CH4 and N2O. The definition of the air pollutant,
as cited in the LDVR, includes CH4 and N2O and
does not include black carbon or other short-lived gases.
3. Use of GWP vs. Mass-Based GHG Thresholds
    For the reasons discussed previously, we are determining permit
program applicability based on the sum-of-six well-mixed gases that
comprise the GHG air pollutant. This section discusses our use of both
the CO2e metric and mass emissions of the GHGs for
applicability purposes.
    Under our proposal, a source's emissions of all six GHGs would be
combined into a single metric by multiplying the mass of each
individual GHG (in tpy) by its GWP value, and summing these products to
determine the total emissions of the GHG pollutant in tpy
CO2e. We received comments on this aspect of the proposed
metric. Several commenters explicitly support the use of GWP and the
CO2e metric for GHG emissions. These commenters believe EPA
has the authority to select an appropriate metric to measure GHGs in
the PSD program, and policy considerations support the choice of GWP.
Some of them note that GWP is a widely-used metric which employs
internationally-recognized conversion factors to compare GHGs based
upon their climate properties, and some add that states and local areas
that have climate action plans for GHG reductions use CO2e.
Some of these commenters believe this metric will ensure a

standard measure across all permitting agencies and will lead to a more
effective system for permitting authorities and create more
opportunities to reduce emissions over the full class of GHGs, rather
than focusing on reducing individual GHGs.
    On the other hand, some commenters oppose the use of GWP and
CO2e, believing that thresholds should be based on
individual mass-based emissions for each GHG. Some of these commenters
felt that EPA has no discretion to ignore the metric for regulation
established by Congress for PSD in section 169 of the Act. Some
commenters were also concerned that the use of CO2e will
complicate the implementation of BACT because sources that trigger PSD
will be required to install BACT for each regulated pollutant, not for
CO2e. As a result, a source that exceeds the threshold
primarily due to its CO2 emissions would be forced to
install BACT for all other individual GHGs, regardless of how minor
those other emissions may be. Finally, a commenter was concerned that
use of GWP would complicate implementation because GWP values can
sometimes change.
    In our proposal preamble discussion of GHG metric, EPA also raised
the possibility of including a limitation in the metric to address the
prospect (expected to occur only rarely) that high-GWP gases could be
emitted in quantities less than statutory thresholds for PSD and title
V but nevertheless exceed the proposed thresholds in terms of
CO2e. Most commenters on this subject support a dual
threshold under which a source would be subject to title V or PSD only
if its GHG emissions exceeded both the statutory thresholds on an
actual tonnage basis and the tailored thresholds on a CO2e
basis. Commenters supporting this approach felt that it would be
unlawful to apply PSD when GHGs are below the statutory thresholds, or
when there is not a net emissions increase. Others added that the
complexity of accounting for emissions according to both mass and GWP
should be manageable and is not a reason to ignore the role of mass-
based emission rates in determining the applicability of PSD
requirements. Additionally, one commenter observed that a dual
threshold is consistent with phasing in the Tailoring Rule and is an
effective way to address the current uncertainty surrounding how to
measure high-GWP gases such as SF6. In contrast, a few
commenters stated they do not support a dual threshold, primarily on
the grounds that there is no benefit to the added complexity.
    After considering these comments, we have decided to adopt
applicability thresholds in the final rule based on a CO2e
metric for the sum-of-six well-mixed gases, and also to adopt an
additional mass-based threshold for the sum-of-six gases as discussed
in the proposal. First, as discussed in the previous section, we have
explained why the appropriate pollutant for PSD purposes is the single
pollutant GHG, which is composed of the six well-mixed gases. Regarding
the CO2e metric, we continue to believe there are a number
of advantages, as laid out in the proposal, to a CO2e
measure that would not be available if we used only a mass-based
metric. These include: (1) A CO2e metric, by incorporating
the GWP values, best addresses the relevant environmental endpoint,
which is radiative forcing of the GHGs emitted; (2) when combined with
a sum-of-six gases approach, the CO2e metric best allows for
consideration of their combined effects when sources emit any one or
combination of the six well-mixed GHGs; (3) a cumulative
CO2e metric is consistent with the metric used in the
mandatory GHG reporting rule and other related rules and guidelines;
and (4) a CO2e metric allows more flexibility for designing
and implementing control strategies that maximize reductions across
multiple GHGs. We recognize the tension between the mass-based metric
in the statute and the CO2e-based metric we are adopting in
this rule, but as discussed later, we will address this by also
retaining the mass-based metric. Moreover, given our need to tailor our
approach to covering sources of GHGs, we believe that the
considerations driving our choice to also use a CO2e-based
metric are appropriate for defining the phase-in and allow for
permitting resources to be directed at those sources and modifications
that have the greatest impact on radiative forcing of the GHGs emitted.
    We recognize the concern of commenters who stated that we cannot
ignore the statutory thresholds based on the mass-based emissions of an
air pollutant as described under CAA section 169(1). As we mentioned in
the proposal, because both the PSD and title V statutory thresholds are
expressed on a mass basis (i.e., tons of a pollutant with no weighting
values applied) we were concerned from a legal standpoint that the
metric proposed (CO2e) could have the effect of subjecting
to PSD or title V requirements a source whose emissions fall below the
statutory threshold limits on a strictly mass basis, but whose
CO2e-based emissions exceed the CO2e thresholds
we establish under the Tailoring Rule. As an example, in rare instances
it is possible that a source may emit only a non-CO2 GHG in
very small amounts, on a mass basis, but one that carries a very large
GWP. In this case, it is possible that the source may emit the GHG in
amounts that fall below the PSD and/or title V statutory applicability
threshold (100 or 250 tpy, as applicable) on a mass basis, but exceed
the 100,000 CO2e PSD and title V applicability thresholds
for Step 2 finalized in this action. Under these circumstances, without
a mass-based threshold, the source would trigger PSD and title V for
its CO2e emissions even though its GHG mass emissions would
not, in fact, exceed the statutory triggers.
    Upon review of the comments pertaining to this issue and further
analysis of the legal and programmatic implications, we are adopting a
two-part applicability process, for both major source applicability
determinations for GHGs under PSD and title V and for determining if a
net increase has occurred in PSD applicability determinations for
modifications. As explained in the RTC document, we accomplish this
two-step applicability approach by continuing to rely on the existing
mass-based applicability provisions in the current regulations, and by
including new regulatory provisions that add a definition of ``subject
to regulation'' that in turn includes the phase-in thresholds.
Similarly, for PSD modification reviews and associated netting
analyses, the same two-step process must be used. Our summary in
section IV.A described how we expect this provision to be implemented
in practice.
    We acknowledge that the possibility of changing GWP values is a
downside to the use of CO2e for the GHG metric, and we
address this comment in the next section, where we discuss our plan to
codify GWP values. By codifying GWP, any changes will be manageable,
and, in our judgment, will not outweigh the benefits of a
CO2e-based approach. We also acknowledge that a
CO2e-based approach may appear to complicate the BACT review
and implementation process. However, we disagree with the commenter's
ultimate conclusion that BACT will be required for each constituent gas
rather than for the regulated pollutant, which is defined as the
combination of the six well-mixed GHGs. To the contrary, we believe
that, in combination with the sum-of-six gases approach described
above, the use of the CO2e metric will enable the
implementation of flexible approaches to design and implement
mitigation and control strategies that look across all six

of the constituent gases comprising the air pollutant (e.g.,
flexibility to account for the benefits of certain CH4
control options, even though those options may increase
CO2). Moreover, we believe that the CO2e metric
is the best way to achieve this goal because it allows for tradeoffs
among the constituent gases to be evaluated using a common currency.
4. Determining What GWP Values Are To Be Used
    At proposal, we proposed to link the calculation of CO2e
for GHGs to GWP values in EPA's ``Inventory of U.S. Greenhouse Gas
Emissions and Sinks'' (GHG Inventory). See, e.g., proposed 40 CFR
51.166(b)(58). Numerous commenters expressed concerns about this
proposal on various grounds, including the following:
     The EPA should follow the proper notice-and-comment
procedures and the requirements of the Information Quality Act for the
relevant technical underpinnings of the proposal. The EPA relies upon
the GWPs of the IPCC without providing the supporting data for review,
and it is inappropriate to use this as a basis for this rule without
first making all the raw data available for public inspection and
comment.
     The EPA cannot tie the definition of GWP to the GHG
Inventory because it is a non-regulatory document that may be changed
without notice-and-comment rulemaking. Before EPA uses a new GWP, that
GWP must be subject to notice and comment to comply with the
requirements of CAA section 307 and the Administrative Procedure Act
(APA).
     An annual update of GWP would create a moving target for
sources conducting applicability determinations and assessing
compliance with minor NSR and PSD emission limits. The EPA needs to
ensure that applicability and compliance with limits continue to be
based on the GWP that existed when the determination was made or the
limit was established.
     The EPA should freeze the GWP at the current values by
incorporating those values into the regulation. The EPA could still
revise the ``NSR'' GWP, but would have to revise the regulation to do
so.
    Commenters added that it is important to ensure that all permitting
agencies are using the same calculations for the determination of
CO2e for GHGs.
    We agree with commenters who suggested we should codify, either in
the Tailoring Rule or through reference to codified values in another
rulemaking, the GWP values to be used in permitting analyses. We agree
that this approach provides certainty as to which GWP values need to be
used by permitting authorities and allows sources to plan appropriately
for possible changes in the GWP values. As mentioned in the comments,
recommended GWP values from IPCC can change over time. While this is
infrequent--the last such changes were in 2007--when it occurs, there
are generally significant lag times in universal adoption of new values
because of inconsistencies that could be created in national
inventories and emission reporting mechanisms. In a regulatory setting,
such as in the permitting programs, this could potentially create
significant implementation issues, such as when a GWP change occurs
while a permit action is in progress.\16\ EPA also recognized similar
potential implementation issues in developing its final mandatory GHG
reporting rule, and codified in the regulatory text for that rule the
GWP values to be used in reporting GHGs as part of that final
rulemaking.
---------------------------------------------------------------------------

    \16\ We note that our approach does not entirely avoid the
possibility that a GWP change can occur while a permit is in
progress although it will ensure advance notice of such a change. In
the event that we plan to propose a change to GWP values, we will
work with permitting authorities as necessary to provide guidance to
sources on transitional issues.
---------------------------------------------------------------------------

    For these reasons, we have decided to follow the approach in the
mandatory GHG reporting rule and require that for PSD and title V
permitting requirements, wherever emissions calculations are performed,
that permitting authorities and sources use GWP values that are
codified in EPA rules. We will establish the GWP values for PSD and
title V rules based on a cross-reference to the values that are
codified in the EPA's mandatory GHG reporting rule. 74 FR 56395, Table
A-1 to subpart A of 40 CFR part 98--Global Warming Potentials. Any
changes to Table A-1 of the mandatory GHG reporting rule regulatory
text must go through an appropriate regulatory process. In this manner,
the values used for the permitting programs will reflect the latest
values adopted for usage by EPA after a regulatory process and will be
consistent with those values used in the EPA's mandatory GHG reporting
rule. Furthermore, the lead time for adopting changes to that rule will
provide a transition time to address implementation concerns raised by
commenters.
5. Use of Short Tons vs. Metric Tons
    We proposed that the GHG metric would be expressed in terms of
English (or short) tons, rather than metric (or long) tons. A few
commenters support using short tons for this purpose. Others prefer the
use of metric tons, and most of them note that the mandatory GHG
reporting rule is based on metric tons and believe that the Tailoring
Rule should be consistent with that rule. These commenters believe that
using different units in the two rules would be confusing and could
result in sources that are not subject to the mandatory GHG reporting
rule becoming subject to PSD. Some of the commenters add that various
``cap and trade'' legislative proposals also quantify GHGs in metric
tons. A few other commenters recommend that EPA harmonize the
applicability thresholds established under the Tailoring Rule and the
mandatory GHG reporting rule without expressing a preference for short
or metric tons.
    We are finalizing our proposal to use short tons because short tons
are the standard unit of measure for both the PSD and title V
permitting programs and the basis for the threshold evaluation to
support this rulemaking. Calculation inputs for PSD are typically
prepared in English units (e.g., pounds of fuel, British thermal units
(Btu), etc.) which is the common convention for all PSD analyses and
the units of the statutory thresholds under the Act.
    It is true that the GHG reporting rule uses metric tons, but this
does not create an inconsistency between permitting programs and the
reporting rule because the two rules already use different
applicability approaches. Although we originally proposed 25,000 tpy as
the major source level for permitting programs, which was similar to
the threshold in the reporting rule, we decided to adopt substantially
higher thresholds in the final rule. Furthermore, even if the numbers
were similar, the thresholds used for the reporting rule are based on
actual emissions, while the PSD and title V programs thresholds are
based on PTE. Therefore, we are less persuaded by arguments for
consistency, and believe it is more important for ease of permit
program implementation to ensure that GHG emissions calculations for
PSD and title V will build on the same set of input variables used to
develop short-ton based estimates for non-GHG pollutants. Thus, the use
of short tons should actually facilitate the development of the GHG
emission estimate. It would likely be more confusing to require a
multi-pollutant PSD applicability analysis to present emissions
information using different units for different pollutants, as would be
the case if we required metric tons for GHG but continue to use short
tons

for every other pollutant. Finally, we do not expect this choice to
introduce additional complexity because the conversion between short
tons and metric tons is a very simple calculation. Therefore, based on
these considerations we are requiring that short tons be used as the
basis for emission calculations used to meet PSD and title V permitting
requirements.

