People interested in presenting oral testimony or inquiring if a hearing is to be held should contact Ms. Pamela S. Long, New Source Review Group, Air Quality Policy Division (C50403), U.S. EPA, Research Triangle Park, NC 27711, telephone number (919) 5410641. If a hearing is to be held, persons interested in presenting oral testimony should notify Ms. Long at least 2 days in advance of the public hearing. Persons interested in attending the public hearing should also contact Ms. Long to verify the time, date, and location of the hearing. The public hearing will provide interested parties the opportunity to present data, views, or arguments concerning these proposed rules. E. How is the preamble organized?

The information presented in this preamble is organized as follows: I. Preamble Glossary of Terms and Abbreviations
II. General Information

A. Does this action apply to me?

B. Where can I get a copy of this document and other related information?

C. What should I consider as I prepare my comments for EPA?

D. How can I find information about a possible public hearing?

E. How Is the preamble organized?
III. Overview of Proposed Rule
IV. Background

A. What are greenhouse gases and their sources?

B. What are the general requirements of the PSD program?

C. What are the general requirements of the title V operating permits program?

D. What is the current treatment of GHG emissions under the title V and PSD programs and what future actions may change that treatment?
V. What would be the administrative burdens of implementing PSD and title V at the current permitting thresholds?

A. PSD Implications

B. Title V Implications

C. ANPR Comments
VI. What is the legal rationale for this proposed Action?

A. ``Absurd Results'' Doctrine

B. ``Administrative Necessity'' Doctrine

C. StepbyStep Process

D. What were the ANPR comments received on GHG tailoring options for regulating GHG emissions under PSD and title V?
VII. Streamlining options and tools To address the administrative burdens of PSD and title V for GHGs

A. Permit Streamlining Techniques for PSD and Title V

B. Implementation of Streamlining Techniques and Overall Approach To Administering PSD and Title V Programs

C. Strategies for Obtaining GHG Reductions From Sources Under the Proposed GHG Permit Thresholds
VIII. Description and Rationale of Proposed Action

A. Proposed Permitting Thresholds for GHGs

B. What is the definition of the GHG pollutant for the proposed permitting thresholds?

C. What is the rationale for selecting the proposed GHG permitting thresholds for PSD?

D. What is the rationale for selecting the proposed firstphase GHG permitting threshold for title V?

E. how will EPA assess the GHG permitting thresholds in the first phase of the tailoring program, and how will epa develop the second phase?
IX. What would be the economic impacts of the proposed rule?

A. What entities are affected by this rule?

B. What are the estimated benefits to small sources due to regulatory relief?

C. What are the economic impacts of this rulemaking?

D. What are the costs of the proposed rule for society? X. What implementation issues are related to this proposal?

A. CAA Provisions Concerning SIP Requirements for PSD Programs, State Submittal Requirements, and EPA Action

B. What PSDSpecific implementation considerations are there?

C. What title VSpecific implementation issues are there?

D. GHGs and title V permit fees

E. Implementation assistance and support

XI. Statutory and Executive Order Reviews

A. Executive Order 12866Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132Federalism

F. Executive Order 13175Consultation and Coordination With Indian Tribal Governments

G. Executive Order 13045Protection of Children From Environmental Health Risks and Safety Risks

H. Executive Order 13211Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

I. National Technology Transfer and Advancement Act

J. Executive Order 12898Federal Actions To Address Environmental Justice in Minority Populations and LowIncome Populations

K. Determination Under Section 307(d)
XII. Statutory Authority

III. Overview of Proposed Rule

EPA is proposing to tailor the major source applicability thresholds for GHG emissions under the PSD and title V programs of the CAA by setting firstphase levels under both programs, setting a first phase PSD significance level \1\ for GHG emissions, undertaking efforts to streamline administrability of the programs, and committing to an assessment of administrability within 5 years and a secondphase rulemaking within 6 years.
\1\ ``Significant levels'' for regulated NSR pollutants are commonly called ``significance levels'' or ``significance
thresholds,'' and these terms are used interchangeably for purposes of this proposed action.

This proposal is necessary because EPA expects soon to promulgate regulations under the CAA to control GHG emissions from lightduty motor vehicles and, as a result, trigger PSD and title V applicability requirements for GHG emissions. When the lightduty vehicle rule is finalized, the GHGs subject to regulation under that rule would become immediately subject to regulation under the PSD program, meaning that from that point forward, prior to constructing any new major source or major modifications that would increase GHGs, a source owner would need to apply for, and a permitting authority would need to issue, a permit under the PSD program that addresses these increases. Similarly, for title V it would mean that any new or existing source exceeding the major source applicability level for those regulated GHGs, if it did not have a title V permit already, would have 1 year to submit a title V permit application.

