"potential to emit" to reflect more closely a source's actual operation
and developing a program of general permits could streamline the
administration of title V permits.

74 FR 55,315 col. 2-3.

	At proposal we stated that we would, and we still commit to, vigorously
pursue development of these streamlining measures, and, as indicated in
our discussion of streamlining methods in section V.E.1 and in response
to comments, we have already begun developing those measures.  For
example, as described elsewhere, we have done much work – both with
stakeholders and in-house -- to begin to develop recommendations for
what controls would qualify as BACT for various industries.  This work
is important as a foundation for developing presumptive BACT, which is a
potentially quite efficient streamlining measure.

	However, it is not possible for us or the State state and local
permitting authorities to develop and implement streamlining techniques
by the time that PSD and title V are triggered for sources emitting GHGs
– January 2, 2011 -- or shortly thereafter.  Developing streamlining
methods would entail acquiring more information about the affected
industry, may entail rulemaking, and would likely entail some type of
public review of proposals for streamlining even if not done through
rulemaking.  As discussed in section VI.E, we do not expect that we
could complete all those steps for meaningful streamlining measures
within two 2 years.

b.  Second stepStep of the “administrative necessity” analysis:
demonstration of administrative impossibility.

Administrative Necessity” Analysis:  Demonstration of Administrative
Impossibility

	With no streamlining measures available at the time that PSD and title
V would apply to sources of GHGs or shortly thereafter, under the second
step of the “administrative necessity” analysis, we must determine
whether implementation of the statutory requirements at that time would
be administratively impossible for the permitting authorities.  We are
mindful that the D.C. Circuit has cautioned that this showing is a high
hurdle, and that in none of the “administrative necessity” decisions
was an administrative agency successful in making such a showing, as we
recognized in the proposal.  See 74 Fed. Reg. at __FR 55317.

	Even so, we believe there is no question that a literal application of
the PSD and title V programs to GHG sources as of January 2, 2011 would
be flatly impossible for the State state and local permitting
authorities to administer for at least an initial period of time.   The
key facts have been recounted abovepreviously, and no more than a brief
recitation is necessary here.  Although the PSD and title V programs are
best seen as a joint program, it is useful to separate them to show how
stark the administrative problems are:  On the PSD side, annual permit
applications would increase by over 300-fold, from 280 to 80almost
82,000; costs to the permitting authorities would increase more than
100-fold, from $12 million to $1.5 billion; and the permitting
authorities would need to hire, train, and manage 9,772 FTEs . .  For
title V, total permit applications would increase by over 400-fold, from
14,700 to 6.1 million; costs to the permitting authorities would
increase by about the same amount, from $62 million to $21 billion; and
the permitting authorities would need to hire, train, and manage 229,118
FTEs.

	We have elaborated upon these burdens elsewhere in today’s this
notice.  It is clear that they justify our conclusion that they They
bespeak an impossible administrative task.  It is not hyperbole to say
that if these administrative responsibilities are not considered
impossible within the meaning of the “administrative necessity”
doctrine, then it is difficult to imagine what would be considered
impossible.

c.  Third step of the “administrative necessity” analysis:
tailoring

Step of the “Administrative Necessity” Analysis:  Tailoring

	Under the third step of the “administrative necessity” analysis, we
must demonstrate that the steps we intend to take towards implementation
of the statutory requirements are the most that can be done during the
indicated time frames, in light of administrative resources.  In this
manner, we adhere most closely to the statutory requirements.  See 74 FR
___55318.  This amounts to establishing a schedule for phasing in PSD
and title V applicability to GHG sources.

	Because this step is based on the administrative resources of the
permitting authorities, our analysis is similar, and leads to the same
conclusions, as we described underpreviously concerning the “absurd
results” basis.  That is, we believe that our tailoring approach –
including Step 1, to be implemented as of January 2, 2011; Step 2, to be
implemented as of July 1, 2011; the additional rulemaking that we commit
to finalize by July 1, 2012, and that will address further threshold
reductions as a Step 3; the study and subsequent rulemaking to address
smaller sources by April 30, 2016; and the determination not to lower
the threshold below 50,000/50,000 tpy CO2e before April 30, 2016 at the
earliest -  is the most that we can do to expand the PSD and title V
programs, based on administrative resources and the information we
currently have about the prospects for streamlining and increasing
permitting resources.

10. “Step-at-a-time” basis for tailoring rule 	As noted previously,
at some point in the process of additional rulemaking, we may conclude
under the “absurd results” doctrine that we will not apply PSD or
title V to GHG sources below a certain size level.  The same conclusion
may be supportable under the “administrative necessity” doctrine if
we decide, based on the information available to us, that even with all
of the streamlining that we are able to accomplish and even with a
significant expansion of permitting resources, it may not be
administratively feasible to implement PSD or title V to sources below
that level.  See Alabama Power v. Costle, 636 F.2d at 358
(acknowledging, in discussing the “administrative necessity”
doctrine, that “[c]ategorical exemptions from the clear commands of a
regulatory statute [are] sometimes permitted,” although emphasizing
that such exemptions “are not favored”).

	In addition, as noted above, in a subsequent rulemaking, we may
conclude that title V should not apply to GHG sources with “empty
permits,” under the “absurd results” doctrine.  The basis for this
conclusion could be a determination that (1) although the applicability
provisions apply by their terms to sources on the basis of their
emissions, and without regard to whether the sources would hold “empty
permits”, those provisions cannot be read literally under the
“absurd results” doctrine; and (2) it is not clear whether Congress
intended that title V apply to such sources, and EPA has reasonably
determined, under Chevron Step 2, that title V does not.  If we come to
that conclusion, then, at that point in time, the “administrative
necessity” doctrine would remain relevant for title V purposes only if
is necessary, for administrative reasons, to phase in the application of
title V to GHG sources that have applicable requirements, and that
therefore do not have “empty permits.”  This is because the
“administrative necessity” doctrine is relevant only when a
statutory directive, read literally, imposes impossible administrative
obligations, and Congress may be presumed to have intended that the
directive be administrable.  The “administrative necessity” doctrine
would not come into play if it is concluded either that under the
“absurd results” doctrine Congress did not intend the statutory
directive or that, under that doctrine, Congress’s intent was not
clear and EPA reasonably decided that the directive does not apply.

10. “One-Step-at-a-Time” Basis for Tailoring Rule

	In addition to the “absurd results” and “administrative
necessity” doctrines, the “one-step-at-a-time” judicial doctrine,
within the Chevron framework, supports at least part of EPA’s
tailoring rule.  Tailoring Rule.  The caselaw under this doctrine,
described abovepreviously, indicates that courtsthe doctrine justifies
an agency’s step-by-step approach under the following circumstances or
conditions: (1) the agency’s ability to comply with a statutory
directive depends on facts, policies, or future events that are
uncertain; (2) the agency has estimated the extent of its remaining
obligation; (3) the agency’s incremental actions are structured in a
manner that is reasonable in light of the uncertainties; and (4) the
agency is on track to full compliance with the statutory requirements.
EPA’s Tailoring Rule fulfills each of those four.

