EPA should clarify that it does not intend to regulate emissions from
the office buildings of Transmission and Distribution (“T&D”)
utilities which do not burn fossil fuels (coal or gas) directly.  The
commenter notes that the final rule on GHG reporting did not cover fleet
vehicles or T& D facilities with no generation by excluding the
reporting of SF6 emissions, and believes that the same decision should
be made for the Tailoring Rule.  If not, EPA should at least delay or
determine as de minimis electric utility office buildings without
generation such as, but not limited to, bill paying centers, customer
relations buildings, or storage areas with transmission equipment that
might contain SF6 canisters or tanks that function as true storage
areas.  The commenter believes that regulation of these de minimis
sources of non-CO2 GHGs should be postponed until phase 2 or 3 of the
PSD and title V permitting programs since no control technology has been
identified and the NAAQS process has not been established.  (5052)

EPA should delay PSD and title V for any extraneous GHGs (e.g., nitric
acid, water vapor, or any other de minimis GHGs) at power plants.
(5052)

EPA should not require additional CO reduction controls if a 250-ton
threshold triggers PSD CO regulation (5052).  This commenter considers
CO as an extraneous de minimis GHG that should not be regulated in the
future (5052).

Response:

Many of the requests for special consideration for these source
categories were considered by EPA in the context of our response to
request for deferrals, exemptions, or particular major source thresholds
for the categories, and we decided not to take final action on any such
special treatment at this time.  Instead, we have decided to adopt
higher applicability thresholds that will apply to all source categories
and phase-in the permitting requirements such that only the largest
sources in any category will be permitted first.  Nevertheless, we have
committed to further consider which sources should be permitted or
exempted in the prospective step 3 rulemaking or the rulemaking
associated with the 5-year study.  Also, several of questions raised by
the commenters are directly or indirectly addressed in the preamble to
the final rule or elsewhere in this response to comments (e.g.,
treatment of biogenic emissions for landfills, secondary or indirect
emissions from electrical generation).

8.4.4  General Suggestions or Comments on Emissions Monitoring, Public
Participation, and Funding

Comment:

Two commenters provide specific suggestions or comments regarding
emissions monitoring in response to the Tailoring Rule.  They state
that:

EPA should establish monitoring exemptions to address GHG emissions
monitoring, including compliance issues arising under the CAM rule.
(4515/4691)

To determine emissions: (1) physical measurements rather than only using
empirical determinations should be allowed; (2) temperature, pressure,
or variations in gravity which use mass and weight should also be
allowed since the metric related calculations seem to be oversimplified,
(3) the most efficient engines should be supported regardless of the
emissions produced, instead than supporting various fuels and combustion
techniques, (4) EPA should clarify whether it supports the development
of higher efficiency engines; and (5) emissions should be based on the
optimal ratio of CO and CO2 produced during combustion, rather than
using raw quantities.  Any exemptions to CO emissions that currently
exist should also apply to CO2 emissions.  (15947)

Concerning public participation, one commenter suggests that in order to
ensure technical support documents are based on the most complete and
substantial information from sources as possible, operators and industry
stakeholders should be included in the development and review of support
documents, and technical and cost information should be peer-reviewed
and based on technically supportable references.  The commenter is
especially concerned that limited information (e.g., projections on
technology performance or cost) provided by one or two sources could
result in biased support documents.  (4515/4691)

	Several commenters request funding assistance from the federal
government to assist state and tribal governments.  They state that:

Even with the Tailoring Rule there is likely to be a significant
increase in workload for permitting authorities (3919).  Consequently,
EPA should seek federal funding assistance for permitting authorities,
at least as a stop-gap measure as states work to develop new regulations
and seek the needed additional resources (3919).  Another commenter adds
EPA should provide the states with additional funds to implement the
Tailoring Rule, including increased funds in the first year of
implementation to cover the cost of synthetic minor permitting.  They
request that funding be sufficient to support new staff, training, and
outreach (3916).

EPA should provide funding for inspection and enforcement or this rule
would be another unfunded mandate.  (5063, 6681)

EPA should increase CAA section 105 program funding and provide for the
collection of title V fees for GHGs.  (7935)

The final rule should include CO2 presumptive emission fees that are
lower than the fees for criteria pollutants, since source emissions of
CO2 are typically 100 to 1000 times higher than emissions of criteria
pollutants from the same source.  (4154)

Tribal air grant funding should be increased to more accurately reflect
the air quality-related needs of tribes across the nation, and allow
these same tribes the opportunity to implement the Act’s PSD and title
V programs.  (8803)

Response:

	EPA would like to thank the commenters for their suggestions and
general comments and we may consider them in our future deliberations.

Concerning monitoring and other methods for calculating GHG emissions,
the establishment of monitoring requirements or exemptions is beyond the
scope of this rule.  We note that the GHG Mandatory Reporting Rule
contains GHG monitoring requirements and detailed GHG emission
calculation protocols for many different source categories.  [See, e.g.,
40 CFR part 98, Subpart C – General Stationary Fuel Combustion
Sources].  In addition, the GHG Mandatory Reporting Rule may be amended
in the future to add monitoring requirements and emission calculation
protocols for additional source categories.  If the GHG Mandatory
Reporting Rule does not specify particular monitoring or emission
calculation methods for your processes, then state and local permitting
authorities will take the lead in authorizing appropriate calculation
methods as part of the permitting process.  Also, under PSD and title V,
permitting authorities retain authority to require monitoring or other
approaches for calculating emissions for compliance purposes, and EPA
takes no action in this rule on commenter’s request to exempt GHG
sources from such requirements.

In the proposal, EPA explained that we support energy efficiency or
other measures to reduce GHG emissions, and we continue to do so.

Concerning public participation, EPA has conducted public outreach in
the development of this rule and has to-date sought the input of the
public, including industry, environmental groups, and state and local
agencies, and others.  We remain committed to meeting all statutory
requirements for public participation, including the requirements of the
APA, and to conducting other outreach as may be appropriate to help
inform our decisions.

Concerning funding issues, issues related to any grants EPA may issue to
state and local or tribal agencies are beyond the scope of this rule,
but we appreciate the feedback nevertheless.  EPA also directs the
commenters to our response on issues related to title V fees below,
which are an important mechanism for funding air quality permitting
programs under the CAA.

8.4.5  PSD-Specific Implementation Issues

Comment:

	Various commenters provide suggestions or comments regarding
implementation issues related to the PSD program.  They state that:

EPA needs to make every effort to modify or clarify its regulations and
policy concerning the determination of a source’s “potential to
emit” GHGs.  According to the commenter, EPA has asserted in the past
that it has substantial discretion in determining such details of the
PSD program, and the courts have agreed.  Additionally, the commenter
believes that it is clear from existing regulations, that EPA also
should reinforce explicitly that the GHG emissions to be assessed are
those from the source itself, and not those from activities like
transportation or off-site electricity generation that have some
connection with the source.  (4903)

EPA should not consider GHGs in determining if a modification at an
existing source is a major modification and therefore subject to PSD
review (6458).  According to this commenter, if “significant’
increases in GHGs are used to determine if a change at an existing
facility is a major modification, existing plants will not be able to
make modifications or changes that, for instance, improve
energy/operational efficiency, increase electrical generation capacity
or reduce maintenance without the change being considered a major
modification because there are no GHG limits that could be lowered to
net out of PSD review and that this would effectively foreclose existing
plants from make any substantial improvements.  If this is not possible,
a commenter suggests that EPA should clearly indicate in the regulations
how “contemporaneous” increases and decreases of GHGs will be
addressed with respect to changes in GHG emissions that took place
before they became regulated under the PSD rules (4903).

