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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2011-10285

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** May 3, 2011
- **Citation:** 76 FR 25178

## Text

ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-HQ-OAR-2010-1033; FRL-9299-9]
RIN 2060-AQ68
Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas's Prevention of Significant Deterioration Program

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

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

DATES:

This action is effective on May 1, 2011.

ADDRESSES:

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

FOR FURTHER INFORMATION CONTACT:

For information on this rule, contact Ms. Cheryl Vetter, Air Quality Policy Division, Office of Air Quality Planning and Standards (C504-03), Environmental Protection Agency, Research Triangle Park, NC 27711;
telephone number:
(919) 541-4391;
fax number:
(919) 541-5509;
e-mail address: vetter.cheryl@epa.gov
.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

The only governmental entity potentially affected by this rule is the State of Texas. Other entities potentially affected by this rule include sources in all industry groups within the State of Texas, which have a direct obligation under the CAA to obtain a PSD permit for GHGs for projects that meet the applicability thresholds set forth in the Tailoring Rule.
1

This independent obligation on sources is specific to PSD and derives from CAA section 165(a). The majority of entities potentially affected by this action are expected to be in the following groups:

1
Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule. 75 FR 31,514 (June 3, 2010). The Tailoring Rule is described in more detail later in this preamble.

Industry Group

NAICS
a

Utilities (electric, natural gas, other systems)
2211, 2212, 2213.

Manufacturing (food, beverages, tobacco, textiles, leather)
311, 312, 313, 314, 315, 316.

Wood product, paper manufacturing
321, 322.

Petroleum and coal products manufacturing
32411, 32412, 32419.

Chemical manufacturing
3251, 3252, 3253, 3254, 3255, 3256, 3259.

Rubber product manufacturing
3261, 3262.

Miscellaneous chemical products
32552, 32592, 32591, 325182, 32551.

Nonmetallic mineral product manufacturing
3271, 3272, 3273, 3274, 3279.

Primary and fabricated metal manufacturing
3311, 3312, 3313, 3314, 3315, 3321, 3322, 3323, 3324, 3325, 3326, 3327, 3328, 3329.

Machinery manufacturing
3331, 3332, 3333, 3334, 3335, 3336, 3339.

Computer and electronic products manufacturing
3341, 3342, 3343, 3344, 3345, 4446.

Electrical equipment, appliance, and component manufacturing
3351, 3352, 3353, 3359.

Transportation equipment manufacturing
3361, 3362, 3363, 3364, 3365, 3366, 3369.

Furniture and related product manufacturing
3371, 3372, 3379.

Miscellaneous manufacturing
3391, 3399.

Waste management and remediation
5622, 5629.

Hospitals/nursing and residential care facilities
6221, 6231, 6232, 6233, 6239.

Personal and laundry services
8122, 8123.

Non-residential (commercial)
Not available. Codes only exist for private households, construction and leasing/sales industries.

a
North American Industry Classification System.

B. How is the preamble organized?

The information presented in this preamble is organized as follows:

I. General Information

A. Does this action apply to me?

B. How is the preamble organized?

II. Overview of Rulemaking

III. Background

A. Requirements for SIP Submittals and EPA Action

B. General Requirements for the PSD Program

C. Regulatory Background: Texas SIP and PSD Program

D. Regulatory Background: GHG Rules

IV. Final Action and Response to Comments

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

B. Determination That EPA's Previous Approval of Texas's PSD Program Was in Error

C. Error Correction: Conversion of Previous Approval to Partial Approval and Partial Disapproval

D. Reconsideration Under CAA Section 301, Other CAA Provisions, and Case Law

E. Relationship of This Action to GHG PSD SIP Call

F. Relationship of This Rulemaking to Other States

G. Federal Implementation Plan

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform

E. Executive Order 13132—Federalism

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

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

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

I. National Technology Transfer and Advancement Act

J. Executive Order 12898—Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

K. Congressional Review Act

VI. Judicial Review

II. Overview of Rulemaking

This notice-and-comment final rulemaking is intended to assure that large GHG-emitting sources in Texas, which became subject to PSD on January 2, 2011, will continue to be able to obtain preconstruction permits under the CAA New Source Review (NSR) PSD program beyond the April 30, 2011, expiration date of the FIP that EPA put in place for this purpose via an Interim Final Rule. “Determinations Concerning Need for Error Correction, Partial Approval and Partial Disapproval, and Federal Implementation Plan Regarding Texas Prevention of Significant Deterioration Program; Interim Final Rule.” 75 FR 82,430 (Dec. 30, 2010). In this manner, this rulemaking will allow those sources to avoid delays in construction or modification.

As in the interim final rulemaking, EPA is determining in this rulemaking that it erred in fully approving Texas's PSD program in 1992 because at that time, the program had a gap, which recent statements by Texas have made particularly evident. The program did not address its application to, or provide assurances that it has adequate legal authority to apply to, all pollutants newly subject to regulation, including non-NAAQS pollutants, among them GHGs. As a result, EPA is correcting its previous full approval to be a partial approval and partial disapproval. EPA is taking this action through the error-correction mechanism provided under CAA section 110(k)(6). The partial disapproval requires EPA, under CAA section 110(c)(1)(B), to promulgate a FIP within 2 years, and, as part of this rulemaking, EPA is exercising its discretion to promulgate the FIP immediately. Under the FIP, EPA will become the permitting authority for, and apply Federal PSD requirements to, large GHG-emitting sources in accordance with the thresholds established under what we call the Tailoring Rule, which EPA published by notice dated June 3, 2010, 75 FR 31,514.
2

2
Texas will continue to be the permitting authority for non-GHG pollutants for sources that triggered PSD requirements due to such other pollutants. EPA will be the permitting authority for all pollutants for sources that trigger PSD solely because of their GHGs, which may occur after July 1, 2011, under the Tailoring Rule. This permitting process will also take place in the seven other states for which EPA is implementing a GHG PSD FIP.

By becoming the permitting authority, EPA will be able to process preconstruction PSD permit applications for GHG-emitting sources and thereby allow the affected sources to avoid delays in construction and modification. According to Texas, 167 GHG-emitting sources will require PSD permits during 2011. These sources have a real need to have a permitting authority in place in Texas. Although the CAA allows states to implement PSD, and Texas has been implementing an EPA-approved PSD program since 1992, Texas has recently informed EPA that it does not have the intention or the authority to apply PSD to GHG-emitting sources, and that it could very well maintain this position even if the U.S. Court of Appeals for the DC Circuit (the DC Circuit) upholds the GHG rules against legal challenges that Texas and other parties have recently brought. Texas's unwillingness to implement this aspect of the Federal PSD program leaves EPA no choice but to resume its role as the permitting authority for this portion, in order to assure that businesses in Texas are not subject to delays or potential legal challenges and are able to move forward with planned construction and expansion projects that will create jobs and otherwise benefit the state's and the nation's economy. EPA has determined that this action is necessary at this time so that there is no period of time when sources are unable to obtain necessary PSD permits.

In order to assure no gap in permitting, EPA is establishing May 1, 2011, as the effective date for the FIP, which immediately follows the expiration of the interim-final FIP EPA published by notice dated December 30, 2010. EPA stated in the interim final rule that the FIP would remain in place until April 30, 2011.

III. Background

A. Requirements for SIP Submittals and EPA Action

This section reviews background information concerning the CAA requirements for what SIPs must include, the process for state submittals of SIPs, requirements for EPA action on SIPs and SIP revisions, and FIPs.

1. Requirements for What SIPs Must Include

Congress enacted the NAAQS and SIP requirements in the 1970 CAA Amendments. CAA section 110(a)(1) requires that states adopt and submit to EPA for approval SIPs that implement the NAAQS. CAA section 110(a)(2) contains a detailed list of requirements that all SIPs must include to be approvable by EPA.

Of particular relevance for this action, subparagraph (E)(i) of CAA section 110(a)(2) provides that SIPs must “provide * * * necessary assurances that the state * * * will have adequate personnel, funding, and authority under State * * * law to carry out such implementation plan.* * *” As applicable to PSD programs, this provision means that EPA may approve the SIP PSD provisions only if EPA is satisfied that the state will have adequate legal authority under state law.

2. EPA Action on SIP Submittals

After a SIP or SIP revision has been submitted, EPA is authorized to act on it under CAA section 110(k)(3)-(4). Those provisions authorize a full approval or, if the SIP or SIP revision meets some but not all of the applicable requirements, a conditional approval, a partial approval and disapproval, or a full disapproval. If EPA disapproves a required SIP or SIP revision, then EPA must promulgate a FIP at any time within 2 years after the disapproval, unless the state corrects the deficiency within that period of time by submitting a SIP revision that EPA approves. CAA section 110(c)(1).
3

3
States are subject to sanctions for failure to submit, or for EPA disapproval of, SIPs for nonattainment areas, under CAA section 179. These

sanctions provisions are not relevant for this rule because they do not apply to PSD SIPs.

3. SIP Call

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

(5) Calls for plan revisions

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

This provision by its terms authorizes the Administrator to “find[] that [a SIP] * * * is substantially inadequate to * * * comply with any requirement of this Act,” and, based on that finding, to “require the State to revise the [SIP] * * * to correct such inadequacies.” This latter action is commonly referred to as a “SIP call.” In addition, this provision authorizes EPA to establish a “reasonable deadline[] (not to exceed 18 months after the date of such notice)” for the submission of the corrective SIP revision.

If EPA does not receive the corrective SIP revision by the deadline, CAA section 110(c) authorizes EPA to “find[] that [the] State has failed to make a required submission.” CAA section 110(c)(1)(A). Once EPA makes that finding, CAA section 110(c)(1) requires EPA to “promulgate a Federal implementation plan at any time within 2 years after the [finding] * * * unless the State corrects the deficiency, and [EPA] approves the plan or plan revision, before [EPA] promulgates such [FIP].”

