6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

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

RIN 2060-AP86

Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Final ruleRule.

SUMMARY:  EPA is tailoring the applicability criteria that determine
which stationary sources and modification projects become subject to
permitting requirements for greenhouse gas (GHG) emissions under the
Prevention of Significant Deterioration (PSD) and title V programs of
the Clean Air Act (CAA or Act).  This rulemaking is necessary because
without it PSD and title V requirements would apply, as of January 2,
2011, at the 100 or 250 tons per year (tpy) levels provided under the
CAA, greatly increasing the number of required permits, imposing undue
costs on small sources, overwhelming the resources of permitting
authorities, and severely impairing the functioning of the programs.
EPA is relieving these resource burdens by phasing in the applicability
of these programs to GHG sources, starting with the largest GHG
emitters.  This rule establishes two initial steps of the phase-in.  The
rule also commits the agency to take certain actions on future steps
addressing smaller sources, but excludes certain smaller sources from
PSD and title V permitting for GHG emissions until at least April 30,
2016.

DATES:  This action is effective on [INSERT DATE 60 DAYS FROM DATE OF
PUBLICATION IN THE FEDERAL REGISTER].

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

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

SUPPLEMENTARY INFORMATION:

I.  General Information

A.  Does this action apply to me?

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

Industry Group	NAICSa

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

11

Mining………………………………………

21

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

2211, 2212, 2213

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

311, 312, 313, 314, 315, 316

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

321, 322

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

32411, 32412, 32419

Chemical manufacturing.	………………………

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

Rubber product manufacturing	…………………….

3261, 3262

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

32552, 32592, 32591, 325182, 32551

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

3271, 3272, 3273, 3274, 3279

Primary and fabricated metal manufacturing…….

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

Machinery manufacturing…………………….

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

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

3341, 3342, 3343, 3344, 3345, 4446

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

3351, 3352, 3353, 3359

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

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

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

3371, 3372, 3379

Miscellaneous manufacturing…………………….

3391, 3399

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

5622, 5629

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

6221, 6231, 6232,6233, 6239

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

8122, 8123

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

8141

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

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

a	North American Industry Classification System.

B.  How is this preamble organized?

	The information presented in this preamble is organized as follows:

Outline

I.  General Information

A.  Does this action apply to me?

B.  How is this preamble organized?

C.  Preamble Acronyms and Abbreviations

II.  Overview of the Final Rule

III.  Background

A.  What are GHGsgreenhouse gases and their sources?

B.  Endangerment Finding and the LDVRLight-Duty Vehicle Rule

1.  Endangerment Finding

2.  Light-Duty Vehicle Rule

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

1.  Overview of the PSD Program

2.  General Requirements for PSD

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

1.  Overview of Title V

2.  Title V Permit Requirements

E.  The Interpretive MemoMemorandum

IV.  Summary of Final Actions

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

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

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

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

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

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

3.  What about Step 3?

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

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

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

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

E.  Other Actions and Issues

1.  Timing for Permit Streamlining Techniques

2.  Guidance for BACTBest Available Control Technology Determinations

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

4.  Transitional Issues Includingincluding Requests for Grandfathering

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

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

1.  Grouping of GHGs into a Single Pollutant

2.  Identifying Which GHGs are Included in the Group

3.  Use of GWP vs. Mass-Based GHG Thresholds

4.  Determining What GWP Values Are To Beare to be Used

5.  Use of Short Tons vs. Metric Tons

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

	1.  Overview

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

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

	4.  The PSD and Title V Programsprograms

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

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

	7.  Additional Rulemaking for the PSD and Title V Programs

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

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

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

C.  Mechanisms for Implementing and Adopting the Tailoring Approach

1.  PSD Approach:  Background and Proposal

2.  Rationale for Our Final Approach to Implementing PSD

3.  Other Mechanisms

4.  Codification of Interpretive Memo

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

6.  Title V Programs

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

E.  Other Actions and Issues

1.  Permit Streamlining Techniques

2.  Guidance for BACTBest Available Control Technology Determinations

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

4.  Transitional Issues Including Requests for Grandfathering

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

A.  What entities are affected by this final rule?

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

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

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

	C.  What are the economic impacts of this rulemaking?

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

VII.  Comments on Statutory and Executive Orders Reviews

A.  Comments on Executive Order 12866 - Regulatory Planning and Review

B.  Comments on the Paperwork Reduction Act

C.  Comments on the RFA

Regulatory Flexibility Act

D.  Comments on the Unfunded Mandates Reform Act

E.  Comments on Executive Order 13132 – Federalism

F.  Comments on Executive Order 13175 - Consultation and Coordination
with Indian Tribal Governments

G.  Comments on Executive Order 13211 - Actions That Significantly
Affect Energy Supply, Distribution, or Use

VIII.  Statutory and Executive Orders Reviews

A.  Executive Order 12866 - Regulatory Planning and Review

B.  Paperwork Reduction Act

C.  Regulatory Flexibility Act

D.  Unfunded Mandates Reform Act

E.  Executive Order 13132 – Federalism

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

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

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

I.  National Technology Transfer and Advancement Act

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

K.  Congressional Review Act

L.  Judicial Review

IXXI.  Statutory AuthorityLanguage

C.  Preamble Acronyms and Abbreviations

	The following are abbreviations of terms used in thisthe preamble.

