promulgation of the LDV Rule or on the effective date of the LDV Rule
when the provisions of the rule are incorporated into the CFR.

Under the LDV Rule, the standards for GHG emissions are not operative
until the 2012 model year, which may begin as early as January 2, 2012.
In accordance with the requirements of Title II of the CAA and
associated regulations, vehicle manufacturers may not introduce a model
year 2012 vehicle into commerce without a model year 2012 certificate of
conformity.  CAA Section 203(a)(1).  A model year 2012 certificate only
applies to vehicles produced during that model year, and the model year
production period may begin no earlier than January 2, 2011.  See CAA
section 202(b)(3)(A) and implementing regulations at 40 CFR 85.2302
through 85.2305.  Thus a vehicle manufacturer may not introduce a model
year 2012 vehicle into commerce prior to January 2, 2011

There will be no controls or limitations on GHG emissions from model
year 2011 vehicles.  The obligation on an automaker for a model year
2012 vehicle would be to have a certificate of conformity showing
compliance with the emissions standards for GHGs when the vehicle is
introduced into commerce, which can occur on or after January 2, 2011.
Therefore the controls on GHG emissions in the Light Duty Rule will not
take effect until the first date when a 2012 model year vehicle may be
introduced into commerce.  In other words, the compliance obligation
under the LDV Rule does not occur until a manufacturer may introduce
into commerce vehicles that are required to comply with GHG standards,
which will begin with MY 2012 and will not occur before January 2, 2011.
 Since section 203(a)(1) of the CAA prohibits manufacturers from
introducing a new motor vehicle into commerce unless the vehicle is
covered by an EPA-issued certificate of conformity for the appropriate
model year, as of January 2, 2011, manufacturers will be precluded from
introducing into commence any model year 2012 vehicle that has not been
certified to meet the applicable standards for GHGs.

This interpretation of when the GHG controls in the LDV Rule take
effect, and therefore, make GHGs subject to regulation under the Act for
PSD purposes, is consistent with the statutory language in section
202(a)(2) of the CAA.  This section provides that “any regulation
prescribed under paragraph (1) of this subsection (and any revision
thereof) shall take effect after such period as the Administrator finds
necessary to permit the development and application of the requisite
technology, giving appropriate consideration to the cost of compliance
within such period.”  See 42 U.S.C. 7521(a)(2) (emphasis added).  The
final LDV Rule will apply to model years 2012 through 2016.  The time
leading up to the introduction of model year 2012 is the time that EPA
“finds necessary to permit the development and application of the
requisite technology, giving appropriate consideration to the cost of
compliance within such period.”  Model year 2012 is therefore when the
GHG standards in the rule “take effect.”

	EPA does not agree with several commenters who have suggested that the
GHG standards in the proposed LDV Rule would not take effect until
October 1, 2011.  The latter date appears to be based on how the
National Highway Traffic Safety Administration (NHTSA) determines the
beginning of the 2012 model year under the Energy Policy and
Conservation Act (EPCA).  Under EPCA, a more stringent CAFE standard
must be prescribed by NHTSA at least 18 months before the beginning of
the model year.  For purposes of this EPCA provision, NHTSA has
historically construed the beginning of the model year to be October 1
of the preceding calendar year.  See 49 U.S.C. §32902(g)(2); 74 FR
49454, 49644 n.447 (Sep. 28, 2009).  Although EPA has endeavored to
harmonize its section 202(a) standards with the NHTSA CAFE standards,
EPA’s standards are promulgated under distinct legal authority in the
CAA.  Thus, the section 202(a) standards promulgated in the LDV Rule are
not subject to EPCA or NHTSA’s interpretation of when a model year
begins for purposes of EPCA.  Under EPA’s planned LDV regulations,
model year 2012 vehicles may be introduced into commerce as early as
January 2, 2011.  Although as a practical matter, some U.S. automakers
may not begin introducing model year 2012 vehicles into commerce until
later in 2011, they may nevertheless do so as early as January 2, 2011
under EPA’s regulations.  Consistent with the discussion above, EPA
construes the phrase “subject to regulation” in section 165(a)(4)
and 169(3) of the Act to mean that the BACT requirement applies when
controls on a pollutant first apply to a regulated activity, and not the
point at which an entity first engages in the regulated activity.  In
this instance, the regulated activity is the introduction of model year
2012 vehicles into commerce.  As of January 2, 2011, a manufacturer may
not engage in this activity without complying with the applicable GHG
standards.

Likewise, EPA does not agree with commenters who argued that EPA should
not consider the GHG controls in the LDV Rule to take effect until
automakers have to demonstrate compliance with the fleet average
standards at the end of the model year, based on actual vehicle model
production.  As discussed above, the LDV Rule includes both fleet
average standards and vehicle standards that apply to individual
vehicles throughout their useful lives, and both of these standards for
GHG emissions are operative on model year 2012 vehicles introduced into
commerce on or after January 2, 2011.  Thus, controls on GHG emissions
from automobiles will take effect prior to the date that a manufacturer
must demonstrate compliance with the fleet average standards.  The fact
that the manufacturer demonstrates final compliance with the fleet
average at a later date, based on production for the entire year, does
not change the fact that their conduct was controlled by both the fleet
average and the vehicle standards, and subject to regulation, prior to
that date.

With regard to the comment suggesting that EPA rely on the doctrines of
administrative necessity and absurd results to delay PSD implementation
for GHG emissions beyond January 2, 2011, EPA has proposed to apply
these doctrines in a separate EPA rulemaking, known as the Tailoring
Rule, to at least temporarily limit the scope of GHG sources covered by
the PSD program to ensure that permitting authorities can effectively
implement it.  EPA will be taking additional action in the near future
in the context of that rule to address GHG-specific circumstances that
will exist beyond January 2, 2011.

In addition to the specific comments regarding PSD applicability for
GHGs based on finalization of the proposed LDV Rule, we also received
general comments arguing that a pollutant does not become “subject to
regulation” until the date when a source must certify compliance with
regulatory requirements or submit a compliance report.  For the same
reasons as provided in response to specific comments addressing the LDV
Rule compliance demonstrations – namely the delay between the
demonstration and the requirement to operate the underlying control or
restrict the regulated activity – EPA declines to adopt this general
interpretation.  Likewise, EPA does not agree with general comments
suggesting that EPA determine that a pollutant does not become subject
to regulation until the time that an individual source engages in the
regulated activity.  EPA does not believe such a reading is consistent
with the “subject to regulation” language in the CAA.  Even if no
source is actually engaged in the activity, once a standard or control
requirement has taken effect, no source may engage in the regulated
activity without complying with the standard.  At this point, the
regulated activity and the emissions from that activity are controlled
or restricted, thus being subject to regulation within the common
meaning of the term regulation used in EPA’s regulations and section
165(a)(4) and 169(3) of the CAA.

Comment:

One commenter (0091) states that for the proposed LDVR, an
interpretation of timing of PSD requirements could be the full
implementation date (or the date controls must be in place and
operation), which would extend the PSD applicability date by 15 to 19
months.  For the NSPS for GHG emissions triggering PSD applicability, an
interpretation of the full implementation date could extend the PSD
applicability date by several years.

Response:

Insofar as the commenter requests that EPA adopt an interpretation which
applies PSD requirements on the “full implementation date” of the
underlying control regulation,  we believe this interpretation is
substantively identical to the interpretation using the “takes
effect” PSD implementation date that we are adopting in this final
action.  However, as described above, we have identified that date as
January 2, 2011, or a similar date applicable under the final LDV Rule,
which is less than the 15 to 19 months extension of applicability stated
in the comment.  To the extent that timeframe is based upon a
misunderstanding of the LDV Rule applicability or the reliance on some
other applicability event, we direct the commenter to our response
provided to similar comments above.  As for the comment that an NSPS for
GHG emissions would delay PSD implementation for several years, we find
no reason that an NSPS would produce such a delay in PSD applicability.
As we have explained in section 8.3, we find the NSPS effective date and
takes effect date to be functionally equivalent such that PSD
requirements for a pollutant covered by an NSPS would apply once such a
standard takes effect and precludes operation of any stationary source
in violation of the standard.

Comment:

  SEQ CHAPTER \h \r 1 One commenter (0104) agrees with EPA that the term
“subject to regulation” in the CAA and corresponding regulations is
most naturally interpreted to mean that PSD requirements apply when the
regulations addressing a particular pollutant become final and
effective.  According to the commenter, neither the effective date, nor
the promulgation date, are the appropriate interpretations for the term
“subject to regulation.”  From the commenter’s perspective,
regulations are final and effective at such time when all legal
challenges to a proposed regulation have been exhausted through the
court system.

  SEQ CHAPTER \h \r 1

Response:

EPA rejects the argument that a pollutant does not become “subject to
regulation” until all legal challenges to the underlying control
regulation for that pollutant have been exhausted.  The commenter does
not provide (and EPA is not aware of) any legal authority or past agency
guidance that would require such an interpretation, and we find it
inconsistent with the actual control interpretation we are upholding in
this action.  We also note such an interpretation would add uncertainty
with regard to the timing of PSD applicability for new pollutants.
There is no way of knowing whether an underlying regulatory requirement
to control a new pollutant will be the subject of a legal challenge, and
even if such a regulation were challenged, the length of time that would
be necessary to resolve the case is also unknown.  Challenges to agency
regulations can take months, if not years, to be “exhausted” by the
courts based on a variety of issues, including the complexity of the
arguments in the case and whether additional appeals are sought,
including Supreme Court review.  Under the interpretation suggested in
the comment, even if the underlying control regulation where upheld on
appeal, the applicability of PSD requirements for the new pollutant
subject to that requirement could be delayed until many years after
those emissions have been controlled under other CAA programs.  Not only
would such an interpretation have the perverse effect of encouraging
legal challenges to control requirements in other CAA programs in order
to delay or avoid application of PSD requirements for stationary
sources, but it is inconsistent with the policy grounds EPA has
articulated in upholding the actual control interpretation, namely
orderly administration of the PSD program following considered judgment
by Congress or EPA that a particular pollutant should be subject to
control requirements.  Accordingly, EPA declines to adopt an
interpretation of PSD applicability timing which is determined by the
possibility of a legal challenge to the underlying control regulation.

9.3.   Need More Time Before PSD/Title V Applies to GHGs

In addition to providing specific comments on the appropriate
interpretation of “subject to regulation” as it relates to the
actual date by which PSD permitting requirements will be triggered, many
comments also expressed a general need for more time before PSD
permitting requirements are triggered for GHGs and specifically set-out
what they believe the appropriate time should be.

9.3.1.   Impacts from GHG Regulation Support Actual Control
Interpretation

One commerce commenter (0074) asserts that the most important
policy-based reason against the trigger of PSD by other interpretations
set out in the proposal is the impact those interpretations would on the
millions of small and medium-sized stationary sources that surpass the
statutory “major source” threshold for GHGs (cited U.S Chamber of
Commerce statistics under a report entitled “A Regulatory Burden:  The
Compliance Dimension of Regulating CO2 as a Pollutant”).  Even with
the proposed Tailoring Rule (which they opine rests on shaky legal
ground), tens of thousands of entities will become exposed to PSD (cites
statistics set out in the Tailoring Rule proposal preamble).

Another commenter (0080) states that the necessity of adopting the
proposed interpretation is emphasized by the very large number of small
emitting sources who could otherwise be required to control CO2
emissions.

One industry commenter (0112) believes that EPA’s “actual control”
interpretation is necessary to avoid the premature and ill-considered
application of PSD requirements to sources in the commenter’s industry
that would result under the other interpretations under EPA
consideration.  The commenter adds that their process (semiconductor
manufacturing) is far more complex than those traditionally regulated
under the PSD permit program and further, new manufacturing processes
are typically introduced every two years with expansions or upgrades in
between to respond to changing market conditions or resolve process
problems.    SEQ CHAPTER \h \r 1 Because frequent permitting actions
would impede their ability to make needed changes at the times necessary
to meet market demand, the commenter’s company has invested
considerable money and effort over the years through design for the
environment (DfE) and other programs to eliminate or minimize criteria
pollutant emissions and keep our emissions below PSD/NSR and title V
permitting thresholds.  As a result, emissions of criteria pollutants
from this commenter’s facilities have held steady or in some cases
declined over the years in spite of substantial growth in manufacturing
capacity during that time.  The commenter states that EPA’s current
“actual control” interpretation is therefore necessary to avoid
“blindsiding” sources like theirs with unforeseen PSD requirements
for GHG emissions and reversing years of planning and extensive
resources devoted to managing regulatory obligations.

