[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Proposed Rules]
[Pages 2070-2076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-495]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2010-1028; FRL-9251-6]


Approval and Promulgation of Air Quality Implementation Plans; 
Virginia; Prevention of Significant Deterioration; Greenhouse Gas 
Permitting Authority and Tailoring Rule Revision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve a State Implementation Plan (SIP) 
revision submitted by the Virginia Department of Environmental Quality 
(VADEQ). This revision pertains to EPA's greenhouse gas (GHG) 
permitting provisions as promulgated on June 3, 2010. This action is 
being taken under the Clean Air Act (CAA).

DATES: Written comments must be received on or before February 11, 
2011.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R03-OAR-2010-1028 by one of the following methods:
    A. www.regulations.gov. Follow the online instructions for 
submitting comments.
    B. E-mail: [email protected].
    C. Mail: EPA-R03-OAR-2010-1028, Kathleen Cox, Associate Director, 
Office of Permits and Air Toxics, Mailcode 3AP10, U.S. Environmental 
Protection Agency, Region III, 1650 Arch Street, Philadelphia, 
Pennsylvania 19103.
    D. Hand Delivery: At the previously-listed EPA Region III address. 
Such deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-R03-OAR-
2010-1028. EPA's policy is that all comments received will be included 
in the public docket without change, and may be made available online 
at www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or e-mail. 
The www.regulations.gov Web site is an ``anonymous access'' system, 
which means EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov, 
your e-mail address will be automatically captured and included as part 
of the comment that is placed in the public docket and made available 
on the Internet. If you submit an electronic comment, EPA recommends 
that you include your name and other contact information in the body of 
your comment and with any disk or CD-ROM you submit. If EPA cannot read 
your comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses.
    Docket: All documents in the electronic docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in www.regulations.gov or 
in hard copy during normal business hours at the Air Protection 
Division, U.S. Environmental Protection Agency, Region III, 1650 Arch 
Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal 
are available at the Virginia Department of Environmental Quality, 629 
East Main Street, Richmond, Virginia 23219.

FOR FURTHER INFORMATION CONTACT: David Talley, (215) 814-2117, or by e-
mail at [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA. On October 27, 2010, the 
Virginia Department of Environmental Quality submitted a revision to 
its SIP for the addition of a new Chapter 85 of 9VAC5.

I. Background

    On October 27, 2010, VADEQ submitted a draft revision to EPA for 
approval into the Virginia SIP to establish appropriate emission 
thresholds for determining which new or modified stationary sources 
become subject to Virginia's Prevention of Significant Deterioration 
(PSD) permitting requirements for GHG emissions. Final approval of 
Virginia's October 27, 2010, SIP revision will put in place the GHG 
emission thresholds for PSD applicability set forth in EPA's 
``Prevention of Significant Deterioration and Title V Greenhouse Gas 
Tailoring Rule,'' (the Tailoring Rule) Final Rule, 75 FR 31514 (June 3, 
2010), ensuring that smaller GHG sources emitting less than these 
thresholds will not be subject to permitting requirements when these 
requirements begin applying to GHGs on January 2, 2011. Pursuant to 
section 110 of the CAA, EPA is proposing to approve this revision into 
the Virginia SIP.
    Today's proposed action on the Virginia SIP generally relates to 
three federal rulemaking actions. The first rulemaking is EPA's 
Tailoring Rule. The second rulemaking is EPA's ``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 (GHG SIP Call). 
75 FR 53892 (September 2, 2010). The third rulemaking is EPA's ``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 53883 
(September 2, 2010) (GHG FIP), which serves as a companion rulemaking 
to EPA's proposed GHG SIP Call. A summary of each of these rulemakings 
is described below.
    In the first rulemaking, the Tailoring Rule, EPA established 
appropriate GHG

[[Page 2071]]