CAA section 110(k)(5), by its terms—specifically, the use of the term “[w]henever”—authorizes, but does not require, EPA to make the specified finding and does not impose any time constraints for EPA to do so. As a result, EPA has discretion in determining whether and when to make the specified finding.
See New York Public Interest Research Group
v.
Whitman,
321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase “Whenever the Administrator makes a determination” in CAA section 502(i)(1) grants EPA “discretion whether to make a determination”);
Her Majesty the Queen in Right of Ontario
v.
EPA,
912 F.2d 1525, 1533 (DC Cir. 1990) (“whenever” in CAA section 115(a) “impl[ied] a degree of discretion” in whether EPA had to make a finding).

4. Authority for EPA to Revise Previous Action on SIPs

EPA has authority to revise its previous actions concerning SIP submittals. Two mechanisms are available to EPA: The error correction mechanism provided under CAA section 110(k)(6), and EPA's general administrative authority to reconsider its own actions under CAA sections 110 and 301(a), in light of case law.

(a) Error Correction Under CAA Section 110(k)(6)

CAA section 110(k)(6) provides as follows:

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

The key provisions for present purposes are that the Administrator has the authority to “determine[]” when a SIP approval was “in error,” and when she does so, she may then revise the SIP approval “as appropriate,” in the same manner as the approval, and without requiring any further submission from the state.

As quoted previously, CAA section 110(k)(6) provides EPA with the authority to correct its own “error,” but nowhere does this provision or any other provision in the CAA define what qualifies as “error.” Thus, the term should be given its plain language, everyday meaning, which includes all unintentional, incorrect or wrong actions or mistakes.

The legislative history of CAA section 110(k)(6) is silent regarding the definition of error, but the timing of the enactment of the provision suggests a broad interpretation. The provision was enacted shortly after the Third Circuit decision in
Concerned Citizens of Bridesburg
v.
U.S. EPA,
836 F.2d 777 (1987). In
Bridesburg,
the court adopted a narrow interpretation of EPA's authority to unilaterally correct errors. The court stated that such authority was limited to typographical and other similar errors, and stated that any other change to a SIP must be accomplished through a SIP revision.
Id.
at 786. In
Bridesburg,
EPA determined that it lacked authority to include odor regulations as part of a SIP unless the odor regulations had a significant relationship to achieving a NAAQS, and so directly acted to remove 13-year-old odor provisions from the Pennsylvania SIP.
Id.
at 779-80. EPA found the previous approval of the provisions to have been an inadvertent error, and so used its “inherent authority to correct an inadvertent mistake” to withdraw its prior approval of the odor regulations without seeking approval of the change from Pennsylvania.
Id.
at 779-80, 785. After noting that Congress had not contemplated the need for revision on the grounds cited by EPA,
Id.
at 780, the court found that EPA's “inherent authority to correct an inadvertent mistake” was limited to corrections such as “typographical errors,” and that instead EPA was required to use the SIP revision process to remove the odor provision from the SIP.
Id.
at 785-86.

When the court made its determination in
Bridesburg
in 1987, there was no provision explicitly addressing EPA's error correction authority under the CAA. In 1990, Congress passed CAA section 110(k)(6). The legislative history says little about the provision, and does not mention
Bridesburg.
Even so, the terms of the provision make it evident that Congress authorized EPA to undertake a broader set of revisions under the guise of error correction than the
Bridesburg
court read the pre-existing Clean Air Act to authorize, and that Congress did not intend to codify the holding of
Bridesburg.
This is apparent because CAA section 110(k)(6) both (i) authorizes EPA to correct SIP approvals and other actions that were “in error,” which, as noted previously, broadly covers any mistake, and thereby contrasts with the holding in
Bridesburg
that EPA's pre-section 110(k)(6) authority was limited to correction of typographical or similar mistakes; and (ii) provides that the error correction need not be accomplished via the SIP revision or SIP call process, which contrasts with the holding of
Bridesburg
requiring a SIP revision. By the same token, because the
Bridesburg
decision stood for the proposition that EPA could not correct anything more than a narrow range of errors, had Congress intended to codify the decision in
Bridesburg,
it is logical that Congress would have described the type of error that EPA was authorized to correct in the same limited way that the decision did. In this manner, the fact that Congress adopted CAA section 110(k)(6) against the backdrop of the
Bridesburg
case confirms that the provision cover a broad range of errors.

EPA has used CAA section 110(k)(6) in the past to correct errors of a non-technical nature. Most recently, EPA withdrew its approval of SIP PSD

programs in 24 states to the extent they apply PSD to GHG-emitting sources below the thresholds in the final Tailoring Rule. “Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting Sources in State Implementation Plans; Final Rule,” 75 FR 82,536 (Dec. 30, 2010)(Narrowing Rule). In addition, EPA has used CAA section 110(k)(6) as authority to make substantive corrections to remove a variety of provisions from Federally approved SIPs that are not related to the attainment or maintenance of NAAQS or any other CAA requirement.
See, e.g.,
“Approval and Promulgation of Implementation Plans; Kentucky: Approval of Revisions to the State Implementation Plan,” 75 FR 2,440 (Jan. 15, 2010) (correcting the SIP by removing a provision, approved in 1982, used to address hazardous or toxic air pollutants); “Approval and Promulgation of Implementation Plans; New York,” 73 FR 21,546 (April 22, 2008) (issuing a direct final rule to correct a prior SIP correction from 1998 that removed general duties from the SIP but neglected to remove a reference to “odor” in the definition of “air contaminant or air pollutant”); “Approval and Promulgation of Implementation Plans; New York,” 63 FR 65,557 (Nov. 27, 1998) (issuing direct final rule to correct SIP by removing a general duty “nuisance provision” that had been approved in 1984); “Correction of Implementation Plans; American Samoa, Arizona, California, Hawaii, and Nevada State Implementation Plans,” 63 FR 34,641 (June 27, 1997) (correcting five SIPs by deleting a variety of administrative provisions concerning variances, hearing board procedures, and fees that had been approved during the 1970s).

CAA section 110(k)(6), by its terms—specifically, the use of the terms “[w]henever” and “may” and the lack of any time constraints—authorizes, but does not require, EPA to make the specified finding. As a result, EPA has discretion in determining whether and when to make the specified finding.
See New York Public Interest Research Group
v.
Whitman,
321 F.3d 316, 330-31 (2d Cir. 2003) (opening phrase “Whenever the Administrator makes a determination” in CAA section 502(i)(1) grants EPA “discretion whether to make a determination”);
Her Majesty the Queen in Right of Ontario
v.
EPA,
912 F.2d 1525, 1533 (DC Cir. 1990) (“whenever” in CAA section 115(a) “impl[ied] a degree of discretion” in whether EPA had to make a finding).

(b) Inherent Authority To Reconsider

The provisions in CAA section 110 that authorize EPA to take action on a SIP revision inherently authorize EPA to, on its own initiative, reconsider and revise that action as appropriate. The courts have found that an administrative agency has the inherent authority to reconsider its decisions, unless Congress specifically proscribes the agency's discretion to do so.
See, e.g.,

Gun South, Inc.
v.
Brady,
877 F.2d 858, 862 (11th Cir. 1989) (holding that agencies have implied authority to reconsider and rectify errors even though the applicable statute and regulations do not provide expressly for such reconsideration);
Trujillo
v.
General Electric Co.,
621 F.2d 1084, 1086 (10th Cir. 1980) (“Administrative agencies have an inherent authority to reconsider their own decisions, since the power to decide in the first instance carries with it the power to reconsider”);
see also New Jersey
v.
EPA,
517 F.3d 574 (DC Cir. 2008) (holding that an agency normally can change its position and reverse a prior decision but that Congress limited EPA's ability to remove sources from the list of hazardous air pollutant source categories, once listed, by requiring EPA to follow the specific delisting process at CAA section 112(c)(9)).
4

4
For additional case law,
see Belville Mining Co.
v.
United States,
999 F.2d 989, 997 (6th Cir. 1993);
Dun & Bradstreet Corp.
v.
United States Postal Service,
946 F.2d 189, 193 (2d Cir. 1991);
Iowa Power & Light Co.
v.
United States,
712 F.2d 1292 (8th Cir. 1983).

Section 301(a) of the CAA, read in conjunction with CAA section 110 and the case law just described, provides further statutory authority for EPA to reconsider its actions under CAA section 110. CAA section 301(a) authorizes EPA “to prescribe such regulations as are necessary to carry out [EPA's] functions” under the CAA. Reconsidering prior rulemakings, when necessary, is part of “[EPA's] functions” under the CAA—in light of EPA's inherent authority as recognized under the case law to do so—and, as a result, CAA section 301(a) confers such authority upon EPA.

EPA finds further support for its authority to narrow its approvals in the Administrative Procedures Act (APA) section 553(e), which requires EPA to give interested persons “the right to petition for the issuance, amendment, or repeal of a rule,” and CAA section 307(b)(1), which expressly contemplates that persons may file a petition for reconsideration under certain circumstances (at the same time that a rule is under judicial review). These authorizations for other persons to petition EPA to amend or repeal a rule suggest that EPA has inherent authority, on its own, to issue such amendment or repeal. This is because EPA may grant a petition from another person for an amendment to or repeal of a rule only if justified under the CAA, and if such an amendment or repeal is justified under the CAA, then EPA should be considered as having inherent authority to initiate the process on its own, even without a petition from another person.

EPA recently used its authority to reconsider prior actions and limit its prior approval of a SIP in connection with California conformity SIPs.
See, e.g.,
68 FR 15,720, 15,723 (discussing prior action taken to limit approvals); 67 FR 69,139 (taking final action to amend prior approvals to limit their duration); and 67 FR 46,618 (proposing to amend prior approvals to limit their duration, based on CAA sections 110(k) and 301(a)). EPA had previously approved SIPs with emissions budgets based on a mobile source model that was current at the time of EPA's approval. Later, EPA updated the mobile source model. But, even though the model had been updated, emissions budgets would continue to be based on the older, previously approved model in the SIPs, rather than the updated model. To rectify this problem, EPA conducted a rulemaking that revised the previous SIP approvals so that the approvals of the emissions budgets would expire early, when the new ones were submitted by states and found adequate, rather than when a SIP revision was approved. This helped California more quickly adjust its regulations to incorporate the newer model. EPA is using its authority to reconsider and limit its prior approval of SIPs generally in the same manner as it did in connection with California conformity SIPs.

