consistent with the metric used in the mandatory GHG reporting rule and
other related rules and guidelines; and (4) a CO2e metric allows more
flexibility for designing and implementing control strategies that
maximize reductions across multiple GHGs.  We recognize the tension
between the mass-based metric in the statute and the CO2e-based metric
we are adopting in this rule, but as discussed later, we will address
this by also retaining the mass-based metric.  Moreover, given our need
to tailor our approach to covering sources of GHGs, we believe that the
considerations driving our choice to also use a CO2e-based metric are
appropriate for defining the phase-in and allow for permitting resources
to be directed at those sources and modifications that have the greatest
impact on radiative forcing of the GHGs emitted.

We recognize the concern of commenters who stated that we cannot ignore
the statutory thresholds based on the mass-based emissions of an air
pollutant as described under CAA section 169(1).  As we mentioned in the
proposal, because both the PSD and title V statutory thresholds are
expressed on a mass basis (—i.e., tons of a pollutant with no
weighting values applied) —we were concerned from a legal standpoint
that the metric proposed (CO2e) could have the effect of subjecting to
PSD or title V requirements a source whose emissions fall below the
statutory threshold limits on a strictly mass basis, but whose
CO2e-based emissions exceed the CO2e thresholds we establish under the
Tailoring Rule.  As an example, in rare instances it is possible that a
source may emit only a non-CO2 GHG in very small amounts, on a mass
basis, but one that carries a very large GWP.  In this case, it is
possible that the source may emit the GHG in amounts that fall below the
PSD and/or title V statutory applicability threshold (100 or 250 tpy, as
applicable) on a mass basis, but exceed the 100,000 CO2e PSD and title V
applicability thresholds for Step step 2 finalized in this action.
Under these circumstances, without a mass-based threshold, the source
would trigger PSD and title V for its CO2e emissions even though its GHG
mass emissions would not, in fact, exceed the statutory triggers.

Upon review of the comments pertaining to this issue and further
analysis of the legal and programmatic implications, we are adopting a
two-part applicability process, for both major source applicability
determinations for GHGs under PSD and title V and for determining if a
net increase has occurred in PSD applicability determinations for
modifications.  As explained in the RTC document, we accomplish this
two-step applicability approach by continuing to rely on the existing
mass-based applicability provisions in the current regulations, and by
including new regulatory provisions that add a definition of "subject to
regulation" that in turn includes the phase-in thresholds.  Similarly,
for PSD modification reviews and associated netting analyses, the same
two-step process must be used.  Our summary in section IV.A described
how we expect this provision to be implemented in practice.

We acknowledge that the possibility of changing GWP values is a downside
to the use of CO2e for the GHG metric, and we address this comment in
the next section, where we discuss our plan to codify GWP values.  By
codifying GWP, any changes will be manageable, and, in our judgment,
will not outweigh the benefits of a CO2e-based approach.  We also
acknowledge that a CO2e-based approach may appear to complicate the BACT
review and implementation process.  However, we disagree with the
commenter’s ultimate conclusion that BACT will be required for each
constituent gas rather than for the regulated pollutant, which is
defined as the combination of the six well-mixed GHGs.  To the contrary,
we believe that, in combination with the sum-of-six gases approach
described above, the use of the CO2e metric will enable the
implementation of flexible approaches to design and implement mitigation
and control strategies that look across all six of the constituent gases
comprising the air pollutant (e.g., flexibility to account for the
benefits of certain CH4methane control options, even though those
options may increase CO2).  Moreover, we believe that the CO2e metric is
the best way to achieve this goal because it allows for tradeoffs among
the constituent gases to be evaluated using a common currency.

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

	At proposal, we proposed to link the calculation of CO2e for GHGs to
GWP values in EPA’s “Inventory of U.S. Greenhouse Gas Emissions and
Sinks” (GHG Inventory).  See, e.g., proposed 40 CFR 51.166(b)(58).
Numerous commenters expressed concerns about this proposal on various
grounds, including the following:

The EPA should follow the proper notice-and-comment procedures and the
requirements of the Information Quality Act (IQA) for the relevant
technical underpinnings of the proposal.  The EPA relies upon the GWPs
of the IPCC without providing the supporting data for review, and it is
inappropriate to use this as a basis for this rule without first making
all the raw data available for public inspection and comment.

The EPA cannot tie the definition of GWP to the GHG Inventory because it
is a non-regulatory document that may be changed without
notice-and-comment rulemaking.  Before EPA uses a new GWP, that GWP must
be subject to notice and comment to comply with the requirements of CAA
section 307 and the Administrative Procedure Act (APA).

An annual update of GWP would create a moving target for sources
conducting applicability determinations and assessing compliance with
minor NSR and PSD emission limits.  The EPA needs to ensure that
applicability and compliance with limits continue to be based on the GWP
that existed when the determination was made or the limit was
established.

The EPA should freeze the GWP at the current values by incorporating
those values into the regulation.  The EPA could still revise the
“NSR” GWP, but would have to revise the regulation to do so.

Commenters added that it is important to ensure that all permitting
agencies are using the same calculations for the determination of CO2e
for GHGs.

We agree with commenters who suggested we should codify, either in the
Tailoring Rule or through reference to codified values in another
rulemaking, the GWP values to be used in permitting analyses.  We agree
that this approach provides certainty as to which GWP values need to be
used by permitting authorities and allows sources to plan appropriately
for possible changes in the GWP values.  As mentioned in the comments,
recommended GWP values from IPCC can change over time.  While this is
infrequent — the last such changes were in 2007 —when it occurs,
there are generally significant lag times in universal adoption of new
values because of inconsistencies that could be created in national
inventories and emission reporting mechanisms.  In a regulatory setting,
such as in the permitting programs, this could potentially create
significant implementation issues, such as when a GWP change occurs
while a permit action is in progress.  EPA also recognized similar
potential implementation issues in developing its final mandatory GHG
reporting rule for GHGs, and codified in the regulatory text for that
rule the GWP values to be used in reporting GHGs as part of that final
rulemaking.

For these reasons, we have decided to follow the approach in the
mandatory GHG reporting rule and require that for PSD and title V
permitting requirements, wherever emissions calculations are performed,
that permitting authorities and sources use GWP values that are codified
in EPA rules.  We will establish the GWP values for PSD and title V
rules based on a cross-reference to the values that are codified in the
EPA’s GHG mandatory GHG reporting rule.  74 FR 56,395, Table A-1 to
subpartSubpart A of 40 CFR partPart 98 – Global Warming Potentials.
Any changes to Table A-1 of the mandatory GHG reporting rule regulatory
text must go through an appropriate regulatory process.  In this manner,
the values used for the permitting programs will reflect the latest
values adopted for usage by EPA after a regulatory process and will be
consistent with those values used in the EPA’s GHG mandatory GHG
reporting rule.  Furthermore, the lead time for adopting changes to that
rule will provide a transition time to address implementation concerns
raised by commenters.

5.  Use of Short Tons vs. Metric Tons

	We proposed that the GHG metric would be expressed in terms of English
(or short) tons, rather than metric (or long) tons.  A few commenters
support using short tons for this purpose.  Others prefer the use of
metric tons, and most of the them note that the mandatory GHG reporting
rule Reporting Rule is based on metric tons and believe that the
Tailoring Rule should be consistent with that rule.  These commenters
believe that using different units in the two rules would be confusing
and could result in sources that are not subject to the mandatory GHG
reporting ruleReporting Rule becoming subject to PSD.  Some of the
commenters add that various “cap and trade” legislative proposals
also quantify GHGs in metric tons.  A few other commenters recommend
that EPA harmonize the applicability thresholds established under the
Tailoring Rule and the mandatory GHG reporting ruleReporting Rule
without expressing a preference for short or metric tons.

	We are finalizing our proposal to use short tons because short tons are
the standard unit of measure for both the PSD and title V permitting
programs and the basis for the threshold evaluation to support this
rulemaking.  Calculation inputs for PSD are typically prepared in
English units (e.g., poundslbs of fuel,  British thermal units
(Btu)MMBtu’s, etc.) which is the common convention for all PSD
analyses and the units of the statutory thresholds under the Act.

It is true that the mandatory GHG mandatory reporting rule uses metric
tons, but this does not create an inconsistency between permitting
programs and the reporting rule because the two rules already use
different applicability approaches.  Although we originally proposed
25,000 tpy as the major source level for permitting programs, which was
similar to the threshold in the reporting rule, we decided to adopt
substantially higher thresholds in the final rule.  Furthermore, even if
the numbers were similar, the thresholds used for the reporting rule are
based on actual emissions, while the PSD and title V programs thresholds
are based on PTEpotential to emit.  Therefore, we are less persuaded by
arguments for consistency, and believe it is more important for ease of
permit program implementation to ensure that GHG emissions calculations
for PSD and title V will build on the same set of input variables used
to develop short-ton based estimates for non-GHG pollutants.  Thus, the
use of short tons should actually facilitate the development of the GHG
emission estimate.  It would likely be more confusing to require a
multi-pollutant PSD applicability analysis to present emissions
information using different units for different pollutants, as would be
the case if we required metric tons for GHG but continue to use short
tons for every other pollutant.  Finally, we do not expect this choice
to introduce additional complexity because the conversion between short
tons and metric tons is a very simple calculation.  Therefore, based on
these considerations we are requiring that short tons be used as the
basis for emission calculations used to meet PSD and title V permitting
requirements.

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

	In this subsection, we describe our legal and policy rationale for our
determinations concerning PSD and title V applicability to GHG emissions
sources.  This subsection includes:  (1) an overview of our rationale;
(2) data concerning costs to sources and administrative burdens to
permitting authorities; (3) a review of the Chevron legal framework and
the “absurd results,” “administrative necessity,” and
“one-step-at-a-time” doctrines, as well as a review of how those
doctrines fit into the Chevron framework; (4) an overview of the
relevant  PSD and title V requirements and their legislative history;
(5) our application of the “absurd results” doctrine for tailoring
the PSD requirements; (6) our application of the “absurd results”
doctrine for tailoring the title V requirements; (7) our plans to issue
further rulemaking that will address the “absurd results” basis for
both PSD and title V requirements; (8) our rationale for the phase-in
schedule for applying PSD and title V to GHG sources; (9) our
application of the “administrative necessity” basis for tailoring
the PSD and title V requirements; and (10) our application of the
“one-step-at-a-time” basis for tailoring the PSD and title V
requirements.

1.  Overview

Under the familiar Chevron two-step approach to construction of
agency-administered statutes, the agency must first, at Chevron Stepstep
1, determine whether Congress's intent in a particular provision on a
specific question is clear; and if so, then the agency must follow that
intent.  If the intent of the provision is not clear, then the agency
may, under Chevron Stepstep 2, fashion a reasonable interpretation of
the provision.  The best indicator of congressional intent is the
literal meaning of the provision and generally, according to the
caselaw, if the literal meaning addresses the specific question, then
the agency should follow the literal meaning.

However, the courts have developed three doctrines relevant here that
authorize departure from a literal application of statutory provisions.
The first is the “absurd results” doctrine, which authorizes such a
departure if the literal application would produce a result that is
inconsistent with congressional intent, and particularly if it would
undermine congressional intent.  The judicial doctrine of
“administrative necessity” authorizes an agency to depart from
statutory requirements if the agency can demonstrate that the statutory
requirements, as written, are impossible to administer.  The
“one-step-at-a-time” doctrine authorizes an agency, under certain
circumstances, to implement a statutory requirement through a phased
approach.  Each of the three doctrines fits into the Chevron framework
for statutory construction because each of the three is designed to
effectuate congressional intent.

To apply the statutory PSD and title V applicability thresholds
literally to sources of GHG emissions would bring tens of thousands of
small sources and modifications into the PSD program each year, and
millions of small sources into the title V program.  These extraordinary
increases in the scope of the permitting programs would mean that the
programs would become several hundred-fold larger than what Congress
appeared to contemplate.  Moreover, the great majority of additional
sources brought into the PSD and title V programs would be small sources
that Congress did not expect would need to undergo permitting and that,
at the present time, in the absence of streamlined permit procedures,
would face unduly high permitting costs.  Further, again at the present
time, in the absence of streamlined permit procedures the administrative
strains would lead to multi-year backlogs in the issuance of PSD and
title V permits, which would undermine the purposes of those programs.
Sources of all types – whether they emit GHGs or not – would face
long delays in receiving PSD permits, which Congress intended to allow
construction or expansion.  Similarly, sources would face long delays in
receiving title V permits, which Congress intended to promote
enforceability.  For both programs, the addition of enormous numbers of
additional sources would provide relatively little benefit compared to
the costs to sources and the burdens to permitting authorities.  In the
case of PSD, the large number of small sources that would be subject to
control constitute a relatively small part of the environmental problem.
 In the case of title V, a great many of the sources that would be newly
subject to permit requirements would have “empty” permits, that is,
permits that do not include any applicable requirements, and that
therefore serve relatively serve little purpose.  For these reasons, the
“absurd results” doctrine applies to avoid a literal application of
the thresholds at this time.  By the same token, the impossibility of
administering the permit programs brings into play the “administrative
necessity” doctrine.  This doctrine also justifies not applying the
PSD or title V applicability threshold provisions literally to GHG
sources at this time.