  SEQ CHAPTER \h \r 1 Two commenters (0115, 0116) representing industry
and a state chamber of commerce (both from South Carolina), do not
believe it is proper for the EPA to attempt to regulate GHGs under the
CAA with respect to either the PSD or the title V programs; however, for
the purposes of responding to EPA’s request for comments on the
various options for when a pollutant can become “subject to
regulation,” they encourage EPA to maintain the interpretation that
PSD permitting requirements would be triggered only when an EPA rule is
promulgated requiring control of emissions of a pollutant in the form of
a final national rule.    SEQ CHAPTER \h \r 1 These commenters (0115,
0116) believe the other interpretations suffer from multiple flaws.
Specifically, the commenters feel that EPA has grossly underestimated
the number and types of facilities that will be impacted by the LDVR
standards proposal by becoming subject to NSR pollutants and the Title V
and NSR/PSD permitting requirements.  The commenters note that their
state agency has identified over 800 of the currently permitted small
sources that would subject to title V and NSR permitting as soon as GHGs
are regulated under LDVR Standards as compared to 281 title V currently
permitted facilities.  In addition to this impact, the commenters
contend that even the smallest modification or expansion activity may
trigger a PSD technology review and modeling analysis.  The technology
review would encompass all of the triggered NSR pollutants, not just
GHG.  Economically, these facilities would have no choice but to abandon
any new project or modification.

One commenter  SEQ CHAPTER \h \r 1  (0100) representing industry claims
that the PSD Interpretive Rule Reconsideration proposal demonstrates
that the “actual control interpretation” is insufficient because
(according to the commenter) even with it in place, EPA had to do
substantial rewriting of the CAA in order to allow it to proceed with an
endangerment finding and the car rules without causing even more
problems under the PSD program.  The   SEQ CHAPTER \h \r 1 commenter
(0100) contends that at a minimum, EPA should endorse the meaning of
“subject to regulation” that best forestalls “absurd results.”
However, the commenter states that if EPA were to proceed, it should do
so as slowly as possible by forestalling as long as possible the
conclusion that GHGs have become “subject to regulation.”  Of the
ranges of timing possibilities laid out in the proposal, this commenter
believes the “actual control interpretation” currently favored by
EPA is “the least of these evils,” but believes that EPA could do
better.

One state/local agency association (0058) states that if EPA adopts any
of the alternatives to the actual control interpretation, the results
would be disastrous because PSD and title V would already be applicable
throughout the nation for GHGs.  The commenter (0058) cites EPA’s
estimates of the permitting burden absent the Tailoring Rule and states
that it is unreasonable to assume that state and local permitting
agencies could absorb such an increase in workload.  The commenter
(0058) concludes that EPA needs to adopt an interpretation which would
avoid this result by allowing sufficient time to implement federal and
local mechanisms to scale down this anticipated workload to something
both more reasonable and manageable.

One state agency commenter (0077) believes that EPA has provided sound
policy and practical reasons for the actual control interpretation.  The
commenter (0077) states that were EPA to adopt any of the alternative
interpretations, it would unleash a hasty, inefficient, and
unpredictable sequence of events that would impose impossible
administrative burdens on state and local permitting authorities
nationwide, and especially in California (the commenter’s state).  The
commenter adds that EPA’s legal rationale for the actual control
interpretation is reasonable in light of the EAB’s Deseret ruling, and
should withstand legal scrutiny.

One industry group (0063) commenter states that it is imperative that
EPA adopt the interpretation contained in the “Actual Control”
Memorandum, as amended, to provide that a pollutant does not become
“subject to regulation” under the PSD program until a regulation
actually controlling that pollutant takes effect through compliance at
applicable sources.  This commenter explains that exposing natural gas
pipelines to PSD permitting for GHGs would disrupt project schedules and
their underlying commercial, legal, financial, engineering and
operational arrangements.  Prevention of Significant Deterioration
permits for critical gas pipeline projects could be delayed by a year or
more as state permitting authorities struggle with an influx of new PSD
applications.

Response:

For the reasons discussed in Chapter 3 of this RTC, EPA is continuing to
apply the “actual control” interpretation.  EPA addresses the
broader concerns with regard to incorporating GHGs into the PSD program
in the following response.

9.3.2.   Implementation Concerns Warrant More Time

Comments:

Several commenters, including many representing state and local
agencies, (0054, 0056, 0058, 0064, 0083, 0089, 0091, 0102, 0108, 0109,
0112) generally express the need for more time before PSD and/or title V
permitting requirements are triggered for “regulated
pollutants”/GHGs.

A local agency commenter (0054) supports EPA’s preferred option under
normal circumstances when EPA is considering the adoption of emissions
standards for pollutants for which EPA has adopted a NAAQS under CAA
section 108 or a standard under section 112.  However, this commenter
questions the triggering of PSD (and title V) permitting requirements at
the time of EPA’s promulgation of emissions standards for GHG for
mobile sources, anticipated for about March 30, 2010.  According to this
commenter, the impact of such a triggering will be overwhelming with
little, if any, environmental benefits, stating that permitting agencies
will be inundated with permit responsibilities, industries will be faced
with significant delays in permit processing, and the lack of effective
controls will make the BACT determination process fraught with legal
challenges.

This state and local agency commenter (0054) states that they are not
confident that the EPA’s tailoring rule will succeed in avoiding the
burden that it aims to avoid, especially in SIP-approved states, which
will need up to two years to change state definitions for major sources.
 This commenter suggests that EPA find a legally-defensible method to
defer for at least two years, or even to totally exempt, the triggering
of PSD and title V requirements for stationary sources of CO2 until such
time as is necessary for Congress to address the issue.

One industry commenter (0056) submits that there are many significant
logistical and other policy reasons for delaying the applicability of
PSD to GHGs.  The commenter’s industry members report that there is a
critical difference to the successful implementation of the PSD
regulations for GHGs between a finding that PSD is applicable to GHGs on
the “first substantive compliance date of a regulation” and a
finding that is applicable on the “effective date” of regulation.
The commenter asserts that the proposed “PSD and Title V Tailoring
Rule” is based on avoiding some of the impacts on businesses, a goal
that could be achieved by adopting a trigger date that delays these
impacts through reasonable interpretation of the CAA.

Two state/local agency associations (0058, 0062) made similar
assertions.  One of these commenters (0062) notes that the proposed
tailoring rule would not modify PSD and Title V programs that are
SIP-approved and argued that states must be provided a sufficient
opportunity to modify those state programs under applicable state laws
so that they will be consistent with EPA’s final tailoring rule;
otherwise, there is a substantial risk that the overwhelming number of
permitting actions forecast by EPA will be required.

Two commenters (0056, 0058) request additional time before promulgation.
 One commenter (0056) states that an additional six months to a year and
a half delay in the applicability of PSD to GHGs is necessary for
sources to more adequately address the technical and financial
challenges of controlling their GHG emissions.  One commenter (0058)
requests an additional year.  The commenter (0058) felt EPA may have
significantly underestimated the increased PSD workload resulting from
the promulgation of the proposed Tailoring Rule, especially considering
the workload the commenter has faced with the current PSD regulations.
The commenter (0058) requests that EPA fully examine the effect of
including non-CO2 GHGs in the PSD and title V programs before the
programs become applicable.

Two commenters (0056, 0058) state that additional time for the
implementation of title V to GHG sources will be necessary.  One
commenter (0056) stated that additional time will be necessary as
thousands of sources will be newly subject to title V.  Both commenters
(0056, 0058) assert that states will need additional time to tailor
their administrative and/or statutory requirements for PSD and title V
permitting.

One state/local agency association (0062) states that EPA should
consider adopting different interpretations of the “subject to
regulation” provisions for the title V program as distinct from the
PSD program, as EPA asserted that it could in its implementation of
programs regulating PM2.5.  The commenter (0062) indicates that the
administrative burden and environmental benefit associated with
incorporating GHGs are substantially different in these programs and may
provide a basis for establishing a priority in application of these
programs to GHG emissions. The commenter also suggests that deferring
implementation of the PSD and title V GHG programs until after the GHG
emission reports are received under the new GHG reporting requirements
(i.e., March 2011) will also greatly facilitate implementation of those
programs by state and local permitting authorities.

	Another second state/local agency association (0058) indicates that EPA
may have seriously underestimated the permitting workload associated
with PSD and title V for GHGs, even with the Tailoring Rule, and gave
illustrative estimates from two local agencies in California.
Accordingly, this commenter (0058) believes immediate applicability at
the time the GHG mobile sources regulations are finalized will
overwhelming.  On this basis, the commenter (0058) urges EPA to
establish an effective date for the PSD and title V programs for GHGs at
no earlier than 1 year after the effective date of a rule controlling
GHG emissions under the CAA (i.e. EPA’s motor vehicle rule) and to
postpone applicability for GHGs other than CO2 for at least another
year.  Regarding the latter, the commenter (0058) does not believe EPA
or permitting agencies currently have sufficient information to
accurately assess the impact of and implement a program applicable to
relatively small sources of high global warming potential pollutants.
The commenter asserted that EPA has authority to postpone applicability
of the PSD and title V programs to GHGs, for a limited period of time,
under the same theories as it has proposed to adopt higher interim
thresholds of applicability than that provided by statute: the legal
doctrines of “administrative necessity” and “absurd results.”

Another industry commenter (0064) believes that it is imperative that
EPA give states the time to put in place staff and allocate resources
needed to handle the additional permitting that will be necessary once
GHG emissions are regulated pollutants for PSD purposes and resolve
fundamental programmatic issues such as what constitutes BACT for GHGs.

One state agency commenter (0077) agrees that while EPA has the latitude
to make PSD requirements for GHGs apply on the effective date of the GHG
motor vehicle regulations rather than on its promulgation, EPA should
apply the “absurd results” and “administrative necessity”
doctrines to provide the implementation onset and phase-in periods, and
stated that comments to that effect would be submitted on the Tailoring
Rule proposal.

Another state agency commenter (0102) supports allowing the necessary
time to study and evaluate emissions characteristics and control options
before making a pollutant subject to PSD requirements through
promulgation of control requirements – they assert that this is the
only way meaningful emissions limits and BACT are developed, creating
regulatory certainty and ensuring an enforceable permitting program.
The commenter (0102) also states that individual permit reviews would
take an inordinate amount of time due to the necessity for developing
emissions standards and controls for individual facilities.

Several additional reasons are cited by a state agency commenter (0091)
as to why additional time is needed before implementing PSD and title V
requirements for GHG:

Many existing facilities may be willing to take federally-enforceable
limits to avoid being subject to PSD and title V permitting, citing as
an example the options provided to states by EPA in the early stages of
the title V program for limiting potential to emit of stationary sources
that greatly reduced the number of facilities needing title V permits.
States will need time to process these types of permit applications
before title V and PSD applications are due.

Facilities subject to the Mandatory Reporting of GHG rule will submit
their first annual reports in March 2011.  The commenter asks EPA to
consider delaying any GHG permitting requirements until there is
accurate monitoring and reporting data and states have additional time
(at least one year after March 2011, but preferably 3 years) to assess
the reporting data and plan for any additional permitting needs.  This
data will also be critical for conducting PSD netting analyses and BACT
determinations.

Like many states, the commenter needs time to adjust their regulations
to increase the major source thresholds for Title V and PSD to be
consistent with the Tailoring Rule, if finalized.

Time is needed to create new fee structures more suitable for GHG.  The
state’s current mandatory fee is $43.75 per ton of each “regulated
pollutant” which, without an adjustment to the current state fee
statute, would result in excessive fees applied to hundreds of small
businesses in the state.

Prior to putting in place any new permitting program for CO2 and other
GHG, states will need time to educate and train small and medium size
businesses newly subject to title V and PSD permitting requirements.
EPA also needs time to develop compliance assistance tools.

Regulatory changes in the state require a lengthy stakeholder
involvement process, agency board review and approval, and legislative
approval.  This normally takes about 18 months.

As a result of significant budget issues over the last 1½ years, their
state budget has been decreased by over 40%, requiring a reduction in
the number of permitting positions.  Positions are carefully controlled
by a board under the state’s appropriations act, and the creation of
new positions is difficult in tough economic times.

The end result for this commenter (0091) is that their state will not be
ready to implement title V and PSD programs for GHG emissions by March
or May 2010, and strongly urge EPA to explore and find ways to give
states the time they need to plan, prepare, and begin permitting GHG
emissions in an orderly and timely manner.  The commenter believes that
if EPA interprets the PSD applicability date to be triggered by the
promulgation or effective date of the final mobile source GHG tailpipe
standards, many states will be forced to default their permitting
programs to the EPA Regional Offices until state statutes or regulations
are adjusted and more resources can be obtained.

Nine industry commenters (0067, 0081, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that EPA should carefully consider the timeframe in
which it seeks to impose PSD requirements on major stationary sources of
any newly regulated pollutants where actual emission controls may
trigger such requirements and should structure its plans to allow
permitting authorities and sources the maximum time available to prepare
for compliance with any such requirements.  These commenters also state
that the need for flexibility in timing of triggering PSD for GHGs is
critical because major stationary sources need an appropriate period of
time to develop the requisite technologies to meet BACT standards in a
cost-effective way, and the Agency needs time to develop its own
technical capacity and provide guidance to the regulated community and
to states with permitting authority.

One of the industry commenters (0109) believes that in the case of CO2,
having this additional time will be critically important to all
stakeholders involved considering that EPA has expressed concerns about
having adequate time to assess emissions of a pollutant and determine
appropriate controls before PSD and BACT requirements are required for a
pollutant.