ANPR				Advance Notice of Proposed Rulemaking

APA				Administrative Procedure Act

AQRVs			Air Quality Related Values

BACT				Best Available Control Technology

Btu				British thermal units

Btu/hr			British thermal units per hour

CAA or Act		Clean Air Act

CAAAC			Clean Air Act Advisory Committee

CAFECAFÉ				Corporate Average Fuel Economy

CH4				Methane

CO				Carbon Monoxide

CO2				Carbon Dioxide

CO2e				Carbon Dioxide Equivalent

EO				Executive Order

EPA				U.S. Environmental Protection Agency

FDA				Food and Drug Administration

FIP				Federal Implementation Plan

FTEs				Full- Time Equivalents

Employees

GHG				Greenhouse Gases

GHz				Gigahertz

GWP				Global Warming Potential

HAP				Hazardous Air Pollutant

HFCs				Hydrofluorocarbons

ICR				Information Collection Request

IPCC				Intergovernmental Panel on Climate Change

IQA				Information Quality Act

LDVR				Light- Duty Vehicle Rule

MACT				Maximum Achievable Control Technology

MCL				Maximum Contaminant Level

N2O				Nitrous Oxide

NAAQS			National Ambient Air Quality Standard

NHTSA	National Highway Traffic Safety Administration

NMOC				Nonmethane Organic Compounds

NOx				Nitrogen Oxides

NPDES	National Pollutant Discharge Elimination System

NOx				Nitrogen Oxide

NMOC				Non-Methane Organic Emissions

NSPS				New Source Performance Standard

NSR				New Source Review

NTAA				National Tribal Air Association

NTTAA	National Technology Transfer and Advancement Act

OMB				Office of Management and Budget

PFCs				Perfluorocarbons

PM				Paticulate Matter

PSD				Prevention of Significant Deterioration

PTE				Potential to Emit

RFA				Regulatory Flexibility Act

RIA				Regulatory Impact Analysis

RTC				Response to Comment

SBA				Small Business Administration

SBAR				Small Business Advocacy Review

SBREFA	Small Business Regulatory Enforcement Fairness Act

SF6				Sulfur Hexafluoride

SIP				State Implementation Plan

SNPR				Supplemental Notice of Proposed Rulemaking

TIP				Tribal Implementation Plan

SO2				Sulfur Dioxide

TRS				Total Reduced Sulfur

TSD				Technical Support Document

tpyTPY				Tons Per Year

UMRA	Unfunded Mandates Reform Act

UNFCCCUNFCC	United Nations Framework Convention on Climate Change

VOC				Volatile Organic Compound

II. Overview of the Final Rule

EPA is relieving overwhelming permitting burdens that would, in the
absence of this rule, fall on permitting authorities and sources.  We
accomplish this by tailoring the applicability criteria that determine
which GHG emission sources become subject to the PSD and title V
programs of the CAA.  In particular, EPA is establishing with this
rulemaking a phase-in approach for PSD and title V applicability, and is
establishing the first two steps of the phase-in for the largest
emitters of GHGs.  We also commit to certain follow-up actions regarding
future steps beyond the first two, discussed in more detail later.  Our
legal basis for this rule is our interpretation of the PSD and title V
applicability provisions under the familiar Chevron two-step framework
for interpreting administrative statutes, taking account of three legal
doctrines, both separately and interdependently:  they are what we will
call (1i) the “absurd results” doctrine, which authorizes agencies
to apply statutory requirements differently than a literal reading would
indicate, as necessary to effectuate congressional intent and avoid
absurd results, (2ii) the “administrative necessity” doctrine, which
authorizes agencies to apply statutory requirements in a way that avoids
impossible administrative burdens; and (3iii) the
“one-step-at-a-time” doctrine, which authorizes agencies to
implement statutory requirements a step at a time.  This legal basis
justifies each of the actions we take with this rule – e.g., each of
the first two steps of the phase-in approach -- both (1i) as part of the
overall tailoring approach, and (2ii) independently of each other action
we take with this rule.  EPA also has authority for this Tailoring Rule
under CAA section 301(a)(1), which authorizes the Administrator “to
prescribe “such regulations as are necessary to carry out his
functions under [the CAA].”

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

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

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

In addition, we commit to explore streamlining techniques that may well
make the permitting programs much more efficient to administer for GHGs,
and that therefore may allow their expansion to smaller sources.  We
expect that the initial streamlining techniques will take several years
to develop and implement.

We are also including in this action a rule that no source with
emissions below 50,000 tpy CO2e, and no modification resulting in net
GHG increases of less than 50,000 tpy CO2e, will be subject to PSD or
title V permitting before at least 6 years from now, April 30, 2016.
This is because we are able to conclude at the present time that the
administrative burdens that would accompany permitting sources below
this level will be so great that even the streamlining actions that EPA
may be able to develop and implement in the next several years, and even
with the increases in permitting resources that we can reasonably expect
the permitting authorities to acquire, it will be impossible to
administer the permit programs for these sources until at least 2016.

Further, we are establishing an enforceable commitment that we will (1i)
complete a study by April 30, 2015, to evaluate the status of PSD and
title V permitting for GHG-emitting sources, including progress in
developing streamlining techniques; and (2ii) complete further
rulemaking based on that study by April 30, 2016, to address the
permitting of smaller sources.  That rulemaking may also consider
additional permanent exclusions based on the “absurd results”
doctrine, where applicable.

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

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

These impacts – the costs to sources and administrative burdens to
permitting authorities – that would result from application of the PSD
and title V programs for GHG emissions at the statutory levels as of
January 2, 2011, are so severe that they bring the judicial doctrines of
“absurd results,” “administrative necessity,” and
“one-step-at-a-time” into the Chevron two-step analytical framework
for statutes administered by agencies.  Under the U.S. Supreme Court’s
decision in Chevron, the agency must, at Stepstep 1, determine whether
Congress’s intent as to the specific matter at issue is clear, and, if
so, the agency must give effect to that intent.  If congressional intent
is not clear, then, at Stepstep 2, the agency has discretion to fashion
an interpretation that is a reasonable construction of the statute.

To determine congressional intent, the agency must first consider the
words of the statutory requirements, and if their literal meaning
answers the question at hand, then, in most cases, the agency must
implement those requirements by their terms.  However, under the
“absurd results” doctrine, the literal meaning of statutory
requirements should not be considered to indicate congressional intent
if that literal meaning would produce a result that is senseless or that
is otherwise inconsistent with - and especially one that
undermines undermines -- underlying congressional purpose.  In these
cases, if congressional intent for how the requirements apply to the
question at hand is clear, the agency should implement the statutory
requirements not in accordance with their literal meaning, but rather in
a manner that most closely effectuates congressional intent.  If
congressional intent is not clear, then an agency may select an
interpretation that is reasonable under the statute.

Under the “administrative necessity” doctrine, Congress is presumed,
at Chevron Step step 1, to intend that its statutory directives to
agencies be administrable, and not to have intended to have written
statutory requirements that are impossible to administer.  Therefore,
under this doctrine, an agency may depart from statutory requirements
that, by their terms, are impossible to administer, but the agency may
depart no more than necessary to render the requirements administrable.
Under the “one-step-at-a-time” doctrine, Congress is presumed at
Chevron Stepstep 1 to have intended to allow the agency to administer
the statutory requirements on a step-by-step basis, as appropriate, when
the agency remains on track to implement the requirements as a whole.
Each of these doctrines supports our action separately, but the three
also are intertwined and support our action in a comprehensive manner.

