addresses GHGs through this CAA mechanism, EPA requests comments on the
issuance of ``air quality criteria'' following listing, as well as the
adequacy of the available scientific literature.
    Under section 109, EPA must propose NAAQS for any newly listed
pollutant at the same time it issues air quality criteria under section
108, and must finalize those standards within 90 days after proposal.
Thus, from the date of listing a pollutant(s) under section 108, the
Agency has only 12 months to propose standards, and only 3 additional
months to issue final NAAQS for the pollutant(s). This tight timeframe
would be particularly challenging in the case of GHGs, for which review
and synthesis of an enormous body of literature would be required
before a proposal could be issued. Furthermore, it is important to note
that while subsequent NAAQS reviews of existing standards are required
on a revolving 5-year cycle, EPA has found it challenging to meet even
this extended schedule, which generally allows 9-12 months between
issuance of the air quality criteria and proposal and an additional 6
months or more for issuance of final standards.
    Once a new standard has been established, the CAA allows EPA to
establish a deadline for states to submit designation recommendations
that is no later than one year after promulgation of the new or revised
NAAQS. EPA then reviews the states' recommendations, collects and
assesses additional information as appropriate, and issues final
designations no later than 2 years following the date EPA promulgated
the new or revised NAAQS. EPA may take up to one additional year if the
Administrator has insufficient

information to promulgate the designations, which could push the date
of final designations out to three years after promulgation of a new
GHG NAAQS.
    The timeline for SIP submittal and implementation of control
requirements depends an area's designation status (attainment,
nonattainment, unclassifiable) and whether there is only a secondary
NAAQS, or both a primary and a secondary standard. These various
scenarios are described above. As a first step, regardless of
attainment status of level of the standard, states must submit
infrastructure SIPs to EPA within 3 years of the promulgation of any
new or revised NAAQS. These SIPs demonstrate that certain basic program
elements (including emissions inventories, monitoring, and modeling)
are properly addressed. Areas that are designated attainment would face
a much shorter list of requirements, which are discussed above in the
context of, Scenarios 3 and 4.
    For areas designated nonattainment with a primary standard, states
must submit nonattainment SIPs no more than 3 years after the effective
date of designations, and must reach attainment no later than 5 years
after the effective date designations. EPA can extend the attainment
deadline by up to an additional 5 years--i.e., to no later than 10
years after the effective date of designations, if EPA finds additional
time is needed considering the severity of nonattainment and the
availability and feasibility of pollution control measures.
    As noted above, the maximum 10-year horizon for attaining the
primary NAAQS is ill-suited to pollutants such as GHGs with long
atmospheric residence times. It is probable that, despite active
control efforts, the entire U.S. would remain in nonattainment for an
indefinite number of years if the level of a NAAQS were set at or below
current atmospheric concentrations; whether attainment would ever be
reached would depend on the timing and stringency of GHG control
measures implemented on a global basis.
    For areas designated nonattainment with a secondary standard only,
the attainment schedule could be significantly longer. The CAA requires
that state plans under a secondary standard must provide for reaching
attainment as expeditiously as practicable, but there is no statutory
maximum date for attainment (e.g., up to 10 years). EPA requests
comment on the suitability of adapting this approach for use in the GHG
context, and specifically, on the schedule that could reasonably be
considered as ``expeditious as practicable.'' We also request comment
on how global emissions should be taken into consideration in this
context.
    EPA requests comment on whether the avenues discussed in this
notice, or alternative approaches, could facilitate schedule
adjustments that would better enable use of the NAAQS approach for
regulating GHGs.
4. What Are Key Considerations Regarding Use of This Authority for
GHGs?
a. Possible Cost and Emissions Impacts
    Listing GHGs as pollutants under section 108 and setting NAAQS
under section 109 would have no direct cost or emissions impacts.
However, these actions would trigger further federal actions, including
designations under section 107, and state or federal actions through
SIPs or FIPs developed under section 110 and other provisions in title
I of the CAA. Thus, the listing of GHGs as NAAQS pollutants would
likely lead to the adoption of a substantial control program affecting
sources across the nation.
    Because establishing NAAQS for a pollutant sets in motion a broad
and prescriptive implementation process that could affect a wide array
of stationary and mobile sources, it is likely to entail substantial
costs. The magnitude of these costs would depend, in part, on the
relative reliance on technologies which are not yet suitable for
commercial application or which have not yet been developed. Though
this problem affects other pollutants, it is more acute in the case of
GHGs. The timing and nature of controls instituted, and thus the costs,
would depend to a significant extent on an area's designation status
and whether EPA set only a secondary NAAQS (with a longer
implementation time horizon), or a primary standard as well (with a
more rapid and rigid compliance schedule, allowing less time for
technological advances and efficiency improvements). The standard set
and the nature of GHGs could also determine whether it is feasible to
attain a NAAQS in the near-term, or how costly attainment could be over
a longer term.
    One important aspect of the NAAQS approach is that the standards
themselves (both primary and secondary) are established without
consideration of these costs. EPA requests comment on the suitability
of establishing regulations to limit atmospheric concentrations of GHGs
through a statutory mechanism that prohibits consideration of the costs
such regulations might entail. EPA also requests comment on the extent
to which various implementation mechanisms in Title I are available for
addressing such costs.
    As mentioned above, CAA section 108 requires EPA to issue
information on air pollution control techniques at the same time it
issues air quality criteria. This would include information on the cost
of installation and operation, energy requirements, emission reduction
benefits, and environmental impacts. Generally, the Agency fulfills
this obligation at the time a standard is issued; as required under
Executive Order 12866, EPA must issue an RIA for major rulemaking
actions. A NAAQS RIA provides an illustrative analysis of control
options available to reduce emissions and ambient concentrations of the
regulated pollutant(s); evaluates the costs of these controls; and
estimates the human health and environmental benefits likely to accrue
from the improved air quality resulting from the standards.
    As required by EO 12866 and guidance from OMB, the analysis
generally compares control options and estimated costs and benefits of
multiple, specific standard options under consideration. While EPA
recognizes the cost estimates for future GHG control technologies would
potentially place more reliance on yet-to-be-developed options, the
precedent exists for consideration of future, unknown controls. EPA
requests comment on whether there are important distinctions between
GHGs and previously regulated criteria pollutants that would make it
appropriate in the case of a new NAAQS for GHG(s) to issue a separate
air pollution control techniques document earlier in the process,
specifically in conjunction with the air quality criteria as required
by section 108, or whether such information is more useful if tailored
to specific standard options under consideration, as in the RIA.
b. Technology Development and Leakage
    Two of the policy design considerations noted in section III.F.1
include the potential to promote technology development and to address
potential concerns about shifting emissions to other countries. The
NAAQS establish standards based on ambient concentrations that must be
attained and maintained everywhere, and are implemented through SIPs
that establish emissions budgets consistent with meeting the standards.
The limited emissions budget encourages state and local areas and
affected sources to work together to identify least-cost emissions

controls to meet their SIP obligations and reduce ambient
concentrations of the regulated pollutant(s). The NAAQS requirements
help create market demand for technologies that can assist in meeting
air quality standards at the least cost. As discussed in Section III.C
of this notice, this process has encouraged significant technological
innovation. EPA requests comment on the extent to which the NAAQS can
be an effective mechanism for encouraging technological innovation and
development of least-cost controls for GHG emissions.
    The 10-year maximum timeline for attaining a primary NAAQS would
allow some time for development and deployment of emerging
technologies, but longer timelines available under other forms of the
NAAQS would provide greater flexibility to provide continuous
incentives over a longer time period for major technology advances, and
more time to deploy new technologies that are developed. EPA requests
comment on the extent to which a GHG NAAQS could reasonably be expected
to advance new control technologies, and on what timeframe.
    With respect to the leakage issue, establishing a primary NAAQS
could lead to high costs among affected industries unless a viable
approach is identified to limit the control burden on U.S. sources.
Because the standards themselves are set without consideration of cost
or availability of control technologies, and because states would be
required to adopt a plan to attain a primary standard within 10 years
of designation, the NAAQS approach might offer less flexibility to
delay emissions reductions in the absence of effective control
technologies or when costs are prohibitive. This consideration may be
particularly relevant in the case of GHGs, where highly efficient
control technologies or mitigation options are currently limited, and
where critical new control strategies, such as carbon capture and
storage, are still in the early stages of development. In these
instances, industries that are unable to locate cost-effective control
strategies may consider relocating to non-regulated locations,
resulting in significant emissions leakage.
    We request comment on the cost-effectiveness of utilizing a NAAQS
approach to regulating GHGs, and on the extent to which this approach
might be expected to result in emissions leakage, especially as
compared to other potential regulatory approaches outlined in this
notice.
c. Summary of Opportunities and Challenges Afforded by NAAQS Pathway
    Regulating GHGs through a NAAQS offers certain opportunities;
however, there are also significant technological, legal and program
design challenges that would tend to limit the appropriateness of the
NAAQS program.
    NAAQS are based purely on preventing adverse health and
environmental impacts, rather than on considerations of cost,
feasibility, or availability of technology. Our expectation is that the
NAAQS approach would establish a goal tied to actual ambient
concentrations of GHGs. A NAAQS would call for assessment of potential
control strategies for a broad array of sources, rather than focusing
only on emissions reductions from a specified (but potentially limited)
list of sources. The NAAQS approach would allow for some flexibility in
the design of control strategies and requirements, including the
possibility of a cap-and-trade approach, and might spur significant
technological innovation. It would provide a mechanism for reducing GHG
emissions from current sources and limiting the growth of emissions
from new sources. If the facts supported adopting only a secondary
standard, this would somewhat reduce the specific obligations on
states, and would allow a suitably extended timeline for achieving the
emissions reductions necessary to stabilize and then reduce ambient GHG
concentrations.
    Though such an approach has the potential to be effective in
reducing emissions, there would be a number of obstacles to overcome.
Chief among these is that if worldwide (non-U.S.) emissons were to
continue increasing, global concentrations of GHGs would continue to
increase despite U.S. emission control efforts, and the NAAQS would be
unachievable (depending on the level of the standards) even if U.S.
emissions were reduced to zero. Unless viable legal approaches could be
identified for limiting the control burden on U.S. sources, such as by
defining a U.S. share of the emissions reductions needed to attain a
NAAQS, the NAAQS approach would result in an expensive program. It
would not achieve the adopted GHG NAAQS due to foreign emissions
growth, although U.S. emissions reductions would be achieved. If the
result of a NAAQS were stringent unilateral controls for vulnerable
industries, this would encourage emissions leakage in the absence of
comparable control efforts abroad.
    Especially if the Agency were to set a primary as well as a
secondary standard, a NAAQS would trigger a relatively rigid
implementation apparatus, limiting the Agency's flexibility to target
cost-effective emissions reductions and to shift the burden of control
requirements among different industries based on the availability of
new technological approaches. The lack of flexibility allowed under the
CAA for many of the NAAQS implementation requirements--especially those
affecting areas designated nonattainment with a primary standard--makes
them difficult to adapt effectively for application in the GHG context.
For example, it would be challenging to apply requirements for
transportation conformity under a GHG NAAQS, or for states to develop
attainment demonstration SIPs. As discussed in section IV.E, a
nonattainment new source review program requiring for GHGs would
dramatically expand the scope of the preconstruction permitting program
to include smaller sources and new types of sources such as apartment
buildings with natural gas heat, unless EPA were successful in applying
legal theories that justify deviating from statutory language. This
would pose substantial administrative feasibility and cost issues.
While implementation of an attainment-level NAAQS would involve fewer
specific requirements, this avenue would only apply if the standard set
by EPA under section 109 resulted in attainment designations. Section
109 calls for standards to be set based on science-based criteria,
which exclude consideration of the cost or efficiency of the
implementation requirements in determining the level of the standard.
    We note that while the NAAQS implementation system is state-based,
legislative proposals have focused on establishing federally
administered national cap-and-trade strategies to address the global
climate problem.
    In closing, we request comment on our assessment of NAAQS
approaches, and on how the NAAQS approach compares to other potential
CAA approaches in light of the policy principles enunciated in section
III.F.1.
5. Possible Implications for Other CAA Provisions
    Listing a pollutant under section 108(a)(1) would preclude listing
under section 112 or regulation under section 111(d), but would not
preclude listing and regulation under section 111(a)-(c) New Source
Performance Standards (NSPS) provisions as described below. Similarly,
regulation of GHGs under section 111(a)-(c) NSPS provisions, as
discussed further in other sections of

today's notice, would not preclude regulation of those pollutants
through a NAAQS, although controls implemented through these provisions
might influence the Agency's perspective on the appropriateness of
establishing air quality criteria for GHGs. EPA requests comment on the
extent to which regulatory action under section 111 could be considered
in the context of exercising authority under section 108 relevant to
GHGs.