This industry commenter (0112) is also concerned that adding a large
number of newly covered sources to the PSD program would create
substantial administrative and resource burdens for state and local air
permit control agencies, which are not staffed to handle such an
exponential increase in workload.  Also, according to the commenter,
there are important unanswered questions that would have to be addressed
by these state and local agencies in issuing PSD permits.  The commenter
cites as an example that EPA’s recently promulgated Mandatory
Reporting of Greenhouse Gases Final Rule did not set recordkeeping and
reporting requirements for PFCs emitted from semiconductor operations
and as such, state and local agencies would be forced to take on this
challenge of defining recordkeeping and reporting requirements on a
case-by-case basis in PSD and title V permits.  Commenter adds that
similarly, the PSD permitting program would require the application of
BACT for GHG emissions and to date, there are few, if any BACT analyses
of GHG emissions.  While recognizing that EPA has proposed some options
to address some of these concerns in the Tailoring Rule, the commenter
believes EPA should for purposes of “administrative necessity” and
avoiding “absurd results,” maintain its current “actual control”
interpretation to allow time to resolve these critical implementation
issues.  Finally, the commenter notes that opportunities their industry
provides for key building blocks for the energy-efficient and
“green” technologies the Administration suggests will launch our
economic recovery and create new jobs could be lost if EPA does not
maintain its current “actual control” interpretation.

Response:

EPA agrees that application of PSD program requirements to GHGs presents
several significant implementation challenges for EPA, states and other
entities that issue permits, and the sources that must obtain permits.
Indeed, many of the public comments summarized above have illustrated
the magnitude of the challenge beyond what is described in the notices
on reconsideration of the PSD Interpretive Memo and the proposed
Tailoring Rule.  In recognition of the substantial challenges associated
with incorporating GHGs into the PSD program, EPA’s preference would
be to establish a specific date when the PSD permitting requirements
initially apply to GHGs based solely on these practical implementation
considerations.  However, EPA has not been persuaded that it has the
authority to proceed in this manner.  While EPA may have discretion as
to the manner and time for regulating GHG emissions under the CAA, once
EPA has determined to regulate a pollutant in some form under the Act
and such regulation is operative on the regulated activity, the terms of
the Act make clear that the PSD program is automatically applicable.
See Alabama Power Co. v. Costle, 636 F.2d 323, 403-406 (C.A.D.C., 1979)
(rejecting arguments that Section 165 should not automatically apply to
all pollutants subject to regulation under the Act.).

Nonetheless, given the substantial magnitude of the PSD implementation
challenges presented by the regulation of GHGs, EPA proposed in the
Tailoring Rule to at least temporarily limit the scope of GHG sources
covered by the PSD program to ensure that permitting authorities can
effectively implement it.  EPA based the proposal primarily on two legal
doctrines:  the “absurd results” doctrine, which we proposed to
apply on the basis that Congress did not envision that the PSD program
would apply to the many small sources that emit GHGs; and the
“administrative necessity” doctrine, which we proposed to apply
because of the extremely large administrative burdens that permitting
authorities would confront in permitting the GHG sources.  In comment on
that action, as well as in comments on the PSD Interpretive Memo
reconsideration notice, EPA received numerous suggestions that it is
necessary to limit the scope of sources covered at the time GHGs become
subject to regulation.  These comments make clear that more time will be
needed beyond January 2, 2011 before permitting of many GHG stationary
sources can begin.  Thus, EPA will be taking additional action in the
near future in the context of the Tailoring Rule to address GHG-specific
circumstances that will exist beyond January 2, 2011.

In addition, to the extent that commenters are specifically arguing that
additional time is necessary for development of guidance regarding
application of PSD requirements, including BACT, to GHG emissions, we
recognize that the BACT process may be more time and resource intensive
when applied to a new pollutant the absence of guidance on control
strategies from EPA and other regulatory agencies. Under a mature PSD
permitting program, successive BACT analyses establish guidelines and
precedents for subsequent BACT determinations.  However, when a new
pollutant is regulated, the first permit applicants and permitting
authorities that are faced with determining BACT for a new pollutant
must invest more time and resources in making an assessment of BACT
under the statutory criteria.  Given the potentially large number of
sources that could be subject to the BACT requirement when EPA regulates
GHGs, the absence of guidance on BACT determinations for GHGs presents a
unique challenge for permit applicants and permitting authorities.  EPA
intends to address this challenge in part by deferring, under the
Tailoring Rule, the applicability of the PSD permitting program for
sources that would become major based solely on GHG emissions.  EPA is
also developing guidance on BACT for GHGs.

In the context of the Tailoring Rule, EPA is considering whether
additional time may therefore be justified for some sources due in part
to the administrative implications that would be caused by an absence of
additional BACT guidance specific to GHGs.  The issuance of further
guidance will assist with, and potentially ease the burden of,
incorporation of GHGs into the existing PSD program, including the BACT
determination process.  We believe that GHG emissions present unique
issues that may not have been previously addressed in Agency guidance
and development of further guidance may be necessary.  Accordingly, EPA
is currently working to develop such guidance and is committed to issue
it in advance of January 2, 2011.  (We also note, however, that our
existing BACT guidance for currently regulated pollutants has addressed
many facets of PSD permitting that will not be unique to its application
to GHG emissions.)  Furthermore, as the comments note, there may be
additional information available in future that could assist in those
determinations.

Nonetheless, for reasons described elsewhere in this document, except
under the rationales that will be discussed in the tailoring rule, the
EPA does not believe that we would have the discretion to delay the
application of BACT for all sources beyond the date that a control
requirement takes effect.  This would be true even if were not
committing to issue guidance, and even though it will initially be
harder to make GHG BACT determinations that will become easier over
time.  Moreover, if the EPA determines in the tailoring rule that some
sources will not be excluded from the BACT requirement as of January 2,
2011, it would not be appropriate to further delay the BACT reductions
for such sources simply because more guidance or experience could be
helpful in applying it.  BACT process is itself designed to determine
the most effective control strategies achievable in each instance,
considering energy, environmental, and economic impacts.

9.3.3.   Provide More Time by Delaying Final Action on the GHG LDV Rule

Comments:

	Three industry commenters (0067, 0073, 0083) indicate that EPA could
address its stated policy goals to have sufficient time to formulate an
efficient approach to GHG stationary source regulation by using its
available discretion to delay final action on the section 202 GHG motor
vehicle regulations rulemaking, thereby putting off the “triggering”
event.  The commenters (0067, 0073, 0083) summarized their
organizations’ prior comments to this effect on the proposed GHG motor
vehicle regulations, and one (0073) attached those comments to this
comment letter.

One commenter (0084) states that Massachusetts v. EPA is clear that EPA
has substantial discretion regarding the timing of issuing rules and,
thus, is under no obligation to issue the LDVR.  Therefore, the
commenter (0084.1) opposes EPA’s attempt to move GHGs into the
category of “actual control” via regulatory action.  The commenter
(0084) believes that finalizing the LDVR will trigger a massive
bureaucratic nightmare that EPA cannot avoid because the Tailoring Rule
rests on flimsy legal foundations.  Instead, the commenter (0084)
believes that EPA should hold all the proposed GHG actions in abeyance
until Congress determines whether it will formulate a new and
appropriate statutory framework for GHG regulations.

	One state agency commenter (0102) states that promulgation of any rules
triggering PSD for GHG (such as the LDVR) should only be pursued after
EPA has comprehensively resolved all issues necessary for states to
implement the GHG control rules, especially issues surrounding proper
BACT review.

	Response:

As discussed elsewhere in this RTC and in the October 7 reconsideration
notice, EPA acknowledges that the final light duty vehicle (LDV) rule,
if finalized to require control of GHG emissions from light duty
vehicles, it will have the effect of triggering PSD requirements for
GHGs  under the interpretation of “subject to regulation” described
in this action.  However, EPA’s present reconsideration action is
merely finalizing the agency’s interpretation of a specific provision
of the PSD rules and is not the proper forum for addressing the issue
raised in the comment.  In this reconsideration action, EPA is not
making any decisions or taking any action with respect to the issuance
of a LDV Rule - the content and timing of the LDV Rule is the subject of
a separate rulemaking action, and that rulemaking is the proper place to
address comments on the timing of any final LDV Rule.  In addition, we
did, in fact, receive similar comments in response to the proposed light
duty vehicle rulemaking.  Thus,  EPA will respond to this issue in the
record for that rule.

9.4.   Identifying the Greenhouse Gases “Subject to Regulation”
Under LDV Rule

Comment:

One commenter (0056) submits for the Tailoring Rule, that regulating GHG
compounds for those compounds that EPA has not yet established an
emission standard would be unreasonable and inconsistent with the
“subject to regulation”/”actual control” test.  In the Mandatory
GHG Reporting rule, the EPA stated that they cannot presently give
guidance to industries with regard to calculating sulfur hexafluoride
(SF6), hydrofluorocarbons (HFC), or perfluorocarbons (PFC) emissions and
deferred mandatory GHG reporting obligations on industries for these
pollutants.  Further, because the EPA has not established or proposed
any “regulation” for SF6, HFC, and PFC, it is difficult to interpret
that the statutory language in the PSD BACT provision or elsewhere is
applicable to these compounds since they are not (and will not be on the
effective date of the LDVR) “subject to regulation.”

	Response:

As identified by the commenter, this issue is specifically addressed in
the Tailoring Rule proposal and will be resolved in EPA’s final action
on that rule, consistent with the regulations contained in the final LDV
Rule.

9.5.   Permit Application Transition

	Comment:

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that EPA also should be prepared to clarify what the
“takes effect” date means, in practical terms, for implementation of
requirements for PSD permit applications.  The commenters believe that
EPA should, for example, confirm that if a PSD permit application is
submitted in complete form before the date on which PSD begins to apply
to a pollutant, then that permit application is not subject to any
requirement to address that pollutant (regardless of the date on which
the submitted permit application is determined to be complete) and that
such an application could not be deemed “incomplete” on the grounds
that it does not address that pollutant.

	Another industry commenter (0067) stated that if EPA determines that
the legal “effective date” of its proposed motor vehicle GHG rule
should be used, then a specific transition period should be adopted that
at least will allow applications submitted prior to the date
Administrator Jackson granted reconsideration of the PSD Interpretive
Memo to be processed without consideration of GHGs.  (The commenter
(0067) notes that another period may be more appropriate and reserved
the right to submit additional comments on this issue as part of the
tailoring rule.)  The commenter (0067) indicates that a similar process
should also be provided for incorporating GHGs into the title V
permitting program.

One industry commenter (0072) requests that if EPA decides to finalize
the interpretations of PSD applicability reflected by the PSD
Interpretive Memo and GHG Tailoring Rule, that EPA make clear that
source owners who have already obtained construction permits for a
proposed stationary source or modification under a SIP-approved
permitting program will not now need to obtain a PSD permit due solely
to their emissions of GHGs, so long as the source owner commences
construction within 18 months from the date when GHGs become subject to
regulation under the CAA or any earlier date as may be required by the
SIP.  This commenter stated that EPA has historically provided clear
relief upon promulgating new requirements under PSD which would cause
facilities that had already applied for or obtained valid permits either
to become subject to PSD for the first time or, if already subject to
PSD, to become subject to new or additional requirements.  Failing to
provide the requested transitional relief would jeopardize the continued
viability of a substantial number of “shovel-ready” construction
projects at a time when the U.S. economy is in crisis and unemployment
rates are high.

	The industry commenters (0067, 0073) similarly indicates that whatever
date is finally established for “actual control,” the requirement to
conduct BACT for GHGs should not attach to projects (1) that have a
completed permit application before the effective date of GHG
regulation, or (2) for which a determination has already been made
before the effective date of GHG regulation that a PSD permit was not
required.

One commenter (0071) suggests that EPA should make clear in the PSD
Interpretive Memo that once a GHG becomes subject to PSD permitting
requirements, those requirements are applied prospectively.

Another commenter (0058) requests that when GHGs become subject to
regulation, EPA allow permitting authorities a chance to adopt a method
of limiting a source’s potential to emit (PTE) (when the source’s
actual emissions are lower than the applicable thresholds) and thus keep
it out of the PSD and title V program, rather than adopt this method
after authorities have begun implementing the title V and PSD.

	Response:

In light of EPA’s conclusion that pollutants become subject to
regulation for PSD purposes when control requirements on that pollutant
take effect and that such requirements will not take effect for GHGs
until January 2, 2011 if EPA finalizes the proposed LDV Rule as
anticipated, EPA does not see any grounds to establish a transition
period for permit applications that are pending before GHGs become
subject to regulation.  As a general matter, permitting and licensing
decisions of regulatory agencies must reflect the law in effect at the
time the agency makes a final determination on a pending application.
See Ziffrin v. United States, 318 U.S. 73, 78 (1943);  State of Alabama
v. EPA, 557 F.2d 1101, 1110 (5th Cir. 1977);  In re: Dominion Energy
Brayton Point, LLC, 12 E.A.D. 490, 614-616 (EAB 2006);  In re Phelps
Dodge Corp., 10 E.A.D. 460, 478 n.10 (EAB 2002).  Thus, in the absence
of an explicit transition or grandfathering provision in the applicable
regulations (and assuming EPA finalizes the LDV Rule as planned), each
PSD permit issued on or after January 2, 2011 would need to contain
provisions that satisfy the PSD requirements that will apply to GHGs as
of that date.