EPA should consider a major modification under PSD to occur when the net
emissions increase would be greater than 100 tpy on a mass emission
basis for the individual gas (e.g., CO2, HFCs, N2O, and CH4) and greater
than 25,000 tpy CO2e of combined GHG emissions.  EPA could evaluate the
need to move back to the currently proposed significance level and
provide a basis for the proposed value based on the 5 years of gathering
information/review.  (3306)

EPA should clarify if sources can be excluded from PSD, under existing
regulations, due to changes at a facility that merely result in the
increased utilization of a unit or increased fuel burning or burning of
an alternative fuel, provided the unit was capable of accommodating that
change (4903, 16411).  See 40 CFR 52.21(b)(2)(iii)(e) - (f).  Since EPA
has identified combustion sources like boilers as the primary units that
will be affected by or will trigger PSD permitting for GHGs, see 74 FR
55,334, there will be an increased number of questions about whether
increases in fuel consumption or fuel-switching at those units are
exempted from being a PSD major modification (4903).  The commenter
(4903) encourages EPA to reinforce the interpretation it applied to
those exemptions from the definition of modification soon after they
were promulgated so that, so long as a unit itself (not including
peripheral equipment) is capable of burning a fuel, or is capable of
burning greater quantities of a fuel, the increased emissions associated
with fuel switching or increased utilization are not counted in
determining a “net emissions increase,” regardless of whether other
changes at a facility made the fuel switching or increased rate of
operation necessary or more desirable.

EPA needs to clarify how debottlenecking projects will be treated and
how projects must be aggregated for PSD applicability purposes.  (4903,
16411)

EPA should develop a standard evaluation process to determine if best
practices and technologies have been incorporated in the case-by-case
review of new or modified facilities that trigger PSD permitting
requirements, otherwise there may be wide variations between permitting
agencies, even agencies located in the same state.  It might be better
to have streamlined standard reviews by source categories.  (4518, 8531)

EPA should clarify whether PSD requirements for GHG sources trigger
additional environmental impact and air quality analyses.  (4691)

EPA should clarify how GHG emissions thresholds apply to routine
operational changes that may trigger PSD major modification procedures
(4867).  Another asks how major modification is determined for GHGs
(5124)?

EPA should exclude GHG emissions from that portion of the PSD definition
of “significant” that defines a 1 µg/m3 impact within a Class I
area as significant, because GHGs are emitted from combustion sources in
amounts orders of magnitude higher than criteria pollutant emissions
(see 40 CFR 52.21(b)(23)(iii)) (4692).  For sources located within
10 km of a Class 1 area, this criterion would require a PSD permit for
combustion sources so small they are exempt from both minor permit NSR
and title V permits (4692).

Since GHGs are global pollutants, EPA should (6457):

Recognize “carbon offsets” from off-site reduction, destruction,
avoidance or sequestration of GHG as a legitimate method of netting
on-site GHG from regulated major emitting facilities for purposes of
PSD/NSR (or title V) applicability, thresholds, or emissions analysis.
Under current law, the federal CAA does not prevent EPA from doing so.

Create a trading system for GHG emissions, which can be readily
distinguished from the trading programs in the Clean Air Interstate Rule
(CAIR) and NOx SIP Call that were recently invalidated by federal courts
on the grounds that those programs failed to adequately account for
inter-airshed transfers and resulting concentrations of pollutants in
upwind airsheds, which may have posed a localized risk to health and
welfare.

Consider on- or off-site carbon reduction projects in determining the
appropriate technology standard (BACT, LAER, RACT, etc.) applicable to
regulated stationary sources under various provisions of the CAA.

EPA should be explicit on how the PSD major modification threshold is
determined.  For ubiquitous industrial emissions sources such as process
heaters, and in light of the very low GHG thresholds EPA has proposed,
the commenter supports the current regulatory practice of determining
changes in emissions as "actual to future actual" and not "actual to
potential.”  The commenter supports the "actual to future actual"
regulations as the more reasoned approach to applying NSR to GHG
emissions and requests EPA to specifically document this approach in the
final regulations. (5124)

Response:

EPA appreciates these comments.  They are beyond the scope of this rule,
which is generally limited to tailoring the PSD and title V
applicability requirements.  EPA will address the issues raised in these
comments as it moves forward with implementation of PSD requirements for
GHG sources.

Because many of the comments concerned BACT, it should be noted that the
CAA requires that a PSD permit contain, among other things, emissions
limits based on the BACT for each pollutant subject to regulation under
the Act emitted from the source that triggers PSD.  42 U.S.C. section
7475(a)(4); 42 U.S.C. section 7479(3).  BACT is defined as follows:

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

42 U.S.C. § 7479(3).

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

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

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

Consistent with our commitment at proposal to involve all stakeholders
in our guidance development, EPA called upon the CAAAC in September
2009, to provide assistance and recommendations for what types of
guidance and technical information would be helpful.  Specifically, our
charge to the CAAAC was “… to discuss and identify the major issues
and potential barriers to implementing the PSD Program under the CAA for
greenhouse gases … [and] focus initially on the BACT requirement,
including information and guidance that would be useful for EPA to
provide concerning the technical, economic, and environmental
performance characteristics of potential BACT options.”  This charge
also requested the CAAAC to “identify and discuss approaches to enable
state and local permitting authorities to apply the BACT criteria in a
consistent, practical and efficient manner.”

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

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

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

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

8.4.6  Title V-Specific Implementation Issues

<IP_ADDRESS>  General Comments or Suggestions

Comment:

EPA should clarify the status of facilities with existing title V
permits, whether:

The requirement to obtain a title V permit where none was previously
needed would require the newly permitted facility to include all
pollutants into a title V permit or whether the minor sources could
remain outside of the title V permit.  (4990).

Will the GHG requirements be added to existing permits or will they be
required to be in a new and separate permit.  The commenter recommends
that EPA make the new requirements additions to existing permits, rather
than a separate permit.  (4990)

Response:

We did not propose to revise the title V regulations to treat GHGs any
differently within title V permits and we are not finalizing any such
changes at this time.  Concerning the scope of the permit, the current
rules specify that when any regulated air pollutants, including GHGs,
trigger major source status, all emission units and all regulated air
pollutants at those emissions units must be included in the permit
application.  Also, permits for major sources must include all
applicable requirements at all emissions units, while certain permits
for minor sources may be limited in scope with respect to applicable
requirements.  See 40 CFR 70.5(c)(3)(i) and 70.3(c)(1).  In the preamble
to the final rule we discussed the future consideration of certain
“hollow permit” theories for limiting the applicability for the
permitting rules in the future but we are taking no action on that
approach at this time.  See more on this under section <IP_ADDRESS>.

Concerning the comment that EPA allows permitting authorities to add new
GHG permit requirements as additions to permits, rather than as a
separate permit, we are not requiring such an approach at this time.
The permit rules allow permitting authorities to either issue a single
permit or multiple permits to a single major source provided all the
applicable requirements at the facility are covered by the permit or
collection of permits, and we are not changing this discretion for
permitting authorities at this time.