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

    In this subsection, we describe our legal and policy rationale for
our determinations concerning PSD and title V applicability to GHG
emissions sources. This subsection includes: (1) An overview of our
rationale; (2) data concerning costs to sources and administrative
burdens to permitting authorities; (3) a review of the Chevron legal
framework and the ``absurd results,'' ``administrative necessity,'' and
``one-step-at-a-time'' doctrines, as well as a review of how those
doctrines fit into the Chevron framework; (4) an overview of the
relevant PSD and title V requirements and their legislative history;
(5) our application of the ``absurd results'' doctrine for tailoring
the PSD requirements; (6) our application of the ``absurd results''
doctrine for tailoring the title V requirements; (7) our plans to issue
further rulemaking that will address the ``absurd results'' basis for
both PSD and title V requirements; (8) our rationale for the phase-in
schedule for applying PSD and title V to GHG sources; (9) our
application of the ``administrative necessity'' basis for tailoring the
PSD and title V requirements; and (10) our application of the ``one-
step-at-a-time'' basis for tailoring the PSD and title V requirements.
1. Overview
    Under the familiar Chevron two-step approach to construction of
agency-administered statutes, the agency must first, at Chevron Step 1,
determine whether Congress's intent in a particular provision on a
specific question is clear; and if so, then the agency must follow that
intent. If the intent of the provision is not clear, then the agency
may, under Chevron Step 2, fashion a reasonable interpretation of the
provision. The best indicator of congressional intent is the literal
meaning of the provision and generally, according to the case law, if
the literal meaning addresses the specific question, then the agency
should follow the literal meaning.
    However, the courts have developed three doctrines relevant here
that authorize departure from a literal application of statutory
provisions. The first is the ``absurd results'' doctrine, which
authorizes such a departure if the literal application would produce a
result that is inconsistent with congressional intent, and particularly
if it would undermine congressional intent. The judicial doctrine of
``administrative necessity'' authorizes an agency to depart from
statutory requirements if the agency can demonstrate that the statutory
requirements, as written, are impossible to administer. The ``one-step-
at-a-time'' doctrine authorizes an agency, under certain circumstances,
to implement a statutory requirement through a phased approach. Each of
the three doctrines fits into the Chevron framework for statutory
construction because each of the three is designed to effectuate
congressional intent.
    To apply the statutory PSD and title V applicability thresholds
literally to sources of GHG emissions would bring tens of thousands of
small sources and modifications into the PSD program each year, and
millions of small sources into the title V program. These extraordinary
increases in the scope of the permitting programs would mean that the
programs would become several hundred-fold larger than what Congress
appeared to contemplate. Moreover, the great majority of additional
sources brought into the PSD and title V programs would be small
sources that Congress did not expect would need to undergo permitting
and that, at the present time, in the absence of streamlined permit
procedures, would face unduly high permitting costs. Further, again at
the present time, in the absence of streamlined permit procedures the
administrative strains would lead to multi-year backlogs in the
issuance of PSD and title V permits, which would undermine the purposes
of those programs. Sources of all types--whether they emit GHGs or
not--would face long delays in receiving PSD permits, which Congress
intended to allow construction or expansion. Similarly, sources would
face long delays in receiving title V permits, which Congress intended
to promote enforceability. For both programs, the addition of enormous
numbers of additional sources would provide relatively little benefit
compared to the costs to sources and the burdens to permitting
authorities. In the case of PSD, the large number of small sources that
would be subject to control constitute a relatively small part of the
environmental problem. In the case of title V, a great many of the
sources that would be newly subject to permit requirements would have
``empty'' permits, that is, permits that do not include any applicable
requirements, and that therefore serve relatively little purpose. For
these reasons, the ``absurd results'' doctrine applies to avoid a
literal application of the thresholds at this time. By the same token,
the impossibility of administering the permit programs brings into play
the ``administrative necessity'' doctrine. This doctrine also justifies
not applying the PSD or title V applicability threshold provisions
literally to GHG sources at this time.
    The situation presented here is exactly the kind that the ``absurd
results,'' ``administrative necessity,'' and ``one-step-at-a-time''
doctrines have been developed to address. Separately and
interdependently, they authorize EPA and the permitting authorities to
tailor the PSD and title V applicability provisions through a phased
program as set forth in this rule, and to use the initial period of
phase-in to develop streamlining measures, acquire expertise, and
increase resources, all of which would facilitate applying PSD and
title V on a broader scale without overburdening sources and permitting
authorities. In this manner, the phased approach reconciles the
language of the statutory provisions with the results of their
application and with congressional intent.
2. Data Concerning Costs to Sources and Administrative Burdens to
Permitting Authorities
    This final action concerning applicability of PSD and title V to
GHG-emitting sources, including the decisions on timing for the
selected permitting thresholds, is based on our assessments of both the
costs to the regulated sources to comply with PSD and title V
permitting requirements and the administrative burdens to the
permitting authorities to process PSD and title V permit actions for
GHG-emitting sources. This section provides a summary of our cost and
administrative burden assessments of permitting that would be required
in the absence of any tailoring as well as under various tailoring
options.
    Our estimates of costs to the sources and administrative burdens to
the permitting authorities from PSD and title V applicability for GHG
emissions are based on labor and cost information from the existing
Information Collection Requests (ICRs) for PSD and title V
programs.\17\ We apply the same basic

methodology used for the proposal, which incorporates information on
numbers and types of affected sources and estimated permitting actions.
We evaluate administrative burdens in terms of staffing needs, time for
processing permits, and monetary costs, and we make some judgments
about how those burdens would affect the permitting authorities'
ability to effectively manage and administer their programs with the
addition of GHG emission sources. We present the administrative burden
data for applying PSD and title V requirements at the literal statutory
thresholds--that is, the 100/250 tpy levels for PSD (and 0 tpy for
modifications) and the 100 tpy level for title V--as well as at other
thresholds, which range from 25,000 tpy CO2e to 100,000 tpy
CO2e. We have significantly revised upwards our assessments
of costs to sources and administrative burdens since proposal, and we
summarize later our reasons for doing so. We also present significant
comments concerning administrative burdens, and our responses to those
comments.
---------------------------------------------------------------------------

    \17\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds;'' Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

    In the next section, concerning legal and policy rationale for our
actions, we discuss how these data on costs to the sources and
administrative burdens to the permitting authorities informed our
decisions that PSD and title V requirements should not, at present, be
applied to GHG-emitting sources under the literal terms of the
statutory thresholds as well as our decisions concerning what
thresholds to apply for Steps 1 and 2 of the applicability phase-in
approach and the applicability floor of 50,000 tpy CO2e.
a. Costs to Sources
    As we did at proposal, we have estimated costs to the sources of
complying with PSD and title V starting from the data in the ICRs. We
recognize that the sizes of the sources, as measured by their
emissions, that would be swept into the PSD and title V programs would
vary greatly, and that their permitting costs would vary as well. For
example, their PSD permitting costs would depend on the amount and
types of their emissions and their control requirements. Accordingly,
we have determined average costs, as described later.
    For PSD, at proposal, we estimated that on average, an industrial
source would incur costs of $84,500 to prepare the PSD application and
receive the permit, and on average, a commercial or residential source
would incur costs of 20 percent that amount, or $16,900. 74 FR 55337
col. 3 to 55339 col. 3. For this action, we retain the same burden
estimates for an average industrial source. This type of source would
need 866 hours, which would cost $84,500, to prepare the application
and the PSD permit. However, based on comments received, we have
determined that a more accurate estimate for an average commercial or
residential source is 70 percent of that amount of time that an
industrial source would need, up from our proposal of 20 percent. Thus,
an average commercial or residential source would need 606 hours, which
would cost $59,000, to prepare the PSD application and receive the
permit. We are increasing this time over what we proposed because we
now recognize that virtually all commercial and residential sources
will have no experience with the PSD permitting process, and therefore
will face a significant learning curve that will entail more time to
complete the application, develop control recommendations, and take the
other required steps. We believe this learning period could extend from
2 to possibly 4 years or more from the date that the sources become
subject to PSD requirements, depending on the type and actual number of
new sources that come in for permitting. In addition, we expect that in
many cases, draft PSD permits for GHGs will receive comments from
various stakeholders, from citizens groups to equipment vendors, who
will seek to participate in the permit process, and that all this could
add to the hours that the permittee will need to invest in the
process.\18\ The actual costs to sources to install BACT controls,
while still uncertain at this point, would likely add additional costs
across a variety of sources in a sector not traditionally subject to
such permitting requirements.
---------------------------------------------------------------------------

    \18\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

    For title V, at proposal, we estimated that on average, an
industrial source would incur costs of approximately $46,400 to prepare
the title V application and receive the permit, and on average, a
commercial or residential source would incur costs of 10 percent that
amount, or almost $5,000. 74 FR 55338 col. 1 to 55339 col. 3. For this
action, we retain the same burden estimates for an average industrial
source. This type of source would need 350 hours, which would cost
$46,400, to prepare the application and the title V permit. However, we
have determined that a more accurate estimate for an average commercial
or residential source is 50 percent of that amount of time that an
industrial source would need, up from our proposal of 10 percent. Thus,
an average commercial or residential source would need about 175 hours,
which would cost $23,200, to prepare the title V application and
receive the permit. This increase is due to the same reasons as with
the PSD program just discussed. We now recognize that virtually all
commercial and residential sources will have no experience with the
title V permitting process and, therefore, will face a significant
learning curve that will entail more time to assess, for the first
time, their GHG emissions (because such sources are not covered by
EPA's mandatory GHG reporting rule), complete the application, respond
to permitting authority comments, meet other title V administrative
requirements, and respond to interested stakeholders.\19\
---------------------------------------------------------------------------

    \19\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

b. Administrative Burdens to Permitting Authorities
(1) Estimated Permitting Authority Burden at Proposal
    As at proposal, we estimated the administrative burdens to the
permitting authorities at the various threshold levels for PSD or title
V applicability as follows. First, for a particular threshold level, we
estimated the number of GHG-emitting sources that would be subject to
PSD requirements because they would undertake new construction or
modification, and the number of existing sources that would be subject
to title V requirements. Second, we estimated the average additional
administrative burden and cost of each PSD permitting action and each
title V permitting action for the GHG-emitting sources. Third, we
multiplied those two estimates, and the product is the additional
administrative burden at the particular threshold level. We employed
the same methodology for this final rule, but, as discussed later, and
described in more detail in our final burden analysis,\20\ we have
updated several key assumptions since the proposal as a

result of our consideration of comments received.
---------------------------------------------------------------------------