Here, we have determined, through analysis of burden and emissions data
as well as consideration of extensive public comment, that the costs to
sources and administrative burdens to permitting authorities that would
result from application of the PSD and title V programs for GHG
emissions at the statutory levels as of January 2, 2011 should be
considered “absurd results.”  Therefore, we conclude that under the
“absurd results” doctrine, Congress could not have intended that the
PSD or title V applicability provisions – in particular, the threshold
levels and timing requirements -- apply literally to GHG sources as of
that date.

Even so, we conclude that the PSD and title V provisions and their
legislative history do indicate a clear congressional intent, under
Chevron Step 1, as to whether the two permitting programs applied to GHG
sources, and that the intent was in the affirmative, that the permitting
programs do apply to GHG sources.  Our previous regulatory action
defining the applicability provisions made this clear, and we do not
reopen this issue in this rulemaking.  Moreover, even if this
long-established regulatory position were not justifiable based on
Chevron Step 1 – on the grounds that in fact, congressional intent on
this point is not clear - then we believe that this position, that the
statutory provisions to apply PSD and title V generally to GHG sources,
was justified under Chevron step 2.

As to how to apply the PSD program to GHG sources, congressional intent,
as expressed in the various statutory provisions and statements in the
legislative history, is clear that PSD should apply at least to the
largest sources initially, at least to as many more sources as possible
and as promptly as possible over time - consistent with streamlining
actions that we intend to consider coupled with increases in permitting
authority resources --– and at least to a certain point.  This is the
approach we take in this Tailoring Rule, and because it is consistent
with congressional intent, we believe it is required under Chevron
Stepstep 1.  Even if congressional intent were not clear as to how to
apply the PSD  requirements to GHG sources, we would have authority
under Chevron Stepstep 2 to establish a reasonable interpretation that
is consistent with the PSD provisions, and we believe that the tailoring
approach so qualifies.

As for title V, the statutory provisions and legislative history, which
of course are different than those concerning the PSD program, do not
express a clear intent as to how title V applies to GHG sources, which
leads our analysis to Chevron Stepstep 2, and here, again, we believe
that the tailoring approach is a reasonable interpretation that is
consistent with the title V provisions.

For both PSD and title V, we intend to use the tailoring approach to
address smaller GHG sources over time, consistent with Congress’s
expectations that the programs would not impose undue costs to sources
or undue administrative burdens to permitting authorities.  However, we
cannot say at this point how close to the statutory thresholds we will
eventually reach.

Because this rule establishes only the first two phases of the tailoring
approach, we do not find it necessary to answer these questions in this
rule, and instead we expect to resolve them through future rulemaking.
We will remain mindful of the concerns that Congress expressed about
including small sources in either program.  We intend to consider the
issue of the applicability of title V to GHG sources without applicable
requirements (i.e., “empty permits”) in future steps of our
tailoring approach.  When we do so, we will further assess the potential
for the approach of excluding empty permits from title V to relieve
burden consistent with statutory requirements.

In addition, because Congress can be said to have intended the PSD and
title V programs to apply to GHG sources, the Tailoring Ruletailoring
rule is also justifiable under the “administrative necessity” and
“one-step-at-a-time” doctrines.

The legal analysis just described justifies each of the actions in this
rule.  The first two steps that we promulgate in this rule, which take
effect on January 2, 2011 and July 1, 2011, constitute the most that
permitting authorities can reasonably be expected to do by those times.
Similarly, the 50,000 tpy floor that we promulgate through at least
April 30, 2016 is reasonable because the information we have available
now shows that it constitutes the most that permitting authorities can
reasonably be expected to do by that date.  Finally, the study and two
additional rulemakings – to take effect by July 1, 2013 and April 30,
2016 - to which we commit in this rule establish a track for acquiring
additional information and for taking further steps to address the
application of PSD and title V more closely to the literal statutory
levels.  We intend to apply them as closely to those levels as is
consistent with congressional intent and administrative imperatives, in
light of the “absurd results,” “administrative necessity,” and
“one-step-at-a-time” doctrines, although, as noted previously, we
will consider in future rulemaking how closely to the statutory
thresholds we will be able to implement the PSD and title V programs as
well as what to require with respect to a potentially large number of
sources with empty title V permits.

In this rule, we are adopting regulatory language codifying our phase-in
approach.  As we will explain, many state, local and tribal area
programs will likely be able to immediately implement our approach
without rule or statutory changes by, for example, interpreting the term
“”subject to regulation” that is part of the applicability
provisions for PSD and title V.  We ask permitting authorities to
confirm that they will follow this implementation approach for their
programs, and if they cannot, then we ask them to notify us so that we
can take appropriate follow-up action to narrow our federal approval of
their programs before GHGs become subject to regulation for PSD and
title V programs on January 2, 2011.  Narrowing our approval will ensure
that for federal purposes, GHG sources below the size thresholds we
establish in this Tailoring Rule are not obligated to hold PSD or title
V permits until the states develop and submit revised PSD and title V
programs that EPA approves, either because they adopt our tailoring
approach or because, if they continue to cover smaller GHG sources, the
states have demonstrated that they have adequate resources to administer
those programs.

The thresholds we are establishing are based on CO2e for the aggregate
sum of six greenhouse gases that constitute the pollutant that will be
subject to regulation, which we refer to

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

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

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

III. Background

A.  What are GHGs greenhouse gases and their sources?

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

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

In the United States, the combustion of fossil fuels (e.g., coal, oil,
gas) is the largest source of CO2 emissions and accounts for 80 percent
of the total GHG emissions.  Anthropogenic CO2 emissions released from a
variety of sources, including through the use of fossil fuel combustion
and cement production from geologically stored carbon (e.g., coal, oil,
and natural gas) that is hundreds of millions of years old, as well as
anthropogenic CO2 emissions from land-use changes such as deforestation,
perturb the atmospheric concentration of CO2 and the distribution of
carbon within different reservoirs readjusts.  More than half of the
energy related emissions come from large stationary sources such as
power plants, while about a third comes from transportation.  Of the six
well-mixed GHGs, four (CO2, CH4, N2O, and HFCs) are emitted by motor
vehicles.  In the United States industrial processes (such as the
production of cement, steel, and aluminum), agriculture, forestry, other
land use, and waste management are also important sources of GHGs.

