[Federal Register: October 7, 2009 (Volume 74, Number 193)]
[Proposed Rules]
[Page 51535-51549]
[DOCID:fr07oc09-24]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-HQ-OAR-2009-0597; FRL-8966-6]
RIN 2060 AP87

Prevention of Significant Deterioration (PSD): Reconsideration of
Interpretation of Regulations That Determine Pollutants Covered by the
Federal PSD Permit Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; reconsideration.

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SUMMARY: In a December 18, 2008 memorandum, EPA established an
interpretation of the regulatory phrase ``subject to regulation'' that
is applied to determine the pollutants subject to the federal
Prevention of Significant Deterioration (PSD) program under the Clean
Air Act (CAA or Act). On February 17, 2009, the EPA Administrator
granted a petition for reconsideration of the regulatory interpretation
in the memorandum. However, the Administrator did not grant a request
to stay the memorandum, so the interpretation remains in effect for the
federal PSD program pending completion of this reconsideration action.
This document implements the grant of reconsideration by discussing and
requesting public comment on various interpretations of the regulatory
phrase ``subject to regulation.'' The interpretations discussed in this
document include our current and preferred interpretation, which would
make PSD applicable to a pollutant on the basis of an EPA regulation
requiring actual control of emissions of a pollutant, as well as
interpretations that would make PSD applicable to a pollutant on the
basis of an EPA regulation requiring monitoring or reporting of
emissions of a pollutant, the inclusion of regulatory requirements for
specific pollutants in an EPA-approved state implementation plan (SIP),
an EPA finding of endangerment, and the grant of a section 209 waiver.
This document also takes comments on related issues and other
interpretations that could influence this reconsideration.

DATES: Comments. Comments must be received on or before December 7,
2009.
    Public Hearing. If anyone contacts EPA requesting a public hearing
by October 22, 2009, we will hold a public hearing approximately 30
days after publication in the Federal Register.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-

OAR-2009-0597, by one of the following methods:
     http://www.regulations.gov: Follow the on-line
instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Mail: Air and Radiation Docket and Information Center,
Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460.
     Hand Delivery: Environmental Protection Agency, EPA West
Building, Room 3334, 1301 Constitution Ave., NW., Washington, DC. Such
deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0597. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://
www.regulations.gov or e-mail. The http://www.regulations.gov Web Site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket, visit the EPA Docket Center homepage at http://www.epa.gov/
epahome/dockets.htm.
    Docket: The December 18, 2008 interpretive memorandum, the petition
for reconsideration, and all other documents in the record for this
reconsideration are in Docket ID. No. EPA-HQ-OAR-2009-0597. All
documents in the docket are listed in the http://www.regulations.gov
index. Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, will be publicly available only in hard copy. Publicly
available docket materials are available either electronically in
http://www.regulations.gov or in hard copy at the Air and Radiation
Docket and Information Center, EPA/DC, EPA West Building, Room 3334,
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The telephone number for the Public Reading Room is
(202) 566-1744, and the telephone number for the Air and Radiation
Docket and Information Center is<PHONE_NUMBER>.
    Public Hearing: If a hearing is held, it will be held at the U.S.
Environmental Protection Agency, 1200 Pennsylvania Avenue, Washington,
DC 20004.

FOR FURTHER INFORMATION CONTACT: Mr. David J. Svendsgaard, Air Quality
Policy Division, Office of Air Quality Planning and Standards (C504-
03), U.S. Environmental Protection Agency, Research Triangle Park, NC
27711; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-
mail address<EMAIL_ADDRESS>    To request a public hearing, please contact Ms. Pam Long, Air
Quality Policy Division, Office of Air Quality Planning and Standards
(C504-03), U.S. Environmental Protection Agency, Research Triangle
Park, NC 27711; telephone number:<PHONE_NUMBER>; fax number: (919)
541-5509; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

------------------------------------------------------------------------
             Industry group                          NAICS \a\
------------------------------------------------------------------------
Utilities (electric, natural gas, other   2211, 2212, 2213.
 systems).
Manufacturing (food, beverages, tobacco,  311, 312, 313, 314, 315, 316.
 textiles, leather).
Wood product, paper manufacturing.......  321, 322.
Petroleum and coal products               32411, 32412, 32419.
 manufacturing.
Chemical manufacturing..................  3251, 3252, 3253, 3254, 3255,
                                           3256, 3259.
Rubber product manufacturing............  3261, 3262.
Miscellaneous chemical products.........  32552, 32592, 32591, 325182,
                                           32551.
Nonmetallic mineral product               3271, 3272, 3273, 3274, 3279.
 manufacturing.
Primary and fabricated metal              3311, 3312, 3313, 3314, 3315,
 manufacturing.                            3321, 3322, 3323, 3324, 3325,
                                           3326, 3327, 3328, 3329.
Machinery manufacturing.................  3331, 3332, 3333, 3334, 3335,
                                           3336, 3339.
Computer and electronic products          3341, 3342, 3343, 3344, 3345,
 manufacturing.                            4446.
Electrical equipment, appliance, and      3351, 3352, 3353, 3359.
 component manufacturing.
Transportation equipment manufacturing..  3361, 3362, 3363, 3364, 3365,
                                           3366, 3366, 3369.
Furniture and related product             3371, 3372, 3379.
 manufacturing.
Miscellaneous manufacturing.............  3391, 3399.
Waste management and remediation........  5622, 5629.
Hospitals/Nursing and residential care    6221, 6231, 6232, 6233, 6239.
 facilities.
Personal and laundry services...........  8122, 8123.
Residential/private households..........  8141.
Non-Residential (Commercial)............  Not available. Codes only
                                           exist for private households,
                                           construction and leasing/
                                           sales industries.
------------------------------------------------------------------------
\a\ North American Industry Classification System.

B. Where can I get a copy of this document and other related
information?

    In addition to being available in the docket, an electronic copy of
this proposal will also be available on the World Wide Web. Following
signature by the EPA Administrator, a copy of this notice will be
posted on the EPA's New Source Review (NSR) Web site, under Regulations
& Standards, at http://www.epa.gov/nsr.

C. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
http://www.regulations.gov or e-mail. Clearly mark the part or all of
the information that you claim to be CBI. For CBI information in a disk
or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM
as CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2. Send or deliver information
identified as CBI only to the following address: Roberto Morales, OAQPS
Document Control Officer (C404-02), U.S. EPA, Research Triangle Park,
NC 27711, Attention Docket ID No. EPA-HQ-OAR-2009-0597.
    2. Tips for preparing your comments. When submitting comments,
remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified.

D. How can I find information about a possible public hearing?

    People interested in presenting oral testimony or inquiring if a
hearing is to be held should contact Ms. Pam Long, New Source Review
Group, Air Quality Policy Division (C504-03), U.S. EPA, Research
Triangle Park, NC 27711, telephone number<PHONE_NUMBER>. If a hearing
is to be held, persons interested in presenting oral testimony should
notify Ms. Long at least 2 days in advance of the public hearing.
Persons interested in attending the public hearing should also contact
Ms. Long to verify the time, date, and location of the hearing. The
public hearing will provide interested parties the opportunity to
present data, views, or arguments concerning these proposed rules.

E. How is the preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related
information?
    C. What should I consider as I prepare my comments for EPA?
    D. How can I find information about a possible public hearing?
    E. How is the preamble organized?
II. Background
III. This Action
    A. Overview
    B. Actual Control of Emissions
    C. Monitoring and Reporting Requirement
    D. EPA-Approved State Implementation Plan
    E. Finding of Endangerment
    F. Granting of Section 209 Waiver
    G. Timing of Regulation
    H. Other Issues
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
V. Statutory Authority

II. Background

    On December 18, 2008, in order to address an ambiguity that existed
in the federal PSD regulations, then-EPA Administrator Stephen Johnson
issued a memorandum setting forth the official EPA interpretation
regarding which pollutants were ``subject to regulation'' for the
purposes of the federal PSD permitting program. Memorandum from Stephen
Johnson, EPA Administrator, to EPA Regional Administrators, RE: EPA's
Interpretation of Regulations that Determine Pollutants Covered by
Federal Prevention of Significant Deterioration (PSD) Permit Program
(Dec. 18, 2008) (``PSD Interpretive Memo'' or ``Memo''); see also 73 FR
80300 (Dec. 31, 2008) (public notice of Dec. 18, 2008 memo). The Memo
was necessary after issues were raised regarding the scope of
pollutants that should be addressed in PSD permitting actions following
the Supreme Court's April 2, 2007 decision in Massachusetts v. EPA, 549
U.S. 497 (2007).
    In Massachusetts v. EPA, the Supreme Court held that greenhouse
gases (GHGs), including carbon dioxide (CO2), are air
pollutants under the CAA. The case arose from EPA's denial of a
petition for rulemaking filed by more than a dozen environmental,
renewable energy, and other organizations requesting that EPA control
emissions of GHGs from new motor vehicles under section 202 of the CAA.
The Court found that in accordance with CAA section 202(a), the
Administrator was required to determine whether or not emissions of
GHGs from new motor vehicles cause or contribute to air pollution which
may reasonably be anticipated to endanger public health or welfare, or
whether the science is too uncertain to make a reasoned decision.\1\
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    \1\ On April 17, 2009, the EPA Administrator took the first step
in the CAA section 202 rulemaking process by proposing endangerment
and cause or contribute findings for GHGs under the CAA. See 74 FR
18886 (April 24, 2009). On September 15, 2009, the U.S. Department
of Transportation Secretary and EPA Administrator jointly signed a
proposed rule establishing a national program that would improve
fuel economy and reduce GHGs from motor vehicles.
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    On August 30, 2007, EPA Region VIII issued a PSD permit to Deseret
Power Electric Cooperative, authorizing it to construct a new waste-
coal-fired electric generating unit near its existing Bonanza Power
Plant, in Bonanza, Utah. Final Air Pollution Control Prevention of
Significant Deterioration (PSD) Permit to Construct, Permit No. PSD-OU-
0002-04.00, Deseret Power Electric Cooperative (Aug. 30, 2007). The
Deseret PSD permit did not include best available control technology
(BACT)