5. FIPs

As noted previously, if the state fails to submit a required SIP revision, or does so but EPA then disapproves that SIP revision, then the CAA requires EPA to promulgate a FIP and thereby, in effect, federalize the part of the air pollution control requirements for which the state, through the required SIP revision, would otherwise have been responsible. Specifically, under CAA section 110(c)(1), EPA is required to:

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

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

Although this provision, by its terms, mandates that EPA promulgate a FIP under the specified circumstances, and mandates that EPA do so within 2 years of when those circumstances occur, the provision gives EPA discretion to promulgate the FIP “at any time within [that] 2 year[]” period. Thus, EPA is authorized to promulgate a FIP immediately after either the specified state failure to submit or EPA disapproval.

However, CAA section 110(c)(1), as quoted earlier, further provides that if EPA delays promulgating a FIP until later in the 2-year period, and, in the meantime, the state corrects the deficiency by submitting an approvable SIP revision that EPA approves, then EPA is precluded from promulgating the FIP. Similarly, once EPA promulgates a FIP, it stays on the books until the state submits an approvable SIP that EPA then approves.

B. General Requirements for the PSD Program

The PSD program is a preconstruction review and permitting program applicable, under EPA rules, to large new stationary sources and, in general, expansions of existing sources. The PSD program applies in areas that are designated “attainment” or “unclassifiable” for a NAAQS, and is contained in part C of title I of the CAA.
5

Specifically, under EPA's regulations, PSD applies to a “major stationary source” that newly constructs or that undertakes a “major modification.” 40 CFR 52.166(a)(7), (b)(1)(i), (b)(2)(i). A “major stationary source” is any source that emits or has the potential to emit 100 or 250 tpy or more, depending on the source category, of any “regulated NSR pollutant.” 40 CFR 51.166(b)(1)(i)(a). The regulations define that term to include four classes of air pollutants, including, as a catch-all, “any pollutant that otherwise is subject to regulation under the Act.” 40 CFR 51.166(b)(49)(iv). As discussed later in this preamble, the phrase “subject to regulation” began to include GHGs on January 2, 2011, under our interpretation of that phrase as described in the Tailoring Rule, 75 FR at 31,580/3, and what we call the “Johnson Memo Reconsideration” (or the “Timing Decision”).
6

5
In contrast, the “nonattainment new source review (NSR)” program applies in areas not in attainment of a NAAQS and in the Ozone Transport Region and is implemented under the requirements of part D of title I of the CAA. We commonly refer to the PSD program and the nonattainment NSR program together as the major NSR program. The EPA rules governing both programs are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, Appendices S and W. There is no NAAQS for CO
2
or any of the other well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore, unless and until we take further such action, the nonattainment NSR program does not apply to GHGs.

6
“Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs.” 75 FR 17,004 (April 2, 2010). This action finalizes EPA's response to a petition for reconsideration of “EPA's Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program” (commonly referred to as the “Johnson Memo”), December 18, 2008.

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

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

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

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

CAA section 161 provides that:

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

These provisions, read in conjunction with the PSD applicability provisions, CAA sections 165(a)(1) and 169(1), mandate that SIPs include PSD programs that are applicable to any air pollutant that is subject to regulation under the CAA, including, as discussed later in this preamble, GHGs as of January 2, 2011.
7

7
In the Tailoring Rule, we noted that commenters argued, with some variations, that the PSD provisions applied only to NAAQS pollutants, and not GHGs, and we responded that the PSD provisions apply to all pollutants subject to regulation, including GHGs.
See
75 FR 31,560-62; “Prevention of Significant Deterioration and Title V GHG Tailoring Rule: EPA's Response to Public Comments,” May 2010, pp.38-41. We did not reopen that issue in this rulemaking.

Most states have EPA-approved SIP PSD programs, and as a result, in those states, PSD permits are issued by state or local air pollution control agencies. In states that do not have EPA-approved SIP PSD programs, EPA issues PSD permits under its own authority, although in some cases, EPA has delegated such authority to the state or local agency.

1. Applicability of PSD to Non-NAAQS Pollutants

EPA has long held the view that PSD applies to “any pollutant subject to regulation under the CAA,” and that includes non-NAAQS pollutants. EPA's long-standing regulations have interpreted CAA section 165(a) broadly enough to capture non-NAAQS pollutants. A detailed discussion of these positions was provided in the Tailoring Rule at 75 FR 31,560/3, and in the Interim Final Rule at 75 FR 82,443.

2. Automatic Application of PSD to Newly Regulated Pollutants

Under the PSD applicability requirements, PSD applies to sources automatically, that is, by operation of law, as soon as their emissions of pollutants become subject to regulation under the CAA. This is because CAA section 165(a)(1) prohibits “major emitting facilit[ies]” from constructing or modifying without obtaining a permit that meets the PSD requirements, and CAA section 169(1) defines a “major emitting facility” as a source that emits a specified quantity of “any air pollutant,” which, as noted earlier, EPA has long interpreted as any pollutant subject to regulation. Whenever EPA promulgates control requirements for a pollutant for the first time, that pollutant becomes subject to regulation, and any stationary source that emits that pollutant in sufficient quantities becomes a “major emitting facility” that, when it constructs or modifies, becomes subject to PSD without any further action from EPA or a state or local government.

EPA regulations have long codified automatic PSD applicability.
See
43 FR 26,380, 26403/3, 26406 (June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57,479, 57,480, 57,483 (November 3, 1977) (proposing 40 CFR 51.21(b)(1)(i)) (applying PSD requirements to a “major stationary source” and defining that term to include sources that emit specified quantities of “any air pollutant regulated under the Clean Air Act”). Most recently, in the 2002 NSR Reform Rule, EPA reiterated these requirements, although changing the terminology to “any regulated NSR pollutant.” 67 FR 80,186. EPA stated in the preamble: “The PSD program applies automatically to newly regulated NSR pollutants, which would include final promulgation of an NSPS applicable to a previously unregulated pollutant.” 67 FR at 80,240/1.

In most states with approved PSD programs, PSD does apply automatically. However, in a minority of

states with approved PSD programs, it does not.
8

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

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

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

C. Regulatory Background: Texas SIP and PSD Program

1. Texas's Initial Attainment SIP Revision

In 1972, shortly after the enactment of the 1970 CAA Amendments, Texas submitted to EPA its SIP to attain and maintain the NAAQS that EPA had promulgated by that time. As part of that SIP revision, Texas provided assurances that it had legal authority to carry out the SIP, in accordance with the predecessor to CAA section 110(a)(2)(E)(i). EPA approved Texas's SIP, including the assurances of legal authority, by notice dated May 31, 1972. 37 FR 10,842.

2. Texas Initial PSD SIP Revision

In the 1977 CAA Amendments, Congress enacted the PSD program. In the immediate aftermath, EPA acted as the PSD permitting authority in the states, but EPA began to delegate to various state authorities all or part of EPA's authority to issue PSD permits. In addition, at this time, EPA revised its pre-existing regulations, which had established a preconstruction permitting program, to conform to the 1977 CAA requirements. Each state was required to adopt a PSD program and submit it for approval as a SIP revision, and, if the PSD program met CAA requirements, EPA approved the program, and the state then became the PSD permitting authority. This process occurred for most of the states in the nation, including Texas. A brief history of Texas's initial PSD SIP approval follows.
9

9
This history is described in “Approval and Promulgation of Implementation Plan, State of Texas; Prevention of Significant Deterioration—Final rulemaking, 57 FR 28,093, 28,094 (June 24, 1992); “Approval and Promulgation of Implementation Plan, State of Texas; Prevention of Significant Deterioration—Proposed rulemaking, 54 FR 52,823, 52,824 (December 22, 1989).

a. Texas's Receipt of Delegation Authority for the PSD Program

Beginning in 1980, when EPA was still the permitting authority for Federally required PSD permits in Texas, the State requested delegation of certain aspects of the Federal PSD program, and in a series of actions, EPA granted that authority.
10

During this time, Texas also revised its state—
i.e.,
Texas Air Control Board (TACB)—PSD regulations. EPA commented on an early set of proposed revisions to TACB regulations by letter dated December 23, 1980 and made clear that PSD applies to non-NAAQS pollutants.
11

EPA reiterated these statements to Texas in 1983.
12

10

See, e.g.,
48 FR 60236,023 (February 9, 1983).

11
Letter from Jack S. Divita, U.S EPA, Region 6, to Roger Wallis, Texas Air Control Board (December 23, 1980), p. 2. In that letter, EPA objected to Texas's proposed definitions of the terms “major facility/stationary source” and “major modification” on grounds they are not equivalent to the definition of those terms in EPA's PSD and nonattainment NSR regulations because Texas's proposed definitions —

include only those stationary sources and modifications with emissions of air contaminants for which a [NAAQS] has been issued. Under the PSD and [nonattainment] NSR requirements, [Texas's] definitions must include sources with emissions of “
any
air pollutant subject to regulation under the Act.” * * * Since the proposed definitions would exclude PSD and [nonattainment] NSR coverage for those sources emitting pollutants subject to regulations under the Act, but for which a NAAQS has not been issued, they are not equivalent to the federal definitions of “major stationary source” and “major modification.”

Id.
(emphasis in original).