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

B.  Endangerment Finding and the LDVRLight-Duty Vehicle Rule

1.  Endangerment Finding

On April 2, 2007, the U.S.nited States Supreme Court found that GHGs are
air pollutants under CAA section 302(g).  Massachusetts v. EPA, 549 U.S.
497 (2007).  As a result, the Supreme Court found that EPA was required
to determine, under CAA section 202(a), whether (1a) GHGs from new motor
vehicles cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare, or (2b) the science is
too uncertain to make a reasoned decision.  After issuing a proposal and
receiving comment, on December 7, 2009, the Administrator signed two
distinct findings regarding GHGs under CAA section 202(a):

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

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

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

2.  Light-Duty Vehicle Rule

The LDVR, 75 FR 25324 (May 7light-duty vehicle rule, signed on April 1,
2010), is a joint rule between EPA and the Department of
Transportation’s National Highway Traffic Safety Administration
(NHTSA) that establishes a national program consisting of new standards
for light-duty vehicles that will reduce GHGgreenhouse gas emissions and
improve fuel economy.  EPA finalized the national GHG emissions
standards under the Act, and NHTSA finalized Corporate Average Fuel
Economy (CAFE) standards under the Energy Policy and Conservation Act,
as amended.  The new standards apply to new passenger cars, light-duty
trucks, and medium-duty passenger vehicles, starting with model year
2012.  The EPA GHG standards are projected to result in an estimated
combined average emissions level of 250 grams of CO2 per mile for model
year 2016 vehicles.  The standards begin with the 2012 model year, with
standards increasing in stringency through model year 2016.  The
standards are a fleet average for each manufacturer, based on a
footprint attribute curve, meaning that the actual target for a vehicle
will vary depending on the size of the vehicle.  Under the
footprint-based standards, each manufacturer will have a GHG standard
unique to its fleet, depending on the footprints of the vehicle models
produced by that manufacturer.  A manufacturer will have separate
footprint-based standards for cars and for trucks.

 The endangerment and contribution findings described previously require
EPA to issue standards under section 202 (a) “applicable to
emission” of the air pollutant that EPA found causes or contributes to
the air pollution that endangers public health and welfare.  The final
emissions standards satisfy this requirement for GHGs from light-duty
vehicles.  Under section 202(a), the Administrator has significant
discretion in how to structure the standards that apply to the emission
of the air pollutant at issue here, the aggregate group of six GHGs.
EPA has the discretion under section 202(a) to adopt separate standards
for each gas, a single composite standard covering various gases, or any
combination of these.  In the LDVR, EPA finalized separate standards for
N2O and CH4, and a CO2 standard that provides for credits based on
reductions of HFCs, as the appropriate way to issue standards applicable
to emission of the single air pollutant, the aggregate group of six
GHGs.  EPA did not set any standards for PFCs or SF6, as they are not
emitted by motor vehicles.

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

1. Overview of the PSD Program

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

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

a.  Major Stationary Source

Under PSD, a “"major stationary source”" is any source belonging to
a specified list of 28 source categories which emits or has thea
potential to emit (PTE) of 100 tpy or more of any pollutant subject to
regulation under the CAA, or any other source type which emits or has
the potential to emit PTE such pollutants in amounts equal to or greater
than 250 tpy.  We refer to these levels as the 100/250-tpy thresholds.
A new source with a potential to emit (PTE) at or above the applicable
“major stationary source threshold”" is subject to major source NSR.
 These limits originate from section 169 of the CAA, which applies PSD
to any “major emitting facility” and defines the term to include any
source that emits or has a PTE of 100 or 250 tpy, depending on the
source category.  Note that the major source definition incorporates the
phrase “subject to regulation,” which, as described later, will
begin to include GHGs on January 2, 2011, under our interpretation of
that phrase discussed in the recent Interpretive Memo notice.  75 FR
17004, April 2, 2010.

b.  Major Modifications

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

2.  General Requirements for PSD

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

.

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

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

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

1.  Overview of Title V

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

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

2.  Title V Permit Requirements

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

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

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

E.  The Interpretive MemoMemorandum

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

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

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

IV. Summary of Final Actions

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

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

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

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

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

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

 Determining permit program applicability for the GHG “air
pollutant” by using the sum-of-six GHGs is based on EPA’s
interpretation that the PSD and title V requirements apply to each
“air pollutant” that is “subject to regulation” under another
provision of the CAA.  As discussed previously, the final LDVR for GHGs
makes it clear that the emissions standards EPA adopted are standards
applicable to emission of the single air pollutant defined as the
aggregate mix of these six well-mixed GHGsgreenhouse gases.  See LDVR,
May 7April 1, 2010, 75 FR 25398-99, section I Preamble, II.A.2.c., pp
153-4., and 40 CFR 86.1818-12.  For reasons explained in more detail in
section V, we have determined it is legally required, and preferable
from a policy standpoint, for EPA to use the same definition of the air
pollutant for permitting purposes as that used in the rule that
establishes the control requirements for the pollutant.  We also believe
there are implementation advantages for applying PSD and title V in this
way.  Thus, this rule establishes that a stationary source will use the
group of six constituent gases for permitting applicability, rather than
treating each gas individually.  Similarly, you will include all six
constituent gases because that is how the air pollutant is defined, even
though motor vehicles only emit four of the six.

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

We are requiring that wherever you perform an emissions calculations
involving CO2e for the purposes of determining the applicability of PSD
or title V requirements, you use the GWP values codified in the EPA’s
GHG mandatory GHG reporting rule.  This approach will assure consistency
between the values required for calculations under the mandatory
reporting rule and for PSD or title V.  In addition, because any changes
to Table A-1 of the mandatory GHG reporting rule regulatory text must go
through a rulemaking, this approach will assure that the values used for
the permitting programs will reflect the latest values adopted for usage
by EPA after notice and comment.

