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Sierra Club Seeks Prospective Relief for CO2 BACT Limits Based on Tailoring Rule

06.01.2010

By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

In a petition for review to the U.S. EPA’s Environmental Appeals Board (EAB) challenging a PSD permit issued by the Illinois EPA (IEPA) to a lime kiln, the Sierra Club has signaled a new strategy to seek to expedite imposition of BACT limits for CO2 emissions under U.S. EPA’s recently issued Tailoring Rule. The petition, captioned In the Matter of Vulcan Construction Materials, EAB Appeal No. PSD 10-_____, and dated May 9, 2010 (and docketed by the EAB as Appeal No. PSD 10-11), involves a Prevention of Significant Deterioration (PSD) permit issued by IEPA to Vulcan Construction Materials for a lime kiln that had been shut down for approximately seven years due to inability to comply with existing air permit limits. 

Interestingly, although Sierra Club did not pose the matter as an issue for review by the EAB, the Sierra Club requests in its petition that, if the PSD permit does not become final prior to January 2, 2011, IEPA be required to revise the permit to include BACT limits for CO2 emissions. This request is based on the date on which U.S. EPA’s Light Duty Vehicle Rule (“LDV Rule”, 75 Fed. Reg. 25324 (May 7, 2010)), takes effect to require greenhouse gas (GHG) restrictions on 2012 model vehicles and, thus, makes GHGs, including CO2, “subject to regulation” for purposes of the New Source Review (NSR) requirements of the Clean Air Act (CAA). This same date – January 2, 2011 – has been incorporated by U.S. EPA into its final Greenhouse Gas Tailoring Rule (“Tailoring Rule”) as the beginning date for Phase 1 of NSR permitting requirements for GHG emissions for new sources or modifications to existing sources if the new source or modification would trigger NSR for other regulated pollutants and would have 75,000 tons per year or more of GHG emissions.

Sierra Club appears to be trying to introduce an extreme bootstrap argument to the EAB on the CO2 issue. Sierra Club did not pose the lack of BACT for CO2 as a formal issue in its petition to the EAB since U.S. EPA’s March 30, 2010 finalization of its reconsideration of the so-called “Johnson Memorandum” undermined Sierra Club’s position. In the Reconsideration, U.S. EPA essentially reaffirmed historic agency interpretation of “subject to regulation” as meaning a requirement for actual control of emissions of a pollutant. Nonetheless, Sierra Club asserts to the EAB that if U.S. EPA’s Reconsideration of the Johnson Memorandum is overturned or vacated under judicial review or if the permit does not become final by January 2, 2011, the Vulcan Construction Materials permit must be revised to establish BACT limits for GHGs.

The Sierra Club’s contention that BACT limits for CO2 are required if the Reconsideration of the Johnson Memorandum is voided is certainly overreaching. Such a development would not, of itself, definitively establish that CO2 were already subject to regulation, as Sierra Club is wont to imply. The import of such a hypothetical decision would depend, obviously, upon the reasoning of the reviewing court.

The impending January 2, 2011 deadline poses a more serious issue for the permit under review as well as for other pending permits from GHG-emitting sources. Sierra Club’s petition, nonetheless, marks a substantial departure for petitions before the EAB in requesting relief based on a future regulatory date. The Sierra Club gambit emphasizes the importance of Congress taking action in the near future to remove GHG regulation from the scope of the Clean Air Act or to defer any GHG regulation by U.S. EPA. Two proposals to that end are pending in the U.S. Senate. One is a proposed resolution introduced by Sen. Lisa Murkowski (R-AK) to block U.S. EPA regulation of GHG emissions. This proposal is scheduled for a vote on June 10, 2010. The other is a proposal by Sen. Jay Rockefeller (D-WV) for a two-year delay in stationary source controls for GHGs.

Clearly, the nature and scope of climate change regulation will remain unsettled for quite some time to come.

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