[Federal Register Volume 76, Number 85 (Tuesday, May 3, 2011)]
[Rules and Regulations]
[Pages 25178-25209]
[FR Doc No: 2011-10285]

Vol. 76

Tuesday,

No. 85

May 3, 2011

Part IV

Environmental Protection Agency

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40 CFR Part 52

Determinations Concerning Need for Error Correction, Partial Approval
and Partial Disapproval, and Federal Implementation Plan Regarding
Texas's Prevention of Significant Deterioration Program; Final Rule

Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Rules and
Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-HQ-OAR-2010-1033; FRL-9299-9]
RIN 2060-AQ68

Determinations Concerning Need for Error Correction, Partial
Approval and Partial Disapproval, and Federal Implementation Plan
Regarding Texas's Prevention of Significant Deterioration Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing a correction to its previous full approval
of Texas's Clean Air Act (CAA) Prevention of Significant Deterioration
(PSD) program to be a partial approval and partial disapproval and is
also promulgating a Federal Implementation Plan (FIP) for Texas. These
actions are based on EPA's determination that at the time EPA approved
Texas's PSD program, the program was flawed because the state did not
address how the program would apply to all pollutants that would become
newly subject to regulation in the future, including non-National
Ambient Air Quality Standard (NAAQS) pollutants, among them greenhouse
gases (GHGs). The partial disapproval requires EPA to promulgate a FIP
and EPA is doing so to assure that GHG-emitting sources in Texas are
able to proceed with plans to construct or expand.

DATES: This action is effective on May 1, 2011.

ADDRESSES: EPA has established a docket for this rulemaking under
Docket ID No. EPA-HQ-OAR-2010-1033. All documents in the docket are
listed in the http://www.regulations.gov index. Although listed in the
index, some information is not publicly available, e.g., confidential
business information or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, will be publicly available only in hard copy. Publicly
available docket materials are available either electronically in
http://www.regulations.gov or in hard copy at the U.S. Environmental
Protection Agency, Air Docket, EPA/DC, EPA West Building, Room 3334,
1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The telephone number for the Public Reading Room is
(202) 566-1744, and the telephone number for the Air Docket is (202)
566-1742.

FOR FURTHER INFORMATION CONTACT: For information on this rule, contact
Ms. Cheryl Vetter, Air Quality Policy Division, Office of Air Quality
Planning and Standards (C504-03), Environmental Protection Agency,
Research Triangle Park, NC 27711; telephone number:<PHONE_NUMBER>; fax
number:<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    The only governmental entity potentially affected by this rule is
the State of Texas. Other entities potentially affected by this rule
include sources in all industry groups within the State of Texas, which
have a direct obligation under the CAA to obtain a PSD permit for GHGs
for projects that meet the applicability thresholds set forth in the
Tailoring Rule.\1\ This independent obligation on sources is specific
to PSD and derives from CAA section 165(a). The majority of entities
potentially affected by this action are expected to be in the following
groups:
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    \1\ Prevention of Significant Deterioration and Title V
Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31,514 (June 3,
2010). The Tailoring Rule is described in more detail later in this
preamble.

------------------------------------------------------------------------
             Industry Group                          NAICS a
------------------------------------------------------------------------
Utilities (electric, natural gas, other  2211, 2212, 2213.
 systems).
Manufacturing (food, beverages,          311, 312, 313, 314, 315, 316.
 tobacco, textiles, leather).
Wood product, paper manufacturing......  321, 322.
Petroleum and coal products              32411, 32412, 32419.
 manufacturing.
Chemical manufacturing.................  3251, 3252, 3253, 3254, 3255,
                                          3256, 3259.
Rubber product manufacturing...........  3261, 3262.
Miscellaneous chemical products........  32552, 32592, 32591, 325182,
                                          32551.
Nonmetallic mineral product              3271, 3272, 3273, 3274, 3279.
 manufacturing.
Primary and fabricated metal             3311, 3312, 3313, 3314, 3315,
 manufacturing.                           3321, 3322, 3323, 3324, 3325,
                                          3326, 3327, 3328, 3329.
Machinery manufacturing................  3331, 3332, 3333, 3334, 3335,
                                          3336, 3339.
Computer and electronic products         3341, 3342, 3343, 3344, 3345,
 manufacturing.                           4446.
Electrical equipment, appliance, and     3351, 3352, 3353, 3359.
 component manufacturing.
Transportation equipment manufacturing.  3361, 3362, 3363, 3364, 3365,
                                          3366, 3369.
Furniture and related product            3371, 3372, 3379.
 manufacturing.
Miscellaneous manufacturing............  3391, 3399.
Waste management and remediation.......  5622, 5629.
Hospitals/nursing and residential care   6221, 6231, 6232, 6233, 6239.
 facilities.
Personal and laundry services..........  8122, 8123.
Non-residential (commercial)...........  Not available. Codes only exist
                                          for private households,
                                          construction and leasing/sales
                                          industries.
------------------------------------------------------------------------
\a\ North American Industry Classification System.

B. How is the preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. How is the preamble organized?
II. Overview of Rulemaking
III. Background
    A. Requirements for SIP Submittals and EPA Action
    B. General Requirements for the PSD Program
    C. Regulatory Background: Texas SIP and PSD Program
    D. Regulatory Background: GHG Rules
IV. Final Action and Response to Comments
    A. Response to General Comments on the Operation of the PSD
Program

    B. Determination That EPA's Previous Approval of Texas's PSD
Program Was in Error
    C. Error Correction: Conversion of Previous Approval to Partial
Approval and Partial Disapproval
    D. Reconsideration Under CAA Section 301, Other CAA Provisions,
and Case Law
    E. Relationship of This Action to GHG PSD SIP Call
    F. Relationship of This Rulemaking to Other States
    G. Federal Implementation Plan
V. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act
VI. Judicial Review

II. Overview of Rulemaking

    This notice-and-comment final rulemaking is intended to assure that
large GHG-emitting sources in Texas, which became subject to PSD on
January 2, 2011, will continue to be able to obtain preconstruction
permits under the CAA New Source Review (NSR) PSD program beyond the
April 30, 2011, expiration date of the FIP that EPA put in place for
this purpose via an Interim Final Rule. ``Determinations Concerning
Need for Error Correction, Partial Approval and Partial Disapproval,
and Federal Implementation Plan Regarding Texas Prevention of
Significant Deterioration Program; Interim Final Rule.'' 75 FR 82,430
(Dec. 30, 2010). In this manner, this rulemaking will allow those
sources to avoid delays in construction or modification.
    As in the interim final rulemaking, EPA is determining in this
rulemaking that it erred in fully approving Texas's PSD program in 1992
because at that time, the program had a gap, which recent statements by
Texas have made particularly evident. The program did not address its
application to, or provide assurances that it has adequate legal
authority to apply to, all pollutants newly subject to regulation,
including non-NAAQS pollutants, among them GHGs. As a result, EPA is
correcting its previous full approval to be a partial approval and
partial disapproval. EPA is taking this action through the error-
correction mechanism provided under CAA section 110(k)(6). The partial
disapproval requires EPA, under CAA section 110(c)(1)(B), to promulgate
a FIP within 2 years, and, as part of this rulemaking, EPA is
exercising its discretion to promulgate the FIP immediately. Under the
FIP, EPA will become the permitting authority for, and apply Federal
PSD requirements to, large GHG-emitting sources in accordance with the
thresholds established under what we call the Tailoring Rule, which EPA
published by notice dated June 3, 2010, 75 FR 31,514.\2\
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    \2\ Texas will continue to be the permitting authority for non-
GHG pollutants for sources that triggered PSD requirements due to
such other pollutants. EPA will be the permitting authority for all
pollutants for sources that trigger PSD solely because of their
GHGs, which may occur after July 1, 2011, under the Tailoring Rule.
This permitting process will also take place in the seven other
states for which EPA is implementing a GHG PSD FIP.
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    By becoming the permitting authority, EPA will be able to process
preconstruction PSD permit applications for GHG-emitting sources and
thereby allow the affected sources to avoid delays in construction and
modification. According to Texas, 167 GHG-emitting sources will require
PSD permits during 2011. These sources have a real need to have a
permitting authority in place in Texas. Although the CAA allows states
to implement PSD, and Texas has been implementing an EPA-approved PSD
program since 1992, Texas has recently informed EPA that it does not
have the intention or the authority to apply PSD to GHG-emitting
sources, and that it could very well maintain this position even if the
U.S. Court of Appeals for the DC Circuit (the DC Circuit) upholds the
GHG rules against legal challenges that Texas and other parties have
recently brought. Texas's unwillingness to implement this aspect of the
Federal PSD program leaves EPA no choice but to resume its role as the
permitting authority for this portion, in order to assure that
businesses in Texas are not subject to delays or potential legal
challenges and are able to move forward with planned construction and
expansion projects that will create jobs and otherwise benefit the
state's and the nation's economy. EPA has determined that this action
is necessary at this time so that there is no period of time when
sources are unable to obtain necessary PSD permits.
    In order to assure no gap in permitting, EPA is establishing May 1,
2011, as the effective date for the FIP, which immediately follows the
expiration of the interim-final FIP EPA published by notice dated
December 30, 2010. EPA stated in the interim final rule that the FIP
would remain in place until April 30, 2011.

III. Background

A. Requirements for SIP Submittals and EPA Action

    This section reviews background information concerning the CAA
requirements for what SIPs must include, the process for state
submittals of SIPs, requirements for EPA action on SIPs and SIP
revisions, and FIPs.
1. Requirements for What SIPs Must Include
    Congress enacted the NAAQS and SIP requirements in the 1970 CAA
Amendments. CAA section 110(a)(1) requires that states adopt and submit
to EPA for approval SIPs that implement the NAAQS. CAA section
110(a)(2) contains a detailed list of requirements that all SIPs must
include to be approvable by EPA.
    Of particular relevance for this action, subparagraph (E)(i) of CAA
section 110(a)(2) provides that SIPs must ``provide * * * necessary
assurances that the state * * * will have adequate personnel, funding,
and authority under State * * * law to carry out such implementation
plan.* * *'' As applicable to PSD programs, this provision means that
EPA may approve the SIP PSD provisions only if EPA is satisfied that
the state will have adequate legal authority under state law.
2. EPA Action on SIP Submittals
    After a SIP or SIP revision has been submitted, EPA is authorized
to act on it under CAA section 110(k)(3)-(4). Those provisions
authorize a full approval or, if the SIP or SIP revision meets some but
not all of the applicable requirements, a conditional approval, a
partial approval and disapproval, or a full disapproval. If EPA
disapproves a required SIP or SIP revision, then EPA must promulgate a
FIP at any time within 2 years after the disapproval, unless the state
corrects the deficiency within that period of time by submitting a SIP
revision that EPA approves. CAA section 110(c)(1).\3\
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    \3\ States are subject to sanctions for failure to submit, or
for EPA disapproval of, SIPs for nonattainment areas, under CAA
section 179. These sanctions provisions are not relevant for this
rule because they do not apply to PSD SIPs.

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3. SIP Call
    The CAA provides a mechanism for the correction of SIPs with
certain types of inadequacies, under CAA section 110(k)(5), which
provides:

(5) Calls for plan revisions

    Whenever the Administrator finds that the applicable
implementation plan for any area is substantially inadequate to * *
* comply with any requirement of this Act, the Administrator shall
require the State to revise the plan as necessary to correct such
inadequacies. The Administrator shall notify the State of the
inadequacies and may establish reasonable deadlines (not to exceed
18 months after the date of such notice) for the submission of such
plan revisions.

This provision by its terms authorizes the Administrator to ``find[]
that [a SIP] * * * is substantially inadequate to * * * comply with any
requirement of this Act,'' and, based on that finding, to ``require the
State to revise the [SIP] * * * to correct such inadequacies.'' This
latter action is commonly referred to as a ``SIP call.'' In addition,
this provision authorizes EPA to establish a ``reasonable deadline[]
(not to exceed 18 months after the date of such notice)'' for the
submission of the corrective SIP revision.
    If EPA does not receive the corrective SIP revision by the
deadline, CAA section 110(c) authorizes EPA to ``find[] that [the]
State has failed to make a required submission.'' CAA section
110(c)(1)(A). Once EPA makes that finding, CAA section 110(c)(1)
requires EPA to ``promulgate a Federal implementation plan at any time
within 2 years after the [finding] * * * unless the State corrects the
deficiency, and [EPA] approves the plan or plan revision, before [EPA]
promulgates such [FIP].''
    CAA section 110(k)(5), by its terms--specifically, the use of the
term ``[w]henever''--authorizes, but does not require, EPA to make the
specified finding and does not impose any time constraints for EPA to
do so. As a result, EPA has discretion in determining whether and when
to make the specified finding. See New York Public Interest Research
Group v. Whitman, 321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase
``Whenever the Administrator makes a determination'' in CAA section
502(i)(1) grants EPA ``discretion whether to make a determination'');
Her Majesty the Queen in Right of Ontario v. EPA, 912 F.2d 1525, 1533
(DC Cir. 1990) (``whenever'' in CAA section 115(a) ``impl[ied] a degree
of discretion'' in whether EPA had to make a finding).
4. Authority for EPA to Revise Previous Action on SIPs
    EPA has authority to revise its previous actions concerning SIP
submittals. Two mechanisms are available to EPA: The error correction
mechanism provided under CAA section 110(k)(6), and EPA's general
administrative authority to reconsider its own actions under CAA
sections 110 and 301(a), in light of case law.
(a) Error Correction Under CAA Section 110(k)(6)
    CAA section 110(k)(6) provides as follows:

    Whenever the Administrator determines that the Administrator's
action approving, disapproving, or promulgating any plan or plan
revision (or part thereof), area designation, redesignation,
classification, or reclassification was in error, the Administrator
may in the same manner as the approval, disapproval, or promulgation
revise such action as appropriate without requiring any further
submission from the State. Such determination and the basis thereof
shall be provided to the State and public.

