A. Overview
The proposal in this rulemaking would, for the first time, regulate GHGs under CAA section 111. Commenters have raised questions regarding whether this rule will have implications for regulations and permits written under the CAA PSD preconstruction permit program and the CAA Title V operating permit program.
Today’s proposal should not require any additional SIP revisions to make clear that the Tailoring Rule
thresholds—described below—continue to apply to the PSD program. Likewise,
today’s rulemaking does not have implications for the Tailoring Rule thresholds established with respect to sources subject to title V requirements. Furthermore, this proposal does not have any direct applicability on the determination of Best Available Control Technology (BACT) for existing EGUs that require PSD permits to authorize a major modification of the EGU. Finally, this proposal does have some
implications for Title V fees, but EPA is proposing action to address those implications as discussed below. B. Applicability of Tailoring Rule Thresholds Under the PSD Program
States with approved PSD programs in their state implementation plans (SIPs) implement PSD, and most of these States have recently revised their SIPs to incorporate the higher
thresholds for PSD applicability to GHGs that the EPA promulgated under what we call the Tailoring Rule.258 Commenters have queried whether under the EPA’s PSD regulations, promulgation of a section 111 standard of performance for GHGs would require these states to revise their SIPs again to incorporate the Tailoring Rule
thresholds again. The EPA included an interpretation in the Tailoring Rule preamble, which makes clear that the Tailoring Rule thresholds continue to apply if and when the EPA promulgates requirements under CAA section 111. Even so, in today’s proposal, the EPA is including a provision in the CAA section 111 regulations that confirms this interpretation.
However, if a state with an approved PSD SIP program that applies to GHGs believes that were the EPA to finalize the rulemaking proposed today, the state would be required to revise its SIP to make clear that the Tailoring Rule thresholds continue to apply, then (i) the EPA encourages the state to do so as soon as possible, and (ii) if the State cannot do so promptly, the EPA will assess whether to proceed with a separate rulemaking action to narrow its approval of that state’s SIP so as to assure that for federal purposes, the Tailoring Rule thresholds will continue to apply as of the effective date of the final rule that the EPA is proposing today.
In the alternative, if the Tailoring Rule thresholds would not continue to apply
when the EPA promulgates
requirements under CAA section 111, then the EPA would assess whether to proceed with a separate rulemaking action to narrow its approval of all of the State’s approved SIP PSD programs to assure that for federal purposes, the Tailoring Rule thresholds will continue to apply as of the effective date of the final rule that EPA is proposing today.
Under the PSD program in part C of title I of the CAA, in areas that are classified as attainment or unclassifiable for NAAQS pollutants, a new or
modified source that emits any air pollutant subject to regulation at or above specified thresholds is required to obtain a preconstruction permit. This permit assures that the source meets specified requirements, including application of BACT. States that are authorized by the EPA to administer the PSD program may issue PSD permits. If a state is not authorized, then the EPA issues the PSD permits.
Regulation of GHG emissions in the Light Duty Vehicle Rule (75 FR 25324) triggered applicability of stationary sources to regulations for GHGs under the PSD and title V provisions of the CAA. Hence, on June 3, 2010 (75 FR 31514), the EPA issued the ‘‘Tailoring Rule,’’ which establishes thresholds for GHG emissions in order to define and limit when new and modified industrial facilities must have permits under the PSD and title V programs. The rule addresses emissions of six GHGs: CO2,
CH4, N2O, HFCs, PFCs and SF6. On
January 2, 2011, large industrial sources, including power plants, became subject to permitting requirements for their GHG emissions if they were already required to obtain PSD or title V permits due to emissions of other (non-GHG) air pollutants.
