Reconsideration of Interpretation of Regulations that Determine
Pollutants Covered by Clean Air Act Permitting Programs

EPA’s Response to Public

Comments

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

Air Quality Policy Division

Research Triangle Park, NC

March 29, 2010

FOREWORD

This document provides responses to public comments on the U.S.
Environmental Protection Agency’s (EPA’s) Reconsideration of
Interpretation of Regulations that Determine Pollutants Covered by Clean
Air Act Permitting Programs.”  EPA received comments on this
Reconsideration proposal via mail, e-mail, and facsimile.  Copies of all
comment letters submitted are available at the EPA Docket Center Public
Reading Room, or electronically through http://www.regulations.gov by
searching Docket ID EPA-HQ-OAR-2009-0597.

This document provides a single response to each significant argument,
assertion, and question contained within the totality of comments. 
Within each comment summary, EPA provides in parentheses, one or more
lists of Docket ID numbers for commenters who raised particular issues;
however, these lists are not meant to be exhaustive and EPA does not
individually identify each and every commenter who made a certain point
in all instances, particularly in cases where multiple commenters
expressed essentially identical arguments.

Table of Contents

  TOC \o "1-3" \h \z \u    HYPERLINK \l "_Toc257362972"  FOREWORD	 
PAGEREF _Toc257362972 \h  i  

  HYPERLINK \l "_Toc257362973"  Acronyms and Abbreviations	  PAGEREF
_Toc257362973 \h  v  

  HYPERLINK \l "_Toc257362974"  Chapter 1.   Introduction	  PAGEREF
_Toc257362974 \h  1  

  HYPERLINK \l "_Toc257362975"  Table 1.   Comment Letters Received on
Proposed Reconsideration Notice	  PAGEREF _Toc257362975 \h  3  

  HYPERLINK \l "_Toc257362976"  Chapter 2.   Procedural Issues	  PAGEREF
_Toc257362976 \h  6  

  HYPERLINK \l "_Toc257362977"  2.1.   Codification of EPA
Interpretation	  PAGEREF _Toc257362977 \h  6  

  HYPERLINK \l "_Toc257362978"  2.2.   Issuance of Memorandum without
Notice and Comment Process	  PAGEREF _Toc257362978 \h  8  

  HYPERLINK \l "_Toc257362979"  2.2.1.   Effect and Meaning of Previous
EPA Interpretation Issued in 1978	  PAGEREF _Toc257362979 \h  10  

  HYPERLINK \l "_Toc257362980"  2.2.2.   Argument that PSD Interpretive
Memo Overturns an EAB Decision	  PAGEREF _Toc257362980 \h  13  

  HYPERLINK \l "_Toc257362981"  2.2.3.   Contention that PSD
Interpretive Memo Amends the Substance of the PSD Program	  PAGEREF
_Toc257362981 \h  16  

  HYPERLINK \l "_Toc257362982"  2.3.   Relevance of Related Public
Participation Opportunities	  PAGEREF _Toc257362982 \h  17  

  HYPERLINK \l "_Toc257362983"  2.4.   Interpretation of Statute and
Revisions Thereto	  PAGEREF _Toc257362983 \h  18  

  HYPERLINK \l "_Toc257362984"  2.5.   Revisions to Interpretation in
PSD Interpretive Memo	  PAGEREF _Toc257362984 \h  19  

  HYPERLINK \l "_Toc257362985"  Chapter 3.   Actual Control of Emissions
  PAGEREF _Toc257362985 \h  21  

  HYPERLINK \l "_Toc257362986"  3.1.   Overview of Comments on Actual
Control Interpretation	  PAGEREF _Toc257362986 \h  21  

  HYPERLINK \l "_Toc257362987"  3.2.    Interpretation of the Clean Air
Act	  PAGEREF _Toc257362987 \h  24  

  HYPERLINK \l "_Toc257362988"  3.2.1.   Arguments that Plain Language
of Act Precludes Actual Control Interpretation	  PAGEREF _Toc257362988
\h  27  

  HYPERLINK \l "_Toc257362989"  3.2.2.   Meaning of the Term
“regulation”	  PAGEREF _Toc257362989 \h  30  

  HYPERLINK \l "_Toc257362990"  3.2.3.   Ambiguity of Statutory Language
and EPA Discretion	  PAGEREF _Toc257362990 \h  31  

  HYPERLINK \l "_Toc257362991"  3.2.4.   Pollutants “Subject To”
Regulation Are Pollutants That EPA Has the Authority to Regulate	 
PAGEREF _Toc257362991 \h  33  

  HYPERLINK \l "_Toc257362992"  3.2.5.   Distinction Between Term
“Control” and “Regulations” In Other Portions of the Clean Air
Act	  PAGEREF _Toc257362992 \h  38  

  HYPERLINK \l "_Toc257362993"  3.2.6.   EPA Elevates Policy Preference
Over Plain Statutory Meaning	  PAGEREF _Toc257362993 \h  41  

  HYPERLINK \l "_Toc257362994"  3.3.   Interpretation of Regulations	 
PAGEREF _Toc257362994 \h  42  

  HYPERLINK \l "_Toc257362995"  3.4.    Policy Considerations Raised by
Actual Control Interpretation	  PAGEREF _Toc257362995 \h  44  

  HYPERLINK \l "_Toc257362996"  3.4.1.   Orderly and Deliberative
Decision Making Process	  PAGEREF _Toc257362996 \h  45  

  HYPERLINK \l "_Toc257362997"  3.4.2.   Public Participation Concerns	 
PAGEREF _Toc257362997 \h  46  

  HYPERLINK \l "_Toc257362998"  3.4.3.   Development of Control
Strategies	  PAGEREF _Toc257362998 \h  48  

  HYPERLINK \l "_Toc257362999"  3.4.4.   Past Policy and Practice	 
PAGEREF _Toc257362999 \h  49  

  HYPERLINK \l "_Toc257363000"  Chapter 4.   Monitoring and Reporting
Requirement	  PAGEREF _Toc257363000 \h  56  

  HYPERLINK \l "_Toc257363001"  4.1.   Overview of Comments on
Monitoring and Reporting Interpretation	  PAGEREF _Toc257363001 \h  56  

  HYPERLINK \l "_Toc257363002"  4.2.   Statutory Interpretation	 
PAGEREF _Toc257363002 \h  56  

  HYPERLINK \l "_Toc257363003"  4.2.1.   Meaning of the Term Regulation	
 PAGEREF _Toc257363003 \h  56  

  HYPERLINK \l "_Toc257363004"  4.2.2.   Effect of Section 821 of the
Clean Air Act	  PAGEREF _Toc257363004 \h  58  

  HYPERLINK \l "_Toc257363005"  4.2.3.   Effect of 2008 Consolidated
Appropriations Act and Mandatory Greenhouse Gas Reporting Rule	  PAGEREF
_Toc257363005 \h  60  

  HYPERLINK \l "_Toc257363006"  4.2.4.   Effects Threshold for PSD
Permitting	  PAGEREF _Toc257363006 \h  61  

  HYPERLINK \l "_Toc257363007"  4.3.   Policy Considerations Raised by
Monitoring and Reporting Interpretation	  PAGEREF _Toc257363007 \h  63  

  HYPERLINK \l "_Toc257363008"  4.4.   Monitoring Equipment Captures and
Controls Emissions	  PAGEREF _Toc257363008 \h  68  

  HYPERLINK \l "_Toc257363009"  4.5.   Applicability of Title V
Requirements Based on Monitoring and Reporting	  PAGEREF _Toc257363009
\h  69  

  HYPERLINK \l "_Toc257363010"  4.6.   Practice of Distinguishing
Pollutants Covered by Control Requirements and Monitoring Requirements	 
PAGEREF _Toc257363010 \h  70  

  HYPERLINK \l "_Toc257363011"  4.7.   Enforceability of Monitoring
Regulations	  PAGEREF _Toc257363011 \h  70  

  HYPERLINK \l "_Toc257363012"  Chapter 5.   EPA-Approved State
Implementation Plan (SIP)	  PAGEREF _Toc257363012 \h  72  

  HYPERLINK \l "_Toc257363013"  5.1.   Overview of Comments on the SIP
Interpretation	  PAGEREF _Toc257363013 \h  72  

  HYPERLINK \l "_Toc257363014"  5.2.   Consistency with the Statute and
Congressional Intent	  PAGEREF _Toc257363014 \h  72  

  HYPERLINK \l "_Toc257363015"  5.3.    Implications of Applying
State-specific Decisions to the Nation	  PAGEREF _Toc257363015 \h  77  

  HYPERLINK \l "_Toc257363016"  5.4.   Content of “Applicable
Implementation Plan”	  PAGEREF _Toc257363016 \h  79  

  HYPERLINK \l "_Toc257363017"  5.5.   Implementation Considerations of
a SIP Interpretation for GHGs	  PAGEREF _Toc257363017 \h  80  

  HYPERLINK \l "_Toc257363018"  5.6.    Reliance on Connecticut Decision
  PAGEREF _Toc257363018 \h  80  

  HYPERLINK \l "_Toc257363019"  Chapter 6.   Finding of Endangerment	 
PAGEREF _Toc257363019 \h  82  

  HYPERLINK \l "_Toc257363020"  6.1.   Appropriateness of Triggering PSD
Requirements from an Endangerment Finding	  PAGEREF _Toc257363020 \h  82
 

  HYPERLINK \l "_Toc257363021"  6.2.   Endangerment Finding Must be
Specific to Stationary Sources to Trigger PSD Requirements	  PAGEREF
_Toc257363021 \h  84  

  HYPERLINK \l "_Toc257363022"  6.3.    Endangerment Finding as
Prerequisite to Regulation or as a Regulation Itself	  PAGEREF
_Toc257363022 \h  85  

  HYPERLINK \l "_Toc257363023"  6.4.   Consistency with Supreme Court
Ruling	  PAGEREF _Toc257363023 \h  86  

  HYPERLINK \l "_Toc257363024"  Chapter 7.   Granting of Section 209
Waiver	  PAGEREF _Toc257363024 \h  88  

  HYPERLINK \l "_Toc257363025"  7.1.   Granting Waiver of State
Preemption	  PAGEREF _Toc257363025 \h  88  

  HYPERLINK \l "_Toc257363026"  7.2.   Adoption of California Standards
by Other States	  PAGEREF _Toc257363026 \h  94  

  HYPERLINK \l "_Toc257363027"  Chapter 8.   Timing of Regulation	 
PAGEREF _Toc257363027 \h  95  

  HYPERLINK \l "_Toc257363028"  8.1.   Effective Date of Control
Requirements	  PAGEREF _Toc257363028 \h  95  

  HYPERLINK \l "_Toc257363029"  8.1.1.   Legal analysis for the “takes
effect” reading for the effective date interpretation:	  PAGEREF
_Toc257363029 \h  95  

  HYPERLINK \l "_Toc257363030"  8.1.2.   General comments on the
effective date interpretation:	  PAGEREF _Toc257363030 \h  100  

  HYPERLINK \l "_Toc257363031"  8.2.   Compliance Date	  PAGEREF
_Toc257363031 \h  104  

  HYPERLINK \l "_Toc257363032"  8.3.   Promulgation Date	  PAGEREF
_Toc257363032 \h  108  

  HYPERLINK \l "_Toc257363033"  8.4.   Apply PSD only after Significance
Level has been promulgated	  PAGEREF _Toc257363033 \h  112  

  HYPERLINK \l "_Toc257363034"  8.5.   Timing Based on Economic and
Technical Feasibility of Controls	  PAGEREF _Toc257363034 \h  113  

  HYPERLINK \l "_Toc257363035"  Chapter 9.   Regulation of Greenhouse
Gases	  PAGEREF _Toc257363035 \h  114  

  HYPERLINK \l "_Toc257363036"  9.1.   GHG and CO2 are Air Pollutants	 
PAGEREF _Toc257363036 \h  114  

  HYPERLINK \l "_Toc257363037"  9.2.   Date When PSD Permitting
Requirements Apply to GHGs	  PAGEREF _Toc257363037 \h  114  

  HYPERLINK \l "_Toc257363038"  9.3.   Need More Time Before PSD/Title V
Applies to GHGs	  PAGEREF _Toc257363038 \h  120  

  HYPERLINK \l "_Toc257363039"  9.3.1.   Impacts from GHG Regulation
Support Actual Control Interpretation	  PAGEREF _Toc257363039 \h  120  

  HYPERLINK \l "_Toc257363040"  9.3.2.   Implementation Concerns Warrant
More Time	  PAGEREF _Toc257363040 \h  122  

  HYPERLINK \l "_Toc257363041"  9.3.3.   Provide More Time by Delaying
Final Action on the GHG LDV Rule	  PAGEREF _Toc257363041 \h  128  

  HYPERLINK \l "_Toc257363042"  9.4.   Identifying the Greenhouse Gases
“Subject to Regulation” Under LDV Rule	  PAGEREF _Toc257363042 \h 
129  

  HYPERLINK \l "_Toc257363043"  9.5.   Permit Application Transition	 
PAGEREF _Toc257363043 \h  130  

  HYPERLINK \l "_Toc257363044"  9.6.   Potential Retroactive Liability	 
PAGEREF _Toc257363044 \h  133  

  HYPERLINK \l "_Toc257363045"  9.7.   Clean Air Act Is Poorly Suited to
Greenhouse Gas Regulation	  PAGEREF _Toc257363045 \h  134  

  HYPERLINK \l "_Toc257363046"  9.8.   Arguments That PSD Cannot Apply
to Pollutants Regulated Only Under Title II of Clean Air Act	  PAGEREF
_Toc257363046 \h  136  

  HYPERLINK \l "_Toc257363047"  9.9.   Need for Additional Process and
Analysis Before Regulating Stationary Source GHG Emissions	  PAGEREF
_Toc257363047 \h  155  

  HYPERLINK \l "_Toc257363048"  9.9.1.   Requests for More Orderly
Process and Judgment Before EPA Regulates GHGs Emissions from Stationary
Sources	  PAGEREF _Toc257363048 \h  155  

  HYPERLINK \l "_Toc257363049"  9.9.2.   Analysis of Effects on Large
Stationary Sources	  PAGEREF _Toc257363049 \h  157  

  HYPERLINK \l "_Toc257363050"  9.10.   Combustion of Biomass-Derived
Fuels	  PAGEREF _Toc257363050 \h  159  

  HYPERLINK \l "_Toc257363051"  Chapter 10.   State Program
Implementation	  PAGEREF _Toc257363051 \h  161  

  HYPERLINK \l "_Toc257363052"  10.1.   Applicability of PSD
Interpretive Memo to State PSD Programs	  PAGEREF _Toc257363052 \h  161 


  HYPERLINK \l "_Toc257363053"  10.2.   Need to Complete SIP Revision
Process	  PAGEREF _Toc257363053 \h  162  

  HYPERLINK \l "_Toc257363054"  Chapter 11.   Other Issues	  PAGEREF
_Toc257363054 \h  165  

  HYPERLINK \l "_Toc257363055"  11.1.   Combination of Interpretations	 
PAGEREF _Toc257363055 \h  165  

  HYPERLINK \l "_Toc257363056"  11.2.   Municipal Solid Waste (MSW)
Landfill Gas Emission Standards	  PAGEREF _Toc257363056 \h  165  

  HYPERLINK \l "_Toc257363057"  11.3.   Section 821 of Public Law
101-549	  PAGEREF _Toc257363057 \h  166  

  HYPERLINK \l "_Toc257363058"  11.4.   Alternatives Analysis Under
Section 165 of the CAA	  PAGEREF _Toc257363058 \h  169  

  HYPERLINK \l "_Toc257363059"  11.5.   Broad Focus of Proposal	 
PAGEREF _Toc257363059 \h  169  

  HYPERLINK \l "_Toc257363060"  11.6.   Adequacy of Comment Opportunity	
 PAGEREF _Toc257363060 \h  171  

 

 

Acronyms and Abbreviations

Acronym/Abbreviation	Definition

AEP	American Electric Power

APS	Arizona Public Service

AFBF	American Farmers Bureau Federation

AF&PA	American Forest & Paper Association

AMI	American Meat Institute

ANPR	Advance Notice of Proposed Rulemaking

APA	Administrative Procedures Act

API	American Petroleum Institute

APPA	American Public Power Association

BACT	Best Available Control Technology

CAA or Act	Clean Air Act

CAFE	Corporate Average Fuel Economy

CAIP	Clean Air Implementation Project

CAPCOA	California Air Pollution Control Officers Association

CARB	California Air Resources Board

CEMS	Continuous Emissions Monitoring System

CIBO	Council of Industrial Boiler Owners 

CO2	Carbon Dioxide

CRA	Congressional Review Act

DfE	Design for the Environment

DHEC	Department of Health and Environmental Control

EAB	Environmental Appeals Board

EDF	Environmental Defense Fund

EEI	Edison Electric Institute

EPA	Environmental Protection Agency

FR	Federal Register

GHG	Greenhouse Gas

HAP	Hazardous Air Pollutants

HFC	Hydrofluorocarbon

ICR	Information Collection Request

IDEM	Indiana Department of Environmental Management

INGAA	Interstate Natural Gas Association of America

LDV	Light-Duty Vehicle

LDVR	Light-Duty Vehicle Rule

LPPC	The Large Public Power Council

MACT	Maximum Achievable Control Technology

MY 2012	Model Year 2012

NAAQS	National Ambient Air Quality Standard(s)

NACAA	National Association of Clean Air Agencies

NAM	National Association of Manufacturers

NEDA/CAP	National Environmental Defense Association/Clean Air Project 

NHTSA	National Highway Traffic Safety Administration

NMA	National Mining Association

NRDC	Natural Resources Defense Council

NSPS	New Source Performance Standard

NSR	New Source Review

NRECA	National Rural Electric Cooperative Association

PFC	Perfluorocarbons

PM	Particulate Matter

PRA	Paperwork Reduction Act

PSD	Prevention of Significant Deterioration

PTE	Potential to Emit

RFA	Regulatory Flexibility Act

RIA	Regulatory Impact Analyses

RMA	Rubber Manufacturers Association

SBREFA	Small Business Regulatory Enforcement Fairness Act

SF6	Sulfur hexafluoride

SIP	State Implementation Plan

SO2	Sulfur Dioxide

TCC	Texas Chemical Council

TCEQ	Texas Commission on Environmental Quality

TIP	Texas Industry Project

TPY	Tons Per Year

UARG	Utility Air Regulatory Group

UMRA	Unfunded Mandates Reform Act

U.S.	United States of America



Chapter 1.   Introduction

	On December 18, 2008, then-EPA Administrator Stephen Johnson issued a
memorandum setting forth EPA’s interpretation regarding which
pollutants were “subject to regulation” for the purposes of the
federal Prevention of Significant Deterioration (PSD) permitting
program.  See Memorandum from Stephen Johnson, EPA Administrator, to EPA
Regional Administrators, RE:  EPA’s Interpretation of Regulations that
Determine Pollutants Covered by Federal Prevention of Significant
Deterioration (PSD) Permit Program (Dec. 18, 2008) (“PSD Interpretive
Memo” or “Memo”); see also 73 FR 80300 (Dec. 31, 2008) (public
notice of Dec. 18, 2008 memo).  The Memo interprets the phrase
“subject to regulation” to include pollutants “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.”  The Memo was
necessary after issues were raised regarding the scope of pollutants
that should be addressed in PSD permitting actions following the Supreme
Court’s April 2, 2007 decision in Massachusetts v. EPA, 549 U.S. 497
(2007).  The Memo also addresses a November 13, 2008 decision by the
Environmental Appeals Board (EAB) in a challenge to a PSD permit to
construct a new electric generating unit.  In re Deseret Power Electric
Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13, 2008) (“Deseret”). 
The Deseret Power permit was issued by EPA Region 8 in August 2007 and
did not include best available control technology (BACT) limits for
carbon dioxide (CO2). 

The purpose of the PSD Interpretive Memo is to “establish[] an
interpretation clarifying the scope of the EPA regulation that
determines the pollutants subject to the federal PSD program under the
Clean Air Act (CAA or Act)” by providing EPA’s “definitive
interpretation” of the definition of the term “regulated NSR
pollutants” found at 40 CFR 52.21(b)(50) and resolving “any
ambiguity in subpart ([iv]) of that paragraph, which includes ‘any
pollutant that otherwise is subject to regulation under the Act.’” 
As the Memo explains, the statute and regulation use similar language
– the regulation defines a regulated NSR pollutant to include “[a]ny
pollutant that otherwise is subject to regulation under the Act” and
requires BACT for “each regulated NSR pollutant,” 40 CFR
52.21(b)(50) and (j), while the Act requires BACT for “each pollutant
subject to regulation under this [Act],” CAA sections 165(a)(4) and
169.  The PSD Interpretive Memo seeks to resolve the ambiguity in
implementation of the PSD program by stating that “EPA will interpret
this definition of ‘regulated NSR pollutant’ to exclude pollutants
for which EPA regulations only require monitoring or reporting but to
include each pollutant subject to either a provision in the Clean Air
Act or regulation adopted by EPA under the Clean Air Act that requires
actual control of emissions of that pollutant.”  

	On December 31, 2008, EPA received a petition for reconsideration of
the position taken in the PSD Interpretive Memo from Sierra Club and 14
other environmental, renewable energy, and citizen organizations. 
Petitioners argued that the PSD Interpretive Memo violated the
Administrative Procedure Act and the CAA, conflicts with prior agency
actions and interpretations, and attempts to establish an interpretation
of the Act that conflicts with the plain language of the statute.  On
February 17, 2009, EPA granted the petition for reconsideration on the
PSD Interpretive Memo and announced its intent to conduct a rulemaking
to allow for public comment on the issues raised in the Memo and on any
issues raised by Deseret, to the extent they do not overlap with the
issues raised in the Memo.  EPA did not stay the effectiveness of the
PSD Interpretive Memo pending reconsideration, but the Agency did
reiterate that the Memo “does not bind States issuing [PSD] permits
under their own State Implementation Plans.” 

On October 7, 2009 (74 FR 51535), EPA proposed a reconsideration of the
PSD Interpretive Memo that solicited comment on five possible
interpretations of the regulatory phrase “subject to regulation” –
the “actual control” interpretation (adopted by the Memo); the
“monitoring and reporting” interpretation (advocated by
Petitioners); the inclusion of regulatory requirements for specific
pollutants in SIPs (discussed in both the Memo and the Petition for
Reconsideration); an EPA finding of endangerment (discussed in the
Memo); and the grant of a section 209 waiver interpretation (raised by
commenters in another EPA action).  EPA also addressed, and requested
public comment on, other issues raised in the PSD Interpretive Memo and
related actions. 

	The comment period for the proposed reconsideration notice ended on
December 7, 2009.  EPA received 71 comments on the proposal.  Commenters
represented a range of interests, including regulatory agencies,
corporations that may need to obtain PSD permits, trade associations
representing various industrial sectors, and environmental and public
interest groups.  Table 1 identifies each public comment received on the
proposal submitted to the Federal Register Docket Management System
(FDMS).  In this document, we identify each commenter by using its
Docket Document ID number in Air Docket ID No.
EPA–HQ–OAR–2009–0597.  For example, “0065.1” identifies the
specific comment document in the docket (i.e., Docket Document ID No.
EPA–HQ–OAR–2009–0597–0065.1).

	The purpose of this Response-to-Comments document (RTC) is to respond
to comments received on EPA’s October 7, 2009 proposal.  This document
contains summarized public comments and EPA responses to those comments.
 This document responds to all comments received, although it does not
respond to comments on issues we did not seek comment on in the
proposal, that were beyond the scope of the issues raised in the
proposal, or that were otherwise not relevant to the proposal.  The
comments in this document are grouped into categories to reflect major
issues discussed in the proposal and other related issues.

Table 1.   Comment Letters Received on Proposed Reconsideration Notice

	The full text of each comment is available for public inspection and
copying at EPA’s Air and Radiation Docket and Information Center,
Environmental Protection Agency, Room B102, 1301 Constitution Avenue,
NW, Washington, DC (Docket ID No. EPA-HQ-OAR-2009–0597).  The EPA
Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m.,
Monday through Friday, excluding legal holidays.  The telephone number
for the Reading Room is (202) 566-1744 and the telephone number for the
Air and Radiation Docket and Information Center is (202) 566-1742. 
Copies may also be mailed on request from the Air Docket by calling
(202) 260-7548.  A reasonable fee may be charged for copying. 
Electronic versions of public comments on the proposal are contained in
Docket ID No. EPA–HQ–OAR–2009–0597, which can be accessed the
federal-wide eRulemaking site at  HYPERLINK "http://www.regulations.gov"
www.regulations.gov .

Docket ID. No.	Commenter Name

0048	Anonymous Commenter

0049	National Association of Manufacturers (NAM)

0050	American Farm Bureau Federation (AFBF)

0051	BP America

0052	Ohio Environmental Protection Agency (EPA)

0053	American Petroleum Institute (API)

0054	Regional Air Pollution Control Agency

0055	Georgia-Pacific

0056	National Environmental Defense Association/Clean Air Project
(NEDA/CAP)

0057	Alabama Department of Environmental Management

0058	California Air Pollution Control Officers Association (CAPCOA)

0059	Flexible Packaging Association

0060	Lilly

0061	The National Climate Coalition

0062	National Association of Clean Air Agencies (NACAA)

0063	Interstate Natural Gas Association of America (INGAA)

0064	The Large Public Power Council (LPPC)

0065	Midwest Ozone Group

0066	American Meat Institute (AMI)

0067	American Electric Power (AEP)

0068	Alliance of Automobile Manufacturers

0069	City Utilities of Springfield, Missouri

0070	The Class of 85 Regulatory Response Group

0071	American Forest & Paper Association (AF&PA)

0072	Calpine Corporation

0073	Edison Electric Institute (EEI)

0074/0075	U.S. Chamber of Commerce

0076	Council of Industrial Boiler Owners (CIBO)

0077	California Air Resources Board (CARB)

0078/0094	Semiconductor Industry Association

0079	Nucor Corporation

0080	Peabody Energy

0081	Progress Energy

0082	Rubber Manufacturers Association (RMA)

0083	Consumers Energy

0084	Landmark Legal Foundation

0085	Air Permitting Forum

0086	American Chemical Council, American Iron and Steel Institute, Brick
Industry Association, Corn Refiners Association, Institute of Shortening
and Edible Oils, National Association of Manufacturers, National Oilseed
Processors Association, and National Petrochemical and Refiners
Association

0087	Clean Air Task Force, Indiana Wildlife Federation, Michigan
Environmental Council, and the Ohio Environmental Council

0088	Jeff Walker, Private Citizen

0089	Utility Air Regulatory Group (UARG)

0090	Arizona Public Service (APS)

0091	South Carolina Department of Health and Environmental Control
(DHEC)

0092	BCCA Appeal Groups

0093	ConocoPhillips

0094	Semiconductor Industry Association

0095	Sierra Club, Natural Resources Defense Council (NRDC) and
Environmental Defense Fund (EDF)

0096	Missouri Joint Municipal Electric Utility Commission

0097	RRI Energy, Inc.

0098	Texas Industry Project (TIP)

0099	Sierra Club

0100	Coalition for Responsible Regulation, Inc.

0101	Center for Biological Diversity 

0102	Texas Commission on Environmental Quality (TCEQ)

0103	Indiana Department of Environmental Management (IDEM)

0104	Texas Chemical Council (TCC)

0105	Dow Chemical Company

0106/0107	American Public Power Association (APPA)

0108	The National Rural Electric Cooperative Association (NRECA)

0109	Duke Energy Corporation

0110	National Mining Association (NMA)

0111	Texas Oil & Gas Association

0112	Intel Corporation

0113	Energy-Intensive Manufacturers Working Group on Greenhouse Gas
Regulation

0114	National Association of Manufacturers

0115	SCANA Corporation

0116	South Carolina Chamber of Commerce

0117	National Association of Homebuilders

0118	Clean Air Implementation Project (CAIP)



Chapter 2.   Procedural Issues

2.1.   Codification of EPA Interpretation

Comment:  

	

One industry   SEQ CHAPTER \h \r 1 commenter (0104) does not support a
codification of the final interpretation of when a pollutant is
“subject to regulation” because it is not necessary.  The commenter
notes that because regulation under PSD already includes a stringent
permitting analysis that requires the installation of BACT, the
performance of an ambient air quality impacts analysis, an additional
impacts analysis and thorough public participation throughout the
process, there is no need to further codify the law in this area.

	

  SEQ CHAPTER \h \r 1 An industry commenter (0105) states that EPA
should not codify its final interpretation in the federal PSD rules
found at 40 CFR 52.21 and 51.166, and should leave the interpretation as
a policy memo.  The commenter believes the logic presented in support of
the “actual control” interpretation was very reasonable and
supported by existing regulatory language and case law.  Further, the
commenter states that given the dynamic nature of the GHG regulatory and
legislative activity currently on-going in the U.S., leaving the
interpretation in a policy memo would be preferred and more easily allow
EPA to potentially respond to future scenarios.  Commenter also states
that if EPA determines it would like to codify these interpretations,
they should publish specific regulatory language for review and comment.

	

Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) took no position on codification of the actual control
interpretation in 40 CFR 52.21 other than to note that (1) EPA should
not delay final action on the proposed PSD Interpretation while it
undertakes any codification, and (2) that interpretation should apply
both to administration of the federal PSD permitting program under 40
CFR 52.21 and to EPA approval of (or other action on) new or revised
state PSD plans under 40 CFR 51.166.

A state agency commenter (0091) states that it is absolutely essential
that the definition of a regulated NSR pollutant, and when a pollutant
is subject to NSR, be resolved, and that it is just as important that
the resolution is a practical and scientifically justified approach that
can be readily-implemented by the permitting agencies.

	

One industry commenter (0050) submits that EPA’s interpretation (they
support the “actual control” interpretation) should be codified in
regulation so that it can be applied generally to any future “air
pollutant.”

	

	Another industry commenter (0081) states that EPA should consider
codifying its chosen interpretation.  The commenter (0081) believes this
would more formally clarify EPA’s position, provide certainty to the
regulated community, and help resolve the issue of the PSD requirements
potentially applying retroactively.  The commenter (0081.1) also
recommended that EPA codify its position as to the specific regulatory
event that triggers PSD, i.e., when a regulation establishing actual
controls takes effect.  However, the commenter (0081.1) believes EPA
should formally propose its various codifications through additional
notice and comment rulemaking because this Reconsideration should not be
seen as the equivalent of a formal regulatory process; rather, the
commenter (0081) believes that through the Reconsideration EPA is
requesting comment on whether it should undertake such a process. 

	

One industry commenter (0093) urges EPA to continue the interpretation
of “subject to regulation” per the PSD Interpretive Memo and
perhaps, although unnecessary, codify the clarification in regulatory
text.

	

One industry commenter (0108) states that it would be a positive step
for EPA to codify its chosen interpretation, assuming EPA selects the
actual control interpretation.  The commenter (0108) believes this would
more formally clarify EPA’s position, provide certainty to the
regulated community, and help resolve the issue of the PSD requirements
potentially applying retroactively.  The commenter (0108) adds that to
ensure consistency in application of  PSD by states that incorporate EPA
regulatory language in their State Implementation Plan(s) (SIP[s]), EPA
should also consider making similar codifications of its interpretation
in 40 CFR 51.66.  The commenter (0108) also recommends that EPA codify
its position as to the specific regulatory event that triggers PSD,
i.e., when a regulation establishing actual controls takes effect. 
However, the commenter (0108) believes EPA should formally propose its
various codifications through additional notice and comment rulemaking
because this Reconsideration should not be seen as the equivalent of a
formal regulatory process.

	

Response:

	

EPA does not believe it is necessary to codify its interpretation in the
regulatory text.  The Agency feels it is more important to promptly
communicate and apply our final decisions regarding the applicability of
the PSD program in light of recent and upcoming actions related to GHGs.
 More specifically, EPA recently finalized the “Mandatory Reporting of
Greenhouse Gases” rule (known as the “Reporting Rule”), 74 FR
56259 (Oct. 30, 2009), which added monitoring requirements for
additional GHGs not covered in the Part 75 regulations.  Further, EPA is
poised to finalize by the end of March 2010 the LDV Rule that will
establish controls on GHGs that take effect in Model Year 2012, which
starts as early as January 2, 2011.  Thus, these actions make it
important that EPA immediately apply its final interpretation of the PSD
regulations on this issue (as refined in this action).  Furthermore,
even if EPA modified the text of the federal rules, many states may
continue to proceed under an interpretation of their rules.  EPA thus
believes overall implementation of PSD permitting programs is
facilitated by this notice that describes how existing requirements in
federal regulations at 40 CFR 52.21 are interpreted by EPA and how
similar state provisions may be interpreted by states.

EPA finds merit in most of the points raised by commenters, but
necessarily has to reconcile these competing considerations.  EPA agrees
that codification of the Agency’s interpretation in the regulatory
text, while not necessary, would provide some measure of additional
certainty to all stakeholders (including regulated sources that must
obtain PSD permits).  Although not necessarily required here, we also
agree that it is preferable that EPA publish specific regulatory
language for review and comment.  However, regardless of whether
codification of this interpretation is ultimately desirable, the Agency
does not believe the national interest is served by delaying final
action on the issues addressed in this notice pending additional
procedural steps or by deferring the applicability of EPA’s final
interpretation. See, 5 U.S.C. §553(d).  EPA is still considering the
option of codifying its interpretation at a later date.

2.2.   Issuance of Memorandum without Notice and Comment Process

  SEQ CHAPTER \h \r 1 According to one environmental group commenter
(0095), EPA chose not to respond to petitioners’ early procedural
challenges to the Memo (see 74 FR 51538 at n.3), and describes these
notice and comment procedures as voluntary (Id. at 51548), a
characterization that the commenter strongly disagrees with.  These
comments incorporate the Petition for Reconsideration, which argues that
the PSD Interpretive Memorandum was a substantive rule and not an
interpretive rule.  To illustrate the nature of an interpretive rule,
the Petition for Reconsideration quotes the following passage from a
court decision:

Interpretative rules “simply state[ ] what the administrative agency
thinks the statute means, and only remind[ ] affected parties of
existing duties.” General Motors Corp. v. Ruckelshaus, 742 F.2d 1561,
1565 (D.C. Cir. 1984) (en banc) (internal quotation marks omitted).
Interpretative rules may also construe substantive regulations.  See
Syncor Internat’l Corp. v. Shalala, 127 F.3d 90, 94 (D.C. Cir. 1997).

Assoc. of Amer. RR v. Dept. of Transp., 198 F.3d 944 at 947 (D.C. Cir.
1999) (emphasis added).  The Petition argues that the PSD Interpretive
Memo is a substantive rule, and not an interpretive one, because it
reverses a formal agency interpretation, overturns an EAB decision, and
amends the substance of the PSD program.

Another commenter (0087) incorporated by reference the arguments put
forth in that Petition and in the Amended Petition for Reconsideration
filed by Sierra Club on January 6, 2009.  

Two industry commenters (0051, 0053) disagree with petitioners that
claimed the PSD Interpretive Memo is invalid because EPA issued it
without undergoing notice-and-comment procedures.  The commenter states
that EPA is undergoing notice-and-comment procedures and is thereby
curing any possible procedural faults in the memorandum’s issuance,
and that the Memorandum is an interpretative action that is exempt from
notice-and-comment procedures, rather than a substantive rulemaking.

Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) notes that the petitioners raised procedural issues in their
Petition for Reconsideration, arguing that the actual control
interpretation established in the PSD Interpretive Memorandum represents
a change in EPA’s historical interpretation of the phrase “subject
to regulation” and thus required a public notice-and-comment
proceeding to alter that interpretation.  The commenters disagree with
arguments that the PSD Interpretive Memorandum represents a change in
EPA’s historical interpretation or practice, and noted that, in any
event, EPA in the present rulemaking proceeding is supplying the process
petitioners argued is required, allowing all interested parties to
provide comments on the established interpretation and various proposed
alternative interpretations and providing a statement of basis and
purpose for the actual control interpretation.

Response:

The PSD Interpretive Memo is not a substantive rule promulgated under
section 307(d) of the CAA, but rather an interpretation of the terms of
a regulation at 40 CFR 52.21(b)(50).  An interpretive document is one
that explains or clarifies, and is consistent with, existing statutes or
regulation.  See National Family Planning and Reproductive Health
Ass’n v. Sullivan, 979 F.2d 227, 236-37 (D.C. Cir. 1992).  The PSD
Interpretive Memo explains and clarifies the meaning of the definition
of “regulated NSR pollutant” in section 52.21(b)(50) of the existing
NSR regulations, and does not alter the meaning of the definition in any
way that is inconsistent with the terms of the regulation.  The
memorandum construes substantive regulations and explains what EPA
thinks sections 165(a)(4) and 169(3) of the CAA mean in the context of
various other provisions of the statute.  See, Assoc. of Amer. RR v.
Dept. of Transp., 198 F.3d 944 at 947 (D.C. Cir. 1999).  In addition,
since the memorandum does not require sources or permit writers to
address a category of pollutants that have not been previously addressed
in PSD permits, it functions only to remind affected parties of existing
duties.  As such, the Memo qualifies as an interpretive rule under the
APA. 

The three main arguments made in the Petition for reconsideration to
support the view that the PSD Interpretive Memorandum is a substantive
rule do not demonstrate that the PSD Interpretive Memorandum is not
“interpretive” in nature.  Even if the primary premise of these
arguments was correct – that EPA’s action reverses a prior
interpretation and overturns an adjudication of the EAB – these points
address only the question of whether the EPA Administrator may revise an
interpretation without following a notice and comment process or adopt
an interpretation in manner that does not strictly follow instructions
or recommendations that the EAB gave to Region 8 upon remand of a
particular permit.  These two arguments do not address whether the
memorandum in fact clarifies the meaning of the regulation or explains
what EPA thinks the statute means.  While the third argument – that
EPA has substantively amended the requirements of the PSD program –
does have bearing on the question of whether the memorandum contains any
substantive rules, EPA does not agree that the memorandum establishes
any new substantive requirements.  The responses that follow address
these three arguments from the Petition in more detail.

Since the PSD Interpretive Memo is interpretive in nature, EPA was not
required to go through a notice and comment rulemaking process to issue
the document.  EPA’s authority to make rules and interpret them
derives from the CAA.  Along with the APA, section 307(d) of the CAA
establishes procedures for the exercise of rulemaking authority and
exceptions to those procedures.  Section 307(d) of the CAA establishes
procedures for, among other things, “the promulgation or revision of
any regulations under part C of subchapter I of this chapter (relating
to prevention of significant deterioration of air quality and protection
of visibility).”  However, that section of the CAA states clearly that
it “shall not apply in the case of any rule or circumstance referred
to in subparagraphs (A) or (B) of subsection 553(b) of title 5 of the
United States Code.”  Under 5 U.S.C. 553(b)(A), interpretive rules are
exempt from notice and comment requirements.  Thus, section 307(b) of
the CAA preserves the Agency’s authority to establish interpretations
of regulations promulgated under the Act without engaging in a notice
and comment rulemaking process that is otherwise required for the
promulgation and revision of PSD regulations.  Courts have frequently
recognized that interpretive rules are exempt from notice and comment. 
See, e.g., Devon Energy v. Kempthorne, 551 F.3d 1030, 1040 (D.C. Cir.
2008).  

Finally, EPA has now completed a notice and comment process with respect
to the content of the PSD Interpretive Memorandum.  Thus, even if EPA
had in fact erred in its assessment of the procedural obligations
associated with issuance of the memorandum, EPA has taken action that
would cure this alleged error.  The only procedural question remaining
after the completion of this reconsideration process is whether EPA
should codify its interpretation in the regulatory text.  As discussed
above, EPA has elected not to codify its interpretation at this time,
but EPA has not ruled out the possibility of amending the regulations at
a later date to explicitly reflect EPA’s interpretation of the CAA.

  

2.2.1.   Effect and Meaning of Previous EPA Interpretation Issued in
1978

The environmental group commenter (0095) emphasizes that the Agency’s
prior legally binding interpretation of the phrase “subject to
regulation” (established in 1978) remains in effect until such time
that the EPA completes a formal rulemaking procedure establishing a new
interpretation.  The commenter (0095) states that the Administrator’s
decision to conduct notice and comment rulemaking on the issues raised
in the Memo does not change the status of the law until this rulemaking
procedure is complete and a new legal interpretation has been finalized
and taken effect, and cites a D.C. Circuit ruling that when an
agency’s purported interpretation of a statute or regulation
“constitutes a fundamental modification of its previous
interpretation,” the agency “cannot switch its position” without
following appropriate procedures.  Paralyzed Veterans of Am. v. D.C.
Arena L.P., 117 F.3d 579, 586 (D.C. Cir. 1997).  

The commenter (0095) further states that the interpretation of the
phrase “subject to regulation under this Act” has been established
since 1978.  At that time, EPA clearly stated in a Federal Register
preamble that the phrase “‘subject to regulation under this Act’
means any pollutant regulated in Subchapter C of Title 40 of the Code of
Federal Regulations for any

source type.”  See 43 FR at 26388, 26397 (June 19, 1978).  This
earlier interpretation has never been withdrawn or modified and directly
conflicts with both the interpretation the Memo purported to adopt and
that proposed by EPA in its reconsideration.  Because the Subchapter C
regulations include, inter alia, regulations that require monitoring and
reporting of CO2 emissions, the logical implication of the 1978 Preamble
is that BACT applies to CO2 emissions.  The Agency’s effort to
establish a different interpretation precluding consideration of CO2
must be conducted via notice and comment rulemaking and until that
process is complete the prior interpretation remains in effect. 

	

	The Petition for Reconsideration interprets EPA’s position in the PSD
Interpretive Memo to be that the Agency is free to adopt a wholly new
definition of the term “regulated in” because the 1978 preamble does
not “amplify the meaning” of this term.  The Petition contends EPA
seeks to evade the procedures mandated by Paralyzed Veterans by
disguising a revision of governing law as an interpretation of its
previous interpretation.  According to the Petition, the PSD
Interpretive Memo claims that the phrase “regulated in” as it
appears in the 1978 preamble is ambiguous and thus subject to
clarification by the Agency, such that the 1978 Preamble may be
understood to mean “regulated by actual control of emissions” by use
of the term “regulated.” The Petitioner argues that this is a
newly-proposed understanding of the words “regulated in” that fits
unnaturally with the text of the 1978 Federal Register.  According to
the Petition, this reading would impose an enormously substantive and
restrictive qualification by use of the words “regulated in,” while
dismissing the far more prominent reference to “Subchapter C of Title
40 of the Code of Federal Regulations” as irrelevant verbiage. 

	

The Petition argues that the words “regulated” and “regulation”
appear pervasively throughout the 1978 Federal Register and always
describe “any act of regulating

or regulation.”  The Petitioners believe that the Agency used
“regulation” and “regulate” in 1978 to encompass all forms of
regulation and contends that, in the PSD Interpretive Memo, EPA departs
from a standard-English definition of these terms.  According to the
Petition, the only plausible reading of the 1978 Federal Register
preamble is that it described all the regulations contained “in
Subchapter C of Title 40 of the Code of Federal Regulations.”  The
Petitioners argue that EPA believes it can freely substitute its
definition of “regulation” as “regulation requiring actual control
of emissions” for the word “regulation” in whatever form the
latter appears in any regulatory document.  

	

The Petitioners also believe that various aspects of the EAB’s
decision in the Desert matter confirmed that EPA intended to apply the
Petitioners’ meaning of the term “regulated.”  The Petition argues
that in the dispute before the EAB in the Deseret matter, EPA offices
assumed that the 1978 preamble used the word “regulated” to describe
any provision in the application portion of the CFR, which is why EPA
tried limit the meaning of this phrase to just the types of pollutants
listed in the 1978 rule preamble.  The Petitioners also contend that the
PSD Interpretive Memo continues to rely on a premise rejected by the
Deseret decision that the list of specific categories of regulations in
the 1978 preamble establishes a binding limitation on the meaning of the
phrase “any pollutant regulated in Subchapter C of title 40 of the
Code of Federal Regulations”

	

Response:

	

EPA agrees that the interpretation reflected in the 1978 preamble
remains applicable, but disagrees with the meaning that these commenters
and Petitioners ascribe to the Agency’s 1978 statement.  The PSD
Interpretive Memorandum clearly and persuasively explains why the 1978
interpretive statement did not determine whether monitoring or reporting
requirements make a pollutant “subject to regulation under the Clean
Air Act.”  The 1978 preamble did not address whether any pollutant
subject to a monitoring requirement promulgated in the appropriate part
of the CFR is in fact “regulated in Subchapter C of Title 40 of the
Code of Federal Regulations.”  The PSD Interpretive Memorandum and
this final action on reconsideration add interpretive statements that
speak to more particular questions not addressed in 1978 statement. 
These additional interpretations apply in parallel with the 1978
interpretation and are not inconsistent with the latter.  In light of
these considerations, the PSD Interpretive Memorandum did not purport to
change or supersede the 1978 statement, nor did EPA propose to supersede
or change that interpretation in the October 7 notice of
reconsideration.  

	

The meaning these commenters and Petitioners assign to the 1978
interpretation is not supported by the terms of the interpretive
statement or EPA’s action since issuing the statement.  The commenter
argues that EPA impermissibly changed the 1978 interpretive statement
because the commenter recognizes only one potential meaning of the term
“regulation” or “regulate” and therefore assumes that the 1978
notice must have intended to applying this single meaning of the term
“regulation” or “regulate.”  These commenters and Petitioners
neglect to consider the ambiguity of the term “regulated” as a form
of the word “regulate,” and the primary dictionary meaning of the
terms “regulation” and “regulate” cited by EPA.  Each of the
sections of the 1978 Federal Register document cited by the Petition
uses the term “regulation” in the context of a sentence that
describes a provision in the CFR.  See, 43 FR at 26389 (“The
regulations made final today apply to any source . . .”), 26398 (“In
the regulations adopted today, EPA’s assessment of the air quality
impacts of new major sources and modifications will be based on”
certain EPA guidelines), 26401 (“Such offsets have always been
acceptable under the agency’s PSD regulations . . . .”), 26402
(“Environmental groups pointed out that the proposed regulations did
not specifically require Federal Land Managers to protect
“affirmatively” air quality related values . . . .”).  The context
in which EPA used the term “regulation” in these sentences does not
demonstrate that EPA intended the term “any pollutant regulated in
Subchapter C of Title 40 of the Code of Federal Regulations for any
source type” to mean what the Petitioner argues it necessarily must
mean (any pollutant covered for any reason in a regulation promulgated
in Subchapter C of Title 40 of the CFR).  The Petitioners charge EPA
with neglecting to consider the standard English definitions of the term
“regulation” and “regulate,” but EPA considered commonly used
meanings of these terms and applied the meaning that appears as the
primary meaning of the term “regulate” that is used in Webster’s
dictionary. 

Consequently, EPA does not agree that the PSD Interpretive Memo applies
a substantive and restrictive qualification on the use of the words
“regulated in.”  EPA has only applied an accepted meaning of the
term regulate and not added any restriction or qualification that is not
already inherent in the meaning of this term.  EPA does not believe it
can substitute any meaning for term “regulation,” but rather that it
may reasonably apply accepted meanings of terms found in standard
English dictionaries that fit the context of the sentence in which the
terms are used.  The Petitioners do not substantiate their conclusion
that the reference to “Subchapter C of Title 40 of the Code of Federal
Regulations” is more prominent in the context of this sentence than
the term “regulated in.”  It is unclear whether the Petitioner
believes prominence is determined by the number of words in each phrase
or some other criteria.  Considering the full context of the sentence at
issue, it is not obvious that the term “regulated in” is any less
prominent or significant than other parts of that sentence.  EPA does
not agree that its identification of an unresolved question in the
meaning of this sentence from the 1978 preamble makes the reference to
Subchapter C of the Title 40 of the CFR meaningless.  The BACT
requirement still applies to any pollutant regulated in this portion of
the CFR, but the question still remains what pollutants are in fact
“regulated” through provisions in this portion of the CFR.  

Commenters also appear to assume that this 1978 interpretative statement
is the only example of EPA’s past practice with respect to whether
pollutants covered by, but not controlled under, regulations in the CFR
make the PSD permitting requirements applicable to a pollutant. 

These commenters have not provided any additional information to
demonstrate that EPA (or another other PSD permitting authority) has in
fact acted in accordance with the meaning that the commenters assign to
the 1978 interpretation.  The record shows that EPA has not in practice
given the 1978 statement the meaning used by the commenter.  A review of
numerous federal PSD permits shows that EPA has been applying the actual
control interpretation in practice – issuing permits that only
contained emissions limitations for pollutants subject to regulations
requiring actual control of emissions under other portions of the Act. 
If EPA had given the 1978 interpretation the meaning the commenter uses,
the Agency would have previously issued PSD permits containing BACT
emission limitations on CO2 and oxygen.  The argument that EPA’s
failure to do so was wrong does not establish that it has in fact been
EPA’s position since 1978 that PSD permits should cover pollutants
subject to monitoring and reporting requirements that are promulgated
anywhere in Subchapter C of the Title 40 of the CFR.  Furthermore, in
1998, well after promulgation of the initial CO2 monitoring regulations
in 1993, EPA’s General Counsel concluded that CO2 would qualify as an
“air pollutant” that EPA had the authority to regulate under the
CAA, but the General Counsel also observed that “the Administrator has
made no determination to date to exercise that authority under the
specific criteria provided under any provision of the Act.” Memorandum
from Jonathan Z. Cannon, General Counsel to Carol M. Browner,
Administrator, entitled EPA’s Authority to Regulate Pollutants Emitted
by Electric Power Generation Sources (April 10, 1998).  

  	

	Furthermore, with respect to the EAB’s conclusion in the Deseret
matter, the PSD Interpretive Memo highlights portions of the EAB
decision that describe the ambiguity in the phrase “regulated in
Subchapter C of Title 40 of the Code of Federal Regulations” and the
term “regulation.”  The PSD Interpretive Memorandum references the
“specific categories of regulations identified in the second
sentence” of the passage quoted from the 1978 preamble only to
illustrate that the PSD Interpretive Memorandum is not inconsistent with
that 1978 statement.  Consistent with the statements in the PSD
Interpretive Memo, EPA agrees with and accepts the EAB’s reasoning
that the enumerated categories of pollutants do not establish a
controlling limitation on the scope of pollutants subject to regulation.
 However, that reasoning still does not establish whether monitoring or
reporting requirements make pollutants subject to regulation or whether
a pollutant is “regulated in” the CFR when the code contains only a
requirement to monitor and report, but not control, emissions of a
pollutant.  This has remained an open question since 1978 that EPA was
free to address in the PSD Interpretive Memorandum without changing any
prior EPA interpretive statement or acting inconsistent with the
reasoning of the EAB’s Deseret opinion. 

2.2.2.   Argument that PSD Interpretive Memo Overturns an EAB Decision

	

Comment:

	

The Petition for Reconsideration (which is incorporated in public
comments) contends that the PSD Interpretive Memo supersedes the EAB’s
decision in the Deseret matter.  The Petition contends, based on the
terms of 40 CFR 124.2(a), that the Administrator has no jurisdiction to
undo a statutory interpretation adopted in an EAB ruling or substitute
his judgment for that of the Board.  According to the Petitioners, the
EAB held in its Deseret opinion that EPA must undertake a notice and
comment process to adopt a new interpretation of the PSD regulatory
program.  The Petition asserts that the EAB is the final agency
decision-maker as to PSD permits, and the EAB has already determined
that a notice and comment process is required for EPA to address the
appropriate scope of analysis in PSD permits.  The Petitioners argued
that the EAB clearly anticipated that EPA would follow a notice and
comment process when it suggested that “[t]he Region should consider
whether interested persons, as well as the Agency, would be better
served by the Agency addressing the interpretation of the phrase
‘subject to regulation under this Act’ in the context of an action
of nationwide scope, rather than through this specific permitting
proceeding.”

	

Response:

			

EPA does not agree that the PSD Interpretive Memorandum overturns or is
in any way precluded by the EAB’s decision in the Deseret matter.  The
record supports the conclusion that the PSD Interpretive Memorandum
achieved its purpose to “build on the Board’s Deseret opinion” and
not to supersede it.  Memo at 2.   

The PSD Interpretive Memorandum does not undo any statutory
interpretation adopted in the EAB ruling.  In addressing the meaning of
the CAA, the EAB concluded only that the meaning of the term “subject
to regulation” in CAA sections 165 and 169 is not so clear and
unequivocal that it precludes EPA from exercise its discretion to
interpret the statute.  Deseret at 63.  The EAB also concluded there was
“no evidence of Congressional intent to compel EPA to apply BACT to
pollutants that are subject only to monitoring and reporting
requirements.”  Deseret at 63.  The EAB remanded the PSD permit in
that case on the grounds that “the Region’s rationale for not
imposing a CO2 BACT limit in the Permit – that is lacked the authority
to do so because of an historical Agency interpretation of the phrase
‘subject to regulation under this Act’ as meaning ‘subject to a
statutory or regulatory provisions that require actual control of
emissions of that pollutant’ is not supported by the administrative
record.”  Thus, the grounds for remand were not based on any statutory
interpretation that EPA was compelled to apply BACT to pollutants
subject to monitoring or reporting requirements.  Furthermore, the
Board’s opinion did not discuss any specific procedural requirements
of the Administrative Procedure Act or section 307(d) of the Clean Air
Act. 

EPA does not read the EAB’s Deseret decision to contain any statutory
interpretation or instructions that required the Administrator to
undertake a notice and comment process to address the appropriate scope
of analysis in PSD permits.  The Deseret permit appeal involved the
review of the rationale supplied by Region 8 to justify a decision not
to establish emission limitations for CO2 in a permit and the merits of
EPA’s contention that it had already established an interpretation of
the applicable law that precluded such an action.  The EAB’s specific
instructions in its remand order were directed to Region 8, which has
not yet acted on those instructions in the context of the permit for the
Deseret facility.  Because the Board found the record for this permit
inadequate to support the rationale provided, the Board directed Region
8 to “reconsider whether or not to impose a CO2 BACT limit in the
Permit” and “develop an adequate record for its decision, including
reopening the record for public comment.”  Id. at 64.  In addition,
the Board said that the Region should consider whether interested
persons and EPA would “be better served by the Agency addressing the
interpretation of the phrase ‘subject to regulation in an action of
nationwide scope, rather than through this specific permit
proceeding.”  Id.  The Board also said this analysis should “address
whether an action of nationwide scope may be required in light of the
Agency’s prior interpretive statements made in various memoranda and
published in the Federal Register and the Agency’s regulations.” 
The Board did not explicitly direct the Region or any other EPA office
to take public comment on any action of nationwide scope that may result
from this analysis.  The Board’s instructions regarding public comment
applied to the record for Region 8’s decision on the question of
whether or not to impose a CO2 BACT limit in the permit for the Deseret
facility.  EPA does not dispute that one might draw the inference that
the EAB anticipated a subsequent EPA action of nationwide scope on this
issue would entail a notice and comment process, but that was not an
express instruction of the Board’s order.

The instructions to EPA Region 8 in the Deseret opinion did not preclude
the Administrator from taking subsequent action to adopt an
interpretation of PSD regulations in accordance with the procedure that
Administrator deemed appropriate under the circumstances.  In the
defining the term “Environmental Appeals Board,” section 124.2(a) of
EPA’s regulations explains that “[t]he Administrator delegates
authority to the Environmental Appeals Board to issue final decisions in
RCRA, PSD, UIC, or NPDES permit appeals filed under this subpart.” 
While this delegation implies some degree of authority on the EAB to
interpret EPA regulations and the CAA, the Part 124 regulations do not
divest the Administrator of the power to promulgate regulations to
implement the PSD program or to interpret those regulations.  Section
124(a) only delegates the power to adjudicate appeals PSD permits to the
EAB and issue final decisions in those matters.  This provision does not
say that the Administrator has the delegated the authority to promulgate
regulations under the PSD program to the EAB.  The Administrator retains
the authority to interpret the CAA and to promulgate and amend PSD
program regulations.  By extension, the Administrator also retains the
authority to interpret those regulations and to determine the
appropriate procedure to be followed when establishing a given
interpretation.  The fact that the EAB issues final decisions on
particular PSD permit appeals does not mean that the EAB also issues
final decisions on all matters relating to the PSD permitting
requirements.

Furthermore, the Board did not clearly conclude that the prior
interpretative statements of the Agency required that the Agency
undertake a notice and comment process to address the issues covered in
the PSD Interpretive Memorandum.  The Board did say that the Region’s
analysis on remand “should address whether an action of nationwide
scope may be required in light of the Agency’s prior interpretive
statements made in various memoranda and published in the Federal
Register and the Agency’s regulations.”  However, this was simply an
instruction to assess the issue described, not a conclusion that Region
8’s rationale in that case was inconsistent with any prior
interpretive statements or that a notice and comment process was
required to adopt such an interpretation in an action of nationwide
scope.  In addition, as discussed in the PSD Interpretive Memorandum,
the EAB did appear to question whether subsequent EPA memorandum could
result in a change the interpretation set forth in the 1978 Federal
Register notice.  Deseret at 52.  But the Board did not make a finding
that the cited court cases in fact precluded EPA from issuing an
additional memorandum that addressed the issue under consideration by
the Board.  The Board’s analysis was specific to two particular
memoranda that lacked characteristics that are present in the PSD
Interpretive Memorandum, which references the relevant provisions of the
CAA, announces an EPA interpretation of the PSD provisions, and
discusses the Administrator’s prior interpretive statement on this
issue from the 1978 Federal Register.  

Finally, even if the EAB had made a determination that notice and
comment process was required to address this issue in an action of
nationwide scope, EPA has now completed a notice and comment process
before making a final decision to continue applying the PSD Interpretive
Memorandum, as modified in this action.  

2.2.3.   Contention that PSD Interpretive Memo Amends the Substance of
the PSD Program

	

The Petition for Reconsideration argues that the PSD Interpretive
Memorandum seeks to substantively amend EPA regulations to establish new
legal rights, restrictions, and/or obligations under the Act’s PSD
program.  The Petition lists the following actions that are alleged to
be newly established: (1) exempting pollutants that are subject to
regulation under the Act through state implementation plans (“SIPs”)
(Memo at 15).  On this point, the Petition acknowledged EPA’s view
that it has adopted a similar approach under the NSR program for the
regulation of ammonia as a PM2.5 precursor, but the Petition contends
that EPA was required to follow the model in that instance of adopting
the position in the PSD Interpretive memo through a notice and comment
rulemaking process; (2)  Establishing Regional Office responsibilities
with regard to future SIP submittals (Memo  at 3 n.1); (3) determining
how pollutants will become subject to PSD permitting in the future on
enactment of new congressionally-mandated emission limits (Memo at 6
n.5); (4) imposing requirements that address when pollutants for which
EPA has made a regulatory endangerment determination must be treated as
PSD pollutants (Id. at 14); and (5) defining when and how import
restrictions will trigger PSD for a pollutant.  The Petition asserts the
breadth of issues addressed in the memo (regarding what the Petitioner
contend are numerous and disparate regulatory programs) rebuts the view
that the PSD Interpretive Memo is an interpretive rule.