The key provisions for present purposes are that the Administrator has
the authority to ``determine[]'' when a SIP approval was ``in error,''
and when she does so, she may then revise the SIP approval ``as
appropriate,'' in the same manner as the approval, and without
requiring any further submission from the state.
    As quoted previously, CAA section 110(k)(6) provides EPA with the
authority to correct its own ``error,'' but nowhere does this provision
or any other provision in the CAA define what qualifies as ``error.''
Thus, the term should be given its plain language, everyday meaning,
which includes all unintentional, incorrect or wrong actions or
mistakes.
    The legislative history of CAA section 110(k)(6) is silent
regarding the definition of error, but the timing of the enactment of
the provision suggests a broad interpretation. The provision was
enacted shortly after the Third Circuit decision in Concerned Citizens
of Bridesburg v. U.S. EPA, 836 F.2d 777 (1987). In Bridesburg, the
court adopted a narrow interpretation of EPA's authority to
unilaterally correct errors. The court stated that such authority was
limited to typographical and other similar errors, and stated that any
other change to a SIP must be accomplished through a SIP revision. Id.
at 786. In Bridesburg, EPA determined that it lacked authority to
include odor regulations as part of a SIP unless the odor regulations
had a significant relationship to achieving a NAAQS, and so directly
acted to remove 13-year-old odor provisions from the Pennsylvania SIP.
Id. at 779-80. EPA found the previous approval of the provisions to
have been an inadvertent error, and so used its ``inherent authority to
correct an inadvertent mistake'' to withdraw its prior approval of the
odor regulations without seeking approval of the change from
Pennsylvania. Id. at 779-80, 785. After noting that Congress had not
contemplated the need for revision on the grounds cited by EPA, Id. at
780, the court found that EPA's ``inherent authority to correct an
inadvertent mistake'' was limited to corrections such as
``typographical errors,'' and that instead EPA was required to use the
SIP revision process to remove the odor provision from the SIP. Id. at
785-86.
    When the court made its determination in Bridesburg in 1987, there
was no provision explicitly addressing EPA's error correction authority
under the CAA. In 1990, Congress passed CAA section 110(k)(6). The
legislative history says little about the provision, and does not
mention Bridesburg. Even so, the terms of the provision make it evident
that Congress authorized EPA to undertake a broader set of revisions
under the guise of error correction than the Bridesburg court read the
pre-existing Clean Air Act to authorize, and that Congress did not
intend to codify the holding of Bridesburg. This is apparent because
CAA section 110(k)(6) both (i) authorizes EPA to correct SIP approvals
and other actions that were ``in error,'' which, as noted previously,
broadly covers any mistake, and thereby contrasts with the holding in
Bridesburg that EPA's pre-section 110(k)(6) authority was limited to
correction of typographical or similar mistakes; and (ii) provides that
the error correction need not be accomplished via the SIP revision or
SIP call process, which contrasts with the holding of Bridesburg
requiring a SIP revision. By the same token, because the Bridesburg
decision stood for the proposition that EPA could not correct anything
more than a narrow range of errors, had Congress intended to codify the
decision in Bridesburg, it is logical that Congress would have
described the type of error that EPA was authorized to correct in the
same limited way that the decision did. In this manner, the fact that
Congress adopted CAA section 110(k)(6) against the backdrop of the
Bridesburg case confirms that the provision cover a broad range of
errors.
    EPA has used CAA section 110(k)(6) in the past to correct errors of
a non-technical nature. Most recently, EPA withdrew its approval of SIP
PSD

programs in 24 states to the extent they apply PSD to GHG-emitting
sources below the thresholds in the final Tailoring Rule. ``Limitation
of Approval of Prevention of Significant Deterioration Provisions
Concerning Greenhouse Gas Emitting Sources in State Implementation
Plans; Final Rule,'' 75 FR 82,536 (Dec. 30, 2010)(Narrowing Rule). In
addition, EPA has used CAA section 110(k)(6) as authority to make
substantive corrections to remove a variety of provisions from
Federally approved SIPs that are not related to the attainment or
maintenance of NAAQS or any other CAA requirement. See, e.g.,
``Approval and Promulgation of Implementation Plans; Kentucky: Approval
of Revisions to the State Implementation Plan,'' 75 FR 2,440 (Jan. 15,
2010) (correcting the SIP by removing a provision, approved in 1982,
used to address hazardous or toxic air pollutants); ``Approval and
Promulgation of Implementation Plans; New York,'' 73 FR 21,546 (April
22, 2008) (issuing a direct final rule to correct a prior SIP
correction from 1998 that removed general duties from the SIP but
neglected to remove a reference to ``odor'' in the definition of ``air
contaminant or air pollutant''); ``Approval and Promulgation of
Implementation Plans; New York,'' 63 FR 65,557 (Nov. 27, 1998) (issuing
direct final rule to correct SIP by removing a general duty ``nuisance
provision'' that had been approved in 1984); ``Correction of
Implementation Plans; American Samoa, Arizona, California, Hawaii, and
Nevada State Implementation Plans,'' 63 FR 34,641 (June 27, 1997)
(correcting five SIPs by deleting a variety of administrative
provisions concerning variances, hearing board procedures, and fees
that had been approved during the 1970s).
    CAA section 110(k)(6), by its terms--specifically, the use of the
terms ``[w]henever'' and ``may'' and the lack of any time constraints--
authorizes, but does not require, EPA to make the specified finding. As
a result, EPA has discretion in determining whether and when to make
the specified finding. See New York Public Interest Research Group v.
Whitman, 321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase ``Whenever
the Administrator makes a determination'' in CAA section 502(i)(1)
grants EPA ``discretion whether to make a determination''); Her Majesty
the Queen in Right of Ontario v. EPA, 912 F.2d 1525, 1533 (DC Cir.
1990) (``whenever'' in CAA section 115(a) ``impl[ied] a degree of
discretion'' in whether EPA had to make a finding).
(b) Inherent Authority To Reconsider
    The provisions in CAA section 110 that authorize EPA to take action
on a SIP revision inherently authorize EPA to, on its own initiative,
reconsider and revise that action as appropriate. The courts have found
that an administrative agency has the inherent authority to reconsider
its decisions, unless Congress specifically proscribes the agency's
discretion to do so. See, e.g., Gun South, Inc. v. Brady, 877 F.2d 858,
862 (11th Cir. 1989) (holding that agencies have implied authority to
reconsider and rectify errors even though the applicable statute and
regulations do not provide expressly for such reconsideration);
Trujillo v. General Electric Co., 621 F.2d 1084, 1086 (10th Cir. 1980)
(``Administrative agencies have an inherent authority to reconsider
their own decisions, since the power to decide in the first instance
carries with it the power to reconsider''); see also New Jersey v. EPA,
517 F.3d 574 (DC Cir. 2008) (holding that an agency normally can change
its position and reverse a prior decision but that Congress limited
EPA's ability to remove sources from the list of hazardous air
pollutant source categories, once listed, by requiring EPA to follow
the specific delisting process at CAA section 112(c)(9)).\4\
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    \4\ For additional case law, see Belville Mining Co. v. United
States, 999 F.2d 989, 997 (6th Cir. 1993); Dun & Bradstreet Corp. v.
United States Postal Service, 946 F.2d 189, 193 (2d Cir. 1991); Iowa
Power & Light Co. v. United States, 712 F.2d 1292 (8th Cir. 1983).
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    Section 301(a) of the CAA, read in conjunction with CAA section 110
and the case law just described, provides further statutory authority
for EPA to reconsider its actions under CAA section 110. CAA section
301(a) authorizes EPA ``to prescribe such regulations as are necessary
to carry out [EPA's] functions'' under the CAA. Reconsidering prior
rulemakings, when necessary, is part of ``[EPA's] functions'' under the
CAA--in light of EPA's inherent authority as recognized under the case
law to do so--and, as a result, CAA section 301(a) confers such
authority upon EPA.
    EPA finds further support for its authority to narrow its approvals
in the Administrative Procedures Act (APA) section 553(e), which
requires EPA to give interested persons ``the right to petition for the
issuance, amendment, or repeal of a rule,'' and CAA section 307(b)(1),
which expressly contemplates that persons may file a petition for
reconsideration under certain circumstances (at the same time that a
rule is under judicial review). These authorizations for other persons
to petition EPA to amend or repeal a rule suggest that EPA has inherent
authority, on its own, to issue such amendment or repeal. This is
because EPA may grant a petition from another person for an amendment
to or repeal of a rule only if justified under the CAA, and if such an
amendment or repeal is justified under the CAA, then EPA should be
considered as having inherent authority to initiate the process on its
own, even without a petition from another person.
    EPA recently used its authority to reconsider prior actions and
limit its prior approval of a SIP in connection with California
conformity SIPs. See, e.g., 68 FR 15,720, 15,723 (discussing prior
action taken to limit approvals); 67 FR 69,139 (taking final action to
amend prior approvals to limit their duration); and 67 FR 46,618
(proposing to amend prior approvals to limit their duration, based on
CAA sections 110(k) and 301(a)). EPA had previously approved SIPs with
emissions budgets based on a mobile source model that was current at
the time of EPA's approval. Later, EPA updated the mobile source model.
But, even though the model had been updated, emissions budgets would
continue to be based on the older, previously approved model in the
SIPs, rather than the updated model. To rectify this problem, EPA
conducted a rulemaking that revised the previous SIP approvals so that
the approvals of the emissions budgets would expire early, when the new
ones were submitted by states and found adequate, rather than when a
SIP revision was approved. This helped California more quickly adjust
its regulations to incorporate the newer model. EPA is using its
authority to reconsider and limit its prior approval of SIPs generally
in the same manner as it did in connection with California conformity
SIPs.
5. FIPs
    As noted previously, if the state fails to submit a required SIP
revision, or does so but EPA then disapproves that SIP revision, then
the CAA requires EPA to promulgate a FIP and thereby, in effect,
federalize the part of the air pollution control requirements for which
the state, through the required SIP revision, would otherwise have been
responsible. Specifically, under CAA section 110(c)(1), EPA is required
to:

promulgate a [FIP] at any time within 2 years after the
Administrator (A) finds that a State has failed to make a required
submission * * *, or (B) disapproves a [SIP] submission in whole or
in part, unless the State corrects the deficiency, and the
Administrator

approves the plan or plan revision, before the Administrator
promulgates such [FIP].

Although this provision, by its terms, mandates that EPA promulgate a
FIP under the specified circumstances, and mandates that EPA do so
within 2 years of when those circumstances occur, the provision gives
EPA discretion to promulgate the FIP ``at any time within [that] 2
year[]'' period. Thus, EPA is authorized to promulgate a FIP
immediately after either the specified state failure to submit or EPA
disapproval.
    However, CAA section 110(c)(1), as quoted earlier, further provides
that if EPA delays promulgating a FIP until later in the 2-year period,
and, in the meantime, the state corrects the deficiency by submitting
an approvable SIP revision that EPA approves, then EPA is precluded
from promulgating the FIP. Similarly, once EPA promulgates a FIP, it
stays on the books until the state submits an approvable SIP that EPA
then approves.

B. General Requirements for the PSD Program

    The PSD program is a preconstruction review and permitting program
applicable, under EPA rules, to large new stationary sources and, in
general, expansions of existing sources. The PSD program applies in
areas that are designated ``attainment'' or ``unclassifiable'' for a
NAAQS, and is contained in part C of title I of the CAA.\5\
Specifically, under EPA's regulations, PSD applies to a ``major
stationary source'' that newly constructs or that undertakes a ``major
modification.'' 40 CFR 52.166(a)(7), (b)(1)(i), (b)(2)(i). A ``major
stationary source'' is any source that emits or has the potential to
emit 100 or 250 tpy or more, depending on the source category, of any
``regulated NSR pollutant.'' 40 CFR 51.166(b)(1)(i)(a). The regulations
define that term to include four classes of air pollutants, including,
as a catch-all, ``any pollutant that otherwise is subject to regulation
under the Act.'' 40 CFR 51.166(b)(49)(iv). As discussed later in this
preamble, the phrase ``subject to regulation'' began to include GHGs on
January 2, 2011, under our interpretation of that phrase as described
in the Tailoring Rule, 75 FR at 31,580/3, and what we call the
``Johnson Memo Reconsideration'' (or the ``Timing Decision'').\6\
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    \5\ In contrast, the ``nonattainment new source review (NSR)''
program applies in areas not in attainment of a NAAQS and in the
Ozone Transport Region and is implemented under the requirements of
part D of title I of the CAA. We commonly refer to the PSD program
and the nonattainment NSR program together as the major NSR program.
The EPA rules governing both programs are contained in 40 CFR
51.165, 51.166, 52.21, 52.24, and part 51, Appendices S and W. There
is no NAAQS for CO2 or any of the other well-mixed GHGs,
nor has EPA proposed any such NAAQS; therefore, unless and until we
take further such action, the nonattainment NSR program does not
apply to GHGs.
    \6\ ``Interpretation of Regulations that Determine Pollutants
Covered by Clean Air Act Permitting Programs.'' 75 FR 17,004 (April
2, 2010). This action finalizes EPA's response to a petition for
reconsideration of ``EPA's Interpretation of Regulations that
Determine Pollutants Covered by Federal Prevention of Significant
Deterioration (PSD) Permit Program'' (commonly referred to as the
``Johnson Memo''), December 18, 2008.
---------------------------------------------------------------------------

    The CAA contemplates that the PSD program be implemented by the
states through their SIPs. CAA section 110(a)(2)(C) requires that:

    Each implementation plan * * * shall * * * include a program to
provide for * * * regulation of the modification and construction of
any stationary source within the areas covered by the plan as
necessary to assure that national ambient air quality standards are
achieved, including a permit program as required in part[] C * * *
of this subchapter.

