the appropriate time.  This is generally because these SIPs specifically
list the pollutants subject to the SIP PSD program requirements, and do
not include GHGs in that list, rather than include a definition of NSR
regulated pollutant that mirrors the federal rule, or because the state
otherwise interprets its regulations to limit which pollutants the state
may regulate.  At proposal, we indicated that we intended to take
separate action to identify these SIPs, and to take regulatory action to
correct this SIP deficiency.

We ask any state or local permitting agency that does not believe its
existing SIP provides authority to issue PSD permits to GHG sources to
notify the EPA Regional Administrator by letter, and to do so no later
than [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTERPROMULGATION].  This letter should indicate whether the state
intends to undertake rulemaking to revise its rules to apply PSD to the
GHG sources that will be covered under the applicability thresholds in
this rulemaking, or alternatively, whether the state believes it has
adequate authority through other means to issue federally-enforceable
PSD permits to GHG sources consistent with this final rule.  For any
stateState that lacks the ability to issue PSD permits for GHG sources
consistent with this final rule, we intend to undertake a separate
action to issue a SIP call, under CAA section 110(k)(5).  As
appropriate, we may also impose a FIP through 40 CFR section 52.21 to
ensure that GHG sources will be permitted consistent with this final
rule.

6.  Title V Programs

	Our final action also differs from the proposal in the specific
regulatory mechanism by which we tailor the definition of “major
source” for title V permit programs, but is a logical outgrowth of our
proposed rule.  EPA proposed to implement tailoring for GHGs under title
V by excluding sources of GHGs from the general definition of “major
source” under 40 CFR 70.2 and 71.2, and adding a separate definition
of “major source” with tailored thresholds for sources of GHGs.  In
response to comments, particularly from states concerned with
implementation of the proposed approach under state law, EPA is adopting
an approach in the final rule that (1) amends the definition of “major
source” by codifying EPA’s longstanding interpretation that
applicability for a “major stationary source” under CAA sections
501(2)(B) and 302(j) and 40 CFR 70.2 and 71.2 is triggered by sources of
pollutants “subject to regulation,” and (2) addsadding a definition
of “subject to regulation.”  Further, we are delaying our action to
move forward with limiting our previous approval of existing state part
70 programs.

	We are finalizingfinalize this alternative approach to address concerns
similar to those we received with respect to state implementation of
SIP-approved PSD programs.  Specifically, we received comments that the
mechanism we proposed would not address the significant administrative
and programmatic considerations associated with permitting GHGs under
title V, because the 100 tpy threshold would continue to apply as a
matter of state law.  Commenters stated that states would need to
undertake a regulatory and/or legislative process to change the
threshold in their state laws which they could not complete before the
laws would otherwise require issuance of operating permits to GHGGHGs
sources.

After considering the commenters’ concerns, we are finalizing an
approach designed to address the state law concerns for states.  As a
result, it is unnecessary to move forward at this time with our proposed
approach to limit approval of existing part 70 programs in many states.

	EPA’s approach involves the interrelationship of terms within the
part 70 definition of “major source” in title V and EPA’s
implementing regulations, and EPA’s historical practice of
interpreting the term “any air pollutant” in the “major stationary
source” component of that definition.  EPA believes the approach in
the final rule will allow many states to adopt the final rule through
interpretation of existing state laws.  Specifically, paragraph (3)
within the definition of “major source” found in 40 CFR 70.2 and
71.2 defines a major source as  “a major stationary source of air
pollutants, as defined in section 302 of the Act, that directly emits or
has the potential to emit, 100 tpy or more of any air pollutant
….”…”  The EPA previously articulated the Agency’s
interpretation that the regulatory and statutory definitions of “major
source” under title V, including the term “any air pollutant,”
applies to pollutants “subject to regulation.”  Wegman Memorandum
from Lydia N. Wegman, Deputy Director, Office of Air Quality Planning
and Standards, U.S. EPA, to Air Division Directors, “Definition of
Regulated Air Pollutant for Purposes of Title V” (April 26, 1993)
(Wegman Memo).  EPA recently re-affirmed this position in EPA’s
Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by Clean Air Act Permitting Programs.  75 FR 17704,
17022-23 (April 2, 2010) (Interpretive Memo reconsideration final
actionMemorandum Reconsideration Final Action).

	Accordingly, under our long-established policy, states historically
have interpreted the term “any air pollutant” under the title V
definition of “major source” to mean any pollutant “subject to
regulation” under the Act.  Thus, as a matter of established
interpretation, EPA and states effectively read the definition of
“major source” under title V to include a source “… that
directly emits or has the potential to emit, 100 tpy or more of any air
pollutant subject to regulation under the Act”  ([emphasis added).].
By amending our regulations to expressly include and define “subject
to regulation” to implement our tailoring for GHGs under title V, we
are seeking to enable states to adopt and implement this approach
through a continued interpretation of the phrase “any air pollutant”
within the “major source” definition, without the need for changes
to state regulations or statutes.  States may be able to track EPA’s
approach to tailoring for GHG permitting without regulatory or statutory
changes, for example, where a state has taken the position, or
determines now, that the state’s interpretation of “major source,”
“subject to regulation” and/or “any air pollutant” is intended
to track EPA’s interpretation.

	Thus, EPA is adding the phrase “subject to regulation” to the
definition of “major source” under 40 CFR 70.2 and 71.2.  EPA is
also adding to these regulations a definition of “subject to
regulation.”  Under the part 70 and part 71 regulatory changes
adopted, the term “subject to regulation,” for purposes of the
definition of “major source,” has two components.  The first
component codifies the general approach EPA recently articulated in the
“Reconsideration of Interpretation of Regulations That Determine
Pollutants Covered by Clean Air Act Permitting.”  75 FR 17704.  Under
this first component, a pollutant “subject to regulation” is defined
to mean a pollutant subject to either a provision in the CAA or
regulation adopted by EPA under the CAA that requires actual control of
emissions of that pollutant and that has taken effect under the CAA.
See id. at 17022-23; Wegman Memorandum Memo at 4-5.  To address
tailoring for GHGs, EPA includes a second component of the definition of
“subject to regulation,” specifying that GHGs are not subject to
regulation for purposes of defining a major source, unless as of July 1,
2011, the emissions of GHGs are from a source emitting or having the
potential to emit 100,000 tpy of GHGs on a CO2e basis.

	As explained previously, we find no substantive difference between the
alternative mechanisms for implementing GHG tailoring in the final rule.
 Whether we add GHG thresholds directly to the definition of “major
source” (as we proposed), or alternatively, expressly add and define
the term “subject to regulation,” both approaches revise the
definition of “major source” to implement the GHG Tailoring Rule.
Accordingly, we adopt the later approach to facilitate state
implementation of the final rule through an interpretation of existing
state part 70 programs.  Similar to our explanation previously for PSD,
while we adopt the “subject to regulation” mechanism for
implementing GHG tailoring in the final rule, the thrust of our
rulemaking is to apply the title V definition of “major source” –
which includes the statutory term, “major stationary source” -- to
GHG sources by treating only GHG sources that emit at levels above the
Stepssteps 1 and 2 thresholds as meeting that definition.  Further, we
believe that our action may reasonably be construed to revise any of
several terms in that definition, including (1i) the numerical
thresholds, as we proposed; (2ii) the term “any air pollutant,”
(3iii) the term “a major stationary source,” (4iv) the term
“subject to regulation,” which, as discussed previously, our
regulations graft into the definition of “major source.”  We believe
that the specific choice of which term constitutes the legal mechanism
does not have a substantive legal effect because each mechanism involves
one of the components of the regulatory term “major source” –
which embodies the meaning of the statutory term, “major source” --
and it is that term that we are interpreting to tailor title V
applicability for GHG-emitting sources.  Thus, while the “subject to
regulation” mechanism facilitates expeditious implementation by
states, and we are therefore revising our regulations to adopt this
approach, we otherwise find no substantive difference between the
alternative mechanisms we may use to finalize the proposed rule.

Further, similar to our revised approach for addressing state
SIP-approved PSD programs, we are delaying our action to limit our
previous approvals for state part 70 operating permit programs.  In our
proposed rule, we explained our concern that states lack adequate
personnel and resources to carry out part 70 operating permit programs
for GHG sources that emit or have the potential to emit 100 tpy of GHGs.
 Accordingly, we proposed to use our general rulemaking authority under
section 301(a) of the CAA and APA section 553 to limit our prior
approval of state operating permit programs.  This limited approval
action would have had the effect of applying CAA permitting requirements
only to sources that exceed the permitting thresholds established in
this rule for the phase-in, because only those sources would be covered
by the federally approved part 70 programs.  74 FR at 55345.  As
discussed previously, we are proceeding with a slightly revised approach
to address concerns similar to those raised with our proposed approach
for addressing SIP-approved PSD permit programs.  Because we now
recognize that, like the PSD program, many states will be able to
implement the final rules without the need to revise their existing part
70 operating permit programs, we are delaying further action on our
proposal to limit approval of existing part 70 programs until we better
understand how permitting authorities will implement our final rule.

In addition to the information requested previously on SIP-approved PSD
permit programs, we ask each state to submit a letter to the appropriate
EPA Regional Administrator no later than [INSERT DATE 60 DAYS AFTER DATE
OF PUBLICATION IN THE FEDERAL REGISTERPROMULGATION] detailing the
state’s  plan for permitting of GHG sources under the state’s part
70 program.  In that letter, states should explain whether they will
adopt an interpretation of the terms “major source” or any of its
component terms – “a major stationary source,” “any air
pollutant,” or “subject to regulation,” or the numericalnumeral
thresholds -- that is consistent with EPA’s regulatory interpretation
of the these terms as codified at 40 CFR 70.2, and whether the state
intends to adopt the interpretation without undertaking a regulatory or
legislative process.  This approach may be available, for example, where
a state has taken the position, or determines now, that the state’s
interpretation of these terms is intended to track EPA’s
interpretation, resulting in title V permitting for sources of GHGs as
described in EPA’s regulations adopted in this rule.  If a state must
revise its title V regulations or statutes to implement the
interpretation, we ask that it provides an estimate of the time to adopt
final rules or statutes in its letter to the Regional Administrator.  If
a state chooses not to (or cannot) adopt our interpretation, the letter
should address whether the state has alternative authority to implement
the GHG tailoring approach or some other approach that is at least as
stringent, but which also addresses the expected shortfalls in personnel
and funding and delays in permitting that would exist if the state
carried out permitting under part 70 program thresholds lower than those
adopted by EPA in this final rule.  For any state that is unable or
unwilling to adopt the permitting thresholds in the final rules, and
otherwise is unable to demonstrate adequate personnel and funding, EPA
will move forward with finalizing a narrowed limited approval of the
state’s existing part 70 program.  If we do so, then we will respond
in that action to comments on our proposal.

In our proposed rule, we also noted that a handful of part 70 operating
permit programs may include provisions that would not require operating
permits for any source of GHG emissions because, for example, the
programs may apply only to pollutants specifically identified in the
program provisions, and the provisions do not specifically identify
GHGs.  In these cases, states may be unable to interpret their
regulatory provisions to interpret the term “any pollutant” to
include pollutants “subject to regulation.”  We indicated that we
intended to take separate action to identify these programs, and to take
regulatory action to correct this deficiency.  Accordingly, we ask any
state or local permitting agency that does not believe its existing part
70 regulations convey authority to issue title V permits to GHG sources
consistent with the final rule to notify the EPA Regional Administrator
by letter as to whether the state intends to undertake rulemaking to
revise its rules consistent with these applicability thresholds.  This
notification should be done no later than the previously described
letter regarding adoption of the Tailoring Rule, and could be combined
with similar notifications we request regarding the PSD program.  We
intend to undertake a separate regulatory action to address part 70
programs that lack the ability to issue operating permits for GHG
sources consistent with the final rule.  We also intend to use our
federal title V authority to ensure that GHG sources will be permitted
consistent with the final rule.

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

The title V program requires permitting authorities to collect fees
“sufficient to cover all reasonable (direct and indirect) costs
required to develop and administer [title V] programs.”   To meet this
requirement, permitting authorities either collect an amount not less
than a minimum amount specified in our rules (known as the
“presumptive minimum”), or may collect a different amount (usually
less than the presumptive minimum).  We did not propose to change the
title V fee regulations in our notice of proposed rulemaking for this
action, nor did we propose to require new fee demonstrations when title
V programs begin to address GHGs.  However, we did recommend that each
state, local or tribal program review its resource needs for GHGs GHG
and determine if the existing fee approaches will be adequate.  If those
approaches will not be adequate, we suggested that states should be
proactive in raising fees to cover the direct and indirect costs of the
program or develop other alternative approaches to meet the shortfall.
We are retaining this proposed approach, and are not changing our fee
regulations as part of this final action establishing Steps steps 1 and
2 of the phase-in.  However, we are offering some additional
clarification of our fee approach during these steps in response to
comments we received on this issue.  Additional discussion of fees will
be included as part of subsequent actions establishing Stepstep 3 and
beyond.