limits for CO2. In responding to comments received during
the permitting process, the Region acknowledged the Massachusetts
decision but found that decision alone did not require PSD permits to
include limits on CO2 emissions. Region VIII explained that
the requirement for PSD permits to contain BACT emissions limitations
for each pollutant ``subject to regulation'' under the CAA, as found in
the CAA section 165(a)(4) and 40 CFR 52.21(b)(12), did not apply to
CO2 emissions because the Agency had historically
interpreted the phrase ``subject to regulation'' to ``describe
pollutants that are presently subject to a statutory or regulatory
provision that requires actual control of emissions of that
pollutant.'' Region VIII explained that EPA codified this approach by
defining the term ``regulated NSR pollutant'' in 40 CFR 52.21(b)(50)
and requiring BACT for ``each regulated NSR pollutant'' in 40 CFR
52.21(j)(2). See Response to Public Comments on Draft Air Pollution
Control Prevention of Significant Deterioration (PSD) Permit to
Construct, Permit No. PSD-OU-0002-04.00 (Aug. 30, 2007) at 5-6.
    On November 13, 2008, the Environmental Appeals Board (EAB) issued
a decision in a challenge to the Deseret PSD permitting decision. In re
Deseret Power Electric Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13,
2008) (``Deseret''). In briefs filed in that case, Region VIII and the
EPA Office of Air and Radiation maintained the position that the Agency
had a binding, historic interpretation of the phrase ``subject to
regulation'' in the federal PSD regulations that required PSD permit
limits to apply only to those pollutants already subject to actual
control of emissions under other provisions of the CAA. Response of EPA
Office of Air and Radiation and Region VIII to Briefs of Petitioner and
Supporting Amici (filed March 21, 2008). Accordingly, these EPA offices
argued that the regulations contained in 40 CFR Part 75, which require
monitoring of CO2 at some sources, did not make
CO2 subject to PSD regulation. The order and opinion issued
by the EAB remanded the permit after finding that prior EPA actions
were insufficient to establish a historic, binding interpretation that
``subject to regulation'' for PSD purposes included only those
pollutants subject to regulations that require actual control of
emissions. However, the EAB also rejected arguments that the CAA
compelled only one interpretation of the phrase ``subject to
regulation'' and found ``no evidence of a Congressional intent to
compel EPA to apply BACT to pollutants that are subject only to
monitoring and reporting requirements.'' Thus, the Board remanded the
permit to the Region to ``reconsider whether or not to impose a
CO2 BACT limit in light of the `subject to regulation'
definition under the CAA.'' The Board encouraged EPA to consider
``addressing the interpretation of the phrase `subject to regulation
under this Act' in the context of an action of nationwide scope, rather
than through this specific permitting proceeding.'' See Deseret at 63-
64.
    Shortly thereafter, in order to address the ambiguity that existed
in the federal PSD program following the EAB's Deseret decision, then-
EPA Administrator Stephen Johnson issued the PSD Interpretive Memo. The
Memo sets forth the official EPA interpretation regarding which
pollutants are ``subject to regulation'' for the purposes of the
federal PSD permitting program, interpreting the phrase to include
pollutants ``subject to either a provision in the CAA or regulation
adopted by EPA under the CAA that requires actual control of emissions
of that pollutant,'' while excluding pollutants ``for which EPA
regulations only require monitoring or reporting.'' See Memo at 1. On
December 31, 2008, EPA received a Petition for Reconsideration of the
position taken in the PSD Interpretive Memo from Sierra Club and 14
other environmental, renewable energy, and citizen organizations.
Petition for Reconsideration, In the Matter of: EPA Final Action
Published at 73 FR 80300 (Dec. 31, 2008), entitled ``Clean Air Act
Prevention of Significant Deterioration (PSD) Construction Permit
Program; Interpretation of Regulations That Determine Pollutants
Covered by the Federal PSD Permit Program.'' Petitioners argued that
the PSD Interpretive Memo ``was impermissible as a matter of law,
because it was issued in violation of the procedural requirements of
the Administrative Procedures Act * * * and the Clean Air Act * * *, it
directly conflicts with prior agency actions and interpretations, and
it purports to establish an interpretation of the Act that conflicts
with the plain language of the statute.'' See Petition at 2.
Accordingly, Petitioners requested that EPA reconsider and retract the
PSD Interpretive Memo. Petitioners later amended their Petition for
Reconsideration to include a request to stay the effect of the Memo
pending the outcome of the reconsideration request. Amended Petition
for Reconsideration (filed Jan. 6, 2009).\2\
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    \2\ On January 15, 2009, a number of environmental organizations
that filed this Petition for Reconsideration also filed a petition
challenging the PSD Interpretive Memo in U.S. Court of Appeals for
the District of Columbia Circuit. Sierra Club v. E.P.A., No. 09-1018
(D.C. Cir., filed Jan. 15, 2009).
    Thereafter, various parties moved to intervene in that action or
filed similar petitions challenging the Memo. The consolidated D.C.
Circuit cases have been held in abeyance pending this
reconsideration process. Id., Order (filed March 9, 2009).
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    On February 17, 2009, the EPA Administrator granted the Petition
for Reconsideration on the PSD Interpretive Memo, citing to the
authority under the Administrative Procedures Act, and announced her
intent to conduct a rulemaking to allow for public comment on the
issues raised in the Memo and on any issues raised by the opinion of
the EAB's Deseret decision, to the extent they do not overlap with the
issues raised in the Memo.\3\ Administrator Jackson did not stay the
effectiveness of the PSD Interpretive Memo pending reconsideration, but
she did reiterate that the Memo ``does not bind States issuing [PSD]
permits under their own State Implementation Plans.'' See Letter from
Lisa P. Jackson, EPA Administrator, to David Bookbinder, Chief Climate
Counsel at Sierra Club (Feb. 17, 2009) at 1.
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    \3\ Because Administrator Jackson's grant of reconsideration
directed the Agency to conduct this reconsideration using a notice
and comment process, this action does not address the procedural
challenge presented in the Petition for Reconsideration.
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III. This Action

A. Overview

    In accordance with the Administrator's February 17, 2009 letter
granting reconsideration, in the sections that follow, we summarize the
interpretation contained in the PSD Interpretive Memo regarding when a
pollutant becomes ``subject to regulation'' for the purposes of
applying PSD program requirements and the Memo's arguments in support
of that interpretation, as well as a summary of Petitioners' main
arguments in favor of alternative interpretations, and request public
comment on those interpretations.\4\ Specifically, this reconsideration
action addresses five interpretations of the regulatory phrase
``subject to regulation''--the actual control interpretation adopted by
the PSD Interpretive Memo; the monitoring and reporting interpretation
advocated

by Petitioners; the inclusion of regulatory requirements for specific
pollutants in SIPs, which is discussed in both the PSD Interpretive
Memo and the Petition for Reconsideration; \5\ an EPA finding of
endangerment, which is discussed in the PSD Interpretive Memo; and the
grant of a section 209 waiver, which was raised by commenters in
another EPA action. EPA is also addressing other issues raised in the
PSD Interpretive Memo and related actions that may influence the
present reconsideration and request for public comment, as necessary.
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    \4\ While the sections below provide a summary of the primary
arguments contained in the PSD Interpretive Memo and the Petition
for Reconsideration, we advise the public to review the original
documents contained in Docket EPA-HQ-OAR-2009-0597 in preparing
their comments.
    \5\ As noted previously, the only change between the original
Petition (filed Dec. 31, 2008) and the Amended Petition (filed Jan.
6, 2009) is the addition of a request that EPA stay the effect of
the PSD Interpretive Memo pending the outcome of the reconsideration
request. Since the request for a stay was already denied in the
February 17, 2009 letter granting reconsideration, the remainder of
this notice references the original Petition when summarizing the
arguments contained in those documents.
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    Of the five interpretations described in this reconsideration, the
EPA continues to favor the ``actual control interpretation,'' which
remains in effect at this time. As explained in the following section,
the actual control interpretation best reflects our past policy and
practice, is in keeping with the structure and language of the statute
and regulations, and best allows for the necessary coordination of
approaches to controlling emissions of newly identified pollutants.
While the other interpretations described herein may represent
alternatives for interpreting ``subject to regulation,'' no particular
one is compelled by the statute, nor did the EAB determine that any one
of them was so compelled. Because we have overarching concerns over the
policy and practical application of each of the other interpretations,
as discussed in more detail later in this notice, we are inclined to
adopt the actual control interpretation as our final interpretation.
Nevertheless, in this notice, we are requesting comment on a wide range
of issues related to each of these interpretations and will carefully
consider those comments before reaching a final decision.
    As a general matter, the stated purpose of the PSD Interpretive
Memo is to ``establish[ ] an interpretation clarifying the scope of the
EPA regulation that determines the pollutants subject to the federal
Prevention of Significant Deterioration (PSD) program under the Clean
Air Act (CAA or Act)'' by providing EPA's ``definitive interpretation''
of the definition of the term ``regulated NSR pollutants'' found at 40
CFR 52.21(b)(50) and resolving ``any ambiguity in subpart ([iv]) of
that paragraph, which includes `any pollutant that otherwise is subject
to regulation under the Act.''' See Memo at 1. As the Memo explains,
the statute and regulation use similar language--the regulation defines
a regulated NSR pollutant to include ``[a]ny pollutant that otherwise
is subject to regulation under the Act'' and requires BACT for ``each
regulated NSR pollutant,'' 40 CFR 52.21(b)(50) and (j), while the Act
requires BACT for ``each pollutant subject to regulation under this
[Act],'' CAA sections 165(a)(4) and 169. The EAB has already determined
that ``the meaning of the term `subject to regulation under this Act'
as used in [CAA] sections 165 and 169 is not so clear and unequivocal
as to preclude the Agency from exercising discretion in interpreting
the statutory phrase'' in implementing the PSD program. See Deseret at
63.
    The PSD Interpretive Memo seeks to resolve the ambiguity in
implementation of the PSD program by stating that ``EPA will interpret
this definition of `regulated NSR pollutant' to exclude pollutants for
which EPA regulations only require monitoring or reporting but to
include each pollutant subject to either a provision in the Clean Air
Act or regulation adopted by EPA under the Clean Air Act that requires
actual control of emissions of that pollutant.'' The Memo states that
``EPA has not previously issued a definitive interpretation of the
definition of `regulated NSR pollutant' in section 52.21(b)(50) or an
interpretation of the phrase `subject to regulation under the Act' that
addressed whether monitoring and reporting requirements constitute
`regulation' within the meaning of this phrase.'' The Memo, however,
explains that the interpretation reflects the ``considered judgment''
of then-Administrator Johnson regarding the PSD regulatory requirements
and is consistent with both historic Agency practice and prior
statements by Agency officials. See Memo at 1-2.
    The Petition for Reconsideration generally argues that the
interpretation in the Memo ``misconstrues the plain language of the
Act, adopts impermissible interpretations of existing regulations, and
ignores the distinct purpose of the PSD program.'' Petitioners assert
that the PSD Interpretive Memo ``attempts to revive a definition [of
``subject to regulation''] that the EAB found was not supported by any
prior interpretation of the statute.'' The Petition also claims that
CO2 is a pollutant ``subject to regulation'' for the
purposes of the PSD program because CO2 emissions are
already regulated under an existing SIP and existing monitoring and
reporting requirements. See Petition at 9-10.
    Although EPA issued the Memo after the EAB's Deseret decision,
which specifically concerned whether CO2 emissions should be
considered ``subject to regulation,'' the PSD Interpretive Memo
establishes an interpretation of ``subject to regulation'' that applies
generally to the PSD program and the treatment of all pollutants under
that program. Petitioners requested reconsideration of the entire PSD
Interpretive Memo, but their arguments primarily address the Memo's
application to CO2 and only address the broader
applicability of the PSD program to other pollutants as a secondary
matter. Issues of general and specific PSD applicability are somewhat
interchangeable, but it is important to address the pollutant
applicability issue for the PSD program as a whole. Accordingly, we
will generally focus this reconsideration on the application of the
interpretation of the definition of ``subject to regulation'' to all
pollutants, instead of focusing on the specific applicability to
CO2 or GHGs, including particular actions that Petitioners
argue have triggered PSD requirements for those pollutants. This will
allow us to uniformly apply the final interpretation in the future as
new pollutants become potentially ``subject to regulation.''