Under certain circumstances, EPA has previously allowed proposed new
major sources and major modifications that have submitted a complete PSD
permit application before a new requirement becomes applicable under PSD
regulations, but have not yet received a final and effective PSD permit,
to continue relying on information already in the application rather
than immediately having to amend applications to demonstrate compliance
with the new PSD requirements.  In such a way, these proposed sources
and modifications were “grandfathered” or exempted from the new PSD
requirements that would otherwise have applied to them.

For example, EPA adopted a grandfathering provision when it changed the
indicator for the particulate matter NAAQS from total suspended
particulate matter (TSP) to particulate matter less than 10 microns
(PM10).  The federal PSD regulations at 40 CFR 52.21(i)(1)(x) provide
that the owners or operators of proposed sources or modifications that
submitted a complete permit application before July 31, 1987, but did
not yet receive the PSD permit, are not required to meet the
requirements for PM10, but could instead satisfy the requirements for
TSP that were previously in effect.

  	In addition, EPA has allowed some grandfathering for permit
applications submitted before the effective date of an amendment to the
PSD regulations establishing new maximum allowable increases in
pollutant concentrations (also known as PSD “increments”).  The
federal PSD regulations at 40 CFR 52.21(i)(10) provide that proposed
sources or modifications that submitted a complete permit application
before the effective date of the increment in the applicable
implementation plan are not required to meet the increment requirements
for PM10, but could instead satisfy the increment requirements for TSP
that were previously in effect.  Also, 40 CFR 52.21(i)(9) provides that
sources or modifications that submitted a complete permit application
before the provisions embodying the maximum allowable increase for
nitrogen oxides (NOx) took effect, but did not yet receive a final and
effective PSD permit, are not required to demonstrate compliance with
the new increment requirements to be eligible to receive the permit.

	Under the particular circumstances presented by the forthcoming
application of PSD requirements to GHGs, EPA does not see a
justification for adopting an explicit grandfathering provision of the
nature described above.  Permit applications submitted prior to the
publication of this notice should in most cases be issued prior to
January 2, 2011 and, thus, effectively have a transition period of nine
months to complete processing before PSD requirements become applicable.
 Additional time for completion of action on applications submitted
prior to the onset of PSD requirements for GHGs therefore does not
appear warranted to ensure a smooth transition and avoid delays for
pending applications.  To the extent any pending permit review cannot
otherwise be completed within the next nine months based on the
requirements for pollutants other than GHGs, it should be feasible for
permitting authorities to begin incorporating GHG considerations into
permit reviews in parallel with the completion of work on other
pollutants without adding any additional delay to permit processing.

Furthermore, the circumstances surrounding the onset of requirements for
GHGs are distinguishable from prior situations where EPA has allowed
grandfathering of applications that were deemed complete prior to the
applicability new PSD permitting requirements.  First, this action and
the PSD Interpretive Memo do not involve a revision of the PSD
permitting regulations but rather involves clarifications of how EPA
interprets the existing regulatory text.  This action articulates what
has, in most respects, been EPA’s longstanding practice.  It has been
EPA’s consistent position since 1978 that regulation of a pollutant
under Title II triggers PSD requirements for such a pollutant.  See 42
FR 57481.  Thus, permitting authorities and permit applicants could
reasonably anticipate that completion of the LDV Rule would trigger PSD
and prepare for this action.  Many commenters interpreted EPA’s
October 7, 2009 notice as proposing to trigger PSD requirements within
60 days of the promulgation of the LDV Rule rather than the January 2,
2011 date that EPA has determined to be the date the controls in that
rule take effect.  Second, there are presently no regulatory
requirements in effect for GHGs.  On the other hand, at the time EPA
moved from using TSP to using PM10 as the indicator for the particulate
matter NAAQS, grandfathered sources were still required to satisfy PSD
requirements for particulate matter based on the TSP indicator.
Likewise, when EPA later updated the PSD increment for particulate
matter to use the PM10 indicator, the grandfathered sources were still
required to demonstrate that they would not cause or contribute to a
violation of the particulate matter increment based on TSP.  In the case
of the adoption of the NO2 increment, grandfathered sources were still
required to demonstrate that they would not cause or contribute to a
violation of the NO2 NAAQS.  In contrast, for GHGs, there are no
measures currently in effect that serve to limit emission of GHGs from
stationary sources.

For these reasons, EPA does not intend to promulgate a transition or
grandfathering provision that exempts pending permit applications from
the onset of GHG requirements in the PSD program.  As discussed above,
in the absence of such a provision, PSD permits that are issued on or
after January 2, 2011 (in accordance with limitations promulgated in the
upcoming Tailoring Rule) will be required to contain provisions that
fulfill the applicable program requirements for GHGs.

In addition, to the extent commenters are raising specific applicability
and implementation issues regarding PSD requirements for GHGs, as
discussed in section 9.3.2, EPA is currently working to develop general
guidance on key PSD-GHG issues and will continue to develop guidance as
necessary to address issues that arise from inquiries by permitting
authorities and the regulated community.

9.6.   Potential Retroactive Liability

	Comment:

	Nine industry commenters (0067, 0080, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109) raise the possibility of retroactive liability
under the alternative interpretations other than the actual control
interpretation.

	Specifically, eight of the industry commenters (0067, 0083, 0089, 0090,
0096, 0106/0107, 0108, 0109) indicate that the monitoring and reporting
interpretation (and the other alternative interpretations) could
unfairly result in retroactive liability.  The commenters note that if
CO2 were “subject to regulation” based on EPA’s 1993 regulations
implementing section 821, any source of GHG emissions at or above the
statutory PSD threshold of 100 to 250 tons per year that underwent
construction or a major modification since that time might theoretically
(putting aside the statute of limitations) be considered in violation of
PSD requirements.  The commenters state that this is not mere
conjecture; environmental advocacy groups filed one citizen suit
alleging this exact sort of violation.  See Sierra Club v. Otter Tail
Power Corp., CIV 08-1012 (D.S.D., filed June 10, 2008), Complaint at
¶¶ 92-96.  (The case was dismissed on other grounds, 608 F. Supp. 2d
1120 (D. S.D. 2009), and has been appealed by plaintiffs, see No.
09-2862 (8th Cir., filed Aug. 10, 2009).)

	The other industry commenter (0080) notes that the proposed Tailoring
Rule is not retroactive and asked whether a ruling in favor of the
Petitioners would mean that any source that undertook activity after
passage of the 1990 CAA Amendments that made it a new or modified major
source for CO2 (under the statutory definition) is in violation of the
CAA because it did not apply for a PSD permit.  The commenter (0080)
notes that a very large number of sources could be at risk.

	Response:

Given that EPA is finalizing an interpretation in which GHG emissions
would not be “subject to regulation” for the purposes of PSD until
the specific GHG emission control requirements in the final LDV Rule
take effect, there is not an issue of retroactivity that is raised by
this final action.

9.7.   Clean Air Act Is Poorly Suited to Greenhouse Gas Regulation

Comment:

Sixteen industry and commerce commenters (0061, 0066, 0067, 0071, 0073,
0074, 0081, 0085, 0097, 0100, 0102, 0104, 0105, 0115, 0116, 0117) and
one legal commenter (0084) believe that the CAA is poorly suited to GHG
regulation.

One industry group (0085) believes that comprehensive climate
legislation is far preferable to using the existing CAA case-by-case
permitting programs to address GHG emissions because these permitting
programs are resource-intensive for both regulated entities and
regulators.  The industry group (0085) states that, in an arena in which
efficiency is the key to reducing impacts, the case-by-case nature of
the Prevention of Significant Deterioration (PSD) and title V programs
indicates that they are perhaps the least efficient mechanisms to
mitigate the effects of climate change.

One legal commenter (0084) believes that the CAA was not designed (and
is poorly equipped) to accommodate the regulation of GHGs, and that it
is incumbent on Congress, not EPA, to craft original legislation.  The
commenter (0084) urges EPA to halt issuance of all new regulations
pertaining to GHGs, and argues that this reconsideration action will
somehow shield EPA from litigation regarding its other GHG regulations
(i.e., Endangerment Finding, GHG Motor Vehicle Rule, and Tailoring
Rule).

Commenter (0086) added that national and international issues related to
GHGs should be settled in a comprehensive legislative or administrative
proceeding, not through individual permitting decisions.

One   SEQ CHAPTER \h \r 1 commenter (0104) strongly disagrees that the
CAA is the appropriate mechanism to regulate GHGs and adamantly oppose
the regulation of GHG emissions under the PSD program or any other
federal permitting program authorized under the CAA.

  SEQ CHAPTER \h \r 1 An industry commenter (0105), referring to its
comments to EPA relative to its Advanced Notice of Proposed Rulemaking
(ANPR) for regulating GHGs under the CAA, believes that the CAA is
clearly unsuitable for reducing GHGs, and that the best approach to
address climate change is new legislation for a market-driven program to
reduce GHGs, and that a cap and trade program must be carefully designed
to avoid disproportionate impacts on the manufacturing sector in
general, and the chemical sector in particular.

One  SEQ CHAPTER \h \r 1  commenter (0116) believes that (if EPA
regulates GHG emissions under the PSD or title V programs) many existing
facilities will need new title V or PSD permits to replace, repair or
improve the efficiency of aging equipment, including energy efficiency
projects, and that permitting delays will force facilities to evaluate
the possibility of shutting down domestic operations and relocating to
beyond the U.S. borders.  Furthermore, small businesses, such as asphalt
and concrete batch plants, metals manufacturing, the remaining textile
industry, food packaging, wood products, even hospitals will be subject
to many more requirements than they currently are (not just GHGs but
also all other new source review [NSR] pollutants), and it will be
significantly more costly for them to receive a permit and they will
experience significant permit delays, discontinued construction and loss
of jobs.  The commenter predicts that the permitting process will grind
economic development and industrial growth to a halt causing adverse
consequences to an already struggling economy.

One industry group (0061) comment letter expresses that the CAA is
flawed and new national legislation is the best mechanism for GHGs.
They assert that regulation under the CAA has historically focused on
control of criteria and hazardous air pollutants (HAP) to address local
or regional human health, welfare and environmental impacts.  The
architecture of the CAA is thus premised on the concept that state,
regional and federal control of emissions will improve air quality in
the corresponding area.  The GHG effect is global – and localized
emissions reduction will not result in environmental benefits to the
U.S. in absence of corresponding international action.

One commerce commenter (0074) expresses belief that EPA has ignored
options to avoid a regulatory cascade through piecemeal regulation of
GHGs under the CAA.  They state that they suggested that EPA not
undertake an endangerment finding; suggested that EPA use a combination
of corporate average fuel economy (CAFE) standards and title VI of the
CAA in its response to the Light Duty Vehicle Rule (LDVR) proposal; and
suggested potential approaches to regulation under section 115 of the
CAA, as well as the “no PSD without a National Ambient Air Quality
Standards (NAAQS)” and “GHGs are not subject to regulation”
approaches in these comments.  The commenter requests that EPA avoid the
CAA’s regulatory cascade and instead allow Congress to craft
comprehensive climate legislation.  This commenter provides copies of
comment letters submitted to EPA from the other EPA GHG-related
rulemakings.

One industry commenter (0097) believes that first and foremost, the CAA
in its current form was not designed to regulate GHGs, including CO2,
for various reasons.  This commenter argues that consequently, national
legislation is the best mechanism for regulating GHGs, including CO2,
because “absurd results” can be avoided and concerns addressed in a
fashion that provides the most certainty that the regulations can move
forward in a fashion which can be defended in the judicial process.
This commenter believes that this is properly the work of Congress
through comprehensive market-based climate legislation, although the
commenter recognizes that the Supreme Court’s decision in
Massachusetts v. EPA may require the Agency to commence regulatory
action for CO2 in absence of, or in the face of delayed, Congressional
action.

One state agency commenter (0102) states that the CAA is not an
appropriate vehicle for the regulation of GHGs and that such regulation
will result in significant impacts on the economy without measurable
environmental benefits.  The commenter (0102) notes that the
endangerment finding and subsequent proposals of the PSD Interpretation,
the GHG mobile sources regulations, and the Tailoring Rule
interconnected, and asserted that the piecemeal GHG proposals prevent
adequate opportunity to evaluate and effectively comment on the
proposals.  The commenter (0102) states that EPA should withdraw all the
GHG proposals.

Commenters (0092, 0098) representing several groups of companies state
that, with regard to all of EPA’s recent GHG rulemakings under the
CAA, the Agency should proceed with caution going forward by allowing
both the international community and Congress time to develop a
comprehensive and sensible approach to the global problem of climate
change.