12
Environmental Protection Agency—Region 6, “EPA Review of Texas Revisions to the General Rules and Regulations VI,” p. 4 (August 1983),
cited in
48 FR 55,483/1 & n.1 (December 13, 1983).

b. Texas's SIP PSD Program

During 1985-1988, Texas submitted a series of SIP revisions comprising its PSD program to EPA for approval. In these SIP revisions, Texas established key components of its PSD rules by incorporating by reference EPA's PSD rules found in 40 CFR 52.21. Of most importance for present purposes, Texas incorporated by reference (IBR'd) EPA's PSD applicability regulations in 52.21.
13

Under EPA's regulations, as then written, PSD applied to “any pollutant subject to regulation under the [Clean Air] Act.” 40 CFR 52.21(b)(1)(i)) (1985-1988). It bears emphasis that this provision, by its terms, applied PSD to each and every air pollutant subject to regulation under the CAA, which, as discussed elsewhere, has been EPA's consistent interpretation of the CAA requirements for PSD applicability. CAA section 165(a)(1), 169(1).
14

13
For convenience, we will use the acronym “IBR” for the various grammatical usages of incorporate by reference, including the noun form,
i.e.,
IBR, for incorporation by reference; as well as the verb form,
e.g.,
IBR'd, for incorporated by reference.

14
As also discussed elsewhere, this is a narrowing interpretation of the PSD applicability requirements in CAA section 169(1), which, read literally, apply PSD to “any air pollutant.”

(1) Incorporation by Reference

In adopting a particular SIP revision that IBR'd EPA's regulations, however, Texas intended that IBR to apply to only the EPA regulations as they read as of the date that Texas adopted the SIP revision. Texas did not intend that IBR in that SIP revision to apply to subsequent revisions to those regulations. This became readily apparent during the course of EPA's review of Texas's SIP revisions. The TACB adopted the first SIP revision on July 26, 1985.
15

This SIP revision consisted, in relevant part, of a revision to TACB Regulation VI—§ 116.3.(a) to add subparagraph (13), which read, in relevant part,

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

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

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

16

Id.

The TACB submitted this SIP revision to EPA on December 11, 1985.
17

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

17
Letter from Mark White, Governor of Texas, to Lee M. Thomas, Administrator of U.S. EPA, December 11, 1985.

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

Id.
p. 2 and Enclosure p. 5.

Texas responded with a letter dated October 24, 1986,
19

in which it stated:

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

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

20

Id.
1-2.

Accordingly, on July 17, 1987, the TACB adopted a revision to its PSD rule, § 116.3(a)(13), so that the rule continued to IBR EPA's PSD regulatory requirements at 40 CFR 52.21, but referenced the date of November 7, 1986.
21

Texas submitted that as a SIP revision to EPA on October 26, 1987.
22

21
TACB Board Order No. 87-09 (July 17, 1987).
See
12 Tex. Reg. 2575/2 (August 7, 1987) (discussing revision to section 116.3(a)(13) in response to request from U.S. EPA).

22
Letter from William P. Clements, Jr., Governor of Texas, to Lee M. Thomas, Administrator of U.S. EPA (October 26, 1987).

However, some 8 months later, by notice published on July 1, 1987, EPA adopted the PM
10
NAAQS,
23

and thereby subjected to PSD sources emitting PM
10
. Recognizing this, the TACB, on July 15, 1988, adopted still another revision to its PSD rule to change the referenced date to August 1, 1987, and thereby incorporated EPA's application of PSD to PM
10
-emitting sources into Texas's PSD program.
24

Texas submitted that revised rule to EPA as a SIP revision on September 29, 1988.
25

As so revised, the Texas PSD rule (again, § 116.3(a)(13)) read, in relevant part, as follows:

23
52 FR 24,634 (July 1, 1987).

24
TACB Board Order No. 88-08 (July 15, 1988).

25
Letter from William P. Clements, Jr., Governor of Texas, to Lee M. Thomas, Administrator of U.S. EPA (September 29, 1988).

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

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

EPA proposed to approve this SIP revision, with this iteration of the Texas PSD rule, by notice dated December 22, 1989,
27

and EPA issued a final approval by notice dated June 24, 1992.
28

In the preambles to the proposed and final rules, and in supporting documents, EPA recounted part of this history of Texas revising its regulations to IBR the current EPA regulatory requirements.
29

27
54 FR 52,823.

28
57 FR 28,093.

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

This history shows that both EPA and Texas were well aware that Texas's method of incorporating by reference EPA's regulatory requirements into Texas's PSD rule was not prospective and therefore did not automatically update to incorporate a pollutant newly subject to regulation.
30

In fact, during the time that EPA was reviewing Texas's PSD SIP, Texas revised its SIP to apply PSD to PM
10
, which EPA subjected to regulation for the first time during that time. However, after stating simply that it does not intend prospective IBR, Texas did not explicitly address this issue. That is, Texas did not acknowledge that following approval of Texas's PSD program, EPA could well subject to regulation additional pollutants—whether through a revised NAAQS or regulation under another CAA provision—and Texas did not discuss how it would respond.
31

Simply put, Texas failed to look down the road and address a problem with its PSD SIP—the mechanism for applying PSD to pollutants newly subject to regulation—that was bound to recur.

30
It should be noted that although Texas subsequently made certain commitments, discussed below, none of those commitments, on its face, suggested that Texas's PSD SIP should be interpreted to automatically update to incorporate a pollutant newly subject to regulation.

31
Following EPA approval of Texas's PSD program, Texas has occasionally submitted SIP revisions to update its PSD program to accommodate further EPA regulatory revisions.
See, e.g.,
69 FR 43,752, 43,753 (July 22, 2004).

(2) Legal Authority

The record of Texas's PSD program includes limited references to, or discussion of, legal authority that may be relevant to whether Texas provided assurances that it had adequate legal authority to apply PSD to pollutants newly subject to regulation. The following merit review:

First, in adopting and submitting the PSD SIP revisions, the TACB—the agency charged with taking that action—relied on its general legal authority to adopt and submit the SIP revisions. The TACB adopted regulatory amendments through “Board Orders,” and then submitted those Board Orders to EPA as SIP revisions. The Board Orders typically cited general authority under the Texas CAA. One example is TACB Board Order No. 88-08 (July 15, 1988), which revised the Texas PSD rule to provide a later date for IBR'ing EPA's PSD program, and which comprised one of the SIP revisions that formed the basis for the Texas PSD program that EPA approved by notice dated June 24, 1992 (57 FR 28,093). This Board Order provides, in relevant part, “Section 3.09(a) of the Texas CAA gives the Board authority to make rules and regulations consistent with the general intent and purposes of the Act and to

amend any rule or regulation it makes” and “the Board hereby certifies that the amendments as adopted have been reviewed by legal counsel and found to be a valid exercise of the Board's legal authority.” Board Order No. 88-08, page 2.

Second, the 1990 CAA Amendments amended CAA section 169(1) to add another type of source that was subject to PSD: Large municipal combustors. Shortly after the 1990 amendments, and before issuing final approval for the Texas PSD program, EPA asked Texas for assurances that its PSD program would apply to large municipal waste combustors. In a March 30, 1992, letter, EPA stated the following:

Since we proposed approval of this SIP before enactment of the 1990 Clean Air Act Amendments (CAAA), it is necessary that we address several issues in the final approval notice in order to be in conformance with the CAAA.

Municipal Waste Combustion—Section 169(1) is amended by expanding the list of major emitting facilities that are subject to PSD requirements if they emit or have the potential to emit 100 tons per year or more of any regulated pollutant. This list now includes municipal incinerators capable of charging more than fifty tons of refuse per day. This requirement has been effective since November 15, 1990, for all applicable PSD sources. In the conference call [with EPA Region 6], the * * * TACB * * * legal representative said that the TACB has the existing legal authority, and can and will be reviewing such sources for PSD applicability and permitting.
32

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

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

Texas responded in a letter dated April 17, 1992:

We understand that you need confirmation in several areas to conform with the requirements of the 1990 Federal Clean Air Act Amendment * * * before the final delegation will be made.

We will address as a major source subject to PSD review, municipal waste combustors capable of cha[n]ging more than 50 tons of refuse per day as one of the sources subject to PSD review if they emit or have the potential to emit 100 tons per year or more of any regulated pollutant.
33

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

Although the TACB Board Order referred to the TACB's general legal authority, the record reveals no discussion or assurances that this legal authority was adequate to apply PSD to pollutants newly subject to regulation. Similarly, the oral assurance that the TACB apparently provided that it had legal authority to apply PSD to large municipal combustors, as required under the then-newly enacted 1990 CAA Amendments, does not address whether Texas had adequate authority to apply PSD to each pollutant that EPA newly subjects to regulation.

(3) Texas's Commitments

The rulemaking record of EPA's approval of Texas's PSD SIP shows that Texas provided two commitments that are relevant for present purposes:

(a) 1987 Texas PSD Commitments Statement

The TACB adopted revisions to TACB Regulation VI on July 17, 1987, which the Governor submitted on October 27, 1987. Those revisions included the following statement, which we call the 1987 Texas PSD Commitments Statement:

Revision To The Texas State Implementation Plan For Prevention Of Significant Deterioration Of Air Quality

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

4. Plan assessment

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

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

EPA's technical support document supporting its proposed approval stated, with respect to this 1987 Texas PSD Commitments Statement:

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

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

This general discussion by EPA does not indicate that EPA considered the Texas statement to apply to pollutants newly subject to regulation.

(b) 1989 Texas Commitment Letter

In 1989, as EPA considered Texas's SIP revision submittal, EPA became concerned that a Texas official had made statements that led EPA to question whether Texas would adhere to EPA's interpretation that Best Available Control Technology (BACT) must be implemented through the Top-Down process.
35

Accordingly, EPA advised Texas that EPA would not approve Texas's PSD program unless Texas provided a letter assuring EPA that Texas would follow EPA requirements in general, and particularly with respect to the interpretation of BACT. Texas provided

this letter, which we call the Texas PSD Commitments Letter, on September 5, 1989.
36

In this letter, Texas acknowledged EPA's concern that a Texas official had—

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

36
Texas's 1989 Commitments Letter, p. 1.

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

Texas went on to state:

[Y]ou may be assured that the position of the [Texas Air Control Board (TACB)] is, and will continue to be, to implement EPA requirements relative to programs for which we have received State Implementation Plan approval, and to do so as effectively as possible. * * * Again, the TACB is committed to the implementation of EPA decisions regarding PSD program requirements. We look forward
37

approval of the PSD revisions and believe EPA will find the management of that program in Texas to be capable and effective.
38

37

Sic:
the word “to” should be between “forward” and “approval”.