B. Actual Control of Emissions

    The PSD Interpretive Memo established that EPA will interpret the
``subject to regulation'' provision of the ``regulated NSR pollutant''
definition ``to include each pollutant subject to either a provision in
the Clean Air Act or regulation adopted by EPA under the Clean Air Act
that requires actual control of emissions of that pollutant.''
(Hereinafter, referred to as the ``actual control interpretation.'') In
so doing, the Memo observes that the EAB rejected claims that the
language of the CAA compelled only one interpretation of the phrase
``subject to regulation,'' and instead found that the phrase is
ambiguous.
    The PSD Interpretive Memo explains that the ``structure and
language of EPA's definition of `regulated NSR pollutant' at 40 CFR
52.21(b)(50)'' supported the actual control interpretation. The Memo
discusses how the first three parts of the definition describe
pollutants that are subject to regulatory requirements that mandate
control or limitation of the emissions of those pollutants, which
suggests that the use of ``otherwise subject to regulation'' in the
fourth prong also intended some prerequisite

act or process of control. The Memo also explains that the definition's
use of ``subject to regulation'' should be read in light of the primary
meaning of ``regulation'' in various dictionaries, which each used or
incorporated a control requirement. See Memo at 6-9.
    The PSD Interpretive Memo observes that the actual control
interpretation is consistent with EPA's broad responsibilities under
the CAA. The Memo explains that the actual control interpretation gives
a broad scope to the PSD permitting program while instilling
``reasonable boundaries'' for administration of the program in an
``effective, yet manageable,'' way. The Memo also explains that
important policy concerns support application of PSD requirements only
after actual control requirements are in place under another part of
the Act, because the actual control interpretation: (1) Allows the
Agency to assess ``whether there is a justification for controlling''
those emissions based on relevant criteria in the Act; (2) provides an
opportunity for public notice and comment when a new pollutant is
proposed to be regulated under other portions of the Act; (3) promotes
``the orderly administration of the permitting program by providing an
opportunity for EPA to develop regulations to manage the incorporation
of a new pollutant into the PSD program''; (4) preserves EPA's
``ability to gather information to inform the Administrator's judgment
regarding the need to establish controls on emissions''; and (5)
safeguards the Administrator's authority to require such controls on
individual pollutants under other portions of the Act before triggering
PSD requirements. Finally, the Memo clarifies that while the ``subject
to regulation'' interpretation issue had been raised in the context of
CO2 emissions, ``adoption of [the actual control]
interpretation is also necessary to preserve EPA's ability to collect
emissions data on other pollutants for research and other purposes,''
both now and in the future, without triggering the requirements of the
PSD permitting program. See Memo at 9-10.
    The PSD Interpretive Memo next describes how an actual control
interpretation of ``subject to regulation'' is ``consistent with the
historic practice of the Agency and with prior statements by Agency
officials.'' The Memo explains that a review of numerous federal PSD
permits shows that EPA has been applying the actual control
interpretation in practice--issuing permits that only contained
emissions limitations for pollutants subject to regulations requiring
actual control of emissions under other portions of the Act. The Memo
also articulates that in 1998, well after promulgation of the
CO2 monitoring regulations, the EPA found CO2 to
be a pollutant under the Act and stated that EPA had the authority to
regulate it, but found ``the Administrator has made no determination to
date to exercise that authority under the specific criteria provided
under any provision of the Act.'' \6\ The PSD Interpretive Memo
explains that the 1978 Federal Register notice promulgating the initial
PSD regulations, which stated that pollutants ``subject to regulation''
in the PSD program included ``any pollutant regulated in Subchapter C
of Title 40 of the Code of Federal Regulations,'' is not inconsistent
with the actual control interpretation because actual control could be
inferred by the specific list of regulated pollutants that followed the
reference to 40 CFR. See Memo at 10-13.
---------------------------------------------------------------------------

    \6\ Memorandum from Jonathan Z. Cannon, General Counsel to Carol
M. Browner, Administrator, entitled EPA's Authority to Regulate
Pollutants Emitted by Electric Power Generation Sources (April 10,
1998).
---------------------------------------------------------------------------

    Finally, the PSD Interpretive Memo finds that the actual control
interpretation is supported, and not precluded, by the language and
structure of the CAA. The Memo notes that the EAB had already concluded
that the CAA's use of the phrase ``subject to regulation under this
Act'' was ambiguous and susceptible to various interpretations, and
explains that the Board determined that ``the terms of the statute do
not preclude reading `subject to regulations under this Act' to mean
`subject to control' by virtue of a regulation or otherwise.'' The Memo
argues that the actual control interpretation was consistent with
Congress' specification that BACT control under PSD ``could be no less
stringent than NSPS [i.e., New Source Performance Standards] and other
control requirements under the Act indicates that Congress expected
BACT to apply to pollutants controlled under these programs.'' The Memo
also finds support for the actual control interpretation in the non-PSD
portions of the Act, reasoning that similar to those CAA sections that
authorized the Administrator to establish emissions limitations or
controls under other programs, Congress ``expected that pollutants
would only be regulated for purposes of the PSD program after the
Administrator has promulgated regulations requiring control of a
particular pollutants. [sic]'' See Memo at 13-14.
    In contrast, the Petition for Reconsideration argues that in
putting forth the actual control interpretation, the PSD Interpretive
Memo ``attempts to revive'' a definition of ``subject to regulation''
that was not supported by the EAB's Deseret decision. See Petition at
9-10. With regard to the Memo's assertion that the interpretation is
supported by the language and structure of the ``regulated NSR
pollutant'' definition, Petitioners disagree. The Petition argues that
the Memo placed undue emphasis on the PSD regulation while ``[i]n
reality, the [PSD Interpretive] Memo is interpreting the language of
the statute'' because the regulation ``simply parrots'' the language
contained in the Act. As such, Petitioners claim that the Agency's
actual control interpretation is not entitled to any deference.
Petitioners also argue that the Memo improperly relied on the other
prongs of the definition in finding an actual control interpretation,
contending that the EAB already rejected that type of analysis and that
the first three prongs referred to a promulgated ``standard'' (and not
to controls) such that the last prong should apply to pollutants
regulated in some other way than a standard. See Petition at 18-20.
    The Petition asserts that the PSD Interpretive Memo improperly
relies on a number of Agency documents in arriving at the actual
control interpretation. Petitioners argue that the EAB already
determined that ``the only relevant interpretation of the applicable
statutory and regulatory language was to be found in EPA's 1978 PSD
rulemaking'' (emphasis in original) and that the 1978 preamble
interpretation ``directly contradicted EPA's theory'' regarding an
actual control interpretation. Petitioners also note that the EAB
determined that the interpretation of ``subject to regulation'' found
in the 1978 preamble language suggests that the phrase includes ``any
pollutant covered by a regulation in Subchapter C of Title 40 of the
CFR, such as CO2.'' Petitioners argue that the Memo
improperly attempts to alter the still-applicable 1978 interpretation
because the EAB already rejected reliance on the types of control
requirements identified following the ``subject to regulation''
sentence in the 1978 preamble, and because there is no ambiguity in the
language used in the 1978 preamble's interpretation. See Petition at 3
and 15-18.
    The Petition for Reconsideration also contends that the PSD
Interpretive Memo ignores the plain language of the CAA because
CO2 is clearly ``subject to regulation under the Act.'' With
regard to the EAB's finding of ambiguity in the Act's use of ``subject
to regulation,''