CAA section 110(a)(2)(J) requires that:

    Each implementation plan * * * shall * * * meet the applicable
requirements of * * * part C of this subchapter (relating to
significant deterioration of air quality and visibility protection).

CAA section 161 provides that:

    Each applicable implementation plan shall contain emission
limitations and such other measures as may be necessary, as
determined under regulations promulgated under this part [C], to
prevent significant deterioration of air quality for such region * *
* designated * * * as attainment or unclassifiable.

    These provisions, read in conjunction with the PSD applicability
provisions, CAA sections 165(a)(1) and 169(1), mandate that SIPs
include PSD programs that are applicable to any air pollutant that is
subject to regulation under the CAA, including, as discussed later in
this preamble, GHGs as of January 2, 2011.\7\
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    \7\ In the Tailoring Rule, we noted that commenters argued, with
some variations, that the PSD provisions applied only to NAAQS
pollutants, and not GHGs, and we responded that the PSD provisions
apply to all pollutants subject to regulation, including GHGs. See
75 FR 31,560-62; ``Prevention of Significant Deterioration and Title
V GHG Tailoring Rule: EPA's Response to Public Comments,'' May 2010,
pp.38-41. We did not reopen that issue in this rulemaking.
---------------------------------------------------------------------------

    Most states have EPA-approved SIP PSD programs, and as a result, in
those states, PSD permits are issued by state or local air pollution
control agencies. In states that do not have EPA-approved SIP PSD
programs, EPA issues PSD permits under its own authority, although in
some cases, EPA has delegated such authority to the state or local
agency.
1. Applicability of PSD to Non-NAAQS Pollutants
    EPA has long held the view that PSD applies to ``any pollutant
subject to regulation under the CAA,'' and that includes non-NAAQS
pollutants. EPA's long-standing regulations have interpreted CAA
section 165(a) broadly enough to capture non-NAAQS pollutants. A
detailed discussion of these positions was provided in the Tailoring
Rule at 75 FR 31,560/3, and in the Interim Final Rule at 75 FR 82,443.
2. Automatic Application of PSD to Newly Regulated Pollutants
    Under the PSD applicability requirements, PSD applies to sources
automatically, that is, by operation of law, as soon as their emissions
of pollutants become subject to regulation under the CAA. This is
because CAA section 165(a)(1) prohibits ``major emitting facilit[ies]''
from constructing or modifying without obtaining a permit that meets
the PSD requirements, and CAA section 169(1) defines a ``major emitting
facility'' as a source that emits a specified quantity of ``any air
pollutant,'' which, as noted earlier, EPA has long interpreted as any
pollutant subject to regulation. Whenever EPA promulgates control
requirements for a pollutant for the first time, that pollutant becomes
subject to regulation, and any stationary source that emits that
pollutant in sufficient quantities becomes a ``major emitting
facility'' that, when it constructs or modifies, becomes subject to PSD
without any further action from EPA or a state or local government.
    EPA regulations have long codified automatic PSD applicability. See
43 FR 26,380, 26403/3, 26406 (June 19, 1978) (promulgating 40 CFR
51.21(b)(1)(i)) and 42 FR 57,479, 57,480, 57,483 (November 3, 1977)
(proposing 40 CFR 51.21(b)(1)(i)) (applying PSD requirements to a
``major stationary source'' and defining that term to include sources
that emit specified quantities of ``any air pollutant regulated under
the Clean Air Act''). Most recently, in the 2002 NSR Reform Rule, EPA
reiterated these requirements, although changing the terminology to
``any regulated NSR pollutant.'' 67 FR 80,186. EPA stated in the
preamble: ``The PSD program applies automatically to newly regulated
NSR pollutants, which would include final promulgation of an NSPS
applicable to a previously unregulated pollutant.'' 67 FR at 80,240/1.
    In most states with approved PSD programs, PSD does apply
automatically. However, in a minority of

states with approved PSD programs, it does not.\8\ Instead, each time
EPA subjects a previously unregulated air pollutant to regulation,
these states must submit a SIP revision incorporating that pollutant
into their programs. Despite the time needed for the state to submit a
SIP revision and EPA to approve it, the pollutant-emitting sources in
the state become subject to PSD under the CAA as soon as EPA first
subjects that pollutant to control. Because under CAA section 165(a)(1)
and 169(1), as interpreted by EPA, a source that emits specified
quantities of any air pollutant subject to regulation cannot construct
or modify unless it first receives a PSD permit, as a practical matter,
in a state with an approved PSD program that does not automatically
update and that has not been revised to include the newly regulated
pollutant, the sources may find themselves subject to the CAA
requirement to obtain a permit, but without a permitting authority to
issue that permit. As discussed later, this action is needed because
GHG-emitting sources in Texas would otherwise confront that situation.
---------------------------------------------------------------------------

    \8\ 75 FR at 53,897/3 (proposed GHG PSD SIP call).
---------------------------------------------------------------------------

    In a recent decision, the U.S. Court of Appeals for the 7th Circuit
(7th Circuit), mistakenly citing to PSD provisions when the issue
before the court involved the separate and different non-attainment
provisions of CAA sections 171-193, concluded that sources could
continue to abide by permitting requirements in an existing SIP until
amended, even if that SIP does not comport with the law. United States
v. Cinergy Corp., No. 09-3344, 2010 WL 4009180 (7th Cir. Oct. 12,
2010). In stark contrast to the nonattainment provisions actually at
issue in Cinergy--which are not self-executing and must therefore be
implemented through a SIP -- PSD is self-executing; it is the statute
(CAA section 165), not just the SIP, that prohibits a source from
constructing a project without a permit issued in accordance with the
Act.

C. Regulatory Background: Texas SIP and PSD Program

1. Texas's Initial Attainment SIP Revision
    In 1972, shortly after the enactment of the 1970 CAA Amendments,
Texas submitted to EPA its SIP to attain and maintain the NAAQS that
EPA had promulgated by that time. As part of that SIP revision, Texas
provided assurances that it had legal authority to carry out the SIP,
in accordance with the predecessor to CAA section 110(a)(2)(E)(i). EPA
approved Texas's SIP, including the assurances of legal authority, by
notice dated May 31, 1972. 37 FR 10,842.
2. Texas Initial PSD SIP Revision
    In the 1977 CAA Amendments, Congress enacted the PSD program. In
the immediate aftermath, EPA acted as the PSD permitting authority in
the states, but EPA began to delegate to various state authorities all
or part of EPA's authority to issue PSD permits. In addition, at this
time, EPA revised its pre-existing regulations, which had established a
preconstruction permitting program, to conform to the 1977 CAA
requirements. Each state was required to adopt a PSD program and submit
it for approval as a SIP revision, and, if the PSD program met CAA
requirements, EPA approved the program, and the state then became the
PSD permitting authority. This process occurred for most of the states
in the nation, including Texas. A brief history of Texas's initial PSD
SIP approval follows.\9\
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    \9\ This history is described in ``Approval and Promulgation of
Implementation Plan, State of Texas; Prevention of Significant
Deterioration--Final rulemaking, 57 FR 28,093, 28,094 (June 24,
1992); ``Approval and Promulgation of Implementation Plan, State of
Texas; Prevention of Significant Deterioration--Proposed rulemaking,
54 FR 52,823, 52,824 (December 22, 1989).
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a. Texas's Receipt of Delegation Authority for the PSD Program
    Beginning in 1980, when EPA was still the permitting authority for
Federally required PSD permits in Texas, the State requested delegation
of certain aspects of the Federal PSD program, and in a series of
actions, EPA granted that authority.\10\ During this time, Texas also
revised its state--i.e., Texas Air Control Board (TACB)--PSD
regulations. EPA commented on an early set of proposed revisions to
TACB regulations by letter dated December 23, 1980 and made clear that
PSD applies to non-NAAQS pollutants.\11\ EPA reiterated these
statements to Texas in 1983.\12\
---------------------------------------------------------------------------

    \10\ See, e.g., 48 FR 60236,023 (February 9, 1983).
    \11\ Letter from Jack S. Divita, U.S EPA, Region 6, to Roger
Wallis, Texas Air Control Board (December 23, 1980), p. 2. In that
letter, EPA objected to Texas's proposed definitions of the terms
``major facility/stationary source'' and ``major modification'' on
grounds they are not equivalent to the definition of those terms in
EPA's PSD and nonattainment NSR regulations because Texas's proposed
definitions --
    include only those stationary sources and modifications with
emissions of air contaminants for which a [NAAQS] has been issued.
Under the PSD and [nonattainment] NSR requirements, [Texas's]
definitions must include sources with emissions of ``any air
pollutant subject to regulation under the Act.'' * * * Since the
proposed definitions would exclude PSD and [nonattainment] NSR
coverage for those sources emitting pollutants subject to
regulations under the Act, but for which a NAAQS has not been
issued, they are not equivalent to the federal definitions of
``major stationary source'' and ``major modification.''
    Id. (emphasis in original).
    \12\ Environmental Protection Agency--Region 6, ``EPA Review of
Texas Revisions to the General Rules and Regulations VI,'' p. 4
(August 1983), cited in 48 FR 55,483/1 & n.1 (December 13, 1983).
---------------------------------------------------------------------------

b. Texas's SIP PSD Program
    During 1985-1988, Texas submitted a series of SIP revisions
comprising its PSD program to EPA for approval. In these SIP revisions,
Texas established key components of its PSD rules by incorporating by
reference EPA's PSD rules found in 40 CFR 52.21. Of most importance for
present purposes, Texas incorporated by reference (IBR'd) EPA's PSD
applicability regulations in 52.21.\13\ Under EPA's regulations, as
then written, PSD applied to ``any pollutant subject to regulation
under the [Clean Air] Act.'' 40 CFR 52.21(b)(1)(i)) (1985-1988). It
bears emphasis that this provision, by its terms, applied PSD to each
and every air pollutant subject to regulation under the CAA, which, as
discussed elsewhere, has been EPA's consistent interpretation of the
CAA requirements for PSD applicability. CAA section 165(a)(1),
169(1).\14\
---------------------------------------------------------------------------

    \13\ For convenience, we will use the acronym ``IBR'' for the
various grammatical usages of incorporate by reference, including
the noun form, i.e., IBR, for incorporation by reference; as well as
the verb form, e.g., IBR'd, for incorporated by reference.
    \14\ As also discussed elsewhere, this is a narrowing
interpretation of the PSD applicability requirements in CAA section
169(1), which, read literally, apply PSD to ``any air pollutant.''
---------------------------------------------------------------------------

(1) Incorporation by Reference
    In adopting a particular SIP revision that IBR'd EPA's regulations,
however, Texas intended that IBR to apply to only the EPA regulations
as they read as of the date that Texas adopted the SIP revision. Texas
did not intend that IBR in that SIP revision to apply to subsequent
revisions to those regulations. This became readily apparent during the
course of EPA's review of Texas's SIP revisions. The TACB adopted the
first SIP revision on July 26, 1985.\15\ This SIP revision consisted,
in relevant part, of a revision to TACB Regulation VI--Sec.  116.3.(a)
to add subparagraph (13), which read, in relevant part,
---------------------------------------------------------------------------

    \15\ TACB Board Order No. 85-7 (July 26, 1985).

    (13) The proposed facility shall comply with the Prevention of
Significant Deterioration of Air Quality regulations promulgated by
the [EPA] in the Code of Federal Regulations at 40 CFR 52.21 as
amended * * *, hereby incorporated by

reference, except for [certain identified] paragraphs [not here
relevant].\16\
---------------------------------------------------------------------------

    \16\ Id.