A few state commenters suggested that EPA should modify part 70 to adopt
a presumptive minimum fee (or range for such fee) for GHGs, some of whom
suggested that current fees may be insufficient to cover the costs of
their program.  It is important to clarify that altering the presumptive
minimum would only affect those states that chose to charge the
presumptive minimum fee to sources.  Most states – including some of
the commenters asking EPA to raise the presumptive minimum -- collect a
lower amount that is not based on the presumptive minimum, but rather,
relies on another fee schedule that it developed and EPA approved as
adequate to cover costs.  Therefore, it is useful to first discuss our
approach to programs that have fee schedules resulting in a different
amount before discussing our approach to the presumptive minimum.

Because of the added GHG title V permitting workload described elsewhere
in this notice, any state that will not, under its current fee
structure, collect fees adequate to fund the permitting of GHG sources
must alter its fee structure in order to meet the requirement that fees
be adequate to cover costs.  Changes may not be required in every
instance; circumstances will vary from state to state.  For example, a
state may see increases in revenue from newly-covered sources (based on
emissions of pollutants already subject to fees) that fully cover the
state’s increased costs, or a state may be over-collecting fees now
and could use the surplus to offset the increased costs.  Nonetheless,
in many cases, we think states will need to adjust their fee structures
to cover the costs of GHG permitting in order to meet the requirements
of the Act and our regulations.

For this reason, although we are not calling for new fee demonstrations
at this time, we plan to closely monitor state title V programs during
the first two steps of the Tailoring Rule to ensure that the added
workload from incorporating GHGs into the permit program does not result
in fee shortfalls that imperil operating permit program implementation
and enforcement, whatever the basis of the states’ fee schedule.  As
described in the proposal, such fee oversight by EPA may involve fee
audits under the authority of 40 CFR §70.9(b)(5) to ensure that
adequate fees are collected in the aggregate to cover program costs,
with emphasis on whether the additional GHG workload is being
appropriately funded.  Also, EPA retains the ability to initiate a
program revision under 40 CFR §70.4(i)(3) or issue a notice of
deficiency under the process described in 40 CFR §70.10(b) to address
fee adequacy issues, which may be uncovered during a fee audit.  By
relying on existing oversight measures, we are ensuring that the fee
requirements are met with a minimum of disruption to existing programs
at a time when they will already be facing significant challenges
related to GHG permitting.

Turning to the minority of states that do use the presumptive minimum,
we did not propose to change the presumptive minimum calculation method
to account for GHGs.  Currently under the statute and our rules, the
presumptive minimum is based on a subset of air pollutants (i.e., VOCs,
NAAQS pollutants except for CO, and pollutants regulated under the NSPS
and MACT standards promulgated under sections 111 and 112 of the Act,
respectively) that does not include GHGs.  The amount is specified on a
per-ton basis and changes with inflation (it is currently set at
$43.75/ton), but does not apply to emissions over 4,000 tpy of a given
pollutant from a given source.  We noted several difficulties in
applying the presumptive minimum to GHG, including the large amounts of
GHG emissions relative to other pollutants and the need for better data
to establish a GHG-specific amount.  Noting that GHGs are not currently
included in the Act’s list of pollutants to which the presumptive fee
applies, we also invited comment on whether we should raise the fee for
listed pollutants to cover the added cost of GHG permitting.

A few state commenters asked us to set a presumptive fee for GHGs, which
we take to mean we should add GHGs to the list of pollutants to which a
presumptive fee would apply.  However, many commenters noted that the
current presumptive minimum fee is unreasonable for GHGs because GHGs
are emitted in greater quantities than the pollutants currently subject
to presumptive fees, which would result in excessive fees.  These
commenters believe that EPA needs to limit the fees that states can
charge for GHGs.  Moreover, one commenter read the statute to prohibit
us from listing GHGs in the presumptive fee calculation in the first
place.  Several commenters disagreed with the idea of instead increasing
the presumptive fee for other pollutants to cover the cost of regulating
GHGs, some of whom believed that this would unfairly punish existing
sources or would bring in no new revenue from sources triggering title V
for the first time.

After considering these comments, we remain disinclined, as we were at
proposal, to change the presumptive fee calculation regulations.  While
there is some support for changing the regulations, the comments confirm
the challenges in doing so.  While we expressly rejected charging the
full presumptive cost per ton amount for GHG, we also did not propose
language to establish a different amount just for GHG, to establish
whether a different tpy cap would apply, or to assess whether GHGs could
even be added to the list.  Thus, many commenters were very concerned
about whether the full $43.75 or the 4000 tpy cap would apply to GHG if
we listed it as a regulated pollutant for fee purposes.  Furthermore, we
noted at proposal, and commenters did not disagree, that more data would
be needed to establish the appropriate basis for the GHG presumptive
minimum.  We are not taking a final position in this notice on whether
the statute is amenable to including GHG in the presumptive fee
calculation currently, but these comments illustrate some of the
difficulties of such an approach.

At the same time, we are not increasing the presumptive minimum for
other pollutants already included in the fee calculation.  We disagree
with the commenter who said such an approach would bring in no new
revenue from newly-subject sources.  Many of the newly subject sources
would emit already-included pollutants.  If new revenue from these
pollutants were insufficient, and because the Act does not specify how
the shortfall must be addressed, the amount of any projected shortfall
could be made up by increasing fees on these pollutants.  In fact, the
projected shortfall could be addressed without having to inventory GHG
emissions from title V sources, since the emissions of already-included
pollutants are well-known.  We also note that, although some commenters
are concerned that failing to assess fees for GHGs directly would be
unfair, the statute does not provide that the presumptive fee be
proportional to each type of pollutant or be proportionally allocated to
all sources.  Rather, the presumptive fee approach provides a backstop
for states that do not wish to adopt a more tailored approach.
Nonetheless, we have decided not to increase the presumptive fee amounts
for other pollutants because we lack information about the extent to
which shortfalls exist due to GHG permitting, and which mix of sources
and fees is appropriate for addressing any such shortfall in a state.
This decision also provides greater flexibility to states and minimizes
disruption to existing programs.

We note that, contrary to the statements of some commenters, the CAA
provisions allowing for a presumptive fee calculation do not override
the basic requirement that fees be adequate to cover costs.  As noted
previously, we expect states to see a revenue increase from emissions of
listed pollutants at newly-major sources for GHGs, and it is also
possible that the presumptive minimum may currently be resulting in
over-collection of fees in a state.  Thus, a state continuing to use the
presumptive minimum may not have a shortfall.  However, if states using
the presumptive minimum approach do have a revenue shortfall due to GHG
permitting, the statute requires the shortfall to be addressed.  The EPA
has had, and will continue to have, the ability to require states that
use the presumptive minimum to increase their fees if the presumptive
minimum results in a revenue shortfall that imperils operating permit
program implementation and enforcement.  Thus, although we are not
changing the presumptive minimum in our regulations, we plan to follow
the same oversight approach for states using the presumptive minimum as
for those collecting less based on a resource demonstration.  As
described previously, this approach may involve fee audits with emphasis
on whether the additional GHG workload is being appropriately funded,
and other appropriate follow-up.

Consistent with our proposal, EPA is not modifying its own part 71 fee
structure (which closely mirrors the presumptive minimum) in order to
charge an additional fee for GHGs.  EPA must revise its fee schedule if
the schedule does not reflect the costs of program administration.  We
have not determined that the existing fee structure will be inadequate
to fund the part 71 programs costs during the first two phases of
permitting GHGs as set forth in this action.  However, we are required
to review the fee schedule every 2 years, and make changes to the fee
schedule as necessary to reflect permit program costs.  40 CFR
71.9(n)(2).  Thus we will continue to examine the increases in part 71
burden due to GHG permitting, the current revenue collection, and the
increases in revenue from newly-subject part 71 sources, and will adjust
the part 71 fee approach accordingly.

Finally, several state and industry commenters asked EPA to provide
guidance and recommendations for an appropriate GHG fee structure.  We
note that title V grants permitting authorities considerable discretion
in charging fees to sources for title V purposes and does not require or
prohibit fees specifically for GHGs, provided the states collect fees in
the aggregate that are sufficient to cover all the direct and indirect
program costs.  In responding to requests for guidance, we do not wish
to limit state discretion.  For example, some commenters suggest that
EPA prohibit emissions-based fees for GHGs GHG or cap the amount that
can be collected, while others suggest we provide a range of acceptable
fees.  We are concerned that, given the wide variety of fee approaches
that states now take, providing specific guidance may be disruptive,
rather than helpful, to states.

On the other hand, we recognize that it will initially be difficult for
states to establish an appropriate emissions fee for GHGs.  As noted
previously, there are currently limited data available for establishing
such a fee, and, due to the large quantities of GHG emissions, such a
fee may only amount to a few cents per ton.  At the same time, as noted
in the proposal, a number similar to that used for other pollutants
(e.g., the presumptive minimum of approximately $45/ton of GHG) would be
inappropriate because it would likely result in huge over-collection.
Because of this challenge, we note that 40 CFR §70.9(b)(3) allows the
state to charge fees to individual sources on any basis (e.g., emission
fee, application fee, service-based fees, or others, in any
combination).  While most states use emissions-based fees, there is
merit to considering all the available fee bases to address increased
GHG workload, including approaches that do not require a GHG emissions
inventory for fee purposes.  For example, where it is possible to
estimate a revenue shortfall as a percentage of fee revenue, it may be
appropriate to simply attach a percentage-based surcharge to each
source’s fee to match that shortfall.  Similarly, where the shortfall
could be estimated as a total dollar amount, a flat surcharge could be
added to each source’s fee to address the shortfall.

These suggestions should not be read to indicate that EPA prefers any
particular approach, or that EPA rejects a cost per ton approach.
Rather, they illustrate that it is possible to address a revenue
shortfall without establishing a GHG per-ton fee.  While the EPA is
declining to recommend specific approaches in this preamble, we are
committed to assisting states in implementing the fee requirements for
GHG.  Therefore, we will work with any state that requests assistance
from EPA in developing a workable fee approach.

E.  Other Actions and Issues

1.  Permit Streamlining Techniques

In our proposal, we stated that while we were phasing-in permitting
requirements, we would make a concerted effort to assess and implement
streamlining options, tools, and guidance to reduce the costs to sources
and permitting authorities of GHG permitting.  We recognized that the
development and implementation of these techniques should be an integral
part of our strategy during the phase-in period, and we stated that we
would undertake as many streamlining actions as possible, as quickly as
possible.  We discussed several streamlining techniques in particular,
including (1) defining potential to emit (“PTE”) for various source
categories, (2) establishing emission limits for various source
categories that constitute presumptive BACT, (3) establishing procedures
for use of general permits and permits-by-rule, (4) establishing
procedures for electronic permitting, and (5) establishing “lean”
techniques for permit process improvements.  The first three of these
approaches have the potential to have the greatest impact in reducing
the numbers of sources subject to PSD or title V (the definition of PTE)
or of reducing permitting costs (presumptive BACT and general permits or
permits-by-rule).

In our proposal, we also described the timing for development and
implementation of these streamlining techniques.  We explained that each
of the first three techniques would generally take 3-4 years to develop
and implement, and therefore would be of limited use in the near-term.
This time frame is necessary because EPA will first need to collect and
analyze small source data that we do not currently have – because
these are sources that EPA has not traditionally regulated ---  in order
to assess which of these techniques are viable or effective for such
sources.  In general, EPA will then need to conduct notice-and-comment
rulemaking to establish the approaches, and that rulemaking will need to
address various legal and policy aspects of these approaches.  After
that, the permitting authorities will need some time to adopt the
streamlining techniques as part of their permitting programs.

We received several comments on streamlining techniques.  In general,
the comments indicate widespread support for our pursuit of streamlining
approaches, but some commenters were concerned that one or more of
EPA’s identified streamlining options were complex, vague,
ineffective, and questionable legally.  Noting our proposal to phase -in
permitting, in part to allow more time to develop streamlining options
for smaller sources, some commenters suggested that we should delay
permitting for larger sources for the same reasons.  We disagree.  Such
a delay is not justified under our legal basis for this rule.  While
implementation of Stepssteps 1 and 2 – which will cover larger sources
-- will pose implementation challenges, and some of the streamlining
tools could assist with meeting these challenges, we have assessed the
burdens associated with GHG permitting and have established a phase-in
schedule that represents a manageable workload, even in the absence of
streamlining techniques.  On the other hand, we do agree with these
commenters that, absent streamlining, applying PSD and title V
requirements to the much larger number of small sources would lead to
absurd results and administrative impossibility.  The sources for whom
the phase-in delays applicability are precisely the sources that have
the greatest need for streamlining measures, and thus the greatest need
for a deferral while we develop and implement streamlining options.