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

Overview

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

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

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

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

a. PSD Permitting

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

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

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

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

b.  Title V Permitting

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

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

a.  PSD Permitting

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

  Specifically, for purposes of determining whether a GHG emission
source, resulting from either new undertaking construction or a physical
or operational change at an existing source, is considered a major
source under PSD, both of the following conditions must be met:

(1) The GHG emission source,  A newly constructed source which is not
major for another pollutant, emits or has the potential to emit GHG in
amounts that equal or exceed the following, calculated as the sum-of-six
well-mixed GHGs on a mass basis (no GWPs applied):

100 tpy for sources in any of the 28 major emitting facility source
categories listed under PSD, or

250 tpy for any other stationary source.

(2)	The GHG emission  A newly constructed source emits or has the
potential to emit GHGs in amounts that equal or exceed 100,000 tpy CO2e
basis.

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

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

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

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

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

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

b.  Title V Permitting

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

(1)	An existing or newly constructedFor determining whether a GHG
emission source is subject to permitting under title V:

1)  An existing or newly constructed source, emits or has the potential
to emit GHGs in amounts that equal or exceed 100 tpy calculated as the
sum of the six well-mixed GHGs on a mass basis (no GWPs applied).

(2)	  An existing or newly constructed source, emits or has the
potential to emit GHGs in amounts that equal or exceed 100,000 tpy
calculated as the sum of the six well-mixed GHGs on a CO2e basis (GWPs
applied).

3.   What about Step 3?

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

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

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

In addition, as part of the Stepstep 3 action, we may solicit comment on
a permanent exclusion of certain sources from PSD, title V or both,
based on an “absurd results” rationale.  For example, we may make a
final determination that under the “absurd results” doctrine, PSD
and/or title V do not apply to a set of GHG sources that, although above
the statutory thresholds for those programs, are too small and
relatively inconsequential in terms of GHG contribution.  Another type
of such exclusion for the title V program could be for sources that
would otherwise be required to obtain an “empty permit,” that is,
for example, one that would not contain any applicable requirements
because there are none that apply to the source.  If we  promulgate a
permanent exclusion, we may conclude that by that time, we will have
brought into the PSD and title V programs the full set of sources that
would be consistent with congressional intent (or, if congressional
intent on that point is unclear, with a reasonable policy consistent
with statutory requirements)), and, under those circumstances, we would
find that such a rule brings the tailoring process to a close.  The
application of the “absurd results” rationale for a permanent
exclusion is discussed in more detail in section V.B., later in this
preamble.

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

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

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

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

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

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

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

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

	As explained earlier, we are adopting thresholds that phase in the
applicability of GHG permitting over a specified time period.  In
adopting regulatory changes to implement these thresholds, we follow an
approach that is substantively the same as the approach proposed, but
takes a different form for purposes of revisions to our PSD and title V
regulations.  Specifically, in this final rule, for our regulations, in
conjunction with the definitions of “major stationary source” and
“major modification” (for PSD) and “major source” (for title V),
we are adopting a definition of explicitly codifying the term “subject
to regulation.”  Moreover, we are defining codifying an interpretation
of this term so that GHG emissions from sources above the threshold are
treated as subject to regulation, and therefore the sources that emit
them are subject to PSD and title V.  We are not finalizing the approach
we proposed, which was to revise the numerical thresholds in the
definitions so that GHG sources would have a higher threshold.  Although
we are defining codifying these changes to the term “subject to
regulation,” we recognize that from a substantive standpoint, our
tailoring approach entails interpreting the definitions of “major
emitting facility,” “major modification,” and “major source”
to phase -in the applicability of PSD and title V, as applicable, to GHG
sources, and it makes no difference whether we interpret those
definitions through a definition of the term “subject to
regulation,” revising the numerical thresholds, or revising other
terms in those definitions.  Accordingly, our action should be
understood as interpreting any one of those terms.

We are adopting definitions ofchoosing the term “subject to
regulation” to implementinterpret and codify the tailoring approach
because that will

facilitate rapid adoption and implementation of the final rules by
states.  Under this approach, states may not need to undertake a
regulatory or legislative action before implementing the finl rule.
These states would be able to establish their interpretations of the
term interpretation of “subject to regulation” used in existing
state rules before January 2, 2011, which is the date that the LDVR and
permitting requirements would take effect, and thereby exempt sources
below the threshold from PSD and title V as a matter of both federal and
state law.  We are also codifying in this definition EPA interpretations
discussedfinalizing this definition consistent with our statements in
our recent action “Reconsideration of Interpretation of Regulations
that Determine Pollutants Covered by Clean Air Act Permitting
Programs” (75 FR 17704) to provide a complete picture of the
meaningbetter inform readers of our existing interpretation of this
phrase as it applies to all air pollutants.  States may not need to
undertake a regulatory or legislative action before implementing the
final rule.

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

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

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

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

E.  Other Actions and Issues

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

1.  Timing for Permit Streamlining Techniques

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

As a result, we fully intend to move forward expeditiously with
developing streamlining approaches.  However, for reasons discussed in
section V.E, we do not expect to develop and implement any of these
approaches before Stepstep 2 begins.  Moreover, we generally expect that
each of the first three – which are the most far-reaching -- will take
several years to implement because we will need to undertake notice and
comment rulemaking to develop them, and then the permitting authorities
will need to adopt them through the appropriate state or local
processes.  We commit to explore a wide range of possible approaches
before the Stepstep 3 rulemaking, and, in that rulemaking, to propose
those that we think may be viable once we have had time to gather and
review key supporting data, and once the states and we have key
implementation experience that can inform our thinking.  Because the
streamlining approaches generally carry uncertainty - as demonstrated by
comments we received raising legal and policy concerns, as discussed
later, that we will have to address -- we cannot commit with this action
to adopt any streamlining actions in particular, nor to adopting them on
any particular schedule.  However, we intend to pursue streamlining
options as expeditiously as possible, beginning immediately and
proceeding throughout the phase-in period, and we encourage permitting
authorities to do the same.

2.  Guidance for BACTBest Available Control Technology Determinations

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

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

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

4.  Transitional Issues Includingincluding Requests for Grandfathering

For reasons explained in section V.E, EPA has determined that
transitional issues for pending applications and permitted sources are
adequately addressed by existing requirements and the amount of lead
time provided before permitting requirements apply to GHGs under this
rule and the March 29, 2010 final action regarding the Interpretive
memo.  This rule does not contain any additional exemptions or
grandfathering provisions addressing the transition to PSD and title V
permitting for GHGs.