    \20\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

    First, we present the administrative burdens at the statutory
levels for PSD and title V applicability. At proposal, for the PSD
program, we estimated the administrative burdens that would result from
applying PSD at the 100/250 tpy major emitting facility threshold
levels in two ways, as described in this section. We stated that at
present, 280 sources are subject to PSD each year, both for new
construction and modifications. This figure served as the baseline from
which to calculate increases in administrative burdens due to
permitting GHG-emitting sources.
    The first method that we used to calculate the administrative
burdens to the permitting authorities was in terms of workload hours,
which we then converted to monetary costs. To make the workload
calculation, we first estimated the number of GHG-emitting sources that
would become subject to PSD through new construction and modification.
Based on our GHG threshold data analysis, we estimated that almost
41,000 new and modified sources per year would become subject to PSD
review. We first calculated the number of new sources that would become
subject to PSD. To do this, we estimated growth rates for the various
sectors, and then applied those growth rates to the numbers of sources
in those sectors. We then calculated the number of modifications. To do
this, we first assumed that each year, two percent of sources that meet
or exceed the threshold levels for PSD applicability due to their
conventional pollutants undertake modifications. We then calculated the
number of sources that would meet or exceed the threshold levels for
PSD applicability due to their GHG emissions, and applied the same
assumption that two percent of them would undertake modifications. In
this manner, we estimated the number of modifications of GHG-emitting
sources that would become subject to PSD.
    We noted that currently, 280 PSD permits are issued each year, but
that applying PSD to GHG-emitting sources at the 100/250 tpy statutory
threshold levels would cause an increase in permits of more than 140-
fold. The reason for the extraordinary increase in PSD applicability
lies simply in the fact that it takes a relatively large source to
generate emissions of conventional pollutants in the amounts of 100/250
tpy or more, but many sources combust fossil fuels for heat or
electricity, and the combustion process for even small quantities of
fossil fuel produces quantities of CO2 that are far in
excess of the sources' quantities of conventional pollutants and that,
for even small sources, equal or exceed the 100/250 tpy levels.
    Based on the 140-fold increase in permits, we then estimated the
per-permit burden on permitting authorities. As we stated in the
proposal:

    We estimated the number of workload hours and cost a permitting
authority would expend on each new source and each modification. We
based these estimates on the workload hours and cost for processing
permits for new sources of non-GHG emissions, which we derived from
labor and cost information from the existing ICRs for PSD programs.
The ICRs show that permitting authorities expend 301 hours to permit
a new or modified industrial source * * *.
    We then made assumptions for number of workload hours and costs
for new sources of GHG emissions. We assumed that permitting new
industrial GHG sources that emit in excess of the 250-tpy threshold
would be of comparable complexity to permitting non-GHG emitting
industrial sources that are subject to PSD. Thus, for these sources,
we assumed that permitting authorities would expend the same number
of workload hours and costs, on a per-permit basis, as they do for
non-GHG emitting industrial sources. On the other hand, for
commercial and residential GHG sources that emit GHGs above the 250-
tpy threshold (and as a result would be subject to the requirements
of the PSD permitting program at this threshold level), we assumed
that the workload hours and cost for permitting these sources would
be significantly less than--only 20 percent of--the hours and cost
necessary to prepare and issue initial PSD permits or permit
modifications for industrial GHG sources. This 20-percent estimate
amounts to 60 hours of permitting authority time per residential or
commercial permit.
    Based on these assumptions, the additional annual permitting
burden for permitting authorities, on a national basis, is estimated
to be 3.3 million hours at a cost of $257 million to include all GHG
emitters above the 250-tpy threshold.

74 FR 55301 col. 2.

    Note that at the proposal, in calculating the PSD administrative
burdens that would occur each year due to GHG emissions, we did not
undertake separate calculations for the administrative burdens
associated with permitting obligations stemming from the GHG emissions
of the 280 sources already subject to PSD permitting requirements due
to their conventional pollutants. In effect, we treated these 280
sources are part of the over 40,000 sources that would become subject
to PSD due to their GHG emissions.
    The second way that we evaluated the burden on permitting
authorities was by reviewing a study conducted by state and local air
permitting agencies. As we said in the preamble:

    In addition to conducting our burden analysis, we also reviewed
summary information from state and local air permitting agencies
regarding additional resources and burden considerations if GHG
sources that emit above the 100/250-tpy thresholds were subjected to
the PSD and title V programs. This information covered 43 state and
local permitting agencies, representing programs from different
regions of the country and various permitting program sizes (in
terms of geographic and source population coverage) * * *. This
information showed significant burdens projected by permitting
agencies with adding sources of GHG emissions in terms of staffing,
budget, and other associated resource needs. Importantly, the
agencies based their analysis on the assumption that, for purposes
of determining whether a source is major, its emissions would be
calculated on an actual emissions (``actuals'') basis, and not on a
PTE basis. On an actuals basis, the agencies estimated a 10-fold
increase in the number of permits.
    Specifically, the agencies estimated that:
     Assuming, again, that number of permits was to increase
by 10-fold (based on actual emissions), the resulting workload would
require an average of 12 more [full-time equivalents (FTEs)] per
permitting authority at an estimated cost of $1 million/year;
     Without the additional FTEs, the average processing
time for a permit would increase to 3 years, which is three times
the current average processing time;
     Permitting authorities would need 2 years on average to
add the necessary staff;
     Permitting authorities would also need, on average,
eight additional enforcement and judicial FTEs;
     Ninety percent of permitting agencies would need to
train their staff in all aspects of permitting for sources of GHG
emissions.
     A quarter of permitting agencies were currently under a
hiring freeze.

    We went on to explain that this state survey significantly
underestimated the administrative burdens:

    It is important to reiterate that the state and local permitting
information on burden was based on the number of additional
facilities subject to PSD because their emissions of GHGs exceed the
100/250-tpy thresholds at actual emissions rates, not PTE-based
emissions rates. However, the PSD applicability requirements are
based on PTE. By adjusting the increase in number of permits to
account for GHG sources that exceed the 100/250-tpy applicability
thresholds based on their PTE emissions, EPA estimated a 140-fold
increase in numbers of PSD permits, much more than the 10-fold
increase estimated by the states based on actual emissions.

74 FR 55301 col. 2-3.

    In addition to PSD, we also estimated title V burdens at the
statutory threshold. At proposal, for the title V program, we estimated
the administrative burdens that would result from applying title V
requirements at the 100 tpy major

source threshold level in the same two ways as for PSD, as follows. The
first method was to calculate the administrative burdens in terms of
workload hours, which we then converted to monetary costs. To make the
workload calculation, we first estimated the number of existing GHG-
emitting sources that would become subject to title V. Based on our GHG
threshold data analysis, we estimated that approximately 6 million
sources would become subject to title V. Compared to the 14,700 title V
permits currently issued, this would be an increase in permits of more
than 400-fold. We noted, in addition, that most of the 14,700 sources
already subject to title V also emit GHGs and may be affected as well.
    We then described the type of work that the permitting authorities
would need to do for these GHG-emitting sources--the six million that
would become newly subject to title V and most of the 14,700 that are
already subject to title V--as follows. Note at the outset that the
permitting authorities' workload is greater for sources newly subject
to title V than for existing sources that seek a revised or renewed
permit. As EPA noted in the preamble:

    [T]he [ ] permits [for the 6 million new sources] would need to
include any requirements for non-GHGs that may apply to the source,
such as provisions of an applicable SIP. For any such requirements,
permitting authorities would also need to develop terms addressing
the various compliance assurance requirements of title V, including
monitoring, deviation reporting, six-month monitoring reports, and
annual compliance certifications.
    Adding to the burden described above would be the burden to add
GHG terms to the 14,700 existing title V permits. While, in general,
existing title V permits would not immediately need to be revised or
reopened to incorporate GHG (because as noted above, there are
generally not applicable requirements for GHGs that apply to such
sources), permitting authorities may face burdens to update existing
title V permits for GHG under two possible scenarios: (1) EPA
promulgates or approves any applicable requirements for GHGs that
would apply to such a source, which would generally require a permit
reopening or renewal application, or (2) the source makes a change
that would result in an applicable requirement for GHGs to newly
apply to the source, such as PSD review, which would generally
require an application for a permit revision. Permitting authorities
will also need to process permit renewal applications, generally on
a five-year cycle, and such renewals would need to assure that the
permit properly addresses GHG. Finally they would have to process
title V applications for new sources (including all the PSD sources
previously discussed).

74 FR 55302 cols. 2-3.

    In light of those demands, we estimated the per-permit burden on
permitting authorities as follows. Note, at the outset, that as with
PSD, we based the workload hours on information in ICRs for industrial
sources, and we then assumed that the workload for commercial and
residential sources would be the indicated percentage of the workload
for industrial sources:

    As with PSD, we have quantified the extent of the administrative
problem that would result in workload hours and cost on the basis of
information concerning hours and costs for processing existing title
V permits that is indicated on ICRs. However, we recognize that more
than 97 percent of these new sources would be commercial and
residential sources. We estimate that for permitting authorities,
the average new commercial or residential permit would require 43
hours to process, which is 10 percent of the time needed for the
average new industrial permit. For an average existing permit, which
permitting authorities would need to process through procedures for
significant revisions and permit renewals, adding GHG emissions to
the permit would result in, we estimate, 9 additional hours of
processing time, which is 10 percent of the amount of time currently
necessary for processing existing permits. We estimate that the
total nationwide additional burden for permitting authorities for
title V permits from adding GHG emissions at the 100-tpy threshold
would be 340 million hours, which would cost over $15 billion.

74 FR 55302 col. 3.

    As with PSD, the second way that we evaluated the burden on
permitting authorities at the statutory threshold was by reviewing a
study conducted by state and local air permitting agencies of the
burden of applying title V to existing GHG-emitting sources at the 100
tpy statutory threshold level. As we said in the preamble to the
proposed rule:

    [W]e also reviewed summary information from state and local
permitting agencies, which showed significant burdens associated
with adding GHGs in their title V programs in terms of staffing,
budget, and other associated resource needs.\21\ Again, note that
the permitting agencies based their estimates on numbers of permits
that would be required from sources subject to the 100-tpy title V
applicability threshold on an actuals--not PTE--basis. Based on that
level, the agencies assumed a 40-fold increase in numbers of
permits, and estimated that:
---------------------------------------------------------------------------

    \21\ ``NACAA Summary on Permitting GHGs Under the Clean Air
Act''; Memorandum from Mary Stewart Douglas, National Association of
Clean Air Agencies to Juan Santiago, EPA/OAQPS, September 3, 2009.
---------------------------------------------------------------------------

     The resulting workload would require an average of 57
more FTEs per permitting agency at an estimated cost of $4.6
million/year;
     Without the additional FTEs, the average processing
time for a permit would increase to almost 10 years, which is 20
times the current average permit processing time;
     Permitting authorities would need 2 years on average to
add the necessary staff;
     On average, permitting authorities would need 29
additional enforcement and judicial staff;
     Eighty percent of permitting authorities would need to
train their staff in all aspects of permitting for sources of GHG
emission.
     A quarter of permitting agencies were currently under a
hiring freeze.

    As with PSD, we added that this state survey significantly
underestimated the administrative burdens:

    It is important to reiterate that, as with PSD, the state and
local information on projected permitting burden is based on the
number of additional facilities subject to title V because their
emissions of GHGs exceed the 100-tpy thresholds at actual emissions
rates, not the PTE-based emissions rates. However, the title V
applicability requirements are based on PTE. As noted elsewhere in
this preamble, the state and local agencies estimated a 40-fold
increase in numbers of title V permits based on the amount of GHG
sources' actual emissions. By adjusting the summary estimates
provided by the state and local agencies to account for GHG sources
that exceed the 100-tpy threshold based on their PTE emissions, EPA
estimated that the average permitting authority would need 570 more
FTEs to support its title V permitting program.

