[Federal Register Volume 77, Number 75 (Wednesday, April 18, 2012)]
[Proposed Rules]
[Pages 23178-23181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9339]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2012-0169; FRL-9660-7]


Approval and Promulgation of Air Quality Implementation Plans; 
Virginia; Deferral for CO2 Emissions From Bioenergy and Other Biogenic 
Sources Under the Prevention of Significant Deterioration Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: EPA is proposing to approve a State Implementation Plan (SIP) 
revision submitted by the Virginia Department of Environmental Quality 
(VADEQ) on December 14, 2011. This revision proposes to defer until 
July 21, 2014 the application of the Prevention of Significant 
Deterioration (PSD) permitting requirements to biogenic carbon dioxide 
(CO2) emissions from bioenergy and other biogenic stationary 
sources in the Commonwealth of Virginia. This action is being taken 
under the Clean Air Act (CAA).

DATES: Written comments must be received on or before May 18, 2012.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R03-OAR-2012-0169 by one of the following methods:
    A. www.regulations.gov. Follow the on-line instructions for 
submitting comments.
    B. Email: [email protected].
    C. Mail: EPA-R03-OAR-2012-0169, Ms. 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-
2012-0169. 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 email. 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 email comment 
directly to EPA without going through www.regulations.gov, your email 
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: Mr. David Talley, (215) 814-2117, or 
by email at [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA. On December 14, 2011, VADEQ 
submitted a revision to its State Implementation Plan (SIP) to maintain 
consistency with Federal greenhouse gas (GHG) permitting requirements 
under the PSD program.

I. Background

A. The 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 from the regulation of GHG's 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 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.
    For the first step of the Tailoring Rule, which began on January 2, 
2011, PSD requirements 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 did 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 noticeably the best available control 
technology (BACT) requirement as defined in CAA section 169(3), apply 
to projects that increase net GHG emissions by at least 75,000 tons per 
year (tpy) of CO2 equivalent (CO2e), but only if 
the project also significantly increases emissions of at least one non-
GHG pollutant. CO2e is a metric used to compare the 
emissions from various greenhouse gases based

[[Page 23179]]

upon their global warming potential (GWP). The CO2e for a 
gas is determined by multiplying the mass of the gas by the associated 
GWP. The applicable GWP's and guidance on how to calculate a source's 
GHG emissions in tpy CO2e can be found in EPA's ``Inventory 
of U.S. Greenhouse Gas Emissions and Sinks,'' which is updated annually 
under existing commitment under the United Nations Framework Convention 
on Climate Change (UNFCCC).
    The second step of the Tailoring Rule, which began on July 1, 2011, 
phased in additional large sources of GHG emissions. New sources that 
emit, or have the potential to emit (PTE), at least 100,000 tpy 
CO2e are 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 emissions by 
at least 75,000 tpy CO2e are also be subject to PSD 
requirements. For both steps, EPA noted 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.
    Virginia adopted the regulations at 9VAC5 chapter 85 (9VAC5-85) to 
incorporate the Tailoring Rule thresholds and submitted them to EPA for 
approval in to the SIP. The Tailoring Rule and the regulations at 
9VAC5-85 address both PSD and Title V requirements. However, only the 
PSD regulations were submitted to EPA for incorporation into the SIP. 
On May 13, 2011, EPA took final action to approve that SIP revision (76 
FR 27898).