We are not promulgating an exemption for PSD permit applications that
are pending when Stepstep 1 of the permitting phase-in begins for those
sources that would otherwise need to obtain a PSD permit based on
emissions of pollutants other than GHGsgreenhouse gases.  Any PSD
permits issued to such Stepstep 1 sources on or after January 2,
20112010 will need to address GHGs.  This action makes no change to the
position we expressed on this issue on April 2, 2010.

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

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

The title V permitting regulations already include a robust set of
provisions to address the incorporation of new applicable requirements
and other transitional considerations.  A title V source applying for
the first time must submit its permit application within 12 months after
the source becomes subject to the operating permit program or an earlier
time at the discretion of the permitting authority.  Where a source is
required to obtain a PSD permit, the source must apply for a title V
permit or permit revision within 12 months of commencing operation or on
or before such earlier date as the permitting authority may establish.
Where additional applicable requirements become applicable to a source
after it submits its permit application, but prior to release of a draft
permit, the source is obligated to supplement its application.
Permitting authorities may also ask for additional information during
the processing of an application.  In addition, where a source that
already has a title V permit becomes subject to additional applicable
requirements, the permitting authority is required to reopen the permit
to add those applicable requirements if the permit term has 3 or more
years remaining and the applicable requirements will be in effect prior
to the date the permit is due to expire.

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

In this section, we describe the legal and policy rationale for our
action, including our rationale for the following:  (1A) our approach to
calculating GHG emissions for PSD and title V applicability purposes,
(2B) our approach to establishing the thresholds and timing of PSD and
title V applicability to GHG emissions sources; (3C) how state, local,
and tribal area programs adopt the final GHG applicability thresholds;
(4D) treatment of GHGs for title V permit fees; (5E) future activities,
including streamlining actions.  We present the rationale description in
the following five subsections later, corresponding to the basic
presentation of the approach in section IV.

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

1.   Grouping of GHGs into a Single Pollutant

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

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

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

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

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

74 FR 55,329 col. 1.

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

A minority of the comments on our proposal addressed this issue.  Some
commenters supported combining the individual GHGs as one pollutant for
purposes of determining permitting applicability, and stated that it is
not uncommon for EPA to recognize “collective”‘collective’ air
pollutants comprised of many individual compounds based upon shared
threats to health and welfare, including such EPA-created group
pollutants as sulfur oxides, nitrogen oxides, volatile organic compounds
(VOCs), and particulate matter (PM).

On the other hand, a significant number of commenters also raised
concerns about grouping the individual GHGs into one metric.  Some of
these commenters argued that grouping GHGs is not appropriate because
GHGs are not like other air pollutants that are comprised of numerous
substances of concern (e.g., VOCs and PM), individual GHGs do not
interact or combine to create a pollutant of concern, and EPA has not
established a “GHG”‘GHG’ NAAQS that supports the definition of
the pollutant as a group.  Some were concerned that regulating the GHGs
as a group would increase the likelihood that a source will trigger
permitting requirements, adding that this is unnecessary and would
conflict with the “absurd results” and “administrative
necessity” doctrines because it would lead to larger numbers of
sources becoming subject to permitting.  Some commenters opposing
grouping suggested that we should explore regulating each of the GHG
pollutants on an individual mass basis rather than collectively because
in their view, it is reasonable and feasible to regulate and control
emissions of each of the listed pollutants, other than CO2carbon
dioxide, at the 100/250 tpy thresholds, or less if deemed necessary, in
accordance with the established mechanisms of the Act and doing so would
lead to a better environmental result.  Finally, some commenters argued
that disaggregating the pollutants would also allow for more appropriate
technology review.

	After considering these comments, and taking into account other related
actions that have occurred since proposal, we have determined that PSD
and title V permitting program requirements will apply, as proposed, to
the “single air pollutant that is comprised of the group of six
GHGs.”  74 FR 55,329, col. 1.  We believe that this approach is both
compelled by the statute and reflects the preferable policy approach.

As more fully discussed elsewhere in this rulemaking, the PSD
requirements apply to a “major emitting facility” that undertakes
construction or “modification.”  CAA sections section 165(a), 169
(2)(C).  The term “major emitting facility” is defined as, in
general, a source that emits 100 or 250 tons of “any air pollutant,”
CAA section 169(1), and, similarly, the term “modification” is
defined as a physical or operational change that results in the
increased or new emissions of “any air pollutant.”  CAA sections
169(2)(C), 111(a)(4).  Through regulation, we have interpreted the term
“any air pollutant,” as found in both the terms “major emitting
facility” and “modification,” more narrowly to mean any
“regulated NSR pollutant,” and we further define this term to
include any pollutant that is “subject to regulation under the Act.”
 40 CFR 52.21(b)(50)(iv), 52.21.(b)(2).

Similarly, as discussed elsewhere, the title V requirements apply to a
“major source,” which is defined, in general, as any source that
emits at least 100 tpy of “any air pollutant.”  CAA sections§§
502(a), 501(2)(B), 302(j).  EPA has interpreted the term “any air
pollutant” narrowly so that applies only with respect to air
pollutants that are subject to regulation under the CAA.  Memorandum
from Lydia N. Wegman, Deputy Director, Office of Air Quality Planning
and Standards, U.S. EPA, “Definition of Regulated Air Pollutant for
Purposes of Title V” (Apr. 26, 1993).

Based on these provisions, the key issue for present purposes in
determining whether a source is subject to PSD (because it qualifies as
a major emitting facility that undertakes construction or modification)
or title V is whether the pollutant or pollutants that the source emits
comprise the “air pollutant” that is “subject to regulation”
under the Act.

The phrase “subject to regulation under the Act,” by its terms,
identifies the air pollutant that is subject to PSD and title V as the
same air pollutant that is identified in the regulatory action under
another provision of the Act.  The term is a simple cross-reference.  It
carries no implication that EPA, in identifying the pollutant to which
PSD or title V apply, may redefine the pollutant that is regulated
elsewhere in the Act.  Whatever the pollutant is that is regulated
elsewhere, it is that pollutant to which PSD and title V apply.