If PSD and title V requirements apply at the applicability levels provided under the CAA, many small sources would be burdened by the costs of individualized PSD control technology requirements and permit applications. In addition, State permitting authorities would be paralyzed by enormous numbers of these permit applications; the numbers are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the permitting authorities. Based on the longestablished judicial doctrines of
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``absurd results'' and ``administrative necessity,'' this proposed rule would phase in PSD and title V applicability. As the first phase, this rule would establish applicability thresholds for both the PSD and title V programs at the level of 25,000 tpy CO2e, and would establish a PSD significance level of between 10,000 and 25,000 tpy CO2e. This rule also marks the beginning of a concerted effort by EPA to streamline administration of the PSD and title V programs as much as possible and as quickly as possible. In addition, EPA commits that, within 5 years of promulgating the first phase, EPA will conduct a study of the permitting authorities' ability to administer the programs going forward, and then, within a year, conduct rulemaking for the second phase of the program. This second phase will either confirm the firstphase permitting levels or establish revised ones or other streamlining techniques. EPA also proposes to identify as the pollutant subject to PSD and title V for applicability purposes the group of up to six GHG emissions, each one weighted for its global warming potential, that are included in regulations for their control under the CAA. EPA also proposes to conform its action on PSD State implementation plans (SIPs) and title V programs to match the proposed Federal applicability requirements.

More specifically, following this overview, section IV of this preamble provides background information as to the nature of GHG emissions and the general requirements of the PSD and title V programs. Currently, PSD applies to sources that emit at least 100 or 250 (depending on the source category) tpy of pollutants subject to regulation under the CAA, and title V generally applies to sources that emit at least 100 tpy of pollutants subject to regulation under the CAA. Currently, PSD and title V requirements apply on the basis of emissions applicability thresholds that are pollutantspecific mass emissions rates expressed in tpy. Under PSD, construction of a stationary source that has the potential to emit (PTE) a regulated NSR pollutant in an amount exceeding 100 or 250 tpy (depending on the source category) (the ``major stationary source'' threshold, in the terminology of EPA regulations) triggers PSD permitting requirements. PSD permitting requirements are also triggered if a major stationary source undertakes a modification that is projected to increase emissions of a regulated NSR pollutant above an emissions threshold (the ``significance level''). For any particular pollutant, this level is zero unless and until EPA establishes one on the basis of de minimis emissions or administrative necessity. Under title V, a source with emissions exceeding a ``major source'' emissions thresholdgenerally 100 tpy on a PTE basistriggers title V permitting requirements.

It should be noted that, as further explained in the background section, there are no geographic areas currently designated ``nonattainment'' for GHG pollutants; as a result, this action affects only the PSD program, and we are not proposing to amend the ``nonattainment NSR'' provisions of our major NSR program at this time, nor are we proposing to amend any provisions that affect minor NSR permitting.

Section IV of this preamble further describes the current and expected future treatment of GHG emissions for applicability purposes under those PSD and title V programs. In particular, section IV describes the lightduty motor vehicle rule, which EPA recently proposed and expects to promulgate by the end of March 2010, and which will control GHG emissions from certain mobile sources. Under EPA's current interpretation of PSD and title V applicability requirements, promulgation of this motor vehicle rule will trigger the applicability of PSD and title V requirements for stationary sources that emit GHGs.

In section V of this preamble, EPA describes the administrative burdens on permitting authorities if the requirements of PSD and title V programs are triggered without having this tailoring rule in place. In short, without this tailoring rule, the administrative burdens would be immense, and they would immediately and completely overwhelm the permitting authorities. Without this tailoring rule, permitting authorities would receive approximately 40,000 PSD permit applications each yearcurrently, they receive approximately 300and they would be required to issue title V permits for approximately some six million sourcescurrently, their title V inventory is some 15,000 sources. These increases are measured in orders of magnitude. We estimate the additional resource burdens in fulltime equivalents (FTEs) and time delays in processing permits, but the sheer numbers of additional permits by themselves paint the picture of the overwhelming administrative burdens.

In section VI of this preamble, we describe the legal rationale for this tailoring rule. The judicial doctrine of ``absurd results'' authorizes departure from a literal application of statutory provisions if it would produce a result that is inconsistent with other statutory provisions or congressional intent, and particularly one that would undermine congressional purposes. The judicial doctrine of ``administrative necessity'' authorizes an agency to depart from statutory requirements if the agency can demonstrate that the statutory requirements, as written, are impossible to administer. However, the agency must first attempt to mitigate administrative problems through techniques consistent with the statutory requirements, and, if variance from the statutory requirements nevertheless is necessary to allow administrability, the variance must be limited as much as possible.

As discussed in section VI of this preamble, to apply the statutory PSD and title V applicability thresholds to sources of GHG emissions would bring tens of thousands of small sources and modifications into the PSD program each year, and millions of small sources into the title V program. This extraordinary increase in the scope of the permitting programs, coupled with the resulting burdens on the small sources and on the permitting authorities, were not contemplated by Congress in enacting the PSD and title V programs. Moreover, the administrative strains would lead to multiyear backlogs in the issuance of PSD and title V permits, which would undermine the purposes of those programs. Sources of all typeswhether they emit GHGs or notwould face long delays in receiving PSD permits, which Congress intended to allow construction or expansion. Similarly, sources would face long delays in receiving title V permits, which Congress intended to promote enforceability. For these reasons, the absurd results doctrine applies to avoid a literal application of the thresholds.

By the same token, the impossibility of administering the permit programs brings into play the administrative necessity doctrine. This doctrine also justifies EPA to avoid a literal application of the threshold provisions.

Instead, these doctrines authorize EPA to apply the PSD and title V applicability provisions through a phased program. The first phase would establish the applicability thresholds at the 25,000tpy levels and vigorously develop streamlining measures that would facilitate applying PSD and title V on a broader scale with overburdening sources and administrators. In this manner, the phased approach reconciles the language of the statutory provisions with the results of their application and with congressional intent.