B. EPA's Biomass Deferral Rule

    On July 20, 2011, EPA promulgated the final ``Deferral for 
CO2 Emissions from Bioenergy and other Biogenic Sources 
Under the Prevention of Significant Deterioration (PSD) and Title V 
Programs'' (Biomass Deferral). Following is a brief discussion of the 
deferral. For a full discussion of EPA's rationale for the rule, see 
the notice of final rulemaking at 76 FR 43490.
    The biomass deferral delays until July 21, 2014 the consideration 
of CO2 emissions from bioenergy and other biogenic sources 
(hereinafter referred to as ``biogenic CO2 emissions'') when 
determining whether a stationary source meets the PSD and Title V 
applicability thresholds, including those for the application of 
BACT.\1\ Stationary sources that combust biomass (or otherwise emit 
biogenic CO2 emissions) and construct or modify during the 
deferral period will avoid the application of PSD to the biogenic 
CO2 emissions resulting from those actions. The deferral 
applies only to biogenic CO2 emissions and does not affect 
non-GHG pollutants or other GHG's (e.g., methane (CH4) and 
nitrous oxide (N2O)) emitted from the combustion of biomass 
fuel. Also, the deferral only pertains to biogenic CO2 
emissions in the PSD and Title V programs and does not pertain to any 
other EPA programs such as the GHG Reporting Program. Biogenic 
CO2 emissions are defined as emissions of CO2 
from a stationary source directly resulting from the combustion or 
decomposition of biologically-based materials other than fossil fuels 
and mineral sources of carbon. Examples of ``biogenic CO2 
emissions'' include, but are not limited to:
---------------------------------------------------------------------------

    \1\ As with the Tailoring Rule, the Biomass Deferral addresses 
both PSD and Title V requirements. However, EPA is only taking 
action on Virginia's PSD program as part of this action.
---------------------------------------------------------------------------

     CO2 generated from the biological decomposition 
of waste in landfills, wastewater treatment or manure management 
processes;
     CO2 from the combustion of biogas collected 
from biological decomposition of waste in landfills, wastewater 
treatment or manure management processes;
     CO2 from fermentation during ethanol production 
or other industrial fermentation processes;
     CO2 from combustion of the biological fraction 
of municipal solid waste or biosolids;
     CO2 from combustion of the biological fraction 
of tire-derived fuel; and
     CO2 derived from combustion of biological 
material, including all types of wood and wood waste, forest residue, 
and agricultural material.
    EPA recognizes that use of certain types of biomass can be part of 
the national strategy to reduce dependence on fossil fuels. Efforts are 
underway at the Federal, state and regional level to foster the 
expansion of renewable resources and promote bioenergy projects when 
they are a way to address climate change, increase domestic alternative 
energy production, enhance forest management and create related 
employment opportunities. We believe part of fostering this development 
is to ensure that those feedstocks with negligible net atmospheric 
impact not be subject to unnecessary regulation. At the same time, it 
is important that EPA have time to conduct its detailed examination of 
the science and technical issues related to accounting for biogenic 
CO2 emissions and therefore have finalized this deferral. 
The deferral is intended to be a temporary measure, in effect for no 
more than three years, to allow the Agency time to complete its work 
and determine what, if any, treatment of biogenic CO2 
emissions should be in the PSD and Title V programs. The biomass 
deferral rule is not EPA's final determination on the treatment of 
biogenic CO2 emissions in those programs. The Agency plans 
to complete its science and technical review and any follow-on 
rulemakings within the three-year deferral period and further believes 
that three years is ample time to complete these tasks. It is possible 
that the subsequent rulemaking, depending on the nature of EPA's 
determinations, would supersede the biomass deferral rulemaking and 
become effective in fewer than three years. In that event, Virginia may 
revise its SIP accordingly.
    For stationary sources co-firing fossil fuel and biologically-based 
fuel, and/or combusting mixed fuels (e.g., tire derived fuels, 
municipal solid waste (MSW)), the biogenic CO2 emissions 
from that combustion are included in the biomass deferral. However, the 
fossil CO2 emissions are not. Emissions of CO2 
from processing of mineral feedstocks (e.g., calcium carbonate) are 
also not included in the deferral. Various methods are available to 
calculate both the biogenic and fossil portions of CO2 
emissions, including those methods contained in the GHG Reporting 
Program (40 CFR Part 98). Consistent with the other pollutants in PSD 
and Title V, there are no requirements to use a particular method in 
determining biogenic and fossil CO2 emissions.
    EPA's final biomass deferral rule is an interim deferral for 
biogenic CO2 emissions only and does not relieve sources of 
the obligation to meet the PSD and Title V permitting requirements for 
other pollutant emissions that are otherwise applicable to the source 
during the deferral period or that may be applicable to the source at a 
future date pending the results of EPA's study and subsequent 
rulemaking action. This means, for example, that if the deferral is 
applicable to biogenic CO2 emissions from a particular 
source during the three-year effective period and the study and future 
rulemaking do not provide for a permanent exemption from PSD and Title 
V permitting requirements for the biogenic CO2 emissions 
from a source with particular characteristics, then the deferral would 
end for that type of source and its biogenic CO2 emissions 
would have to be appropriately considered in any applicability 
determinations that the source may need to conduct for future 
stationary source permitting purposes,