	First, as the D.C. Circuit stated in National Association of
Broadcaster v. FCC, 740 F.2d 1190, 1210 (D.C. Cir. 1984) (“National
Association of Broadcasters”), incremental agency action is most
readily justifiable “against a shifting background in which facts,
predictions, and policies are in flux and in which an agency would be
paralyzed if all the necessary answers had to be in before any action at
all could be taken.”  Those circumstances are present here, and so is
that fact that the task at hand is extraordinarily demanding.  As
discussed previously, EPA and the permitting authorities’ progress in
implementing the PSD and title V programs for GHG sources will depend in
large measure on the development of streamlining measures and increases
in permitting authorities’ resources, and those things carry some
uncertainty and in any event, under the best of circumstances, cannot
have much impact for at least several years.  It will take EPA that long
to develop streamlining measures, and it will take permitting
authorities that long to begin to raise money and hire and train FTEs.

	Second, as the Court stated in National Association of Broadcasters,
“the agency [should] ma[k]e some estimation, based upon evolving
economic and technological conditions, as to the nature and magnitude of
the problem it will have to confront when it comes to [undertake the
remaining steps]” and that estimation must be “plausible and flow
from the factual record compiled.”  Id. at 1210.  Here, EPA has done
this by estimating the number of PSD and title V permits and the costs
of issuing them, and has provided as much information as possible about
the development of streamlining methods and permitting authority
resources.

	Third, again as the Court stated in National Association of
Broadcasters, it must be “reasonable, in the context of the decisions
made in the proceeding under review, for the agency to have deferred the
issue to the future.  With respect to that question, postponement will
be most easily justified when an agency acts against a background of
rapid technical and social change and when the agency’s initial
decision as a practical matter is reversible should the future
proceedings yield drastically unexpected results.”  Id. at 1211.
Here, our tailoring approach is reasonable in light of changes in
permitting authority capacity that may occur with the development of
streamlining methods and increased resources.  In addition, the first
two steps that EPA promulgates today are reasonable initial steps that
we expect to build on by lowering thresholds, as appropriate, in the
future.  We have no reason to suspect that we may need to reverse either
of the first two steps.  Having received and analyzed extensive comment
on the number of permitting actions to expect and on permitting
authority resources, we consider it unlikely that we would need to
establish a higher threshold level than what we have established in
Steps 1 and 2.  In addition, if we were to adopt an “empty permits”
approach for title V, we would not need to reverse either of Steps 1 and
2, as explained above.

Finally, as the D.C. Circuit stated in Grand Canyon Air Tour Coalition
v. F.A.A., 154 F.3d 455, 477-78 (D.C. Cir. 1998), the Courts will accept
an initial step towards full compliance with a statutory mandate, as
long as the agency is headed towards full compliance, and we believe
that the doctrine is applicable here.  EPA intends to require full
compliance with the CAA applicability provisions of the PSD and title V
programs, but we believe that in the case of GHG-emitting sources, by
application of the “absurd results” doctrine or the
“administrative necessity” doctrine, full compliance with the
applicability provisions does not necessarily mean full

compliance with the literal terms of those provisions.  Rather, as we
have explained elsewhere, in the case of GHG sources, full compliance
may mean compliance with higher levels that are consistent with
congressional intent, under the “absurd results” doctrine, or that
are within the reach of permitting authorities in light of their
administrative constraints, under the “administrative necessity”
doctrine.  Today’s This rulemaking constitutes a package of initial
steps towards that full compliance, and, seen in that light, is
supported by the “one-step-at-a-time” doctrine.

	Even if the doctrine were found to apply only when an agency is
committed to fully implementing statutory requirements according to
their literal terms, we believe that the steps we promulgate today in
this notice would be considered valid under the one-step-at-a-time
doctrine.  This is because even if we are incorrect about the
applicability of the “absurd results” and “administrative
necessity” doctrines, so that GHG sources are required to comply with
the literal terms of the PSD and title V applicability provisions, the
“one-step-at-a-time” doctrine would allow PSD and title V
applicability to be phased in, and the first two steps we promulgate
todayin this notice would be upheld as reasonable initial steps toward
full compliance with the literal terms of the CAA.  As we have described
elsewhere, there is little question but that sources and permitting
authorities cannot reasonably be expected to comply with or implement
PSD and title V applicability requirements in the near term – by
January 2, 2011 and July 1, 2011 -- except to the limited extent
described under stepsSteps 1 and 2.  Nor is applicability of the PSD and
title V requirements at levels below 50,000 tpy CO2e reasonable before
six6 years from promulgation of today’s this rule, as discussed
elsewhere.  If further steps resulting in full compliance with the
literal terms of the applicability provisions of PSD and title V were
required, it would be reasonable for those steps to occur in the future,
as part of the rulemaking to be completed by the sixth year after
promulgation, to which EPA commits itself as part of today’sthis
action, or as part of subsequent actions.  See id.Grand Canyon Air Tour,
891 F.2d at 476-77 (upholding agency action as a step towards full
compliance with statutory mandate when the agency expected full
compliance to occur some 20 years after the deadline in the statute).

C.  Mechanisms for implementing and adopting the tailoring approach

Implementing and Adopting the Tailoring Approach

In this section, we discuss three issues related to adoption of the
tailoring approach within our regulations and by permitting agencies.
The first is the regulatory mechanism for implementing the tailoring
approach, and our rationale for  – that is, the specific way we are
revising the PSD and title V applicability provisions to incorporate the
tailoring approach – and our rationale.  The second is the process by
which state or local permitting authorities may incorporate the
tailoring approach into their PSD SIP and title V permit programs.
Finally, we discuss our reasons for delaying action on our
limitedproposal to limit approval of both SIP-approved PSD programs and
titletitle V programs, and we request furthercertain information from
Statesstates on both of their programs and their actions in response to
this rule.

In brief, we proposed to exempt sources emitting GHGs below certain
threshold levels from the definition of the regulatory terms “major
stationary source” and “major modification” in PSD programs and
the definition of the regulatory term “major source” in title V
programs.  We further proposed to effectuate this change in SIP-approved
PSD programs (as included in SIPs) and Part EPA-approved part 70 title V
programs by limiting our prior approval of those programs to the revised
applicability thresholds for GHGs.  While these These changes would have
the effect of putting the lower thresholdshigher thresholds adopted
under the Tailoring Rule in place in states PSD and title V programs as
a matter of federal law.  However, state commenters expressed concern
that they would not be able to adopt the tailoring ruleTailoring Rule
under state laws on an expeditious basis.  To address this, our final
action differs from our proposed rule in the way we incorporate the
limitations promulgated in this tailoring ruleTailoring Rule into the
“major stationary source,” “major modification” and “major
source” definitions.  This approach relies on further defining the
term “subject to regulation” and although this approach is not
substantively different in effect from the proposed rule, but this
mechanism it will facilitate more rapid adoption and implementation of
the limitations in this final rule Tailoring Rule by states through
interpretation of language in existing state regulations.  We believe
these differences are a logical outgrowth of our proposed rule.  We are
also delaying action on our proposed limited approval of SIPEPA-approved
PSDPSD programs and Partpart 70 title programs to determine how each
State state will implement the final rules.