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In section VII of this preamble, we describe the streamlining techniquesshort of limiting the applicability of PSD and title V to higheremitting sourcesthat may be available to improve
administrability. These techniques range from defining ``potential to emit''which is the basis for calculating the statutory thresholdsto be closer to actual emissions, to general permits and presumptive best available control technology (BACT), which is the principal control requirement under the PSD program. Although these techniques offer promise over the long term to improve administrability, they cannot be in place by March 2010, when we expect PSD and title V requirements to be triggered for GHG emitters, or within a severalyear period thereafter. Accordingly, this tailoring rule is necessary at this time.

In section VIII of this preamble, we describe in detail our proposed tailoring rule. For the PSD program, we are proposing to establish, as the first phase, the GHG ``major stationary source'' emissions applicability threshold level at 25,000 tpy on a CO2e basis. That is, sources that emit at this level or higher would be considered ``major stationary sources'' and therefore would become subject to PSD requirements when they construct or modify. We are also proposing to establish in this first phase a PSD ``significance level'' emissions rate for GHGs and are proposing a range for that value of 10,000 to 25,000 tpy CO2e for comment. The ``significance'' level is important for determining whether existing sources that make physical or operational changes become subject to PSD and for determining whether sources that are subject to PSD for other pollutants are also subject to PSD for their GHG emissions.

As further described in section VIII of this preamble, for the title V operating permits program, we are also proposing to establish the GHG emissions applicability threshold level at 25,000 tpy CO2e for this first phase. That is, sources that emit at this level or higher would be considered ``major sources'' and therefore would become subject to title V requirements.

As further described in section VIII of this preamble, as an integral part of the tailoring rule, EPA proposes to commit to complete, within 5 years of a final rule, a study to evaluate the actual administrative burden resulting from the proposed GHG permitting thresholds and possible other thresholds, and the progress of developing streamlining techniques and augmentation of permitting authorities' resources. In addition, EPA commits to propose and promulgate a rulemakinginformed by the studywithin 6 years from the effective date of a final version of this rulemaking (i.e., 1 year from the completion of the study) that would establish the second phase, which would either reaffirm the GHG permitting thresholds, promulgate alternative thresholds, adopt other streamlining techniques, and/or take other action consistent with the goal of expeditiously meeting CAA requirements in light of the administrative burden that remains at that time.

During this first phase of the tailoring program, EPA proposes to make a concerted effort to assess and implement streamlining options, tools, and guidancesome of which we describe in section VII of this preambleto reduce the administrative burden on permitting authorities when implementing PSD and title V for GHGs. EPA proposes to undertake as many of these streamlining actions as possible and to do so as quickly as possible. In addition, for larger sources that would be subject to PSD and title V requirements during the first phase, EPA intends to work closely with the stakeholders to develop efficient methods for implementing those requirements. For smaller sources for which PSD and title V requirements would not apply during the first phase due to the increase in the major source applicability threshold, EPA intends to identify costeffective opportunities available as soon as possible to achieve GHG reductions through means other than PSD and title V (e.g., energy efficiency and other appropriate measures).

Section VIII of this preamble further describes our proposal to define the relevant pollutants as the group of up to six GHG emissions that have been regulated for control, calculated on the basis of global warming potential (GWP).\2\
\2\ The Intergovernmental Panel on Climate Change (IPCC) describes GWP as an index, based upon radiative properties of well mixed GHGs, measuring the radiative forcing of a unit mass of a given wellmixed greenhouse gas in the presentday atmosphere integrated over a chosen time horizon, relative to that of CO2. The GWP represents the combined effect of the differing times these gases remain in the atmosphere and their relative effectiveness in absorbing outgoing thermal infrared radiation. (Intergovernmental Panel on Climate Change (IPCC), Glossary of Terms used in the IPCC Fourth Assessment Report, WG1). http://www.ipcc.ch/ _____________________________________

Section IX of this preamble describes the burden and economic impacts of the proposed rule.

Section X of this preamble discusses implementation issues related to this proposal. These include conforming EPA approval of the PSD programs in SIPs and EPA approval of the State title V programs to be consistent with the proposed applicability threshold levels. By way of background, as soon as EPA promulgates a rule regulating for control of GHG emissionswhich we expect to occur with the proposed lightduty motor vehicle rule, scheduled for promulgation at the end of March 2010stationary sources will become subject to PSD and title V requirements. The major source thresholds for PSD and title V, significance level for PSD, and identification of GHGs subject to PSD and title V as proposed in this tailoring rule would each take effect immediately in the Federal PSD program (codified at 40 CFR 52.21) and in the Federal operating permits program (codified at 40 CFR 71), as applicable. To conform EPA action on PSD SIPs and State title V programs, EPA intends to limit its previous approval of those SIPs and title V programs to cover only the permitting of sources of GHG emissions at or above the proposed threshold levels. EPA will take no action onthat is, EPA will not disapprovethe PSD SIPs and title V programs to the extent they require permitting of GHG emitters at levels below the proposed thresholds. EPA proposes to take this action by virtue of its authority to reconsider its previous regulatory actions. Section X of this preamble also explains how we propose to address the treatment of GHGs in the fee programs under title V. IV. Background