38
Texas's 1989 Commitments Letter, p. 1.

By notice dated December 22, 1989, EPA proposed to fully approve Texas's PSD program.
39

In this proposal, EPA focused on the issue of how EPA's current and future interpretations of PSD statutory requirements would be reflected in the state-implemented program. EPA stated:

39
54 FR 52,823.

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

54 FR 52,824/2-3.

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

* * * EPA's approval of the Texas PSD SIP requires the state to follow EPA's statutory interpretations and applicable policies[], including those concerning [BACT]. * * *

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

54 FR 52,825/1-2.

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

Comment 1:
The commenters expressed concern with the preamble language in the proposal notice, suggesting that final approval would require that the State follow EPA's current and future interpretations of the Act's PSD provisions and EPA regulations as well as EPA's operating policies and guidance. The commenter contended that such a condition would be unlawful * * * and would improperly limit the State's flexibility * * *.

Response 1:
The EPA did not intend to suggest that Texas is required to follow EPA's interpretations and guidance issued under the Act in the sense that those pronouncements have independent status as enforceable provisions of the Texas PSD SIP, such that mere failure to follow such pronouncements, standing alone, would constitute a violation of the Act. As clarified herein, EPA's intent is merely to place the State and the public on notice of EPA's longstanding views that the Agency must continue to oversee the State's implementation of the PSD SIP * * *.

* * * Texas and other states [have] considerable discretion to implement the PSD program as they see fit.

* * * PSD-SIP approved states remain free to follow their own course, provided that state action is consistent with the letter and spirit of the SIP, when read in conjunction with the applicable statutory and regulatory provisions.

* * *

Comment 4:
One commenter noted that the TACB's letter, dated September 5, 1989, cannot reasonably be interpreted as a legal requirement that the State follow the EPA's present and future new source review interpretations, policies and guidance, including the BACT “Top-Down” approach, because it only commits Texas to implement properly established EPA requirements and legally-binding EPA decisions. The commenter said that the Clean Air Act specifically requires that, if at all, any such change in EPA policy for BACT determinations be accomplished through notice and comment rulemaking, and that the EPA first prepare an economic impact assessment.

Response 4:
In certain circumstances, EPA's approval of a SIP revision through notice-and-comment rulemaking procedures can serve to adopt specific interpretations or decisions of the Agency. For example, a state may commit in writing to follow particular EPA interpretations or decisions in administering the PSD program. As part of the SIP revision process, EPA may incorporate that State's commitment into the SIP by reference. This process has been followed in today's action. Of course, EPA agrees with the commenter that the Agency must act reasonably in construing the terms of a commitment letter, so as to avoid approving it in a manner that would contravene the state's intent in issuing the letter in the first place. Moreover, the State commitment must be consistent with the plain language of the applicable statutory or regulatory provisions at issue. Similarly, EPA cannot unilaterally change the clear meaning of any approved SIP provision by later guidance or policy. Rather, as stated in the proposed approval notice, such fundamental change must be accomplished through the SIP revision process.

Consistent with the terms of the TACB letter dated September 5, 1989, EPA views that letter as a commitment on the part of the TACB to “implement EPA program requirements * * * as effectively as possible,” and as a commitment “to the implementation of the EPA decisions regarding PSD program requirements.” EPA

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

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

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

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

57 FR 28,094.

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

40

See
“Technical Support Document (TSD): State of Texas State Implementation Plan for Prevention of Significant Deterioration” (November 28, 1988).

As discussed previously, in 1996 EPA proposed, and in 2002 finalized, what we call the NSR Reform Rule,
41

which included a set of amendments to the PSD provisions that included revisions to conform to the 1990 CAA Amendments.
See
61 FR 38,250 (July 23, 1996), 67 FR 80,186 (December 31, 2002). The NSR Reform Rule revised the terminology for PSD applicability. In 2006, Texas submitted a SIP revision to incorporate the NSR Reform Rule into its PSD program, including revising its applicability provisions. EPA disapproved this SIP revision by notice dated September 15, 2010.
42

Accordingly, the applicable Texas PSD applicability provisions remain the ones in the state's currently approved SIP.

41
“Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Baseline Emissions Determination, Actual-to-Future-Actual Methodology, Plantwide Applicability Limitations, Clean Units, Pollution Control Projects—Final Rule,” 67 FR 80,186 (December 31, 2002) (NSR Reform rule).

42
75 FR 56,424 (September 15, 2010).

D. Regulatory Background: GHG Rules

1. GHGs and Their Sources

As discussed in detail in the rule EPA calls the “Endangerment Finding,”
43

greenhouse gases trap the Earth's heat that would otherwise escape from the atmosphere into space, and form the greenhouse effect that helps keep the Earth warm enough for life. Greenhouse gases are naturally present in the atmosphere and are also emitted by human activities. Human activities are intensifying the naturally occurring greenhouse effect by increasing the amount of GHGs in the atmosphere, which is changing the climate in a way that endangers human health, society, and the natural environment.

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

Some GHGs, such as carbon dioxide (CO
2
), are emitted to the atmosphere through natural processes as well as human activities. Other gases, such as fluorinated gases, are created and emitted solely through human activities. The well-mixed GHGs of concern directly emitted by human activities include CO
2
, methane (CH
4
), nitrous oxide (N
2
O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF
6
). These six GHGs will, for the purposes of this final rule, be referred to collectively as “the six well-mixed GHGs,” or, simply, GHGs, and together constitute the “air pollutant” upon which the GHG thresholds in the Tailoring Rule are based. These six gases remain in the atmosphere for decades to centuries where they become well-mixed globally in the atmosphere. When they are emitted more quickly than natural processes can remove them from the atmosphere, their concentrations increase, thus increasing the greenhouse effect. The heating effect caused by the human-induced buildup of GHGs in the atmosphere is very likely the cause of most of the observed global warming over the last 50 years. A detailed explanation of greenhouse gases, climate change, and its impact on health, society, and the environment is included in EPA's technical support document (TSD) for the Endangerment Finding Final Rule (Docket ID No. EPA-HQ-OAR-2009-0472-11292).

In the United States, the combustion of fossil fuels (
e.g.,
coal, oil, gas) is the largest source of CO
2
emissions and accounts for 80 percent of the total GHG emissions. Anthropogenic CO
2
emissions released from a variety of sources, including fossil fuel combustion and industrial manufacturing processes that rely on geologically stored carbon (
e.g.,
coal, oil, and natural gas) that is hundreds of millions of years old, as well as anthropogenic CO
2
emissions from land-use changes such as deforestation, all perturb the atmospheric concentration of CO
2
and cause readjustments in the distribution of carbon within different reservoirs. More than half of the energy-related emissions come from large stationary sources such as power plants, while about a third comes from transportation. Of the six well-mixed GHGs, four (CO
2
, CH
4
, N
2
O, and HFCs) are emitted by motor vehicles. In the United States industrial processes (such as the production of cement, steel, and aluminum), agriculture, forestry, other land use, and waste management are also important sources of GHGs.

Different GHGs have different heat-trapping capacities. The concept of Global Warming Potential (GWP) was developed to compare the heat-trapping capacity and atmospheric lifetime of one GHG to another. The definition of a GWP for a particular GHG is the ratio of heat trapped by one unit mass of the GHG to that of one unit mass of CO
2
over a specified time period. When quantities of the different GHGs are multiplied by their GWPs, the different GHGs can be summed and compared on a CO
2
-equivalent (CO
2
e) basis. For example, CH
4
has a GWP of 21, meaning each ton of CH
4
emissions would have 21 times as much impact on global warming over a 100-year time horizon as 1 ton of CO
2
emissions. Thus, on the basis of heat-trapping capability, 1 ton of CH
4
would equal 21 tons of CO
2
e. The GWPs of the non-CO
2
GHGs range from 21 (for CH
4
) up to 23,900 (for SF
6
). Aggregating all GHGs on a CO
2
e basis at the source level allows a facility to evaluate its total GHG emissions contribution based on a single metric.

2. GHG Regulatory Actions

Over the past year, EPA has completed four distinct actions related to greenhouse gases under the CAA. The result of these rules, in conjunction with the operation of the CAA, has been to trigger PSD applicability for GHG sources on and after January 2, 2011, but to limit the scope of sources covered by PSD. These actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which we issued in a single

final action;
44

the Johnson Memo Reconsideration, noted previously; the “Light-Duty Vehicle Rule” (LDVR or Vehicle Rule);
45

and the “Tailoring Rule,” also noted previously.

44
“Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act.” 74 FR 66,496 (December 15, 2009).

45
“Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule.” 75 FR 25,324 (May 7, 2010).

a. Endangerment Finding, Vehicle Rule, Johnson Memo Reconsideration

In the Endangerment and Cause or Contribute Finding, which is governed by CAA section 202(a), the Administrator exercised her judgment, based on an exhaustive review and analysis of the science, to conclude that “six greenhouse gases taken in combination endanger both the public health and the public welfare of current and future generations.” 74 FR at 66,496. The Administrator also found “that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare under CAA section 202(a).”
Id.

The Endangerment Finding led directly to promulgation of the Vehicle Rule, also governed by CAA section 202(a), in which EPA set standards for the emission of greenhouse gases for new motor vehicles built for model years 2012-2016. 75 FR 25,324. The Vehicle Rule established the first controls for GHGs under the CAA.