1.  PSD Approach:  Background and Proposal

Under CAA §section 165(a), no “major emitting facility” may
construct or modify unless it receives a preconstruction permit that
meets the requirements of the PSD program.  CAA §section 169(1) defines
a major emitting facility as “any … source[]” in one of 28
specified source categories that “emit[s], or ha[s] the potential to
emit, one hundred tons per year or more of any air pollutant;” or
“any other source with the potential to emit two hundred and fifty
tons per year or more of any air pollutant.”  EPA’s regulations
replace the term “major emitting facility” with the term “major
stationary source,” and defines the term as “[a]ny of … [28 types
of] stationary sources of air pollutants which emits, or has the
potential to emit, 100 tons per year or more of any regulated NSR
pollutant” or “any stationary source which emits, or has the
potential to emit 250 tons per year or more of a regulated NSR
pollutant.”  40 CFR 51.166(b)(1)(i)(a)-(b).  The term “regulated NSR
pollutant” is defined to include, among other things, “any … air
pollutant that otherwise is subject to regulation under the Clean Air
Act.”  40 CFR 51.166(b)(50).  Note that the regulatory definition in
effect narrowsinterprets the statutory definition more narrowly to read
“one hundred tons per year [or more” or “two hundred and fifty]
tons per year or more of any air pollutant subject to regulation under
the Clean Air Act” (emphasis added).

Similarly, under the statute, a modification occurs if there is a
physical change or change in the method of operation “which increases
the amount of any air pollutant emitted . . .” Section….” CAA
section 165(a), 169(2)(c), and 111(a)(4).  As with the major stationary
source definition, we have limited coverage of the modification
provision to physical changes or changes in the method of operation that
result in a significant increase, and a significant net emissions
increase in emissions of a “regulated NSR pollutant.”  40 CFR
51.166(b)(2)(i).

Our proposed rule revised the definition of “major stationary source
to 1) exempt GHG from the regulated NSR pollutants that, if emitted by a
source in the 100 or 250 tpy quantities, would cause the source to
qualify as a “major stationary source;”,” and 2) add a specific
threshold at which a source that emits a specified quantity of GHGs (at
proposal, that quantity was 25,000 tpy CO2e) would qualify as a “major
stationary source.”  74 FR 55,351, proposed 40 CFR 51.166(b)(1)(i)(a),
(b), and (d).  We also proposed a significance threshold, which is the
amount of an increase needed to trigger PSD for a modifications
ormodification or to require BACT for a new source, of at a level
between 10,000 and 25,000 tpy CO2e.  74 FR 55351; 40 C.F.R
51.166(b)(23)(i).

Additionally, we recognized that it may take some time before
Statesstates could change their SIP-approved PSD programs and that as a
result, absent additional action on our part, GHG-emitting sources would
remain subject to the 100 or 250 tpy thresholds, and subject to a zero
significance threshold for major modifications as a matter of
Federalfederal law.  To address this issue, we proposed to narrow our
previous approval of those SIPs, under the authority of the
Administrative Procedures Act.  The effect of our proposal would be that
EPA would have approved the SIP PSD programs only to the extent they
apply PSD and requirements to GHG sources at or above the thresholds
established in the Tailoring Rule (which, generally, were 25,000 tpy
CO2e), and EPA would have taken no action on the SIP PSD programs to the
extent they apply PSD requirements to GHG sources below that threshold.
We relied on the authority of the APA and the general authority of CAA
section 301. and, in the alternative, on the error correction mechanism
under CAA section 110(k)(6).  Our limited approval would revise existing
SIPEPA-approved SIP PSD programs to authorize permitting under the Clean
Air ActCAA only for GHG sources at the appropriate levels.

In response to our proposed approach, we received numerous comments from
Statestate and local permitting agencies expressing significant concern.
 They observed that our proposed approach in the Tailoring Rule could
meet its objectives to avoid applying PSD requirements to small sources
under federal law, but would not succeed in avoiding the application of
PSD requirements to those small sources under state law.  The commenters
explained that, although EPA was changing federal PSD applicability
thresholds; for GHG-emitting sources to incorporate the tailoring
approach, and limiting the scope EPA approval of SIPs consistent with
these thresholds, the state rules containing the originally- approved
SIP thresholds would continue to apply as a matter of state law.  As a
result, states would be faced with the same administrative difficulties
recognized in the proposed rule in implementing existing State law.
Rather, as commenters explained, for the most part, the laws and
regulations states adopt to implement federal PSD programs mirror
EPA’s regulations, so that the state laws, in addition to the
federally approved SIPs, apply PSD to sources that emit air pollutants
subject to regulation at the 100/250 tpy threshold.  Commenters reasoned
that, until the Statesstates can change their state laws, the 100/250
tpy thresholds will continue to apply as a matter of state law, even
though the higher thresholds apply as a matter of federal law.
Importantly, these commenters emphasized that, their Statestate process
requires that they promulgate a rulemaking, or in some cases, a
legislative change, to incorporate the higher thresholds for GHG sources
in their SIPs only through a rulemaking or, in some cases, through a
legislative change..  These processes would require many months and in
some cases as long as two2 years.  As a result, sources that emit GHGs
below the federally established levels in the final rule, but at above
the 100/250 tpy levels in state laws and rules, would still be required
to obtain PSD permits under state law.  As a result, states, in
attempting to implement state permitting requirements, would be faced
with the same administrative difficulties that EPA recognized in the
proposed rule as impossible.  Commenters emphasized that this situation
was untenable.

In addition to the Statestate comments just described, we received
comments that took issue with our description of our legal mechanism as
an application ofview that we were in effect revising the numerical
thresholds for PSD applicability as the legal mechanism for the
tailoring approach.  They asserted that in fact, our mechanism consisted
of interpreting the term “any source” to exclude small GHG-emitting
sources.  Other commenters objected to our proposed mechanism of
narrowing our previous SIP approval, arguing that this mechanism was
without legal basis.