A. What are greenhouse gases and their sources?

Gases that trap heat in the atmosphere are often called GHGs. Some GHGs such as carbon dioxide (CO2) are emitted to the atmosphere through natural processes as well as human activities. Other gases, such as fluorinated gases, are created and emitted solely through human activities. The primary GHGs of concern directly emitted by human activities include CO2, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). These six primary GHGs will, for the purposes of this proposal, be referred to collectively as ``the six primary GHGs.'' These six gases, once emitted, remain in the atmosphere for decades to centuries. Thus, they become wellmixed globally in the atmosphere and their concentrations accumulate when emissions exceed the rate at which natural processes remove them from the atmosphere. The heating effect caused by the humaninduced buildup of GHGs
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in the atmosphere is very likely the cause of most of the observed global warming over the last 50 years. A detailed explanation of climate change and its impact on health, society, and the environment is included in EPA's technical support document for the endangerment finding proposal (Docket ID No. EPAHQOAR200901710137).\3\
\3\ ``Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act,'' Climate Change Division, Office of Atmospheric Programs, U.S. Environmental Protection Agency, Washington, DC. April 17, 2009.

In the U.S., the combustion of fossil fuels (e.g., coal, oil, gas) is the largest source of CO2 emissions and accounts for 80 percent of total GHG emissions. More than half the energyrelated emissions come from large stationary sources such as power plants, while about a third come from transportation. Of the six primary GHGs, four (CO2, CH4, N2O, and HFCs) are emitted by motor vehicles. Industrial processes (such as the production of cement, steel, and aluminum), agriculture, forestry, other land use, and waste management are also important sources of GHG emissions in the U.S. These emissions are inventoried at a national level by EPA in the Inventory of U.S. Greenhouse Gas Emissions and Sinks.\4\
\4\ For additional information about the Inventory of U.S. Greenhouse Gas Emissions and Sinks, and for more information about GHGs, climate change, climate science, etc., see EPA's climate change Web site at http://www.epa.gov/climatechange/.

Different GHGs have different heattrapping capacities. It is useful to compare them to each other through the use of the CO2e metric. This metric incorporates both the heattrapping ability and atmospheric lifetime of each GHG and can be used to adjust the quantities, in tpy, of all GHGs relative to the GWP of CO2. When quantities of the different GHGs are multiplied by their GWPs, the different GHGs can be summed and compared on a CO2e basis. Depending on which GWP values are used, the calculated GHG emissions on a CO2e basis will vary. Throughout this preamble, we are applying the GWP values established by the Intergovernmental Panel on Climate Change (IPCC) in its Second Assessment Report (SAR) (IPCC 1996).\5\ For example, CH4 has a GWP of 21, meaning each ton of CH4 emissions would have 21 times as much impact on global warming over a 100year time horizon as 1 ton of CO2 emissions. Thus, on the basis of heattrapping capability, 1 ton of CH4 would equal 21 tons of CO2e. The GWPs of the six primary GHGs range from 21 (for CH4) up to 23,900 (for SF6). Aggregating all GHGs on a CO2e basis at the source level allows a facility to evaluate its total GHG emissions contribution based on a single metric. For a complete list of the applicable GWP values for each GHG, please refer to EPA's Inventory of U.S. Greenhouse Gas Emissions and Sinks. \5\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 19902007,'' U.S. Environmental Protection Agency, EPA 430R09004, April 15, 2009. Table 12, p. 16. http://www.epa.gov/climatechange/ emissions/usinventoryreport.html.
B. What are the general requirements of the PSD program?

1. Overview of the PSD Program

The PSD program is a preconstruction review and permitting program applicable to ``new major stationary sources'' and ``major modifications'' at existing major stationary sources, in the terminology of EPA's implementing regulations. The PSD program applies in areas meeting the healthbased National Ambient Air Quality Standards (NAAQS) or for which there is insufficient information to determine whether they meet the NAAQS (``unclassifiable'' areas). The PSD program is contained in part C of title I of the CAA. The ``nonattainment NSR'' program applies in areas not meeting the NAAQS and in the Ozone Transport Region, and is implemented under the requirements of part D of title I of the CAA. Collectively, we also commonly refer to these two programs as the major NSR program. The governing EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendices S and W. There is no NAAQS for CO2 or any of the other primary GHGs, nor does EPA plan to promulgate one; therefore, we do not anticipate that the

``nonattainment'' major NSR program will apply to GHGs.

The applicability of the PSD program to a particular source must be determined in advance of construction or modification and is pollutant specific. The primary criterion in determining PSD applicability is whether the proposed project is sufficiently large (in terms of its emissions) to be a major stationary source or major modification, both of which are described below.

a. Major Stationary Sources

Under PSD, a ``major stationary source'' is any source type belonging to a specified list of 28 source categories which emits or has a PTE of 100 tpy or more of any pollutant subject to regulation under the CAA, or any other source type which emits or has the potential to emit such pollutants in amounts equal to or greater than 250 tpy. See, e.g., 40 CFR 52.21(b)(1). We may refer to these levels as the 100/250tpy thresholds. A new source with a PTE at or above the applicable ``major stationary source threshold'' amount is subject to major NSR. These limits originate from section 169 of the CAA, which applies PSD to any ``major emitting facility'' \6\ and defines the term to include any source with a PTE of 100 or 250 tpy, depending on source category.
\6\ EPA's regulations employ the term ``major stationary source'' in lieu of ``major emitting facility.'' e.g., 40 CFR 52.21(a)(2)(i), (b)(1)(i).

b. Major Modifications

PSD applies to not only new construction but also to existing sources that undertake a ``major modification,'' which is defined in terms of the following three criteria:
(1) A physical change in, or change in the method of operation of, a ``major stationary source'' must occur;
(2) The change must result in an increase in emissions that is ``significant,'' that is, equal to or above the significance level defined for the pollutant in question, e.g., in 40 CFR 52.21(b)(23)); and
(3) The increase in emissions resulting from the change must be a significant net emissions increase. In other words, when the increase from the project is added to other contemporaneous increases or decreases in actual emissions at the source, the net emissions increase must be significant (equal to or above the significance level defined, e.g., in 40 CFR 52.21(b)(23)).