74 FR 55302 col. 3--55303 col. 1.

(2) Revisions to Proposal Estimates of Permitting Authority Burden
    We received numerous comments from state and local authorities
stating that EPA had underestimated the administrative burden on the
permitting authorities in the proposal. State and local authorities
stated that in particular, EPA underestimated the number of
modifications and the amount of time it would take permitting
authorities to process permits, particularly for commercial and
residential sources. Based on the comments and additional analysis that
we have conducted in response, we are revising in several respects our
estimates of the administrative burdens for applying PSD and title V at
the statutory threshold levels.
    First we present revisions to our analysis regarding the burdens at
the statutory levels. Before we present those changes, we want to note
a revision to our methodology that affected our estimate of the number
of permits currently issued under existing programs. We are revising
upwards the number of sources that are already subject to PSD
permitting requirements anyway for their conventional pollutants,
which, as discussed previously, we refer to as ``anyway'' sources. This
revision has implications

both for (1) the number of sources that would become subject to PSD due
to their GHG emissions; and also (2) the baseline number of sources
already subject to PSD, which we use to compare the amount of increases
in administrative burden due to permitting GHG sources. At proposal, we
stated that 280 sources each year are subject to PSD due to their new
construction or modifications. However, upon further analysis, we have
realized that this figure is too low because it includes only sources
that have emissions of one or more NAAQS pollutants at the 100/250 tpy
thresholds and that are located in areas of the country that are
designated attainment or unclassifiable for all of those pollutants,
and thus are not designated nonattainment for any of those NAAQS
pollutants. We estimate that another 520 sources have emissions of one
or more NAAQS pollutants at the 100/250 tpy thresholds and are located
in areas of the country that are nonattainment for at least one of
those NAAQS pollutants. Some of these 520 sources may also emit one or
more pollutants at the 100/250 tpy level for which their area is
designated attainment or unclassifiable, and therefore may be subject
to PSD for those pollutants. Accordingly, the correct number of
``anyway'' sources subject to PSD each year is the 280 sources that are
located in areas that are attainment or unclassifiable for each
pollutant that the sources emit at the 100/250 tpy level, plus at least
some of the 520 sources that are located in areas that are
nonattainment for at least one of the NAAQS pollutants that the sources
emit at or above the 100/250 tpy threshold. In the absence of data on
the number of nonattainment NSR permits that do not have a PSD
component, and because we expect this to be a small number, we have
assumed for purposes of this action, that each of the 520 sources is
subject to PSD for at least one pollutant, so that we will consider all
800 sources as subject to PSD. Of this number, we estimate that 70
percent, or 560 sources will undergo a modification, while the
remaining 240 permitting actions will involve new construction. Of the
modifications, we assume that 80 percent, or 448, would become subject
to additional requirements due to their GHG emissions because those
projects have combustion-related activities that would likely emit GHGs
in the requisite quantities. Our estimate of 80 percent of modification
activities significantly involving combustion activities is based on a
review of a random sample of PSD permits. In total we estimate that 688
sources, either upon new construction or modification, would need to
add GHG requirements to their otherwise required PSD permitting action.
    We should also note that in this rulemaking we are justifying our
conclusions about permitting authority administrative burdens on the
basis of their PSD and title V cost as calculated on both a separate
basis and a combined basis. That is, we believe that the administrative
burdens of the PSD program justify our tailoring approach for the PSD
requirements, and the administrative burdens of the title V program
justify our tailoring approach for the title V requirements, but in
addition, the administrative burdens of both programs on a combined
basis justify the tailoring approaches. Viewing the administrative
burdens on a combined basis provides a useful perspective because most
permitting authorities have a single organizational unit that is
responsible for both the PSD program and the title V program, and in
many cases, the same employees work on both programs. In addition, in
some jurisdictions, permitting authorities issue a single, merged
permit that includes both PSD and title V requirements. For these
reasons, considering administrative burdens on a combined PSD and title
V basis, offers a more accurate picture of the issues these agencies
will face in transitioning to GHG permitting.
    Turning to the revisions to our burden estimates that we made as a
result of public comment, we begin by noting that many commenters
believed that we significantly underestimated the administrative
burdens associated with the proposed thresholds or that the
administrative burden under the proposed thresholds would still
overwhelm the states and result in significant permitting delays and
uncertainty for sources. Many of these commenters indicate that our
estimate of the number of sources that would be subject to permitting
is too low, and some add that we have underestimated the per-permit
effort required. (More detail on these comments is given elsewhere on
the methodology used in the analysis.) Several state and local agencies
provided estimates of the increased number of permits and/or staff that
would be required under the thresholds we proposed that were higher
than our original estimates. Specifically, commenters recommended that
we increase the estimated administrative burdens for PSD permits by
anywhere from 100 percent to over 2,000 percent; and that we increase
the burdens for title V permits by anywhere from 29 percent to 240
percent. Many commenters indicated that EPA has not adequately
accounted for ``synthetic minor'' sources or modification projects,
stating that many such sources and projects will not be able to keep
GHGs below the proposed thresholds, and those who could do so may not
be able to establish enforceable synthetic minor limits. Numerous
commenters also stated that the EPA has underestimated the rate of
major modifications for GHGs under PSD. Some commenters assert that we
underestimated the number of permits required for specific industry
sectors, including the oil and gas production industry, the natural gas
transmission industry, the semiconductor industry, the wood products
industry, the brick industry, and landfills. Some of the state and
local commenters also believe that we have overestimated their ability
to hire and train sufficient staff to administer GHG permitting.
    We are persuaded by the data and arguments provided by the many
commenters who believe EPA underestimated the number of permitting
actions and the burdens of each action, and thus the overall
administrative burdens associated with permitting GHG sources.
Accordingly, we have reevaluated our assessment of these administrative
burdens, for both the PSD and title V programs. In conducting this
reevaluation, we considered arguments made by the commenters, as well
as any actual data they provided, and then we determined whether and
how to modify various aspects of our detailed assessment of the
burdens. Based on this consideration we have substantially revised
upwards our estimate of administrative burdens, based on the analysis
included in the final docket for this rulemaking.\22\ The revisions
affect two elements of our analysis by showing: (1) A substantial
increase in the number of PSD and title V permits that will occur at a
given threshold, and (2) an increase in the average burden estimate for
each such permit.
---------------------------------------------------------------------------

    \22\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

    Regarding the increase in our estimate of the number of projects
that will occur, we estimated an increase in both PSD and title V
permit actions, though the greatest changes were for PSD. At proposal,
we estimated that, if PSD requirements were to apply to GHG sources at
the 100/250 tpy statutory levels, 40,496 projects--consisting of 3,299
projects at industrial sources and 37,197 projects at commercial or

residential sources--would need PSD permits each year. Some of these
projects involve the construction of an entirely new source, but the
majority of these are modifications. We now estimate that at the 100/
250 tpy levels, 81,598 projects would become subject to PSD each year.
These projects include 26,089 actions at industrial sources and 55,509
at commercial and residential sources. We describe our calculation of
this 81,598 amount in a TSD.\23\ The great majority of these 81,598
projects that would become subject to PSD are modifications. We base
these estimates on the assumption that the significance levels would be
100 tpy regardless of category.
---------------------------------------------------------------------------

    \23\ ``Summary of Methodology and Data Used to Estimate Burden
Relief and Evaluate Resource Requirements at Alternative Greenhouse
Gas (GHG) Permitting Thresholds''; Prepared by EPA Staff; March
2010.
---------------------------------------------------------------------------

    Our estimate of the number of PSD modifications is where we made
our most significant upward revisions from our proposal, based on
comments. Our doubling of the estimated PSD permitting actions--from
40,496 at proposal to 81,598--results from three separate adjustments
we made to our estimates at proposal of the number of permit actions
that would result from applying PSD to GHG sources. Two of these
increased the number of major modifications, and one of these increased
the number of major sources and modifications. The most significant
adjustment, and one that was raised by multiple commenters, was that we
undercounted the number of major modification projects at existing
major sources because we did not include the existing projects that
avoid major PSD review by either taking ``synthetic minor'' limits or
by netting out for conventional pollutants, but that would not be able
to avoid PSD through those mechanisms for GHGs.
    We agree that the ability and procedures for sources to achieve
reductions, or minimize increases, due to GHGs through adoption of
enforceable limits or through netting out are not well established at
this point. We believe that there will be numerous instances,
particularly for combustion-related projects, where it will not be
possible for sources to achieve the same level of reductions for
CO2 emissions as they do for emissions of nitrogen oxides
(NOX), for example, simply because there are not as many
proven control techniques that can reduce CO2 emissions to
the same degree as NOX. Also, more research will be
necessary in the type of emission units and processes resulting in GHG
emissions, and how they operate over a wide range of utilization
patterns at a variety of source categories, before permitting
authorities will be able to establish procedures and rules for
developing minor source permit limitations. Therefore, we adjusted our
count of major modification permits under PSD upward to account for
this.
    The second change to the number of permits concerns the general
modification rate of 2 percent that we applied at proposal, based on
historical experience across all pollutant types. Commenters provided
information that suggest that this 2 percent figure is an underestimate
for GHG sources because their emissions of CO2 are high and
accumulate quickly from various changes involving combustion units.
Therefore, a greater percentage of their physical or operational
changes will result in GHG emissions in excess of the significance
levels that we identified at proposal. In light of these comments, we
reviewed the source populations and pollutant mix within the various
populations, and determined that we should revise our general
modification rate to 4 percent for GHG sources. This 4 percent rate was
obtained by dividing the current annual major NSR permit actions
involving modifications by the 14,700 existing sources. We have revised
our burden analysis accordingly. Again, the burden analysis in the
docket describes our basis for these calculations in more detail.
    The third adjustment to the number of permits involves our estimate
of the number of sources with PTE that is greater than the various
thresholds considered. This affects the number of major sources at the
statutory thresholds, which we used to estimate the number of PSD and
title V major sources, but also has an effect on the number of major
modifications because the number of modifications depends on the size
of the population of major sources. Commenters provided evidence that
our estimates of capacity utilization (which, as described previously,
we use for estimating potential-to-emit based on data for actual
emissions) for the general manufacturing source category (referred to
as ``unspecified stationary combustion'' in our analysis) and for the
oil and gas industry were not accurate. In our proposal, our estimated
range for capacity utilization for ``unspecified stationary
combustion'' varied from 70 to 90 percent depending on manufacturing
category. For the oil and gas industry, our estimate was 90 percent. We
received comments indicating that these utilization rates are higher
than what is normally achieved in real-world conditions, particularly
for smaller manufacturing type facilities. Accordingly, in this action,
we are using a 50 percent capacity utilization rate for both of these
source categories, which better reflects what can be deemed reasonable
operation under normal conditions for facilities in these source
categories. This adjustment increased the overall number of affected
facilities at various threshold levels and we have revised our burden
analysis accordingly.
    A few commenters asserted that we underestimated the number of
residential homes, commercial buildings, and retail stores that would
be subject to permitting requirements because these commenters believed
the estimate in EPA's TSD was based on actual emissions from space
heating equipment rather than PTE. We wish to clarify that our
threshold analysis estimates for the number of residential and
commercial sources (as well as all other sources) did use a PTE basis.
To calculate the PTE amount for these sources, we extrapolated from the
actual emissions data for the residential and commercial sources.
Specifically, we assumed that a typical residential facility operates
its fuel combustion sources at only 10 percent of its capacity and a
typical commercial facility operates at only 15 percent of its
capacity. Based on these assumptions, we multiplied residential actual
emissions by a factor of 10, and commercial actual emissions by a
factor of 6.6 to obtain PTE-based estimates. There is very little
information available on the capacity utilization rates of fuel
combustion equipment at different types of residential and commercial
facilities, but we believe our methodology was reasonable for these
types of sources and we did not adjust it in response to this comment.
Information on the development of these estimates is provided in our
Technical Support Document for Greenhouse Gas Emissions Thresholds
Evaluation.
    The second source of upward revisions to our administrative burden
estimate is that we are increasing the estimated average cost to
permitting authorities of issuing each PSD and title V permit at the
statutory thresholds. At proposal, we estimated that for PSD permits,
permitting authorities would expend, on average, 301 hours to permit an
industrial source of GHG emissions, and 20 percent of that time, or 60
hours to permit a commercial or residential source. After estimating
that amount of workload, we went on to estimate the monetary cost to
permitting authorities of that workload. Similarly, for title V
permits, we estimated at proposal that permitting authorities would
expend 10 percent of the number of hours needed to process an
industrial permit in order