Commenters have queried whether, because of the way that the EPA’s PSD regulations are written, promulgating the rule we propose today may raise questions as to whether the EPA must revise its PSD regulations—and, by the same token, whether states must revise their SIPs—to assure that the Tailoring Rule thresholds will continue to apply to sources subject to PSD. That is, under the EPA’s regulations, PSD applies to a ‘‘major stationary source’’ that
undertakes construction and to a ‘‘major modification.’’ 40 CFR 51.166(a)(7)(i) and (iii). A ‘‘major modification’’ is defined as ‘‘any physical change in or change in the method of operation of a major stationary source that would result in a significant emissions increase . . . and a significant net emissions increase. . . .’’ Thus, for present purposes, the key component of these
259This position reads the regulations to be
consistent with the CAA PSD provisions
themselves. Under those provisions, PSD applies to any ‘‘major emitting facility,’’ which is defined to mean stationary sources that emit or have the potential to emit ‘‘any air pollutant’’ at either 100 or 250 tons per year, depending on the source category. CAA section 165(a), 169(1). EPA has long interpreted these provisions to apply PSD to a stationary source that emits the threshold amounts of any air pollutant subject to regulation. See Tailoring Rule, 75 FR 31579. Under these provisions, at present, PSD is already applicable to GHGs because GHGs are already subject to regulation, and regulating GHGs under CAA section 111 does not create any additional type of PSD trigger.
260The Tailoring Rule thresholds themselves are
not at issue in this rulemaking.
261‘‘Limitation of Approval of Prevention of
Significant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans; Final Rule,’’ 75 FR 82536 (December 30, 2010).
applicability provisions is that PSD applies to a ‘‘major stationary source.’’
The EPA’s regulations define the term ‘‘major stationary source’’ as a
‘‘stationary source of air pollutants which emits, or has the potential to emit, 100 [or, depending on the source category, 250] tons per year or more of any regulated NSR pollutant.’’ 40 CFR 51.166(b)(1)(i)(a). The EPA’s regulations go on to define ‘‘regulated NSR
pollutant’’ 40 CFR 51.166(b)(49) to include any pollutant that is subject to any standard promulgated under section 111 of the Act. Thus, the PSD
regulations contain a separate PSD trigger for pollutants regulated under the NSPS, 40 CFR 51.166(b)(49)(ii) (the ‘‘NSPS trigger provision’’), so that as soon as the EPA promulgates the first NSPS for a particular air pollutant, as we are doing in this rulemaking with respect to the GHG air pollutant, then PSD is triggered for that air pollutant. The Tailoring Rule, on the face of its regulatory provisions, incorporated the revised thresholds it promulgated into only the fourth prong (‘‘[a]ny pollutant that otherwise is subject to regulation under the Act’’), and not the NSPS trigger provision in the second prong (‘‘[a]ny pollutant that is subject to any standard promulgated under section 111 of the Act’’). For this reason, a question may arise as to whether the Tailoring Rule thresholds apply to the PSD requirement as triggered by the NSPS that the EPA is promulgating in this rulemaking.
However, although the Tailoring Rule thresholds on their face apply to only the term, ‘‘subject to regulation’’ in the definition of ‘‘regulated NSR pollutant,’’ the EPA stated in the Tailoring Rule preamble that the thresholds should be interpreted to apply to other terms in the definition of ‘‘major stationary source’’ and in the statutory provision, ‘‘major emitting facility.’’ Specifically, the EPA stated:
3. Other Mechanisms
As just described, we selected the ‘‘subject to regulation’’ mechanism because it most readily accommodated the needs of States to expeditiously revise—through interpretation or otherwise—their state rules. Even so, it is important to recognize that this mechanism has the same substantive effect as the mechanism we considered in the proposed rule, which was revising numerical thresholds in the definitions of major stationary source and major modification. Most importantly, although we are codifying the ‘‘subject to regulation’’ mechanism, that approach is driven by the needs of the states, and our action in this rulemaking should be interpreted to rely on any of several legal mechanisms to accomplish this result. Thus, our action in this rule should be understood
as revising the meaning of several terms in these definitions, including: (1) The
numerical thresholds, as we proposed; (2) the term, ‘‘any source,’’ which some commenters identified as the most relevant term for purposes of our proposal; (3) the term, ‘‘any air pollutant; or (4) the term, ‘‘subject to regulation.’’ The specific choice of which of these constitutes the nominal mechanism does not have a substantive legal effect because each mechanism involves one or another of the components of the terms ‘‘major stationary source’’—which embodies the statutory term, ‘‘major emitting
facility’’—and ‘‘major modification,’’ which embodies the statutory term, ‘‘modification,’’ and it is those statutory and regulatory terms that we are defining to exclude the indicated GHG-emitting sources.[Footnote]
[Footnote: We also think that this approach better clarifies our long standing practice of interpreting open-ended SIP regulations to automatically adjust for changes in the regulatory status of an air pollutant, because it appropriately assures that the Tailoring Rule applies to both the definition of ‘‘major stationary source’’ and ‘‘regulated NSR pollutant.’’ ]