Generally, significance levels for PSD are pollutantspecific emissions rates. For example, the significance level for emissions of nitrogen oxides (NOX) is 40 tpy. See, e.g., 40 CFR 52.21(b)(23)(i). However, for a regulated NSR pollutant for which no specific significance level is listed, PSD applies to ``any increase.'' See, e.g., 40 CFR 52.21(b)(23)(ii). Thus, if GHGs were to become subject to regulation and PSD review, and no significance levels for GHGs had been established, the default value would be ``zero.''

EPA has promulgated significance levels for criteria pollutants and certain other pollutants, which EPA generally based on levels that represent a de minimis contribution to air quality problems. For example, for certain pollutants regulated under the new source performance standards (NSPS), EPA generally based significance levels at 20 percent of the NSPS. These concentrations were compared to available health and welfare data to assure that significant adverse effects
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were avoided.\7\ To this point, EPA has not established a significance level for GHGs, and we currently do not have an adequate supporting record to establish a similar health and welfarebased de minimis level for significance for GHGs.
\7\ EPA established significance levels for hazardous air pollutants on a similar basis, but subsequently, in the 1990 Clean Air Act Amendments, Congress mooted them by exempting hazardous air pollutants from PSD, under CAA section 112(b)(6).

2. General Requirements for PSD

Under the PSD program, one of the principal requirements is that a new major source or major modification must apply BACT, which is determined on a casebycase basis taking into account, among other factors, the cost and effectiveness of the control. EPA has developed a ``topdown'' approach for BACT review which involves a decision process that includes identification of all available control technologies, elimination of technically infeasible options, ranking of remaining options by control and cost effectiveness, and then selection of BACT. Under PSD, once a source is determined to be major for any regulated pollutant, a BACT review is performed for each attainment pollutant whose emissions exceed its PSD significance level as part of new construction or modification projects at the source.

In addition to performing a BACT review, the source must analyze the impact of the project on ambient air quality to assure that no violation of any NAAQS or PSD increments will result, and must analyze impacts on soil, vegetation, and visibility. Sources or modifications that would impact Class I areas (e.g., national parks) may be subject to additional requirements to protect air quality related values (AQRVs) that have been identified for such areas. Under PSD, if a source proposes to locate within 100 kilometers of a Class I area, the Federal Land Manager (FLM) is notified and is responsible for evaluating a source's projected impact on the AQRVs and recommending either approval or disapproval of the source's permit application based on anticipated impacts. There are currently no NAAQS or PSD increments established for GHGs, and therefore these PSD requirements would not apply to GHG emissions sources, even when PSD is triggered for GHG emissions sources. However, as noted previously, if PSD is triggered for a GHG emissions source, all regulated NSR pollutants which the new source emits in significant amounts would be subject to PSD requirements. Therefore, if a facility triggers review for regulated NSR pollutants that are nonGHG pollutants for which there are established NAAQS or increments, the air quality, additional impacts, and Class I requirements would apply to those pollutants.

When the reviewing authority reaches a preliminary decision to authorize construction of a proposed new major source or major modification, it must provide notice of the preliminary decision and an opportunity for comment by the general public, industry, and other interested persons. After considering and responding to the comments, the reviewing authority may issue a final determination on the construction permit in accordance with the PSD regulations.

Usually NSR permits are issued by State or local air pollution control agencies. In these cases, State and local air pollution control agencies may have their own permit programs that are approved by EPA in the SIP or they may be delegated the authority to issue permits on behalf of EPA. In some areas, the EPA issues the permits.

3. Minor NSR Program

The permitting program for minor stationary sources is addressed by section 110(a)(2)(C) of the CAA. We commonly refer to this program as the minor NSR program. A minor stationary source means a source whose PTE is lower than the major source applicability threshold for a particular pollutant as defined in the applicable nonattainment major NSR program or PSD program. As with nonattainment NSR requirements, the CAA does not require that minor source programs apply to GHGs because there are no NAAQS for GHGs.
C. What are the general requirements of the title V operating permits program?

1. Overview of Title V

The title V operating permits program was added to the CAA by Congress in 1990. The operating permits program requirements under title V are intended to improve sources' compliance with the requirements of the CAA. In summary, the title V program requires major sources (generally defined as sources that actually emit or have the potential to emit 100 tpy) and certain other sources to obtain operating permits that: Consolidate all CAA requirements into a single document; provide for review of these documents by EPA, States, and the public; and require permit holders to track, report, and annually certify their compliance status with respect to their permit requirements.