B. Standards of Performance for New and Existing Sources

    CAA section 111 provides EPA with authority to set national
performance standards for stationary sources. There are two alternative
pathways for using section 111 to regulate GHGs--as part of an
implementation program for a GHG NAAQS or as a freestanding program.
     In the event of a GHG NAAQS, section 111 authorizes EPA to
set emissions performance standards for new and modified sources but
not for unmodified existing sources.
     In the absence of a GHG NAAQS, section 111 offers the
potential for an independent, comprehensive program for regulating most
stationary sources of GHGs, except to the extent GHG emissions are
regulated under section 112
    Section 111 provides for consideration of cost, and allows
substantial discretion regarding the types and size of sources
regulated. As with most other CAA authorities, however, establishment
of a section 111 standard for any source category of GHGs would trigger
preconstruction permitting requirements for all types of GHG major
sources under the PSD program.
    The Stationary Source TSD for this ANPR identifies some specific
industry sectors that EPA has evaluated for their emissions of multiple
pollutants, including GHGs. EPA requests comment on this analysis. In
addition, EPA requests comment on GHG emissions from these and all
other categories and subcategories that have been subject to section
111 standards and on the relative costs that could be associated with
employing certain identified control technology or practices affecting
GHG emissions, including any positive or negative impacts on the
emissions of traditional pollutants.
1. What Does Section 111 Require?
    Section 111 establishes two distinct mechanisms for controlling
emissions of air pollutants from stationary sources. Section 111(b)
provides authority for EPA to promulgate New Source Performance
Standards (NSPS) which may be issued regardless of whether there is a
NAAQS for the pollutant being regulated, but apply only to new and
modified sources. Once EPA has elected to set an NSPS for new and
modified sources in a given source category, section 111(d) calls for
regulation of existing sources with certain exceptions explained below.
Taken together, the section 111 provisions could allow significant
flexibility in regulation that may not be available under other CAA
Title I provisions.
a. Section 111(b) New Source Performance Standards
    Section 111(b) of the CAA requires EPA to establish emission
standards for any category of new and modified stationary sources that
the Administrator, in his judgment, finds ``causes, or contributes
significantly to, air pollution which may reasonably be anticipated to
endanger public health or welfare.'' EPA has previously made
endangerment findings under this section for more than 60 stationary
source categories and subcategories that are now subject to NSPS.\239\
An endangerment finding would be a prerequisite for listing additional
source categories under section 111(b), but is not required to regulate
GHGs from source categories that have already been listed.
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    \239\ EPA has developed NSPS for more than 70 source categories
and subcategories. However, endangerment findings apply to the
categories as a whole, while subcategories within them have been
established for purposes of creating standards that distinguish
among sizes, types, and classes of sources.
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    For listed source categories, EPA must establish ``standards of
performance'' that apply to sources that are constructed, modified or
reconstructed after EPA proposes the NSPS for the relevant source
category.\240\ However, EPA has significant discretion to define the
source categories, determine the pollutants for which standards should
be developed, identify the facilities within each source category to be
covered, and set the level of the standards. In addition, EPA believes
that the NSPS program is flexible enough to allow the use of certain
market-oriented mechanisms to regulate emissions, as discussed below.
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    \240\ Specific statutory and regulatory provisions define what
constitutes a modification or reconstruction of a facility. 40 CFR
60.14 provides that an existing facility is modified, and therefore
subject to an NSPS, if it undergoes ``any physical change in the
method of operation . . . which increases the amount of any air
pollutant emitted by such source or which results in the emission of
any air pollutant not previously emitted.'' 40 CFR 60.15, in turn,
provides that a facility is reconstructed if components are replaced
at an existing facility to such an extent that the capital cost of
the new equipment/components exceed 50 percent of what is believed
to be the cost of a completely new facility.
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    As implemented over many years by EPA, the NSPS program has
established standards that do not necessarily set emission limits for
all pollutants or even all regulated pollutants emitted by sources
within the relevant source category. Rather, the NSPS generally focus
on specific pollutants of concern for a particular source category. Air
pollutants currently regulated through section 111(b) include the
criteria pollutants listed under section 108 and certain additional
pollutants. These additional pollutants are acid mist, fluorides,
hydrogen sulfide in acid gas, total reduced sulfur, and landfill gas.
EPA has discretion to revise an existing NSPS to add standards for
pollutants not currently regulated for that source category, but has
interpreted the section to not require such a result when an NSPS is
reviewed pursuant to section 111(b)(1)(B). That section requires EPA to
review and, if appropriate, revise NSPS every eight years unless the
Agency determines that such review is not appropriate in light of
readily available information on the efficacy of the standard.
    Further, in contrast to other provisions in the CAA which require
regulation of all sources above specific size thresholds, section 111
gives EPA significant discretion to identify the facilities within a
source category that should be regulated. To define the affected
facilities, EPA can use size thresholds for regulation and create
subcategories based on source type, class or size. Emission limits also
may be established either for equipment within a facility or for an
entire facility.
    EPA also has significant discretion to determine the appropriate
level for the standards. Section 111(a)(1) provides that NSPS are to
``reflect the degree of emission limitation achievable through the
application of the best system of emission reduction which (taking into
account the cost of achieving such reduction and any nonair quality
health and environmental impact and energy requirements) the
Administrator determines has been adequately demonstrated.'' This level
of control is commonly referred to as best demonstrated technology
(BDT). In determining BDT, we typically conduct a technology review
that identifies what emission reduction systems exist and how much they
reduce air pollution in practice. This allows us to identify potential
emission limits. Next, we evaluate each limit in conjunction with
costs, secondary air benefits (or disbenefits) resulting from energy

requirements, and non-air quality impacts such as solid waste
generation. The resultant standard is commonly a numerical emissions
limit, expressed as a performance level (i.e., a rate-based standard).
While such standards are based on the effectiveness of one or more
specific technological systems of emissions control, unless certain
conditions are met, EPA may not prescribe a particular technological
system that must be used to comply with a NSPS. Rather, sources remain
free to elect whatever combination of measures will achieve equivalent
or greater control of emissions.
    It is important to note that under section 111, the systems on
which a standard is based need only be ``adequately demonstrated'' in
EPA's view such that it would be reasonable to apply them to the
regulated category. The systems, and corresponding emission rates, need
not be actually in use or achieved in practice at potentially regulated
sources or even at a commercial scale. Further, EPA believes that if a
technology is ``adequately demonstrated'' for use at a date in the
future, EPA could establish a future-year standard based on that
technology. This would allow EPA to develop two- or multi-phased
standards with more stringent limits in future years that take into
account and promote the development of technology.
    Costs are also considered in evaluating the appropriate standard of
performance for each category or subcategory. We generally compare
control options and estimated costs and emission impacts of multiple,
specific emission standard options under consideration. As part of this
analysis, we consider numerous factors relating to the potential cost
of the regulation, including industry organization and market
structure; control options available to reduce emissions of the
regulated pollutant(s); and costs of these controls. Frequently, much
of this information is presented in the Regulatory Impact Analysis
(RIA) that is required for all major rulemaking actions.
b. Section 111(d) Emissions Guidelines for Existing Sources
    Section 111(d) requires regulation of existing sources in specific
circumstances. Specifically, where EPA establishes a NSPS for a
pollutant, a section 111(d) standard is required for existing sources
in the regulated source category except in two circumstances. First,
section 111(d) prohibits regulation of a NAAQS pollutant under that
section. Second, ``where a source category is being regulated under
section 112, a section 111(d) standard of performance cannot be
established to address any HAP listed under 112(b) that may be emitted
from that particular source category.'' \241\
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    \241\ See 70 FR 15994, 16029-32 (Mar. 29, 2005).
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    Section 111(d) also uses a different regulatory mechanism to
regulate existing sources than section 111(b) uses for new and modified
sources in a source category. Instead of giving EPA direct authority to
set national standards applicable to existing sources in the source
category, section 111(d) provides that EPA shall establish a procedure
for states to issue performance standards for existing sources in that
source category. Under the 111(d) mechanism, EPA first develops
regulations known as ``emission guidelines.'' These may be issued at
the same time or after an NSPS for the source category is promulgated.
Although called ``guidelines,'' they establish binding requirements
that states are required to address when they develop plans to regulate
the existing sources in their jurisdictions. These state plans are
similar to state implementation plans and must be submitted to EPA for
approval. Historically, EPA has issued model standards for existing
sources that could then be adopted by states. Under this approach,
creating an interstate trading system would require adoption of
compatible state rules promoted by EPA rules and guidance. In the event
that a state does not adopt and submit a plan, EPA has authority to
then issue a federal plan covering affected sources.
    Section 111(d) guidelines, like NSPS standards, must reflect the
emission reduction achievable through the application of BDT. However,
both the statute and EPA's regulations implementing section 111(d)
recognize that existing sources may not always have the capability to
achieve the same levels of control at reasonable cost as new sources.
The statute and EPA's regulations in 40 CFR 60.24 permit states and EPA
to set less stringent standards or longer compliance schedules for
existing sources where warranted considering cost of control; useful
life of the facilities; location or process design at a particular
facility; physical impossibility of installing necessary control
equipment; or other factors making less stringent limits or longer
compliance schedules appropriate.
2. What Sources Could Be Affected?
    Section 111 has been used to regulate emissions of traditional and
nontraditional air pollutants from a broad spectrum of stationary
source categories. EPA has already promulgated NSPS for more than 70
source categories and subcategoriesand we could add GHG emission
standards, as appropriate, to the standards for existing source
categories.\242\ EPA has begun a review of the existing NSPS source
categories to determine whether it would be appropriate to regulate GHG
emissions from sources in each category. In addition, EPA is in the
process of responding to a remand from the D.C. Circuit requiring it to
consider whether to add standards for GHGs to the NSPS for utility
boilers, and EPA has received suggestions that it would be appropriate
to add such standards to the NSPS for Portland cement kilns.\243\
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    \242\ Some of the existing source categories are very broad,
comprising an entire industrial process such as steel making, while
others are narrowly defined as a single piece of equipment within a
broader production process. Examples of source categories subject to
NSPS are fossil fuel-fired boilers, incinerators, sulfuric acid
plants, petroleum refineries, lead smelters, and equipment leaks of
VOCs in the synthetic organic chemicals manufacturing industry. A
complete list of the NSPS source categories is found at 40 CFR part
60.
    \243\ The NSPS for Petroleum Refineries were recently amended,
resulting in the promulgation of new Subpart Ja. These performance
standards include emission limitations and work practice standards
for fluid catalytic cracking units, fluid coking units, delayed
coking units, fuel gas combustion devices, and sulfur recovery
plants. As such, they regulate criteria pollutant emissions from the
processes that are also responsible for most of the refinery GHG
emissions. During the public comment period for Subpart Ja, we
received several comments in favor of developing new source
performance standards to address GHG emissions from refineries.
However, we declined to adopt standards for GHG emissions in that
rulemaking, in part because while doing so was within our
discretion, we believed that it was important to fully consider the
implications for programs under other parts of the CAA before
electing to regulate GHG under section 111. This is a fundamental
purpose for today's notice and request for comments.
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    To determine whether regulation of GHGs is appropriate for existing
categories, we must evaluate whether it is reasonable to do so given
the magnitude of emissions and availability of controls, considering
the costs of control. Decisions in this regard could be influenced by
several factors, including the magnitude of the GHG emissions from a
source category; the potency of the particular GHG emitted; whether
emissions are continuous, seasonal or intermittent; the availability of
information regarding the category's GHG emissions; and whether
regulating GHG emissions from the source category would be beneficial.
EPA requests comment on the extent to which these factors should, if at
all, influence EPA's decisions whether to add standards to existing
NSPS and what additional factors should be taken into consideration.
EPA also requests

