GHGs are
considered to be subject to regulation under the CAA only the extent
indicated under Stepssteps 1 and 2 of the Tailoring Rule, e.g., for
Stepstep 2, only if the source’s GHG emissions exceed the threshold
established in Stepstep 2.  We adopt the same approach for the
definition of the regulatory term “major modification.”

Although EPA is codifying its interpretation of “subject to
regulation” by revising its regulations to apply the phrase subject to
regulation in this manner, we have been advised that states may be able
to adopt our approach without having to undertake a rulemaking action to
revise their stateSIP regulations or without requiring an act of the
state legislature.  Instead, it is our understanding that states may
adopt our approach by interpreting the term “subject to regulation”
reflected in their regulationsSIPs to have the same meaning for the term
“subject to regulation” that we are assigning to that termincluding
in our regulations in this rulemaking.  We believe that States can rely
on an interpretation because we view the term “subject to
regulation” as open-ended, and therefore amenable to interpretation.
This is particularly – although not exclusively -- the case in a state
that has taken the position, or determines now, that the state’s
definition of “subject to regulation,” or, more broadly,
“regulated NSR pollutant” or “major stationary source” or
“major modification, is intended to be interpreted in a way that
tracks the meanings that EPA has assigned to these phrases.  Such states
can adopt the meaning of “subject to regulation” that we establish
in this rule by January 2, 2011, and thereby avoid the situation in
which, as a matter of state law, GHG-emitting sources above the 100 or
250 tpy thresholds become subject to PSD by that date.  The following
explains our basis for concluding that states may apply EPA’s approach
under existing regulations that use the term “subject to
regulation.”the phrase “subject to regulation” is open-ended.

First, we recently stated this position in our reconsideration of the
Interpretive Memo.  On December 18, 2008, EPA issued the Interpretive
Memorandum, establishing EPA’s interpretation of the definition
“regulated NSR pollutant” found at 40 CFR 52.21(b)(50).  EPA
intended this memorandum to resolve ambiguity in subparagraphsubpart
(iv) of this definition, which includes “any pollutant that otherwise
is subject to regulation under the Act.”  Specifically, the memorandum
stated that EPA will interpret the definition of “regulated NSR
pollutant” to exclude pollutants for which EPA regulations only
require monitoring or reporting but to include pollutants subject to
either a provision in the CAA or regulation adopted by EPA under the CAA
that requires actual control of emissions of that pollutant.

After reconsidering this interpretation through a formal
notice-and-comment process, EPA refined its interpretation to establish
that the PSD permitting requirements will not apply to a newly regulated
pollutant until a regulatory requirement to control emissions of that
pollutant “takes effect.”  75 FR 17704.  Importantly, as stated
previously, because the term “regulated NSR pollutant” is embedded
within the definition of “major stationary source,” this
interpretation effectively defines which major stationary sources are
subject to PSD permitting.  As a result, for example, EPA explained that
PSD and title V permitting requirements for GHGs will not apply to GHGs
until at least January 2, 2011, following the anticipated promulgation
of EPA regulations requiring control of GHG emissions under titleTitle
II of the CAA.  Id.

	In the RTC document for EPA’s reconsideration of the PSD
interpretative memorandum, we stated that,

Absent a unique requirement of state law, EPA believes that state laws
that use the same language that is contained in EPA’s PSD program
regulations at 52.21(b)(50) and 51.166(b)(50) are sufficiently
open-ended to incorporate greenhouse gases as a regulated NSR pollutant
at the appropriate time consistent with EPA’s interpretation of these
regulations (emphasis added).  (Docket ID No.
EPA-HQ-OAR-2009-0597-0128).

Because the state regulations SIP provisions that include EPA’s
definition of the term “subject to regulation” in the
reconsideration of the Interpretive Memo PSD interpretive memorandum are
“sufficiently open-ended to incorporate greenhouse gases as a
regulated pollutant,” those state regulationsSIP provisions are also
sufficiently open-ended to incorporate the further refinement to the
meaning of the phrase “subject to regulation” that we make in this
rulemaking.