    The TACB submitted this SIP revision to EPA on December 11,
1985.\17\ EPA responded with a letter to Texas, dated July 3, 1986,
commenting on several aspects of the SIP revision, including inquiring
whether the state had authority to IBR Federal rules prospectively,
asking for ``legal clarification'' on the subject, and recommending
that if the TACB did not have such authority, then the TACB should
clarify the IBR by ``referencing the appropriate date.'' \18\
---------------------------------------------------------------------------

    \17\ Letter from Mark White, Governor of Texas, to Lee M.
Thomas, Administrator of U.S. EPA, December 11, 1985.
    \18\ Letter from William B. Hathaway, Director, Air, Pesticides
and Toxics Division, EPA Region 6, to Allen Eli Bell, Executive
Director, TACB (July 3, 1986). Specifically, EPA stated--State's
authority to IBR Federal rules prospectively--The Board approved and
signed the incorporation of the PSD regulations on July 26, 1985, An
amendment to the Federal PSD regulations [40 CFR 52.21(o)(3), p(1)
and p(3)] occurred on July 12, 1985. However, the TACB proposed to
adopt the Federal regulations and carried out the public
participation process before the July 12, 1985, promulgation date of
the amendments. We need a legal analysis from the state concerning
the TACB's legal authority to incorporate by reference the federal
rules prospectively. We recognize that the proposed federal rules
were unchanged on the final promulgation; however, the Texas Water
Commission believes that the state cannot adopt prospective Federal
rules under the State laws. We would appreciate a legal
clarification on this subject. If the State did not intend
prospective adoption, the rules should be clarified by referencing
the appropriate date.
    Id. p. 2 and Enclosure p. 5.
---------------------------------------------------------------------------

    Texas responded with a letter dated October 24, 1986,\19\ in which
it stated:
---------------------------------------------------------------------------

    \19\ Letter from Steve Spaw, Deputy Executive Director, TACB, to
William B. Hathaway, Director, Air, Pesticides and Toxics Division,
EPA Region 6 (October 24, 1986).

    An issue of concern * * * is whether the [TACB] intended to
incorporate by reference Federal rules prospectively in the PSD rule
Sec.  116.3(a)(13) and in the stack height rule Sec.  116.3(a)(14).
[A]lthough our intention was not prospective rulemaking and we do
not believe the rule language implies such, we have no specific
objection to including the date of Federal adoption of any Federal
material adopted by reference by the TACB in future SIP revisions
(including the proposed PSD and stack height revisions). By
initiating the public hearing process for PSD rules again (to
incorporate requested revisions), Federal PSD regulations amended on
July 12, 1985 will be subject to the state public participation
process. This should eliminate the concern expressed in your July 3,
1986 letter.\20\
---------------------------------------------------------------------------

    \20\ Id. 1-2.

    Accordingly, on July 17, 1987, the TACB adopted a revision to its
PSD rule, Sec.  116.3(a)(13), so that the rule continued to IBR EPA's
PSD regulatory requirements at 40 CFR 52.21, but referenced the date of
November 7, 1986.\21\ Texas submitted that as a SIP revision to EPA on
October 26, 1987.\22\
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    \21\ TACB Board Order No. 87-09 (July 17, 1987). See 12 Tex.
Reg. 2575/2 (August 7, 1987) (discussing revision to section
116.3(a)(13) in response to request from U.S. EPA).
    \22\ Letter from William P. Clements, Jr., Governor of Texas, to
Lee M. Thomas, Administrator of U.S. EPA (October 26, 1987).
---------------------------------------------------------------------------

    However, some 8 months later, by notice published on July 1, 1987,
EPA adopted the PM10 NAAQS,\23\ and thereby subjected to PSD
sources emitting PM10. Recognizing this, the TACB, on July
15, 1988, adopted still another revision to its PSD rule to change the
referenced date to August 1, 1987, and thereby incorporated EPA's
application of PSD to PM10-emitting sources into Texas's PSD
program.\24\ Texas submitted that revised rule to EPA as a SIP revision
on September 29, 1988.\25\ As so revised, the Texas PSD rule (again,
Sec.  116.3(a)(13)) read, in relevant part, as follows:
---------------------------------------------------------------------------

    \23\ 52 FR 24,634 (July 1, 1987).
    \24\ TACB Board Order No. 88-08 (July 15, 1988).
    \25\ Letter from William P. Clements, Jr., Governor of Texas, to
Lee M. Thomas, Administrator of U.S. EPA (September 29, 1988).

    (13) The proposed facility shall comply with the Prevention of
Significant Deterioration (PSD) of Air Quality regulations
promulgated by the Environmental Protection Agency (EPA) in the Code
of Federal Regulations at 40 CFR 52.21 as amended August 1, 1987 * *
*, except for [certain identified] paragraphs [not here
relevant].\26\
---------------------------------------------------------------------------

    \26\ TACB Board Order No. 88-08 (July 15, 1988).

    EPA proposed to approve this SIP revision, with this iteration of
the Texas PSD rule, by notice dated December 22, 1989,\27\ and EPA
issued a final approval by notice dated June 24, 1992.\28\ In the
preambles to the proposed and final rules, and in supporting documents,
EPA recounted part of this history of Texas revising its regulations to
IBR the current EPA regulatory requirements.\29\
---------------------------------------------------------------------------

    \27\ 54 FR 52,823.
    \28\ 57 FR 28,093.
    \29\ 57 FR 28,093, 28,094/2 (June 24, 1992) (final rule); 54 FR
52,823, 52,824/1 (December 22, 1989) (proposed rule); Technical
Support Document: Texas State Implementation Plan for Prevention of
Significant Deterioration, U.S. Environmental Protection Agency, 4
(November 28, 1988). Moreover, Texas submitted another SIP revision
on February 18, 1991, to change the date in section 116.3(a)(13)
from ``August 1, 1987'' to ``October 17, 1988'' to reflect the
amendments to 40 CFR 52.21 as promulgated in the Federal Register on
October 17, 1988 (53 FR 40,656) (Nitrogen Oxides PSD increments).
EPA did not act on this SIP revision when it approved the Texas PSD
program on June 24, 1992, but did approve this SIP revision later,
on September 9, 1994 (59 FR 46,556). See 62 FR 44,084/2.
---------------------------------------------------------------------------

    This history shows that both EPA and Texas were well aware that
Texas's method of incorporating by reference EPA's regulatory
requirements into Texas's PSD rule was not prospective and therefore
did not automatically update to incorporate a pollutant newly subject
to regulation.\30\ In fact, during the time that EPA was reviewing
Texas's PSD SIP, Texas revised its SIP to apply PSD to PM10,
which EPA subjected to regulation for the first time during that time.
However, after stating simply that it does not intend prospective IBR,
Texas did not explicitly address this issue. That is, Texas did not
acknowledge that following approval of Texas's PSD program, EPA could
well subject to regulation additional pollutants--whether through a
revised NAAQS or regulation under another CAA provision--and Texas did
not discuss how it would respond.\31\ Simply put, Texas failed to look
down the road and address a problem with its PSD SIP--the mechanism for
applying PSD to pollutants newly subject to regulation--that was bound
to recur.
---------------------------------------------------------------------------

    \30\ It should be noted that although Texas subsequently made
certain commitments, discussed below, none of those commitments, on
its face, suggested that Texas's PSD SIP should be interpreted to
automatically update to incorporate a pollutant newly subject to
regulation.
    \31\ Following EPA approval of Texas's PSD program, Texas has
occasionally submitted SIP revisions to update its PSD program to
accommodate further EPA regulatory revisions. See, e.g., 69 FR
43,752, 43,753 (July 22, 2004).
---------------------------------------------------------------------------

(2) Legal Authority
    The record of Texas's PSD program includes limited references to,
or discussion of, legal authority that may be relevant to whether Texas
provided assurances that it had adequate legal authority to apply PSD
to pollutants newly subject to regulation. The following merit review:
    First, in adopting and submitting the PSD SIP revisions, the TACB--
the agency charged with taking that action--relied on its general legal
authority to adopt and submit the SIP revisions. The TACB adopted
regulatory amendments through ``Board Orders,'' and then submitted
those Board Orders to EPA as SIP revisions. The Board Orders typically
cited general authority under the Texas CAA. One example is TACB Board
Order No. 88-08 (July 15, 1988), which revised the Texas PSD rule to
provide a later date for IBR'ing EPA's PSD program, and which comprised
one of the SIP revisions that formed the basis for the Texas PSD
program that EPA approved by notice dated June 24, 1992 (57 FR 28,093).
This Board Order provides, in relevant part, ``Section 3.09(a) of the
Texas CAA gives the Board authority to make rules and regulations
consistent with the general intent and purposes of the Act and to

amend any rule or regulation it makes'' and ``the Board hereby
certifies that the amendments as adopted have been reviewed by legal
counsel and found to be a valid exercise of the Board's legal
authority.'' Board Order No. 88-08, page 2.
    Second, the 1990 CAA Amendments amended CAA section 169(1) to add
another type of source that was subject to PSD: Large municipal
combustors. Shortly after the 1990 amendments, and before issuing final
approval for the Texas PSD program, EPA asked Texas for assurances that
its PSD program would apply to large municipal waste combustors. In a
March 30, 1992, letter, EPA stated the following:

    Since we proposed approval of this SIP before enactment of the
1990 Clean Air Act Amendments (CAAA), it is necessary that we
address several issues in the final approval notice in order to be
in conformance with the CAAA.
* * * * *
    Municipal Waste Combustion--Section 169(1) is amended by
expanding the list of major emitting facilities that are subject to
PSD requirements if they emit or have the potential to emit 100 tons
per year or more of any regulated pollutant. This list now includes
municipal incinerators capable of charging more than fifty tons of
refuse per day. This requirement has been effective since November
15, 1990, for all applicable PSD sources. In the conference call
[with EPA Region 6], the * * * TACB * * * legal representative said
that the TACB has the existing legal authority, and can and will be
reviewing such sources for PSD applicability and permitting.\32\
---------------------------------------------------------------------------

    \32\ Letter from A. Stanley Meiburg, Director, Air, Pesticides &
Toxics Division, EPA Region 6, to Steve Spaw, Executive Director,
TACB (March 30, 1992).

Thus, according to this letter, Texas provided oral statements in a
conference call with EPA Region 6 that Texas has legal authority to
apply its state PSD rules to large municipal waste combustors.
    Texas responded in a letter dated April 17, 1992:

    We understand that you need confirmation in several areas to
conform with the requirements of the 1990 Federal Clean Air Act
Amendment * * * before the final delegation will be made.
* * * * *
    We will address as a major source subject to PSD review,
municipal waste combustors capable of cha[n]ging more than 50 tons
of refuse per day as one of the sources subject to PSD review if
they emit or have the potential to emit 100 tons per year or more of
any regulated pollutant.\33\
---------------------------------------------------------------------------

    \33\ Letter from Steve Spaw, Executive Director, TACB, to A.
Stanley Meiburg, Director, Air, Pesticides and Toxics Division, EPA
Region 6 (April 17, 1992).

    Although the TACB Board Order referred to the TACB's general legal
authority, the record reveals no discussion or assurances that this
legal authority was adequate to apply PSD to pollutants newly subject
to regulation. Similarly, the oral assurance that the TACB apparently
provided that it had legal authority to apply PSD to large municipal
combustors, as required under the then-newly enacted 1990 CAA
Amendments, does not address whether Texas had adequate authority to
apply PSD to each pollutant that EPA newly subjects to regulation.
(3) Texas's Commitments
    The rulemaking record of EPA's approval of Texas's PSD SIP shows
that Texas provided two commitments that are relevant for present
purposes:
(a) 1987 Texas PSD Commitments Statement
    The TACB adopted revisions to TACB Regulation VI on July 17, 1987,
which the Governor submitted on October 27, 1987. Those revisions
included the following statement, which we call the 1987 Texas PSD
Commitments Statement:

    Revision To The Texas State Implementation Plan For Prevention
Of Significant Deterioration Of Air Quality
    The Texas Air Control Board (TACB) will implement and enforce
the Federal requirements for Prevention of Significant Deterioration
of Air Quality (PSD) as specified in 40 CFR 51.166(a) by requiring
all new major stationary sources and major modifications to obtain
air quality permits as provided in TACB regulation VI, Control of
Air Pollution by Permits for New Construction and Modification. In
addition, the TACB will adhere to the following conditions in the
implementation of the PSD program:
* * * * *
4. Plan assessment

    The TACB will review the adequacy of the Texas PSD plan on an
annual basis and within 60 days of the time information becomes
available that an applicable increment may be violated. If the TACB
determines that an increment is being exceeded due to the violation
of a permit condition, appropriate enforcement action will be taken
to stop the violation. If an increment is being exceeded due to a
deficiency in the state PSD plan, the plan will be revised and the
revisions will be subject to public hearing.

    This 1987 Texas PSD Commitments Statement does not specifically
address the application of PSD to pollutants newly subject to
regulation. The first paragraph, as quoted previously in this preamble,
commits TACB to require ``all new major stationary sources and major
modifications to obtain air quality permits as provided in TACB
regulation VI * * *,'' but this does not commit TACB to address
pollutants newly subject to regulation. Instead, this limits the TACB
requirement to application of PSD to sources ``as provided in TACB
regulation VI,'' and that regulation VI does not automatically update.
As for ``4, Plan assessment,'' although the first sentence calls for
the TACB to review the adequacy of the Texas PSD plan on an annual
basis, and although the rest of the provision requires a plan revision
if an increment violation is determined to result from a deficiency in
the plan, this does not address what happens when a new pollutant
becomes subject to regulation and does not require a plan revision to
apply to the new pollutant. The fact that Texas agreed to revise the
plan if the plan is found to be deficient and that deficiency results
in an increment being exceeded serves to highlight the lack of any
comparable focus on how the plan would deal with pollutants newly
subject to regulation.
    EPA's technical support document supporting its proposed approval
stated, with respect to this 1987 Texas PSD Commitments Statement:

    The ``Revision to Texas State Implementation Plan for Prevention
of Significant Deterioration of Air Quality'' specifies how the TACB
will fulfill the requirements of 40 CFR 51.166(a), plan revisions,
and plan assessment. The EPA has reviewed the State's commitment and
has determined that the TACB has addressed the continuous plan
revisions and assessments adequately.\34\
---------------------------------------------------------------------------

    \34\ Technical Support Document: Texas State Implementation Plan
for Prevention of Significant Deterioration, U.S. Environmental
Protection Agency, 6 (November 28, 1988).