Response:

Regardless of whether the CAA is the preferred mechanism for GHG
regulation, the U.S. Supreme Court determined that GHGs fit within the
definition of air pollutant in the Act and directed EPA to take actions
in accordance with that determination.  EPA is responding to the
Court’s decision by following the statutory requirements of the CAA.
Accordingly, EPA finalized its endangerment and cause and contribute
findings for GHGs under section 202(a) of the CAA and proposed
corresponding GHG controls for light duty vehicles.  As explained in
various responses above, a final vehicle rule will trigger PSD
requirements for GHGs.  Thus, EPA is taking appropriate action in this
reconsideration and the proposed Tailoring Rule to ensure a common sense
and efficient approach to GHG regulation.  This reconsideration action
is not the appropriate forum for addressing whether the CAA is suited to
GHG regulation or opining on potential Congressional action with regard
to GHG regulation.

9.8.   Arguments That PSD Cannot Apply to Pollutants Regulated Only
Under Title II of Clean Air Act

Comment:

Twenty-six industry and commerce commenters (0051, 0053, 0056, 0060,
0061, 0066, 0067, 0068, 0069, 0071, 0072, 0073, 0074/0075, 0076, 0085,
0086, 0088, 0092, 0093, 0096, 0098, 100, 0104, 0106/0107, 0111, 0118)
opine that a GHG NAAQS is a prerequisite for PSD to be triggered based
solely on emissions of GHGs and EPA must interpret the CAA and PSD
regulations consistent with this requirement.

One commenter (0086), representing several groups of companies, believes
that the PSD Interpretive Memorandum and the Reconsideration Proposal
reflect a major oversight on EPA’s part in that EPA has been focused
on whether the phrase “subject to regulation” in section 165(a)
refers only to actual control, concluding in the end that it does and
then merely assuming, without analysis, that the “any pollutant”
component of the total phrase “any pollutant subject to regulation”
has no bounds and therefore potentially includes GHGs.  However, the
commenter believes that the 100/250 TPY thresholds in the statute must
have some meaning, as EPA has recognized, because they are an integral
part of the statutory fabric, and they cannot be reconciled
programmatically with an unbounded reading of “any pollutant subject
to regulation.”  The commenter states that, while EPA has chosen to
try to weave new thresholds into that fabric specifically for GHGs, it
has ignored the possibility that the 100/250 TPY thresholds actually
signal that the 95th Congress intended applicability of the section
165(a) PSD program to be based on conventional pollutants, and that the
95th Congress did not mean to authorize EPA to base section 165(a) PSD
applicability on GHG emissions.  The commenter urges EPA, at a minimum,
to address that probability through a detailed and thoughtful legal
analysis, because without such an analysis, any final decision to base
PSD on GHG emissions can have no legitimacy.  The commenter states that
if EPA fails to adopt the interpretation that PSD intended only to apply
to conventional pollutants, its PSD Interpretive Memorandum, along with
the LDV rule, will be arbitrary and capricious for failure to adequately
consider their consequences.  The commenter (0086) adds that failure to
account for the PSD and title V implications of EPA’s actions also
violates the Regulatory Flexibility Act (RFA), the Unfunded Mandates Act
(UMA), and the Paperwork Reduction Act (PRA).

  SEQ CHAPTER \h \r 1 According to one commenter (0094) representing an
industry trade association, EPA’s reconsideration proposal does not
reflect the robust legal analysis required to support an interpretation
with such far-reaching legal, policy, technical and economic
consequences.  The commenter notes that the proposal begins with the
starting premise that the phrase in section 165(a)(4) -- “subject to
regulation under this Act” -- operates as an independent and powerful
PSD permitting trigger.  According to the commenter, the proposal rests
on the proposition that treating this phrase as a permitting trigger
accords with longstanding Agency practice, but the Deseret case found
otherwise, and besides, longstanding Agency practice alone cannot
provide sufficient legal basis for the interpretation.  This commenter
contends that the reconsideration proposal offers no evidence to
indicate that U.S. EPA, in arriving at the interpretation, evaluated any
of the following:

(1)  The entire statutory provision at issue in the context of the CAA
and with reference to its legislative and regulatory history;

(2)  A potentially more appropriate triggering phrase -- “in any area
to which this part applies” -- at the beginning of section 165(a); and

(3)  Other potential meanings of the “subject to regulation under this
Act” phrase in section 165(a)(4), including based upon comparison to
other provisions with similar scope and status to section 165(a)(4) --
i.e., sections 165(a) (1), (2), (3), (5), (6), (7) and (8).  The
commenter claims that the absence of such evaluation is material, and
concludes that the Reconsideration Proposal, therefore, does not satisfy
the Agency’s obligation for rational, fully reasoned and explained
analysis.

One industry   SEQ CHAPTER \h \r 1 commenter (0100) claims that
adherence to the statute will save everyone a lot of trouble.  The
commenter, referring to the Tailoring Rule proposal, states that EPA
leans most heavily on Alabama Power to support its claim of authority to
adjust the statute out of “impossibility” or “administrative
necessity,” but asserts that this case instructs EPA not to do exactly
what it proposes to do with the regulation of GHGs.  According to the
commenter, what Alabama Power tells us is that EPA cannot create its own
“administrative necessity” by ignoring one provision of the CAA, and
then solve that manufactured necessity by ignoring another.  Commenter
cites resolution of the  “potential to emit” issue in Alabama Power,
and EPA’s attempt (then) to exempt from PSD review any source with
actual (controlled) emissions below 50 tons over year.  Commenter claims
that this attempt at a tailoring rule ignored the very same specific
100/250 ton-per-year thresholds set by statute and was an
‘expansion’ of the limited exemption provided in section 165(b) of
the Act.  Further, commenter argues that EPA tried to defend its
tailoring of the PSD thresholds in 1979 the same way it now tries 30
years later, claiming that EPA’s present plans with respect to CAA
regulation of GHG are little different from those found defective and
remanded in Alabama Power in that EPA intends to (1) manufacture CAA
overbreadth in direct violation of CAA language, structure, and
legislative history, in this case by declaring GHGs to be an air
pollutant that endangers public health and welfare, (2) adopt rules to
limit such emissions from mobile sources, and (3) in this Docket,
conclude that these limits on mobile source emissions instantly trigger
air permitting requirements for stationary sources.

This industry   SEQ CHAPTER \h \r 1 commenter (0100) argues that EPA
should decide to leave GHGs out of the PSD program (at least before
completing the process required by section 166) and states that such a
decision would not only comport with the law, but with good policy in
that the currently proposed decisions do not reflect a policy that a
rational legislature would have intended (e.g., it makes no sense to
have a pollutant regulated for one purpose, from one category of
sources, under one section of the statute, based on one set of findings,
to cause that pollutant automatically to become regulated for an
entirely different purpose, from a wholly separate category of sources,
under a totally different regulatory scheme.

This industry commenter (0100) states that proper “tailoring” could
be undertaken in the design of a future PSD program for GHGs.  In
support, this commenter states that Congress left EPA relatively free to
fashion — by rule — a sensible PSD program for those unknown future
pollutants and, consequently, EPA — in the event EPA could justify and
promulgate a NAAQS for GHGs — has the freedom to craft a PSD program
appropriate to GHGs.  Section 166(c) tells EPA that it may choose some
other means of technology-forcing appropriate to GHGs.  Further,
commenter points out that section 166(e) also would be handy in that
unlikely future, as it leaves EPA without the obligation to undertake
any geographical classifications that are rather pointless for GHGs and
that EPA arguably even could set the permitting thresholds at a sensible
level, as section 166(c) allows.  The commenter claims that EPA proceeds
at odds with the statute with any rule that declares GHGs “subject to
regulation” under Part C by any means other than the one prescribed in
section 166.

The commenter (0100) argues that the proper interpretation of Part C (if
followed by EPA as commenter claims it must) allows for orderly
administration respectful of the State Implementation Planning process,
and that another major advantage of complying with the statute is that
it allows for orderly implementation.  SEQ CHAPTER \h \r 1

  SEQ CHAPTER \h \r 1 The commenter (0100) asserts that EPA’s request
for comments posits only a very limited range of possibilities, asking
narrowly and only about the meaning of the section 165(a)(4) phrase,
“subject to regulation,” and then suggesting a range of nuances in
that phrase having to do with whether the pollutant is regulated by
monitoring, by constituent, or by numeric limit, and whether by the date
of adoption of the limit or its effective date.  This commenter points
out that section 165(a)(4) is but one sub-subsection of an entire part
of the CAA, “Prevention of Significant Deterioration of Air Quality,
“ states that the entirety of the statute should be examined to find a
sensible interpretation that gives full effect to the purpose of the
Act, to each of its provisions, and avoids “absurd results.”

The commenter (0100) asserts that the “absurd results” documented in
the proposed Tailoring Rule establish that Congress did not intent for
GHG to be regulated under Part C.  The commenter notes that EPA makes
quite clear its intent to ignore clear statutory thresholds and state
prerogatives in the implementation of the PSD program, all out of a
claimed need to avoid the “absurd results” and impossible burdens
befalling the PSD program as a result of EPA’s choice to invite GHGs
into it, overnight.  The commenter suggests that EPA’s view is
incorrect, and that the statute — at section 166 — prescribes a very
different, longer and more thoughtful path to possible regulation of
GHGs under the PSD program.  Further, the commenter contends that the
statute does not compel the “absurd results” that cause EPA to
propose rules that violate the statute.  The commenter notes that the
phrase “subject to regulation” appears in the subsection of section
165 that enumerates the criteria for review and issuance of PSD permits,
notes that section appears in a Part of the Act enacted in 1977 to
prevent significant deterioration of air quality, and so claims that the
meaning of that one subsection should be understood in the context in
which it was adopted.  The commenter states that the PSD provisions were
enacted to address a limited number of criteria pollutants – those
“subject to regulation” to regulation in 1977 – certainly not
including “greenhouse gases.”

The   SEQ CHAPTER \h \r 1 commenter (0100), based on their review of the
PSD program (Part C of Title I) statute and legislative history,
contends that everything about Part C was drafted with the intention of
governing emissions of the criteria pollutants regulated at the time of
enactment (in 1977) and that nothing about Part C suggests an intent to
apply PSD to anything other than criteria pollutants, or to pollutants
that might be regulated in the future, after enactment.  Commenter notes
that the PSD program was established in 1977 as reaction to concerns
about the possibility that areas cleaner than the national ambient air
quality standards might be allowed to degrade to bare compliance with
those standards.  The PSD provisions of the CAA establish in detail the
requirements for EPA to establish the maximum amount of degradation
allowed from “baseline” air quality relative to the existing NAAQS,
at least for two out of the six criteria pollutants, sulfur dioxide and
particulate matter.  Commenter also observes that Part C is extremely
prescriptive, not only in its quantification of allowable deterioration
of the two covered pollutants (the “increments”), but also in its
designation of geographic areas of applicability, and its special
concern for national parks and visibility, and notes one criteria for
issuance of a required permit is the imposition of BACT for “each
pollutant subject to regulation.”  The commenter also points out that
throughout Part C, it completely relies on state implementation.  To
this commenter it is no surprise that none of the Part C provisions make
any sense as applied to emissions of GHG, especially for the purpose of
regulating those emissions so as to minimize a trace, natural, uniformly
distributed constituent of clean air presumed to be associated with
modulating global temperatures.  The commenter provides a review of
sections 161 through 172 to support the contention that everything about
Part C was drafted with the intention of governing emissions of the
criteria pollutants regulated at the time of enactment, with detailed
instructions on SO2 and PM, and generalized instructions to adapt a PSD
program for the others of the time (hydrocarbons, carbon monoxide,
photochemical oxidants, and nitrogen oxides) and that nothing about Part
C suggests an intent to apply PSD to anything other than criteria
pollutants, or to pollutants that might be regulated in the future,
after enactment.

  SEQ CHAPTER \h \r 1 Further, the commenter (0100) claims that before
EPA can add a new pollutant subject to review under Part C, it must
undertake a rulemaking to create a PSD program appropriate to that
pollutant.

The commenter (0100) further contends that EPA’s pending proposals to
sweep GHGs into the PSD program on the day of its regulation under
section 202(a) of the CAA could not more clearly violate Congress’
instructions on how to handle “other pollutants” under Part C:
Section 166(a) limits PSD to new criteria pollutants, and, as to those,
it requires rules specific to that new pollutant to be developed within
two years after adopting its NAAQS.

One   SEQ CHAPTER \h \r 1 commenter (0104) representing industry states
that they support EPA’s “actual control alternative,” but that, in
addition, the PSD Interpretive Memo should be amended to clarify that
the process for PSD regulation under the “actual control”
interpretation must include a determination that a pollutant is a
criteria pollutant and the establishment of corresponding NAAQS.  The
commenter further states that that only criteria pollutants with an
established NAAQS are subject to PSD, and in cases where there is no
NAAQS for a pollutant, PSD is not triggered because there is no
“attainment” or “unclassifiable” determination to be made.  The
commenter believes that regulation of any pollutant under the PSD
program without first determining that the pollutant is a criteria
pollutant and establishing a corresponding NAAQS would be a violation of
the rule of law as outlined in the CAA.  In the alternative, the
commenter urges EPA to revise the memo to make it clear that GHGs are
not pollutants “subject to regulation” under the PSD permitting
program.