<IP_ADDRESS>  Hollow Permits

Comment:

	Several commenters assert that permitting agencies would spend a lot of
time and money to process the permits of applicants (3858) who have
essentially nothing to report, because there are no applicable GHGs
requirements under the CAA (4692, 5143, 5179, 5417, 5808, 8545) and
these sources have no other obligations under the Act (5129).  For that
reason, it would seem that the D.C. Circuit might be receptive to EPA's
adopting a scheme to provide relief from title V for these sources
(8545).  However, if “hollow” permits are created or would be
created, two commenters suggest that EPA could: (1) include the GHG
Mandatory Reporting Rule as an applicable requirement under title V to
prevent this from happening (4747), or (2) provide model permit language
for the first round of title V permits (5338) to facility the issuance
of all the new permits.

	One commenter has concerns about how compliance assurance measures
would be established in title V permits for the semiconductor industry
given that there are no applicable requirements.  Even the GHG Mandatory
Reporting Rule has been deferred for semiconductor manufacturers, and
the commenter contends that establishment of reporting and monitoring
requirements outside of the GHG Mandatory Reporting Rule on a patchwork
basis through state-administered title V permitting programs would
undermine the Tailoring Rule and also the efforts by the semiconductor
industry to establish voluntary GHG emissions reporting and reduction
goals on a worldwide basis through the World Semiconductor Council.
(5143)

Response:

Many commenters argued that EPA should apply the title V program only to
sources that are subject to applicable requirements, so that sources
should not be required to hold empty permits (i.e., permits issued to a
source that is not subject to any applicable requirement for any
pollutant).  To the extent that commenters argue that the statute
requires EPA to adopt a “no-empty–permits” theory, we disagree.
We believe that although various provisions of title V indicate that one
of title V’s purposes is to gather a source’s applicable
requirements into a single permit, see CAA sections 503(b)(1), 504(a),
we do not read those provisions as expressly limiting title V to sources
with applicable requirements.  We also note that to date, we have issued
permits to sources without applicable requirements, albeit on rare
occasions.  We believe that the tailoring approach we adopt in this
rulemaking best reconciles the statutory provisions with congressional
intent.

We also raised the issue of “hollow” or “empty” permits in
discussing our rationale for why it may make sense to delay title V
permitting under our proposal.  We were concerned that many title V
permits for GHG sources would contain no applicable requirements, and
their issuance would therefore be of little value and would not be the
best use of scarce resources.  Several commenters agreed that
implementing title V for GHG will, at least initially, require “empty
permits” to be issued to GHG sources because such sources will not be
subject to “substantive” requirements, and that this would not be
the best use of scarce resources.

	We believe that the amount of resources that would be spent on, and the
limited value that would result from, “empty permits” does warrant
consideration under the Chevron analysis, taking account of the
“absurd results” doctrine.  Therefore, we intend to consider the
role of “empty permits” when we undertake future rulemaking.
However we believe the issue of “empty permits” has limited or no
relevance to the first two steps of the phase in that we are
promulgating in this rule.  During step 1, permitting for GHGs is only
required if the source is otherwise subject to permitting for its
emissions of non-GHGs.  Those sources very likely will be subject to
existing substantive applicable requirements for non-GHGs (e.g., NSPS,
MACT, and SIP requirements, including PSD).  Thus, there should be no,
or at least no additional, “empty permits” during step 1.  For step
2, it is possible that sources that become subject to title V
requirements for GHG emissions may not be subject to other requirements,
but our assessment suggests that this is very unlikely.  We estimate
that virtually all of the 550 newly-major sources in step 2 will be
subject to applicable requirements under the CAA because they are from
categories that have been traditionally subject to regulations, such as
smaller industrial sources from already regulated categories, large
landfills, and oil/gas/coal production.  Even the approximately 50
newly-subject commercial sources in step 2, which we estimate to be
comprised of very large hospitals, are likely to be covered by standards
for medical waste incinerators.  In addition, we expect these sources
may well be subject to SIP requirements.  Thus, we do not expect any, or
at most very few “empty permits” during step 2.

In later stages of implementation (e.g., prospective step 3) or in the
event that we permit smaller, non-traditional sources of GHGs that have
never otherwise been subject to major source permitting, there would be
a greater potential for “empty permits” to be issued under title V.
Cognizant of this, we intend to further explore in the rulemaking for
step 3 “empty permit” theories under the “absurd results”
rationale that may serve to permanently narrow the scope of title V to
exclude sources that would potentially be required to obtain an “empty
permit” due to GHG emissions.

Concerning the request for EPA to develop model language for hollow
permits, EPA reiterates that it does not expect many, if any, such
permits to be issued under the approach of this final rule and further
notes that no title V permit, even a “hollow” one, would be a
completely blank slate.  Each title V permit must include the title V
administrative requirements, such as fee payment requirements, title
V’s recordkeeping, reporting and monitoring requirements, and
procedures of applying for permit revisions or permit renewals.  Because
each state, local or tribal title V program is unique, permit language
would depend on the requirements of the EPA-approved title V program.
As such, the state, local, or tribal agency would be in the best
position to develop such model language based on the specific
requirements of their approved permit program, if such language is
deemed necessary.

<IP_ADDRESS>  Application Shield

Comment:

Several commenters request that EPA address the issue of the title V
Application Shield in the proposed rulemaking (3003, 4298, 4860) because
section 502 of the CAA states that it is unlawful for a source to
operate except in compliance with an operating permit (4860) and upon
triggering GHG applicability, all the sources that become subject to
operating permit requirements will not have the required permit pursuant
to the CAA or state regulations.  Therefore, they will not be shielded
from enforcement or be able to certify compliance.  For these reasons,
two commenters ask EPA to:

Clarify whether “shields” would be granted to newly captured
facilities even if a title V permit application is determined to be
incomplete?  (3003)

Implement a uniform national policy, with respect to the treatment of
synthetic minor permit applications that extends permit shield
protections afforded to major sources that have applied for title V
permits to sources that have applied for synthetic minor status.  In the
event a synthetic minor permit is not ultimately issued, sources should
have at least six months to submit an administratively complete title V
permit application without penalty.  (4298)

Response:

The title V regulations offer two types of “shields” for sources, an
application shield and a permit shield.  Application shields protect
sources from a violation for operating without a permit, provided they
submit a timely and complete permit application by the applicable
deadline; this is a mandatory element of state title V program.  See 40
CFR 70.7(b) and section 503(d) of the Act.  The title V regulations
generally provide that a permitting authority must determine that an
application is incomplete with 60 days following receipt or the
application will be deemed complete.  See 40 CFR 70.5(a)(2).  Where a
permitting authority seeks additional information regarding an
application previously determined or deemed complete, the application
shield continues to apply so long as the source meets any deadlines set
by the permitting authority for submission of additional information.
See 40 CFR 70.5(a)(2); 70.7(b).  Permit shields protect sources from a
violation for not meeting the terms of an applicable requirement,
provided the source meets the terms and conditions of the applicable
requirement that are included in the permit; this provision is an
optional element for state title V programs.  See 40 CFR 70.6(f)(1)(i)
and section 504(f) of the Act.  The EPA did not propose to revise the
title V regulations with respect to these shields as part of the
proposal for the Tailoring Rule and we have not finalized any such
provisions.  Thus, these shields are available in permitting for GHGs to
the same extent that they are available with respect to other
pollutants.