Since the time of our proposal, we have finalized both the contribution
finding and the LDVR for GHGs.  The final LDVR for GHGs specifies, in
the rule’s applicability provisions, the air pollutant subject to
control as the aggregate group of the six

GHGs, including CO2, CH4, N2O, SF6, HFCs, and PFCs.   Because it is
this pollutant that is regulated under the LDVR, it is this pollutant to
which PSD and title V apply.  Specifically, the applicability provision
in the LDVR provides a clear reference to the definition of the single
pollutant comprised of the aggregate group of the six well-mixed GHGs,
which makes clear PSD and title V applicability depends on the same
sum-of-six GHG construct.  We must follow this construct of the
aggregate group of the six gases and do not have discretion to interpret
the GHG “‘air pollutant”’ differently for the purposes of PSD or
title V.

This construct of the pollutant as the aggregate group of the six gases
is also consistent with the definition of the air pollutant in the final
contribution finding for GHGs [see 74 FR 66496, 66499, 66536-7 (December
15, 2009)].  There, the Administrator defined the air pollutant as the
“aggregate group of the same six … greenhouse gases,” 74 FR
66536), and these well-mixed GHGsgreenhouse gases are defined to include
CO2, CH4, N2O, SF6, HFCs, and PFCs.

Moreover, even if we had discretion to identify the GHGs air pollutant
differently in the permitting programs than in the LDVR, we believe it
is reasonable to identify the GHGs air pollutant through the sum-of-six
construct for the same reasons why we adopted that definition in the
contribution finding and for additional reasons noted below specific to
the permit programs.  The term “air pollutant” is defined under CAA
section 302(g) as “any air pollution agent or combination of such
agents, including any physical, chemical, biological, radioactive …
substance or matter which is emitted into or otherwise enters the
ambient air.”  Under this definition, EPA has broad discretion to
identify an air pollutant, including, as appropriate, treating a
combination of air pollutant agents as a single air pollutant.  Here, we
think that the six well-mixed gases are appropriately combined into a
single air pollutant because, as noted in the contribution findings,
they share several important attributes:  Each of the six gases: --

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

Is long-lived in the atmosphere after it is emitted;

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

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

See 74 FR 66516-66518.

In addition, treating the six GHGs greenhouse gases as a single air
pollutant is consistent with the actions of international scientific
bodies.  For example, the Intergovernmental Panel on Climate Change
(IPCC) considers in various reports how the six gases drive
human-induced climate change and how that affects health, society, and
the environment.  Similarly, the United Nations Framework Convention on
Climate Change (UNFCCC) requires reporting of these six gases and the
commitments under the UNFCCC and Kyoto Protocol are based on the
combined emissions of these six gases.  Finally, as discussed later, it
is standard practice to compute the “carbon dioxide (CO2)
equivalency” of aggregate emissions using GWP.

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

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

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

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

2.  Identifying Which GHGs are Included in the Group

As discussed previously, we proposed to include the combination of six
well-mixed GHGs as the air pollutant that triggers PSD and title V
applicability:  CO2, CH4, N2O, SF6, HFCs, and PFCs.  Some commenters
supported including all six.  They cite the proposed contribution
findings that identify the pollutant through the sum-of-six construct,
and they emphasize that EPA, in order to protect the public, has to
control all the GHGs greenhouse gases it has regulated and reduce the
overall impact of the mix of six GHGsgreenhouse gases.

However, a substantial number of commenters, mainly from industry
sectors who also disagree with grouping the GHGs together, contend that
only the constituent gases that are actually subject to controls under
the LDVR should be included in determining applicability under the
Tailoring Rule.  Some of these commenters believe that only the three
compounds (CO2, CH4, N2O) for which the LDVR contains emissions
standards or caps should be considered in the GHG metric for permitting,
while others would also add HFCs (which are included in a credit
flexibility arrangement under the LDVR) for a total of four GHGs.  These
commenters argued that PSD is not triggered for all six GHGs by the LDVR
because under the proposed PSD interpretation in the Interpretive
Memo“EPA’s Interpretation of Regulations that Determine Pollutants
Covered by Federal Prevention of Significant Deterioration (PSD) Permit
Program”, actual emission controls under the Act are required to
trigger PSD obligations for a given pollutant.  They also argue that
including all six would conflict with EPA’s rationale for the
Tailoring Rule by leading to larger numbers of sources subject to
permitting, thereby increasing the harm that EPA says it wants to avoid.
 They further assert that the EPA cannot exercise its discretion to
widen the scope of PSD and title V applicability to six GHGs when it is
relying on the judicial doctrines of “absurd results” and
“administrative necessity” to narrow PSD and title V applicability.
They explain that in their view, those doctrines apply only when EPA has
taken all steps possible to narrow the scope of PSD and title V and
thereby avoid the administrative problems that force it to rely on those
doctrines.

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

	We disagree with commenters who suggest that because the LDVR actually
reduces only four of the six GHGs, EPA may apply PSD and title V to only
those four GHGs.  It is true that the LDVR standard for the single air
pollutant that is comprised of the aggregate of six GHGs consists of
individual standards for only four particular constituents of the single
air pollutant – which are emissions limits or caps for three GHGs
(CO2, CH4, and N2O) and an emission crediting option for one GHG (HFCs)
– but this does not dictate that only those four compounds are subject
to regulation for permitting purposes.  Although the LDVR results in
reductions only with respect to four specific GHGs, as a legal matter
the LDVR standard covers the entire set of GHGs that as a class are the
single “air pollutant” in the contribution finding.  Similar to our
rationale for addressing the group of six GHGs as one pollutant for PSD
and title V applicability purposes, we must adhere to the definition of
applicability, cited previously, in the final LDVR for GHGs and include
CO2, CH4, N2O, SF6, HFCs, and PFCs.  We do not have discretion to select
only a subset of these gases in defining our GHG threshold metric for
the permitting applicability purposes.  See LDVR, May 7April 1, 2010, 75
FR 25398-99, section I Preamble, II.A.2.c., pp 153-4 (discussing EPA’s
exercise of discretion under section 202(a) in setting emissions
standards applicable to emission of the single air pollutant).  [April
1, 2010 Preamble, II.A.2.c, pp 153-4.]