	

Response: 

	

	EPA does not agree that these portions of the memorandum established
new legal rights, restrictions, or obligations under the PSD program. 
The memorandum does not require any additional emissions limitations or
impose any additional criteria that a permit applicant must satisfy to
obtain a permit.  Likewise, the memorandum did not eliminate any permit
terms or conditions that had previously been required by EPA.  The
memorandum preserved the status quo regarding the criteria for obtaining
a PSD permit and the required terms and conditions of any permit.  

	

	The five examples of new matters addressed in the memo are each matters
on which EPA explains and clarifies existing rights, restrictions, or
obligations under the PSD program.  These portions of the memo do not
add requirements or limitations, but rather explain and clarify how EPA
intends to apply existing requirements in the face of the uncertainty
created by the EAB’s decision in the Deseret case and related actions.
 The Agency’s discussion of the significance of State Implementation
Plan provisions that require controls on a pollutant not regulated
outside the state follows an interpretation previously established by
EPA in a prior rulemaking regarding precursors to PM2.5.  The fact that
EPA initially established this interpretation through a notice and
comment rulemaking process did not necessitate that EPA employ the same
process to apply this established approach to a comparable situation. 
Furthermore, the additional reasoning for this position supplied in the
PSD Interpretation did not itself establish a new right, restriction, or
obligation.  The footnote on page 3 of the memorandum addressing EPA
Regional office responsibilities with regard to SIP submittals merely
explains how the Region’s should handle this existing responsibility
to review SIP submissions after the EAB’s determination that EPA had
not previously established the interpretation later adopted in the PSD
Interpretive Memorandum.  Another explanatory element is the discussion
of the EPA’s view that existing statutory instructions for EPA to
promulgate emission limitations of various types do not trigger the PSD
requirements until EPA promulgates the required limitations.  This
portion of the memo clarifies EPA’s view of what the statute and
regulations mean with respect to when a pollutant becomes subject
regulation under such requirements.  Likewise, the memo’s discussion
of the significance of an endangerment finding that is not accompanied
by direct regulatory requirements is a variation on this same question
regarding the particular stage in the regulatory process when a
pollutant becomes “subject to regulation.”  This part of the memo
does not create a limitation that is not already inherent in one
accepted meaning of the term “regulation” used in the existing
statute and regulations.  Since the definition of “regulated NSR
pollutant” in the PSD regulations expressly incorporates the
pollutants covered by the production and import restrictions under Title
VI of the CAA, the discussion of these import restrictions in the
memorandum does not add new rights, obligations, or limitations on the
application of the PSD program to these pollutants.  At most, this
portion of the memo clarifies and explains the time at which the PSD
requirements are invoked by the application of these requirements to
particular pollutants.  Moreover, each of these issues pertains to one
regulatory program – the PSD permitting.  Each of these topics is an
element or variation of the same basic question regarding the
applicability of the phrase “subject regulation” to particular
pollutants based on the EPA’s implementation of other programs under
the CAA.  

2.3.   Relevance of Related Public Participation Opportunities

	

Comment: 

	

The Petition for Reconsideration argues that public participation in the
specific adjudicatory proceeding regarding the Deseret plant or public
participation in EPA’s advanced notice of proposed rulemaking
(“ANPRM”) on regulation of GHGs under the CAA is legally
insufficient to cure the procedural failures of the PSD Interpretive
Memo.  The Petition argues that the EAB case not an adequate substitute
for notice and comment on a rule of nationwide scope because it
addressed only a single facility, and the adjudicatory process
associated with an individual permit proceeding cannot substitute for
notice and comment on a legislative rule of broad national significance.
 The Petition argues that the ANPRM never indicated EPA’s intention to
take imminent final action establishing new parameters for the PSD
regulatory program, nor specific intent to reinterpret agency policy
articulated in the 1978 preamble. 

	

Response: 

	

	EPA has never asserted that the opportunities for public input provided
in the EAB appeal and the ANPRM were sufficient to cure any perceived
procedural deficiency in the manner EPA issued the Memo.  Since EPA
maintains that the PSD Interpretive Memo is an interpretation that the
Agency was authorized to issue without a notice and comment rulemaking
process, there was no procedural deficiency that needed to cured by
referencing these particular opportunities for the public to provide EPA
with their views on this issue.  Since EPA recognized that there was
significant public interest in the issue addressed in the PSD
Interpretive Memo, EPA’s purpose in referencing the previous public
comment opportunities was simply to illustrate that, even though public
comment was not required by law, EPA had nevertheless considered the
views of several interested stakeholders and all information available
to EPA at that time.  Even in circumstances where quick action by EPA is
warranted and a formal public comment opportunity is not mandatory, EPA
recognizes that the Agency is accountable to the citizens of the United
States and should be responsive to public concerns.  Furthermore, EPA
understands that the best decisions are those that are well-informed and
reflect an evaluation of all relevant considerations.  EPA thus
referenced these earlier opportunities for public input to show that the
Agency’s action was responsive to public concerns and reflected
consideration of all information available to the Agency at that time. 

	

2.4.  Interpretation of Statute and Revisions Thereto

	

	Comment: 

	

The Petition for Reconsideration argues that PSD Interpretive Memo is
not entitled to deference because the regulation simply parrots the
language of the statute.  The Petition quotes the following statement
from a Supreme Court decision: 

[T]he existence of a parroting regulation does not change the fact that
the

question here is . . . the meaning of the statute. An agency does not

acquire special authority to interpret its own words when, instead of
using

its expertise and experience to formulate a regulation, it has elected

merely to paraphrase the statutory language.”

Gonzales v. Oregon, 546 U.S. 243, 257 (2006).

Response:    

EPA does not contend that it can interpret the PSD regulations in a
manner that is inconsistent with the requirements of the CAA.  The PSD
Interpretive Memorandum explains in detail why the Agency’s
interpretation of the language in the regulation is not precluded by the
language in the CAA that the regulation is modeled upon.  EPA need not
address the question of whether its interpretation of the regulation is
entitled judicial deference to reach the conclusion that its
interpretation of the regulation is permissible under the CAA.  

	

	Comment:

	

One state commenter (0057) asserts that a tenet of administrative law is
that, if an agency seeks to change a previous, formal interpretation of
the meaning and/or the implementation of a rule or statute, it must go
through a rulemaking to do so.  

	

The Petition for Reconsideration contends that the D.C. Circuit has held
that “when an agency’s purported interpretation of a statute or
regulation constitutes a fundamental modification of its previous
interpretation, the agency cannot switch its position without following
appropriate procedures.”  Petition at 5 (citing Paralyzed Veterans of
Am. v. D.C. Arena L.P., 117 F.3d 579, 586 (D.C. Cir. 1997) (internal
quotations omitted).  According to the Petition, “[o]nce an agency
provides an interpretation of a statute – as EPA did here, in 1978 –
‘it can only change that interpretation as it would formally modify
the regulation itself: through the process of notice and comment
rulemaking.’”  Petition at 5. 

Response:    

These comments overextend the reach of this line of case law.  The
Paralyzed Veterans line of cases holds only that regulatory agencies
cannot change a long-standing, definitive, and authoritative
interpretation of its regulations without going through a notice and
comment process.  See, Paralyzed Veterans of America v. D.C. Arena L.P.,
117 F.3d 579, 586 (D.C. Cir. 1997); Alaska Professional Hunters Ass’n
Inc. v. FAA, 177 F.3d 1030, 1033-34 (D.C. Cir. 1999).  To EPA’s
knowledge, no court has required a rulemaking procedure when the Agency
seeks to issue or change its interpretation of a statute.  Nevertheless,
EPA has completed this notice and comment proceeding before deciding to
adopt the revised interpretation of the CAA described in this final
action.

2.5.   Revisions to Interpretation in PSD Interpretive Memo

Comment: 

One state commenter (0057) asserts that a tenet of administrative law is
that, if an agency seeks to change a previous, formal interpretation of
the meaning and/or the implementation of a rule or statute, it must go
through a rulemaking to do so.  Based on this principle, the commenter
argues that EPA cannot merely “re-interpret” its previous
interpretation; it must undergo a rulemaking process and formally change
the federal PSD rules to legally effect the change.

Response:

The commenter does not specify any specific change in interpretation
that the commenter is concerned about.  Since EPA’s interpretation of
the PSD program regulations is unchanged in most respects by this
action, it is not clear that the particular refinement to that
interpretation that EPA is making in this action would invoke the
doctrine described by the commenter.  Even if this refinement is viewed
as a fundamental change, EPA has completed the revision to the
interpretation in the PSD Interpretive Memo after a notice and comment
process.  Furthermore, since EPA initiated a process of reconsidering
and soliciting comment on the PSD Interpretive Memo within three months
of its issuance, the memorandum had not yet become particularly
well-established or long-standing.  See Metwest v. Secretary of Labor,
560 F.3d 506, 511 n.4 (D.C. Cir. 2009).  Thus, the case law referenced
by the commenter does not preclude the action EPA has taken here to
refine its interpretation of the regulations. 

As noted above, while this doctrine has been applied to some types of
changes in the interpretation of a rule, EPA does not agree that any
court has established a principle of administrative law that requires a
notice and comment process before an agency can change its
interpretations of a statute. 

Chapter 3.   Actual Control of Emissions

3.1.   Overview of Comments on Actual Control Interpretation

	Comment:

	

Forty industry and commerce commenters (0050, 0051, 0053, 0055, 0056,
0059, 0060, 0061, 0063, 0065, 0066, 0067, 0068, 0070, 0071, 0073, 0074,
0076, 0080, 0081, 0083, 0085, 0086, 0089, 0090, 0092, 0093, 0096, 0097,
0098, 0103, 0104, 0105, 0106/0107, 0108, 0109, 0110, 0112, 0115, 0116,
0118), one legal commenter (0084), and six state/local agency
associations (0054, 0058, 0062, 0077, 0091, 0109) support EPA’s
position that the “actual control interpretation” established in the
PSD Interpretive Memo is the proper interpretation of the phrase
“subject to regulation.”

	

Four industry and commerce commenters (0051, 0053, 0068, 0074) state
that EPA must retain the “actual control” interpretation set forth
in the PSD Interpretive Memo because the “actual control”
interpretation is supported by the statutory text, is consistent with
past EPA practice, and is sound public policy.  These commenters said
that alternatives to the “actual control” interpretations are not
legally supportable, are contrary to past practice, and/or are contrary
to public policy considerations.

	

The industry commenter (0118) reiterates the arguments made in the PSD
Interpretive Memo and proposed PSD Interpretation notice, and states
that the arguments strongly support the “actual control”
interpretation, and asserts that the “actual control” interpretation
is consistent with the EPA’s longstanding interpretation of the phrase
“subject to regulation” and is supported by legal and compelling
policy reasons.  

One of the industry commenters (0109) believes that this interpretation
is consistent with EPA’s longstanding practice, is reasonable and
logical, and is supported by strong policy and legal rationales, while
the other alternative interpretations examined by EPA are not required
by law, are neither reasonable nor consonant with sound public policy,
and could implicate retroactive liability concerns.  

  SEQ CHAPTER \h \r 1 Industry commenter (0105) supports EPA’s
preferred interpretation of “subject to regulation” based on an EPA
regulation requiring “actual control” of emissions of a pollutant,
and agrees this interpretation is supported by EPA’s past policy and
practice and is in keeping with the language and structure of the CAA. 

Three industry commenters (0067, 0073, 0083) similarly state that this
interpretation is consistent with EPA’s longstanding practice, is
consistent with the language and structure of the CAA, and is supported
by important policy concerns.  These commenters (0067, 0073, 0083)
believe that the alternative interpretations are fundamentally flawed
for the reasons articulated by EPA in the proposed PSD Interpretation. 

Under the circumstance that a lack of Congressional action essentially
forces EPA to move forward with regulation of CO2 under the CAA, an
industry commenter (0097) supports and endorses the EPA’s previous
interpretation which is the “actual control interpretation” under a
final national rule, agreeing that this interpretation best reflects
past policy and practice, is in keeping the structure and language of
the statute and regulations, best reflects Congressional intent in the
CAA and best allows for the necessary coordination of approaches to
controlling emissions of newly identified pollutants. 

Ten of the industry commenters (0089 and others incorporating this
submission (0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109))
believe that this interpretation is consistent with EPA’s longstanding
practice, is reasonable and logical, and is supported by strong policy
and legal rationales, while the other alternative interpretations
examined by EPA, or put forward by other parties, are not required by
law, are neither reasonable nor consonant with sound public policy, and
could implicate retroactive liability concerns.  

Three commenters (0092, 0093, 0098) representing several groups of
companies (industry) and several other industry commenters recommend
that EPA reaffirm the PSD Interpretive Memo’s position (and also
EPA’s long-standing interpretation) that an air pollutant becomes
“subject to regulation” at the point that regulations requiring
actual controls of emissions are in place.  These commenters believe the
“actual control” interpretation is the only reasonable and rationale
approach, and that other interpretations of “subject to regulation”
would result in an unworkable and unreasonable PSD program.  

One industry group commenter (0070) expresses support for the “actual
control interpretation” because it best reflects EPA’s past policy
and practice and is keeping with the structure and language of the CAA
and its regulations.

	

One industry group commenter (0071) states that the PSD interpretive
memo is a logical and reasonable interpretation of the PSD regulations
and the CAA. The approach in the Interpretive Memo is a reasonable one,
and the other approaches proposed would be unreasonable.

For all the reasons stated in the PSD Interpretive Memorandum, nine
other industry commenters (0065, 0067, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109) fully agree with EPA’s determination, as
proposed to be reaffirmed in the proposed PSD Interpretation, that the
“actual control” interpretation is, and should continue to be, the
controlling interpretation on this issue.  

Four commenters (0087, 0095, 0099, 0101), representing numerous
environmental organizations, are opposed to EPA’s “actual control”
approach.

Although one environmental commenter (0087) applauds EPA’s work in
finalizing the Mandatory Reporting of Greenhouse Gas Rule; the effort
and care EPA has taken in responding to the Supreme Court’s mandate in
Massachusetts v. EPA; and the Proposed and Final Endangerment and
Contribution Findings and proposed CAFE standards for mobile sources;
they express disappointment that, in the proposal, EPA has reaffirmed
what the commenter termed an unlawful decision made by the previous
administration.  The commenter (0087) then states that the positions
taken by EPA in the Proposed Reconsideration are in contrast to the
mandates of the CAA.  

  SEQ CHAPTER \h \r 1 One environmental organization commenter (0095)
asserts that EPA’s Reconsideration of the PSD Interpretive Memo
suffers from the same defects of the original Memo, and introduces new
areas of concern.  According to the commenter, the reconsideration
proposal simply restates the policy preferences of the original Memo,
while offering no legal support for EPA’s decision to ignore the plain
language of the CAA, and instead, it reiterates the agency’s position
that “past policy and practice” and a variety of administrative
preferences somehow support the idea that Congress meant the term
“regulation” in section 165 of the CAA to mean “actual control of
emissions,” even though Congress distinguished between “control”
of emissions and “regulation” throughout the CAA.

Response:

EPA has made a final decision to continue applying (with one limited
refinement) the Agency’s existing interpretation of 40 CFR
52.21(b)(50) that is articulated in the PSD Interpretive Memo.  For
reasons explained further below, EPA has concluded that the “actual
control interpretation” is a permissible interpretation of the CAA and
is the most appropriate interpretation to apply given the policy
implications.  EPA has not been persuaded that the Agency is compelled
by the CAA, the terms of EPA regulations, or prior EPA action to apply
any of the four alternatives to its preferred interpretation described
in the October 7, 2009 notice – monitoring and reporting requirement,
EPA-approved SIP, endangerment finding, or CAA section 209 waiver.  EPA
has likewise not been persuaded that all of the alternative
interpretations are precluded by the CAA.  However, since Congress has
not precisely spoken to this issue, EPA has the discretion to choose
among the range of permissible interpretations of the statutory
language.  Since EPA’s interpretation of the regulations is not
precluded by the statutory language, we are electing to maintain that
interpretation on policy grounds.  We have concluded that the “actual
control” interpretation is not only consistent with decades of past
practice, but provides the most reasonable and workable approach to
developing an appropriate regulatory scheme to address newly identified
pollutants of concern.  Thus, except as to the one element that EPA
proposed to modify, EPA is reaffirming the PSD Interpretive Memo and its
establishment of the actual control interpretation as EPA’s definitive
interpretation of the phrase “subject to regulation” under the PSD
provisions in the CAA and EPA regulations.  

The actual control interpretation is supported by the language and
structure of the regulations and is consistent with past practice in the
PSD program and prior EPA statements regarding pollutants subject to the
PSD program.  The CAA is most effectively implemented by making PSD
emissions limitations applicable to pollutants after a considered
judgment by EPA (or Congress) that particular pollutants should be
subject to control or limitation.  The actual control interpretation
promotes the orderly administration of the permitting program by
allowing the Agency to first assess whether there is a justification for
controlling emissions of a particular pollutant under relevant criteria
in the Act before applying the requirements of the PSD permitting
program to a pollutant.

EPA responds to more specific points raised by these commenters
elsewhere in this document.

3.2.    Interpretation of the Clean Air Act

	

Comment:

One commenter (0110) states that they generally agree with the
conclusions EPA draws in the Reconsideration and those originally made
by former EPA Administrator Stephen Johnson in his December 18, 2008
memorandum interpreting the applicability of CAA regulations that
determine when pollutants become covered by the PSD permit program (PSD
Interpretive Memorandum).  Both documents appropriately interpret the
phrase “subject to regulation” in sections 165(a)(4) and 169 of the
CAA, and in the definition of “regulated [New Source Review (NSR)]
pollutant” in 40 CFR 52.21(b)(50). 

Commenter (0107) stated that, in Massachusetts v. EPA, the Supreme Court
ruled that the definition of “pollutant” under the CAA is extremely
broad and encompasses many substances that may or may not be necessary
for EPA to regulate unless the Administrator determines that they
endanger the public or the environment.  Commenter (0107) further stated
that, unless a pollutant has been subject to “actual controls,”
there would be no regulatory basis for determining that emissions of the
pollutant should be reduced under another regulatory program such as
PSD. 

Another industry commenter (0080) supports the legal and policy
rationales proffered by EPA in the proposed PSD Interpretation, but
added that the legal rationale should focus more broadly on the meaning
of the phrase “subject to regulation” within the PSD statutory
program and the CAA as a whole.  Referring to Crandon v. U.S., 494 U.S.
152, 158 (1990), citing K Mart Corp. v. Carrier, Inc., 486 U.S. 281, 291
(1988); Dolan v. United States Postal Service, 546 U.S. 481, 486 (2006);
and Holloway v. U.S., 526 U.S. 1, 6 (1999), this commenter (0080)
indicated that a basic maxim of statutory construction is that one must
look not only at the particular statutory language, but also consider
the purpose and context of the whole statute.  The commenter (0080) also
noted that the purpose of the CAA is to “protect and enhance the
quality of the Nation’s air resources so as to promote public health
and welfare and the productive capacity of its population.”  CAA
section 101(b)(1).  

	

The commenter (0080) asserts that interpreting the phrase “subject to
regulation” as “subject to regulation that restricts emissions”
fits within the statute because EPA is only authorized to restrict
emissions of  air pollutant where the EPA has made an endangerment
finding (or where Congress has implicitly done so, as in the case of
Title VI).  

	

This industry commenter (0080) states that Massachusetts v. EPA
confirmed the basic structure of the CAA under which first there is an
EPA endangerment finding and then there is regulation.  The commenter
(0080) added that under Massachusetts, EPA may not regulate GHGs simply
because they are “air pollutants” under the Act; it must first find
a danger to public health or welfare.  The commenter (0080) indicates
that the Massachusetts v. EPA Petitioners (which included some of the
Petitioners in this reconsideration) specifically recognized the
requirement for an endangerment finding under section 202, but now the
Petitioners seek to convince EPA that EPA should engage in GHG
regulation even without an endangerment finding.  Considering the
context of the PSD program and the CAA as a whole, the commenter (0080)
finds absurd the Petitioners’ contention that various actions taken by
EPA, even before EPA determined that CO2 endangers health or welfare and
even before EPA decided to require that any emitter should be required
to reduce emissions, should be interpreted as triggering CO2 BACT for a
potentially very large number CO2 emitters.  

One industry group commenter (0071) states that the placement of the
phrase “subject to regulation” within the statute requiring BACT
limits strongly suggest that the phrase refers to presently controlled
(and thus “regulated”) pollutants.  See CAA §§165(a)(4), 169(3),
42 U.S.C. 7475(4), 7479(3).  The commenter states that the approach that
EPA has taken to implement the statutory PSD program in the PSD
Interpretive Memo is well within the scope of EPA’s authority to
implement the PSD program (cited Alabama Power Co. v. Costle, 606F. 2nd
1068, 1077 (D.C. Cir 1979) (describing the “flexibility” and
“latitude” EPA has in fashioning PSD regulations); and Envtl. Def.
v. Duke Energy Corp., 127 S. Ct. 1423, 1433-1434 (2007) (legislative
history does not suggest Congress “had details of regulatory
implementation in mind when it imposed PSD requirements on modified
sources”).

A commenter (0093) points out that the term “subject to regulation”
should not be applied more broadly than where referenced in the CAA at
42 U.S.C. §7475(a)(4) which applies to the determination of BACT for
sources that have otherwise triggered PSD applicability.  The commenter
refers EPA to the comments of the American Petroleum Institute (API),
the Texas Industry Project (TIP) and the National Environmental
Development Association Clean Air Project (NEDA/CAP) for further
discussion of the inferiority and unreasonableness of alternate
potential interpretations of “subject to regulation.” 

One commenter (0086), representing several groups of companies
(industry), states that the “actual control” interpretation is the
most plausible reading to “subject to regulation” and gave
counter-arguments to some other textual constructions.  

One industry commenter (0056) states that the petitioners misread the
decision by the U.S. EAB in the matter of the PSD permit appeal for the
Deseret Power Plant, arguing that EPA lacked the authority to interpret
the phrase “subject to regulation” in Subpart C of Title I of the
CAA.  Petitioners demanded that EPA reconsider and retract the PSD
Interpretive Memo because it was inconsistent with the plain language of
the CAA and it had not been issued consistent with public participation
procedures in the law.  This commenter states that petitioners also
argue that when EPA’s EAB reviewed the same issue in the permit
proceeding for a construction of a new EGU at the Deseret power plant in
Utah, EAB found that the EPA did not have discretion to make the
“actual control” interpretation.  The permit was remanded back to
the permitting authority in Region 8 because EAB found that EPA
improperly cited an interpretation for historical precedent which did
not support a finding that EPA had historically interpreted the phrase
as a pollutant subject to “actual control.” 

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) note that
the only judicial decisions addressing this issue have adopted or
affirmed EPA’s actual control interpretation and have rejected other
interpretations advanced by litigants that challenged application of
that interpretation.  See, e.g., Longleaf Energy Associates v. Friends
of the Chattahoochee, 681 S.E.2d 203 (Ga. Ct. App. 2009) (reversing a
lower court’s decision to the contrary), cert. denied, Case No.
S09C1879 (Ga. S. Ct., Sept. 28, 2009); Appalachian Voices v. State Air
Pollution Control Bd., Case No.: CL08-3530 (Cir. Ct. City of Richmond,
Aug. 10, 2009), appeal pending, Appalachian Voices v. State Air
Pollution Control Bd., No. 2199-09-2 (Va. Ct. App., filed Oct. 1, 2009).

	

Response:

	

	EPA agrees that the interpretation of the CAA described in the PSD
Interpretive Memorandum is a permissible reading of the Act, considering
the context of the PSD provisions within the Act as whole. 

	

The PSD Interpretive Memo reasonably applies a common meaning of the
term “regulation” to support a permissible interpretation that the
phrase “pollutant subject to regulation” means a pollutant subject
to a provision in the CAA or a regulation issued by EPA under the Act
that requires actual control of emissions of that pollutant.  Public
comments have not demonstrated the dictionary meanings of the term
“regulation” described in the Memo are no longer accepted meanings
of this term.  In light of the different meanings of the term
“regulation,” EPA has not been persuaded by public comments that the
CAA plainly and unambiguously requires that EPA apply any of the other
interpretations described in the October 7, 2009 notice.  

Moreover, the Memo carefully explains how the actual control
interpretation is consistent with the overall context of the CAA in
which sections 165(a)(4) and 169(3) are found.  After consideration of
public comment, EPA continues to find this discussion persuasive.  The
“subject to regulation” language appears in the BACT provisions of
the Act, which themselves require actual controls on emissions.  The
BACT provisions reference the New Source Performance Standards (NSPS)
and other control requirements under the Act, which establish a floor
for the BACT requirement.  See 42 U.S.C. §7479(3).  Other provisions in
the CAA that authorize EPA to establish emissions limitations or
controls on emissions provide criteria for the exercise of EPA’s
judgment to determine which pollutants or source categories to regulate.
 Thus, it follows that Congress expected that pollutants would only be
regulated for purposes of the PSD program after:  (1) the EPA
promulgated regulations requiring control of a particular pollutants on
the basis of considered judgment, taking into account the applicable
criteria in the CAA, or (2) EPA promulgates regulations on the basis of
Congressional mandate that EPA establish controls on emissions of a
particular pollutant, or (3) Congress itself directly imposes actual
controls on emissions of a particular pollutant.  In addition,
considering other sections in the Act that require reasoned
decision-making and authorize the collection of emissions data prior to
establishing controls on emissions, it is also consistent with the
Congressional design to require BACT limitations for pollutants after a
period of data collection and study that leads to a reasoned decision to
establish control requirements.  Public commenters did not demonstrate
that it was erroneous for EPA to interpret the PSD provisions in this
manner, based on the context of the Act. 

3.2.1.   Arguments that Plain Language of Act Precludes Actual Control
Interpretation

	

Comment: 

 	

	The commenter (0087) states the proposed Reconsideration, like the
original PSD Interpretive Memo, is devoid of legal support as it ignores
the intent of Congress as evidenced by the plain language of the CAA.  

	

  SEQ CHAPTER \h \r 1 One environment organization commenter (0095)
claims that EPA’s position is inconsistent with the plain language of
the CAA.  EPA proposes to adopt an interpretation of a regulation that
parrots the CAA phrase, “pollutant subject to regulation under this
Act.”  The commenter states that interpretation would “exclude
pollutants for which EPA regulations only require monitoring or
reporting but . . . include each 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.”  The commenter (0095)
continues that section 165(a)(4) of the CAA requires BACT “for each
pollutant subject to regulation under this chapter emitted from . . .
such facility.” 42 U.S.C. §7475(a)(4).  CO2 is regulated under
“this chapter” because section 821 of the CAA Amendments of 1990
required EPA to “promulgate regulations” requiring major sources,
including coal-fired power plants, to monitor CO2 emissions and report
their monitoring data to EPA.  In 1993, EPA promulgated these
regulations, which require sources to monitor CO2 emissions, 40 CFR
75.1(b), 75.10(a)(3), prepare and maintain monitoring plans, id.
§75.53, maintain records, id. §75.57, and report monitoring data to
EPA, id. §75.60-64.  

	

The commenter (0101) states that attempting to distinguish the
overwhelming evidence showing that CO2 is now regulated under the CAA,
EPA concludes that “subject to regulation under the Act” is best
interpreted as those pollutants subject to a nationwide standard,
binding in all states, that EPA promulgates on the basis of its CAA
rulemaking authority.”  See 74 FR at 51543.  The commenter (0101)
opines that with each iteration of its position, EPA moves further away
from the clear import of the CAA’s language and structure.  Neither
the plain meaning of section 165(a)(4) nor the intent and purpose of the
CAA permit such redefinition.  This commenter believes that EPA should
correct – not reaffirm – Administrator Johnson’s erroneous
interpretation.  In accordance with the plain language of the statute,
the PSD program becomes applicable to GHGs and other pollutants whenever
they become “subject to regulation.”  The commenter (0101) opines
that this already has occurred as a result of Massachusetts v. EPA.  In
the case of the PSD program, the statute mandates that permitting be
required for any pollutant that is subject to regulation under this
Act.”  CAA §165(a)(4), 42 U.S.C. §7475(a)(4); see also 40 CFR
52.21(b)(50)(iv) (a “regulated NSR pollutant” is “[a]ny pollutant
that otherwise is subject to regulation under the Act”).  Under
Massachusetts v. EPA, GHGs are “subject to regulation” under the CAA
in any normal sense of the phrase.  Indeed, given that EPA has already
“regulated” GHGs in a number of ways, the statute plainly requires
that permitting for GHGs commence immediately.  EPA has already
regulated GHG in the various ways outlined in the Petition: through a
regulation to monitor or report emissions; through a regulation that
approves the inclusion of regulatory requirements in a SIP; through a
finding that pollutants endanger public health or welfare; or through a
regulation that grants a section 209 waiver.  By any of these measures,
GHGs already are “subject to regulation” under the CAA, and the time
to begin issuing PSD permits for these pollutants already has passed.

  	

According to several other commenters (0067, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109), those opposing the “actual control”
interpretation incorrectly assert that this interpretation is precluded
by the CAA.  To the contrary, as the EAB stated in Deseret, this
interpretation is a reasonable construction of an ambiguous phrase, and
no contrary interpretation is in any way legally compelled.  See Deseret
at 29.  This is clearly an area where EPA has discretion to interpret
the statute in a reasonable way, consistent with well-established
historical practice, to make PSD implementation manageable and
effective.  Rejection of the “actual control” interpretation would
cause the PSD program to apply in a way that frustrates the objectives
and purposes of the CAA.

	

Response:

EPA has concluded that the plain language of the CAA does not preclude
EPA from applying the actual control interpretation.  EPA finds the
EAB’s reasoning of in the Deseret opinion to be the most persuasive
and adopts that reasoning here.  The EAB concluded that a statutory
plain meaning cannot be ascertained from looking solely at the word
“regulation” to determine whether Congress, in enacting the statute
in 1977, intended “subject to regulation” to apply narrowly to mean
a provision that prescribes actual control of emissions of the
pollutant, or more broadly to embrace requirements for monitoring of
pollutant emissions, among other things.  It does not appear that, when
it enacted CAA sections 165 and 169 in 1977, Congress considered this
precise issue, or more significantly, drafted language sufficiently
specific to address it.  The phrase “subject to regulation under this
Act” is not as clear and unequivocal as commenters argue.  

The use of similar, but not identical, language in section 821 of the
1990 Public Law, which requires the Agency to promulgate
“regulations,” does not constrain the Agency’s ability to
interpret sections 165 and 169.  Commenters argue that the only
supportable reading of sections 165 and 169 mandates that PSD regulatory
authority extends to any pollutant subject to “a” or “any”
regulation promulgated in the CFR because that is the meaning of section
821’s direction to promulgate regulations.  The statutory language
does not compel this meaning.  

The argument that sections 165 and 169 have only one proper
interpretation, ignores the fact that Section 821 uses different
terminology, “regulations,” from that used in the PSD provisions of
sections 165 and 169, “subject to regulation.” The difference in
terminology is potentially significant.  When read in the context of the
phrases in which they are used, possible alternative meanings of
“regulation” and “regulations” become apparent.  In the phrase
“the Administrator * * * shall promulgate regulations * * * to require
[sources to monitor CO[2]]” in section 821, the term “regulations”
is understood to be the end product of the administrative rule making
process.  Thus, Congress’ direction that EPA promulgate
“regulations” found at various places in the CAA and in section 821
is most naturally read to mean that Congress directed EPA to use its
legislative rule making authority to implement the statutory
requirements, filling in necessary specificity and detail.  Section 112
of the Act uses the term “subject to regulations,” referring to
“regulations” in the plural. CAA sections 112(r)(3) and
112(r)(7)(F). This evidences that Congress may not have meant “subject
to regulation” (singular) to have the same meaning.

The Supreme Court has observed in other contexts that the same or
similar words may be construed differently “not only when they occur
in different statutes, but when used more than once in the same statute
or even in the same section.”  Envtl. Def. v. Duke Energy Corp., 549
U.S. 561, slip op. at 9 (2007) (quoting Atl. Cleaners & Dyers, Inc. v.
United States, 286 U.S. 427, 433 (1932)). In reviewing the meaning of
the phrase “subject to regulation under this Act” we do not confine
ourselves “to examining a particular statutory provision in
isolation.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132
(2000). Rather, “[t]he meaning -- or ambiguity -- of certain words or
phrases may only become evident when placed in context * * *. It is a
‘fundamental canon of statutory construction that the words of a
statute must be read in their context and with a view to their place in
the overall statutory scheme.’” Id. at 132-33.

	

We find no evidence that Congress’s addition of section 821 in 1990
was an attempt to interpret or constrain the Agency’s interpretation
of the broader phrase “subject to regulation” as used in sections
165 and 169.  See 136 Cong. Rec. H2915, 2934 (1990) (statement of Rep.
Moorhead), reprinted in S. Comm. on Env’t and Public Works,
Legislative History of Clean Air Act Amendments of 1990, at 2986-87
(1993); 136 Cong. Rec. H2511, 2578 (1990) (statement of Rep. Cooper),
reprinted in S. Comm. on Env’t and Public Works, Legislative History
of Clean Air Act Amendments of 1990, at 2652-53 (1993); 136 Cong. Rec.
H2511, 2561-62 (1990) (statement of Rep. Moorhead), reprinted in S.
Comm. on Env’t and Public Works, Legislative History of Clean Air Act
Amendments of 1990, at 2612-14 (1993).  Section 821 bears no facial
relationship to the PSD provisions of sections 165 and 169. Congress’s
subsequent use of the word “regulations” in a section of the 1990
Public Law that bears no explicit relationship with the earlier-enacted
sections would not appear sufficient, on its own, to implicitly
constrain EPA’s authority to interpret the PSD provisions of section
165 and 169. This is particularly true where, as here, the two sections
were enacted 13 years apart, bear no obvious relationship, and are not
even placed in close proximity. Moreover, the Agency did determine, in
1978 that the phrase “subject to regulation under this Act” used in
the PSD provisions requires interpretation to properly implement the PSD
program, and Congress did not evidence an intent in section 821 to alter
the Agency’s determination.  Normally, more express terminology would
be expected if Congress intended to alter an established meaning.  

	

 Moreover, since section 821 was enacted 13 years after sections 165 and
169, Congress’ use of the term “regulations” in enacting section
821 in 1990 ordinarily would not be looked to as informative of what
Congress intended when much earlier in 1977 it enacted the BACT
requirement. Int’l Bhd. of Teamsters v. Daniel, 439 U.S. 551, 571
(1979) (Burger, C.J., concurring) (understanding of draftsman of
amendment in 1970 “would have little, if any, bearing” on
“construction of definitions enacted in 1933 and 1934”); United
States v. Price, 361 U.S. 304,332(1960) (“The views of a subsequent
Congress form a hazardous basis for inferring the intent of an earlier
one.”)

3.2.2.   Meaning of the Term “regulation”

	

Comment:

	

One industry group commenter (0071) opines that an agency’s
interpretation of a statute should focus first on the ordinary
dictionary meaning of the terms used (see, e.g., MCI Telecommunications
Corp. v. AT&T, 512 U.S. 218, 225-28 (1994).  This commenter states that
monitoring emissions does not fit within any of the types of activities
understood to constitute “regulation” of those emissions in the
ordinary meaning of that term, and nothing in the phrase “subject to
regulation” compels a contrary reading to the “actual control”
interpretation.  

	

	A state/local agency association (0058) who agrees with EPA’s
position notes that the PSD Interpretive Memo relies in part on the
Black’s Law Dictionary definition of “regulation.”  The commenter
(0058) reconciles that while EPA’s CO2 monitoring rule is a
“regulation” in the second sense, the pollutant CO2 is not
“subject to” regulation because EPA’s regulation does not in any
way limit CO2; instead, the source operator is the one subject to
regulation because he is required to monitor CO2 emissions.  The
commenter notes that while other EPA regulations may also take the form
of applying to the source operator rather than to the pollutant, the
difference is that in those cases the pollutant itself is in some way
controlled, and thus “subject to” the regulation.

	

Response: 

	

EPA agrees that its interpretation of the CAA should be informed by
ordinary and accepted dictionary meanings of the applicable terms.  As
discussed in the PSD Interpretive Memo, the term “regulation” can be
used to describe a rule contained in a legal code, such as the CFR, or
the act or process of controlling or restricting an activity.  The
primary meaning of the term “regulation” in Black’s Law Dictionary
(8th Ed.)  TA \l "Black’s Law Dictionary (8th Ed.)" \s "Black’s" \c
3   is “the act or process of controlling by rule or restriction.” 
However, an alternative meaning in this same dictionary defines the term
as “a rule or order, having legal force, usu. issued by an
administrative agency or local government.”  The primary meaning in
Webster’s dictionary for the term “regulation” is “the act of
regulating: the state of being regulated.”  Merriam-Webster’s
Collegiate Dictionary 983 (10th ed. 2001).  Webster’s secondary
meaning is “an authoritative rule dealing with details of procedure”
or “a rule or order issued by an executive authority or regulatory
agency of a government and having the force of law.”  Webster’s also
defines the term “regulate” and the inflected forms “regulated”
and “regulating” (both of which are used in Webster’s definition
of “regulation”) as meaning “to govern or direct according to
rule” or to “to bring under the control of law or constituted
authority.”  Id.   EPA thus agrees that monitoring of emissions does
not necessarily fit within one ordinary meaning of the term regulation.

	

Comment:

	

The Petition for Reconsideration contends that, in the PSD interpretive
Memo, EPA is interpreting the terms “regulation”, “regulate,”
and “regulated” to mean anything the Administrator wants them to
mean, wherever they might appear in any environmental statute or EPA
regulation.

Response:    

	

To the contrary, EPA has applied common and accepted meanings of these
terms (based on several dictionaries), and EPA has carefully considered
the context in which these terms are used in the CAA and EPA
regulations.  EPA does not purport to have the authority to define words
to mean whatever EPA chooses.   

3.2.3.   Ambiguity of Statutory Language and EPA Discretion

		

One environmental group commenter (0101) states that EPA’s
redefinition of the phrase “subject to regulation” is unsupported
and contrary to the CAA’s purpose and intent.  Confronted with a
statute that requires it to take action more expeditiously than it would
otherwise prefer, the commenter claims that EPA has found a regulatory
ambiguity where none exists, and in the process has attempted to avail
itself of a degree of discretion that the statute does not confer—and
in fact precludes.  The commenter (0101) states that the phrase
“subject to regulation” is not ambiguous and it cannot be redefined
to enlarge EPA’s authority beyond the scope of the statute.  EPA’s
interpretation—that a pollutant is not “subject to regulation”
until EPA decides to subject it to nationwide, binding, numerical
emissions control limits — effectively would allow the agency complete
and exclusive control over whether and how GHGs are to be regulated
under the Act.  The commenter (0101) continues that although EPA might
prefer an interpretation that would allow it to proceed only if and when
it sees fit, the statute does not confer any such wide-ranging
authority.  

	The commenter (0101) further provides definitions from multiple
dictionaries in support of their interpretation of “subject to” and
notes that of four definitions, only one even partially conveys
immediate and actual control.  The commenter (0101) continues that EPA
has sought to avoid this conclusion by claiming that the term
“regulation” is ambiguous and that the claim is incorrect.  In the
PSD Interpretive Memo, former EPA Administrator Johnson turned to
dictionary definitions of “regulation” to support the claim of
ambiguity, including “a rule contained in a legal code,” “a rule
or order, having legal force, [usually] issued by an administrative
agency or local government,” and “to bring under the control of law
or constituted authority”.  The commenter contends that none of these
definitions suggests that the term “regulation” is ambiguous or
contradictory.

	

An industry commenter (0059) states that the EPA has argued successfully
before EPA’s EAB in the Deseret Permit Proceeding, that §§165(a)(4)
and 169 of the PSD provisions in Part C of the CAA that refers to when a
pollutant becomes “subject to regulation” are amenable to many
interpretations.  They assert that this is clearly the case where a
Court reviewing the EPA’s interpretation should find under the Supreme
Court’s decision in Chevron USA v. Natural Resource Defense Council
that Congress did not speak on the issue that it will not disturb such
an interpretation unless it finds that it is unreasonable.  They opine
that it is reasonable for EPA to interpret “subject to regulation”
to mean when GHGs become subject to “actual control.”

	

An industry commenter (0107) states that the Environmental Appeals Board
(EAB) in the Deseret Permit Proceeding concluded that the phrase
“subject to regulation” is ambiguous and that EPA’s construing the
term to mean when GHGs became subject to actual control was both
“reasonable” and “permissible,” and that EAB remanded the
interpretation back to Region 8 (which had justified the interpretation
based on historical EPA interpretations that EAB found were not
supportive of that position).  The commenter asserts, therefore, that
under Chevron, the question before EPA in this action is whether it is
reasonable to construct the statute to trigger PSD for GHGs when a
requirement requires “actual control” of GHGs.  The commenter (0107)
believes that the “actual control” interpretation of the phrase
“subject to regulation” in sections 165(a) (4) and 169 is consistent
with the CAA and reasonable.

	

Several other commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) said that starting from the premise that the statutory phrase is
ambiguous, a finding supported by the EAB in its Deseret decision, EPA
has discretion to interpret the phrase in a manner that is reasonable
and consistent with the Act and its implementation of the PSD program. 
Deseret at 29; see also Chevron v. Natural Res. Def. Council, Inc., 467
U.S. 837, 843 (1984).  According to the EAB’s Deseret decision,
EPA’s interpretation is “reasonable” and “‘permissible’ in
light of the [statutory] ambiguity,” and no contrary interpretation is
compelled by the statute.  Deseret at 29.  

Response:

	

The presence of alternative meanings of the terms in the applicable
phrase from the CAA illustrates ambiguity rather than establishing a
plain meaning.  Because the term “regulation” is susceptible to more
than one meaning (described above), there is ambiguity in the phrase
“each pollutant subject to regulation under the Act” that is used in
both sections 165(a)(4) and 169(3) of the CAA.  Commenters have not
demonstrated that the different meanings of the term “regulation”
considered by the EPA are not in fact accepted and commonly-applied
meanings of this term.  In addition, the term “subject to” is also
susceptible to multiple meanings.  One commenter (0101) cited several
meanings of the latter term that give it a conditional or potential
state, but also acknowledged the following meaning of the term
“subject to”:  “being in a position or in circumstances that place
one under the power or authority of another or others.”  There are
also additional dictionary meanings similar to this last one, which
incorporate the idea of “control.”  Several were cited by parties in
briefs to the EAB in the Deseret matter.  See Response Brief of
Permittee Deseret Power Electric Cooperative, In re: Deseret Power
Electric Cooperative, PSD Appeal No. 07-03, Page 8.  Since neither the
term “regulation” or “subject to” has a consistent and plain
meaning, the combination of both these terms in the phrase “subject to
regulation under the Act” results in an ambiguous phrase.

After considering the different dictionary meanings of the term
“regulation,” the EAB was likewise persuaded that “a statutory
plain meaning cannot be ascertained from looking solely at the word
‘regulation.’”  Deseret, Slip Op. at 28-29.  EPA continues to
finds the EAB’s opinion to be thoughtful and well-reasoned.  Thus, EPA
adopts that reasoning here.  Commenters have not provided any
information that demonstrates any error in the EAB’s analysis or
illustrates a plain meaning that was overlooked by the EAB or the
Administrator. 

3.2.4.   Pollutants “Subject To” Regulation Are Pollutants That EPA
Has the Authority to Regulate

	

Comment:

One environmental group commenter (0101) argues that GHGs are presently
subject to regulation because EPA has the authority to regulate them. 
The Supreme Court has determined that EPA “has the statutory authority
to regulate the emission” of GHGs.  Massachusetts v. EPA, 549 U.S. at
532 (emphasis added).  At a minimum, then, EPA is authorized to regulate
GHGs. Where such authorization exists, it must be exercised “within
defined statutory limits,” and all of EPA’s “reasons for action or
inaction must conform to the authorizing statute.”  Id., at 532-33. In
the case of the PSD program, the statute mandates that permitting be
required for any pollutant that is subject to regulation under this
Act.” CAA §165(a)(4), 42 U.S.C. §7475(a)(4); see also 40 CFR
52.21(b)(50)(iv) (a “regulated NSR pollutant” is “[a]ny pollutant
that otherwise is subject to regulation under the Act”).  Under
Massachusetts v. EPA, GHGs are “subject to regulation” under the CAA
in any normal sense of the phrase.  The commenter (0101) further
provides definitions from multiple dictionaries in support of their
interpretation of “subject to” and notes that of four definitions,
only one even partially conveys immediate and actual control.  The
commenter (0101) continues that EPA has sought to avoid this conclusion
by claiming that the term “regulation” is ambiguous and that the
claim is incorrect.  

	

	In contrast, one state/local agency association (0062) argues that
interpretation of the phrase “subject to” regulation advocated by
some goes too far – EPA has very broad authority under section 309 of
the CAA to regulate pollution in whatever form it may occur if there is
an imminent and substantial endangerment, and so under section 309 one
could argue that all pollutants are “subject to” regulation;
however, Congress could not have intended the BACT obligation to apply
today to all pollutants that EPA might theoretically have reason to
regulate in the future.  The commenter (0062) believes that this concept
is reinforced by the language of the statute that appears to use the
terms “subject to regulation” and “regulated” interchangeably.  

	

An industry group commenter (0071) states that it is necessary to make
the PSD program workable and to avoid adverse consequences.  One of the
most important practical implications of the PSD Interpretive Memo is
that it relieves facility owners and permitting authorities from having
to consider a virtually limitless set of chemicals that might be emitted
by a source, but that are not subject to any emission limitation or
other controls under the CAA.

	

Response: 

	

In the context of the PSD provisions of the CAA, EPA believes it would
be unworkable and contrary to Congressional intent for EPA to interpret
the phrase “pollutants subject to regulation under the Act” to
describe any pollutant that EPA has the authority to regulate.  EPA does
not dispute that, when read in isolation, the statutory language is
susceptible to this meaning if one applies the particular dictionary
definitions of “subject to” cited by Commenter 0101.  In certain
contexts, this meaning of “subject to regulation” may be
appropriate.  However, this is not plainly the meaning that Congress
intended for EPA to apply in the context of CAA sections 165 and 169. 
Indeed, EPA believes that applying this meaning would frustrate
Congressional intent for reasoned decision making and a considered
judgment by EPA before regulating a pollutant (see discussion above).  

	

Under this reading of the phrase “subject to regulation,” any
emissions that could be considered an air pollutant, and thus could
potentially be subject to regulation under the CAA at any time in the
future, would require an emissions limitation under the PSD program now.
 This is clearly inconsistent with the EAB’s previous observation that
“[n]ot all air pollutants are covered by the federal PSD review
requirements.”  Knauf Fiber Glass, 8 E.A.D. at 162.  If section
165(a)(4) were interpreted to require EPA to establish PSD emission
limits for all pollutants merely capable of regulation in the future,
this would result in an administratively unworkable program.  There
would be almost no bounds to the substances for which permitting
authorities would be required to set PSD limits, especially in light of
the Supreme Court’s reading of what constitutes an “air pollutant”
under the Act.  See Massachusetts v. EPA, 127 S. Ct. at 1460 (finding
that the Act’s “sweeping definition” of air pollutant “embraces
all airborne compounds of whatever stripe”).  

The decision in Massachusetts v. EPA did not instantly render CO2
“regulated” under the CAA, hold that CO2 was already regulated, or
direct EPA to regulate CO2 and other GHG emissions under section 202 or
any other section of the Act.  The Supreme Court simply concluded that
CO2 and other GHG emissions are “air pollutants” under section
302(g) of the Act, 127 S. Ct. at 1460, and therefore found that EPA was
not precluded from regulating these substances under section 202 of the
Act, id. at 1462-63.  The Court clearly indicated that the Agency would
have to take additional steps on remand, including making a finding of
endangerment to public health or welfare, before CO2 could become
regulated under CAA section 202.  Id. at 1363. 

In addition, we find it informative that Congress titled section 122 of
the Act “listing of certain unregulated pollutants.”  42 U.S.C.
§7422 (emphasis added).  In this section, Congress directs the
Administrator to review relevant information on radioactive pollutants,
cadmium, arsenic, and polycyclic organic matter, in the ambient air, to
determine whether the pollutant will “cause or contribute to air
pollution which may reasonably be anticipated to endanger public
health.”  If the Administrator makes this endangerment type of
finding, the Act directs the Administrator to add the pollutant to a
list under Section 108(a)(1), 112(b)(1)(A), or 111(b)(1)(A).  Section
122 shows that Congress recognized the existence of air pollutants that
are “unregulated” and set forth a scheme wherein the pollutants
would first be subject to an endangerment type finding, then a listing,
and then promulgation of regulations under the appropriate sections of
the Act.  This process in Section 122, is entirely consistent with
EPA’s interpretation in the PSD Interpretive Memorandum.  If any
pollutant that EPA had the authority to regulate were in fact “subject
to regulation,” then the pollutants listed in section 122 would not
have been “unregulated” at the time section 122 was enacted. 

In order to carry out their administrative functions, federal agencies
are often afforded broad discretion in interpreting the statutory
requirements and setting regulatory priorities.  Sierra Club v. Thomas,
828 F.2d 783, 798 (D.C. Cir. 1987) (  TA \l "Sierra Club v. Thomas, 828
F.2d 783 (D.C. Cir. 1987)" \s "828 F.2d at" \c 1  finding that given
Congress’ broad mandate to EPA under the CAA, “the Agency cannot
avoid setting priorities” in carrying out its regulatory duties). 
Interpreting sections 165 and 169 to invoke PSD requirements for any
substance that EPA could regulate, would usurp EPA’s discretion to
interpret and implement the PSD program under the CAA in an orderly and
reasoned manner.  See generally, Environmental Defense v. Duke Energy
Corp., 127 S. Ct. 1423 (2007)  TA \l "Environmental Defense v. Duke
Energy Corp., 127 S. Ct. 1423 (2007)" \s "Environmental Defense v. Duke
Energy Corp., 127 S. Ct. 1423 (2007)" \c 1   (finding that EPA has
discretion to define relevant statutory terms in the context of
implementing the overall PSD program).  This is an unworkable
interpretation of the Act that would have EPA establish emissions
limitations under the PSD program on the basis of presumed decisions
under other provisions of the Act that the Administrator has not yet
made or developed a record to support.  

	

Comment:

Commenter (0095) argues, to the extent EPA’s references to past
practice are referring to how it has interpreted the phrase “subject
to regulation” elsewhere in the CAA, EPA -- by regulation -- has
previously given the same phrase its plain meaning, a meaning that is in
direct conflict with the interpretation EPA unlawfully promotes here. 
Section 209(e)(1) of the CAA provides:

No state or political subdivision thereof shall adopt or attempt to
enforce any standard or other requirement relating to the control of
emissions from either of the following new nonroad engines or nonroad
vehicles subject to regulation under this chapter - (A) New engines
which are used in construction equipment or vehicles or used in farm
equipment or vehicles and which are smaller than 175 horsepower. (B) New
locomotives or new engines used in locomotives.

According to the commenter (0095), if “subject to regulation” means
“subject to actual control of emissions” as EPA asserts it does
here, then section 209(e)(1) must means that states (or localities) are
preempted from imposing emission standards on these engines only after
EPA imposes “actual control of emissions “ from those engines.  But
in its regulations implementing section 209(e), EPA has repeatedly taken
the position that states and localities are categorically preempted from
regulating those engines, regardless of whether EPA has already
subjected those engines to “actual control” of emissions.

Commenter (0095) adds that under section 209(e), all states are
preempted from adopting emissions standards for ``[n]ew engines which
are used in construction equipment or vehicles or used in farm equipment
or vehicles and which are smaller than 175 horsepower’’ or for
``[n]ew locomotives or new engines used in locomotives.”  59 FR 36969,
36970 (July 20, 1994).  This position is the justification for the
formal regulatory definition (id. at 36986-87):

Sec. 85.1603 Application of definitions; scope of preemption.

(a)  For equipment that is used in applications in addition to farming
or construction activities, if the equipment is primarily used as farm
and/or construction equipment or vehicles, as defined in this subpart,
it is considered farm or construction equipment or vehicles.

(b)  States are preempted from adopting or enforcing standards or other
requirements relating to the control of emissions from new engines
smaller than 175 horsepower, that are primarily used in farm or
construction equipment or vehicles, as defined in this subpart.

(c)  States are preempted from adopting or enforcing standards or other
requirements relating to the control of emissions from new locomotives
or new engines used in locomotives.

(d) No state shall enforce any standards or other requirements relating
to the control of emission from new nonroad engines or vehicles except
as provided for in this subpart.

EPA then repeated this interpretation of that phrase three years later:

	

Under section 209(e): (1) All states are preempted from adopting
emission standards and other requirements for new nonroad engines used
in construction or farm equipment or vehicles which are smaller than 175
horsepower and for new locomotives and new engines used in locomotives;

62 FR at 67733, 67734; December 30, 1997.  At no point in either of
these rulemakings did EPA discuss the phrase “subject to regulation”
or in any way even hint that preemption of state authority hinged on
whether EPA itself had imposed “actual control” of emissions from
these sources.  In fact, EPA did not promulgate emission controls or any
other standard or control for these engines until years later:  June 17,
1994 for the farm and construction equipment standards (59 FR 31306),
and April 16, 1998 for locomotives.  See 63 FR at 18978.

And, as currently codified in the CFR:

States and localities are preempted from adopting or enforcing standards
or other requirements relating to the control of emissions from new
engines smaller than 175 horsepower that are primarily used in farm or
construction equipment or vehicles, as defined in this part.  For
equipment that is used in applications in addition to farming or
construction activities, if the equipment is primarily used as farm
and/or construction equipment or vehicles (as defined in this part), it
is considered farm or construction equipment or vehicles.

40 CFR Sec. 1074.10(a).

Response: 

	EPA’s discussion of past practice was in reference to its application
of the PSD permitting requirements, not this prior interpretation of CAA
section 209(e).  EPA does not dispute the commenters summary of EPA’s
previous interpretation of the phrase “subject to regulation” in the
particular context of the preemption provision in CAA section 209(e). 
However, EPA does not agree that EPA’s reading of section 209
establishes a plain meaning of the term “subject to regulation” that
must be applied each time that phrase appears in the CAA. 

Although there is often a presumption that identical words used in
different parts of the same statute have the same meaning – see, e.g.,
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71, 86
(2006); Comm’r v. Lundy, 516 U.S. 235, 249-50 (1996) – courts
recognize that this presumption can yield to a different interpretation
in appropriate circumstances.  EPA may interpret the same word
differently based on statutory context.  See Envtl. Def. v. Duke Energy
Corp., 549 U.S. 561, 127 S.Ct. 1423, 1433 (2007).  The Supreme Court
observed that the same or similar words may be construed differently
“not only when they occur in different statutes, but when used more
than once in the same statute or even in the same section.“  Id.
(quoting Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433
(1932)).  In reviewing the meaning of the phrase “subject to
regulation under this Act” EPA has not confined itself “to examining
a particular statutory provision in isolation.”  See FDA v. Brown &
Williamson Tobacco Corp., 529 U.S. 120, 132 (2000).  Rather, “[t]he
meaning -- or ambiguity -- of certain words or phrases may only become
evident when placed in context * * *.  It is a ‘fundamental canon of
statutory construction that the words of a statute must be read in their
context and with a view to their place in the overall statutory
scheme.’”  Id. at 132-33 (quoting Davis v. Mich. Dep’t of
Treasury, 489 U.S. 803, 809 (1989).

	

	The context in which “subject to regulation” is used in section 209
and in sections 165 and 169 of the CAA are clearly distinguishable and
support the different interpretations that EPA has applied in each case.
 

The CAA section 209(e) preemption provision addresses specific
categories of nonroad engines and nonroad vehicles that EPA had the
authority to regulate under section 213 of the Act and was required to
regulate by a specific time.  EPA read the preemption of state authority
in 209(e)(1) as applying prior to issuance of EPA regulation, in a
context where Congress had allocated authority to regulate to EPA, not
to states, and where EPA was required to issue regulations for
locomotives, and had just issued regulations the month before for farm
and construction equipment.  In the context of these provisions
(sections 213 and 209(e)) allocating authority to EPA instead of the
states, it naturally follows that the use of “subject to regulation”
in section 209(e) would address something that EPA has the authority to
regulate as opposed to something that EPA has in fact regulated.  

In contrast, the phrase “subject to regulation” appears in the PSD
provisions in a context that requires BACT emissions limitations for any
pollutants that are “subject to regulation” under the Act.  As
discussed above, this provision appears in the context of other CAA
provisions that establish specific criteria that governs the exercise of
the Administrator’s judgment as to whether to establish emissions
limitations on particular pollutants or source categories.  In this
latter context, it is more appropriate to read the term “subject to
regulation” to address whether something is actually covered by a
control requirement or emissions limitations, rather than to describe
something that EPA has the authority to regulate.  As discussed above,
reading “subject to regulation” to describe pollutants that EPA has
the authority to regulate would lead to an unworkable situation in which
the PSD program applied to any substance that could theoretically be
regulated at some point in the future.

In comparison, the application of the actual control interpretation in
CAA section 209(e)(1) would lead to peculiar result --- that Congress
allowed temporary state controls that would later be totally preempted
by mandatory EPA regulations.  Section 209(e)(1) provides for total
preemption, without any chance for a waiver, for the applicable subset
of nonroad equipment.  This contrasts with the preemption under
209(e)(2) for the rest of nonroad, where EPA could issue a waiver of
preemption and there was no reference to “subject to regulation.”  

3.2.5.   Distinction Between Term “Control” and “Regulations” In
Other Portions of the Clean Air Act 

	

Comment: 

	

An environmental group commenter (0087) states that EPA’s
interpretation conflates the concept of quantitative “control” or
emissions “standards” with the more expansive term “subject to
regulation.”  The commenter asserts that Congress clearly knew how to
distinguish between pollutants subject to “control” or direct
emissions standards and pollutants “subject to regulation” under the
CAA.  CO2 is “regulated” under “this chapter” (i.e., Chapter 85
of Title 42) because section 821 of the CAA Amendments of 1990 require
EPA to “promulgate regulations” requiring major sources to monitor
CO2 emissions and report them to EPA, and EPA has done so.  The
commenter cites as an example of Congress’ deliberate distinction
between emissions standards and “controls” of air pollutants is
illustrated by section 307(b)(1), which provides for venue in the D.C.
Circuit for actions challenging:

any emission standard or requirement under section 7412 of this title,
any standard of performance or requirement under section 7411 of this
title, any standard under section 7521 of this title (other than a
standard required to be prescribed under section 7521(b)(1) of this
title), any determination under section 7521(b)(5) of this title, any
control or prohibition under section 7545 of this title, any standard
under section 7571of this title, any rule issued under section 7413,
7419, or under section 7420 of this title, or any other nationally
applicable regulations promulgated, or final action taken, by the
Administrator under this chapter . . . .

42 U.S.C. §7607(b) (emphasis added).  According to this commenter, this
section makes clear that Congress knew how to distinguish – and did
distinguish – quantitative “controls” or “standards” of air
pollutants with other types of regulations to which air pollutants may
be subject, including monitoring and reporting requirements.

