On October 27, the U.S. Environmental Protection Agency (“EPA”) published a proposed rule that would regulate greenhouse gas (“GHG”) emissions under the Clean Air Act’s (“CAA”) Title V and prevention of significant deterioration (“PSD”) permitting programs. EPA’s proposed rule, which it refers to as the “tailoring rule,” sets the stage to begin regulating stationary sources emitting 25,000 tons per year or more of the following GHGs: CO2e, methane, nitric oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
EPA estimates that the proposed thresholds would apply to sources responsible for nearly 70% of the nation’s GHG emissions from stationary sources and will result in GHG-related permit requirements for approximately 14,000 facilities nationwide, including approximately 3,000 sources that have not yet been subject to the CAA’s Title V Program. EPA believes, however, that the majority of the facilities that would be subject to this rule are electric-generating units and industrial facilities that already have Title V Operating Permits. Under the tailoring rule, additional facilities, including landfills and large commercial facilities, would become subject to the Title V and PSD programs for the first time.
The CAA’s Title V Program requires major stationary sources emitting regulated air pollutants to obtain an operating permit. The PSD Program requires new, major sources of regulated air pollutants, as well as existing major sources that make a change resulting in significant net increases in emissions, to obtain a PSD permit requiring the use of best available control technology (“BACT”). EPA’s current proposed rule sets applicability thresholds for the Title V and PSD programs at levels that are especially tailored for GHG emissions and are significantly more stringent than the applicable thresholds for other regulated pollutants.
The current Title V Program requires major sources with potential emissions of 100 tons per year (“TPY”) or greater of any regulated air pollutant to obtain an operating permit for the facility. Under the proposed rule, the applicability threshold under the Title V Program for GHG emissions would be established at 25,000 TPY of CO2e per year. Once GHG emissions become regulated, facilities without an operating permit that meet or exceed the GHG threshold would have one year to submit an application for a Title V Operating Permit. Stationary sources already possessing operating permits would not be required to revise their permits to incorporate GHG requirements until EPA promulgates applicable GHG control requirements or the facility triggers the PSD Program and is required to implement BACT control technology for GHGs.
EPA has stated that it will defer its decision on whether and how best to regulate smaller sources until it has experience regulating GHG emissions from large sources. The proposed rule contemplates a phased approach that may eventually lead to regulation of smaller GHG sources under both the PSD and Title V Programs. The first phase, which would last five years, would establish a temporary level for the PSD and Title V applicability thresholds at 25,000 TPY. By the end of the five year “first phase,” EPA proposes to complete a study to evaluate whether it is administratively feasible for PSD and Title V permitting authorities to adequately administer the program at lower GHG applicability thresholds. After reviewing the study results, EPA will promulgate a “second phase” threshold, either confirming the first phase levels or establishing different levels to better reflect the administrative capabilities of permitting authorities. Comments on the current proposal will be accepted by EPA for 60 days following its publication in the Federal Register on October 27.
While the full ramifications of regulation of GHGs under the Title V and PSD Programs are still unknown, what is known is that regulation in some form will soon be imposed. Businesses likely to be impacted by the new rule are advised to begin preparations now for dealing with anticipated GHG regulations. Smith, Gambrell & Russell attorneys are available to assist you and your business in developing strategies to address challenges presented by these forthcoming regulations. In addition, facilities who believe their operations could be affected by the new rule may wish to consider commenting on the rule during the public comment period.