EPA Issues New Guidance — Effective Data for Considering Greenhouse Gas in Air Permitting

EPA issued its long-awaited reconsideration of a Bush-era interpretation addressing when a new pollutant such as CO₂ is first subject to air permitting requirements under the prevention of significant deterioration (PSD) and Title V programs. While the Obama administration’s overall approach to greenhouse gases (GHG) differs significantly from its predecessor, both former EPA Administrator Stephen Johnson and current EPA Administrator Lisa Jackson reached virtually the same conclusion with respect to when a new pollutant such as CO₂ is first subject to the Clean Air Act’s PSD and Title V programs. Both concluded that these requirements apply only when the new pollutant becomes subject to “actual control” under the Clean Air Act. For purposes of GHG emissions such as CO₂, this means PSD and Title V will apply no earlier than January 2, 2011 — the date the Clean Air Act’s GHG auto emission standards are anticipated to first take effect.

EPA also intends in the next few days to issue a final GHG emission rule (known as the Tailoring Rule) addressing the phase-in of GHG permitting requirements. It is believed the Tailoring Rule will further extend the time many facilities will have to address GHG. It is likely that only large emitters of GHG will find the PSD and Title V requirements applicable as of January 2, 2011.

EPA’s interpretation did leave some room for GHG issues to be addressed in current air permitting actions:

• States approved under the State Implementation Plan (SIP) that administer their own air programs are free to interpret state law more broadly than EPA and set an earlier effective date for addressing GHG emissions. However, as many states raised substantial administrative concerns with immediate implementation of a GHG permitting program, it is unlikely most states will elect to use this option.
• States are “encouraged” by EPA to address GHG considerations in current air permitting decisions through the PSD program’s “balancing criteria” — energy, environment, and economics. In general, EPA recommends an assessment be performed of energy efficiency options as a means of indirectly reducing GHG.
• With respect to current permit applications going through the system, any permits issued after January 2, 2011 will need to address GHG emission unless otherwise exempted by the upcoming Tailoring Rule. Practically, this means a permit applicant with significant GHG emissions will need to address GHG in the application materials if there is a likelihood that the permit will not be issued until after January 2, 2011. (Industry commenters had asked EPA to rule that any permit applied for by the trigger date could avoid GHG requirements; EPA refused to go this way.)

The Obama administration continues to express a desire for a comprehensive national cap and trade program to address GHG emissions. However, as congressional action is uncertain, the fallback remains the phased implementation of a GHG emission control program based on the Clean Air Act. While under the interpretation just released, GHG will not be considered a pollutant subject to the PSD or Title V programs until January 2, 2011, so companies with significant GHG emissions that are planning new projects triggering PSD should consider addressing GHG emissions in the permit application in order to assure that the permit, when issued, will address all regulated pollutants.

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If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:

Mark A. Thimke
Milwaukee, Wisconsin
414.297.5832
mthimke@foley.com

Richard G. Stoll
Washington, D.C.
202.295.4021
rstoll@foley.com