emission thresholds for determining the applicability of PSD 
requirements to GHG-emitting sources. In the second rulemaking, the GHG 
SIP Call (which is not yet final), EPA proposed to find that the EPA-
approved PSD programs in 13 States (not including Virginia) are 
substantially inadequate to meet CAA requirements because they do not 
appear to apply PSD requirements to GHG-emitting sources. For each of 
these States, EPA proposed to require the State (through a ``SIP 
Call'') to revise its SIP as necessary to correct such inadequacies. 
EPA proposed an expedited schedule for these States to submit their SIP 
revision, in light of the fact that as of January 2, 2011, certain GHG-
emitting sources will become subject to the PSD requirements and may 
not be able to obtain a PSD permit in order to construct or modify. In 
the third rulemaking, the GHG FIP (which is not yet final), EPA 
proposed a FIP to apply in any state that is unable to submit, by its 
deadline, a SIP revision to ensure that the state has authority to 
issue PSD permits for GHG-emitting sources. Because Virginia already 
has authority to regulate GHGs, Virginia is only seeking to revise its 
SIP to put in place the GHG emission thresholds for PSD applicability 
set forth in EPA's Tailoring Rule, thereby ensuring that smaller GHG 
sources emitting less than these thresholds will not be subject to 
permitting requirements when these requirements begin applying to GHGs 
on January 2, 2011.
    Below is a brief overview of GHGs and GHG-emitting sources, the CAA 
PSD program, minimum SIP elements for a PSD program, and EPA's recent 
actions regarding GHG permitting. Following this section, EPA 
discusses, in sections III and IV, the relationship between the 
proposed Virginia SIP revision and EPA's other national rulemakings as 
well as EPA's analysis of Virginia's SIP revision.

A. What are GHGs and their sources?

    A detailed explanation of GHGs, climate change and the impact on 
health, society, and the environment is included in EPA's technical 
support document for EPA's GHG endangerment finding final rule 
(Document ID No. EPA-HQ-OAR-2009-0472-11292 at www.regulations.gov).
    The endangerment finding rulemaking is discussed later in this 
rulemaking. A summary of the nature and sources of GHGs is provided 
below.
    GHGs 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. GHGs 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.
    Some GHGs, such as carbon dioxide (CO2), are emitted to 
the atmosphere through natural processes as well as human activities. 
Other gases, such as fluorinated gases, are created and emitted solely 
through human activities. The well-mixed GHGs of concern directly 
emitted by human activities include CO2, methane 
(CH4), nitrous oxide (N2O), hydrofluorocarbons 
(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride 
(SF6), hereafter referred to collectively as ``the six well-
mixed GHG,'' or, simply, GHGs. Together these six well-mixed GHGs 
constitute the ``air pollutant'' upon which the GHG thresholds in EPA's 
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.
    In the United States, the combustion of fossil fuels (e.g., coal, 
oil, gas) is the largest source of CO2 emissions and 
accounts for 80 percent of the total GHG emissions by mass. 
Anthropogenic CO2 emissions released from a variety of 
sources, including through the use of fossil fuel combustion and cement 
production from geologically stored carbon (e.g., coal, oil, and 
natural gas) that is hundreds of millions of years old, as well as 
anthropogenic CO2 emissions from land-use changes such as 
deforestation, perturb the atmospheric concentration of CO2, 
and the distribution of carbon within different reservoirs readjusts. 
More than half of the energy-related emissions come from large 
stationary sources such as power plants, while about a third come from 
transportation. Of the six well-mixed GHGs, four (CO2, 
CH4, N2O, 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 CO2 
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 carbon dioxide equivalent (CO2e) basis. For example, 
CH4 has a GWP of 21, meaning each ton of CH4 
emissions would have 21 times as much impact on global warming over a 
100-year time horizon as 1 ton of CO2 emissions. Thus, on 
the basis of heat-trapping capability, 1 ton of CH4 would 
equal 21 tons of CO2e. The GWPs of the non-CO2 
GHG range from 21 (for CH4) up to 23,900 (for 
SF6). Aggregating all GHG on a CO2e basis at the 
source level allows a facility to evaluate its total GHG emissions 
contribution based on a single metric.

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

1. Overview of the PSD Program
    The PSD program is a preconstruction review and permitting program 
applicable to new major stationary sources and major modifications at 
existing stationary sources. The PSD program applies in areas that are 
designated ``attainment'' or ``unclassifiable'' for a national ambient 
air quality standard (NAAQS). The PSD program is contained in part C of 
title I of the CAA. The ``nonattainment new source review (NSR)'' 
program applies in areas not in attainment of a NAAQS or in the Ozone 
Transport Region, and it is implemented under the requirements of part 
D of title I of the CAA. Collectively, EPA commonly refers to these two 
programs as the major NSR program. The governing EPA rules are 
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, 
Appendices S and W. There is no NAAQS for CO2 or any of the 
other well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore, 
unless and until EPA takes such further action, the nonattainment NSR 
program does not apply to GHGs.
    The applicability of PSD to a particular source must be determined 
in advance of construction or modification and is pollutant-specific. 
The primary criterion in determining PSD applicability for a proposed 
new or modified source is whether the source is a ``major emitting 
facility,'' based on its predicted potential emissions of regulated 
pollutants, within the meaning of CAA section 169(1) that either 
constructs or undertakes a modification. EPA has implemented these 
requirements in its regulations, which use somewhat different