Petitioners simply note that ``[t]o the extent the EAB declined to hold
that the PSD provision requires use of BACT for CO2
emissions, [Petitioners] disagree with the Board's decision in that
case.'' See Petition at footnote 10. Petitioners assert that the Memo's
reliance on the structure of the CAA contradicts the broad purpose of
regulation under the PSD program. The Petition asserts that Congress
``deliberately established a much lower threshold'' for requiring PSD
control mechanisms than they did when ``establishing generally
applicable standards such as the NAAQS, [NSPS], or motor vehicle
standard.'' See Petition at 21.
    With this reconsideration, we note the policy and legal arguments
stated in the PSD Interpretive Memo, and summarized above, for the
actual control interpretation. This interpretation remains our
preference for a number of reasons. The Memo explains that this
interpretation best reflects our past policy and practice, as applied
consistently over the years. The Memo also describes why such an
interpretation allows for a more practical development of regulations
and guidance concerning control of pollutants once they are determined
to endanger public health or welfare. Triggering PSD prior to a
judicious review of the pollutant's health and environmental effects,
as well as its emission characteristics and control options for
different source types, could lead to serious implementation
consequences for the program as a whole. As part of this
reconsideration, we request comment on whether the policy concerns EPA
described in the PSD Interpretive Memo, as well as those noted in the
Petition for Reconsideration, are also of concern to commenters.
    For example, the Memo notes the importance of providing EPA the
time to collect and assess data on newly identified pollutants prior to
undertaking PSD reviews and determining emission control requirements.
Without this time, the EPA's ability to make regulatory decisions that
are based on analysis of a robust and relevant dataset on a pollutant
would be significantly hampered. Furthermore, without this prior review
period, individual technical BACT reviews could be time-consuming due
to the need to research and develop the generally available emission
control options for a new pollutant about which this information is not
well known. Triggering PSD with the actual control interpretation would
also allow EPA to review and promulgate a significant emissions rate
for a pollutant before it would be subject to PSD permitting
requirements, so that de minimis increases in emissions are not
automatically captured, thus hindering efficient implementation of the
program. Thus, the actual control interpretation allows the greatest
opportunity for the EPA to address whether and how a pollutant should
be ``subject to regulation'' based on the promulgation of more general
control requirements.
    This opportunity extends not only to CO2 and other GHGs,
but to non-GHG pollutants that may, in the future, become regulated NSR
pollutants. Therefore, we request comment on the importance of
affording EPA the necessary time to study and evaluate the emissions
characteristics and control options for new pollutants prior to making
emissions of those pollutants subject to PSD permitting requirements.
Similarly, we ask for comment on the extent to which the availability
of such time under the actual control interpretation should weigh in
our consideration of whether to adopt this approach. Finally, we seek
comment on any other policy factors we should consider that are not
addressed in the Memo or the Petition for Reconsideration that would
weigh for or against the actual control interpretation.

C. Monitoring and Reporting Requirement

    In addition to finding that the actual control interpretation
should be applied to the federal PSD program, the PSD Interpretive Memo
also rejects an interpretation of ``subject to regulation'' in the
regulated NSR pollutant definition that would have applied to
pollutants for which EPA regulations only require monitoring or
reporting. (Hereinafter, referred to as the ``monitoring and reporting
interpretation.''). The Memo begins by noting that the EAB's Deseret
decision found ``no evidence of a Congressional intent to compel EPA to
apply BACT to pollutants that are subject only to monitoring and
reporting requirements.'' See Memo at 4. The Memo finds such an
interpretation is inconsistent with important policy considerations,
past Agency practice and statements, and an overall reading of the CAA.
    In describing policy concerns arising from the monitoring and
reporting interpretation, the PSD Interpretive Memo explains that
``requiring [PSD emissions] limitations automatically for pollutants
that are only subject to data gathering and study would frustrate EPA's
ability to accomplish several objectives of the Clean Air Act.'' The
Memo explains that administration of the CAA's pollutant control
programs relies on reasoned decision-making that is often based on
collection of emissions data under CAA section 114(a)(1). The Memo
predicts that adopting the monitoring and reporting interpretation
would impair EPA's decision-making, leading to the ``perverse result''
of requiring PSD limits for a pollutant while the Agency is still
deciding whether to establish controls on that pollutant under other
parts of the Act. The Memo also stresses that the monitoring and
reporting interpretation had broader implications than PSD limits for
CO2 because it would apply to other pollutants that may
emerge in the future. See Memo at 9-10.
    The PSD Interpretive Memo also finds that the monitoring and
reporting interpretation is inconsistent with past agency practice
because ``EPA has not issued PSD permits containing emissions
limitations for pollutants that are only subject to monitoring and
reporting requirements,'' including CO2 emissions. The Memo
determines that the monitoring and reporting interpretation is not
required under the 1978 preamble language, explaining that the preamble
language could be interpreted in a variety of ways and ``did not
specifically address the issue of whether a monitoring or reporting
requirement makes a pollutant `regulated in' [Subpart C of Title 40] of
the Code of Federal Regulations.'' See Memo at 11-12.
    Finally, the PSD Interpretive Memo articulates that the monitoring
and reporting interpretation is not required by the language of the
CAA. The Memo emphasizes that the EAB rejected arguments that the
language of the CAA required application of the monitoring and
reporting interpretation, instead finding ``no evidence of
Congressional intent to compel EPA to apply BACT to pollutants that are
subject only monitoring and reporting requirements.'' The Memo reasons
that the overall regulatory direction given to EPA in the CAA is
``evidence that Congress generally expected that EPA would gather
emissions data prior to establishing plans to control emissions or
developing emissions limitations'' and finds rejection of the
monitoring and reporting interpretation ``fully consistent with
Congressional design.'' See Memo at 4.
    The Petition for Reconsideration asserts that applying the
monitoring and reporting interpretation to the PSD program is
appropriate because ``monitoring and reporting requirements clearly
constitute regulation'' and CO2 emissions are subject to PSD
permitting

requirements based on the existing requirement to monitor and report
CO2 emissions. Petitioners state that the policy concerns
expressed in the Memo are a ``red herring'' because ``EPA has not
identified a single pollutant other than CO2 that would be
affected by an interpretation of `regulation' in Section 165 to include
monitoring and reporting regulations.'' The Petition argues that EPA
can gather pollutant information about pollutants under Section 114
without adopting regulations, and thus avoid triggering PSD
requirements for those pollutants. See Petition at 13 and 22.
    The Petition stresses that the PSD Interpretive Memo could not
eliminate the monitoring and reporting interpretation based on concerns
about applying it to future pollutants because Congress could choose to
expressly exclude future pollutants from PSD requirements in express
terms. Petitioners also argue that the Memo does not provide a
statutory provision to support the claim that requiring BACT for
pollutants under a monitoring and reporting interpretation would
conflict with the information-gathering objectives of the CAA. The
Petition also contends that the Memo fails to demonstrate anything
``unworkable'' about requiring PSD for pollutants subject to monitoring
regulations. See Petition at 22-23.
    Finally, Petitioners assert that CO2 is clearly
``subject to regulation'' under the interpretation provided in the 1978
preamble language because the CO2 monitoring and reporting
regulations are contained in the Subpart C of Title 40 of the CFR.
Petitioners contend that the CO2 monitoring and reporting
requirements meet the statutory and regulatory definition of ``subject
to regulation'' and have the force of law in the same way as control
requirements. The Petition also claims that each of the dictionary
definitions of ``regulation'' relied upon in the Memo would include
monitoring. Petitioners also contend that a monitoring and reporting
interpretation is consistent with an actual control requirement because
there must be some control of pollutant emissions in order to monitor
them. See Petition at 14-16.
    We note that the EAB already found ``no evidence of Congressional
intent to compel EPA to apply BACT to pollutants that are subject only
monitoring and reporting requirements.'' See Deseret at 63. In light of
that finding, we request comment on the arguments made in the Memo and
discussed further in this reconsideration proposal. Our review of the
arguments in the PSD Interpretive Memo indicates that a monitoring and
reporting interpretation would be unlikely to preserve the Agency's
ability to conduct monitoring or reporting for investigative purposes
to inform future rulemakings involving actual emissions control or
limits. The Petition for Reconsideration argues that these concerns are
a ``red herring'' because EPA has not identified a pollutant other than
CO2 that would be affected by the monitoring and reporting
interpretation. We believe that additional comment would assist us in
evaluating this concern.
    However, we also note that EPA has issued regulations, such as
NSPS, that require monitoring of noncriteria pollutant emissions in
order to demonstrate compliance with the regulation on the criteria
pollutant(s). For example, one of our NSPS stipulates that if a source
uses Continuous Emissions Monitoring Systems (CEMS) to measure
emissions of NOx and SO2 from its boiler, the
source must also have a CEMS to measure oxygen gas (O2) or
CO2. 40 CFR 60.49Da(b) and (c). Clearly, there is no intent
by the EPA to consider O2 as ``subject to regulation,'' and
therefore subject to PSD, as a result of this NSPS requirement, but the
application of the monitoring and reporting interpretation as put
forward in the Petition could require just that.
    In addition, it is not always possible to predict when a new
pollutant will emerge as a candidate for regulation. In such cases, the
Memo's reasoning is correct in that we would be unable to promulgate
any monitoring or reporting rule for such a pollutant without
triggering PSD under this interpretation. Nonetheless, we seek
additional comment on the extent to which our interest in preserving
the ability to investigate unregulated pollutants as stated in the memo
is a real, rather than hypothetical, concern. We further seek comment
on any other policy factors we should consider that are not addressed
in the Memo or the Petition for Reconsideration that would weigh for or
against the monitoring and reporting interpretation.