In addition, commenters generally echoed many of our concerns about why
it will take time to put these measures in place, and no commenter
presented any information to suggest that our 3-4 year estimate for the
PTE, presumptive BACT, and general permit measures was invalid.

For these three techniques, we continue to believe that as we noted at
proposal, we will require collection of significant category-specific
data for source and emission unit types that have heretofore generally
not been regulated by the CAA (e.g., furnaces, water heaters, etc.),
which could take up to 1 year.  Moreover, commenters had differences of
opinion as to whether and how we should move forward on these
approaches, and some raised policy and legal issues that we would likely
want to explore through a notice and comment process in order to assess
which of these measures are viable to pursue further.  Even if a
rulemaking were done expeditiously, it would likely require 1 year.
Finally, unlike lean and electronic permitting, these approaches, once
finalized by EPA, will likely require additional time of up to 2 years
for states to adopt.  Thus, it is clear that these approaches will not
be in place in time to ease any burden prior to the planned rulemaking
for Stepstep 3.

Some commenters did observe that the fourth and fifth techniques, lean
and electronic permitting, could, at least theoretically, become
available sooner.  However, these commenters also noted that successful
design and implementation of these approaches will require
implementation experience with GHG permitting that is not now available.
 We expect that for the lean and electronic permitting techniques, at
least 1 year of implementation experience (of the type that we will gain
starting in 2011) would be required, plus at least an additional year to
extrapolate that experience to small sources and put these approaches
into effect for small source permitting.  Thus, we do not think the lean
and electronic permitting would be in place before the beginning of
2013.  Moreover, a handful of commenters questioned whether lean and/or
electronic permitting would alleviate significant burden.  Thus we are
not able, at this time, to presume that these approaches will ease any
burden prior to the planned rulemaking for Stepstep 3.

	It is also important to note that, as a practical matter, while these
efforts to streamline the program for small sources are underway, EPA
and states will also be devoting a significant amount of their
permitting resources and expertise to implementing the PSD and title V
programs for the GHG-emitting sources covered under Steps 1 and 2.  We
have established these steps in a manner that they will be feasible for
EPA and state/local/tribal authorities, but even so, they will not only
consume current permitting authority resources, but they will also
require substantial additional resources.  As a result, the efforts to
develop and implement streamlining techniques will have to compete with
the work necessary to administer existing programs.  For example, during
the remainder of 2010, as described elsewhere in this notice, EPA
permitting program resources will, in addition to continuing to
administer programs for non-GHG pollutants, be used to conduct at least
the following GHG-related activities in addition to streamlining: (1)
develop BACT and other information and guidance for implementing
programs for sources covered by Step 1, followed by additional guidance
and information for sources covered by Step 2; (2) review and act on
information we receive regarding state adoption of GHG permitting
requirements, which may entail  narrowing of previous SIP approvals or
processing of other programmatic revisions; and (3) propose and finalize
measures to address programs with deficiencies in GHG coverage.  As the
beginning of Stepstep 2 nears, we will also begin to receive and process
the first applications for permits that will incorporate GHG
requirements (i.e., those that will be issued after January 2, 2011).
States seeking to implement streamlining approaches will face similar
competition for permitting resources.

	These time frames and resource considerations for streamlining confirm
the approach to phase-in that we are taking in this rule.  First and
foremost, they make clear that it will not be possible to have
streamlining measures in place in time for either Step 1 or Step 2.
Therefore our selection of threshold for those steps is not built on
assumptions that streamlining will remove some or all of the burden
during those steps.

	Second, they make clear that, while no significant streamlining can be
in place by the time we must begin to develop the Step step 3 rule
(i.e., latter half of 2011, to promulgate by July 2012, effective July
2013), it is likely that by that time EPA and states will have had an
opportunity to gain implementation experience that could serve as the
basis for beginning to implement streamlining techniques that do not
require rulemaking or state adoption (e.g., lean and electronic
permitting).  It is also likely that we will have had an opportunity to
gather technical information – which we have already begun to gather
-- for certain source and emissions unit categories that would be
necessary to support proposal of PTE or presumptive BACT approaches for
those categories.  We expect that the Stepstep 3 rulemaking will provide
an opportunity for us to use that experience and data to begin to
propose streamlining approaches that need notice and comment rulemaking.
 We can also begin to take into account any burden reductions from
possible early streamlining efforts – that is, through lean and
electronic permitting -- in the establishment of Stepstep 3.

	Third, it is clear that the potential availability of streamlining
measures does not call into question our decision that in no event will
we broaden PSD and title V applicability to cover GHG-emitting sources
below the 50,000 tpy CO2e level prior to July 2016, as discussed
elsewhere.  EPA cannot now predict the resources that will be required
to implement PSD and title V programs for GHG-emitting sources once
various streamlining techniques are ultimately completed.  This is
uncertain not only because we need data and implementation experience
with GHG permitting during Stepssteps 1, 2, and 3 that we can apply to
estimates for small sources, but also because, as comments indicate,
there is a broad range of legal and policy issues to consider in
crafting the streamlining approaches we ultimately adopt.  We have
presented an initial assessment of options and obtained views of
commenters both supporting and opposing them, and it is the result of
these future actions, whose outcomes are uncertain at this time, that
will ultimately determine the extent to which streamlining approaches
will allow for the administration of PSD and title V programs for
numerous small sources.  Thus, while we are optimistic that we can craft
workable, common-sense solutions, we nonetheless, believe it is
important to preserve our small source exclusion until we have not only
had time to put the streamlining approaches in place, but also have had
time to assess the burdens that remain, before we bring in additional
sources below the 50,000 tpy CO2e levels.  We believe that the 6-year
timeframe will require a sustained intensive effort by EPA and states to
develop, adopt, and implement streamlining techniques, and will require
EPA to then evaluate those techniques and complete a rulemaking
concerning PSD and title V applicability to small-sources based on that
evaluation.  In this manner, the 6-year period will give us the
necessary time to make the best decisions about the actions we should
take beyond Stepstep 3.

While comments make clear that there are issues to be addressed, nothing
in the comments has persuaded us that we should abandon our streamlining
efforts.  To the contrary, the strong support for these efforts shown by
many commenters reinforces our intention, as stated at proposal, to move
forward with these approaches as an integral part of our phase-in
approach.  Moreover, notwithstanding the competition for GHG permitting
resources and expertise, we believe it is critical that we move forward
expeditiously.  As noted previously, we are already taking a first step
by initiating permitting for larger sources, beginning January 2011,
that will begin to provide valuable implementation experience.  This
experience can be useful in allowing states to begin implementing early
streamlining measures, like lean and electronic permitting, which do not
require EPA action.  We have also already begun, and will continue,
developing data necessary to support possible rulemakings addressing
approaches such as PTE, presumptive BACT, and/or general permits.  We
expect to be able to use these data to support possible rulemakings on
these topics, as appropriate, at about the same time as our Stepstep 3
rulemaking.  There may also be available streamlining options that were
not described in our proposal that warrant further consideration.
Because of the uncertainty surrounding such approaches, we are not
committing to finalize rules on any particular approach, but we do plan
to explore all streamlining options as expeditiously as possible,
beginning immediately and proceeding throughout the phase-in period, and
we encourage permitting authorities to do the same.  We commit to
consider a wide array of possible streamlining measures, and we commit
to propose and take comment on, in the Stepstep 3 rulemaking, a set of
those measures that we determine are viable to pursue further.

2.   Guidance for BACTBest Available Control Technology Determinations

The CAA requires that a PSD permit contain, among other things,
emissions limits based on the BACT for each pollutant subject to
regulation under the Act emitted from the source that triggers PSD.  42
U.S.C. § 7475(a)(4); 42 U.S.C. § 7479(3).  BACT is defined as follows:

	(3) The term "best available control technology" means an emission
limitation based on the maximum degree of reduction of each pollutant
subject to regulation under this Act emitted from or which results from
any major emitting facility, which the permitting authority, on a
case-by-case basis, taking into account energy, environmental, and
economic impacts and other costs, determines is achievable for such
facility through application of production processes and available
methods, systems, and techniques, including fuel cleaning, clean fuels,
or treatment or innovative fuel combustion techniques for control of
each such pollutant. In no event shall application of "best available
control technology" result in emissions of any pollutants which will
exceed the emissions allowed by any applicable standard established
pursuant to section 111 or 112 of this Act.  Emissions from any source
utilizing clean fuels, or any other means, to comply with this paragraph
shall not be allowed to increase above levels that would have been
required under this paragraph as it existed prior to enactment of the
Clean Air Act Amendments of 1990.

42 U.S.C. § 7479(3).

Thus, the BACT process is designed to determine the most effective
control strategies achievable in each instance, considering energy,
environmental, and economic impacts.  However, the case-by-case nature
of BACT, together with the range of factors and technologies that must
be considered, presents a challenge in determining BACT for newly
regulated pollutants.  When a new pollutant is regulated, the first
permit applicants and permitting authorities that are faced with
determining BACT for a new pollutant will likely need to invest more
time and resources in gathering and analyzing information necessary to
make an assessment of BACT under the statutory criteria.  Once the PSD
permitting program matures with respect to the new pollutant, successive
BACT analyses will establish precedents that can inform subsequent BACT
determinations.  While the BACT provisions clearly contemplate that the
permitting authority evaluate control strategies on a case-by-case
basis, EPA recognizes the need to develop and share policy guidance and
technical information for sources and permitting authorities as they
begin to permit sources of newly regulated pollutants, such as GHGs.
When applied in a practical manner, this additional EPA guidance and
technical information should reduce time and resource needs when
evaluating BACT for newly regulated pollutants.

As described in the proposed GHG Tailoring Rule, EPA intends to compile
and make available technical and background information on GHG emission
factors, control technologies and measures, and measurement and
monitoring methodologies for key GHG source categories.  We expressed
our intent to work closely with stakeholders in developing this
supporting information and to ensure this information is available in
sufficient time to assist permitting agencies in their BACT
determinations.  The proposal took comment on what other types of
support or assistance EPA can provide to initially help air pollution
control agencies with the permitting of GHGs.

Commenters on the proposed GHG Tailoring Rule generally supported EPA
providing technical information and policy guidance for sources of GHGs.
 Several commenters specifically requested guidance to clarify
GHG-related issues, such as how to compute CO2e emissions, how to
evaluate emissions of CO2 from biomass fuel, and whether an air quality
analysis will be required for GHGs.  Additionally, commenters requested
that EPA issue “white papers” and other tools that would provide
information on a range of control technologies and measures for major
stationary source categories, such as power plants, cement kilns, glass
furnaces, and other sources.  Many of these commenters further requested
that EPA provide an opportunity for stakeholder input on the guidance,
and a few commenters insisted that permitting for sources of GHGs should
not begin prior to issuing final guidance.

Consistent with our commitment at proposal to involve all stakeholders
in our guidance development, EPA called upon the CAAAC in September
2009, to provide assistance and recommendations for what types of
guidance and technical

information would be helpful.  Specifically, our charge to the CAAAC
was “… to discuss and identify the major issues and potential
barriers to implementing the PSD Program under the CAA for greenhouse
gases … [and] focus initially on the BACT requirement, including
information and guidance that would be useful for EPA to provide
concerning the technical, economic, and environmental performance
characteristics of potential BACT options.”  This charge also
requested the CAAAC to “identify and discuss approaches to enable
state and local permitting authorities to apply the BACT criteria in a
consistent, practical and efficient manner.”

At its October 6, 2009 meeting, the CAAAC established a Climate Change
Work Group, made up of 35 representatives from a variety of industries,
state and local governments, and environmental and public health
non-profit organizations, organized under CAAAC’s Permits, New Source
Review and Toxics Subcommittee.  The Work Group initially focused its
attention on the procedure for evaluating BACT and decided that the
process and criteria for determining BACT for criteria pollutants
represented a workable and acceptable framework for GHGs.  The Work
Group also recommended a second phase, in which the Work Group would
consider member proposals regarding possible alternative or
supplementary approaches to applying the PSD program to GHG sources.