[[Page 2072]]

terminology than the CAA does, for determining PSD applicability.
a. Major Stationary Source
    Under PSD, a ``major stationary source'' is any source belonging to 
a specified list of 28 source categories that emits or has the 
potential to emit (PTE) 100 tons per year (tpy) or more of any air 
pollutant subject to regulation under the CAA, or any other source type 
that emits or has the potential to emit such pollutants in amounts 
equal to or greater than 250 tpy. We refer to these levels as the 100/
250-tpy thresholds. A new source with a potential to emit (PTE) at or 
above the applicable ``major stationary source threshold'' is subject 
to major NSR. These limits originate from section 169 of the CAA, which 
applies PSD to any ``major emitting facility'' and defines the term to 
include any source that emits or has a PTE of 100 or 250 tpy, depending 
on the source category. Note that the major source definition 
incorporates the phrase ``subject to regulation,'' which, as described 
later, will begin to include GHGs on January 2, 2011, under our 
interpretation of that phrase as discussed in the recent memorandum 
entitled, ``EPA's Interpretation of Regulations that Determine 
Pollutants Covered by Federal Prevention of Significant Deterioration 
(PSD) Permit Program.'' 75 FR 17004 (April 2, 2010).
b. Major Modifications
    PSD also applies to existing sources that undertake a ``major 
modification,'' which occurs when: (1) There is a physical change in, 
or change in the method of operation of, a ``major stationary source;'' 
(2) the change results in a ``significant'' emissions increase of a 
pollutant subject to regulation (equal to or above the significance 
level that EPA has set for the pollutant in 40 CFR 52.21(b)(23)); and 
(3) there is a ``significant net emissions increase'' of a pollutant 
subject to regulation that is equal to or above the significance level 
(defined in 40 CFR 52.21(b)(23)). Significance levels, which EPA has 
promulgated for criteria pollutants and certain other pollutants, 
represent a de minimis contribution to air quality problems. When EPA 
has not set a significance level for a regulated NSR pollutant, PSD 
applies to an increase of the pollutant in any amount (that is, in 
effect, the significance level is treated as zero).
2. General Requirements for PSD
    This section provides a very brief summary of the main requirements 
of the PSD program. One principal requirement is that a new major 
source or major modification must apply best available control 
technology (BACT), which is determined on a case-by-case basis taking 
into account, among other factors, the cost effectiveness of the 
control and energy and environmental impacts. EPA has developed a 
``top-down'' approach for BACT review, which involves a decision 
process that includes identification of all available control 
technologies, elimination of technically infeasible options, ranking of 
remaining options by control and cost effectiveness, and then selection 
of BACT. Under PSD, once a source is determined to be major for any 
regulated NSR pollutant, a BACT review is performed for each attainment 
pollutant that exceeds its PSD significance level as part of new 
construction or for modification projects at the source, where there is 
a significant increase and a significant net emissions increase of such 
pollutant.\1\
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    \1\ EPA notes that the PSD program has historically operated in 
this fashion for all pollutants--when new sources or modifications 
are ``major,'' PSD applies to all pollutants that are emitted in 
significant quantities from the source or project. This rule does 
not alter that for sources or modifications that are major due to 
their GHG emissions.
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    In addition to performing BACT, the source must analyze impacts on 
ambient air quality to assure that sources do not cause or contribute 
to violation of any NAAQS or PSD increments and must analyze impacts on 
soil, vegetation, and visibility. In addition, sources or modifications 
that would impact Class I areas (e.g., national parks) may be subject 
to additional requirements to protect air quality related values 
(AQRVs) that have been identified for such areas. Under PSD, if a 
source's proposed project may impact a Class I area, the Federal Land 
Manager is notified and is responsible for evaluating a source's 
projected impact on the AQRVs and recommending either approval or 
disapproval of the source's permit application based on anticipated 
impacts. There are currently no NAAQS or PSD increments established for 
GHGs, and therefore these PSD requirements would not apply for GHGs, 
even when PSD is triggered for GHGs. However, if PSD is triggered for a 
GHG-emitting source, all regulated NSR pollutants that the new source 
emits in significant amounts would be subject to PSD requirements. 
Therefore, if a facility triggers NSR for non-GHG pollutants for which 
there are established NAAQS or increments, the air quality, additional 
impacts, and Class I requirements would apply to those pollutants.
    Pursuant to existing PSD requirements, the permitting authority 
must provide notice of its preliminary decision on a source's 
application for a PSD permit and must provide an opportunity for 
comment by the public, industry, and other interested persons. After 
considering and responding to comments, the permitting authority must 
issue a final determination on the construction permit. Usually NSR 
permits are issued by a state or local air pollution control agency 
that has its own authority to issue PSD permits under a permit program 
that has been approved by EPA for inclusion in its SIP. In some areas, 
EPA has delegated its authority to issue PSD permits under federal 
regulations to the state or local agency. In other areas, EPA issues 
the permits under its own authority.