comment on which of the previously regulated categories might be
appropriate for GHG regulation and on the information on which such
judgments might be based.
    To inform the public of EPA's analytical work to date, we have
provided descriptions of key industrial sectors, their GHG emissions,
and information that we have collected to date on GHG control options
for those sectors in the Stationary Source TSD in the docket for
today's notice. It is important to note that, as described further in
the technical support materials, many near-term technologies or
techniques for reducing GHG, e.g., energy efficiency or process
efficiency improvements, are relatively cost effective and achieve
modest emission reductions when compared with the potential of some
add-on control techniques. Other controls may become available in the
future whose costs and emission reduction effectiveness may differ
substantially from what is discussed here today. The Stationary Source
TSD also discusses various mechanisms, such as cap-and-trade programs
or emissions averaging approaches across facilities or industries, that
can help reduce costs of reducing emissions. EPA requests comment on
the availability and extent of its legal authority for such mechanisms.
    In addition to regulating GHGs from previously listed source
categories, section 111 provides discretionary authority to list new
source categories, or reformulate listed source categories, for
purposes of regulating of GHG emissions. For example, such categories
could include sources of emissions covered by existing NSPS source
categories as well as sources not currently covered by any NSPS. One
option available to EPA is the reorganization of source categories for
purposes of GHG regulation. In creating new categories to be used for
regulation of GHGs, EPA could consider factors unique to GHG emissions.
For example, EPA could take into account concerns about emissions
leakage (discussed in section III.F.5 of this notice), and structure
categories to minimize opportunities for shifting emissions to other
source categories. EPA could also explore how the rearrangement of
source categories could facilitate netting arrangements through which a
more broadly defined ``source'' could avoid triggering an GHG NSPS by
off-setting its increased GHG emissions.\244\ In addition, EPA could
structure categories to take into account possible reductions from
improvements at non-emitting parts of the plants, for example, by
creating source categories that cover all equipment at particular
plants, instead of using categories that cover only specific types of
equipment at a plant. EPA invites comment on whether such rearrangement
would be appropriate and what type of rearrangement would be desirable.
We also solicit information on how rearrangement could facilitate
netting and how we might structure such netting.
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    \244\ We recognize that the Court in Asarco Inc. v. EPA, 578
F.2d 326 (D.C. Cir. 1978) struck down an NSPS provision that allowed
netting. The provision at issue there, however, permitted netting
between sources, not within a source. See Alabama Power v. EPA, 636
F.2d 323, 401-02 (D.C. Cir. 1980).
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    An alternative, or complementary, scenario would be to create
larger ``super-categories'' covering major groupings of stationary
sources of GHG emissions. For example, it might be possible to create
process-based categories (i.e., all sources emitting CO2 through a
stack as a result of combustion processes) or vertically integrated
categories which take more of a life-cycle approach to the control of
GHG emissions and reduce the possibility of leakage of GHG reductions
to other parts of the economy or other geographic regions.\245\ The
creation of such ``super-categories'' might provide additional
opportunities for the development of innovative control mechanisms such
as cap-and-trade programs covering multiple industry sectors. In light
of these considerations, EPA requests comment on whether the creation
of such ``super categories'' would be appropriate and what categories
would be most useful for regulating GHGs.
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    \245\ For instance, a ``super-category'' could be created
encompassing all aspects of the production, processing, and
consumption of petroleum fuels, or to regulate the production and
consumption of fossil fuels for heat and power, addressing all
aspects of emissions-producing activity within a sector, including
fuel production, consumption, and energy conservation.
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    Under either option, EPA possesses authority to distinguish among
classes, types and sizes of sources within existing categories for
purposes of regulating GHG emissions. For example, we have at times
distinguished between new and modified/reconstructed sources when
setting the standards. This may be appropriate, for instance, when a
particular new technology may readily be incorporated into a new
installation, but it may be technically infeasible or unreasonably
costly to retrofit this technology to an existing facility undergoing
modification or reconstruction. Alternatively, we have distinguished
among sources within a category, for instance fossil fuel-fired
boilers, for which we have subcategorized on the basis of fuel types
(e.g., coal, oil, natural gas). EPA requests comment on what
considerations are relevant to determining whether it is appropriate
and reasonable to establish subcategories for regulation under section
111.
3. What Are Possible Key Milestones and Implementation Timelines?
a. Priority Setting Among Source Categories
    If EPA were to pursue section 111 regulation of GHGs, timetables
for regulation would depend upon how EPA prioritized among source
categories to determine which categories should be regulated first. In
the near term, it may be possible to address GHGs under section 111 in
a limited fashion by establishing control requirements for new and
existing sources in some number of existing source categories, while
information is developed on other source categories. Actions under
other portions of the CAA may involve longer lead times to develop and
implement, so that standards under section 111 for certain source
categories could provide for emission reductions in the interim. We
have begun to examine source categories subject to existing NSPS and
other standards to consider how we might determine priorities among
them for review and revisions, and whether GHGs could be addressed for
specific sectors in a more coordinated, multi-pollutant fashion. EPA
requests comment on the availability of its legal authority, if any, to
prioritize among source categories in the event that regulation under
section 111 was pursued.
    Under a ``prioritization'' approach, EPA could seek to revise
standards earliest for those categories offering the greatest potential
for significant reductions in the emissions of covered pollutants, and
either deferring action or determining that no further action is
necessary or appropriate at this time for other categories. This
conclusion could be based, for example, on the lack of significant
improvements in technology since the last NSPS review or the fact that
no new sources are considered to be likely in the foreseeable future.
    Another possibility might be to schedule and structure the review
and revision of standards for source categories to account for the fact
that, in addition to the need to address GHG emissions, they may be
subject to multiple standards for different pollutants under several
sections of the CAA. Such standards may often be subject currently to
different review

timetables resulting from when these standards were last established or
revised. In addition, as discussed in section III.D of today's notice,
they may have the potential for positive or negative interactions with
one another and with opportunities for the control of GHG emissions.
    Still another approach might consider the impacts of future
reduction opportunities or enacted legislation so that standards under
section 111 might focus initially on source categories for which near-
term benefits might result largely from efficiency improvements which
do not result in ``stranded capital,'' or investment in systems that
will be superseded by more effective systems that we determine will be
available at some specific future date. Alternatively, standards could
focus on those sectors of the economy which will not likely be subject
to controls being addressed in enacted legislation.
    We request comment on EPA's available legal authority, if any, to
defer action with respect to any ``class'' of section 111 source
categories or subcategories as well as how and under what circumstances
EPA could also consider such approaches to the identification of source
categories for standards to address GHGs. Assuming the existence of
adequate authority, what, if any, additional criteria should be
considered in our priority-setting analysis efforts? In considering
such sector- or multi-pollutant-based approaches, we further request
comment on the extent to which we could establish new or revised source
categories which better accommodate these approaches, or whether we are
bound by existing source categories and their definitions.
b. Timetables for Promulgation and Implementation
    In our experience, collecting and analyzing information regarding
available control technologies, resulting emission reductions, and cost
effectiveness can take up to several years for a source category.
However, this time period can be shortened to 1\1/2\ to 2 years when
information is readily available or is presented to the Agency in a
form that facilitates efficient consideration. With respect to GHGs,
there has been significant effort devoted to identifying and evaluating
ways to reduce emissions within sectors such as the electricity
generating industry, and we are aware of the potential for GHG
reductions through energy efficiency and other means within other
industries. However, for many others, technologies for reducing GHG
emissions have not yet been identified or evaluated by EPA. EPA
requests comment on whether and how the availability of current
information should be considered when considering regulation under
section 111.
    As is the case with traditional pollutants, any new or revised NSPS
for new and modified sources of GHGs under section 111(b) would be
developed through a notice and comment rulemaking process and would be
effective upon promulgation. As noted previously, EPA is also required
to review, and if appropriate revise, existing NSPS every 8 years
unless the Administrator determines that ``such review is not
appropriate in light of readily available information on the efficacy
of such standard.'' Standards for pollutants not regulated by the
existing NSPS may be added concurrent with the 8-year review, but such
additions are not part of that review process.
    Any section 111(d) emission guidelines associated with the revised
NSPS standards would be promulgated either along with or after the
NSPS. States are generally required to submit the required state plans
containing the standards of performance applicable to existing sources
in their jurisdictions within 9 months of EPA's promulgation of the
guidelines.
    In the case of existing sources regulated under section 111(d),
affected sources are typically provided up to 3 years to comply with
any resulting requirements; however, states have flexibility to provide
longer or shorter compliance timeframes based on a number of source-
specific factors. In addition, where we determine that a technology has
been adequately demonstrated to be available for use by some particular
future date, we believe it is possible to establish timeframes for
compliance that reflect this finding.\246\
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    \246\ See Portland Cement Association v. EPA, 486 F.2d 275 (D.C.
Cir. 1973).
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    No explicit 8-year review requirement exists with regard to section
111(d) standards for existing sources. Nonetheless, it also may be
appropriate to require existing source plans to periodically revise
their control strategies to reflect changes in available technologies
and standards over time, particularly where the existing limitations
were based on more limited controls at the time they were established.
EPA requests comment on its authority and the advisability of such
periodic updating with respect to the possible control of GHG.
    The CAA and EPA's regulations implementing section 111(d) permit
states to consider a number of factors when determining the level of
stringency of controls, but do not establish a bright line test when
stricter requirements for existing sources are warranted. Many of these
sources may also be subject to requirements for the control of other
non-section 111(d) pollutants as part of implementation plans to attain
and maintain NAAQS for one or more pollutants, and in some cases, these
provisions may result in more stringent coincidental control of section
111(d) pollutants. We request comment on how and when we should
evaluate, review, and revise as appropriate any section 111(d)
standards that might be established in the future for GHGs.
4. What Are the Key Considerations Regarding Use of This Authority To
Regulate GHGs?
a. Key Attributes and Limitations of Section 111
    As noted above, section 111 possesses certain flexible attributes
that may be useful in tailoring emissions standards to address GHG
emissions. Yet, regulation under this section also has important
limitations. This section of today's notice briefly summarizes these
attributes and limitations. We request comment on how these attributes
and limitations relate to the policy design considerations set forth in
section III.F.1.
    Program scope: Section 111 provides EPA with authority to regulate
GHG emissions from stationary source categories, but does not require
EPA to regulate GHGs emitted by all source categories or even all
listed source categories. EPA has flexibility to identify the source
categories for which it is appropriate to establish GHG limits. For
example, EPA could decide to set GHG limits for those source categories
with the largest GHG emissions and reduction opportunities. EPA could
postpone or decline to set GHG limits for source categories for which
emissions contributions may be small or for which no effective means of
reducing emissions exist, currently or within the reasonably
foreseeable future. EPA also could consider traditional air pollutants
as well as GHGs in setting its overall priorities for the NSPS program.
    Source size: Section 111 does not require regulation of all sources
above a certain size. Instead, EPA has discretion to use rational
emission thresholds to identify which facilities within a source
category are covered by NSPS standards.
    Consideration of cost: Section 111 explicitly directs EPA to take
``into account the cost of achieving'' emission