This general discussion by EPA does not indicate that EPA considered
the Texas statement to apply to pollutants newly subject to regulation.
(b) 1989 Texas Commitment Letter
    In 1989, as EPA considered Texas's SIP revision submittal, EPA
became concerned that a Texas official had made statements that led EPA
to question whether Texas would adhere to EPA's interpretation that
Best Available Control Technology (BACT) must be implemented through
the Top-Down process.\35\ Accordingly, EPA advised Texas that EPA would
not approve Texas's PSD program unless Texas provided a letter assuring
EPA that Texas would follow EPA requirements in general, and
particularly with respect to the interpretation of BACT. Texas provided

this letter, which we call the Texas PSD Commitments Letter, on
September 5, 1989.\36\ In this letter, Texas acknowledged EPA's concern
that a Texas official had--
---------------------------------------------------------------------------

    \35\ Letter from Allen Eli Bell, Executive Director, Texas Air
Control Board to Robert Layton Jr., Regional Administrator, U.S. EPA
(September 5, 1989) 1 (Texas's Commitments Letter).
    \36\ Texas's 1989 Commitments Letter, p. 1.

indicated a lack of intent to follow Federal interpretations of the
Clean Air Act and Environmental Protection Agency (EPA) operating
policies, most specifically, the ``Top-Down'' approach for Best
Available Control Technology (BACT) analysis in reviewing PSD permit
---------------------------------------------------------------------------
applications.

Texas went on to state:

    [Y]ou may be assured that the position of the [Texas Air Control
Board (TACB)] is, and will continue to be, to implement EPA
requirements relative to programs for which we have received State
Implementation Plan approval, and to do so as effectively as
possible. * * * Again, the TACB is committed to the implementation
of EPA decisions regarding PSD program requirements. We look forward
\37\ approval of the PSD revisions and believe EPA will find the
management of that program in Texas to be capable and effective.\38\
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    \37\ Sic: the word ``to'' should be between ``forward'' and
``approval''.
    \38\ Texas's 1989 Commitments Letter, p. 1.

    By notice dated December 22, 1989, EPA proposed to fully approve
Texas's PSD program.\39\ In this proposal, EPA focused on the issue of
how EPA's current and future interpretations of PSD statutory
requirements would be reflected in the state-implemented program. EPA
stated:
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    \39\ 54 FR 52,823.

    \In adopting the Clean Air Act, Congress designated EPA as the
agency primarily responsible for interpreting the statutory
provisions and overseeing their implementation by the states. The
EPA must approve state programs that meet the requirements of 40 CFR
51.166. Conversely, EPA cannot approve programs that do not meet
those requirements. However, PSD is by nature a very complex and
dynamic program. It would be administratively impracticable to
include all statutory interpretations in the EPA regulations and the
SIPs of the various states, or to amend the regulations and SIPs
every time EPA interprets the statute or regulations or issues
guidance regarding the proper implementation of the PSD program, and
the Act does not require EPA to do so. Rather, action by the EPA to
approve this PSD program as part of the SIP will have the effect of
requiring the state to follow EPA's current and future
interpretations of the Act's PSD provisions and EPA regulations, as
well as EPA's operating policies and guidance (but only to the
extent that such policies are intended to guide the implementation
of approved state PSD programs). Similarly, EPA approval also will
have the effect of negating any interpretations or policies that the
state might otherwise follow to the extent they are at variance with
EPA's interpretation and applicable policies. Of course, any
fundamental changes in the administration of PSD would have to be
accomplished through amendments to the regulations in 40 CFR 52.21
---------------------------------------------------------------------------
and 51.166, and subsequent SIP revisions.

54 FR 52,824/2-3.

    EPA went on to state that it was basing its proposed approval of
Texas's PSD program on Texas's agreement, as contained in the September
5, 1989, letter, that Texas would ``implement that PSD SIP approved
program in compliance with all of the EPA's statutory interpretations
and operating policies.'' 54 FR 82,825/2. EPA stated--

    * * * EPA's approval of the Texas PSD SIP requires the state to
follow EPA's statutory interpretations and applicable policies[],
including those concerning [BACT]. * * *
    In support of the discussion above, the Executive Director of
the TACB has submitted a letter, dated September 5, 1989, which
commits the TACB to implement the PSD SIP approved program in
compliance with all of the EPA's statutory interpretations and
operating policies. Specifically, the TACB's letter states that (1)
``* * * you may be assured that the position of the agency is, and
will continue to be, to implement EPA requirements relative to
programs for which we have received [SIP] approval, and to do so as
effectively as possible * * *'', and (2) ``* * * the TACB is
committed to the implementation of the EPA decisions regarding PSD
program requirements * * *''. The EPA has evaluated the content of
this letter and has determined that the letter sufficiently commits
the TACB to carry out the PSD program in accordance with the Federal
requirements as set forth in the [CAA] applicable regulations, and
as further clarified in the EPA's statutory and regulatory
interpretations, including the proper conduct of BACT analyses. The
EPA also interprets this letter as committing the TACB to follow
applicable EPA policies such as the ``Top-Down'' approach. This
letter will be incorporated into the SIP upon the final approval
action.

54 FR 52,825/1-2.

    EPA issued a final rule to give full approval to the program by
notice dated June 24, 1992, 57 FR 28,093. In the final rule, EPA
indicated that it had received adverse comments concerning its
statements in the proposal that Texas was required to adopt all of
EPA's interpretations of the PSD requirements. Accordingly, EPA refined
its views. EPA stated:

    Comment 1: The commenters expressed concern with the preamble
language in the proposal notice, suggesting that final approval
would require that the State follow EPA's current and future
interpretations of the Act's PSD provisions and EPA regulations as
well as EPA's operating policies and guidance. The commenter
contended that such a condition would be unlawful * * * and would
improperly limit the State's flexibility * * *.
    Response 1: The EPA did not intend to suggest that Texas is
required to follow EPA's interpretations and guidance issued under
the Act in the sense that those pronouncements have independent
status as enforceable provisions of the Texas PSD SIP, such that
mere failure to follow such pronouncements, standing alone, would
constitute a violation of the Act. As clarified herein, EPA's intent
is merely to place the State and the public on notice of EPA's
longstanding views that the Agency must continue to oversee the
State's implementation of the PSD SIP * * *.
    * * * Texas and other states [have] considerable discretion to
implement the PSD program as they see fit.
    * * * PSD-SIP approved states remain free to follow their own
course, provided that state action is consistent with the letter and
spirit of the SIP, when read in conjunction with the applicable
statutory and regulatory provisions.
     * * *
    Comment 4: One commenter noted that the TACB's letter, dated
September 5, 1989, cannot reasonably be interpreted as a legal
requirement that the State follow the EPA's present and future new
source review interpretations, policies and guidance, including the
BACT ``Top-Down'' approach, because it only commits Texas to
implement properly established EPA requirements and legally-binding
EPA decisions. The commenter said that the Clean Air Act
specifically requires that, if at all, any such change in EPA policy
for BACT determinations be accomplished through notice and comment
rulemaking, and that the EPA first prepare an economic impact
assessment.
    Response 4: In certain circumstances, EPA's approval of a SIP
revision through notice-and-comment rulemaking procedures can serve
to adopt specific interpretations or decisions of the Agency. For
example, a state may commit in writing to follow particular EPA
interpretations or decisions in administering the PSD program. As
part of the SIP revision process, EPA may incorporate that State's
commitment into the SIP by reference. This process has been followed
in today's action. Of course, EPA agrees with the commenter that the
Agency must act reasonably in construing the terms of a commitment
letter, so as to avoid approving it in a manner that would
contravene the state's intent in issuing the letter in the first
place. Moreover, the State commitment must be consistent with the
plain language of the applicable statutory or regulatory provisions
at issue. Similarly, EPA cannot unilaterally change the clear
meaning of any approved SIP provision by later guidance or policy.
Rather, as stated in the proposed approval notice, such fundamental
change must be accomplished through the SIP revision process.
    Consistent with the terms of the TACB letter dated September 5,
1989, EPA views that letter as a commitment on the part of the TACB
to ``implement EPA program requirements * * * as effectively as
possible,'' and as a commitment ``to the implementation of the EPA
decisions regarding PSD program requirements.'' EPA

agrees, however, that the TACB letter need not be interpreted as a
specific commitment by the State to follow a ``Top-Down'' approach
to BACT determinations.

57 FR 28,095/1-2; 28,096/1.

    As for the fact that Texas's PSD program was limited to pollutants
that were regulated as of the date Texas adopted the program as a SIP
revision, but did not automatically apply to newly regulated
pollutants, the preamble to the final rule alluded to this limitation:

    The State's regulation VI requires review and control of air
pollution from new facility construction and modification and allows
the TACB to issue permits for stationary sources subject to this
regulation. Section 116.3(a)(13) of the TACB Regulation VI
incorporates by reference the Federal PSD regulations (40 CFR 52.21)
as they existed on August 1, 1987, which include revisions
associated with the July 1, 1987, promulgation of revised National
Ambient Air Quality Standards for particulate matter (52 FR 24872)
and the visibility NSR requirements noted above.

57 FR 28,094.

    However, there is no indication in the preamble for the final rule
that (i) Texas specifically addressed the requirement that its PSD
program apply to pollutants newly subject to PSD, including non-NAAQS
pollutants, or (ii) Texas provided assurances that it had adequate
authority under State law to carry out the PSD program, including
applying PSD to pollutants newly subject to regulation, among them non-
NAAQS pollutants. Nor is there any indication that EPA asked Texas to
do so.\40\
---------------------------------------------------------------------------

    \40\ See ``Technical Support Document (TSD): State of Texas
State Implementation Plan for Prevention of Significant
Deterioration'' (November 28, 1988).
---------------------------------------------------------------------------

    As discussed previously, in 1996 EPA proposed, and in 2002
finalized, what we call the NSR Reform Rule,\41\ which included a set
of amendments to the PSD provisions that included revisions to conform
to the 1990 CAA Amendments. See 61 FR 38,250 (July 23, 1996), 67 FR
80,186 (December 31, 2002). The NSR Reform Rule revised the terminology
for PSD applicability. In 2006, Texas submitted a SIP revision to
incorporate the NSR Reform Rule into its PSD program, including
revising its applicability provisions. EPA disapproved this SIP
revision by notice dated September 15, 2010.\42\ Accordingly, the
applicable Texas PSD applicability provisions remain the ones in the
state's currently approved SIP.
---------------------------------------------------------------------------

    \41\ ``Prevention of Significant Deterioration (PSD) and
Nonattainment New Source Review (NNSR): Baseline Emissions
Determination, Actual-to-Future-Actual Methodology, Plantwide
Applicability Limitations, Clean Units, Pollution Control Projects--
Final Rule,'' 67 FR 80,186 (December 31, 2002) (NSR Reform rule).
    \42\ 75 FR 56,424 (September 15, 2010).
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D. Regulatory Background: GHG Rules

1. GHGs and Their Sources
    As discussed in detail in the rule EPA calls the ``Endangerment
Finding,'' \43\ greenhouse gases trap the Earth's heat that would
otherwise escape from the atmosphere into space, and form the
greenhouse effect that helps keep the Earth warm enough for life.
Greenhouse gases are naturally present in the atmosphere and are also
emitted by human activities. Human activities are intensifying the
naturally occurring greenhouse effect by increasing the amount of GHGs
in the atmosphere, which is changing the climate in a way that
endangers human health, society, and the natural environment.
---------------------------------------------------------------------------

    \43\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act.'' 74 FR
66,496 (December 15, 2009).
---------------------------------------------------------------------------