C. What are the CAA requirements to include the PSD program in the SIP?

    The CAA contemplates that the PSD program be implemented in the 
first instance by the states and requires that states include PSD 
requirements in 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 as well as other provisions such as the BACT provision the 
under CAA Section 165(a)(4), mandate that SIPs include PSD programs 
that are applicable to, among other things, any air pollutant that is 
subject to regulation. As discussed below, this includes GHGs on and 
after January 2, 2011.\2\ A number of

[[Page 2073]]

states do not have PSD programs approved into their SIPs. In those 
states, EPA's regulations at 40 CFR 52.21 govern, and either EPA or the 
state as EPA's delegatee acts as the permitting authority. However, 
most states have PSD programs that have been approved into their SIPs, 
and these states implement their PSD programs and act as the permitting 
authority. Virginia's PSD program has been granted a ``limited'' 
approval. The approval was limited because the definition of ``baseline 
actual emissions'' at 9 VAC5 Chapter 80 differs from the federal 
definition at 40 CFR 51.166 (b)(47). This issue will not prevent 
today's proposed action from being fully approved.
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    \2\ In the Tailoring Rule, EPA noted that commenters argued, 
with some variations, that the PSD provisions applied only to NAAQS 
pollutants, and not GHG, and EPA responded that the PSD provisions 
apply to all pollutants subject to regulation, including GHG. See 75 
FR 31560-62 (June 3, 2010). EPA maintains its position that the PSD 
provisions apply to all pollutants subject to regulation, and the 
Agency incorporates by reference the discussion of this issue in the 
Tailoring Rule.
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D. What actions has EPA taken concerning PSD requirements for GHG-
emitting sources?