2.  Rationale for Our Final Approach to Implementing PSD

In response to these concerns, we are adding another mechanism to
implement the tailoring approach for PSD by interpreting the phrase
“subject to regulation” , and that is usedto adopt a definition,
within our PSD regulations, the phrase “subject to regulation,” as
found within the phrase “any regulated NSR pollutant ” that,”
which, in turn, is part of the definitions of “major stationary
source”  and “major modification.”  To implement this mechanism,
we are codifying an interpretation ofdefining the phrase “subject to
regulation” so that the GHGs emitted by sources that fall below the
thresholds or scope established in Steps 1 and 2  are not treated as
“subject to regulation,” and therefore do not trigger PSD for the
sources that emit them.  As discussed in section V.B.3., the term
“subject to regulation” is one of four terms that should be
considered not to apply literally in the case of GHG sources.

To understand this approach, it is useful to return to the definition of
“major stationary source,” which, again, is central to PSD
applicability.  The definition, quoted abovepreviously, employs the term
“regulated NSR pollutant,” which is a defined term.  The definition
incorporates many other elements as well (e.g., the 100/250 threshold
requirements), but for convenience, we shorthandquote it as follows:  a
“major stationary source” is “[a]ny … source[] of air
pollutants, which emits, or has the potential to emit, [depending on the
source category, either] 100 [or 250] tons per year or more of any air
pollutant that is subject to regulation under the Clean Air Act.”   A
similar construct exists for the “major modification” definition.
Returning to our shorthand above and applying40 CFR
51.166(b)(1)(i)(a)-(b).  Applying our definition of “subject to
regulation” to exclude GHG sources that emit below specified
thresholds, the definition wouldmay now readbe paraphrased as follows:
A “major stationary source” is “[a]ny … any source[] of air
pollutants, which emits, or has the potential to emit, [depending on the
source category, either] 100 [or 250] tons per year  tpy or more of any
air pollutant subject to regulation under the Clean Air Act,  [butCAA,
except that the source’s GHGs are not considered to be subject to
regulation under the Clean Air Act if emitted by sources below the
thresholds established in steps 1 and 2 .]”    Similarly, major
modification now means “any physical change or change in the method of
operation that would result in:  a significant emissions increase . . .
. of a regulated NSR pollutant . . but GHG are not subject to regulation
CAA only the extent indicated under the Clean Air Act if emitted by
sources below the thresholds established in steps 1 and 2 and result in
an increase less than the amounts specified therein.”

Steps 1 and 2 of the Tailoring Rule, e.g., for Step 2, only if the
source’s GHG emissions exceed the threshold established in Step 2.  We
adopt the same approach for the definition of the regulatory term
“major modification.”

Although EPA is codifyingrevising its interpretation of “regulations
to apply the phrase subject to regulation”,  in this manner, we have
been advised that states may be able to follow EPA’sadopt our approach
to tailoring for GHG permitting without having to undertake a rulemaking
action to revise their state regulations that are included in their SIPs
or without requiring an act of the State state legislature.  EPA
believes this can be accomplished through interpretation by the Instead,
it is our understanding that states ifmay adopt our approach by
interpreting the term “subject to regulation” reflected in their
regulations to have the same meaning that we are assigning to that term
in our regulations in this rulemaking.  This is particularly –
although not exclusively - the case in a state that has taken the
position, or determines now, that the state’s definition of “subject
to regulation,” or, more broadly, “regulated NSR pollutant” and/or
“major stationary source” or “major modification, is intended to
be interpreted in a way that tracks the meanings that EPA has assigned
to these phrases.  As a result, these States Such states can adopt the
meaning of “subject to regulation established” that we establish in
this rule by EPA and apply it by interpretation before January 2, 2011,
and thereby avoid the situation in which, as a matter of Statestate law,
GHG-emitting sources above the 100 or 250 tpy thresholds become subject
to PSD by that date.  We believe that States can adopt this regulatory
approach through an interpretation, rather than by a rulemaking action
or state legislative process, because we view the phrase “regulated
NSR pollutant” as open-ended, and therefore subject to interpretation,
as the The following discussion demonstrates.

explains our basis for concluding that states may apply EPA’s approach
under existing regulations that use the term “subject to
regulation.”  On December 18, 2008, EPA issued an interpretive
memorandum the Interpretive Memo, establishing EPA’s interpretation of
the definition “regulated NSR pollutant” found at 40 C.F.R.FR
52.21(b)(50)).. Id. ).  EPA intended this memo memorandum to resolve any
ambiguity in subpart (visubparagraph (iv) of this definition, which
includes “any pollutant that otherwise is subject to regulation under
the Act.”  Specifically, the memomemorandum stated that EPA will
interpret the definition of “regulated NSR pollutant” to exclude
pollutants for which EPA regulations only require monitoring or
reporting but to include each pollutant pollutants subject to either a
provision in the Clean Air Act CAA or regulation adopted by EPA under
the Clean Air ActCAA that requires actual control of emissions of that
pollutant.

	After reconsidering this interpretation through a formal notice -and
-comment process, EPA refined its interpretation to establish that the
PSD permitting requirements will not apply to a newly regulated
pollutant until a regulatory requirement to control emissions of that
pollutant “takes effect.”  75 FR 17704.  Importantly, as stated
above, since previously, because the term “regulated NSR pollutant”
is embedded within the definition of “major stationary source,” this
interpretation effectively defines which major stationary sources are
subject to PSD permitting.  As a result, for example, EPA explained that
PSD and title V permitting requirements for GHGs will not apply to GHGs
until at least January 2, 2011 -, following the anticipated promulgation
of EPA regulations requiring control of GHG emissions under Titletitle
II of the CAA.  Id.  Nonetheless, because this final rule tailors the
application of GHG permitting, GHG emissions at certain thresholds will
not be “subject to regulation” as we interpret that term within the
“regulated NSR pollutant” definition.

	In the Response to CommentRTC document for EPA’s reconsideration of
the PSD interpretative memorandum, we stated that,

Absent a unique requirement of state law, EPA believes that state laws
that use the same language that is contained in EPA’s PSD program
regulations at 52.21(b)(50) and 51.166(b)(50) are sufficiently
open-ended to incorporate greenhouse gases as a regulated NSR pollutant
at the appropriate time consistent with EPA’s interpretation of these
regulations (cite docket #emphasis added).  (Docket ID No.
EPA-HQ-OAR-2009-0597-0128).

	Historically

Because the state regulations that include EPA’s definition of the
term “subject to regulation” in the reconsideration of the
Interpretive Memo are “sufficiently open-ended to incorporate
greenhouse gases as a regulated pollutant,” those state regulations
are also sufficiently open-ended to incorporate the further refinement
to the meaning of the phrase “subject to regulation” that we make in
this rulemaking.