In February 2010, the CAAAC completed work on the first phase of its
effort and sent EPA a list of recommendations that highlighted areas of
the BACT determination process that are in need of technical and policy
guidance.  For more information, see the Interim Phase I Report on
Issues related to BACT for GHGs, February 3, 2010 that is located in the
public docket for this rulemaking and at   HYPERLINK
"http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf"
http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf .
In response, we are working on a number of fronts to develop technical
information, guidance, and training to assist states in permitting large
stationary sources of GHGs, including identifying GHG control measures
for different industries.  EPA is currently working with states on
technical information and data needs related to BACT determinations for
GHGs.  This includes developing the EPA Office of Research and
Development GHG Mitigation Strategies Database, enhancing the
RACT/BACT/LAER Clearinghouse to include GHG-specific fields, and
preparing technical information on sector-based GHG control measures.
Also, EPA is actively developing BACT policy guidance for GHGs that will
undergo notice and comment and will culminate in training courses for
state, local, and tribal permitting authorities.  The results of all of
these efforts will roll out over the remainder of 2010.  EPA currently
awaits the Work Group’s recommendations from its second phase of
deliberations, which is underway as of the date of this notice.

EPA does not agree with some commenters’ suggestion that EPA should
delay permitting of any sources until final BACT guidance is issued.  As
discussed in the final action on reconsideration of the Interpretive
Memo, delaying the application of BACT to enable the development of
guidance or control strategies is not consistent with the BACT
requirements.  63 FR at 17008.  Furthermore, as just described, EPA
expects such a delay to be unnecessary because EPA will soon begin
providing technical information to inform BACT decisions, and will
continue to provide additional guidance prior to the date that GHG
permitting begins.  However, even in the absence of such guidance, a
delay would not be justified under the legal doctrines of “absurd
results” and “administrative necessity”.  While implementation of
the BACT requirement during Stepssteps 1 and 2 will pose implementation
challenges, EPA has assessed the burden associated with GHG permitting
with consideration given to these challenges, and has established a
phase-in schedule that represents a manageable workload.

Thus, while BACT will remain a case-by-case assessment, as it always has
been under the PSD program, EPA is confident that this guidance
development effort will help support a smooth transition to permitting
emissions of GHGs.  Furthermore, EPA will continue to work to provide
the most updated information and support tools to allow permitting
authorities to share and access the most updated information on GHG BACT
determinations as they are made once permitting of GHGs begins.  EPA
remains committed to involving stakeholders in the upcoming efforts to
develop guidance to help to permitting authorities in making BACT
determinations for sources of GHGs.

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

Although we did not propose any categorical exemptions, many commenters
requested exemptions from major source and major modification
applicability determinations under title V and PSD for certain types of
GHG-emitting sources or certain types of GHG emissions as follows:

Source Categories.  Many commenters requested various exemptions or
exclusions from source applicability for GHGs under both PSD and title V
permitting, either during the phase-in period or permanently, citing
anticipated burdens, societal costs, and differences in emission
characteristics.  Commenters representing non-traditional sources or
source categories (sources that have not historically been required to
get permits) requested exemptions from permitting based on GHG
emissions, including agricultural sources, residential sources, and
small businesses.  In general, these commenters sometimes, but not
always cited “absurd results” and “administrative necessity”
arguments in their exemption requests.

Several commenters from sectors that consume a great deal of energy in
their industrial processes and that are subject to international
competitiveness, such as aluminum, steel, cement, glass, pulp and paper,
and other manufacturers, requested that they be exempt from permitting
under this final rule.  These commenters state that we have not
carefully considered the environmental and economic consequences of this
action because if we had, we would have exempted them for several
reasons, including (1i) other countries typically exempt similar sources
from GHG cap and trade programs because the industries are making
significant energy efficiency improvements even in the absence of GHG
regulation, and (2ii) permitting such sources may cause many facilities
to move to countries that have less regulation or no regulation for
GHGs.

Other industry groups cited unique characteristics of their emissions,
or the quantities in which they are emitted, that they argued should
justify exclusion or unique thresholds.  Semiconductor production
facilities asked for exemptions, arguing that combustion-related GHG
emissions are different from their GHG emissions, which result from the
use of high-GWP industrial gases, such as PFCs, with higher GWP values
that are more likely to trigger permitting requirements at relatively
low tpy values.  One lime production commenter stated that EPA could
encourage energy efficiency projects at its plants by excluding
calcination and other process emissions, arguing that these emissions
are a relatively small portion of the national inventory that will have
no material effect on air quality and global warming.  Another commenter
requested that EPA exclude emissions from poultry production (natural
bird respiration) from permitting consideration because the IPCC
excludes them from its GHG emission estimates.  Representatives of the
landfill industry pointed to the relationship between current statutory
thresholds that apply to their regulated emissions, primarily NMOC, and
the equivalent amount of GHG emissions this corresponds to.  They argued
for a source-category specific threshold that is at least equivalent to
their current NMOC threshold, or roughly 750,000 tpy CO2e according to
their estimate.

Although the proposal for the Tailoring Rule generally addressed how the
statutory requirements for major source applicability (100/250 tpy
thresholds) could be phased -in in ways that would offer relief to
traditional and non-traditional sources, such as residences, farms,
small business, and semiconductor manufacturers, it did so by
establishing relatively high CO2e thresholds during the early
implementation period and lowering the thresholds over time as
streamlining mechanisms become available to reduce administrative
burdens.  We did not propose any permanent exemptions of any kind or
temporary exemptions based on source category.  Also, note that the
proposal discussed energy efficiency, process efficiency improvements,
recovery and beneficial use of process gases, and certain raw material
and product changes in the context of short-term, low-cost means of
achieving GHG emission reductions for small-scale stationary sources,
but not in the context of exemptions.

As discussed previously, we are still considering whether permanent
exemptions from the statute are justified for GHG permitting based on
the “absurd results” legal doctrine.  We do not have a sufficient
basis to take final action at this time to promulgate any of the
suggested exclusions on the grounds, described previously, suggested by
the commenters.  We note, however, that nothing in this rule forecloses
the opportunities we may have to explore such options in the future.
Therefore, we are taking no action in this rule on these various
commenters’ requests for exclusions.

Some commenters also recommended that we create exclusions for their
particular source categories for the specific purpose of avoiding
overwhelming permitting burdens.  We did solicit comment on alternative
approaches to burden relief in the proposal.  Some commenters suggested
that the “administrative necessity” or “absurd results”
rationale, each of which would be based on extraordinary administrative
burdens, could be used to create at least temporary exclusions that
would allow more sources to escape permitting than what we proposed.
However, commenters have not, to date, provided specific information
about the costs and administrative burdens associated with permitting
their source categories.

Regarding the specific concerns about the need for a small business
exclusionIn addition, we note that the Office of Advocacy of the SBA
made several recommendations on the proposal to address concerns about
large numbers of small businesses becoming subject to the permit
programs.  For example they recommended that EPA adopt major source
thresholds of 100,000 tpy and major modification thresholds of 50,000
tpy CO2e.  They also recommended that we adopt an interpretation of the
effective date of the LDVR to provide additional time to prepare.  We
took action consistent with the latter recommendation in the
Interpretive Memo, and we are taking action consistent with the former
recommendation in this rule (although the threshold for modifications we
are adopting is higher, for reasons explained previously).  We are
finalizing Stepshave finalized steps 1 and 2 using the threshold-based
approach, which applies the various legal doctrines, in the context of
the Chevron framework, in a way that effectively exempts all small
sources during this part of the phase-in, while assuring the
administrability of the permitting programs for the sources that remain
subject to them.  We anticipate that virtually all small businesses not
already subject to PSD and title V would be excluded under this
approach.  Similarly, Furthermore, specifically with respect to high GWP
gases as discussed previously, we are maintaining the statutory
mass-based threshold, and this should address commenters’ concerns
regarding the inclusion of those gases.  Therefore, we reiterate that we
are not finalizing any such exclusions in this rule and, as noted above,
we are not taking final action in the commenters’ requests for
exclusions.

Concerning the comment that we did not take appropriate economic and
environmental considerations into account for this rulemaking action, we
disagree.  The approach we finalize in this notice for Stepssteps 1 and
2 minimizes economic burdens by limiting permitting to the largest GHG
emission sources.  We further note that the PSD program as applied to
the sources that are covered in Stepssteps 1 and 2 contains an express
requirement to take energy, environmental, and economic considerations
into account when making control technology (i.e., BACT) decisions and
accordingly many of the concerns about control costs will be able to be
accounted for in that analysis.

Biomass Combustion/Biogenic Emissions.  Several commenters request that
EPA exempt emissions from biogenic activities or biomass combustion or
oxidation activities, including solid waste landfills, waste-to-energy
projects, fermentation processes, combustion of renewable fuels, ethanol
manufacturing, biodiesel production, and other alternative energy
production that uses biomass feedstocks (e.g., crops, or trees).  For
example, commenters urged that EPA exclude emissions from biomass
combustion in determining the applicability of PSD to GHGs based on the
notion that such combustion is “carbon neutral” (i.e., that
combustion or oxidation of such materials would cause no net increase in
GHG emissions on a lifecycle basis).  SomeOther commenters oppose the
exemption of biogenic/biomass activities, claiming the  because they
opine that carbon neutrality of biomass combustion is an incorrect
assumption that stems from what they call a “critical accounting
error” in the Kyoto protocols.  These commenters oppose the exemption
of biogenic/biomass activities, citing the lack of a valid scientific
basis for treating these GHG emissions differently than other GHG
emissions and expressing concern that we should not assume all biomass
combustion were carbon neutral.

The proposed Tailoring Rule did not address this issue of exemptions for
biomass combustion or biogenic emissions.  We are mindful of the role
that biomass or biogenic fuels and feedstocks could play in reducing
anthropogenic GHG emissionsGHGs, and we do not dispute the commenters’
observations that many state, federal, and international rules and
policies treat biogenic and fossil sources of CO2 emissions differently.
 We note that EPA's technical support document for the endangerment
finding final rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292) states
that “recognize carbon dioxide has a very different life cycle
compared to the other GHGs, which have well-defined lifetimes.  Instead,
unlike the other gases, CO2 is not destroyed by chemical, photolytic, or
other reaction mechanisms, but rather the carbon in CO2 cycles between
different reservoirs in the atmosphere, ocean, land vegetation, soils,
and sediments.  There are large exchanges between these reservoirs,
which are approximately balanced such that the net source or sink is
near zero.”

Nevertheless-neutrality in various ways.  However, we have determined
that our application of the “absurd results,” “administrative
necessity,” and one-step-at-a-time legal rationales that support this
rule, which are based on the overwhelming permitting burdens described
previously, we do not provide have sufficient basis to exclude emissions
of CO2 from biogenic sources in determining create an exclusion from the
permitting applicability provisions at this time.  This is because such
for biomass combustion or biogenic fuels and feedstocks.  Such an
exclusion alone, while reducing burdens for some sources, would not
address the overwhelming permitting burdens described abovepreviously,
and a threshold-based approach would still be needed.  As noted above,
we have not examined burdens with respect to specific categories and
thus we have not analyzed Once we adopt a threshold-based approach, we
do not have information regarding the administrative burden of
permitting projects that specifically involve biogenic CO2 emissions
taking account of the threshold-based approachthese source types, nor
did the commenters provide information to any that demonstrate that an
overwhelming permitting burden would still exist, justifying that
justifies even a temporary exclusion for biomass sources.

At the same time, the decision not to provide this type of an exclusion
at this time does not foreclose EPA’s ability to either (1) provide
this type of an exclusion at a later time when we have additional
information about overwhelming permitting burdens due to biomass
sources, or (2) provide another type of exclusion or other treatment
based on some other rationale.  Although we do not take a final position
here, we believe that some commenters’ observations about a different
treatment of biomass combustion warrant further exploration as a
possible rationale.  Therefore, although we did not propose any sort of
permanent exclusion from based on an interpretation of the statutory
provisions of PSD or title V.  Regardless of any arguments about the
legality and advisability of such an exclusion, we would need to propose
a PSD and/or title V applicability based on lifecycle considerations of
biogenic CO2, we plan to seek further comment on how we might address
emissions of biogenic carbon dioxide under the PSD and title V programs
through a future action, such as a separate Advance Notice of Proposed
Rulemaking (ANPR).  This action would seek comment on how to address
biogenic carbon under PSD and title V, the specific legal and policy
issues raised by options regarding rationale and specify details
regarding our implementation.  We will approach (e.g. an approach to
carbon accounting), and would need to provide an opportunity for public
comment before adopting any final such exclusion.  Therefore we are not
able to finalize such an approach.  here.  We note, however, that we are
not taking final action on commenters’ request for exclusion, and that
nothing in this rule forecloses the opportunities we may have to explore
such options in the future.