1. What are the Endangerment Finding, the Light Duty Vehicle Rule, and 
the Johnson Memo Reconsideration?
    By notice dated December 15, 2009, and pursuant to CAA section 
202(a), EPA issued two findings regarding GHGs that are commonly 
referred to as the ``Endangerment Finding'' and the ``Cause or 
Contribute Finding.'' ``Endangerment and Cause or Contribute Findings 
for Greenhouse Gases Under Section 202(a) of the Clean Air Act,'' 74 FR 
66496. In the Endangerment Finding, the Administrator found that six 
long-lived and directly emitted GHGs--CO2, CH4, 
N2O, HFCs, PFCs, and SF6--may reasonably be 
anticipated to endanger public health and welfare. In the Cause or 
Contribute Finding, the Administrator ``define[d] the air pollutant as 
the aggregate group of the same six * * * greenhouse gases,'' 74 FR 
66536, and found that the combined emissions of this air pollutant from 
new motor vehicles and new motor vehicle engines contribute to the GHG 
air pollution that endangers public health and welfare.
    By notice dated May 7, 2010, EPA published what is commonly 
referred to as the ``Light-Duty Vehicle Rule'' (LDVR), which for the 
first time established federal controls on GHGs emitted from light-duty 
vehicles. ``Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards; Final Rule.'' 75 FR 25324. In 
its applicability provisions, the LDVR specifies that it ``contains 
standards and other regulations applicable to the emissions of six 
greenhouse gases,'' including CO2, CH4, 
N2O, HFCs, PFCs, and SF6. 75 FR 25686 (40 CFR 
86.1818-12(a)). Shortly before finalizing the LDVR, by notice dated 
April 2, 2010, EPA published a notice commonly referred to as the 
Johnson Memo Reconsideration. On December 18, 2008, EPA issued a 
memorandum, ``EPA's Interpretation of Regulations that Determine 
Pollutants Covered by Federal Prevention of Significant Deterioration 
(PSD) Permit Program'' (known as the ``Johnson Memo'' or the ``PSD 
Interpretive Memo,'' and referred to in this preamble as the 
``Interpretive Memo''), that set forth EPA's interpretation regarding 
which EPA and state actions, with respect to a previously unregulated 
pollutant, cause that pollutant to become ``subject to regulation'' 
under the CAA. Whether a pollutant is ``subject to regulation'' is 
important for the purposes of determining whether it is covered under 
the federal PSD permitting program. The Interpretive Memo established 
that a pollutant is ``subject to regulation'' only if it is subject to 
either a provision in the CAA or regulation adopted by EPA under the 
CAA that requires actual control of emissions of that pollutant 
(referred to as the ``actual control interpretation''). On February 17, 
2009, EPA granted a petition for reconsideration on the Interpretive 
Memo and announced its intent to conduct a rulemaking to allow for 
public comment on the issues raised in the memorandum and on related 
issues. EPA also clarified that the Interpretive Memo would remain in 
effect pending reconsideration.
    On March 29, 2010, EPA signed a notice conveying its decision to 
continue applying (with one limited refinement) the Interpretive Memo's 
interpretation of ``subject to regulation'' (``Interpretation of 
Regulations that Determine Pollutants Covered by Clean Air Act 
Permitting Programs,'' 75 FR 17004). EPA concluded that the ``actual 
control interpretation'' is the most appropriate interpretation to 
apply given the policy implications. However, EPA refined the Agency's 
interpretation in one respect: EPA established that PSD permitting 
requirements apply to a newly regulated pollutant at the time a 
regulatory requirement to control emissions of that pollutant ``takes 
effect'' (rather than upon promulgation or the legal effective date of 
the regulation containing such a requirement). In addition, based on 
the anticipated promulgation of the LDVR, EPA stated that the GHG 
requirements of the vehicle rule would take effect on January 2, 2011, 
because that is the earliest date that a 2012 model year vehicle may be 
introduced into commerce. In other words, the compliance obligation 
under the LDVR does not occur until a manufacturer may introduce into 
commerce vehicles that are required to comply with GHG standards, which 
will begin with model year 2012 and will not occur before January 2, 
2011.
2. What is EPA's Tailoring Rule?
    On June 3, 2010 (effective August 2, 2010), EPA promulgated a final 
rulemaking, the Tailoring Rule, for the purpose of relieving 
overwhelming permitting burdens that would, in the absence of the rule, 
fall on permitting authorities and sources. 75 FR 31514. EPA 
accomplished this by tailoring the applicability criteria that 
determine which GHG emission sources become subject to the PSD program 
\3\ of the CAA. In particular, EPA established in the Tailoring Rule a 
phase-in approach for PSD applicability and established the first two 
steps of the phase-in for the largest GHG-emitters. Additionally, EPA 
committed to certain follow-up actions regarding future steps beyond 
the first two, discussed in more detail later in this notice.
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    \3\ The Tailoring Rule also applies to the title V program, 
which requires operating permits for existing sources. However, 
today's action does not affect Virginia's title V program.
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    For the first step of the Tailoring Rule, which will begin on 
January 2, 2011, PSD requirements will apply to major stationary source 
GHG emissions only if the sources are subject to PSD anyway due to 
their emissions of non-GHG pollutants. Therefore, in the first step, 
EPA will not require sources or modifications to evaluate whether they 
are subject to PSD requirements solely on account of their GHG 
emissions. Specifically, for PSD, Step 1 requires that as of January 2, 
2011, the applicable requirements of PSD, most notably, the BACT 
requirement, will apply to projects that increase net GHG emissions by 
at least 75,000 tpy CO2e, but only if the project also 
significantly increases emissions of at least one non-GHG pollutant.
    The second step of the Tailoring Rule, beginning on July 1, 2011, 
will phase in additional large sources of GHG emissions. New sources 
that emit, or have the PTE, at least 100,000 tpy CO2e will 
become subject to the PSD requirements. In addition, sources that emit 
or have the PTE at least 100,000 tpy CO2e and that undertake 
a modification that increases net GHG

[[Page 2074]]