The Johnson Memo Reconsideration—as well as the Tailoring Rule, which we discuss later—is governed by the PSD and Title V provisions in the CAA. It was issued to address the automatic statutory triggering of the PSD and Title V programs for GHGs due to the Vehicle Rule establishing controls for GHGs. The Johnson Memo Reconsideration provided EPA's interpretation of a pre-existing definition in its PSD regulations delineating the “pollutants” that are taken into account in determining whether a source must obtain a PSD permit and the pollutants each permit must control. The Johnson Memo Reconsideration stated that when the Vehicle Rule takes effect on January 2, 2011, it will, in conjunction with the applicable CAA requirements, trigger the application of PSD to GHG-emitting sources. 75 FR 17,004.

b. Tailoring Rule

In the Tailoring Rule, EPA limited PSD applicability, at the outset, to only the largest GHG-emitting sources, and to phase-in PSD applicability, as appropriate, to smaller sources over time. 75 FR 31,514. In the Tailoring Rule, EPA identified the air pollutant that, if emitted or potentially emitted by the source in excess of specified thresholds, would subject the source to PSD requirements, as the aggregate of six GHGs: CO
2
, CH
4
, N
2
O, HFCs, PFCs, and SF
6
. EPA based this identification on the Vehicle Rule, which included applicability provisions specifying that the rule “contains standards and other regulations applicable to the emissions of those six greenhouse gases.” 75 FR at 25,686 (promulgating 40 CFR 86.1818-12(a)). The Tailoring Rule noted that it was because the Vehicle Rule subjected to regulation the pollutant that is comprised of the six GHGs, that PSD was triggered for that pollutant and that, as a result, the pollutant must be defined for PSD purposes in the same way as it is identified in the Vehicle Rule. 75 FR 31,527. The Vehicle Rule identified the pollutant as the aggregate of the six gases because in the Endangerment Finding, the Administrator found that those six gases—which she described as long-lived and directly emitted GHGs — may reasonably be anticipated to endanger public health and welfare.

3. Implementation of GHG PSD Requirements

Because PSD is implemented through the SIP system, EPA has taken a series of actions to address the obligations of states (including localities and other jurisdictions, as appropriate) to implement PSD requirements for GHG-emitting sources. EPA has taken these actions through the Tailoring Rule discussed elsewhere in this preamble and a series of subsequent actions.
46

46
A detailed description of EPA's implementation efforts, and the status of state compliance with those efforts, is included in Declaration of Regina McCarthy,
Coalition for Responsible Regulation
v.
EPA,
DC Cir. No. 09-1322 (and consolidated cases) (McCarthy Declaration), including Attachment 1 (Tables 1, 2, and 3), which can be found in the docket for this rulemaking.

a. Tailoring Rule

In the Tailoring Rule, EPA incorporated the PSD thresholds for GHGs in the definition of the term “subject to regulation.” As noted previously, under EPA's PSD regulations, PSD applies to a “major stationary source;” a “major stationary source” is defined as a source that emits 100/250 tons per year (tpy) on a mass basis of a “regulated NSR pollutant;” and a “regulated NSR pollutant,” in turn, is defined as, among other things, a pollutant that is “subject to regulation” under the CAA.
47

In the Tailoring Rule, EPA added a limitation to the term “subject to regulation” so that the only GHG emissions that would be treated as “subject to regulation” (and therefore subject to PSD) are those emitted at or above specified thresholds of, depending on the circumstances, 75,000 and/or 100,000 tpy on a CO
2
e basis.
48

EPA explained in the Tailoring Rule that it intends these levels to be the first steps in a phase-in approach for PSD applicability, and EPA committed in that rule to conduct additional rulemaking by 2012 and 2016 that would consider taking additional steps.

47
40 CFR 51.166(a)(7)(i), (b)(1)(i)(a), (b)(49).

48
Specifically, under the revised definition of “subject to regulation,” sources that emit at least the 75,000 and/or 100,000 tpy CO
2
e threshold amount of GHGs are subject to PSD as long as the amount of GHG emissions also exceeds, in general, 100/250 tpy on a mass basis for new sources and zero tpy on a mass basis for modifications of existing sources. 40 CFR 51.166(b)(48), 75 FR at 31,606; see EPA Office of Air Quality Planning and Standards, “PSD and Title V Permitting Guidance for Greenhouse Gases.” (March 2011 update).

Some states advised EPA that it is likely they would be able to implement the Tailoring Rule thresholds by interpreting the term “subject to regulation” in their SIPs, and without having to take further action. A state's ability to take this approach would have implications for how EPA needed to implement the Tailoring Rule.
49

Accordingly, in the Tailoring Rule, EPA began a process to gather more information about how states would implement permitting for GHG-emitting sources.

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

b. 60-Day Letters

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

above the Tailoring Rule thresholds.
50

This information would assist EPA to determine what, if any, action it needed to take with respect to the states.

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

Almost all states submitted 60-day letters, generally by August 4, 2010. The letters, along with other information EPA received through review of state requirements and further communications with state officials, indicate that the states, localities, and other jurisdictions may be divided into three categories, described later in this preamble, for purposes of EPA's implementation of the PSD program to GHG-emitting sources.

c. The Three Categories of States and EPA's Implementation Process

The first category, which includes 7 states, 35 subsections of states, the District of Columbia, American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and Indian Territory, does not have an approved SIP PSD permitting program. Instead, Federal requirements apply. Thus, implementation of PSD for GHG-emitting sources in these jurisdictions is the simplest of all the states: GHG-emitting sources became subject to PSD and the thresholds in the Tailoring Rule as of January 2, 2011, without further action.
51

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

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

52

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

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

As a result of these state actions and EPA's Narrowing Rule, as of January 2, 2011, or shortly thereafter, in all or almost all of these states, only GHG-emitting sources at or above the Tailoring Rule thresholds are subject to PSD requirements.
54

53
“Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting Sources in State Implementation Plans; Final Rule, 75 FR 82535 (December 30, 2010). Specifically, in the Narrowing Rule, EPA narrowed its approval of the affected states' SIP PSD applicability provisions to only the extent they apply PSD to GHG-emitting sources at or above the Tailoring Rule thresholds. In addition, recognizing that GHG-emitting sources also have permitting obligations under state law, EPA has strongly encouraged states to revise their state law as promptly as possible to eliminate the state PSD obligations of sources below the Tailoring Rule thresholds.
McCarthy Declaration
paragraph 92, page 19.

54

Id.
paragraphs 62-94, pages 13-20, and Attachment 1, Table 3.

d. SIP Call States, Including Texas

As just noted, the second category, which includes Texas, includes 13 states and some districts within states whose SIPs have an approved PSD program but do not have the authority to apply that program to GHG-emitting sources. For most of these states, including Texas, the reason is that their PSD applicability provision applies to any “pollutant subject to regulation” under the CAA (or a similar term), but other provisions of state law preclude automatic updating. As a result, this applicability provision covers only pollutants—not including GHGs—that were subject to regulation at the time the state adopted the applicability provision.

After proposing action by notice dated September 2, 2010,
55

EPA promulgated the final SIP call for 13 states, including Texas, by notice signed on December 1, 2010, and published on December 13, 2010, 75 FR 77,698, which we call the GHG PSD SIP Call or, simply, the SIP call.
56

In this action, consistent with the requirements of CAA section 110(k)(5), EPA (i) issued a finding that the SIPs for 13 states (comprising 15 state and local programs) are “substantially inadequate to * * * comply with any requirement of this Act” because their PSD programs do not apply to GHG-emitting sources as of January 2, 2011; (ii) issued a SIP call requiring submission of a corrective SIP revision; and (iii) established a “reasonable deadline[] (not to exceed 18 months after the date of such notice)” for the submission of the corrective SIP revision. This deadline ranges, for different states, from 3 weeks to 12 months after the date of the final SIP call, as discussed later in this preamble.

55
“Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call—Proposed Rule,” 75 FR 53,892 (September 2, 2010); “Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan—Proposed Rule,” 75 FR 53,883 (September 2, 2010).

56
“Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call—Final Rule,” 75 FR 77,698 (December 13, 2010).

EPA justified its finding that the affected SIPs are “substantially inadequate” to comply with CAA requirements on grounds that (i) the CAA requires that PSD requirements apply to any stationary source that emits specified quantities of any air pollutant subject to regulation under the CAA, and those PSD requirements must be included in the approved SIPs; (ii) as of January 2, 2011, GHG-emitting sources will become subject to PSD; (iii) as a result, the CAA requires PSD programs to apply to GHG-emitting sources; and (iv) accordingly, the failure of any SIP PSD applicability provisions to apply to GHG-emitting sources means that the SIP fails to comply with these CAA requirements.

In the SIP call proposal, EPA discussed in some detail the SIP submittal deadline under CAA section 110(k)(5). Under this provision, in issuing a SIP call, EPA “may establish reasonable deadlines (not to exceed 18 months after the date of such notice) for the submission of such plan revisions.” EPA proposed to allow each of the affected states up to 12 months from the date of signature of the final finding of substantial inadequacy and SIP call within which to submit the SIP revision, unless, during the comment period, the state expressly advised that it would not object to a shorter period—as short as 3 weeks from the date of signature of the

final rule—in which case EPA would establish the shorter period as the deadline. EPA stated that, assuming that EPA were to finalize the SIP call on or about December 1, 2010, as EPA said it intended to do in the proposal, then the earliest possible SIP submittal deadline would be December 22, 2010.

EPA made clear that the purpose of establishing the shorter period as the deadline for any interested state is to accommodate states that wish to ensure that a FIP is in effect as a backstop to avoid any gap in PSD permitting. EPA also made clear that if a state did not advise EPA that it does not object to a shorter deadline, then the 12-month deadline would apply. EPA emphasized that for any state that receives a deadline after January 2, 2011, the affected GHG-emitting sources in that state may be delayed in their ability to receive a Federally approved permit authorizing construction or modification. This is because after January 2, 2011, these sources may not have available a permitting authority to review their permit applications until the date that EPA either approves the SIP submittal or promulgates a FIP.