Similarly, another commenter (0095) claims EPA ignores the fact that
throughout the CAA, Congress carefully differentiated “regulation”
from “control,” and indeed from numerous other terms that describe
various types of agency actions.  Instead, EPA seems to suggest that
when Congress used the word “regulation” in section 821, Congress
overlooked what it had written in section 165(a)(4).  However, according
to the commenter, if Congress had intended BACT to apply only when a
pollutant was subject to “actual control,” it would have said so. 
In fact, Congress uses the word “control” dozens of times in the
CAA, including right there in section 165(a)(4), when it requires
“best available control technology” for each such pollutant
“subject to regulation under this chapter.” 42 U.S.C. 7475(a)(4). 
Notably, Congress did not limit the requirement to impose “control”
technology to only those pollutants that were already “subject to
control” elsewhere in the CAA; Congress required “control”
technology for any pollutants that were “subject to regulation.”

The commenter (0095) also states that Congress was equally nuanced in
section 307(d)(1), which established rulemaking procedures for certain
agency actions and that section 307(d)(1) carefully and repeatedly
distinguishes between “standards,” “emission standard or
limitation,” “standards of performance,” “requirement,” and
“regulations.”  Yet despite this, EPA insists that Congress used
“regulation” in section 165(a)(4) to mean “control” of
emissions:

(A) the promulgation or revision of any national ambient air quality
standard under section 7409 of this title,* * *

(C) the promulgation or revision of any standard of performance under
section 7411 of this title, or emission standard or limitation under
section 7412(d) of this title, any standard under section 7412(f) of
this title, or any regulation under section 7412(g)(1)(D) and (F) of
this title, or any regulation under section 7412(m) or (n) of this
title,

(D) the promulgation of any requirement for solid waste combustion under
section 7429 of this title,

(E) the promulgation or revision of any regulation pertaining to any
fuel or fuel additive under section 7545 of this title,

(F) the promulgation or revision of any aircraft emission standard under
section 7571 of this title, etc.

	

42 U.S.C. 7607.  In particular, it is worth noting how Congress treats
section 7545 in these two different provisions of section 307; after
specifically limiting the applicability of 307(b)(1) to only a
“control or prohibition” promulgated under section 7545, Congress
made section 307(d) applicable to “any regulation pertaining to any
fuel or fuel additive” under section 7545.  Thus, Congress clearly
knew how to distinguish between “control” and “regulation” –
and did so when it wanted to.

Response:

EPA does not contend that Congress clearly and unequivocally intended to
use the term “regulation” in section 165(a)(4) and 169(3) to
describe a control or emissions limitation.  Rather EPA’s view is that
sections 165(a)(4) and 169(3) are ambiguous and that Congress left EPA
with a gap to fill.  EPA agrees that if Congress had clearly intended
for EPA read “subject to regulation” to mean “subject to
control,” Congress certainly could have used language to this effect. 
However, the fact that Congress did not use particular terms in sections
165(a)(4) and 169(3) that it used elsewhere does not demonstrate that
Congress intended to preclude the meaning that EPA has applied to the
words Congress did use, considering the potential meanings of various
terms and the context in which they are used.  Nor does Congressional
failure to use particular words that would have plainly established the
meaning EPA applies demonstrate the opposite proposition -- that
Congress clearly intended for section 165(a)(4) and 169(a)(3) of the Act
to mean what commenters argues these provisions mean.  The logic
employed by commenters -- that Congress knew how to use particular terms
and could have used those terms in the PSD provisions if that is how
Congress intended for EPA to read them – can also be applied to
demonstrate that Congress did not clearly intend the PSD provisions to
mean that PSD is triggered by a monitoring or reporting requirement or
the promulgation of any regulation of any type that covers a particular
pollutant.  Thus, this exercise simply leaves one with an ambiguous
statutory provision that has no readily apparent plain meaning.  

	

In all but one of the contrasting examples cited by commenters of
Congressional usage of the term “regulation,” Congress in fact used
the plural term “regulations” rather than the singular
“regulation.”  There are many examples in the CAA where Congress
uses the plural term “regulations” in a context with the verb
“promulgate” or a similar verb to describe the product of the
rulemaking process.  See, e.g., CAA section 110(5)(B) (authorizing the
Administrator to “promulgate, implement and enforce regulations” for
indirect source review); Section 111(b)(1)(B) (requiring the
Administrator to propose “regulations” establishing Federal
standards of performance for new sources); Section 111(d) (directing the
Administrator to promulgate “regulations” for categories of air
pollutants); Section 165(e)(1) (describing “regulations”
implementing analytical requirements of the PSD program); Section 166
(directing the Administrator to “promulgate regulations” to prevent
the significant deterioration of air quality by specific pollutants);
Section 301(a) (requiring the Administrator to “promulgate
regulations” setting forth the general criteria for regional officers
and employees).  This Congressional direction that EPA promulgate
“regulations” found at various places in the CAA and in section 821
of the 1990 amendments is most naturally read to mean that Congress
directed EPA to use its legislative rule making authority to implement
the statutory requirements, filling in necessary specificity and detail.
 Likewise, section 112 of the Act uses the term “subject to
regulations,” referring to “regulations” in the plural.  CAA
sections 112(r)(3) and 112(r)(7)(F).  In the one example cited by
commenters where Congress used the singular form of the term
“regulation,” Congress added the word “any” in front of the word
“regulation.”  

If, as commenters argue, Congress could have used the term “control”
in section 165(a)(4) or 169(3) of the Act, it certainly would not have
been any harder for Congress to add an “S,” “A,” or “ANY” to
the phrase “subject to regulation,” as it did elsewhere in the Act
to establish a particular meaning, if Congress had intended for EPA to
read sections 165(a)(4) and 169(3) to apply to any pollutant covered by
a regulation promulgated by EPA.  The phrase “promulgate
regulations” fits best with the adoption of a “rule or practice”
or “rule of order,” as used in the dictionary meanings from
Black’s and Webster’s cited by Petitioners.  Pet. at 6.  The
phrasing “subject to regulations under the Act” or “subject to a
regulation under the Act” would have been more consistent with the
dictionary meanings that describe a regulation as a “rule” such as
would be contained in the CFR.  

	

Following commenters reasoning, the language in section 307(d)(1)(E) of
the Act can be read to show that Congress did not clearly intend for the
PSD provisions to apply to any regulation pertaining to any pollutant. 
If Congress had specifically intended for sections 165 and 169(3) to
apply to “the promulgation of any regulation” covering any
pollutant, then Congress could have written sections 165(a)(4) and
169(3) of the Act to use the same or similar language as section
307(d)(1)(E).  Congress did not in fact write language that applies the
BACT requirement to a pollutant upon “the promulgation or revision of
any regulation pertaining to” that pollutant.  If this is what
Congress had clearly intended, it could have just as easily included
this language in section 165(a)(4) and 169(3) as it could have used the
term “control” or “emissions limitation”

	Instead, Congress used the term “regulation” in a context that is
ambiguous, but that permits the application of the dictionary meaning
applied by EPA that refers to an “act or process” rather than a
“rule.”  In context, the “subject to regulation” terminology
reflected in sections 165(a)(4) and 169(3) may be read to describe an
“act or process,” which supports EPA’s application of the meaning
from Black’s Law Dictionary (8th Ed.) that emphasizes “controlling
by rule or restriction.”  

Thus, EPA has not been persuaded by this line of argument that the PSD
Interpretive Memorandum is inconsistent with the plain meaning of the
Act or Congressional intent. 

3.2.6.   EPA Elevates Policy Preference Over Plain Statutory Meaning

According to the commenter (0087), EPA does not ground its proposed
interpretation in the language of the CAA, at all.  Rather, after making
a cursory reference to statutory text at the outset of the proposal, the
commenter opines that EPA offers only that its position “best reflects
our past policy and practice” and “allows for a more practical
development for regulations and guidance concerning control of
pollutants once they are determined to endanger public health or
welfare.”

	

	Finally, the commenter (0087) states that EPA’s suggestion that its
proposed interpretation will allow for a more practical approach to
determining whether emissions of air pollutants endanger health and
human welfare amounts only to a policy preference.  Given the clear
Congressional intent to distinguish between air pollutants “subject to
regulation” and air pollutants subject to quantitative controls,
EPA’s policy preference must be subordinate.

	

	One environmental group commenter (0101) notes that EPA’s primary
justification for the preference for the current definition of the
phrase “subject to regulation” is not the statutory language, as
nothing there can be found to support it.  Rather, according to the
commenter, it is clear that EPA’s argument is almost entirely grounded
in a practical desire to go about regulating GHGs in a particular
manner.  This commenter states that EPA, long prone to ignoring
deadlines explicitly spelled out in the CAA until finally forced to
proceed by court decree, cannot avail itself of additional,
non-statutory de facto extensions of time to fulfill its statutory
obligations. Nor can the agency simply choose by fiat to implement
mandatory CAA requirements seriatim when the statute requires that they
be contemporaneous and complementary.

	

Response:

	

Where the governing statutory authority is susceptible to more than one
interpretation, it is not impermissible for EPA to apply policy
preferences when determining which interpretation to apply, so long as
the interpretation EPA elects to follow is a permissible one.  The PSD
Interpretive Memo provides a persuasive explanation for why the
interpretation reflected in that memorandum is consistent with the terms
of the CAA and Congressional intent.  In this instance, EPA’s policy
preferences are fully consistent with that intent.  Congress intended
for EPA to gather data before establishing controls on emissions and to
make reasoned decisions. 

3.3.   Interpretation of Regulations

Comment:

	

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) believe
that EPA reasonably construes the definition of the phrase “regulated
NSR pollutant,” as contained in the Agency’s regulations, to require
actual control of emissions in light of the fact that 40 CFR
52.21(b)(50)(i)-(iii) describes pollutants that are subject to actual
emission control requirements under the CAA’s NAAQS, NSPS, and
stratospheric ozone programs and that the phrase “otherwise is subject
to regulation” in 40 CFR 52.21(b)(50)(iv) is therefore properly
understood to require actual control of emissions by regulations
promulgated under other provisions of the CAA that are not described in
the first three clauses.  See 74 FR 51539-51540;  In re: Deseret Power
Electric Cooperative, Brief Amicus Curiae of the Utility Air Regulatory
Group in Support of Respondent Environmental Protection Agency (“UARG
Amicus Brief”) at 31 & n.21.

 

Another commenter (0080) asserts that interpreting the phrase “subject
to regulation” as “subject to regulation that restricts emissions”
fits within the statute because EPA is only authorized to restrict
emissions of  air pollutant where the EPA has made an endangerment
finding (or where Congress has implicitly done so, as in the case of
Title VI).  The commenter (0080) adds that defining the term
“regulated NSR pollutant” at 40 CFR 52.21(b)(50) as a pollutant that
is actually subject to emission controls makes sense for the same
reason.  

	

Response:

EPA agrees that the actual control interpretation is consistent with the
terms of the regulations EPA promulgated in 2002.  See 67 FR
80186-80289.  EPA continues to find the reasoning of the PSD
Interpretive Memo to be persuasive.  The structure and language of
EPA’s definition of ‘regulated NSR pollutant’ at 40 CFR
52.21(b)(50) supports the actual control interpretation.  The first
three parts of the definition describe pollutants that are subject to
regulatory requirements that mandate control or limitation of the
emissions of those pollutants, which suggests that the use of
“otherwise subject to regulation” in the fourth prong of the
definition also intended some prerequisite act or process of control. 
The definition’s use of “subject to regulation” should be read in
light of the primary meanings of “regulation” described above, which
each use or incorporate the concept of control. 

	

	Comment: 

The Petition for Reconsideration criticizes EPA’s application of a
canon of statutory construction known as ejusdem generis, which provides
that “where general words follow the enumeration of particular classes
of things, the general words are most naturally construed as applying
only to things of the same general class as those enumerated.” Am.
Mining Cong. v. EPA, 824 F.2d 1177, 1189 (D.C. Cir. 1987).  Petitioners
argue that the PSD Interpretive Memo conflicts with the Deseret decision
because the EAB explicitly held that it is not appropriate to use
ejusdem generis to interpret a parroting regulation “[w]ithout a clear
and sufficient supporting analysis or statement of intent in the
regulation’s preamble.”  Deseret at 46 (emphasis added). The
Petition states analysis in a memo is an inadequate substitute for the
missing analysis in the rulemaking itself.  In addition, the Petitioners
argue that this ejusdem generis canon of construct is inapplicable in
this situation because the dispute concerns the meaning of a provision
of the CAA, not the nearly identical language of a subsection of the
regulation.  Finally, the Petition argues that the first three
subsections of the regulation at 40 CFR 52.21(b)(50) are more dissimilar
than similar and that the “otherwise” language in the fourth part of
the definition suggests a contrast to the other three parts rather than
a similarity.  

	

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) believe
that EPA may apply the canon of statutory interpretation that states
that general words that follow a description of a particular class of
things are naturally construed as applying to things in the same class
that is enumerated.  PSD Interpretive Memorandum at 8-9.  Although the
EAB in Deseret declined to apply this canon, it did so in the absence at
that time of any clear, definitive evidence of Agency intent to so cabin
the terms of the regulation.  See Deseret at 45.  In the PSD
Interpretive Memorandum, EPA provided the necessary analysis and
statement of intent.

	

The commenter (0080) states that the use of esjudem generis in
construing the meaning of 40 CFR 52.21(b)(50)(iv) is appropriate
(contrary to the assertion of the Petitioners) because it advances the
purposes of the statute as a whole – to interpret it otherwise would
confound the purpose of the statute to require emission reductions where
there is endangerment.

	

Response:   

	

The Petition for Reconsideration correctly notes that the EAB decision
in Deseret declined to apply this canon of statutory construction in
part based on the absence of a statement of intent in regulation’s
preamble.  However, the EAB did not have before it the question of
whether an after-the-fact memorandum of the Administrator, could supply
sufficient intent to apply this principle.  Thus, the EAB decision
itself does not definitely preclude the approach applied in the PSD
Interpretive Memo to supply a clearer statement of EPA intent.  It is
also not clear that this portion of the EAB’s decision was grounded on
any controlling judicial decision.  This part of EAB decision in Deseret
does, however, support the commenters argument that this doctrine is not
appropriately applied to regulations that parrot the statutory language,
since EPA has the power to write the regulations in more explicit terms.
 Thus, upon reconsideration, EPA agrees that this element of the PSD
interpretive memorandum is not particularly persuasive.  However, we do
not consider the weakness in this part of the memorandum significant
enough to undermine the merits of the memorandum as a whole.  The
discussion of the dictionary meanings of the term regulation and the
context in which this term is used in the regulations is sufficiently
persuasive to justify continuing to apply that interpretation, even
without application of the ejusdem generis principle. 

The Petitioners argument that the use of the term “otherwise” is
intended to convey a contrast rather than a similarity, even if
plausible, does not demonstrate that the reasoning of the PSD
Interpretive Memo is erroneous.  At most, Petitioners have presented an
alternative reading of this same language.  Petitioners have provided no
additional information to demonstrate that EPA in fact intended the
regulation to be interpreted in this manner when that regulation was
adopted in 2002.  The factual record does not reflect that EPA has ever
interpreted “otherwise” in the fourth part of this definition to
mean that the PSD BACT requirement applies to pollutants that were not
subject to a control requirement. 

Comment: 

One commenter (0086) presents detailed arguments that the regulatory
history of the PSD program can only be squared with the “actual
control” interpretation in which the commenter discusses the 1978
preamble to the PSD regulations, the Wegman and Cannon memoranda, the
MSW NSPS, the 2002 regulation defining “regulated NSR pollutant,”
the 2008 GHG ANPR, and longstanding EPA permitting practices.

Four industry and commerce commenters (0051, 0053, 0068, 0074) assert
that the primary regulation is the most plausible textual reading of
sections 165 and 169 which suggests that BACT limits are required for
pollutants subject to requirements that actually control or limit
emissions.  This commenter cites the 1978 preamble to PSD regulations,
the 1980 Regulatory Impact Analyses (RIA), the 2008 ANPR on whether and
how GHGs might be regulated under the CAA, and regulatory history,
policy and permitting practices to support their position.

Response: 

	The EAB discussed this regulatory history cited by the commenters at
length in the Deseret decision.  The PSD Interpretive Memo described the
EAB’s opinion as thoughtful and well-reasoned and built on that
reasoning.  EPA continues to find the EAB decision thoughtful and
well-reasoned.  With regard to the significance of the regulatory
history cited by commenters, EPA adopts the reasoning of the EAB’s
Deseret decision.  With respect to the significant of the 1978 to
preamble to the PSD regulations, EPA is applying the reasoning of the
EAB’s Deseret decision and the additional analysis provided in the PSD
Interpretive Memorandum. 

	

Comment: 

	

The Petition for Reconsideration asserts that the PSD Interpretive memo
“attempts to revive a definition that the EAB found was not supported
by any prior EPA interpretation of the statute.”  Petition at Pages
9-10. 

	

	Response: 

	

	The EAB’s conclusion that EPA had not previously adopted the
particular interpretation does not itself preclude EPA from taking
subsequent action to do so.  The record for the PSD Interpretive
Memorandum supports the interpretation reflected there. 

3.4.    Policy Considerations Raised by Actual Control Interpretation

3.4.1.   Orderly and Deliberative Decision Making Process

One (0109) states that each of the other proposed alternative
interpretations would short circuit what the CAA envisions as an orderly
process, starting with information gathering about emissions of a
pollutant, determinations regarding the effect of the pollutant on
public health and welfare, and if determined to be necessary, the
issuance of proposed control regulations, followed by final regulatory
controls on emissions of the pollutant.  

Another commenter (0110) opines that the alternative interpretations (to
the “actual control” interpretation) contemplated by EPA in the
Reconsideration proposal would not allow for the agency to gather
emissions information on GHG air pollutants in an orderly way, nor
assess that information adequately to determine whether to impose
controlling regulations of those emissions under the CAA.  

One commenter (0085) adds that the “actual control” interpretation
comports with the deliberate process of evaluation and eventual
regulation that is contemplated by the CAA.

Another commenter (0105) adds that this interpretation provides the
agency with much needed flexibility to review a pollutant’s effects
without triggering PSD, and also ensures the PSD is not triggered until
EPA has truly determined that a pollutant should be controlled by
regulation.  

 Three commenters (0067, 0073, 0083) state that any of the alternatives
would be damaging to the efficient and orderly operation of the Act, and
an efficient and orderly transition to regulation of GHGs under the CAA
is essential for both regulated sources and permitting authorities.  

Another commenter (0097) also agrees with the important policy concerns
stated in the proposed reconsideration (and in the original PSD
Interpretive Memo) that support application of PSD requirements only
after actual control requirements are in place under another part of the
Act.  According to this commenter, to deviate from the “actual control
interpretation” would actually create much more difficulty in
determining if it is appropriate to regulate other compounds.  

	

One commenter (0070) notes that the “actual control interpretation”
is the only interpretation that provides EPA with a meaningful
opportunity to collect and analyze crucial data and information before
subjecting sources to PSD permitting requirements for newly identified
pollutants.

Industry commenter (0090) believes this is the correct interpretation
because it allows for EPA to gather emissions data on air pollutants
through monitoring and reporting.

A commenter (0104) representing a group of industry associations,
generally agrees with EPA’s approach and also supports the “actual
control” interpretation outlined in the PSD Interpretive Memo over the
four other possible interpretations outlined in the EPA proposal.  This
commenter concurs with EPA that this interpretation is the most
reasonable because it allows for a more practical development of
regulations and guidance concerning control of pollutants.  

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) said that
the “actual control” interpretation safeguards the Administrator’s
authority to require such controls on individual pollutants under other
portions of the Act before triggering PSD requirements.  In other words,
EPA has and should retain flexibility “to address whether and how a
pollutant should be ‘subject to regulation’ based on the
promulgation of more general control requirements.”  See 74 FR 51541. 


Some commenters (0095) who opposed the actual control interpretation
argued that this deliberate approach leads to “analysis paralysis”
and is subject to political manipulation.

Response:

EPA continues to prefer the actual control interpretation because it
ensures an orderly and manageable process for incorporating new
pollutants into the PSD program after an opportunity for public
participation in the decision making process.  EPA agrees with the
commenters who identified these considerations as important reasons that
EPA should continue applying the “actual control” interpretation. 
As discussed persuasively in the PSD Interpretive Memo, under this
interpretation, EPA may first assess whether there is a justification
for controlling emissions of a particular pollutant under relevant
criteria in the Act before imposing controls on a pollutant under the
PSD program.  In addition, this interpretation permits the Agency to
provide notice to the public and an opportunity to comment when a new
pollutant is proposed to be regulated under one or more programs in the
Act.  It also promotes the orderly administration of the permitting
program by providing an opportunity for EPA to develop regulations to
manage the incorporation of a new pollutant into the PSD program, for
example, by promulgating a significant emissions rate (or de minimis
level) for the pollutant when it becomes regulated.  See 40 CFR
52.21(b)(23)  TA \l “40 CFR 52.21(b)(23)” \s “40 CFR
52.21(b)(23)” \c 6  .  Furthermore, this interpretation preserves the
Agency’s ability to gather data on pollutant emissions to inform their
judgment regarding the need to establish controls on emissions without
automatically triggering such controls.  This interpretation preserves
EPA’s authority to require control of particular pollutants through
emissions limitations or other restrictions under various provisions of
the Act, which would then trigger the requirements of the PSD program
for any pollutant addressed in such an action.  

	While this analysis may sometimes take more time than some commenters
would prefer, a deliberative and orderly approach to regulation is in
the public interest and consistent with Congressional intent.  It would
be premature to impose the BACT requirement on a particular pollutant if
neither EPA nor Congress has made a considered judgment that a
particular pollutant is harmful to public health and welfare and merits
control.  

3.4.2.   Public Participation Concerns 

	

One commenter (0050) observed that the “actual control”
interpretation best implements the procedures and requirements for
regulating pollutants under the CAA and the public participation
requirements of the APA.  Section 202(a)(1) of the CAA provides that the
Administrator shall “by regulation” prescribe standards applicable
to motor vehicle emissions “which, in his judgment cause, or
contribute to, air pollution which may reasonably be anticipated to
endanger public health and welfare.”  This section reinforces the two
required findings —the finding of endangerment, and the finding that
the pollutant from the source “cause or contribute” to the pollution
that is the subject of the proposed regulation.  The “actual
control” approach is the only alternative considered that incorporates
both of these requirements.  Further, it is the only approach being
considered that provides for public participation under the APA on both
endangerment and cause or contribute.  Because PSD and Title V affect
all sectors of the economy, the commenter asserts that transparency and
public participation are extremely important elements of the regulatory
process.

Industry commenter (0090) believes this is the correct interpretation
because it provides the opportunity for public notice and comments
associated with a proposed new regulated pollutant.

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) said that
the “actual control” interpretation provides an opportunity for
public notice and comment when a new pollutant is proposed to be
regulated under other provisions of the CAA, which is very important to
allow the potentially regulated entities and other affected members of
the public to participate in the development of any emission control
regulations, including by submitting comments on the potential impacts
of the regulations and the timeframe necessary to allow compliance
before the regulations could take effect. 

One industry commenter (0050) observed that if the EPA were to adopt any
interpretation other than “actual control,” it would completely
change the regulatory design for GHGs and likely cause severe economic
disruption.  Adoption of any of the other options would automatically
make PSD and Title V applicable to GHGs without public notice or
opportunity for public comment, and without agency analyses of the
economic or small business impacts.  The commenter states that such an
outcome would violate both the letter and spirit of the notice and
comment requirements of the Administrative Procedures Act (APA). 

	

Response:

EPA agrees that one significant benefit of the actual control
interpretation is that it permits the Agency to provide notice to the
public and an opportunity to comment when a new pollutant is proposed to
be regulated under one or more programs in the Act.  This was one of the
important policy considerations that EPA cited in its justification for
the interpretation adopted in the PSD Interpretive Memo, and it remains
an important ground for EPA’s decision to continue following the
interpretation reflected in that memorandum.  EPA thus agrees that it
would not be good policy to allow automatic triggering of PSD permitting
requirements for additional pollutants without an opportunity for public
comment on EPA’s initial decision to regulate a pollutant.  

3.4.3.   Development of Control Strategies

One commenter (0110) emphasizes that regulated entities need adequate
time to analyze and implement technologies and strategies to comply with
new requirements.  The requirement for entities seeking permits for new
construction of major stationary sources or for major modifications to
existing stationary sources to install BACT for regulated pollutants
imposes significant costs and burdens on those entities.  The commenter
states that EPA’s “actual control” interpretation is the most
reasonable option considered by EPA in the Reconsideration in terms of
allowing permitting authorities and regulated entities appropriate time
to implement appropriate controls.  The commenter also discusses the
need to allow permitting authorities time to rationally and adequately
develop emission control programs for regulated pollutants prior to
subjecting facilities to PSD requirements.  

	

Another commenter (0107) argues that until actual control measures are
required, there is no requisite information about a pollutant for a
permit authority to issue a PSD permit or evaluate alternative pollution
controls that may represent BACT.  The proposed PSD Interpretation and
companion proposed PSD/Title V Tailoring rule both underscore the need
to provide the EPA, state permitting authorities, and industries with
the time necessary to develop controls and establish control strategies
for GHGs.  Before a pollutant has been subject to “actual controls,”
there would have been no examination of the technological feasibility
and capabilities that are appropriate to reduce such a pollutant.  This
information is critical before a source can be subject to BACT review. 
Once a control requirement is effective, however, and an affected source
has time to evaluate compliance with the requirement, purchase or design
the control required, and install and test it, it would be reasonable to
require BACT for that pollutant.  As evidenced by EPA’s creation of
the GHG BACT Workgroup and other efforts, EPA has only begun to evaluate
potential available technologies for the control of GHGs from various
industries that emit GHGs, the cost of such technologies, and whether
the application of such technologies will have a positive impact on the
build-up of GHGs in the atmosphere.  Congress did not intend for EPA to
impose economic hardships on businesses and their customers if
regulations of a pollutant did not yield an environmental benefit.

	

Another commenter (077) agrees that the “actual control”
interpretation allows for sensible development of regulations and
guidance following an endangerment finding – control options can be
better evaluated and BACT can be explored in an orderly and efficient
manner.  

	

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) said that
EPA has underscored that it needs time to gather information on
emissions of an air pollutant and to research and evaluate various
emission control options and technologies for that pollutant before any
PSD requirements for the pollutant are imposed.  This concern is
important not only for EPA and states, but also for the sources of
emissions of that pollutant that will have to comply with the PSD
requirements because the PSD program imposes potentially very costly and
burdensome requirements (including but not limited to BACT
requirements).  Thus, it is vital that any interpretation by EPA of the
phrase “subject to regulation” provide the Agency, states, and
affected sources with the time necessary to establish appropriate
compliance strategies and to prepare to satisfy compliance obligations. 


  SEQ CHAPTER \h \r 1 One environmental group commenter (0095) states
that EPA’s desire to have “time to study and evaluate the emissions
characteristics and control options for new pollutants prior to making
emissions of those pollutants subject to PSD permitting requirements”
(74 FR 51541) flies in the face of both the language and purpose of the
BACT requirement.  The case-by-case BACT requirement does not
contemplate waiting years for EPA to conduct analyses and “develop”
control options.  See 74 FR at 51541.  Rather, BACT must be based on
control options that are available, and it applies “immediately to
each type of pollutant regulated for any purpose under any provision of
the Act.” Alabama Power v. Costle, 636 F.2d 323, 403 (D.C. Cir. 1979).
 And, permitting agencies are instructed to make this “case-by-case”
determination “taking into account energy, environmental, and economic
impacts and other costs” and thereby ensuring that the decision is
informed by the available solutions, their efficacy and costs.  See CAA
§169(3).

Response: 

Once the Agency has made a determination that a pollutant should be
controlled using one or more of the regulatory tools provided in the CAA
and those controls take effect, a BACT analysis must then be completed
based on available information.  As one commenter (0095) points out, the
BACT process is designed to determine the most effective control
strategies achievable in each instance, considering energy,
environmental, and economic impacts.  Thus, EPA agrees that the onset of
the BACT requirement should not be delayed in order for technology or
control strategies to be developed.  Furthermore, EPA agrees with the
commenter that delaying the application of BACT to enable development of
guidance on control strategies is not necessarily consistent with the
BACT requirement.  The BACT provisions clearly contemplate that the
permitting authority will develop control strategies on a case-by-case
basis.  Thus, EPA is not in this final action relying on the need to
develop guidance or control strategies for BACT as a justification for
choosing to continue applying the actual control interpretation. 
However, in the absence of guidance on control strategies from EPA and
other regulatory agencies, the BACT process may be more time and
resource intensive when applied to a new pollutant.  Under a mature PSD
permitting program, successive BACT analyses establish guidelines and
precedents for subsequent BACT determinations.  However, when a new
pollutant is regulated, the first permit applicants and permitting
authorities that are faced with determining BACT for a new pollutant
must invest more time and resources in making an assessment of BACT
under the statutory criteria.  Given the potentially large number of
sources that could be subject to the BACT requirement when EPA regulates
GHGs, the absence of guidance on BACT determinations for GHGs presents a
unique challenge for permit applicants and permitting authorities.  EPA
intends to partially address this challenge under the Tailoring Rule by
deferring the applicability of the PSD permitting program for various
categories of sources that would become major based solely on GHG
emissions.  EPA is also developing guidance on BACT for GHGs.

 

3.4.4.   Past Policy and Practice

Comment: 

According to the commenter (0095), the Deseret decision rejects the idea
that “past policy and practice” is a sufficient justification for
EPA’s position, and in any event, such policy preferences cannot trump
the clearly expressed intent of Congress.  Engine Mfrs. Ass’n, 88 F.3d
1075, 1089 (D.C. Cir. 1996) (EPA cannot “avoid the Congressional
intent clearly expressed in the text simply by asserting that its
preferred approach would be better policy.”). 

One industry commenter (0055) agrees with EPA’s current policy and
preferred interpretation that GHGs are not currently “regulated NSR
pollutants” that are “subject to regulation” under the CAA.  This
commenter (0055) states that EPA has historically and consistently
interpreted PSD regulations to apply to only those pollutants subject to
actual emission limitations or control measures, without previous
objection, is significant justification for the current proposal to
continue in that regard.

One industry commenter (0050) supports the “actual control”
interpretation because it best reflects EPA’s past policy and
practice.

Another of the industry commenters (0090) believes this is the correct
interpretation because it is consistent with past policy and practice.

 One industry group (0070) commenter expresses support for the “actual
control interpretation” for because it best reflects EPA’s past
policy.

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) states that
the “actual control” interpretation is also reasonable because it
“best reflects [EPA’s] past policy and practice, as applied
consistently over the years.”  See 74 FR 51541;  PSD Interpretive
Memorandum at 10-13.  The EPA is correct that it has never taken the
position that CO2 or other GHGs are “subject to regulation” under
the CAA.  The commenter cites EPA discussion at 74 FR 51540 & n.6
(discussing Memorandum from Jonathan Z. Cannon, EPA General Counsel, to
Carol M. Browner, EPA Administrator (Apr. 10, 1998)), and Deseret UARG
Amicus Br. at 24-27 (citing statements by EPA officials in testimony and
memoranda that the Agency had not decided to regulate CO2 emissions). 
This history is fully consistent with the legislative history of the CAA
and its 1990 amendments, in which Congress clearly declined to take any
action that would have required EPA to establish or impose any emission
controls for CO2 under the CAA at that time.  (The commenter provided
several citations to the legislative history of the 1990 CAA
Amendments.)  

	

	Response: 

	

While the record continues to show that the actual control
interpretation is consistent with EPA’s historic practice under the
PSD program, EPA agrees that continuity with past practice alone does
not justify maintaining a position when there is good cause to change
it.  In this case, however, EPA has not found cause to change an
interpretation that is consistent with Congressional intent and
supported by the policy considerations described earlier.  Thus, EPA is
not retaining the actual control interpretation simply to maintain
continuity with historic practice.  The record reflects that EPA’s
past practice was grounded in a permissible interpretation of the law
and supported by rational policy considerations.  Public commenters have
not otherwise persuaded EPA to change its historic practice in this
area. 

	A review of numerous federal PSD permits shows that EPA has been
applying the actual control interpretation in practice – issuing
permits that only contained emissions limitations for pollutants subject
to regulations requiring actual control of emissions under other
portions of the Act.  Furthermore, in 1998, well after promulgation of
the initial CO2 monitoring regulations in 1993, EPA’s General Counsel
concluded that CO2 would qualify as an “air pollutant” that EPA had
the authority to regulate under the CAA, but the General Counsel also
observed that “the Administrator has made no determination to date to
exercise that authority under the specific criteria provided under any
provision of the Act.”  Memorandum from Jonathan Z. Cannon, General
Counsel to Carol M. Browner, Administrator, entitled EPA’s Authority
to Regulate Pollutants Emitted by Electric Power Generation Sources
(April 10, 1998).

	

Comment: 

	

  SEQ CHAPTER \h \r 1 An environmental group commenter (0095) claims
that EPA’s interpretation of “subject to regulation” does not
reflect EPA’s past policy and contradicts its own regulations.  The
commenter disagrees with EPA’s assertion that its preferred
interpretation of “subject to regulation” to mean “actual control
of emissions” is justified on the basis that it “best reflects our
past policy and practice”.  According to the commenter, EPA’s
interpretation repudiates the Agency’s most direct previous statement
interpreting “subject to regulation.”  In the preamble to the
Agency’s 1978 Federal Register rulemaking, 43 FR at 26388, 26397 (June
19, 1978), the Administrator established that “‘subject to
regulation under this Act’ means any pollutant regulated in Subchapter
C of Title 40 of the Code of Federal Regulations for any source type.”
 43 FR at 26397.  This interpretation is the sole instance of past
practice identified by the EAB as “possess[ing] the hallmarks of an
Agency interpretation that courts would find worthy of deference.” 
Deseret at 39.  The commenter states that as the Board recognized, that
preamble offers no support for an interpretation applying “BACT only
to pollutants that are ‘subject to a statutory or regulatory provision
that requires actual control of emissions of that pollutant.”  Instead
(again, as expressly noted by the Board) it implies that “CO2 became
subject to regulation under the Act in 1993 when the Agency included
provisions relating to CO2 in Subchapter C.”  Id. at 42 n.43.  Under
the 1978 preamble definition, CO2 is “subject to regulation” for
BACT purposes because it is regulated under Subchapter C of Title 40 of
the CFR.  In its 1993 rulemaking to revise the PSD regulations, EPA did
not withdraw its 1978 interpretation of “subject to regulation.” 
See Deseret at 42; see also Acid Rain Program: General Provisions and
Permits, Allowance System, Continuous Emissions Monitoring, Excess
Emissions and Administrative Appeals, 58 FR at 3590, 3701 (Jan. 11,
1993) (final rule implementing §821’s CO2 monitoring and reporting
regulations).  Nor has any subsequent rulemaking, including the 2002
rulemaking on which the PSD Interpretive Memo relies, disturbed the 1978
interpretation.  See Deseret at 46.  Thus, the only existing EPA
interpretation of the phrase “subject to regulation” in section
165(a)(4), 42 U.S.C. §7465(a)(4), affirms that BACT is required for CO2
emissions because it is regulated under the Act’s implementing
regulations.  In both the Memo and the Reconsideration, the Agency
suggests that the “actual control” interpretation is not
inconsistent with the 1978 preamble “because actual control could be
inferred by the specific list of regulated pollutants that followed
reference to 40 CFR.”  See 74 FR at 51540.  Deseret directly refutes
that claim:  “Nothing in the 1978 preamble . . . indicates that the
Agency intended to depart from the normal use of ‘includes’ as
introducing an illustrative, and nonexclusive, list of pollutants
subject to regulation under the Act.” Deseret at 40 (holding that
“we must reject” the “conten[tion] that only the pollutants
identified in the preamble by general category defined the scope of the
Administrator’s 1978 interpretation.) Under any plausible reading, the
1978 Federal Register preamble used “regulated in” to describe all
the regulations contained “in Subchapter C of Title 40 of the Code of
Federal Regulations.”  See Deseret at 41-42 & n.43 (noting that
“plain and more natural reading of the preamble’s interpretative
statement suggests a different unifying rule” than a rule that would
limit “regulation” to actual control of emissions). 

	

Ten industry commenters ((0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) dispute the
argument that EPA’s interpretation of “subject to regulation” in
the 1978 PSD rulemaking is clear that any regulations found in 40 CFR
Subchapter C, including those implementing section 821 of Public Law
101-549, are thereby “subject to regulation.”  The EPA has properly
clarified that the 1978 statement does not support this interpretation
because that statement referred to specific categories of pollutants for
which emission controls existed as of that date, a clarification that is
consistent with the EAB’s decision in Deseret.  To adopt
petitioners’ view would irrationally elevate procedure – the mere
fortuity of future placement of a newly promulgated regulatory provision
in a particular part of a codification of a large body of rules – over
substance.

	

Response:

The 1978 Federal Register notice promulgating the initial PSD
regulations stated that pollutants “subject to regulation” in the
PSD program included “any pollutant regulated in Subchapter C of Title
40 of the Code of Federal Regulations.”  Commenters argue this
statement illustrates that EPA has in fact applied the PSD BACT
requirement to any pollutant subject to only a monitoring requirement
codified in this portion of the CFR.  However, this comment overlooked
the discussion in the PSD Interpretive Memo regarding the differing
meanings of the term “regulation” and “regulate.” The 1978
preamble did not amplify the meaning of the term “regulated in.” 
Thus, commenters have not demonstrated that EPA had concluded in 1978
that monitoring requirements equaled “regulation” within the meaning
of sections 165(a)(4) and 169(3) of the CAA, nor have commenters
provided any examples of permits issued by EPA after 1978 that
demonstrate EPA’s interpretation was inconsistent with the practice
described in the PSD Interpretive Memo.  

	

Commenters assume that this 1978 interpretative statement is the only
example of EPA’s past practice with respect to whether pollutants
covered by, but not controlled under, regulations in the CFR make the
PSD permitting requirements applicable to a pollutant. These commenters
have not provided any additional information to demonstrate that EPA (or
another other PSD permitting authority) has in fact acted in accordance
with the meaning that the commenters assign to the 1978 interpretation. 
The record shows that EPA has not in practice given the 1978 statement
the meaning used by the commenter. 

A review of numerous federal PSD permits shows that EPA has been
applying the actual control interpretation in practice – issuing
permits that only contained emissions limitations for pollutants subject
to regulations requiring actual control of emissions under other
portions of the Act.  If EPA had given the 1978 interpretation the
meaning the commenter uses, the Agency would have previously issued PSD
permits containing BACT emission limitations on CO2 and oxygen. 
Commenters have provided no information that contradicts the following
analysis from the PSD Interpretive Memorandum:

As a matter of practice, EPA has not issued PSD permits containing
emissions limitations for pollutants that are only subject to monitoring
and reporting requirements.  PSD permits issued by the Agency (and
delegated states authorized to issue federal permits on EPA’s behalf)
have only contained emissions limitations for pollutants subject to
regulations requiring actual control of emissions.  EPA staff have
reviewed permits issued under this program and have not identified any
federal PSD permits that establish limitations on the emissions of
pollutants that were only subject to monitoring and reporting
requirements established under the Act at the time the permit issued. 
Since 1993, EPA has had regulations in place requiring monitoring and
reporting of carbon dioxide emissions.  See Acid Rain Program: General
Provisions and Permits, Allowance System, Continuous Emissions
Monitoring, Excess Emissions and Administrative Appeals (final rule), 58
FR at 3590 (Jan. 11, 1993).  I am not aware of any PSD permits
containing emissions limitations for carbon dioxide issued by either the
Agency or its delegates since that time.  During at least part of this
time period, EPA made clear that it considered CO2 to be an air
pollutant under the Act.  See Memorandum from Jonathan Z. Cannon,
General Counsel to Carol M. Browner, Administrator, entitled EPA’s
Authority to Regulate Pollutants Emitted by Electric Power Generation
Sources (April 10, 1998) (“Cannon Memo”).  … The record of permits
compiled to support this memorandum is sufficient to demonstrate that
EPA has not in practice issued PSD permits establishing emissions
limitations for pollutants that are subject to only monitoring and
reporting requirements.

  

The argument that EPA’s failure to do so was wrong does not establish
that it has in fact been EPA’s position since 1978 that PSD permits
should cover pollutants subject to monitoring and reporting requirements
that are promulgated anywhere in Subchapter C of the Title 40 of the
CFR. 

Furthermore, in 1998, well after promulgation of the initial CO2
monitoring regulations in 1993, EPA’s General Counsel concluded that
CO2 would qualify as an “air pollutant” that EPA had the authority
to regulate under the CAA, but the General Counsel also observed that
“the Administrator has made no determination to date to exercise that
authority under the specific criteria provided under any provision of
the Act.” Memorandum from Jonathan Z. Cannon, General Counsel to Carol
M. Browner, Administrator, entitled EPA’s Authority to Regulate
Pollutants Emitted by Electric Power Generation Sources (April 10,
1998).  

	With respect to the EAB’s conclusion in the Deseret matter, the PSD
Interpretive Memo highlights portions of the EAB decision that describe
the ambiguity in the phrase “regulated in Subchapter C of Title 40 of
the Code of Federal Regulations” and the term “regulation.”  The
PSD Interpretive Memorandum references the “specific categories of
regulations identified in the second sentence” of the passage quoted
from the 1978 preamble only to illustrate that the PSD Interpretive
Memorandum is not inconsistent with that 1978 statement.  Consistent
with the statements in the PSD Interpretive Memo, EPA agrees with and
accepts the EAB’s reasoning that the enumerated categories of
pollutants do not establish a controlling limitation on the scope of
pollutants subject to regulation.  However, that reasoning still does
not establish an EPA’s historic position has been that monitoring or
reporting requirements make pollutants subject to regulation or
“regulated in” the CFR when the code contains only a requirement to
monitor and report, but not control, emissions of a pollutant.  

	Comment: 

According to one commenter (0095), to the extent EPA’s reference to
“past policy and practice” is referring to its previous failure to
impose the BACT requirement for pollutants only subject to monitoring
and reporting, that assertion is irrelevant and, moreover, its “actual
control of emissions” interpretation was first put forth by Region 8
in the Deseret permitting proceeding and, as the EAB found, was entirely
unsupported by past policy and practice. Deseret at 37-54. 

 Commenter (0087) notes that the EAB in re Deseret Power Electric
Cooperative, PSD Appeal No. 07–03 (EAB Nov. 13, 2008)
(‘‘Deseret’’) found nothing in the administrative record
supporting EPA’s position that the agency’s historical
interpretation mandated EPA’s interpretation of the statutory term.  

Response:    

	

EPA’s reference to past practice was supported in the proposal by the
record of PSD permits that EPA compiled to support the PSD Interpretive
Memo.  EPA has not identified any permits that contain an emissions
limitation for a pollutant subject only to a monitoring and reporting
requirement, nor has any public commenter produced such a permit. 
Commenters have not substantiated their conclusory assertion that
EPA’s previous failure to impose irrelevant consideration.  Extensive
evidence of EPA’s past practice is available in the permits issued
under the PSD program.  EPA does not rely upon arguments made in the
Deseret permit proceeding to support its conclusion that the actual
control interpretation is consistent with past practice. 

In the Deseret matter, the EAB held “the Region’s rationale for not
imposing a CO2 BACT limit in the Permit -- that it lacked the authority
to do so because of an historical Agency interpretation of the phrase
“subject to regulation under this Act” as meaning “subject to a
statutory or regulatory provision that requires actual control of
emissions of that pollutant” -- is not supported by the administrative
record.”  This analysis pertained to the administrative record for the
particular permit at issue, and it did constitute a conclusion that no
such record could be found anywhere. The EAB decision did not prevent
EPA from developing a more thorough record to show the agency’s
traditional practice under the PSD program, as EPA did when it issued
the PSD Interpretive Memorandum.  Despite the weakness of the particular
administrative record for the Deseret permit, the EAB observed that
broad statements in the 1998 memorandum cited above by the Agency’s
then General Counsel suggested that the Agency has not, as a matter of
practice, treated CO2 as a “regulated” pollutant under any
provisions of the Act, including those establishing the PSD program. 
Slip op. at 53-54.  

Chapter 4.   Monitoring and Reporting Requirement

4.1.   Overview of Comments on Monitoring and Reporting Interpretation

Comment:

Twenty-nine industry and commerce commenters (0050, 0051, 0053, 0056,
0059, 0065, 0066, 0067, 0068, 0070, 0071, 0073, 0074, 0076, 0079, 0081,
0083, 0085, 0086, 0089, 0090, 0092, 0096, 0098, 0105, 0106/0107, 0108,
0109, 0118) and six state/local agency associations (0054, 0058, 0062,
0091, 0102, 0103) agree with EPA’s position that the “monitoring and
reporting interpretation” is not the proper interpretation of the
phrase “subject to regulation” for purposes of PSD.  

	Ten of the industry commenters (0089 and others incorporating this
submission (0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109))
agree that the EPA should reject the “monitoring and reporting”
interpretation for all of the reasons stated in the PSD Interpretive
Memorandum and the proposed PSD Interpretation.  

Three commenters (0087, 0095, 0101) representing several environmental
organizations support applying PSD to CO2 at the present time on the
basis of regulations that require monitoring of CO2.  These commenters
argue that the CAA requires this outcome. 

Response:

EPA is not persuaded that the monitoring and reporting interpretation is
compelled by the CAA, and the Agency remains concerned that application
of this approach would lead to odd results and make the PSD program
difficult to administer.  EPA continues to find the reasoning of the PSD
Interpretive Memo persuasive.  EPA responds to more specific points
raised by these commenters elsewhere in this document.

4.2.   Statutory Interpretation

4.2.1.   Meaning of the Term Regulation

Comment: 

	

The Petition for Reconsideration argues that CO2 is regulated under
Section 821 of the Clean Air Act Amendments of 1990.  According to the
Petition, Section 821 requires EPA to “promulgate regulations”
requiring major sources, including coal-fired power plants, to monitor
CO2 emissions and report their monitoring data to EPA.  42 U.S.C.
§7651(k) note; Pub. L. 101-549; 104 Stat. 2699 (emphasis added).  In
1993, EPA promulgated these regulations, which require sources to
monitor CO2 emissions, 40 CFR 75.1(b), 75.10(a)(3), prepare and maintain
monitoring plans, id. §75.33, maintain records, id. §75.57, and report
monitoring data to EPA, id. §75.60-64. The regulations prohibit
operation in violation of these requirements and provide that a
violation of any Part 75 requirement is a violation of the Act. Id.
§75.5. Not only do the regulations require that polluting facilities
“measure . . . CO2 emissions for each affected unit,” id.
§75.10(a), they also prohibit operation of such units “so as to
discharge or allow to be discharged, emissions of . . . CO2 to the
atmosphere without accounting for all such emissions . . . . “ Id.
§75.5(d).

One environmental commenter (0101) notes that EPA has issued monitoring
and reporting regulations for CO2 in 40 CFR 75, promulgated pursuant to
section 821 of the CAA.  See 42 U.S.C. §7651(k) note; Pub. L. 101-549;
104 Stat. 2699 (1990).  Under the definitions advanced in the PSD
Interpretive Memo, these monitoring and reporting rules are
“regulation”: they are contained in a legal code, have the force of
law, and bring the subject matter under the control of law and the EPA. 
EPA itself has characterized these monitoring and reporting requirements
as “regulations.”  Id.  

	The state/local agency association (0062) notes that EPA has broad
authority under sections 114 and 208 of the CAA to require monitoring of
emissions, by regulation or otherwise, and has historically done so well
in advance of any decision to limit emissions of any pollutant.  The
commenter opines that such monitoring requirements do not regulate
emissions of pollutants; instead, they govern other conduct by the
operator in a way that does not constrain emissions, just as the
obligation to identify a contact person at a facility may be required of
a Title V source, but does not constitute an emissions limitation.  

	Two industry commenters (0051, 0053) opine that the text of the CAA
refutes a “monitoring and reporting” interpretation.  This commenter
asserts that, contrary to the view of some (who believe that regulations
requiring monitoring and reporting of CO2, promulgated pursuant to
section 821 of the CAA, cause CO2 to be “subject to regulation”
under the PSD program), because section 821 of the CAA does not call for
controls of emissions, it does not subject CO2 or other GHGs to
regulation for purposes of the PSD program.

Response: 

Each of these commenters focuses on only one of the two potential
meanings of the term “regulation” described elsewhere in this
document.  The commenter that favors the “monitoring and reporting”
interpretation appears to focus only on the dictionary meanings that
describe a rule contained in a legal code.  The commenter has not
demonstrated that it is impermissible for EPA to construe the CAA on the
basis of another common meaning of the term “regulation.”  In the
context of construing the Act, the EAB observed in the Deseret case that
a plain meaning could not be ascertained from looking solely at the word
“regulation.”  The Board reached this conclusion after considering
the dictionary definitions of the term “regulation” cited above. 
Deseret slip op. at 28-29.  EPA continues to find the reasoning of the
EAB and the PSD Interpretive Memo to be persuasive.  The EAB found “no
evidence of Congressional intent to compel EPA to apply BACT to
pollutants that are subject only monitoring and reporting
requirements.”  See Deseret at 63.  

4.2.2.   Effect of Section 821 of the Clean Air Act

Comment:

The Petition for Reconsideration contends that monitoring and reporting
requirements

clearly constitute regulation.  Against the backdrop of Section 165’s
use of “regulation,”

Congress explicitly used that exact same word in Section 821 to refer
solely to

monitoring and reporting requirements. 

	

Ten commenters (0089 and others incorporating this submission (0065,
0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) add that this
interpretation should be rejected specifically with regard to CO2
because the legislative histories of the CAA and of Public Law 101-549,
which enacted, among other things, amendments to the CAA, clearly
demonstrate that Congress did not intend monitoring and reporting
requirements for CO2 to have any consequences in terms of triggering
emission control requirements under any part of the CAA.  According to
these commenter, the legislative history of Public Law 101-549 shows
that Congress simply intended the CO2 monitoring and reporting
provisions to allow EPA to gather scientific evidence of U.S.
contributions to GHGs, to establish a baseline to allow utilities to
seek credit for emission reductions in any possible future regulatory
program, and to inform the United States’ position in international
negotiations.  The commenters assert that the legislative history
demonstrates that Congress did not intend those provisions to have any
further regulatory impact.  (See, e.g., 103rd Cong., 1st Sess., S. Print
103-38, Legis. Hist. at 2612, 2652, 2987.  Members of Congress expressly
referred to section 821 as a “simple data collection” provision that
was not intended to “force any reductions” of CO2 emissions.  Legis.
Hist. at 2651-52, 2653, 2985; see also UARG Amicus Brief at 12-15.). 
Congress clearly declined to take any action that would have required
EPA to establish or impose any emission controls for CO2 under the CAA
at that time. 

	

One industry commenter (0107) said that section 821 does not make CO2
subject to permitting. According to this commenter, it is hard to
believe that such monitoring, in a provision titled “Information
Gathering on Greenhouse Gases Contribution to Global Climate Change,”
was added to the Act for the purpose of regulating GHGs under PSD.  In
fact, Congress rejected attempts by senators to require control of GHGs
as part of the 1990 CAA Amendments.  As EPA discussed, the collection of
data about a pollutant is necessary before EPA can make decisions about
“regulating” that pollutant under any CAA program that requires
controls.  This means that Congress did not intend BACT for CO2 to apply
before collection of monitoring information for CO2 or other GHGs took
place.  Given that Congress rejected control requirements for GHGs in
1990 on the basis that not much was then known about climate change, it
would be unreasonable to conclude that Congress intended such sources
including multi-unit apartment buildings, shopping malls, and hospitals
to obtain PSD and/or Title V permits.

One of the commenters (0086) presented detailed arguments that the
monitoring and reporting interpretation cannot be squared with the
legislative or regulatory history .

	

Response: 

	

EPA agrees with the analysis of the EAB (summarized below) that section
821 of the CAA does not compel EPA to apply the monitoring and reporting
interpretation.  The use of similar, but not identical, language in
section 821 of the 1990 Public Law, which requires the Agency to
promulgate “regulations,” does not constrain the Agency’s ability
to interpret sections 165 and 169 to exclude monitoring and reporting
requirements.  

The argument that sections 165 and 169 have only one proper
interpretation based on section 821, ignores the fact that Section 821
uses different terminology, “regulations,” from that used in the PSD
provisions of sections 165 and 169, “subject to regulation.” The
difference in terminology is potentially significant.  When read in the
context of the phrases in which they are used, possible alternative
meanings of “regulation” and “regulations” become apparent.  In
the phrase “the Administrator * * * shall promulgate regulations * * *
to require [sources to monitor CO[2]]” in section 821, the term
“regulations” is understood to be the end product of the
administrative rule making process.  Thus, Congress’ direction that
EPA promulgate “regulations” found at various places in the CAA and
in section 821 is most naturally read to mean that Congress directed EPA
to use its legislative rule making authority to implement the statutory
requirements, filling in necessary specificity and detail.  Section 112
of the Act uses the term “subject to regulations,” referring to
“regulations” in the plural. CAA sections 112(r)(3) and
112(r)(7)(F).  This evidences that Congress may not have meant
“subject to regulation” (singular) to have the same meaning.

The Supreme Court has observed in other contexts that the same or
similar words may be construed differently “not only when they occur
in different statutes, but when used more than once in the same statute
or even in the same section.” Envtl. Def. v. Duke Energy Corp., 549
U.S. 561, slip op. at 9 (2007) (quoting Atl. Cleaners & Dyers, Inc. v.
United States, 286 U.S. 427, 433 (1932)).  In reviewing the meaning of
the phrase “subject to regulation under this Act” we do not confine
ourselves “to examining a particular statutory provision in
isolation.”  FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120,
132 (2000).  Rather, “[t]he meaning -- or ambiguity -- of certain
words or phrases may only become evident when placed in context * * *. 
It is a ‘fundamental canon of statutory construction that the words of
a statute must be read in their context and with a view to their place
in the overall statutory scheme.’”  Id. at 132-33.

	

We find no evidence that Congress’s addition of section 821 in 1990
was an attempt to interpret or constrain the Agency’s interpretation
of the broader phrase “subject to regulation” as used in sections
165 and 169.  See 136 Cong. Rec. H2915, 2934 (1990) (statement of Rep.
Moorhead), reprinted in S. Comm. on Env’t and Public Works,
Legislative History of Clean Air Act Amendments of 1990, at 2986-87
(1993); 136 Cong. Rec. H2511, 2578 (1990) (statement of Rep. Cooper),
reprinted in S. Comm. on Env’t and Public Works, Legislative History
of Clean Air Act Amendments of 1990, at 2652-53 (1993); 136 Cong. Rec.
H2511, 2561-62 (1990) (statement of Rep. Moorhead), reprinted in S.
Comm. on Env’t and Public Works, Legislative History of Clean Air Act
Amendments of 1990, at 2612-14 (1993).  Section 821 bears no facial
relationship to the PSD provisions of sections 165 and 169. Congress’s
subsequent use of the word “regulations” in a section of the 1990
Public Law that bears no explicit relationship with the earlier-enacted
sections would not appear sufficient, on its own, to implicitly
constrain EPA’s authority to interpret the PSD provisions of section
165 and 169. This is particularly true where, as here, the two sections
were enacted 13 years apart, bear no obvious relationship, and are not
even placed in close proximity. Moreover, the Agency did determine, in
1978 that the phrase “subject to regulation under this Act” used in
the PSD provisions requires interpretation to properly implement the PSD
program, and Congress did not evidence an intent in section 821 to alter
the Agency’s determination.  Normally, more express terminology would
be expected if Congress intended to alter an established meaning.  

Since section 821 was enacted 13 years after sections 165 and 169,
Congress’ use of the term “regulations” in enacting section 821 in
1990 ordinarily would not be looked to as informative of what Congress
intended when much earlier in 1977 it enacted the BACT requirement. See
Int’l Bhd. of Teamsters v. Daniel, 439 U.S. 551, 571 (1979) (Burger,
C.J., concurring) (understanding of draftsman of amendment in 1970
“would have little, if any, bearing” on “construction of
definitions enacted in 1933 and 1934”); United States v. Price, 361
U.S. 304,332 (1960) (“The views of a subsequent Congress form a
hazardous basis for inferring the intent of an earlier one.”)

4.2.3.   Effect of 2008 Consolidated Appropriations Act and Mandatory
Greenhouse Gas Reporting Rule

Comment: 

The Petition for Reconsideration also suggests that GHGs are regulated
because Congress has specifically required monitoring of all GHGs,
including CO2, economy-wide, in the 2008 Consolidated Appropriations
Act. H.R. 2764; Public Law 110-161, at 285 (enacted Dec. 26, 2007). As a
result, CO2 monitoring and reporting is required under the Act separate
and apart from Section 821.  According to Petitioner, the PSD
Interpretive Memo, attempts to evade the consequences of the
Appropriations Act requirement by, among other things, opining that a
pollutant is not “subject to regulation” when Congress specifically
tells EPA to regulate it, but only when EPA actually adopts regulations.


The commenter (0107) believes for the same reasons as describe above for
section 821 of the 1990 Clean Air Act Amendments that it would be
unreasonable to conclude that Congress intended EPA to regulate GHGs
under PSD or other provisions of the Act for establishing standards when
it charged EPA in the 2008 Omnibus Budget Amendment to require GHG
monitoring and reporting from the largest sources of GHG by 2010.  This
statute states that it intended EPA to use the information collection
authority in the CAA, not any of the Act’s substantive regulatory
authorities for setting emission standards, to collect and analyze GHG
emissions data from the largest sources.

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) note that, while they are  not aware that environmental
advocacy groups or others have expressly argued that EPA’s
promulgation of the Mandatory Reporting of Greenhouse Gases Final Rule
(“GHG Reporting Rule”), 74 FR 56260 (Oct. 30, 2009) makes GHGs
subject to the PSD program, they have argued that the statute that
authorized promulgation of that rule, the Fiscal Year 2008 Consolidated
Appropriations Act, Pub. L. No. 110-161 (“Appropriations Act”),
triggered PSD for GHGs.  The commenters assert that that argument, and
any related argument that the GHG Reporting Rule triggered PSD
requirements, should be rejected for the same reasons the PSD
Interpretive Memorandum rejected – and the proposed PSD Interpretation
would continue to reject – the monitoring and reporting interpretation
discussed above.  

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) also argue that any such argument is meritless for an additional
reason: the Appropriations Act is not the CAA, and the GHG Reporting
Rule was not promulgated under the CAA.  Thus, even if the GHG Reporting
Rule did constitute “regulation,” it still could not be considered
regulation “under the Act.”

Response:

	

	Similar to section 821 of the CAA, the 2008 Omnibus Budget Amendment
contains a directive that EPA promulgate regulations that establish
monitoring and reporting requirements for GHGs.  As with section 821 and
the regulations promulgated to satisfy this law (Part 75), EPA does
interpret the 2008 Omnibus Budget Amendment or the EPA regulation
promulgated to implement this law to be sufficient to make GHGs subject
to regulation for the purposes of CAA sections 165(a)(4) and 169(3). 
EPA’s reasoning for this conclusion is the same as for section 821,
because the 2008 enactment does not require any controls on emissions. 
Furthermore, since EPA has now promulgated GHG reporting regulations to
address its responsibilities under the 2008 law, the Petitioners
criticism of EPA’s conclusion that a pollutant becomes subject to
regulation upon EPA promulgation of rules mandated by Congress is no
longer material.  In this Reporting Rule (which became effective in
December 2009 and required monitoring to begin in January of this year),
EPA established monitoring and reporting requirements for CO2 and other
GHGs under CAA sections 114 and 208.  Thus, there can be no dispute that
monitoring and reporting of CO2 (as well as other GHGs) is now occurring
under the CAA, regardless of the status of the 2008 Omnibus Budget
Amendment. 