emissions by at least 75,000 tpy CO2e will also be subject 
to PSD requirements. For both steps, EPA notes that if sources or 
modifications exceed these CO2e-adjusted GHG triggers, they 
are not covered by permitting requirements unless their GHG emissions 
also exceed the corresponding mass-based triggers in tpy.
    EPA believes that the costs to the sources and the administrative 
burdens to the permitting authorities of PSD permitting will be 
manageable at the levels in these initial two steps and that it would 
be administratively infeasible to subject additional sources to PSD 
requirements at those times. However, EPA also intends to issue a 
supplemental notice of proposed rulemaking in 2011, in which the Agency 
will propose or solicit comment on a third step of the phase-in that 
would include more sources, beginning on July 1, 2013. In the Tailoring 
Rule, EPA established an enforceable commitment that the Agency will 
complete this rulemaking by July 1, 2012, which will allow 1 year's 
notice before Step 3 would take effect. In addition, EPA committed to 
explore streamlining techniques that may well make the permitting 
programs much more efficient to administer for GHG, and that therefore 
may allow their expansion to smaller sources. EPA expects that the 
initial streamlining techniques will take several years to develop and 
implement.
    In the Tailoring Rule, EPA also included a provision, that no 
source with emissions below 50,000 tpy CO2e, and no 
modification resulting in net GHG increases of less than 50,000 tpy 
CO2e, will be subject to PSD permitting before at least 6 
years (i.e., April 30, 2016). This is because EPA has concluded that at 
the present time, the administrative burdens that would accompany 
permitting sources below this level would be so great that even with 
the streamlining actions that EPA may be able to develop and implement 
in the next several years, and even with the increases in permitting 
resources that EPA can reasonably expect the permitting authorities to 
acquire, it would be impossible to administer the permit programs for 
these sources until at least 2016.
    As EPA explained in the Tailoring Rule, the threshold limitations 
are necessary because without it, PSD would apply to all stationary 
sources that emit or have the PTE more than 100 or 250 tons of GHG per 
year beginning on January 2, 2011. This is the date when EPA's recently 
promulgated LDVR takes effect, imposing control requirements for the 
first time on CO2 and other GHGs. If this January 2, 2011, 
date were to pass without the Tailoring Rule being in effect, PSD 
requirements would apply to GHG emissions at the 100/250 tpy 
applicability levels provided under a literal reading of the CAA as of 
that date. From that point forward, a source owner proposing to 
construct any new major source that emits at or higher than the 
applicability levels (and which therefore may be referred to as a 
``major'' source) or modify any existing major source in a way that 
would increase GHG emissions would need to obtain a permit under the 
PSD program that addresses these emissions before construction or 
modification could begin.
    Under these circumstances, many small sources would be burdened by 
the costs of the individualized PSD control technology requirements and 
permit applications that the PSD provisions, absent streamlining, 
require. Additionally, state and local permitting authorities would be 
burdened by the extraordinary number of these permit applications, 
which are orders of magnitude greater than the current inventory of 
permits and would vastly exceed the current administrative resources of 
the permitting authorities. Permit gridlock would result since the 
permitting authorities would likely be able to issue only a tiny 
fraction of the permits requested.
    In the Tailoring Rule, EPA adopted regulatory language codifying 
the phase-in approach. As explained in that rulemaking, many state, 
local and tribal area programs will likely be able to immediately 
implement the approach without rule or statutory changes by, for 
example, interpreting the term ``subject to regulation'' that is part 
of the applicability provisions for PSD permitting. EPA has requested 
permitting authorities to confirm that they will follow this 
implementation approach for their programs, and if they cannot, then 
EPA has requested that they notify the Agency so that we can take 
appropriate follow-up action to narrow federal approval of their 
programs before GHGs become subject to PSD permitting on January 2, 
2011.\4\ On July 28, 2010, Virginia provided a letter to EPA with 
confirmation that the Commonwealth has the authority to regulate GHG in 
its PSD and title V programs. See the docket for this proposed 
rulemaking for a copy of Virginia's letter.
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    \4\ Narrowing EPA's approval will ensure that for federal 
purposes, sources with GHG emissions that are less than the 
Tailoring Rule's emission thresholds will not be obligated under 
federal law to obtain PSD permits during the gap between when GHG 
PSD requirements go into effect on January 2, 2011 and when either 
(1) EPA approves a SIP revision adopting EPA's tailoring approach, 
or (2) if a state opts to regulate smaller GHG-emitting sources, the 
state demonstrates to EPA that it has adequate resources to handle 
permitting for such sources. EPA expects to finalize the narrowing 
action prior to the January 2, 2011 deadline with respect to those 
States for which EPA will not have approved the Tailoring Rule 
thresholds in their SIPs by that time.
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    The thresholds that EPA established in the Tailoring Rule are based 
on CO2e for the aggregate sum of six GHGs that constitute 
the pollutant that will be subject to regulation, which we refer to as 
GHG.\5\ These gases are: CO2, CH4, 
N2O, HFCs, PFCs, and SF6. Thus, in EPA's 
Tailoring Rule, EPA provided that PSD applicability is based on the 
quantity that results when the mass emissions of each of these gases is 
multiplied by the GWP of that gas, and then summed for all six gases. 
However, EPA further provided that in order for a source's GHG 
emissions to trigger PSD requirements, the quantity of the GHG 
emissions must equal or exceed both the applicability thresholds 
established in the Tailoring Rule on a CO2e basis and the 
statutory thresholds of 100 or 250 tpy on a mass basis.\6\ Similarly, 
in order for a source to be subject to the PSD modification 
requirements, the source's net GHG emissions increase must exceed the 
applicable significance level on a CO2e basis and must also 
result in a net mass increase of the constituent gases combined.
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    \5\ The term ``greenhouse gases'' is commonly used to refer 
generally to gases that have heat-trapping properties. However, in 
this notice, unless noted otherwise, we use it to refer specifically 
to the pollutant regulated in the LDVR.
    \6\ The relevant thresholds are 100 tpy for title V, and 250 tpy 
for PSD, except for 28 categories listed in EPA regulations for 
which the PSD threshold is 100 tpy.
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3. What is the GHG SIP Call?
    By Federal Register notice dated September 2, 2010, EPA proposed 
the GHG SIP Call. In that action, along with the companion GHG FIP 
rulemaking published at the same time, EPA took steps to ensure that in 
the 13 States that do not appear to have authority to issue PSD permits 
to GHG-emitting sources at present, either the State or EPA will have 
the authority to issue such permits by January 2, 2011. EPA explained 
that although for most states, either the state or EPA is already 
authorized to issue PSD permits for GHG-emitting sources as of that 
date, our preliminary information shows that these 13 States have EPA-
approved PSD programs that do not appear to include GHG-emitting 
sources and therefore do not appear to authorize these States to issue 
PSD permits to such sources. Therefore, EPA