<IP_ADDRESS>  Title V Fees

Comment:

A few commenters support EPA’s position that it is not necessary to
amend the federal regulations to establish presumptive fees that account
for GHG emissions or to mandate revisions to fee regulations in states
that did not adopt the presumptive fee approach because:

Current fees on traditional “regulated pollutants” emitted from
sources newly covered by title V should suffice to cover the costs of
permitting.  In fact, they believe that EPA should go further than it
proposes and prohibit presumptive and/or supplementary fees for GHG
emissions.  (4298)

Applying the current "presumptive fee" of $43.75/ton for GHG emissions
would impose an insurmountable financial burden on a large number of
companies (5300) and thus EPA should eliminate or severely limit the
title V fees that states can collect for GHG emissions (4745, 5300,
5773).  However, they assert that EPA should not leave this to state
discretion (4745, 5300) since this will cause an unsatisfactory
patchwork of state approaches (5300).

EPA has used its discretion under section 502(b)(3) of the CAA to
establish presumptive fees for GHGs and has left the fee adequacy
requirement to each state.  (4120)

	Other commenters disagree with EPA’s suggestion that states should
not charge for GHG emissions and/or increase the fees of other
pollutants to cover the cost of regulating GHG emissions because:

This approach unfairly punishes existing sources and brings in no
additional revenue from new sources triggering PSD and title V
permitting for the first time.  These new sources will continue to need
permit modifications and renewals after the first permit issuance, and
states and local agencies will need to continue to cover the cost of
these permit actions over time.  (4521)

EPA lacks any credible support for its assumption that a 50 percent
increase in resources is needed and achievable to fund the expanded
resources required by state permitting authorities.  (4630)

Several commenters state that any effort to increase fees for GHGs will
be contentious because:

Many regulated sources such as coal-fired power plants and refineries in
their state already pay the maximum title V fee.  (5135)

Many states are subject to statutory limitations on title V fee
increases and existing fees are likely to be insufficient to address the
increasing workload.  (4691, 5063)

Pending federal GHG legislation would potentially negate the need for
such an increase.  (5135)

Many states are prohibited from collecting fees for CO2e by their
authorizing legislation or it could take, like in this state, 3 years to
get fee change authorization.  (8025)

Given the status of the economy, certain states will not be able to
raise fees on businesses.  (5301)

The potential that states can charge a fee for administering the program
could significantly impact the economics of regulated sources.  (3757)

The CAA is very clear in section 502(b)(3)(B)(ii) that permitting
authorities may not levy title V permit fees on any regulated pollutant
for which a NAAQS, NSPS, or NESHAP has not been established (5052).  The
commenter (5052) also notes that this section also caps permit fees at
4,000 tpy of that regulated pollutant.

Given that legislative and regulatory changes are needed, the timing of
the influx of permit applications will precede their state’s ability
to collect fees and obtain additional resources.  (4238, 5135)

For these reasons, several commenters ask EPA to:

Clearly detail permitting agencies' authority to collect fees under this
program (7935), and provide such agencies with general guidance and
recommendations for fee structure (4555, 5056, 7935).  One commenter
adds that EPA should develop a range of recommended fees for the title V
program so that the states do not have to develop an independent cost
analysis (4866).

Clarify if there will be a separate fee in $/ton for GHG and criteria
pollutants.  (2493, 2505)

Modify its part 70 rules to adopt presumptive title V fees that are
tailored to the GHG program.  (4864, 5057, 5084)

Establish a presumptive minimum title V fee that includes the additional
cost related to the inclusion of GHGs in title V permits to ensure that
adequate funding is available to implement this rule.  (3278, 4989)

Monitor closely state GHG programs to ensure fees are reasonable,
appropriate and dedicated to the GHG program (4106, 4120, 4238, 4555,
4691, 5056).  Fees should not be used for general revenues by the states
(4106, 4120).

Ensure that any relief given for fees should apply to all sources
regardless of size.  (5082)

Clarify for CO2 if there will be a cap on fees per pollutant similar to
the acid rain rule.  (2493, 2505)

Response:

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

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

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

For this reason, although we are not calling for new fee demonstrations
at this time, we plan to closely monitor state title V programs during
the first two steps of the Tailoring Rule to ensure that the added
workload from incorporating GHGs into the permit program does not result
in fee shortfalls that imperil operating permit program implementation
and enforcement, whatever the basis of the states’ fee schedule.  As
described in the proposal, such fee oversight by EPA may involve fee
audits under the authority of section70.9(b)(5) to ensure that adequate
fees are collected in the aggregate to cover program costs, with
emphasis on whether the additional GHG workload is being appropriately
funded.  Also, EPA retains the ability to initiate a program revision
under section70.4(i)(3) or issue a notice of deficiency under the
process described in section70.10(b) to address fee adequacy issues,
which may be uncovered during a fee audit.  By relying on existing
oversight measures, we are ensuring that the fee requirements are met
with a minimum of disruption to existing programs at a time when they
will already be facing significant challenges related to GHG permitting.

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

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

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

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

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

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

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

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

These suggestions should not be read to indicate that EPA prefers any
particular approach, or that EPA rejects a cost per ton approach.
Rather, they illustrate that it is possible to address a revenue
shortfall without establishing a GHG per-ton fee.  While the EPA is
declining to recommend specific approaches in the preamble of this final
rule, we are committed to assisting states in implementing the fee
requirements for GHG.  Therefore, we will work with any state that
requests assistance from EPA in developing a workable fee approach.  EPA
recognizes that states need time to adopt new fee structures, collect
fees, and hire additional permitting staff, and has taken these issues
into consideration in adopting this final rule.

Chapter 9.  Comments on Statutory and Executive Order Reviews

Section XI of the proposal preamble for the Tailoring Rule sets out
EPA’s obligations under EOs 12866, 13045, 13132, 13175, 13211, and
12898; the PRA; the RFA; the UMRA; and the National Technology Transfer
and Advancement Act (NTTAA); and EPA’s conclusions and actions
performed (where necessary) to meet those obligations for the proposed
Tailoring Rule.  Comments received on EPA’s obligations under these
statutory and Executive Order (EO) reviews and EPA’s actions in
response to those obligations are presented in this Chapter.  Specific
comments related to RFA SBREFA are presented in Chapter 7, section 7.2.

9.1  General Comment

Comment:

One commenter (5052) notes that it filed comments with EPA and SBA on
December 1, 2009 to help provide data on small business implications and
asks that these comments be considered under SBREFA, UMRA, and EO 12866.
 (These comments are in the docket for this action, Docket ID No.
EPA-HQ-OAR-2009-0517-5052.8.)

Response:

We have considered all comments on the proposed action for this final
rule.