reductions, as well as other nonair quality, health and environmental
impact and energy requirements.'' This gives EPA significant
flexibility to determine of appropriate levels of control, and can be
an important source of distinctions between requirements for new
sources and those for modified or reconstructed sources.
    Potential for emissions trading: As EPA has interpreted the NSPS
requirements in the past with respect to certain air pollutants, we
believe that the NSPS program could use emissions trading, including
cap-and-trade programs and rate-based regulations that allow emissions
trading, to achieve GHG emission reductions. EPA believes such programs
are consistent with the statutory requirements because they satisfy the
three substantive components of the section 111(a)(1) definition of
``standard of performance''--(1) a standard for emissions of air
pollutants; that (2) reflects that degree of emission limitation
available''; and (3) ``constitutes the best system of emission
reduction.'' A cap-and-trade program can constitute a ``standard for
emissions of air pollutants'' because it is a system created by EPA for
control of emissions. The use of emissions budgets does not make the
system less of a ``standard'' since the budgets must be met regardless
of the methodology used to allocate allowances to specific sources.
Further, any such system would be based on our assessment of the
overall degree of emission reduction available for the source category
and our analysis of the available systems of emission reductions. EPA
could select a market-oriented mechanism as the ``standard of
performance'' if these analyses (including cost analyses) indicate that
the system would ``reflect the degree of emission limitation
achievable'' and ``constitute the best system of emission reduction.''
EPA also believes that trading among new and existing sources could be
permitted, and could offer, at least in some cases, cost
efficiencies.\247\ EPA also believes that because of the potential cost
savings, it might be possible for the Agency to consider deeper
reductions through a cap-and-trade program that allowed trading among
sources in various source categories relative to other systems of
emission reduction. We request comment on the extent of EPA's available
legal authority in this area as well as the attributes such a program
must possess to qualify as a standard of performance under section 111.
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    \247\ In the Clean Air Mercury Rule we concluded that new
sources needed to comply with a unit specific control requirement in
addition to participating in the trading program. We solicit comment
on whether section 111 requires such controls for new sources or if
it would be sufficient for them to participate in a trading program
or other market based mechanism without this restriction. While not
ensuring an equally stringent level of control at each new source,
the latter approach would be expected to achieve the same total
emissions reductions at a lower overall compliance cost.
---------------------------------------------------------------------------

    Potential for declining performance standards: EPA believes that
section 111 authority may be used to set both single-phase performance
standards based upon current technology and to set two-phased or multi-
phased standards with more stringent limits in future years. Future-
year limits may permissibly be based on technologies that, at the time
of the rulemaking, we find adequately demonstrated to be available for
use at some specified future date. Alternatively, it may be possible to
establish a goal based on future availability of a technology and to
revise the standard to reflect technological advancements at
appropriate intervals, such as the 8-year review cycles. We believe
these concepts could be applied to standards for new and modified
sources, as well as to standards for existing sources under section
111(d). In addition, this concept could be coupled with emissions
trading.
    We recognize that various legal issues and questions concerning
legal authority may be involved in setting standards based on
technology only adequately demonstrated for use at a future date. For
example, there might be greater uncertainty regarding the cost of
technology for such standards than for standards based only on
technology that is already commercially demonstrated at the time of
promulgation. In the Clean Air Mercury Rule (CAMR), which was vacated
by the D.C. Circuit on other grounds, EPA interpreted section 111 to
allow a two-phased ``standard of performance'' to reduce mercury
emissions from existing sources. The compliance date for the more
stringent second phase was 2018. EPA believed that it had greater
flexibility to set such a standard for existing sources under section
111(d) because these standards, in contrast to section 111(b) standards
for new sources, are not subject to the requirements of section 111(e).
Section 111(e) makes unlawful to operate any new source in violation of
a standard of performance after its effective date. EPA requests
comment on this interpretation. We also request comment on the
circumstances under which the requirements of section 111(e) would be
satisfied by a standard requiring compliance with the initial
requirements of a multi-phase standard. More generally, EPA seeks
comment on its legal authority in this matter as well as the legal and
factual conditions that must be satisfied to support a multi-phase
standard with future-year standards based on technology adequately
demonstrated for use by that future date. EPA also seeks comment on how
far into the future multi-phase standards could extend and the degree
of certainty with which EPA must make its determinations of
availability for future use, considering the section 111 standard
setting language.
    Technology development: Section 111 also contains a waiver
provision that can be used to encourage the development of innovative
technologies, as described below.
    Standards tied to available technology: The fact that section 111
requirements are based upon a demonstration of the availability of
control technology could limit the amount of reductions achievable
through section 111 regulations to demonstrably feasible and cost-
effective levels. If a given level of overall emission reduction is
determined to be necessary and that level exceeds what is currently
demonstrated to be feasible now or by some future date, then section
111 may not provide adequate authority by itself to achieve needed
reductions. Although section 111 provides certain opportunities and
incentives for technology development, this feature may make it more
difficult to set ``stretch goals'' without other companion mechanisms.
    In light of these considerations, we request comment on whether and
to what extent section 111 provides an appropriate means for regulating
GHG emissions.
b. Additional Considerations
    We also request comment on the questions presented below which
relate to the manner in which EPA could or should exercise its
authority under this section to regulate GHGs.
i. What Regulatory Mechanisms Are Available?
    As noted above, NSPS standards and 111(d) emission guidelines most
commonly establish numerical emission standards expressed as a
performance level. Such rate-based limits, however, are not the only
mechanisms that could be used to regulate GHGs.
    Efficiency Standards: We believe that most reductions in stationary
GHG emissions may occur initially as the result of increased energy
efficiency, process efficiency improvements, recovery and beneficial
use of process gases, and certain raw material and product changes that
could reduce inputs of carbon or other GHG-

generating materials. Such emission reductions may range in the near
term (e.g., 5-10 years) from 1 to 10%. Thus, it could be possible to
utilize NSPS standards to ensure reductions from efficiency
improvements are obtained. For such standards to be effective, they
likely would generally need to apply to the entire facility, not just
specific equipment at the facility. EPA requests comment on the
availability of its legal authority in this area and whether and when
it might be appropriate to establish efficiency standards for source
categories as a way of reducing GHG emissions.
    Plant-wide standards: EPA also believes there may be benefits to
developing plant-wide or company-wide standards for GHG emissions.
Section 111, however, requires each affected facility to comply with
the standard. EPA believes that it could redefine the affected facility
for certain categories, for purposes of GHG regulation only, to include
an entire plant. EPA also requests comment on whether it would be
consistent with the statutory requirements to establish company-wide
limits.
    Work practice standards: In some circumstances, it may not be
possible to identify a specific performance level for sources in a
particular category; however, section 111(h) permits promulgation of
design, equipment, work practice, or operational standards but allows
such standards to be established only in specific circumstances.
Specifically, it provides that where we determine ``that (A) a
pollutant or pollutants cannot be emitted through a conveyance designed
and constructed to emit or capture such pollutant, or that any
requirement for, or use of, such a conveyance would be inconsistent
with any Federal, State, or local law, or (B) the application of
measurement methodology to a particular class of sources is not
practicable due to technological or economic limitations,'' we may
establish a ``design, equipment, work practice, or operational
standard, or combination thereof, which reflects the best technological
system of continuous mission reduction which . . . has been adequately
demonstrated.'' EPA requests comment on the circumstances under which
the section 111(h) criteria would be satisfied and when, and for which
source categories, work practice standards could be appropriate
standards to control GHGs.
    Market-oriented regulatory mechanisms: As mentioned above, EPA
believes that market-oriented regulatory approaches including emissions
trading are worthy of consideration for applying NSPS to GHG emissions.
Several market-oriented regulatory mechanisms are discussed in section
VII.G of today's notice. EPA requests comment on which of these
mechanisms are consistent with the section 111 definition of a
``standard of performance.''
ii. Request for Comment on Section 111 Regulatory Approaches
    This notice and the Stationary Source TSD describe possible
approaches for using section 111 to reduce GHG emissions, in general
and in regard to particular source categories. We request comment on
the following specific questions regarding potential regulatory
approaches under section 111:
     What are the overall advantages and disadvantages of the
regulatory approaches discussed above, in light of the policy design
considerations in section III.F.1? Please describe in detail any
approaches not discussed in today's notice that you think we should
consider.
     What are the industry-specific advantages and
disadvantages of the regulatory approaches discussed above and in the
TSD?
    In developing section 111 standards for a particular source
category (e.g., refineries, cement plants, industrial commercial
boilers, electric generating plants, etc.) we are requesting source
category-specific comments on the following additional issues:
     What data are available, or would need to be collected, to
support the development of performance standards, either by process,
subcategory, or for the facility?
     Should the standards be different for new and existing
sources, either in terms of the systems for emission reductions on
which they should be based and/or on the regulatory structure and
implementing mechanisms for such standards?
     To what extent, if any, should the standards be
technology-forcing for existing sources?
     Should the standards require additional reductions over
time? To what extent would such reductions be consistent with the
authority and purpose of section 111, and how should they be designed
and carried out to ensure consistency?
iii. What Reductions Could Be Achieved From Efficiency Improvements at
Existing Sources?
    Recognizing that existing sources do not have as much flexibility
in the levels of control that may realistically be achieved at a new
source, a section 111(d) standard regulating GHG from existing sources
would at this time most likely focus on currently available measures to
increase the energy efficiency at the facility, thereby reducing GHG
emissions. Examples of typical measures that promote energy efficiency
include the use of cleaner fuels and equipment replacement or process
improvements which reduce energy consumption. How well a measure, or
combination of measures, will reduce GHG emissions at an individual
facility will vary. A review of available literature suggests a range
of improvements for various industry sectors that may be achievable
through energy and process efficiency improvements, and some
representative examples are summarized below. This information is
illustrative, and does not represent any final technical determination
by the agency as to what emission reduction requirements might be
appropriate to require from the source categories discussed below.
    For example, reductions in emissions of GHG from cement plants
would most likely occur from fuel efficiency and electric energy
efficiency measures as well as raw material and product changes that
reduce the amount of CO2 generated per ton of cement
produced. There are numerous efficiency measures generally accepted by
much of the U.S. industry, and many of these measures have been adopted
in recent cement plant improvements. Such measures may directly reduce
GHG emissions by cement plants, or they may indirectly reduce GHG
emissions at sources of power generation due to reduced electrical
energy requirements. The range of effectiveness of the individual
measures in reducing GHG is from less than 1% to 10%.\248\ Benchmarking
and other studies have demonstrated a technical potential for up to 40%
improvement in energy efficiency for a new cement plant using the most
efficient technologies compared to older plants using wet kilns.
---------------------------------------------------------------------------

    \248\ U.S. EPA (2008), Air Pollution Controls and Efficiency
Improvement Measures for Cement Kiln. Final Report.
---------------------------------------------------------------------------

    A number of opportunities may exist within refineries to increase
energy efficiency by optimizing utilities, fired heaters, heat
exchangers, motors, and process designs. Competitive benchmarking data
indicate that most petroleum refineries can economically improve energy
efficiency by 10 to 20%.\249\ Therefore, we would expect that a new
refinery could be designed to be at least 20% more efficient than an
existing one.
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    \249\ Energy Efficiency Improvement and Cost Saving
Opportunities for Petroleum Refineries, LBNL, 2005.