[[Page 2075]]

proposed to find that these 13 States' SIPs are substantially 
inadequate to comply with CAA requirements and, accordingly, proposed 
to issue a SIP Call to require a SIP revision that applies their SIP 
PSD programs to GHG-emitting sources. In the companion GHG FIP 
rulemaking, EPA proposed a FIP that would give EPA authority to apply 
EPA's PSD program to GHG-emitting sources in any State that is unable 
to submit a corrective SIP revision by its deadline. Virginia was not 
one of the States for which EPA proposed a SIP Call.

II. What is the relationship between today's proposed action and EPA's 
proposed GHG SIP Call and GHG FIP?

    As noted above, by notice dated September 2, 2010, EPA proposed the 
GHG SIP Call. At the same time, EPA proposed a FIP to apply in any 
state that is unable to submit, by its deadline, a SIP revision to 
ensure that the state has authority to issue PSD permits to GHG-
emitting sources.\7\ As discussed in Section IV of this rulemaking, 
Virginia interprets its current PSD regulations as providing them with 
the authority to regulate GHG, and as such, Virginia is not included on 
the list of areas for the proposed SIP call. Additionally, Virginia 
would not be subject to the FIP to implement GHG for PSD applicability. 
Virginia's October 27, 2010, proposed SIP revision (the subject of this 
rulemaking) merely modifies Virginia's SIP to establish appropriate 
thresholds for determining which stationary sources and modification 
projects become subject to permitting requirements for GHG emissions 
under the PSD program of the CAA.
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    \7\ As explained in the proposed GHG SIP Call (75 FR 53892, 
53896), EPA intends to finalize its finding of substantial 
inadequacy and the SIP call for the 13 listed states by December 1, 
2010. EPA requested that the states for which EPA is proposing a SIP 
call identify the deadline--between 3 weeks and 12 months from the 
date of signature of the final SIP Call--that they would accept for 
submitting their corrective SIP revision.
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III. General Information Pertaining to SIP Submittals From the 
Commonwealth of Virginia