4.2.4.   Effects Threshold for PSD Permitting

Comment:

	

One environmental group   SEQ CHAPTER \h \r 1 commenter (0095) claims
that EPA ignores the Congressionally-established purpose of PSD to
protect public health and welfare from actual and potential adverse
effects.  Specifically, this commenter states that to limit BACT (as
described in the PSD Interpretive Memo and favored by EPA in the
reconsideration) ignores the broad, protective purpose of the PSD
program as explicitly stated by Congress (the purpose of the PSD program
is to “protect public health and welfare from any actual or potential
adverse effect which in the Administrator’s judgment may reasonably be
anticipate[d] to occur from air pollution notwithstanding attainment and
maintenance of all national ambient air quality standards.” 42 U.S.C.
§7470(1) (emphasis added).  In contrast, Congress required EPA to make
an endangerment finding before establishing generally applicable
standards such as the NSPS or motor vehicle emissions standards.  Each
of these programs expressly require EPA to find that emissions of a
pollutant “cause or contribute to air pollution which may reasonably
be anticipated to endanger public health or welfare” as a prerequisite
to regulation.  Id. §7408(a)(1)(A); id. §7521(a)(1); see also id.
§7411(b)(1).  This commenter opines that the policy arguments cited in
the reconsideration are not consistent with the statutory purpose of
PSD.  It is the emphasis on “potential adverse effect[s]” that
distinguishes PSD from the national ambient air NAAQS and NSPS programs
that EPA looks to bolster its “actual control” position.  As new
pollutants are identified, BACT’s case-by-case approach provides the
dynamic flexibility necessary to implement an emission limitation
appropriate to each particular source and pollutant. PSD’s
Congressionally-enacted power to address potential adverse effects is
dramatically hindered by EPA’s suggestion that endangerment
determinations and actual control limits must be first established.  The
PSD Interpretive Memo’s focus on endangerment – see, e.g., Memo at
18 – and EPA’s consistent position in the reconsideration improperly
limit the scope of the PSD program and the BACT requirement.  The
commenter asserts that the “actual control” view ignores the broader
purpose of the PSD program by limiting the scope of the PSD program and
the BACT requirement.  According to the commenter, the congressional
directive that BACT be no less stringent than those other control
requirements is a further indication that BACT is meant to be more
protective and apply more broadly.  Further, commenter states that the
PSD Interpretive Memo and EPA’s reconsideration demonstrates a
fundamental misperception of the role of the PSD program and its BACT
requirement within the CAA.

	

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) argue that
the Petitioners incorrectly assert that the CAA provides a “lower
threshold” for regulation under the PSD program than it does under the
Act’s NAAQS and NSPS provisions.  To the contrary, the criteria for
regulation under the NAAQS and NSPS provisions are, in effect, imported
by reference into EPA’s definition of “regulated NSR pollutant.” 
Moreover, evidence does not exist that Congress intended to create –
or that EPA established by regulation – a subset of potential
regulated NSR pollutants for which similar regulatory preconditions
would not have to be met before they could become subject to PSD
requirements.  In fact, in the preamble to its proposed Tailoring Rule,
EPA appropriately cited legislative history supporting the view that
Congress designed the PSD program to address conventional criteria
pollutants and to promote and safeguard attainment of the NAAQS.  See 74
FR 55308/2-55309/3.

Response:

EPA does not agree that the terms of section 160 compel EPA to read
sections 165(a)(4) and 169(3) to apply to a pollutant before the Agency
has established control requirements for the pollutant.  Section 160(1)
describes PSD’s purpose to “protect public health and welfare from
any actual or potential adverse effect which in the Administrator’s
judgment may reasonably be anticipated to occur from air pollution.” 
Thus, this goal contemplates an exercise of judgment by EPA to determine
that an actual or potential adverse effect may reasonably be anticipated
from air pollution.  In that sense, this goal is consistent with NAAQS
and NSPS programs, which contemplate that regulation of a pollutant will
not occur until a considered judgment by EPA that a substance or source
category merits control or restriction.  The commenter has not
persuasively established that the “potential adverse effect”
language in section 160(1) makes this provision markedly different than
the language used in sections 108(a)(1)(A) and 111(b)(1)(A).  All three
sections use the phrase “may reasonably be anticipated” Furthermore,
section 160 contains general goals and purposes and does not contain
explicit regulatory requirements.  The controlling language in the PSD
provisions is the “subject to regulation” language in sections
165(a)(4) and 169(3).  As discussed earlier, the “actual control”
interpretation is based on a common and accepted meaning of the term
“regulation.”  To the extent the goals and purpose in section 160
are instructive as to the meaning of other provisions in Part C of the
Act, section 160(1) is just one of several purposes of the PSD program
that Congress specified.  The Act also instructs EPA to ensure that
economic growth occurs consistent with the preservation of existing
clean air resources.  CAA §160(3).  EPA’s interpretation is
consistent with this goal because it allows EPA to look at the larger
picture by coordinating control of an air pollutant under the PSD
program with control under other CAA provisions.  

EPA finds the logic of the PSD Interpretive Memo more persuasive.  The
Memo considers the full context of the CAA, including the health and
welfare criteria that generally must be satisfied to establish control
requirements under other parts of the Act, information gathering
provisions that contemplate data collection and study before pollutants
are controlled, and requirements for reasoned decision making.  While
some commenters presented arguments for why it might be possible or
beneficial to apply the BACT requirement before a control requirement is
established for a pollutant elsewhere under the Act, these arguments do
not demonstrate that the contextual reading of the CAA described in the
PSD Interpretive Memo is erroneous.  Thus, the comments have at most
provided another permissible reading of the Act, but they do not
demonstrate that EPA must require BACT limitations for pollutants that
are not yet controlled but only subject to data collection and study. 

4.3.   Policy Considerations Raised by Monitoring and Reporting
Interpretation

Comment:

One commenter (0062) agrees with the policy arguments advanced by EPA
and others that EPA’s critical information gathering activities will
be constrained, with likely adverse environmental and public health
consequences, if monitoring requirements are necessarily associated with
the potentially significant implementation and compliance costs and
resource constraints of the PSD and Title V programs.

	

Another commenter (0102) expresses concern that without the ability to
gather data or investigate unregulated pollutants, for fear of
triggering automatic regulation under the CAA, EPA will not have the
flexibility to review the validity of controlling additional or fewer
GHGs.

	

	A state agency commenter (0102) also expresses concern that a
permitting program triggered by a monitoring and reporting requirement
with no established federal emission standard would be subject to
continuous legal challenges based on the concept of the program and the
restrictions of individual permits.  The commenter (0102) believes that
such a program could not be effectively administered.

	

Commenters (0092, 0067, 0081, 0083, 0089, 0096, 0090, 0106/0107, 0108,
0109) representing several companies (industry), state that an
interpretation of “subject to regulation,” that would be applied to
pollutants based on monitoring and reporting requirements would
effectively eliminate the ability of EPA to conduct investigative
monitoring, necessary if the EPA wishes to develop informed,
appropriate, and legally defensible regulations for controlling
emissions, and could prevent EPA from monitoring unregulated surrogate
emissions, which are monitored to demonstrate compliance with emission
standards of associated regulated pollutants.  

	

	Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) state that
subjecting a pollutant to the PSD program because of a requirement to
gather information on emissions would reverse the logical order of CAA
regulation, requiring sources to control a pollutant through BACT even
before Congress or EPA could determine whether that pollutant should be
subject to emission controls at all.  The commenters stress that
Congress established the PSD program for the purpose of preventing
emissions of pollutants that are already subject to CAA regulation from
degrading air quality that meets the NAAQS.  The commenters indicate
that EPA has consistently rejected the “monitoring and reporting”
interpretation, and cite as an example a memorandum issued
contemporaneously with its 1993 section 821 regulations (the Wegman
memorandum).  The commenters also agree with EPA that adopting the
“monitoring and reporting” interpretation would hamper EPA’s
consideration of whether to adopt emission control regulations for any
additional pollutant in the future if a requirement merely to measure
and report emissions of that pollutant subjected those emissions to PSD
requirements.

	

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) seek to
rebut Petitioners argument that EPA has failed to demonstrate that there
is anything “unworkable” about requiring PSD to be met for
pollutants that are subject only to monitoring and reporting
requirements.  The EPA has demonstrated that this would pose serious
problems of administrability, e.g., by hampering the gathering of
information to allow factually grounded determinations of whether and
how emission control requirements should be developed and imposed.

	

One industry commenter (0085) agrees with EPA that monitoring and
reporting are normal preceding steps to actual regulation under the CAA.
 The commenter (0085) adds that if EPA were to adopt the interpretation
that gathering information triggered PSD, the Agency would clearly be
reluctant to even begin the information gathering process for a
pollutant. 

One of the commenters (0086) agrees with EPA’s rationale for this
conclusion and that the monitoring and reporting interpretation would
create perverse incentives.

	One industry commenter (0050) states that the CAA allows EPA to
promulgate requirements for monitoring and reporting emissions of
pollutants prior to a finding of endangerment, and that the Greenhouse
Gas Reporting Rule was recently finalized by the EPA.  This commenter
opines that the application of PSD/Title V upon implementation of
monitoring and reporting requirements would stifle the collection of
data necessary to make informed decisions.  In addition, applying
PSD/Title V would render the statutorily-required endangerment finding
unnecessary.  This commenter also believes that adoption of the
“monitoring and reporting requirement” option would deter EPA from
further studying the possible impacts of a substance on public health
and welfare, thereby preventing the agency from much needed information
on addressing possible health or welfare effects.  

One industry commenter (0059) submits that it would be unreasonable to
conclude that requiring monitoring of GHG emissions on January 1, 2010
or reporting of GHGs on March 31, 2011 under the Mandatory GHG Reporting
Rule, subjects GHGs to the PSD program.  They assert that collection of
such information is intended to help the EPA determine which industry
sources should be regulated and how, and to construe that collection as
subjecting GHGs to regulation under PSD did not make sense.

	This industry commenter (0050) states that the “monitoring and
reporting requirement” option was not acceptable from the standpoint
of the regulated community because they believed it would subject all
sectors of the economy burdensome PSD and Title V requirements for
substances that may not cause problems for public health or welfare and
thus should not be subject to regulation.

One industry commenter (0097) argues that if an interpretation that a
monitoring requirement triggered control standards, every request for
data or monitoring requirement, excepting a program which is established
to demonstrate compliance with an existing regulation, would be expected
to be challenged in court because of the potential outcome that such
actions would constitute a control requirement and set in motion a
further chain of regulatory action.  On this point, the commenter argues
that if, as now seems the case, regulation of environmental matters
occurs via the judicial system, the analyses and demonstration of need
through the use of scientific information and policy decisions will be
lost.  Further, the commenter claims this could include information
collection requests (ICR) under section 114 of the CAA.  The potential
for this to occur is a circumstance that must be recognized and
considered.

One industry group (0071) commenter opines that industry would be much
more resistant to proposed monitoring requirements and EPA would be less
likely to impose monitoring requirements if they would trigger PSD BACT
requirements.

Response:

The monitoring and reporting interpretation would make the substantive
requirements of the PSD program applicable to particular pollutants
based solely on monitoring and reporting requirements (contained in
regulations established under section 114 or other authority in the
Act).  This approach would lead to the perverse result of requiring
emissions limitations under the PSD program while the Agency is still
gathering the information necessary to conduct research or evaluate
whether to establish controls on the pollutant under other parts of the
Act.  Such a result would frustrate the Agency’s ability to gather
information using section 114 and other authority and make informed and
reasoned judgments about the need to establish controls or limitations
for particular pollutants.  If EPA interpreted the requirement to
establish emissions limitations based on BACT to apply solely on the
basis of a regulation that requires collecting and reporting emissions
data, the mere act of gathering information would essentially dictate
the result of the decision that the information is being gathered to
inform (whether or not to require control of a pollutant).  

We agree that a monitoring and reporting interpretation would hamper the
Agency’s ability to conduct monitoring or reporting for investigative
purposes to inform future rulemakings involving actual emissions control
or limits.  In addition, it is not always possible to predict when a new
pollutant will emerge as a candidate for regulation.  In such cases, the
Memo’s reasoning is correct in that we would be unable to promulgate
any monitoring or reporting rule for such a pollutant without triggering
PSD under this interpretation.  

Comment:

  SEQ CHAPTER \h \r 1 According to an environmental organization
commenter (0095), requiring BACT for pollutants subject to monitoring
and reporting regulations does not impair EPA’s ability to gather
information about pollutants.  The EPA can gather such information
without triggering BACT because neither section 114 nor the general
regulations governing agency information collection efforts require EPA
to promulgate regulations in order to collect information.  See, e.g., 5
CFR 1320.5(c),1320.8(d) (indicating that information may be collected
with or without a formal

rulemaking).  

	

Response:

	EPA understands that the monitoring and reporting interpretation would
not result in application of the PSD BACT requirement when EPA exercises
its section 114 authority to collect information without promulgating a
regulation.  However, EPA’s ability to gather information by
rulemaking would still be hampered by the application of the monitoring
and reporting interpretation.  EPA wishes to preserve all its potential
information gathering tools, even those that may be used less
frequently.  

	

Comment:

	

This commenter (0095) further asserts that as a practical matter, EPA
has still not identified even one pollutant other than GHGs that would
become “subject to regulation” as a result of monitoring or
reporting requirements.  In the reconsideration, EPA attempts to provide
a single example, claiming that certain stationary sources “must”
monitor oxygen gas (O2) or CO2 – at 74 FR 51542 – citing 40 CFR
60.49Da(b) and (c).  According to the commenter, EPA is simply wrong:
one of these subsections (40 CFR 60.49Da(c)) deals solely with NOx
monitoring, and says nothing about O2, and the other permits -- but does
not require -- such monitoring. 40 CFR 60.49Da(b)(4) provides that:

If the owner or operator has installed and certified a SO2 continuous
emissions monitoring system (CEMS) according to the requirements of
Sec.75.20(c)(1) of this chapter and appendix A to part 75 of this
chapter, and is continuing to meet the ongoing quality assurance
requirements of Sec. 75.21 of this chapter and appendix B to part 75 of
this chapter, that CEMS may be used to meet the requirements of this
section, provided that:  (i) A CO2 or O2 continuous monitoring system is
installed.

One of the state agency commenters (0102) responds to the Petitioners
contention that EPA has not identified a pollutant other than CO2 that
would be affected by the monitoring and reporting interpretation by
noting that EPA’s endangerment finding covers six GHGs, not just CO2. 


Further, commenter (0071) says that EPA has, in the past, imposed
monitoring and/or reporting requirements for chemicals that EPA does not
intend to regulate, nor is likely to want to do so in the future.  For
example, monitoring O2 in the stack of a boiler, which EPA provides at
74 FR at 51542, is a very real example that demonstrates that monitoring
and reporting requirements alone cannot reasonably be interpreted to
trigger PSD and BACT requirements.

A state agency commenter (0091), citing the example described by EPA of
the NSPS subpart Da requirement to “measure” O2 or CO2, states that
since EPA is not considering the measuring of O2 as “subject to
regulation,” it should therefore not interpret CO2 to be regulated in
this manner.  The commenter also states that this interpretation would
not preserve the EPA’s ability to collect emissions data on other
pollutants for research or other purposes such as evaluating the need
for emissions controls or limitations.

One industry group commenter (0070) argues that adopting a “monitoring
and reporting interpretation” could prevent EPA from monitoring
unregulated surrogate emissions, which are monitored to demonstrate
compliance with emission standards of associated regulated pollutants. 
Under such a scenario, the mere monitoring of environmentally-benign
surrogate emissions could require pointless control of their emissions.

Commenter (0097) states that if compounds such as oxygen are measured or
monitored to allow quantification of emissions, that gas would also be
“regulated” under this policy, which the commenter does not believe
is the desire of EPA or in the best interest of the Country.  

Response:

EPA’s GHG Reporting Rule covers six GHGs, not just CO2.  Further, EPA
has promulgated regulations that require monitoring of oxygen (O2) in
the stack of a boiler under certain circumstances.  See 40 CFR
60.49Da(d).  In the proposal, EPA mistakenly cited 60.49Da(c) of this
regulation.  As the commenter points out, this provision does not
address O2 monitoring.  However, section 60.49Da(d) says that “[t]he
owner or operator of an affected facility not complying with an output
based limit shall install, calibrate, maintain, and operate a CEMS, and
record the output of the system, for measuring the O2 or carbon dioxide
(CO2) content of the flue gases at each location where SO2 or NOx
emissions are monitored.”  These examples help demonstrate why
monitoring and reporting requirements alone should not be interpreted to
trigger PSD and BACT requirements.  Even if EPA only establishes
monitoring and reporting requirements for only a small number of
pollutants, this does not alter the undesirable outcome of the PSD
program requiring emissions limitations on the basis of regulations
designed for information gathering.  

4.4.   Monitoring Equipment Captures and Controls Emissions

Comment: 

Even if EPA’s “preferred” interpretation of “actual control of
emissions” is applied to its monitoring and reporting regulations, the
commenter (0101) states that the processes that must be utilized to
monitor and report on CO2 emissions require actual and physical
“control” of them, as the amount of emissions cannot be determined
unless the gases are first in some way captured and controlled.

Commenter (0095).  The Part 75 regulations prohibit operation in
violation of these requirements and provide that a violation of any Part
75 requirement is a violation of the Act. Id. §75.5.  Not only do the
regulations require that polluting facilities “measure . . . CO2
emissions for each affected unit,” id. §75.10(a), they also prohibit
operation of such units “so as to discharge or allow to be discharged,
emissions of . . . CO2 to the atmosphere without accounting for all such
emissions . . . . “ Id. §75.5(d).  According to the commenter (0095),
in arguing that these regulations do not make CO2 “subject to
regulation” because they do not require “actual control of CO2
emissions”, EPA appears to really mean “quantitative control” or
“limitation” of emissions, as opposed to “actual control.”  In
fact, this commenter (0095) asserts that one cannot accurately monitor
emissions without “controlling” them.  

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) argue that
this contention that any monitoring requires some level of “control”
would, without any basis in logic, simply erase the distinction between
monitoring and emission controls.

Response:

	The actual control interpretation contemplates a regulatory action that
serves to limit or restrict emissions of a pollutant.  The containment
of emissions in a stack or a monitoring device for the purposes of
monitoring does not function to limit or restrict emissions.  Even if
some small percentage of emission are captured for purposes of analysis,
a monitoring requirement provides no assurance that pollutants captured
for purposes of monitoring alone will not eventually be emitted to the
ambient air without limitation after the necessary analysis is complete.
 Thus, EPA is not persuaded by the argument that monitoring devices are
equivalent to emissions control devices or techniques and would actually
control emissions.

4.5.   Applicability of Title V Requirements Based on Monitoring and
Reporting

Comment:

One of the industry commenters (0067) and two of the state/local agency
associations (0054, 0062) added that monitoring and reporting
obligations also do not give rise to permitting obligations under Title
V of the CAA.  

Response:

Title V requires, among other things, that any “major source” –
defined, as relevant here, under CAA sections 302(j) and 501(2)(b), as
“any stationary facility or source of air pollutants which directly
emits, or has the potential to emit, one hundred tons per year or more
of any air pollutant...” – apply for a Title V permit.  EPA
interprets this requirement to apply to sources of pollutants “subject
to regulation” under the Act.  EPA previously articulated its
interpretation that this Title V permitting requirement applies to
“pollutants subject to regulation” in a 1993 memorandum from EPA’s
air program.  Memorandum from Lydia N. Wegman, Deputy Director, Office
of Air Quality Planning and Standards, U.S. EPA, “Definition of
Regulated Air Pollutant for Purposes of Title V” (Apr. 26, 1993)
(“Wegman Memo”).  EPA continues to maintain this interpretation. 
The interpretation in this memorandum was based on: (1) EPA’s reading
of the definitional chain for “major source” under Title V,
including the definition of “air pollutant” under section 302(g) and
the definition of “major source” under 302(j); (2) the view that
Congress did not intend to require a variety of sources to obtain Title
V permits if they are not otherwise regulated under the Act (see also
CAA section 504(a), providing that Title V permits are to include and
assure compliance with applicable requirements under the Act); and (3)
consistency with the approach under the PSD program.  While the specific
narrow interpretation in the Wegman Memo of the definition of “air
pollutant” in CAA section 302(g) is in question in light of
Massachusetts (finding this definition to be “sweeping”), EPA
believes the core rationale for its interpretation of the applicability
of Title V remains sound.  EPA continues to maintain its interpretation,
consistent with CAA sections 302(j), 501, 502 and 504(a), that the
provisions governing Title V applicability for “a major stationary
source” can only be triggered by emissions of pollutants subject to
regulation.  This interpretation is based primarily on the purpose of
Title V to collect all regulatory requirements applicable to a source
and to assure compliance with such requirements –  see, e.g., CAA
section 504(a) – and on the desire to promote consistency with the
approach under the PSD program.

In applying this interpretation under Title V, the Wegman Memo also
explains that EPA does not consider CO2 to be a pollutant subject to
regulation based on the monitoring and reporting requirements of section
821 of the Clean Air Act Amendments of 1990.  As articulated in numerous
orders issued by EPA in response to petitions to object to Title V
permits, EPA views the Title V operating permits program as a vehicle
for ensuring that air quality control requirements are appropriately
applied to facility emission units and that compliance with these
requirements is assured.  See, e.g., In the Matter of Fort James Camas
Mill, Petition No. X-1999-1 at 3-4 (Dec. 22, 2000); In the Matter of
Cash Creek Generation, LLC, Petition Nos. IV-2008-1 & IV-2008-2 at 2
(Dec. 15, 2009).  The Wegman Memo points out that section 821 involves
reporting and study of emissions, but is not related to actual control
of emissions.  Since the reporting requirements of section 821 have no
connection to existing air quality control requirements, it is
appropriate not to treat them as making CO2 “subject to regulation”
for purposes of Title V.  Cf. Section 504(b) (providing EPA authority to
specify requirements for “monitoring and analysis of pollutants
regulated under this Act.”).

4.6.   Practice of Distinguishing Pollutants Covered by Control
Requirements and Monitoring Requirements 

Comment:

One industry commenter (0079) states that it is a long standing practice
in the air pollution community to distinguish between those pollutants
subject to control requirements – NAAQS, NSPS, NESHAP, and SIP
requirements – versus those pollutants that are subject only to
generic emission inventory or similar reporting requirements.  The first
set of pollutants is considered “subject to regulation.”  The second
set of pollutants is “potentially” subject to regulation in the
future.  

The commenter (0062) indicates that EPA has issued fairly clear guidance
over the years concerning what constitutes an emissions limitation, as
opposed to a monitoring requirement, and states that EPA should
incorporate those concepts in its final guidance.

Response:

EPA agrees there is a distinction between pollutants subject to control
requirements and pollutant subject only to emissions inventory and
monitoring requirements.  This distinction illustrated by commenters
supports EPA’s final action to continue applying the actual control
interpretation under the PSD program. 

4.7.   Enforceability of Monitoring Regulations

	Comment:

The Petition for Reconsideration says that, just like regulations
restricting emissions

quantities, the regulations EPA promulgated implementing Section 821
have the force

of law, and violation results in severe sanctions. 40 CFR 75.5; 42
U.S.C. §7413(c)(2) (punishable by imprisonment of up to six months or
fine of up to $10,000 for making false statement or representation or
providing inaccurate monitoring reports under CAA).

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) argue that
fact that EPA may enforce the section 821 regulations using enforcement
mechanisms authorized by the CAA does not support petitioners’
interpretation.  Section 821 expressly incorporates by reference the
CAA’s enforcement mechanisms, but neither that incorporation nor the
use of those mechanisms transforms the section 821 requirement for
monitoring and reporting into an actual emission control under the CAA. 
See In Re: Deseret Power Electric Cooperative, Response of Amicus Curiae
Utility Air Regulatory Group to the Board’s Request for Supplemental
Briefing, at 3-10 (Sept. 12, 2008) (“UARG Supplemental Amicus
Brief”); see also infra Section VII.

Response: 

EPA agrees that the Part 75 regulations are enforceable and that a
violation of these requirements could lead to the imposition of
penalties where appropriate.  However, this similarity with other EPA
regulations that restrict emissions does not demonstrate that monitoring
and reporting requirements themselves restrict emissions or constitute
“regulation” within the meaning of that term that EPA has applied
considering the context of the CAA.  EPA agrees with the second set of
commenters that the particular enforcement mechanism of the Part 75
regulations does not transform these regulations into actual control
requirements.  

Chapter 5.   EPA-Approved State Implementation Plan (SIP)

5.1.   Overview of Comments on the SIP Interpretation 

	

Comment:

Thirty industry commenters (0050, 0051, 0053, 0056, 0059, 0065, 0066,
0067, 0068, 0070, 0071, 0073, 0074, 0076, 0079, 0081, 0083, 0085, 0086,
0089, 0090, 0092, 0096, 0097, 0098, 0105, 0106/0107, 0108, 0109, 0118)
and four state/local agency associations (0058, 0062, 0091, 0102) agree
with EPA’s position that the “SIP interpretation” is not the
proper interpretation of the phrase “subject to regulation” for
purposes of PSD.  

Ten of these industry commenters (0089 and others incorporating this
submission (0065, 0067, 0083, 0089, 0090, 0096, 0106/0107, 0108, 0109))
express full support for the rationale provided by EPA in the PSD
Interpretive Memorandum and the proposed PSD Interpretation for
rejecting the SIP interpretation as unwarranted and unreasonable.  These
commenters assert that the petitioners’ arguments in favor of the SIP
interpretation (i.e., that the Delaware SIP is enforceable under the
CAA, that the SIP interpretation is supported by the plain language of
the CAA, and that the approved SIP’s provisions are codified under 40
CFR Subchapter C) are not significantly different from those raised
under the monitoring and reporting interpretation, and that this
interpretation should be rejected for the same reasons.

Environmental group commenters (0095, 0101) who incorporate the Petition
for Reconsideration in their comments support the SIP interpretation. 

Response: 

After reconsidering the legal and policy issues, we decline to adopt the
SIP interpretation.  Since the meaning of the term “subject to
regulation” is ambiguous and susceptible to multiple interpretations,
the SIP interpretation is not compelled by the structure and language of
the Act.  Furthermore, there would be negative policy implications if
EPA adopted this interpretation.  EPA responds to more specific points
in the responses that follow.  

5.2.   Consistency with the Statute and Congressional Intent

Comment:

Several commenters expressed that the SIP interpretation is inconsistent
with the CAA.  One commenter (0079) opines that the SIP interpretation
belies 35 years of practice to the contrary, and is inconsistent with
section 110(a)(1) of the CAA, which limits the effect of a SIP to “air
quality control regions” “within such state.”  42 U.S.C.
§7410(a)(1).  States are only required to prevent interference with
other states’ compliance with NAAQS or measures required to be
included in the PSD portions of their SIP.  42 U.S.C. §7410(a)(2)(D). 
Section 126 of the CAA is similar in limiting its effects to NAAQS and
the required elements of the PSD program.  See 42 U.S.C. §7426. 
Commenter (0085) also states that the SIP interpretation would ignore
extensive provisions in the CAA for addressing interstate air pollution
by allowing one state to create national policy.  Three commenters
(0059, 0097, 0058, 0107) point to CAA section 116 as evidence that a
state can set more stringent CAA regulations in its jurisdiction to
advance the state’s own public policy goals and Congress expressed no
intent that such state regulations would trigger nationwide
requirements.  Commenters argue that the SIP interpretation establishes
a situation that would allow the actions in a single state to define
policy in other states and nationally, which may be contrary to the best
interests of the nation or other states.

Three commenters (0070, 0086, 0092, 0098) state that the SIP
interpretation conflicts with the core principle of cooperative
federalism on which the CAA is based, and that this interpretation would
strip Congress and EPA of their authority to set the minimum standards
and instead, would allow individual states to control the federal
permitting program’s baseline requirements.  Commenter 0086 notes that
although EPA-approved SIP requirements become enforceable by EPA and
citizens under certain provisions of the CAA, it does not follow that
such enforcement authority renders the pollutant subject to regulation
under the CAA.  Rather, this enforcement authority promotes the CAA of
providing federal assistance to States in preventing air pollution under
their own programs.  Moreover, Section 304 that provides for citizen
enforcement specifically defines the term “emission standard or
limitations” to include SIP requirements, but Congress limited the
application of this definition to only Section 304.  This suggests that
Congress meant for a different definition that does not include SIP
requirements, to apply for other purposes under the CAA.  Another
industry commenter (0068) opines that the SIP interpretation would
unconstitutionally delegate authority to States to substitute their
judgment for EPA’s when the CAA clearly gives States authority to only
address local air quality concerns.  Finally, commenter 0086 notes that
courts have already recognized that the CAA does not require a state to
“respect its neighbor’s air quality standards (or design its SIP to
avoid interference therewith) if those standards are more stringent than
the requirements of federal law.”  Connecticut v. EPA, 656 F.2d 902,
909 (2d Cir. 1981). 

Several industry commenters (0089 and others incorporating this
submission (0065,0067, 0083, 0089, 0090, 0096, 0106/0107, 0108, 0109))
add that no interpretation is defensible whereby a state’s SIP
provision would establish national regulatory policies and bind EPA and
other states.  One state’s SIP provisions cannot impose on EPA an
obligation to regulate all other states the same way.  See Vermont v.
Thomas, 850 F.2d 99, 102-04 (2d Cir. 1988) (holding that Vermont cannot,
through inclusion of a state ambient air quality standard in a revision
to a SIP, impose that standard on upwind states).  Rather, EPA
establishes the rules, based on the CAA, which states then implement
through their SIPs.  

Another commenter (0085), while ceding that that SIP regulations become
federally-enforceable once approved by EPA, asserts that such approval
does not constitute an affirmative decision to subject GHGs to
regulation under the Act; rather, EPA’s criteria for approving SIPs is
wholly different from the criteria required to establish national
regulations.  Another commenter (0059) states that EPA would be required
to analyze the impacts from a state SIP amendment on a national scale
because the impacts of PSD/Title V would be national in scope.  This
would create an unwarranted and unnecessary burden on the agency and
could lead to significant delays in the approval of SIP amendments.  

Another commenter (0086) notes that although, EPA-approved SIP
requirements become enforceable by EPA and citizens under certain
provisions of the CAA, it does not follow that such enforcement
authority renders the pollutant subject to regulation under the CAA.
Rather, this enforcement authority promotes the CAA purpose of providing
federal assistance to States in preventing air pollution under their own
programs.

One industry commenter (0068) opines that, to delegate,
unconstitutionally, the power of federal regulation to the states by
enabling one state to take action triggering the regulation of a
pollutant on a nation-wide scale would be contrary to the structure of
the CAA, which clearly gives states autonomy to tailor their programs to
achieve local air quality requirements but only limited authority for
states to substitute their judgment for EPA’s.

Some environmental commenters, who incorporate the Petition for
Reconsideration in their comments (95, 101) and support the SIP
interpretation, fault the Agency’s rejection of this interpretation by
stating that neither the Act, nor the PSD Interpretive Memo, provides a
basis for a position that regulation by a single state is not enough to
constitute “regulation under the Act” on a nationwide basis for
purpose of section 165.  Petitioners and another commenter also assert
that CO2 is already “subject to regulation under the Act” and take
the position that any requirement EPA adopts and approves in an
implementation plan makes the covered pollutant “subject to regulation
under the Act” because it is approved by the EPA “under the Act,”
and because it becomes enforceable by the state, by EPA and by citizens
“under the Act” upon approval.  

Response:

While EPA does not agree that the SIP interpretation is inconsistent
with the CAA, we nonetheless decline to adopt the interpretation.  We
believe that the actual control interpretation better unifies the
multiple purposes of the CAA and the concept of cooperative federalism. 
Congress allowed individual states to create and apply some regulations
more stringently than federal regulations within its borders, without
allowing individual states to set national regulations that would impose
those requirements on all states.  See Ellis v. Gallatin Steel Co., 390
F.3d 461, 467 (6th Cir. 2004).  

EPA continues to believe that the CAA and our implementing regulations
are intended to provide states flexibility to develop and implement SIPs
to meet the air quality goals of their individual state.  Each state’s
implementation plan is a reflection of the air quality concerns in that
state, allowing a state significant latitude in the treatment of
specific pollutants of concern (or their precursors) within its borders
based on air quality, economic, and other environmental concerns of that
state.  As such, pollutant emissions in one state may not present the
same problem for a state a thousand miles away.  As expressed in the PSD
Interpretive Memo, we continue to have concerns that the SIP
interpretation would improperly limit the flexibility of states to
develop and implement their own air quality plans, because the act of
one state to establish regulatory requirements for a particular
pollutant would drive national policy.  If EPA determined that a new
pollutant becomes “subject to regulation” nationally within the
meaning of section 165 based solely on the provisions of an EPA-approved
SIP, then all states would be required to subject the new pollutant to
PSD permitting whether or not control of the air pollutant was relevant
for improving that state’s air quality.  Whether one state, five
states, or 45 states make the decision that their air quality concerns
are best addressed by imposing regulations on a new pollutant, we do not
think those actions should trump the cooperative federalism inherent in
the CAA.  While several states may face similar air quality issues and
may choose regulation as the preferred approach to dealing with a
particular pollutant, we are concerned that allowing the regulatory
choices of some number of states to impose PSD regulation on all other
states would do just that. 

	EPA disagrees with the commenters and petitioners who contend that a
pollutant regulated in one SIP approved by EPA must automatically be
regulated through the PSD program nationally.  In fact, Congress
demonstrated intent, in the language and structure of the Act, for SIP
requirements to have only a local or regional effect.

In CAA section 102(a), Congress directs EPA to encourage cooperative
activities among states, and the adoption of uniform state and local
laws for the control of air pollution “as practicable in light of the
varying conditions and needs.”  This language informs the issue of
whether SIP requirements have nationwide applicability in two ways. 
First, there would be no need for EPA to facilitate uniform adoption of
standards in different air quality control regions, if the regulation of
an air pollutant by one region would automatically cause that pollutant
to be regulated in another region.  Second, Congress bounded its desire
to promote uniformity by recognizing that addressing local air quality
concerns may preempt national uniformity of regulation.  

Indeed, section 116 of the CAA grants States the right to adopt more
stringent standards than the uniform, minimum requirements set forth by
EPA.  See 42 U.S.C. 7416.  The legislative history of the 1977 CAA
Amendments shows that Congress understood that States may adopt
different and more stringent standards then the federal minimum
requirements.  See, e.g., 122 Cong. Rec. S12456 (daily ed. July 26,
1976) (statement of Sen. Randolph) (“[T]he States are given latitude
in devising their own approaches to air pollution control within the
framework of broad goals. ... The State of West Virginia has established
more stringent requirements than those which, through the Environmental
Protection Agency, are considered as adequate...”); 122 Cong. Rec.
S12458 (daily ed. July 26, 1976) (statement of Sen. Scott) (“The
states have the right, however, to require higher standards, and they
should have under the police powers.”)  Congress could not have
intended states to have latitude to implement their own approaches to
air pollution control, and simultaneously, require that air pollutants
regulated by one State automatically apply in all other States.

Importantly, the legislative history also shows that Congress intended
to limit the EPA’s ability to disapprove a State’s decision to adopt
more stringent requirements in setting forth the criteria for approving
state submissions under section 110.  This intent is supported by the
following passage:

State implementation plans usually contain a unified set of requirements
and frequently do not make distinctions between the controls needed to
achieve one kind of ambient standard or another.  To try to separate
such emission limitations and make judgments as to which are necessary
to achieving the national ambient air quality standards assumes a
greater technical capability in relating emissions to ambient air
quality than actually exists.

A federal effort to inject a judgment of this kind would be an
unreasonable intrusion into protected State authority.  EPA’s role is
to determine whether or not a State’s limitations are adequate and
that State implementation plans are consistent with the statute.  Even
if a State adopts limits which may be stricter than EPA would require,
EPA cannot second guess the State judgment and must enforce the approved
State emission limit.

123 Cong. Rec. S9167 (daily ed. June 8, 1977) (statement of Sen.
Muskie). 

	This Congressional intent is reflected within the statutory language. 
Under section 110(k)(3), the EPA Administrator “shall approve” a
state’s submittal if it meets the requirements of the Act, and under
section 110(l) “shall not” approve a plan revision “if the
revision would interfere with any other applicable requirement of this
Act.”  Courts have similarly interpreted this language to limit
EPA’s discretion to approve or disapprove SIP requirements.  See,
e.g., State of Connecticut v. EPA, 656 F.2d 902, 906 (2d. Cir. 1981)
(“As is illustrated by Congress’s use of the word ‘shall,’
approval of an SIP revision by the EPA Administrator is mandatory if the
revision has been the subject of a proper hearing and the plan as a
whole continues to adhere to the requirements of section 110(a)(2)”)
(referencing Union Electric Co. v. EPA, 427 U.S. 246, 257 (1976); and
Mission Indus., Inc. v. EPA, 547 F.2d 123 (1st Cir. 1976)).  These
provisions of the statute do not establish any authority or criteria for
EPA to judge the approvability of a state’s submission based on the
implications such approval would have nationally.  The absence of such
authority or criteria in the applicable standard argues against
nationwide applicability of SIP requirements and the SIP interpretation.

Moreover, under section 307(b) of the CAA, Congress assigns review of
specific regulations promulgated by EPA and “any other nationally
applicable regulations promulgated or final action taken, by the
Administrator under this Act” only to the U.S. Court of Appeals for
the District of Columbia Circuit (“D.C. Circuit”).  In contrast,
“the Administrator’s action in approving and promulgating any
implementation plan under Section 110 ... or any other final action of
the Administrator under this Act ... which is local or regionally
applicable may be filed only in the United States Court of Appeals for
the appropriate circuit.”  42 U.S.C. §7607(b) (emphasis added). 
Thus, Congress set forth its intended applicability of these regulations
in assigning judicial venue and clearly articulated that requirements in
a SIP are generally “local or regionally applicable.”

We agree that EPA’s approval of a state requirement into that
State’s implementation plan has the effect of making that requirement
enforceable under the CAA.  In addition, we agree with the commenter who
notes that the enforcement provisions of the Act further the concept of
federalism by providing federal support to States’ unique programs,
and do not necessarily define the scope of the PSD permitting program. 
However, the fact that EPA has authority to enforce SIP provisions
against regulated entities in one state does not establish that EPA has
the power to enforce these provisions against entities in other states
that are not subject to the state laws incorporated into the SIP.  Thus,
it does not follow that the enforceability of particular SIP provisions
by EPA makes a pollutant regulated under such state’s laws into a
pollutant that is subject to regulation on a nationwide basis. 

5.3.    Implications of Applying State-specific Decisions to the Nation

Comment:

Several commenters indicate that state actions to regulate local air
quality concerns should not establish national pollution control policy.
 One State commenter (0091) expressed that States should have
flexibility in their implementation plans to take action, but that one
state’s decision to regulate GHG emissions does not obligate another
state to do so.  Several industry commenters (0067, 0083, 0089, 0090,
0096, 0106/0107, 0108, 0109) argue that no interpretation is defensible
whereby a state’s SIP provision would establish national regulatory
policies and bind EPA and other states.  One state’s SIP provisions
cannot impose on EPA an obligation to regulate all other states the same
way.  See Vermont v. Thomas, 850 F.2d 99, 102-04 (2d Cir. 1988) (holding
that Vermont cannot, through inclusion of a state ambient air quality
standard in a revision to a SIP, impose that standard on upwind states.)

Two commenters (0107, 0105) state that EPA’s approval of a SIP
revision only approves that state developing and implementing its own
regulations and only allows EPA to enforce the regulation in a state as
part of that state’s overall effort to attain it policies within its
own jurisdiction.  Commenter (0059, 0107) believes it would be
unreasonable to interpret the CAA as requiring PSD permitting of a
source that emitted GHGs in Montana simply because Delaware chose to
regulate emissions from combustion turbines locally.  Commenter 0059
notes that CAA clearly recognizes in section 116 that a state can set
more stringent CAA regulations in its jurisdiction to advance the
state’s own public policy goals.  Another industry commenter (0050)
states that States often apply to EPA to add substances to their SIP
that may be an issue within the state.  The commenter (0050) opines that
EPA’s consideration of these applications extends only to the impacts
on the particular state, and not nationally, and that problems that one
state seeks to address may not be problems in the other 49 states.  A
state/local agency association and industry commenter (0058, 0086) also
concurs with EPA’s concern that taking the opposite view would set a
precedent for other pollutants, such as ammonia, which EPA currently
allows, but does not require, a state to treat as a precursor to PM2.5.

	Several commenters (0062, 0102, 0059, 0085, 0051, 0053) noted that the
process for EPA to approve an individual State’s SIP is not the
appropriate process for establishing nationally applicable requirements.
 One state/local agency associations (0062) states that PSD and Title V
applicability should arise only after a EPA makes a conscious decision
to broadly regulate a pollutant under the CAA.  Another state agency
commenter (0102) states that it is appropriate and necessary that
regulations, particularly those with significant economic effect, not be
indiscriminately applied throughout an individual state or the nation.

Finally, two commenters (0051, 0053) state that because EPA’s approval
of a SIP does not constitute a NAAQS, a NSPS, or a federal standard
regulating ozone-depleting substances (see 40 CFR
52.21(b)(50)(i)-(iii)), and is merely an approval of state laws as
meeting federal requirements, that approval does not make GHGs regulated
pollutants under the CAA.

	

 Response:

We are concerned that adopting the SIP interpretation would subject a
pollutant to regulation before EPA finds that the pollutant warrants
national regulation, and by-pass the opportunity for judicial review of
that finding for each individual pollutant.  As one commenter notes, the
process for the Administrator to establish national regulations is
different than the process for approving SIPs.  For example, before
establishing a new NAAQS, the Administrator must find that the pollutant
“causes or contributes to air pollution which may reasonably be
anticipated to endanger public health or welfare.”  See 42 U.S.C 7408.
 The CAA requires the Administrator to make similar findings before
regulating pollutants under other sections of the Act.  See, for
example, CAA sections 111, 112(b), 112(f) that require the Administrator
to find that a pollutant “presents or may present… a threat of
adverse human health effects;” or is “known to cause or may… cause
death, injury, or serious adverse effects to human health and the
environment.”  

In contrast, the statutory process for EPA to approve SIPs does not
directly contemplate that EPA conduct a finding or national impact
analysis of an individual state’s decision to regulate a new
pollutant.  Specifically, Congress limited the EPA’s ability to
disapprove a State’s decision to adopt more stringent requirements in
setting forth the criteria for approving state submissions under section
110.  See CAA section 110(k)(3).  Accordingly, under the SIP
interpretation, a new pollutant could become nationally regulated upon
EPA’s approval of a SIP, and the ability of any party to challenge the
national implications of such approval would be limited.  EPA believes
such an outcome raises public policy concerns because it by-passes these
meaningful steps in the regulatory development process. 

Even if the Act could be read to support EPA review of the national
implications of state SIP submissions, such an approach would be
undesirable for policy reasons.  As we highlighted in our
reconsideration notice, one practical effect of allowing state-specific
concerns to create national regulation is that EPA’s review of SIPs
would likely be much more time-consuming, because we would have to
consider each nuance of the SIP as a potential statement of national
policy.  Thus, we would have heightened oversight of air quality actions
in all states – even those regarding local and state issues that are
best decided by local agencies.  Our approval of SIPs would be delayed,
which would in turn, delay state’s progress toward improving air
quality.  And, EPA would be required to defend challenges to the
approval of a SIP with national implications in the D.C. Circuit Court
of Appeals rather than the local Circuit Court of Appeals.  The
potential increased burden of reviewing and approving SIPs to analyze
the national implications of each SIP, and the associated delay in
improving air quality, creates a compelling policy argument against
adoption of the SIP interpretation.

The Memo reasons that application of the SIP interpretation would
convert EPA’s approval of regulations applicable only in one state
into a decision to regulate a pollutant on a nationwide scale for
purposes of the PSD program.  The Memo explains that the establishment
of SIPs is better read in light of the “cooperative federalism”
underlying the Act, whereby Congress allowed individual states to create
and apply some regulations more stringently than federal regulations
within its borders, without allowing individual states to set national
regulations that would impose those requirements on all states.  See
Ellis v. Gallatin Steel Co., 390 F.3d 461, 467 (6th Cir. 2004).  In
rejecting the SIP interpretation, the Memo also explains that EPA
adopted a similar position in promulgation of the NSR regulations for
fine particulate matter (or “PM2.5”), without any public comments
opposing that position.  See Memo at 15-16.

5.4.   Content of “Applicable Implementation Plan”

Comment:

Several industry commenters (0089 and others incorporating this
submission (0065, 0067, 0083, 0090, 0096, 0106/0107, 0108, 0109) argue
that only those portions of EPA-approved state regulations that
implement CAA requirements can be part of an applicable implementation
plan under the CAA.  (See CAA section 302(q) (defining the “applicable
implementation plan” as “the portion (or portions) of the
implementation plan, or most recent revision thereof, which has been
approved under section 110 of this Act, . . . and which implements the
relevant requirements of this Act”) (emphasis added).)  Because
emission controls for CO2 and other GHGs have not been established as
relevant requirements of the Act to be implemented through SIPs, any
state regulation that imposes emission controls on these substances
would not be an applicable implementation plan under the CAA.  Thus, the
fact that Delaware established emission controls for CO2 in state
regulations and included those state-law provisions in a document that
it labeled a SIP, which subsequently was approved by EPA, does not
thereby render CO2 subject to regulation for PSD purposes.  In fact, in
its submittal information to EPA, Delaware made clear it had included
CO2 provisions solely as a matter of state law and those provisions were
not within the scope of the state’s implementation of the federal CAA
(Doc. No. EPA-R03-OAR-2007-1188-0002.7).  

An environmental group commenter (0101) argues that approval of a
regulation into a SIP makes that requirement part of the “applicable
implementation plan.”  The commenter’s notes that EPA has approved a
SIP revision submitted by the State of Delaware that directly
establishes emissions limits for CO2.  See Approval and Promulgation of
Air Quality Implementation Plans; Delaware; Control of Stationary
Generator Emissions, 73 FR 23101 (April 29, 2008).  Specifically,
Delaware’s SIP revision imposed CO2 limits on new and existing
distributed generators.  Section 110 of the CAA mandates that EPA
approve or disapprove SIPs; upon EPA’s approval, these CO2 emission
control requirements became part of an “applicable implementation
plan” under the Act, and thus enforceable “regulations” under the
Act.  

Response:

EPA did not propose in this action to reconsider whether it should have
approved the Delaware CO2 provisions included in the state’s SIP
submission.  Thus, it would not be appropriate for EPA to revisit that
determination here.  Furthermore, since we have otherwise declined to
interpret the PSD provisions to apply to pollutants regulated in a SIP,
it is not necessary for EPA to address the commenter’s argument that
the Delaware CO2 provisions are not a part of the applicable
implementation plan notwithstanding EPA’s approval of a SIP submission
that included those provisions.  Under the interpretation affirmed by
EPA in this action, the Delaware CO2 provisions are insufficient to
trigger PSD requirements for CO2 on a nationwide basis.  

5.5.   Implementation Considerations of a SIP Interpretation for GHGs

Comment:

One industry group (0071) noted that the SIP interpretation would lead
to unacceptable consequences. Specifically the commenter states that if
States are allowed to decide that the CAA PSD subtitle, and their SIP
provisions implementing the PSD subtitle, apply to GHGs even before GHGs
are subject to any emission limitation or other control requirement,
then the adverse consequences of overloading the PSD permitting system,
causing unacceptable delays in processing PSD permits and thereby
impeding economic development, efficiency and other improvements, and
innovation, would be felt despite EPA’s intention to try and avoid
such permitting gridlock.

Response:

We agree that the SIP interpretation could cause a delay in obtaining
preconstruction permits for major stationary sources that emit GHGs. 
Moreover, we agree that we do not know what consequences any of our
proposed interpretation would have on PSD permitting for future
pollutants.  The potential for a delay in obtaining PSD permits, while
undesirable, does not, by itself, necessitate that we reject the SIP
interpretation or any other proposed interpretation.  Nonetheless, we
decline to adopt the SIP interpretation in favor of the actual control
interpretation for all the reasons summarized above and in our Federal
Register notice. 

5.6.    Reliance on Connecticut Decision

Comment:

	

An environmental group commenter (0095), who incorporated by reference
the Petition for Reconsideration, faults EPA’s reliance on Connecticut
v. EPA, 656 F.2d 902 (2d Cir. 1981), and asserts that this case has
nothing to do with the issue of whether a pollutant is “subject to
regulation under the Act.”  

Another commenter (0086) notes that courts have already recognized that
the CAA does not require a state to “respect its neighbor’s air
quality standards (or design its SIP to avoid interference therewith) if
those standards are more stringent than the requirements of federal
law.” Connecticut v. EPA, 656 F.2d 902, 909 (2d Cir. 1981).

Response:

In the PSD Interpretive Memo, EPA cited Connecticut to support the
notion that while a state is free to adopt air quality standards more
stringent than required by the NAAQS or other federal law provisions,
Congress precludes those stricter requirements from applying to other
states.  The Agency agrees with commenter 0095 that the circumstances
involved in that case are not directly analogous, but, nevertheless, the
case supports the inference that EPA has drawn from it.  The Court
concluded that “[n]othing in the Act, however, indicates that a state
must respect its neighbor’s air quality standards (or design its SIP
to avoid interference therewith) if those standards are more stringent
than the requirements of federal law.”  If a state is not required to
respect the more stringent requirements of a neighboring State in
developing its own implementation plan, then by inference, the state
would also not be compelled to follow the more stringent standards. 

Chapter 6.   Finding of Endangerment

	

6.1.   Appropriateness of Triggering PSD Requirements from an
Endangerment Finding

	Comment:  

	

Twenty-nine industry commenters (0050, 0051, 0053, 0056, 0059, 0065,
0066, 0067, 0068, 0070, 0071, 0073, 0074, 0076, 0081, 0083, 0085, 0086,
0089, 0090, 0092, 0096, 0098, 0100, 0105, 0106/0107, 0108, 0109, 0118)
and four state/local agency associations (0058, 0062, 0091, 0102) agree
with EPA’s proposed position that the “endangerment finding
interpretation” is not the proper interpretation of the phrase
“subject to regulation” for purposes of PSD.  One of the state/local
agency associations (0062.1) added that an endangerment finding also
does not give rise to permitting obligations under Title V of the CAA. 
Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) note that the Petition for Reconsideration also disavows the
endangerment finding interpretation, and agrees with EPA’s analysis
showing that the endangerment finding interpretation would be
inconsistent with the other parts of the definition of “regulated NSR
pollutant” at 40 CFR 52.21(b)(50)(i) and (ii).  The industry commenter
(0085) adds that EPA’s conclusion in prior actions that endangerment
finding alone does not trigger PSD should be reaffirmed in this action.

The commenters believe that subjecting the pollutant to PSD
requirements, including imposition of BACT emission limits, before the
Agency has taken regulatory action to establish emission controls would
turn the CAA process on its head.  The industry commenter (0067)
similarly indicated that endangerment finding interpretation clearly
undermines the orderly process created by Congress for regulation of new
air pollutants.  A state agency (0102) commenter (0102) adds that
establishing controls without having a standard to be achieved leads to
uncertainty in the permitting program.

Three industry commenters (0067, 0092, 0098) representing several groups
of companies (industry), states that an interpretation of “subject to
regulation” that would be applied to pollutants simply because they
have been subject to an “endangerment finding” would be completely
irrational and unworkable since an endangerment finding is only the
first of many necessary steps when developing NSPS under section 111 of
the CAA and thus it would be premature and inappropriate to subject
sources to PSD permitting requirements for pollutants after only
undergoing the very first step in the NSPS development process.

	One  environmental groups commenter (0101) contends that an
endangerment finding is sufficient to make a pollutant subject to
regulation.  In particular, they point to the December 2009 endangerment
and cause or contribute findings under section 202(a), and argue that
because control requirements under section 202(a) are mandatory (e.g.,
inevitable) for a particular air pollutant (here, greenhouse gases) once
EPA has made a positive endangerment finding for an air pollutant, at
that point the air pollutant becomes “subject to” regulation.

	Response:

	

EPA maintains its view that the terms of EPA’s regulations and the
relevant provisions of the CAA do not compel EPA to conclude that an air
pollutant becomes “subject to regulation” when EPA finds that it
endangers public health or welfare without contemporaneously
promulgating control requirements for that pollutant. 

As explained in EPA’s Endangerment and Cause or Contribute Findings
for GHGs under section 202(a) of the CAA, there are actually two
separate findings involved in what is often referred to as an
endangerment finding.  See 74 FR 66496 (Dec. 15, 2009).  The first
finding addresses whether air pollution may reasonably be anticipated to
endanger public health or welfare.  The second finding involves an
assessment of whether emissions of an air pollutant from the relevant
source category cause or contribute to this air pollution.  In this
action, EPA uses the phrase “endangerment finding” to refer to EPA
findings on both of these questions.  The EPA interpretation described
here applies to both findings regardless of whether they occur together
or separately.  

As explained in the proposed reconsideration, and as several commenters
noted, an interpretation of “subject to regulation” that does not
include endangerment findings is consistent with the first three parts
of the definition of “regulated NSR pollutant” in section
52.21(b)(50) of EPA’s regulations.  Unlike the first three parts of
the definition, an endangerment finding does not itself contain any
restrictions (e.g., regarding the level of air pollution or emissions or
use).  Moreover, two parts of the definition involve actions that can
occur only after an endangerment finding of some sort has taken place. 
In other words, other parts of the definition already bypass an
endangerment finding and apply the PSD trigger to a later step in the
regulatory process.  

Specifically, under the first part of that definition, PSD regulation is
triggered by promulgation of a NAAQS under CAA section 109.  However, in
order to promulgate NAAQS standards under section 109, EPA must first
list, and issue air quality criteria for a pollutant under section 108,
which in turn can only happen after EPA makes an endangerment finding
and a version of a cause or contribute finding, in addition to meeting
other requirements.  CAA sections 108(a)(1) and 109(a)(2).  Thus, if EPA
were to conclude that an endangerment finding, cause or contribute
finding, or both would make a pollutant “subject to regulation”
within the meaning of the PSD provisions, this would read all meaning
out of the first part of the “regulated NSR pollutant” definition
because a pollutant would become subject to PSD permitting requirements
well before the promulgation of the NAAQS under section 109.  See 40 CFR
52.21(b)(50)(i).

Similarly, the second part of the definition of “regulated NSR
pollutant” includes any pollutant that is subject to a standard
promulgated under section 111 of the CAA.  Section 111 requires EPA to
list a source category, if in his or her judgment, “it causes, or
contributes significantly to, air pollution which may reasonably be
anticipated to endanger public health or welfare.”  See CAA section
111(b)(1)(A).  After EPA lists a source category, it promulgates NSPS
for that source category.  For a source category not already listed, if
EPA were to list it on the basis of its emissions of a pollutant that
was not previously regulated, and such a listing made that pollutant
“subject to regulation” within the meaning of the PSD provisions,
this chain of events would result in triggering PSD permitting
requirements for that pollutant well in advance of the point
contemplated by the second prong of the regulated NSR pollutant
definition.  See 40 CFR 52.21(b)(50)(ii).

Furthermore, waiting to apply PSD requirements at least until the actual
promulgation of control requirements that follow an endangerment finding
is sensible.  When promulgating the final regulations establishing the
control requirements for a pollutant, EPA often makes decisions that are
also relevant to decisions that must be made in implementing the PSD
program for that pollutant.  For example, EPA often does not make a
final decision regarding how to identify the specific pollutant subject
to an NSPS standard until the NSPS is issued, which occurs after both
the endangerment finding and the source category listing.  

	 

Finally, we disagree with commenters who argue that EPA must adopt an
interpretation of its regulations that has PSD triggered by a positive
endangerment finding.  While such an interpretation may be available to
EPA, given the ambiguity in the statute and the language “subject
to” and “regulation,” it is not mandated by the statutory or
regulated text.  See section 3.2.4 of this document for response to
comments regarding “subject to regulation.”  Section6.3 below
contains EPA’s response to comments regarding whether a final
endangerment finding is “regulation.”  In addition, as noted above,
it would be inconsistent with other parts of the definition of
“regulated NSR pollutant,” which are linked to action that can occur
only after (or concurrently with) an endangerment finding is made. 
Moreover, also as noted above, relevant considerations for
implementation of the PSD program often do not occur until the actual
control requirements are finalized, and establishing a PSD trigger
before this last step would deprive the PSD program of potentially
important and necessary information.  For these and other reasons
provided in the final notice and this Response to Comments document, EPA
reasonably interprets the regulations to include each pollutant subject
to a regulation adopted by EPA under the Clean Air Act that requires
actual control of emissions of that pollutant.

6.2.   Endangerment Finding Must be Specific to Stationary Sources to
Trigger PSD Requirements 

  

	Comment:

One commenter (0068) suggests that EPA should make a “cause and
contribute” finding, specific to stationary sources, before GHGs are
considered “subject to regulation.”  This commenter stated that the
endangerment and cause or contribute finding process for vehicles,
regulated under Title II of the CAA did not consider whether emissions
from stationary sources also cause and contribute to the endangerment
from GHGs.  They assert that to comply with the APA and ensure
constitutional safeguards, a “cause and contribute” process for
stationary sources, regulated under Title I of the CAA must be followed.


Response:

Absent specific Congressional direction, we do not believe EPA is
compelled to conduct a “cause or contribute” finding for stationary
sources before applying PSD requirements to a pollutant that is
otherwise subject to regulation under the Act.  In contrast to the
specific inclusion of a “cause and contribute” finding requirement
in Section 202 of the CAA, Congress did not include a similar
requirement within the definition of major emitting facility (section
169 of the CAA) such that the term would be necessarily limited to only
those stationary sources found to “cause or contribute.”  Likewise,
Congress did not  include a “cause or contribute” requirement
directly in Section 165.  For reasons discussed in section 9.8 of this
document, EPA is unable in this action to change its interpretation that
the regulation of a pollutant under Title II of the Clean Air Act is
sufficient to make a pollutant subject to regulation under the Act for
PSD purposes. 

We disagree with commenter that the APA and constitutional safeguards
compel EPA to make a “cause or contribute” finding for stationary
sources before regulating stationary sources under the PSD provisions in
Title I of the CAA.  As discussed elsewhere in this document, the actual
control interpretion applied by EPA ensures that there is an opportunity
for public comment before EPA establishes controls on a pollutant that
trigger PSD permitting requirements. 