    Some GHGs, such as carbon dioxide (CO2), are emitted to
the atmosphere through natural processes as well as human activities.
Other gases, such as fluorinated gases, are created and emitted solely
through human activities. The well-mixed GHGs of concern directly
emitted by human activities include CO2, methane
(CH4), nitrous oxide (N2O), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride
(SF6). These six GHGs will, for the purposes of this final
rule, be referred to collectively as ``the six well-mixed GHGs,'' or,
simply, GHGs, and together constitute the ``air pollutant'' upon which
the GHG thresholds in the Tailoring Rule are based. These six gases
remain in the atmosphere for decades to centuries where they become
well-mixed globally in the atmosphere. When they are emitted more
quickly than natural processes can remove them from the atmosphere,
their concentrations increase, thus increasing the greenhouse effect.
The heating effect caused by the human-induced buildup of GHGs in the
atmosphere is very likely the cause of most of the observed global
warming over the last 50 years. A detailed explanation of greenhouse
gases, climate change, and its impact on health, society, and the
environment is included in EPA's technical support document (TSD) for
the Endangerment Finding Final Rule (Docket ID No. EPA-HQ-OAR-2009-
0472-11292).
    In the United States, the combustion of fossil fuels (e.g., coal,
oil, gas) is the largest source of CO2 emissions and
accounts for 80 percent of the total GHG emissions. Anthropogenic
CO2 emissions released from a variety of sources, including
fossil fuel combustion and industrial manufacturing processes that rely
on geologically stored carbon (e.g., coal, oil, and natural gas) that
is hundreds of millions of years old, as well as anthropogenic
CO2 emissions from land-use changes such as deforestation,
all perturb the atmospheric concentration of CO2 and cause
readjustments in the distribution of carbon within different
reservoirs. More than half of the energy-related emissions come from
large stationary sources such as power plants, while about a third
comes from transportation. Of the six well-mixed GHGs, four
(CO2, CH4, N2O, and HFCs) are emitted
by motor vehicles. In the United States industrial processes (such as
the production of cement, steel, and aluminum), agriculture, forestry,
other land use, and waste management are also important sources of
GHGs.
    Different GHGs have different heat-trapping capacities. The concept
of Global Warming Potential (GWP) was developed to compare the heat-
trapping capacity and atmospheric lifetime of one GHG to another. The
definition of a GWP for a particular GHG is the ratio of heat trapped
by one unit mass of the GHG to that of one unit mass of CO2
over a specified time period. When quantities of the different GHGs are
multiplied by their GWPs, the different GHGs can be summed and compared
on a CO2-equivalent (CO2e) basis. For example,
CH4 has a GWP of 21, meaning each ton of CH4
emissions would have 21 times as much impact on global warming over a
100-year time horizon as 1 ton of CO2 emissions. Thus, on
the basis of heat-trapping capability, 1 ton of CH4 would
equal 21 tons of CO2e. The GWPs of the non-CO2
GHGs range from 21 (for CH4) up to 23,900 (for
SF6). Aggregating all GHGs on a CO2e basis at the
source level allows a facility to evaluate its total GHG emissions
contribution based on a single metric.
2. GHG Regulatory Actions
    Over the past year, EPA has completed four distinct actions related
to greenhouse gases under the CAA. The result of these rules, in
conjunction with the operation of the CAA, has been to trigger PSD
applicability for GHG sources on and after January 2, 2011, but to
limit the scope of sources covered by PSD. These actions include, as
they are commonly called, the ``Endangerment Finding'' and ``Cause or
Contribute Finding,'' which we issued in a single

final action; \44\ the Johnson Memo Reconsideration, noted previously;
the ``Light-Duty Vehicle Rule'' (LDVR or Vehicle Rule); \45\ and the
``Tailoring Rule,'' also noted previously.
---------------------------------------------------------------------------

    \44\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act.'' 74 FR
66,496 (December 15, 2009).
    \45\ ``Light-Duty Vehicle Greenhouse Gas Emission Standards and
Corporate Average Fuel Economy Standards; Final Rule.'' 75 FR 25,324
(May 7, 2010).
---------------------------------------------------------------------------

a. Endangerment Finding, Vehicle Rule, Johnson Memo Reconsideration
    In the Endangerment and Cause or Contribute Finding, which is
governed by CAA section 202(a), the Administrator exercised her
judgment, based on an exhaustive review and analysis of the science, to
conclude that ``six greenhouse gases taken in combination endanger both
the public health and the public welfare of current and future
generations.'' 74 FR at 66,496. The Administrator also found ``that the
combined emissions of these greenhouse gases from new motor vehicles
and new motor vehicle engines contribute to the greenhouse gas air
pollution that endangers public health and welfare under CAA section
202(a).'' Id.
    The Endangerment Finding led directly to promulgation of the
Vehicle Rule, also governed by CAA section 202(a), in which EPA set
standards for the emission of greenhouse gases for new motor vehicles
built for model years 2012-2016. 75 FR 25,324. The Vehicle Rule
established the first controls for GHGs under the CAA.
    The Johnson Memo Reconsideration--as well as the Tailoring Rule,
which we discuss later--is governed by the PSD and Title V provisions
in the CAA. It was issued to address the automatic statutory triggering
of the PSD and Title V programs for GHGs due to the Vehicle Rule
establishing controls for GHGs. The Johnson Memo Reconsideration
provided EPA's interpretation of a pre-existing definition in its PSD
regulations delineating the ``pollutants'' that are taken into account
in determining whether a source must obtain a PSD permit and the
pollutants each permit must control. The Johnson Memo Reconsideration
stated that when the Vehicle Rule takes effect on January 2, 2011, it
will, in conjunction with the applicable CAA requirements, trigger the
application of PSD to GHG-emitting sources. 75 FR 17,004.
b. Tailoring Rule
    In the Tailoring Rule, EPA limited PSD applicability, at the
outset, to only the largest GHG-emitting sources, and to phase-in PSD
applicability, as appropriate, to smaller sources over time. 75 FR
31,514. In the Tailoring Rule, EPA identified the air pollutant that,
if emitted or potentially emitted by the source in excess of specified
thresholds, would subject the source to PSD requirements, as the
aggregate of six GHGs: CO2, CH4, N2O,
HFCs, PFCs, and SF6. EPA based this identification on the
Vehicle Rule, which included applicability provisions specifying that
the rule ``contains standards and other regulations applicable to the
emissions of those six greenhouse gases.'' 75 FR at 25,686
(promulgating 40 CFR 86.1818-12(a)). The Tailoring Rule noted that it
was because the Vehicle Rule subjected to regulation the pollutant that
is comprised of the six GHGs, that PSD was triggered for that pollutant
and that, as a result, the pollutant must be defined for PSD purposes
in the same way as it is identified in the Vehicle Rule. 75 FR 31,527.
The Vehicle Rule identified the pollutant as the aggregate of the six
gases because in the Endangerment Finding, the Administrator found that
those six gases--which she described as long-lived and directly emitted
GHGs -- may reasonably be anticipated to endanger public health and
welfare.
3. Implementation of GHG PSD Requirements
    Because PSD is implemented through the SIP system, EPA has taken a
series of actions to address the obligations of states (including
localities and other jurisdictions, as appropriate) to implement PSD
requirements for GHG-emitting sources. EPA has taken these actions
through the Tailoring Rule discussed elsewhere in this preamble and a
series of subsequent actions.\46\
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    \46\ A detailed description of EPA's implementation efforts, and
the status of state compliance with those efforts, is included in
Declaration of Regina McCarthy, Coalition for Responsible Regulation
v. EPA, DC Cir. No. 09-1322 (and consolidated cases) (McCarthy
Declaration), including Attachment 1 (Tables 1, 2, and 3), which can
be found in the docket for this rulemaking.
---------------------------------------------------------------------------

a. Tailoring Rule
    In the Tailoring Rule, EPA incorporated the PSD thresholds for GHGs
in the definition of the term ``subject to regulation.'' As noted
previously, under EPA's PSD regulations, PSD applies to a ``major
stationary source;'' a ``major stationary source'' is defined as a
source that emits 100/250 tons per year (tpy) on a mass basis of a
``regulated NSR pollutant;'' and a ``regulated NSR pollutant,'' in
turn, is defined as, among other things, a pollutant that is ``subject
to regulation'' under the CAA.\47\ In the Tailoring Rule, EPA added a
limitation to the term ``subject to regulation'' so that the only GHG
emissions that would be treated as ``subject to regulation'' (and
therefore subject to PSD) are those emitted at or above specified
thresholds of, depending on the circumstances, 75,000 and/or 100,000
tpy on a CO2e basis.\48\ EPA explained in the Tailoring Rule
that it intends these levels to be the first steps in a phase-in
approach for PSD applicability, and EPA committed in that rule to
conduct additional rulemaking by 2012 and 2016 that would consider
taking additional steps.
---------------------------------------------------------------------------

    \47\ 40 CFR 51.166(a)(7)(i), (b)(1)(i)(a), (b)(49).
    \48\ Specifically, under the revised definition of ``subject to
regulation,'' sources that emit at least the 75,000 and/or 100,000
tpy CO2e threshold amount of GHGs are subject to PSD as
long as the amount of GHG emissions also exceeds, in general, 100/
250 tpy on a mass basis for new sources and zero tpy on a mass basis
for modifications of existing sources. 40 CFR 51.166(b)(48), 75 FR
at 31,606; see EPA Office of Air Quality Planning and Standards,
``PSD and Title V Permitting Guidance for Greenhouse Gases.'' (March
2011 update).
---------------------------------------------------------------------------

    Some states advised EPA that it is likely they would be able to
implement the Tailoring Rule thresholds by interpreting the term
``subject to regulation'' in their SIPs, and without having to take
further action. A state's ability to take this approach would have
implications for how EPA needed to implement the Tailoring Rule.\49\
Accordingly, in the Tailoring Rule, EPA began a process to gather more
information about how states would implement permitting for GHG-
emitting sources.
---------------------------------------------------------------------------

    \49\ Specifically, a state's implementation of the Tailoring
Rule in this manner prior to January 2, 2011 would obviate the need
for EPA to narrow its approval of that state's SIP, as EPA had
proposed in the proposed Tailoring Rule. Thus, in the Final
Tailoring Rule, EPA delayed final action on its narrowing proposal
so that EPA could gather information about the process and time-line
for states to implement the Tailoring Rule.
---------------------------------------------------------------------------

b. 60-Day Letters
    To gather this information, EPA, in the Tailoring Rule, asked
states to submit letters within 60 days of publication of the Tailoring
Rule, which we refer to as the 60-day letters, concerning the status of
their PSD program and their legal authority for applying PSD program to
GHG-emitting sources. This information would help clarify, for each
state, the two central issues for PSD applicability to GHG-emitting
sources: (i) Whether the state has an approved PSD program that applies
to GHG-emitting sources; and (ii) if so, what action the state would
take to limit the applicability of its PSD program to GHG-emitting
sources at or

above the Tailoring Rule thresholds.\50\ This information would assist
EPA to determine what, if any, action it needed to take with respect to
the states.
---------------------------------------------------------------------------

    \50\ Alternatively, a state could choose to apply its PSD
program to sources below the Tailoring Rule thresholds and acquire
sufficient resources to implement the program as expanded, but no
state had indicated an intention to proceed in this manner.
---------------------------------------------------------------------------

    Almost all states submitted 60-day letters, generally by August 4,
2010. The letters, along with other information EPA received through
review of state requirements and further communications with state
officials, indicate that the states, localities, and other
jurisdictions may be divided into three categories, described later in
this preamble, for purposes of EPA's implementation of the PSD program
to GHG-emitting sources.
c. The Three Categories of States and EPA's Implementation Process
    The first category, which includes 7 states, 35 subsections of
states, the District of Columbia, American Samoa, Guam, Puerto Rico,
the U.S. Virgin Islands, and Indian Territory, does not have an
approved SIP PSD permitting program. Instead, Federal requirements
apply. Thus, implementation of PSD for GHG-emitting sources in these
jurisdictions is the simplest of all the states: GHG-emitting sources
became subject to PSD and the thresholds in the Tailoring Rule as of
January 2, 2011, without further action.\51\
---------------------------------------------------------------------------

    \51\ McCarthy Declaration, paragraphs 28-33, page 8, and
Attachment 1, Table 1.
---------------------------------------------------------------------------

    The second category includes 13 states and a number of districts
within states that have approved PSD SIPs, but those SIPs do not apply
the PSD program to GHG-emitting sources. This group includes Texas,
which is the focus of this action. The implementation process for this
category is discussed later.\52\
---------------------------------------------------------------------------

    \52\ Id., paragraphs 34-55, pages 8-12, and Attachment 1, Table
2.
---------------------------------------------------------------------------

    The third category includes the remaining states, which have an
approved SIP PSD program that applies to GHG-emitting sources. As for
the implementation process for this category, some of these states have
indicated that they are able to interpret their SIPs to apply PSD only
to GHG emissions at or above the Tailoring Rule thresholds, and that
they do not need to revise their SIPs to do so. However, most indicated
that they would need to submit SIP revisions to EPA in order to
incorporate the Tailoring Rule thresholds. This means that in these
states, until they do submit their SIP revisions and EPA approves them,
sources emitting GHGs at or above the 100/250 tpy levels are subject to
PSD requirements as of January 2, 2011, if they construct or modify.
EPA has encouraged these states to submit SIP revisions adopting the
Tailoring Rule thresholds as soon as possible and some of these states
have already done so. Moreover, almost all of these states are
proceeding to revise their state law to reflect the Tailoring Rule
thresholds and either did so by January 2, 2011, or very soon
thereafter, or are currently in the process of revising their SIPs. In
the meantime, EPA has finalized what we call the Narrowing Rule so that
as of January 2, 2011, at least for Federal purposes, PSD will apply to
GHG-emitting sources only at the Tailoring Rule thresholds or
higher.\53\ As a result of these state actions and EPA's Narrowing
Rule, as of January 2, 2011, or shortly thereafter, in all or almost
all of these states, only GHG-emitting sources at or above the
Tailoring Rule thresholds are subject to PSD requirements. \54\
---------------------------------------------------------------------------