D. EPA-Approved State Implementation Plan

    In discussing the application of the actual control interpretation
to specific actions under the CAA, the PSD Interpretive Memo rejects an
interpretation of ``subject to regulation'' in which regulatory
requirements for an individual pollutant in the SIP for a single state
would ``require regulation of that pollutant under the PSD program
nationally.'' (Hereinafter, referred to as the ``SIP interpretation.'')
The Memo reasons that application of the SIP interpretation would
convert EPA's approval of regulations applicable only in one state into
a decision to regulate a pollutant on a nationwide scale for purposes
of the PSD program. The PSD Interpretive Memo explains that the
establishment of SIPs is better read in light of the ``cooperative
federalism'' underlying the Act, whereby Congress allowed individual
states to create and apply some regulations more stringently than
federal regulations within its borders, without allowing individual
states to set national regulations that would impose those requirements
on all states. In rejecting the SIP interpretation, the PSD
Interpretive Memo also explains that a similar position had been
adopted in EPA's promulgation of the NSR regulations for fine
particulate matter (or ``PM2.5''), without any public
comments opposing that position. See Memo at 15-16.
    The Petition for Reconsideration argues that the SIP interpretation
is appropriate for the PSD program and applies to CO2
emissions at this time. Petitioners note that the Delaware SIP
established regulations limiting CO2 emissions in 2008 and
that, in approving that SIP provision, EPA stated it was doing so under
the CAA, thus making the CO2 standards enforceable under
various provisions of the CAA. The Petition argues that the Memo
rejected the SIP interpretation without providing a relevant statutory
or regulatory basis for that position. Instead, Petitioners claim that
the SIP interpretation is directly supported by the plain language of
``subject to regulation under the Act'' because those emissions are
restricted under the CAA, whether in one state or all. Finally, the
Petition asserts that because SIP regulations are incorporated into
Subpart C of Title 40 of the CFR after approval by EPA, the SIP
interpretation must apply given the 1978 preamble language interpreting
``subject to regulation'' for the PSD program. See Petition at 10-12.
    EPA continues to believe that the CAA and our implementing
regulations are intended to provide states flexibility to develop and
implement SIPs to meet the air quality goals of their state. Each
state's implementation plan is a reflection of the air quality concerns
in that state, allowing a state to dictate treatment of specific
pollutants of concern (or their precursors) within its borders based on
air quality, economic, and other environmental concerns of that state.
As such, pollutant emissions in one state may not present the same
problem for a state a thousand miles away. As expressed in the PSD

Interpretive Memo, we have concerns that the SIP interpretation would
improperly limit the flexibility of states to develop and implement
their own air quality plans because the act of one state to establish
regulatory requirements for a particular pollutant would drive national
policy by determining that a new pollutant is ``subject to
regulation,'' thus requiring all states to subject the new pollutant to
PSD permitting. Whether one state, five states, or 45 states make the
decision that their air quality concerns are best addressed by imposing
regulations on a new pollutant, we do not think those actions should
trump the cooperative federalism inherent in the CAA. While several
states may face similar air quality issues and may choose regulation as
the preferred approach to dealing with a particular pollutant, we are
concerned that allowing the regulatory choices of some number of states
to impose PSD regulation on all other states would do just that.
    The SIP interpretation could have significant negative consequences
to the PSD program and the ability for states to manage their own air
quality programs. One practical effect of allowing state-specific
concerns to create national policy upon EPA's approval of a state's
preferred implementation policy is that EPA's review of SIPs would
likely be much more time-consuming, since we would have to consider
each nuance of the SIP as a potential statement of national policy.
Thus, there would be heightened oversight of air quality actions in all
states--even those regarding local and state issues that are best
decided by local agencies--for fear of having a national policy
compelled by the action of one state. Given the need for states to
effectively manage their own air quality programs, we believe ``subject
to regulation under the Act'' is best interpreted as those pollutants
subject to a nationwide standard, binding in all states, that EPA
promulgates on the basis of its CAA rulemaking authority.
    Although we remain concerned about the consequences to the PSD
program of the SIP interpretation as described in the Memo, we are
seeking comment on the issues raised in the Petition for
Reconsideration. However, our request for comment is limited because we
have already finalized a position very similar to that in the Memo in
our final NSR implementation rule for PM2.5 (73 FR 28321,
May 16, 2008). As we explained in the final rule, we adopted the
position contained in the proposed rule without receiving any public
comments opposing that position. That final rule did not require
ammonia to be regulated as a PM2.5 precursor but did give
states the option to regulate ammonia as a precursor to
PM2.5 in nonattainment areas for purposes of NSR on a case-
by-case basis. In that final rule, we explained that if a state
demonstrates to the Administrator's satisfaction that ammonia emissions
in a specific nonattainment area are a significant contributor to that
area's ambient PM2.5 concentrations, the state would
regulate ammonia as a PM2.5 precursor under the NSR program
in that nonattainment area. We explained that once this demonstration
is made, ammonia would be a ``regulated NSR pollutant'' under
nonattainment NSR for that particular nonattainment area. In all other
nonattainment areas in that state and nationally, ammonia would not be
subject to the NSR program. With regard to PSD, we specifically stated
that ``the action of any State identifying ammonia emissions as a
significant contributor to a nonattainment area's PM2.5
concentrations, or [EPA's] approval of a nonattainment SIP doing so,
does not make ammonia a regulated NSR pollutant for the purposes of
PSD'' in any areas nationally. See 73 FR 28330 (May 16, 2008).
Therefore, we request comment on the question of whether there is a
basis that can be upheld under the Act and our CAA implementing
regulations that would allow for application of a different SIP-based
interpretation than the interpretation established in that final
PM2.5 NSR implementation rule. If so, we ask for comment on
how the adoption of that different interpretation could be done in a
way that addresses the specific policy concerns raised in the Memo.

E. Finding of Endangerment

    In providing the reasoning as to which actions make a pollutant
``subject to regulation'' for the purposes of the PSD program, the PSD
Interpretive Memo states that the ``otherwise subject to regulation''
prong of the regulated NSR pollutant definition should not be
interpreted ``to apply at the time of an endangerment finding.'' See
Memo at 14. (Hereinafter, referred to as the ``endangerment finding
interpretation.'') As explained in the Proposed Endangerment and Cause
or Contribute Findings for Greenhouse Gases under Section 202(a) of the
CAA, there are actually two separate findings involved in what is often
referred to as an endangerment finding. 74 FR 18886 (April 24, 2009).
First, whether air pollution may reasonably be anticipated to endanger
public health or welfare, and second, whether emissions from the
relevant source category cause or contribute to this air pollution. In
that proposal, we referred to the first finding as the endangerment
finding, and the second as the cause or contribute finding. Often,
however, both tests are referred to collectively as the endangerment
finding. In this reconsideration package, we will consider the phrase
``endangerment finding'' to refer to both findings.
    The only reference to an endangerment finding in the Petition for
Reconsideration is in the argument that Congress ``clearly intended
that BACT apply regardless of whether an endangerment finding had been
made for that pollutant.'' However, the Petition does not argue that an
endangerment finding itself should trigger PSD requirements. In fact,
Petitioners argue against the endangerment finding interpretation,
stating that Congress ``deliberately established a much lower threshold
for requiring BACT than an `endangerment finding.' '' See Petition at
21.
    The issue of whether ``lower thresholds'' (such as monitoring and
reporting requirements) should make a pollutant ``subject to
regulation'' within the meaning of the PSD program is already being
addressed in other sections of this notice. However, in accordance with
the February 17, 2009 grant of reconsideration, EPA has reconsidered
the endangerment finding interpretation included in the PSD
Interpretive Memo and proposes to reaffirm that an endangerment finding
is not an appropriate trigger for PSD regulation. To be clear, this
proposed affirmation applies to both steps of what is often referred to
as the endangerment finding--the finding that air pollution may
reasonably be anticipated to endanger public health or welfare and the
finding that emissions of an air pollutant from a particular source
category causes or contributes to this air pollution--regardless of
whether the two findings occur together or separately.
    As the PSD Interpretive Memo explains, an endangerment finding
should not be construed as ``regulating'' the air pollutant(s) at
issue. It is, rather, a prerequisite to issuing regulations that
themselves impose control requirements. As such, it is unlike the other
triggering actions identified in the ``regulated NSR pollutant''
definition, which set standards that require imposition of actual
limitations on emissions that a source or sources must comply with. An
endangerment finding, a cause or contribute finding, or both, on the
other hand, do not contain or require source limits that are backed by
rule of law; rather, they are often the

first step required before EPA may set specific emissions limits
through a rule.
    Furthermore, the other actions addressed in the ``regulated NSR
pollutant'' definition weigh against the endangerment finding
interpretation. Under the first prong of that definition, PSD
regulation is triggered by promulgation of a National Ambient Air
Quality Standard (NAAQS) under CAA section 109. However, in order to
promulgate NAAQS standards under section 109, since 1970 EPA must list
and issue air quality criteria for a pollutant under section 108, which
in turn can only happen after the Administrator makes an endangerment
finding and a version of a cause or contribute finding, in addition to
meeting other requirements. See CAA sections 108(a)(1) and 109(a)(2).
Thus, if we were to find that an endangerment finding and/or cause or
contribute findings would make a pollutant ``subject to regulation''
within the meaning of the PSD program, it would read all meaning out of
the first prong of the ``regulated NSR pollutant'' definition because a
pollutant would become subject to PSD permitting requirements well
before the promulgation of the NAAQS under section 109.40 CFR
52.21(b)(50)(i).
    Similarly, the second prong of the definition of ``regulated NSR
pollutant'' includes any pollutant that is subject to a standard
promulgated under section 111 of the CAA. Section 111 requires the
Administrator to list a source category, if in his or her judgment,
``it causes, or contributes significantly to, air pollution which may
reasonably be anticipated to endanger public health or welfare.'' See
CAA section 111(B)(1)(A). After EPA lists a source category, it
promulgates NSPS for that source category. For a source category not
already listed, if we were to list it on the basis of its emissions of
a pollutant that was not previously regulated, and such a listing made
that pollutant ``subject to regulation'' within the meaning of the PSD
program, this chain of events would result in triggering PSD permitting
requirements for that pollutant well in advance of the point
contemplated by the second prong of the regulated NSR pollutant
definition. 40 CFR 52.21(b)(50)(ii).
    In addition, as explained in the Memo, waiting to apply PSD
requirements until after the actual promulgation of control
requirements that follow an endangerment finding ``makes sense.'' The
Memo explains that when promulgating the final regulations establishing
the control requirements for a pollutant, EPA often makes decisions
that are also relevant to decisions that must be made in implementing
the PSD program for that pollutant. See Memo at 14. For example, EPA
often does not make a final decision regarding how to identify the
specific pollutant subject to an NSPS standard until the NSPS is
issued, which occurs after both the endangerment finding and the source
category listing.
    Accordingly, we believe that the prerequisite act of making an
endangerment finding, a cause or contribute finding, or both, should
not make a pollutant ``subject to regulation'' for the purposes of the
PSD program. As explained above, EPA believes that there are strong
legal and policy reasons for rejecting the endangerment finding
interpretation. EPA seeks comment on any other policy factors or legal
arguments that are not addressed above but could weigh for or against
our consideration of the endangerment finding interpretation.