6.3.    Endangerment Finding as Prerequisite to Regulation or as a
Regulation Itself

	Comment:

  SEQ CHAPTER \h \r 1 One industry commenter (0105) that supports
EPA’s preferred interpretation of “subject to regulation” states
that although a finding of endangerment may be one of the first steps in
EPA regulating a pollutant it can not trigger PSD; the finding in itself
is not even a regulation and certainly does not impact or regulate the
pollutant.

One commenter (0050) expresses that EPA acknowledges that the petition
for reconsideration does not propose that a pollutant be considered
“subject to regulation” upon a finding of endangerment.  They
express that EPA has repeatedly stated (as it does in the proposed
endangerment finding for GHG) that it does not consider the endangerment
finding as a “regulation” under the CAA.  The commenter (0050)
asserts that an endangerment finding has been construed as requiring
regulation under the CAA, and not the regulation itself. 

One state/local agency association (0058) and one state agency commenter
(0102) states that it seems self-evident that an endangerment finding
does not by itself make a pollutant “subject to regulation” because
it is a prerequisite to regulation.  

Industry commenters (0067, 0083, 0089, 0090, 0106/0107, 0108, 0109) note
that the CAA sets out a process under which EPA first makes a
determination whether emissions of a pollutant should be regulated (a
determination that, under several provisions of the CAA, includes an
endangerment determination) and later promulgates regulations regarding
control of emissions of that pollutant.  Industry commenters (0105,
0050) assert that an endangerment finding requires regulation under the
CAA, but is not itself a regulation.

	Response:

	

EPA agrees that the fact that an endangerment finding is not a codified
regulation in the Code of Federal Regulations further supports the view
that an endangerment finding does not make an air pollutant “subject
to regulation.”  The PSD Interpretive Memo explains that an
endangerment finding should not be construed as “regulating” the air
pollutant(s) at issue because there is no actual regulatory language
applicable to the air pollutant at this time in the CFR.  Rather, the
finding is a prerequisite to issuing regulatory language that imposes
control requirements.  This is true even if the endangerment finding is
a “rule” for purposes of administrative processes; that does not
alter the fact that there is no regulation or regulatory text attached
to the endangerment finding itself.  Since an endangerment finding does
not establish “regulation” within the common meaning of the term
applied by EPA, we do not believe the CAA compels EPA to apply PSD
requirements to a pollutant on the basis of an endangerment finding
alone.  

As noted elsewhere in this document, the existence of a regulation or
rule covering a pollutant in the Code of Federal Regulation is also not
determinative of whether a pollutant is “subject to regulation”
within the meaning of the PSD provisions in the Clean Air Act and EPA
regulations.

6.4.   Consistency with Supreme Court Ruling

	Comment:

Industry commenters (0085, 0070, 0107,0105, 0050, 0067, 0092, 0098) and
one state/local agency association commenter (0058)  and two state
agency commenter (0102,0091) state that an endangerment finding does not
by itself make a pollutant “subject to regulation” because it is a
prerequisite to regulation.  Commenter (0107) notes that the Supreme
Court acknowledged the difference between a finding of endangerment and
regulation in Massachusetts v. EPA, in which Justice Stevens, writing
for the majority, observed that while the judgment to find that an air
pollutant “causes(s) or contribute(s) to air pollution which may
reasonably be anticipated to endanger public health or welfare (cite
omitted),” is not a “roving license to ignore the Agency’s
responsibility to regulate, EPA “has significant latitude as to the
manner, timing, content and coordination of its regulations with those
of other agencies.”  The commenter (0107) believes that this shows
that the Supreme Court clearly distinguished between a finding of
endangerment and ensuing regulations which subject pollutants to
control. 

	Response:

We agree with commenters that EPA’s interpretation is also consistent
with the Supreme Court’s decision in Massachusetts.  In its decision,
the Court acknowledged that EPA “has significant latitude as to the
manner, timing, content and coordination” of the regulations that
would result from a positive endangerment finding under section 202(a). 
See 549 U.S. at 532.  Just as EPA has discretion regarding the timing of
the section 202(a) control regulations that would flow from an
endangerment finding under that section, it also has some discretion
regarding the timing of the triggering of PSD controls that the statute
requires based on those section 202(a) regulations.  EPA has reasonably
determined that PSD controls should not precede any other control
requirements.  

Chapter 7.   Granting of Section 209 Waiver

7.1.   Granting Waiver of State Preemption

Comments:  

As summarized below, a majority of commenters agreed with EPA’s
proposal to find that neither the CAA nor the Agency’s PSD regulations
require that EPA’s grant of a waiver of preemption to state standards
under section 209 of the CAA result in the application of the PSD
program to pollutants subject to those state standards.  These
commenters agreed that the Agency’s decision to grant a section 209
waiver to the state of California to establish its own GHG emission
standards for new motor vehicles does not trigger PSD requirements for
GHGs.  While two commenters disagreed with that proposal, EPA has not
been persuaded to change its proposed position based on these comments,
as explained below.

Twenty-seven industry commenters (0050, 0051, 0053, 0056, 0059, 0065,
0067, 0068, 0070, 0071, 0073, 0074, 0076, 0079, 0081, 0083, 0085, 0086,
0089, 0090, 0096, 0097, 0105, 0106/0107, 0108, 0109, 0118) and two
state/local agency association (0058, 102) agree with EPA’s position
that a decision to grant a CAA section 209 waiver to the State of
California to adopt and enforce establish GHG emission standards for new
motor does not trigger PSD requirements for GHGs.  Most of the industry
commenters state that California standards are not regulations under the
CAA, and therefore do not trigger PSD for pollutants regulated under
California standards.

Eight of the industry commenters (0067, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109) expressly concur with EPA’s analysis and
conclusions regarding this issue as presented in the proposed PSD
Interpretation.  One of these commenters (0089) also noted that his
organization had submitted detailed comments on this issue in comments
on EPA’s proposed reversal of its 2008 denial of California’s
request for a section 209 waiver to enforce state regulatory limits on
GHG emissions from new motor vehicles, which can be found in Docket ID
No. EPA-HQ-OAR-2006-0173-8960.1.

One industry commenter (0085) supports EPA’s reasoning and added that
it is well-established that if Congress intends to accord a state law
the status of a federal law (or allow an agency like EPA to do so), it
must state its intentions clearly.  The commenter (0085) asserts that
Congress made no such plain statement here; therefore section 209(b) of
the Act does not convert an EPA-approved state emissions standard into
federal law.

One industry commenter (0118) and one commenter representing several
groups of companies  (industry) (0086) agrees with EPA’s position that
a decision to grant a CAA section 209 waiver to the State of California
to establish GHG emission standards for new motor does not trigger PSD
requirements for GHGs.  This commenter provides detailed analyses of the
statutory text and Congressional intent to support EPA’s position.

  SEQ CHAPTER \h \r 1 One industry commenter (0105) that supports
EPA’s preferred interpretation of “subject to regulation” states
that the granting of a section 209 waiver allows a state to develop its
own regulations, but does not in itself regulate any pollutant.

	One industry commenter (0107) supports the reasoning EPA provided when
rejecting the SIP interpretation in the proposal.  The commenter added
that this was a state choice and for the same reasons that Delaware’s
SIP particulars do not establish that a pollutant is subject to federal
regulation, California law and policy does not extend to other
jurisdictions.  The industry commenter (0107) asserts that under our
federalist system, not only may a state regulate a pollutant that is not
regulated elsewhere in the country under its autonomous authority, but
the provision of the CAA allowing EPA to grant a waiver from a national
vehicle emissions program to California does not subject other sources
to a national emission control requirement.

A couple of the industry commenters (0050, 0070) opine that granting a
waiver merely removes a barrier to allowing a state to set its own
standard in a particular area, and only applies in and to the state that
requests it, and should not be construed as applying or creating a
federal standard. 

One industry commenter (0079) states that EPA’s decision to grant a
CAA section 209 waiver to the State of California to establish GHG
emission standards for new motor does not trigger nation-wide PSD
requirements for GHGs for the same reasons that adoption of such a
standard in a state SIP does not trigger those requirements.  

One commenter (0097) states that regulation upon issuance of a section
209 waiver is inappropriate because the granting of a waiver does not
establish any federal emission standards or other federal requirement,
and the action of one state or political jurisdiction should not direct
the actions of other states or jurisdictions.

One state/local agency association (0058) notes that CAA section
209(b)(3) provides that where a state is subject to rules which have
been granted a waiver, “compliance with such State standards shall be
treated as compliance with applicable Federal standards for purposes of
this subchapter,” but does not say that such state standards actually
become the federal standards, which would have been easy to say had it
been Congress’s intent.  The commenter (0058) adds that a contrary
interpretation would mean that California had the power to dictate what
pollutants are subject to PSD throughout the entire nation, which could
not have been the intent of Congress in adopting the waiver provision.

One commenter (0101) notes several instances that support GHGs as
already being “subject to regulation,” including EPA’s
authorization for California to implement its own CO2 emissions
limitations under section 209(b) of the Act, 42 U.S.C. §7509(b).  See
California State Motor Vehicle Pollution Control Standards; Notice of
Decision Granting a Waiver of CAA Preemption for California’s 2009 and
Subsequent Model Year Greenhouse Gas Emission Standards for New Motor
Vehicles;  74 FR at 32744 (July 8, 2009).  The commenter argues that
this authorization immediately allowed California and 10 other states to
“regulate” CO2 under the Act.  In this case, “regulation”
entails not only the control, but the drastic curtailment of CO2
emissions.  The commenter (0101) also argues that throughout years of
litigation, EPA has vehemently insisted that California is prohibited
from controlling GHG emissions unless EPA first issues a
“regulation” (the waiver) permitting those emissions controls.  This
commenter states that EPA has now issued the waiver, and thus stopped
claiming, as it did in the proposed reconsideration notice, that it has
not actually controlled these emissions.

  SEQ CHAPTER \h \r 1 Another environmental organization commenter
(0099) contends that even under the “actual control” theory, a
waiver under section 209 triggers BACT.  The EPA authorized the state of
California to implement its motor vehicle GHG emission standards
pursuant to section 209(b) of the CAA, 42 U.S.C. §7543(b), on July 8,
2009.  See 74 FR 32744.  As a result, CO2 was immediately subject to
emission limits not only in California, but also in ten of the 14 other
states that have imposed these same standards pursuant to their
independent authority under Section 177 of the Act, 42 U.S.C. §7507. 
Therefore, according to the commenter, even under EPA’s unduly narrow
interpretation of the phrase “subject to regulation” in CAA section
165(a)(4) to mean “subject to actual control of emissions,” CO2 is
now “subject to regulation” and, accordingly, CO2 emissions from
major emitting facilities are now unambiguously subject to BACT.  

The commenter (0099) adds that two federal courts have found that these
very CO2 emission limits are indeed federal CAA standards (citations
provided with comment).  When confronted with these two decisions, EPA
turns again to its touchstone of congressional confusion, opining that
what those courts actually held was that Congress intended that such
standards be federal regulations under the CAA for purposes of Energy
Policy and Conservation Act, but nonetheless they remain state standards
for purpose of the CAA.  See 74 FR 51544 n. 7.  EPA has made its
reluctance to have states determine what additional pollutants -- even
ones subject to “actual control” -- are “subject to regulation”
clear in its discussion of the Delaware SIP.  Id. at 51542-43.  But
EPA’s reluctance should not stand in the way of clear congressional
intent in the case of California’s emission standards.  In 1970,
Congress specifically carved out a regulatory role for California
vehicle emission standards under the CAA, and over the years has
endorsed and expanded that role by allowing other states to adopt
California standards. Given how Congress has enshrined this role in the
Act, it is hard to see how pollutants regulated under these provisions
are somehow not regulated “under the Act.”  (Even more telling is
the fact that each time California has chosen to regulate a pollutant
under this provision, EPA has followed suit. (e.g., for carbon monoxide
(CO), Nitrogen Oxide (NOx), hydrocarbons, and evaporative emissions),
the exact same scenario as with CO2.  The commenter adds that apropos of
these specific standards, EPA’s position is doubly unfounded, because
these standards are an integral part of EPA’s own proposed GHG vehicle
emission standards.  In fact, by agreement between California and EPA,
EPA’s has proposed regulations that explicitly incorporate these
standards in order to create “a single, nationwide program to reduce
light duty vehicle GHG emissions.” See 74 FR 49460.  Commenter (0091)
concludes that EPA should interpret pollutants “subject to
regulation” in both CAA §165(a)(4) and 40 CFR 52.21(b)(50)(iv) (a) to
include pollutants that are regulated by California and other states
pursuant to §§177 and 209(b) of the CAA.

	

	Response:

	

EPA is affirming its position that an Agency decision to grant a waiver
to a state under section 209 of the CAA does not make the PSD program
applicable to pollutants that may be regulated under state authority
following a grant of such a waiver.  For the reasons discussed below,
the granting of a waiver does not make the pollutants that are regulated
by a state after obtaining a section 209 waiver into pollutants
regulated under the CAA.  Furthermore, EPA is also affirming the
position that PSD requirements are not applicable to a pollutant in all
states when a handful of states besides the one obtaining the waiver
adopt identical standards under section 177 of the CAA that are then
approved into state SIPs by EPA.  EPA agrees with the majority of
commenters on this issue that this final interpretation is consistent
with the statutory and regulatory structure of the waiver program and is
also consistent with the position that we previously explained to
Congress.  As the Administrator stated last year, “a decision to grant
a waiver under section 209 of the Act removes the preemption of state
law otherwise imposed by the Act.  Such a decision is fundamentally
different from the decisions to establish requirements under the CAA
that the Agency and the [EAB] have considered in interpreting the
provisions governing the applicability of the PSD program.”  Letter
from Lisa P. Jackson, EPA Administrator, to Senator James M. Inhofe
(March 17, 2009).  

With regard to the commenters that disagreed with EPA’s proposed
position on the section 209 waiver provisions, and assert that EPA’s
granting of the waiver results in “actual control,” EPA has not been
persuaded to change its proposed position based on these comments. EPA
does not disagree that the regulations promulgated by the state pursuant
to the waiver will require control of emissions and thus constitute
“regulation” of GHGs under the meaning applied by EPA.  However, the
principal issue here is whether this regulation occurs under the
authority of the Clean Air Act (i.e., “under the Act.”).  As
explained in our reconsideration notice, a waiver granted under CAA
section 209(b)(1) simply removes the prohibition found in section 209(a)
that forbids states from adopting or enforcing their own standards
relating to control of emissions from new motor vehicles or new motor
vehicle engines.  Thus, the grant of the waiver does not lead to
regulation “under the Act” because it simply allows California to
exercise the same authority to adopt and enforce state emissions
standards for new motor vehicles that California could have exercised
without the initial prohibition in section 209(a).  

Consistent with a number of the comments that support our position and
reasoning with regard to the section 209 waiver, we note that a waiver
constitutes a withdrawal of federal preemption that allows a state to
develop its own state standards to regulate vehicle emissions; the
waiver does not transform the pollutants regulated by these state
standards into pollutants regulated under the CAA for purpose of
sections 165 and 169.  As a number of the comments summarized above
note, there is nothing in the legislative history that supports a
conclusion that Congress intended section 209 waivers to result in
application of PSD requirements. The opposing comments have not
convincingly articulated a mechanism through which EPA’s action
granting the waiver in fact requires control of emissions (as opposed to
the states action under state law).  If EPA granted the waiver alone and
the state ultimately decided not to implement its regulation, there
would be no control requirement in effect under the CAA.  

As we explained in our reconsideration notice, we also find it
instructive that enforcement of any emission standard by the State after
we grant a section 209 waiver would occur pursuant to state enforcement
authority, not federal authority.  EPA would continue to enforce the
federal emission standards we promulgate under section 202. EPA does not
enforce the state standard.  EPA only conducts testing to determine
compliance with the federal standards promulgated by EPA, and any
enforcement would be for violation of EPA standards, not the state
standards.  As noted in some of the comments, CAA section 209(b)(3)
provides that where a state has adopted standards that have been granted
a waiver “compliance with such State standards shall be treated as
compliance with applicable Federal standards for purposes of this
subchapter,” but does not say that such state standards actually
become EPA standards.  A review of the relevant legislative history
reveals nothing that would indicate that Congress intended for such
state standards to generally become EPA standards under the CAA when it
gave EPA the authority to grant a section 209 waiver, especially in
light of the fact that if a manufacturer fails to comply with a state
standard adopted pursuant to a section 209 waiver, EPA only has
authority to bring an enforcement action if the EPA standards are
violated.  Simply put, while compliance with a state standard adopted
pursuant to a section 209 waiver may be treated as compliance with the
EPA standard, violation of the state standard is not enough to show
violation of the EPA standard.  Accordingly, we find the absence of
legislative history supporting the contrary position and the language in
section 209(b)(3) instructive, as they indicate that Congress clearly
recognized the co-existence of the EPA and state standards.  This shows
Congress did not intend that state regulations replace, or transform
state standards into EPA regulations “under the Act.”  

Contrary to the commenter’s assertions, this position is also
consistent with the two federal court decisions noted in the comments. 
As EPA explained in the preamble to the proposed reconsideration, these
Courts did not examine whether California standards were EPA standards
under the specific provisions of the CAA.  Rather, those decisions
turned on an interpretation of the corporate average fuel economy (CAFE)
standard setting and preemption provisions found in the Energy Policy
and Conservation Act (EPCA).  These courts determined that the
California GHG emissions standards are a type of “other motor vehicle
standards of the Government” as that term is used in EPCA such that
NHTSA had to consider the effect of these state standards on fuel
economy in determining the appropriate CAFE standard.  The Court relied
on legislative history indicating Congress specifically intended to
include California emissions standards in this EPCA provision for
setting CAFE standards, and NHTSA had historically treated California
emissions standards as included in this provision.  Based on this
legislative history and past practice, the Court concluded that
California’s GHG emissions standards are not included in the scope of
EPCA’s preemption provision.  Nothing in the comments has persuaded
EPA to change its position that these determinations apply only to these
EPCA preemption provisions and do not apply to an interpretation of very
different provisions, sections 165 and 169 of the CAA.  EPA continues to
believe that these courts’ interpretations of an EPCA provision did
not change the California standards into EPA standards under the CAA
regulatory program, and thus should not trigger PSD permitting.

It is important to note that in this action EPA is not interpreting
EPCA, the standard setting or preemption provisions of EPCA, or the
interplay between GHG standards adopted by EPA under section 202(a) of
the CAA, state GHG standards that receive a waiver under section 209(b)
of the CAA, and consideration by NHTSA of “other motor vehicle
standards of the Government” under EPCA.  While those issues were
before the District Courts discussed by commenters, EPA is interpreting
a different and separate provision, section 165, and the relationship of
that specific CAA provision and state GHG standards that receive a
waiver under CAA section 209(b).  That is a very different issue than
the EPCA issues before the District Courts, and EPA is not in any way
intending to imply or indicate that the interpretation announced today
is based on or is in any way related to the very different issues
considered in those District Court cases. 

Moreover, EPA is not aware of any position in previous litigation that
is inconsistent with this position, and the commenter fails to site any
specific litigation, statements, or positions to the contrary.  While
EPA agrees that it was required to grant the section 209 waiver before
standards regulating GHGs emissions from new motor vehicles could be
enforced in California, EPA did not assert that the grant of such a
waiver would constitute “regulation under the Act” or impose control
of GHG emissions pursuant to federal emissions standards.  Rather, as
explained above, EPA’s grant of the section 209 waiver simply removed
a federal prohibition and thereby allowed California to impose state
regulations that control GHG emissions pursuant to state law.

Finally, EPA finds no merit in commenter’s assertion that GHGs are
clearly “subject to regulation” as a matter of the federal PSD
program after the grant of the section 209 waiver because the California
standards are an integral part of EPA’s own proposed GHG emission
standards for light duty vehicles (LDV) or because there is an asserted
agreement between EPA and California regarding such integration.  At the
outset, the “agreement” to which the commenter is referring are
several individual commitments made by various vehicle manufacturers,
trade associations, and California that are conditional in nature. 
There is no “agreement” between these parties.  Instead each of
these commitment letters states the intentions of the signatory and
states that if certain things occur then they will take certain actions.
 Many of the conditions relate to future actions that were under
consideration by EPA, such as the then pending reconsideration of the
California waiver and EPA’s intention to propose GHG standards for
LDV.  EPA made no “commitments” or “agreement” and had no
obligation to take any action.  Instead EPA announced that it planned to
conduct a notice and comment rulemaking proposing GHG emissions from
LDV.  The various parties announced their support for such a proposed
rule, and their intention to take various actions if EPA in fact
finalized such GHG standards.  Nothing in the actions by these various
parties somehow transformed or changed the legal effect of a waiver of
emissions standards under section 209.    

Moreover, EPA has not incorporated California’s GHG standards into our
proposed LDV Rule.  EPA’s proposed standards are in fact very
different from the California standards, and do not incorporate or
duplicate California’s regulations.  EPA did not propose to adopt the
California standards as federal standards in the LDV Rule.  EPA’s 
actions in adopting such a  LDV Rule  would not have any relevance to
whether the prior grant of the 209 waiver made GHG “subject to
regulation” under federal law.  In fact, promulgation of an EPA
standard in the LDV Rule would itself establish a federal
“regulation” of GHG emissions under the CAA, which was not achieved
through issuance of the waiver. 	

Furthermore, as explained in the proposed LDV Rule, once EPA’s rule is
promulgated, California will make a final decision on whether it will
accept a manufacturer’s compliance with the federal GHG standards as
compliance with the California standards.  California’s acceptance of
this compliance approach under California’s regulations is not because
California’s standards are incorporated into the federal standards but
would be based on California’s view that the federal standards would
achieve comparable performance to the California standards.  As
discussed elsewhere in this RTC, EPA agrees that issuance of final GHG
emissions standards in a LDV Rule will make GHGs subject to regulation
under the Act.  However, we emphasize that this result would occur
regardless of whether California  was granted a section 209 waiver for
GHG regulations and regardless of  how standards and regulations in the
California state program take into account  any federal GHG standards
established in the LDV Rule.  

7.2.   Adoption of California Standards by Other States

Comment:

The commenter (0099) states that the CO2 emission limits are in effect
not only in California, but also in ten other states that have also
promulgated these standards for Model Years 2009 or 2010: Connecticut,
Maine, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode
Island, Vermont, and Washington.  Each of these states adopted the CO2
Emission Limits pursuant to section 177 of the CAA, 42 U.S.C. §7507,
which expressly grants other states the authority to adopt
California’s vehicle emission standards.  Commenter (0099) notes that
states have been exercising their section 177 authority for almost two
decades; the first to do so was New York, adopting California’s
original Low Emission Vehicle standards in 1992, and adds that in three
more states and the District of Columbia, these standards will come into
effect in subsequent model years.  Once incorporated into a SIP, the
commenter notes that numerous provisions authorize both EPA and citizens
to enforce such requirements, e.g., 42 U.S.C. §7413; 42 U.S.C.
§7604(a)(1), (f)(3).  Because the CO2 Emission Limits are no different
than any other vehicle emission standards that states have been adopting
and enforcing under the CAA for decades, it is clear that CO2 is now
“subject to regulation” under the CAA.  

Response:

EPA has also concluded that the adoption of identical standards by
several states under section 177 does not make a pollutant covered by
those standards “subject to regulation under the Act” in all states.
 Like section 209, section 177 only grants States authority to regulate
under state authority by removing federal preemption.  Adoption of
California standards by other States does not change the fact that those
standards are still state standards enforced under state law and federal
law is approved in a SIP.  While EPA agrees that when a state adopts
alternate vehicle standards into its SIP pursuant to section 177, and
EPA approves the SIP, these standards become enforceable by EPA and
citizens under the CAA, we do not agree that this compels an
interpretation that any pollutant included in an individual state SIP
requirement becomes “subject to regulation” in all states under the
CAA.  As discussed in response to comments above, EPA rejects the theory
that a regulation of a pollutant in one or more states in an
EPA-approved implementation plan necessarily makes that pollutant
subject to regulation in all states.  Such an approach is inconsistent
with the fundamental principle of cooperative federalism embodied in the
CAA.  

Chapter 8.   Timing of Regulation

EPA received many comments on the appropriate interpretation of
“subject to regulation” as it relates to the actual date by which
PSD permitting requirements will be triggered.  As discussed more fully
below (and also in Chapter 9 of this RTC), those comments suggested
trigger dates ranging from promulgation of the underlying actual control
regulation (0099) to more than two years after that event (0067, 0073). 
Overall, many commenters agreed with EPA’s proposal to change from an
interpretation of “subject to regulation” under which PSD permitting
requirements would become applicable upon the  promulgation date of the
underlying “actual control” regulation to an interpretation in which
PSD requirements would become applicable on the effective date of that
regulation.  However, a majority of the commenters argued that EPA had
improperly limited the proposal of “effective date” to the end of
the 60 day review period afforded by the Congressional Review Act (CRA).
 Instead, they argued that a more natural reading of “subject to
regulation – as supported by the CAA, various policy and
implementation concerns, and the CRA itself – was that the underlying
“actual control” regulation does not become effective until it
“takes effect” for the sources affected by that regulation.  

The specific basis for the various interpretations and trigger dates, as
provided for in the comments, will be discussed in more detail below. 
However, we note that in arguing for a specific interpretation of the
triggering date, many commenters discussed how various implementation
concerns supported that interpretation.  Some of those concerns are
summarized below in order to provide the context in which the specific
timing interpretation comments were provided, but we primarily address
the various implementation concerns in Chapter 9 of this RTC. 

8.1.   Effective Date of Control Requirements

8.1.1.   Legal analysis for the “takes effect” reading for the
effective date interpretation:

Comments: 

	Eight of the industry commenters (0067, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109) agree with EPA’s statement in the proposed PSD
Interpretation that PSD requirements should not be considered to apply
to emissions of a pollutant before an actual emission control regulation
for that pollutant has become “final and effective.”  However, the
commenters believes that such a regulation would have to have become
actually effective, in the sense that actual legal obligations created
by the regulation have become currently applicable for regulated sources
and are no longer merely prospective obligations, before that regulation
could make a pollutant subject to actual control and thus be “subject
to regulation” for PSD purposes.  The commenters therefore state that
if EPA promulgates its proposed motor vehicle GHG rules in final form,
those rules could not have any PSD triggering effect before the
beginning date of the first model year to which those rules apply (i.e.,
October 1, 2011).  (A second industry commenter (0067) concurs with this
interpretation of when the motor vehicle rules should be considered to
“become effective.”)  The commenters provide an extensive legal
analysis of this issue, which is presented below.

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) state that the date a regulation becomes “final and effective”
and the date it actually “takes effect” may differ, and that the
“take effect” date may occur after the “final and effective”
date.  See Liesegang v. Sec’y of Veterans Affairs, 312 F.3d 1368,
1374-75 (Fed. Cir. 2002) (recognizing that the two dates are not
necessarily the same and stating that “[t]he ordinary meaning of
‘take effect’ is ‘[t]o be in force; go into operation’”
(quoting Black’s Law Dictionary at 1466 (7th ed. 1999)), amended on
reh’g in part on other grounds, 65 Fed. Appx. 717 (Fed. Cir. 2003). 
The commenters argue that a regulation may “take effect” subsequent
to its stated “effective date” where it has been published in final
form but does not require immediate implementation by the agency or
compliance by regulated entities.  The commenters note that in this
situation, a regulated entity has no immediate compliance obligations
and cannot be held in violation of the regulation until such a legal
obligation becomes applicable to them on the “takes effect” date. 
See, e.g., Natural Res. Def. Council v. Abraham, 355 F.3d 179, 201-02
(2d Cir. 2004) (“takes effect” means the point at which the “rule
becomes applicable,” a point that may not be reached until “several
years” after the final rule is issued); Liesegang, 312 F.3d at 1376
(agency must wait for rule to become operative before it can implement
it); cf. Natural Res. Def. Council v. EPA, 22 F.3d 1125, 1137-39 (D.C.
Cir. 1994) (recognizing that where a provision of the CAA (section
182(c)(3)(B)) required a program of emission controls to “take
effect” by a given date, it did not thereby require the program to
“be fully implemented” by that date).

The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) went on to state that under the CRA, a major rule does not
necessarily “take effect” on the date that the rule or authorizing
statute states as the “effective date.”  See Abraham, 355 F.3d at
201-02 (“take effect” under the CRA signifies when a rule becomes
applicable, even if that occurs several years after the rule is
prescribed in final form); Liesegang, 312 F.3d at 1375 (recognizing that
the CRA affects the date when a rule is operative, i.e., enforceable).  

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) note that section 202(a)(2) of the CAA uses the “takes effect”
formulation, stating that a regulation under that provision “shall
take effect after such period as the Administrator finds necessary to
permit the development and application of the requisite technology,
giving appropriate consideration to the cost of compliance within such
period” (emphasis added).  Thus, the commenters believe, even if EPA
issues final motor vehicle GHG rules by the end of March 2010, those
standards would not take effect on that date or 60 days after
publication of those rules in the Federal Register because EPA is both
authorized and, given the mandatory “shall” in section 202(a)(2),
required to ensure that the rules’ requirements will not “take
effect” until after motor vehicle manufacturers have had an adequate
period of time to develop and apply the technology necessary to meet
those requirements, giving appropriate consideration to compliance costs
within that lead-time period.  See Am. Motors Corp. v. Blum, 603 F.2d
978, 981 (D.C. Cir. 1979) (EPA’s Administrator is “bound by section
202(a)(2) to allow such lead time as he finds necessary to satisfy the
requirements of section 202(a)(2).”).  

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) point out that the proposed motor vehicle GHG rules do not require
actual compliance until model year 2012, which does not begin until
October 1, 2011; thus, by the very nature of EPA’s proposed motor
vehicle rules, and consistent with section 202(a)(2), the rules’
compliance obligations would begin several months later than 60 days
after the rules’ Federal Register publication date.  The commenters
(0067, 0083, 0089, 0090, 0096, 0106/0107, 0108, 0109) believe that it
would make no sense for EPA to subject stationary sources to immediate
regulation of GHG emissions, based on a regulation promulgated for
automobile manufacturers, at a time when the regulation is not yet even
operative for those primarily regulated entities.

	

	Based on points discussed above, the industry commenters (0067, 0083,
0089, 0090, 0096, 0106/0107, 0108, 0109) indicate that EPA should
clarify that PSD for GHGs could not be triggered by EPA’s motor
vehicle GHG rules before those rules “take effect” within the
meaning of section 202(a)(2).  The commenter states that this conclusion
not only is required by the clear implication of the PSD provisions’
“subject to regulation” language, as EPA’s statements in the
proposed PSD Interpretation reflect, but also is supported by compelling
policy reasons: major stationary sources would need time to prepare to
meet any newly applicable PSD compliance obligations in a cost-effective
way, and EPA and state permitting authorities would need time to prepare
to satisfy their permitting obligations.  Other industry commenters
(0067, 0073) concur with this policy rationale and added that the Agency
needs time to develop its own technical capability and provide guidance
to the regulated community and permitting authorities.

	

Response:

	

EPA has reviewed the federal court decisions and other arguments
presented in the comments above, and we agree that they support the idea
that the date a regulation becomes “final and effective” and the
date it actually “takes effect” may differ.  The federal court
decisions referenced in the comments that suggest the date that the
terms of a regulation become effective can take more than one form.  In
one case involving the Congressional Review Act (CRA), the United States
Court of Appeals for the Federal Circuit observed that the date a
regulation may “take effect” in accordance with the CRA is distinct
from the “effective date” of the regulation.  See Liesegang v.
Sec’y of Veterans Affairs, 312 F.3d 1368, 1374-75 (Fed. Cir. 2002),
amended on reh’g in part on other grounds, 65 Fed. Appx. 717 (Fed.
Cir. 2003).  In this opinion, the court observed that “[t]he ordinary
meaning of ‘take effect’ is ‘[t]o be in force; go into
operation.’”  Id. at 1375 (quoting Black’s Law Dictionary at 1466
(7th ed. 1999).  Based on this, the court reasoned that the CRA does not
“change the date on which the regulation becomes effective” but
rather “only affects the date when the rule becomes operative.”  Id.
 In another case, the Second Circuit Court of Appeals described a
distinction between the date a rule may “take effect” under the CRA,
the “effective date” for application of the rule to regulated
manufacturers, and the “effective date” for purposes of modifying
the CFR.  See Natural Resources Defense Council v. Abraham, 355 F.3d
179, 202 (2d Cir. 2004).

	The Office of Federal Register (OFR) uses the term “effective date”
to describe the date that amendments in a rulemaking document affect the
current CFR.  See Federal Register Document Drafting Handbook, at p.
2-10 (Oct. 10, 1998).  However, OFR draws a contrast between such a date
and the compliance or applicability date of a rule, which is described
as “the date that the affected person must start following the
rule.”  Id. at 2-11.  Thus, the “effective date” of a regulation
is commonly used to describe the date by which a provision in the CFR is
enacted as law, but it is not necessarily the same as the time when
provision enacted in the CFR is operative on the regulated activity or
entity.  The latter may be described as the “compliance,”
“applicability,” or “takes effect” date.  

The terms of the CAA also recognize a similar distinction in some
instances.  Section 112(i)(3)(A) of the CAA provides that “after the
effective date of any emissions standard, limitation or regulation
promulgated under this section and applicable to a source, no person may
operate such source in violation of such standard, limitation, or
regulation except, in the case of an existing source, the Administrator
shall establish a compliance date or dates for each category or
subcategory of existing sources, which shall provide for compliance as
expeditiously as practicable, but in no event later than 3 years after
the effective date of such standard.”  Another example is section 202
of the Act, which is discussed in more detail in section 9.2 below. 

Another formulation may be found in Section 553(c) of the APA (5 U.S.C.
§553(c)), which provides, with some exceptions, that “[t]he required
publication or service of a substantive rule shall be made not less than
30 days before its effective date.”  The APA does not define the term
“effective date” or make precisely clear whether it is referring to
the date a regulation has the force of law or the date by which a
regulatory requirement applies to a regulated entity or activity.  The
APA also separately recognizes the concept of finality of Agency action
for purposes of judicial review.  See 5 U.S.C. §704. 

In the October 7, 2009 notice, EPA did not clearly distinguish between
the various forms of the date when a regulatory requirement may become
effective.  One commenter observed that the EPA analysis in the proposed
reconsideration appeared to blur the distinction between the
“effective date” set by EPA and the date that Congress allows a
regulation to become effective under the CRA.  EPA in fact discussed all
of these concepts in its notice, with part of the discussion focused on
the date a regulation becomes “final” and “effective” and a part
on when a regulation may “take effect” under the CRA.  EPA viewed
these forms of the date when a regulation becomes “effective” to be
essentially the same, but the case law suggests that administrative
agencies do not necessarily need to harmonize the date that regulatory
requirements take effect with the “effective date” of a regulation,
meaning the date a regulation has the force of law and amends the CFR. 
Since these are distinct concepts, the effective date of a regulation
for purposes of amending the CFR may precede the date when a regulatory
requirement “takes effect” or when a regulated entity must comply
with a regulatory requirement.  A regulation may “take effect”
subsequent to its stated “effective date” where it has been
published in final form but does not require immediate implementation by
the agency or compliance by regulated entities.  

The key issue raised by EPA in the October 7, 2009 notice was
determining which date should be determined by EPA to be the date when a
pollutant becomes “subject to regulation” and, thus, the date when
the requirements of the PSD permitting program apply to that pollutant. 
In recognition of the distinction between the “effective date” of
the regulation for purposes of amending the CFR and the point at which a
regulatory restriction may “take effect,” EPA has considered whether
it is permissible to construe section 165(a)(4) and 169(3) of the CAA to
mean that a pollutant becomes “subject to regulation” at the point
that a regulatory restriction or control “takes effect.”  In the
October notice, EPA observed that the use of “subject to” in the Act
suggests that PSD requirements are intended to be triggered when those
standards become effective for the pollutant.  We also said that no
party is required to comply with a regulation until it has become final
and effective.  Prior to that date, an activity covered by a rule is not
in the ordinary sense “subject to” any regulation.  Regardless of
whether one interprets regulation to mean monitoring or actual control
of emissions, prior to the effective date of a rule there is no
regulatory requirement to monitor or control emissions.

The same reasoning applies to the date that a regulation “takes
effect,” as that term is used in the judicial decisions described
above.  Regulated entities are not required to comply with a regulatory
requirement until it takes effect.  Prior to the date a regulatory
requirement takes effect, the activity covered by a rule is not in the
ordinary sense subject to any regulation. 

As discussed in the PSD Interpretive Memo, as used in the context of the
PSD provisions in EPA regulations and the CAA, EPA interprets the term
“regulation” in the context of sections 165(a)(4) and 169 of the CAA
to mean the act or process of controlling or restricting an activity. 
This interpretation applies a common meaning of the term regulation
reflected in dictionaries.  

 	

Thus, EPA agrees with the commenters above that the term “subject to
regulation” used in both the CAA and EPA’s regulations may be
construed to mean the point at which a requirement to control a
pollutant takes effect.  The CAA does not necessarily preclude
construing a pollutant to become subject to regulation upon the
promulgation date or the date that a regulation becomes final and
effective for purposes of amending the CFR or judicial review.  However,
EPA has been persuaded by public comments that the phrase “subject to
regulation” may also be interpreted to mean the date by which a
control requirement takes effect.

Indeed, EPA has concluded that the latter interpretation is more
consistent with the actual control interpretation reflected in the PSD
Interpretive Memo.  As one commenter observed, a regulation would have
to have become actually effective, in the sense that actual legal
obligations created by the regulation have become currently applicable
for regulated entities and are no longer merely prospective obligations,
before that regulation could make a pollutant subject to actual control.
 Another commenter noted that a regulated entity has no immediate
compliance obligations and cannot be held in violation of the regulation
until a legal obligation becomes applicable to them on the “takes
effect” date.  Thus, based on this reasoning, EPA has decided that it
will construe the point at which a pollutant becomes “subject to
regulation” within the meaning of section 52.21(b)(50)(iv) of EPA’s
regulations to be when a control or restriction is operative on the
activity regulated.  EPA agrees with commenters that there is generally
no legally enforceable obligation to control a pollutant when a
regulation is promulgated or, in some instances, even when a regulation
becomes effective for some purposes.

Thus, in this final action, EPA chooses to adopt an interpretation of
“subject to regulation” in section 52.21(b)(50)(iv) under which a
pollutant becomes a “regulated NSR pollutant at the time when a
control or restriction on emissions of the pollutant takes effect or
becomes operative on the regulated activity.  

EPA has also concluded that it is appropriate to extend the reasoning of
this interpretation across all parts of the definition of the term
“regulated NSR pollutant.”  The reasoning described above is equally
applicable to the regulation of additional pollutants under the specific
sections of the Act delineated in the first three parts of the
definition of “regulated NSR pollutant.”  

8.1.2.   General comments on the effective date interpretation:

Comment:

Seventeen commenters (0050, 0051, 0053, 0064, 0067, 0069, 0070, 0074,
0081, 0083, 0089, 0090, 0096, 0105, 0106/0107, 0108, 0109) believe the
interpretation of “subject to regulation” is most naturally
interpreted as when a regulation becomes “final and effective”, and
that entities should thus be subject to the proposed regulation no
earlier than the date by which the underlying “actual control”
regulations apply to sources covered by the regulations (i.e., for the
GHG Light Duty Vehicle Rule, this is model year 2012 [the first model
year to which the regulation applies]).

Ten commenters (0067, 0071, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109, 0110) state that the time frame for “final and effective” and
when a regulation actually “takes effect” may be different, and that
the “takes effect” date may occur well after the “final and
effective” date.  Eight of these commenters (0067, 0083, 0089, 0090,
0096, 0106/0107, 0108, 0109) suggest that EPA confirm that PSD
requirements do not begin to apply before the latter of a) the date when
the actual control requirement is “final and effective” or 2) the
date when the control requirement “takes effect”, i.e., the
requirement becomes operative with current applicable compliance
obligations for the regulated sources.

Two commenters (0080, 0100) disagreed with EPA’s proposed
interpretation that a pollutant become “subject to regulation” upon
the CRA effective date of the “actual control” regulation, citing
policy and implementation concerns.  One commenter (0080) states that
EPA’s interpretation of when the LDV Rule is final and effective
(i.e., 60 days after promulgation as per the Congressional Review Act)
is wrong because it will result in stationary sources reducing GHG
emissions almost a year and a half in advance of when motor vehicles
begin reducing emissions.  

Another commenter (0100) disagrees with EPA’s decision to make GHGs
“subject to regulation” upon the effective date of the proposed LDV
Rule.  The commenter (0100) states that by the time the tailpipe
standards are adopted (presumably March 2010), EPA will not have been
able to decide that PSD review for stationary sources of GHG is
appropriate, as no information has been presented by EPA on this issue
(such as available BACT for GHGs), nor has EPA provided an opportunity
for public comment on the costs and benefits of regulating GHGs through
the permit process.  The commenter (0100) further asserts that including
GHG emissions in the PSD permit program will be highly disruptive to
state permitting programs.  

One industry commenter (0050) states that the appropriate timing for
application of PSD/title V should be no earlier than the effective date
that the regulation is applied.  To that extent, the commenter agrees
with EPA that “the term ‘subject to regulation’ is most naturally
interpreted to mean that PSD requirements apply when the regulation
addressing a pollutant becomes final and effective.”  The commenter
notes however, that a regulation becoming “final” and becoming
“effective” can mean two different dates.  A regulation can become
“effective” 60 days after publication in the Federal Register.  The
Congressional Review Act (5 U.S.C. 801 et seq) (CRA) allows Congress 60
days to review major regulations and to disapprove them within that
time.  Regulations not acted upon by Congress within that time can go
into effect, and in a great many cases the end of the review period is
the effective date.  Thus, the commenter argues that the interpretation
of “subject to regulation” should be a regulation that is “final
and effective” and not one in which the review period under the CRA
has ended.  The commenter (0050) also states that the proposed rule
would be “final” after the CRA period has ended and “effective,”
at the earliest, in the fall of 2011, as the Administrator states that
model year 2012 is the time when it is “necessary to permit the
development and application of the requisite technology, giving
appropriate consideration to the cost of compliance within such a
period.”

One industry commenter (0085) believes that an air pollutant should not
become “subject to regulation” for purposes of the PSD program until
the regulation providing actual control of emissions become effective
and enforceable.  The commenter states that this date would be with the
MY 2012 compliance date for the section 202 regulations, not the
issuance of those regulations.  The commenter (0085) states that just as
manufacturers need time to produce compliant cars, stationary sources
need time to prepare for applicability.  The commenter (0085) points out
that many facilities have applications for PSD permits pending at this
time, and such sources are largely at the mercy of the resources
available to the state permitting authority in terms of the timing of
permit issuance.  The commenter (0085) holds that it is unreasonable to
impose the PSD BACT requirements suddenly upon issuance of a wholly
separate regulation, such as the GHG motor vehicles regulations.  If EPA
adopts an interpretation that applies upon the date the underlying
regulation is effective and enforceable, the commenter (0085) believes
that in most cases, facilities will have sufficient notice and time for
compliance with PSD requirements.

The commenter representing several groups of companies (0086) states
that EPA’s language – about when rules become “final and
effective” – dovetails with the lead time requirement in section
202(a)(2), that tailpipe regulations do not “take effect” until the
model year to which the standards apply.  The commenter (0086) believes
that this interpretation is also dictated by policy considerations,
i.e., to delay implementation of the PSD requirements for GHGs to
account for administrative difficulties (as was done for PM2.5 as a
result of adequate modeling techniques).

A state agency commenter (0091), while agreeing that EPA has the leeway
to interpret “subject to regulation” as the effective date (not the
promulgation date), believes other more fitting interpretation options
exist.  In particular, the commenter believes EPA could also interpret
the full implementation date, or the date controls must be in place and
operational as a trigger for PSD applicability.  According to the
commenter, this could mean the PSD applicability date could be extended
15-19 months for the proposed mobile source tailpipe standards, and for
several years in the case of an NSPS, giving states the time they need
to adjust state regulations, statutes if needed, and fee structures, and
also give time for cost effective GHG control technologies to be
explored and put in practice.  This commenter also believes EPA can use
exemptions and approaches similar to the 1992 exemption for sources
subject to the risk management program made in the title V program (see
40 CFR 70.3(a)(3)), and the clarification in the recent Mandatory
Reporting of Greenhouse Gases rule preamble (74 FR 56288) that this
monitoring and reporting requirement is not an “applicable
requirement” under title V, to lessen the PSD and title V permitting
burden from regulating GHG, by excluding or exempting stationary sources
from being affected by the promulgation of the “tailpipe rule.” 
This commenter notes that EPA has a long history of giving states and
the regulated community time to implement resource intensive programs,
citing examples such as the three years given to states to develop and
submit title V operating programs for approval, the three years given to
SIP approved states in 2008 to develop state rules and begin
implementing the PM2.5 NSR Implementation rule, and the NESHAP program
where existing sources are given up to three years to comply with a
control standard.  The commenter suggests EPA could take a similar
approach for GHG emissions by issuing an interim policy (similar to the
1997 PM10 surrogate policy for PM2.5) that would temporarily define the
“presumptive BACT” for GHG emissions from combustion sources while
EPA takes the time to develop essential GHG guidance through rulemaking
and state make adjustments to their state rule.

  SEQ CHAPTER \h \r 1 An industry commenter (0105) states that the
timing of PSD being triggered should be based on when the control
regulation first actually controls emissions of the pollutant.  In
addition to the EPA view in Federal Register notice EPA that the
regulation must be final and effective, the commenter states that
determining the timing of PSD being triggered should also be based upon
the language at 40 CFR 52.21(b) (50) (iv):  “[a]ny pollutant that
otherwise is subject to regulation under the Act…”  Expanding on the
concept that a control regulation must be final and effective, the
commenter (105) suggests that EPA should also consider a more flexible
interpretation and make clear that PSD would be triggered at the time
when the rule first actually controls emissions of the pollutant, and a
pollutant should not be considered subject to a regulation until the
time that the rule actually controls the pollutant of concern.  This
commenter notes that depending on the specific rule in question, this
may or may not coincide with the 60 day review period for congressional
review, and in the case of EPA’s proposed mobile source rule, this
date would coincide with the production of model year 2012 vehicles that
are subject to the EPA’s mobile source rules.

One industry commenter (0108) believes that the applicability
interpretation (when the LDVR takes effect) would not lead to an
inappropriate delay because if EPA actually decided to regulate GHG
emissions from major stationary sources directly, rather than through
the PSD program, it presumably would allow these sources more than 60
days to comply following publication of a final rule, given the inherent
complexities that would be involved in terms of implementation and
compliance.  Consequently, the commenter (0108) asserts that EPA should
either amend its proposed interpretation to use the language “takes
effect” rather than “final and effective,” or use both and clarify
that the PSD program begins to apply with the later of the two periods,
which would resolve the issue for regulations not only under section 202
of the CAA but also for other CAA provisions where EPA could decide to
postpone the date of compliance beyond the date of the regulation’s
publication.  

One of the industry commenters (0109) states that the “takes effect”
interpretation is within EPA’s discretion under the CAA, would provide
more certainty, and would provide more time for permitting authorities
to structure their programs than EPA’s proposed interpretation.  The
commenter (0109) also adds that “subject to regulation” should also
be defined as when the regulation providing actual control of emissions
is effective and enforceable.  The commenter (0109) states that this
definition provides more certainty and allows more time for regulating
agencies to structure (or re-structure) their permitting programs.

One industry commenter (0110) urges EPA to amend its proposed
interpretation to clarify that PSD program requirements begin to apply
when GHG regulations “take effect” and not automatically when the
regulations become “final and effective” 60 days after publication
of the rule.  This will allow time for EPA to resolve the significant
PSD issues that will be created for major stationary sources if the
motor vehicle regulations are finalized.  The EPA has not adequately
analyzed the implications the motor vehicle proposal and the proposed
PSD tailoring rule will have on major stationary sources.  Adopting an
interpretation that allows for the most time and flexibility for all
parties is reasonable and consistent with key policy goals.

	Response:

As discussed in response to the legal comments above, we are persuaded
that EPA should interpret that time that a pollutant becomes a
“regulated NSR pollutant” under section 52.21(b)(50)(iv) to be the
time when a control or restriction on emissions of the pollutant takes
effect or becomes operative on the regulated activity.  The general
comments summarized above provide additional support for that
interpretation.  EPA has reviewed these general comments in light of
that interpretation and finds no issues raised in these comments that
must be addressed through further refinement of that interpretation,
although we do believe a few points of clarification are necessary.

	A number of the comments argue that the “takes effect”
interpretation is appropriate because it will allow for more time to
prepare for implementation of the PSD program for newly regulated
pollutants, including GHGs.  As discussed in response to comments in
section 9.1(a) above, we do not construe the language of the CAA to
provide the Agency with the discretion to choose a date when PSD program
requirements apply based on the implementation considerations for the
PSD program.  Accordingly, we are re-iterating that our adoption of this
interpretation is based on the specific language of the PSD provisions
and structure of the PSD program as provided for in the CAA and our
corresponding implementing regulations, as described above, and not on
the implementation concerns noted in these comments.

	With regard to the comment that “subject to regulation” should also
be defined as when the regulation providing actual control of emissions
is effective and enforceable, we note that there is generally no legally
enforceable obligation to control a pollutant when a regulation is
promulgated or, in some instances, even when a regulation becomes
effective for some purposes.  Consistent with our interpretation, the
enforceable obligation to control a newly regulated pollutant only
exists when the regulation of the pollutant takes effect or becomes
operative on the regulated activity.  Until that time, regulated
entities are generally not required to comply with the control
requirements and thus cannot be found in violation of those
requirements.  See generally, CAA section 113(a)(3) (prohibiting
violation of a “requirement” of a rule). 

To the extent that the comments above have suggested specific
interpretations of when regulations “take effect” under the language
of CAA section 202 or have provided specific dates upon which they
believe control requirements for GHG emissions would “take effect”
under the proposed LDV Rule, EPA provides a response to these specific
section 202 timing issue in Chapter 9 of this RTC.

8.2.   Compliance Date 

Comments:

	

Three commenters (0051, 0053, 0074) state that PSD should not become
applicable to a pollutant until controls are actually required by an EPA
regulation, i.e., model year 2012 for the proposed rule.  The three
commenters (0051, 0053, 0074) refer to section 202 regulations, which do
not take effect immediately upon promulgation, although the PSD
Interpretive Memo states that “a pollutant becomes a regulated NSR
pollutant at an earlier point upon promulgation of a regulation that
requires actual control of emissions,” similarly to the proposed PSD
tailoring rule. The two commenters (0051, 0053) state that to use this
interpretation of “subject to regulation” would “directly conflict
with the [CRA]”.  The commenters (0051, 0053) state that “subject to
regulation” is most naturally interpreted to mean that PSD
requirements apply when a regulation becomes “final and effective”,
which in the case of the proposed Light Duty Vehicle (LDV) rule, is the
first compliance date for model year 2012 standards.  Three commenters
(0051, 0053, 0081) also state precedence in delaying implementation of
PSD requirements, such as enforcement of BACT requirements for PM2.5 due
to the lack of adequate modeling techniques.

	

Other industry commenters (0069, 0096, 0106/0107) state that that EPA
should use its discretion to determine that a pollutant becomes
“subject to regulation” when the regulated entity must actually
comply with an emission limit or other emission standard for control,
not when a regulation becomes effective.  The commenters made the
following points in support of this position:

Under the CAA there is generally no legally enforceable obligation to
control a pollutant when a regulation is promulgated or even when it
becomes effective; instead, a great deal of consideration is given to
how long it will take a facility to evaluate the applicability of the
requirement, to design and engineer or purchase the equipment, to
install the equipment, and to operate the source until it shakes down
and can be tested for compliance.  It is only at that point that an
affected source becomes “subject to the regulation” in the sense
that it is legally obligated by the Act to effect “actual control.” 
Therefore, consistent with EPA’s interpretation in the proposed PSD
Interpretation, a pollutant is regulated when a source must actually
comply with such regulation – not when the regulation becomes
effective for purposes of judicial review.

There are very important logistical and other policy reasons for
delaying the applicability of PSD to municipal utilities and other
sources.  The EPA is obligated to provide sources with more information
on available control technologies and provide the market a reasonable
opportunity to bring such technologies to market.  An additional 7
months to a year-and-a-half may help this nation, in a deep economic
crisis, more adequately address the technical and financial challenges
of controlling GHGs.

The EPA’s assertions regarding why the doctrines of “absurd
results” and “administrative necessity” support phasing in PSD
over 6 years compel the Administrator to delay regulation of GHGs under
the PSD program as long as is reasonable.  Unfortunately for the members
of the commenter’s association, nearly all of our cities’ electric
utilities both have the PTE greater than 25,000 tons of GHGs annually
and are small businesses that meet the Small Business Regulatory
Enforcement Fairness Act (SBREFA).  These sources need the relief that
EPA suggests that it is providing to small sources in the PSD Tailoring
Rule.  The commenter urges EPA to provide further and more effective
relief from PSD by not only interpreting the phrase “subject to
regulation” in this rulemaking to when a regulated entity must
“actually comply” with GHG emission standards, but by also deferring
regulation under the PSD program.  The commenter asks that these
comments be considered by the EPA and OMB under UMRA, Executive Order
12866, and SBREFA.

		

One commenter (0050) states that the proposed rule would be “final”
after the CRA period has ended and “effective,” at the earliest, in
the fall of 2011, as the Administrator states that model year 2012 is
the time when it is “necessary to permit the development and
application of the requisite technology, giving appropriate
consideration to the cost of compliance within such a period.”

One commenter (0056) states there is a substantial difference between a
finding that PSD is applicable to GHGs on the “first substantive
compliance date of a regulation” and a finding that PSD is applicable
on the “effective date” of a regulation. The commenter (0056) 
emphasizes that a source becomes “subject to regulation”
specifically after the “first substantive compliance date” in an
effort to provide some temporal relief to sources and allowing EPA to
provide technical and permitting assistance to sources and permitting
authorities.  The commenter (0056) also states that the Interpretation
memo on the meaning of “subject to regulation” does not need to be
re-proposed as there is adequate basis for such an interpretation in the
October 7th proposal.  

	

One local agency commenter (0062) states that the need for more time to
facilitate implementation of the GHG Tailoring Rule for PSD and title V
requirements justifies the MY 2012 compliance date for the GHG mobile
source regulations.  

One industry commenter (0076) states that in the maximum achievable
control technology (MACT) program, EPA uses the “first substantive
compliance date” for a standard to distinguish when a source may
become an area source after the effective date of a control requirement.
 This commenter asserts that the use of the “first substantive
compliance date” would be a logical way to define when “actual
control” of a pollutant occurs.

Another of the industry commenter (0080) states that interpreting
“actual control” to occur at the beginning of MY 2012 harmonizes the
requirements that will be triggered by the GHG motor vehicle rule with
the requirements that will be triggered under the PSD program.  The
industry commenter (0080) asserts that EPA’s proposed interpretation
would create the anomalous result that stationary sources would have to
begin reducing GHG emissions as much as a year-and-a-half in advance of
the time when motor vehicles begin reducing emissions, even though it is
the regulation of motor vehicles that triggers the requirements for
stationary sources.

One commenter (0088), while generally agreeing with the December 18,
2008 EPA Memorandum, states the “actual control of emissions” date
should be established by the actual compliance date of any pertinent
regulatory requirement.  The commenter states that, if this is the LDVR,
the date should be the actual implementation of the MY 2012 requirements
(in Calendar Year 2011 or 2012). 

	

Commenters (0092, 0098) representing several groups of companies state
that EPA should adopt a more reasonable approach to the timing of PSD
applicability and conclude that PSD does not apply until the compliance
date (not the promulgation date) of a regulation requiring emission
controls.

One commenter (0097) states that while the “effective date” of a
rule is better than the promulgation date, it still does not properly
identify the date on which a pollutant is actually controlled.  Rather,
“actual control” is the first compliance date for achieving a
standard or implementation of control equipment under a formal national
rule.  Consistent with EPA, this commenter (0097) believes that this
interpretation best reflects past policy and practice, is in keeping the
structure and language of the statute and regulations and best allows
for the necessary coordination of approaches to controlling emissions of
newly identified pollutants.

One state agency commenter (0102) notes that the LDVR provides a certain
amount of time for those vehicles to come into compliance and asserts
that this compliance date also should determine the effective date that
the pollutant must be regulated under the CAA.

Two c  SEQ CHAPTER \h \r 1 ommenters (0115, 0116) encourage EPA to
maintain the interpretation that PSD permitting requirements would be
triggered only when compliance is required with a final regulation
requiring actual control of the pollutant’s emissions.

One industry commenter (0118) and one commenter representing several
groups of companies (industry) (0086) urges EPA to interpret “actual
control” as the date that a source has an actual compliance obligation
under a regulation, that is, when controls must first be in place for
the pollutant.  One of these commenters (0118) indicate that allowing
additional time after a regulation is adopted before BACT must be
determined in PSD permitting will provide a more reasonable period for
sources to identify and evaluate control options for the newly regulated
pollutant, which the commenter (0118) believes is particularly desirable
when, as is the case with GHGs, the initial regulation will require
controls that are not appropriate for stationary sources.

One industry commenter (0083) states that the CAA regulations contain
many examples where active controls are deferred for many months or
years after the effective date of a regulation.  However, the comments
did not provide any specific examples.

Response:  

As discussed in response to the legal comments above, we are persuaded
that EPA should interpret that time that a pollutant becomes a
“regulated NSR pollutant” under section 52.21(b)(50)(iv) to be the
time when a control or restriction on emissions of the pollutant takes
effect or becomes operative on the regulated activity.  In so doing, we
generally note that date at which a regulation “takes effect” and
“becomes operative” is functionally equivalent to the “compliance
date” for that regulation.  As such, EPA acknowledges that the general
“compliance date” comments above provide additional support for the
interpretation we are adopting in this final action.  We have also
reviewed these general comments in light of that interpretation and find
no issues raised in these comments that must be addressed through
further refinement of that interpretation, although we do believe a few
points of clarification are necessary.

A number of comments note that under EPA’s regulatory program for HAP
pollutants, EPA uses the “first substantive compliance date” to
determine when a new MACT standard becomes applicable for the purpose of
applying an area source designation.  While our response to the legal
comments in section 8.1.1. above discussed how CAA section 112(i)(3)(A) 
requires the Administrator to establish a date for compliance with a new
HAP emission standard within 3 years after the effective date of the
standard, it did not use the term “first substantive compliance
date”  because it is not contained in the language of CAA section 112.
 Rather, “first substantive compliance date” is the term EPA has
used in policy documents relating to the timing of application of
particular HAP regulatory requirements.  See Memorandum from John S.
Seitz, Director OAQPS, to Regional Air Directors, “Potential to Emit
for MACT Standards – Guidance on Timing Issues” (May 16, 1995).  As
used in this guidance, the term is equivalent to the use of “takes
effect” or “becomes operative” as used in the interpretation EPA
is adopting here.

Similar to the comments received for the “takes effect”
interpretation above, a number of the comments here argue that the
“compliance date” interpretation is appropriate because it will
allow for more time to prepare for implementation of the PSD program for
newly regulated pollutants, including GHGs.  However, our adoption of
the “takes effect”  interpretation is based on the specific language
of the PSD provisions and structure of the PSD program as provided for
in the CAA and our corresponding implementing regulations, as described
above, and not on the implementation concerns noted in these comments.