9.2  Executive Order 12866 – Regulatory Planning and Review

Comment:

Several commenters state that EPA’s failure to estimate the full costs
of the effects of its interpretation of PSD applicability in the
proposed Tailoring Rule violates EO 12866 (3513, 4095, 4862, 4870, 5052,
5058, 5062, 5083, 5110, 5140, 5181, 5183, 5278, 5279, 5317, 5343, 5886,
8015, 8513).  Some of these commenters (4095, 5052, 5083, 5181, 5317)
maintain that EO 12866 directs EPA to submit to OMB new significant
regulations under consideration by the EPA.  These commenters assert
that, in the section 202 rule, EPA failed to analyze the effect on
stationary sources in the cost benefit analysis and there is no
indication that EPA included these impacts in its submission to OMB.
According to the commenters, in EPA’s proposal for this rulemaking,
EPA has similarly failed to analyze the costs and benefits of triggering
PSD for stationary sources.  The commenters assert that without this key
information, OMB could not fully review the impacts of the proposed
rule.  According to one commenter (4095), EPA’s failure to account for
known costs that will occur as a direct result of the promulgation of
the proposed rule in conjunction with the section 202 rule violates
several applicable requirements of EO 12866, including sections 6(B)(ii)
and 6(C)(iii), which require assessments of the potential costs and
benefits of the regulatory action and “reasonably feasible
alternatives to the planned regulation, identified by the Agencies or
the public . . .” thereby violating both the APA and CAA section
307(d) because they deprive businesses and permitting authorities alike
of a meaningful opportunity to comment on the rule.

Response:

	The EPA has prepared a revised RIA assessing the benefits and costs of
the final Tailoring Rule to support this rulemaking in accordance with
EO 12866 as was done with the proposal for this rulemaking.  Similarly,
the RIA completed for this action is subject to review by an
inter-agency review panel that includes the President’s OMB as was the
case with the proposal RIA.  Further, the RIA completed for this final
rule fully assesses the known benefits and costs associated with the
tailoring rulemaking.  This final rule is one of regulatory relief from
statutory requirements in which a large number of sources of GHGs will
be relieved of the burden of title V and PSD permitting for a period of
at least six years.  This final rule will provide relief from title V
permitting to over 6 million sources of GHG in this country.  Likewise,
tens of thousands of sources potentially subject to PSD permitting
requirements for GHGs will have regulation postponed for a period of at
least 6 years.  While larger sources of GHG may still be required to
obtain title V permits or modify existing permits and to comply with PSD
requirements, these burdens result from existing statutory requirements,
not from this final Tailoring Rule.

9.3  Paperwork Reduction Act

Comment:

Some commenters (4095, 4870, 5058, 5083, 5140, 5181, 5183, 5278, 16411)
believe EPA has failed to comply with its obligations under the PRA.
Although EPA asserts that the PRA’s requirement for creation and OMB
review and approval of an ICR does not apply because of prior approval
of an ICR for the PSD program, this ignores the fact that there would be
a huge increase in the paperwork burden as a result of applying PSD and
title V permitting requirements to sources that are “major” only
because of their GHG emissions.  One commenter (5181) maintains that the
Paperwork Reduction Act (PRA) requires the EPA to seek approval from the
OMB prior to engaging in rulemaking that will involve information
collection requirements.  EPA may not “conduct or sponsor the
collection of information unless in advance of the adoption or revision
of the collection of information…  The Director [of OMB] has approved
the proposed collection of information.”  Contrary to the PRA’s
clear mandate, the EPA neglected to submit this proposed rule to OMB for
approval on the basis that “this action does not impose any new
information collection burden.”  Rather, EPA claims that “this
proposed action would significantly reduce costs incurred by sources and
permitting authorities relative to the costs that would be incurred if
EPA did not revise the rule.”  Finally, according to the commenter, it
is not an answer that EPA has previously submitted the PSD and title V
regulations to OMB under the PRA and has received approval based on
existing criteria pollutant emissions.  Those approvals were based on
the burdens created at that time, not the dramatic expansion of the
program that EPA proposes in this rulemaking (even with the lower
thresholds, doubling the number of title V subject sources).  According
to the commenter (5181), unless EPA resubmits the information collection
approval request to OMB with a proper and fully inclusive analysis, EPA
will lack authority to collect information from stationary sources for
PSD and title V GHG emissions permitting.

Response:

	As we stated in the proposal, this is a burden relief rule and as such
it does not impose any new requirements for the NSR or title V programs
that are not currently required.   For that reason, we concluded that
for purposes of this rule it was unnecessary for us to submit a new ICR
to the OMB and that the ICR contained in the existing regulations for
PSD (see, e.g., 40 CFR 52.21) and title V (see 40 CFR parts 70 and 71)
that had already been approved under the provisions of the PRA, 44
U.S.C. 3501 et seq. and was assigned OMB control number 20600003 and OMB
control number 20600336, respectively, still applies.

Nevertheless, we understand that once GHGs are regulated under the PSD
and title V programs, there might be an increase in the overall
paperwork burden for these programs.   EPA will have to assess this
possible burden during the normal course of 3-year renewal ICR process.

9.4  Regulatory Flexibility Act

For discussion of RFA issues, please see section 7.2 of this RTC.

9.5  Unfunded Mandates Reform Act

Comment:

Some commenters (4095, 4512, 4870, 5052, 5058, 5083, 5110, 5140, 5181,
5278, 5312, 10432) on the proposed rule assert that EPA has failed to
comply with the requirements of UMRA, pursuant to which EPA must assess
the effects of the Proposed Rule on state, local, and tribal governments
and the private sector.  Specifically, these commenters state that
section 202 of the UMRA requires EPA to prepare a written statement,
including a cost-benefit analysis, for proposed rules with “federal
mandates” that may result in expenditures to state, local, and tribal
governments, in the aggregate, or to the private sector, of $100 million
or more in any one year.  According to the commenters, in concluding
that “the revisions would ultimately reduce the PSD and title V
program administrative burden that would otherwise occur in the absence
of this rulemaking,” EPA completely failed to account for the billions
of dollars that permitting authorities and stationary sources will soon
be required to spend once PSD is triggered for GHGs.  One commenter
(5052) asserts that EPA failed to adequately study the proposed rules
costs and operational impacts on unfunded mandates as required by UMRA.
The commenter contends that the EPA grossly underestimated the impacts
to public utilities which are owned/operated by local governments and
also to state regulatory agencies.  One commenter (5312) alleges that
implementation of PSD and title V at the statutory thresholds would
generate permit fees at levels adequate to support those programs.  If,
however, EPA imposes a threshold of 25,000 tpy for the first 5 years,
this will wall off new sources of revenue from smaller emitters and,
essentially, impose an unfunded mandate on the various state air
agencies because the they will not be able to attract, hire, train, and
utilize the additional staff necessary to carry out the rule.
Commenters 5304 and 5524 opine that EPA needs to further evaluate the
impact on state and local permitting authorities in order to insure that
UMRA of 2005 is not violated.

Response:

The EPA has carefully considered the comments on unfunded mandates
expressed by commenters to the proposed rule.  The EPA did complete a
RIA for the final rule assessing the benefits and costs of the Tailoring
Rule, including any unfunded mandates.  As previously discussed, the
Tailoring Rule is one of regulatory relief because it increases the GHG
emissions threshold for NSR and title V permitting substantially above
otherwise statutory requirements.  As such, the EPA asserts this
Tailoring Rule does not impose unfunded mandates on any entities.  This
RIA of the final rule incorporates the extensive changes made in this
final rule, including increased threshold levels for title V and PSD
above those contained in the proposed rule.  While we also incorporated
improved estimates of the costs for sources to obtain permits and for
permitting authorities to process permits, they do not change our
conclusion that this final rule does not impose unfunded mandates on any
entities.