The situation presented here is exactly the kind that the “absurd
results,” “administrative necessity,” and “one-step-at-a-time”
doctrines have been developed to address.  Separately and
interdependently, they authorize EPA and the permitting authorities to
tailor the PSD and title V applicability provisions through a phased
program as set forth in this rule, and to use the initial period of
phase-in to develop streamlining measures, acquire expertise, and
increase resources, all of which would facilitate applying PSD and title
V on a broader scale without overburdening sources and permitting
authorities.  In this manner, the phased approach reconciles the
language of the statutory provisions with the results of their
application and with congressional intent.

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

	This final action concerning applicability of PSD and title V to
GHG-emitting sources, including the decisions on timing for the selected
permitting thresholds, is based on our assessments of both the costs to
the regulated sources to comply with PSD and title V permitting
requirements and the administrative burdens to the permitting
authorities to process PSD and title V permit actions for GHG-emitting
sources.  This section provides a summary of our cost and administrative
burden assessments of permitting that would be required in the absence
of any tailoring as well as under various tailoring options.

Our estimates of costs to the sources and administrative burdens to the
permitting authorities from PSD and title V applicability for GHG
emissions are based on labor and cost information from the existing
Information Collection Requests (ICRs) for PSD and title V programs.  We
apply the same basic methodology used for the proposal, which
incorporates information on numbers and types of affected sources and
estimated permitting actions.  We evaluate administrative burdens in
terms of staffing needs, time for processing permits, and monetary
costs, and we make some judgments about how those burdens would affect
the permitting authorities’ ability to effectively manage and
administer their programs with the addition of GHG emission sources.  We
present the administrative burden data for applying PSD and title V
requirements at the literal statutory thresholds - that is, the 100/250
tpy levels for PSD (and 0 tpy for modifications) and the 100 tpy level
for title V ––- as well as at other thresholds, which range from
25,000 tpy CO2e to 100,000 tpy CO2e.  We have significantly revised
upwards our assessments of costs to sources and administrative burdens
since proposal, and we summarize later our reasons for doing so.  We
also present significant comments concerning administrative burdens, and
our responses to those comments.

	In the next section, concerning legal and policy rationale for our
actions, we discuss how these data on costs to the sources and
administrative burdens to the permitting authorities informed our
decisions that PSD and title V requirements should not, at present, be
applied to GHG-emitting sources under the literal terms of the statutory
thresholds as well as our decisions concerning what thresholds to apply
for Steps 1 and 2 of the applicability phase-in approach and the
applicability floor of 50,000 tpy CO2e.

a.  Costs to Sources

	As we did at proposal, we have estimated costs to the sources of
complying with PSD and title V starting from the data in the ICRs.  We
recognize that the sizes of the sources, as measured by their emissions,
that would be swept into the PSD and title V programs would vary
greatly, and that their permitting costs would vary as well.  For
example, their PSD permitting costs would depend on the amount and types
of their emissions and their control requirements.  Accordingly, we have
determined average costs, as described later.

For PSD, at proposal, we estimated that on average, an industrial source
would incur costs of $84,500 to prepare the PSD application and receive
the permit, and on average, a commercial or residential source would
incur costs of 20 percent that amount, or $16,900.  74 FR at 55,337 col.
3 to 55,339 col. 3.  For this action, we retain the same burden
estimates for an average industrial source.  This type of source would
need 866 hours, which would cost $84,500, to prepare the application and
the PSD permit.  However, based on comments received, we have determined
that a more accurate estimate for an average commercial or residential
source is 70 percent of that amount of time that an industrial source
would need, up from our proposal of 20 percent.  Thus, an average
commercial or residential source would need 606 hours, which would cost
$59,000, to prepare the PSD application and receive the permit.  We are
increasing this time over what we proposed because we now recognize that
virtually all commercial and residential sources will have no experience
with the PSD permitting process, and therefore will face a significant
learning curve that will entail more time to complete the application,
develop control recommendations, and take the other required steps.  We
believe this learning period could extend from 2 to possibly 4 years or
more from the date that the sources become subject to PSD requirements,
depending on the type and actual number of new sources that come in for
permitting.  In addition, we expect that in many cases, draft PSD
permits for GHGs will receive comments from various stakeholders, from
citizens groups to equipment vendors, who will seek to participate in
the permit process, and that all this could add to the hours that the

permittee will need to invest in the process.  The actual costs to
sources to install BACT controls, while still uncertain at this point,
would likely add additional costs across a variety of sources in a
sector not traditionally subject to such permitting requirements.

For title V, at proposal, we estimated that on average, an industrial
source would incur costs of approximately $46,400 to prepare the title V
application and receive the permit, and on average, a commercial or
residential source would incur costs of 10 percent that amount, or
almost $5,000.  74 FR at 55,338 col. 1 to 55,339 col. 3.  For this
action, we retain the same burden estimates for an average industrial
source.  This type of source would need 350 hours, which would cost
$46,400, to prepare the application and the title V permit.  However, we
have determined that a more accurate estimate for an average commercial
or residential source is 50 percent of that amount of time that an
industrial source would need, up from our proposal of 10 percent.  Thus,
an average commercial or residential source would need about 175 hours,
which would cost $23,200, to prepare the title V application and receive
the permit.  This increase is due to the same reasons as with the PSD
program just discussed.  We now recognize that virtually all commercial
and residential sources will have no experience with the title V
permitting process, and, therefore, will face a significant learning
curve that will entail more time to assess, for the firs time, their GHG
emissions (because such sources are not covered by EPA’s mandatory GHG
reporting rule), complete the application, respond to permitting
authority comments, meet other title V administrative requirements, and
respond to interested stakeholders.

b.  Administrative Burdens to Permitting Authorities

(1) Estimated Permitting Authority Burden at Proposal

As at proposal, we estimated the administrative burdens to the
permitting authorities at the various threshold levels for PSD or title
V applicability as follows.  First, for a particular threshold level, we
estimated the number of GHG-emitting sources that would be subject to
PSD requirements because they would undertake new construction or
modification, and the number of existing sources that would be subject
to title V requirements.  Second, we estimated the average additional
administrative burden and cost of each PSD permitting action and each
title V permitting action for the GHG-emitting sources.  Third, we
multiplied those two estimates, and the product is the additional
administrative burden at the particular threshold level.  We employed
the same methodology for this final rule, but, as discussed later, and
described in more detail in our final burden analysis, we have updated
several key assumptions since the proposal as a result of our
consideration of comments received.

First, we present the administrative burdens at the statutory levels for
PSD and title V applicability.  At proposal, for the PSD program, we
estimated the administrative burdens that would result from applying PSD
at the 100/250 tpy major emitting facility threshold levels in two ways,
as described in this section.  We stated that at present, 280 sources
are subject to PSD each year, both for new construction and
modifications.  This figure served as the baseline from which to
calculate increases in administrative burdens due to permitting
GHG-emitting sources.

The first method that we used to calculate the administrative burdens to
the permitting authorities was in terms of workload hours, which we then
converted to monetary costs.  To make the workload calculation, we first
estimated the number of GHG-emitting sources that would become subject
to PSD through new construction and modification.  Based on our GHG
threshold data analysis, we estimated that almost 41,000 new and
modified sources per year would become subject to PSD review.  We first
calculated the number of new sources that would become subject to PSD.
To do this, we estimated growth rates for the various sectors, and then
applied those growth rates to the numbers of sources in those sectors.
We then calculated the number of modifications.  To do this, we first
assumed that each year, two percent of sources that meet or exceed the
threshold levels for PSD applicability due to their conventional
pollutants undertake modifications.  We then calculated the number of
sources that would meet or exceed the threshold levels for PSD
applicability due to their GHG emissions, and applied the same
assumption that two percent of them would undertake modifications.  In
this manner, we estimated the number of modifications of GHG-emitting
sources that would become subject to PSD.

  We noted that currently, 280 PSD permits are issued each year, but
that applying PSD to GHG-emitting sources at the 100/250 tpy statutory
threshold levels would cause an increase in permits of more than
140-fold.  The reason for the extraordinary increase in PSD
applicability lies simply in the fact that it takes a relatively large
source to generate emissions of conventional pollutants in the amounts
of 100/250 tpy or more, but many sources combust fossil fuels for heat
or electricity, and the combustion process for even small quantities of
fossil fuel produces quantities of CO2 that are far in excess of the
sources’ quantities of conventional pollutants and that, for even
small sources, equal or exceed the 100/250 tpy levels.

 Based on the 140-fold increase in permits, we then estimated the
per-permit burden on permitting authorities.  As we stated in the
proposal:

We estimated the number of workload hours and cost a permitting
authority would expend on each new source and each modification.  We
based these estimates on the workload hours and cost for processing
permits for new sources of non-GHG emissions, which we derived from
labor and cost information from the existing [Information Collection
Requests (“ICRs”)] for PSD programs.  The ICRs show that permitting
authorities expend 301 hours to permit a new or modified industrial
source….

We then made assumptions for number of workload hours and costs for new
sources of GHG emissions.  We assumed that permitting new industrial GHG
sources that emit in excess of the 250-tpy threshold would be of
comparable complexity to permitting non-GHG emitting industrial sources
that are subject to PSD.  Thus, for these sources, we assumed that
permitting authorities would expend the same number of workload hours
and costs, on a per-permit basis, as they do for non-GHG emitting
industrial sources.  On the other hand, for commercial and residential
GHG sources that emit GHGs above the 250-tpy threshold (and as a result
would be subject to the requirements of the PSD permitting program at
this threshold level), we assumed that the workload hours and cost for
permitting these sources would be significantly less than—only 20
percent of—the hours and cost necessary to prepare and issue initial
PSD permits or permit modifications for industrial GHG sources.  This
20-percent estimate amounts to 60 hours of permitting authority time per
residential or commercial permit.

Based on these assumptions, the additional annual permitting burden for
permitting authorities, on a national basis, is estimated to be 3.3
million hours at a cost of $257 million to include all GHG emitters
above the 250-tpy threshold.

74 FR at 55,301 col. 2.

Note that at the proposal, in calculating the PSD administrative burdens
that would occur each year due to GHG emissions, we did not undertake
separate calculations for the administrative burdens associated with
permitting obligations stemming from the GHG emissions of the 280
sources already subject to PSD permitting requirements due to their
conventional pollutants.  In effect, we treated these 280 sources are
part of the over 40,000 sources that would become subject to PSD due to
their GHG emissions.

The second way that we evaluated the burden on permitting authorities
was by reviewing a study conducted by state and local air permitting
agencies.  As we said in the preamble:

In addition to conducting our burden analysis, we also reviewed summary
information from state and local air permitting agencies regarding
additional resources and burden considerations if GHG sources that emit
above the 100/250-tpy thresholds were subjected to the PSD and title V
programs.  This information covered 43 state and local permitting
agencies, representing programs from different regions of the country
and various permitting program sizes (in terms of geographic and source
population coverage)….  This information showed significant burdens
projected by permitting agencies with adding sources of GHG emissions in
terms of staffing, budget, and other associated resource needs.
Importantly, the agencies based their analysis on the assumption that,
for purposes of determining whether a source is major, its emissions
would be calculated on an actual emissions ("actuals") basis, and not on
a PTE basis.  On an actuals basis, the agencies estimated a 10-fold
increase in the number of permits.

Specifically, the agencies estimated that:

Assuming, again, that number of permits was to increase by 10-fold
(based on actual emissions), the resulting workload would require an
average of 12 more [full-time equivalents (FTEs)] per permitting
authority at an estimated cost of $1 million/year;

Without the additional FTEs, the average processing time for a permit
would increase to 3 years, which is three times the current average
processing time;

Permitting authorities would need 2 years on average to add the
necessary staff;

Permitting authorities would also need, on average, eight additional
enforcement and judicial FTEs;

Ninety percent of permitting agencies would need to train their staff in
all aspects of permitting for sources of GHG emissions.

A quarter of permitting agencies were currently under a hiring freeze.

 	We went on to explain that this state survey significantly
underestimated the administrative burdens:

It is important to reiterate that the state and local permitting
information on burden was based on the number of additional facilities
subject to PSD because their emissions of GHGs exceed the 100/250-tpy
thresholds at actual emissions rates, not PTE-based emissions rates.
However, the PSD applicability requirements are based on PTE.  By
adjusting the increase in number of permits to account for GHG sources
that exceed the 100/250-tpy applicability thresholds based on their PTE
emissions, EPA estimated a 140-fold increase in numbers of PSD permits,
much more than the 10-fold increase estimated by the states based on
actual emissions.