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    In the case of industrial boilers, measures applied to individual
facilities could result in energy savings and GHG reductions on the
order of 1% to 10%. Replacing an existing boiler with a combined heat
and power plant could improve the energy efficiently of an existing
plant by 10% to 33%.
    Existing coal-fired power plants can reduce their fuel consumption
(reduce heat rate) and reduce CO2 emissions by performing
well known modifications and upgrades to plant systems. Heat rate
reductions of up to 10% may be feasible through various efficiency
improvements at individual coal units, depending on site specific
conditions. Because of plant age and other physical limitations, the
potential average heat rate reduction for the coal fleet would likely
not exceed about 5%. The existing fleet operates at an average net
efficiency of about 33%. If the corresponding coal fleet average net
heat rate were reduced by 5% via efficiency improvements, a potential
5% reduction in CO2 emissions could be obtained as well.
    As older, less efficient coal power plants are retired, their
capacity may be replaced with new, more efficient coal-fired units. A
new, fully proven supercritical coal plant design can operate at a heat
rate 10-15% below the current coal fleet average, and therefore produce
10-15% less GHG than the average existing coal plant. Future more
advanced ultra-supercritical plant designs with efficiencies above 40%
would have heat rates that are 20-25% or more below the current coal
fleet average, and therefore produce that much less GHG than the
average existing coal plant.
    Technology to capture and geologically sequester CO2 is
the subject of ongoing projects in the U.S. and other countries and is
a promising technology.\250\ The electric power sector will most likely
be the largest potential market for carbon capture and sequestration
(CCS) technologies, with the potential to reduce CO2 by
approximately 80-90% at an individual plant.\251\ It may become
possible to apply CCS to some portion of the existing coal-fired fleet
by retrofit to achieve significant CO2 reductions. Other
facilities that might be able to use CCS include refineries, chemical
manufacturing plants, ethanol production facilities, cement kilns and
steel mills. As advances in GHG reduction technologies continue,
section 111(d) standards would be expected to consider and reflect
those advances over time. We solicit comment on the criteria EPA should
use to evaluate whether CCS technology is adequately demonstrated to be
available for the electric power and other industrial sectors,
including the key milestones and timelines associated with the wide-
spread use of the technology.
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    \250\ See http://www.netl.doe.gov/technologies/carbon_seq/
partnerships/partnerships.html for more information about the
Regional Carbon Sequestration Partnerships in the United States.
    \251\ IPCC Special Report on Carbon Dixoide Capture and Storage,
2005, pp.3, 22.
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    iv. What Are the Possible Effects of Section 111 With Respect to
Innovation?
    As noted previously, whatever path may be pursued with respect to
the control of GHG through the CAA or other authority, we believe it is
likely that most early reductions in stationary GHG emissions may occur
as the result of increased energy efficiency, process efficiency
improvements, recovery and beneficial use of process gases, and certain
raw material and product changes that could reduce inputs of carbon or
other GHG-generating materials. Clearly, more fundamental technological
changes will be needed to achieve deeper reductions in stationary
source GHG emissions over time. We request general comments on how to
create an environment in which new, more innovative approaches may be
encouraged pursuant to section 111, or other CAA or non-CAA authority.
    Waiver authority under section 111(j) would be useful as one
element of broader policies to encourage development of innovative
technologies. Section 111(j) authorizes the Administrator to waive the
NSPS requirements applicable to a source if he determines that the
innovative technology the source proposes to use will operate
effectively and is likely to achieve greater emission reductions, or at
least equivalent reductions but at lower cost. Also, the Administrator
must determine that the proposed system has not yet been adequately
demonstrated (i.e. it is still an innovative technology), but that it
will not cause or contribute to an unreasonable risk to public health,
welfare, or safety in its operation, function, or malfunction. These
waivers can be given for up to 7 years, or 4 years from the date that a
source commences operation, whichever is earlier.
    We believe that effective GHG reduction techniques for many source
categories potentially subject to NSPS may at this time be limited and
that additional research and development will be necessary before these
controls are demonstrated to be effective. We ask for comment on how
the use of innovative technology waivers could conceivably be used to
foster the development of additional approaches for GHG reductions.
5. Possible Implications for Other CAA Provisions
    Regulation of GHGs under a section 111 standard for any industry
would trigger preconstruction permitting requirements for all types of
GHG sources under the PSD program. NSPS are also incorporated into
operating permits issued under Title V of the CAA. The consequences of
triggering and the options for addressing these permitting requirements
are addressed in detail in section VII.D of this notice.
    Whether GHGs were regulated individually or as a group in NSPS
standards would affect the definition of regulated pollutant for
stationary sources subject to preconstruction permitting under the PSD
program. Conversely, while the section 111 mechanisms are relatively
independent of other CAA programs, NSPS decision-making as a practical
matter would need to consider the pollutant definitions adopted under
other CAA authorities. It would be advantageous to maintain consistency
regarding the GHG pollutants subject to regulation elsewhere in the Act
to avoid the potential for PSD review requirements for individual GHGs
as well as for groups of the same GHGs.
    In considering the impact that decisions to list pollutants under
other authorities of the CAA might have on our use of section 111
authority, we note that some industries have processes that emit more
than one GHG and a potential may exist among some of these industries
to control emissions of one GHG in ways that may increase emissions of
others (e.g., collecting methane emissions and combusting them to
produce heat and/or energy, resulting in emissions of CO2.)
While an overall reduction in GHGs may occur, as well as a reduction in
global warming potential, whether GHGs are regulated as a class of
compounds or as individual constituents could have implications for the
degree of flexibility and for the outcome of any regulatory decisions.
More specifically, if we were to regulate GHGs as a group, then
standards under section 111 might establish an overall level of
performance that could accommodate increases in emissions of some gases
together with reductions in others, so long as the overall performance
target was met. If we were to regulate individual GHGs, then we may be
less able to establish less stringent requirements for the control of
some gases, while setting more stringent requirements for others. The
extent to which we may be able to do so depends

on the significance of the emissions of each gas from the source
category in question as well as the feasibility and cost-effectiveness
of controlling each. One result of this lessened flexibility may be the
preclusion of certain approaches that could yield greater net reduction
in GHG emissions. For this reason, we request comments on (1) the
extent to which we are limited in our flexibility to regulate GHG as a
class if listed individually under other CAA authorities, and (2)
whether regulation under section 111 should treat GHG emissions as a
class for determining the appropriate systems for emissions reduction
and resulting standards.
    Finally, we note that our authority to promulgate 111(d) standards
for existing sources depends on the two restrictions noted above.
First, section 111(d) prohibits regulation of a NAAQS pollutant under
that section. Second, ``where a source category is being regulated
under section 112, a section 111(d) standard of performance cannot be
established to address any HAP listed under 112(b) that may be emitted
from that particular source category.'' If we were to promulgate a
section 111(d) emission standard and then subsequently take action
under sections 108 or 112 such that we could not promulgate a section
111(d) standard had we not already done so, the continued validity of
the section 111(d) regulations might become unclear. We request comment
on the extent, if any, to which the requirements of section 111(d)
plans would, or could, remain in force under such circumstances.

C. National Emission Standards for Hazardous Air Pollutants

    Along with the NAAQS system and section 111 standards, section 112
is one of the three main regulatory pathways under the CAA for
stationary sources. Section 112 is the portion of the Act that Congress
designed for controlling hazardous air pollutant emissions from these
sources, including toxic pollutants with localized or more
geographically widespread effects. This focus is reflected in the
statutory provisions, which, for example, require EPA to regulate
sources with relatively small amounts of emissions. In comparison to
section 111, section 112 provides substantially less discretion to EPA
concerning the size and types of sources to regulate, and is specific
about when EPA may and may not consider cost.
    This section explores the implications if EPA were to list GHGs as
hazardous air pollutants under section 112.

1. What Does Section 112 Require?

a. Overview
    Section 112 contains a list of hazardous air pollutants (HAPs) for
regulation. EPA can add or delete pollutants from the list consistent
with certain criteria described below.
    EPA must list for regulation all categories of major sources that
emit one or more of the HAPs listed in the statute or added to the list
by EPA. A major source is defined as a source that emits or has the
potential to emit 10 tons per year or more of any one HAP or 25 tons
per year of any combination of HAPs.
    For each major source category, EPA must develop national emission
standards for hazardous air pollutants (NESHAP). Standards are required
for existing and new major sources. The statute requires the standards
to reflect ``the maximum degree of reduction in HAP emissions that is
achievable, taking into consideration the cost of achieving the
emission reduction, any nonair quality health and environmental
impacts, and energy requirements.'' This level of control is commonly
referred to as maximum achievable control technology, or MACT.
    The statute also provides authority for EPA to list and regulate
smaller ``area'' sources of HAPs. For those sources EPA can establish
either MACT or less stringent ``generally available control
technologies or management practices''.
    Section 112(d)(6), requires a review of these technology-based
standards every 8 years and requires that they be revised ``as
necessary taking into account developments in practices, processes and
control technologies.'' Additionally, EPA under section 112(f)(2)(C)
must reevaluate MACT standards within 8 years of their issuance to
determine whether MACT is sufficient to protect public health with an
ample margin of safety and prevent adverse environmental effects. If
not, EPA must promulgate more stringent regulations to address any such
``residual risk''.
b. How Are Pollutants and Source Categories Listed for Regulation Under
Section 112?
    Section 112(b)(1) includes an initial list of more than 180 HAPs.
Section 112(b)(2) requires EPA to periodically review the initial HAP
list and outlines criteria to be applied in deciding whether to add or
delete particular pollutants.
    A pollutant may be added to the list because of either human health
effects or adverse environmental effects. With regard to adverse human
health effects, the provision allows listing of pollutants ``including,
but not limited to, substances which are known to be, or may reasonably
be anticipated to be, carcinogenic, mutagenic, teratogenic, neurotoxic,
which cause reproductive dysfunction, or which are acutely or
chronically toxic.'' An adverse environmental effect is defined as
``any significant and widespread adverse effect, which may reasonably
be anticipated, to wildlife, aquatic life, or other natural resources,
including adverse impacts on populations of endangered or threatened
species or significant degradation of environmental quality over broad
areas.'' Section 112(b)(2) provides that ``no substance, practice,
process or activity regulated under [the Clean Air Act's stratospheric
ozone protection program] shall be subject to regulation under this
section solely due to its adverse effects on the environment.'' Thus,
section 112 may not be used to regulate certain chlorofluorocarbons and
other ozone-depleting substances, their sources, or activities related
to their production and use to address climate change unless we
establish that such regulations are necessary to address human health
effects in addition to any adverse environmental impacts. See section
602 of the Clean Air Act for a partial list of these substances.
    Section 112(b)(3) of the Act establishes general requirements for
petitioning EPA to modify the HAP list by adding or deleting a
substance. Although the Administrator may add or delete a substance on
his own initiative, if a party petitions the Agency to add or delete a
substance, the burden historically has been on the petitioner to
include sufficient information to support the requested addition or
deletion under the substantive criteria set forth in CAA section
112(b)(3)(B) and (C). The Administrator must either grant or deny a
petition within 18 months of receipt of a complete petition.
    The effects and findings described in section 112 are different
from other sections of the CAA addressing endangerment of public health
discussed in previous sections of today's notice. Given the nature of
the effects identified in section 112(b)(2), we request comment on
whether the health and environmental effects attributable to GHG fall
within the scope of this section. We also request comment on direct and
indirect GHG emissions from existing source categories currently
subject to regulation under section 112, any assessment of the relative
costs of regulating GHG under the authority of section 112, and any co-
benefits or co-detriments with regard to controlling GHG and the
emissions of HAP.