    \53\ ``Limitation of Approval of Prevention of Significant
Deterioration Provisions Concerning Greenhouse Gas Emitting Sources
in State Implementation Plans; Final Rule, 75 FR 82535 (December 30,
2010). Specifically, in the Narrowing Rule, EPA narrowed its
approval of the affected states' SIP PSD applicability provisions to
only the extent they apply PSD to GHG-emitting sources at or above
the Tailoring Rule thresholds. In addition, recognizing that GHG-
emitting sources also have permitting obligations under state law,
EPA has strongly encouraged states to revise their state law as
promptly as possible to eliminate the state PSD obligations of
sources below the Tailoring Rule thresholds. McCarthy Declaration
paragraph 92, page 19.
    \54\ Id. paragraphs 62-94, pages 13-20, and Attachment 1, Table
3.
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d. SIP Call States, Including Texas
    As just noted, the second category, which includes Texas, includes
13 states and some districts within states whose SIPs have an approved
PSD program but do not have the authority to apply that program to GHG-
emitting sources. For most of these states, including Texas, the reason
is that their PSD applicability provision applies to any ``pollutant
subject to regulation'' under the CAA (or a similar term), but other
provisions of state law preclude automatic updating. As a result, this
applicability provision covers only pollutants--not including GHGs--
that were subject to regulation at the time the state adopted the
applicability provision.
    After proposing action by notice dated September 2, 2010,\55\ EPA
promulgated the final SIP call for 13 states, including Texas, by
notice signed on December 1, 2010, and published on December 13, 2010,
75 FR 77,698, which we call the GHG PSD SIP Call or, simply, the SIP
call.\56\ In this action, consistent with the requirements of CAA
section 110(k)(5), EPA (i) issued a finding that the SIPs for 13 states
(comprising 15 state and local programs) are ``substantially inadequate
to * * * comply with any requirement of this Act'' because their PSD
programs do not apply to GHG-emitting sources as of January 2, 2011;
(ii) issued a SIP call requiring submission of a corrective SIP
revision; and (iii) established a ``reasonable deadline[] (not to
exceed 18 months after the date of such notice)'' for the submission of
the corrective SIP revision. This deadline ranges, for different
states, from 3 weeks to 12 months after the date of the final SIP call,
as discussed later in this preamble.
---------------------------------------------------------------------------

    \55\ ``Action to Ensure Authority to Issue Permits under the
Prevention of Significant Deterioration Program to Sources of
Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP
Call--Proposed Rule,'' 75 FR 53,892 (September 2, 2010); ``Action to
Ensure Authority to Issue Permits under the Prevention of
Significant Deterioration Program to Sources of Greenhouse Gas
Emissions: Federal Implementation Plan--Proposed Rule,'' 75 FR
53,883 (September 2, 2010).
    \56\ ``Action to Ensure Authority to Issue Permits under the
Prevention of Significant Deterioration Program to Sources of
Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP
Call--Final Rule,'' 75 FR 77,698 (December 13, 2010).
---------------------------------------------------------------------------

    EPA justified its finding that the affected SIPs are
``substantially inadequate'' to comply with CAA requirements on grounds
that (i) the CAA requires that PSD requirements apply to any stationary
source that emits specified quantities of any air pollutant subject to
regulation under the CAA, and those PSD requirements must be included
in the approved SIPs; (ii) as of January 2, 2011, GHG-emitting sources
will become subject to PSD; (iii) as a result, the CAA requires PSD
programs to apply to GHG-emitting sources; and (iv) accordingly, the
failure of any SIP PSD applicability provisions to apply to GHG-
emitting sources means that the SIP fails to comply with these CAA
requirements.
    In the SIP call proposal, EPA discussed in some detail the SIP
submittal deadline under CAA section 110(k)(5). Under this provision,
in issuing a SIP call, EPA ``may establish reasonable deadlines (not to
exceed 18 months after the date of such notice) for the submission of
such plan revisions.'' EPA proposed to allow each of the affected
states up to 12 months from the date of signature of the final finding
of substantial inadequacy and SIP call within which to submit the SIP
revision, unless, during the comment period, the state expressly
advised that it would not object to a shorter period--as short as 3
weeks from the date of signature of the

final rule--in which case EPA would establish the shorter period as the
deadline. EPA stated that, assuming that EPA were to finalize the SIP
call on or about December 1, 2010, as EPA said it intended to do in the
proposal, then the earliest possible SIP submittal deadline would be
December 22, 2010.
    EPA made clear that the purpose of establishing the shorter period
as the deadline for any interested state is to accommodate states that
wish to ensure that a FIP is in effect as a backstop to avoid any gap
in PSD permitting. EPA also made clear that if a state did not advise
EPA that it does not object to a shorter deadline, then the 12-month
deadline would apply. EPA emphasized that for any state that receives a
deadline after January 2, 2011, the affected GHG-emitting sources in
that state may be delayed in their ability to receive a Federally
approved permit authorizing construction or modification. This is
because after January 2, 2011, these sources may not have available a
permitting authority to review their permit applications until the date
that EPA either approves the SIP submittal or promulgates a FIP.
    EPA asked that each of the affected states write EPA a letter
during the comment period to identify the deadline for SIP submission
to which the state would not object if EPA established. We call these
the 30-day letters. Each affected state wrote a 30-day letter to EPA,
as requested. Except for Texas, each state identified a SIP submittal
deadline, which differed among the states, and which ranged from three
weeks to 12 months. In the final SIP call, EPA established SIP
submittal deadlines identified by the states, except that EPA
established a deadline of 12 months for Texas, in accordance with EPA's
proposal. Except for Texas, each state explained in its 30-day letter
and in subsequent communications with EPA, that it was planning on
either receiving a FIP or adopting a SIP and that it chose a deadline
that would result in having either the FIP or an approved SIP, as
appropriate, in place by January 2, 2011 or soon enough thereafter so
as to avoid any hardship to its sources. In the final SIP call, EPA
justified approving this 3-week-to-12-month time period, although
expeditious, as meeting the CAA section 110(k)(5) requirement to be a
``reasonable'' deadline in light of: (i) The SIP development and
submission process; (ii) the preference of the state; and (iii) the
imperative to minimize the period when sources will be subject to PSD
but will not have available a PSD permitting authority to act on their
permit application and therefore may face delays in constructing or
modifying.
    In the final SIP call, based on the states' 30-day letters and
other communications, EPA established a SIP submittal deadline of
December 22, 2010, for seven states. Each of the states indicated that
it did not expect to submit a SIP revision by that date and instead
expected to receive a FIP. On December 23, 2010, for each of the seven
states, EPA issued a finding of failure to submit its corrective SIP
revision by that deadline, and EPA promulgated a FIP.
    Except for Texas, EPA expected each of the other states subject to
the SIP call to adopt a SIP revision and receive EPA approval of it, or
receive a FIP, within the first half of 2011, and, in most cases,
substantially sooner. Although none of these states had a permitting
authority in place as of January 2, 2011, none of these states expected
that gap to pose meaningful difficulties for sources because, depending
on the state, the gap would be brief, and the state did not expect any
sources to seek a permit during the gap, or even if the state had been
the permitting authority during the gap, it could not have completed
processing the permits during that time.\57\
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    \57\ McCarthy Declaration, p. 12, paragraph 55.
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    As discussed later, Texas has responded to the SIP call differently
than the other states. As a result, its GHG-emitting sources do face
the prospect of permitting delays. This rulemaking action addresses
that situation.
4. Summary of the Effect of EPA's Implementation Actions in States
Other Than Texas
    EPA recently summarized the status of its implementation efforts,
for all three categories of sources, as follows:

    Overall, EPA has received information about the status of 99
jurisdictions (49 states,\58\ 4 territories, 45 localities, and the
District of Columbia), and included that information in Attachment
1. Of these jurisdictions, 94 will have, for Federal law purposes, a
PSD permitting program for GHG emissions at the Tailoring Rule
thresholds on Jan. 2, 2011. Of these 94 entities, 84 will have made
any necessary amendments to state or local law to ensure that state
or local permits are not required for GHG emissions below Tailoring
Rule thresholds. By the end of the first quarter of 2011, only one
jurisdiction will not have authority to permit GHG sources, and that
jurisdiction will obtain authority by July 1, 2011 and in the
meantime, does not expect large sources seeking permits for their
GHGs. In addition, by the end of the first quarter of 2011, all but
one more state will have made any necessary amendments to state or
local law to ensure that permits are not required for GHG emissions
below Tailoring Rule levels. 1 program with GHG permitting authority
at the lower statutory levels has not yet determined how, and on
which timeline, it will incorporate the Tailoring Rule thresholds
into its state law.\59\
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    \58\ California's PSD program is administered in its entirety by
local jurisdictions.
    \59\ McCarthy Declaration, p. 20, paragraph 98. There have been
a few changes in the status of individual states since this time,
but the overall picture remains the same. EPA has been in close
communication with almost every state and many other jurisdictions,
along with multi-state organizations such as the National
Association of Clean Air Agencies (NACAA). In addition to the
letters that states have sent responding to the Tailoring Rule (the
60-day letters) and proposed SIP Call (the 30-day letters), EPA
officials, primarily through the Regional Offices, have had numerous
communications with their state counterparts. It is as a result of
the prompt action taken by the states that implementation efforts
have been so successful to date.

    Thus, under EPA's implementation program, (i) in every state, (a)
only sources at or above the Tailoring Rule thresholds will be subject
under Federal law to obtain a PSD permit when they construct or modify
as of January 2, 2011, and (b) only those same sources will be subject
under state law to obtain a PSD permit when they construct or modify as
of January 2, 2011 or very soon thereafter; and (ii) in every state,
except for Texas, as of January 2, 2011 or very soon thereafter, GHG
sources that construct or modify will be able to receive permits when
they need them, so that the sources will not face obstacles to
constructing and modifying. Again, Texas has responded to EPA's
implementation program in a manner that has resulted in its sources
facing obstacles to constructing and modifying, as discussed next,
which this rulemaking addresses.
5. EPA's Implementation Approach for Texas and Texas's Response
    The following describes the progress to date of implementing PSD
for GHG emissions in Texas, based on extensive communications between
EPA and TCEQ. It should be borne in mind, as noted earlier, that Texas
is in the second of the three categories of states: that is, it has an
approved PSD program that does not apply to GHGs-emitting sources.
a. Texas's 60-Day Letter
    Texas's 60-day letter provides the State's clearest articulation of
its response to EPA's efforts to implement PSD for GHG-emitting sources
at the Tailoring Rule thresholds beginning January 2, 2011. As noted
previously, in the preamble to the final Tailoring Rule, EPA asked each
state to send EPA a

letter within 60 days to identify which category the state was in and
what action the state intended to take. Specifically, with regard to
sources in Category 2, EPA stated:

    In our proposed rule, we also noted that a handful of EPA-
approved SIPs fail to include provisions that would apply PSD to GHG
sources at the appropriate time. This is generally because these
SIPs specifically list the pollutants subject to the SIP PSD program
requirements, and do not include GHGs in that list, rather than
include a definition of NSR regulated pollutant that mirrors the
Federal rule, or because the state otherwise interprets its
regulations to limit which pollutants the state may regulate. At
proposal, we indicated that we intended to take separate action to
identify these SIPs, and to take regulatory action to correct this
SIP deficiency.
    We ask any state or local permitting agency that does not
believe its existing SIP provides authority to issue PSD permits to
GHG sources to notify the EPA Regional Administrator by letter, and
to do so no later than August 2, 2010. This letter should indicate
whether the state intends to undertake rulemaking to revise its
rules to apply PSD to the GHG sources that will be covered under the
applicability thresholds in this rulemaking, or alternatively,
whether the state believes it has adequate authority through other
means to issue Federally-enforceable PSD permits to GHG sources
consistent with this final rule. For any state that lacks the
ability to issue PSD permits for GHG sources consistent with this
final rule, we intend to undertake a separate action to issue a SIP
call, under CAA section 110(k)(5). As appropriate, we may also
impose a FIP through 40 CFR 52.21 to ensure that GHG sources will be
permitted consistent with this final rule.

75 FR 31,582/3.

    With regard to states in category 3, EPA requested that in the
states' 60-day letter,

the state should explain whether it will apply EPA's meaning of the
term ``subject to regulation'' and if so, whether the state intends
to incorporate that meaning of the term through interpretation, and
without undertaking a regulatory or legislative process. If a state
must undertake a regulatory or legislative process, then the letter
should provide an estimate of the time needed to adopt the final
rules. If a state chooses not to adopt EPA's meaning by
interpretation, the letter should address whether the state has
alternative authority to implement either our tailoring approach or
some other approach that is at least as stringent, whether the state
intends to use that authority. If the state does not intend to
interpret or revise its SIP to adopt the tailoring approach or such
other approach, then the letter should address the expected
shortfalls in personnel and funding that will arise if the state
attempts to carry out PSD permitting for GHG sources under the
existing SIP and interpretation.
    For any state that is unable or unwilling to adopt the tailoring
approach by January 2, 2011, and that otherwise is unable to
demonstrate adequate personnel and funding, we will move forward
with finalizing our proposal to limit our approval of the existing
SIP.

75 FR 31,582/3.

    On August 2, 2010, Texas submitted its 60-day letter, signed by the
Texas Attorney General and the Chairman of the Texas Commission on
Environmental Quality.\60\ In that letter, Texas responded specifically
to EPA's request that ``any state * * * that does not believe its
existing SIP provides authority to issue PSD permits to GHG sources to
notify [EPA and] * * * indicate whether the state intends to * * *
revise its rules to apply PSD to * * * GHG sources'' by stating:
``Texas has neither the authority nor the intention of interpreting,
ignoring, or amending its laws in order to compel the permitting of
greenhouse gas emission.'' Id. p. 1. Texas offered several explanations
for this position. First, Texas noted:
---------------------------------------------------------------------------

    \60\ Letter from Bryan W. Shaw, Chairman, Texas Commission on
Environmental Quality, and Greg Abbott, Attorney General of Texas,
to Hon. Lisa Jackson, Administrator, U.S. Environmental Protection
Agency, and Dr. Alfredo ``Al'' Armendariz, Regional Administrator,
U.S. Environmental Protection Agency, Region 6 (August 2, 2010)
(Texas's 60-day letter), included in the docket for this rulemaking.