	By the same token, EPA has historically interpreted certain state
SIP-approved-SIP programs as sufficiently open-ended such that the rules
provide for the “automatic assumption for the responsibility for
review” of new pollutants before the general deadline for states to
revise their PSD programs.  See, e.g.., 52 FR at 24682.  Conversely, we
have also read federal rules and state rules approved in SIPs to provide
for the automatic removal of a pollutant when such pollutant is no
longer “subject to regulation.”  For example, the 1990 CAA
amendmentsAmendments exempted hazardous air pollutants HAPs listed in
Sectionsection 112(b)(1) from the PSD requirements.  See CAA
Sectionsection 112(b)(6).  Following passage of the amendments, EPA
issued “New Source Review (NSR) Program Transitional Guidance“,,,”
a memorandum from John S. Seitz, Director, Office of Air Quality
Planning and Standards to Regional Air Division Directors on March 11,
1991.  In that guidance, EPA interpreted its PSD regulations to
automatically cease to apply to listed HAPs (with some noted
exceptions.), and implicitly stated that a State state with an
open-ended SIP-approved PSD rule could also take the position that its
SIP-approved rule automatically ceaseceased to regulate HAPs.

	After reviewing these past practices in the PSD permitting program, and
EPA’s prior statements regarding pollutants subject to the PSD
program, we conclude that Statestates with SIP-approved rules that
contain the same language as used in the 40 C.F.R. SectionFR
52.21(b)(50) or 40 C.F.R. SectionFR 51.166(b)(49), or who that otherwise
have sufficiently open-ended NSR PSD regulations, would be able to
implement our tailoring rule approach to permitting of GHG sources
without the need for a SIP revision if they establish that the state
intended to apply the same meaning as EPA when it incorporated the term
“subject to regulation” in its PSD program regulationsTailoring Rule
approach to permitting by interpreting their regulations, and without
needing to promulgate a regulation or seek state legislative action.
This is particularly – although not exclusively - the case for states
that take the position that they intend their rules to apply in the same
manner as EPA's counterpart rules.  If states adopt this reading of
their regulations, GHG sources falling below the specified cutoffs would
not be emitting pollutants “subject to regulation” within the
definition of “regulated NSR pollutant” and therefore would not be
subject to PSD permitting as a major stationary source or for making a
major modification.

During our consideration of this action, we participated in
teleconferences with severalone local and six state agency permitting
authorities (6 states and 1 local agency) to discuss this issue of
whether they could implement the proposed rule without the need for
state law or regulations changes or a revision of the provisions of
state law that are a part of the SIP. [Placeholder: docket # for meeting
summary] We specifically discussed whether defining the phrase
“subject to regulation”  would better facilitate state incorporation
of the limitations in this final rule.  The state and local agencies
participating in the calls generally agreed that defining the phrase
“subject to regulation” that is used within the definition of
“regulated NSR pollutant” would, compared to our proposed approach,
better facilitate state  incorporation of the limitations in the final
rule in states with regulations that mirror the existing  federal rules,
or in states whose rules are otherwise sufficiently open-ended to
incorporate the limitations in the final rule by interpretation.
Participants from each agency also indicated that it is likely that
their rules were sufficiently open-ended to do so because they contain
the term “subject to regulation” and that term has not been
previously interpreted in ways that would preclude adoption of EPA’s
meaning of the termapplication of the meaning assigned to the term by
EPA.  We therefore concluded it is likely the state rules are
sufficiently open-ended to apply EPA’s approach by interpretation
(although some states indicated they may elect to pursue rulemaking in
addition to or instead of interpretation).  Accordingly, we selected the
“subject to regulation” regulatory approach as the mechanism for
codifyingimplementing the final rule.

3.  Other mechanismsMechanisms

The mechanism for implementing the terms of this tailoring ruleAs just
described above , we selected the “subject to regulation” mechanism
because it most readily accommodated the needs of states to
expeditiously revise – through interpretation or otherwise - their
state rules.  Even so, it is important to recognize that this mechanism
has the same substantive effect as the mechanism we considered in the
proposed rule.  Defining the term “subject to regulation”, has the
effect of modifying the meaning of the regulatory terms “, which was
revising numerical thresholds in the definitions of major stationary
source” and “major modification” – again, the keys to PSD
applicability – to exclude GHG-emitting sources below the thresholds
established in Steps 1 and 2, and our action  and major modification.
Most importantly, although we are codifying the “subject to
regulation” mechanism, that approach is driven by the needs of the
states, and our action in this rulemaking should be interpreted to rely
on any of several legal mechanisms to accomplish this interpretation.
The thrust of this rulemaking is to apply the PSD definition of “major
stationary source” – which embodies the statutory term, “major
emitting facility” -- to GHG sources by treating only GHG sources that
emit at levels above the steps 1 and 2 thresholds as meeting that
definition.  Our action may reasonably be construed to have the effect
of result.  Thus, our action in this rule should be understood as
revising the meaning of several terms in these definitions, including:
(i (1) the numerical thresholds, as we proposed; (ii2) the term, “any
source,” which some commenters identified as the most relevant term
for purposes of our proposal; (3) the term, “any air pollutant; or
(iii4) the term, “subject to regulation,” which, as discussed above,
our regulations attach to the definition of “major stationary
source” and “major modification.”  The specific choice of which
term of these constitutes the mechanism does not have a substantive
legal effect because each mechanism involves one or another of the
components of the regulatory term “major stationary source” and it
is that term that we are defining to exclude the indicated GHG-emitting
sources. Thus, while the “subject to regulation” mechanism
facilitates expeditious implementation by states, and we are therefore
revising our regulations to adopt this approach, there is no substantive
difference in effect between the alternative mechanisms we may use to
finalize the proposed rule.

Similarly, with respect to “major modification” although our final
action revises our regulations to incorporate the “subject to
regulation” mechanism, we believe that our final action should be
construed as interpreting the definition of the regulatory term
“major modification”—which embodies the statutory term
“modification”--– to exclude GHG-emitting sources below the
thresholds established in Steps 1 and 2, and that our action should be
interpreted to rely on any of the several mechanisms noted above to
accomplish this interpretation.  Further, we believe that our action may
reasonably be construed to revise any of several terms in that
definition,  – including (i) the numerical thresholds (zero for
modifications under the statute), as we proposed; (ii) the term, “a
stationary source,” which parallels the “any source” theory
identified by commenters with respect to “major stationary source”;
or (iii) the term, “subject to regulation,” which, as discussed
above, that our regulations attach to the definition of “major
modification.”  We believe that the specific choice of which term
constitutes thenominal mechanism does not have a substantive legal
effect because each mechanism involves one or another of the components
of the regulatoryterms “major stationary source” - which embodies
the statutory term, “major emitting facility” - and “major
modification,” which embodies the statutory term, “modification,”
and it is that termthose statutory and regulatory terms that we are
interpretingdefining to exclude

the indicated GHG-emitting sources. Thus, while the “subject to
regulation” mechanism facilitates expeditious implementation by
states, and we are therefore revising our regulations to adopt this
approach, we otherwise find no substantive difference between the
alternative mechanisms we may use to finalize the proposed rule.