	By the same token, EPA has historically interpreted certain state
SIP-approved programs as sufficiently open-ended such that the rules
provide for the “automatic assumption for the responsibility for
review” of new pollutants before the general deadline for states to
revise their PSD programs.  See, e.g., 52 FR at 24682.  Conversely, we
have also read federal rules and state rules approved in SIPs to provide
for the automatic removal of a pollutant when such pollutant is no
longer “subject to regulation.”  For example, the 1990 CAA
Amendmentsamendments exempted HAPs listed in sectionSection 112(b)(1)
from the PSD requirements.  See CAA section §112(b)(6).  Following
passage of the amendments, EPA issued “New Source Review (NSR) Program
Transitional Guidance,”“, a memorandum from John S. Seitz, Director,
Office of Air Quality Planning and Standards to Regional Air Division
Directors on March 11, 1991.  In that guidance, EPA interpreted its PSD
regulations to automatically cease to apply to listed HAPs (with some
noted exceptions), and implicitly stated that a state with an open-ended
SIP-approved PSD rule could also take the position that its SIP-approved
rule automatically ceased to regulate HAPs.

	After reviewing these past practices in the PSD permitting program, and
EPA’s prior statements regarding pollutants subject to the PSD
program, we conclude that states with SIP-approved rules that contain
the same language as used in 40 CFR 52.21(b)(50) or 40 CFR
51.166(b)(49), or that otherwise have sufficiently open-ended PSD
regulations, would be able to implement our Tailoring Rule approach to
permitting by interpreting their regulations, and without needing to
promulgate a regulation or seek state legislative action.  This is
particularly – although not exclusively -- the case for states that
take the position that they intend their rules to apply in the same
manner meaning as EPA's counterpart rules.  If states adopt this reading
of their regulations, GHG sources falling below the specified cutoffs
would not be emitting pollutants “subject to regulation” within the
definition of “regulated NSR pollutant” and therefore would not be
subject to PSD permitting as a major stationary source or for making a
major modification.

During our consideration of this action, we participated in
teleconferences with one local and six state states agency permitting
authoritiesauthority to discuss this issue of whether they could
implement the proposed rule without the need for state law or regulation
changes or a revision of the provisions of state law that are a part of
the SIP.  We specifically discussed whether defining the phrase
“subject to regulation” would better facilitate state incorporation
of the limitations in this final rule.  The state and local agencies
participating in the calls generally agreed that defining the phrase
“subject to regulation” would, compared to our proposed approach,
better facilitate state incorporation of the limitations in the final
rule in states with regulations that mirror the existing federal rules,
or in states whose rules are otherwise sufficiently open-ended to
incorporate the limitations in the final rule by interpretation.
Participants from each agency also indicated that their rules contain
the term “subject to regulation” and that term has not been
previously interpreted in ways that would preclude application of the
adoption of EPA’s meaning assigned toof the term by EPAinterpretation
to allow for adoption.  We therefore concluded it is likely the state
rules are sufficiently open-ended to apply EPA’s approach by
interpretation (although some states indicated they may elect to pursue
rulemaking in addition to or instead of interpretation).  Accordingly,
we selected the “subject to regulation” regulatory approach as the
mechanism for implementingcodifying the final rule.

3.  Other Mechanisms

As just described, we selected the “subject to regulation” mechanism
because it most readily accommodated the needs of statesStates to
expeditiously revise – through interpretation or otherwise -- their
state rules.  Even so, it is important to recognize that this mechanism
has the same substantive effect as the mechanism we considered in the
proposed rule, which was revising numerical thresholds in the
definitions of major stationary source and major modification.  Most
importantly, although we are codifying the “subject to regulation”
mechanism, that approach is driven by the needs of the states, and our
action in this rulemaking should be interpreted to rely on any of
several legal mechanisms to accomplish this result.  Thus, our action in
this rule should be understood as revising the meaning of several terms
in these definitions, including:  (1i) the numerical thresholds, as we
proposed; (2ii) the term, “any source,” which some commenters
identified as the most relevant term for purposes of our proposal;
(3iii) the term, “any air pollutant; or (4iv) the term, “subject to
regulation.”  The specific choice of which of these constitutes the
nominal mechanism does not have a substantive legal effect because each
mechanism involves one or another of the components of the terms
“major stationary source” - which embodies the statutory term,
“major emitting facility” -- and “major modification,” which
embodies the statutory term, “modification,” and it is those
statutory and regulatory terms that we are defining to exclude

the indicated GHG-emitting sources.