74 FR at 55,301 col. 2-3.

In addition to PSD, we also estimated title V burdens at the statutory
threshold.  At proposal, for the title V program, we estimated the
administrative burdens that would result from applying title V
requirements at the 100 tpy major source threshold level in the same two
ways as for PSD, as follows.:  The first method was to calculate the
administrative burdens in terms of workload hours, which we then
converted to monetary costs.  To make the workload calculation, we first
estimated the number of existing GHG-emitting sources that would become
subject to title V.  Based on our GHG threshold data analysis, we
estimated that approximately 6 million sources would become subject to
title V.  Compared to the 14,700 title V permits currently issued, this
would be an increase in permits of more than 400-fold.  We noted, in
addition, that most of the 14,700 sources already subject to title V
also emit GHGs and may be affected as well.

We then described the type of work that the permitting authorities would
need to do for these GHG-emitting sources – the six million that would
become newly subject to title V and most of the 14,700 that are already
subject to title V – as follows.  Note at the outset that the
permitting authorities’ workload is greater for sources newly subject
to title V than for existing sources that seek a revised or renewed
permit.  As EPA noted in the preamble:

[T]he[] permits [for the 6six million new sources] would need to include
any requirements for non-GHGs that may apply to the source, such as
provisions of an applicable State Implementation Plan (SIP).  For any
such requirements, permitting authorities would also need to develop
terms addressing the various compliance assurance requirements of title
V, including monitoring, deviation reporting, six-month monitoring
reports, and annual compliance certifications.

Adding to the burden described above would be the burden to add GHG
terms to the 14,700 existing title V permits.  While, in general,
existing title V permits would not immediately need to be revised or
reopened to incorporate GHG (because as noted above, there are generally
not applicable requirements for GHGs that apply to such sources),
permitting authorities may face burdens to update existing title V
permits for GHG under two possible scenarios: (1) EPA promulgates or
approves any applicable requirements for GHGs that would apply to such a
source, which would generally require a permit reopening or renewal
application, or (2) the source makes a change that would result in an
applicable requirement for GHGs to newly apply to the source, such as
PSD review, which would generally require an application for a permit
revision.  Permitting authorities will also need to process permit
renewal applications, generally on a five-year cycle, and such renewals
would need to assure that the permit properly addresses GHG.  Finally
they would have to process title V applications for new sources
(including all the PSD sources previously discussed).

74 FR at 55,302 cols. 2-3.

In light of those demands, we estimated the per-permit burden on
permitting authorities as follows.  Note, at the outset, that as with
PSD, we based the workload hours on information in ICRs for industrial
sources, and we then assumed that the workload for commercial and
residential sources would be the indicated percentage of the workload
for industrial sources:

As with PSD, we have quantified the extent of the administrative problem
that would result in workload hours and cost on the basis of information
concerning hours and costs for processing existing title V permits that
is indicated on ICRs.  However, we recognize that more than 97 percent
of these new sources would be commercial and residential sources.  We
estimate that for permitting authorities, the average new commercial or
residential permit would require 43 hours to process, which is 10
percent of the time needed for the average new industrial permit.  For
an average existing permit, which permitting authorities would need to
process through procedures for significant revisions and permit
renewals, adding GHG emissions to the permit would result in, we
estimate, 9 additional hours of processing time, which is 10 percent of
the amount of time currently necessary for processing existing permits.
We estimate that the total nationwide additional burden for permitting
authorities for title V permits from adding GHG emissions at the 100-tpy
threshold would be 340 million hours, which would cost over $15 billion.

74 FR at 55,302 col. 3.

As with PSD, the second way that we evaluated the burden on permitting
authorities at the statutory threshold was by reviewing a study
conducted by state and local air permitting agencies of the burden of
applying title V to existing GHG-emitting sources at the 100 tpy
statutory threshold level.  As we said in the preamble to the proposed
rule:

[W]e also reviewed summary information from state and local permitting
agencies, which showed significant burdens associated with adding GHGs
in their title V programs in terms of staffing, budget, and other
associated resource needs.  Again, note that the permitting agencies
based their estimates on numbers of permits that would be required from
sources subject to the 100-tpy title V applicability threshold on an
actuals—not PTE—basis.  Based on that level, the agencies assumed a
40-fold increase in numbers of permits, and estimated that:

The resulting workload would require an average of 57 more FTEs per
permitting agency at an estimated cost of $4.6 million/year;

Without the additional FTEs, the average processing time for a permit
would increase to almost 10 years, which is 20 times the current average
permit processing time;

Permitting authorities would need 2 years on average to add the
necessary staff;

On average, permitting authorities would need 29 additional enforcement
and judicial staff;

Eighty percent of permitting authorities would need to train their staff
in all aspects of permitting for sources of GHG emission.

A quarter of permitting agencies were currently under a hiring freeze.

     As with PSD, we added that this state survey significantly
underestimated the administrative burdens:

It is important to reiterate that, as with PSD, the state and local
information on projected permitting burden is based on the number of
additional facilities subject to title V because their emissions of GHGs
exceed the 100-tpy thresholds at actual emissions rates, not the
PTE-based emissions rates.  However, the title V applicability
requirements are based on PTE.  As noted elsewhere in this preamble, the
state and local agencies estimated a 40-fold increase in numbers of
title V permits based on the amount of GHG sources' actual emissions.
By adjusting the summary estimates provided by the state and local
agencies to account for GHG sources that exceed the 100-tpy threshold
based on their PTE emissions, EPA estimated that the average permitting
authority would need 570 more FTEs to support its title V permitting
program.

74 FR at 55,302 col. 3 – 55,303 col. 1.

(2)  Revisions to Proposal Estimates of Permitting Authority Burden

We received numerous comments from state and local authorities stating
that EPA had underestimated the administrative burden on the permitting
authorities in the proposal.  State and local authorities stated that in
particular, EPA underestimated the number of modifications and the
amount of time it would take permitting authorities to process permits,
particularly for commercial and residential sources.  Based on the
comments and additional analysis that we have conducted in response, we
are revising in several respects our estimates of the administrative
burdens for applying PSD and title V at the statutory threshold levels.

First we present revisions to our analysis regarding the burdens at the
statutory levels.  Before we present those changes, we want to note a
revision to our methodology that affected our estimate of the number of
permits currently issued under existing programs.  We are revising
upwards the number of sources that are already subject to PSD permitting
requirements anyway for their conventional pollutants, which, as
discussed previously, we refer to as  (“anyway” sources).  This
revision has implications both for (1i) the number of sources that would
become subject to PSD due to their GHG emissions; and also (2ii) the
baseline number of sources already subject to PSD, which we use to
compare the amount of increases in administrative burden due to
permitting GHG sources.  At proposal, we stated that 280 sources each
year are subject to PSD due to their new construction or modifications.
However, upon further analysis, we have realized that this figure is too
low because it includes only sources that have emissions of one or more
NAAQS pollutants at the 100/250 tpy thresholds and that are located in
areas of the country that are designated attainment or unclassifiable
for all of those pollutants, and thus are not designated nonattainment
for any of those NAAQS pollutants.  We estimate that another 520 sources
have emissions of one or more NAAQS pollutants at the 100/250 tpy
thresholds and are located in areas of the country that are
nonattainment for at least one of those NAAQS pollutants.  Some of these
520 sources may also emit one or more pollutants at the 100/250 tpy
level for which their area is designated attainment or unclassifiable,
and therefore may be subject to PSD for those pollutants.  Accordingly,
the correct number of “anyway” sources subject to PSD each year is
the 280 sources that are located in areas that are attainment or
unclassifiable for each pollutant that the sources emits at the 100/250
tpy level, plus at least some of the 520 sources that are located in
areas that are nonattainment for at least one of the NAAQS pollutants
that the sources emit at or above the 100/250 tpy threshold.  In the
absence of data on the number of nonattainment NSR permits that do not
have a PSD component, and because we expect this to be a small number,
we have assumed for purposes of this action, that each of the 520
sources is subject to PSD for at least one pollutant, so that we will
consider all 800 sources as subject to PSD.  Of this number, we estimate
that 70 percent, or 560 sources will undergo a modification, while the
remaining 240 permitting actions will involve new construction.  Of the
modifications, we assume that 80 percent, or 448, would become subject
to additional requirements due to their GHG emissions because those
projects have combustion-related activities that would likely emit GHGs
in the requisite quantities.  Our estimate of 80 percent of modification
activities significantly involving combustion activities is based on a
review of a random sample of PSD permits.  In total we estimate that 688
sources, either upon new construction or modification, would need to add
GHG requirements to their otherwise required PSD permitting action.

We should also note that in this rulemaking we are justifying our
conclusions about permitting authority administrative burdens on the
basis of their PSD and title V cost as calculated on both a separate
basis and a combined basis.  That is, we believe that the administrative
burdens of the PSD program justify our tailoring approach for the PSD
requirements, and the administrative burdens of the title V program
justify our tailoring approach for the title V requirements, but in
addition, the administrative burdens of both programs on a combined
basis justify the tailoring approaches.  Viewing the administrative
burdens on a combined basis provides a useful perspective because most
permitting authorities have a single organizational unit that is
responsible for both the PSD program and the title V program, and in
many cases, the same employees work on both programs.  In addition, in
some jurisdictions, permitting authorities issue a single, merged permit
that includes both PSD and title V requirements.  For these reasons,
considering administrative burdens on a combined PSD and title V basis,
offers a more accurate picture of the issues these agencies will face in
transitioning to GHG permitting.

Turning to the revisions to our burden estimates that we made as a
result of public comment, we begin by noting that many commenters
believed that we significantly underestimated the administrative burdens
associated with the proposed thresholds or that the administrative
burden under the proposed thresholds would still overwhelm the states
and result in significant permitting delays and uncertainty for sources.
 Many of these commenters indicate that our estimate of the number of
sources that would be subject to permitting is too low, and some add
that we have underestimated the per-permit effort required.  (More
detail on these comments is given elsewhere on the methodology used in
the analysis).  Several state and local agencies provided estimates of
the increased number of permits and/or staff that would be required
under the thresholds we proposed that were higher than our original
estimates.  Specifically, commenters recommended that we increase the
estimated administrative burdens for PSD permits by anywhere from 100
percent to over 2,000 percent; and that we increase the burdens for
title V permits by anywhere from 29 percent to 240 percent.  Many
commenters indicated that EPA has not adequately accounted for
“synthetic minor” sources or modification projects, stating that
many such sources and projects will not be able to keep GHGs below the
proposed thresholds, and those who could do so may not be able to
establish enforceable synthetic minor limits.  Numerous commenters also
stated that the EPA has underestimated the rate of major modifications
for GHGs under PSD.  Some commenters assert that we underestimated the
number of permits required for specific industry sectors, including the
oil and gas production industry, the natural gas transmission industry,
the semiconductor industry, the wood products industry, the brick
industry, and landfills.  Some of the state and local commenters also
believe that we have overestimated their ability to hire and train
sufficient staff to administer GHG permitting.

We are persuaded by the data and arguments provided by the many
commenters who believe EPA underestimated the number of permitting
actions and the burdens of each action, and thus the overall
administrative burdens associated with permitting GHG sources.
Accordingly, we have reevaluated our assessment of these administrative
burdens, for both the PSD and title V programs.  In conducting this
re-evaluation, we considered arguments made by the commenters, as well
as any actual data they provided, and then we determined whether and how
to modify various aspects of our detailed assessment of the burdens.
Based on this consideration we have substantially revised upwards our
estimate of administrative burdens, based on the analysis included in
the final docket for this rulemaking.  The revisions affect two elements
of our analysis by showing:  (1) a substantial increase in the number of
PSD and title V permits that will occur at a given threshold, and (2) an
increase in the average burden estimate for each such permit.

	Regarding the increase in our estimate of the number of projects that
will occur, we estimated an increase in both PSD and title V permit
actions, though the greatest changes were for PSD.  At proposal, we
estimated that, if PSD requirements were to apply to GHG sources at the
100/250 tpy statutory levels, 40,496 projects - consisting of 3,299
projects at industrial sources and 37,197 projects at commercial or
residential sources -- would need PSD permits each year.  Some of these
projects involve the construction of an entirely new source, but the
majority of these are modifications.  We now estimate that at the
100/250 tpy levels, 81,598 projects would become subject to PSD each
year.  These projects include 26,089 actions at industrial sources and
55,509 at commercial and residential sources.  We describe our
calculation of this 81,598 amount in a TSD.  The great majority of these
81,598 projects that would become subject to PSD are modifications.  We
base these estimates on the assumption that the significance levels
would be 100 tpy regardless of category.