We further note that, while we are not promulgating an applicability
exclusion for biogenic emissions and biomass fuels or feedstocks, there
is flexibility to apply the existing regulations and policies regarding
BACT in ways that take into account their lifecycle effects on GHG
concentrations.  This topic has already been explored by the CAAAC
workgroup on BACT issues related to GHGs that recently provided
recommendations to EPA.  These recommendations are located in the public
docket for this rulemaking and at   HYPERLINK
"http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf"
http://www.epa.gov/air/caaac/climate/2010_02_InterimPhaseIReport.pdf .
While that group was unable to come to a consensus on how biomass-based
emissions should be treated, it provided us with information that we
will consider as we issue guidance on BACT.  As previously discussed, we
plan to issue BACT guidance later this year, but are not doing so as
part of this rulemaking. Without prejudging the outcome of our process
to seek comment whether and how we might address emissions of biogenic
carbon under the PSD and title V programs through a future action, this
This issue warrants further exploration in the BACTthat context as well,
and we plan to fully explore it and take action if as appropriate.

Fugitive Emissions.  Numerous commenters believe that fugitive GHG
emissions should be excluded from major source determinations, citing
difficulties in measuring or estimating such emissions.  Others believe
EPA did not address fugitive emissions in the proposal and they ask for
clarification of the treatment of fugitive GHGs in applicability
determinations under PSD and title V.  Some of these commenters state
that EPA has not undertaken a rulemaking under CAA section 302(j) for
any source category of fugitive GHGs, so they should not be included.
Several commenters representing the solid waste disposal industry
requested exemptions for fugitive emissions for landfills and
waste-to-energy projects, pointing out that current practice under PSD
is for fugitive emissions from certain landfills to not be counted
toward major source determinations.

In the proposal, EPA did not offer any specific guidance or discuss
exemptions for fugitive emissions of GHGs.  Commenters did not suggest
that a fugitive exemption would address the overwhelming permitting
burdens described previously, or that it was necessary to specifically
tailor GHG applicability through the use of a fugitive emissions
exclusion for categories that would otherwise be required to include
them.

We do agree with commenters who stated that we should clarify how to
count fugitives in determining applicability under this rule.  In
response, we note that we are not taking final action with respect to
commenters’ request, and we are not finalizing any special rules for
fugitive emissions related to GHG.  Thus, EPA's rules related to the
treatment of fugitives would apply.  Regarding the comment that a CAA
section 302(j) rulemaking is required before fugitive emissions may be
counted, we disagree.  As we read section 302(j), once EPA has
established by rule that fugitive emissions are to be counted for a
specific source category, nothing in section 302(j) requires EPA to
conduct new rulemaking to allow for the counting of additional
pollutants from that category.  We read section 302(j) as imposing an
obligation to determine if fugitive emission generally should be counted
from a source or source category and not requiring that EPA list both
source categories and relevant pollutants.  Indeed, our practice in
listing categories has not been to limit the pollutants to which the
listing applies.  Therefore, we are applying our existing rules and
policies for fugitive emissions for GHG as we would any other pollutant.

Pollution Control Projects.  Other commenters request exemptions for
pollution control projects from PSD major modification requirements,
particularly projects that increase the efficiency or thermal
performance of a unit or facility, resulting in emission reductions on a
pounds/megawatt-hour or production basis.  The current PSD rules do not
exclude pollution control projects from being considered a physical
change or change in the method of operation that would – if it
resulted in a significant net emissions increase -- constitute a major
modification, and the caselaw makes clearnor does case law suggest that
we could

adopt a permanent exclusion in the future.  To the extent that the
commenters seek .  We also do not believe we should adopt an exclusion
for pollution control projects that relies solely on “absurd
results” or “administrative necessity” for reasons similar to
those described previously for other requested exclusions, we take no
action on this request in this rulemaking.  Although such an exclusion
may have positive features, it would not address the overwhelming
permitting burdens that justify the tailoring approach.

4.  Transitional Issues Includingincluding Requests for Grandfathering

In the Tailoring Rule proposal, we did not discuss or specifically ask
for comment on any provisions to address the transition from a
permitting regime that does not incorporate GHGsgreenhouse gases to one
that does, such as “grandfathering” provisions or similar approaches
that would exempt previously issued permits or pending applications from
having to incorporate requirements for GHGsgreenhouse gases.  We
nonetheless received several public comments that addressed a variety of
transitional issues.  One group of comments addresses situations prior
to permit issuance where a PSD or title V application is either
administratively complete or more generally being processed prior to the
trigger date for GHG permitting (“in process” applications).
Another group of comments addresses situations where a PSD or title V
permit is issued prior to the GHG trigger date and the commenters
request that the application and/or permit be exempt from any
requirements for updates related to GHGs after permit issuance.

With respect to PSD, many commenters requested that we adopt a
“grandfathering” approach to applicability to exempt projects that
have administratively complete PSD or minor NSR permit applications
pending when the GHG permitting requirements go into effect.  Several
commenters urged us to promulgate transition provisions (without
specifically using the term “grandfathering”), pointing out that we
have provided transition periods for revising pending PSD permits, in
the past, when new PSD rules were issued (e.g., in late 1970s and 1980).
 These commenters assert that GHG requirements will cause more
disruption than those previous rule changes.  Several commenters asked
that PSD applications be evaluated on the basis of the PSD requirements
effective when the application is submitted and if submitted prior to
the trigger date, then the application and permit would not need to
address GHGs.  Several commenters also asked that PSD sources with a
valid permit that commences construction within 18 months of the trigger
date not be required to seek a revised PSD permit for GHGs.  Similarly,
several commenters asked that PSD permits issued prior to the GHG
trigger date not be required to be reopened only for the purpose of
addressing GHG emissions.  Additional commenters asked that we clarify
that sources or projects not be required to obtain PSD permits if they
obtained a determination that PSD did not apply (a
“non-applicability” determination) prior to the GHG trigger date.
Finally, many commenters also requested “grandfathering” for title V
so that existing title V applications and permits do not need to be
amended, revised, or resubmitted to address GHGs after they become
“subject to regulation.””.  Other commenters asked that transition
provisions for title V be provided in the final action that would be
similar to those requested for PSD.

 We partially addressed transitional issues for PSD permitting in our
April 2, 2010 final action on reconsideration of the Interpretive Memo.
75 FR 17021.  This action addressed the applicability of PSD permitting
requirements for GHGsgreenhouse gases to pending PSD permit applications
that were (or will be) submitted prior to January 2, 2011 based on
emissions of pollutants other than GHGsgreenhouse gases.  However, we
have not yet addressed the questions raised by public comments
concerning sources that obtain PSD permits, minor NSR permits, or
determinations that no such permits are needed prior to the Stepstep 1
period set forth in this rule.  We have also not yet addressed questions
about the applicability of PSD permitting requirements for sources that
are not currently required to submit an application for a PSD permit but
that could be required to do so in Stepstep 2 of the phase-in
established in this action.  In addition, our April 2, 2010 action did
not address transitional issues concerning the application of the title
V provisions to GHGsgreenhouse gases.

a.  Transition for PSD Permit Applications Pending When Step 1 Begins

In our action on April 2, 2010, EPA explained that the Agency did not
see grounds to establish a transition provision for pending PSD permit
applications because we had determined that PSD permitting requirements
would not apply for GHGsgreenhouse gases for another 9 months.  We
explained that permit applications submitted prior to April 2, 2010
should in most cases be issued prior to January 2, 2011 and, thus,
effectively have a transition period of 9 months to complete processing
before PSD requirements become applicable to GHGsgreenhouse gases.  We
also observed that, in the case of any PSD permit application review
that cannot otherwise be completed within the next 9 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 delay to permit processing.  Additional
discussion of EPA’s reasons for not developing transition provisions
for PSD permit applications that are pending on January 2, 2011 are
provided in the April 2, 2010 notice.  75 FR 17021-22.

For these same reasons, we continue to feel that a transition period is
not warranted to incorporate GHG requirements into any PSD permit
applications that are pending when Stepstep 1 of the permitting phase-in
begins for those sources that would otherwise need to obtain a PSD
permit based on emissions of pollutants other than GHGsgreenhouse gases.
 Thus, this action makes no change to the position we expressed on this
particular issue in the April 2, 2010 notice.  In this final rule on
tailoring the PSD program to address GHGs, we have determined that the
additional burden of incorporating GHG requirements into PSD permits for
the sources already required to obtain such permits is manageable in the
Stepstep 1 period.  Thus, this rule has added no additional requirements
or limitations that would justify deferring the establishment of
pollution controls for this category of GHG sources once PSD permitting
requirements are initially triggered for GHGs.

While we do not provide for grandfathering of PSD applications, we do
note that there are more than 7 months left before GHG BACT requirements
will be triggered at anyway sources for projects that increase GHG
emissions by more than 75,000 tpy CO2e and more than a year before the
requirements would be triggered at sources solely because of emissions
of GHGs (more than 100,000 tpy of CO2e).  We intend to work
constructively and affirmatively with permitting authorities to use this
time to ensure expeditious processing of pending permits and to further
assure that the triggering of BACT requirements at such sources will not
result in adverse impacts on pending projects.  We have separately
described our plans to expeditiously issue GHG BACT guidance, but we
understand that for pending projects that will be permitted soon after
January 2, 2011, an opportunity for earlier engagement with EPA on BACT
issues would be beneficial for permitting authorities to issue these
permits without delay.

Therefore, following the issuance of this rule, we will contact
permitting authorities that have pending PSD permit applications to
identify those applications with a reasonable likelihood that final
issuance will occur after January 2, 2011, and therefore will be
required to contain GHG BACT limits.  We will then work closely with
those permit agencies to provide technical, legal or policy assistance
to help prepare BACT analysis and provide additional support as
necessary to expedite permitting for those pending applications.
Similarly, when EPA is the permitting authority, we will provide
assistance to applicants with pending permits to ensure that GHG
permitting decisions are made promptly, and that administrative
processes move forward expeditiously.

b.  PSD Permits Issued Prior to Step 1

EPA has not historically required PSD permits to be updated or reopened
after they are issued in the absence of an action by the applicant to
change the physical or operational characteristics of the source
described in the permit application.  EPA’s PSD permitting regulations
contain no provisions that address the modification or amendment of a
PSD permit or require a PSD permit to be reopened or modified on the
basis of new PSD permitting requirements that take effect after the
final permit is issued.  Since PSD permits are construction permits, EPA
has not required updates to PSD permits in the same manner as is
typically required for operating permits that incorporate a variety of
applicable requirements (such as title V permits and National Pollutant
Discharge Elimination System (NPDES)NDPES permits under the Clean Water
Act).  In addition, unlike operating permits, PSD permits are not
required to be renewed.  However, if construction under a PSD permit is
not commenced in a timely manner or is discontinued for an extended
period, a PSD permit may expire if an extension is not requested or
justified.  See, 40 CFR 52.21(r)(2); 40 CFR 124.5(g).

With respect to the application of PSD permitting requirements for GHGs
beginning on January 2, 2011, we do not see any cause to deviate from
our historical practice of not requiring PSD permits to be reopened or
amended to incorporate requirements that take effect after the permit is
issued.  Thus, we are not promulgating any new rules or requirements
pertaining to PSD permits issued prior to Step 1 of the phase-in
described in this rule.  There is no mandatory requirement to reopen a
previously issued PSD permit to incorporate GHG requirements that were
not applicable at the time the permit was issued.

A major source that obtains a PSD permit prior to January 2, 2011 will
not be required under EPA regulations to reopen or revise the PSD permit
to address GHGsgreenhouse gases in order for such a source to begin or
continue construction authorized under the permit.  Our current PSD
permitting regulations provide that “[n]o new major stationary source
or major modification to which the requirements of paragraphs (j)
through (r)(5) of this section apply shall begin actual construction
without a permit that states the major stationary source or major
modification will meet those requirements.”  40 CFR 51.166(a)(7)(iii);
40 CFR 52.21(a)(2)(iii).  The term “begin actual construction”
generally means “initiation of physical onsite construction activities
on an emissions unit which are of a permanent nature” and includes
activities such as “installation of building supports and foundations,
laying underground pipework and construction of permanent storage
structures.”  40 CFR 51.166(b)(11); 40 CFR 52.21(b)(11).  A source
that begins actual construction authorized under a PSD permit prior to
January 2, 2011 will not be in violation of the prohibition described
previously if it continues construction after that date.  This portion
of the regulation precludes only beginning construction without the
appropriate preconstruction permit and does not require a permit to be
updated to continue actual construction that has already begun.

