EPA Releases Proposal To Subject Stationary Sources Of GHGS To Major Permit Review

October 1, 2009
By James A. Holtkamp – Holland and Hart

On September 30, 2009, EPA released its much-anticipated proposed rule addressing permitting of stationary sources of greenhouse gases under the Clean Air Act. The 416-page proposal would subject stationary sources emitting 25,000 tons per year (“tpy”) of CO2 equivalent (“CO2e”) and modifications of existing sources resulting in an increase of 10,000 tpy of CO2e to Prevention of Significant Deterioration (“PSD”) review. The proposal would also subject stationary sources emitting 25,000 tpy or more to the operating permit requirements of Title V of the Clean Air Act.

In the proposal, EPA acknowledges that application of the statutory thresholds for PSD major source permitting of 100 tpy of CO2e for certain listed source categories and 250 tpy for unlisted categories would overwhelm the air permitting system. The preamble to the proposal notes that there are about 280 PSD permits issued each year in the U.S. Requiring such permits from sources of CO2e emitting 100/250 tpy would increase that number to over 14,000. Similarly, the number of Title V operating permits would jump from about 14,000 to over 6 million.

Invoking judicial doctrines of “absurd results” and “administrative necessity,” EPA proposes to implement PSD and Title V permitting of stationary sources of CO2e emissions in two phases. Phase I would be the temporary “tailoring” of the major source PSD and Title V requirements by requiring PSD and Title V operating permits for sources with a potential to emit 25,000 tpy of CO2e and PSD permits for modifications resulting in an increase of 10,000 tpy of CO2e.

During the five years following the promulgation of the final “tailoring” rule, EPA proposes to conduct an investigation into how to streamline the PSD and Title V processes so as to bring in sources emitting less than 25,000 tpy of CO2e but more than 100 or 250 tpy, as the case may be. EPA would then issue a final rule one year after the end of the five-year investigation period which would cover the remaining sources. In addition EPA expects the state and local permitting agencies to use the five-year investigation period to increase staff and resources to accommodate the additional permitting loads.

EPA lists the following as mechanisms it intends to investigate in order to streamline the process to bring all sources of CO2e emissions above the statutory threshold into the PSD and Title V programs:

• Redefine “potential to emit” to more closely reflect actual emissions
  
• Establish “presumptive” Best Available Control Technology for source categories
  
• Establish general permits and/or Permits-By-Rule for source categories
  
• Establish or require electronic permitting systems
  
• Implement “lean” process improvement principles to eliminate waste in the permitting process
  

EPA seeks comment on these and other mechanisms to streamline the permitting process.

The proposal will be published in the Federal Register, and comments will be accepted for 60 days after the date of publication therein. The proposal can be found here on EPA's website.

In a companion proposal entitled “Reconsideration of Interpretation of Regulations that Determine Pollutants Covered by the Federal PSD Permit Program,” also released on September 30, EPA implements its grant of reconsideration of the December 18, 2008 “Johnson Memorandum” in which then-Administrator Johnson concluded that CO2 was not regulated as a PSD pollutant in the absence of emission limitations. The proposal seeks comments on when a pollutant should become subject to PSD regulation. EPA’s proposed interpretation is that a pollutant such as CO2 becomes subject to regulation under the PSD program upon the effective date of a final rule establishing a standard for the pollutant. The public comment period will end 60 days after the date of publication in the Federal Register. The proposal can be found here on EPA's website.