75 FR 31582.
Thus, according to the preamble of the final Tailoring Rule, the definition of ‘‘major stationary source’’ itself already incorporates the Tailoring Rule thresholds, and not just through one component (the ‘‘subject to regulation’’ prong of the term ‘‘regulated NSR pollutant’’) of that definition. For this reason, it is the EPA’s position that the Tailoring Rule thresholds continue to apply even when the EPA promulgates the first NSPS for GHGs (which, as noted above, triggers the PSD requirement under the NSPS trigger provision in the definition of ‘‘regulated NSR pollutant’’).259
As a result, the EPA believes that states that incorporated the Tailoring Rule thresholds into their SIPs may take the position that they also incorporated the EPA’s interpretation in the preamble that the thresholds apply to the
definition ‘‘major stationary source.’’ Even so, to clarify and confirm that the Tailoring Rule thresholds apply to the section 111 prong of the definition of regulated NSR pollutant, in this
proposed rulemaking, the EPA is proposing to add new provisions to the NSPS regulations, although not the PSD regulations, to make explicit that the NSPS trigger provision in the PSD regulations incorporates the Tailoring Rule thresholds.260Under these new provisions, to the extent that
promulgation of section 111 requirements for GHGs triggers PSD requirements for GHGs, it does so only for GHGs emitted at or above the Tailoring Rule thresholds.
The EPA requests that all States with approved SIP PSD programs that apply to GHGs indicate during the comment period on this rule whether, (i) in light of EPA’s interpretation that the Tailoring Rule thresholds continue to apply even when the EPA promulgates the first NSPS for GHGs, and (ii) assuming that EPA finalizes the added provisions to the section 111 regulations proposed today, they can interpret their SIPs already to apply the Tailoring Rule thresholds to the NSPS prong or whether they must revise their SIPs. For any State that says it must revise its SIP (or that does not respond), the EPA will assess whether to propose a rule shortly after the close of the comment period, to narrow its approval of that state’s SIP so as to assure that for federal purposes, the Tailoring Rule thresholds will continue to apply as of the effective date of the final rule that the EPA is
proposing today. Such a rule would be comparable to what we call the SIP PSD Narrowing Rule that EPA promulgated in December, 2010.261The EPA may finalize such a narrowing rule at the same time that it finalizes this NSPS rule.
C. Implications for BACT Determinations Under PSD
New major stationary sources and major modifications at existing major stationary sources are required by the CAA to, among other things, obtain a permit under the PSD program before commencing construction. A source is subject to PSD by way of its proposed construction and the effect of the construction and operation of the new equipment on emissions. The emission thresholds that define PSD applicability can be found in 40 CFR parts 51 and 52 and are discussed briefly in the above section.
As mentioned above, sources that are subject to PSD must obtain a
preconstruction permit that contains emission limitations based on application of Best Available Control Technology for each regulated NSR pollutant. The BACT requirement is set forth in section 165(a)(4) of the CAA, and in EPA regulations under 40 CFR parts 51 and 52. These provisions require that BACT determinations be made on a case-by-case basis after consideration of the record in each case. CAA section 169(3) defines BACT as an emissions limitation (including a visible emission standard) based on the
maximum degree of reduction for each pollutant subject to regulation under the Clean Air Act which would be emitted from any proposed major stationary source or major modification which the Administrator, on a case-by-case basis, taking into account energy,
environmental, and economic impacts and other costs, determines is
achievable for such facility through application of production processes and available methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control of each such pollutant.