F. Granting of Section 209 Waiver

    While neither the PSD Interpretive Memo nor the Petition for
Reconsideration raise the issue of whether a decision to grant a waiver
under the section 209 of the CAA would trigger PSD requirements under
the CAA section 165(a)(4), EPA received comments in response to the
proposed grant of a CAA section 209 waiver to the state of California
to establish GHG emission standards for new motor vehicles that
suggested that arguments might be made that the grant of the waiver
made GHGs subject to regulation for the purposes of PSD. See 74 FR
32744, 32783 (July 8, 2009). Those commenters requested that EPA state
clearly that granting the California Waiver did not render GHGs
``subject to regulation'' under the CAA, while others commented that
the question of when and how GHGs should be addressed in the PSD
program or otherwise regulated under the Act should instead be
addressed in separate proceedings. At that time, EPA stated that the
PSD interpretation issues were not a part of the waiver decision and
would be more appropriately addressed in another forum.
    Accordingly, we are taking this opportunity to state our position
that a decision to grant a CAA section 209 waiver to the state of
California to establish GHG emission standards for new motor vehicles
does not trigger PSD requirements for GHGs. As explained below, EPA
does not interpret the CAA or the Agency's PSD regulations to make the
PSD program applicable to pollutants that may be regulated by states
after EPA has granted a waiver under section 209 of the CAA.
    As the EPA Administrator previously explained to Congress, ``a
decision to grant a waiver under section 209 of the Act removes the
preemption of state law otherwise imposed by the Act. Such a decision
is fundamentally different from the decisions to establish requirements
under the CAA that the Agency and the [EAB] have considered in
interpreting the provisions governing the applicability of the PSD
program.'' Letter from Lisa P. Jackson to Senator James M. Inhofe
(March 17, 2009). As explained more fully below, the decision to grant
a CAA section 209 waiver is different from the other actions that have
been alleged to trigger the statutory and regulatory PSD requirements,
including the other interpretations of ``subject to regulation''
discussed above, in two key respects.
    First, a waiver granted under CAA section 209(b)(1) simply removes
the prohibition found in section 209(a) that forbids states from
adopting or enforcing their own standards relating to control of
emissions from new motor vehicles or new motor vehicle engines. Thus,
the grant of the waiver simply allows California the authority to adopt
and enforce state emissions standards for new motor vehicles that it
would have otherwise had without the initial prohibition in section
209(a). As EPA previously explained, by removing the section 209(a)
prohibition, the waiver ``merely gives back to California what was
taken away by section 209(a)--the ability to adopt and enforce its own
state emission standards.'' See 74 FR 32751 (July 8, 2009).
Importantly, granting the waiver does not itself establish any federal
emission standards or other federal requirements for the pollutants.
Courts have recognized such a distinction. See American Automobile
Manufacturers Association v. Commissioner, Massachusetts Department of
Environmental Protection, 31 F.3d 18, 21 (1st Cir. 1994) (stating that
``there can be only two types of cars `created' under emissions
regulations in this country: `California' cars and `federal' (that is,
EPA-regulated) cars''). Thus, grant of a section 209 waiver to the
California emissions standards does not render those standards to be
federal standards and does not make a pollutant covered by the
California standards ``subject to regulation'' under the CAA. \7\
---------------------------------------------------------------------------

    \7\ EPA recognizes that two courts have addressed the issue of
whether the California motor vehicle standards have the effect of
federal standards once a section 209 waiver is granted, but those
cases are not applicable to our current determination because they
did not involve interpretation of the CAA. Those cases were
examining whether the California standards were ``other motor
vehicle standards of the government'' under the specific provisions
of the Energy Policy and Conservation Act (EPCA). See Century Valley
Chrysler-Jeep, Inc. v. Goldstene, 529 F.Supp. 2d 1151 (E.D. Cal.
2007), appeals pending Nos. 08-17378, 08-17380 (9th Cir., filed Oct.
30, 2008); Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie,
508 F.Supp. 2d 295 (D. Vt. 2007). In those cases, automobile dealers
and manufacturers brought action challenging the validity of the
California GHG emissions standards, arguing that the standards were
preempted by the fuel economy standards established by EPCA. After
examining the statutory language and legislative history of EPCA,
the courts found that the EPCA fuel standards were not preemptive of
the California standards. The courts noted that the term ``Federal
standards fuel economy reduction'' as used in the original
codification of section 502(d) of the Energy Policy and Conservation
Act (EPCA), referred to EPA-approved California emission standards,
and noted that ``there is nothing in [EPCA] or in case law to
support the proposition that a regulation promulgated by California
and granted waiver of preemption under [CAA] section 209 is anything
other than a `law of the Government' whose effect on fuel economy
must be considered by NHTSA in setting fuel economy standards.''
Century Valley Chrysler-Jeep, 529 F.Supp. 2d at 1173. See also Green
Mountain Chrysler Plymouth Dodge Jeep, 508 F.Supp. 2d at 347.
    However, these Courts did not examine whether California
standards were federal standards under the specific provisions of
the CAA. Accordingly, their holdings are properly limited to
interpretation of EPCA's preemption provisions and are not binding
on our present consideration of whether the California standards
should be considered federal standards under the provisions of the
CAA, in particular, provisions such as the PSD program. As noted
above, a waiver granted to California motor vehicle emissions
standards does not preempt the federal CAA standards but instead
lifts the preemption that the Act would normally have under CAA
Sec.  209(a). Accordingly, we believe these courts' determinations
that the California emissions standards were a type of ``Federal
standards fuel economy reduction'' that were not preempted by EPCA's
fuel economy provisions do not change the fact that the California
standards are not federal standards that EPA adopts or enforces as
part of its CAA regulatory program, and thus should not trigger PSD
permitting requirements.

---------------------------------------------------------------------------

    Second, enforcement of any emission standard that might be
established after a waiver is granted would occur pursuant to
regulation under state law, not regulation ``under the Act.''
Specifically, section 209(b)(3) of the CAA provides that for any new
motor vehicle to which state emission standards apply pursuant to a
waiver granted under section 209(b)(1), ``compliance with such State
standards shall be treated as compliance with applicable Federal
standards'' for purposes of Title II of the Act. This provision was
added when Congress amended section 209 to allow some California
standards to be less stringent than federal standards as long as
California's standards are ``in the aggregate'' at least as protective
of human health and the environment. Section 209(b)(3) ensures that a
vehicle complying with California's standards for which a waiver has
been granted, but not necessarily all federal standards, is not subject
to enforcement under the Act for failure to meet all federal standards.
However, EPA would not enforce California's standards as it would its
own. Although the California standards for which EPA has granted a
waiver include GHG emissions standards, EPA's granting of a waiver does
not promulgate those GHG standards as EPA standards, nor does it lead
to EPA enforcement of those GHG standards. Therefore, the grant of a
waiver to California does not render GHG emissions subject to
regulation under the CAA.
    We are also aware that some states have chosen, pursuant to section
177 of the CAA, to adopt the California low emission vehicle (CAL LEV)
program into their state pollution control programs, including specific
pollutant emissions standards that are included in CAL LEV after the
grant of a section 209 waiver. However, for the same reasons as
discussed above, the adoption of those standards by other states under
section 177 does not change the fact that those standards are still
state standards enforced under state law. Accordingly, we find that
adoption of waived standards pursuant to CAA section 177 should not
trigger PSD requirements for the pollutants included in those
standards.\8\
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    \8\ To the extent that some states adopt the CAL LEV emission
standards pursuant to section 177 and then incorporate by reference
those standards into their SIPs, including the emission standards
included in the CAL LEV program pursuant to a section 209 waiver,
the PSD Interpretive Memo already expressed the view that inclusion
of a pollutant standard in a SIP does not make that pollutant
subject to the PSD program requirements. While we are taking comment
on that SIP interpretation as part of this reconsideration, the
current inclusion of the CAL LEV standards into state SIPs does not
make the pollutants covered by those standards ``subject to
regulation'' under the Act since the PSD Interpretive Memo remains
in effect for the federal PSD program.
---------------------------------------------------------------------------

    Accordingly, we believe that neither the act of granting a section
209 waiver for emission standards nor the adoption of such standards
pursuant to section 177 makes a pollutant ``subject to regulation'' for
the purposes of the PSD program. EPA believes there is strong legal
support for this position. EPA requests comment on this position and
any other legal or policy factors that weigh for or against our
consideration of the grant of a section 209 waiver interpretation.