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

We also disagree with commenters who suggested that including all six
GHGs in determining permitting applicability would conflict with our
“absurd results” and “administrative necessity” rationale for
the phase-in periods and applicability thresholds for GHGs.  Even if we
did have discretion to identify the air pollutant for PSD and title V
purposes as consisting of only four of the six well-mixed GHGs, we do
not believe that doing so would have any meaningful impact on the
administrative burdens that are at the heart of our reliance on the
“absurb results” and “administrative necessity” doctrines.  The
number of additional permitting actions and amount of additional
permitting burden resulting from including all six GHGs, rather than
four, is minimal.  This is because the administrative burden of GHG
permitting is dominated by CO2 and CH4 emission sources.  For example,
with a major source threshold set at 100,000 tpy CO2e, the combined
population of sources that would be major for N2O, HFCs, PFCs, and SF6
accounts for fewer than two percent of the GHG sources that would remain
covered.

For similar reasons, we disagree with commenters who specifically
suggest SF6 emissions should not be included in the applicability metric
for GHGs.  As we have stated earlier in this section, our selection of
the GHG metric is driven by the definition of the “air pollutant” as
defined in the LDVR, and in consideration of the final GHG endangerment
finding.  SF6 is specifically included as one of the “well-mixed
greenhouse gases” in the definition of air pollutant in the
contribution finding, and is included in the definition of the air
pollutant in the LDVR for which that rule is applicable.  We do not
believe we have the discretion to define the “air pollutant”
differently for PSD and title V applicability purposes than the
definition of the “air pollutant” that is regulated elsewhere.  In
any event, including SF6 emissions based on the thresholds finalized in
this rulemaking does not add an excessive administrative burden for
permitting authorities.  Based on our threshold evaluation study, we
estimate that less than 40 sources of SF6 nationwide would exceed the
100,000 tpy CO2e threshold.  Furthermore, SF6 is a high GWP gas and, as
discussed elsewhere, we have included a mass-based trigger for high GWP
gases that will likely have the effect of further reducing this count.

For the same reasons, we disagree with the commenters who suggest we
include black carbon and other short-lived climate forcers to the list
of GHGs, and well as commenters asking for an exclusion of CH4 and N2O.
The definition of the air pollutant, as cited in the LDVR, includes CH4
and N2O and does not include black carbon or other short-lived gases.

3.  Use of GWP vs. Mass-Basedmass-based GHG Thresholdsthresholds

For the reasons discussed previously, we are determining permit program
applicability based on the sum-of-six well-mixed gases that comprise the
GHG air pollutant.  This section discusses our use of both the CO2e
metric and mass emissions of the GHGs for applicability purposes.

Under our proposal, a source’s emissions of all six GHGs would be
combined into a single metric by multiplying the mass of each individual
GHG (in tpy) by its GWP value, and summing these products to determine
the total emissions of the GHG pollutant in tpy CO2e.  We received
comments on this aspect of the proposed metric.  Several commenters
explicitly support the use of GWP and the CO2e metric for GHG emissions.
 These commenters believe EPA has the authority to select an appropriate
metric to measure GHGs in the PSD program, and policy considerations
support the choice of GWP.  Some of them note that GWP is a widely-used
metric which employs internationally-recognized conversion factors to
compare GHGs based upon their climate properties, and some add that
states and local areas that have climate action plans for GHG reductions
use CO2e.  Some of these commenters believe this metric will ensure a
standard measure across all permitting agencies and will lead to a more
effective system for permitting authorities and create more
opportunities to reduce emissions over the full class of GHGs, rather
than focusing on reducing individual GHGs.

On the other hand, some commenters oppose the use of GWP and CO2e,
believing that thresholds should be based on individual mass-based
emissions for each GHG.  Some of these commenters felt that EPA has no
discretion to ignore the metric for regulation established by Congress
for PSD in section 169 of the Act.  Some commenters were also concerned
that the use of CO2e will complicate the implementation of BACT because
sources that trigger PSD will be required to install BACT for each
regulated pollutant, not for CO2e.  As a result, a source that exceeds
the threshold primarily due to its CO2 emissions would be forced to
install BACT for all other individual GHGs, regardless of how minor
those other emissions may be.  Finally, a commenter was concerned that
use of GWP would complicate implementation because GWP values can
sometimes change.

In our proposal preamble discussion of GHG metric, EPA also raised the
possibility of including a limitation in the metric to address the
prospect (expected to occur only rarely) that high-GWP gases could be
emitted in quantities less than statutory thresholds for PSD and title V
but nevertheless exceed the proposed thresholds in terms of CO2e.  Most
commenters on this subject support a dual threshold under which a source
would be subject to title V or PSD only if its GHG emissions exceeded
both the statutory thresholds on an actual tonnage basis and the
tailored thresholds on a CO2e basis.  Commenters supporting this
approach felt that it would be unlawful to apply PSD when GHGs are below
the statutory thresholds, or when there is not a net emissions increase.
 Others added that the complexity of accounting for emissions according
to both mass and GWP should be manageable and is not a reason to ignore
the role of mass–based emission rates in determining the applicability
of PSD requirements.  Additionally, one commenter observed that a dual
threshold is consistent with phasing in the Tailoring Rule and is an
effective way to address the current uncertainty surrounding how to
measure high-GWP gases such as SF6.  In contrast, a few commenters
stated they do not support a dual threshold, primarily on the grounds
that there is no benefit to the added complexity.

After considering these comments, we have decided to adopt applicability
thresholds in the final rule based on a CO2e metric for the sum-of-six
well-mixed gases, and also to adopt an additional mass-based threshold
for the sum-of-six gases as discussed in the proposal.  First, as
discussed in the previous section, we have explained why the appropriate
pollutant for PSD purposes is the single pollutant GHG, which is
composed of the six well-mixed gasses.  Regarding the CO2e metric, we
continue to believe there are a number of advantages, as laid out in the
proposal, to a CO2e measure that would not be available if we used only
a mass-based metric.  These include:  (1) a CO2e metric, by
incorporating the GWP values, best addresses the relevant environmental
endpoint, which is radiative forcing of the GHGs emitted; (2) when
combined with a sum-of-six gases approach, the CO2e metric best allows
for consideration of their combined effects when sources emit any one or
combination of the six well-mixed GHGs; (3) a cumulative CO2e metric is