Title V will be triggered for GHG emissions when EPA regulates them for control under another provision of the CAA. Section 502(a) of the Act sets forth the sources required to obtain operating permits under title V. These sources include: (1) Any affected source subject to acid rain rules under title IV of the Act; (2) any major source; (3) any source required to have a permit under part C or D (PSD/NSR) of title I of the Act; (4) ``any source subject to section 111 [NSPS] or section 112 [NESHAP];'' and (5) any other source designated by rule. See also 40 CFR 70.3(a) and 71.3(a). The requirements of section 502(a) are primarily implemented through the operating permit program rules at 40 CFR part 70, which sets out the minimum requirements for title V operating permit programs administered by State, local, and tribal permitting authorities (57 FR 32261; July 21, 1992); and part 71, the Federal operating permit program requirements that apply where EPA or a delegate agency authorized by EPA to carry out a Federal permit program is the title V permitting authority (61 FR 34228, July 1, 1996).

Title V generally does not add new substantive requirements for pollution control, but it does require that each permit contain all of a facility's ``applicable requirements'' under the CAA, and that certain procedural requirements be followed, especially with respect to compliance with these requirements. ``Applicable requirements'' for title V purposes include all stationary source requirements, but do not include mobile source requirements.

2. Title V Permit Requirements

When a source becomes subject to title V, it must apply for a permit within 1 year of the date it became subject. The application must include identifying information, a description of emissions and other information necessary to determine applicability of CAA requirements, identification and certification of the source's compliance status with these requirements (including a schedule to come into compliance for any requirements for which the source is currently out of compliance), a statement of the methods for determining compliance, and other information. The permitting authority then uses this information to issue the source a permit to operate, as appropriate. A title V source may not operate without a permit, except that if it has submitted a complete application, the submission acts as a ``shield'' that
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authorizes it to operate while awaiting issuance of its permit.

Title V permits must contain the following main elements: (1) Emissions standards to assure compliance with all applicable requirements; (2) a duration of no more than 5 years, after which the permit must be renewed; (3) monitoring, recordkeeping, and reporting requirements necessary to assure compliance, including a semiannual report of all required monitoring and a prompt report of each deviation from a permit term; (4) provisions for payment of permit fees as established by the permitting authority such that total fees collected are adequate to cover the costs of developing and implementing the program; and (5) a requirement for an annual compliance certification by a responsible official at the source. An additional specific monitoring requirement, compliance assurance monitoring (CAM), also applies to some emissions units operating at major sources with title V permits. The CAM rule requires source owners to design and conduct monitoring of the operation of addon control devices used to control emissions from moderately large emissions units. Source owners use the monitoring data to evaluate, verify, and certify the compliance status for applicable emissions limits. The CAM rule is implemented in conjunction with the schedule of the operating permits program. While these are the main elements relevant to a discussion of GHGs, there are numerous other permit content requirements and optional elements, as set forth in the title V regulations at 40 CFR 70.6.

In addition to the permit content requirements, there are procedural requirements that permitting authorities (typically States) must follow in issuing title V permits, including (1) determining and notifying the applicant that its application is complete; (2) providing public notice and a 30day public comment period on the draft permit, as well as the opportunity for a public hearing; (3) giving notice to EPA and affected States; and (4) preparing and providing to any requester a statement of the legal and factual basis of the draft permit. The permitting authority must take final action on permit applications within 18 months of receipt. EPA also has 45 days from receipt of a proposed permit to object to its issuance, and citizens have 60 days to petition EPA to object. Permits may also need to be revised or reopened if new requirements come into effect or if the source makes changes that conflict with, or necessitate changes to, the current permit. Permit revisions and reopenings follow procedural requirements which vary depending on the nature of the necessary changes to the permits.
D. What is the current treatment of GHG emissions under the title V and PSD programs and what future actions may change that treatment?

This section of the preamble describes the current treatment of GHG emissions under the PSD and title V programsunder which GHG emissions are not included for purposes of determining applicabilityincluding recent regulatory and legal developments related to this action, and then describes what future action may change that treatment. 1. Regulation of GHGs Under the CAA

a. The Massachusetts U.S. Supreme Court Decision

On April 2, 2007, in Massachusetts v. EPA, 549 U.S. 497 (2007), the U.S. Supreme Court held that GHGs are air pollutants covered by the CAA. Therefore, the Court further held that GHG emissions are subject to CAA section 202(a) under which the Administrator must determine whether or not emissions of GHGs from new motor vehicles or motor vehicle engines cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision. This decision resulted from a petition for rulemaking under section 202(a) filed by more than a dozen environmental, renewable energy, and other advocacy organizations. As a result of this decision, EPA decided to issue an advance notice of proposed rulemaking (ANPR), discussed later in this preamble, soliciting comment on how GHG emissions should be regulated under the CAA.

b. The EPA ANPR

On July 30, 2008, EPA published an ANPR in the Federal Register entitled, ``Regulating Greenhouse Gas Emissions under the CAA.'' 73 FR 44354, July 30, 2008. This ANPR presented information relevant to, and solicited public comment on how to respond to, the U.S. Supreme Court's decision in Massachusetts v. EPA, holding that GHGs are air pollutants subject to the CAA. The notice reviewed the various CAA provisions (including the PSD and title V requirements) that may be applicable to sources of GHGs, examined the issues that regulating GHGs under those provisions may raise, provided information regarding potential regulatory approaches and technologies for reducing GHG emissions, and raised issues relevant to possible legislation and the potential for overlap between legislation and CAA regulation.