EPA asked that each of the affected states write EPA a letter during the comment period to identify the deadline for SIP submission to which the state would not object if EPA established. We call these the 30-day letters. Each affected state wrote a 30-day letter to EPA, as requested. Except for Texas, each state identified a SIP submittal deadline, which differed among the states, and which ranged from three weeks to 12 months. In the final SIP call, EPA established SIP submittal deadlines identified by the states, except that EPA established a deadline of 12 months for Texas, in accordance with EPA's proposal. Except for Texas, each state explained in its 30-day letter and in subsequent communications with EPA, that it was planning on either receiving a FIP or adopting a SIP and that it chose a deadline that would result in having either the FIP or an approved SIP, as appropriate, in place by January 2, 2011 or soon enough thereafter so as to avoid any hardship to its sources. In the final SIP call, EPA justified approving this 3-week-to-12-month time period, although expeditious, as meeting the CAA section 110(k)(5) requirement to be a “reasonable” deadline in light of: (i) The SIP development and submission process; (ii) the preference of the state; and (iii) the imperative to minimize the period when sources will be subject to PSD but will not have available a PSD permitting authority to act on their permit application and therefore may face delays in constructing or modifying.

In the final SIP call, based on the states' 30-day letters and other communications, EPA established a SIP submittal deadline of December 22, 2010, for seven states. Each of the states indicated that it did not expect to submit a SIP revision by that date and instead expected to receive a FIP. On December 23, 2010, for each of the seven states, EPA issued a finding of failure to submit its corrective SIP revision by that deadline, and EPA promulgated a FIP.

Except for Texas, EPA expected each of the other states subject to the SIP call to adopt a SIP revision and receive EPA approval of it, or receive a FIP, within the first half of 2011, and, in most cases, substantially sooner. Although none of these states had a permitting authority in place as of January 2, 2011, none of these states expected that gap to pose meaningful difficulties for sources because, depending on the state, the gap would be brief, and the state did not expect any sources to seek a permit during the gap, or even if the state had been the permitting authority during the gap, it could not have completed processing the permits during that time.
57

57
McCarthy Declaration, p. 12, paragraph 55.

As discussed later, Texas has responded to the SIP call differently than the other states. As a result, its GHG-emitting sources do face the prospect of permitting delays. This rulemaking action addresses that situation.

4. Summary of the Effect of EPA's Implementation Actions in States Other Than Texas

EPA recently summarized the status of its implementation efforts, for all three categories of sources, as follows:

Overall, EPA has received information about the status of 99 jurisdictions (49 states,
58

4 territories, 45 localities, and the District of Columbia), and included that information in Attachment 1. Of these jurisdictions, 94 will have, for Federal law purposes, a PSD permitting program for GHG emissions at the Tailoring Rule thresholds on Jan. 2, 2011. Of these 94 entities, 84 will have made any necessary amendments to state or local law to ensure that state or local permits are not required for GHG emissions below Tailoring Rule thresholds. By the end of the first quarter of 2011, only one jurisdiction will not have authority to permit GHG sources, and that jurisdiction will obtain authority by July 1, 2011 and in the meantime, does not expect large sources seeking permits for their GHGs. In addition, by the end of the first quarter of 2011, all but one more state will have made any necessary amendments to state or local law to ensure that permits are not required for GHG emissions below Tailoring Rule levels. 1 program with GHG permitting authority at the lower statutory levels has not yet determined how, and on which timeline, it will incorporate the Tailoring Rule thresholds into its state law.
59

58
California's PSD program is administered in its entirety by local jurisdictions.

59
McCarthy Declaration, p. 20, paragraph 98. There have been a few changes in the status of individual states since this time, but the overall picture remains the same. EPA has been in close communication with almost every state and many other jurisdictions, along with multi-state organizations such as the National Association of Clean Air Agencies (NACAA). In addition to the letters that states have sent responding to the Tailoring Rule (the 60-day letters) and proposed SIP Call (the 30-day letters), EPA officials, primarily through the Regional Offices, have had numerous communications with their state counterparts. It is as a result of the prompt action taken by the states that implementation efforts have been so successful to date.

Thus, under EPA's implementation program, (i) in every state, (a) only sources at or above the Tailoring Rule thresholds will be subject under Federal law to obtain a PSD permit when they construct or modify as of January 2, 2011, and (b) only those same sources will be subject under state law to obtain a PSD permit when they construct or modify as of January 2, 2011 or very soon thereafter; and (ii) in every state, except for Texas, as of January 2, 2011 or very soon thereafter, GHG sources that construct or modify will be able to receive permits when they need them, so that the sources will not face obstacles to constructing and modifying. Again, Texas has responded to EPA's implementation program in a manner that has resulted in its sources facing obstacles to constructing and modifying, as discussed next, which this rulemaking addresses.

5. EPA's Implementation Approach for Texas and Texas's Response

The following describes the progress to date of implementing PSD for GHG emissions in Texas, based on extensive communications between EPA and TCEQ. It should be borne in mind, as noted earlier, that Texas is in the second of the three categories of states: that is, it has an approved PSD program that does not apply to GHGs-emitting sources.

a. Texas's 60-Day Letter

Texas's 60-day letter provides the State's clearest articulation of its response to EPA's efforts to implement PSD for GHG-emitting sources at the Tailoring Rule thresholds beginning January 2, 2011. As noted previously, in the preamble to the final Tailoring Rule, EPA asked each state to send EPA a

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

In our proposed rule, we also noted that a handful of EPA-approved SIPs fail to include provisions that would apply PSD to GHG sources at the appropriate time. This is generally because these SIPs specifically list the pollutants subject to the SIP PSD program requirements, and do not include GHGs in that list, rather than include a definition of NSR regulated pollutant that mirrors the Federal rule, or because the state otherwise interprets its regulations to limit which pollutants the state may regulate. At proposal, we indicated that we intended to take separate action to identify these SIPs, and to take regulatory action to correct this SIP deficiency.

We ask any state or local permitting agency that does not believe its existing SIP provides authority to issue PSD permits to GHG sources to notify the EPA Regional Administrator by letter, and to do so no later than August 2, 2010. This letter should indicate whether the state intends to undertake rulemaking to revise its rules to apply PSD to the GHG sources that will be covered under the applicability thresholds in this rulemaking, or alternatively, whether the state believes it has adequate authority through other means to issue Federally-enforceable PSD permits to GHG sources consistent with this final rule. For any state that lacks the ability to issue PSD permits for GHG sources consistent with this final rule, we intend to undertake a separate action to issue a SIP call, under CAA section 110(k)(5). As appropriate, we may also impose a FIP through 40 CFR 52.21 to ensure that GHG sources will be permitted consistent with this final rule.

75 FR 31,582/3.

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

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

For any state that is unable or unwilling to adopt the tailoring approach by January 2, 2011, and that otherwise is unable to demonstrate adequate personnel and funding, we will move forward with finalizing our proposal to limit our approval of the existing SIP.

75 FR 31,582/3.

On August 2, 2010, Texas submitted its 60-day letter, signed by the Texas Attorney General and the Chairman of the Texas Commission on Environmental Quality.
60

In that letter, Texas responded specifically to EPA's request that “any state * * * that does not believe its existing SIP provides authority to issue PSD permits to GHG sources to notify [EPA and] * * * indicate whether the state intends to * * * revise its rules to apply PSD to * * * GHG sources” by stating: “Texas has neither the authority nor the intention of interpreting, ignoring, or amending its laws in order to compel the permitting of greenhouse gas emission.”
Id.
p. 1. Texas offered several explanations for this position. First, Texas noted:

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

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

Id.
p. 2. Texas then explained that it had several objections to interpreting the phrase “subject to regulation” to allow regulation of GHGs. For one thing, according to Texas, long-standing state case law precluded the term—and the PSD applicability provisions generally—from automatically incorporating newly regulated pollutants. Specifically, Texas said:
61

61
In this explanation, Texas was referring to the PSD applicability provision that Texas adopted under State law in 2006, which differed slightly from the applicability provision approved into the SIP in 1993.

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

Id.
at 4.

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

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

Id.
at 4-5.

Texas provided a more detailed exposition of its view that PSD applies only to NAAQS pollutants in its challenges before the DC Circuit to EPA's GHG actions, where Texas moved to stay the Endangerment Finding, the Vehicle Rule, and the Johnson Memo Reconsideration (Texas's Motion to Stay Three GHG Actions).
62

(In a separate motion, Texas also moved to stay the Tailoring Rule.
63

) There, Texas reiterated arguments based on the text of some of the CAA PSD provisions that, in Texas's view, lead to the conclusion that the CAA precludes applying PSD to non-NAAQS. As noted previously, these arguments were raised by commenters to the Tailoring Rule. Texas concluded that EPA's efforts to apply PSD to GHGs—

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

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

62
“State of Texas's Motion For A Stay Of EPA's Endangerment Finding, Timing Rule, and Tailpipe Rule,”
Coalition for Responsible Regulation
v.
EPA,
No. 09-1322 (and consolidated cases) (September 15, 2010). On December 10, 2010, the DC Circuit denied Texas's, and other parties', motions to stay. Order,
Coalition for Responsible Regulation
v.
EPA,
No. 09-1322 (and consolidated cases) (December 10, 2010).

63
“State of Texas's Motion For A Stay Of EPA's Greenhouse Gas Tailoring Rule,”
Coalition for Responsible Regulation
v.
EPA,
No. 09-1322 (and consolidated cases) (September 15, 2010) (Texas's Motion to Stay the Tailoring Rule).