	As explained above, we agree with the comment that there is generally
no legally enforceable obligation to control a pollutant when a
regulation is promulgated or, in some instances, even when a regulation
becomes effective for some purposes.  Consistent with our
interpretation, the enforceable obligation to control a newly regulated
pollutant only exists when the regulation of the pollutant takes effect
or becomes operative on the regulated activity.  Until that time,
regulated entities are generally not required to comply with the control
requirements and thus cannot be found in violation of those
requirements.  See generally, CAA section 113(a)(3) (prohibiting
violation of a “requirement” of a rule).  

To the extent that the comments above have suggested specific
interpretations of the applicable “compliance date” under the
language of CAA section 202 or have provided specific dates upon they
believe auto manufacturer would have to comply with control requirements
for GHG emissions under a final LDV Rule, EPA provides a response to
these specific section 202 timing issue in section 9.2 below.

8.3.   Promulgation Date

Comment:

  SEQ CHAPTER \h \r 1 An environmental organization commenter (0099)
claims that even under the “actual control” theory, CO2 will be
“subject to regulation” upon Federal Register publication of the
appropriate standards.  The commenter (0099) states that EPA should
interpret the phrase “subject to regulation” to mean that pollutants
become so regulated on the date of Federal Register publication of
EPA’s section 209(b) determination (for section 209(b) pollutants) or
EPA regulations.  The commenter (0099) opposes EPA’s proposal to
interpret “subject to regulation” to mean that PSD requirements
apply when the regulations addressing a particular pollutant become
final and effective, as opposed to their date of promulgation.  The
commenter (0099) argues that the reasons EPA gives for choosing
effective date are not persuasive.  First, the commenter (0099) argues
that there is no need to “harmonize” the PSD requirements with the
Congressional Review Act (CRA), because Congress has used the CRA
process exactly once to overturn a regulation.  Second, the
environmental commenters notes that EPA incorrectly finds that the
“effective date” interpretation best fits the regulatory language
describing two of the other three categories of “regulated NSR
pollutant” in 40 CFR 52.21(b)(50), because EPA’s rationale ignores
the language of section 111(b)(1)(B) of the CAA, which specifically
provides that “Standards of performance or revisions thereof shall be
effective upon promulgation.”  Thus, the commenter argues that both
the section 111 and the NAAQS regulatory categories supports the better
interpretation that a pollutant becomes “subject to regulation” upon
promulgation, not the effective date.  

This environmental organization commenter (0099) also argues against a
later interpretation of the triggering date – such as “takes
effect” or compliance date – by noting that such an interpretation
would potentially postpone, for many years, PSD regulation of a
pollutant that EPA had already determined threatened health or welfare.
The commenter (0099) also notes that if the PSD regulatory requirements
are triggered at the time a source must comply with the actual control
regulations, there is no such “actual control” until the source
begins operation and emitting that pollutant, which not only adds
additional years to the delay, but there is no way for anyone else to
know when this would happen as the “actual control” status would be
known only to the operator of a single source in one state.  According
to the commenter (0099), even worse is the suggestion that the “actual
control” trigger be defined not by the imposition of such emissions
limits, but only when the source is subsequently required to demonstrate
compliance with that limit.  The commenter notes that for a stationary
source, such an interpretation would (presumably) mean when it reports
its emissions, which could easily be months or even years after it
begins operations, and for mobile sources, this would mean at the final
determination of compliance with fleet average standards may, which not
occur until several years after the close of the model year in which the
standards apply.  

Response:

The regulatory language of 40 CFR 52.21(b)(50)(iv) does not specify the
exact time at which the PSD requirements should apply to pollutants in
the fourth category of the definition of “regulated NSR pollutant.” 
While the PSD Interpretive Memo states that EPA interprets the language
in this definition to mean that the fourth part of the definition should
“apply to a pollutant upon promulgation of a regulation that requires
actual control of emissions,” Memo at 14, EPA proposed to modify that
interpretation in the reconsideration notice after continuing to
consider the underlying statutory requirement in the CAA and the
language in all parts of the regulatory definition more closely.  EPA
acknowledges, and the comment does not dispute, that the regulatory
language of 40 CFR 52.21(b)(50)(iv) could be interpreted to apply PSD
requirements to a newly regulated pollutant at either the date the
underlying control regulation is promulgated or the date which the
control requirement takes effect.  After considering the comments
received on this timing issue, as well as other issues and policy
concerns raised in the reconsideration notice, EPA has determined that
the term “subject to regulation” in the statute and regulation is
most naturally interpreted to mean that PSD requirements apply at the
point in time when a control or restriction that functions to limit
pollutant emissions takes effect or becomes operative to control or
restrict the regulated activity, as explained above, and nothing in the
comment has persuaded us to change that interpretation.

With regard to the comment’s first point – that harmonization of the
PSD requirements with the Congressional Review Act (CRA) is unnecessary
because Congress has only used the CRA once to overturn a regulation –
we note that the commenter only finds reliance on the CRA unpersuasive
but does not argue that such reliance is prohibited by the regulatory or
statutory language.  As explained in the response to comments provided
above, the potential for the CRA process to affect the date at which a
rule requiring control of a new pollutant becomes operative, or takes
effect, is relevant to determining when PSD requirements shall apply to
newly regulated pollutants.  

With regard to the commenter’s argument that EPA incorrectly tries to
rely on the NAAQS and  NSPS categories of “regulated NSR pollutant”
found in 40 CFR 52.21(b)(50)(i) and (ii) to interpret PSD requirements
as applying at a point later than promulgation of underlying regulation
to which the new pollutant is subject, we are also unpersuaded.  We find
that the reasoning we provide in section 8.1 above in applying the
“takes effect” interpretation for timing of PSD requirements for new
pollutants “subject to regulation” under 40 CFR 52.21(b)(50)(iv) is
equally applicable to the regulation of additional pollutants under the
specific sections of the Act delineated in the first three parts of the
definition.  While the date a control requirement may take effect could
vary across sections 109, section 111, and Title VI, we do not see any
distinction in the applicability of the legal reasoning above to these
provisions of the CAA.  There should be less variability among rules
promulgated under the same statutory section, so EPA does not expect
that it will be necessary for EPA to identify the date that a new
pollutant becomes subject to regulation each time EPA regulates a new
pollutant in a NAAQS or NSPS.  EPA can more readily identify the
specific dates when controls under such rules take effect. 

With specific regard to the NSPS concerns raised in the comments, we
note that the NSPS under section 111 of the Act preclude operation of a
new source in violation of such a standard after the effective date of
the standard.  See 42 U.S.C. §7411(e).  Thus, an NSPS takes effect on
the effective date of the rule.  Once such a standard takes effect and
operates to preclude operations in violation of the standards, then EPA
interprets the statute and EPA’s PSD regulations to also require that
the BACT requirement apply to a pollutant that is subject to NSPS. 
Consistent with our October 7, 2009 proposal, EPA has determined that
the existing language in section 52.21(b)(50)(ii) of its regulations may
be construed to apply to a new pollutant upon the effective date of an
NSPS.  This part of the definition covers “[a]ny pollutant that is
subject to any standard promulgated under section 111 of the Act.”  40
CFR 52.21(b)(50)(ii).  While the word “promulgated” appears in this
part of the definition, term modifies the term “standard” and does
not directly address the timing of PSD requirements.  Under the language
in this part of the definition, the PSD requirements apply when a
pollutant becomes “subject to” the underlying standard, which is
“promulgated under” section 111 of the Act.  Thus, section
52.21(b)(50)(ii) can be interpreted to make an NSPS pollutant a
regulated NSR pollutant upon the effective date of an NSPS. 
Accordingly, the effective date of an NSPS is also that date when the
controls in an NSPS “take effect.” 

Likewise, with regard to the NAAQS pollutant arguments raised in the
comments, under section 169(a)(3) of the Act, a source applying for a
PSD permit must demonstrate that it will not cause or contribute to a
violation of the NAAQS in order to obtain the permit, as required by
section 169(a)(3) of the Act.  Once a NAAQS is effective with respect to
a pollutant, the standard operates through section 169(a)(3) of the Act
and section 52.21(k) of EPA’s regulations to preclude construction of
a new source that would cause or contribute to a violation of such
standard. Using the effective date of a NAAQS to determine when a
pollutant covered by a NAAQS becomes a regulated NSR pollutant is more
consistent with EPA’s general approach for determining when a new
NAAQS applies to pending permit applications.  EPA generally interprets
a revised NAAQS that establishes either a lower level for the standard
or a new averaging time for a pollutant already regulated to apply upon
the effective date of the revised NAAQS.  Thus, unless EPA promulgates a
grandfathering provision that allows pending applications to apply
standards in effect when the application is complete, a final permit
decision issued after the effective date of a NAAQS must consider such a
NAAQS.  As described above, the effective date of the NAAQS is also the
date a NAAQS takes effect through the PSD permitting program to regulate
construction of a new or modified source.

EPA does not agree that a NAAQS would not take effect until the time a
state first promulgates limitations for the pollutant in a SIP.  Since a
NAAQS covering a new pollutant would operate through the PSD permitting
program to control emissions of that pollutant from the construction or
modification of a major source upon the effective date of the NAAQS, a
NAAQS covering a new pollutant takes effect on the effective date of the
regulation promulgating the NAAQS.  Under section 165(a)(3) of the Act
and the federal PSD permitting regulations at 52.21(k), to obtain a PSD
permit, a major source must demonstrate that the proposed construction
will not cause or contribute to a violation of a NAAQS.  Due to these
requirements, the PSD program operates to incorporate the NAAQS as a
governing standard for permitting construction of large sources.  Thus,
under the federal PSD program regulations at least, a new pollutant
covered by a NAAQS becomes subject to regulation at a much earlier date.
 These PSD provisions require emissions limitations for the NAAQS
pollutant before construction at a major source may commence and thereby
function to protect the NAAQS from new source construction and
modifications of existing major sources in the SIP development period
before a completion of the planning process necessary to determine
whether additional standards for a new NAAQS pollutant need to be
developed.  The timing when the NAAQS operates in this manner under
SIP-approved programs is potentially more nuanced and depends on whether
state laws are sufficiently open-ended to call for application of a new
NAAQS as a governing standard for PSD permits upon the effective date. 
EPA believes that state laws that use the same language as in EPA’s
PSD program regulations at 52.21(k) and 51.166(k) are sufficiently
open-ended and allow such a NAAQS to “take effect” through the PSD
program upon the effective date of the NAAQS.  Notwithstanding this
complexity in SIP-approved programs, the applicability of the federal
PSD program regulations to a new NAAQS pollutant upon the effective date
of the NAAQS is sufficient to determine that a new pollutant is subject
to regulation on this date. 

In the October 7, 2009 notice, EPA observed that one portion of its
existing regulations was not necessarily consistent with this reading of
the CAA.  For the first class of pollutants described in the definition
of “regulated NSR pollutant,” the PSD requirements apply once a
“standard has been promulgated” for a pollutant or its precursors. 
See 40 CFR 52.21(b)(50)(i).  The use of “has been” in the regulation
indicates that a pollutant becomes a “regulated NSR pollutant,” and
hence PSD requirements for the pollutant are triggered, on the date a
NAAQS is promulgated. Thus, EPA observed in the October 7, 2009 notice
that it may not be possible for EPA to read the regulatory language in
this provision to make PSD applicable to a NAAQS pollutant upon the
effective date of the NAAQS.  EPA did not propose to modify the language
in 40 CFR 52.21(b)(50)(i) in the October 2009 notice because EPA had not
yet reached a final decision to interpret the CAA to mean that a
pollutant is subject to regulation on the date a regulatory requirement
becomes effective.  Since EPA was not proposing to establish a NAAQS for
any additional pollutants, the timing of PSD applicability for a newly
identified NAAQS pollutant did not appear to be of concern at the time. 
No public comments on the October 2009 notice addressed this issue. 
Since EPA is now adopting a variation of the proposed interpretation
with respect to the timing of PSD applicability, we believe it will be
appropriate to propose a revision of the regulatory language in section
52.21(b)(50)(i) at such time as EPA may consider promulgation of a NAAQS
for an additional pollutant.  Until that time, EPA will continue to
apply the terms of section 52.21(b)(50)(i) of the regulation.  This is
permissible because, even though EPA believes the better reading of the
Act is to apply PSD upon the date that a control requirement “takes
effect,” the Agency has not determined in this action that the Clean
Air Act precludes applying PSD requirements upon the promulgation of a
regulation that establishes a control requirement (as a NAAQS does
through the PSD provisions).

However, we do not believe that this present limitation prohibits us
from applying such an interpretation to non-NAAQS pollutants covered by
the 40 CFR 52.21(b)(50)(iv).

As described above, EPA has chosen a “takes effect” interpretation
of when a pollutant becomes “subject to regulation” under the PSD
program because it is a permissible interpretation of the relevant
statutory and regulatory language.  EPA recognizes that the fourth part
of the definition of “regulated NSR pollutant” as used in
52.51(b)(50) functions as a catch-all provision and may cover a variety
of different types of control requirements established by EPA under the
CAA.  These different types of regulations may contain a variety of
different mechanisms for controlling emissions and have varying amounts
of lead time before controls take effect under the particular regulatory
framework.  Thus, in order to avoid the type of uncertainty and
potential delay that concern the commenter, EPA anticipates that it will
be helpful to states and regulated sources for EPA to identify the date
when a new pollutant becomes subject to regulation whenever the Agency
adopts controls on a new pollutant under a portion of the CAA covered by
the fourth part of the definition.  With regard to GHGs, the Agency has
determined that date to be January 2, 2011, or a similar date as
finalized in the LDV rulemaking, as described in section 9.2 below. 
Accordingly, the adoption of the “takes effect” interpretation will
not result in the uncertainty regarding the exact date of PSD
applicability or the prolonged delay of such applicability described by
the commenter.  

EPA is not adopting the view that a pollutant becomes subject to
regulation at the time that an individual source engages in the
regulated activity.  EPA does not believe such a reading is consistent
with the “subject to regulation” language in the CAA.  Even if no
source is actually engaged in the activity, once a standard or control
requirement has taken effect, no source may engage in the regulated
activity without complying with the standard.  At this point, the
regulated activity and the emissions from that activity are controlled
or restricted, thus being subject to regulation within the common
meaning of the term regulation used in EPA’s regulations and section
165(a)(4) and 169(3) of the CAA.

Likewise, EPA does not accept the view that a pollutant does not become
subject to regulation until the date when a source must certify
compliance with regulatory requirements or submit a compliance report. 
In some instances, a compliance report or certification of compliance
may not be required until well after the point that a regulation
operates to control or restrict the regulated activity.  Thus, EPA does
not feel that it would be appropriate as a general rule to establish the
date when a source certifies compliance or submits its compliance report
as the date that a pollutant becomes subject to regulation.

8.4.   Apply PSD only after Significance Level has been promulgated

One commenter (0072) requests that EPA revise the PSD regulations to
prevent application of PSD to a pollutant until EPA has developed a
significance level for that pollutant for the following reasons: 

Both potentially regulated facilities and state and federal permitting
agencies would know which pollutants they had to consider in determining
whether there would be a new major emitting facility or a major
modification.

It would give permit writers and sources preparing permit applications
some criteria to apply to emissions of a pollutant, rather than asking
them to start applying PSD permitting to a pollutant without any
guidance as to when that pollutant’s emissions are significant enough
that they should be analyzed in greater detail.

It would avoid the current PSD regulations from considering any increase
significant for a pollutant EPA has never evaluated for significance
under the PSD program.

Response: 

EPA does not construe the CAA or existing regulations to permit the
agency to prevent applicability of PSD requirements to a pollutant based
on the absence of a significance level.  Significance levels identify de
minimis levels of emissions that do not warrant scrutiny in permitting
reviews.  They do not serve to “regulate” or require control of the
pollutant for which they are established.  EPA’s regulations
contemplate the application of PSD requirements in the absence of a
significance level.  See 40 CFR 52.21(b)(23)(ii).  However, as discussed
elsewhere in this document, one of the policy reasons EPA prefers the
actual control interpretation is that it provides the opportunity for
EPA to promulgate significance levels in a timely manner when the agency
proposes to regulate an additional pollutant.  In the Tailoring Rule,
EPA took comment on significance levels for GHGs.  As explained above,
we fully expect the Tailoring Rule to be promulgated prior to the GHG
LDV Rule’s “take effect” date of January 2, 2011.  

8.5.   Timing Based on Economic and Technical Feasibility of Controls

Comments:

One industry commenter (0083) asserts that certain statutory provisions
require EPA to defer the application of controls until economically or
technically feasible.  Another industry commenter (0081) made the same
point specifically for GHG sources.  

Response:

	

The economic and technical feasibility of available control options are
assessed in setting the BACT limit for each specific facility under
review.  See CAA §169(3); 40 CFR 52.21(b)(12).  Thus, EPA does not
believe this would be a permissible basis for deferring the
applicability of the BACT requirements in the first instance. 

Chapter 9.   Regulation of Greenhouse Gases

9.1.   GHG and CO2 are Air Pollutants

Comment: 

Commenter (0101) argues that it is now beyond dispute that GHGs are
“pollutants” under the CAA.  The CAA defines “air pollutant” as
“[a]ny air pollution agent or combination of such agents, including
any physical, chemical, biological, [and] radioactive . . . substance or
matter which is emitted into or otherwise enters the ambient air.” CAA
§302(g), 42 U.S.C. §7602(g).  In Massachusetts v. EPA, the Supreme
Court held that greenhouse gases, including CO2, are “without a
doubt” physical chemical substances emitted into the ambient air and
thus pollutants. Id., 549 U.S. at 529.  Similarly, in its final
“Endangerment and Cause or Contribute Finding for Greenhouse Gases”
(Dec. 7, 2009) (“Endangerment Finding”), EPA has stated
unequivocally that GHGs are air pollutants.

One industry commenter (0069) expresses that comments on the PSD
Interpretive Memorandum should not be construed as admitting that GHGs
are, individually or in combination, a “pollutant” subject to
regulation under the CAA.

Response:

EPA recognizes that the Supreme Court has held that GHGs fit within the
definition of “air pollutant” under CAA section 302.  Massachusetts
v. EPA, 549 U.S. 497 (2007). 

9.2.   Date When PSD Permitting Requirements Apply to GHGs

Comments:

Several commenters discussed the specific date upon which PSD
requirements for GHG should be triggered based on the GHG standards in
EPA’s proposed motor vehicle regulations, which are proposed to begin
with the 2012 model year (MY 2012), including:

The beginning of MY 2012 (Commenter 0080)

MY 2012, as being either Spring 2011 or Late 2011 (Commenter 0076)

At the earliest January 2, 2011 and at the latest by March 30, 2013
(0056, 0059, 0064, 0096, and 0106/0107)

March 2011 (0062)

Summer 2011, while acknowledging possibility as early as January 2, 2011
(0062)

Fall of 2011 (0050)

October 2011 (0067, 0073, 0083, 0089, 0090, 0096, 0106/0107, 0108, and
0109)

Late 2011 (0081)

May 1, 2012 (0067, 0073)

Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109), in asserting that EPA should clarify it is adopting the
“takes effect” interpretation, state that if EPA promulgates its
proposed motor vehicle GHG rules in final form, those rules could not
have any PSD triggering effect before the beginning date of the first
model year to which those rules apply (i.e., October 1, 2011).  

Some industry commenters (0069, 0096, 0106/0107) note that U.S.
automakers are not required to comply with the MY 2012 GHG mobile
vehicle regulations before an LDV is manufactured on January 2, 2011,
and because compliance with these regulations is based on fleet
averaging, automakers will not have to certify compliance until March
2013.  For these reasons, it is more reasonable to conclude that GHGs
are not actually controlled until 2011 at the earliest and 2013 at the
latest.  Because this is the logical construction of EPA’s own
interpretation, the commenters (0069, 0096, 0106/0107) assert that EPA
can take final action and conclude that one of these dates and not the
effective date of the GHG mobile vehicle regulations is when GHGs become
subject to regulation for purposes of triggering PSD without additional
rulemaking.

One commenter (0058) requests that EPA establish an effective date for
the PSD and title V programs for GHGs no earlier than one year after the
effective date of the LDVR.  The commenter (0058) states that EPA has
the authority for such a postponement under the legal doctrine of
“administrative necessity” and “absurd results.”  The commenter
(0058) also requests that EPA postpone applicability for non-CO2 GHGs
for at least another year to allow for further understanding of workload
impacts of PSD and title V applicability to those non-CO2 GHG
pollutants.

One of the industry commenters (0064) notes that, in the case of the
regulation of GHG emissions from motor vehicles, the compliance
obligation occurs when manufacturers introduce into commerce vehicles
that are required to comply with GHG standards, which will begin with MY
2012 and will not occur before January 2, 2011.  The commenter (0064)
also indicates that another interpretation on the timing for the
compliance obligation in the context of the GHG motor vehicle
regulations could be when the manufacturer is required to meet the
fleet-wide average, which occurs for the first time at the close of MY
2012 and is based on actual production figures for each model and on
model-level emissions data collected through testing over the course of
the model year.  Thus, the commenter (0064) believes that some point
after the end of MY 2012 could be considered the date there is a
compliance obligation or “actual control” of GHG pollutants for
purposes of the GHG motor vehicle regulations.  The commenter believes
that these are reasonable interpretations of an ambiguous statute,
entitling EPA deference under Chevron.  Other industry commenters (0067,
0073) use a similar rationale to arrive at alternative dates of October
2011 and May 1, 2012.

One commenter (0067) supports EPA’s proposal that the “effective”
date is the date sources are obliged to meet the requirements for new
pollutants in PSD and title V permit applications.  No actual control
obligations will be imposed until at least October 2011.  One commenter
(0067) states that delaying the effective date until October 2011 will
provide adequate time to receive information from the first year of
EPA’s GHG reporting rule, develop additional information for the
RACT/BACT/LAER clearinghouse, and supplement other necessary information
sources.

Response:

A majority of the comments EPA received in this action, as summarized
above and elsewhere in this RTC, addressed the specific issue of when
GHG-PSD permitting requirements would be applied under the various
interpretations discussed above.  EPA has determined that GHGs will
initially become “subject to regulation” under the CAA on January 2,
2011  based on the following considerations: (1) the overall
interpretation reflected in the PSD Interpretive Memo; (2) EPA’s
conclusion in this notice that a pollutant becomes subject to regulation
when controls “take effect,” and (3) the assumption that the agency
will establish emissions standards for model year 2012 vehicles when it
completes the proposed LDV Rule. 

As proposed, the LDV Rule consists of two kinds of standards — fleet
average standards determined by the emissions performance of a
manufacturer’s fleet of various models, and separate vehicle standards
that apply for the useful life of a vehicle to the various models that
make up the manufacturer’s fleet.  CAA section 203(a)(1) prohibits
manufacturers from introducing a new motor vehicle into commerce unless
the vehicle is covered by an EPA-issued certificate of conformity for
the appropriate model year.  Section 206(a)(1) of the CAA describes the
requirements for EPA issuance of a certificate of conformity, based on a
demonstration of compliance with the emission standards established by
EPA under section 202 of the Act.  A certification demonstration
requires emission testing, and must be done for each model year.  

The certificate covers both fleet average and vehicle standards, and the
manufacturer has to demonstrate compliance with both of these standards
for purposes of receiving a certificate of conformity.  The
demonstration for the fleet average is based on a projection of sales
for the model year, and the demonstration for the vehicle standard is
based on emissions testing and other information. 

Both the fleet average and vehicle standards in the LDV Rule will
require that automakers control or limit GHG emissions from the
tailpipes of these vehicles.  As such, they clearly constitute
“regulation” of GHGs under the interpretation in the PSD
Interpretive Memo.  This view is consistent with the position originally
expressed by EPA in 1978 that a pollutant regulated in a Title II
regulation is a pollutant subject to regulation.  See 42 FR at 57481. 
However, the regulation of GHGs will not actually take effect upon
promulgation of the LDV Rule or on the effective date of the LDV Rule
when the provisions of the rule are incorporated into the CFR. 

Under the LDV Rule, the standards for GHG emissions are not operative
until the 2012 model year, which may begin as early as January 2, 2012. 
In accordance with the requirements of Title II of the CAA and
associated regulations, vehicle manufacturers may not introduce a model
year 2012 vehicle into commerce without a model year 2012 certificate of
conformity.  CAA Section 203(a)(1).  A model year 2012 certificate only
applies to vehicles produced during that model year, and the model year
production period may begin no earlier than January 2, 2011.  See CAA
section 202(b)(3)(A) and implementing regulations at 40 CFR 85.2302
through 85.2305.  Thus a vehicle manufacturer may not introduce a model
year 2012 vehicle into commerce prior to January 2, 2011  

There will be no controls or limitations on GHG emissions from model
year 2011 vehicles.  The obligation on an automaker for a model year
2012 vehicle would be to have a certificate of conformity showing
compliance with the emissions standards for GHGs when the vehicle is
introduced into commerce, which can occur on or after January 2, 2011. 
Therefore the controls on GHG emissions in the Light Duty Rule will not
take effect until the first date when a 2012 model year vehicle may be
introduced into commerce.  In other words, the compliance obligation
under the LDV Rule does not occur until a manufacturer may introduce
into commerce vehicles that are required to comply with GHG standards,
which will begin with MY 2012 and will not occur before January 2, 2011.
 Since section 203(a)(1) of the CAA prohibits manufacturers from
introducing a new motor vehicle into commerce unless the vehicle is
covered by an EPA-issued certificate of conformity for the appropriate
model year, as of January 2, 2011, manufacturers will be precluded from
introducing into commence any model year 2012 vehicle that has not been
certified to meet the applicable standards for GHGs.  

This interpretation of when the GHG controls in the LDV Rule take
effect, and therefore, make GHGs subject to regulation under the Act for
PSD purposes, is consistent with the statutory language in section
202(a)(2) of the CAA.  This section provides that “any regulation
prescribed under paragraph (1) of this subsection (and any revision
thereof) shall take effect after such period as the Administrator finds
necessary to permit the development and application of the requisite
technology, giving appropriate consideration to the cost of compliance
within such period.”  See 42 U.S.C. 7521(a)(2) (emphasis added).  The
final LDV Rule will apply to model years 2012 through 2016.  The time
leading up to the introduction of model year 2012 is the time that EPA
“finds necessary to permit the development and application of the
requisite technology, giving appropriate consideration to the cost of
compliance within such period.”  Model year 2012 is therefore when the
GHG standards in the rule “take effect.”  

	EPA does not agree with several commenters who have suggested that the
GHG standards in the proposed LDV Rule would not take effect until
October 1, 2011.  The latter date appears to be based on how the
National Highway Traffic Safety Administration (NHTSA) determines the
beginning of the 2012 model year under the Energy Policy and
Conservation Act (EPCA).  Under EPCA, a more stringent CAFE standard
must be prescribed by NHTSA at least 18 months before the beginning of
the model year.  For purposes of this EPCA provision, NHTSA has
historically construed the beginning of the model year to be October 1
of the preceding calendar year.  See 49 U.S.C. §32902(g)(2); 74 FR
49454, 49644 n.447 (Sep. 28, 2009).  Although EPA has endeavored to
harmonize its section 202(a) standards with the NHTSA CAFE standards,
EPA’s standards are promulgated under distinct legal authority in the
CAA.  Thus, the section 202(a) standards promulgated in the LDV Rule are
not subject to EPCA or NHTSA’s interpretation of when a model year
begins for purposes of EPCA.  Under EPA’s planned LDV regulations,
model year 2012 vehicles may be introduced into commerce as early as
January 2, 2011.  Although as a practical matter, some U.S. automakers
may not begin introducing model year 2012 vehicles into commerce until
later in 2011, they may nevertheless do so as early as January 2, 2011
under EPA’s regulations.  Consistent with the discussion above, EPA
construes the phrase “subject to regulation” in section 165(a)(4)
and 169(3) of the Act to mean that the BACT requirement applies when
controls on a pollutant first apply to a regulated activity, and not the
point at which an entity first engages in the regulated activity.  In
this instance, the regulated activity is the introduction of model year
2012 vehicles into commerce.  As of January 2, 2011, a manufacturer may
not engage in this activity without complying with the applicable GHG
standards.  

Likewise, EPA does not agree with commenters who argued that EPA should
not consider the GHG controls in the LDV Rule to take effect until
automakers have to demonstrate compliance with the fleet average
standards at the end of the model year, based on actual vehicle model
production.  As discussed above, the LDV Rule includes both fleet
average standards and vehicle standards that apply to individual
vehicles throughout their useful lives, and both of these standards for
GHG emissions are operative on model year 2012 vehicles introduced into
commerce on or after January 2, 2011.  Thus, controls on GHG emissions
from automobiles will take effect prior to the date that a manufacturer
must demonstrate compliance with the fleet average standards.  The fact
that the manufacturer demonstrates final compliance with the fleet
average at a later date, based on production for the entire year, does
not change the fact that their conduct was controlled by both the fleet
average and the vehicle standards, and subject to regulation, prior to
that date.  

With regard to the comment suggesting that EPA rely on the doctrines of
administrative necessity and absurd results to delay PSD implementation
for GHG emissions beyond January 2, 2011, EPA has proposed to apply
these doctrines in a separate EPA rulemaking, known as the Tailoring
Rule, to at least temporarily limit the scope of GHG sources covered by
the PSD program to ensure that permitting authorities can effectively
implement it.  EPA will be taking additional action in the near future
in the context of that rule to address GHG-specific circumstances that
will exist beyond January 2, 2011.

In addition to the specific comments regarding PSD applicability for
GHGs based on finalization of the proposed LDV Rule, we also received
general comments arguing that a pollutant does not become “subject to
regulation” until the date when a source must certify compliance with
regulatory requirements or submit a compliance report.  For the same
reasons as provided in response to specific comments addressing the LDV
Rule compliance demonstrations – namely the delay between the
demonstration and the requirement to operate the underlying control or
restrict the regulated activity – EPA declines to adopt this general
interpretation.  Likewise, EPA does not agree with general comments
suggesting that EPA determine that a pollutant does not become subject
to regulation until the time that an individual source engages in the
regulated activity.  EPA does not believe such a reading is consistent
with the “subject to regulation” language in the CAA.  Even if no
source is actually engaged in the activity, once a standard or control
requirement has taken effect, no source may engage in the regulated
activity without complying with the standard.  At this point, the
regulated activity and the emissions from that activity are controlled
or restricted, thus being subject to regulation within the common
meaning of the term regulation used in EPA’s regulations and section
165(a)(4) and 169(3) of the CAA.

Comment:

One commenter (0091) states that for the proposed LDVR, an
interpretation of timing of PSD requirements could be the full
implementation date (or the date controls must be in place and
operation), which would extend the PSD applicability date by 15 to 19
months.  For the NSPS for GHG emissions triggering PSD applicability, an
interpretation of the full implementation date could extend the PSD
applicability date by several years.  

Response:

	

Insofar as the commenter requests that EPA adopt an interpretation which
applies PSD requirements on the “full implementation date” of the
underlying control regulation,  we believe this interpretation is
substantively identical to the interpretation using the “takes
effect” PSD implementation date that we are adopting in this final
action.  However, as described above, we have identified that date as
January 2, 2011, or a similar date applicable under the final LDV Rule,
which is less than the 15 to 19 months extension of applicability stated
in the comment.  To the extent that timeframe is based upon a
misunderstanding of the LDV Rule applicability or the reliance on some
other applicability event, we direct the commenter to our response
provided to similar comments above.  As for the comment that an NSPS for
GHG emissions would delay PSD implementation for several years, we find
no reason that an NSPS would produce such a delay in PSD applicability. 
As we have explained in section 8.3, we find the NSPS effective date and
takes effect date to be functionally equivalent such that PSD
requirements for a pollutant covered by an NSPS would apply once such a
standard takes effect and precludes operation of any stationary source
in violation of the standard.

	

Comment:

	

  SEQ CHAPTER \h \r 1 One commenter (0104) agrees with EPA that the term
“subject to regulation” in the CAA and corresponding regulations is
most naturally interpreted to mean that PSD requirements apply when the
regulations addressing a particular pollutant become final and
effective.  According to the commenter, neither the effective date, nor
the promulgation date, are the appropriate interpretations for the term
“subject to regulation.”  From the commenter’s perspective,
regulations are final and effective at such time when all legal
challenges to a proposed regulation have been exhausted through the
court system. 

  SEQ CHAPTER \h \r 1 

Response:

EPA rejects the argument that a pollutant does not become “subject to
regulation” until all legal challenges to the underlying control
regulation for that pollutant have been exhausted.  The commenter does
not provide (and EPA is not aware of) any legal authority or past agency
guidance that would require such an interpretation, and we find it
inconsistent with the actual control interpretation we are upholding in
this action.  We also note such an interpretation would add uncertainty
with regard to the timing of PSD applicability for new pollutants. 
There is no way of knowing whether an underlying regulatory requirement
to control a new pollutant will be the subject of a legal challenge, and
even if such a regulation were challenged, the length of time that would
be necessary to resolve the case is also unknown.  Challenges to agency
regulations can take months, if not years, to be “exhausted” by the
courts based on a variety of issues, including the complexity of the
arguments in the case and whether additional appeals are sought,
including Supreme Court review.  Under the interpretation suggested in
the comment, even if the underlying control regulation where upheld on
appeal, the applicability of PSD requirements for the new pollutant
subject to that requirement could be delayed until many years after
those emissions have been controlled under other CAA programs.  Not only
would such an interpretation have the perverse effect of encouraging
legal challenges to control requirements in other CAA programs in order
to delay or avoid application of PSD requirements for stationary
sources, but it is inconsistent with the policy grounds EPA has
articulated in upholding the actual control interpretation, namely
orderly administration of the PSD program following considered judgment
by Congress or EPA that a particular pollutant should be subject to
control requirements.  Accordingly, EPA declines to adopt an
interpretation of PSD applicability timing which is determined by the
possibility of a legal challenge to the underlying control regulation.

 

9.3.   Need More Time Before PSD/Title V Applies to GHGs

	

In addition to providing specific comments on the appropriate
interpretation of “subject to regulation” as it relates to the
actual date by which PSD permitting requirements will be triggered, many
comments also expressed a general need for more time before PSD
permitting requirements are triggered for GHGs and specifically set-out
what they believe the appropriate time should be.  

	

9.3.1.   Impacts from GHG Regulation Support Actual Control
Interpretation

		

One commerce commenter (0074) asserts that the most important
policy-based reason against the trigger of PSD by other interpretations
set out in the proposal is the impact those interpretations would on the
millions of small and medium-sized stationary sources that surpass the
statutory “major source” threshold for GHGs (cited U.S Chamber of
Commerce statistics under a report entitled “A Regulatory Burden:  The
Compliance Dimension of Regulating CO2 as a Pollutant”).  Even with
the proposed Tailoring Rule (which they opine rests on shaky legal
ground), tens of thousands of entities will become exposed to PSD (cites
statistics set out in the Tailoring Rule proposal preamble).

	

Another commenter (0080) states that the necessity of adopting the
proposed interpretation is emphasized by the very large number of small
emitting sources who could otherwise be required to control CO2
emissions.

One industry commenter (0112) believes that EPA’s “actual control”
interpretation is necessary to avoid the premature and ill-considered
application of PSD requirements to sources in the commenter’s industry
that would result under the other interpretations under EPA
consideration.  The commenter adds that their process (semiconductor
manufacturing) is far more complex than those traditionally regulated
under the PSD permit program and further, new manufacturing processes
are typically introduced every two years with expansions or upgrades in
between to respond to changing market conditions or resolve process
problems.    SEQ CHAPTER \h \r 1 Because frequent permitting actions
would impede their ability to make needed changes at the times necessary
to meet market demand, the commenter’s company has invested
considerable money and effort over the years through design for the
environment (DfE) and other programs to eliminate or minimize criteria
pollutant emissions and keep our emissions below PSD/NSR and title V
permitting thresholds.  As a result, emissions of criteria pollutants
from this commenter’s facilities have held steady or in some cases
declined over the years in spite of substantial growth in manufacturing
capacity during that time.  The commenter states that EPA’s current
“actual control” interpretation is therefore necessary to avoid
“blindsiding” sources like theirs with unforeseen PSD requirements
for GHG emissions and reversing years of planning and extensive
resources devoted to managing regulatory obligations.

  SEQ CHAPTER \h \r 1 Two commenters (0115, 0116) representing industry
and a state chamber of commerce (both from South Carolina), do not
believe it is proper for the EPA to attempt to regulate GHGs under the
CAA with respect to either the PSD or the title V programs; however, for
the purposes of responding to EPA’s request for comments on the
various options for when a pollutant can become “subject to
regulation,” they encourage EPA to maintain the interpretation that
PSD permitting requirements would be triggered only when an EPA rule is
promulgated requiring control of emissions of a pollutant in the form of
a final national rule.    SEQ CHAPTER \h \r 1 These commenters (0115,
0116) believe the other interpretations suffer from multiple flaws. 
Specifically, the commenters feel that EPA has grossly underestimated
the number and types of facilities that will be impacted by the LDVR
standards proposal by becoming subject to NSR pollutants and the Title V
and NSR/PSD permitting requirements.  The commenters note that their
state agency has identified over 800 of the currently permitted small
sources that would subject to title V and NSR permitting as soon as GHGs
are regulated under LDVR Standards as compared to 281 title V currently
permitted facilities.  In addition to this impact, the commenters
contend that even the smallest modification or expansion activity may
trigger a PSD technology review and modeling analysis.  The technology
review would encompass all of the triggered NSR pollutants, not just
GHG.  Economically, these facilities would have no choice but to abandon
any new project or modification.

One commenter  SEQ CHAPTER \h \r 1  (0100) representing industry claims
that the PSD Interpretive Rule Reconsideration proposal demonstrates
that the “actual control interpretation” is insufficient because
(according to the commenter) even with it in place, EPA had to do
substantial rewriting of the CAA in order to allow it to proceed with an
endangerment finding and the car rules without causing even more
problems under the PSD program.  The   SEQ CHAPTER \h \r 1 commenter
(0100) contends that at a minimum, EPA should endorse the meaning of
“subject to regulation” that best forestalls “absurd results.” 
However, the commenter states that if EPA were to proceed, it should do
so as slowly as possible by forestalling as long as possible the
conclusion that GHGs have become “subject to regulation.”  Of the
ranges of timing possibilities laid out in the proposal, this commenter
believes the “actual control interpretation” currently favored by
EPA is “the least of these evils,” but believes that EPA could do
better.

	

One state/local agency association (0058) states that if EPA adopts any
of the alternatives to the actual control interpretation, the results
would be disastrous because PSD and title V would already be applicable
throughout the nation for GHGs.  The commenter (0058) cites EPA’s
estimates of the permitting burden absent the Tailoring Rule and states
that it is unreasonable to assume that state and local permitting
agencies could absorb such an increase in workload.  The commenter
(0058) concludes that EPA needs to adopt an interpretation which would
avoid this result by allowing sufficient time to implement federal and
local mechanisms to scale down this anticipated workload to something
both more reasonable and manageable.

	

One state agency commenter (0077) believes that EPA has provided sound
policy and practical reasons for the actual control interpretation.  The
commenter (0077) states that were EPA to adopt any of the alternative
interpretations, it would unleash a hasty, inefficient, and
unpredictable sequence of events that would impose impossible
administrative burdens on state and local permitting authorities
nationwide, and especially in California (the commenter’s state).  The
commenter adds that EPA’s legal rationale for the actual control
interpretation is reasonable in light of the EAB’s Deseret ruling, and
should withstand legal scrutiny.

One industry group (0063) commenter states that it is imperative that
EPA adopt the interpretation contained in the “Actual Control”
Memorandum, as amended, to provide that a pollutant does not become
“subject to regulation” under the PSD program until a regulation
actually controlling that pollutant takes effect through compliance at
applicable sources.  This commenter explains that exposing natural gas
pipelines to PSD permitting for GHGs would disrupt project schedules and
their underlying commercial, legal, financial, engineering and
operational arrangements.  Prevention of Significant Deterioration
permits for critical gas pipeline projects could be delayed by a year or
more as state permitting authorities struggle with an influx of new PSD
applications.  

Response: 	

For the reasons discussed in Chapter 3 of this RTC, EPA is continuing to
apply the “actual control” interpretation.  EPA addresses the
broader concerns with regard to incorporating GHGs into the PSD program
in the following response.

9.3.2.   Implementation Concerns Warrant More Time

Comments:

Several commenters, including many representing state and local
agencies, (0054, 0056, 0058, 0064, 0083, 0089, 0091, 0102, 0108, 0109,
0112) generally express the need for more time before PSD and/or title V
permitting requirements are triggered for “regulated
pollutants”/GHGs.

A local agency commenter (0054) supports EPA’s preferred option under
normal circumstances when EPA is considering the adoption of emissions
standards for pollutants for which EPA has adopted a NAAQS under CAA
section 108 or a standard under section 112.  However, this commenter
questions the triggering of PSD (and title V) permitting requirements at
the time of EPA’s promulgation of emissions standards for GHG for
mobile sources, anticipated for about March 30, 2010.  According to this
commenter, the impact of such a triggering will be overwhelming with
little, if any, environmental benefits, stating that permitting agencies
will be inundated with permit responsibilities, industries will be faced
with significant delays in permit processing, and the lack of effective
controls will make the BACT determination process fraught with legal
challenges.  

This state and local agency commenter (0054) states that they are not
confident that the EPA’s tailoring rule will succeed in avoiding the
burden that it aims to avoid, especially in SIP-approved states, which
will need up to two years to change state definitions for major sources.
 This commenter suggests that EPA find a legally-defensible method to
defer for at least two years, or even to totally exempt, the triggering
of PSD and title V requirements for stationary sources of CO2 until such
time as is necessary for Congress to address the issue.

One industry commenter (0056) submits that there are many significant
logistical and other policy reasons for delaying the applicability of
PSD to GHGs.  The commenter’s industry members report that there is a
critical difference to the successful implementation of the PSD
regulations for GHGs between a finding that PSD is applicable to GHGs on
the “first substantive compliance date of a regulation” and a
finding that is applicable on the “effective date” of regulation. 
The commenter asserts that the proposed “PSD and Title V Tailoring
Rule” is based on avoiding some of the impacts on businesses, a goal
that could be achieved by adopting a trigger date that delays these
impacts through reasonable interpretation of the CAA.

	

Two state/local agency associations (0058, 0062) made similar
assertions.  One of these commenters (0062) notes that the proposed
tailoring rule would not modify PSD and Title V programs that are
SIP-approved and argued that states must be provided a sufficient
opportunity to modify those state programs under applicable state laws
so that they will be consistent with EPA’s final tailoring rule;
otherwise, there is a substantial risk that the overwhelming number of
permitting actions forecast by EPA will be required.  

Two commenters (0056, 0058) request additional time before promulgation.
 One commenter (0056) states that an additional six months to a year and
a half delay in the applicability of PSD to GHGs is necessary for
sources to more adequately address the technical and financial
challenges of controlling their GHG emissions.  One commenter (0058)
requests an additional year.  The commenter (0058) felt EPA may have
significantly underestimated the increased PSD workload resulting from
the promulgation of the proposed Tailoring Rule, especially considering
the workload the commenter has faced with the current PSD regulations. 
The commenter (0058) requests that EPA fully examine the effect of
including non-CO2 GHGs in the PSD and title V programs before the
programs become applicable.

Two commenters (0056, 0058) state that additional time for the
implementation of title V to GHG sources will be necessary.  One
commenter (0056) stated that additional time will be necessary as
thousands of sources will be newly subject to title V.  Both commenters
(0056, 0058) assert that states will need additional time to tailor
their administrative and/or statutory requirements for PSD and title V
permitting.  

One state/local agency association (0062) states that EPA should
consider adopting different interpretations of the “subject to
regulation” provisions for the title V program as distinct from the
PSD program, as EPA asserted that it could in its implementation of
programs regulating PM2.5.  The commenter (0062) indicates that the
administrative burden and environmental benefit associated with
incorporating GHGs are substantially different in these programs and may
provide a basis for establishing a priority in application of these
programs to GHG emissions. The commenter also suggests that deferring
implementation of the PSD and title V GHG programs until after the GHG
emission reports are received under the new GHG reporting requirements
(i.e., March 2011) will also greatly facilitate implementation of those
programs by state and local permitting authorities.  

	Another second state/local agency association (0058) indicates that EPA
may have seriously underestimated the permitting workload associated
with PSD and title V for GHGs, even with the Tailoring Rule, and gave
illustrative estimates from two local agencies in California. 
Accordingly, this commenter (0058) believes immediate applicability at
the time the GHG mobile sources regulations are finalized will
overwhelming.  On this basis, the commenter (0058) urges EPA to
establish an effective date for the PSD and title V programs for GHGs at
no earlier than 1 year after the effective date of a rule controlling
GHG emissions under the CAA (i.e. EPA’s motor vehicle rule) and to
postpone applicability for GHGs other than CO2 for at least another
year.  Regarding the latter, the commenter (0058) does not believe EPA
or permitting agencies currently have sufficient information to
accurately assess the impact of and implement a program applicable to
relatively small sources of high global warming potential pollutants. 
The commenter asserted that EPA has authority to postpone applicability
of the PSD and title V programs to GHGs, for a limited period of time,
under the same theories as it has proposed to adopt higher interim
thresholds of applicability than that provided by statute: the legal
doctrines of “administrative necessity” and “absurd results.”

Another industry commenter (0064) believes that it is imperative that
EPA give states the time to put in place staff and allocate resources
needed to handle the additional permitting that will be necessary once
GHG emissions are regulated pollutants for PSD purposes and resolve
fundamental programmatic issues such as what constitutes BACT for GHGs.

One state agency commenter (0077) agrees that while EPA has the latitude
to make PSD requirements for GHGs apply on the effective date of the GHG
motor vehicle regulations rather than on its promulgation, EPA should
apply the “absurd results” and “administrative necessity”
doctrines to provide the implementation onset and phase-in periods, and
stated that comments to that effect would be submitted on the Tailoring
Rule proposal.

Another state agency commenter (0102) supports allowing the necessary
time to study and evaluate emissions characteristics and control options
before making a pollutant subject to PSD requirements through
promulgation of control requirements – they assert that this is the
only way meaningful emissions limits and BACT are developed, creating
regulatory certainty and ensuring an enforceable permitting program. 
The commenter (0102) also states that individual permit reviews would
take an inordinate amount of time due to the necessity for developing
emissions standards and controls for individual facilities.

Several additional reasons are cited by a state agency commenter (0091)
as to why additional time is needed before implementing PSD and title V
requirements for GHG:

Many existing facilities may be willing to take federally-enforceable
limits to avoid being subject to PSD and title V permitting, citing as
an example the options provided to states by EPA in the early stages of
the title V program for limiting potential to emit of stationary sources
that greatly reduced the number of facilities needing title V permits. 
States will need time to process these types of permit applications
before title V and PSD applications are due.

Facilities subject to the Mandatory Reporting of GHG rule will submit
their first annual reports in March 2011.  The commenter asks EPA to
consider delaying any GHG permitting requirements until there is
accurate monitoring and reporting data and states have additional time
(at least one year after March 2011, but preferably 3 years) to assess
the reporting data and plan for any additional permitting needs.  This
data will also be critical for conducting PSD netting analyses and BACT
determinations.

Like many states, the commenter needs time to adjust their regulations
to increase the major source thresholds for Title V and PSD to be
consistent with the Tailoring Rule, if finalized.

Time is needed to create new fee structures more suitable for GHG.  The
state’s current mandatory fee is $43.75 per ton of each “regulated
pollutant” which, without an adjustment to the current state fee
statute, would result in excessive fees applied to hundreds of small
businesses in the state.

Prior to putting in place any new permitting program for CO2 and other
GHG, states will need time to educate and train small and medium size
businesses newly subject to title V and PSD permitting requirements. 
EPA also needs time to develop compliance assistance tools.

Regulatory changes in the state require a lengthy stakeholder
involvement process, agency board review and approval, and legislative
approval.  This normally takes about 18 months.

As a result of significant budget issues over the last 1½ years, their
state budget has been decreased by over 40%, requiring a reduction in
the number of permitting positions.  Positions are carefully controlled
by a board under the state’s appropriations act, and the creation of
new positions is difficult in tough economic times. 

The end result for this commenter (0091) is that their state will not be
ready to implement title V and PSD programs for GHG emissions by March
or May 2010, and strongly urge EPA to explore and find ways to give
states the time they need to plan, prepare, and begin permitting GHG
emissions in an orderly and timely manner.  The commenter believes that
if EPA interprets the PSD applicability date to be triggered by the
promulgation or effective date of the final mobile source GHG tailpipe
standards, many states will be forced to default their permitting
programs to the EPA Regional Offices until state statutes or regulations
are adjusted and more resources can be obtained.

Nine industry commenters (0067, 0081, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that EPA should carefully consider the timeframe in
which it seeks to impose PSD requirements on major stationary sources of
any newly regulated pollutants where actual emission controls may
trigger such requirements and should structure its plans to allow
permitting authorities and sources the maximum time available to prepare
for compliance with any such requirements.  These commenters also state
that the need for flexibility in timing of triggering PSD for GHGs is
critical because major stationary sources need an appropriate period of
time to develop the requisite technologies to meet BACT standards in a
cost-effective way, and the Agency needs time to develop its own
technical capacity and provide guidance to the regulated community and
to states with permitting authority.  

One of the industry commenters (0109) believes that in the case of CO2,
having this additional time will be critically important to all
stakeholders involved considering that EPA has expressed concerns about
having adequate time to assess emissions of a pollutant and determine
appropriate controls before PSD and BACT requirements are required for a
pollutant.

This industry commenter (0112) is also concerned that adding a large
number of newly covered sources to the PSD program would create
substantial administrative and resource burdens for state and local air
permit control agencies, which are not staffed to handle such an
exponential increase in workload.  Also, according to the commenter,
there are important unanswered questions that would have to be addressed
by these state and local agencies in issuing PSD permits.  The commenter
cites as an example that EPA’s recently promulgated Mandatory
Reporting of Greenhouse Gases Final Rule did not set recordkeeping and
reporting requirements for PFCs emitted from semiconductor operations
and as such, state and local agencies would be forced to take on this
challenge of defining recordkeeping and reporting requirements on a
case-by-case basis in PSD and title V permits.  Commenter adds that
similarly, the PSD permitting program would require the application of
BACT for GHG emissions and to date, there are few, if any BACT analyses
of GHG emissions.  While recognizing that EPA has proposed some options
to address some of these concerns in the Tailoring Rule, the commenter
believes EPA should for purposes of “administrative necessity” and
avoiding “absurd results,” maintain its current “actual control”
interpretation to allow time to resolve these critical implementation
issues.  Finally, the commenter notes that opportunities their industry
provides for key building blocks for the energy-efficient and
“green” technologies the Administration suggests will launch our
economic recovery and create new jobs could be lost if EPA does not
maintain its current “actual control” interpretation.

	

Response:

	

EPA agrees that application of PSD program requirements to GHGs presents
several significant implementation challenges for EPA, states and other
entities that issue permits, and the sources that must obtain permits. 
Indeed, many of the public comments summarized above have illustrated
the magnitude of the challenge beyond what is described in the notices
on reconsideration of the PSD Interpretive Memo and the proposed
Tailoring Rule.  In recognition of the substantial challenges associated
with incorporating GHGs into the PSD program, EPA’s preference would
be to establish a specific date when the PSD permitting requirements
initially apply to GHGs based solely on these practical implementation
considerations.  However, EPA has not been persuaded that it has the
authority to proceed in this manner.  While EPA may have discretion as
to the manner and time for regulating GHG emissions under the CAA, once
EPA has determined to regulate a pollutant in some form under the Act
and such regulation is operative on the regulated activity, the terms of
the Act make clear that the PSD program is automatically applicable. 
See Alabama Power Co. v. Costle, 636 F.2d 323, 403-406 (C.A.D.C., 1979)
(rejecting arguments that Section 165 should not automatically apply to
all pollutants subject to regulation under the Act.).  

Nonetheless, given the substantial magnitude of the PSD implementation
challenges presented by the regulation of GHGs, EPA proposed in the
Tailoring Rule to at least temporarily limit the scope of GHG sources
covered by the PSD program to ensure that permitting authorities can
effectively implement it.  EPA based the proposal primarily on two legal
doctrines:  the “absurd results” doctrine, which we proposed to
apply on the basis that Congress did not envision that the PSD program
would apply to the many small sources that emit GHGs; and the
“administrative necessity” doctrine, which we proposed to apply
because of the extremely large administrative burdens that permitting
authorities would confront in permitting the GHG sources.  In comment on
that action, as well as in comments on the PSD Interpretive Memo
reconsideration notice, EPA received numerous suggestions that it is
necessary to limit the scope of sources covered at the time GHGs become
subject to regulation.  These comments make clear that more time will be
needed beyond January 2, 2011 before permitting of many GHG stationary
sources can begin.  Thus, EPA will be taking additional action in the
near future in the context of the Tailoring Rule to address GHG-specific
circumstances that will exist beyond January 2, 2011.

In addition, to the extent that commenters are specifically arguing that
additional time is necessary for development of guidance regarding
application of PSD requirements, including BACT, to GHG emissions, we
recognize that the BACT process may be more time and resource intensive
when applied to a new pollutant the absence of guidance on control
strategies from EPA and other regulatory agencies. Under a mature PSD
permitting program, successive BACT analyses establish guidelines and
precedents for subsequent BACT determinations.  However, when a new
pollutant is regulated, the first permit applicants and permitting
authorities that are faced with determining BACT for a new pollutant
must invest more time and resources in making an assessment of BACT
under the statutory criteria.  Given the potentially large number of
sources that could be subject to the BACT requirement when EPA regulates
GHGs, the absence of guidance on BACT determinations for GHGs presents a
unique challenge for permit applicants and permitting authorities.  EPA
intends to address this challenge in part by deferring, under the
Tailoring Rule, the applicability of the PSD permitting program for
sources that would become major based solely on GHG emissions.  EPA is
also developing guidance on BACT for GHGs. 

In the context of the Tailoring Rule, EPA is considering whether
additional time may therefore be justified for some sources due in part
to the administrative implications that would be caused by an absence of
additional BACT guidance specific to GHGs.  The issuance of further
guidance will assist with, and potentially ease the burden of,
incorporation of GHGs into the existing PSD program, including the BACT
determination process.  We believe that GHG emissions present unique
issues that may not have been previously addressed in Agency guidance
and development of further guidance may be necessary.  Accordingly, EPA
is currently working to develop such guidance and is committed to issue
it in advance of January 2, 2011.  (We also note, however, that our
existing BACT guidance for currently regulated pollutants has addressed
many facets of PSD permitting that will not be unique to its application
to GHG emissions.)  Furthermore, as the comments note, there may be
additional information available in future that could assist in those
determinations.  

Nonetheless, for reasons described elsewhere in this document, except
under the rationales that will be discussed in the tailoring rule, the
EPA does not believe that we would have the discretion to delay the
application of BACT for all sources beyond the date that a control
requirement takes effect.  This would be true even if were not
committing to issue guidance, and even though it will initially be
harder to make GHG BACT determinations that will become easier over
time.  Moreover, if the EPA determines in the tailoring rule that some
sources will not be excluded from the BACT requirement as of January 2,
2011, it would not be appropriate to further delay the BACT reductions
for such sources simply because more guidance or experience could be
helpful in applying it.  BACT process is itself designed to determine
the most effective control strategies achievable in each instance,
considering energy, environmental, and economic impacts. 

9.3.3.   Provide More Time by Delaying Final Action on the GHG LDV Rule

Comments: 

	Three industry commenters (0067, 0073, 0083) indicate that EPA could
address its stated policy goals to have sufficient time to formulate an
efficient approach to GHG stationary source regulation by using its
available discretion to delay final action on the section 202 GHG motor
vehicle regulations rulemaking, thereby putting off the “triggering”
event.  The commenters (0067, 0073, 0083) summarized their
organizations’ prior comments to this effect on the proposed GHG motor
vehicle regulations, and one (0073) attached those comments to this
comment letter.

One commenter (0084) states that Massachusetts v. EPA is clear that EPA
has substantial discretion regarding the timing of issuing rules and,
thus, is under no obligation to issue the LDVR.  Therefore, the
commenter (0084.1) opposes EPA’s attempt to move GHGs into the
category of “actual control” via regulatory action.  The commenter
(0084) believes that finalizing the LDVR will trigger a massive
bureaucratic nightmare that EPA cannot avoid because the Tailoring Rule
rests on flimsy legal foundations.  Instead, the commenter (0084)
believes that EPA should hold all the proposed GHG actions in abeyance
until Congress determines whether it will formulate a new and
appropriate statutory framework for GHG regulations.

	One state agency commenter (0102) states that promulgation of any rules
triggering PSD for GHG (such as the LDVR) should only be pursued after
EPA has comprehensively resolved all issues necessary for states to
implement the GHG control rules, especially issues surrounding proper
BACT review.

	Response:

As discussed elsewhere in this RTC and in the October 7 reconsideration
notice, EPA acknowledges that the final light duty vehicle (LDV) rule,
if finalized to require control of GHG emissions from light duty
vehicles, it will have the effect of triggering PSD requirements for
GHGs  under the interpretation of “subject to regulation” described
in this action.  However, EPA’s present reconsideration action is
merely finalizing the agency’s interpretation of a specific provision
of the PSD rules and is not the proper forum for addressing the issue
raised in the comment.  In this reconsideration action, EPA is not
making any decisions or taking any action with respect to the issuance
of a LDV Rule - the content and timing of the LDV Rule is the subject of
a separate rulemaking action, and that rulemaking is the proper place to
address comments on the timing of any final LDV Rule.  In addition, we
did, in fact, receive similar comments in response to the proposed light
duty vehicle rulemaking.  Thus,  EPA will respond to this issue in the
record for that rule.

9.4.   Identifying the Greenhouse Gases “Subject to Regulation”
Under LDV Rule

Comment:  

One commenter (0056) submits for the Tailoring Rule, that regulating GHG
compounds for those compounds that EPA has not yet established an
emission standard would be unreasonable and inconsistent with the
“subject to regulation”/”actual control” test.  In the Mandatory
GHG Reporting rule, the EPA stated that they cannot presently give
guidance to industries with regard to calculating sulfur hexafluoride
(SF6), hydrofluorocarbons (HFC), or perfluorocarbons (PFC) emissions and
deferred mandatory GHG reporting obligations on industries for these
pollutants.  Further, because the EPA has not established or proposed
any “regulation” for SF6, HFC, and PFC, it is difficult to interpret
that the statutory language in the PSD BACT provision or elsewhere is
applicable to these compounds since they are not (and will not be on the
effective date of the LDVR) “subject to regulation.”

	Response:

As identified by the commenter, this issue is specifically addressed in
the Tailoring Rule proposal and will be resolved in EPA’s final action
on that rule, consistent with the regulations contained in the final LDV
Rule.

9.5.   Permit Application Transition

	Comment:

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that EPA also should be prepared to clarify what the
“takes effect” date means, in practical terms, for implementation of
requirements for PSD permit applications.  The commenters believe that
EPA should, for example, confirm that if a PSD permit application is
submitted in complete form before the date on which PSD begins to apply
to a pollutant, then that permit application is not subject to any
requirement to address that pollutant (regardless of the date on which
the submitted permit application is determined to be complete) and that
such an application could not be deemed “incomplete” on the grounds
that it does not address that pollutant.