4.  Codification of Interpretive Memo

NotablyAs noted previously, we recently affirmed and refined our
interpretation of the term “subject to regulation” as it applies
broadly to the PSD program through a formal notice and comment process.
[placeholder cite Johnson} “Interpretation of Regulations that
Determine Pollutants Covered by Clean Air Act Permitting Programs,” 75
FR 17004.  In the response to comments for that action, we indicated
that we may opt to proposal associated with that action, we requested
comment on whether we should codify our interpretation of the term in
the GHG final tailoring rule.  Accordingly, our final rule adopts this
in the regulatory text.  74 FR 51535, 51547 (October 7, 2009).  We
elected not to codify out interpretation to bring additional clarity to
our rules.  Specifically, in the final action on reconsideration of the
Interpretive Memo because we add a new paragraph to the definitions
concluded such an action was not necessary and that it was important to
apply the refined interpretation immediately.  75 FR 17015.  However, in
the RTC document for that action, we indicated that we had not ruled out
the option of codifying our interpretation at a later time.  Since we
are otherwise adopting a definition of “subject to regulation” in
this rule as the mechanism for implementing the phase-in, it makes sense
in this final rule to codify the interpretation reflected in the
Interpretive Memo and the final action on reconsideration at the same
time to bring clarity to our rules.  Specifically, the definitions of
the term “subject to regulation” contain a paragraph that
containsreflects our existing interpretation of that term (i.e., prior
to adopting the provisions that implement the phase-in).  Codification
of the Interpretive Memo in this action makes sense to ensure the
regulations reflect a complete picture of the meaning of “subject to
regulation” applied by EPA.  We also movedare moving existing
exceptions (e.g. Section., section 112 hazardous air pollutantsHAPs) to
a new paragraph with in the definition of "subject to regulation".
Movement."  This minor reorganization of these regulations is not
intended to effect any change in how those regulations are they are to
be implemented, but merely simplifysimplifies and clarifies the
regulations by clearly delineating different terms and concepts.

We do not believe that This codification of this interpretation of
“subject to regulation” from the reconsideration for the
Interpretive Memo is not necessary to continueassure the effectiveness
of the interpretation, nor do we believe that our action disturbs
States’ and it does not disturb states’ existing authority to adopt
the definition through interpretation of their existing rules.  Our
decision to codify Codifying our existing interpretation is based solely
on a desire to better inform readers of the existing interpretation.

in this action will ensure that parties reading the regulations have a
full understanding of how EPA applies the PSD program requirements.
Since the interpretation described in the Interpretive Memo and the
April 2, 2010 final action are otherwise applicable at this time, the
particular time sensitivity discussed in the latter action is not the
same for this final action tailoring the PSD requirements.

5. Delaying Limited Approvals and Request for Submission of Information
from States implementing Implementing a SIP-approved PSD program

Approved PSD Program

Because we now anticipate that many states will be able to implement the
final rulesour tailoring approach through interpretation of the term
“subject to regulation,” and without the need to revise their SIPs,
we are delaying further action on our proposal to limit approved our
approval of SIPs until we better understand how permitting authorities
will, in fact, implement our final ruletailoring approach.  For this
purpose, we ask each State state to submit a letter to the appropriate
EPA Regional Administrator no later than [insert dateINSERT DATE 60 days
after promulgationDAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTER].  In that letter, states the state should explain whether they
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 state must revise its regulations to
apply EPA’s meaning of the term “subject to regulation” we ask
States to undertake a regulatory or legislative process, then the letter
should provide an estimate of the time needed to adopt the final rules
in its letter to the Regional Administrator.  If a state chooses not to
adopt EPA’s meaning by interpretation, the letter should address
whether the State state has alternative authority to implement today’s
phase-in either our tailoring approach or some other approach that is at
least as stringent, but which also addresses 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 would existwill arise if the state attempts to carriedcarry
out PSD permitting for GHG sources under itsthe existing program
thresholdsSIP and interpretation.

For any State state that is unable or unwilling to adopt the limitations
 in the final rules by tailoring approach by January 2, 2011, and
whothat otherwise are is unable to demonstrate adequate personnel and
funding, EPA we will move forward with finalizing a limited our proposal
to limit our approval of the existing SIP.  Although we received
comments questioning EPA’s authority to undertake a limited
approvalour authority to limit approval as proposed, using our general
rulemaking and CAA section 110(k)(6) authorities, we are not responding
to those comments at this time.  We will address these comments in any
final action we take to implement a limited approval.

In our proposed rule, we also noted that a handful of EPA-approved SIPs
fail to include provisions that would subject GHG emissions to their PSD
requirements when regulations that EPA promulgates to regulate GHGs take
effect and thereby trigger the applicability of PSD for sources that
remain covered under today’s ruleapply 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 including include a
definition of NSR regulated pollutant that mirrors the federal rule, or
because a 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
consistent with the final rule to notify the EPA Regional Administrator
by letter (which should be done, and to do so no later than the
previously described letter regarding adoption of the tailoring
rule).[INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTER].  This letter should inform the Regional Administratorindicate
whether the state intends to undertake rulemaking to revise theirits
rules to apply PSD to the handle 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 the this final rule.  For any State state that lacks the ability to
issue PSD permits for GHGsGHG sources consistent with thethis final
rule, we will intend to undertake a separate action to issue a SIP call
the SIP, under CAA section 110(k)(5).  As appropriate, we willmay also
move quickly to impose a FIP through 40 C.F.R. Section FR 52.21 to
ensure that GHG sources will be regulatedpermitted consistent with the
this final rule.

6.  Title V programs

Programs

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

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

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

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

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

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

	As explained abovepreviously, we find no substantive difference between
the alternative mechanisms for implementing GHG tailoring in the final
rule.  Whether we add GHG thresholds directly to the definition of
“major source,” (as we proposed), or alternatively, expressly add
and define the term “subject to regulation,” both approaches revise
the definition of “major source” to implement the GHG tailoring
ruleTailoring Rule.  Accordingly, we adopt the later approach to
facilitate State state implementation of the final rule through an
interpretation of existing State Partstate part 70 programs.  Similar to
our explanation abovepreviously for PSD, while we adopt the “subject
to regulation” mechanism for implementing GHG tailoring in the final
rule, the thrust of our rulemaking today is to apply the title V
definition of “major source” – which includes the statutory term,
“major stationary source” -- to GHG sources by treating only GHG
sources that emit at levels above the stepsSteps 1 and 2 thresholds as
meeting that definition.  Further, we believe that our action may
reasonably be construed to revise any of several terms in that
definition, including (i1) the numerical thresholds, as we proposed;
(ii2) the term “any air pollutant,” or (iii(3) the term “a major
stationary source,” (4) the term “subject to regulation,” which,
as discussed abovepreviously, our regulations graft into the definition
of “major source.”  We believe that the specific choice of which
term constitutes the legal mechanism does not have a substantive legal
effect because each mechanism involves one of the components of the
regulatory term “major source,”” – which embodies the meaning of
the statutory term, “major source” - and it is that term that we are
interpreting to tailor title V applicability for GHG-emitting sources.
Thus, while the “subject to regulation” mechanism facilitates
expeditious implementation by states, and we are therefore revising our
regulations to adopt this approach, we otherwise find no substantive
difference between the alternative mechanisms we may use to finalize the
proposed rule.