    The source categories to be regulated under section 112 are
determined based on the list of HAP. Section 112(c) requires EPA to
publish a list of all categories and subcategories of major sources of
one or more of the listed pollutants, and to periodically review and
update that list. In doing this, EPA also is required to list each
category or subcategory of area sources which the Administrator finds
presents a threat of adverse effects to human health or the environment
(by such sources individually or in the aggregate) warranting
regulation under section 112.
c. How Is MACT Determined?
    In essence, MACT standards are intended to ensure that all major
sources of HAP emissions achieve the level of control already being
achieved by the better controlled and lower emitting sources in each
category. This approach provides assurance to citizens that each major
source of toxic air pollution will be required to effectively control
its emissions. At the same time, this approach provides assurances that
facilities that employ cleaner processes and good emissions controls
are not disadvantaged relative to competitors with poorer controls.
    MACT is determined separately for new and existing sources. For
existing sources, MACT standards must be at least as stringent as the
average emissions limitation achieved by the best performing 12 percent
of sources in the category or subcategory (or the best performing five
sources for source categories with less than 30 sources). This level is
called the ``MACT floor.'' For new or reconstructed sources, MACT
standards must be at least as stringent as the control level achieved
in practice by the best controlled similar source.\252\ EPA also must
consider more stringent ``beyond-the-floor'' control options for MACT.
When considering beyond-the-floor options, EPA must consider not only
the maximum degree of reduction in emissions of the HAP, but also
costs, energy requirements and non-air quality health environmental
impacts of imposing such requirements.
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    \252\ See CAA section 112(d)(3).
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    MACT standards may require the application of measures, processes,
methods, systems, or techniques including, but not limited to, (1)
reducing the volume of, or eliminating emissions of, such pollutants
through process changes, substitution of materials, or other
modifications; (2) enclosing systems or processes to eliminate
emissions; (3) collecting, capturing, or treating such pollutants when
released from a process, stack, storage or fugitive emissions point;
(4) design, equipment, work practice, or operational standards
(including requirements for operator training or certification) as
provided in subsection (h); or (5) a combination of the above. (See
section 112(d)(2) of the Act.)
    For area sources, CAA section 112(d)(5) provides that the standards
may reflect generally available control technology or management
practices (GACT) in lieu of MACT.
d. What Is Required To Address Any Residual Risk?
    Section 112(f)(2) of the CAA requires us to determine for each
section 112(d) source category whether the MACT standards protect
public health with an ample margin of safety. If the MACT standards for
a HAP ``classified as a known, probable, or possible human carcinogen
do not reduce lifetime excess cancer risks to the individual most
exposed to emissions from a source in the category or subcategory to
less than 1-in-1-million,'' EPA must promulgate residual risk standards
for the source category (or subcategory) as necessary to protect public
health with an ample margin of safety. EPA must also adopt more
stringent standards if needed to prevent an adverse environmental
effect, but must consider cost, energy, safety, and other relevant
factors in doing so. EPA solicits comments on the extent to which these
programs could apply with respect to the possible regulation of sources
of GHG under section 112, including the relevance of any carcinogenic
effects of individual GHG.
2. What Sources Would Be Affected if GHGs Were Regulated Under This
Authority?
    If GHGs were listed as HAP, EPA would be required to regulate a
very large number of new and existing stationary sources, including
smaller sources than if alternative CAA authorities were used to
regulate GHG. This is the result of three key requirements. First, the
section 112(a) major sources thresholds of 10 tons for a single HAP and
25 for any combination of HAPs would mean that very small GHG emitters
would be considered major sources. Second, section 112(c) requires EPA
to list all categories of major sources. Third, section 112(d) requires
EPA to issue MACT standards for all listed categories.
    We believe that most significant stationary source categories of
GHG emissions have already been listed under section 112 (although the
10-ton threshold in the case of GHGs would be expected to bring in
additional categories such as furnaces in buildings, as explained
below). To date we have adopted standards for over 170 categories and
subcategories of major and area sources. This is a significantly
greater number than the categories for which we have adopted NSPS
because under section 112 we must establish standards for all listed
categories, whereas section 111 requires that we identify and regulate
only those source categories that contribute ``significantly'' to air
pollution endangering public health and welfare.
3. What Are the Key Milestones and Expected Timeline if Section 112
Were Used for GHG Controls?
    One possible timetable for addressing GHG under this part of the
Act would be to incorporate GHG emission control requirements
concurrent with the mandatory 8-year technology reviews for each
category, collecting information on emissions and control technologies
at the time the existing MACT standards are reviewed to determine
whether revisions are needed. If we were to list new source categories
under section 112, EPA would be required to adopt MACT standards for
those categories within 2 years of the date of category listing.
    EPA must require existing sources to comply within 3 years of a
standard's promulgation, although states and EPA are authorized in
certain circumstances to extend the period of compliance by one
additional year. Most new sources must comply as soon as a section 112
standard is issued; however, there is an exception where the final rule
is more stringent than the proposal.
    Because of the more detailed requirements for identifying
appropriate levels of control to establish a level for MACT,
significantly more information on the best performing sources is needed
under section 112 than under section 111, making the development of
such standards within 2 years after listing a source category
difficult. We request comment on this and other approaches for
addressing GHG under section 112, both for categories already listed
for regulation and for any that might appropriately be added to the
section 112 source category list if we were to elect to regulate GHGs
under this section.
4. What Are the Key Considerations Regarding Use of This Authority for
GHGs (and How Could Potential Issues Be Addressed)?
    A key consideration in evaluating use of section 112 for GHG
regulation is that

the statutory provisions appear to allow EPA little flexibility
regarding either the source categories to be regulated or the size of
sources to regulate. As described above, EPA would be required to
regulate a very large number of new and existing stationary sources,
including smaller sources than if alternative CAA authorities were used
to regulate GHG. For example, in calculating CO2 emissions based on
fossil-fuel consumption, we believe that small commercial or
institutional establishments and facilities with natural gas-fired
furnaces would exceed this major source threshold; indeed, a large
single-family residence could exceed this threshold if all appliances
consumed natural gas. EPA requests comment on the requirement to
establish standards for all sources under section 112 relevant to GHG
emissions and whether any statutory flexibility is or is not available
with respect to this requirement and GHGs.
    A section 112 approach for GHGs would require EPA to issue a large
number of standards based on assessments for each source category.
Determining MACT based on the best-controlled 12 percent of similar
sources for each category would present a difficult challenge, owing to
our current lack of information about GHG control by such sources and
the effort required to obtain sufficient information to establish a
permissible level of performance.
    GHG regulation under section 112 would likely be less cost
effective than under some CAA authorities, in part because section 112
was designed to ensure a MACT level of control by each major source,
and thus provides little flexibility for market-oriented approaches.
Given the structure and past implementation of section 112, this
section may not provide EPA with authority to allow emissions trading
among facilities or averaging across emitting equipment in different
source categories. This is because the statutory terms of section 112
provide that emission standards must be established for sources within
``each category'' and those standards must be no less stringent than
the ``floor,'' or the level of performance achieved by the best-
performing sources within that category. Each source in the category
must then achieve control at least to this floor level. Trading would
allow sources to emit above the floor. In addition, it may not be
possible to assess individual source fence line risk for section 112(f)
residual risk purposes if the sources did not each have fixed limits.
Finally, the section 112 program is in part designed to protect the
population in the vicinity of each facility, which trading could
undermine (in contrast to an ambient standard). Given the global nature
of GHGs and the lack of direct health effects from such emissions at
ambient levels, EPA requests comments on the extent to which the CAA
could be interpreted to grant flexibility to consider such alternative
implementation mechanisms, and what, if any, limitations should be
considered appropriate in conjunction with them.
    Another reason that section 112 regulation of GHGs would be
expected to be less cost effective than other approaches is that the
statute limits consideration of cost in setting MACT standards. As
described above, the statute sets minimum stringency levels, or
``floors,'' for new and existing source standards. Cost can only be
considered in determining whether to require standards to be more
stringent than the floor level.
    A further consideration is that the short compliance timetables--
immediate for most new sources, and within 3-4 years for existing
sources--appear to preclude setting longer compliance timeframes to
allow for emerging GHG technologies to be further developed or
commercialized.
5. What Are the Possible Implications for Other Provisions of the Clean
Air Act?
    As provided under section 112(b)(6), pollutants regulated under
section 112 of the Act are exempt from regulation under the PSD
program. Also, a section 111(d) standard of performance for existing
sources cannot be established to address any HAP listed under section
112(b) that that is emitted from a source category regulated under
section 112.\253\
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    \253\ It is important to note that many sources may be subject
to standards under both section 111 and 112; however these standards
establish requirements for the control of different pollutants.
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    If EPA were to list GHGs under section 108 of the CAA for purposes
of establishing NAAQS, we would be prevented by section 112(b)(2) from
listing and regulating them as HAPs under this section of the Act.
However, it is less clear that the reverse is true; that is, if a
pollutant were first listed under section 112 and then EPA decided to
list and regulate it under section 108, the statute does not clearly
say whether that is permissible, or whether EPA would then have to
remove the pollutant from the section 112 pollutant list. We request
comment on the extent to which this apparent ambiguity in the Act poses
an issue regarding possible avenues for regulating GHG and if so, how
it should be addressed.
    In light of the foregoing, we request comment on the
appropriateness of section 112 as a mechanism for regulating stationary
source emissions of GHGs under the CAA. If commenters believe use of
section 112 would be appropriate, we further request comments on which
GHGs should be considered, what additional sources of emissions should
be listed and regulated, and how MACT should be determined for GHG
emission sources.

D. Solid Waste Combustion Standards

1. What Does Section 129 Require?
    Section 129 of the CAA requires EPA to set performance standards
under section 111 to control emissions from solid waste incineration
units of at least 9 specific air pollutants. It directs EPA to develop
standards which include emission limitations and other requirements for
new units and guidelines and other requirements applicable to existing
units.
    Section 129 directs EPA to set standards for ``each category'' of
such units, including those that combust municipal, hospital, medical,
infectious, commercial, or industrial waste, and ``other categories''
of solid waste incineration units, irrespective of size. The pollutants
to be addressed by these standards include the NAAQS pollutants
particulate matter (total and fine), sulfur dioxide, oxides of
nitrogen, carbon monoxide, and lead; and the hazardous air pollutants
hydrogen chloride, cadmium, mercury, and dioxins and dibenzofurans. EPA
is authorized to regulate additional pollutants under these provisions,
but section 129 includes no endangerment test or other criteria for
determining when it is appropriate to do so.
    Although the emission standards called for by section 129 are to be
established pursuant to section 111, the degree of control required
under those standards more closely resembles that of section 112(d).
For new sources the level of control is required to be no less
stringent than that of the best performing similar source, while for
existing sources the level of control is to be no less stringent than
the average of the top 12% of best-performing sources. For both new and
existing source standards, beyond these ``floor'' levels EPA must
consider the cost of achieving resulting emission reductions and any
non-air quality health and environmental impacts and energy
requirements in determining what is achievable for units within each
category. The performance standards must be reviewed every 5 years.
Additionally, for those pollutants that