	Another industry commenter (0067) stated that if EPA determines that
the legal “effective date” of its proposed motor vehicle GHG rule
should be used, then a specific transition period should be adopted that
at least will allow applications submitted prior to the date
Administrator Jackson granted reconsideration of the PSD Interpretive
Memo to be processed without consideration of GHGs.  (The commenter
(0067) notes that another period may be more appropriate and reserved
the right to submit additional comments on this issue as part of the
tailoring rule.)  The commenter (0067) indicates that a similar process
should also be provided for incorporating GHGs into the title V
permitting program.

One industry commenter (0072) requests that if EPA decides to finalize
the interpretations of PSD applicability reflected by the PSD
Interpretive Memo and GHG Tailoring Rule, that EPA make clear that
source owners who have already obtained construction permits for a
proposed stationary source or modification under a SIP-approved
permitting program will not now need to obtain a PSD permit due solely
to their emissions of GHGs, so long as the source owner commences
construction within 18 months from the date when GHGs become subject to
regulation under the CAA or any earlier date as may be required by the
SIP.  This commenter stated that EPA has historically provided clear
relief upon promulgating new requirements under PSD which would cause
facilities that had already applied for or obtained valid permits either
to become subject to PSD for the first time or, if already subject to
PSD, to become subject to new or additional requirements.  Failing to
provide the requested transitional relief would jeopardize the continued
viability of a substantial number of “shovel-ready” construction
projects at a time when the U.S. economy is in crisis and unemployment
rates are high.

	

	The industry commenters (0067, 0073) similarly indicates that whatever
date is finally established for “actual control,” the requirement to
conduct BACT for GHGs should not attach to projects (1) that have a
completed permit application before the effective date of GHG
regulation, or (2) for which a determination has already been made
before the effective date of GHG regulation that a PSD permit was not
required.

	

One commenter (0071) suggests that EPA should make clear in the PSD
Interpretive Memo that once a GHG becomes subject to PSD permitting
requirements, those requirements are applied prospectively. 

Another commenter (0058) requests that when GHGs become subject to
regulation, EPA allow permitting authorities a chance to adopt a method
of limiting a source’s potential to emit (PTE) (when the source’s
actual emissions are lower than the applicable thresholds) and thus keep
it out of the PSD and title V program, rather than adopt this method
after authorities have begun implementing the title V and PSD. 

	Response:

In light of EPA’s conclusion that pollutants become subject to
regulation for PSD purposes when control requirements on that pollutant
take effect and that such requirements will not take effect for GHGs
until January 2, 2011 if EPA finalizes the proposed LDV Rule as
anticipated, EPA does not see any grounds to establish a transition
period for permit applications that are pending before GHGs become
subject to regulation.  As a general matter, permitting and licensing
decisions of regulatory agencies must reflect the law in effect at the
time the agency makes a final determination on a pending application. 
See Ziffrin v. United States, 318 U.S. 73, 78 (1943);  State of Alabama
v. EPA, 557 F.2d 1101, 1110 (5th Cir. 1977);  In re: Dominion Energy
Brayton Point, LLC, 12 E.A.D. 490, 614-616 (EAB 2006);  In re Phelps
Dodge Corp., 10 E.A.D. 460, 478 n.10 (EAB 2002).  Thus, in the absence
of an explicit transition or grandfathering provision in the applicable
regulations (and assuming EPA finalizes the LDV Rule as planned), each
PSD permit issued on or after January 2, 2011 would need to contain
provisions that satisfy the PSD requirements that will apply to GHGs as
of that date.

Under certain circumstances, EPA has previously allowed proposed new
major sources and major modifications that have submitted a complete PSD
permit application before a new requirement becomes applicable under PSD
regulations, but have not yet received a final and effective PSD permit,
to continue relying on information already in the application rather
than immediately having to amend applications to demonstrate compliance
with the new PSD requirements.  In such a way, these proposed sources
and modifications were “grandfathered” or exempted from the new PSD
requirements that would otherwise have applied to them.

For example, EPA adopted a grandfathering provision when it changed the
indicator for the particulate matter NAAQS from total suspended
particulate matter (TSP) to particulate matter less than 10 microns
(PM10).  The federal PSD regulations at 40 CFR 52.21(i)(1)(x) provide
that the owners or operators of proposed sources or modifications that
submitted a complete permit application before July 31, 1987, but did
not yet receive the PSD permit, are not required to meet the
requirements for PM10, but could instead satisfy the requirements for
TSP that were previously in effect.

  	In addition, EPA has allowed some grandfathering for permit
applications submitted before the effective date of an amendment to the
PSD regulations establishing new maximum allowable increases in
pollutant concentrations (also known as PSD “increments”).  The
federal PSD regulations at 40 CFR 52.21(i)(10) provide that proposed
sources or modifications that submitted a complete permit application
before the effective date of the increment in the applicable
implementation plan are not required to meet the increment requirements
for PM10, but could instead satisfy the increment requirements for TSP
that were previously in effect.  Also, 40 CFR 52.21(i)(9) provides that
sources or modifications that submitted a complete permit application
before the provisions embodying the maximum allowable increase for
nitrogen oxides (NOx) took effect, but did not yet receive a final and
effective PSD permit, are not required to demonstrate compliance with
the new increment requirements to be eligible to receive the permit.

	Under the particular circumstances presented by the forthcoming
application of PSD requirements to GHGs, EPA does not see a
justification for adopting an explicit grandfathering provision of the
nature described above.  Permit applications submitted prior to the
publication of this notice should in most cases be issued prior to
January 2, 2011 and, thus, effectively have a transition period of nine
months to complete processing before PSD requirements become applicable.
 Additional time for completion of action on applications submitted
prior to the onset of PSD requirements for GHGs therefore does not
appear warranted to ensure a smooth transition and avoid delays for
pending applications.  To the extent any pending permit review cannot
otherwise be completed within the next nine 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 any additional delay to permit processing.  

Furthermore, the circumstances surrounding the onset of requirements for
GHGs are distinguishable from prior situations where EPA has allowed
grandfathering of applications that were deemed complete prior to the
applicability new PSD permitting requirements.  First, this action and
the PSD Interpretive Memo do not involve a revision of the PSD
permitting regulations but rather involves clarifications of how EPA
interprets the existing regulatory text.  This action articulates what
has, in most respects, been EPA’s longstanding practice.  It has been
EPA’s consistent position since 1978 that regulation of a pollutant
under Title II triggers PSD requirements for such a pollutant.  See 42
FR 57481.  Thus, permitting authorities and permit applicants could
reasonably anticipate that completion of the LDV Rule would trigger PSD
and prepare for this action.  Many commenters interpreted EPA’s
October 7, 2009 notice as proposing to trigger PSD requirements within
60 days of the promulgation of the LDV Rule rather than the January 2,
2011 date that EPA has determined to be the date the controls in that
rule take effect.  Second, there are presently no regulatory
requirements in effect for GHGs.  On the other hand, at the time EPA
moved from using TSP to using PM10 as the indicator for the particulate
matter NAAQS, grandfathered sources were still required to satisfy PSD
requirements for particulate matter based on the TSP indicator. 
Likewise, when EPA later updated the PSD increment for particulate
matter to use the PM10 indicator, the grandfathered sources were still
required to demonstrate that they would not cause or contribute to a
violation of the particulate matter increment based on TSP.  In the case
of the adoption of the NO2 increment, grandfathered sources were still
required to demonstrate that they would not cause or contribute to a
violation of the NO2 NAAQS.  In contrast, for GHGs, there are no
measures currently in effect that serve to limit emission of GHGs from
stationary sources.

For these reasons, EPA does not intend to promulgate a transition or
grandfathering provision that exempts pending permit applications from
the onset of GHG requirements in the PSD program.  As discussed above,
in the absence of such a provision, PSD permits that are issued on or
after January 2, 2011 (in accordance with limitations promulgated in the
upcoming Tailoring Rule) will be required to contain provisions that
fulfill the applicable program requirements for GHGs.

In addition, to the extent commenters are raising specific applicability
and implementation issues regarding PSD requirements for GHGs, as
discussed in section 9.3.2, EPA is currently working to develop general
guidance on key PSD-GHG issues and will continue to develop guidance as
necessary to address issues that arise from inquiries by permitting
authorities and the regulated community.  

9.6.   Potential Retroactive Liability

	Comment:

	

	Nine industry commenters (0067, 0080, 0083, 0089, 0090, 0096,
0106/0107, 0108, 0109) raise the possibility of retroactive liability
under the alternative interpretations other than the actual control
interpretation.  

	

	Specifically, eight of the industry commenters (0067, 0083, 0089, 0090,
0096, 0106/0107, 0108, 0109) indicate that the monitoring and reporting
interpretation (and the other alternative interpretations) could
unfairly result in retroactive liability.  The commenters note that if
CO2 were “subject to regulation” based on EPA’s 1993 regulations
implementing section 821, any source of GHG emissions at or above the
statutory PSD threshold of 100 to 250 tons per year that underwent
construction or a major modification since that time might theoretically
(putting aside the statute of limitations) be considered in violation of
PSD requirements.  The commenters state that this is not mere
conjecture; environmental advocacy groups filed one citizen suit
alleging this exact sort of violation.  See Sierra Club v. Otter Tail
Power Corp., CIV 08-1012 (D.S.D., filed June 10, 2008), Complaint at
¶¶ 92-96.  (The case was dismissed on other grounds, 608 F. Supp. 2d
1120 (D. S.D. 2009), and has been appealed by plaintiffs, see No.
09-2862 (8th Cir., filed Aug. 10, 2009).) 

	

	The other industry commenter (0080) notes that the proposed Tailoring
Rule is not retroactive and asked whether a ruling in favor of the
Petitioners would mean that any source that undertook activity after
passage of the 1990 CAA Amendments that made it a new or modified major
source for CO2 (under the statutory definition) is in violation of the
CAA because it did not apply for a PSD permit.  The commenter (0080)
notes that a very large number of sources could be at risk.

	

	Response:

	

Given that EPA is finalizing an interpretation in which GHG emissions
would not be “subject to regulation” for the purposes of PSD until
the specific GHG emission control requirements in the final LDV Rule
take effect, there is not an issue of retroactivity that is raised by
this final action.

9.7.   Clean Air Act Is Poorly Suited to Greenhouse Gas Regulation

	

Comment:  

	

Sixteen industry and commerce commenters (0061, 0066, 0067, 0071, 0073,
0074, 0081, 0085, 0097, 0100, 0102, 0104, 0105, 0115, 0116, 0117) and
one legal commenter (0084) believe that the CAA is poorly suited to GHG
regulation.

	

One industry group (0085) believes that comprehensive climate
legislation is far preferable to using the existing CAA case-by-case
permitting programs to address GHG emissions because these permitting
programs are resource-intensive for both regulated entities and
regulators.  The industry group (0085) states that, in an arena in which
efficiency is the key to reducing impacts, the case-by-case nature of
the Prevention of Significant Deterioration (PSD) and title V programs
indicates that they are perhaps the least efficient mechanisms to
mitigate the effects of climate change.

One legal commenter (0084) believes that the CAA was not designed (and
is poorly equipped) to accommodate the regulation of GHGs, and that it
is incumbent on Congress, not EPA, to craft original legislation.  The
commenter (0084) urges EPA to halt issuance of all new regulations
pertaining to GHGs, and argues that this reconsideration action will
somehow shield EPA from litigation regarding its other GHG regulations
(i.e., Endangerment Finding, GHG Motor Vehicle Rule, and Tailoring
Rule).

Commenter (0086) added that national and international issues related to
GHGs should be settled in a comprehensive legislative or administrative
proceeding, not through individual permitting decisions.  

One   SEQ CHAPTER \h \r 1 commenter (0104) strongly disagrees that the
CAA is the appropriate mechanism to regulate GHGs and adamantly oppose
the regulation of GHG emissions under the PSD program or any other
federal permitting program authorized under the CAA. 

	

  SEQ CHAPTER \h \r 1 An industry commenter (0105), referring to its
comments to EPA relative to its Advanced Notice of Proposed Rulemaking
(ANPR) for regulating GHGs under the CAA, believes that the CAA is
clearly unsuitable for reducing GHGs, and that the best approach to
address climate change is new legislation for a market-driven program to
reduce GHGs, and that a cap and trade program must be carefully designed
to avoid disproportionate impacts on the manufacturing sector in
general, and the chemical sector in particular. 

	

One  SEQ CHAPTER \h \r 1  commenter (0116) believes that (if EPA
regulates GHG emissions under the PSD or title V programs) many existing
facilities will need new title V or PSD permits to replace, repair or
improve the efficiency of aging equipment, including energy efficiency
projects, and that permitting delays will force facilities to evaluate
the possibility of shutting down domestic operations and relocating to
beyond the U.S. borders.  Furthermore, small businesses, such as asphalt
and concrete batch plants, metals manufacturing, the remaining textile
industry, food packaging, wood products, even hospitals will be subject
to many more requirements than they currently are (not just GHGs but
also all other new source review [NSR] pollutants), and it will be
significantly more costly for them to receive a permit and they will
experience significant permit delays, discontinued construction and loss
of jobs.  The commenter predicts that the permitting process will grind
economic development and industrial growth to a halt causing adverse
consequences to an already struggling economy.

	

One industry group (0061) comment letter expresses that the CAA is
flawed and new national legislation is the best mechanism for GHGs. 
They assert that regulation under the CAA has historically focused on
control of criteria and hazardous air pollutants (HAP) to address local
or regional human health, welfare and environmental impacts.  The
architecture of the CAA is thus premised on the concept that state,
regional and federal control of emissions will improve air quality in
the corresponding area.  The GHG effect is global – and localized
emissions reduction will not result in environmental benefits to the
U.S. in absence of corresponding international action.

	

One commerce commenter (0074) expresses belief that EPA has ignored
options to avoid a regulatory cascade through piecemeal regulation of
GHGs under the CAA.  They state that they suggested that EPA not
undertake an endangerment finding; suggested that EPA use a combination
of corporate average fuel economy (CAFE) standards and title VI of the
CAA in its response to the Light Duty Vehicle Rule (LDVR) proposal; and
suggested potential approaches to regulation under section 115 of the
CAA, as well as the “no PSD without a National Ambient Air Quality
Standards (NAAQS)” and “GHGs are not subject to regulation”
approaches in these comments.  The commenter requests that EPA avoid the
CAA’s regulatory cascade and instead allow Congress to craft
comprehensive climate legislation.  This commenter provides copies of
comment letters submitted to EPA from the other EPA GHG-related
rulemakings.

	

One industry commenter (0097) believes that first and foremost, the CAA
in its current form was not designed to regulate GHGs, including CO2,
for various reasons.  This commenter argues that consequently, national
legislation is the best mechanism for regulating GHGs, including CO2,
because “absurd results” can be avoided and concerns addressed in a
fashion that provides the most certainty that the regulations can move
forward in a fashion which can be defended in the judicial process. 
This commenter believes that this is properly the work of Congress
through comprehensive market-based climate legislation, although the
commenter recognizes that the Supreme Court’s decision in
Massachusetts v. EPA may require the Agency to commence regulatory
action for CO2 in absence of, or in the face of delayed, Congressional
action.

	

One state agency commenter (0102) states that the CAA is not an
appropriate vehicle for the regulation of GHGs and that such regulation
will result in significant impacts on the economy without measurable
environmental benefits.  The commenter (0102) notes that the
endangerment finding and subsequent proposals of the PSD Interpretation,
the GHG mobile sources regulations, and the Tailoring Rule
interconnected, and asserted that the piecemeal GHG proposals prevent
adequate opportunity to evaluate and effectively comment on the
proposals.  The commenter (0102) states that EPA should withdraw all the
GHG proposals.

	

Commenters (0092, 0098) representing several groups of companies state
that, with regard to all of EPA’s recent GHG rulemakings under the
CAA, the Agency should proceed with caution going forward by allowing
both the international community and Congress time to develop a
comprehensive and sensible approach to the global problem of climate
change.

Response:

Regardless of whether the CAA is the preferred mechanism for GHG
regulation, the U.S. Supreme Court determined that GHGs fit within the
definition of air pollutant in the Act and directed EPA to take actions
in accordance with that determination.  EPA is responding to the
Court’s decision by following the statutory requirements of the CAA. 
Accordingly, EPA finalized its endangerment and cause and contribute
findings for GHGs under section 202(a) of the CAA and proposed
corresponding GHG controls for light duty vehicles.  As explained in
various responses above, a final vehicle rule will trigger PSD
requirements for GHGs.  Thus, EPA is taking appropriate action in this
reconsideration and the proposed Tailoring Rule to ensure a common sense
and efficient approach to GHG regulation.  This reconsideration action
is not the appropriate forum for addressing whether the CAA is suited to
GHG regulation or opining on potential Congressional action with regard
to GHG regulation. 

9.8.   Arguments That PSD Cannot Apply to Pollutants Regulated Only
Under Title II of Clean Air Act

	

Comment:  

Twenty-six industry and commerce commenters (0051, 0053, 0056, 0060,
0061, 0066, 0067, 0068, 0069, 0071, 0072, 0073, 0074/0075, 0076, 0085,
0086, 0088, 0092, 0093, 0096, 0098, 100, 0104, 0106/0107, 0111, 0118)
opine that a GHG NAAQS is a prerequisite for PSD to be triggered based
solely on emissions of GHGs and EPA must interpret the CAA and PSD
regulations consistent with this requirement.

One commenter (0086), representing several groups of companies, believes
that the PSD Interpretive Memorandum and the Reconsideration Proposal
reflect a major oversight on EPA’s part in that EPA has been focused
on whether the phrase “subject to regulation” in section 165(a)
refers only to actual control, concluding in the end that it does and
then merely assuming, without analysis, that the “any pollutant”
component of the total phrase “any pollutant subject to regulation”
has no bounds and therefore potentially includes GHGs.  However, the
commenter believes that the 100/250 TPY thresholds in the statute must
have some meaning, as EPA has recognized, because they are an integral
part of the statutory fabric, and they cannot be reconciled
programmatically with an unbounded reading of “any pollutant subject
to regulation.”  The commenter states that, while EPA has chosen to
try to weave new thresholds into that fabric specifically for GHGs, it
has ignored the possibility that the 100/250 TPY thresholds actually
signal that the 95th Congress intended applicability of the section
165(a) PSD program to be based on conventional pollutants, and that the
95th Congress did not mean to authorize EPA to base section 165(a) PSD
applicability on GHG emissions.  The commenter urges EPA, at a minimum,
to address that probability through a detailed and thoughtful legal
analysis, because without such an analysis, any final decision to base
PSD on GHG emissions can have no legitimacy.  The commenter states that
if EPA fails to adopt the interpretation that PSD intended only to apply
to conventional pollutants, its PSD Interpretive Memorandum, along with
the LDV rule, will be arbitrary and capricious for failure to adequately
consider their consequences.  The commenter (0086) adds that failure to
account for the PSD and title V implications of EPA’s actions also
violates the Regulatory Flexibility Act (RFA), the Unfunded Mandates Act
(UMA), and the Paperwork Reduction Act (PRA).

  SEQ CHAPTER \h \r 1 According to one commenter (0094) representing an
industry trade association, EPA’s reconsideration proposal does not
reflect the robust legal analysis required to support an interpretation
with such far-reaching legal, policy, technical and economic
consequences.  The commenter notes that the proposal begins with the
starting premise that the phrase in section 165(a)(4) -- “subject to
regulation under this Act” -- operates as an independent and powerful
PSD permitting trigger.  According to the commenter, the proposal rests
on the proposition that treating this phrase as a permitting trigger
accords with longstanding Agency practice, but the Deseret case found
otherwise, and besides, longstanding Agency practice alone cannot
provide sufficient legal basis for the interpretation.  This commenter
contends that the reconsideration proposal offers no evidence to
indicate that U.S. EPA, in arriving at the interpretation, evaluated any
of the following:

(1)  The entire statutory provision at issue in the context of the CAA
and with reference to its legislative and regulatory history;

(2)  A potentially more appropriate triggering phrase -- “in any area
to which this part applies” -- at the beginning of section 165(a); and

(3)  Other potential meanings of the “subject to regulation under this
Act” phrase in section 165(a)(4), including based upon comparison to
other provisions with similar scope and status to section 165(a)(4) --
i.e., sections 165(a) (1), (2), (3), (5), (6), (7) and (8).  The
commenter claims that the absence of such evaluation is material, and
concludes that the Reconsideration Proposal, therefore, does not satisfy
the Agency’s obligation for rational, fully reasoned and explained
analysis.

One industry   SEQ CHAPTER \h \r 1 commenter (0100) claims that
adherence to the statute will save everyone a lot of trouble.  The
commenter, referring to the Tailoring Rule proposal, states that EPA
leans most heavily on Alabama Power to support its claim of authority to
adjust the statute out of “impossibility” or “administrative
necessity,” but asserts that this case instructs EPA not to do exactly
what it proposes to do with the regulation of GHGs.  According to the
commenter, what Alabama Power tells us is that EPA cannot create its own
“administrative necessity” by ignoring one provision of the CAA, and
then solve that manufactured necessity by ignoring another.  Commenter
cites resolution of the  “potential to emit” issue in Alabama Power,
and EPA’s attempt (then) to exempt from PSD review any source with
actual (controlled) emissions below 50 tons over year.  Commenter claims
that this attempt at a tailoring rule ignored the very same specific
100/250 ton-per-year thresholds set by statute and was an
‘expansion’ of the limited exemption provided in section 165(b) of
the Act.  Further, commenter argues that EPA tried to defend its
tailoring of the PSD thresholds in 1979 the same way it now tries 30
years later, claiming that EPA’s present plans with respect to CAA
regulation of GHG are little different from those found defective and
remanded in Alabama Power in that EPA intends to (1) manufacture CAA
overbreadth in direct violation of CAA language, structure, and
legislative history, in this case by declaring GHGs to be an air
pollutant that endangers public health and welfare, (2) adopt rules to
limit such emissions from mobile sources, and (3) in this Docket,
conclude that these limits on mobile source emissions instantly trigger
air permitting requirements for stationary sources.

This industry   SEQ CHAPTER \h \r 1 commenter (0100) argues that EPA
should decide to leave GHGs out of the PSD program (at least before
completing the process required by section 166) and states that such a
decision would not only comport with the law, but with good policy in
that the currently proposed decisions do not reflect a policy that a
rational legislature would have intended (e.g., it makes no sense to
have a pollutant regulated for one purpose, from one category of
sources, under one section of the statute, based on one set of findings,
to cause that pollutant automatically to become regulated for an
entirely different purpose, from a wholly separate category of sources,
under a totally different regulatory scheme.

	

This industry commenter (0100) states that proper “tailoring” could
be undertaken in the design of a future PSD program for GHGs.  In
support, this commenter states that Congress left EPA relatively free to
fashion — by rule — a sensible PSD program for those unknown future
pollutants and, consequently, EPA — in the event EPA could justify and
promulgate a NAAQS for GHGs — has the freedom to craft a PSD program
appropriate to GHGs.  Section 166(c) tells EPA that it may choose some
other means of technology-forcing appropriate to GHGs.  Further,
commenter points out that section 166(e) also would be handy in that
unlikely future, as it leaves EPA without the obligation to undertake
any geographical classifications that are rather pointless for GHGs and
that EPA arguably even could set the permitting thresholds at a sensible
level, as section 166(c) allows.  The commenter claims that EPA proceeds
at odds with the statute with any rule that declares GHGs “subject to
regulation” under Part C by any means other than the one prescribed in
section 166.  

The commenter (0100) argues that the proper interpretation of Part C (if
followed by EPA as commenter claims it must) allows for orderly
administration respectful of the State Implementation Planning process,
and that another major advantage of complying with the statute is that
it allows for orderly implementation.  SEQ CHAPTER \h \r 1 

  SEQ CHAPTER \h \r 1 The commenter (0100) asserts that EPA’s request
for comments posits only a very limited range of possibilities, asking
narrowly and only about the meaning of the section 165(a)(4) phrase,
“subject to regulation,” and then suggesting a range of nuances in
that phrase having to do with whether the pollutant is regulated by
monitoring, by constituent, or by numeric limit, and whether by the date
of adoption of the limit or its effective date.  This commenter points
out that section 165(a)(4) is but one sub-subsection of an entire part
of the CAA, “Prevention of Significant Deterioration of Air Quality,
“ states that the entirety of the statute should be examined to find a
sensible interpretation that gives full effect to the purpose of the
Act, to each of its provisions, and avoids “absurd results.”

	

The commenter (0100) asserts that the “absurd results” documented in
the proposed Tailoring Rule establish that Congress did not intent for
GHG to be regulated under Part C.  The commenter notes that EPA makes
quite clear its intent to ignore clear statutory thresholds and state
prerogatives in the implementation of the PSD program, all out of a
claimed need to avoid the “absurd results” and impossible burdens
befalling the PSD program as a result of EPA’s choice to invite GHGs
into it, overnight.  The commenter suggests that EPA’s view is
incorrect, and that the statute — at section 166 — prescribes a very
different, longer and more thoughtful path to possible regulation of
GHGs under the PSD program.  Further, the commenter contends that the
statute does not compel the “absurd results” that cause EPA to
propose rules that violate the statute.  The commenter notes that the
phrase “subject to regulation” appears in the subsection of section
165 that enumerates the criteria for review and issuance of PSD permits,
notes that section appears in a Part of the Act enacted in 1977 to
prevent significant deterioration of air quality, and so claims that the
meaning of that one subsection should be understood in the context in
which it was adopted.  The commenter states that the PSD provisions were
enacted to address a limited number of criteria pollutants – those
“subject to regulation” to regulation in 1977 – certainly not
including “greenhouse gases.”

The   SEQ CHAPTER \h \r 1 commenter (0100), based on their review of the
PSD program (Part C of Title I) statute and legislative history,
contends that everything about Part C was drafted with the intention of
governing emissions of the criteria pollutants regulated at the time of
enactment (in 1977) and that nothing about Part C suggests an intent to
apply PSD to anything other than criteria pollutants, or to pollutants
that might be regulated in the future, after enactment.  Commenter notes
that the PSD program was established in 1977 as reaction to concerns
about the possibility that areas cleaner than the national ambient air
quality standards might be allowed to degrade to bare compliance with
those standards.  The PSD provisions of the CAA establish in detail the
requirements for EPA to establish the maximum amount of degradation
allowed from “baseline” air quality relative to the existing NAAQS,
at least for two out of the six criteria pollutants, sulfur dioxide and
particulate matter.  Commenter also observes that Part C is extremely
prescriptive, not only in its quantification of allowable deterioration
of the two covered pollutants (the “increments”), but also in its
designation of geographic areas of applicability, and its special
concern for national parks and visibility, and notes one criteria for
issuance of a required permit is the imposition of BACT for “each
pollutant subject to regulation.”  The commenter also points out that
throughout Part C, it completely relies on state implementation.  To
this commenter it is no surprise that none of the Part C provisions make
any sense as applied to emissions of GHG, especially for the purpose of
regulating those emissions so as to minimize a trace, natural, uniformly
distributed constituent of clean air presumed to be associated with
modulating global temperatures.  The commenter provides a review of
sections 161 through 172 to support the contention that everything about
Part C was drafted with the intention of governing emissions of the
criteria pollutants regulated at the time of enactment, with detailed
instructions on SO2 and PM, and generalized instructions to adapt a PSD
program for the others of the time (hydrocarbons, carbon monoxide,
photochemical oxidants, and nitrogen oxides) and that nothing about Part
C suggests an intent to apply PSD to anything other than criteria
pollutants, or to pollutants that might be regulated in the future,
after enactment.

  SEQ CHAPTER \h \r 1 Further, the commenter (0100) claims that before
EPA can add a new pollutant subject to review under Part C, it must
undertake a rulemaking to create a PSD program appropriate to that
pollutant.  

The commenter (0100) further contends that EPA’s pending proposals to
sweep GHGs into the PSD program on the day of its regulation under
section 202(a) of the CAA could not more clearly violate Congress’
instructions on how to handle “other pollutants” under Part C: 
Section 166(a) limits PSD to new criteria pollutants, and, as to those,
it requires rules specific to that new pollutant to be developed within
two years after adopting its NAAQS.  

One   SEQ CHAPTER \h \r 1 commenter (0104) representing industry states
that they support EPA’s “actual control alternative,” but that, in
addition, the PSD Interpretive Memo should be amended to clarify that
the process for PSD regulation under the “actual control”
interpretation must include a determination that a pollutant is a
criteria pollutant and the establishment of corresponding NAAQS.  The
commenter further states that that only criteria pollutants with an
established NAAQS are subject to PSD, and in cases where there is no
NAAQS for a pollutant, PSD is not triggered because there is no
“attainment” or “unclassifiable” determination to be made.  The
commenter believes that regulation of any pollutant under the PSD
program without first determining that the pollutant is a criteria
pollutant and establishing a corresponding NAAQS would be a violation of
the rule of law as outlined in the CAA.  In the alternative, the
commenter urges EPA to revise the memo to make it clear that GHGs are
not pollutants “subject to regulation” under the PSD permitting
program. 

One commenter (0111) states that the CAA limits PSD applicability for
GHGs to (1) areas designated as attainment or unclassifiable under a GHG
NAAQS or (2) sources that require a PSD permit based on emissions of a
criteria pollutant that also will experience a significant increase in
GHG emissions.  According to the commenter, a NAAQS for GHGs is
necessary for PSD to be triggered solely on the basis of a source’s
GHG emissions (i.e., for GHGs emitted from otherwise minor sources, or
for significant increases of GHGs from major sources that are not
otherwise experiencing a significant increase of a NAAQS pollutant for
which the area is designated attainment or unclassifiable). 
Importantly, CAA sections 161 and 165 precondition applicability of the
PSD program to those areas designated as attainment or unclassifiable
under section 107.  Section 161 provides that EPA is to promulgate
regulations “to prevent significant deterioration of air quality in
each region . . . designated pursuant to section 107 [NAAQS
designations] as attainment or unclassifiable.”  Section 165(a)
prohibits construction of a major emitting facility “in any area to
which this part applies” unless the PSD permit requirements are met. 
National Ambient Air Quality Standard designations are made on a
pollutant-by-pollutant basis.  The applicability of the PSD program in a
given area must be based on the attainment status of the area for the
pollutant in question.  If there is no NAAQS, there can be no attainment
status and therefore the fact that a source has major emissions of a
non-NAAQS pollutant does not make it a PSD major source.

	

	The commenter (0111) argues that the existence of section 166 supports
the conclusion that the applicability of PSD under the CAA is based on
the existence of a NAAQS for the pollutant in question.  This section
requires EPA to develop PSD regulations within two years of establishing
a new NAAQS.  Under section 166, EPA is also required to approve plan
revisions for the new regulations within 25 months after EPA promulgates
applicable rules.  Thus, under Section 166, PSD is triggered by adoption
of a NAAQS, not by a pollutant becoming subject to regulation. Through
this section, Congress recognized the need for a mechanism for
incorporating new pollutants into the PSD program.  This more reasonable
approach to regulation can be compared to EPA’s interpretation that
BACT for GHGs would be determined under section 165(a)(4) without
reference to any standard for calculating the impact of GHGs on local
air quality.  The existence of both sections 166 and 165 of the CAA
strongly suggests that PSD applicability is not “triggered” by a new
pollutant becoming “subject to regulation” under the CAA.  Rather,
the more reasonable interpretation of both these provisions suggests
that PSD is only applicable after the establishment of a new NAAQS
pursuant to sections 108 and 109 of the CAA and the designation of new
areas for that NAAQS under section 107.

	

	The commenter (0111) continues that the only part of the PSD statutory
scheme that imposes requirements broadly on pollutants “subject to
regulation” is the requirement for BACT.  Thus, if a source makes a
modification that increases emissions significantly of a NAAQS
pollutant, all pollutants “subject to regulation” must be
controlled.  Those facilities that trigger PSD for a non-GHG NAAQS
pollutant would also have to consider BACT for GHGs if a significant
increase in GHG emissions occurs.  However, if a major source does not
have a significant increase of a NAAQS pollutant in an area designated
attainment or unclassifiable, nothing in the statute requires the source
to be subject to the significance levels for non-NAAQS pollutants.

	

One industry commenter (0085) states that EPA is incorrect in assuming
that that the section 202 rule will automatically trigger PSD permitting
for sources solely based on their emissions of GHGs.  The commenter
believes that the text of the statute is more naturally read to limit
PSD applicability to sources that are major for a NAAQS pollutant only
and, then, within that group, to those projects that result in a
significant net emissions increase of a NAAQS pollutant – only when
PSD is triggered by a major NAAQS pollutant source for a NAAQS pollutant
would the statute impose BACT on pollutants “subject to regulation.”
 The commenter indicates that EPA’s approach is inconsistent with the
statutory and regulatory language because it completely bypasses the
core applicability provisions and renders their inclusion in the statute
superfluous.  The commenter argues that sections 161 and 165(a) of the
CAA limit PSD applicability based on the location of the source and case
law confirms this limitation, as follows:

The text of sections 161 and 165(a) plainly limits application of PSD to
certain areas – those designated attainment or unclassifiable pursuant
to section 107 of the CAA, which applies only to NAAQS pollutants.  It
is only section 165(a)(4) – defining the pollutants subject to BACT
once PSD permitting is already required – that uses the phrase
“pollutants subject to regulation.”

This plain language reading is also consistent with the holding in
Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979), where the
court found that location is the key determinant for PSD applicability
and rejected EPA’s contention that PSD should apply in all areas of
the country, regardless of attainment status.

The EPA gave this ruling only grudging effect by an interpretation of
PSD requirements in the preamble to the 1980 PSD regulations.  45 FR
52675, 52,676 (Aug. 7, 1980).  The 1980 preamble stated that PSD
requirements still apply to any area that is “designated . . . as
‘attainment’ or ‘unclassifiable’ for any pollutant for which a
national ambient air quality standard exists.”  

This interpretation of the “location-limiting language” of the
statute results in no limitation at all since every area of the country
is and always has been in attainment with at least one criteria
pollutant.  Congress must be presumed to have been aware of this fact
when it enacted the PSD provisions, making EPA’s construction
inconsistent with canons of statutory construction requiring all words
in the statute to be given meaning.

While this reading was inconsistent with the CAA, industry had no reason
at the time to challenge it.  There were very few regulated pollutants
that were not subject to NAAQS at that time and even for those, it was
unlikely that those pollutants would be the sole reason that a PSD
permit would be required.

Now, with EPA’s decision to regulate GHGs, this interpretation could
trigger a host of results that contravene congressional intent.  The EPA
has itself recognized that the practical result of the 1980
interpretation is not desirable, specifically soliciting comment on an
approach in which BACT would be applied to GHGs only in those cases
where PSD permits are otherwise required for a source.  See Proposed
Tailoring Rule, 74 FR 55327.

The EPA can only rely on the “administrative necessity” rationale in
its proposed PSD Tailoring Rule so long as it is strictly necessary to
avoid absurd consequences that result from “the literal application of
a statute.”  United States v. Ron Pair Enterprises, 489 U.S. 235, 242
(1989).  Here the “absurd results” are not driven by the statute,
but rather by an EPA interpretation that is not consonant with the
statutory language.  Where a statute can be interpreted to avoid
“absurd results,” it must be so interpreted rather than relying on
judicially created exceptions.  (Numerous citations given.)

Accordingly, to give effect to unambiguous terms of the statute (and
regulations), EPA cannot require a source to undergo PSD permitting
solely on the basis of emissions of a pollutant for which there is no
NAAQS.  Chevron, U.S.A. v. NRDC, 467 U.S. 837, 842 (1984) (agency must
give effect to the unambiguously expressed intent of Congress).

	The industry commenter (0085) adds that EPA can implement the
interpretation advocated above without changing its regulations because
40 CFR 52.21(a)(2) includes the location limitation of the statutory
provisions and EPA’s historic interpretation is contained only the
preamble to the 1980 PSD rules.  The commenter (0085) believes that all
that is necessary is for EPA to announce its new interpretation in the
Federal Register, which is sufficient because it is a logical outgrowth
of the request for comments on this issue (in this action and in the
companion GHG proposals) and the comments received. 

One industry commenter (0118) states that the PSD program only applies
to those pollutants for which EPA has promulgated a NAAQS, not to all
pollutants “subject to regulation” under the CAA.  Citing the
language of sections 161 and 165 of the Act, the commenter argues that
the Act limits applicability of the PSD program to new and existing
major sources that trigger PSD for NAAQS pollutants in areas designated
as “attainment” or “unclassifiable.”  Thus, the commenter
believes that a change resulting in a significant increase of a
non-NAAQS pollutant (such as GHGs) that does not trigger PSD for a NAAQS
pollutant is not subject to PSD preconstruction requirements.

	The industry commenter (0118) notes that, in its 1979 PSD regulations,
EPA initially interpreted part C of title I of the Act to require PSD
permitting for nonattainment pollutants, but the Court rejected this
interpretation in Alabama Power.  The commenter further explained that,
in the 1980 PSD regulations, EPA excluded nonattainment pollutants from
PSD but took the position that PSD applies to any regulated pollutant
(other than a nonattainment pollutant) as long as an area is attainment
or unclassifiable for any pollutant.  The commenter (0118) urges EPA to
reinterpret the PSD regulations to be consistent with the Court’s
decision and rule that PSD applies only to major new or existing sources
that trigger PSD for a NAAQS pollutant in an attainment or
unclassifiable area.

	

	The industry commenter (0118) concedes that under section 164(a)(4) of
the CAA, if a major source or major modification is subject to PSD for a
NAAQS pollutant, BACT is to be installed to control emissions of all
pollutants “subject to regulation” under the Act.  Thus, the
commenter states that even though the full range of PSD requirements do
not apply to a non-NAAQS pollutant “subject to regulation” under the
Act, BACT is required for such a pollutant when the construction is
otherwise subject to the PSD preconstruction requirements.  The
commenter notes that by so interpreting the CAA, the regulation of
non-NAAQS pollutants will not increase the number of PSD permits that
will be required, which alleviates greatly one of the “absurd
results” that the proposed Tailoring Rule is intends to address. 
However, the commenter believes that the BACT requirement for those
sources that do require PSD permits would still be an enormous burden. 
Also, the commenter (0118) notes that this changed interpretation of PSD
applicability would not affect the applicability of title V permitting
to the approximately 6.1 million sources of GHGs estimated by EPA.

Three industry commenters (0069, 0096, 0106/0107) contend that, based on
the language of sections 161 and 165(a), the CAA only applies PSD review
for pollutants that have the potential to result in deterioration of air
quality in an area that meets a NAAQS or is undesignated.  One commenter
(0107) adds that if applicable at all, the only possible interpretation
of the applicability of PSD would be limited to situations when criteria
pollutants or their precursors might cause significant deterioration of
air quality and BACT would apply to other pollutants “subject to
regulation” if a significant increase would be projected to result
from the project.  On this basis, one commenter (0107) asserts that
EPA’s intent to regulate GHGs under the PSD program by requiring PSD
review and permitting of new “major” GHG emitting facilities and
“major modifications” of major GHG emitting facilities based on GHG
emission increases alone violates Title I of the CAA.  Commenter (0096)
also states that PSD rules apply only to pollutants for which a NAAQS
exist and certainly not to a Title II motor vehicle standard for which
there is no NAAQS.

	

Commenters (0092, 0098) representing several groups of companies
(industry) contend that the plain language of the CAA and EPA’s
corresponding regulations condition PSD applicability in the first
instance on emissions of a pollutant for which there is a NAAQS.  The
commenters state that EPA should correct this error and state that
whether a pollutant is “subject to regulation” is relevant only to
whether a source that is subject to PSD requirements for a
NAAQS-pollutant must install BACT for other pollutants.  Alternatively,
the commenters recommend that EPA exercise its discretion by
interpreting “subject to regulation” to exclude CAA section 202
regulation of GHG emissions from motor vehicles.  The commenters contend
that Alabama v. Costle supports the NAAQS prerequisite interpretation of
the CAA, and that EPA’s response to this decision misinterpreted the
Court’s opinion.  The commenters further claim that even if the
statutory language were ambiguous, EPA could not apply PSD to GHGs,
because such an interpretation does not represent a reasonable balancing
of the goals Congress established for the PSD program, and the “absurd
results” of EPA’s proffered interpretation show that the language
must be interpreted to require a GHG NAAQS before GHGs can be the sole
trigger for PSD.  The commenters add that to the extent EPA applies the
“absurd results” doctrine to support the PSD Tailoring Rule, the
Agency’s approach is inconsistent with the law because it applies PSD
to GHGs notwithstanding the absurdity of doing so.  

	

One commerce commenter (0074) states that revising the PSD Interpretive
Memo to state that PSD is not triggered without a NAAQS would be
consistent with the plain meaning of sections 161 and 165 of the CAA,
section 52.52 of the regulations, and the holding in Alabama Power Co.
v. Costle (where the court found that location is the key determinant
for PSD applicability and rejected EPA’s contention that PSD should
apply in all areas of the country, regardless of attainment status). 
CAA sections 161 and 165 precondition applicability of the PSD program
to those areas designated as attainment or unclassifiable under section
107 for a NAAQS.  This and other commenters opine that PSD permitting
requirements can only be triggered in the first instance by pollutants
for which there is a NAAQS.  Section 52.21(a)(2) of the regulations
provides “applicability procedures” for PSD, stating that PSD
applies to “the construction of any new major stationary source (as
defined in paragraph (b)(1) of this section) or any project at an
existing major stationary source in an area designated as attainment or
unclassifiable under sections 107(d)(1)(A)(ii) or (iii) of the Act.” 
It is only in defining and requiring BACT that the statute imposes
requirements on pollutants “subject to regulation.”  The commenter
opines that nothing in the statute or regulations requires a source that
is major to be subject to the significance levels for non-NAAQS
pollutants if there is no significant increase of a NAAQS pollutant for
which the source is designated attainment or unclassifiable.

One industry group commenter (0066) requests that EPA revise the
interpretive memo to clarify that PSD is limited to criteria pollutants
for which a NAAQS has been set.

Two commenters (0051, 0053) request that EPA interpret PSD applicability
provisions of the statute and regulations to avoid triggering PSD for
the vast majority of sources rather than relying on the “absurd
results” and “administrative necessity” doctrines to rewrite
statutory thresholds.  This commenter states that the GHG-PSD problem is
created by interpreting the statute and regulations to require that PSD
applicability as being dictated solely through the phrase “subject to
regulation.”  Prior to resorting to the “administrative necessity”
and “absurd results” doctrines to rewrite statutory thresholds, they
opine that EPA is obliged to consider statutory interpretations that
eliminate the GHG-PSD problem.  The statute does not state that PSD
applies to all pollutants subject to regulation; the statute only
requires BACT apply to all pollutants subject to regulation fro sources
that trigger PSD.  Under the suggested interpretation, sources and
modifications will not be classified as major requiring a PSD permit
based on GHG emissions unless: (1) EPA issues a NAAQS for GHGs; or (2) a
facility is already major for traditional pollutants triggers PSD for a
non-GHG pollutant (e.g., for ozone (O3, SO2)(and the facility
experiences a significant GHG emissions increase).  Under this approach,
GHG emissions would still be regulated.  Any new or existing source that
triggers PSD for a non-GHG pollutant will also be subject to BACT, if
the source also experiences a significant GHG emission increase.  This
would limit the number of PSD permits and BACT determinations for GHGs
to larger sources that trigger PSD for other pollutants.  Nothing in the
statute requires a source that is major to be subject to significance
levels for non-NAAQS pollutants if there is no significant increase of a
NAAQS pollutant for which the area is designated attaining in the
statute requires a source that is major to be subject to significance
levels for non-NAAQS pollutants if there is no significant increase of a
NAAQS pollutant for which the area is designated attainment or
unclassifiable.  The commenter asserts that there are no “absurd
results” under their suggested NAAQS prerequisite approach, and it is
consistent with Alabama Power v. Costle.

One industry commenter (0068) states that based on the requirements
outlined in the statute regarding the applicability of PSD and the
decision in Alabama Power, PSD would not be triggered solely on the
basis of GHG emissions.  The commenter opines that such an approach
would prevent the EPA from having to rely on the “administrative
necessity” and “absurd results” legal doctrines which are
exceptions to a statutory mandate as fewer sources would be subject to
permit requirements and states would not be forced to handle massive
increases in the number of PSD permits and could still require BACT in
PSD permits that are triggered for attainment pollutants.

One industry commenter (0056) believes that PSD review is only triggered
by the emissions/emissions increases of pollutants for which a NAAQS has
been established.  They state that the CAA prohibits applying PSD to a
GHG unless PSD review is triggered by a significant increase in a NAAQS
pollutant that could contribute to a violation of a NAAQS or a NAAQS
increment.  Since there is no NAAQS for a GHG, PSD applicability to a
proposed project cannot be triggered by GHG emissions alone.  If a BACT
review is allowed for a GHG, it is only if a criteria pollutant triggers
PSD review and the projected actual emissions of GHGs exceeded the major
source threshold or the definition of a “significant emissions
increase.”  This commenter asserts that their statutory construction
is consistent with the purposes of the Act and provides a
technology-forcing function for regulated pollutants for which EPA has
not established a NAAQS or an increment.

One industry commenter (0060) believes that section 161 and 165 of the
CAA clearly limit the applicability of the PSD program in such a way to
reflect the most basic aspect of applicability of the PSD program: 
Prevention of Significant Deterioration review is triggered only for
pollutants for which a NAAQS has been established.  As an example, they
state that if EPA were to establish an emission control requirement for
a previously unregulated substance pursuant to an NSPS standard, then
the substance would be “subject to regulation under the Act.” But
because the substance is not a criteria pollutant for which a NAAQS has
been established, the level of the substance’s emissions is not a
factor in determining whether a source is a major source or whether a
project is a major modification under the PSD program.  Only the
pollutants for which there are NAAQS may be used to make that
determination.  They opine that if a project is not major for any NAAQS
pollutant, and it has emissions of a previously unregulated substance,
it should not be subject to PSD, regardless of the amount of the
substance emitted by the project.

One industry group commenter (0061) states that section 161 of the CAA
and section 52.21(a)(2) of the CFR limit applicability of the PSD
program to those areas “designated” as attainment or unclassifiable
pursuant to section 107 of the CAA.  See also, section 165(a) (requiring
demonstration that air quality requirements are met).  Section 107
applies only to sources that are major for a NAAQS pollutant and those
major sources that have modifications that result in a significant net
emissions increase of a NAAQS pollutant.  Stated differently, this
commenter (0061) asserts that emissions of a non-NAAQS pollutant cannot
trigger PSD applicability.

One industry commenter (0072) urges EPA to adopt an “alternative
interpretation” of the existing stationary and regulatory provisions,
so PSD is not triggered for a source by its emissions of a regulated NSR
pollutant for which no NAAQS has been promulgated.  They assert that,
because section 161 and 165 of the CAA make clear that the PSD program
only applies to construction projects in an area designated as
attainment or unclassifiable for a NAAQS, PSD applicability should not
be triggered by emissions of a pollutant for which no NAAQS has been
promulgated.  Once a source becomes subject to PSD due to emissions of
any NAAQS pollutant in excess of the statutory major source thresholds
of 100 or 250 TPY, the source must achieve BACT for every pollutant
“subject to regulation” under the CAA that will be emitted in
significant amounts, which, for GHGs, would be any amount (absent
promulgation of a higher de minimis threshold, as proposed by the GHG
Tailoring Rule).  As other commenters opine, this commenter believes
that EPA could completely avoid the “absurd results: and
“administrative necessity” it claims as the basis for establishing a
higher PSD applicability threshold in the GHG Tailoring Rule.  By
modifying this interpretation, so that a source does not trigger PSD
based on its emissions of non-criteria pollutants, the commenter states
that EPA could begin requiring BACT for GHGs under existing PSD rules,
without any resulting negative impacts.  The commenter asserts that this
interpretation is consistent with Alabama Power v. Costle, 636 F.2d 232
(D.C. Cir. 1979).

An industry commenter (0093) urges EPA to clarify that the applicability
of PSD to pollutants “subject to regulation” properly triggers a
BACT analysis for sources that otherwise trigger requirements of the
existing PSD program, but does not trigger PSD applicability, in and of
itself, for pollutants which do not have, nor are precursors to, a
NAAQS.

One state agency commenter (0102) believes that the PSD applies only to
pollutants or precursors for which a NAAQS exists, and not to non-NAAQS
emissions regulated by a Title II motor vehicle standard.  The state
agency commenter indicates that EPA’s policy should state that PSD is
not triggered automatically or otherwise upon GHGs becoming controlled
under title II of the CAA because PSD applies only to pollutants for
which a NAAQS has been established.  The PSD program and the NAAQS
assume that some areas of a state or the country have higher
concentrations of a criteria pollutant than another (hence attainment
and nonattainment areas), but GHG concentrations are generally uniform
throughout the world.  Thus, the commenter believes that preventing
deterioration of an area’s GHG concentrations below a certain ambient
air quality standard through permitting controls is virtually impossible
where the standard to achieve is a global one.  The commenter concludes
that EPA’s interpretation that PSD is applicable to GHGs at any time
is not legally supportable and no amount of tampering with the Tailoring
Rule or ordering of federal actions will change this.

Nine industry and commerce commenters (0051, 0053, 0066, 0072, 0074,
0076, 0079, 0085, 0086) suggest that EPA clarify in the PSD Interpretive
Memo that the term “Pollutants Subject to Regulation” exclude GHGs. 
They assert that Congress did not intend such pollutants to trigger PSD.
 In order to secure passage in 1977, supporters of the PSD program
stressed that it would not impact smaller sources, such as residential,
commercial, or agricultural facilities.

One commenter (0111) noted that EPA should construe the phrases “any
pollutant” in section 169(1) and “any pollutant subject to
regulation” in section 165(a) to refer only to conventional pollutants
whose emissions have regional or local impact, rather than any pollutant
subject to regulation under the CAA.  Such an interpretation would
automatically exclude GHGs, which are “global in nature because the
GHG emissions emitted from the United States . . . become globally
well-mixed.”  In the PSD Tailoring Rule, EPA’s own analysis—which
demonstrates that Congress could not have intended those CAA sections to
require PSD applicability for GHGs, because, if they did, the number of
sources requiring PSD permits would rise to absurd and unanticipated
levels— supports this interpretation. EPA proposes only one solution
to avoid the absurdity of triggering PSD for GHGs: rewriting the
statutory PSD and title V applicability thresholds and significance
levels.

	The commenter (0111) states that strong evidence supports an
interpretation of the CAA that excludes GHGs from PSD.  First, the
original 28 source categories listed by Congress constitute the sources
EPA regarded as posing the greatest potential for air quality
degradation due to conventional pollutants.  The 100 TPY threshold for
these source categories makes sense only in terms of conventional
pollutants.  Second, the air quality monitoring and impact analysis
provisions of CAA sections 165(a) and (e) focus on local and regional
impacts.  For example, Section 165(e)(1) requires an analysis of “the
ambient air quality at the proposed site and in areas which may be
affected by emissions from [the proposed] facility for each pollutant
subject to regulation under the [CAA] which will be emitted from such
facility.” The focus on the “proposed site” and affected areas
implies that Congress was focused on regional and local concerns.

	In addition, according to the commenter (0111), the legislative history
of sections 165(a) and 169(l) under the 1977 CAA amendments makes clear
that Congress had only conventional pollutants in mind when creating
those provisions.  Both the Senate and the House were engaged primarily
in continuing the work that a prior Congress had begun, through the 1970
CAA, to rid the Nation, especially urban areas, of unhealthy levels of
smog, particulates, sulfur dioxide, and other conventional pollutants. 
The air quality problems of concern to the 95th Congress in 1977 simply
did not include global warming.  It is simply not possible, in light of
this legislative history and the legislative history EPA references, to
make a credible argument that the 95th Congress intended that GHG
emissions could be a basis for applicability of the PSD permitting
program as defined by sections 165(a) and 169(1).  Additional evidence
of Congress’ intent for the CAA not to apply to GHGs is Section 166,
which provides EPA with a separate mechanism for adding pollutants for
PSD applicability.  The commenter (0111) notes that the consequences of
applying PSD to GHGs are perhaps the best evidence that such an
interpretation runs contrary to congressional intent.  If PSD applies to
GHG emissions, EPA estimates that 40,000 new PSD permits will be
required annually, including permits for small entities not previously
subject to PSD, such as hospitals, churches, schools, and small
businesses.  This vast and unprecedented expansion in permitting will
halt the nation’s economic growth with little if any improvement in
local air quality.

	One industry commenter (0085) argues that the endangerment finding
under title II is distinctly different from the air quality purposes of
the PSD program – the former is triggered where, in the
Administrator’s judgment, such emissions “may reasonably be
anticipated to endanger public health or welfare” (CAA section
202(a)(1)), while the latter is specifically directed towards the
protection of “air quality” (CAA section 161), i.e., the air that
people breathe.  Consequently, the commenter asserts that the regulation
of CO2 emissions – where it is intended to address the effects that
CO2 has on global climate change, rather than its effect on local “air
quality” – does not constitute a measure to control CO2 emissions
which is “necessary” to “prevent significant deterioration” of
local “air quality” (CAA section 161); therefore, it does not follow
from an endangerment finding under title II that EPA is thereby
authorized, much less compelled, to regulate CO2 emissions from
stationary sources under the PSD program.

	

	Rather than seeking to justify rewriting the CAA’s 100/250 TPY
thresholds for PSD applicability, the industry commenter (0085) believes
that EPA could rely on the fact that Congress never intended the PSD
program to apply to emissions of a substance such as CO2 that, while it
may constitute an “air pollutant” under the broad definition of CAA
section 302(g), does not pose any threat to “air quality.”  To that
end, the commenter (0085) asserts that EPA should recognize that the
CAA’s PSD provisions, including the Best Available Control Technology
(BACT) requirement “for each pollutant subject to regulation” under
the Act, must be understood in the context of the fundamental purpose
and scope of the PSD program, as is made clear on the face of CAA
section 161; that is, the BACT requirement should be read as applying
only to regulated pollutants that have an adverse impact on “air
quality” – i.e., air that people breathe.

	The industry commenter (0085) observes that the preamble to the
proposed Tailoring Rule is replete with statements by the EPA that point
out how inconsistent with Congressional intent would be the regulation
of thousands of small stationary sources of CO2, and opines that EPA has
drawn the wrong conclusion as to how it should proceed in the face of
this anomalous situation.  The commenter asserts that, rather than
attempting to rewrite the PSD threshold limits, which are set forth in
the Act in unambiguous terms, EPA should instead conclude that Congress
never intended the regulation of CO2 under the PSD program because
emissions of CO2 do not degrade air quality. 

Another commenter (0086), representing several groups of companies,
asserts that (in absence of the alternative to applying PSD only to
pollutants for which there is a national ambient air quality standard
[NAAQS]) EPA should interpret the phrases “any pollutant” in section
169(1) and “any pollutant subject to regulation” in section 165(a)
to refer only to pollutants whose emissions have local or regional
impacts, and hence not GHGs.  The commenter believes that EPA should
find that Congress intended applicability to be based only on
“conventional” pollutants, i.e., pollutants whose emissions have
predominantly local or regional impact such as pollutants subject now to
NAAQS and new source performance standards (NSPS) for the following
reasons:

The 28 source categories that Congress listed in section 169(1) in 1977
are the ones EPA regarded at the time as posing the greatest potential
for air quality degradation due to conventional pollutants.  The only
way to explain the selection of those particular categories is to posit
a concern only with conventional pollutants.  Indeed, the only way to
understand the 100/250 TPY cutoffs is also in terms of conventional
pollutants.

The provisions of sections 165(a) and (e) that call for air quality
monitoring and air quality impact analysis in connection with PSD
permitting are oriented on their face to local or regional impacts.

Other relevant provisions of the CAA demonstrate the same mindset.  An
example is the system for area designations in section 107(d) and the
underlying system for establishing air quality control regions in
section 107(b), which make sense only from the standpoint of managing
emissions of conventional pollutants, in particular NAAQS pollutants. 
The objective of the PSD program, to prevent significant deterioration
of air quality in areas designated as attainment or unclassifiable under
section 107(d), makes sense only from the standpoint of emissions having
a local or regional impact, not emissions of GHGs.

Congress kept the door open for a PSD program geared to other
pollutants, such as GHGs, through section 166.  That section requires
EPA, in the event it creates a NAAQS for a “new” pollutant (i.e., a
pollutant not subject to a NAAQS in 1977), to create a PSD system that
is tailored to that pollutant’s unique profile, but that need not
necessarily conform to the blueprint of sections 165(a) and 169(1). 
Thus, EPA potentially could create for GHGs a PSD permitting system with
a 25,000 TPY CO2 equivalent cutoff, but it would first have to establish
a NAAQS for GHGs.

The legislative history of the CAA Amendments of 1977, the origin of
sections 165(a) and 169(1), reveals that Congress had in mind only
conventional pollutants.  Both the Senate and the House saw themselves
as engaged primarily in continuing the work that a prior Congress had
begun, through the 1970 CAA, to rid the Nation, especially urban areas,
of unhealthy levels of smog, particulates, sulfur dioxide, and other
conventional pollutants.  The air quality problems of concern to the
95th Congress in 1977 did not remotely include global warming.

One industry commenter (0079), and others, express that section 163, as
enacted by the 1977 Amendments, addresses baseline concentrations and
increments for sulfur dioxide (SO2) and particulate matter (PM), see
§163(b), and to any other pollutant for which a national primary or
secondary NAAQS exists, see §163(c).  This emphasis, the commenter
opines, is carried on in CAA section 169, which provides:

Not later than one year after the date of enactment of this Act, the
Administrator shall publish a guidance document to assist the States in
carrying out their functions under part C of title I of the Clean Air
Act (relating to prevention of significant deterioration of air quality)
with respect to pollutants, other than sulfur oxides and particulates,
for which national ambient air quality standards are promulgated.  Such
guidance document shall include recommended strategies for controlling
petrochemical oxidants on a regional or multistate basis for the purpose
of implementing part C and section 110 of such Act.

§169(c).  This subsection omits consideration of additional pollutants
beyond the NAAQS.  The commenter asserts that section 166 of the CAA
also provides further limiting of “pollutants subject to regulation
under the Act” to those pollutants subject to NAAQS.  See §166(a) &
(e).  This commenter asserts that the only condition that suggests a
broader reading is in §165(a)(3):

The owner or operator of such facility demonstrates that emissions from
construction or operation of such facility will not cause, or contribute
to, air pollution in excess of any (A) maximum allowable increase or
maximum allowable concentration for any pollutant in any area to which
this part applies more than one time per year, (B) national ambient air
quality standard in any air quality region, or (C) any other applicable
emission standard or standard of performance under this Act;

The commenter asserts that (A) and (B) apply to NAAQS pollutants,
consistent with the argument outlined above.  (C) applies to “any
other applicable emission standard or standard of performance under the
Act.”  This language is susceptible to a broader reading, though
§169(a)(3) clarifies that the “applicable emission standards” are
those issued pursuant to subsection 111 or 112 of the CAA.  This
commenter adds that in the 1990 CAA Amendments, Congress provided
evidence of its intent not to broaden the NAAQS and NSPS focus of the
PSD program by specifically mandating that HAPs are not “subject to
regulation” under the CAA for purposes of the PSD program.  See 42
U.S.C. §7412(b)(6).