Furthermore, a source that is authorized to construct under a PSD permit
but has not yet begun actual construction on January 2, 2011 may still
begin actual construction after that date without having to amend the
previously-issued PSD permit to incorporate GHG requirements.  Sections
51.166(a)(7)(iii) and 52.21(a)(2)(iii) require “a permit that states
that the major stationary source or major modification will meet those
requirement,” which refers to the “requirements in paragraphs (j)
through (r)(5)” referenced earlier in those provisions.  EPA construes
this language to describe a permit that meets the requirements of
paragraph (j) through (r)(5) that are in effect at the time the permit
is issued.  Permitting and licensing decisions of regulatory agencies
must generally 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, a source may begin actual construction on or after January 2,
2011 under a PSD permit that authorized construction to begin prior to
January 2, 2011 because such a permit states that the source will meet
the requirements of paragraphs (j) through (r)(5) of these regulations
(or state equivalents) that were in effect at the time the permit was
issued.  However, this would not be the case if the permit has expired
because the applicant has discontinued construction or failed to
commence construction by the necessary date.  See, 40 CFR 52.21(r)(2).

This approach is consistent with EPA’s practice when the
preconstruction permitting requirements change by virtue of the
designation of an area as a nonattainment area after a PSD permit is
issued.  In transitional guidance issued by EPA in 1991, EPA explained
that “the area designation in effect on the date of permit issuance by
the reviewing agency determines which regulations (part C or D) apply to
that permit.”  Memorandum from John S. Seitz, Director OAQPS, New
Source Review (NSR) Program Transitional Guidance, page 6 (March. 11,
1991).  This memorandum explained further that “where a source
receives a PSD or other permit prior to the date the area is designated
as nonattainment, the permit remains in effect” as long as the
sourcesources meets the conditions necessary to prevent the permit from
expiring.  Id. at 6.

 This approach does not apply if the source engages in a major
modification after January 2, 2011 that is not authorized by the
previously issued permit.  Once Stepstep 1 of the phase-in begins, if
the PSD requirements for GHGs are applicable to a previously-permitted
source that engages in a major modification not covered by the permit,
such a source will need to obtain a new PSD permit to authorize the
modification and that permit may need to include GHG requirements
depending on the level of increase in GHGs that results from the
modification.

c.   Additional Sources for Which PSD Applies in Step 2

In light of the terms of existing PSD regulations and the lead time
provided in this action for sources that will first become subject to
PSD permitting in Step 2, we do not believe there is presently a need to
establish transition provisions for sources that will be required to
obtain PSD permits for the first time in Step 2 of the phase-in.  As
described previously, under our current PSD permitting regulations, a
new major stationary source or major modification may not begin actual
construction without a PSD permit that meets the applicable
preconstruction permitting requirements.  40 CFR 51.166(a)(7)(iii); 40
CFR 52.21(a)(2)(iii).

Since a permit must be obtained before a major source may begin actual
construction, the major source preconstruction permitting requirements
in 40 CFRsections 51.166 and 52.21 of the regulation do not generally
apply to a source that begins actual construction at a time when it was
not a major source required to obtain a PSD permit.  One exception,
however, is the unique circumstance when a source becomes a major source
solely by virtue of the relaxation of an enforceable limitation on the
source’s PTEpotential to emit.  40 CFR 51.166(r)(2); 40 CFR
52.21(r)(4).  But absent these circumstances, PSD preconstruction
permitting requirements do not generally preclude a source from
continuing actual construction that began before the source was a source
required to obtain a PSD permit.  Thus, a source that began actual
construction under the authorization of any previously required minor
source or state construction permit is not required to meet any PSD
preconstruction permitting requirement that becomes applicable after
actual construction begins unless the source engages in a major
modification after PSD permitting requirements are applicable.
Likewise, a PSD permit is not required after a source begins actual
construction based on a valid determination (by the source or the
permitting authority) that the source need not obtain either a major PSD
permitting requirements or and minor NSR permit.  Based on these
provisions in existing regulations, EPA will not require any sources to
which PSD permitting requirements begin to apply in Stepstep 2 to obtain
a PSD permit to continue construction that actually begins before
Stepstep 2 begins.

However, we will expect StepPhase 2 sources that begin actual
construction in Stepphase 2 (i.e., beginning July 1, 2011) to do so only
after obtaining a PSD permit in accordance with 40 CFRsections 52.21 or,
51.166, or any applicable state regulation that meets the requirements
of 40 CFRsection 51.166.  We recognize the potential for the triggering
of Stepstep 2 to result in a change in status where a project may
legally have begun actual construction before Stepstep 2 but did not do
so and would then need a PSD permit.  However we also note that we are
providing over a year of lead time before PSD permitting requirements
become applicable to Stepstep 2 sources.  If projects would be adversely
affected by this change in status, this lead time affords an opportunity
for sources planning such projects to secure appropriate minor NSR
permits (which generally take less than a year to issue),
non-applicability determinations, etc. in time to avoid such a change in
status.  If a new or modified source that would become newly subject to
PSD in Stepstep 2 plans to begin actual construction before Stepstep 2,
it has more than a year to obtain the applicable preconstruction
approvals and begin actual construction.  Likewise, a Stepstep 2 source
that does not anticipate the ability to begin actual construction before
Stepstep 2 begins should have enough lead time to submit a PSD permit
application and obtain the necessary permit without significantly
delaying the project further.  Therefore, we do not think it is
necessary or appropriate to promulgate a transition provision that would
exempt Stepstep 2 sources from PSD permitting requirements that will
apply based on construction that begins after Stepstep 2 takes effect.

This approach for Step 2 sources that have obtained a minor source
construction permit or non-applicability determination differs from the
approach described previously for source that obtained a PSD permit
prior to Step 1.  As described previously, a Step 1 source that is
authorized to begin actual construction before January 2, 2011 under a
previously-issued PSD permit may begin actual construction under that
permit after January 2, 2011 without modifying the PSD permit to address
GHGs.  However, a Step 2 source that was not required to obtain a PSD
permit before Step 2 begins would need to obtain a PSD permit addressing
GHGs if it has not yet begun actual construction prior to Step 2, even
if the source had obtained any preconstruction approvals that were
necessary to authorize construction prior to Step 2.  This is because
such a Step 2 source that begins actual construction after Step 2 would
likely be doing so without having any permit meeting the requirements of
paragraphs (j) through (r)(5) of 40 CFRsection 52.21 or, 51.166, or a
state equivalent.  A source that has obtained only a minor source permit
prior to Step 2 but that begins actual construction after July 1, 2011
would violate the requirements of 40 CFRsection 52.21(a)(2)(iii) or),
51.166(a)(7)(iii), or a state equivalent, unless the source took care to
ensure that it was authorized to construct under a PSD permit or could
demonstrate that the source’s minor source construction permit makes
clear that requirement of paragraphs (j) through (r)(5) of 40
CFRsections 52.21 or, 51.166, or a state equivalent, would be met by the
source even though such a permit was not nominally a PSD permit.  This
difference in approach for non-PSD sources is driven by the terms of 40
CFRsections 52.21(a)(2)(iii) and 51.166(a)(7)(iii).  Since we have not
provided any prior notice that we might be considering revisions to 40
CFRsections 52.21 and 51.166 to address this topic, we are unable to
revise the regulations in this action to achieve the same result for
non-PSD sources as for PSD sources.  Furthermore, at the present time,
we see no indication that this difference in approach is not
unreasonable since non-PSD sources will not trigger permitting for GHG
until Stepstep 2 (only anyway PSD source trigger in Stepstep 1).  Thus
sources will have until July 1, 20112010, an additional 6 months of lead
time (for a total of more than 14 months), to prepare for the transition
described here.  Nevertheless, we recognize that the transition to the
increased coverage of new sources and modifications that occurs in July
will represent an unusual occurrence that may have unanticipated
impacts.  For this reason it is important to note that nothing in this
rule forecloses our ability to further address such impacts, as
necessary, by adopting rule changes or using other available tools.

EPA has previously promulgated exemptions that have authorized some
sources that were not previously subject to the PSD regulations to
commence construction on the basis of minor source permits after the
date new PSD requirements have took effect in 1978 and 1980.  See, e.g.,
40 CFR 52.21(i)(1)(iv)-(v).   There is a notable distinction between
these provisions, which use the term “commence construction,” and
the terms of 40 CFRsections 52.21(a)(2)(iii) and 51.166(a)(7)(iii),
which use the term “begin actual construction.”  “CommenceCommerce
construction” is defined more broadly than “begin actual
construction” to include obtaining all necessarily preconstruction
approvals and either beginning actual on-site construction or entering
into binding contracts to undertake a program of actual construction.
40 CFR 52.21(b)(9); 40 CFR 51.166(b)(9).  The term “commence
construction” is also defined in the CAA.  42 U.S.C.SC 7479(2)(A).
Among other purposes, the term “commence construction” is generally
used in the Act and EPA regulations to distinguish construction
activities that are exempt from new PSD permitting requirements from
those that are not.  See, e.g., 42 U.S.C.SC 7475(a); 40 CFR
52.21(i)(1)(i)-(v).  In the absence an explicit exemption in the CAA or
the PSD regulations that uses the term “commence construction,” we
do not believe we can use the date a source “commences construction”
under a minor source construction permit approval as a demarcation point
for Step 2 sources that may continue ongoing construction activities
without having to obtain a PSD permit based on emissions of GHGs.  Since
we did not provide prior notice of an intention to adopt transition
provisions applicable to this situation, we are unable to adopt such an
exemption in this action that applies the term commence construction in
this context.  Consequently, the approach described previously applies
the term “begin actual construction” based on the language in 40
CFRsections 52.21(a)(2)(iii) and 51.166(a)(7)(iii).

d.  Transitional Issues for Title V Permitting

Since the title V permitting regulations already include a robust set of
provisions to address the incorporation of new applicable requirements
and other transitional considerations, we do not see grounds to
establish unique transition or grandfathering provisions for GHGs in
this action.  Furthermore, since the purpose of title V is to collect
all regulatory requirements applicable to a source and ensure
compliance, we do not believe special exemptions for GHG requirements
are likely to be justified.  The existing title V rules do not provide
any exemptions that relieve the obligation to incorporate all applicable
requirements into a title V permit.  However, the title V regulations
contain numerous provisions that allow a reasonable period of time for
incorporating new applicable requirements or applying for a title V
permit that was not previously required.  Transitional issues for
incorporation of GHG requirements into title V permitting generally
involve questions in the following categories:  (1) permit application
requirements for sources not previously subject to title V that will
become subject to title V requirements in Stepstep 2 of the phase-in;
(2) the need for updates or amendments to title V permit applications
that are pending when GHGs become subject to regulation in Step 1 of the
phase-in; and (3) the incorporation of new applicable requirements for
GHGs into existing permits for sources currently subject to title V.

With respect to the first category, a title V source applying for the
first time must submit its permit application within 12 months after the
source “becomes subject to the [operating] permit program” or such
earlier time that the permitting authority may require (see 40 CFR
§70.5(a)(1)).  Sources not otherwise subject to title V can become
major sources subject to title V due to emissions of GHG no sooner than
July 1, 2011.  If a source becomes “subject to the [operating] permit
program” on July 1, 2011, then its permit application under the title
V operating permit program would typically have to be submitted no later
than July 1, 2012.

There are also existing regulations relevant for the second category of
GHG transition issues, where sources currently subject to title V have
title V permit applications pending with a permitting authority as of
January 2, 2011.  Where additional applicable requirements become
applicable to a source after it submits its application, but prior to
release of a draft permit, the source is obligated to supplement its
permit application.  See 40 CFR 70.5(b); 71.5(b).  Furthermore, title V
permits are generally required to contain provisions to assure
compliance with all applicable requirements at the time of permit
issuance.  See CAA section 504(a); 40 CFR 70.6(a)(1) and); 71.6(a)(1).
If a permitting authority determines that additional information is
necessary to evaluate or take final action on an application (e.g.,
because of uncertainty over whether a draft permit assures compliance
with all applicable requirements), it may, and should, request
additional information from the source in writing and set a reasonable
deadline for a response.  See 40 CFR 70.5(a)(2); 71.5(a)(2).