    Texas' stationary source permitting program encompasses all
``federally regulated new source review pollutants,'' including,
``any pollutant that otherwise is subject to regulation under the
[federal Clean Air Act].'' 30 Tex. Admin. Code Sec.  116.12(14)(D).
The rules of the Texas Commission on Environmental Quality (TCEQ),
like the EPA's rules, do not define the phrase ``subject to
---------------------------------------------------------------------------
regulation.''

Id. p. 2. Texas then explained that it had several objections to
interpreting the phrase ``subject to regulation'' to allow regulation
of GHGs. For one thing, according to Texas, long-standing state case
law precluded the term--and the PSD applicability provisions
generally--from automatically incorporating newly regulated pollutants.
Specifically, Texas said: \61\
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    \61\ In this explanation, Texas was referring to the PSD
applicability provision that Texas adopted under State law in 2006,
which differed slightly from the applicability provision approved
into the SIP in 1993.

    * * * Texas' stationary source permitting program encompasses
all ``federally regulated new source review pollutants,'' including
``any pollutant that otherwise is subject to regulation under the
[federal Clean air Act].'' 30 Tex. Admin. Code Sec.  116.12(14)(D).
This delegation of legislative authority to the EPA is limited
solely to those pollutants regulated when Texas Rule 116.12 was
adopted (1993) and last amended (2006). As the Texas Supreme Court
has explained, ``The general rule is that when a statute is adopted
by a specific descriptive reference, the adoption takes the statute
as it exists at that time, and the subsequent amendment thereof
would not be within the terms of the adopting act.'' Trimmer v.
Carlton, 296 S.W. 1070 (1927). Thus, in order for Texas Rule 116.12
to pass constitutional muster, it must be limited to adopting by
reference the definition of ``subject to regulation'' in existence
when Rule 116.12 was last amended in 2006. In other words, Texas
Rule 116.12 cannot delegate authority to the EPA to define ``subject
to regulation'' in 2010 to include pollutants that were not
---------------------------------------------------------------------------
``subject to regulation'' in 2006.

Id. at 4.

    Secondly, Texas took the position that PSD applies only to NAAQS
pollutants, and not non-NAAQS pollutants. Texas stated:

    The only sensible interpretation of the Clean Air Act is one
that requires the EPA to promulgate a National Ambient Air Quality
Standard (NAAQS) for greenhouse gases before the EPA can require PSD
permitting of greenhouse gases. * * * EPA, however, has not
developed a NAAQS for greenhouse gases. * * *

Id. at 4-5.

    Texas provided a more detailed exposition of its view that PSD
applies only to NAAQS pollutants in its challenges before the DC
Circuit to EPA's GHG actions, where Texas moved to stay the
Endangerment Finding, the Vehicle Rule, and the Johnson Memo
Reconsideration (Texas's Motion to Stay Three GHG Actions).\62\ (In a
separate motion, Texas also moved to stay the Tailoring Rule.\63\)
There, Texas reiterated arguments based on the text of some of the CAA
PSD provisions that, in Texas's view, lead to the conclusion that the
CAA precludes applying PSD to non-NAAQS. As noted previously, these
arguments were raised by commenters to the Tailoring Rule. Texas
concluded that EPA's efforts to apply PSD to GHGs--

thus violates the CAA. Moreover, [EPA's] interpretation of the CAA
is not entitled to deference because the text of the statute is
unambiguous. Chevron, U.S.A. v. NRDC, 467 U.S. 837, 842 (1984) (the
Agency must give effect to the unambiguously expressed intent of
Congress). Accordingly, EPA's attempt to short cut the CAA's NAAQS

process in order to regulate GHG emissions from stationary sources
through PSD and Title V must fail.\64\
---------------------------------------------------------------------------

    \62\ ``State of Texas's Motion For A Stay Of EPA's Endangerment
Finding, Timing Rule, and Tailpipe Rule,'' Coalition for Responsible
Regulation v. EPA, No. 09-1322 (and consolidated cases) (September
15, 2010). On December 10, 2010, the DC Circuit denied Texas's, and
other parties', motions to stay. Order, Coalition for Responsible
Regulation v. EPA, No. 09-1322 (and consolidated cases) (December
10, 2010).
    \63\ ``State of Texas's Motion For A Stay Of EPA's Greenhouse
Gas Tailoring Rule,'' Coalition for Responsible Regulation v. EPA,
No. 09-1322 (and consolidated cases) (September 15, 2010) (Texas's
Motion to Stay the Tailoring Rule).
    \64\ Texas's Motion to Stay Three GHG Actions, at 27.

    At the close of its 60-day letter, Texas added, ``In the event a
court concludes EPA's actions comport with the law, Texas specifically
reserves and does not waive any rights under the Federal Clean Air Act
or other law with respect to the issues raised herein.'' \65\
---------------------------------------------------------------------------

    \65\ Id. at 5.
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b. Texas's 30-Day Letter
    As noted previously, in the GHG PSD SIP call proposal, EPA proposed
to establish, for each affected state, a deadline of 12 months from the
date of signature of the final SIP call for submitting the corrective
SIP revision, unless the state expressly advised EPA in its 30-day
letter that it would not object to a shorter period. Texas submitted a
30-day letter on October 4, 2010,\66\ and in that letter, voiced
various objections to the proposed SIP call. Texas reiterated its view
that PSD is limited to NAAQS pollutants, and therefore cannot apply to
GHGs, and added that the SIP call is ``based on an impermissible
interpretation of the [Clean Air Act]. EPA cannot * * * impose
permitting through [the PSD] program without first setting a NAAQS.* *
* '' Texas 30-day letter p. 2, 4. EPA responded to those objections in
the final SIP call.\67\
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    \66\ ``Texas Commission on Environmental Quality Comments on
Actions to Ensure Authority to Issue Permits Under the Prevention of
Significant Deterioration Program to Sources of Greenhouse Gas
Emissions, Finding of Substantial Inadequacy and SIP Call, Docket ID
No. EPA-HQ-OAR-2010-0107, FRL-9190-7 Federal Implementation Plan
(FIP), Docket ID No EPA-HQ-OAR-2010-0107, FRL-9190-8 (October 4,
2010) (Texas 30-day letter).
    \67\ Final SIP Call, 75 FR at 77,706/2-3 and n. 18.
---------------------------------------------------------------------------

    In its 30-day letter, Texas went on to discuss the SIP submission
schedule and FIP that EPA proposed, but Texas declined EPA's invitation
to identify a specific deadline for the state's SIP submission. As a
result, in the final SIP call, EPA was obliged to establish the default
SIP submission deadline for Texas of December 1, 2011, in accordance
with EPA's proposal. Because Texas has clearly stated that it does not
intend, and, in its view, does not have the authority, to adopt a SIP
revision to respond to the SIP Call, including to apply PSD to GHG-
emitting sources, EPA expects to promulgate a FIP to continue to apply
PSD to these sources in December, 2011. But, again, because Texas did
not identify an earlier deadline for its SIP submittal, the earliest
that EPA could promulgate such a FIP would be December 2, 2011. Under
this approach, due to the position Texas has taken, absent further
action, sources in Texas could not expect to have a permitting
authority with authority to issue preconstruction permits for their GHG
emissions until that December 2, 2011, date. As a result, absent
further action, sources in Texas would face obstacles in constructing
or modifying before that date.
    Texas's 30-day letter indicates that Texas was well aware of the
consequences of its decision not to identify a specific deadline for
its SIP submission, but had several reasons for making that decision.
These included its view, again, that PSD applies only to NAAQS
pollutants, and also that EPA was required to employ a different
process for requiring a SIP revision, one that would have provided the
state with 3 years to adopt a SIP revision. Texas 30-day letter at 4-5.
In addition, Texas asserted that there is no reason to allow EPA to
promulgate an early FIP for the benefit of Texas's sources because, in
Texas's view, for practical reasons, EPA could not issue those permits
for the ``foreseeable future'' anyway. Specifically, Texas explained
that EPA had not issued guidance for determining BACT, the key element
of a PSD permit for a GHG source. Texas added that even after EPA
issued that guidance, BACT will, in Texas's view, remain uncertain and
contentious, and the guidance will be of limited usefulness until the
control technology is proven. Id. at 5. Texas added that ``[i]ndustry
should be particularly concerned about EPA's lack of resources and
experience to issue these permits.* * * '' Id. at 6. Texas concluded,
``The result of all this is that, even under a FIP, it is unlikely that
construction of new major GHG sources or major modifications will
commence in the foreseeable future.'' Id. at 6.
    In order to reduce uncertainty for sources and permitting
authorities, EPA has issued guidance for use in determining BACT,
provided training for permitting authorities and sources, and is
continuing to maintain and update resources for use in making these
determinations. These resources include question and answer documents
and white papers on proven and emerging technologies for reducing
greenhouse gas emissions in different industries as well as continued
close interaction between sources, permitting authorities, and EPA.
    It should be noted that Texas stated in filings before the DC
Circuit in which it challenged the Tailoring Rule that it believed 167
projects in Texas would be affected by the lack of a permitting
authority during 2011.\68\
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    \68\ Texas's Motion to Stay the Tailoring Rule, pp. 2, 16.
---------------------------------------------------------------------------

IV. Final Action and Response to Comments

    In this action, EPA is taking the following actions to ensure that
there is a mechanism for large, GHG-emitting sources in Texas to obtain
PSD permits under a program that complies with the CAA. First, EPA is
determining that the Administrator's action approving the Texas SIP PSD
program was in error under CAA section 110(k)(6).
    Second, EPA, in the same manner as its past action to approve the
Texas SIP PSD program, is revising such action as appropriate without
requiring any further submission from Texas. Id. The appropriate
revision is to convert the previous approval to a partial approval and
partial disapproval. The partial approval applies to the extent that
Texas's PSD program actually covers pollutants that are required to be
included in PSD. The partial disapproval applies to the extent that
Texas failed to address or to include assurances of adequate legal
authority (required under CAA section 110(a)(2)(E)(i)) for the
application of PSD to each newly regulated pollutant, including non-
NAAQS pollutants, under the CAA. Note that as an alternative basis to
CAA section 110(k)(6) for taking these first two steps, EPA relies on
its inherent administrative authority to reconsider its previous
action.
    Third, in this rulemaking, EPA is promulgating a FIP to apply
appropriate measures to assure that EPA's PSD regulatory requirements
will apply to non-NAAQS pollutants that are newly subject to regulation
under the CAA that the Texas PSD program does not already cover. At
present, the only such pollutant is GHGs. Therefore, EPA's FIP will at
present apply the EPA regulatory PSD program for the GHG portion of PSD
permits for GHG-emitting sources in Texas, and EPA commits to take
whatever steps are appropriate if, in the future, Texas fails to apply
PSD to another newly regulated non-NAAQS pollutant. In light of the
immediate need of Texas's GHG-emitting sources for a permitting
authority to process their permit applications for GHGs, this rule will
be effective on May 1, 2011.

A. Response to General Comments on the Operation of the PSD Program

1. Comments on the Self-Executing Nature of the PSD Program
    Several commenters disagreed with EPA's position regarding section
165(a) of the CAA and argue that EPA's decision to regulate GHGs had no
self-executing effect on the permitting requirements applicable to
sources in Texas. These commenters state that the only CAA requirements
that are self-executing are found in CAA section 168, a section of the
statute that incorporated PSD changes made in the 1977 amendments to
the Act. Instead, according to these commenters, GHG-emitting sources
became subject to PSD requirements through EPA's revisions to the PSD
regulations in 40 CFR 51.166, and those regulations provide states 3
years to revise their SIPS to incorporate changes in the PSD program.
Accordingly, one commenter asserted that rather than imposing a
``construction permitting moratorium'' upon EPA's adoption of a new
minimum PSD requirement, the PSD rules provide states a reasonable
period of time for incorporating a new minimum PSD requirement, with
prospective effect, into SIPs, during which time the EPA-approved SIP
continues in force and the state may continue to issue permits under
that SIP without addressing the new minimum requirement promulgated by
EPA.
2. EPA Response
    EPA indicated in the proposal for this rulemaking, 75 FR at 82,388/
2, that in earlier rulemakings, EPA took comment on and resolved the
issue of whether the CAA PSD requirements apply by their terms, so that
EPA was not soliciting comment on that issue in this rulemaking. In
those earlier rulemakings, EPA concluded that the CAA PSD requirements
do apply by their terms, so that sources in a state are subject to PSD
for their emissions of pollutants newly subject to regulation even if
the state has an approved SIP that does not apply PSD to those
pollutants. See 75 FR 31,514 (June 3, 2010) and 75 FR 77,698 (December
13, 2010). As noted earlier in this preamble, notwithstanding the
proposal, EPA did receive comments on this issue in this rulemaking.
Because EPA resolved this issue in those earlier rulemakings, and those
dissatisfied with that resolution may challenge it in court--and in
fact are so doing--and because the present rulemaking is based on those
rulemakings, EPA is not obliged to respond to those comments in this
rulemaking.
    Even so, for the sake of completeness, and without reopening this
issue in this rulemaking, EPA does provide the following response. EPA
disagrees with these commenters and EPA continues to take the view that