In addition, the notice described and solicited comment on petitions the EPA had received to regulate GHG emissions from ships, aircraft, and nonroad vehicles such as farm and construction equipment. Finally, the notice discussed several other actions concerning stationary sources for which EPA has received comment regarding the regulation of GHG emissions, including promulgation of performance standards or guidelines under CAA section 111 for new and existing sources in various source categories. The EPA included options for phasing in the PSD program and title V programs to mitigate burdens that would occur if GHGs were to be regulated under the CAA and solicited comments on those actions. Section V.C of this preamble summarizes some of the substantive comments received on the ANPR. In issuing the ANPR, EPA made clear that it believed that the best way to address the problems posed by GHG emissions would be through legislation directly addressing GHG emissions, rather than through use of the tools in the CAA.
2. Current Applicability of the PSD Program to Sources of GHG Emissions

As explained earlier in this preamble, EPA treats sources as subject to PSD requirements only if they emit ``regulated NSR pollutants'' at specified threshold levels. Currently, EPA does not consider GHG emissions to be ``regulated NSR pollutants'' under the PSD program because GHG emissions have not, thus far, been subject to regulation requiring control under the CAA. As discussed later in this preamble, EPA is in the process of reviewing its approach to PSD applicability and is in the process of developing a rulemakingthe lightduty motor vehicle rulethat will trigger PSD applicability for GHG emissions.

a. PSD Interpretive Memorandum

EPA is currently reconsidering the PSD Interpretive Memorandum (previously referred to as the ``Johnson Memorandum''), which describes the circumstances under which EPA considers a pollutant subject to PSD requirements. See memorandum (in docket for this rulemaking) from Administrator Stephen L. Johnson to Regional Administrators, ``EPA's Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program,'' December 18, 2008. The PSD
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Interpretive Memorandum followed a decision by the Environmental Appeals Board (EAB) in In re Deseret Power Electric Cooperative, on November 13, 2008. PSD Appeal No. 0703 (EAB 2008) (In re Deseret). There, the Board remanded a PSD permit that EPA Region VIII issued on August 30, 2007, to Deseret Power Electric Cooperative, authorizing the latter to construct a new wastecoalfired electric generating unit near its existing Bonanza Power Plant, in Bonanza, Utah. The primary issue before the Board was whether the permit had to include BACT limits for CO2, which depended on whether CO2 meets the definition of a ``regulated NSR pollutant'' under 40 CFR 52.21(b)(50), which in turn interprets the provisions in CAA sections 165 and 169 that apply the BACT requirement to ``each pollutant subject to regulation'' under the CAA. The Board rejected arguments by the petitioner, the Sierra Club, that the CAA compelled a broad interpretation of the phrase ``subject to regulation,'' which, according to the petitioner, required EPA to apply BACT to pollutants as long as they are subject to monitoring and reporting requirements. Currently, and since 1993, sources covered by the Acid Rain program have been required to monitor and report CO2 emissions pursuant to the CAA. The Board also rejected the view advanced by the EPA offices involved in the caseRegion VIII and the Office of Air and Radiationthat EPA had already established an interpretation of ``subject to regulation,'' which was that this term authorized BACT only for pollutants subject to actual regulatory controls. Thus, the Board remanded the permit to the Region to ``reconsider whether or not to impose a CO2 BACT limit in light of the `subject to regulation' definition under the CAA.'' In re Deseret, slip op. at 63.

On December 18, 2008, EPA's thenAdministrator Stephen Johnson issued a memorandum establishing an interpretation clarifying the scope of the PSD program under the CAA (the PSD Interpretive Memorandum). This memorandum interprets the definition of ``regulated NSR pollutant'' to 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, and to exclude pollutants for which EPA regulations only require monitoring or reporting.

On February 17, 2009, EPA Administrator Lisa Jackson responded to an amended petition for reconsideration dated January 6, 2009, filed on behalf of the Sierra Club and other parties (petitioners), seeking reconsideration of the PSD Interpretive Memorandum. In Administrator Jackson's response, she granted the petition for reconsideration in order to allow for public comment on issues raised in the memorandum and stated that EPA will also seek public comment on any issues raised by the opinion of the EAB with regard to the In re Deseret decision (as discussed in the PSD Interpretive Memorandum), to the extent they are not coextensive with the issues raised in the memorandum. However, Administrator Jackson made clear that the current interpretations in the PSD Interpretive Memorandum remain in effect during the reconsideration process.

Because the PSD Interpretive Memorandum concerns PSD applicability, its reconsideration will identify the circumstances under which GHG emissions are treated as ``subject to regulation under the CAA'' and, therefore, are ``regulated NSR pollutants.'' Once GHG emissions are considered ``regulated NSR pollutants,'' PSD program requirements for existing thresholds (100/250 tpy) are triggered. The PSD Interpretive Memorandum reconsideration is being addressed in a proposed rule published in the Federal Register on October 7, 2009 (74 FR 51535). Although several possible triggering events may be considered in that action, the latest of these events would be the one that applies under EPA's current interpretation: A nationwide rule controlling or limiting GHG emissions. Presently, the EPA expects that the first such rule will be the lightduty motor vehicle rule.

b. LightDuty Vehicle Rule

EPA is currently developing a rule to regulate GHGs from mobile sources under title II of the CAA (74 FR 24007; May 22, 2009). EPA expects to promulgate this rule by the end of March 2010. As described in the PSD Interpretive Memorandum, it is EPA's position that new pollutants become subject to PSD and title V when a rule controlling those pollutants is promulgated (and even before that rule takes effect). Accordingly, as soon as GHGs become regulated under the light duty motor vehicle rule, GHG emissions will be considered pollutants ``subject to regulation'' under the CAA and will become subject to PSD and title V requirements.