G. Timing of Regulation

    In a related matter concerning the final interpretation of the
regulatory language found in 40 CFR 52.21(b)(50)(iv), we are seeking
comment on whether the interpretation of ``subject to regulation''
should also more clearly identify the specific date on which PSD
regulatory requirements would apply. In the PSD Interpretative Memo,
the Administrator stated that EPA interprets language in the definition
of ``regulated NSR pollutant'' to mean that the fourth part of the
definition should ``apply to a pollutant upon promulgation of a
regulation that requires actual control of emissions.'' See Memo at 14.
However, after evaluating the underlying statutory requirement in the
CAA and the language in all parts of the regulatory definition more
closely, EPA proposes to modify its interpretation of the fourth part
of the definition with respect to the timing of PSD applicability.
    In considering the actual application of PSD requirements to
regulated NSR pollutants that are ``subject to regulation,'' we believe
that the term ``subject to regulation'' in the statute and regulation
is most naturally interpreted to mean that PSD requirements apply when
the regulations addressing a particular pollutant become final and
effective. The CAA requires PSD controls ``for each pollutant subject
to regulation'' under the Act that are emitted from a source and does
not mention promulgation. See 42 U.S.C. 7475(a)(4) and 7479(3)
(emphasis added). The regulatory language of 40 CFR 52.21(b)(50)(iv)
does not specify the exact time at which the PSD requirements should
apply to pollutants in that class, whether upon promulgation or
effective date of the underlying regulation. However, the use of
``subject to'' in the Act suggests that PSD requirements are intended
to be triggered when those standards become effective for the
pollutant. No party is required to comply with a regulation until it
has become final and effective. Prior to that date, an activity covered
by a rule is not in the ordinary sense ``subject to'' any regulation.
Regardless of whether one interprets regulation to mean monitoring or
actual control of emissions, prior to the effective date of a rule
there is no regulatory requirement to monitor or control emissions.
    In addition, applying PSD to a pollutant upon the effective date of
a regulation would harmonize application of the PSD program with the
requirements of the Congressional Review Act (CRA). Under the CRA,
major regulations promulgated by EPA do not become effective until
after Congress has had an opportunity to review them. See 5 U.S.C. 801
et seq. As part of that review, Congress can potentially disapprove
final actions issued by federal agencies within a specified time
period. Accordingly, under the CRA, a major rule cannot take

effect until 60 days after it is published in the Federal Register.
Since an EPA regulation that would trigger PSD requirements for a
pollutant could be disapproved by Congress after it is promulgated, it
would be more consistent with the CRA to defer application of PSD
requirements to a pollutant until the rule regulating the pollutant is
final and effective, and not simply promulgated.
    Since the fourth part of the definition of ``regulated NSR
pollutant'' (40 CFR 52.21(b)(50)(iv)) does not use the word promulgated
and uses the ``subject to regulation'' language from the CAA, the
language in the fourth part of the definition can be interpreted to
render PSD requirements applicable to a pollutant upon the effective
date of a regulation. Because this is consistent with a more natural
reading of the statutory language in the Clean Air Act, the application
of the Congressional Review Act to EPA regulations, and the ``actual
control interpretation'' favored by EPA at this time, we propose upon
reconsideration to interpret 40 CFR 52.21(b)(50)(iv) to make PSD
requirements applicable to a pollutant upon the effective date of a
regulation covered by this part of the definition.
    The PSD Interpretive Memo relied on other parts of the definition
of ``regulated NSR pollutant'' to conclude that PSD requirements apply
to a pollutant upon promulgation of a control requirement. However, a
closer reading of the other parts of that definition indicates that the
language used in several parts of the definition may in fact be
construed to make PSD applicable upon the effective date of regulatory
requirements, rather than the date of promulgation. The definition says
that PSD requirements apply to NSPS or Title VI pollutants once they
are ``subject to a[ny] standard promulgated under'' particular
provisions of the CAA. 40 CFR 52.21(b)(50)(ii)-(iii). While the word
``promulgated'' appears in the definition, this term qualifies the
underlying standard and does not directly address the actual
application of PSD requirements. Under the language in these two parts
of the definition, PSD requirements apply when a pollutant becomes
``subject to'' the underlying standard, which is ``promulgated under''
a particular part of the Act. For the same reasons as discussed above,
we think it is best to interpret these two provisions to apply PSD
requirements to NSPS and Title VI pollutants on the effective date of
the underlying standards.
    However, different timing language is used for the first class of
pollutants described in the regulated NSR pollutant definition: PSD
requirements apply once a ``standard has been promulgated'' for a NAAQS
pollutant or its precursors. 40 CFR 52.21(b)(50)(i). The use of ``has
been'' in the regulation indicates that a pollutant becomes a
``regulated NSR pollutant,'' and hence PSD requirements for the
pollutant are triggered, on the date a NAAQS is promulgated. Thus, it
may not be possible for EPA to read the regulatory language in this
provision to make PSD applicable to a NAAQS pollutant upon the
effective date of the NAAQS. Although our present view is that the
Clean Air Act is most naturally read to make PSD requirements
applicable upon the effective date of a rule that ``regulates'' the
pollutant, we are not at this time proposing to modify the language in
40 CFR 52.21(b)(50)(i). Since EPA is not presently proposing to
establish a NAAQS for any additional pollutants, the timing of PSD
applicability for a newly identified NAAQS pollutant does not appear to
be of concern at this time. If EPA adopts the interpretation proposed
here with respect to the timing of PSD applicability, we will consider
whether a revision of this regulatory language is needed at such time
as EPA may be considering promulgation of a NAAQS for an additional
pollutant.
    Accordingly, in considering statutory language and the actual
application of PSD requirements in practice, we believe the ``subject
to regulation'' language in the fourth part of the regulated NSR
pollutant definition should be interpreted such that PSD requirements
would not apply to pollutants covered by this part of the definition
until the effective date of the underlying regulation. EPA believes the
underlying statutory requirements and the structure of the regulation
support this position. EPA requests comment on our interpretation that
a pollutant becomes ``subject to regulation'' under section
52.21(b)(50)(iv) upon the effective date of the underlying regulation,
as well as any other legal or policy factors that that could inform
this interpretation.

H. Other Issues

    As a general matter, during the public comment period for other GHG
rulemaking actions, such as the GHG Mandatory Reporting Rule (74 FR
16447, April 10, 2009) and the proposed Endangerment Finding (74 FR
18885, April 24, 2009), EPA received some comments that discussed the
interpretation of the PSD applicability issues we are reconsidering
here. The notices of proposed rulemaking for those packages clearly
indicated that the issue of how and when PSD permitting requirements
would apply to GHG pollutants would be addressed during this
reconsideration action (74 FR at 16456, n. 8 and 18905, n. 29), and EPA
will not be searching other rulemaking dockets for comments that might
be applicable to our current reconsideration of the PSD Interpretive
Memo. Accordingly, we direct all parties that might have submitted
comments regarding interpretation of the PSD applicability definitions
in those other rulemakings to submit new comments in accordance with
the requests in this reconsideration process. In particular, commenters
should submit only those portions of their previously submitted
comments that respond to the specific requests for comment in this
action.
    We believe the above summary of the PSD Interpretive Memo, the
summary of Petitioners' arguments for reconsideration of the Memo, and
the requests for comments presented thus far provide an adequate basis
for the public to comment on the Agency's reconsideration of the PSD
Interpretive Memo. However, in accordance with Administrator Jackson's
February 17, 2009 grant of reconsideration, EPA also seeks comment on
any other interpretations of ``subject to regulation'' and any other
issues that were not addressed in the PSD Interpretive Memo but may
help to inform our present reconsideration of that Memo, including
those raised by the EAB's Deseret decision.
    For example, there is an issue from the Deseret case that is
relevant to our consideration of the monitoring and reporting
interpretation. Briefs submitted by Region VIII and the EPA Office of
Air and Radiation (OAR) in that case argued that even if the monitoring
and reporting interpretation was adopted by the Board, PSD permitting
requirements would not apply to CO2 emissions. Region VIII
and OAR reasoned that the existing CO2 monitoring and
reporting regulations were not promulgated ``under the Act'' because
the text, context, and legislative history of the underlying statutory
provision ``demonstrate that Congress did not intend section 821 of the
1990 Public Law'' amending the CAA to become part of the CAA. See
Deseret at 55. The EAB found that the statutory text both supported and
subverted this argument, and also that the Agency's prior actions and
statements were inconsistent with and contradictory to it. Accordingly,
the Board declined to rely on this argument in deciding the case and
directed Region VIII to