Likewise, the existing title V regulations provide sufficient transition
for the third category of issues, where a source has additional
GHG-related applicable requirements (such as the terms of a PSD permit)
that must be incorporated into its existing title V permit.  Where a
source is required to obtain a PSD permit, the source must apply for a
title V permit or permit revision within 12 months of commencing
operation or on or before such earlier date as the permitting authority
may establish (or prior to commencing operation if an existing title V
permit would prohibit the construction or change in operation).  See 40
CFR  70.5(a)(1)(ii); 71.5(a)(1)(ii); see also 40 CFR §§70.7(d) and
(e); 71.7(d) and (e) (permit modifications).  In addition, where a
source becomes subject to additional applicable requirements, the
permitting authority is required to reopen the permit to add those
applicable requirements if the permit term has three or more years
remaining and the applicable requirements will be in effect prior to the
date the permit is due to expire.  See 40 CFR 70.7(f)(1)(i);
71.7(f)(1)(i).

Finally, EPA notes that the existing title V regulations require sources
to furnish permitting authorities, within a reasonable time, any
information the permitting authority may request in writing to determine
whether cause exists for modifying, revoking, and reissuing, or
terminating the permit, and for other reasons, and further provide that
permitting authorities shall reopen and revise permits if EPA or the
permitting authority determine that the permit must be revised or
revoked to assure compliance with applicable requirements.  See 40 CFR
§§70.6(a)(6)(v);71.6(a)(6)(v) and §§ 70.7(f)(1)(iv); 71.7(f)(1)(iv).

Thus, EPA believes that the existing title V regulations provide an
adequate regulatory framework for managing the transition to
incorporating GHG requirements in title V permits and additional
specific exemptions or transition rules for title V are not currently
warranted.

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

This section of the preamble examines the economic impacts of the final
rule including the expected benefits and costs for affected sources and
permitting authorities.  The final rule uses a phased-in approach for
requiring sources of GHG emissions to comply with title V operating
permit and PSD statutory requirements, essentially lifting this burden
for the phase-in a period of at least 6 years for a large number of
smaller sources of GHG.  Thus, this rule provides regulatory relief
rather than regulatory requirements for these smaller GHG sources.  For
larger sources of GHGs GHG that will be required to obtain title V
permits and/or comply on PSD requirements, there are no direct economic
burdens or costs as a result of this final rule, because these
requirements are not imposed as a result of this rulemaking.  Statutory
requirements to obtain a title V operating permit or to adhere to PSD
requirements are already mandated by the CAA and by existing rules, not
by this rule.  Similarly, this rule will impose costs to society in the
form of foregone environmental benefits resulting from GHG emission
reductions that, absent this rule, might otherwise have occurred at
sources deferred from permitting during the phase-in period.

The regulatory impact analysis (RIA) conducted for this final rule
provides details of the benefits or regulatory relief that smaller GHG
sources will experience in terms of costs avoided as a result of this
final rule and the potential for social costs in terms of foregone
environmental benefits during this 6-year period.  Complete details of
the RIA conducted for this final rule may be found in the document
"Regulatory Impact Analysis for the Final Prevention of Significant
Deterioration and Title V Greenhouse Gas Tailoring Rule," in the docket
for this rulemaking.

This rulemaking provides permitting thresholds for sources of GHG that
exceed levels contained in the CAA, and these levels are phased- in
steps based upon application of the “administrative necessity” and
“absurd results” doctrines as explained in section V.B.  For Step
step 1, which  that is effective from January 2, 2011 through June 30,
2011, only sources required to undergo title V or PSD permitting based
upon non-GHG air pollutants are required to obtain an operating permit
or PSD permit to include GHG emissions (referred to as the “anyway”
threshold).  Step 2, effective from July 1, 2011 until such time as EPA
acts on a rule to amend it (which for reasons described previously, we
assume is June 30, 2013 for the purposes of this analysis), will phase
in title V permit requirements for larger sources emitting GHG above
100,000 tpy CO2e tpy (if they do not already have one) and phase in for
such sources, PSD requirements when they are newly constructed or modify
in a way that increases emissions by more than a 75,000 tpy CO2e tpy
significance level.  Step 2 is referred to as the 100,000 tpy CO2e
threshold.  Thereafter, EPA makes an enforceable commitment to consider
a possible Stepstep 3 to further lower thresholds below 100,000 tpy CO2e
tpy and/or permanently exclude some sources from the program(s), but
only after a regulatory process is conducted addressing
“administrative necessity” and “absurd results” considerations
based upon the actual permitting experiences in the first two steps of
the phase-in.  In addition, EPA provides a deferral of permitting until
we take required action in April 2016 for sources and modifications that
emit below 50,000 tpy CO2e tpy.  The deferral will end when a required
study is conducted of the permitting process for sources of GHG and EPA
acts, based on the study, to promulgate a rule that describes the
additional GHG permitting requirements beyond 2016.  In the 6 years
following promulgation of this rule, the EPA estimates that compared to
baseline estimates that do not include the effects of this rule, over
six million sources of GHG emissions in total will be allowed to
continue to operate without a title V operating permit.  During this
period, tens of thousands of new sources or modifying sources each year
will not be subject to PSD requirements for GHG.  For this large number
of smaller sources, this rule alleviates the regulatory burden
associated with obtaining an operating or PSD permit or complying with
NSR BACT requirements.  Therefore, this final action may be considered
beneficial to these small sources because it provides relief from
regulation that would otherwise be required.

This decision does potentially have environmental consequences in the
form of higher emissions during the 6-year period of time (generally
because emissions increases would have been lower if BACT were applied).
 These consequences are limited due to the fact that sources between
100/250 and 100,000 tpy CO2e tpy account for an estimated 11 percent of
the six directly emitted GHG nationally from industrial, commercial, and
residential source categories, while representing over 95 percent of the
total number of sources potentially requiring an operating or PSD permit
for GHG under current permitting thresholds in the CAA.  Moreover,
requiring such a large number of small sources to obtain permits for the
first time would overtax the permitting authorities' abilities to
process new permits and would therefore interfere with any such benefits
actually being achieved.  Moreover, reductions from these small sources
will still be occurring, notwithstanding the fact that permitting
requirements would not apply to them.  These smaller sources of GHGs GHG
will be the focus of voluntary emission reduction programs and energy
efficiency measures that lead to reductions in GHGs.  We will also
reevaluate this decision after a 6-year period and complete a study of
the implications for those sources and permitting authorities of
permitting smaller GHG sources beyond 2016.

In reaching the preceding decisions for this final rule, we carefully
considered comments received on the Tailoring Rule proposal.  We
received several comments specifically on our description of the impacts
of this rule.  Most of these comments disagreed with our assertion that
the rule is a “relief” rule.  Others assert that we should have
prepared a more comprehensive RIA than prepared for the rule proposal.
Those commenting contend: (1) we understated the burdens of the rule
while overstating its relief at proposal; (2) we erroneously omitted the
impacts for “larger sources” of GHGsGHG  from the proposal RIA and
should have recognized the burden to “larger sources” due to other
GHG actions; (3) the economic impacts the rule will have on industry and
the U.S.nited States economy and society in general will be burdensome,
especially given the current state of the economy; and (4) we need to
propose a full RIA or a complete estimation of impacts to comply with
CAA section 307(d) and the APA.

	EPA has carefully considered the comments addressing the issue of
whether the Tailoring Rule is a regulatory “relief rule,””, and we
are not persuaded that we erred in concluding that the effect of the
Tailoring Rule is to provide regulatory relief to a large number of
sources of GHG for a period of up to 6 years.  This final rule will
provide relief from title V permitting to over 6 million sources of GHG
in this country.  Likewise tens of thousands of sources potentially
subject to PSD permitting requirements annually for GHG will have
regulation postponed for a period of up to 6 years under this rule,
followed by an additional required rule addressing the period beyond 6
years.  While larger sources of GHG may be required to obtain title V
permits or modify existing permits and to comply with PSD requirements,
these burdens result not from the Tailoring Rule but rather from the CAA
requirements to apply PSD and title V to each pollutant subject to
regulation, which are triggered when the LDVR takes effect.  To clearly
illustrate this, consider what would occur if EPA did not complete the
Tailoring Rule.  Sources would not be relieved of the requirement to
obtain permits addressing each pollutant subject to regulation when they
construct or modify, nor would they be relieved of their obligation to
obtain title V permits.  Instead, these requirements would simply apply
to a much larger population of sources and modifications, and would lead
to the absurd results and severe impairment to program implementation
that this rule is designed to address.

In response to comments asserting that the RIA completed for proposal of
this rulemaking: (1) understated the burdens of the rule and overstated
the benefits, (2) did not fully recognize the rule will be burdensome,
especially given the current state of the economy; and (3) does not
consider a complete estimation of impacts to comply with the
APAAdministrative Procedure Act and CAA section 307(d) and needs to
correct flawed or erroneous assumptions, EPA did make improvements and
modifications to the RIA completed for this final rule.  Based upon
comments, EPA modified estimates of the number of sources affected at
various threshold levels upward.  EPA also improved the burden estimates
associated with obtaining permits for sources and permitting
authorities.

After consideration of the burden imposed by the proposed rule with
these improved estimates for affected sources, the EPA modified the
steps of the phase-in period to include two initial steps, described in
section V, that are higher, and therefore cover fewer sources and are
less burdensome than the proposal threshold of 25,000 tpy CO2e tpy
emissions.  EPA also increased the threshold below which permitting
would not apply for 6 years from 25,000 to 50,000 tpy CO2e.  After the
initial two step period, EPA has committed to consider lower thresholds
but only down to 50,000 tpy CO2e, and only after a regulatory process
that uses information gathered on actual permitting activity during the
first two steps of the phase-in period.  The RIA conducted for the final
rule also incorporates improvements in our estimates of the number of
sources affected at alternative thresholds and improved estimates of the
costs of obtaining permits by sources and processing permits by
permitting authorities.  The EPA acknowledges that the regulatory relief
associated with the control costs due to BACT requirements for PSD new
and modifying sources is not included in the RIA for the final rule due
to the lack of sufficient data about the nature of those requirements.
However, it is the case that, as it relates to burden, those estimates
would simply increase the amount of regulatory relief associated with
this final rule.

Finally, with regard to comments that the RIA should have been a more
comprehensive analysis to include the larger sources of GHG that will be
required to obtain permits when GHG are regulated, the EPA maintains as
previously explained that there are no direct economic burdens or costs
as a result of this rule for these sources.  Requirements for larger GHG
sources to obtain title V or PSD permits are already mandated by the Act
and by existing rules and are not imposed as a result of the Tailoring
Rule.  Thus the economic impacts for larger sources of GHG do not occur
because of this Tailoring Rule.  To include these larger sources in the
RIA would actually be an inaccurate assessment of how this rule affects
sources and would ignore the fact that this rule provides regulatory
relief.

A.  What entities are affected by this final rule?

As previously stated, this final rule does not itself result in the
application of permitting requirements to any industrial, commercial, or
residential entities.  Entities affected by this rule are those who
experience regulatory relief due to the higher thresholds and deferred
applicability set forth in this rule.  This action increases the
threshold to obtain a title V and PSD permitting from statutory CAA
levels using a phased-in step process as previously discussed.  As
Tabletable VI-1 shows, this action lifts permitting requirements for
over six million potential title V sources in total and tens of
thousands of potential PSD new sources annually that would be otherwise
required by the CAA to obtain permits.  Under Stepstep 1, over six
million title V sources in total and approximately 20 thousand new PSD
sources per year will not be required to obtain permits.  Under Stepstep
2, requiring sources over a 100,000 tpy CO2e to obtain a permit, over
six million title V sources in total and approximately 19.9 thousand new
PSD sources per year will obtain regulatory relief.  While the threshold
approach differs for Stepssteps 1 and 2 of the phase-in plan, the
estimated number of sources affected does not differ greatly as shown in
Table VI-1. Sectors experiencing this regulatory relief include
electricity, industrial, energy, waste treatment, agriculture,
commercial and residential.Table VI-1.  Estimated Number of Affected
Sources Experiencing Regulatory Relief1,2

	Number of Sources Experiencing Regulatory Relief

	Step 1 AnwayNon-GHG Based	Step 2 <100,000 tpytoy

Sector	Title V	New PSD	Title V	New PSD

Electricity	285	93	285	33

Industrial	170,910	604	170,654	599

Energy	2,588	48	2,536	44

Waste Treatment	3,358	2	3,165	1

Agriculture	37,351	299	37,351	299

Commercial	1,355,921	12,041	1,355,870	12,039

Residential 	4,535,500	6,915	4,535,500	6,915

Totals	6,105,913	20,002	6,105,361	19,930

% Emissions Covered3

13%

11%

Notes: (1) Number of sources is determined on a PTEpotential to emit
basis.  Estimates for title V are the total number of sources expected
to experience regulatory relief.  PSD sources are annual estimates of
newly constructed facilities and do not include modifications at
existing facilities that may also be subject to PSD requirements.  (2)
See appendices to “Appendices to ‘Regulatory Impact Analysis of the
Final Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule”’ for more details of how thresholds and sources
affected are developed.  (3) Percentage of emissions covered represent
estimated actual emissions from sources expected to experience
regulatory relief as a percentage of total stationary source GHG
emissions.