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

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

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

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

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

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

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

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

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

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

After considering these comments, we remain disinclined, as we were at
proposal, to change the presumptive fee calculation regulations.  While
there is some support for changing the regulations, the comments confirm
the challenges in doing so.  While we expressly rejected charging the
full presumptive cost per ton amount for GHG, we also did not propose
language to establish a different amount just for GHG, to establish
whether a different tpy cap would apply, or to assess whether GHGs could
even be added to the list.  Thus, many commenters were very concerned
about whether the full $43.75 or the 4000 tpy cap would apply to GHG if
we listed it as a regulated pollutant for fee purposes.  Furthermore, we
noted at proposal, and commenters did not disagree, that more data would
be needed to establish the appropriate basis for the GHG presumptive
minimum.  We are not taking a final position todayin 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 approach 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
abovepreviously, we expect states to see a revenue increase from
emissions of listed pollutants at newly-major sources for GHGs, and it
is also possible that the presumptive minimum may currently be resulting
in over-collection of fees in a state.  Thus, a state continuing to use
the presumptive minimum may not have a shortfall.  However, if states
using the presumptive minimum approach do have a revenue shortfall due
to GHG permitting, the statute requires the shortfall to be addressed.
The EPA has had, and will continue to have, the ability to require
states that use the presumptive minimum to increase their fees if the
presumptive minimum results in a revenue shortfall that imperils
operating permit program implementation and enforcement.  Thus, although
we are not changing the presumptive minimum in our regulations, we plan
to follow the same oversight approach for states using the presumptive
minimum as for those collecting less based on a resource demonstration.
As described abovepreviously, this approach may involve fee audits with
emphasis on whether the additional GHG workload is being appropriately
funded, and other appropriate follow-up.

Consistent with our proposal, EPA is not modifying its own part 71 fee
structure (which closely mirrors the presumptive minimum) in order to
charge an additional fee for GHGs.  EPA must revise its fee schedule if
the schedule does not reflect the costs of program administration.  We
have not determined that the existing fee structure will be inadequate
to fund the part 71 programs costs during the first two phases of
permitting GHGs as set forth in this action.  However, we are required
to review the fee schedule every two2 years, and make changes to the fee
schedule as necessary to reflect permit program costs.  40 CFR section
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 GHGGHGs or cap the amount that can
be collected, while others suggest we provide a range of acceptable
fees.  We are concerned that, given the wide variety of fee approaches
that states now take, providing specific guidance may be disruptive,
rather than helpful, to states.

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

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

E.    Other Actions and Issues

1.  Permit Streamlining Techniques

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

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

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

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

For these three techniques, we continue to believe that as we noted at
proposal, we will require collection of significant category-specific
data for source and emission unit types that have heretofore generally
not been regulated by the CAA (e.g., furnaces, water heaters, etc.),
which could take up to one 1 year.  Moreover, commenters had differences
of opinion as to whether and how we should move forward on these
approaches, and some raised policy and legal issues that we would likely
want to explore through a notice and comment process.  in order to
assess which of these measures are viable to pursue further.  Even if a
rulemaking were done expeditiously, it would likely require one1 year.
Finally, unlike lean and electronic permitting, these approaches, once
finalized by EPA, will likely require additional time of up to two2
years for states to adopt.  Thus, it is clear that these approaches will
not be in place in time to ease any burden prior to the planned
rulemaking for step Step 3.

Some commenters did observe that the fourth and fifth techniques, lean
and electronic permitting, could, at least theoretically, become
available sooner.  However, these commenters also noted that successful
design and implementation of these approaches will require
implementation experience with GHG permitting that is not now available.
 We expect that for the lean and electronic permitting techniques, at
least one1 year of implementation experience (of the type that we will
gain starting in 2011) would be required, plus at least an additional
year to extrapolate that experience to small sources and put these
approaches into effect for small source permitting.  Thus, we do not
think the lean and electronic permitting would be in place before the
beginning of 2013.  Moreover, a handful of commenters questioned whether
lean and/or electronic permitting would alleviate significant burden.
Thus we are not able, at this time, to presume that these approaches
will ease any burden prior to the planned rulemaking for step Step 3.

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

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

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

	Third, it is clear that the potential availability of streamlining
measures does not call into question our decision today that in no event
will we broaden PSD and title V applicability to cover GHG-emitting
sources below the 50,000 tpy CO2e level prior to July 2016, as discussed
elsewhere.  EPA cannot now predict the resources that will be required
to implement PSD and title V programs for GHG-emitting sources once
various streamlining techniques are ultimately completed.  This is
uncertain not only because we need data and implementation experience
with GHG permitting during stepsSteps 1, 2, and 3 that we can apply to
estimates for small sources, but also because, as comments indicate,
there is a broad range of legal and policy issues to consider in
crafting the streamlining approaches we ultimately adopt.  We have
presented an initial assessment of options and obtained views of
commenters both supporting and opposing them, and it is the result of
these future actions, whose outcomes are uncertain at this time, that
will ultimately determine the extent to which streamlining approaches
will allow for the administration of PSD and title V programs for
numerous small sources.  Thus, while we are optimistic that we can craft
workable, common-sense solutions, we nonetheless, believe it is
important to preserve our small source exclusion until we have not only
had time to put the streamlining approaches in place, but also have had
time to assess the burdens that remain, before we bring in additional
sources below the 50,000 tpy CO2e levels.   We believe that the
six6-year timeframe will require a sustained intensive effort by EPA and
states to develop, adopt, and implement streamlining techniques, and
will require EPA to then evaluate those techniques and complete a
rulemaking concerning PSD and title V applicability to small-sources
based on that evaluation.  In this manner, the six6-year period will
give us the necessary time to make the best decisions about the actions
we should take beyond stepStep 3.