    In 1995, Virginia adopted legislation that provides, subject to 
certain conditions, for an environmental assessment (audit) 
``privilege'' for voluntary compliance evaluations performed by a 
regulated entity. The legislation further addresses the relative burden 
of proof for parties either asserting the privilege or seeking 
disclosure of documents for which the privilege is claimed. Virginia's 
legislation also provides, subject to certain conditions, for a penalty 
waiver for violations of environmental laws when a regulated entity 
discovers such violations pursuant to a voluntary compliance evaluation 
and voluntarily discloses such violations to the Commonwealth and takes 
prompt and appropriate measures to remedy the violations. Virginia's 
Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-
1198, provides a privilege that protects from disclosure documents and 
information about the content of those documents that are the product 
of a voluntary environmental assessment. The Privilege Law does not 
extend to documents or information (1) that are generated or developed 
before the commencement of a voluntary environmental assessment; (2) 
that are prepared independently of the assessment process; (3) that 
demonstrate a clear, imminent and substantial danger to the public 
health or environment; or (4) that are required by law.
    On January 12, 1998, the Commonwealth of Virginia Office of the 
Attorney General provided a legal opinion that states that the 
Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege 
to documents and information ``required by law,'' including documents 
and information ``required by Federal law to maintain program 
delegation, authorization or approval,'' since Virginia must ``enforce 
Federally authorized environmental programs in a manner that is no less 
stringent than their Federal counterparts. * * *'' The opinion 
concludes that ``[r]egarding Sec.  10.1-1198, therefore, documents or 
other information needed for civil or criminal enforcement under one of 
these programs could not be privileged because such documents and 
information are essential to pursuing enforcement in a manner required 
by Federal law to maintain program delegation, authorization or 
approval.'' Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides 
that ``[t]o the extent consistent with requirements imposed by Federal 
law,'' any person making a voluntary disclosure of information to a 
state agency regarding a violation of an environmental statute, 
regulation, permit, or administrative order is granted immunity from 
administrative or civil penalty. The Attorney General's January 12, 
1998 opinion states that the quoted language renders this statute 
inapplicable to enforcement of any Federally authorized programs, since 
``no immunity could be afforded from administrative, civil, or criminal 
penalties because granting such immunity would not be consistent with 
Federal law, which is one of the criteria for immunity.''
    Therefore, EPA has determined that Virginia's Privilege and 
Immunity statutes will not preclude the Commonwealth from enforcing its 
PSD program consistent with the Federal requirements. In any event, 
because EPA has also determined that a state audit privilege and 
immunity law can affect only state enforcement and cannot have any 
impact on Federal enforcement authorities, EPA may at any time invoke 
its authority under the CAA, including, for example, sections 113, 167, 
205, 211 or 213, to enforce the requirements or prohibitions of the 
state plan, independently of any state enforcement effort. In addition, 
citizen enforcement under section 304 of the CAA is likewise unaffected 
by this, or any, state audit privilege or immunity law.

IV. What is EPA's analysis of Virginia's SIP revision?

    On October 27, 2010, VADEQ provided a revision to Virginia's SIP to 
EPA for approval. This revision to Virginia's SIP is necessary because 
without it, PSD requirements would apply, as of January 2, 2011, at the 
100- or 250-tpy levels provided under the CAA. This would greatly 
increase the number of required permits, imposing undue costs on small 
sources; which would overwhelm Virginia's permitting resources and 
severely impair the function of the program.
    Virginia's October 27, 2010, proposed SIP revision establishes 
thresholds for determining which stationary sources and modification 
projects become subject to permitting requirements for GHG emissions 
under Virginia's PSD program. Specifically, Virginia's October 27, 
2010, proposed SIP revision includes changes to VADEQ's Rule 9VAC5, 
specifically the creation of Chapter 85: Permits for Stationary Sources 
Subject to Regulation, and addresses the thresholds for GHG permitting 
applicability.
    The current SIP-approved program (adopted prior to the promulgation 
of EPA's Tailoring Rule) applies to major stationary sources (having 
the potential to emit at least 100 tpy or 250 tpy or more of a 
regulated NSR pollutant, depending on the type of source) or 
modifications constructing in areas designated attainment or 
unclassifiable with respect to the NAAQS.
    The changes to Virginia's PSD program regulations at 9VAC5 Chapter 
85: Permits for Stationary Sources Subject to Regulation are 
substantively the same as the federal provisions amended in EPA's 
Tailoring Rule. As

[[Page 2076]]

part of its review of the Virginia submittal, EPA performed a line-by-
line review of Virginia's proposed revision and has preliminarily 
determined that they are consistent with the Tailoring Rule. These 
changes to Virginia's regulations are also consistent with section 110 
of the CAA because they are incorporating GHGs for regulation in the 
Virginia SIP.

V. Proposed Action

    Pursuant to section 110 of the CAA, EPA is proposing to approve 
Virginia's October 27, 2010, SIP revision, relating to PSD requirements 
for GHG-emitting sources. Specifically, Virginia's October 27, 2010, 
proposed SIP revision establishes appropriate emissions thresholds for 
determining PSD applicability to new and modified GHG-emitting sources 
in accordance with EPA's Tailoring Rule. EPA has made the preliminary 
determination that this SIP revision is approvable because it is in 
accordance with the CAA and EPA regulations regarding PSD permitting 
for GHGs. EPA is soliciting public comments on the issues discussed in 
this document. These comments will be considered before taking final 
action.

VI. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
proposed action merely approves the State's law as meeting federal 
requirements and does not impose additional requirements beyond those 
imposed by the State's law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this proposed SIP revision pertaining to greenhouse 
gas permitting does not have tribal implications as specified by 
Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP 
is not approved to apply in Indian country located in the State, and 
EPA notes that it will not impose substantial direct costs on tribal 
governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, and Reporting and recordkeeping requirements.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: January 3, 2011.
W.C. Early,
Acting Regional Administrator, Region III.
[FR Doc. 2011-495 Filed 1-11-11; 8:45 am]
BILLING CODE 6560-50-P