Our estimate of the number of PSD modifications is where we made our
most significant upward revisions from our proposal, based on comments.
Our doubling of the estimated PSD permitting actions – from 40,496 at
proposal to 81,598 -- results from three separate adjustments we made to
our estimates at proposal of the number of permit actions that would
result from applying PSD to GHG sources.  Two of these increased the
number of major modifications, and one of these increased the number of
major sources and modifications.  The most significant adjustment, and
one that was raised by multiple commenters, was that we undercounted the
number of major modification projects at existing major sources because
we did not include the existing projects that avoid major PSD review by
either taking “synthetic minor” limits or by netting out for
conventional pollutants, but that would not be able to avoid PSD through
those mechanisms for GHGs.

We agree that the ability and procedures for sources to achieve
reductions, or minimize increases, due to GHGs through adoption of
enforceable limits or through netting out are not well established at
this point.  We believe that there will be numerous instances,
particularly for combustion-related projects, where it will not be
possible for sources to achieve the same level of reductions for CO2
emissions as they do for NOx emissions of nitrogen oxides (NOx), for
example, simply because there are not as many proven control techniques
that can reduce CO2 emissions to the same degree as NOx.  Also, more
research will be necessary in the type of emission units and processes
resulting in GHG emissions, and how they operate over a wide range of
utilization patterns at a variety of source categories, before
permitting authorities will be able to establish procedures and rules
for developing minor source permit limitations.  Therefore, we adjusted
our count of major modification permits under PSD upward to account for
this.

The second change to the number of permits concerns the general
modification rate of 2 percent that we applied at proposal, based on
historical experience across all pollutant types.  Commenters provided
information that suggest that this 2 percent figure is an underestimate
for GHG sources because their emissions of CO2 are high and accumulate
quickly from various changes involving combustion units.  Therefore, a
greater percentage of their physical or operational changes will result
in GHG emissions in excess of the significance levels that we identified
at proposal.  In light of these comments, we reviewed the source
populations and pollutant mix within the various populations, and
determined that we should revise our general modification rate to 4
percent for GHG sources.  This 4 percent rate was obtained by dividing
the current annual major NSR permit actions involving modifications by
the 14,700 existing sources.  We have revised our burden analysis
accordingly.  Again, the burden analysis in the docket describes our
basis for these calculations in more detail.

The third adjustment to the number of permits involves our estimate of
the number of sources with PTE potential to emit that is greater than
the various thresholds considered.  This affects the number of major
sources at the statutory thresholds, which we used to estimate the
number of PSD and title V major sources, but also has an effect on the
number of major modifications because the number of modifications
depends on the size of the population of major sources.  Commenters
provided evidence that our estimates of capacity utilization (which, as
described previously, we use for estimating potential-to-emit based on
data for actual emissions) for the general manufacturing source category
(referred to as “unspecified stationary combustion” in our analysis)
and for the oil and gas industry were not accurate.  In our proposal,
our estimated range for capacity utilization for “‘unspecified
stationary combustion” varied from 70 to 90 percent depending on
manufacturing category.  For the oil and gas industry, our estimate was
90 percent.  We received comments indicating that these utilization
rates are higher than what is normally achieved in real-world
conditions, particularly for smaller manufacturing type facilities.
Accordingly, in this action, we are using a 50 percent capacity
utilization rate for both of these source categories, which better
reflects what can be deemed reasonable operation under normal conditions
for facilities in these source categories.  This adjustment increased
the overall number of affected facilities at various threshold levels
and we have revised our burden analysis accordingly.

	A few commenters asserted that we underestimated the number of
residential homes, commercial buildings, and retail stores that would be
subject to permitting requirements because these commenters believed the
estimate in EPA’s TSD was based on actual emissions from space heating
equipment rather than PTE.  We wish to clarify that our threshold
analysis estimates for the number of residential and commercial sources
(as well as all other sources) did use a PTE basis.  To calculate the
PTE amount for these sources, we extrapolated from the actual emissions
data for the residential and commercial sources.  Specifically, we
assumed that a typical residential facility operates its fuel combustion
sources at only 10 percent of its capacity and a typical commercial
facility operates at only 15 percent of its capacity.  Based on these
assumptions, we multiplied residential actual emissions by a factor of
10, and commercial actual emissions by a factor of 6.6 to obtain
PTE-based estimates.  There is very little information available on the
capacity utilization rates of fuel combustion equipment at different
types of residential and commercial facilities, but we believe our
methodology was reasonable for these types of sources and we did not
adjust it in response to this comment.  Information on the development
of these estimates is provided in our Technical Support Document for
Greenhouse Gas Emissions Thresholds Evaluation.

 The second source of upward revisions to our administrative burden
estimate is that we are increasing the estimated average cost to
permitting authorities of issuing each PSD and title V permit at the
statutory thresholds.  At proposal, we estimated that for PSD permits,
permitting authorities would expend, on average, 301 hours to permit an
industrial source of GHG emissions, and 20 percent of that time, or 60
hours to permit a commercial or residential source.  After estimating
that amount of workload, we went on to estimate the monetary cost to
permitting authorities of that workload.  Similarly, for title V
permits, we estimated at proposal that permitting authorities would
expend 10 percent of the number of hours needed to process an industrial
permit in order to process a commercial or residential permit for GHG
sources.

We received comments from both permitting authorities and sources
asserting that our methodology underestimated the administrative burden
on grounds that (1) our methodology fails to recognize that when a
source triggers PSD for conventional pollutants, additional labor hours
would be required to issue BACT for GHGs; (2) our estimate of 60 hours
(versus 301 hours) to issue PSD permits to commercial and residential
sources of GHGs is unrealistically low; (3) our estimate failed to
account for the increase in the complexity of permits for criteria
pollutants due to (i) increases in criteria pollutant emissions becoming
newly subject to BACT at sources that are major only for GHGs, which
will result in increased permitting and (ii) BACT controls for criteria
pollutants (e.g., an oxidizer for VOCs) may result in significant GHG
emissions, triggering an additional BACT determination.; and (4) our
methodology failed to account for the significant additional PSD and
title V burdens due to sources that obtain federally enforceable permit
limits on GHGs in order to become “synthetic minors” and thereby
avoid PSD (and possibly also title V).

	Based on these comments and our own reassessment of permitting actions
created by the addition of GHGs, we have revised upwards in several ways
our estimate of the additional per-permit costs of applying PSD and
title V to GHG sources, including the following:  First we have added an
estimate of the additional permitting cost for adding a GHG component to
“anyway” PSD and title V permitting actions for conventional
pollutants.  We estimated this burden based on information in the
comments together with our own judgment about how to adjust the burden
numbers contained in the current supporting statements for our approved
permitting ICRs.  These adjustments are found in our revised burden
estimate document.

Second, we have raised the per-permit burden hours for commercial and
residential sources for PSD and title V.  At proposal, our estimates
were based on the fact that many of these permits will be technically
simpler due to such factors as a lower number of emissions points,
simpler processes, and less required modeling.  However, commenters
pointed out that, until EPA streamlines its permitting procedures, there
are many permitting activities that represent a fixed cost, such as
public notice, hearing, and response to comment activities.  In
addition, we agree, as commenters pointed out, that many of these
sources will need significantly more permitting authority staff time to
assist them in the permit application and preparation process because of
their lack of experience with these requirements.  In addition,
permitting authorities will have little, if any, experience in
permitting commercial and residential sources, and therefore will face a
learning curve that will entail more time to take permitting action.  In
addition, we expect that in many cases PSD and title V permit
applications for GHGs will receive comments from various stakeholders,
from citizens groups to equipment vendors, who will seek to participate
in the permit process, and responding and revising permits accordingly
will add to the hours that the permitting authority will spend.

As a result, we raised the PSD per-permit hours for various steps in the
permitting process, as described in the burden estimate document.  While
we continue to estimate that permitting authorities will expend, on
average, 301 hours to issue a PSD permit to an industrial source, and
that this would cost $23,243, we now recognize that a permitting
authority would expend 70 percent of that time or 210 hours, to permit a
commercial or residential source, which would cost $16,216.  Similarly,
for title V, while we continue to estimate that permitting authorities
will expend, on average, 428 hours to issue a title V permit to an
industrial source, and that this would cost $19,688, we now recognize
that a permitting authority would expend 50 percent of the time, or 214
hours, to permit a commercial or residential source, which would cost
$9,844.

We disagree with commenters who suggested that by basing our estimates
on the numbers of newly constructing and modifying sources with high
enough emissions to qualify as major emitting facilities, we failed to
account for the costs of sources that seek “synthetic minor” permits
to avoid PSD, and possibly title V, requirements.  In fact, our
methodology includes sources that might take such limits as newly-major
sources for their GHG emissions; and therefore we count the full
administrative burden associated with a PSD permit and a title V permit
for those sources.  In effect, we assume that such sources would go
through PSD or title V permitting, rather than take “synthetic
minor” limits.  We take this approach because although we suspect that
there may, in fact, be significant synthetic minor activity, we do not
have data that would allow us to determine whether, and how many of,
these sources will be able to adopt “synthetic minor” limits or
restrict their operations to obtain minor source permitting status.  Nor
do we have data on the amount of the administrative burden that would
fall on any particular permitting authority to establish a “synthetic
minor” limit, except that we understand that the amount varies widely
across states.  As a result, we opted to include these sources in our
analysis as sources receiving a PSD or title V permit.  Therefore, to
the extent that synthetic minor activity occurs, our estimate would
already have included the burden for that activity.  In fact, our
estimate would have overestimated the burden to the extent that a
permitting authority would have less administrative costs to issuing a
“synthetic minor” permit, as compared to a PSD or title V permit.

(3)  Revised Burden Estimates at Statutory Thresholds

Based on the revisions just described, we estimate that in all, if
sources that emit GHGs become subject to PSD at the 100/250 tpy levels,
permitting authorities across the country would face over $1.5 billion
in additional PSD permitting costs each year.  This would represent an
increase of 130 times the current annual burden hours under the NSR
major source program for permitting authorities.  The permitting
authorities would need a total of almost 10,000 new full time employees
(FTEs) to process PSD permits for GHG emissions.

In addition, we estimate that in all, if sources that emit GHGs become
subject to title V at the 100 tpy level, permitting authorities across
the country would incur about 1.4 billion additional work hours, which
would cost $63 billion.  We estimate that most of this work would be
done over a 3 year period, which would amount to 458 million in
additional work hours, and $21 billion in additional costs, on an annual
basis over that 3-year period.

We also note that the survey of state and local permitting authorities
described in the proposed rulemaking continues to shed light on the
extent of the administrative burdens, including staffing, budget, and
other associated resource needs, as projected by the permitting
authorities.  As noted previously, that survey concluded that
application of the PSD requirements to GHG-emitting sources at the level
of 100/250 tpy or more of actual emissions would, without additional
FTEs, increase the average processing time for a PSD permit from one to
3 years.  The survey further concluded that application of the title V
requirements to GHG-emitting sources at the level of 100 tpy or more of
actual emissions would, without additional FTEs, increase the average
processing time for a title V permit from 6 months to 10 years.  As we
noted at proposal, this survey assumed a ten-fold increase in the number
of PSD permits and a 40-fold increase in the number of title V permits
due to GHG-emitting sources, but those assumptions were severely
underestimated because they were based on actual emissions.  At
proposal, our calculations, which were based on potential emissions,
indicated a 140-fold increase in PSD permits and a more than 400-fold
increase in title V permits.  In this rulemaking, we recognize that even
our estimates at proposal were severely underestimated.  We now
recognize that the number of PSD permits will be about twice what we
estimated at proposal, and the average processing time for both PSD and
title V permits will be two or three times greater than what we
estimated at proposal.  The survey of state and local permitting
authorities provided other useful information as well, including the
fact that it would take the permitting authorities 2 years, on average,
to hire the staff necessary to handle a ten-fold increase in PSD permits
and a 40-fold increase in title V permits, and that 90 percent of their
staff would need additional training in all aspects of permitting for
GHG sources.

(4)  Revised Estimates of Administrative Burdens at Various Threshold
Levels

In order to determine the appropriate PSD and title V applicability
level for GHG sources, we not only estimated the burden at the statutory
thresholds, as described previously, but we also estimated the number of
sources, number of permitting actions, and amount of administrative
burden at various applicability levels for both PSD and title V, based
on the revised methodology described previously, that we used to
estimate the administrative burdens of applying PSD and title V at the
statutory levels.  This information is summarized in Table VI-1,
previously.  Note that Table VI-1 also includes, in the last column, the
administrative burdens, described previously, associated with the
100/250 tpy thresholds.Table V-1.  Coverage and Burden Information

	Current Program1

	“Anyway” Source Approach 75k Major Mod.