9.6  Executive Order 13132 – Federalism

Comment:

Some comments (4095, 5058, 5083, 5715) received on the proposed rule
assert that federalism concerns were ignored, in violation of EO No.
13132.  According to the commenters, EPA cannot maintain that the
Tailoring Rule "will not have a substantial direct effect on the states,
on the relationship between the national government and the states, or
on the distribution of power and responsibilities between various levels
of government," such that EO No. 13132 does not apply.  Some of these
commenters assert that the proposed rulemaking would require radical
changes in state laws, interjects GHGs into permit programs never once
conceived for that purpose (any more than was EPA's), requires massive
staff hiring at state agencies, and rewrites SIPs in place for years or
even decades.

Response:

As we stated previously, this is a burden relief rule and as such it
does not impose any requirements for the NSR or title V programs that
are not currently required.  In addition, this action does not interject
GHGs into the permit programs, nor does it change state laws or SIPs to
impose any new permitting requirements.  Instead, this action will
significantly reduce the burden and costs incurred by sources and
permitting authorities relative to the burden and costs that would be
incurred if EPA did not revise the permitting provisions to account for
higher applicability thresholds for GHG emissions.  While we are aware
that a few states will have to amend their SIPs to incorporate these new
thresholds if they do not implement the federal PSD and title V rules by
reference in their SIPs, EO 13132 is still not implicated by this rule
because it finalizes burden reducing thresholds that would not otherwise
apply to the PSD and title V programs.

9.7  Executive Order 13175 – Consultation and Coordination with
Indian Tribal Governments

Comment:

A commenter asserts that the proposed rule violates EO 13175 (5058).
Another commenter (8803) supports EPA’s proposed rule but requests
that tribal air grant funding be increased to reflect the air
quality-related needs of tribes across the nation, and to allow these
tribes the opportunity to implement the CAA’s PSD and title V
programs.  The commenter states that, not only are tribes eligible for
section 103 grant funding to conduct air quality monitoring, emissions
inventories, and other studies and assessments, but they may also obtain
section 105 grant funding to implement CAA regulatory programs.
According to the commenter, tribes are facing many of the same
air-related issues that neighboring state and local jurisdictions are
facing, but are significantly underfunded to address such issues.

Response:

	The Agency is aware and concerned about the resource needs for the
tribal air program and we are working to see how grant funding might be
increased in the future.  Nevertheless and for the purpose of the
permitting programs, we want to clarify that tribes that develop Tribal
Implementation Plans (TIPs) can charge for permits and tribes with
delegation or authorization would develop permit fee programs under
their authority (e.g., Navajo’s permit fee program for their delegated
title V permit program) to fund both the NSR and title V programs.  For
these reasons, there are a number of ways we would like to work to
address the funding concern, including encouraging delegation or
authorization of permitting programs and having model codes available
for tribes that want to do TIPs for NSR and title V permitting.

9.8  Executive Order 13211 – Actions That Significantly Affect Energy
Supply, Distribution, or Use

Comment:

A few commenters assert that the proposed rule violates EO 13211.
(5058, 5317)  One commenter (5317) asserts that EPA’s analysis under
EO 13211 is insufficient because it addresses only smaller sources.  The
commenter contends that EPA has not meaningfully examined the energy
implications of its proposed actions and interpretations of the CAA.
The commenters disagree with EPA’s conclusion that the imposition of
costly PSD obligations on power plants would have no impact on power
supply, distribution, or use, when those plants will have had no time to
prepare for compliance and no idea what BACT may be for GHG emissions.
Other commenters opine that the adoption of BACT for some industries
newly-subject to PSD permitting requirements for GHGs could involve
fuel-switching, and increased energy costs (e.g., due to the need for a
source to convert from coal to natural gas to meet BACT).  (4515, 4691,
5058, 5079, 5085 5123, 5124, 5179, 5607, 5729, 6491)

Response:

Again, this action is a burden relief rule and as such it does not
create any new requirements for sources in the energy supply,
distribution, or use sectors.  For the purpose of the BACT
determinations for GHGs, the long-standing top-down BACT selection
process still applies.  Under the CAA and EPA’s implementing
regulations, BACT is still an emission limitation based on the maximum
degree of emission reduction achievable through application of
production processes and available methods, systems, and techniques that
considers energy, environmental, and economic impacts.  In other words,
BACT determinations for GHGs will still have to consider energy,
environmental and economic feasibility for the various control
technologies under consideration before selecting a particular
technology as BACT for a particular source.  For that reason, what BACT
may be for GHG emissions will vary by source, and the technology that is
ultimately selected has to be one that is feasible based on the current
energy, environmental and economic impacts that the planned technology
might have.  Thus, we do not believe that this action is likely to have
a significant adverse effect on the supply, distribution, or use of
energy.

Chapter 10.  Miscellaneous Comments

This Chapter of the document contains comments that are relevant but not
specifically-germane to what was proposed for the Tailoring Rule and/or
do not fit under Chapters 2 through 9 of this document.

Comment:

The United States Department of Agriculture (USDA) should take the lead
in addressing GHG issues related to agriculture.  This commenter
provides several reasons for their position (e.g., knowledge,
agriculture regulation experience).  (5074)

Response:

The purpose of this rulemaking is to tailor the applicability criteria
that determine which stationary sources and modification projects become
subject to permitting requirements for GHG emissions under the PSD and
title V programs of the CAA.  For that reason, EPA is the lead on any
GHG issues related to the CAA.  Nevertheless, any GHG issues related to
a specific sector, such as the agriculture sector, will likely be
addressed through notice and comment rulemaking and the USDA, as well as
all other stakeholders, will be involved in this process.

Comment:

A utility representative and utility group (5113, 5714) notes that, in
the Tailoring Rule proposal preamble, EPA states that “sources covered
by the Acid Rain program have been required to monitor and report CO2
emissions pursuant to the CAA” (citing 74 FR 55300).  The commenter
(5113) points out that the monitoring and reporting requirements that
EPA refers to are required by section 821 of Public Law Number 101-549,
which is not part of the CAA.  The commenter (5113) requests that in the
final rule, when EPA refers to section 821 monitoring and reporting
requirements, it should clarify that these requirements are not part of
the CAA.

Response:

	We have not referenced the Acid Rain program monitoring provisions in
the final rule.  In addition, we have not made a final decision whether
section 821 of the CAA Amendments of 1990 is part of the CAA.  As we
stated in the final rule titled:  “Reconsideration of Interpretation
of Regulations to Determine Pollutants Covered by Clean Air Act
Permitting Programs (75 FR 17004), in the October 7, 2009 proposal
notice of this rule, EPA also solicited comment on the question of
whether section 821 of the CAA Amendments of 1990 is part of the Clean
Air Act.  EPA indicated that the Agency was inclined against continuing
to argue that section 821 was not a part of the CAA, as the Office of
Air and Radiation and Region 8 had done in briefs submitted to the EAB
in the Deseret matter.  This question bears on the determination of
whether the CO2 monitoring requirements in EPA’s Part 75 regulations
are requirements ‘‘under the Act.’’  In the proposed
reconsideration notice, EPA explained that it would be necessary to
resolve whether or not the CO2 monitoring and reporting regulations in
Part 75 were promulgated ‘‘under the Act’’ if EPA adopted the
monitoring and reporting interpretation.  EPA received public comments
on both sides of this issue, with one environmental organization
pressing EPA to drop the position that section 821 is not a part of the
CAA and several industry parties requesting that EPA affirm it.  EPA has
not yet made a final decision on this question, and it is not necessary
for the Agency to do so at this time.  Since EPA is not adopting the
monitoring and reporting interpretation, the status of section 821 is
not material to the question of whether and when CO2 is ‘‘subject to
regulation under the Act.’’  Because there are currently no controls
on CO2 emissions, the pollutant is not ‘‘subject to
regulation.’’  Given that the provisions in Part 75 do not
‘‘regulate’’ emissions of CO2, it is unnecessary to determine
whether such provisions are ‘‘under the Act’’ or not to
determine PSD applicability.  Furthermore, the promulgation of EPA’s
GHG Mandatory Reporting Rule makes this issue even less material.  In
that rule, which became effective in December 2009 and required
monitoring to begin in January of this year, EPA established monitoring
and reporting requirements for CO2 and other GHGs under sections 114 and
208 of the CAA.  Thus, there can be no dispute that monitoring and
reporting of CO2 (as well as other GHGs) is now occurring under the CAA,
regardless of the status of section 821 of the 1990 amendments.  At this
point, the section 821 issue would only become relevant if a court were
to find that the monitoring and reporting interpretation is compelled by
the CAA and a party subsequently seeks to retroactively enforce such a
finding against sources that had not obtained a PSD permit with any
limit on CO2 emissions.  If this situation were to arise, EPA will
address the section 821 issue as necessary.

Comment:

One commenter (8531) states that EPA should clarify when the FLM should
be notified of PSD permit actions.   In the discussion of General
Requirements for PSD, on page 55298, in order to align with EPA and FLM
guidance, the commenter recommends that the sentence reads: "Under PSD,
if a source's proposed project may impact a Class I area, the Federal
Land Manager (FLM) is notified and is responsible for evaluating a
source's projected impact on the AQRVs..."   The commenter states that
the FLAG 2000 Report, consistent with EPA guidance, does not use a
bright line test of 100 kilometers in determining when to notify the
FLM.   The significance of the impact to AQRVs is more important than
the distance of the source.   The commenter states that the requested
change allows for the use of the most current FLM guidance for notifying
the FLM of PSD permit actions.   In addition, the requested change
allows the FLM to carry out its affirmative responsibility of protecting
Class I area.

Response:

	We agree with the commenter when he states that the significance of the
impact to AQRVs is more important than the distance of the source to a
Class I area.  We should not have specified a distance in the preamble
of the proposed rule.  For that reason, we are amending the text in the
preamble of the final rule to state, as the commenter suggested, that:
“Under PSD, if a source's proposed project may impact a Class I area,
the FLM is notified and is responsible for evaluating a source's
projected impact on the AQRVs...."

Comment:

Several commenters (0523, 1157, 3607, 3741, 4021, 4123, 5184, 5312,
5318, 5454, 5766, 5803, 7136, 8534) requested that EPA extend the period
of public comment.

One industry commenter (0523) requested a 30 day extension to the public
comment period for the proposed PSD and title V GHG Tailoring Rule.  The
proposed rule requests comment on an array of issues, many of which
require detailed analysis and consideration.  The commenter stated that
they believe that the proposed 60 day comment deadline is wholly
inadequate to assess implications, review background documentation, and
develop comments substantiated with technical data and facts, especially
in the midst of the holiday season.  The commenter stated that until GHG
related mobile source regulations are promulgated, EPA is under no
obligation to promulgate GHG regulations for stationary sources and that
a 30 day extension would allow those who wish to comment additional time
to consider the rulemaking and develop a thoughtful response well before
the mobile source regulations are promulgated.

One manufacturing association commenter representing a group of 20
industry associations (1157) submitted, on November 18, 2009, a request
to EPA to extend until January 28, 2010, the public comment period for
the Tailoring Rule.  The commenter states that the associations should
be given the opportunity to fully evaluate the consequences of the GHG
rulemakings, develop data and analyses, and formulate appropriate
comments.  The commenter further states that the current comment period
is simply insufficient to allow the associations a fair opportunity to
do so.  The request for extension of the comment period was denied by
EPA on November 25, 2009.

On December 22, 2009, the commenter submitted another request for an
extension.  (5766)

The commenter summarizes the request in the following paragraph:

"To ensure an adequate and complete record for the GHG rulemakings, to
give commenters a fair and full opportunity to analyze the proposals
individually and collectively, and given the close timing and
inter-relatedness of the rulemakings, the Associations respectfully
request that either:  (1) EPA and NHTSA extend the public comment
deadline for the Motor Vehicle GHG Rule until December 28, 2009, and
that EPA extend the public comment deadlines for both the GHG Tailoring
Rule and the PSD Interpretive Memo Reconsideration until January 28,
2010; or alternatively (2) that EPA consider comments submitted in the
GHG Tailoring Rule to be submitted in both the PSD Interpretive Memo
Reconsideration and Motor Vehicle GHG Rule dockets, and vice-versa.  The
Associations believe that a failure to grant this reasonable request
would be arbitrary and capricious."

Response:

	As we stated in the letter of November 25, 2009; we were not able to
extend the comment period of the Tailoring Rule or any of the other
proposed actions related to GHGs due to the importance of proceeding
with these actions.  However, we did clarify that, as we have done in
the past, we would consider, to the extent possible, any comments that
arrived after the close of the comment period.

Comment:

One academic commenter (3003) suggests that EPA use the University of
California dataset of GHG emissions available either through the Climate
Registry or the CARB.  These data include GHG emissions data from
on-site stationary combustion and will soon be third-party certified and
may be useful to EPA.  If the commenter already collects these data for
other purposes, it should not be difficult for the commenter to comply
with the GHG Mandatory Reporting Rule requirements if applicable.

Response:

	We thank this commenter for their suggestion, but we believe that the
GHG data we are collecting under the GHG Mandatory Reporting Rule is the
data most useful for the Agency at this time.

Comment:

State commenter 3915 expresses concern over the proposed implementation
periods.  They state, “If EPA intends to reduce CO2 significance
levels to current PSD levels, then it should be done now, thereby
creating only one period of chaos and panic instead of two separated by
5 years.   According to the commenter, if EPA does not intend to reduce
the significance levels, then that should be made clear now or this rule
promulgation postponed until EPA is more certain on the path forward and
can justify it.”

Response:

	We disagree with this commenter.  As we have stated in the preamble of
this final Tailoring Rule, this rulemaking is necessary because without
it, PSD and title V would apply to all stationary sources that emit or
have the PTE more than 100 or 250 tons of GHGs per year beginning on
January 2, 2011.  This is the date when EPA’s recently promulgated
LDVR takes effect, imposing control requirements for the first time on
CO2 and other GHGs.  If this January 2, 2011 date were to pass without
this rule being in effect, PSD and title V requirements would apply at
the 100/250 tpy applicability levels provided under a literal reading of
the CAA as of that date.  Under these circumstances, many small sources
would be burdened by the costs of the individualized PSD control
technology requirements and permit applications that the PSD provisions,
absent streamlining, require.  Additionally, state and local permitting
authorities would be burdened by the extraordinary number of these
permit applications, which are orders of magnitude greater than the
current inventory of permits and would vastly exceed the current
administrative resources of the permitting authorities.  Permit gridlock
would result with the permitting authorities able to issue only a tiny
fraction of the permits requested.