to process a commercial or residential permit for GHG sources.
    We received comments from both permitting authorities and sources
asserting that our methodology underestimated the administrative burden
on grounds that (1) Our methodology fails to recognize that when a
source triggers PSD for conventional pollutants, additional labor hours
would be required to issue BACT for GHGs; (2) our estimate of 60 hours
(versus 301 hours) to issue PSD permits to commercial and residential
sources of GHGs is unrealistically low; (3) our estimate failed to
account for the increase in the complexity of permits for criteria
pollutants due to (i) increases in criteria pollutant emissions
becoming newly subject to BACT at sources that are major only for GHGs,
which will result in increased permitting and (ii) BACT controls for
criteria pollutants (e.g., an oxidizer for VOCs) may result in
significant GHG emissions, triggering an additional BACT determination;
and (4) our methodology failed to account for the significant
additional PSD and title V burdens due to sources that obtain federally
enforceable permit limits on GHGs in order to become ``synthetic
minors'' and thereby avoid PSD (and possibly also title V).
    Based on these comments and our own reassessment of permitting
actions created by the addition of GHGs, we have revised upwards in
several ways our estimate of the additional per-permit costs of
applying PSD and title V to GHG sources, including the following: First
we have added an estimate of the additional permitting cost for adding
a GHG component to ``anyway'' PSD and title V permitting actions for
conventional pollutants. We estimated this burden based on information
in the comments together with our own judgment about how to adjust the
burden numbers contained in the current supporting statements for our
approved permitting ICRs. These adjustments are found in our revised
burden estimate document.
    Second, we have raised the per-permit burden hours for commercial
and residential sources for PSD and title V. At proposal, our estimates
were based on the fact that many of these permits will be technically
simpler due to such factors as a lower number of emissions points,
simpler processes, and less required modeling. However, commenters
pointed out that, until EPA streamlines its permitting procedures,
there are many permitting activities that represent a fixed cost, such
as public notice, hearing, and response to comment activities. In
addition, we agree, as commenters pointed out, that many of these
sources will need significantly more permitting authority staff time to
assist them in the permit application and preparation process because
of their lack of experience with these requirements. In addition,
permitting authorities will have little, if any, experience in
permitting commercial and residential sources, and therefore will face
a learning curve that will entail more time to take permitting action.
In addition, we expect that in many cases PSD and title V permit
applications for GHGs will receive comments from various stakeholders,
from citizens groups to equipment vendors, who will seek to participate
in the permit process, and responding and revising permits accordingly
will add to the hours that the permitting authority will spend.
    As a result, we raised the PSD per-permit hours for various steps
in the permitting process, as described in the burden estimate
document. While we continue to estimate that permitting authorities
will expend, on average, 301 hours to issue a PSD permit to an
industrial source, and that this would cost $23,243, we now recognize
that a permitting authority would expend 70 percent of that time or 210
hours, to permit a commercial or residential source, which would cost
$16,216. Similarly, for title V, while we continue to estimate that
permitting authorities will expend, on average, 428 hours to issue a
title V permit to an industrial source, and that this would cost
$19,688, we now recognize that a permitting authority would expend 50
percent of the time, or 214 hours, to permit a commercial or
residential source, which would cost $9,844.
    We disagree with commenters who suggested that by basing our
estimates on the numbers of newly constructing and modifying sources
with high enough emissions to qualify as major emitting facilities, we
failed to account for the costs of sources that seek ``synthetic
minor'' permits to avoid PSD, and possibly title V, requirements. In
fact, our methodology includes sources that might take such limits as
newly-major sources for their GHG emissions; and therefore we count the
full administrative burden associated with a PSD permit and a title V
permit for those sources. In effect, we assume that such sources would
go through PSD or title V permitting, rather than take ``synthetic
minor'' limits. We take this approach because although we suspect that
there may, in fact, be significant synthetic minor activity, we do not
have data that would allow us to determine whether, and how many of,
these sources will be able to adopt ``synthetic minor'' limits or
restrict their operations to obtain minor source permitting status. Nor
do we have data on the amount of the administrative burden that would
fall on any particular permitting authority to establish a ``synthetic
minor'' limit, except that we understand that the amount varies widely
across states. As a result, we opted to include these sources in our
analysis as sources receiving a PSD or title V permit. Therefore, to
the extent that synthetic minor activity occurs, our estimate would
already have included the burden for that activity. In fact, our
estimate would have overestimated the burden to the extent that a
permitting authority would have less administrative costs to issuing a
``synthetic minor'' permit, as compared to a PSD or title V permit.
    (3) Revised Burden Estimates at Statutory Thresholds Based on the
revisions just described, we estimate that in all, if sources that emit
GHGs become subject to PSD at the 100/250 tpy levels, permitting
authorities across the country would face over $1.5 billion in
additional PSD permitting costs each year. This would represent an
increase of 130 times the current annual burden hours under the NSR
major source program for permitting authorities. The permitting
authorities would need a total of almost 10,000 new FTEs to process PSD
permits for GHG emissions.
    In addition, we estimate that in all, if sources that emit GHGs
become subject to title V at the 100 tpy level, permitting authorities
across the country would incur about 1.4 billion additional work hours,
which would cost $63 billion. We estimate that most of this work would
be done over a 3 year period, which would amount to 458 million in
additional work hours, and $21 billion in additional costs, on an
annual basis over that 3-year period.
    We also note that the survey of state and local permitting
authorities described in the proposed rulemaking continues to shed
light on the extent of the administrative burdens, including staffing,
budget, and other associated resource needs, as projected by the
permitting authorities. As noted previously, that survey concluded that
application of the PSD requirements to GHG-emitting sources at the
level of 100/250 tpy or more of actual emissions would, without
additional FTEs, increase the average processing time for a PSD permit
from one to 3 years. The survey further concluded that application of
the title V requirements to GHG-emitting sources at the level of 100
tpy or more of actual emissions would, without additional FTEs,
increase the average processing time for

a title V permit from 6 months to 10 years. As we noted at proposal,
this survey assumed a ten-fold increase in the number of PSD permits
and a 40-fold increase in the number of title V permits due to GHG-
emitting sources, but those assumptions were severely underestimated
because they were based on actual emissions. At proposal, our
calculations, which were based on potential emissions, indicated a 140-
fold increase in PSD permits and a more than 400-fold increase in title
V permits. In this rulemaking, we recognize that even our estimates at
proposal were severely underestimated. We now recognize that the number
of PSD permits will be about twice what we estimated at proposal, and
the average processing time for both PSD and title V permits will be
two or three times greater than what we estimated at proposal. The
survey of state and local permitting authorities provided other useful
information as well, including the fact that it would take the
permitting authorities 2 years, on average, to hire the staff necessary
to handle a ten-fold increase in PSD permits and a 40-fold increase in
title V permits, and that 90 percent of their staff would need
additional training in all aspects of permitting for GHG sources.
(4) Revised Estimates of Administrative Burdens at Various Threshold
Levels
    In order to determine the appropriate PSD and title V applicability
level for GHG sources, we not only estimated the burden at the
statutory thresholds, as described previously, but we also estimated
the number of sources, number of permitting actions, and amount of
administrative burden at various applicability levels for both PSD and
title V, based on the revised methodology described previously, that we
used to estimate the administrative burdens of applying PSD and title V
at the statutory levels. This information is summarized in Table V-1.
Note that Table V-1 also includes, in the last column, the
administrative burdens, described previously, associated with the 100/
250 tpy thresholds.

                                                                           Table V-1--Coverage and Burden Information
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      ``Anyway''  source
                                   Current  program      approach  75k     100k Major source  100k Major  source  100k Major  source   50k Major source    25k Major  source  100/250 Major, 100
                                          \1\             major  mod.       100k major mod.     75k major mod.      50k major mod.      50k major mod.      25k major mod.           mod.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Major Sources.........  15,000............  15,000............  15,550............  15,550............  15,550............  18,500............  22,500............  6,118,252.
Number of Newly Major GHG         N/A...............  0.................  550...............  550...............  550...............  3,500.............  7,500.............  6,105,913.
 Sources.
Number of PSD New Construction    240...............  240...............  242...............  242...............  242...............  243...............  250...............  19,889.
 Actions.
Number of PSD Modification        448...............  448...............  468...............  1,363.............  2,257.............  2,354.............  9,645.............  62,284.
 Actions at Covered major
 sources.
Permitting Authority Cost to Run  $12M/yr...........  $15M/yr...........  $15M/yr...........  $36M/yr...........  $57M/yr...........  $59M/yr...........  $229M/yr..........  $1.5B/yr.
 PSD programs.
Permitting Authority Work Hours   150,795...........  185,195...........  192,055...........  461,450...........  730,544...........  764,781...........  2.97 M............  19.7 M.
 to Run PSD programs \2\.
Permitting Authority Cost to Run  $62M/yr...........  $63M/yr...........  $67M/yr...........  $69M/yr...........  $70M/yr...........  $88M/yr...........  $126M/yr..........  $21 B/yr.
 Title V Programs.
Permitting Authority Work Hours   1.35 M............  1.38 M............  1.46 M............  1.49 M............  1.53 M............  1.92 M............  2.74 M............  460 M.
 to Run Title V Programs.
Annual Total Cost to Run PSD and  $74M/yr...........  $78M/yr 5%          $82M/yr 11%         $105M/yr 42%        $127M/yr 72%        $147M/yr 99%        $355M/yr 380%       $22.5 B/yr 30,305%
 Title V Programs and percent                          increase (once      increase.           increase.           increase.           increase.           increase.           increase.
 increase in cost over current                         states adopt).
 program.
% GHG emissions covered \3\.....  0.................  65%...............  67%...............  67%...............  67%...............  70%...............  75%...............  78%.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: (1) As explained in the preamble, ``current program'' figures for PSD permits also reflect NSR permits in nonattainment areas that we assume include a PSD component for at least one
  pollutant. (2) Number of FTEs may be calculated as work hours divided by 2,000 hours. (3) Percent of national GHG stationary source emissions emitted from sources that would be considered
  major for GHG emissions under each threshold scenario.

    As described in the TSD, we considered several different major
source/major modification threshold combinations. We chose the
combinations to reflect representative, incremental steps along the
possible range. Because it is time- and resource- intensive to develop
estimates for a given step, we chose intervals that best reflect
representative points within the range, given those time and resource
constraints. Here, we discuss key observations about some of the
combinations that we assessed. As the table indicates, under the
current PSD and title V programs, approximately 15,000 sources qualify
as major PSD sources for at least one pollutant and therefore meet the
applicability thresholds. Of these, approximately 668 sources are
subject to PSD requirements each year for at least one pollutant--240
because they undertake new construction, and 448 because they undertake
modifications. The permitting authorities' administrative burdens for
the NSR program are 153,795 work hours, and $12 million. For the title
V program, the 15,000 sources are, for the most part already permitted,
and therefore need revised permits as required and renewal permits on a
5-year schedule. The permitting authorities' title V administrative
burdens on an annual basis are 1,349,659 work hours and $62 million.
    The first threshold Table 1 describes--and which, as discussed
later, we are adopting for Step 1--is the