	100k Major Source

100k Major Mod.	100k Major Source

75k Major

Mod.	100k Major Source

50k Major

Mod.	50k Major

Source

50k Major

Mod.	25k Major Source

25k Major

Mod.	100/250

Major,

100 Mod.

Number of Major Sources	15,000	15,000	15,550         	15,550
15,550         	18,500

	22,500         	6,118,252

Number of Newly Major GHG Sources	N/A	0	550	550	550	3,500	7,500
6,105,913

Number of PSD New Construction Actions	240	240	242	242	242	243	250
19,889

Number of PSD Modification Actions at Covered major sources	448	448	468
1,363	2,257	2,354	9,645	62,284

Permitting Authority Cost to Run PSD programs	$12M/yr.	$15M/yr.	$15M/yr.
$36M/yr.	$57M/yr.	$59M/yr.	$229M/yr.	$1.5B/yr

Permitting Authority Work Hours to Run PSD programs2	150,795	185,195
192,055	461,450	730,544	764,781	2.97 M	19.7 M

Permitting Authority Cost to Run Title V Programs	$62M/yr. 	$63M/yr.
$67M/yr. 	$69M/yr. 	$70M/yr. 	$88M/yr. 	$126M/yr. 	$21 B/yr

Permitting Authority Work Hours to Run Title V Programs 	1.35 M	1.38 M
1.46 M	1.49 M	1.53 M	1.92 M	2.74 M	460 M

Annual Total Cost to Run PSD and Title V Programs and percent increase
in cost over current program

	$74M/yr.	$78M/yr.

5% increase (once states adopt)	$82M/yr.

11% increase	$105M/yr

42% increase	$127M/yr.

72% increase	$147M/yr.

99% increase	$355M/yr.

380% increase	$22.5 B/yr

30,305% increase

% GHG emissions covered3	-0-	65%	67%	67%	67%	70%	75%	78%

Notes:  (1) As explained in the preamble, "current program" figures for
PSD permits also reflect NSR permits in nonattainment areas that we
assume include a PSD component for at least one pollutant.  (2) Number
of FTEs may be calculated as work hours divided by 2,000 hours.  (3)
Percent of national GHG stationary source emissions emitted from sources
that would be considered major for GHG emissions under each threshold
scenario.

As described in the TSD, we considered several different major
source/major modification threshold combinations.  We chose the
combinations to reflect representative, incremental steps along the
possible range.  Because it is time- and resource- intensive to develop
estimates for a given step, we chose intervals that best reflect
representative points within the range, given those time and resource
constraints.  Here, we discuss key observations about some of the
combinations that we assessed.  As the table indicates, under the
current PSD and title V programs, approximately 15,000 sources qualify
as major PSD sources for at least one pollutant and therefore meet the
applicability thresholds.  Of these, approximately 668 sources are
subject to PSD requirements each year for at least one pollutant - 240
because they undertake new construction, and 448 because they undertake
modifications.  The permitting authorities’ administrative burdens for
the NSR program are 153,795 work hours, and $12 million.  For the title
V program, the 15,000 sources are, for the most part already permitted,
and therefore need revised permits as required and renewal permits on a
5-year schedule.  The permitting authorities’ title V administrative
burdens on an annual basis are 1,349,659 work hours and $62 million.

The first threshold Table 1 describes – and which, as discussed later,
we are adopting for Step 1 – is the “anyway” source approach.
Under this approach, (i) PSD applies to the GHG emissions from projects
that are subject to PSD anyway as new sources or major modifications due
to their emissions of non-GHG pollutants and that result in an increase
(or, in the case of modifications, a net increase) of at least 75,000
tpy CO2e; and (ii) title V applies to what we will call “anyway”
title V sources, that is, sources that are subject to title V anyway due
to their emissions of non-GHG pollutants.  Under this approach, the
number of sources subject to PSD each year – including new
construction and modifications - is the same as under the current
program, but the permitting authorities will need to address GHG
emissions as part of those permitting actions each year and, to do so,
will require, each year, 34,400 additional workload hours costing an
additional $3 million.  For title V, we estimate that the number of
title V sources that require permitting actions will, on average, be the
same each year, but permitting authorities will need to address GHG
requirements for some of them; as a result, permitting authorities will
need, each year, 27,468 additional work hours costing $1 million in
additional funding.

	Another threshold described in Table VI-1 is the one we are adopting
under Step 2, as described later, under which (i) sources will be
subject to PSD on account of their GHG emissions if they newly construct
and emit at least 100,000 tpy CO2e, or if they are existing sources that
emit at least 100,000 tpy CO2e of GHGs and make a modification that
results in a net emissions increase of at least 75,000 tpy CO2e; and
(ii) existing sources will be subject to title V due to their GHG
emissions if they emit 100,000 tpy CO2e in GHG emissions.  Under this
approach, which we will call the 100,000/75,000 approach, we estimate
that each year, compared to current levels, the permitting authorities
will need to issue GHG permits to two additional sources that newly
construct and to 915 additional sources that undertake modifications.
Doing so will require 310,655 additional workload hours costing an
additional $24 million, compared to the current program.  For title V,
an additional 190 sources will require new title V permits each of the
first 3 years, and the permitting authorities’ associated costs will
be 141,322 work hours and $7 million more than the current program.

The last approach we will describe here may be called the 50,000/50,000
approach, which, as discussed later, we adopt as the floor for
thresholds during the first 6 years after promulgation.  Under this
approach, (i) sources will be subject to PSD on account of their GHG
emissions if they newly construct and emit at least 50,000 tpy CO2e, or
if they are existing sources that emit at least 50,000 tpy CO2e of GHGs
and make a modification that results in a net emissions increase of at
least 50,000 tpy CO2e; and (ii) existing sources will be subject to
title V on account of their GHG emissions if they emit 50,000 tpy CO2e
in GHG emissions.  Under this approach, each year, the permitting
authorities will need to issue GHG permits to 3 additional sources that
newly construct and 1,900 that undertake modifications above current
permitting levels.  Doing so will require 613,986 additional workload
hours costing $47 million, compared to the current program.  For title
V, an additional 1,189 sources will require new title V permits each of
the first 3 years and the permitting authorities’ associated costs
will be 568,017 work hours and $26 million more than the current
program.

We present the remaining entries in the table to illustrate how the cost
and burden estimates vary with increasing or decreasing thresholds
relative to those selected in this rule.  These variations are important
in understanding how alternative thresholds would compare to the ones
selected.  We also include entries reflecting the baseline (current
program without GHG permitting) and the burdens if we immediately
implemented the full statutory thresholds on January 2, 2011, without
tailoring or streamlining.

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

a.  Introduction and Summary

Having described the factual underpinnings of our action, which are the
costs to sources and administrative burdens to permitting authorities,
we now describe the legal underpinnings.  They involve the framework for
analyzing agency-administered statutes, as established by the U.S.
Supreme Court in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43
(1984).  In this case, Chevron framework must take into account the
“absurd results,” “administrative necessity,” and
“one-step-at-a-time” legal doctrines.  We believe that each of these
doctrines provides independent support for our action, but in addition,
the three doctrines are directly intertwined and can be considered in a
comprehensive and interconnected manner.  Moreover, although each of the
three doctrines pre-date the 1984 Chevron decision, in which the U.S.
Supreme Court established the framework for construing
agency-administered statutes, each fits appropriately

into the Chevron framework.

To reiterate, for convenience, the statutory provisions at issue:
Congress, through the definition of “major emitting facility,”
applied the PSD program to include “any … source [[ that] emit[s],
or ha[s] the potential to emit, one hundred [or, depending on the source
category two hundred fifty] tons per year or more of any air
pollutant.”  CAA sections§§ 165(a),

169(1).  In addition, Congress, through the definition of
“modification,” applied the PSD program to include “any physical
change in, or change in the method of operation of, a stationary source
which increases the amount of any air pollutant emitted by such source
or which results in the emission of any air pollutant not previously
emitted.”  CAA sections§§ 165(a), 169(2)(C), 111(a)(4).  Similarly,
Congress, through the definition of “major source,” specified that
the title V program includes “any stationary facility or source of air
pollutants which directly emits, or has the potential to emit, one
hundred tons per year or more of any air pollutant.”  CAA sections§§
502(a), 501(2)(B), 302(j).  EPA, through long-established regulatory
action, in the case of PSD, and long-established guidance, in the case
of title V, has interpreted these definitions narrowly so that they
apply only with respect to air pollutants that are subject to regulation
under the CAA.

Applying these definitions by their terms, as interpreted narrowly by
EPA, to GHGgreenhouse gas sources at the present time would mean that
the PSD and title V programs would apply to an extraordinarily large
number of small sources, the sources would incur unduly high compliance
costs, and permitting authorities would face overwhelming administrative
burdens.  As a result, we believe Congress did not intend for us to
follow this literal reading, and instead, with this action, we chart a
course for tailoring the applicability provisions of the PSD program and
the title V program by phasing them in over time to the prescribed
extent.

For our authority to take this action, we rely in part on the “absurd
results” doctrine, because applying the PSD and title V requirements
literally (as previously interpreted narrowly by EPA) would not only be
inconsistent with congressional intent concerning the applicability of
the PSD and title V programs, but in fact would severely undermine
congressional purpose for those programs.  We also rely on the
“administrative necessity” doctrine, which applies because
construing the PSD and title V requirements literally (as previously
interpreted narrowely by EPA) would render it impossible for permitting
authorities to administer the PSD provisions.  The tailoring approach we
promulgate in this action is consistent with both doctrines.  It is also
consistent with a third doctrine, the “one-step-at-a-time” doctrine,
which authorizes administrative agencies under certain circumstances to
address mandates through phased action.

	Our discussion of the legal bases for this rule is organized as
follows:  In this section V.B.3, we provide an overview of the three
doctrines and describe how they fit into the Chevron framework for
statutory construction.  In section V.B.4, we discuss the PSD and title
V programs, including each program’s relevant statutory provisions,
legislative history, and regulatory history.  In sections V.B.5 and
V.B.6 we discuss the “absurd results” approach for PSD and title V,
respectively, that we are finalizing in our action.  In section V.B.7.,
we discuss additional rulemaking in which we may consider exempting
certain categories of sources from PSD and title V under the “absurd
results” doctrine.  In section V.B.8, we discuss the legal and policy
rationale for the phase-in schedule that we are adopting for applying
PSD and title V to GHG sources.  In section V.B.9 we discuss the
“administrative necessity” approach for PSD and title V,
respectively.  In section V.B.10, we discuss the third legal basis for
our action, the “one- step-at-a-time” doctrine.

b.  The “Absurd Results” Doctrine

Turning first to the “absurd results” doctrine, we note at the
outset that we discussed the doctrine at length in the notice of
proposed rulemaking, and we incorporate by reference that discussion,
although we make some refinements to that discussion in this preamble.
The starting point for EPA's interpretation of the PSD and title V
applicability provisions and reliance on the “absurd results”
doctrine is the familiar Chevron two-step analysis.  We discuss this
analysis in greater detail later, but in brief, in interpreting a
statutory provision, an agency must, under Chevron Stepstep 1, determine
whether Congress's intent on a particular question is clear; if so, then
the agency must follow that intent.  If the intent of the provision is
not clear, then the agency may, under Stepstep 2, fashion a reasonable
interpretation of the provision.  Chevron U.S.A. Inc. v. NRDC, 467 U.S.
837, 842-43 (1984).

The courts consider the best indicator of congressional intent to be the
plain meaning of the statute.  However, the U.S. Supreme Court has held
that the literal meaning of a statutory provision is not conclusive
“in the ‘rare cases [in which] the literal application of a statute
will produce a result demonstrably at odds with the intentions of the
drafters’ … [in which case] the intention of the drafters, rather
than the strict language, controls.”  United States v. Ron Pair
Enterprises, 489 U.S. 235, 242 (1989).  This doctrine of statutory
interpretation may be termed the “absurd results” doctrine.