64
Texas's Motion to Stay Three GHG Actions, at 27.

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

65

Id.
at 5.

b. Texas's 30-Day Letter

As noted previously, in the GHG PSD SIP call proposal, EPA proposed to establish, for each affected state, a deadline of 12 months from the date of signature of the final SIP call for submitting the corrective SIP revision, unless the state expressly advised EPA in its 30-day letter that it would not object to a shorter period. Texas submitted a 30-day letter on October 4, 2010,
66

and in that letter, voiced various objections to the proposed SIP call. Texas reiterated its view that PSD is limited to NAAQS pollutants, and therefore cannot apply to GHGs, and added that the SIP call is “based on an impermissible interpretation of the [Clean Air Act]. EPA cannot * * * impose permitting through [the PSD] program without first setting a NAAQS.* * * ” Texas 30-day letter p. 2, 4. EPA responded to those objections in the final SIP call.
67

66
“Texas Commission on Environmental Quality Comments on Actions to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions, Finding of Substantial Inadequacy and SIP Call, Docket ID No. EPA-HQ-OAR-2010-0107, FRL-9190-7 Federal Implementation Plan (FIP), Docket ID No EPA-HQ-OAR-2010-0107, FRL-9190-8 (October 4, 2010) (Texas 30-day letter).

67
Final SIP Call, 75 FR at 77,706/2-3 and n. 18.

In its 30-day letter, Texas went on to discuss the SIP submission schedule and FIP that EPA proposed, but Texas declined EPA's invitation to identify a specific deadline for the state's SIP submission. As a result, in the final SIP call, EPA was obliged to establish the default SIP submission deadline for Texas of December 1, 2011, in accordance with EPA's proposal. Because Texas has clearly stated that it does not intend, and, in its view, does not have the authority, to adopt a SIP revision to respond to the SIP Call, including to apply PSD to GHG-emitting sources, EPA expects to promulgate a FIP to continue to apply PSD to these sources in December, 2011. But, again, because Texas did not identify an earlier deadline for its SIP submittal, the earliest that EPA could promulgate such a FIP would be December 2, 2011. Under this approach, due to the position Texas has taken, absent further action, sources in Texas could not expect to have a permitting authority with authority to issue preconstruction permits for their GHG emissions until that December 2, 2011, date. As a result, absent further action, sources in Texas would face obstacles in constructing or modifying before that date.

Texas's 30-day letter indicates that Texas was well aware of the consequences of its decision not to identify a specific deadline for its SIP submission, but had several reasons for making that decision. These included its view, again, that PSD applies only to NAAQS pollutants, and also that EPA was required to employ a different process for requiring a SIP revision, one that would have provided the state with 3 years to adopt a SIP revision. Texas 30-day letter at 4-5. In addition, Texas asserted that there is no reason to allow EPA to promulgate an early FIP for the benefit of Texas's sources because, in Texas's view, for practical reasons, EPA could not issue those permits for the “foreseeable future” anyway. Specifically, Texas explained that EPA had not issued guidance for determining BACT, the key element of a PSD permit for a GHG source. Texas added that even after EPA issued that guidance, BACT will, in Texas's view, remain uncertain and contentious, and the guidance will be of limited usefulness until the control technology is proven.
Id.
at 5. Texas added that “[i]ndustry should be particularly concerned about EPA's lack of resources and experience to issue these permits.* * * ”
Id.
at 6. Texas concluded, “The result of all this is that, even under a FIP, it is unlikely that construction of new major GHG sources or major modifications will commence in the foreseeable future.”
Id.
at 6.

In order to reduce uncertainty for sources and permitting authorities, EPA has issued guidance for use in determining BACT, provided training for permitting authorities and sources, and is continuing to maintain and update resources for use in making these determinations. These resources include question and answer documents and white papers on proven and emerging technologies for reducing greenhouse gas emissions in different industries as well as continued close interaction between sources, permitting authorities, and EPA.

It should be noted that Texas stated in filings before the DC Circuit in which it challenged the Tailoring Rule that it believed 167 projects in Texas would be affected by the lack of a permitting authority during 2011.
68

68
Texas's Motion to Stay the Tailoring Rule, pp. 2, 16.

IV. Final Action and Response to Comments

In this action, EPA is taking the following actions to ensure that there is a mechanism for large, GHG-emitting sources in Texas to obtain PSD permits under a program that complies with the CAA. First, EPA is determining that the Administrator's action approving the Texas SIP PSD program was in error under CAA section 110(k)(6).

Second, EPA, in the same manner as its past action to approve the Texas SIP PSD program, is revising such action as appropriate without requiring any further submission from Texas.
Id.
The appropriate revision is to convert the previous approval to a partial approval and partial disapproval. The partial approval applies to the extent that Texas's PSD program actually covers pollutants that are required to be included in PSD. The partial disapproval applies to the extent that Texas failed to address or to include assurances of adequate legal authority (required under CAA section 110(a)(2)(E)(i)) for the application of PSD to each newly regulated pollutant, including non-NAAQS pollutants, under the CAA. Note that as an alternative basis to CAA section 110(k)(6) for taking these first two steps, EPA relies on its inherent administrative authority to reconsider its previous action.

Third, in this rulemaking, EPA is promulgating a FIP to apply appropriate measures to assure that EPA's PSD regulatory requirements will apply to non-NAAQS pollutants that are newly subject to regulation under the CAA that the Texas PSD program does not already cover. At present, the only such pollutant is GHGs. Therefore, EPA's FIP will at present apply the EPA regulatory PSD program for the GHG portion of PSD permits for GHG-emitting sources in Texas, and EPA commits to take whatever steps are appropriate if, in the future, Texas fails to apply PSD to another newly regulated non-NAAQS pollutant. In light of the immediate need of Texas's GHG-emitting sources for a permitting authority to process their permit applications for GHGs, this rule will be effective on May 1, 2011.

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

1. Comments on the Self-Executing Nature of the PSD Program

Several commenters disagreed with EPA's position regarding section 165(a) of the CAA and argue that EPA's decision to regulate GHGs had no self-executing effect on the permitting requirements applicable to sources in Texas. These commenters state that the only CAA requirements that are self-executing are found in CAA section 168, a section of the statute that incorporated PSD changes made in the 1977 amendments to the Act. Instead, according to these commenters, GHG-emitting sources became subject to PSD requirements through EPA's revisions to the PSD regulations in 40 CFR 51.166, and those regulations provide states 3 years to revise their SIPS to incorporate changes in the PSD program. Accordingly, one commenter asserted that rather than imposing a “construction permitting moratorium” upon EPA's adoption of a new minimum PSD requirement, the PSD rules provide states a reasonable period of time for incorporating a new minimum PSD requirement, with prospective effect, into SIPs, during which time the EPA-approved SIP continues in force and the state may continue to issue permits under that SIP without addressing the new minimum requirement promulgated by EPA.

2. EPA Response

EPA indicated in the proposal for this rulemaking, 75 FR at 82,388/2, that in earlier rulemakings, EPA took comment on and resolved the issue of whether the CAA PSD requirements apply by their terms, so that EPA was not soliciting comment on that issue in this rulemaking. In those earlier rulemakings, EPA concluded that the CAA PSD requirements do apply by their terms, so that sources in a state are subject to PSD for their emissions of pollutants newly subject to regulation even if the state has an approved SIP that does not apply PSD to those pollutants.
See
75 FR 31,514 (June 3, 2010) and 75 FR 77,698 (December 13, 2010). As noted earlier in this preamble, notwithstanding the proposal, EPA did receive comments on this issue in this rulemaking. Because EPA resolved this issue in those earlier rulemakings, and those dissatisfied with that resolution may challenge it in court—and in fact are so doing—and because the present rulemaking is based on those rulemakings, EPA is not obliged to respond to those comments in this rulemaking.

Even so, for the sake of completeness, and without reopening this issue in this rulemaking, EPA does provide the following response. EPA disagrees with these commenters and EPA continues to take the view that the CAA PSD requirements apply by their terms to pollutants newly subject to regulation, regardless of whether a state with an approved SIP applies PSD to such pollutants. As discussed at length in the preamble to the final PSD GHG SIP call (75 FR 77,707-77,709, Dec 13. 2010), the CAA requirements (i) prohibit a “major emitting facility” from constructing or modifying without obtaining a permit that meets the PSD requirements, CAA section 165(a)(1); and (ii) define a “major emitting facility” as a source that emits a specified quantity of “any air pollutant,” CAA section 169(1), which EPA has long interpreted as any pollutant subject to regulation. 40 CFR 52.166(b)(49)(iv). In this manner, the CAA requirements for PSD applicability are what we call automatically updating, that is, at the very time EPA regulates a previously unregulated pollutant, any source emitting that pollutant in sufficient quantities becomes a “major emitting facility,” and that source cannot construct or modify without receiving a PSD permit. That is, PSD applies to that pollutant at the time it becomes subject to regulation, without further regulatory action by EPA.

EPA regulations have codified this automatically updating aspect of the CAA PSD requirements.
See
43 FR 26,380, 26,403/3, 26,406 (June 19, 1978) (promulgating 40 CFR 51.21(b)(1)(i)) and 42 FR 57,479, 57,480, 57,483 (November 3, 1977) (proposing 40 CFR 51.21(b)(1)(i)) (applying PSD requirements to a “major stationary source” and defining that term to include sources that emit specified quantities of “any air pollutant regulated under the Clean Air Act”). Most recently, in our 2002 NSR Reform rule, EPA reiterated these requirements, although changing the terminology. 67 FR 80,186 (December 31, 2002). Specifically, EPA required that emissions of “any regulated NSR pollutant” be subject to PSD requirements when emitted in specified quantities by sources and defined that term to include pollutants regulated under certain CAA requirements, as well as “any pollutant that otherwise is subject to regulation under the [CAA].” 40 CFR 52.166(b)(49)(iv). EPA made clear in the preamble to the NSR Reform rule that PSD applicability was automatically updating. 67 FR 80,240.

GHG-emitting sources became subject to PSD due to the operation of these CAA and regulatory provisions, in conjunction with the Light-Duty Vehicle Rule. The latter rule subjected GHGs to regulation for the first time, as of January 2, 2011, so that, by operation of the CAA PSD prov

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2011-10285. Public record. Not legal advice.