are listed under section 112 as a HAP, EPA must reevaluate the
standards in accordance with section 112(f) to determine whether they
are sufficient to protect public health with an ample margin of safety
and prevent adverse environmental effects, and must promulgate more
stringent regulations if necessary to address any such ``residual
risk.'' Thus, for this particular class of source categories, section
129 merges important elements of both sections 111 and 112.
    EPA has established standards for a variety of solid waste
incinerator categories and is in the process of developing additional
standards and revising others.\254\ In the absence of statutory
criteria for determining whether and under what circumstances EPA
should regulate additional pollutants under this section of the CAA, we
request comment on whether emissions of GHG could fall within the scope
of this section. We also request comment on direct and indirect GHG
emissions from existing source categories currently subject to
regulation under section 129, any assessment of the relative costs of
regulating GHGs under the authority of section 129, and any co-benefits
or co-detriments with regard to controlling GHG and the emissions of
pollutants specifically listed for regulation under section 129.
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    \254\ Rules have been promulgated for large and small municipal
waste combustors; medical waste incinerators; other solid waste
incinerators; and commercial, institutional, and industrial solid
waste incinerators. EPA is also currently reevaluating and revising
certain standards under section 129 in response to decisions by the
U.S. Court of Appeals for the D.C. Circuit.
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2. What Sources Would Be Affected if GHGs Were Regulated Under This
Authority?
    Standards required by section 129 are applicable to ``any facility
which combusts any solid waste material from commercial or industrial
establishments or the general public (including single and multiple
residences, hotels, and motels).'' Thus the provisions of this section
are limited to a specific type of emission source, although there are
many such units in existence that are subject to regulation. To date we
have adopted standards for five categories of incinerators and are
currently in the process of developing revised standards on remand for
several of these categories, which may involve the inclusion of several
additional subcategories of incineration units. We anticipate that when
completed these rules will establish standards of performance for as
many as five hundred or more units.
    Because section 129 does not require, but authorizes EPA to
establish requirements for other air pollutants, we request comment on
whether and for what categories or subcategories of incinerators EPA
could address GHG emissions control requirements.
a. How Are Control Requirements Determined?
    As noted above, the control requirements for sources regulated
under section 129 are similar to the MACT standards mandated under
section 112(d). However, whereas section 112(d)(3) provides that
standards are to be based on the best performing sources ``for which
the Administrator has emissions information,'' section 129 contains no
such limitation. Consequently, it appears that EPA is obligated to
obtain information from all potentially affected sources in order to
determine the appropriate level of control.
    Section 129(a)(2) provides authority for EPA to distinguish among
classes, types, and sizes of units within a category in establishing
standards. This provision is similar to authorities provided in
sections 111( b)(2) and 112(b)(2). Because section 129 directs that EPA
establish standards for affected source categories under sections
111(b) and (d), we believe that the provisions governing the creation
of design, equipment, work practice, or operational standards are also
available for standards required by section 129. For existing sources,
we believe that provisions for consideration of remaining useful life
and other related factors are relevant to EPA and States when
determining the requirements and schedules for compliance for
individual affected sources.
b. What Is Required To Address Any Residual Risk?
    For each of the air pollutants named in section 129 that are listed
as HAP under section 112, section 129 requires EPA to evaluate and
address any residual risk remaining after controls established under
the initial emission standards.\255\ In so doing, it requires EPA to
determine for each affected source category whether the performance
standards protect public health with an ample margin of safety. EPA
must also adopt more stringent standards if needed to prevent an
adverse environmental effect, but must consider cost, energy, safety,
and other relevant factors in doing so.
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    \255\ Section 129(h)(3) provides that for purposes of
considering residual risk the standards under section 129(a) and
section 111 applicable to categories of solid waste incineration
units are to be ``deemed standards under section 112(d)(2).''
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    Section 129(h)(3) limits residual risk assessments and any
subsequent resulting regulations to ``the pollutants listed under
subsection (a)(4) of this section and no others.'' Consequently, if EPA
were to regulated GHG emissions from incineration units under section
129, we would not be required to conduct additional residual risk
determinations.
3. What Are the Key Milestones and Expected Timeline if Section 129
Were Used for GHG Controls?
    As stated above, we have adopted rules governing emissions from
certain categories of solid waste incineration units and are in the
process of revising or establishing new standards for others. Thus if
we were to elect to regulate GHG emissions under section 129, a
question arises concerning how to incorporate new requirements for
those categories for which standards have already been established. One
possible timetable for addressing GHG under this part of the Act would
be to incorporate GHG emission control requirements concurrent with the
mandatory 5-year reviews for each previously-regulated category,
collecting information on emissions and control technologies at the
time the existing standards are reviewed to determine whether revisions
are needed. Because of the more detailed requirements for identifying
appropriate levels of control to establish a level for these categories
of sources, significantly more information on the best performing
sources is needed under section 129 than even under section 112
(because of the absence of limitations for this analysis to those
sources ``for which the Administrator has information''), making the
development of such standards a more time-consuming effort. In the
event that we were to elect to regulate GHGd under this section, we
request comment on this and other approaches for addressing GHGd under
section 129, both for categories already regulated and for any for
which standards are currently under development.
4. What Are the Key Considerations Regarding Use of This Authority for
GHGs (and How Could Potential Issues Be Addressed)?
    If we were to elect to regulate GHG emissions from solid waste
incinerators under section 129, then we would need to establish
standards for at least some number of categories of such sources. We
request comment on the availability of authority to establish
requirements

for controlling GHG emissions from subcategories of incineration units
based on size, type or class, as provided under section 111, and to
exclude from regulation other categories or subcategories.
    Given the structure of section 129 and its hybrid approach to the
use of authorities under sections 111 and 112, we question whether this
section provides EPA with available authority to establish alternative
compliance approaches, such as emissions trading or averaging across
sources within a category. This is because the statutory terms of
section 129 provide that emission standards must be established for
sources within ``each category'' and those standards must be no less
stringent than the level of performance achieved by the best-performing
sources within that category. Each source in the category must then
achieve control at least to this level. Trading would allow sources to
emit above the floor. As a practical matter, given that requirements
for control of specifically-listed pollutants may preclude trading for
those pollutants, and given that many of the controls applicable to
those pollutants would be the same as or similar to those that would be
applicable to GHGs, we believe that trading options would likely be
infeasible with respect to GHG control requirements. However, EPA
requests comments on the extent to which the CAA could be interpreted
to grant flexibility to consider such alternative implementation
mechanisms, to what extent, and what, if any, limitations should be
considered appropriate in conjunction with them.
5. What Are the Possible Implications for Other Provisions of the Clean
Air Act?
    Section 129 recognizes that many incineration units may also be
subject to prevention of significant deterioration or nonattainment new
source review requirements. It addresses potentially conflicting
outcomes of control determinations under those programs by providing
that ``no requirement of an applicable implementation plan . . . may be
used to weaken the standards in effect under this section.''
    If EPA were to list GHGs under section 108 for purposes of
establishing NAAQS, we would not be prevented from regulating them
under this section of the Act as well. If EPA were to list GHG under
section 112, a potential conflict arises in that section 112
establishes major and area source emissions thresholds, providing for
standards of different stringency for each, and requires analysis of
residual risk for major sources regulated under that section of the
Act. We request comments on how such apparent conflicts could be
reconciled if we were to elect to regulate emissions of GHGs from solid
waste incineration units under section 129.
    In light of the foregoing, we request comment on the
appropriateness of section 129 as a mechanism for regulating
incineration unit emissions of GHGs under the CAA. If commenters
believe that use of section 129 would be appropriate, we further
request comments on which GHGs should be considered, what source
categories or subcategories should be regulated, and how appropriate
control requirements should be determined for new and existing GHG
emission sources.

E. Preconstruction Permits Under the New Source Review (NSR) Program

1. What Are the Clean Air Act Provisions Describing the NSR Program?
    Under what is known as the New Source Review (NSR) program, the CAA
requires the owners and operators of large stationary sources of air
pollution to obtain construction permits prior to building or modifying
such a facility. The program is subdivided into the Prevention of
Significant Deterioration (PSD) and nonattainment NSR (NNSR) programs,
either of which may be applicable depending on the air quality for a
particular pollutant in the location of the source subject to
permitting.
    The PSD program, set forth in Part C of Title I of the CAA, applies
in areas that are in attainment with the NAAQS (or are unclassifiable)
and has the following five goals and purposes:
     To protect public health and welfare from air pollution
beyond that which is addressed by the attainment and maintenance of
NAAQS;
     To protect specially designated areas such as national
parks and wilderness areas from the effects of air pollution;
     To assure that economic growth will occur in a manner
consistent with the preservation of existing clean air resources;
     To assure emissions in one state will not interfere with
another state's PSD plan; and
     To assure that any decision to permit increased air
pollution is made only after evaluating the consequences of the
decision and after opportunities for informed public participation.
    The main element of the PSD program is the requirement that a PSD
permit be obtained prior to construction of any new ``major emitting
facility'' or any new ``major modification.'' Before a source can
receive approval to construct under PSD, the source and its permitting
authority (usually a state or local air pollution control agency, but
sometimes EPA) must follow certain procedural steps, and the permit
must contain certain substantive requirements. The most important
procedural step is providing an opportunity for the public to comment
when a permitting authority proposes to issue a permit.
    The PSD program primarily applies to all pollutants for which a
NAAQS is promulgated, but some of the substantive requirements of the
PSD program also apply to regulated pollutants for which there is no
NAAQS (except that there is an explicit statutory exemption from PSD
for HAPs).\256\ Since there is currently no NAAQS for GHGs and GHGs are
not otherwise subject to regulation under the CAA, the PSD program is
not currently applicable to GHGs.\257\ However, as discussed in section
IV of this notice, it is possible that EPA actions under other parts of
the CAA could make GHGs pollutants subject to regulation under the Act
and thus subject to one or more parts of the PSD program.
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    \256\ CAA section 112(b)(6).
    \257\ In the Energy Independence and Security Act of 2007
(EISA), Congress provided that regulation of GHGs under CAA section
211(o) would not automatically result in regulation of GHGs under
other CAA provisions. Because of this provision, EISA does not
impact the interrelationship of other provisions of the CAA, and we
only reference the HAP exception in the text.
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    If EPA were to promulgate a rule establishing limitations on GHG
emissions from mobile sources or stationary sources without
promulgating a NAAQS for GHGs, the PSD requirement of greatest
relevance would be the requirement that a permit contain emissions
limits that reflect the Best Available Control Technology (BACT). BACT
is defined as the maximum achievable degree of emissions reduction for
a given pollutant (determined by the permitting authority on a case-by-
case basis), taking into account energy, environmental, and economic
impacts. BACT may include add-on controls, but also includes
application of inherently lower-polluting production processes and
other available methods and techniques for control. BACT cannot be less
stringent than any applicable NSPS.
    Since emission control requirements will likely have the most
direct impact on new or modified stationary sources subject to PSD, our
focus in this notice is on the BACT requirement. However, we are also
interested in stakeholder input on the extent to which we should

evaluate other substantive PSD program elements which would be affected
by any possible EPA action to regulate GHGs under other parts of the
Act. These include the requirements to evaluate, in consultation with
the appropriate Federal Land Manager (FLM), the potential impact of
proposed construction on the Air Quality Related Values of any affected
``Class I area'' (national parks, wilderness areas, etc.) and
additional impacts analysis.\258\
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    \258\ As codified at 40 CFR 51.166(o), the owner or operator
shall provide an analysis of the impairment to visibility, soils,
and vegetation that would occur as a result of the source or
modification and general commercial, residential, industrial, and
other growth associated with the source or modification.
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    If EPA were to promulgate a NAAQS for GHGs, because of the
relatively uniform concentration of GHGs, we expect that the entire
country would be in nonattainment or attainment of the NAAQS. The
preconstruction permitting requirements that apply would depend on
whether the country is designated as nonattainment or attainment for
the GHG emissions that would increase as a result of a project being
constructed.
    If the entire country is designated attainment, and PSD applies,
the adoption of a NAAQS would trigger air quality analysis requirements
that are in addition to all the requirements described above. For
example, under CAA section 165(a)(3), permit applicants have to conduct
modeling to determine whether they cause or contribute to a NAAQS
violation. Following promulgation of a NAAQS, EPA may also promulgate a
PSD increment for GHGs, which would require additional analysis for
each new and modified source subject to PSD.\259\ However, this notice
does not address in detail the PSD elements that relate to increments.
---------------------------------------------------------------------------