``anyway'' source approach. Under this approach, (i) PSD applies to the
GHG emissions from projects that are subject to PSD anyway as new
sources or major modifications due to their emissions of non-GHG
pollutants and that result in an increase (or, in the case of
modifications, a net increase) of at least 75,000 tpy CO2e;
and (ii) title V applies to what we will call ``anyway'' title V
sources, that is, sources that are subject to title V anyway due to
their emissions of non-GHG pollutants. Under this approach, the number
of sources subject to PSD each year--including new construction and
modifications--is the same as under the current program, but the
permitting authorities will need to address GHG emissions as part of
those permitting actions each year and, to do so, will require, each
year, 34,400 additional workload hours costing an additional $3
million. For title V, we estimate that the number of title V sources
that require permitting actions will, on average, be the same each
year, but permitting authorities will need to address GHG requirements
for some of them; as a result, permitting authorities will need, each
year, 27,468 additional work hours costing $1 million in additional
funding.
    Another threshold described in Table V-1 is the one we are adopting
under Step 2, as described later, under which (i) 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 a net emissions increase of at
least 75,000 tpy CO2e; and (ii) existing sources will be
subject to title V due to their GHG emissions if they emit 100,000 tpy
CO2e in GHG emissions. Under this approach, which we will
call the 100,000/75,000 approach, we estimate that each year, compared
to current levels, the permitting authorities will need to issue GHG
permits to two additional sources that newly construct and to 915
additional sources that undertake modifications. Doing so will require
310,655 additional workload hours costing an additional $24 million,
compared to the current program. For title V, an additional 190 sources
will require new title V permits each of the first 3 years, and the
permitting authorities' associated costs will be 141,322 work hours and
$7 million more than the current program.
    The last approach we will describe here may be called the 50,000/
50,000 approach, which, as discussed later, we adopt as the floor for
thresholds during the first 6 years after promulgation. Under this
approach, (i) sources will be subject to PSD on account of their GHG
emissions if they newly construct and emit at least 50,000 tpy
CO2e, or if they are existing sources that emit at least
50,000 tpy CO2e of GHGs and make a modification that results
in a net emissions increase of at least 50,000 tpy CO2e; and
(ii) existing sources will be subject to title V on account of their
GHG emissions if they emit 50,000 tpy CO2e in GHG emissions.
Under this approach, each year, the permitting authorities will need to
issue GHG permits to 3 additional sources that newly construct and
1,900 that undertake modifications above current permitting levels.
Doing so will require 613,986 additional workload hours costing $47
million, compared to the current program. For title V, an additional
1,189 sources will require new title V permits each of the first 3
years and the permitting authorities' associated costs will be 568,017
work hours and $26 million more than the current program.
    We present the remaining entries in the table to illustrate how the
cost and burden estimates vary with increasing or decreasing thresholds
relative to those selected in this rule. These variations are important
in understanding how alternative thresholds would compare to the ones
selected. We also include entries reflecting the baseline (current
program without GHG permitting) and the burdens if we immediately
implemented the full statutory thresholds on January 2, 2011, without
tailoring or streamlining.
3. ``Absurd Results,'' ``Administrative Necessity,'' and ``One-Step-at-
a-Time'' Legal Doctrines
a. Introduction and Summary
    Having described the factual underpinnings of our action, which are
the costs to sources and administrative burdens to permitting
authorities, we now describe the legal underpinnings. They involve the
framework for analyzing agency-administered statutes, as established by
the U.S. Supreme Court in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837,
842-43 (1984). In this case, Chevron framework must take into account
the ``absurd results,'' ``administrative necessity,'' and ``one-step-
at-a-time'' legal doctrines. We believe that each of these doctrines
provides independent support for our action, but in addition, the three
doctrines are directly intertwined and can be considered in a
comprehensive and interconnected manner. Moreover, although each of the
three doctrines pre-date the 1984 Chevron decision, in which the U.S.
Supreme Court established the framework for construing agency-
administered statutes, each fits appropriately into the Chevron
framework.\24\
---------------------------------------------------------------------------

    \24\ Although we set out an analysis of how the three doctrines
fit into the Chevron framework, we note that even if the doctrines
are viewed independently of the Chevron framework, they support this
action.
---------------------------------------------------------------------------

    To reiterate, for convenience, the statutory provisions at issue:
Congress, through the definition of ``major emitting facility,''
applied the PSD program to include ``any * * * source [that] emit[s],
or ha[s] the potential to emit, one hundred [or, depending on the
source category two hundred fifty] tons per year or more of any air
pollutant.'' CAA sections 165(a), 169(1). In addition, Congress,
through the definition of ``modification,'' applied the PSD program to
include ``any physical change in, or change in the method of operation
of, a stationary source which increases the amount of any air pollutant
emitted by such source or which results in the emission of any air
pollutant not previously emitted.'' CAA sections 165(a), 169(2)(C),
111(a)(4). Similarly, Congress, through the definition of ``major
source,'' specified that the title V program includes ``any stationary
facility or source of air pollutants which directly emits, or has the
potential to emit, one hundred tons per year or more of any air
pollutant.'' CAA sections 502(a), 501(2)(B), 302(j). EPA, through long-
established regulatory action, in the case of PSD, and long-established
guidance, in the case of title V, has interpreted these definitions
narrowly so that they apply only with respect to air pollutants that
are subject to regulation under the CAA.
    Applying these definitions by their terms, as interpreted narrowly
by EPA, to GHG sources at the present time would mean that the PSD and
title V programs would apply to an extraordinarily large number of
small sources, the sources would incur unduly high compliance costs,
and permitting authorities would face overwhelming administrative
burdens. As a result, we believe Congress did not intend for us to
follow this literal reading, and instead, with this action, we chart a
course for tailoring the applicability provisions of the PSD program
and the title V program by phasing them in over time to the prescribed
extent.
    For our authority to take this action, we rely in part on the
``absurd results'' doctrine, because applying the PSD and title V
requirements literally (as previously interpreted narrowly by

EPA) would not only be inconsistent with congressional intent
concerning the applicability of the PSD and title V programs, but in
fact would severely undermine congressional purpose for those programs.
We also rely on the ``administrative necessity'' doctrine, which
applies because construing the PSD and title V requirements literally
(as previously interpreted narrowly by EPA) would render it impossible
for permitting authorities to administer the PSD provisions. The
tailoring approach we promulgate in this action is consistent with both
doctrines. It is also consistent with a third doctrine, the ``one-step-
at-a-time'' doctrine, which authorizes administrative agencies under
certain circumstances to address mandates through phased action.
    Our discussion of the legal bases for this rule is organized as
follows: In this section V.B.3, we provide an overview of the three
doctrines and describe how they fit into the Chevron framework for
statutory construction. In section V.B.4, we discuss the PSD and title
V programs, including each program's relevant statutory provisions,
legislative history, and regulatory history. In sections V.B.5 and
V.B.6 we discuss the ``absurd results'' approach for PSD and title V,
respectively, that we are finalizing in our action. In section V.B.7.,
we discuss additional rulemaking in which we may consider exempting
certain categories of sources from PSD and title V under the ``absurd
results'' doctrine. In section V.B.8, we discuss the legal and policy
rationale for the phase-in schedule that we are adopting for applying
PSD and title V to GHG sources. In section V.B.9 we discuss the
``administrative necessity'' approach for PSD and title V,
respectively. In section V.B.10, we discuss the third legal basis for
our action, the ``one-step-at-a-time'' doctrine.
b. The ``Absurd Results'' Doctrine
    Turning first to the ``absurd results'' doctrine, we note at the
outset that we discussed the doctrine at length in the notice of
proposed rulemaking, and we incorporate by reference that discussion,
although we make some refinements to that discussion in this preamble.
The starting point for EPA's interpretation of the PSD and title V
applicability provisions and reliance on the ``absurd results''
doctrine is the familiar Chevron two-step analysis. We discuss this
analysis in greater detail later, but in brief, in interpreting a
statutory provision, an agency must, under Chevron Step 1, determine
whether Congress's intent on a particular question is clear; if so,
then the agency must follow that intent. If the intent of the provision
is not clear, then the agency may, under Step 2, fashion a reasonable
interpretation of the provision. Chevron U.S.A. Inc. v. NRDC, 467 U.S.
837, 842-43 (1984).
    The courts consider the best indicator of congressional intent to
be the plain meaning of the statute. However, the U.S. Supreme Court
has held that the literal meaning of a statutory provision is not
conclusive ``in the `rare cases [in which] the literal application of a
statute will produce a result demonstrably at odds with the intentions
of the drafters' * * * [in which case] the intention of the drafters,
rather than the strict language, controls.'' United States v. Ron Pair
Enterprises, 489 U.S. 235, 242 (1989). This doctrine of statutory
interpretation may be termed the ``absurd results'' doctrine.
    Although, as just noted, the U.S. Supreme Court has described the
``absurd results'' cases as ``rare,'' in that case the Court seemed to
be referring to the small percentage of statutory-construction cases
that are decided on the basis of the doctrine. The DC Circuit, in
surveying the doctrine over more than a century of jurisprudence,
characterized the body of law in absolute numbers as comprising
``legions of court decisions.'' In re Franklyn C. Nofziger, 925 F.2d
428, 434 (DC Cir. 1991). Indeed, there are dozens of cases, dating from
within the past several years to well into the 19th century,\25\ in
which the U.S. Supreme Court has applied the ``absurd results''
doctrine to avoid the literal application of a statute, or if not so
holding, has nevertheless clearly acknowledged the validity of the
doctrine. Some of the more recent of these cases include: Logan v.
United States, 552 U.S. 23, 36-37 (2007) (``[s]tatutory terms, we have
held, may be interpreted against their literal meaning where the words
`could not conceivably have been intended to apply' to the case at hand
[citation omitted]''); Nixon v. Missouri Municipal League, 541 U.S.
125, 132-33 (2004) (``any entity'' includes private but not public
entities); Raygor v. Regents of Univ. of Minn., 534 U.S. 533, 542-45
(2002) (``implying a narrow interpretation of * * * `any claim
asserted' so as to exclude certain claims dismissed on Eleventh
Amendment grounds''); United States v. X-Citement Video, Inc., 513 U.S.
64, 69 (1994) (rejecting a literal interpretation of the statutory term
``knowingly'' on grounds that Congress could not have intended the
``positively absurd'' results that some applications of such an
interpretation would produce, ``[f]or instance, a retail druggist who
returns an uninspected roll of developed film to a customer ``knowingly
distributes'' a visual depiction and would be criminally liable if it
were later discovered that the visual depiction contained images of
children engaged in sexually explicit conduct''); Rowland v. Cal. Men's
Colony, 506 U.S. 194, 200 (1993) (finding that an artificial entity
such as an association is not a ``person'' under the statute, and
describing the absurdity doctrine as a ``common mandate of statutory
construction''); United States v. Ron Pair Enterprises, 489 U.S. 235,
242 (1989) (the plain meaning of a statutory provision is not
conclusive ``in the `rare cases [in which] the literal application of a
statute will produce a result demonstrably at odds with the intentions
of the drafters' * * * [in which case] the intention of the drafters,
rather than the strict language, controls''); Green v. Bock Laundry
Machine Company, 490 U.S. 504 (1989) (provision in Federal Rule of
Evidence that protects ``the defendant'' against potentially
prejudicial evidence, but not the plaintiff, refers to only criminal,
and not civil, defendants); Public Citizen v. United States Dep't of
Justice, 491 U.S. 440, 453-54 (1989) (rejecting a broad,
straightforward reading of the term ``utilize,'' on grounds that a
literal reading would appear to require the absurd result that all of
FACA's restrictions apply if a President consults with his own
political party before picking his Cabinet, and such a reading ``was
unmistakably not Congress' intention''); Watt v. Alaska, 451 U.S. 259,
266 (1981) (rejecting reliance on plain statutory language and
concluding that the term ``minerals'' in section 401(a) of the Wildlife
Refuge Revenue Sharing Act applies only to minerals on acquired refuge
lands; stating ``[t]he circumstances of the enactment of particular
legislation may persuade a

court that Congress did not intend words of common meaning to have
their literal effect''); Train v. Colorado Public Interest Research
Group, Inc., 426 U.S. 1, 23-24 (1976) (prohibition in Federal Water
Pollution Control Act against discharging into navigable waters
``pollutants,'' which are defined to include ``radioactive materials,''
does not apply to three specific types of radioactive materials);
Jackson v. Lykes Bros. S.S. Co., 386 U.S. 731, 735 (1967) (refusing to
distinguish between a longshoreman hired by ``an independent stevedore
company'' and one hired by ``the shipowner * * * to do exactly the same
kind of work,'' despite the clear terms of the Act, and stating: ``[w]e
cannot hold that Congress intended any such incongruous, absurd, and
unjust result in passing this Act,'' when the Act was ``designed to
provide equal justice to every longshoreman similarly situated'');
Lynch v. Overholser, 369 U.S. 705, 710, (1962) (statutory construction
is not confined to the ``bare words of a statute''); United States v.
Bryan, 339 U.S. 323, 338 (1950) (``Despite the fact that the literal
language would encompass testimony elicited by the House Committee in
its questioning of respondent relative to the production of the records
of the association, the Court will not reach that result if it is
contrary to the congressional intent and leads to absurd conclusions.
And we are clearly of the opinion that the congressional purpose would
be frustrated if the words, ``in any criminal proceeding,'' were read
to include a prosecution for willful default under R.S. Sec.
102.'').\26\
---------------------------------------------------------------------------