[[Page 23180]]

consistent with that subsequent rulemaking and the Final Tailoring Rule 
(e.g., a major source determination for Title V purposes or a major 
modification determination for PSD purposes). EPA also wishes to 
clarify that we did not require that a PSD permit issued during the 
deferral period be amended or that any PSD requirements in a PSD permit 
existing at the time the deferral took effect, such as BACT 
limitations, be revised or removed from an effective PSD permit for any 
reason related to the deferral or when the deferral period expires.
    Section 52.21(w) of 40 CFR requires that any PSD permit shall 
remain in effect, unless and until it expires or it is rescinded, under 
the limited conditions specified in that provision. Thus, a PSD permit 
that is issued to a source while the deferral was effective need not be 
reopened or amended if the source is no longer eligible to exclude its 
biogenic CO2 emissions from PSD applicability after the 
deferral expires. However, if such a source undertakes a modification 
that could potentially require a PSD permit and the source is not 
eligible to continue excluding its biogenic CO2 emissions 
after the deferral expires, the source will need to consider its 
biogenic CO2 emissions in assessing whether it needs a PSD 
permit to authorize the modification.
    Any future actions to modify, shorten, or make permanent the 
deferral for biogenic sources are beyond the scope of the biomass 
deferral action and this proposed approval of the deferral into the 
Virginia SIP, and will be addressed through subsequent rulemaking. The 
results of EPA's review of the science related to net atmospheric 
impacts of biogenic CO2 and the framework to properly 
account for such emissions in Title V and PSD permitting programs based 
on the study are prospective and unknown. Thus, we are unable to 
predict which biogenic CO2 sources, if any, currently 
subject to the deferral as incorporated into the Virginia SIP would be 
subject to any permanent exemptions or which currently deferred sources 
would be potentially required to account for their emissions in the 
future rulemaking EPA has committed to undertake for such purposes in 
three or fewer years. Only in that rulemaking can EPA address the 
question of extending the deferral or putting in place requirements 
that would have the equivalent effect on sources covered by the biomass 
deferral. Once that rulemaking has occurred, Virginia may address 
related revisions to its SIP.

II. Summary of SIP Revision

    Similar to our approach with the Tailoring Rule, EPA incorporated 
the biomass deferral into the regulations governing state programs and 
into the Federal PSD program by amending the definition of ``subject to 
regulation'' under 40 CFR 51.166 and 52.21 respectively. Virginia has 
adopted this same approach. The proposed SIP revision incorporates the 
Biomass Deferral into Virginia's PSD program by amending the definition 
of ``subject to regulation'' under 9VAC5-85-50(C). The language adopted 
by Virginia mirrors the language in the Federal regulations. EPA last 
took action on these provisions on May 13, 2011 (76 FR 27898). In 
addition to the incorporation of the Biomass Deferral, the proposed SIP 
revision makes a minor, clarifying revision to 9VAC5-85-50(B).

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. Proposed Action

    EPA's review of this material indicates that it is consistent with 
Federal regulations. EPA is proposing to approve the Virginia SIP 
revision incorporating the Biomass Deferral,

[[Page 23181]]

which was submitted on December 14, 2011. EPA is soliciting public 
comments on this proposed approval of Virginia's SIP revision request. 
These comments will be considered before taking final action.

V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the CAA 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 
action merely proposes to approve state law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by state 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 rule relating to GHG permitting under 
Virginia's PSD program 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, Carbon monoxide, 
Greenhouse Gases, Incorporation by reference, Intergovernmental 
relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting 
and recordkeeping requirements, Sulfur oxides, Volatile organic 
compounds.

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

    Dated: April 5, 2012.
W.C. Early,
Action Regional Administrator, Region III.
[FR Doc. 2012-9339 Filed 4-17-12; 8:45 am]
BILLING CODE 6560-50-P