One commenter (0111) states that the CAA limits PSD applicability for
GHGs to (1) areas designated as attainment or unclassifiable under a GHG
NAAQS or (2) sources that require a PSD permit based on emissions of a
criteria pollutant that also will experience a significant increase in
GHG emissions.  According to the commenter, a NAAQS for GHGs is
necessary for PSD to be triggered solely on the basis of a source’s
GHG emissions (i.e., for GHGs emitted from otherwise minor sources, or
for significant increases of GHGs from major sources that are not
otherwise experiencing a significant increase of a NAAQS pollutant for
which the area is designated attainment or unclassifiable).
Importantly, CAA sections 161 and 165 precondition applicability of the
PSD program to those areas designated as attainment or unclassifiable
under section 107.  Section 161 provides that EPA is to promulgate
regulations “to prevent significant deterioration of air quality in
each region . . . designated pursuant to section 107 [NAAQS
designations] as attainment or unclassifiable.”  Section 165(a)
prohibits construction of a major emitting facility “in any area to
which this part applies” unless the PSD permit requirements are met.
National Ambient Air Quality Standard designations are made on a
pollutant-by-pollutant basis.  The applicability of the PSD program in a
given area must be based on the attainment status of the area for the
pollutant in question.  If there is no NAAQS, there can be no attainment
status and therefore the fact that a source has major emissions of a
non-NAAQS pollutant does not make it a PSD major source.

	The commenter (0111) argues that the existence of section 166 supports
the conclusion that the applicability of PSD under the CAA is based on
the existence of a NAAQS for the pollutant in question.  This section
requires EPA to develop PSD regulations within two years of establishing
a new NAAQS.  Under section 166, EPA is also required to approve plan
revisions for the new regulations within 25 months after EPA promulgates
applicable rules.  Thus, under Section 166, PSD is triggered by adoption
of a NAAQS, not by a pollutant becoming subject to regulation. Through
this section, Congress recognized the need for a mechanism for
incorporating new pollutants into the PSD program.  This more reasonable
approach to regulation can be compared to EPA’s interpretation that
BACT for GHGs would be determined under section 165(a)(4) without
reference to any standard for calculating the impact of GHGs on local
air quality.  The existence of both sections 166 and 165 of the CAA
strongly suggests that PSD applicability is not “triggered” by a new
pollutant becoming “subject to regulation” under the CAA.  Rather,
the more reasonable interpretation of both these provisions suggests
that PSD is only applicable after the establishment of a new NAAQS
pursuant to sections 108 and 109 of the CAA and the designation of new
areas for that NAAQS under section 107.

	The commenter (0111) continues that the only part of the PSD statutory
scheme that imposes requirements broadly on pollutants “subject to
regulation” is the requirement for BACT.  Thus, if a source makes a
modification that increases emissions significantly of a NAAQS
pollutant, all pollutants “subject to regulation” must be
controlled.  Those facilities that trigger PSD for a non-GHG NAAQS
pollutant would also have to consider BACT for GHGs if a significant
increase in GHG emissions occurs.  However, if a major source does not
have a significant increase of a NAAQS pollutant in an area designated
attainment or unclassifiable, nothing in the statute requires the source
to be subject to the significance levels for non-NAAQS pollutants.

One industry commenter (0085) states that EPA is incorrect in assuming
that that the section 202 rule will automatically trigger PSD permitting
for sources solely based on their emissions of GHGs.  The commenter
believes that the text of the statute is more naturally read to limit
PSD applicability to sources that are major for a NAAQS pollutant only
and, then, within that group, to those projects that result in a
significant net emissions increase of a NAAQS pollutant – only when
PSD is triggered by a major NAAQS pollutant source for a NAAQS pollutant
would the statute impose BACT on pollutants “subject to regulation.”
 The commenter indicates that EPA’s approach is inconsistent with the
statutory and regulatory language because it completely bypasses the
core applicability provisions and renders their inclusion in the statute
superfluous.  The commenter argues that sections 161 and 165(a) of the
CAA limit PSD applicability based on the location of the source and case
law confirms this limitation, as follows:

The text of sections 161 and 165(a) plainly limits application of PSD to
certain areas – those designated attainment or unclassifiable pursuant
to section 107 of the CAA, which applies only to NAAQS pollutants.  It
is only section 165(a)(4) – defining the pollutants subject to BACT
once PSD permitting is already required – that uses the phrase
“pollutants subject to regulation.”

This plain language reading is also consistent with the holding in
Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979), where the
court found that location is the key determinant for PSD applicability
and rejected EPA’s contention that PSD should apply in all areas of
the country, regardless of attainment status.

The EPA gave this ruling only grudging effect by an interpretation of
PSD requirements in the preamble to the 1980 PSD regulations.  45 FR
52675, 52,676 (Aug. 7, 1980).  The 1980 preamble stated that PSD
requirements still apply to any area that is “designated . . . as
‘attainment’ or ‘unclassifiable’ for any pollutant for which a
national ambient air quality standard exists.”

This interpretation of the “location-limiting language” of the
statute results in no limitation at all since every area of the country
is and always has been in attainment with at least one criteria
pollutant.  Congress must be presumed to have been aware of this fact
when it enacted the PSD provisions, making EPA’s construction
inconsistent with canons of statutory construction requiring all words
in the statute to be given meaning.

While this reading was inconsistent with the CAA, industry had no reason
at the time to challenge it.  There were very few regulated pollutants
that were not subject to NAAQS at that time and even for those, it was
unlikely that those pollutants would be the sole reason that a PSD
permit would be required.

Now, with EPA’s decision to regulate GHGs, this interpretation could
trigger a host of results that contravene congressional intent.  The EPA
has itself recognized that the practical result of the 1980
interpretation is not desirable, specifically soliciting comment on an
approach in which BACT would be applied to GHGs only in those cases
where PSD permits are otherwise required for a source.  See Proposed
Tailoring Rule, 74 FR 55327.

The EPA can only rely on the “administrative necessity” rationale in
its proposed PSD Tailoring Rule so long as it is strictly necessary to
avoid absurd consequences that result from “the literal application of
a statute.”  United States v. Ron Pair Enterprises, 489 U.S. 235, 242
(1989).  Here the “absurd results” are not driven by the statute,
but rather by an EPA interpretation that is not consonant with the
statutory language.  Where a statute can be interpreted to avoid
“absurd results,” it must be so interpreted rather than relying on
judicially created exceptions.  (Numerous citations given.)

Accordingly, to give effect to unambiguous terms of the statute (and
regulations), EPA cannot require a source to undergo PSD permitting
solely on the basis of emissions of a pollutant for which there is no
NAAQS.  Chevron, U.S.A. v. NRDC, 467 U.S. 837, 842 (1984) (agency must
give effect to the unambiguously expressed intent of Congress).

	The industry commenter (0085) adds that EPA can implement the
interpretation advocated above without changing its regulations because
40 CFR 52.21(a)(2) includes the location limitation of the statutory
provisions and EPA’s historic interpretation is contained only the
preamble to the 1980 PSD rules.  The commenter (0085) believes that all
that is necessary is for EPA to announce its new interpretation in the
Federal Register, which is sufficient because it is a logical outgrowth
of the request for comments on this issue (in this action and in the
companion GHG proposals) and the comments received.

One industry commenter (0118) states that the PSD program only applies
to those pollutants for which EPA has promulgated a NAAQS, not to all
pollutants “subject to regulation” under the CAA.  Citing the
language of sections 161 and 165 of the Act, the commenter argues that
the Act limits applicability of the PSD program to new and existing
major sources that trigger PSD for NAAQS pollutants in areas designated
as “attainment” or “unclassifiable.”  Thus, the commenter
believes that a change resulting in a significant increase of a
non-NAAQS pollutant (such as GHGs) that does not trigger PSD for a NAAQS
pollutant is not subject to PSD preconstruction requirements.

	The industry commenter (0118) notes that, in its 1979 PSD regulations,
EPA initially interpreted part C of title I of the Act to require PSD
permitting for nonattainment pollutants, but the Court rejected this
interpretation in Alabama Power.  The commenter further explained that,
in the 1980 PSD regulations, EPA excluded nonattainment pollutants from
PSD but took the position that PSD applies to any regulated pollutant
(other than a nonattainment pollutant) as long as an area is attainment
or unclassifiable for any pollutant.  The commenter (0118) urges EPA to
reinterpret the PSD regulations to be consistent with the Court’s
decision and rule that PSD applies only to major new or existing sources
that trigger PSD for a NAAQS pollutant in an attainment or
unclassifiable area.

	The industry commenter (0118) concedes that under section 164(a)(4) of
the CAA, if a major source or major modification is subject to PSD for a
NAAQS pollutant, BACT is to be installed to control emissions of all
pollutants “subject to regulation” under the Act.  Thus, the
commenter states that even though the full range of PSD requirements do
not apply to a non-NAAQS pollutant “subject to regulation” under the
Act, BACT is required for such a pollutant when the construction is
otherwise subject to the PSD preconstruction requirements.  The
commenter notes that by so interpreting the CAA, the regulation of
non-NAAQS pollutants will not increase the number of PSD permits that
will be required, which alleviates greatly one of the “absurd
results” that the proposed Tailoring Rule is intends to address.
However, the commenter believes that the BACT requirement for those
sources that do require PSD permits would still be an enormous burden.
Also, the commenter (0118) notes that this changed interpretation of PSD
applicability would not affect the applicability of title V permitting
to the approximately 6.1 million sources of GHGs estimated by EPA.

Three industry commenters (0069, 0096, 0106/0107) contend that, based on
the language of sections 161 and 165(a), the CAA only applies PSD review
for pollutants that have the potential to result in deterioration of air
quality in an area that meets a NAAQS or is undesignated.  One commenter
(0107) adds that if applicable at all, the only possible interpretation
of the applicability of PSD would be limited to situations when criteria
pollutants or their precursors might cause significant deterioration of
air quality and BACT would apply to other pollutants “subject to
regulation” if a significant increase would be projected to result
from the project.  On this basis, one commenter (0107) asserts that
EPA’s intent to regulate GHGs under the PSD program by requiring PSD
review and permitting of new “major” GHG emitting facilities and
“major modifications” of major GHG emitting facilities based on GHG
emission increases alone violates Title I of the CAA.  Commenter (0096)
also states that PSD rules apply only to pollutants for which a NAAQS
exist and certainly not to a Title II motor vehicle standard for which
there is no NAAQS.

Commenters (0092, 0098) representing several groups of companies
(industry) contend that the plain language of the CAA and EPA’s
corresponding regulations condition PSD applicability in the first
instance on emissions of a pollutant for which there is a NAAQS.  The
commenters state that EPA should correct this error and state that
whether a pollutant is “subject to regulation” is relevant only to
whether a source that is subject to PSD requirements for a
NAAQS-pollutant must install BACT for other pollutants.  Alternatively,
the commenters recommend that EPA exercise its discretion by
interpreting “subject to regulation” to exclude CAA section 202
regulation of GHG emissions from motor vehicles.  The commenters contend
that Alabama v. Costle supports the NAAQS prerequisite interpretation of
the CAA, and that EPA’s response to this decision misinterpreted the
Court’s opinion.  The commenters further claim that even if the
statutory language were ambiguous, EPA could not apply PSD to GHGs,
because such an interpretation does not represent a reasonable balancing
of the goals Congress established for the PSD program, and the “absurd
results” of EPA’s proffered interpretation show that the language
must be interpreted to require a GHG NAAQS before GHGs can be the sole
trigger for PSD.  The commenters add that to the extent EPA applies the
“absurd results” doctrine to support the PSD Tailoring Rule, the
Agency’s approach is inconsistent with the law because it applies PSD
to GHGs notwithstanding the absurdity of doing so.

One commerce commenter (0074) states that revising the PSD Interpretive
Memo to state that PSD is not triggered without a NAAQS would be
consistent with the plain meaning of sections 161 and 165 of the CAA,
section 52.52 of the regulations, and the holding in Alabama Power Co.
v. Costle (where the court found that location is the key determinant
for PSD applicability and rejected EPA’s contention that PSD should
apply in all areas of the country, regardless of attainment status).
CAA sections 161 and 165 precondition applicability of the PSD program
to those areas designated as attainment or unclassifiable under section
107 for a NAAQS.  This and other commenters opine that PSD permitting
requirements can only be triggered in the first instance by pollutants
for which there is a NAAQS.  Section 52.21(a)(2) of the regulations
provides “applicability procedures” for PSD, stating that PSD
applies to “the construction of any new major stationary source (as
defined in paragraph (b)(1) of this section) or any project at an
existing major stationary source in an area designated as attainment or
unclassifiable under sections 107(d)(1)(A)(ii) or (iii) of the Act.”
It is only in defining and requiring BACT that the statute imposes
requirements on pollutants “subject to regulation.”  The commenter
opines that nothing in the statute or regulations requires a source that
is major to be subject to the significance levels for non-NAAQS
pollutants if there is no significant increase of a NAAQS pollutant for
which the source is designated attainment or unclassifiable.

One industry group commenter (0066) requests that EPA revise the
interpretive memo to clarify that PSD is limited to criteria pollutants
for which a NAAQS has been set.