	These impacts – the costs to sources and administrative burdens to
permitting authorities – that would result from application of the
PSD and title V programs for GHG emissions at the statutory levels as of
January 2, 2011 are so severe that they bring into play the judicial
doctrines of “absurd results” and “administrative necessity.”
The “absurd results” doctrine authorizes departure from a literal
application of statutory provisions if such an application would produce
a result that is inconsistent with, and especially a result that
undermines congressional intent.  The “administrative necessity”
doctrine authorizes an agency to depart from statutory requirements if
the agency can demonstrate that those requirements, as written, are
impossible to administer.  The departure from the statutory provisions
must be no greater than necessary to effectuate congressional intent, in
the case of the “absurd results” doctrine, and administrative
imperatives, in the case of the “administrative necessity” doctrine.

	We have determined, through analysis of burden and emissions data as
well as consideration of extensive public comment, that the costs to
sources and administrative burdens to permitting authorities that would
result from application of the PSD and title V programs for GHG
emissions at the statutory levels as of January 2, 2011 should be
considered “absurd results” that are contrary to congressional
intent for each program.  Similarly, the administrative burdens are so
great as to render compliance with the literal provisions of the PSD and
title V permitting programs administratively impossible under the
“administrative necessity” doctrine.  The phase-in approach that we
promulgate with this rulemaking is consistent with congressional intent
and administrative imperatives because it will implement the statute as
closely to the literally prescribed levels as possible and as soon as
possible, while still assuring that permitting authorities and affected
sources can manage their permitting requirements.

	In particular, the first two steps that we promulgate in this rule,
which take effect on January 2, 2011 and July 1, 2011, are consistent
with congressional intent and administrative imperatives because they
constitute the most that permitting authorities can reasonably be
expected to do by those times.  Similarly, the 50,000 tpy floor that we
promulgate through at least April 30, 2016 is reasonable because the
information we have available now shows that it constitutes the most
that permitting authorities can reasonably be expected to do by that
date.  Finally, the study and two additional rulemakings – to take
effect by July 1, 2013 and April 30, 2016 -- to which we commit in this
rule are also consistent with congressional intent and administrative
imperatives because they establish a track for acquiring additional
information and for taking further steps to apply PSD and title V more
closely to the literal statutory levels.  Although we cannot say whether
or when we would ultimately apply the PSD and title V programs at the
literal statutory thresholds, we can say that we intend to apply them as
closely to those levels as is consistent with congressional intent and
administrative imperatives, consistent with the “absurd results” and
“administrative necessity” doctrines.

Comment:

One commenter asserts that to the extent that the rule works a
discriminatory hardship against Midwestern coal-burning sources, it also
imposes an economic hardship against the lower income populations in
that region.  The commenter believes that by using an environmental
regulation to selectively create an economic harm, EPA is raising
serious issues of environmental justice.  (5312)

Response:

	As we stated in the previous chapter, this is a burden relief rule and
as such it does not impose any requirements for the NSR or title V
programs that are not currently required.  In addition, this action does
not interject GHGs into the permit programs, nor does it change state
laws or SIPs to impose any new permitting requirements.  Instead, this
action will significantly reduce the burden and costs incurred by
sources and permitting authorities relative to the burden and costs that
would be incurred if EPA did not revise the permitting provisions to
account for higher applicability thresholds for GHG emissions.  For
these reasons, we disagree with this commenter when he states that the
rule might work a discriminatory hardship against Midwestern
coal-burning sources.

 Note, that at least one petition for reconsideration on the
endangerment/contribution findings raises the same arguments related to
the timing of decisions and absurd results.  As noted before, EPA is
carefully evaluating all the pending petitions for reconsideration.

 We do not believe that this term is ambiguous with respect to the need
to cover GHG sources under either the PSD or title V program, only with
respect to what sources of GHG should be covered under the circumstances
presented here.

 While it is the case that the section 111 listing was based in part on
ozone impacts from the VOCs emitted by landfills, VOCs were already
regulated under the CAA.  This is because the ozone precursors found in
landfill gases are already covered by the regulated NSR pollutant VOC.
Therefore, EPA's designation of the problem as the source specific
emissions from landfills did not result in other sources of VOCs, which
impacted ozone generally, to be unregulated. However, if we were to
define the GHG air pollutant as only those gases emitted by LDVs, as the
commenter suggests, this would result in other sources of GHGs being
unregulated.

 See 40 CFR 86.1818-12(a)  Greenhouse gas emission standards for
light-duty vehicles, light-duty trucks, and medium-duty passenger
vehicles.  (“Applicability.  This section contains standards and other
regulations applicable to the emission of the air pollutant defined as
the aggregate group of six greenhouse gases: carbon dioxide, nitrous
oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.”).

 We note that our approach does not entirely avoid the possibility that
a GWP change can occur while a permit is in progress although it will
ensure advance notice of such a change.  In the event that we propose a
change to GWP values, we will work with permitting authorities as
necessary to provide guidance to sources on transitional issues.

 EPA does not believe that section 609(c) of the RFA offers agencies a
chance to circumvent the panel process where they do not intend to
certify that the rule does not have a SISNOSE, and EPA remains committed
to holding SBAR panels where contemplated by the RFA.

 We also think that this approach better clarifies our long standing
practice of interpreting open-ended SIP regulations to automatically
adjust for changes in the regulatory status of an air pollutant, because
it appropriately assures that the Tailoring Rule applies to both the
definition of “major stationary source” and “regulated NSR
pollutant.”

 Memorandum from Lydia N. Wegman, Deputy Director, Office of Air Quality
Planning and Standards, U.S. EPA, to Air Division Directors,
“Definition of Regulated Air Pollutant for Purposes of Title V”
(April 26, 1993) (Wegman Memo).

 See 549 U.S. 497, 533 (2007).

 See Commonwealth of Mass. v EPA, No. 03-1361 (D.C. Cir. Jun. 26, 2008)

	 Note, that at least one petition for reconsideration on the
endangerment/contribution findings raises the same arguments related to
the timing of decisions and absurd results.  As noted before, EPA is
carefully evaluating all the pending petitions for reconsideration.

	 On June 24, 2005, the United States Court of Appeals for the District
of Columbia Circuit vacated the portions of the 2002 and 1992 NSR rules
that pertained to PCP, among other provisions.  In response to this
Court action, on June 5, 2007, EPA removed these provisions from the NSR
regulations.  (See 72 FR 32526).  These provisions were added as part
of EPA’s NSR improvement rule that was issued on December 31, 2002.

	 See page 55298 of the October 27, 2009 proposed Tailoring Rule.

 The CAAAC is a senior-level policy committee established in 1990 to
advise the U.S. EPA on issues related to implementing the CAA Amendments
of 1990.  The committee is chartered under the Federal Advisory
Committee Act and has been renewed every 2 years since its creation.
The membership is approximately 40 members and experts representing
state and local government, environmental and public interest groups,
academic institutions, unions, trade associations, utilities, industry,
and other experts.  The CAAAC meets 3 times a year, normally in
Washington, D.C.  It provides advice and counsel to EPA on a variety of
important air quality policy issues.  The committee has formed several
subcommittees to provide more detailed discussion and advice on many
technical issues.

	 The fee provisions are set forth in CAA section 502(b)(3) and in our
regulations at 40 CFR 70.9 and 71.9.

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