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

EPA estimated the annual benefits (avoided costs) to sources of GHG
emissions and permitting authorities anticipated from this final rule.
In addition, an accounting of the benefits from this action as measured
by avoided permit processing costs for state, local, and tribal
permitting authorities is provided.  These benefits or avoided costs
relate specifically to permit information collection costs or burden
costs postponed for smaller sources of GHG emissions otherwise required
to obtain an operating permit under title V or required to modify an
existing permit to address GHG emissions.  Avoided costs shown also
include permit burdens information collection requirements for
additional PSD permits postponed for new or modifying smaller sources of
GHG, as well as the avoided costs to state, local and tribal permitting
authorities.  We are providing an illustrative monetary estimate of
statutory permitting requirements to show the magnitude of the savings
that hypothetically result from this rulemaking.  While we believe it is
impossible to implement these permit requirements by January 2, 2011,
for the reasons laid out in this preamble, it is useful to understand
the scale of what the burden may have been.  For sake of simplicity, we
refer to this illustrative monetary estimate as the monetized benefits
of the regulatory relief presented by this rulemaking or regulatory
relief benefits for brevity.

 These benefit estimates do not consider avoided emission control costs
associated with PSD requirements for potential BACT requirements.
Estimates for BACT are unavailable at this time because of the
difficulty predicting the results of the BACT process as it would be
applied to new pollutants and classes of sources for which there is no
previous BACT experience on which to rely.

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

Table VI-2 shows that the estimated annual title V benefits to sources
and to permitting authorities in terms of avoided information collection
cost resulting from this final action to be approximately $70,535
million under Stepstep 1 of the phase-in, the non-GHG based requirements
threshold.  These avoided costs become $70,520509.9 million annually
under Stepstep 2 of the phase-in. where permitting is required for
sources at or above the 100,000 tpy CO2e threshold.  Under the anyway
threshold Stepnon-GHG based phase-in step 1, approximately $49,457.3
million in regulatory relief will accrue to sources and approximately
$21,078 million to permitting authorities annually in the form of
avoided permit processing costs.  With the <100,000 tpy CO2e threshold
for phase-in Stepstep 2, these annual regulatory relief benefits are
expected to be quite similar at $49,447.4 million for sources of GHG
emissions and $21,072062.5 million for permitting authorities.
Industrial sources permitting costs are estimated to be $46.4 thousand
per permit for a new permit and $1.7 thousand for a permit revision.
The EPA estimates that over tens of thousands of industrial sources per
year will avoid incurring these permitting costs under Stepssteps 1 and
2 of the phase-in period.  The cost for a permit for new commercial and
residential sources is estimated to be $23.2 thousand per permit with
approximately 2 million of these permits avoided annually.

State, local, and tribal permitting authorities will also benefit in
terms of avoided permitting administrative costs of over $21 billion as
a result of the decisions final in this action.  For industrial sources,
the cost for permitting authorities to process a new industrial title V

permit is approximately $19.7 thousand per permit and $1.8 thousand for
a permit revision.  Similarly, permitting authority avoided permit
processing costs are approximately $9.8 thousand per permit for a new
commercial or residential title V permit.  All estimates are stated in
2007 dollars.

Table VI-2.  Annual Title V Regulatory Relief for Sources and
Permitting Authorities1, 2

 	Step One

AnywayNon-GHG Based	Step Two

<100,000 tpy CO2e

Activity	Cost per Permit (2007$)	Number of Permits	Avoided Costs
(millions 2007$)	Number of Permits	Avoided Costs (millions 2007$)

Sources

New Industrial	$46,350	71,829	$3,329.3	71,657	$3,321.3

New Commercial/ Residential	$23,175	1,985,948	$46,024.3	1,985,930
$46,024023.9

Permit revisions due to GHG	$1,677	61,836	$104103.7	60,921	$102.2

Source Total	 	2,119,613	$49,457.3	2,118,508	$49,447.4

Permitting Authority

New Industrial	$19,688	71,829	$1,414.2	71,657	$1,410.8

New Commercial/ Residential	$9,844	1,985,948	$19,550549.7	1,985,930
$19,550539.6

Permit revisions due to GHG	$1,840	61,836	$114113.8	60,921	$112.1

Permitting Authority Total	 	2,119,613	$21,078077.7	2,118,508
$21,072062.5

Total Title V Regulatory Relief	$70,535	 	$70,520509.9

Notes:  Sums may not add due to rounding. (1) Annual title V avoided
costs estimates represent information collection costs for one third of
the total number of title V sources obtaining regulatory relief shown in
Table VI-1 potentially requiring permits or permit revisions for GHG.

(2) More details on these estimated regulatory relief benefits are
available in the appendicesAppendices to the “Regulatory Impact
Analysis for the Final Prevention of Significant Deterioration and Title
V Greenhouse Gas Tailoring Rule.””.

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

Table VI-3 summarizes the estimated annual permit burdeninformation
collection costs avoided by sources and permitting authorities for PSD
permitting due to this Tailoring Rule.  The benefits associated with
avoided cost of compliance for BACT for these sources is not included in
these estimates due to a lack of available data.  The estimated avoided
burden or reporting and recordkeeping cost that would occur absent this
rule for new industrial sources to obtain permits is estimated to be
$84.5 thousand for a modifying PSD industrial source and $59.2 thousand
for a modifying commercial or multi-family residential source.  New PSD
sources will also be required to obtain a title V permit increasing
these costs to $130.9 thousand per permit for new industrial sources and
to $82.3 thousand per permit for new commercial or multi-family
residential sources.  (Note the title V costs for these new PSD sources
have been included in title V estimates shown in Table VI-2.)  New and
modifying sources avoid approximately $5.5 billion annually in PSD
permitting costs with this rule under the phase-in Stepstep 1, non-GHG
based threshold.  Under the phase-in Stepstep 2, <100,000 tpy CO2e tpy
threshold and <75,000 tpy CO2e significance level, this avoided PSD
permitting cost estimate becomes $5.4 billion annually.  State, local,
and tribal permitting authorities are expected to avoid about $1.51
billion annually in administrative expenditures associated with
postponing PSD program requirements for these GHG sources under Stepstep
1 and $1.49 billion under Stepstep 2.  All estimates are shown in 2007
dollars.  Table VI-3.  Annual PSD Regulatory Relief for Sources and
Permitting Authorities1,2

 	Step One

AnywayNon-GHG Based	Step Two

<100,000 tpy Threshold, <75,000 Significance Level

Activity	Cost per Permit (2007$)	Number of Permits	Avoided Costs
(millions 2007$)	Number of Permits	Avoided Costs (millions 2007$)

Sources

New Industrial	$84,530	26,089	$2,205.3	25174	$2,128.0

New Commercial/Residential	$59,152	55,509	$3,283.5	55505	$3,283.2

Source Total	 	81,598	$5,489488.8	80679	$5,411.2

Permitting Authority

	New Industrial	$23,243	26,089	$606.4	25174	$585.1

New Commercial/Residential	$16,216	55,509	$900.1	55505	$900.1

Permitting Authority Total	 	 81,598	$1,506.5	80679	$1,485.2

Total Title V Regulatory Relief	 	$6,995.3	 	$6,896.4

Notes: Sums may not add due to rounding.  (1) All estimates are based
upon PTE.potential to emit.  Regulatory relief shown represents annual
estimates of PSD permitting costs avoided under Stepssteps 1 and 2 of
the phase-in period.  (2) More details on these estimated regulatory
relief benefits are available in the appendicesAppendices to the
“Regulatory Impact Analysis for the Final Prevention of Significant
Deterioration and Title V Greenhouse Gas Tailoring Rule.””.

C.  What are the economic impacts of this rulemaking?

This final rulemaking does not impose economic burdens or costs on any
sources or permitting authorities, but should be viewed as regulatory
relief for smaller GHG emission sources and for permitting authorities.
Although sources above the thresholds set in this rule will become
subject to permitting on January 2, 2011, those impacts are not
attributable to the present rulemaking.  Rather they are mandated by the
CAA and existing regulations and automatically take effect independent
of this action.

In addition to considering the regulatory relief expected for affected
entities as a result of this final rule, the EPA considered the impact
of this rulemaking to small entities (small businesses, governments and
non-profit organizations) as required by the Regulatory Flexibility Act
(RFA) and the Small Business Regulatory Enforcement Fairness Act
(SBREFA).  For informational purposes, the RIA includes the Small
Business Administration (SBA) definition of small entities by industry
categories for stationary sources of GHG and potential regulatory relief
from title V and NSR permitting programs for small sources of GHG.
Since this rule does not impose regulatory requirements but rather
lessens the regulatory burden of the CAA requirements to smaller sources
of GHG, no economic costs are imposed upon small sources of GHG as a
result of this final rule.  Rather this action provides regulatory
relief for small sources.  These avoided costs or benefits accrue
because small sources of GHG are not required to obtain a title V permit
and new or modifying small sources of GHG are not required to meet PSD
requirements.  Some of the small sources benefitting from this action
are small entities, and these entities will benefit from the regulatory
relief finalized by this rule.  For discussion of comments received and
EPA responses regarding small entities impacts, see section VIIVIII. of
this preamble.

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

EPA examined the social costs of this final rule.  These social costs
represent the foregone environmental benefits that will occur as a
result of the regulatory relief offered to sources of GHG emissions.
This action is one of regulatory relief since it increases the emissions
thresholds for the title V and PSD programs, as they apply to sources of
GHG emissions, to levels above those in the CAA.  In this preamble
section, the benefits or avoided regulatory costs of such relief are
discussed, but there is also a social cost imposed by such relief,
because this rule may forego some of the possible benefits associated
with title V and PSD programs for sources of GHG emissions below the
permitting thresholds established.  These benefits are those attributed
to title V and PSD permitting programs in general.  These benefits are
based upon the relevance of these programs to policymaking, transparency
issues, and market efficiency, and therefore are very difficult to
quantify and monetize.  For title V, they include the benefits of
improved compliance with CAA requirements that stem from (1) improved
clarity regarding applicability of requirements, (2) discovery and
required correction of noncompliance prior to receiving a permit, (3)
improving monitoring, recordkeeping, and reporting concerning compliance
status, (4) self-certification of compliance with applicable
requirements initially and annually, and prompt reporting of deviations
from permit requirements, (5) enhanced opportunity for the public to
understand and monitor sources’ compliance obligations, and (6)
improved ability of EPA, permitting authorities, and the public to
enforce CAA requirements.  However, it is important to remember that a
title V permit generally does not add new requirements for pollution
control itself, but rather collects all of a facility’s applicable
requirements under the CAA in one permitting mechanism.  Therefore, the
compliance benefits above are less when title V permits contains few or
no CAA applicable requirements.  During the initial steps of the
phase-in plan established under this action, we expect that the vast
majority of sources excluded from title V would be sources that have no
CAA applicable requirements for GHG emissions and few or no requirements
for other pollutants because their emissions of those pollutants are so
small.  For this reason while it is extremely difficult to measure the
degree of improved compliance, if any, that would be foregone, or to
quantify the social costs that would be imposed, we expect that they
would be small.  We will be evaluating this issue further during
subsequent phases.

	For PSD, the primary social cost imposed by the Tailoring Rule stems
from the foregone benefit of applying BACT to the tens of thousands of
small new sources and modifications that will be below our final
thresholds during the first steps of the phase-in.  This social cost
potentially weighs against the cost savings described previously that
stem (in part) from avoiding the administrative and control costs of
applying BACT to these sources.  The BACT requirement assures that new
and modified sources, when they increase their emissions are using
state-of-the-art emission controls and affords the public an opportunity
to comment on the control decision.  It does not prohibit increases but
it assures that such controls are applied.  Delaying the BACT
requirement for numerous small sources during the first steps of the
phase-in for this final rule could allow increases from these smaller
sources that are greater than they would be if BACT were applied.  A
detailed analysis of this difference is beyond the scope of this rule,
because we do not have detailed information on the universe of these
tens of thousands of small PSD actions, the candidate BACT technologies
for each of them, how permitting authorities would make the BACT
decisions, and how the BACT limit would compare to what would otherwise
be installed absent BACT.

It is not possible at this time to quantify the social costs of avoided
BACT.  However, we note that the universe of possible emissions that
would be regulated by sources excluded under the Tailoring Rule is small
compared to those that would remain subject to PSD.  The sources