    \259\ PSD increments are air quality levels which represent an
allowable deterioration in air quality as compared to the existing
air quality level on a certain baseline date for a given area.
---------------------------------------------------------------------------

    Under a GHG NAAQS with the country in nonattainment, the
nonattainment NSR permitting program would be triggered nationally. The
nonattainment NSR program requirements are contained in section 173 of
the Act. Like PSD, they apply to new and modified major stationary
sources, but they contain significantly different requirements from the
PSD program. A key difference is the requirement that the emissions
increases from the new or modified source in a nonattainment area must
be offset by reductions in existing emissions from the same
nonattainment area or a contributing upwind nonattainment area of equal
or higher nonattainment classification. The offsetting emissions
reductions must be at least equal to the proposed increase and must be
consistent with a SIP that assures the nonattainment area is making
reasonable progress toward attainment.\260\ Another key difference is
that instead of BACT, sources subject to nonattainment NSR must comply
with the Lowest Achievable Emission Rate (LAER), which is the most
stringent emission limitation that is (1) contained in any SIP for that
type of source, or (2) achieved in practice for sources of the same
type as the proposed source.\261\ Notably, if the rate is achievable,
LAER does not allow for consideration of costs or of the other factors
that BACT does. While LAER and offsets are likely of greatest
significance for GHG regulation under nonattainment NSR, there are
additional requirements for nonattainment NSR that would also apply.
The additional requirements include the alternatives analysis
requirement; the requirement that source owners and operators
demonstrate statewide compliance with the Act; and the prohibition
against permit issuance if the SIP is not being adequately implemented.
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    \260\ CAA section 173(a)(1); limitations on offsets are set
forth in section 173(c).
    \261\ CAA section 173(a); LAER is defined in section 171(3)(A).
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    For simplicity, the remainder of this notice describing affected
sources, impacts, and possible tailoring generally focuses on PSD,
raising issues specific to nonattainment NSR where applicable.
2. What Sources Would Be Affected if GHGs Were Regulated Under NSR?
    A PSD permit is required for the construction or modification of
``major emitting facilities,'' which are commonly referred to as
``major sources.'' A ``major emitting facility'' is generally any
source that emits or has the potential to emit 250 tons per year (tpy)
of a regulated NSR pollutant.\262\ \263\ A source that belongs to one
of several specifically identified source categories is considered a
major source if it emits or has the potential to emit 100 tpy of a
regulated NSR pollutant.\264\ Also, for nonattainment NSR, the major
source threshold is at most 100 tpy, and is less in some nonattainment
areas, depending on the pollutant and the nonattainment classification.
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    \262\ 42 U.S.C. 7569(1). The PSD regulations use the term
``major stationary source.'' 40 CFR 51.166(b)(1) The definition of
``regulated NSR pollutant'' is at 40 CFR 51.166(b)(49).
    \263\ ``Potential-to-emit'', or PTE, is defined as the maximum
capacity of a source to emit any air pollutant under its physical
and operational design.
    \264\ These specific sources include major industrial categories
such as petroleum refining, fossil-fuel fired steam electric plants,
chemical process plants, and 24 other categories. The full list of
100 tpy major sources is promulgated at 40 CFR 51.166(b)(1)(i)(a).
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    A ``major modification'' is any physical change or change in the
method of operation of a major source which significantly increases the
amount of emissions of any regulated NSR pollutant. EPA defines what
emissions levels of a pollutant are ``significant'' through regulation,
and the defined significance levels range from 0.3 tpy for lead to 100
tpy for CO. Currently there is no defined significance level for GHGs
(either individually or as a group) because they are not regulated NSR
pollutants, and thus, were GHGs to become regulated, the significance
threshold would be zero. Note that, when determining whether a facility
is ``major,'' a source need not count fugitive emissions (i.e.,
emissions which may not reasonably be vented through stacks, vents,
etc.) unless it is in a listed category.
    As noted in section IV, GHGs are not currently subject to
regulation under the Act, and therefore are not regulated NSR
pollutants. However, if GHG emissions become subject to regulation
under any of the stationary or mobile source authorities discussed
above (except sections 112 and 211(o)), GHGs could become regulated NSR
pollutants. Many types of new GHG sources and GHG-increasing
modifications that have not heretofore been subject to PSD would become
subject to PSD permitting requirements. This is particularly true for
CO2 because, as noted in section III, the mass
CO2 emissions from many source types are orders of magnitude
greater than for currently regulated pollutants. Thus, many types of
new small fuel-combusting equipment could become newly subject to the
PSD program if CO2 becomes a regulated NSR pollutant. As
discussed below in the section on potential to emit, the extent to
which such equipment would become subject to PSD would depend upon
whether, for each type of equipment, its maximum capacity considering
its physical and operational design would involve constant year-round
operation or some lesser amount of operation. For example, the
calculated size of a natural gas-fired furnace that has a potential to
emit 250 tpy of CO2, if year-round operation (8760 hours per
year) were assumed--would be only 0.49 MMBTU/hr, which is comparable to
the size of a very small commercial furnace. In practice, a furnace
like this would likely operate far less than year round and its actual
emissions would be well below 250 tpy. For example, such a furnace, if
used for

space heating, might only be burning gas for about 1000 hours per year,
meaning that it would need to be sized at over 4 MMBTU/hr--a size more
comparable to a small industrial furnace--to actually emit 250 tons of
CO2. For sources such as these, the interpretation of the
term ``potential to emit'' and the availability of streamlined
mechanisms for smaller sources to limit their potential to emit would
determine whether they would be considered ``major'' for GHG emissions
under PSD.
    For sources already major for other pollutants, it is likely that
many more changes made by the source would also qualify as major
modifications and become subject to PSD as well, unless potential
approaches (including those discussed below) for raising applicability
thresholds were implemented. Relatively small changes in energy use
that cause criteria pollutant emissions too small to trigger PSD would
newly trigger PSD at such facilities because such changes would likely
result in greater CO2 increases. For example, consider a
hypothetical 500 MW electric utility boiler firing a bituminous coal
that is well-controlled for traditional pollutants. Such a boiler,
operating more than 7000 hours per year (out of a possible 8760), can
emit approximately 4 million tons of CO2 per year, or more
than 580 tons per hour. Assuming a 100 tpy significance level (rather
than the current zero level for GHGs), any change resulting in just 10
additional minutes of utilization over the course of a year at such a
source would be enough to result in an increase of 100 tons and
potentially subject the change to PSD. By contrast, to be considered a
modification for NOX, the same change would require
approximately 36 additional hours of operation assuming that the
hypothetical source had a low-NOX burner, and 90 additional
hours of operation assuming that the source also employed a selective
catalytic reduction add-on control device.
    Once a source is major for any NSR regulated pollutant, PSD applies
to significant increases of any other regulated pollutant, so
significant increases of GHGs would become newly subject to PSD at
sources that are now major for other regulated pollutants. Similarly,
significant increases of other pollutants would become subject to PSD
if they occur at sources previously considered minor, but which become
classified as major sources for GHG emissions.
    Currently, EPA estimates that EPA, state, and local permitting
authorities issue approximately 200-300 PSD permits nationally each
year for construction of new major sources and major modifications at
existing major sources. Under existing major source thresholds, we
estimate that if CO2 becomes a regulated NSR pollutant
(either as an individual GHG or as a group of GHGs), the number of PSD
permits required to be issued each year would increase by more than a
factor of 10 (i.e. more than 2000-3000 permits per year), unless action
were taken to limit the scope of the PSD program under one or more of
the legal theories described below. The additional permits would
generally be issued to smaller industrial sources, as well as large
office and residential buildings, hotels, large retail establishments,
and similar facilities. These facilities consist primarily of equipment
that combusts fuels of various kinds and release their exhaust gases
through a stack or vent. Few of these additional permits would be for
source categories (such as agriculture) where emissions are
``fugitive,'' because, as noted above, fugitive emissions do not count
toward determining if a source is a major source except in a limited
number of categories of large sources.
    Because EPA and states have generally not collected emissions
information on sources this small, our estimate of the number of
additional permits relies on limited available information and
engineering judgment, and is uncertain. Our estimate of the number of
additional permits is also not comprehensive. First, it does not
include permits that would be required for modifications to existing
major GHG sources because the number of these is more difficult to
estimate.\265\ Nonetheless, we anticipate that, for modifications,
coverage of GHGs would increase because the larger universe of major
sources will bring in additional sources at which modifications could
occur and because for ``traditional'' major sources, many more types of
small modifications that were minor for traditional pollutants could
become major due to increases in GHG emissions that exceed the
significance levels. Second, EPA's estimate is uncertain because it is
based on actual emissions, and thus excludes a potentially very large
number of sources that would be major if they operated at their full
potential-to-emit (PTE) (i.e. they emitted at a level that reflects the
maximum capacity to emit under their physical and operational design),
but which in practice do not. Such sources could be defined as major
sources without an enforceable limitation on their PTE, but for the
purposes of this estimate, we assume they have options for limiting
their PTE and avoiding classification as a major source. (Nonetheless,
there are important considerations in creating such PTE limits, as
discussed below). Third, this estimate does not specifically account
for CO2 from sources other than combustion sources. While we
know there are sources with significant non-combustion emissions of
GHGs, there are relatively few of these compared to the sources with
major amounts of combustion CO2. These non-combustion
sources would likely be major for combustion CO2 in any
event, and many of these are likely already major for other pollutants,
though GHG regulation would likely mean increases in the number of
major modifications at such sources.
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    \265\ Among other things, any estimate of modifications must
take into account the netting provisions of NSR, in which sources
can avoid NSR if the increase of pollutant emissions from a project
is below the significance level for that pollutant, after taking
into account other increases and decreases of emissions that are
contemporaneous with the project.
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    We request any available information that would allow us to better
characterize the number and types of sources and modifications that
would become subject to the PSD program if CO2 becomes a
regulated NSR pollutant. As discussed below, we are particularly
interested in information that would allow us to analyze the effects of
different major source thresholds and significance levels.
    Finally, we note that our estimates above are for CO2.
As described above in section IV, there are implications to regulating
additional GHGs as pollutants, or GHGs in the aggregate. Our estimates
of PSD program impacts do not include consideration of GHGs other than
CO2 because we expect that at the vast majority of these
sources CO2 will be the dominant pollutant. We ask for
comment on whether there are large categories of potentially newly
regulated PSD sources for individual GHGs besides CO2. We
also ask for comment on the effects of aggregating GHGs for PSD
applicability. Aggregating GHGs could bring additional sources into PSD
to the extent that other GHGs are present and would add enough to a
source's PTE to make it a major source. On the other hand, under the
netting provisions of the CAA, it may be easier to facilitate
interpollutant netting if GHGs are aggregated (e.g., a source using
netting to avoid PSD for a CO2 increase based on methane
decreases at the same source).

3. What Are the Key Milestones and Expected Timeline if the PSD Program
Were Used for GHG Controls?
    Because PSD applies to all regulated pollutants except HAP, EPA's
interpretation of the Act is that PSD program requirements would become
applicable immediately upon the effective date of the first regulation
requiring GHG control under the Act.\266\ While existing PSD permits
would remain unaffected, from that point forward, each new major source
of GHGs and each major modification at an existing major source that
significantly increases GHGs would need to get a PSD permit before
beginning construction. Control requirements could take effect as the
first new and modified sources obtain their permits and complete
construction of the permitted projects. Because of the case-by-case
nature of the PSD permitting decisions, the complexity of the PSD
permitting requirements, and the time needed to complete the PSD
permitting process, it can take several months to receive a simple PSD
permit, and more than a year to receive a permit for a complex
facility. We ask for comment on whether there are additional timeline
considerations not noted here.
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