Two commenters (0051, 0053) request that EPA interpret PSD applicability
provisions of the statute and regulations to avoid triggering PSD for
the vast majority of sources rather than relying on the “absurd
results” and “administrative necessity” doctrines to rewrite
statutory thresholds.  This commenter states that the GHG-PSD problem is
created by interpreting the statute and regulations to require that PSD
applicability as being dictated solely through the phrase “subject to
regulation.”  Prior to resorting to the “administrative necessity”
and “absurd results” doctrines to rewrite statutory thresholds, they
opine that EPA is obliged to consider statutory interpretations that
eliminate the GHG-PSD problem.  The statute does not state that PSD
applies to all pollutants subject to regulation; the statute only
requires BACT apply to all pollutants subject to regulation fro sources
that trigger PSD.  Under the suggested interpretation, sources and
modifications will not be classified as major requiring a PSD permit
based on GHG emissions unless: (1) EPA issues a NAAQS for GHGs; or (2) a
facility is already major for traditional pollutants triggers PSD for a
non-GHG pollutant (e.g., for ozone (O3, SO2)(and the facility
experiences a significant GHG emissions increase).  Under this approach,
GHG emissions would still be regulated.  Any new or existing source that
triggers PSD for a non-GHG pollutant will also be subject to BACT, if
the source also experiences a significant GHG emission increase.  This
would limit the number of PSD permits and BACT determinations for GHGs
to larger sources that trigger PSD for other pollutants.  Nothing in the
statute requires a source that is major to be subject to significance
levels for non-NAAQS pollutants if there is no significant increase of a
NAAQS pollutant for which the area is designated attaining in the
statute requires a source that is major to be subject to significance
levels for non-NAAQS pollutants if there is no significant increase of a
NAAQS pollutant for which the area is designated attainment or
unclassifiable.  The commenter asserts that there are no “absurd
results” under their suggested NAAQS prerequisite approach, and it is
consistent with Alabama Power v. Costle.

One industry commenter (0068) states that based on the requirements
outlined in the statute regarding the applicability of PSD and the
decision in Alabama Power, PSD would not be triggered solely on the
basis of GHG emissions.  The commenter opines that such an approach
would prevent the EPA from having to rely on the “administrative
necessity” and “absurd results” legal doctrines which are
exceptions to a statutory mandate as fewer sources would be subject to
permit requirements and states would not be forced to handle massive
increases in the number of PSD permits and could still require BACT in
PSD permits that are triggered for attainment pollutants.

One industry commenter (0056) believes that PSD review is only triggered
by the emissions/emissions increases of pollutants for which a NAAQS has
been established.  They state that the CAA prohibits applying PSD to a
GHG unless PSD review is triggered by a significant increase in a NAAQS
pollutant that could contribute to a violation of a NAAQS or a NAAQS
increment.  Since there is no NAAQS for a GHG, PSD applicability to a
proposed project cannot be triggered by GHG emissions alone.  If a BACT
review is allowed for a GHG, it is only if a criteria pollutant triggers
PSD review and the projected actual emissions of GHGs exceeded the major
source threshold or the definition of a “significant emissions
increase.”  This commenter asserts that their statutory construction
is consistent with the purposes of the Act and provides a
technology-forcing function for regulated pollutants for which EPA has
not established a NAAQS or an increment.

One industry commenter (0060) believes that section 161 and 165 of the
CAA clearly limit the applicability of the PSD program in such a way to
reflect the most basic aspect of applicability of the PSD program:
Prevention of Significant Deterioration review is triggered only for
pollutants for which a NAAQS has been established.  As an example, they
state that if EPA were to establish an emission control requirement for
a previously unregulated substance pursuant to an NSPS standard, then
the substance would be “subject to regulation under the Act.” But
because the substance is not a criteria pollutant for which a NAAQS has
been established, the level of the substance’s emissions is not a
factor in determining whether a source is a major source or whether a
project is a major modification under the PSD program.  Only the
pollutants for which there are NAAQS may be used to make that
determination.  They opine that if a project is not major for any NAAQS
pollutant, and it has emissions of a previously unregulated substance,
it should not be subject to PSD, regardless of the amount of the
substance emitted by the project.

One industry group commenter (0061) states that section 161 of the CAA
and section 52.21(a)(2) of the CFR limit applicability of the PSD
program to those areas “designated” as attainment or unclassifiable
pursuant to section 107 of the CAA.  See also, section 165(a) (requiring
demonstration that air quality requirements are met).  Section 107
applies only to sources that are major for a NAAQS pollutant and those
major sources that have modifications that result in a significant net
emissions increase of a NAAQS pollutant.  Stated differently, this
commenter (0061) asserts that emissions of a non-NAAQS pollutant cannot
trigger PSD applicability.

One industry commenter (0072) urges EPA to adopt an “alternative
interpretation” of the existing stationary and regulatory provisions,
so PSD is not triggered for a source by its emissions of a regulated NSR
pollutant for which no NAAQS has been promulgated.  They assert that,
because section 161 and 165 of the CAA make clear that the PSD program
only applies to construction projects in an area designated as
attainment or unclassifiable for a NAAQS, PSD applicability should not
be triggered by emissions of a pollutant for which no NAAQS has been
promulgated.  Once a source becomes subject to PSD due to emissions of
any NAAQS pollutant in excess of the statutory major source thresholds
of 100 or 250 TPY, the source must achieve BACT for every pollutant
“subject to regulation” under the CAA that will be emitted in
significant amounts, which, for GHGs, would be any amount (absent
promulgation of a higher de minimis threshold, as proposed by the GHG
Tailoring Rule).  As other commenters opine, this commenter believes
that EPA could completely avoid the “absurd results: and
“administrative necessity” it claims as the basis for establishing a
higher PSD applicability threshold in the GHG Tailoring Rule.  By
modifying this interpretation, so that a source does not trigger PSD
based on its emissions of non-criteria pollutants, the commenter states
that EPA could begin requiring BACT for GHGs under existing PSD rules,
without any resulting negative impacts.  The commenter asserts that this
interpretation is consistent with Alabama Power v. Costle, 636 F.2d 232
(D.C. Cir. 1979).

An industry commenter (0093) urges EPA to clarify that the applicability
of PSD to pollutants “subject to regulation” properly triggers a
BACT analysis for sources that otherwise trigger requirements of the
existing PSD program, but does not trigger PSD applicability, in and of
itself, for pollutants which do not have, nor are precursors to, a
NAAQS.

One state agency commenter (0102) believes that the PSD applies only to
pollutants or precursors for which a NAAQS exists, and not to non-NAAQS
emissions regulated by a Title II motor vehicle standard.  The state
agency commenter indicates that EPA’s policy should state that PSD is
not triggered automatically or otherwise upon GHGs becoming controlled
under title II of the CAA because PSD applies only to pollutants for
which a NAAQS has been established.  The PSD program and the NAAQS
assume that some areas of a state or the country have higher
concentrations of a criteria pollutant than another (hence attainment
and nonattainment areas), but GHG concentrations are generally uniform
throughout the world.  Thus, the commenter believes that preventing
deterioration of an area’s GHG concentrations below a certain ambient
air quality standard through permitting controls is virtually impossible
where the standard to achieve is a global one.  The commenter concludes
that EPA’s interpretation that PSD is applicable to GHGs at any time
is not legally supportable and no amount of tampering with the Tailoring
Rule or ordering of federal actions will change this.

Nine industry and commerce commenters (0051, 0053, 0066, 0072, 0074,
0076, 0079, 0085, 0086) suggest that EPA clarify in the PSD Interpretive
Memo that the term “Pollutants Subject to Regulation” exclude GHGs.
They assert that Congress did not intend such pollutants to trigger PSD.
 In order to secure passage in 1977, supporters of the PSD program
stressed that it would not impact smaller sources, such as residential,
commercial, or agricultural facilities.

One commenter (0111) noted that EPA should construe the phrases “any
pollutant” in section 169(1) and “any pollutant subject to
regulation” in section 165(a) to refer only to conventional pollutants
whose emissions have regional or local impact, rather than any pollutant
subject to regulation under the CAA.  Such an interpretation would
automatically exclude GHGs, which are “global in nature because the
GHG emissions emitted from the United States . . . become globally
well-mixed.”  In the PSD Tailoring Rule, EPA’s own analysis—which
demonstrates that Congress could not have intended those CAA sections to
require PSD applicability for GHGs, because, if they did, the number of
sources requiring PSD permits would rise to absurd and unanticipated
levels— supports this interpretation. EPA proposes only one solution
to avoid the absurdity of triggering PSD for GHGs: rewriting the
statutory PSD and title V applicability thresholds and significance
levels.

	The commenter (0111) states that strong evidence supports an
interpretation of the CAA that excludes GHGs from PSD.  First, the
original 28 source categories listed by Congress constitute the sources
EPA regarded as posing the greatest potential for air quality
degradation due to conventional pollutants.  The 100 TPY threshold for
these source categories makes sense only in terms of conventional
pollutants.  Second, the air quality monitoring and impact analysis
provisions of CAA sections 165(a) and (e) focus on local and regional
impacts.  For example, Section 165(e)(1) requires an analysis of “the
ambient air quality at the proposed site and in areas which may be
affected by emissions from [the proposed] facility for each pollutant
subject to regulation under the [CAA] which will be emitted from such
facility.” The focus on the “proposed site” and affected areas
implies that Congress was focused on regional and local concerns.

	In addition, according to the commenter (0111), the legislative history
of sections 165(a) and 169(l) under the 1977 CAA amendments makes clear
that Congress had only conventional pollutants in mind when creating
those provisions.  Both the Senate and the House were engaged primarily
in continuing the work that a prior Congress had begun, through the 1970
CAA, to rid the Nation, especially urban areas, of unhealthy levels of
smog, particulates, sulfur dioxide, and other conventional pollutants.
The air quality problems of concern to the 95th Congress in 1977 simply
did not include global warming.  It is simply not possible, in light of
this legislative history and the legislative history EPA references, to
make a credible argument that the 95th Congress intended that GHG
emissions could be a basis for applicability of the PSD permitting
program as defined by sections 165(a) and 169(1).  Additional evidence
of Congress’ intent for the CAA not to apply to GHGs is Section 166,
which provides EPA with a separate mechanism for adding pollutants for
PSD applicability.  The commenter (0111) notes that the consequences of
applying PSD to GHGs are perhaps the best evidence that such an
interpretation runs contrary to congressional intent.  If PSD applies to
GHG emissions, EPA estimates that 40,000 new PSD permits will be
required annually, including permits for small entities not previously
subject to PSD, such as hospitals, churches, schools, and small
businesses.  This vast and unprecedented expansion in permitting will
halt the nation’s economic growth with little if any improvement in
local air quality.

	One industry commenter (0085) argues that the endangerment finding
under title II is distinctly different from the air quality purposes of
the PSD program – the former is triggered where, in the
Administrator’s judgment, such emissions “may reasonably be
anticipated to endanger public health or welfare” (CAA section
202(a)(1)), while the latter is specifically directed towards the
protection of “air quality” (CAA section 161), i.e., the air that
people breathe.  Consequently, the commenter asserts that the regulation
of CO2 emissions – where it is intended to address the effects that
CO2 has on global climate change, rather than its effect on local “air
quality” – does not constitute a measure to control CO2 emissions
which is “necessary” to “prevent significant deterioration” of
local “air quality” (CAA section 161); therefore, it does not follow
from an endangerment finding under title II that EPA is thereby
authorized, much less compelled, to regulate CO2 emissions from
stationary sources under the PSD program.

	Rather than seeking to justify rewriting the CAA’s 100/250 TPY
thresholds for PSD applicability, the industry commenter (0085) believes
that EPA could rely on the fact that Congress never intended the PSD
program to apply to emissions of a substance such as CO2 that, while it
may constitute an “air pollutant” under the broad definition of CAA
section 302(g), does not pose any threat to “air quality.”  To that
end, the commenter (0085) asserts that EPA should recognize that the
CAA’s PSD provisions, including the Best Available Control Technology
(BACT) requirement “for each pollutant subject to regulation” under
the Act, must be understood in the context of the fundamental purpose
and scope of the PSD program, as is made clear on the face of CAA
section 161; that is, the BACT requirement should be read as applying
only to regulated pollutants that have an adverse impact on “air
quality” – i.e., air that people breathe.

	The industry commenter (0085) observes that the preamble to the
proposed Tailoring Rule is replete with statements by the EPA that point
out how inconsistent with Congressional intent would be the regulation
of thousands of small stationary sources of CO2, and opines that EPA has
drawn the wrong conclusion as to how it should proceed in the face of
this anomalous situation.  The commenter asserts that, rather than
attempting to rewrite the PSD threshold limits, which are set forth in
the Act in unambiguous terms, EPA should instead conclude that Congress
never intended the regulation of CO2 under the PSD program because
emissions of CO2 do not degrade air quality.