Although, as just noted, the U.S. Supreme Court has described the
“absurd results” cases as “rare,” in that case the Court seemed
to be referring to the small percentage of statutory-construction cases
that are decided on the basis of the doctrine.  The D.C. Circuit, in
surveying the doctrine over more than a century of jurisprudence,
characterized the body of law in absolute numbers as comprising
“legions of court decisions.”  In re Franklyn C. Nofziger, 925 F.2d
428, 434 (D.C. Cir. 1991).  Indeed, there are dozens of cases, dating
from

within the past several years to well into the 19th century, in which
the U.S. Supreme Court has applied the “absurd results” doctrine to
avoid the literal application of a statute, or if not so holding, has
nevertheless clearly acknowledged the validity of the doctrine.  Some of
the more recent of these cases include:  Logan v. United States, 552
U.S. 23, 36-37 (2007) (“[s]tatutory terms, we have held, may be
interpreted against their literal meaning where the words ‘could not
conceivably have been intended to apply’ to the case at hand [citation
omitted]”); Nixon v. Missouri Municipal League, 541 U.S. 125, 132-33
(2004)  TA \l "Nixon v. Missouri Municipal League, 541 U.S. 125 (2004)"
\s "Nixon v. Missouri Municipal League, 541 U.S. 125 (2004)" \c 1
(“any entity” includes private but not public entities); Raygor v.
Regents of Univ. of Minn., 534 U.S. 533, 542-45 (2002)  TA \l "Raygor v.
Regents of Univ. of Minn., 534 U.S. 533, 542-45 (2002)" \s "Raygor v.
Regents of Univ. of Minn., 534 U.S. 533, 542-45 (2002)" \c 1
(“implying a narrow interpretation of … ‘any claim asserted’ so
as to exclude certain claims dismissed on Eleventh Amendment
grounds”); United States v. X-Citement Video, Inc., 513 U.S. 64, 69
(1994) (rejecting a literal interpretation of the statutory term
“knowingly” on grounds that Congress could not have intended the
“positively absurd” results that some applications of such an
interpretation would produce, “[f]or instance, a retail druggist who
returns an uninspected roll of developed film to a customer “knowingly
distributes” a visual depiction and would be criminally liable if it
were later discovered that the visual depiction contained images of
children engaged in sexually explicit conduct”); Rowland v. Cal.
Men’s Colony, 506 U.S. 194, 200 (1993) (finding that an artificial
entity such as an association is not a “person” under the statute,
and describing the absurdity doctrine as a “common mandate of
statutory construction”); United States v. Ron Pair Enterprises, 489
U.S. 235, 242 (1989) (the plain meaning of a statutory provision is not
conclusive “in the ‘rare cases [in which] the literal application of
a statute will produce a result demonstrably at odds with the intentions
of the drafters’ … [in which case] the intention of the drafters,
rather than the strict language, controls”);  Green v. Bock Laundry
Machine Company, 490 U.S. 504 (1989) (provision in Federal Rule of
Evidence that protects “the defendant” against potentially
prejudicial evidence, but not the plaintiff, refers to only criminal,
and not civil, defendants); Public Citizen v. United States Dep’t of
Justice, 491 U.S. 440, 453-54 (1989) (rejecting a broad, straightforward
reading of the term “utilize,” on grounds that a literal reading
would appear to require the absurd result that all of FACA’s
restrictions apply if a President consults with his own political party
before picking his Cabinet, and such a reading “was unmistakably not
Congress’ intention”); Watt v. Alaska, 451 U.S. 259, 266 (1981)
(rejecting reliance on plain statutory language and concluding that the
term “minerals” in section§ 401(a) of the Wildlife Refuge Revenue
Sharing Act applies only to minerals on acquired refuge lands; stating
“[t]he circumstances of the enactment of particular legislation may
persuade a court that Congress did not intend words of common meaning to
have their literal effect”); Train v. Colorado Public Interest
Research Group, Inc., 426 U.S. 1,  23-24 (1976) (prohibition in Federal
Water Pollution Control Act against discharging into navigable waters
“pollutants,” which are defined to include “radioactive
materials,” does not apply to three specific types of radioactive
materials); Jackson v. Lykes Bros. S.S. Co., 386 U.S. 731, 735 (1967)
(refusing to distinguish between a longshoreman hired by “an
independent stevedore company” and one hired by “the shipowner ….
. . to do exactly the same kind of work,” despite the clear terms of
the Act, and stating: “[w]e cannot hold that Congress intended any
such incongruous, absurd, and unjust result in passing this Act,” when
the Act was “designed to provide equal justice to every longshoreman
similarly situated”);  HYPERLINK
"http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=708&FindType
=Y&ReferencePositionType=S&SerialNum=1962103008&ReferencePosition=1067"
Lynch v. Overholser,  HYPERLINK
"http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=708&FindType
=Y&ReferencePositionType=S&SerialNum=1962103008&ReferencePosition=1067"
369 U.S. 705, 710, (1962)  (statutory construction is not confined to
the “bare words of a statute”); United States v. Bryan, 339 U.S.
323, 338 (1950) (“Despite the fact that the literal language would
encompass testimony elicited by the House Committee in its questioning
of respondent relative to the production of the records of the
association, the Court will not reach that result if it is contrary to
the congressional intent and leads to absurd conclusions.  And we are
clearly of the opinion that the congressional purpose would be
frustrated if the words, “in any criminal proceeding,” were read to
include a

prosecution for willful default under R.S. § 102.”).

	The D.C. Circuit has also handed down numerous decisions that applied
the absurd results doctrine to avoid a literal interpretation or
application of statutory provisions or that have acknowledged the
doctrine.  Some of the most recent ones include:  Arkansas Dairy
Cooperative Ass’n, Inc., v. U.S. Dep’t of Agriculture, 573 F.3d 815
(D.C. Cir. 2009) (rejecting the canon of construction that presumes that
Congress is aware of existing law pertinent to the legislation that it
enacts, when in this case, the presumption that Congress was aware of
the Departments definition of “hearing” would lead to “the absurd
result that Congress intended to impose a requirement with which the
Secretary could not comply;” stating:  “Courts, ‘in interpreting
the words of a statute, [have] some scope for adopting a restricted
rather than a literal or usual meaning of its words where acceptance of
that meaning would lead to absurd results …. . . or would thwart the
obvious purpose of the statute …. . . .’” (quoting In re Trans
Alaska Pipeline Rate Cases, 436 U.S. 631, (1978));   Buffalo Crushed
Stone, Inc. v. Surface Transportation Board, 194 F.3d 125, 129-30 (D.C.
Cir. 1999) (regulation of Surface Transportation Board providing that if
a notice of exemption “contains false or misleading information, the
use of the exemption is void ab initio” does not apply to a notice
containing false information when declaring the notice void ab initio
would undermine the goals of the governing statute; a conflict between
the “literal application of statutory language” and maintaining the
integrity of the regulatory scheme should be resolved by construing the
text in accordance with its purpose); Mova Pharm. Corp. v. Shalala, 140
F.3d 1060, 1068-69 (D.C. Cir. 1998) (as discussed at length later,
describes the “absurd results” doctrine in the context of the
Chevron framework for statutory construction; invalidates a Food and
Drug Administration’s (FDA) regulation designed to remedy what the FDA
described as the absurd result of a literal application of the statutory
provisions governing FDA approval of successive generic drug
applications, on grounds that “[i]n effect, the FDA has embarked upon
an adventurous transplant operation in response to blemishes in the
statute that could have been alleviated with more modest corrective
surgery;” states that “[t]he rule that statutes are to be read to
avoid absurd results allows an agency to establish that seemingly clear
statutory language does not reflect the "unambiguously expressed intent
of Congress," Chevron, 467); U.S. at 842, and thus to overcome the first
step of the Chevron analysis”v. Stewart, 104 F.3d 1377, 1388 (D.C.
Cir. 1997); Environmental Defense Fund v. EPA, 82 F.3d 451, 468-69
(D.C. Cir. 1996) (although Act requires that a federal action conform to
the SIP that is currently in place, EPA may instead require conformity
to a revised implementation plan that state commits to develop;
“[t]his is one of those rare cases …* ** [that] requires a more
flexible, purpose-oriented interpretation if we are to avoid ‘absurd
or futile results.’”); American Water Works Ass’n v. EPA, 40 F.3d
1266, 1271 (D.C. Cir. 1994) (holding that EPA’s interpretation of the
term “feasible” so as to require a treatment technique instead of a
an maximum contaminant level (MCL) for lead is reasonable; the court
stated: “Indeed, where a literal reading of a statutory term would
lead to absurd results, the term simply ‘has no plain meaning …. . .
and is the proper subject of construction by the EPA and the courts.’
If the meaning of ‘feasible’ suggested by the NRDC is indeed its
plain meaning, then this is such a case; for it could lead to a result
squarely at odds with the purpose of the Safe Drinking Water Act.”
(quoting Chem. Mfrs. Ass’n v. Natural Res. Def. Council, Inc., 470
U.S. 116, 126 (1985))  (citation omitted); In re Nofziger, 925 F.2d 428,
434-35 (D.C. Cir. 1991) (provision authorizing payment of attorney fees
to the subject of an investigation conducted by an independent counsel
of the Department of Justice only if “no indictment is brought”
against such individual does not preclude payment of attorney fees when
an indictment is brought but is determined to be invalid).

c.  The “Administrative Necessity” Doctrine

In the proposed rulemaking, we also described in detail the
“administrative necessity” doctrine, 74 FR 55311 col. 3 to 55318
col. 3, and we incorporate that discussion by reference into this
notice.  Under this doctrine, if a statutory provision, however clear on
its face, is impossible for the agency to administer, then the agency is
not required to follow the literal requirements, and instead, the agency
may adjust the requirements in as refined a manner as possible to assure
that the requirements are administrable, while still achieving
Congress's overall intent.  The D.C. Circuit set out the doctrine of
"administrative necessity" in a line of cases that most prominently
includes Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1980).  The
Court cited the doctrine most recently in New York v. EPA, 443 F.3d 880,
884, 888 (D.C. Cir. 2006).

As we stated in the proposed rulemaking, “We believe that the
“administrative necessity” case law establishes a three-step process
under which an administrative agency may, under the appropriate
circumstances, in effect revise statutory requirements that the agency
demonstrates are impossible to administer so that they are
administrable.”  74 FR 55315 col. 1.  Specifically:

[T]he three steps are as follows:  When an agency has identified what it
believes may be insurmountable burdens in administering a statutory
requirement, the first step the agency must take is to evaluate how it
could streamline administration as much as possible, while remaining
within the confines of the statutory requirements.  The second step is
that the agency must determine whether it can justifiably conclude that
even after whatever streamlining of administration of statutory
requirements (consistent with those statutory requirements) it conducts,
the remaining administrative tasks are impossible for the agency because
they are beyond its resources, e.g., beyond the capacities of its
personnel and funding.  If the agency concludes with justification that
it would be impossible to administer the statutory requirements, as
streamlined, then the agency may take the third step, which is to phase
in or otherwise adjust the requirements so that they are administrable.
However, the agency must do so in a manner that is as refined as
possible so that the agency may continue to implement as fully as
possible Congressional intent.

74 FR 55315 cols. 1-2.

	It should also be noted that we believe the administrative burdens
encountered by the state and local permitting authorities are fully
relevant under the “administrative necessity” doctrine.  Although
the caselaw that discusses the doctrine focuses on federal agencies (,
see 74 FR 55312-14), under the CAA, state and local agencies are EPA’s
partners in implementing provisions of the CAA, and have primary
responsibility for implementing the PSD program.  They generally adopt
EPA’s PSD requirements in their SIPs, as required under CAA section
110(a)(2)(C); and they generally adopt EPA’s title V requirements in
their title V programs, as required under CAA section 502(d).  They
issue the PSD and title V permits and are responsible in the first
instance for enforcing the terms of the permits.  In all these respects,
the law that the state and local permitting authorities administer is
both federal and state law.  Under certain circumstances, EPA may become
responsible for permit issuance and enforcement in the first instance,
but even then, EPA may, and frequently has, delegated those duties to a
state, in which case, the state implements federal law directly.  Thus,
although the PSD and title V programs are federal requirements, for the
most part, it is the states that implement those programs.  For this
reason, the administrative burdens that the states face in implementing
the programs are relevant in determining the applicability of the
“administrative necessity” doctrine.

d.  “One-Step-at-a-Time” Doctrine

In addition to the “absurd results” and “administrative
necessity” doctrines, another judicial doctrine supports at least part
of EPA’s Tailoring Rule, and that is the doctrine that agencies may
implement statutory mandates one step at a time, which we will call the
“one-step-at-a-time” doctrine.  In the notice of proposed
rulemaking, we also described this doctrine and recent case law applying
it.  74 FR 55,319 col. 1-3.  As we noted, that the U.S. Supreme Court
recently described the doctrine in Massachusetts v. EPA, 549 U.S. 497,
524 (2007), as follows: “Agencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop;” and instead
they may permissibly implement such regulatory programs over time,
“refining their preferred approach as circumstances change and as they
develop a more nuanced understanding of how best to proceed.”  We
assume familiarity with our discussion in the proposal, but we expand
upon it here to review the caselaw in greater detail and to highlight
certain components of the doctrine that are particularly relevant to the
Tailoring Rule.