Furthermore, this definition in the CAA specifies that ‘‘[i]n no event shall application of [BACT] result in emissions of any pollutants which will exceed the emissions allowed by any applicable standard established pursuant to section 111 or 112 of the Act.’’ This has historically been interpreted to mean that BACT cannot be less stringent than any applicable standard of performance under the NSPS. See e.g. EPA, PSD and Title V Permitting Guidance for Greenhouse Gases, p. 20–21 (March 2011). Thus, upon completion of an NSPS, EPA reads the CAA to mean that the NSPS
establishes a ‘‘BACT Floor’’ for PSD permits issued to affected facilities covered by an NSPS. It is important to note that a proposed NSPS does not establish the BACT Floor for affected facilities seeking a PSD permit. This is explained on page 25 of EPA’s PSD and Title V Permitting Guidance for Greenhouse Gases (March 2011):
In cases where a NSPS is proposed, the NSPS will not be controlling for BACT purposes since it is not a final action and the proposed standard may change, but the record of the proposed standard (including any significant public comments on EPA’s evaluation) should be weighed when considering available control strategies and achievable emission levels for BACT determinations made that are completed before a final standard is set by EPA. However, even though a proposed NSPS is not a controlling floor for BACT, the NSPS is an independent requirement that will apply to an NSPS source that commences construction after an
NSPS is proposed and carries with it a strong presumption as to what level of control is achievable. This is not intended to limit available options to only those considered in the development of the NSPS. (p.25)
However, once an NSPS is finalized, then the standard applies to any new source or modification that meets the applicability of the NSPS and has not commenced construction as of the date of the proposed NSPS.
It is also important to keep in mind that BACT is a case-by-case review that considers a number of factors, and the fact that a minimum control
requirement is established by EPA through an NSPS does not mean that a more stringent control cannot be chosen by the permitting agency. The EPA’s PSD and Title V Permitting Guidance for Greenhouse Gases (March 2011) discusses considerations (e.g., technical feasibility, economic impacts and other costs, and environmental and energy impacts) when evaluating BACT for CO2, as well as other greenhouse gases.
Under this proposed NSPS, an affected facility is a new EGU. In this rule we are not proposing standards for modified or reconstructed sources. However, since both a new and existing power plant can add new EGUs to increase generating capacity, this NSPS will apply to both a new, greenfield EGU facility or an existing facility that adds EGU capacity by adding a new EGU that is an affected facility under this NSPS. While this latter scenario can be considered the modification of existing sources under PSD, this proposed NSPS will not apply to modified or reconstructed sources as those terms are defined under part 60. Thus, this NSPS would not establish a BACT floor for sources that are
modifying an existing EGU, for example, by adding new steam tubes in an existing boiler or replacing blades in their existing combustion turbine with a more efficient design.
Furthermore, our analysis for this proposed NSPS considers only the extent to which particular pollution control techniques are BSER for new units, and does not evaluate whether such techniques also qualify as BSER for modified or reconstructed sources under Part 60 or are otherwise achievable methods for reducing GHG emission from such sources considering economic, environmental, and energy impacts. Therefore, we do not believe that the content of this rule has any direct applicability on the
determination of BACT for any part 60 modified or reconstructed sources obtaining a PSD permit.
D. Implications for Title V Program Under the title V program, a source that emits any air pollutant subject to regulation at or above specified thresholds (along with certain other sources) is required to obtain an operating permit. This permit includes all of the CAA requirements applicable to the source. These permits are generally issued through EPA-approved State title V programs.
As the EPA explained in the Tailoring Rule preamble, title V applies to a ‘‘major source,’’ CAA section 502(a), which is defined to include, among other things, certain sources, including any ‘‘major stationary source,’’ CAA section 501(2)(B), which, in turn, is defined to include a stationary source of ‘‘any air pollutant’’ at or above 100 tpy. CAA section 302(j). The EPA’s
regulations under title V define the term