3. Current Applicability of Title V Program to GHGs

CAA section 502(a) and related definitions under sections 302 and 501, require that specified types of sources have operating permits. These include any source that emits or has a potential to emit 100 tpy of a pollutant subject to regulation (consistent with EPA's policy interpretation) \8\, any source with a NSR or PSD permit, any major source of a hazardous air pollutant (HAP), any source subject to acid rain requirements, and certain minor sources subject to section 111 or section 112 standards. As with the PSD program, currently GHGs are not considered to be subject to regulation and have not been considered to trigger title V applicability.
\8\ EPA included this policy interpretation that title V addresses 100tpy sources of ``pollutants subject to regulation'' in a memorandum from Lydia Wegman. 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). 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) promoting consistency with the approach under the PSD program. While the specific narrow interpretation in the Wegman Memorandum of the definition of ``air pollutant'' in CAA section 302(g) is in question in light of the Massachusetts v. EPA decision (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 title V applies to 100 tpy sources of pollutants subject to regulation. This interpretation is based primarily on the purpose of title V to include all regulatory requirements applicable to the source in one document to assure compliance, see, e.g., CAA section 504(a), and to promote consistency with the approach under the PSD program. V. What would be the administrative burdens of implementing PSD and title V at the current permitting thresholds?

This section of the preamble describes the additional administrative burdens for the PSD and title V programs in terms of staffing needs, time for processing permits, and costs that permitting authorities would incur if sources of GHG emissions were to trigger PSD and title V at the statutory thresholds, which we shorthand as the 100/ 250tpy thresholds. Evidence we have collected to this point makes it clear that if PSD and title V applicability requirements are triggered at those threshold levels, an enormous influx of permits would occur tens of thousands of PSD permits and millions of title V permitswhich would create enormous administrative burdens for permitting authorities that would far exceed their current capacity to administer the PSD and title V programs. It is also worth noting here that, under a scenario where
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State or local permitting authorities do not have the resources to implement the title V or PSD programs for GHG sources at current CAA permitting applicability thresholds, EPA may withdraw its approval, in which case, EPA would become the permitting authority and the enormous resource requirements would shift to EPA to implement these programs. A. PSD Implications

We evaluated the additional administrative burden and cost of including GHG emitters in the PSD program at the current 250tpy major source permitting threshold (but not at 100 tpy \9\). To calculate the administrative burdens and cost, we first estimated the number of new sources and modifications that would be subject to PSD if GHGs were included at the 250tpy threshold level. We developed these estimates of number of new sources and modifications as part of our GHG threshold data analyses. For more information on these analyses, see the technical support documents entitled ``Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation'' and ``Methodology for Estimating Modified Sources That Would Be Subject to PSD Permitting for GHGs;'' Prepared by EPA Staff; August 2009 in the docket for this rulemaking.
\9\ In light of time and resource constraints, we did not calculate the additional administrative burden and cost of including in the PSD program sources that emit between 100 tpy and 250 tpy and that are among the 28 source categories identified in CAA section 169(l). Including these sources in the calculation would increase the administrative burdens and costs of implementing PSD at the statutory thresholds.

After estimating the number of affected facilities and sources, we then evaluated the additional administrative burden and cost of including these numbers of new and modified GHG emitters in the PSD program. Our burden estimates are based on labor and cost information from the existing Information Collection Requests (ICRs) for PSD programs.\10\
\10\ ``Summary of ICRbased Data Used to Estimate Avoided Burden and Evaluate Resource Requirements at Alternative GHG Permitting Thresholds;'' Prepared by EPA Staff; August 2009.

Based on our GHG threshold data analysis, we estimate that almost 41,000 new and modified facilities per year would be subject to PSD review, based on the current rate of modifications at major sources, if a GHG major source threshold of 250 tpy CO2e were applied. Compared to the 280 PSD permits currently issued per year, this would be an increase in permits of more than 140fold.

We estimated the number of workload hours and cost a permitting authority would expend on each new source and each modification. We based these estimates on the workload hours and cost for processing permits for new sources of nonGHG emissions, which we derived from labor and cost information from the existing ICRs for PSD programs. The ICRs show that permitting authorities expend 301 hours to permit a new or modified industrial source. For more detail on information used from the PSD ICR for this evaluation, please refer to the docket for this rulemaking.

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

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

In addition to conducting our burden analysis, we also reviewed summary information from State and local air permitting agencies regarding additional resources and burden considerations if GHG sources that emit above the 100/250tpy thresholds were

FOR FURTHER INFORMATION CONTACT

Mr. Joseph Mangino, Air Quality Policy Division, Office of Air Quality Planning and Standards (C50403), Environmental Protection Agency, Research Triangle Park, NC 27711; telephone number: (919) 5419778; fax number: (919) 5415509; email address: mangino.joseph@epa.gov.

To request a public hearing, please contact Pam Long, Air Quality Planning Division, Office of Air Quality Planning and Standards (C504 03), Environmental Protection Agency, Research Triangle Park, NC 27711; telephone number: (919) 5410641; fax number: (919) 5415509 no later than November 16, 2009 to request a hearing.