Another commenter (0086), representing several groups of companies,
asserts that (in absence of the alternative to applying PSD only to
pollutants for which there is a national ambient air quality standard
[NAAQS]) EPA should interpret the phrases “any pollutant” in section
169(1) and “any pollutant subject to regulation” in section 165(a)
to refer only to pollutants whose emissions have local or regional
impacts, and hence not GHGs.  The commenter believes that EPA should
find that Congress intended applicability to be based only on
“conventional” pollutants, i.e., pollutants whose emissions have
predominantly local or regional impact such as pollutants subject now to
NAAQS and new source performance standards (NSPS) for the following
reasons:

The 28 source categories that Congress listed in section 169(1) in 1977
are the ones EPA regarded at the time as posing the greatest potential
for air quality degradation due to conventional pollutants.  The only
way to explain the selection of those particular categories is to posit
a concern only with conventional pollutants.  Indeed, the only way to
understand the 100/250 TPY cutoffs is also in terms of conventional
pollutants.

The provisions of sections 165(a) and (e) that call for air quality
monitoring and air quality impact analysis in connection with PSD
permitting are oriented on their face to local or regional impacts.

Other relevant provisions of the CAA demonstrate the same mindset.  An
example is the system for area designations in section 107(d) and the
underlying system for establishing air quality control regions in
section 107(b), which make sense only from the standpoint of managing
emissions of conventional pollutants, in particular NAAQS pollutants.
The objective of the PSD program, to prevent significant deterioration
of air quality in areas designated as attainment or unclassifiable under
section 107(d), makes sense only from the standpoint of emissions having
a local or regional impact, not emissions of GHGs.

Congress kept the door open for a PSD program geared to other
pollutants, such as GHGs, through section 166.  That section requires
EPA, in the event it creates a NAAQS for a “new” pollutant (i.e., a
pollutant not subject to a NAAQS in 1977), to create a PSD system that
is tailored to that pollutant’s unique profile, but that need not
necessarily conform to the blueprint of sections 165(a) and 169(1).
Thus, EPA potentially could create for GHGs a PSD permitting system with
a 25,000 TPY CO2 equivalent cutoff, but it would first have to establish
a NAAQS for GHGs.

The legislative history of the CAA Amendments of 1977, the origin of
sections 165(a) and 169(1), reveals that Congress had in mind only
conventional pollutants.  Both the Senate and the House saw themselves
as engaged primarily in continuing the work that a prior Congress had
begun, through the 1970 CAA, to rid the Nation, especially urban areas,
of unhealthy levels of smog, particulates, sulfur dioxide, and other
conventional pollutants.  The air quality problems of concern to the
95th Congress in 1977 did not remotely include global warming.

One industry commenter (0079), and others, express that section 163, as
enacted by the 1977 Amendments, addresses baseline concentrations and
increments for sulfur dioxide (SO2) and particulate matter (PM), see
§163(b), and to any other pollutant for which a national primary or
secondary NAAQS exists, see §163(c).  This emphasis, the commenter
opines, is carried on in CAA section 169, which provides:

Not later than one year after the date of enactment of this Act, the
Administrator shall publish a guidance document to assist the States in
carrying out their functions under part C of title I of the Clean Air
Act (relating to prevention of significant deterioration of air quality)
with respect to pollutants, other than sulfur oxides and particulates,
for which national ambient air quality standards are promulgated.  Such
guidance document shall include recommended strategies for controlling
petrochemical oxidants on a regional or multistate basis for the purpose
of implementing part C and section 110 of such Act.

§169(c).  This subsection omits consideration of additional pollutants
beyond the NAAQS.  The commenter asserts that section 166 of the CAA
also provides further limiting of “pollutants subject to regulation
under the Act” to those pollutants subject to NAAQS.  See §166(a) &
(e).  This commenter asserts that the only condition that suggests a
broader reading is in §165(a)(3):

The owner or operator of such facility demonstrates that emissions from
construction or operation of such facility will not cause, or contribute
to, air pollution in excess of any (A) maximum allowable increase or
maximum allowable concentration for any pollutant in any area to which
this part applies more than one time per year, (B) national ambient air
quality standard in any air quality region, or (C) any other applicable
emission standard or standard of performance under this Act;

The commenter asserts that (A) and (B) apply to NAAQS pollutants,
consistent with the argument outlined above.  (C) applies to “any
other applicable emission standard or standard of performance under the
Act.”  This language is susceptible to a broader reading, though
§169(a)(3) clarifies that the “applicable emission standards” are
those issued pursuant to subsection 111 or 112 of the CAA.  This
commenter adds that in the 1990 CAA Amendments, Congress provided
evidence of its intent not to broaden the NAAQS and NSPS focus of the
PSD program by specifically mandating that HAPs are not “subject to
regulation” under the CAA for purposes of the PSD program.  See 42
U.S.C. §7412(b)(6).

	This commenter (0079) further states that the legislative history of
the PSD program also supports “pollutants subject to regulation under
the Act” as being limited to NAAQS pollutants and NSPS pollutants
(cites discussion by The House Committee on Interstate and Foreign
Commerce, in its discussion of a bill that ultimately became part of the
CAA Amendments of 1977.

	In addition to statute and legislative support for limiting
“pollutants subject to regulation under the Act,” this commenter
(0079) asserts that there are practical economic and burden
considerations to limiting the PSD program to NAAQS and NSPS pollutants.

Another state agency commenter (0103) agrees with the “actual
control” interpretation to the extent that it excludes pollutants
subject only to monitoring or reporting requirements, but does not
believe that the interpretation goes far enough.  The commenter
advocates an interpretation that requires EPA to establish an NSPS or
NAAQS for the pollutant (if the pollutant is not considered a HAP
subject to section 112 of the CAA) and also requires the ability to
control the pollutant by means of an add-on control device.

One commenter (0088), while generally agreeing with the December 18,
2008 EPA Memorandum, states that interpretation must be further
clarified to state that the PSD permitting program should only apply to
air pollutants with NAAQS.

Response:

We agree with these commenters that the appropriate scope of the PSD
program is an important issue in evaluating the level of administrative
necessity and the need to tailor the PSD program with respect to GHG
emissions, but comments on this topic are beyond the scope of this
action.  This  reconsideration action sought comment on EPA’s
interpretation of the phrase “subject to regulation under the Act”
used the fourth part of an  existing regulatory definition of
“Regulated NSR Pollutant” at 40 CFR 52.21(b)(50).  EPA requested
comment on whether this part of the regulation (and similar provisions
in the CAA) should apply to any pollutant that may be subject to a
monitoring and reporting requirement, SIP provision, endangerment
finding, or a waiver under section 209 of the Act.  While this raised
issues of how EPA’s definition should be interpreted in light of a
variety of statutory provisions, EPA did not propose to amend or remove
from this definition the description of the categories of pollutants
listed in the first three parts.  See 40 CFR 52.21(b)(50)(ii)-(vi).  Nor
did EPA propose to reconsider its interpretive statement in 1978 that a
pollutant subject to regulation includes “all pollutants regulated
under Title II of the Act.”  See 43 FR at 26397.  EPA requested
comment only on whether it should amend the text of the definition to
expressly incorporate EPA’s interpretation that pollutants subject to
regulation are those subject to an actual control requirement, like
those described in the first three parts of the definition.  As
discussed elsewhere in this document, EPA is not changing the regulatory
definition in this action at this time.  Because, for the reasons
described below, we believe that the interpretations of the CAA
advocated by these commenters are inconsistent with the plain language
of the portions of the regulation that EPA did not propose to
reconsider, we are therefore not addressing them as part of this action.
 We note, however, that to the extent that these comments are directed
at the need to tailor the PSD program with respect to GHGs, we believe
these interpretive issues are more appropriately addressed in the
context of the tailoring rule, where we received similar comments.

These commenters urged a variety of interpretations by focusing on the
statute itself but largely ignore the applicable rules in the CFR, which
govern PSD applicability until such time as they are changed pursuant to
a rulemaking under Section 307 of the CAA.  Moreover, those comments
that do acknowledge that there are applicable regulations that govern
which pollutants are subject to the PSD program only focus on the
original EPA rules adopted  in 1980 and ignore the comprehensive
definition of “regulated NSR pollutant” adopted in 2002.The phrase
“pollutants otherwise subject to regulation” is  just one part of
that definition.  That definition provides that Regulated NSR pollutant
includes:

(i) Any pollutant for which a national ambient air quality standard has
been promulgated and any pollutant identified under this paragraph
(b)(50)(i) as a constituent or precursor for such pollutant. Precursors
identified by the Administrator for purposes of NSR are the following:

 (ii) Any pollutant that is subject to any standard promulgated under
section 111 of the Act;

(iii) Any Class I or II substance subject to a standard promulgated
under or established by title VI of the Act;

(iv) Any pollutant that otherwise is subject to regulation under the
Act; except that any or all hazardous air pollutants either listed in
section 112 of the Act or added to the list pursuant to section
112(b)(2) of the Act, which have not been delisted pursuant to section
112(b)(3) of the Act, are not regulated NSR pollutants unless the listed
hazardous air pollutant is also regulated as a constituent or precursor
of a general pollutant listed under section 108 of the Act.

Based on the plain language of the first three parts of this provision
(and other regulations that incorporate this definition), we are unable
within the scope of this action to adopt the interpretations advocated
by commenters.

EPA’s regulations are not susceptible the interpretation that
“pollutants subject to regulation” are limited to NAAQS pollutants.
As NAAQS pollutants and precursors are spelled out as a specific line
item in the definition of “Regulated NSR Pollutant,” this
interpretation would render the remainder of the definition meaningless.
 Furthermore, this interpretation would be inconsistent with the plain
language in parts (ii) and (iii) of the definition, which presently
incorporate pollutants regulated in an NSPS and under Title VI of the
Act that are not covered by a NAAQS.  Accordingly, we decline to adopt
this interpretation in this action.

While some commenters present as a separate argument, based on section
166 of the Act, that the Agency should interpret “subject to
regulation” as requiring that EPA undertake a PSD implementation
rulemaking prior to regulating a pollutant under PSD, we do not view
this as a distinct argument.  As the commenters acknowledge, Section 166
requires certain actions be taken with respect to a new NAAQS, and thus
this interpretation would act to ensure that “any future application
of Part C is limited to criteria pollutants.” (commenter 100 page
8-9).  In addition, the argument that pollutants are not subject to
regulation for PSD purposes until EPA promulgates regulations for each
pollutant under section 166 was previously rejected by the D.C. Circuit.
 Alabama Power Co. v. Costle, 636 F. 2d 323, 406 (D.C. Cir. 1979).

Furthermore, the definition of regulated NSR pollutant affects more than
just the applicability of the BACT requirements under the PSD
regulations.  The term “regulated NSR pollutant” is also
incorporated in the definitions of “major stationary source” and
“major modification.”  40 CFR 52.21(b)(1)-(2).  Because of the
references to “regulated NSR pollutant,” both of those provisions
contemplate that PSD may be triggered based upon non-NAAQS pollutants
(e.g. a modification occurs if there is a significant increase in any
“regulated NSR pollutant” not “any pollutant for which an area has
been designated attainment.”).  Accordingly, the interpretation urged
by these commenters is inconsistent with the language and structure of
the existing PSD regulations.

EPA is not persuaded that it can limit the scope of PSD to NAAQS
pollutants through an interpretation of 52.21(a)(2) on the ground that
this provision limits the scope of PSD to areas that have been
designated “attainment or unclassifiable.”  As some of these
commenters acknowledge, adopting this approach would require that the
Agency reverse a long standing interpretation of 52.21(a)(2) that PSD
applies if the source is locating in an area that is designated as
attainment for any pollutant.  Thus, commenters’ request that EPA
adopt this interpretation of 52.21(a)(2) is beyond the scope of this
immediate action as we did not seek comment on this provision, or this
long standing interpretation.  However, as noted above, we do intend to
address the underlying substantive claim in the tailoring rule.  We do
not agree with one commenter’s (0086) argument that 52.21(a)(2)
unambiguously limits applicability of all PSD requirements to only those
pollutants for which the area has been designated attainment or
unclassifiable.  The language of that provision in the regulation, that
the “requirements of this section apply to the construction of any new
major stationary source … or any project at an existing major
stationary source in an area designated as attainment or
unclassifiable,” does not contain the express limitation “for that
pollutant,” which commenters are reading into it.

As with other commenters, the commenters that cite 52.21(a)(2) failed to
address the adoption of the definition of “regulated NSR pollutant”
in 2002 and instead chose to focus on provision enacted as part of the
original 1980 PSD rulemaking.  Accordingly, these commenters have made
no attempt to show how the urged interpretation of 52.21(a) is
consistent with the broader definitions of “major stationary source”
and “major modification” which incorporate the definition of
“regulated NSR pollutant,” and which we have explained above cannot
be so narrowly construed as to be limited to NAAQS pollutants.

The claims of some commenters that these are new issues upon which they
had no reason to comment in 1980 also ignores the existence of the 2002
rulemaking and the revisions to various parts of section 52.21 made
therein.  While the potential for regulation of GHGs, and the
implications of such regulation, may have been outside of the
commenters’ contemplation in 1980, the potential for GHG regulation
and the implication of the language that the agency was adopting was
evident by 2002.  Thus, commenters could have challenged the adoption of
the definition at that time.

EPA is also unable to interpret the existing PSD provisions as being
limited to pollutants whose effects are primarily local or that only
affect “air quality” (defined by one commenter as the “air that