By Jaime K. Saylor, Hatchett & Hauck LLP
On October 3, the U.S. Environmental Protection Agency (EPA) published proposed revisions to its greenhouse gas (GHG) permitting program in response to decisions issued in 2014 and 2015 by the U.S. Supreme Court and U.S. Court of Appeals for the D.C. Circuit. 81 Fed. Reg. 68110 (Oct. 3, 2016). The comment period was extended and closed on December 16, 2016. 81 Fed. Reg. 81711 (Nov. 18, 2016). The agency is proposing a significant emission rate (SER) for GHGs and other related changes. Given that the proposed rule cannot be finalized until after the new administration is installed, the ultimate fate of these proposed changes is unclear.
Without dredging up all the gory details, U.S. EPA’s original, multi-phase plan for permitting GHGs in the PSD and Title V programs was referred to as the Tailoring Rule, and Step 1 required “anyway sources” – sources already required to seek a PSD permit based on emissions of other NSR pollutants besides GHGs – to also include GHGs in their BACT review if emissions of carbon dioxide equivalent (CO2e) exceeded a significant emission rate (SER) of 75,000 tons per year (tpy). Step 2 cast a broader net, requiring GHG BACT review for new stationary sources with a PTE of 100,000 tpy or more CO2e as well as major modifications with PTE greater than 75,000 tpy CO2e at these sources even if the modification would not otherwise be subject to PSD based on emission of other NSR pollutants. Step 2 also pulled these sources into Title V, even if those sources were not subject to Title V on the basis of any other pollutant.
The U.S. Supreme Court upheld the Step 1 process for “anyway sources” but invalidated the Step 2 process to the extent it triggered PSD and Title V permitting for a source solely because of GHG emissions. It was also found that U.S. EPA had not made a required de minimis finding for its 75,000 tpy CO2e significance threshold for Step 1.
In the first step to implement the court decisions, in August 2015 the U.S. EPA removed from the PSD and Title V rules the provisions regarding the Step 2 sources. This was easily done, because it only required the agency to remove entire provisions from the rules. In this cut, U.S. EPA is laying out its findings in support of a de minimis level of 75,000 tpy CO2e for the “anyway sources” (the agency is also proposing a 30,000 tpy threshold in the alternative) and is also proposing corresponding changes to relevant PSD and Title V definitions, like “major stationary source,” “major modification,” and “significant,” which it believes are necessary to implement the court decisions.
In this proposal, U.S. EPA reiterates that if a source triggers PSD review for GHGs, the review is basically limited to review of BACT control options because there is no National Ambient Air Quality Standard (NAAQS) or PSD increment for GHGs and there are no models available to quantify the impacts attributable to a specific GHG source. Thus, under U.S. EPA’s proposal, GHG will be subject to BACT review if the source has already been classified as a major stationary source or major modification for another regulated NSR pollutant and there is a significant net emissions increase of GHG emissions equal to or greater than the agency’s proposed GHG SER.
This proposal lays out U.S. EPA’s rationale for a finding that 75,000 tpy CO2e is a de minimis level of emissions below which there is little benefit to BACT review and implementation of control technologies. U.S. EPA asserts that there does not appear to be a basis for a de minimis level above 75,000 tpy, but it is soliciting comments on a lower 30,000 tpy SER as an alternative.
One of the more interesting of the agency’s findings is that a 75,000 tpy SER triggers BACT review for the largest GHG sources “from a national perspective.” 81 Fed. Reg. 68110 at 68124. This is based on an observation that source categories represented in the “anyway sources” with PSD permits addressing GHGs correlate highly with the largest GHG-emitters identified through the GHG Reporting Program. U.S. EPA notes:
Almost all of the PSD permits since 2011 that contained GHG BACT limits were issued to sources in categories that collectively represent over 92% of the 2013 reported emissions under the GHGRP. These GHGRP categories include power plants (66% of GHGRP emissions for 2013), petroleum and natural gas systems (7%), petroleum refineries (5.6%), organic and inorganic chemicals manufacturing (5.5%), minerals production (3.5%), metals production (3.4%), and pulp and paper manufacturing facilities (1.2%).
Id. The agency also observed that combustion units dominate the reported GHG emissions from industrial stationary sources as well as the group of PSD permits containing GHG BACT limits. U.S. EPA’s experience is that GHG BACT for combustion sources is usually energy efficiency measures, and only the larger sources which are custom-built have a realistic possibility of being designed and constructed so as to incorporate these measures. In contrast, the ability to implement GHG reductions through energy efficiency measures is much more limited with package units associated with smaller GHG emission increases. Thus, application of BACT review is mostly relevant to the larger sources which would most likely trigger BACT review under the proposed 75,000 tpy SER.
Whether this proposal will get finalized at all is unclear. While it is never as easy as the campaign rhetoric would have us believe to “wipe away” regulation which an incoming administration may find detestable, President-elect Trump stated many times in his campaign that he would seek to undo the current administration’s actions on climate change, and the person he has appointed to oversee the U.S. EPA transition, Myron Ebell, is an outspoken climate-change skeptic. “Anyway sources” planning PSD projects in the coming months will be watching these developments carefully, having to decide whether it is prudent to include GHG-driven energy efficiency measures in their design and planning even though it is no longer clear what action may actually be required in the future. As has been the case for so long now with these rules, regulators and the regulated community will have to “stay tuned.”
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