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

2.   Guidance for Best Available Control TechnologyBACT Determinations

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

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

42 U.S.C. § 7479(3).

Thus, the BACT process is designed to determine the most effective
control strategies achievable in each instance, considering energy,
environmental, and economic impacts.  However, the case-by-case nature
of BACT, together with the range of factors and technologies that must
be considered, presents a challenge in determining BACT for newly
regulated pollutants.  When a new pollutant is regulated, the first
permit applicants and permitting authorities that are faced with
determining BACT for a new pollutant will likely need to invest more
time and resources in gathering and analyzing information necessary to
make an assessment of BACT under the statutory criteria.  Once the PSD
permitting program matures with respect to the new pollutant, successive
BACT analyses will establish precedents that can inform subsequent BACT
determinations.  While the BACT provisions clearly contemplate that the
permitting authority evaluate control strategies on a case-by-case
basis, EPA recognizes the need to develop and share policy guidance and
technical information for sources and permitting authorities as they
begin to permit sources for 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 CO2eq 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 their
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 Best Available Control Technology (BACT) for
Greenhouse Gases (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 Statesstates 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
Statestate, local, and tribal permitting authorities.  The results of
all of these efforts will roll out over the remainder of 2010.  EPA
currently awaits the Work Group’s recommendations from its second
phase of deliberations, which is underway as of the date of this notice.

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

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

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

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

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

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

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

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

As discussed abovepreviously, we are still considering whether permanent
exemptions from the statute are justified for GHG permitting based on an
the “absurd results theory.  However, similar to our conclusion for
the suggested biomass exclusion below, we have determined that we ”
legal doctrine.  We do not have a sufficient basis to create take final
action at this time to promulgate any of the suggested exclusions.  We
did not propose any sort of permanent exclusion based on an
interpretation of the statutory provisions of PSD or title V.
Regardless of any arguments about the legality and advisability from a
policy or economic standpoint of such exclusions, we would need to
propose a PSD and/or title V specific legal and policy rationale that
fits within the Clean Air Act, to specify details regarding our
implementation approach, and to provide an opportunity for public
comment before adopting any such exclusion.  Therefore we are not doing
so here on the grounds, described previously, suggested by the
commenters.  We note, however, that nothing in today’s this rule
forecloses the opportunities we may have to explore such options in the
future.  Therefore, we are taking no action in this rule on these
various commenters’ requests for exclusions.

The remaining option for creating such exclusions in this rule is to
find that such an exclusion is necessary to avoid administrative
necessity or absurd resultsSome commenters also recommended that we
create exclusions for their particular source categories for the
specific purpose of avoiding overwhelming permitting burdens.  We did
solicit comment on alternative approaches to the proposed phase-in for
permittingburden relief in the proposal.  Some commenters suggested that
the “administrative necessity” or “absurd results” rationale,
each of which would be based on extraordinary administrative burdens,
could be used to create at least temporary exclusions that would allow
more sources to escape permitting than would already be excluded under
step 1, step 2, and the small source exclusion until 2016.  We
considered each of these requests in the context of the overwhelming
permitting burdens and the options for reducing such burdens, and
ultimately decided that, given our threshold-based approach to the phase
in, it is not appropriate to also adopt such exclusions to address the
same burdens.  We what we proposed.  However, commenters have finalized
stepsnot, to date, provided specific information about the costs and
administrative burdens associated with permitting their source
categories.

Regarding the specific concerns about the need for a small business
exclusion, we note that the Office of Advocacy of the SBA made several
recommendations on the proposal to address concerns about large numbers
of small businesses becoming subject to the permit programs.  For
example they recommended that EPA adopt major source thresholds of
100,000 tpy and major modification thresholds of 50,000 tpy CO2e.  They
also recommended that we adopt an interpretation of the effective date
of the LDVR to provide additional time to prepare.  We took action
consistent with the latter recommendation in the Interpretive Memo, and
we are taking action consistent with the former recommendation in this
rule (although the threshold for modifications we are adopting is
higher, for reasons explained previously).  We are finalizing Steps 1
and 2 using the threshold-based approach, which applies administrative
necessity and absurd results argumentsthe various legal doctrines, in
the context of the Chevron framework, in a way that effectively exempts
all small sources during this part of the phase-in.  The suggested
exclusions alone would not address the overwhelming , while assuring the
administrability of the permitting burdens, and the threshold-based
approach would still be necessary.  Moreover, once the threshold
approach is applied as described, we do not seeprograms for the sources
that remain subject to them.  We anticipate that the remaining burdens
would be so overwhelming as to lead to absurd results or administrative
impossibility.   While we could have crafted specific exemptions of the
kind suggested as an alternative means of tailoring the programs, our
approach achieves the same result and does so in a way that will be
simpler to administer.   Furthermore, specifically with virtually all
small businesses not already subject to PSD and title V would be
excluded under this approach.  Similarly, with respect to high GWP,
gases as discussed above, we have included a previously, we are
maintaining the statutory mass-based trigger that addresses
commentsthreshold, and this should address commenters’ concerns
regarding the inclusion of those gases.  Therefore, we reiterate that we
are not finalizing any such exclusions in today’sthis rule and, as
noted above, we are not taking final action in the commenters’
requests for exclusions.

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

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

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

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

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

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

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

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

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

Pollution Control Projects.  Other commenters request exemptions for
pollution control projects from PSD major modification requirements,
particularly projects that increase the efficiency or thermal
performance of a unit or facility, resulting in emission reductions on a
pounds/megawatt-hour or production basis.  The current PSD rules do not
exclude pollution control projects from being considered a physical
change or change in the method of operation that would – if it
resulted in a significant net emissions increase -- constitute a major
modification, nor does case law suggestand the caselaw makes clear that
we could adopt a permanent exclusion in the future.  We also do not
believe we should adopt.  To the extent that the commenters seek an
exclusion for pollution control projects that relies solely on “absurd
results” or “administrative necessity” for reasons similar to
those described abovepreviously for other requested exclusions.
Although such an exclusion may have positive features, it would not
address the overwhelming permitting burdens that justify the tailoring
approach, we take no action on this request in this rulemaking.

4.    Transitional Issues includingIncluding Requests for Grandfathering

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

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

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

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

In its our action on April 2, 2010, EPA explained that the Agency did
not see grounds to establish a transition provision for pending PSD
permit applications because we had determined that PSD permitting
requirements would not apply the greenhouse gasesfor GHGs for another
nine9 months.   We explained that permit applications submitted prior to
April 2, 2010 should in most cases be issued prior to January 2, 2011
and, thus, effectively have a transition period of nine9 months to
complete processing before PSD requirements become applicable to
greenhouse gases. GHGs.  We also observed that, in the case of any PSD
permit application review that cannot otherwise be completed within the
next nine9 months based on the requirements for pollutants other than
GHGs, it should be feasible for permitting authorities to begin
incorporating GHG considerations into permit reviews in parallel with
the completion of work on other pollutants without adding delay to
permit processing.   Additional discussion of EPA’s reasons for not
developing transition provisions for PSD permit applications that are
pending on January 2, 2011 are provided in the April 2, 2010 notice.  75
FR 17021-22.

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

While we do not provide for grandfathering of PSD applications, we do
note that there are more than 7 months left before GHG BACT requirements