October 27, 2009

Applying Clean Air Act Permit Requirements to Stationary Sources of Greenhouse Gases

Posted on October 27, 2009 by Chester Babst

I.          Introduction

            On September 15, 2009, EPA announced a proposed rule to regulate greenhouse gases (“GHG”) from light-duty vehicles. EPA estimates that the light-duty vehicle GHG regulation could become final as early as the first quarter of 2010, at which time carbon dioxide and the other specified GHG would become air pollutants “subject to regulation” under the Prevention of Significant Deterioration (“PSD”) and Title V permit programs.

            The Clean Air Act (“CAA”) “major source” applicability threshold for both permit programs is 100 or 250 tons per year (“tpy”) of any regulated pollutant, depending upon the type of facility. EPA recognized that applying these traditional thresholds to GHG could “overwhelm” permitting authorities and subject the newly expanded regulated community to increased uncertainty, delay, and costs.

            In response to these concerns, EPA issued a proposed rule on September 30, 2009 to address how CAA permitting requirements will be applied to stationary sources of GHG emissions. The “Tailoring Rule” would provide temporary relief for some sources, but ultimately leaves the regulated community with the same degree of uncertainty while creating additional legal issues.

II.         Litigation Risks

            Although EPA acknowledges the significant legal issues associated with agency action to change the statutory “major source” thresholds from 100/250 tpy to 25,000 tpy, it relies on a principle that administration agencies must interpret statutes in a way that avoids absurd results and a principle that administrative necessity can sometimes justify an agency’s plan to implement a statute. Having to rely on these principles as a source of its authority seems only to strengthen the argument that the CAA was not enacted to address GHG, but that is another issue that will be “teed up” by the Tailoring Rule.

            Because of the uncertainty regarding EPA’s authority to change the statutory thresholds, the regulated community faces the potential for citizen suits to challenge proposed projects and leaves uncertain the issues of permitting, timing, and cost. As environmental practitioners, we must be sure clients understand these uncertainties as they evaluate any plan to construct or modify their facilities.

III.       Permit Delay

            Although the Tailoring Rule would dramatically reduce the number of sources initially impacted by application of the PSD and Title V programs to stationary sources of GHG, EPA estimates that PSD permit applications will increase by approximately 100 applications per year, and sources subject to Title V will increase by 3,000. On a percentage basis, these estimates represent significant increases and will further burden permitting authorities at a time when many state agencies are facing or will face meaningful budget reductions (e.g., Pennsylvania’s recently announced 27% budget cut for the Department of Environmental Protection). At a minimum, these added permitting burdens will increase delays in obtaining necessary permits and thereby create additional uncertainty for businesses wishing to grow or modernize their facilities.

IV.       Best Available Control Technology for Stationary Sources of GHG

            Stationary sources of GHG subject to PSD will be required to install best available control technology (“BACT”). BACT for sources of currently regulated pollutants has developed over the years, so the regulated community, in most cases, has an ability to estimate the potential cost of controls. To the contrary, BACT for stationary sources of GHG is a complete unknown. While some have argued that efficiency improvements should qualify for BACT, others have insisted that traditional add-on emissions control technology is required. Once again, this debate results in cost uncertainty for any project affected by the PSD program and further frustrates business planning.

V.        Conclusion

            The Tailoring Rule does little to address significant problems and issues that will flow from the application of the PSD and Title V permit programs to stationary sources of GHG. The significant uncertainties created by EPA’s path to regulate GHG under the CAA will likely affect the timing and cost of future permitting. Environmental practitioners must be prepared to communicate these consequences to clients as they plan for the future.

Tags: Air


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