4.  Codification of Interpretive Memo

As noted previously, we recently affirmed and refined our interpretation
of the term “subject to regulation” as it applies broadly to the PSD
program through a formal notice and comment process.  “Interpretation
of Regulations that Determine Pollutants Covered by Clean Air Act
Permitting Programs,” 75 FR 17004.  In the proposal associated with
that action, we requested comment on whether we should codify our
interpretation in the regulatory text.  74 FR 51535, 51547 (October. 7,
2009).  We elected not to codify out interpretation in the final action
on reconsideration of the Interpretive Memo because we concluded such an
action was not necessary and that it was important to apply the refined
interpretation immediately.  75 FR at 17015.  However, in the RTC
document response to comments for that action, we indicated that we had
not ruled out the option of codifying our interpretation at a later
time.  Since we are otherwise adopting a definition of “subject to
regulation” in this rule as the mechanism for implementing the
phase-in, it makes sense in this final rule to codify the interpretation
reflected in the Interpretive MemoMemorandum and the final action on
reconsideration at the same time to bring clarity to our rules.
Specifically, the definitions of the term “subject to regulation”
contain a paragraph that reflects our existing interpretation of that
term (i.e., prior to adopting the provisions that implement the phase-
in).  Codification of the Interpretive MemoMemorandum in this action
makes sense to ensure the regulations reflect a complete picture of the
meaning of “subject to regulation” applied by EPA.  We also are
moving existing exceptions (e.g., section 112 HAPs) to a new paragraph
within the definition of "subject to regulation."".  This minor
reorganization of these regulations is not intended to effect any change
in how they are to be implemented, but merely simplifies and clarifies
the regulations by clearly delineating different terms and concepts.

This codification of this interpretation of “subject to regulation”
from the reconsideration for the Interpretive Memo is not necessary to
assure the effectiveness of the interpretation, and it does not disturb
states’States’ existing authority to adopt the definition through
interpretation of their existing rules.  Codifying our existing
interpretation in this action will ensure that parties reading the
regulations have a full understanding of how EPA applies the PSD program
requirements.  Since the interpretation described in the Interpretive
MemoMemorandum and the April 2, 2010 final action are otherwise
applicable at this time, the particular time sensitivity discussed in
the latter action is not the same for this final action tailoring the
PSD requirements.

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

approved PSD program

Because we now anticipate that many states will be able to implement our
tailoring approach through interpretation of the term “subject to
regulation,” and without the need to revise their SIPs, we are
delaying further action on our proposal to limit our approval of SIPs
until we better understand how permitting authorities will, in fact,
implement our tailoring approach.  For this purpose, we ask each state
to submit a letter to the appropriate EPA Regional Administrator no
later than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTERPROMULGATION].  In that letter, the state should explain whether
it will apply EPA’s meaning of the term “subject to regulation”
and if so, whether the state intends to incorporate that meaning of the
term through interpretation, and without undertaking a regulatory or
legislative process.  If a state must undertake a regulatory or
legislative process, then the letter should provide an estimate of the
time needed to adopt the final rules.  If a state chooses not to adopt
EPA’s meaning by interpretation, the letter should address whether the
state has alternative authority to implement either our tailoring
approach or some other approach that is at least as stringent, whether
the state intends to use that authority.  If the state does not intend
to interpret or revise its SIP to adopt the tailoring approach or such
other approach, then the letter should address the expected shortfalls
in personnel and funding that will arise if the state attempts to carry
out PSD permitting for GHG sources under the existing SIP and
interpretation.

For any state that is unable or unwilling to adopt the tailoring
approach by January 2, 2011, and that otherwise is unable to demonstrate
adequate personnel and funding, we will move forward with finalizing our
proposal to limit our approval of the existing SIP.  Although we
received comments questioning our authority to limit approval as
proposed, using our general rulemaking and CAA section 110(k)(6)
authorities, we are not responding to those comments at this time.  We
will address these comments in any final action we take to implement a
limited approval.

In our proposed rule, we also noted that a handful of EPA-approved SIPs
fail to include provisions that would apply PSD to GHG sources when at