The roots of the doctrine go back at least to the D.C. Circuit’s 1979
decision in United States Brewers Association, Inc. v. EPA, 600 F.2d 974
(D.C. Cir. 1979).  There, the Court considered a challenge to EPA’s
guidelines for managing beverage containers, which EPA was required to
promulgate under the Resource Conservation and Recovery Act of 1976
(RCRA).  RCRA gave EPA one year to promulgate the guidelines.  EPA
promulgated a partial set of guidelines, started two others, and was
challenged before the year was out by petitioners who objected to the
initial guideline, saying it fell short of the statutory mandate.  The
Court upheld the initial guideline, stating:  “Under these
circumstances we think the question of whether the Agency has fully
satisfied the mandate of the statute is not fit for judicial review at
this time, when the Agency, still well within the one-year period
granted by statute, is deeply involved in the process of formulating
rules designed to carry out the congressional mandate.  The Agency might
properly take one step at a time.”  States Brewers Association, Inc.
v. EPA, 600 F.2d at 982.

The Court addressed the doctrine at greater length in National
Association of Broadcasters v. FCC, 740 F.2d 1190, 1209-14 (D.C. Cir.
1984).  There, the Court noted that under certain statutory schemes,
step-by-step agency action might not be authorized; but the Court
emphasized that when it is authorized, it may offer significant
benefits; and the Court went on to delineate some of the circumstances
under which its use is justified.  In that case, the Court held that
Federal Communications Commission (FCC) acted reasonably in making a
spectrum allocation decision that granted direct broadcast satellite
service priority use of a gigahertz (GHz) band in 5-years time, and -
although acknowledging that fixed service users that were, at that time,
using that band, would have to relocate to other bands – in postponing
the details of the fixed service relocation to future proceedings.  The
Court described in some detail “[t]he circumstances under which …
[an] agency may defer resolution of problems raised in a rulemaking,”
as follows:

	The requisite judgment is in essence a pragmatic one.  In an ideal
world, of course, agencies would act only after comprehensive
consideration of how all available alternatives comported with a
well-defined policymaking objective, and in some circumstances, statutes
indeed mandate that agencies proceed by only such a course ….  But
administrative action generally occurs against a shifting background in
which facts, predictions, and policies are in flux and in which an
agency would be paralyzed if all the necessary answers had to be in
before any action at all could be taken ….  We have therefore
recognized the reasonableness of [an agency’s] decision to engage in
incremental rulemaking and to defer resolution of issues raised in a
rulemaking even when those issues are “related”‘related’ to the
main ones being considered ….  At the same time, [an agency] cannot
‘restructure [an] entire industry on a piecemeal basis’ through a
rule that utterly fails to consider how the likely future resolution of
crucial issues will affect the rule’s rationale ….

	Drawing a line between the permissible and the impermissible in this
area will generally raise two questions.  First the agency will likely
have made some estimation, based upon evolving economic and
technological conditions, as to the nature and magnitude of the problem
it will have to confront when it comes to resolve the postponed issue.
With regard to this aspect of the agency’s decision, as long as the
agency’s predictions about the course of future events are plausible
and flow from the factual record compiled, a reviewing court should
accept the agency’s estimation ….  Second, once the nature and
magnitude of the unresolved issue is determined, the relevant question
is whether it was reasonable, in the context of the decisions made in
the proceeding under review, for the agency to have deferred the issue
to the future.  With respect to that question, postponement will be most
easily justified when an agency acts against a background of rapid
technical and social change and when the agency’s initial decision as
a practical matter is reversible should the future proceedings yield
drastically unexpected results.  In contrast, an incremental approach to
agency decision making is least justified when small errors in
predictive judgments can have catastrophic effects on the public welfare
or when future proceedings are likely to be systematically defective in
taking into account certain relevant interests….

740 F.2d at 1210-11 (citations omitted).

In City of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989), the Court
suggested that one component of upholding partial agency compliance with
a statutory directive is evidence that the agency was on track for full
compliance.  There, the Court upheld the Department of Interior’s
decision to list the population of desert tortoises living north and
west of the Colorado River (the “Mojave” population) as endangered
species, but not the nearby population living south and east of the
river (the “Sonoran” population).  The agency explained that the
Mojave population faced certain threats that the Sonoran population did
not, and the Court found nothing to fault in that reasoning.  The Court
added:  “Since agencies have great discretion to treat a problem
partially, we would not strike down the listing if it were a first step
toward a complete solution, even if we thought it ‘should’ have
covered both the Mojave and Sonoran populations.”  City of Las Vegas
v. Lujan, 891 F.2d 927, 935 (D.C. Cir. 1989) (footnote omitted).

In Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d 455 (D.C. Cir.
1998), the D.C. Circuit added another component to the
“one-step-at-a-time” doctrine:  While reiterating that
“ordinarily, agencies have wide latitude to attack a regulatory
problem in phases and that a phased attack often has substantial
benefits,”  id. at 471, the Court went on to uphold partial agency
action even when that action was long-delayed.  There, the relevant
statute was the Overflights Act, which required the Federal Aviation
Administration (FAA) to reduce aircraft noise from sightseeing tours in
Grand Canyon National Park, and established the goal of “substantial
restoration of natural quiet and experience of the park.”  The statute
required the agency to develop a plan to implement the statutory
requirements within 120 days after enactment, and report to Congress
within 2 years after the date of the plan as to the plan’s success.
In fact, the FAA did not develop, through rulemaking, a plan until ten
years after enactment, and when it did, it acknowledged that the plan
was only a partial one, and that it would need two more rules and
another ten years to meet the statutory goal of substantial restoration.
 Although recognizing that the Overflights Act did not establish an
explicit timetable for meeting the statutory goal, the Court stated that
“[t]he language of the Overflights Act does manifest a congressional
concern with expeditious agency action,” and described the agency’s
action variously as “tardy,” “undeniably slow,” and “slow and
faltering.”  Id. at 476-77.  Even so, the Court upheld the FAA’s
action against different challenges from appellants and intervenors that
(i) the agency acted unreasonably in not promulgating a complete plan to
meet the statutory goal, instead of promulgating just the first step;
and (ii) the agency acted unreasonably in not waiting until it had a
complete plan before promulgating the first step.  The Court stated:
“We agree that it would be arbitrary and capricious for an agency
simply to thumb its nose at Congress and say – without any explanation
– that it simply does not intend to achieve a congressional goal on
any timetable at all….,” but went on to emphasize that the FAA’s
rule was the first of three that the agency assured would achieve the
statutory goal.  The Court cited City of Las Vegas v. Lujan, discussed
previously, for the proposition that “a court will not strike down
agency action ‘if it were a first step toward a complete
solution.’”  Grand Canyon Air Tour Coalition v. F.A.A., 154 F.3d
455, 477-78 (D.C. Cir. 1998).

e.  Consistency of Doctrines with Chevron Framework

Although the formation of the “absurd results,” “administrative
necessity,” and “one-step-at-a-time” doctrines pre-date the
Chevron two-step analysis for construing statutes that Congress has
authorized an agency to administer, we believe that the doctrines can be
considered very much a part of that analysis, and courts have continued
to apply them post-Chevron.  Under Chevron Stepstep 1, an agency must
determine whether “Congress has directly spoken to the precise
question at issue.”  If so, “the court, as well as the agency, must
give effect to the unambiguously expressed intent of Congress.”
However, if “the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency’s
answer is based on a permissible construction of the statute.”

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-42 (1984).

Thus, Step step 1 under Chevron calls for determining congressional
intent for the relevant statutory directive on the specific issue
presented.  To determine Congress’s intent, the agency must look first
to the statutory terms in question, and generally interpret them
according to their literal meaning, within the overall statutory
context, and perhaps with reference to the legislative history.  If the
literal meaning of the statutory requirements is clear then, absent
indications to the contrary, the agency must take it to indicate
congressional intent and must implement it.  Even if the literal meaning
of the statutory requirements is not clear, if the agency can otherwise
find indications of clear congressional intent, such as in the
legislative history, then the agency must implement that congressional
intent.

The D.C. Circuit has indicated that the “absurd results” doctrine
fits into the Chevron Step step 1 analysis in the following way:  Recall
that in the cases in which the courts have invoked this doctrine, the
literal meaning of the statutory requirements has been clear, but has
led to absurd results.  This can occur when the literal meaning, when
applied to the specific question, conflicts with other statutory
provisions, contradicts congressional purpose as found in the
legislative history – and, in particular, undermines congressional
purpose – or otherwise produces results so illogical or otherwise
contrary to sensible public policy as to be beyond anything Congress
would reasonably have intended.  See United States v. Ron Pair
Enterprises, 489 U.S. 235, 242-43 (1989); Griffin v. Oceanic
Contractors, Inc., 458 U.S. 564, 571 (1982).

Under these circumstances, the agency must not take the literal meaning
to indicate congressional intent.  As the D.C. Circuit has explained,
“where a literal reading of a statutory term would lead to absurd
results, the term ‘simply has no plain meaning …. . . and is the
proper subject of construction by the EPA and the court.’”
American Water Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994)
(quoting Chemical Manufacturers’ Association v. NRDC, 470 U.S. 116,
126 (1985)).  Under these circumstances, if the agency can find other
indications of clear congressional intent, then the agency must
implement that intent.  See United States v. Ron Pair Enterprises, 489
U.S. 235, 242-43 (1989).  This may mean implementing the statutory
terms, albeit not in accordance with their literal meaning, but in a way
that achieves a result that is as close as possible to congressional
intent.  As the D.C. Circuit said in Mova Pharm. Corp. v. Shalala, 140
F.3d 1060 (D.C. Cir. 1998):

The rule that statutes are to be read to avoid absurd results allows an
agency to establish that seemingly clear statutory language does not
reflect the “‘unambiguously expressed intent of Congress,”’ …
and thus to overcome the first step of the Chevron analysis.  But the
agency does not thereby obtain a license to rewrite the statute.  When
the agency concludes that a literal reading of a statute would thwart
the purposes of Congress, it may deviate no further from the statute
than is needed to protect congressional intent ….  . . .  [T]he agency
might be able to show that there are multiple ways of avoiding a
statutory anomaly, all equally consistent with the intentions of the
statute’s drafters …. . . .  In such a case, we would move to the
second stage of the Chevron analysis, and ask whether the agency’s
choice between these options was “‘based on a permissible
construction of the statute.”’  Otherwise, however, our review of
the agency’s deviation from the statutory text will occur under the
first step of the Chevron analysis, in which we do not defer to the
agency’s interpretation of the statute..”

Id. at 1068 (quoting Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842, 843
(1984) (citations omitted)).

The “administrative necessity” doctrine is not as well developed as
the “absurd results” doctrine, so that the courts have not had
occasion to explicitly describe how the doctrine fits into the Chevron
analytical framework.  However, we think that a reasonable approach, in
line with the D.C. Circuit’s approach to the “absurd results”
doctrine as just described, is as follows:  Recall that under the
“administrative necessity” doctrine, an agency is not required to
implement a statutory provision in accordance with the literal
requirements when doing so would be impossible, but the agency must
nevertheless implement the provision as fully as possible.  Placed in
the context of the Chevron framework, we think that that the
“administrative necessity” doctrine is based on the premise that
inherent in the statutory design is the presumption that Congress does
not intend to impose an impossible burden on an administrative agency.
See Alabama Power v. Costle, 636 F.2d 323, 357 (D.C. Cir. 1980)
(describing the “administrative necessity” approach as one of the
“limited grounds for the creation of exemptions [that] are inherent in
the administrative process, and their unavailability under a statutory
scheme should not be presumed, save in the face of the most unambiguous
demonstration of congressional intent to foreclose them”).

Therefore, if the literal meaning of a statutory directive would impose
on an agency an impossible administrative burden, then that literal
meaning should not be considered to be indicative of congressional
intent.  Rather, congressional intent should be considered to achieve as
much of the statutory directive as possible.  As a result, the agency
must adopt an approach that implements the statutory directive as fully
as possible.  This is consistent with the D.C. Circuit’s holding in
Mova Pharm. Corp that if congressional intent is clear, but the plain
meaning of a statute does not express that intent, then the agency must,
under Chevron Stepstep 1, select an interpretation that most closely
approximates congressional intent.  Mova Pharm. Corp, 140 F.3d at 1068.

	The “one-step-at-a-time” doctrine fits into the Chevron framework
in much the same manner that the “administrative necessity” doctrine
does.  That is, inherent in the statutory design is the presumption that
Congress intended an agency, under certain circumstances, to implement
the statutory requirements in a one-step-at-a-time fashion, as long as
the agency stays on a path towards full implementation.