consider the issue more fully on remand. Should the EPA adopt the
monitoring and reporting interpretation, it will be necessary for EPA
to resolve whether or not the existing CO2 monitoring and
reporting regulations were promulgated ``under the Act'' since the
position taken by Region VIII and OAR in the Deseret case would keep us
from applying that interpretation in some instances. We therefore
welcome comments on this issue. We note that there are several factors
that make us less inclined to maintain the position advocated by Region
VIII and OAR in the Deseret case on remand. Notably, the EAB found that
EPA's previous statements on whether section 821 was part of the Clean
Air Act had been inconsistent and that EPA had taken actions that were
contradictory to the position advocated by Region VIII and OAR.
Although we are considering changing our position, we want our review
of this issue to be informed by public comments. Accordingly,
consistent with our grant of reconsideration, we seek comment on the
section 821 issue and any other issues or interpretations to the extent
they could inform our final interpretation of the regulatory phrase
``subject to regulation.''
    In addition, this reconsideration of the PSD Interpretive Memo is
following the type of notice and comment process normally found in
formal rulemaking proceedings. See CAA section 307(d). Accordingly, EPA
is also seeking comment on whether or not, upon completion of this
reconsideration, the Agency should codify the final interpretation of
what makes a pollutant ``subject to regulation'' for the purposes of
PSD applicability into the definitions section of the federal PSD
regulations. 40 CFR 52.21(b). If a commenter supports EPA codifying its
``subject to regulation'' PSD applicability position, we request that
the commenter include in their comment suggested amendatory language
for inclusion in 40 CFR 52.21.
    As we are requesting comment on whether to codify the Agency's
final interpretation in the federal PSD rules found at 40 CFR 52.21, we
also request comment on whether that interpretation should be also
codified in 40 CFR 51.166 for permitting authorities with approved
implementation plans. We note that the PSD Interpretive Memo expressly
limits the applicability of the interpretation to permitting
jurisdictions that fall under the federal PSD program. Since the EAB
determined that the interpretation adopted in this memorandum was not
previously established by the Agency, that interpretation should not
apply retroactively to prior approvals of SIPs by EPA Regional Offices.
However, the Memo gives discretion to EPA Regional Office authorities
to apply the Memo's interpretation prospectively when reviewing and
approving new submissions for approval or revision of state plans under
40 CFR 51.166. The Memo also explains that when states use the same
language in their approved implementation plans as contained in 40 CFR
52.21(b)(50), those states may interpret that language in their state
regulations in the same manner as reflected in the Memo. See Memo at 3,
n. 1. For the sake of consistent application of EPA's final
interpretation, we are soliciting comment on whether we should also
codify the Agency's final interpretation as a revision to 40 CFR
51.166.
    Finally, we note that, in addition to the policy questions raised
by each of the interpretations above, there is another overarching
consideration upon which we seek comment: the consequence that a given
interpretation would have on the scope and timing of the triggering of
the PSD program for GHGs. Although the policy questions discussed
earlier extend beyond the immediate issues surrounding triggering of
PSD for GHGs, we also seek comment on whether these immediate issues,
discussed below, warrant consideration in this reconsideration effort.
    The actual control interpretation would mean that GHGs become
``subject to regulation'' upon final promulgation of the GHG Light Duty
Vehicle Rule. We are concerned about millions of small and previously
unpermitted sources becoming immediately subject to PSD permitting as a
result of finalization of that rule. The basis for this concern, and
EPA's approach to addressing it, are explained in a separate notice
published in the Proposed Rules section of this Federal Register known
as the GHG Tailoring Rule. The GHG Tailoring Rule proposes to establish
temporary applicability thresholds for PSD and Title V purposes to
levels that reflect the administrative capabilities of permitting
authorities to address GHG emissions from stationary sources. Without
the GHG Tailoring Rule, PSD permitting requirements would apply to
numerous small sources, resulting in a program that is impossible to
administer due to a tremendous influx of permit applications
accompanied by, at least initially, a shortfall of resources, training,
and experience by permitting authorities, the regulated community, and
other stakeholders.
    The GHG Tailoring Rule is intended to address this problem in
advance of regulation under the GHG Light Duty Vehicle Rule. Therefore,
under our preferred interpretation of ``subject to regulation'', EPA
will not face the administrative impossibility problem if the GHG
Tailoring Rule is finalized according to this planned timing. However,
if EPA adopts any other interpretation (which thereby would void the
PSD Interpretive Memo), additional timing considerations arise.
Finalizing any other interpretation prior to promulgating the GHG Light
Duty Vehicle Rule would result in earlier triggering of PSD permitting
requirements for future new and modified sources of GHGs including the
large numbers of small sources addressed by the GHG Tailoring Rule. On
the other hand, finalizing any other interpretation after EPA
promulgates the GHG Light Duty Vehicle Rule would likely have a limited
effect on triggering PSD permitting requirements for future new and
modified sources of GHGs, because we expect that the GHG Light Duty
Vehicle Rule would already have triggered PSD for the same pollutants
and the GHG Tailoring Rule would be in place. Our strong preference is
that these three actions--the GHG Light Duty Vehicle Rule, the GHG
Tailoring Rule, and this reconsideration--work together with EPA's
other GHG-related actions to yield a common sense and efficient
approach to GHG regulation that does not result in the imposition of an
impossible administrative burden on permitting agencies. Our preferred
approach has the added benefit of achieving this goal by triggering PSD
only after the GHG Tailoring Rule can be put in place. We seek comment
on whether and how this goal could be achieved were EPA to adopt any of
the other four interpretations.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is a ``significant regulatory action.'' The action was
identified as a ``significant regulatory action'' because it raises
novel legal or policy issues. Accordingly, EPA submitted this action to
the Office of Management and Budget (OMB) for review under EO 12866 and
any changes made in response to OMB recommendations have been
documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under
the provisions of the Paperwork Reduction

Act, 44 U.S.C. 3501 et seq. We are not promulgating any new paperwork
requirements (e.g., monitoring, reporting, and recordkeeping) as part
of this proposed action. The OMB has previously approved the
information collection requirements contained in the existing NSR
regulations (40 CFR parts 51 and 52) under the provisions of the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and has assigned OMB
control number 2060-0003, EPA ICR number 1230.23. The OMB control
numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    This proposed reconsideration of the PSD Interpretive Memo is not
subject to the Regulatory Flexibility Act (RFA), which generally
requires an agency to prepare a regulatory flexibility analysis for any
rule that will have a significant economic impact on a substantial
number of small entities. The RFA applies only to rules subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act (APA) or any other statute. In the case of this
reconsideration process, public notice and comment was not required
under the APA or CAA, but rather was voluntarily conducted in
accordance with the February 17, 2009 letter granting reconsideration.
Accordingly, an RFA analysis is not required.
    However, EPA recognizes that some small entities continue to be
concerned about the potential impacts of the statutory imposition of
PSD requirements that may occur given the various EPA rulemakings
currently under consideration concerning greenhouse gas emissions. As
explained in the preamble for the proposed GHG Tailoring Rule, located
in the Proposed Rules section of this Federal Register, EPA is using
the discretion afforded to it under the RFA to consult with OMB and the
Small Business Administration, with input from outreach to small
entities, regarding the potential impacts of PSD regulatory
requirements as that might occur as EPA considers regulations of GHGs.
Concerns about the potential impacts of statutorily imposed PSD
requirements on small entities will be the subject of deliberations in
that consultation and outreach. Concerned small entities should direct
any comments relating to potential adverse economic impacts on small
entities from PSD requirements for GHG emissions, including any
concerns about the impacts of this reconsideration action, to the
docket for the GHG Tailoring Rule.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2
U.S.C. 1531-1538, requires federal agencies, unless otherwise
prohibited by law, to assess the effects of their regulatory actions on
state, local, and tribal governments and the private sector. Federal
agencies must also develop a plan to provide notice to small
governments that might be significantly or uniquely affected by any
regulatory requirements. The plan must enable officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant federal
intergovernmental mandates and must inform, educate, and advise small
governments on compliance with the regulatory requirements.
    This proposed reconsideration does not contain a federal mandate
that may result in expenditures of $100 million or more for state,
local, and tribal governments, in the aggregate, or the private sector
in any one year. Thus, this proposed rule is not subject to the
requirements of sections 202 or 205 of UMRA.
    In developing this reconsideration notice, EPA consulted with small
governments pursuant to a plan established under section 203 of UMRA to
address impacts of regulatory requirements in the rule that might
significantly or uniquely affect small governments.

E. Executive Order 13132--Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This action would ultimately
simplify and reduce the burden on state and local agencies associated
with implementing the PSD program by providing clarity on what
pollutants are ``subject to regulation'' to the CAA for PSD
applicability purposes. Therefore, this proposed rule will not impose
substantial direct compliance costs on state or local governments, nor
will it preempt state law. Thus, the requirements of sections 6(b) and
6(c) of the Executive Order do not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and state and local
governments, EPA specifically solicits comment on this proposed rule
from state and local officials.

F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments

    Subject to the Executive Order 13175, entitled ``Consultation and
Coordination with Indian Tribal Governments'' (65 FR 67249, November 9,
2000), EPA may not issue a regulation that has tribal implications,
that imposes substantial direct compliance costs, and that is not
required by statute, unless the federal government provides the funds
necessary to pay the direct compliance costs incurred by tribal
governments, or EPA consults with tribal officials early in the process
of developing the proposed regulation and develops a tribal summary
impact statement.
    EPA has concluded that this action may have tribal implications.
However, it will neither impose substantial direct compliance costs on
tribal governments nor preempt tribal law. There are no tribal
authorities currently issuing major NSR permits; however, this may
change in the future.
    Although Executive Order 13175 does not apply to this proposed
rule, EPA specifically solicits additional comment on this proposed
action from tribal officials.

G. Executive Order 13045--Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying
only to those regulatory actions that concern health or safety risks,
such that the analysis required under section 5-501 of the EO has the
potential to influence the regulation. This action is not subject to EO
13045 because this proposed reconsideration merely proposes to
reconsider EPA's previous PSD applicability with regards to what
constitutes a pollutant being ``subject to regulation'' under the CAA
for the purposes of PSD applicability.

H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy. This
action proposes options and positions that would clarify PSD
applicability for pollutants ``subject to regulation'' under the CAA
and does

not, in and of itself, pose any new requirements.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.
    This proposed reconsideration does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards.

J. Executive Order 12898--Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the U.S.
    EPA has determined that this proposed reconsideration of PSD
applicability will not have a disproportionately high and adverse human
health or environmental effects on minority or low-income populations
because it does not affect the level of protection provided to human
health or the environment. This proposed reconsideration merely
proposes to reconsider EPA's previous PSD applicability with regards to
what constitutes a pollutant being ``subject to regulation'' under the
CAA for the purposes of PSD applicability.

V. Statutory Authority

    The statutory authority for this action is provided by sections
101, 107, 110, and 301 of the CAA as amended (42 U.S.C. 7401, 7410, and
7601).

List of Subjects in 40 CFR Part 52

    Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Reporting and
recordkeeping requirements.

    Dated: September 30, 2009.
Lisa P. Jackson,
Administrator.
[FR Doc. E9-24196 Filed 10-6-09; 8:45 am]

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