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EPA’s Ploy to Limit its GHG Permitting Workload – the Draft GHG Tailoring Rule


By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

Can climate change regulation go too far, even for its proponents? Apparently the U.S. EPA believes so, judging by its proposed “Greenhouse Gas Tailoring Rule,” published in the October 27, 2009, 74 Fed. Reg. 55292. This proposed rule is intended to mitigate the Federal Register, Agency’s (and state air quality agencies’) Clean Air Act (CAA) permitting workload under the Prevention of Significant Deterioration (PSD) program and the Title V operating permit program that will ensue if U.S. EPA finalizes two other pending administrative actions: (1) a proposed endangerment finding relating to greenhouse gas (GHG) emissions from mobile sources; and (2) a proposed rule to regulate GHG emissions from new mobile sources.

Before delving into the GHG Tailoring Rule proposal, a brief background overview may be helpful. In Massachusetts v. EPA, 549 U.S. 497 (2007), the U.S. Supreme Court found carbon dioxide (CO2) and other GHGs to be air pollutants under the CAA and mandated U.S. EPA to decide, pursuant to Section 202(a) of the CAA, whether mobile source emissions of GHGs are an endangerment to the public health or welfare. This decision set in motion a series of U.S. EPA actions that are likely to lead to broad regulation of GHG emissions.

  • On April 17, 2009, U.S. EPA proposed a finding under the CAA’s § 202(a) that mobile source emissions of GHGs do endanger the public health or welfare. See 74 Fed. Reg. 18886.
  • On May 22, 2009, U.S. EPA proposed a rule to regulate GHG emissions from new mobile sources (cars and light trucks). If this rule is finalized, which it must be if U.S. EPA finally adopts the endangerment finding, GHGs will be regulated pollutants under Title II of the CAA. See 74 Fed. Reg. 24007.

U.S. EPA has taken the position that regulation of mobile source GHG emissions under Title II of the CAA will be construed as making GHGs “subject to regulation under the Act” for purposes of Title I of the CAA as well, and Section 169(3), in particular, such that proposed construction of new or modified major stationary sources of GHGs will require PSD permits requiring a high level of emissions control known as Best Available Control Technology. (See GHG Tailoring Rule, 74 Fed. Reg. at 55294.) This position may be challenged, but some argue it is supported by the literal language of the CAA.

Under the CAA’s PSD provisions, a major source is defined by potential emissions of 100 to 250 tons per year of a regulated pollutant. 42 U.S.C. § 7479(1). Much lower “significance” thresholds determine PSD applicability for major modifications to a major source. In fact, a modification to a major source of GHGs that produces any increase in actual emissions of GHGs, no matter how small, would subject the modification to PSD unless U.S. EPA adopts rules setting a higher significance threshold. Since GHGs are routinely emitted in much higher quantities than other pollutants, U.S. EPA estimates that, if GHGs become regulated air pollutants, PSD permits for about 40,000 sources of GHGs would be required annually (compared to a current annual PSD permitting workload of 300 sources), and the universe of Title V sources requiring permitting will increase from 15,000 sources to roughly 6 million sources. (See GHG Tailoring Rule, 74 Fed. Reg. at 55295.) It has been estimated by some commentators that sources that would be subject to PSD and/or Title V permitting if GHGs were regulated pollutants would be likely to range from power plants, cement plants, steel mills and other industrial facilities to an extensive array of smaller sources such as big box retail stores, hospitals, schools, and even multi-family apartment buildings.

In anticipation of finalization of the proposed GHG mobile source rule and the initiation of PSD and Title V permitting for stationary sources that would follow, U.S. EPA developed the proposed GHG Tailoring Rule to reduce the tsunami of permit applications that otherwise would be expected to a manageable number. The GHG Tailoring Rule would do this as follows. The major source threshold for PSD and Title V purposes would be increased to 25,000 tons/year of GHGs (roughly a hundredfold increase) during an initial five-year phase. In addition, the U.S. EPA proposes to increase the PSD significance level for major modifications to within the range of 10,000 tons/year to 25,000 tons/year. Finally, the proposed GHG Tailoring Rule sets an initial five-year evaluation period – the first phase of the GHG Tailoring Rule program – to assess the effect of the rule on reducing the CAA permitting workload and whether revisions to the major source and significance thresholds are necessary. (See, e.g., GHG Tailoring Rule, 74 Fed. Reg. at 55326.)

Whatever else may be said about the proposed GHG Tailoring Rule, it appears to be squarely contradictory to the major source definition of the CAA as established at Section 169(1) by proposing to set major source thresholds for GHGs a hundred times greater than the statutory level. Thus, this rule, if adopted, would be vulnerable to legal challenge. Recognizing the obvious interpretative problems posed by the proposed higher major source threshold, U.S. EPA has developed two lines of legal argument in defense of the proposed rule. One is that the rule is necessary to prevent an “absurd result” – here said to consist of an overwhelming flood of sources otherwise subject to permitting requirements under the CAA’s provisions that would ensue if GHGs become regulated pollutants under the statutory major source thresholds. See 74 Fed. Reg. at 55306. The second line of argument, referred to as the “administrative necessity doctrine,” is similarly based on the effects of the flood of permit applications on the ability of the U.S. EPA and state agencies to continue to function. See 74 Fed. Reg. at 55311.

Given the legal difficulties confronting the proposed GHG Tailoring Rule, it can be speculated whether the real underlying purpose of the proposal is to pose a high-stakes game of “chicken” by the Obama Administration with the Congress to prod enactment of Climate Change legislation, based on an implicit assumption that any Congressional legislative action would include major source thresholds similar to that proposed in the GHG Tailoring Rule (unless, of course, the anticipated legislation would eliminate PSD and Title V permitting applicability for GHG emitting sources altogether).


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