Under all of the circumstances described previously, congressional
intent is clear – whether it is indicated by the plain language or
otherwise – and as a result, the agency must follow that intent under
Chevron Stepstep 1.  On the other hand, the agency may determine that
congressional intent on the specific issue is not clear.  In these
cases, the agencies should proceed to Chevron Stepstep 2 and select an
interpretation or an application that is a permissible construction of
the statute.  This situation generally occurs when the statutory
provisions are ambiguous or silent as to the specific issue, and there
are no other indications of clear congressional intent.  In addition, in
some cases in which the literal meaning of the statutory provision, when
applied to the specific question, leads to an absurd result – and,
therefore, the statutory provision should be considered not to have a
plain meaning – there may be no other indications of clear
congressional intent.  Under all these circumstances, the agency is
authorized, under Chevron Stepstep 2, to develop and implement a
construction of the statute that the courts will uphold as long as it is
reasonable.

As noted previously, the D.C. Circuit, has pointed out that this
situation may also occur when the literal language leads to an absurd
result, and, in attempting to implement congressional intent, the agency
is “able to show that there are multiple ways of avoiding a statutory
anomaly, all equally consistent with the intentions of the statute’s
drafters …. . . .  In such a case, we would move to the second stage
of the Chevron analysis, and ask whether the agency’s choice between
these options was ‘based on a permissible construction of the
statute.’”  Mova Pharm. Corp, 140 F.3d at 1068.  As the U.S. Supreme
Court has recently said, although in a context different than “absurd
results,” “ In the end, the interpretation applied by EPA "governs
if it is a reasonable interpretation of the statute - not necessarily
the only possible …. . . interpretation, nor even the interpretation
deemed most reasonable by the courts."  Entergy Corp. v. Riverkeeper,
Inc., 129 S.Ct. 1498. 1505 (2009).

As a related matter, although the courts have described Chevron Stepstep
2 as requiring that the agency’s policy be “a permissible
construction of the statute,” see Mova Pharm. Corp, 140 F.3d at 1068
(quoting Chevron, 467 U.S. at 842-43), if the statutory requirements
cannot be read literally because doing so would produce “absurd
results,” then the agency’s policy need not be completely consistent
with those particular requirements.  The policy must still, in order to
be upheld, be consistent with Congress’s actions, but those actions
should be considered to afford the agency broad discretion considering
that both the statutory terms cannot be considered dispositive and
underlying congressional intent is not clear.  As the U.S. Supreme Court
has recently said, although in a context different than “absurd
results,” “ In the end, the interpretation applied by the agency
governs if it is a reasonable interpretation of the statute -- not
necessarily the only possible …. . . interpretation, nor even the
interpretation deemed most reasonable by the courts."  Entergy Corp. v.
Riverkeeper, Inc., 129 S.Ct. 1498. 1505 (2009).

There is another aspect of the “administrative necessity” doctrine
worth noting in this context:  The doctrine applies when (i) a literal
application of the statutory directive to the case at hand is impossible
for the agency to administer; and (ii) even so, either Congress clearly
intended the statutory directive to apply to the case at hand or, if
Congress did not clearly intend that, then the agency reasonably
construes the statute to apply the statutory directive to the case at
hand.  In contrast, if Congress did not intend the statutory directive
to apply to the case at hand, or if congressional intent is uncertain
and the agency considers another approach to be reasonable, then the
“administrative necessity” doctrine would not apply.  As a result,
the agency would not be required to implement the statutory directive to
the case at hand at all, much less in a more administrable fashion.

f.  Interconnectedness of the Legal Doctrines

Although we believe that each of the “absurd results,”
“administrative necessity,” and “one-step-at-a-time” doctrines
provide independent support for our action, we also believe that in this
case, the three doctrines are intertwined and form a comprehensive basis
for EPA’s tailoring approach.  As just discussed, each of the three
doctrines is tied into the Chevron analytical framework because each is
designed to give effect to underlying intent.  As discussed previously,
each of the three doctrines comes into play in this case because a
literal reading of the PSD and title V applicability provisions results
in insurmountable administrative burdens.  Those insurmountable
administrative burdens - along with the undue costs to sources -- must
be considered “absurd results” that would undermine congressional
purpose for the PSD and title V programs.  Under the “absurd
results” doctrine, EPA is authorized not to implement the
applicability provisions literally – that is, not to implement them as
applying on the January 2, 2011 date that PSD and title V are triggered
to all GHG sources at or above the statutory thresholds -- but instead
to tailor them in a manner consistent with congressional intent.  That
means applying the PSD and title V requirements through a phase-in
approach to as many sources as possible and as quickly as possible,
starting with the largest sources, as EPA does with this Tailoring Rule,
 at least to a certain point.  By the same token, the insurmountable
administrative burdens bring into play the “administrative
necessity” doctrine, under which EPA is, again, authorized not to
implement the applicability provisions literally, but instead to apply
them in a manner consistent with administrative resources.  This also
means phasing them in through the approach in the Tailoring Rule.
Finally, the “one-step-at-a-time” doctrine, which authorizes
incremental action by agencies to implement statutory requirements under
certain circumstances, provides further support for the phased tailoring
approach in the Tailoring Rule.

g.  Application of Chevron Approach

The Chevron analytical approach, and the three legal doctrines at issue
here, apply to this action in the following manner:  To reiterate, for
convenience, the statutory provisions at issue:  Congress, through the
definition of “major emitting facility,” applied the PSD program to
include (i) “any … stationary sources of air pollutants which emit
or have the potential to emit, one hundred [or, depending on the source
category, two hundred fifty] tons per year or more of any air
pollutant,” CAA sections§§ 165(a), 169(1); and (ii) and such sources
that undertake a physical or operational change that “increases the
amount of any air pollutant emitted” by such

sources, CAA sections§§ 165(a), 169(2)(C), 111(a)(4).  Similarly,
Congress, through the definition of “major source,” specified that
the title V program includes “any stationary facility or source of air
pollutants which directly emits, or has the potential to emit, one
hundred tons per year or more of any air pollutant.”  CAA sections§§
502(a), 501(2)(B), 302(j).  EPA, through long-established regulatory
action, in the case of PSD, and long-established interpretation, in the
case of title V, has interpreted these definitions so that they apply
only with respect to air pollutants that are subject to regulation under
the CAA.

For each of these applicability provisions, the approach under Chevron
is as follows:  Under Chevron Stepstep 1, we must determine whether
Congress expressed an intention on the specific question, which is
whether the PSD or title V applicability provisions apply to GHG
sources.  Said differently, the specific question is whether, in the
case of PSD, Congress intended that the definitions of “major emitting
facility” and “modification” apply, respectively, to all GHG
sources that emit at least 100 or 250 tpy or GHGs and to all physical or
operational changes by major emitting facilities that “increase[] the
amount” of GHGs; and, in the case of title V, whether the definition
of “major source” applies to all GHG sources that emit at least 100
tpy GHGs.

To determine intent, we must first examine the terms of the statute in
light of their literal meaning.  Here, the literal reading of each
provision covers GHG sources.  For PSD, a GHG source that emits at least
100 or 250 tpy GHGs literally qualifies as “stationary source [] of
air pollutants which emit[s] or ha[s] the potential to emit, one hundred
[or two hundred fifty] tons per year or more of any air pollutant
[subject to regulation under the CAA].”  CAA section§ 169(1).  For
modifications, a physical or operational change that increases the
amount of GHG emissions qualifies as a “modification” because it
“increases the amount of any air pollutant emitted” by the source.
Similarly, for title V, a GHG source that emits at least 100 tpy GHGs
literally qualifies as “any stationary facility or source of air
pollutants which directly emits, or has the potential to emit, one
hundred tons per year or more of any air pollutant [subject to
regulation under the CAA].”  CAA sections§§ 502(a), 501(2)(B),
302(j).

Although each definition is clear that it applies to GHG sources as a
general matter, However, applying each definition in accordance with its
literal meaning to all GHG sources at the specified levels of emissions
and at the present time – in advance of the development of
streamlining methods and greater permitting authority expertise and
resources -- would create undue costs for sources and impossible
administrative burdens for permitting authorities.  These results are
not consistent with other provisions of the PSD and title V
requirements, and are inconsistent with – and, indeed, undermine –
congressional purposes for the PSD and title V provisions.  Accordingly,
under the “absurd results” doctrine, neither the PSD definition of
“major emitting facility” nor “modification” nor the title V
definition of “major source,” should be applied literally to all GHG
sources, and therefore none should be considered to have a literalplain
meaning with respect to its application to all GHG sources.

In analyzingparsing the provisions of each definition more closely, we
believe that each has four terms, any one of which could be considered
not to have its literal meaning, in this respect.  Specifically, each
provision includes (i) the term “any … source,” or “a stationary
source,” and that term could be considered not to refer literally to
all of the GHG sources; (ii) either the term “two hundred fifty tons
per year” or “100 tons per year,” or the term “increases the
amount,” and those terms could be considered not to refer literally to
the tonnage amount of emissions from all of the GHG sources; (iii) the
term “any air pollutant,” and that term could be considered not to
refer literally to the emissions from all of the GHG sources; and (iv)
the term “subject to regulation under the CAA” (which we have
interpreted “any air pollutant” to include), and that term could be
considered not to refer literally to the emissions from all of the GHG
sources.  As long as any one of those fourthree terms mayshould be
considered not to have its literal meaning as applied to GHG sources,
then the definition as a whole – again, for PSD, the terms “major
emitting facility” or “modifications,” and for title V, the term
“major source” – cannot be considered to apply literally to GHG
sources.  Because we read the terms together, as integral parts of each
definition as a whole, we do not think that the choice of which of those
fourthree terms within each definition cannot be considered to apply
literally to GHG sources has substantive legal effect.  In other words,
we believe that any one of these terms, or all of them together as part
of each definition as a whole, should be considered not to apply
literally in the case of GHG sources.

Having determined that each definition does not have a literalplain
meaning with respect to the applicability of on the specific question of
whether PSD or title V applies to all GHG sources, we must next inquire
as to whether Congress has nevertheless expressed an intent on that
question through other means.  We discuss the statutory terms and
legislative history of the PSD and title V provisions in more detail
later, but for now it suffices to say that on the issue of whether PSD
and title V apply to GHG sources, we believe that congressional intent
is clear, and that is to apply PSD and title V to GHG sources generally.
 We believe that this intent is clear from the broad phrasing of the
applicability provisions – as noted earlier, the definitions apply by
their terms to GHG source generally, even though the definitions should
not be applied literally to all GHG sources - the fact that the various
components of the PSD and title V programs can be readily applied to GHG
sources, and the fact that the two programs can readily accommodate at
least some GHG sources.  As a result, we believe that as a matter of
Chevron Step step 1, PSD and title V generally apply to GHG sources.
Our previous regulatory action defining the applicability provisions
made this clear, and we do not reopen this issue in this rulemaking.
Moreover, even if this long-established regulatory position were not
justifiable based on Chevron step 1 – on the grounds that in fact,
congressional intent on this point is not clear -- then we believe that
this position, that the statutory provisions to apply PSD and title V
generally to GHG sources, was justified under Chevron step 2.

On the issue of how to apply PSD to GHG sources, including the specific
threshold levels and the timing, we believe that Congress could be
considered to have expressed a clear intent that GHG sources be included
in the PSD program at as close to the statutory thresholds as possible,
and as quickly as possible, and at least to a certain point, all as
consistent with the need to assure that the PSD program does not impose
undue costs on sources or undue administrative burdens on the permitting
authorities.  Under this view, EPA would be required at Chevron Stepstep
1 to adopt the Tailoring Rule because, by phasing in PSD applicability,
it most closely gives effect to Congress’s intent.  Under these
circumstances, EPA is authorized to exercise its expert judgment as to
the best approach for phasing in the application of PSD to GHG sources.

Even so, we recognize that it could be concluded that on the issue of
how to apply PSD to GHG sources, congressional intent is unclear.  Under
these circumstances, EPA has the discretion at Chevron Stepstep 2 to
adopt the Tailoring Rule because it is a reasonable interpretation of
the statutory requirements (remaining mindful that the applicability
requirements cannot be applied literally).  Under the Tailoring Rule,
EPA seeks to include as many GHG sources in the permitting programs at
as close to the statutory thresholds as possible, and as quickly as
possible, although we recognize that we ultimately may stop the phase-in
process short of the statutory threshold levels.

As for title V, we believe that taken together, the various statutory
requirements and statements in the legislative history do not evidence a
clear congressional intent for how title V is to be applied to GHG
sources.  As discussed later, the relevant title V requirements and
statements in legislative history differ from PSD, not least because
they include provisions that concern empty permits that point in
different directions.  As a result, here, too, EPA has the discretion at
Chevron Stepstep 2 to adopt the Tailoring Rule as a reasonable
interpretation of the statutory requirements.  Alternatively, even if
the statute does express a clear intent as to title V that, similar to
PSD, title V requirements must be phased in as closely to the statutory
threshold as possible and as quickly as possible, this Tailoring
Ruletailoring rule is consistent with that intent.

It should also be noted that although EPA has concluded that applying
the PSD and title V applicability provisions literally in the case of
GHG sources would produce “absurd results” and therefore is not