	This commenter (0079) further states that the legislative history of
the PSD program also supports “pollutants subject to regulation under
the Act” as being limited to NAAQS pollutants and NSPS pollutants
(cites discussion by The House Committee on Interstate and Foreign
Commerce, in its discussion of a bill that ultimately became part of the
CAA Amendments of 1977.

	In addition to statute and legislative support for limiting
“pollutants subject to regulation under the Act,” this commenter
(0079) asserts that there are practical economic and burden
considerations to limiting the PSD program to NAAQS and NSPS pollutants.

Another state agency commenter (0103) agrees with the “actual
control” interpretation to the extent that it excludes pollutants
subject only to monitoring or reporting requirements, but does not
believe that the interpretation goes far enough.  The commenter
advocates an interpretation that requires EPA to establish an NSPS or
NAAQS for the pollutant (if the pollutant is not considered a HAP
subject to section 112 of the CAA) and also requires the ability to
control the pollutant by means of an add-on control device.  

	

One commenter (0088), while generally agreeing with the December 18,
2008 EPA Memorandum, states that interpretation must be further
clarified to state that the PSD permitting program should only apply to
air pollutants with NAAQS.

Response:

We agree with these commenters that the appropriate scope of the PSD
program is an important issue in evaluating the level of administrative
necessity and the need to tailor the PSD program with respect to GHG
emissions, but comments on this topic are beyond the scope of this
action.  This  reconsideration action sought comment on EPA’s
interpretation of the phrase “subject to regulation under the Act”
used the fourth part of an  existing regulatory definition of
“Regulated NSR Pollutant” at 40 CFR 52.21(b)(50).  EPA requested
comment on whether this part of the regulation (and similar provisions
in the CAA) should apply to any pollutant that may be subject to a
monitoring and reporting requirement, SIP provision, endangerment
finding, or a waiver under section 209 of the Act.  While this raised
issues of how EPA’s definition should be interpreted in light of a
variety of statutory provisions, EPA did not propose to amend or remove
from this definition the description of the categories of pollutants
listed in the first three parts.  See 40 CFR 52.21(b)(50)(ii)-(vi).  Nor
did EPA propose to reconsider its interpretive statement in 1978 that a
pollutant subject to regulation includes “all pollutants regulated
under Title II of the Act.”  See 43 FR at 26397.  EPA requested
comment only on whether it should amend the text of the definition to
expressly incorporate EPA’s interpretation that pollutants subject to
regulation are those subject to an actual control requirement, like
those described in the first three parts of the definition.  As
discussed elsewhere in this document, EPA is not changing the regulatory
definition in this action at this time.  Because, for the reasons
described below, we believe that the interpretations of the CAA
advocated by these commenters are inconsistent with the plain language
of the portions of the regulation that EPA did not propose to
reconsider, we are therefore not addressing them as part of this action.
 We note, however, that to the extent that these comments are directed
at the need to tailor the PSD program with respect to GHGs, we believe
these interpretive issues are more appropriately addressed in the
context of the tailoring rule, where we received similar comments.

These commenters urged a variety of interpretations by focusing on the
statute itself but largely ignore the applicable rules in the CFR, which
govern PSD applicability until such time as they are changed pursuant to
a rulemaking under Section 307 of the CAA.  Moreover, those comments
that do acknowledge that there are applicable regulations that govern
which pollutants are subject to the PSD program only focus on the
original EPA rules adopted  in 1980 and ignore the comprehensive
definition of “regulated NSR pollutant” adopted in 2002.The phrase
“pollutants otherwise subject to regulation” is  just one part of
that definition.  That definition provides that Regulated NSR pollutant
includes:

	

(i) Any pollutant for which a national ambient air quality standard has
been promulgated and any pollutant identified under this paragraph
(b)(50)(i) as a constituent or precursor for such pollutant. Precursors
identified by the Administrator for purposes of NSR are the following:

 (ii) Any pollutant that is subject to any standard promulgated under
section 111 of the Act;

(iii) Any Class I or II substance subject to a standard promulgated
under or established by title VI of the Act;

(iv) Any pollutant that otherwise is subject to regulation under the
Act; except that any or all hazardous air pollutants either listed in
section 112 of the Act or added to the list pursuant to section
112(b)(2) of the Act, which have not been delisted pursuant to section
112(b)(3) of the Act, are not regulated NSR pollutants unless the listed
hazardous air pollutant is also regulated as a constituent or precursor
of a general pollutant listed under section 108 of the Act.

Based on the plain language of the first three parts of this provision
(and other regulations that incorporate this definition), we are unable
within the scope of this action to adopt the interpretations advocated
by commenters.  

EPA’s regulations are not susceptible the interpretation that
“pollutants subject to regulation” are limited to NAAQS pollutants. 
As NAAQS pollutants and precursors are spelled out as a specific line
item in the definition of “Regulated NSR Pollutant,” this
interpretation would render the remainder of the definition meaningless.
 Furthermore, this interpretation would be inconsistent with the plain
language in parts (ii) and (iii) of the definition, which presently
incorporate pollutants regulated in an NSPS and under Title VI of the
Act that are not covered by a NAAQS.  Accordingly, we decline to adopt
this interpretation in this action.  

While some commenters present as a separate argument, based on section
166 of the Act, that the Agency should interpret “subject to
regulation” as requiring that EPA undertake a PSD implementation
rulemaking prior to regulating a pollutant under PSD, we do not view
this as a distinct argument.  As the commenters acknowledge, Section 166
requires certain actions be taken with respect to a new NAAQS, and thus
this interpretation would act to ensure that “any future application
of Part C is limited to criteria pollutants.” (commenter 100 page
8-9).  In addition, the argument that pollutants are not subject to
regulation for PSD purposes until EPA promulgates regulations for each
pollutant under section 166 was previously rejected by the D.C. Circuit.
 Alabama Power Co. v. Costle, 636 F. 2d 323, 406 (D.C. Cir. 1979).  

Furthermore, the definition of regulated NSR pollutant affects more than
just the applicability of the BACT requirements under the PSD
regulations.  The term “regulated NSR pollutant” is also
incorporated in the definitions of “major stationary source” and
“major modification.”  40 CFR 52.21(b)(1)-(2).  Because of the
references to “regulated NSR pollutant,” both of those provisions
contemplate that PSD may be triggered based upon non-NAAQS pollutants
(e.g. a modification occurs if there is a significant increase in any
“regulated NSR pollutant” not “any pollutant for which an area has
been designated attainment.”).  Accordingly, the interpretation urged
by these commenters is inconsistent with the language and structure of
the existing PSD regulations.  

EPA is not persuaded that it can limit the scope of PSD to NAAQS
pollutants through an interpretation of 52.21(a)(2) on the ground that
this provision limits the scope of PSD to areas that have been
designated “attainment or unclassifiable.”  As some of these
commenters acknowledge, adopting this approach would require that the
Agency reverse a long standing interpretation of 52.21(a)(2) that PSD
applies if the source is locating in an area that is designated as
attainment for any pollutant.  Thus, commenters’ request that EPA
adopt this interpretation of 52.21(a)(2) is beyond the scope of this
immediate action as we did not seek comment on this provision, or this
long standing interpretation.  However, as noted above, we do intend to
address the underlying substantive claim in the tailoring rule.  We do
not agree with one commenter’s (0086) argument that 52.21(a)(2)
unambiguously limits applicability of all PSD requirements to only those
pollutants for which the area has been designated attainment or
unclassifiable.  The language of that provision in the regulation, that
the “requirements of this section apply to the construction of any new
major stationary source … or any project at an existing major
stationary source in an area designated as attainment or
unclassifiable,” does not contain the express limitation “for that
pollutant,” which commenters are reading into it.  

As with other commenters, the commenters that cite 52.21(a)(2) failed to
address the adoption of the definition of “regulated NSR pollutant”
in 2002 and instead chose to focus on provision enacted as part of the
original 1980 PSD rulemaking.  Accordingly, these commenters have made
no attempt to show how the urged interpretation of 52.21(a) is
consistent with the broader definitions of “major stationary source”
and “major modification” which incorporate the definition of
“regulated NSR pollutant,” and which we have explained above cannot
be so narrowly construed as to be limited to NAAQS pollutants.

The claims of some commenters that these are new issues upon which they
had no reason to comment in 1980 also ignores the existence of the 2002
rulemaking and the revisions to various parts of section 52.21 made
therein.  While the potential for regulation of GHGs, and the
implications of such regulation, may have been outside of the
commenters’ contemplation in 1980, the potential for GHG regulation
and the implication of the language that the agency was adopting was
evident by 2002.  Thus, commenters could have challenged the adoption of
the definition at that time.

EPA is also unable to interpret the existing PSD provisions as being
limited to pollutants whose effects are primarily local or that only
affect “air quality” (defined by one commenter as the “air that
people breathe”).  Such a limitation does not appear in the definition
of “regulated NSR pollutant.”  Furthermore, the language of that
definition in the current regulation demonstrates that EPA has already
taken a position on this issue that is contrary to one commenters
recommend.  Specifically the inclusion of ozone depleting substances
(ODS), which are regulated because of their global, not local, impacts,
as a specific category of pollutants that are regulated NSR pollutants
demonstrates EPA has previously rejected the local effects view.  Thus,
we believe that reading such a limitation into the fourth part of the
definition would be inconsistent with the definition as a whole.  The
notice of reconsideration did not raise the issue of whether EPA should
amend section 52.21(b)(50) to exclude ozone depleting substances. 

EPA is also unable in this action to adopt the interpretation that the
phrase “subject to regulation” requires control only for sources
that are regulated under a MACT or NESHAP (or similar regulation)
covering the pollutant.  This interpretation is inconsistent with
portions of the existing definition of “regulated NSR pollutant”
that EPA did not address in the reconsideration notice.  First, MACT
standards and NSPS are covered by specific provisions of the definition
of “regulated NSR pollutant.”  NSPS pollutants are covered in
section 52.21(b)(50)(ii), while MACT pollutants are exempt under the
last sentence in section 52.21(b)(50) due to a statutory exemption of
MACT pollutants from PSD (42 U.S.C. §7412(b)(6)).  Second, the NSPS
provision in the definition of “regulated NSR pollutant” provides
that the definition includes “any pollutant that is subject to any
standard promulgated under section 111.”  See 40 CFR 
52.21(b)(50)(ii).  Since it applies to any pollutant regulated in any
NSPS, this provision is not susceptible to an interpretation that it
means “any pollutant for which an NSPS has been promulgated for the
source category of the source obtaining a PSD permit.”

	Comments: 

	

A state agency commenter (0091) supports EPA’s preferred option of
“actual control” or a regulated NSR pollutant as being “subject to
regulation under the Act,” and also supports EPA in their
interpretation that the remaining four options are not viable.  However,
this commenter believes that the actual control should be the control of
a stationary source, and not a mobile source tailpipe emissions
limitation.  The commenter understands that EPA is considering
development of an NSPS for GHG emissions from several industry sectors,
and states that promulgation of an NSPS for stationary sources would be
the most appropriate trigger for PSD applicability.

Ten industry commenters (0089 and others incorporating this submission
(0065, 0067, 0081, 0083, 0090, 0096, 0106/0107, 0108, 0109)) said that
the “actual control” interpretation safeguards the Administrator’s
authority to require such controls on individual pollutants under other
portions of the Act before triggering PSD requirements.  This is
important because it properly recognizes that promulgation of emission
control requirements with respect to a pollutant (such as CO2) under
another provision of the CAA (e.g., a provision in Title II of the Act)
does not automatically trigger PSD.  

	

One commenter (0088), while generally agreeing with the December 18,
2008 EPA Memorandum, states that clearly the interpretation must be
further clarified, and strongly suggests EPA’s interpretation must
clarify that the PSD permitting program actions should be activated upon
stationary source regulations and the actual control of stationary
sources of missions – not a mobile source control rule such as the
LDVR

Commenters (0092, 0098) representing several groups of companies
(industry) argue that the proposed reconsideration implicitly promotes
EPA’s erroneous belief that the LDVR would automatically trigger PSD
permitting requirements for stationary sources, and this is by no means
the correct or the preferable interpretation of the CAA.  According to
these commenters, under a more logical interpretation of the CAA, the
LDVR would not trigger PSD, eliminating the need for millions of new
sources to obtain PSD permits and for much of the PSD Tailoring Rule.  

Response: 

	EPA has already established an interpretation that a pollutant
“subject to regulation” includes “all pollutants regulated under
Title II of the Act regarding emission standards for mobile sources.” 
43 FR at 26397.  Thus, EPA has not previously considered PSD to be
limited only to pollutants regulated in stationary source standards. 
Nor has EPA previously taken the position that Title II standards do not
automatically trigger PSD.  Since EPA’s reconsideration notice did not
address this precedent, EPA is unable to modify this interpretation
through this final action.  

The Agency interprets the provisions of Section 165 to apply to any
pollutant that becomes “subject to regulation” under the Act.  The
D.C Circuit Court upheld this position. See Alabama Power Co. v. Costle,
636 F.2d 323, 403-406 (C.A.D.C., 1979) (rejecting arguments that Section
165 should not automatically apply to all pollutants subject to
regulation under the Act.).  We have continued to assert this position
since this time.  See, e.g., 67 FR 80240 (stating that The PSD program
applies automatically to newly regulated NSR pollutants); 61 FR 38307
(stating that the PSD regulations apply to all pollutants regulated
under the Act), and Memo. From John S. Seitz, Director Office of Air
Quality Planning and Standards to Regional Air Directors, “Interim
Implementation of New Source Review Requirements for PM2.5,”  April
5, 2005 (stating that Section 165(a)(1) of the Act provides that no new
or modified major source may be constructed without a PSD permit.).  We
are not changing our regulations, and did not open this interpretation
for reconsideration in this action.  

9.9.   Need for Additional Process and Analysis Before Regulating
Stationary Source GHG Emissions

9.9.1.   Requests for More Orderly Process and Judgment Before EPA
Regulates GHGs Emissions from Stationary Sources

	Comment:

	

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that the orderly regulatory process contemplated by
the CAA starts with information-gathering concerning the pollutant’s
emissions, continues with determinations (under the CAA’s non-PSD
provisions) regarding the effect of the pollutant on public health and
welfare and with development and issuance of proposed control
regulations, and ultimately culminates in final regulatory controls on
emissions of the pollutant, if justified and necessary.  The commenters
express concern that EPA’s recent proposals to regulate GHG emissions
from major stationary sources through PSD would undermine the orderly
approach contemplated by the CAA.  The commenters believe that
establishing GHG emission control requirements for stationary sources
through the back door of GHG rules for motor vehicles promulgated under
Title II simply does not allow the time necessary to assess emissions
and available controls and to prepare for compliance with any new
regulatory requirements.  Two of the commenters (0081, 0083) add that if
EPA wants to establish GHG emission controls on stationary sources, it
should do so through the orderly regulatory process set forth in the
CAA, which would allow sufficient time to assess emissions and controls
and provide sources the ability to work with the Agency in shaping the
regulations and time to meet any new requirements.

	

	One industry commenter (0109) state that the concerns expressed by EPA,
that it have adequate time to assess emissions of a pollutant and
determine appropriate controls before PSD and BACT requirements are
required for a pollutant, would seem to be at odds with EPA’s recent
efforts to regulate GHG emissions from large stationary sources through
the back door of GHG emission standards for motor vehicles promulgated
under Title II of the CAA, an approach which would appear to skip all of
the regulatory steps that EPA states are important.  The commenter
(0109) believes that if EPA believes it is necessary to establish
emission controls on large stationary sources of GHGs, it should heed
its own pronouncements and proceed directly through the orderly
regulatory process set forth under the CAA, which would allow the Agency
sufficient time to assess emissions and available controls and provide
major stationary sources with the ability to work with the Agency in
shaping the regulation, as well as giving those sources the necessary
time to meet any new requirements. 

	Another industry commenter (0107) states that the PSD program is very
different than new motor vehicle standards, and pollutants regulated
under Title I have a different purpose than Title II national vehicle
standards.  On this basis, the commenter (0107) concludes that it is
logical and reasonable to conclude that Congress could not have intended
that a LDVR would operate as a trigger for the PSD program.

	One industry commenter (0113) states that EPA’s proposed regulation
of GHGs is one of the most consequential regulatory actions ever taken,
and the agency has deliberately taken it without consideration of the
consequences.  EPA’s response is, in effect, that it did not and does
not have to inform itself (or others) of the relevant environmental and
economic facts because it has had and will have no opportunities to make
use of facts— no opportunities for judgment and thus no need to inform
that judgment.  The outcome, under the CAA, was “triggered,”
“automatic” or “self-effectuating.”  According to the commenter
EPA’s opinion is that the statute made them do it.  The agency’s
defense, in effect, is that it made no choices—committed no acts of
judgment— that would have benefited from facts and analysis with
respect to the environmental and economic consequences of this historic,
contentious, intrusive and inefficient new frontier in regulation.  It
was only doing what the law required.  The commenter contends that the
agency had innumerable opportunities to do other than what it has done. 
It could have shaped, conditioned delayed or phased this outcome.  Or,
it could have decided not to do this at all, and the Clean Air Act would
not have stood in the way – so long as its judgment was considered and
supported.  Informed judgment has been needed from the first step on
this regulatory path to PSD regulation, and the remaining steps likewise
require it.  Each of various EPA opportunities for judgment –
opportunities for action or inaction – would have benefited from
consideration of the environmental and economic consequences of their
exercise. According to the commenter, an agency cannot decide whether to
try to avoid, mitigate or prudentially delay a problem if it does not
assess the problem, and it cannot take an action without considering its
most fundamental aspects.  The commenter concludes that even if that
trigger operates just as automatically as the agency says it does (and
it clearly does not), the agency is not excused from informing itself of
the consequences of pulling the trigger.  The alleged mechanistic and
determinate character of that one step cannot be ascribed to the rest of
the decisional process.  At some point, before it effectuates it, the
agency had and has obligation to consider the impact of the outcome.

Response: 

EPA understands commenters’ concerns but disagrees with how commenters
have characterized EPA’s efforts to implement the mandate delivered by
the United States Supreme Court in Massachusetts v. EPA.  EPA
acknowledges that there are challenges to using the existing CAA to
addressing the challenge of global climate change.  EPA supports
Congressional efforts to adopt comprehensive energy climate change
legislation, but under the circumstances has exercised its judgment with
great thought and care within the framework of the CAA to respond to the
Court’s direction and the Act’s provisions.  EPA is working within
the constraints of the Act to promulgate an approach that addresses
sources of GHGs in a common sense way that responds to the policy and
practical issues that have been raised in comments submitted on both
this action and proposed tailoring rule.

EPA has an obligation to respond to the Supreme Court remand in
Massachussetts v. EPA and make a determination regarding whether GHG
emissions from motor vehicles (i.e., on-highway vehicles) endanger
public health and welfare.  In response to that obligation, EPA
carefully reviewed the available science on climate change, proposed a
determination for public comment, and made an affirmative determination
after considering the information and comments provided by the public. 
Having made a determination, based on sound science, that GHG emissions
from mobile sources endanger public health and welfare, EPA has an
obligation under the relevant CAA provision (section 202(a)) to
promulgate standards to address emissions from those sources.  As
discussed above, once GHGs are “subject to regulation under the
Act,” EPA does not believe it can wholly defer application of the PSD
program to GHG emissions from stationary sources until EPA can address
whether to promulgate categorical GHG standards for stationary sources
under other provisions in the CAA.  

Under Title II or other provisions of the CAA, EPA is authorized to make
decisions to control pollutants (and regulate various categories of
sources) that the Agency (or Congress) has found endanger public health
or welfare.  The PSD program works to ensure that the same pollutants
are controlled when new major stationary sources are constructed or
major existing stationary sources are modified.  The case-by-case nature
of PSD control determinations ensures that these stationary source
emissions are limited based on real-world considerations of
technological availability, costs, energy impacts and other relevant
factors.  While there may be some advantages to PSD being triggered by a
decision to control stationary source GHG emissions, the statute and
practicality do not require it.  In fact, best available control
technology determinations in PSD can provide information and experience
that is useful in setting generally applicable stationary source
requirements under other CAA provisions.  Moreover, given the wide
variety of stationary sources that emit GHGs, it would take some time
before the Agency could promulgate national standards for all the
potentially relevant source categories.  PSD provides a basis for
limiting emissions when a large emitting facility constructs or modifies
in a way that significantly increases emissions, and so allows
permitting authorities, permit applicants and the public to consider
what controls make sense for that facility considering costs and other
relevant factors.

9.9.2.   Analysis of Effects on Large Stationary Sources

	Comment:

	Nine industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109, 0080) assert that EPA has not adequately analyzed the
impacts of GHG regulation on large stationary sources of GHG emissions.

	Eight of these industry commenters (primary comment by 0089;
incorporated or referenced by 0067, 0083, 0090, 0096, 0106/0107, 0108,
0109) assert that EPA should not proceed with actions that the Agency
believes will trigger PSD requirements for GHG emissions in the absence
of proper analysis of the effects of doing so, and public notice of
opportunity for comment on that analysis.  The commenters do not agree
that the proposed motor vehicle GHG rules, if made final, would
necessarily have PSD effects or that they would take place in the
timeframe discussed in the Reconsideration proposal package (i.e., 60
days after publication of the final GHG vehicle rules).  In addition,
these industry commenters believe that none of EPA’s current proposed
GHG-related rules addresses in any meaningful way how EPA believes those
rules would affect large stationary sources of GHG emissions and why EPA
believes it should use motor vehicle rules – rules that it has no
statutory obligation to promulgate at this time – to trigger
enormously complex, expensive, and burdensome PSD requirements.  The
commenters assert this is not good policy, and argue that the problem is
compounded by EPA’s failure to assess what the Agency believes the
effects of that policy will be on this nation’s large stationary
sources, including its electricity generating and manufacturing sectors,
and on the nation’s economy and international competitiveness.  

These industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) state that, although EPA properly recognizes in the proposed
PSD Interpretation that the need for adequate time to assess emission
levels and determine appropriate emission controls supports
reaffirmation of its actual control interpretation, EPA seems at the
same time wholly to ignore the dramatic implications of its plan to
impose – in the very near term – PSD requirements for GHGs on large
stationary sources, in the absence of guidance on and without time to
prepare for implementation of those requirements.  The commenters
believe that, at a minimum, EPA should make clear that any final motor
vehicle GHG rules under section 202(a) of the Act do not trigger PSD
requirements before those rules take effect, an event that would not
occur before October 2011.

	Response:

EPA included an extended discussion on the economic impacts of PSD
regulation for GHG emissions in the preamble to the proposed Tailoring
Rule and also prepared a cost-benefit analysis under EO 12866 for that
proposal.  See 55292 FR at 55337-340, 55343.  As part of the Tailoring
Rule docket, EPA also conducted the appropriate analysis required by the
RFA and undertook additional discretionary RFA outreach to further
assess the impacts of that rule.  See id. at 55349 and docket
EPA-HQ-OAR-2009-0517-19130 (summary of discretionary outreach available
in the docket for the Tailoring Rule).  These analyses were available
for comment as part of the Tailoring Rule proposal.  In that proposal,
EPA also took comment regarding the final permitting thresholds that
could be adopted for implementing the PSD program for GHG emissions,
including matters related to the selection of those thresholds. 
Commenters that felt EPA’s analyses did not fully consider the costs
and/or benefits of GHG regulation for large sources were able to address
that issue in their comments on the proposed Tailoring rule.  EPA will
address concerns regarding the scope of these analyses in the final
action on the Tailoring Rule.

For response to the concerns raised by commenters regarding EPA’s
interpretation of “subject to regulation” as it relates to
applicability of PSD regulation following promulgation of the light duty
vehicle rule for GHG emissions, see EPA’s responses to related
comments in Chapters 8 and 9 of this RTC.

9.10.   Combustion of Biomass-Derived Fuels

	Comment:

Two industry commenters (0055, 0071) request that EPA exempt CO2
emissions from the combustion of fuels derived from biomass
(“biofuels”) from both counting towards the threshold for major
emitting facilities or major modification status from BACT analyses for
CO2 emissions.  These commenters stated that CO2 emissions from
combustion of biomass, because of the principle of carbon neutrality and
best carbon accounting practices, do not contribute climate change and
should not be counted as increasing emissions of a pollutant regulated
under the CAA.  Biomass CO2 neutrality is an inherent property of
biomass based on the natural carbon cycle.  The neutrality of CO2
emissions from biomass combustion has been recognized for many years by
an abundance of studies and is widely accepted by agencies,
institutions, regulations and legislation.  This is true for IPCC
Guidelines and Guidance for the UN Framework Convention on Climate
Change UNFCCC reporting protocols and an innumerable other agencies and
institutions (cites agencies and countries whose accounting practices
quantify biomass as CO2 -neutral).  EPA recently confirmed its position
that the combustion of biomass should be considered CO2-neutral,
regardless of the source of the biomass, in its proposed rule to
implement the Energy Independence and Security Act of 2007 through a new
Renewable Fuel Standard, RFS2.  In EPA’s Mandatory GHG Reporting Rule,
EPA clearly and intentionally excludes biomass CO2 emissions for the
calculation of thresholds for determining regulated facilities.

Another industry commenter (0071) stated that excluding CO2 emissions
from the oxidation of biomass would: 

Avoid imposing PSD requirements on emissions that do not cause or
contribute to the air quality impact (increased CO2 concentration in the
global atmosphere) that application of PSD permitting is supposed to be
addressing, and

Encourage substitution of renewable fuels for fossil fuels, which EPA is
already seeking to accomplish through other measures, such as provisions
in the proposed GHG tailpipe standards that give manufacturers extra
credit for alternative fuel vehicles.

Response:

As explained elsewhere in this RTC, this action reconsiders an
interpretation of general regulatory text found in 40 CFR 52.21(b)(50)
and is not the appropriate forum to address the specific PSD
applicability and implementation issues presented by the regulation of
GHGs.  .  Similar comments and issues were raised in the context of the
Tailoring Rule. EPA will respond, as appropriate, to those comments in
that forum and in guidance that EPA is developing to address issues
raised by the CAAAC workgroup, permitting authorities, and the regulated
community  

Chapter 10.   State Program Implementation

10.1.   Applicability of PSD Interpretive Memo to State PSD Programs

Comment:  

One industry commenter (0055) requests that EPA make the PSD
interpretive memo binding on state PSD programs.  They state that if
states have the freedom to apply PSD permitting requirements to GHGs
even before they are subject to control measures under the CAA, the
harmful effects of overloading the PSD permitting system with thousands
of new PSD permit applications would be realized anyway, despite EPA’s
attempt to try to avoid the result.

One industry group (0071) commenter states that it is imperative to make
the PSD Interpretive Memo binding on state PSD programs.

Eight industry commenter (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) said that EPA’s interpretation should apply both to
administration of the federal PSD permitting program under 40 CFR 52.21
and to EPA approval of (or other action on) new or revised state PSD
plans under 40 CFR 51.166.

Response:

EPA will apply the PSD Interpretive Memo, with the refinement described
in this action, when implementing the federal permitting program under
40 CFR 52.21.  Furthermore, we will expect that states that implement
the federal PSD permit program under delegation from an EPA Regional
Office will do the same. 

 

In addition, EPA will apply the interpretation reflected in this notice
and the PSD Interpretive Memo in its oversight of existing state
programs and review and approval of new program submissions.  Many
states implement the PSD program pursuant to state laws that have been
approved by EPA as part of the SIP, pursuant to a determination by EPA
that such laws meet the PSD program criteria set forth in 40 CFR 51.166.
 The EPA regulation setting forth PSD program requirements for SIPs also
includes the same definition of the term “regulated NSR pollutant”
as the federal program regulation.  See 40 CFR 51.166(b)(49).  Because
this regulation uses the same language as contained in 40 CFR 52.21 and
the same considerations apply to implementation of the PSD program under
state laws, EPA will interpret section 51.166(b)(49) in the same manner
as section 52.21(b)(50).  However, in doing so, EPA will be mindful that
permitting authorities in SIP approved states have some independent
discretion to interpret state laws, provided those interpretations are
consistent with minimum requirements under the federal law.  

To the extent approved SIPs contain the same language as used in 40 CFR
52.21(b)(50) or 40 CFR 51.166(b)(49), SIP-approved state permitting
authorities may interpret that language in state regulations in the same
manner reflected in the PSD Interpretive Memo and this notice.  However,
EPA will not seek to preclude actions to address GHGs in PSD permitting
actions prior to January 2, 2011 where a state permitting authority
feels it has the necessary legal foundation and resources to do so.  

EPA has not called on any states to make a SIP submission that addresses
the interpretive issues addressed in this notice and the PSD
Interpretive Memo.  As long as states are applying their approved
program regulations consistent with the minimum program elements
established in 40 CFR 51.166, EPA does not believe it will be necessary
to issue a SIP call for all states to address this issue.  However,
permitting authorities in SIP-approved states do not have the discretion
to apply state laws in a manner that does not meet the minimum federal
standards in 40 CFR 51.166, as interpreted and applied by EPA.  Thus, if
a state is not applying the PSD requirements to GHGs for the required
sources after January 2, 2011, or lacks the legal authority to do so,
EPA will exercise its oversight authority as appropriate to call for
revisions to SIPs and to otherwise ensure sources do not commence
construction without permits that satisfy the minimum requirements of
the federal PSD program.  

To enable EPA to assess the consistency of a state’s action with any
PSD program requirements for GHGs, states should ensure that the record
for each PSD permitting decision addresses whether the state has elected
to follow EPA’s interpretation or believes it is appropriate to apply
a different interpretation of state laws that is nonetheless consistent
with the requirements of EPA’s PSD program regulations.  

10.2.   Need to Complete SIP Revision Process 

Comment:

One industry commenter (0086) states that, because the federal and state
PSD rulemakings that established the regulatory language that is now
being interpreted as requiring GHGs to be subject to PSD did not
contemplate or address the massive impacts of that interpretation, the
PSD Interpretive Memorandum is, in effect, a new rule that has important
implications for timing and the CAA’s cooperative federalism.  The
commenter (0086) believes that EPA has overlooked the necessity of the
SIP revision process in this case where the existing state PSD rules and
EPA’s approval process for those rules did not construe the rules as
applying to GHGs.  The commenter (0086) believes, therefore, that the
normal SIP pattern under section 110 must be used: (1) 3 years for
adoption and submission of the necessary SIP revisions; (2) 1-2 years
for EPA action on the submission; and (3) possible 40 CFR 52.21 FIP
rulemakings.  While the commenter (0086) believes that the CAA requires
EPA to follow that pattern with respect to GHG emissions, the commenter
believes it is beyond doubt that the CAA at least affords EPA discretion
to follow it.  The commenter (0086) states that the alternative would be
for EPA to trigger a GHG-based PSD system initially in only those states
subject to 40 CFR 52.21, which would create huge adverse differences
between the states, at least for several years, an outcome Congress
strongly disfavored in establishing the PSD program in its present form
in 1977.  The commenter (0086) urges EPA to adopt the usual section 110
pattern because the commenter believes it is the only lawful pattern,
and would be more orderly.

Another industry commenter (0100) states that no matter what federal
pronouncements EPA may issue about whether and when it intends to
subject a pollutant to PSD permitting, it cannot purport to make GHG
emissions regulated until states have legally required time (through the
SIP call process) to amend their construction and operating permit rules
to include GHG as a regulated pollutant, and the process (in section
110(k) of the CAA) is followed for aligning state rules with changes in
EPA rules.  This commenter asserts that a change in federal law (i.e.,
adoption of the car rules) does not automatically result in a new
“pollutant” called “greenhouse gases” to be governed by state
permit rules and that further, any state rules that purport to regulate
new pollutants at the will of EPA without intervention by or guidance
from the state are unconstitutional because such provisions would
delegate lawmaking powers to a federal agency.  

Response:

	

The applicability of PSD permitting requirements to a newly regulated
pollutant under SIP-approved PSD programs depends on whether states have
previously adopted laws that are sufficiently open-ended to apply to
additional pollutants without subsequent action by the state.  Many
States do not need to revise their SIPs or state laws to begin
implementing PSD for new pollutants.  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 GHGs as a
regulated NSR pollutant at the appropriate time consistent with EPA’s
interpretation of these regulations.  As noted above, SIP-approved state
permitting authorities may interpret the same language in state
regulations in the same manner reflected in the PSD Interpretive Memo
and this notice.  

	

The Agency interprets the provisions of Section 165 to apply to any
pollutant that becomes “subject to regulation” under the Act.  The
D.C Circuit Court upheld this position.  See Alabama Power Co. v.
Costle, 636 F.2d 323, 403-406 (C.A.D.C., 1979) (rejecting arguments that
Section 165 should not automatically apply to all pollutants subject to
regulation under the Act.).  We have continued to assert this position
since this time.  See, e.g., 67 FR 80240 (stating that The PSD program
applies automatically to newly regulated NSR pollutants); 61 FR 38307
(stating that the PSD regulations apply to all pollutants regulated
under the Act), and Memo. From John S. Seitz, Director Office of Air
Quality Planning and Standards to Regional Air Directors, “Interim
Implementation of New Source Review Requirements for PM2.5,”  April
5, 2005 (stating that Section 165(a)(1) of the Act provides that no new
or modified major source may be constructed without a PSD permit.).  We
are not changing our regulations, and did not open this interpretation
for reconsideration in this action.  

The provisions in section 110 of the Act must be reconciled with the
requirements of section 165 of the Act, which preclude construction of a
major emitting facility without obtaining a permit in compliance with
the requirements of section 165.  EPA does not interpret CAA section 110
to preclude states from applying state laws that are sufficiently
open-ended to incorporate a pollutant that is subject to regulation at
the time of a permitting decision.  Furthermore, EPA has not promulgated
a NAAQS for GHGs that would implicate many of the procedural
requirements of section 110.  At the same time, EPA does not interpret
section 110 to mean that the requirements of 165 may be delayed for a
pollutant that is subject to regulation.  Thus, our approach provides
maximum flexibility for states to expeditiously adopt our interpretation
of subject to regulation, but does not allow for interpretation of that
phrase in a way that would circumvent section 165.

Specifically, as discussed above, EPA has not called on any states to
make a SIP submission that addresses the interpretive issues addressed
in this notice and the PSD Interpretive Memo.  As long as states are
applying their approved program regulations consistent with the minimum
program elements established in 40 CFR 51.166, EPA does not believe it
will be necessary to issue a SIP call under section 110(k) for all
states to address this issue.  However, EPA will exercise its oversight
authority as appropriate to call for revisions to the PSD permitting
provisions of SIPs and to otherwise ensure sources do not commence
construction without permits that satisfy the minimum requirements of
the federal PSD program.  

In those cases where state laws are not sufficiently open-ended to
incorporate new PSD permitting requirements at the appropriate time, EPA
has often recognized and provided time for States to revise their
existing SIPs to implement new requirements.  See 67 FR 80240.  However,
EPA has also worked with States by issuing interim transition policies
that provide means for states to use existing state regulatory
authorities to assure that CAA requirements are met in the period before
any state that needs to do so may revise its SIP.  The PSD Interpretive
Memo and this final action on reconsideration of the memo does not
involve a revision of the PSD permitting regulations but rather involves
clarifications of how EPA interprets the existing regulatory text. 
These actions articulate what has, in most respects, been EPA’s
longstanding practice.  Thus, many states may continue to proceed under
an interpretation of their rules after this action.  In light of
additional actions to be taken by EPA in the Tailoring Rule, states that
issue permits in the near term may want to preserve the discretion to
modify their approach after other EPA actions are finalized.  In light
of this contingency, one option states may consider is to establish that
the state will not interpret its laws to require PSD permits for sources
that are not required to obtain PSD permits under EPA regulations.  

Comment:

An industry commenter (110) claims that EPA cannot, as it proposes in
its Tailoring Rule, retroactively change a SIP on the grounds that it is
the correction of a mistake without following all applicable procedural
requirements, citing a the Third Circuit decision in Concerned Citizens
of Bridesburg v. EPA that held that, because a state must have an
opportunity to pass first upon the mechanics of achieving compliance
with air quality standards, EPA cannot unilaterally revise a SIP without
following the CAA’s revision provisions.

Response: 

 	Since this action does not involve the action described, this comment
is outside the scope of this reconsideration action. 

Chapter 11.   Other Issues

11.1.   Combination of Interpretations 

Comment:

One private citizen commenter (0048) believes that there should be a
combination of the proposed interpretations of “subject to
regulation.”  This commenter opines that monitoring and reporting is
necessary to interpreting pollutants that are “subject to
regulation.”  They state that with a combination of monitoring and
reporting, there should also be an EPA-approved SIP and a finding of
endangerment to develop limits.  

	Response:

	For reasons discussed elsewhere in this document, EPA has decided to
continue applying the actual control interpretation and has rejected the
options of triggering PSD permitting requirements based solely on a
finding of endangerment or on regulation of a pollutant in an
EPA-approved SIP.  Thus, EPA is not adopting the commenters suggestion
to employ a combination of these interpretations.  

11.2.   Municipal Solid Waste (MSW) Landfill Gas Emission Standards

Comment:

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) indicate that environmental advocacy groups have alleged in
permit challenges that CO2 is subject to regulation for purposes of the
PSD program because CO2 is one of the constituents of MSW landfill
emissions that are regulated by EPA under section 111 of the CAA and 40
CFR 60.33c and 60.751.  The commenters state that EPA made clear in its
Deseret briefing that this argument has no merit.  The commenters assert
that both the regulatory text of, and the preamble to, the proposed
section 111 rules for MSW landfill emissions explicitly address the
issue and clarify that the term “MSW landfill emissions” refers to a
single designated composite pollutant, not its various individual
constituents, and that MSW landfill emissions is the only pollutant
subject to regulation.  See Deseret Surreply Brief of EPA Office of Air
and Radiation and Region VIII at 1-6.

	

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) further note that the specific control options in the MSW landfill
regulations focus on control of NMOC emissions, which are used as a
surrogate for MSW landfill emissions, and that EPA recognized in issuing
the standards that control options identified as reducing overall MSW
landfill emissions may actually increase the secondary emissions of
individual components, including CO2.  Based on this, the commenters
state that EPA did not intend for the MSW landfill emission regulations
to address climate change considerations, but rather ambient ozone
problems, air toxic concerns, and potential explosion hazards.

	

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) assert that EPA’s MSW landfill gas emission regulations do not
make CO2 or other GHGs “subject to regulation” under the CAA for
purposes of the PSD program, and that EPA in effect concurred with this
conclusion in the PSD Interpretive Memorandum, where it stated that MSW
landfill gas is an example of a pollutant regulated as a collective
group of emissions, and not by its individual components.  The
commenters suggest that EPA reaffirm its position on this issue in its
final action in the present proceeding.

	Response:

The PSD Interpretive Memorandum contains the following statement in
footnote 6 (page 6) that relates to this issue:

This memorandum does not seek to further define the specific nature or
scope of any individual “pollutant” that is subject to such
controls.  Any ambiguity as to whether some part, component, or
constituent of a substance or category of substances is controlled under
a regulation should be resolved in the context of interpreting the
individual rule that gives rise to the issue.  See, e.g., Regulating
Greenhouse Gas Emissions Under the Clean Air Act, Advance Notice of
Proposed Rulemaking (“ANPR”), 73 FR 44354 (July 30, 2008) at
44420-421 (describing the various consequences that could arise given
the definition of the “pollutant” that EPA may establish in a
regulation of one or many GHGs).  For example, in adopting the New
Source Performance Standard (NSPS) for municipal solid waste (MSW)
landfills, EPA was explicit that it was regulating only MSW landfill
emissions collectively, and not the individual components of those
emissions.  56 FR at 24468, 24470 (May 30, 1991) (“The pollutant to be
regulated under the proposed standards and guidelines is “MSW landfill
emissions.”); id. at 24474 (“The EPA views these emissions as a
complex aggregate of pollutants which together pose a threat to public
health and welfare based on the combined adverse effects of the various
components. . . . The EPA thus views the complex air emission mixture
from landfills to constitute a single designated pollutant.”).

Since EPA is not withdrawing the PSD Interpretive Memorandum, EPA’s
position on this issue is unchanged by this action.  

 

11.3.   Section 821 of Public Law 101-549

	Comment:

	

	Ten industry commenters (0067, 0073, 0083, 0085, 0089, 0090, 0096,
0106/0107, 0108, 0109) asserts that section 821 of Public Law 101-549 is
not part of the CAA, and section 821 implementing regulations do not
constitute regulation under the CAA.  Eight of the commenters (0067,
0083, 0089, 0090, 0096, 0106/0107, 0108, 0109) state that no basis
exists for EPA to change its carefully considered and well-supported
determination that section 821 is not part of the CAA and that section
821 implementing regulations do not constitute regulation under the CAA.
 The commenters state that EPA should confirm that determination in this
proceeding.

One industry commenter (0085) stated that section 821 was deliberately
excluded from the Act even though it was part of the overall bill that
amended the CAA in 1990.  The commenter (0085) asserts that this
exclusion was clearly intentional and cannot be ignored by interpreting
the CAA to include section 821.

	

	As a threshold matter, the industry commenters (0067, 0083, 0089, 0090,
0096, 0106/0107, 0108, 0109) note that the section 821 issue is moot,
assuming that EPA continues to maintain the actual control
interpretation – this issue becomes relevant only if the Agency
determines that monitoring and reporting requirements alone can make a
pollutant subject to the PSD program.  Nevertheless, the commenters
strongly disagree with any suggestion that EPA should change its
position on the issue of whether section 821 is part of the CAA.  The
commenters believe that it is clear that Congress did not make and never
intended to make section 821 part of the CAA.  See In re Deseret Power
Electric Coop., Response of EPA Office of Air and Radiation and Region
VIII to Briefs of Petitioner and Supporting Amici, at 45-46 (Mar. 21,
2008) (explaining why section 821 is not part of the CAA); Deseret UARG
Amicus Brief at 7-11 (same).  The commenters state that for several
reasons, specifically discussed by EPA and UARG in their submissions to
the EAB in Deseret, this conclusion is clear both from the language of
section 821 itself, which refers to the CAA as separate legislation, and
from contemporaneous Congressional statements.  The commenters add that
even a cursory review of the CAA makes clear that section 821 is not
part of that statute; the CAA begins with section 101 and continues
through section 618 and no further; it includes no section 821.  CAA
sections 101-618, 42 U.S.C. 7401-7671q.  The industry commenters (0067,
0073) similarly note that the language of Public Law 101-549 and the
legislative history clearly indicate that section 821 did not amend the
CAA and is not part of the CAA.

	The industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108,
0109) state that no weight should be given to past assertions by EPA
that section 821 is part of the CAA.  The commenters note that those
statements did not address the point that is germane here, i.e., whether
the requirements of section 821 and section 821 regulations constitute
regulation under the CAA that may trigger PSD obligations.  In addition,
the commenters (0067, 0083, 0089, 0090, 0096, 0106/0107, 0108, 0109)
believe that ill-considered, incorrect past Agency characterizations of
section 821 or its implementing regulations could not possibly form the
basis for a new Agency interpretation concerning the effect of that
section or those regulations.  The industry commenters similarly noted
EPA’s inconsistent references to the legal status of section 821
cannot change the provisions of Public Law 101-549.

  SEQ CHAPTER \h \r 1 An environmental organization commenter (0095)
states that EPA properly recognizes section 821 of the CAA.  Commenter
notes that the Reconsideration states that in light of EPA’s
contradictory statements in assorted federal court proceedings as to
this point, EPA is now “less inclined to maintain” the position that
section 821 did not amend the CAA.. The commenter agrees that EPA should
abandon this theory.  The commenter adds that EPA has consistently
enforced the CO2 monitoring, reporting and recordkeeping obligations
imposed by section 821 and EPA’s own Part 75 regulations through the
enforcement provisions of the CAA.  (Case references are included and
attached.)  In four of these five cases, EPA has used section 113 of the
CAA to enforce the section 821 regulations.  In three of those cases, it
has assessed civil administrative penalties.  Thus, in those three
cases, EPA alleged that violations of section 821 and the implementing
regulations were violations of various parts “of this chapter”,
i.e., the Clean Air Act, and then imposed hundreds of thousands of
dollars in penalties for those violations.  EPA also enforced section
821 under section 113(b)(2), wherein the Administrator is authorized
“to commence a civil action for a permanent or temporary injunction,
or to assess and recover a civil penalty of not more than $25,000 per
day for each violation, or both.” And, consistent with its practice in
the administrative penalty cases, in at least one instance of violations
of section 821 (United States v. Block Island Power Co.), EPA duly
invoked federal court jurisdiction for violations “of this chapter.”

Finally, commenter (0095) asserts that EPA has also invoked its right
under Section 304(c)(2) to intervene in an ongoing citizen suit that
was, in turn, brought under Section 304(a)(1)(A) for violations of “an
emission standard or limitation under this chapter.” Thus EPA has
consistently contended that Section 821 is a regulatory provision of the
CAA and/or that violations of the Section 821 regulations are violations
of the CAA.

	

	Response:

	

In the October 7, 2009 notice, EPA solicited comment on the question of
whether section 821 of the CAA Amendments of 1990 is part of the CAA. 
EPA indicated that the Agency was inclined against continuing to argue
that section 821 was not a part of the CAA, as the Office of Air and
Radiation and Region VIII had done in briefs submitted to the EAB in the
Deseret matter.  This question bears on the determination of whether the
CO2 monitoring requirements in EPA’s Part 75 regulations are
requirements “under the Act.”  In the proposed reconsideration
notice, EPA explained that it would be necessary to resolve whether or
not the CO2 monitoring and reporting regulations in Part 75 were
promulgated “under the Act” if EPA adopted the monitoring and
reporting interpretation.  

EPA has not yet made a final decision on this question, and it is not
necessary for the Agency to do so at this time.  Since EPA is not
adopting the monitoring and reporting interpretation, the status of
section 821 is not material to the question of whether and when CO2 is
“subject to regulation under the Act.”  Because there are currently
no controls on CO2 emissions, the pollutant is not “subject to
regulation.”  Given that the provisions in Part 75 do not
“regulate” emissions of CO2, it is unnecessary determine whether
such provisions are “under the Act” or not to determine PSD
applicability.  Furthermore, the promulgation of EPA’s Reporting Rule
makes this issue even less material.  In that rule, which became
effective in December 2009 and required monitoring to begin in January
of this year, EPA established monitoring and reporting requirements for
CO2 and other GHGs under sections 114 and 208 of the CAA.  Thus, there
can be no dispute that monitoring and reporting of CO2 (as well as other
GHGs) is now occurring under the CAA, regardless of the status of
section 821 of the 1990 amendments.  At this point, the section 821
issue would only become relevant if a court were to find that the
monitoring and reporting interpretation is compelled by the CAA and a
party subsequently seeks to retroactively enforce such a finding against
sources that had not obtained a PSD permit with any limit on CO2
emissions.  If this situation were to arise, EPA will address the
section 821 issue as necessary.

11.4.   Alternatives Analysis Under Section 165 of the CAA

	

	Comment:

	

	Eight industry commenters (0067, 0083, 0089, 0090, 0096, 0106/0107,
0108, 0109) observe that EPA did not address in the proposed PSD
Interpretation the argument that GHG emissions should be considered in
the alternatives analysis for a PSD permit under CAA section 165(a)(2),
and petitioners did not raise it in their Petition for Reconsideration. 
The commenters note that EPA observed in the PSD Interpretive Memorandum
(at 4 n.4) that the EAB disposed of this argument in the Deseret
litigation.  The commenters opine that no legal support exists for any
argument that a PSD permit applicant or PSD permitting authority has an
affirmative obligation at this time to consider GHGs in an alternatives
analysis under section 165(a)(2) or EPA’s PSD regulations.

	

	Response:

	

As noted in the October 7 notice for this reconsideration, EPA’s
present action is focused on the interpretation of “subject to
regulation” as contained in 40 CFR 52.21(b)(50) (iv) and CAA sections
165(a)(4) and 169.  As such, this action is not the proper forum for
deciding whether GHGs may or may not be considered in the alternatives
analysis under CAA section 165(a)(2) or EPA’s PSD regulations.  While
we are declining to resolve this issue in this reconsideration action,
we want to clarify one aspect of the EAB Deseret decision referenced in
the comment.  The EAB’s decision found only that Region 8 was not
required to consider a particular alternative that may have reduced GHG
emissions on the grounds that this alternative was not identified in
public comments and that there is no affirmative duty to consider an
alternative not identified in public comments under section 165(a)(2) or
EPA’s PSD regulations.  EPA does not read the EAB’s decision to
conclude that there is never a duty to respond to GHG issues associated
with an alternative that is raised in public comments.  If it becomes
necessary, EPA will address the scope of consideration of GHG emissions
in the alternatives analysis when such an issue arises in a permitting
action or by issuing specific guidance on the issue.

11.5.   Broad Focus of Proposal

	Comment:

	

	Two industry commenters (0065, 0067) state that EPA has properly
focused on the application of the proposed interpretation to all
pollutants, instead of limiting the applicability to CO2 or GHGs.

	

In contrast, one state/local agency association (0062) believes that PSD
Interpretive Memo was crafted more narrowly than the proposed
reconsideration.  The commenter (0062) the proposed broadening of the
interpretation is unwise and recommended that any future determinations
of whether a pollutant is “subject to regulation” be made on a
case-by-case basis, considering all of the relevant facts.  The
commenter (0062) states that in discussing the proposed PSD
Interpretation, EPA has revived issues that were resolved (such as the
ammonia PM2.5 issue) and seeks to address a number of issues that will
be moot (such as the approval of the California waiver and the
endangerment finding issue) or are unrelated to the current issues (such
as whether a rule that only affects 49 states is sufficient to trigger
PSD and title V permitting).  The commenter (0062) believes that EPA’s
proposed standard for when a pollutant is subject to regulation
(“[t]hose pollutants subject to a nationwide standard, binding in all
states, that EPA promulgates on the basis of its CAA rulemaking
authority”) is at once too narrow and too broad.  As an illustration,
the commenter (0062) notes that California-certified vehicles do not
have to meet federal emissions standards, so it could be argued that the
federal motor vehicle GHG standard is not binding in all 50 states.  On
the other hand, the commenter (0062) asserts that it will likely be
argued that such a standard is impermissible under the CAA because the
statutory limitation would be too subject to gaming by the Agency (e.g.,
if EPA were to exempt a single state from an otherwise federally imposed
national control strategy for a pollutant); that is, if PSD
applicability for a pollutant is imposed only when EPA explicitly
chooses to do so, CAA section 165(a)(4) has no meaning.

	

	The state/local agency association (0062) agrees that PSD and title V
applicability should only arise based on a conscious decision to broadly
regulate emissions of a pollutant under the CAA, but expressed concern
that attempting to limit the form of future regulation will have adverse
consequences – one of the largest concerns is the amount of litigation
it is likely to engender.  The commenter (0062) asserts that EPA is far
more likely to achieve what is needed under these circumstances by
limiting its interpretation to the CO2 monitoring and light-duty vehicle
GHG rules at issue rather than issuing a sweeping pronouncement that
establishes a single factor that attempts to govern all future
pollutants; decisions respecting such future pollutants are better left
to a review at the time they arise based on all of the relevant facts at
the time.  The commenter (0062) believes that in the present
circumstance – where EPA is pursuing a rulemaking that clearly would
meet any reasonable reading of the term “subject to regulation” –
such a broad interpretation is not necessary, may produce inappropriate
results in the future, and may delay the overall implementation of the
program if it is challenged and overturned.

	Response:

In accordance with the position taken in the PSD Interpretive Memo and
supported by the first commenter above, EPA continues to believe it is
best to determine the full scope of pollutants “subject to
regulation” under the federal PSD program, in order to “resolve
ambiguity and reduce confusion among permitting authorities, the
regulated community, and other interested stakeholders.”  See Memo at
2.  Accordingly, this reconsideration action represents a broad
consideration of the most appropriate legal interpretation and policy
rationales for potentially applying PSD permitting requirements to all
pollutants regulated under the CAA.

	

At the outset, we disagree with the comment above that characterizes the
reconsideration as being broader than the original Memo.  In fact, this
reconsideration is seeking comment on issues specifically raised in the
Memo itself, such as the effect of an endangerment finding, control of a
pollutant in one SIP, and the interplay of this interpretation with our
PM2.5 rulemaking  (see Memo at 14-16), and on related issues brought to
EPA’s attention in other actions, such as comments in the California
waiver action seeking clarification of the impact of a waiver on PSD
implementation (see 74 FR 32744, 32783 (July 8, 2009). Accordingly, EPA
disagrees that the issues addressed in this reconsideration have been
resolved, will be moot, or are unrelated to the current issues.  As the
discussions in the notice of reconsideration and the resulting comments
make clear, each of these issues could have important impacts on our
consideration of PSD implementation for pollutants “subject to
regulation” under the relevant regulatory and statutory provisions.  

With regard to the specific illustration raised in the comment, we note
that the commenter has misconstrued the impact of the grant of a section
209 waiver in California.  As explained in response to specific comments
regarding whether a pollutant addressed by a section 209 waiver is
“subject to regulation” above, while an automobile in compliance
with state standards is treated as in compliance with federal standards
under CAA section 209(a)(3), the federal standards are still applicable
– if a manufacturer fails to comply with a state standard adopted
pursuant to a section 209 waiver, EPA can still bring an enforcement
action if the federal standards are violated.

	

EPA also disagrees that the interpretation presented in this action is
either too narrow or too broad.  Rather we believe that it is an
interpretation that resolves general ambiguity in the PSD regulatory
program.  To the extent that the commenter requests that EPA interpret
“subject to regulation” on a case-by-case basis to avoid speculated
impacts of the chosen interpretation on future actions , we note that in
adopting the “takes effect” interpretation regarding the timing of
PSD implementation, the response to comments provided earlier in this
document acknowledged that it will be helpful in some contexts for EPA
to provide additional implementation information specific to each new
pollutant that becomes subject to regulation and we have provided such
information with regard to the forthcoming LDV Rule that is anticipated
to establish the first controls on GHGs.  Moreover, EPA has no desire to
conduct a case-specific notice and comment process each time there is
the potential for PSD requirements to apply to a newly regulated
pollutant.  We believe it is best to provide an overall interpretation
that can used to provide future consistency in PSD regulatory actions,
and reject the notion that we should limit the current action to
consideration of GHGs. 

11.6.   Adequacy of Comment Opportunity 

 

Comment:

One industry commenter (0111) states that the close timing of the GHG
Rulemakings made it difficult for them to submit meaningful comments on
these rulemakings, particularly on the Motor Vehicle GHG Rule. 
Problematically, the GHG rulemakings were all published in the Federal
Register within just one month of each other.  Meanwhile, many
stakeholders, including the commenter (0111), were focused on and have
allocated substantial resources towards analyzing and preparing to
comply with the final mandatory GHG Reporting Rule, which was finalized
in the midst of all three GHG rulemaking comment periods, on October 30,
2009.  Further compounding the already tight timeline, the GHG
rulemaking comment deadlines fall within the holiday season—the Motor
Vehicle GHG Rule comments were due during the Thanksgiving holiday and
the PSD Tailoring Rule comments are due immediately after Christmas. 
The GHG rulemakings are legally and technically complex, with
significant and likely unprecedented consequences for its members.  Each
rulemaking on its own requires significant time and resources to fully
evaluate, develop data and analyses, and formulate appropriate comments.
 Given the close timing of the publication of the GHG rulemakings, the
current comment periods were simply insufficient to allow the commenter
(0111) a fair opportunity to do so.	

One industry organization representing many industries (0049, 0114)
requested an extension of the comment period for the LDVR, PSD and title
V GHG Tailoring Rule on, and this proposed “PSD Interpretive Memo
Reconsideration” on November 18, 2009 because the closing of the
comment periods and close timing of the GHG rulemakings makes it
difficult to fully analyze the rules, develop useful data, and submit
comments on all relevant aspects of the rule.  This commenter received a
reply from EPA’s Assistant Administrator (on November 25, 2009)
denying the extension request in its entirety.  The commenter (0114)
requested, on December 22, 2009, that EPA reconsider its denial.

One industry commenter (0078/0094) adds that the Reconsideration
Proposal, being framed as a stand alone section 307(d) rulemaking, but
not containing any proposed regulations to implement the interpretation
by force of law, may not be entitled to Chevron deference.  The
commenter claims that there is not sufficient opportunity to comment on
the Reconsideration Proposal, claims that U.S. EPA’s process
bifurcates the proposal from the proposed Tailoring Rule and any other
rulemaking necessary for its implementation, and argues that such
rulemaking is essential to evaluate and address the Reconsideration
Proposal’s legal, policy, technical and economic implications.  The
commenter (0078/0094) concludes that as a result, the proposal, standing
alone, does not embody the notice legally required to provide a fair
opportunity for comment.  

	Response:

	

As explained in the Nov. 25, 2009 response from Assistant Administrator
Gina McCarthy to the National Association of Manufacturers (described
above)  we were not able to extend the normal comment period for this
and the EPA’s other GHG actions.  We have reviewed the comments on
related actions and made every effort to understand comments on each of
these important packages.  In addition, as explained in Chapter 2 of
this RTC, since the PSD Interpretive Memo is interpretive in nature, EPA
was not required to go through a notice and comment rulemaking process
to issue the document.  EPA’s action to take comment on
reconsideration of the memorandum was voluntary.  Nevertheless, EPA has
taken the appropriate steps to provide an adequate opportunity for
comment on the issue raised in the PSD Interpretive Memorandum,
including providing twice the amount of time for comment described in
CAA section 307(h).  

   0075 comments were comments submitted by U.S. Chamber of Commerce in
response to the Advance Notice of Proposed Rulemaking “Regulating
Greenhouse Gas Emissions Under the Clean Air Act” published in the
Federal Register on July 30, 2008.

   Notably, the legislative record refers to “State” emission limit,
and makes no note of this State emission limitation having broader
applicability.  

   For example, EPA has already assembled a workgroup consisting of
members of the Clean Air Act Advisory Committee (CAAAC) to discuss and
identify the major issues and potential barriers to implementing the PSD
program for GHGs, with a focus on the BACT determination.  The workgroup
presented their initial recommendations to the CAAAC at the CAAAC’s
February 3, 2010, meeting, and the CAAAC unanimously voted to pass the
recommendations on to EPA.  EPA is currently reviewing those
recommendations and developing guidance addressing the issues raised
therein.  The workgroup is continuing to meet to assess issues that were
deferred in their initial recommendations, including GHG-specific
consideration of netting similar to that identified in the comments
above, and EPA anticipates that the we will also issue guidance in
accordance with the additional recommendations that arise from the
workgroup’s continued deliberations, as well as other issues that it
might be necessary to address that arise from inquiries by permitting
authorities and the regulated community.  (Additional information
regarding the workgroup and its work in this area are available at
http://www.epa.gov/air/caaac/climatechangewg.html.)  

   The increments for emissions of the various oxides of nitrogen are
expressed as concentrations of nitrogen dioxide (NO2). 

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