    \25\ For early cases in which the U.S. Supreme Court applied the
``absurd results'' doctrine, see Holy Trinity Church v. U.S., 143
U.S. 457, 516-17 (1892) (``any alien'' does not include a foreign
pastor; Court stated, ``It is a familiar rule, that a thing may be
within the letter of the statute and yet not within the statute,
because not within its spirit, nor within the intention of its
makers * * *. If a literal construction of the words be absurd, the
Act must be construed as to avoid the absurdity''); Chew Heong v.
United States, 112 U.S. 536, 555 (1884) (rejecting a literal
interpretation of treaty that would have prevented the re-entry of a
person into the U.S. upon the ground that he did not possess a
certificate which did not exist prior to his departure, and which
could not possibly have been issued); Heyenfeldt v. Daney Gold
Mining Co., 93 U.S. 634, 638 (1877) (statutory language expressly
referred to past land sales and dispositions, ``but evidently they
were not employed in this sense, for no lands in Nevada had been
sold or disposed of by any act of Congress,'' and the language of
the statute ``could not * * * apply to past sales or dispositions,
and, to have any effect at all, must be held to apply to the
future'').
    \26\ For other U.S. Supreme Court cases, see Utah Junk Co. v.
Porter, 328 U.S. 39, 44 (1946) (``literalness may strangle
meaning''); Markham v. Cabell, 326 U.S. 404, 409 (1945) (``The
policy as well as the letter of the law is a guide to decision.'');
United States v. American Trucking Associations, Inc. 310 U.S. 534
(1940) (the term ``employees'' in the Federal Motor Carrier Act, is
limited to employees whose activities affect safety); C.V. Sorrels
v. U.S., 287 U.S. 435, 446-49 (1932) (provisions of National
Prohibition Act that criminalize possessing and selling liquor do
not apply if defendant is entrapped; Court declines to apply the
``letter of the statute'' because doing so ``in the circumstances
under consideration is foreign to its purpose''); United States v.
Katz, 271 U.S. 354, 362 (1926) (holding that the statutory words
``no person'' refer only to persons authorized under other
provisions of the Act to traffic alcohol, thus rejecting a literal
application of general terms descriptive of a class of persons made
subject to a criminal statute); Hawaii v. Mankichi, 190 U.S. 197,
212-14 (1903) (refusing to adopt a literal application of the
``Newlands resolution'' which would have entitled every criminal in
the State of Hawaii convicted of an offense between 1898-1900 to be
set at large, as ``surely such a result could not have been within
the contemplation of Congress'').
---------------------------------------------------------------------------

    The DC Circuit has also handed down numerous decisions that applied
the absurd results doctrine to avoid a literal interpretation or
application of statutory provisions or that have acknowledged the
doctrine. Some of the most recent ones include: Arkansas Dairy
Cooperative Ass'n, Inc., v. U.S. Dep't of Agriculture, 573 F.3d 815 (DC
Cir. 2009) (rejecting the canon of construction that presumes that
Congress is aware of existing law pertinent to the legislation that it
enacts, when in this case, the presumption that Congress was aware of
the Departments definition of ``hearing'' would lead to ``the absurd
result that Congress intended to impose a requirement with which the
Secretary could not comply;'' stating: ``Courts, `in interpreting the
words of a statute, [have] some scope for adopting a restricted rather
than a literal or usual meaning of its words where acceptance of that
meaning would lead to absurd results * * * or would thwart the obvious
purpose of the statute * * *.' '' (quoting In re Trans Alaska Pipeline
Rate Cases, 436 U.S. 631, (1978)); Buffalo Crushed Stone, Inc. v.
Surface Transportation Board, 194 F.3d 125, 129-30 (DC Cir. 1999)
(regulation of Surface Transportation Board providing that if a notice
of exemption ``contains false or misleading information, the use of the
exemption is void ab initio'' does not apply to a notice containing
false information when declaring the notice void ab initio would
undermine the goals of the governing statute; a conflict between the
``literal application of statutory language'' and maintaining the
integrity of the regulatory scheme should be resolved by construing the
text in accordance with its purpose); Mova Pharm. Corp. v. Shalala, 140
F.3d 1060, 1068-69 (DC Cir. 1998) (as discussed later, describes the
``absurd results'' doctrine in the context of the Chevron framework for
statutory construction; invalidates a Food and Drug Administration's
(FDA) regulation designed to remedy what the FDA described as the
absurd result of a literal application of the statutory provisions
governing FDA approval of successive generic drug applications, on
grounds that ``[i]n effect, the FDA has embarked upon an adventurous
transplant operation in response to blemishes in the statute that could
have been alleviated with more modest corrective surgery;'' states that
``[t]he rule that statutes are to be read to avoid absurd results
allows an agency to establish that seemingly clear statutory language
does not reflect the ``unambiguously expressed intent of Congress,''
Chevron, 467 U.S. at 842, and thus to overcome the first step of the
Chevron analysis''); Environmental Defense Fund v. EPA, 82 F.3d 451,
468-69 (DC Cir. 1996) (although Act requires that a federal action
conform to the SIP that is currently in place, EPA may instead require
conformity to a revised implementation plan that state commits to
develop; ``[t]his is one of those rare cases * * * [that] requires a
more flexible, purpose-oriented interpretation if we are to avoid
`absurd or futile results.' ''); American Water Works Ass'n v. EPA, 40
F.3d 1266, 1271 (DC Cir. 1994) (holding that EPA's interpretation of
the term ``feasible'' so as to require a treatment technique instead of
a maximum contaminant level (MCL) for lead is reasonable; the court
stated: ``Indeed, where a literal reading of a statutory term would
lead to absurd results, the term simply `has no plain meaning * * * and
is the proper subject of construction by the EPA and the courts.' If
the meaning of `feasible' suggested by the NRDC is indeed its plain
meaning, then this is such a case; for it could lead to a result
squarely at odds with the purpose of the Safe Drinking Water Act.''
(quoting Chem. Mfrs. Ass'n v. Natural Res. Def. Council, Inc., 470 U.S.
116, 126 (1985)) (citation omitted); In re Nofziger, 925 F.2d 428, 434-
35 (DC Cir. 1991) (provision authorizing payment of attorney fees to
the subject of an investigation conducted by an independent counsel of
the Department of Justice only if ``no indictment is brought'' against
such individual does not preclude payment of attorney fees when an
indictment is brought but is determined to be invalid).
c. The ``Administrative Necessity'' Doctrine
    In the proposed rulemaking, we also described in detail the
``administrative necessity'' doctrine, 74 FR 55311 col. 3 to 55318 col.
3, and we incorporate that discussion by reference into this notice.
Under this doctrine, if a statutory provision, however clear on its
face, is impossible for the agency to administer, then the agency is
not required to follow the literal requirements, and instead, the
agency may adjust the requirements in as refined a manner as possible
to assure that the requirements are administrable, while still
achieving Congress's overall intent. The DC Circuit set out the
doctrine of ``administrative necessity'' in a line of cases that most
prominently includes Alabama Power v. Costle, 636 F.2d 323 (DC Cir.
1980). The Court cited the doctrine most recently in New York v. EPA,
443 F.3d 880, 884, 888 (DC Cir. 2006).
    As we stated in the proposed rulemaking, ``We believe that the
``administrative necessity'' case law establishes a three-step process
under which an administrative agency may, under the appropriate
circumstances, in

effect revise statutory requirements that the agency demonstrates are
impossible to administer so that they are administrable.'' 74 FR 55315
col. 1. Specifically:

    [T]he three steps are as follows: When an agency has identified
what it believes may be insurmountable burdens in administering a
statutory requirement, the first step the agency must take is to
evaluate how it could streamline administration as much as possible,
while remaining within the confines of the statutory requirements.
The second step is that the agency must determine whether it can
justifiably conclude that even after whatever streamlining of
administration of statutory requirements (consistent with those
statutory requirements) it conducts, the remaining administrative
tasks are impossible for the agency because they are beyond its
resources, e.g., beyond the capacities of its personnel and funding.
If the agency concludes with justification that it would be
impossible to administer the statutory requirements, as streamlined,
then the agency may take the third step, which is to phase in or
otherwise adjust the requirements so that they are administrable.
However, the agency must do so in a manner that is as refined as
possible so that the agency may continue to implement as fully as
possible Congressional intent.

74 FR 55315 cols. 1-2.

    It should also be noted that we believe the administrative burdens
encountered by the state and local permitting authorities are fully
relevant under the ``administrative necessity'' doctrine. Although the
case law that discusses the doctrine focuses on federal agencies (see
74 FR 55312-14), under the CAA, state and local agencies are EPA's
partners in implementing provisions of the CAA, and have primary
responsibility for implementing the PSD program. They generally adopt
EPA's PSD requirements in their SIPs, as required under CAA section
110(a)(2)(C); and they generally adopt EPA's title V requirements in
their title V programs, as required under CAA section 502(d). They
issue the PSD and title V permits and are responsible in the first
instance for enforcing the terms of the permits. In all these respects,
the law that the state and local permitting authorities administer is
both federal and state law. Under certain circumstances, EPA may become
responsible for permit issuance and enforcement in the first instance,
but even then, EPA may, and frequently has, delegated those duties to a
state, in which case, the state implements federal law directly. Thus,
although the PSD and title V programs are federal requirements, for the
most part, it is the states that implement those programs. For this
reason, the administrative burdens that the states face in implementing
the programs are relevant in determining the applicability of the
``administrative necessity'' doctrine.
d. ``One-Step-at-a-Time'' Doctrine
    In addition to the ``absurd results'' and ``administrative
necessity'' doctrines, another judicial doctrine supports at least part
of EPA's Tailoring Rule, and that is the doctrine that agencies may
implement statutory mandates one step at a time, which we will call the
``one-step-at-a-time'' doctrine. In the notice of proposed rulemaking,
we also described this doctrine and recent case law applying it. 74 FR
55319 col. 1-3. As we noted, that the U.S. Supreme Court recently
described the doctrine in Massachusetts v. EPA, 549 U.S. 497, 524
(2007), as follows: ``Agencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop;'' and instead
they may permissibly implement such regulatory programs over time,
``refining their preferred approach as circumstances change and as they
develop a more nuanced understanding of how best to proceed.'' We
assume familiarity with our discussion in the proposal, but we expand
upon it here to review the case law in greater detail and to highlight
certain components of the doctrine that are particularly relevant to
the Tailoring Rule. The roots of the doctrine go back at least to the
DC Circuit's 1979 decision in United States Brewers Association, Inc.
v. EPA, 600 F.2d 974 (DC Cir. 1979). There, the Court considered a
challenge to EPA's guidelines for managing beverage containers, which
EPA was required to promulgate under the Resource Conservation and
Recovery Act of 1976 (RCRA). RCRA gave EPA one year to promulgate the
guidelines. EPA promulgated a partial set of guidelines, started two
others, and was challenged before the year was out by petitioners who
objected to the initial guideline, saying it fell short of the
statutory mandate. The Court upheld the initial guideline, stating:
``Under these circumstances we think the question of whether the Agency
has fully satisfied the mandate of the statute is not fit for judicial
review at this time, when the Agency, still well within the one-year
period granted by statute, is deeply involved in the process of
formulating rules designed to carry out the congressional mandate. The
Agency might properly take one step at a time.'' States Brewers
Association, Inc. v. EPA, 600 F.2d at 982.
    The Court addressed the doctrine at greater length in National
Association of Broadcasters v. FCC, 740 F.2d 1190, 1209-14 (DC Cir.
1984). There, the Court noted that under certain statutory schemes,
step-by-step agency action might not be authorized; but the Court
emphasized that when it is authorized, it may offer significant
benefits; and the Court went on to delineate some of the circumstances
under which its use is justified. In that case, the Court held that
Federal Communications Commission (FCC) acted reasonably in making a
spectrum allocation decision that granted direct broadcast satellite
service priority use of a gigahertz (GHz) band in 5-years time, and--
although acknowledging that fixed service users that were, at that
time, using that band, would have to relocate to other bands--in
postponing the details of the fixed service relocation to future
proceedings. The Court described in some detail ``[t]he circumstances
under which * * * [an] agency may defer resolution of problems raised
in a rulemaking,'' as follows:

    The requisite judgment is in essence a pragmatic one. In an
ideal world, of course, agencies would act only after comprehensive
consideration of how all available alternatives comported with a
well-defined policymaking objective, and in some circumstances,
statutes indeed mandate that agencies proceed by only such a course
* * *. But administrative action generally occurs 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 * * *. We have
therefore recognized the reasonableness of [an agency's] decision to
engage in incremental rulemaking and to defer resolution of issues
raised in a rulemaking even when those issues are ``related'' to the
main ones being considered * * *. At the same time, [an agency]
cannot `restructure [an] entire industry on a piecemeal basis'
through a rule that utterly fails to consider how the likely future
resolution of crucial issues will affect the rule's rationale * * *.
    Drawing a line between the permissible and the impermissible in
this area will generally raise two questions. First the agency will
likely have made 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 resolve the
postponed issue. With regard to this aspect of the agency's
decision, as long as the agency's predictions about the course of
future events are plausible and flow from the factual record
compiled, a reviewing court should accept the agency's estimation *
* *. Second, once the nature and magnitude of the unresolved issue
is determined, the relevant question is whether it was 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.
In contrast, an incremental approach to agency decision making is
least justified when small errors in predictive judgments can have
catastrophic effects on the public welfare or when future
proceedings are likely to be systematically defective in taking into
account certain relevant interests * * *.

740 F.2d at 1210-11 (citations omitted).

    In City of Las Vegas v. Lujan, 891 F.2d 927 (DC Cir. 1989), the
Court suggested that one component of upholding partial agency
compliance with a statutory directive is evidence that the agency was
on track for full compliance. There, the Court upheld the Department of
Interior's decision to list the population of desert tortoises living
north and west of the Colorado River (the ``Mojave'' population) as
endangered species, but not the nearby population living south and east
of the river (the ``Sonoran'' population). The agency explained that
the Mojave population faced certain threats that the Sonoran population
did not, and the Court found nothing to fault in that reasoning. The
Court added: ``Since agencies have great discretion to treat a problem
partially, we would not strike down the listing if it were a first step
toward a complete solution, even if we thought it `should' have covered
both the Mojave and Sonoran populations.'' City of Las Vegas v. Lujan,
891 F.2d 927, 935 (DC Cir. 1989) (footnote omitted).
    In Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d 455 (DC Cir.
1998), the DC Circuit added another component to the ``one-step-at-a-
time'' doctrine: While reiterating that ``ordinarily, agencies have
wide latitude to attack a regulatory problem in phases and that a
phased attack often has substantial benefits,'' id. at 471, the Court
went on to uphold partial agency action even when that action was long-
delayed. There, the relevant statute was the Overflights Act, which
required the Federal Aviation Administration (FAA) to reduce aircraft
noise from sightseeing tours in Grand Canyon National Park, and
established the goal of ``substantial restoration of natural quiet and
experience of the park.'' The statute required the agency to develop a
plan to implement the statutory requirements within 120 days after
enactment, and report to Congress within 2 years after the date of the
plan as to the plan's success. In fact, the FAA did not develop,
through rulemaking, a plan until ten years after enactment, and when it
did, it acknowledged that the plan was only a partial one, and that it
would need two more rules and another ten years to meet the statutory
goal of substantial restoration. Although recognizing that the
Overflights Act did not establish an explicit timetable for meeting the
statutory goal, the Court stated that ``[t]he language of the
Overflights Act does manifest a congressional concern with expeditious
agency action,'' and described the agency's action variously as
``tardy,'' ``undeniably slow,'' and ``slow and faltering.'' Id. at 476-
77. Even so, the Court upheld the FAA's action against different
challenges from appellants and intervenors that (i) the agency acted
unreasonably in not promulgating a complete plan to meet the statutory
goal, instead of promulgating just the first step; and (ii) the agency
acted unreasonably in not waiting until it had a complete plan before
promulgating the first step. The Court stated: ``We agree that it would
be arbitrary and capricious for an agency simply to thumb its nose at
Congress and say--without any explanation--that it simply does not
intend to achieve a congressional goal on any timetable at all * * *,''
but went on to emphasize that the FAA's rule was the first of three
that the agency assured would achieve the statutory goal. The Court
cited City of Las Vegas v. Lujan, discussed previously, for the
proposition that ``a court will not strike down agency action `if it
were a first step toward a complete solution.' '' Grand Canyon Air Tour
Coalition v. F.A.A., 154 F.3d 455, 477-78 (DC Cir. 1998).\27\
---------------------------------------------------------------------------

    \27\ For other cases, see Arizona Public Service Co. v. EPA, 562
F.3d 1116, 1125-26 (10th Cir. 2009); General American Transp. Corp.
v. ICC, 872 F.2d 1048, 1058 (DC Cir. 1989); Hazardous Waste
Treatment Council v. EPA, 861 F.2d 277, 287 (DC Cir. 1988); Western
Union International, Inc. v. FCC, 725 Fl2d 732, 754 (DC Cir. 1984).
---------------------------------------------------------------------------

e. Consistency of Doctrines With Chevron Framework
    Although the formation of the ``absurd results,'' ``administrative
necessity,'' and ``one-step-at-a-time'' doctrines pre-date the Chevron
two-step analysis for construing statutes that Congress has authorized
an agency to administer, we believe that the doctrines can be
considered very much a part of that analysis, and courts have continued
to apply them post-Chevron. Under Chevron Step 1, an agency must
determine whether ``Congress has directly spoken to the precise
question at issue.'' If so, ``the court, as well as the agency, must
give effect to the unambiguously expressed intent of Congress.''
However, if ``the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.''
    Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-42 (1984).

    Thus, Step 1 under Chevron calls for determining congressional
intent for the relevant statutory directive on the specific issue
presented. To determine Congress's intent, the agency must look first
to the statutory terms in question, and generally interpret them
according to their literal meaning, within the overall statutory
context, and perhaps with reference to the legislative history. If the
literal meaning of the statutory requirements is clear then, absent
indications to the contrary, the agency must take it to indicate
congressional intent and must implement it. Even if the literal meaning
of the statutory requirements is not clear, if the agency can otherwise
find indications of clear congressional intent, such as in the
legislative history, then the agency must implement that congressional
intent.
    The DC Circuit has indicated that the ``absurd results'' doctrine
fits into the Chevron Step 1 analysis in the following way: Recall that
in the cases in which the courts have invoked this doctrine, the
literal meaning of the statutory requirements has been clear, but has
led to absurd results. This can occur when the literal meaning, when
applied to the specific question, conflicts with other statutory
provisions, contradicts congressional purpose as found in the
legislative history--and, in particular, undermines congressional
purpose--or otherwise produces results so illogical or otherwise
contrary to sensible public policy as to be beyond anything Congress
would reasonably have intended. See United States v. Ron Pair
Enterprises, 489 U.S. 235, 242-43 (1989); Griffin v. Oceanic
Contractors, Inc., 458 U.S. 564, 571 (1982).
    Under these circumstances, the agency must not take the literal
meaning to indicate congressional intent. As the DC Circuit has
explained, ``where a literal reading of a statutory term would lead to
absurd results, the term `simply has no plain meaning * * * and is the
proper subject of construction by the EPA and the court.' '' American
Water Works Assn v. EPA, 40 F.3d 1266, 1271 (DC Cir. 1994) (quoting
Chemical Manufacturers' Association v. NRDC, 470 U.S. 116, 126 (1985)).
Under these circumstances, if the agency can find other indications of
clear congressional intent, then the agency must implement that intent.
See United States v. Ron Pair Enterprises, 489 U.S. 235, 242-43 (1989).
This may mean implementing the statutory terms, albeit not in
accordance with their literal meaning,

but in a way that achieves a result that is as close as possible to
congressional intent. As the DC Circuit said in Mova Pharm. Corp. v.
Shalala, 140 F.3d 1060 (DC Cir. 1998):

    The rule that statutes are to be read to avoid absurd results
allows an agency to establish that seemingly clear statutory
language does not reflect the ``unambiguously expressed intent of
Congress,'' * * * and thus to overcome the first step of the Chevron
analysis. But the agency does not thereby obtain a license to
rewrite the statute. When the agency concludes that a literal
reading of a statute would thwart the purposes of Congress, it may
deviate no further from the statute than is needed to protect
congressional intent * * *. [T]he agency might be able to show that
there are multiple ways of avoiding a statutory anomaly, all equally
consistent with the intentions of the statute's drafters * * *. In
such a case, we would move to the second stage of the Chevron
analysis, and ask whether the agency's choice between these options
was ``based on a permissible construction of the statute.''
Otherwise, however, our review of the agency's deviation from the
statutory text will occur under the first step of the Chevron
analysis, in which we do not defer to the agency's interpretation of
the statute.

Id. at 1068 (quoting Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842,
843 (1984) (citations omitted)).

    The ``administrative necessity'' doctrine is not as well developed
as the ``absurd results'' doctrine, so that the courts have not had
occasion to explicitly describe how the doctrine fits into the Chevron
analytical framework. However, we think that a reasonable approach, in
line with the DC Circuit's approach to the ``absurd results'' doctrine
as just described, is as follows: Recall that under the
``administrative necessity'' doctrine, an agency is not required to
implement a statutory provision in accordance with the literal
requirements when doing so would be impossible, but the agency must
nevertheless implement the provision as fully as possible. Placed in
the context of the Chevron framework, we think that that the
``administrative necessity'' doctrine is based on the premise that
inherent in the statutory design is the presumption that Congress does
not intend to impose an impossible burden on an administrative agency.
See Alabama Power v. Costle, 636 F.2d 323, 357 (DC Cir. 1980)
(describing the ``administrative necessity'' approach as one of the
``limited grounds for the creation of exemptions [that] are inherent in
the administrative process, and their unavailability under a statutory
scheme should not be presumed, save in the face of the most unambiguous
demonstration of congressional intent to foreclose them'').
    Therefore, if the literal meaning of a statutory directive would
impose on an agency an impossible administrative burden, then that
literal meaning should not be considered to be indicative of
congressional intent. Rather, congressional intent should be considered
to achieve as much of the statutory directive as possible. As a result,
the agency must adopt an approach that implements the statutory
directive as fully as possible. This is consistent with the DC
Circuit's holding in Mova Pharm. Corp that if congressional intent is
clear, but the plain meaning of a statute does not express that intent,
then the agency must, under Chevron Step 1, select an interpretation
that most closely approximates congressional intent. Mova Pharm. Corp,
140 F.3d at 1068.\28\
---------------------------------------------------------------------------

    \28\ We recognize that we described the relationship between the
Chevron framework and the ``administrative necessity'' doctrine
somewhat differently in the proposal, 74 FR 55312, and that, after
further analysis, we are refining our view of that relationship as
described previously.
---------------------------------------------------------------------------

    The ``one-step-at-a-time'' doctrine fits into the Chevron framework
in much the same manner that the ``administrative necessity'' doctrine
does. That is, inherent in the statutory design is the presumption that
Congress intended an agency, under certain circumstances, to implement
the statutory requirements in a one-step-at-a-time fashion, as long as
the agency stays on a path towards full implementation.
    Under all of the circumstances described previously, congressional
intent is clear--whether it is indicated by the plain language or
otherwise--and as a result, the agency must follow that intent under
Chevron Step 1. On the other hand, the agency may determine that
congressional intent on the specific issue is not clear. In these
cases, the agencies should proceed to Chevron Step 2 and select an
interpretation or an application that is a permissible construction of
the statute. This situation generally occurs when the statutory
provisions are ambiguous or silent as to the specific issue, and there
are no other indications of clear congressional intent. In addition, in
some cases in which the literal meaning of the statutory provision,
when applied to the specific question, leads to an absurd result--and,
therefore, the statutory provision should be considered not to have a
plain meaning--there may be no other indications of clear congressional
intent. Under all these circumstances, the agency is authorized, under
Chevron Step 2, to develop and implement a construction of the statute
that the courts will uphold as long as it is reasonable.
    As noted previously, the DC Circuit, has pointed out that this
situation may also occur when the literal language leads to an absurd
result, and, in attempting to implement congressional intent, the
agency is ``able to show that there are multiple ways of avoiding a
statutory anomaly, all equally consistent with the intentions of the
statute's drafters * * *. In such a case, we would move to the second
stage of the Chevron analysis, and ask whether the agency's choice
between these options was `based on a permissible construction of the
statute.' '' Mova Pharm. Corp, 140 F.3d at 1068. As the U.S. Supreme
Court has recently said, although in a context different than ``absurd