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 March 09, 2012
EPA to Keep Thresholds in Step 3 of Tailoring Rule for GHG Permits

 A proposed rule issued on Friday by the Environmental Protection Agency (EPA) will not change the greenhouse gas (GHG) permitting thresholds for the Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs. However, it includes revisions to the permitting program that would provide some flexibility in how compliance is achieved with GHG emission caps.

The rule is the third step of the EPA's final Tailoring Rule issued on May 13, 2010, which seeks to curb GHG emissions from the largest stationary sources under Clean Air Act permitting programs. The final rule sets thresholds for GHG emissions that define when GHG emissions are covered under the permitting programs (and when permits under the PSD and Title V Operating Permit programs are required for new and existing facilities).

The EPA chose to implement PSD and Title V requirements for GHGs at the 100 and 250 tons/year (tpy) thresholds through a phase-in approach to prevent a dramatic increase in the number of required permits. Without the phase-in, state authorities and the federal agency would be overwhelmed by "tens of thousands of PSD permits and millions of Title V permits," it said.

Under the first step of the Tailoring Rule, PSD permitting requirements applied to sources' GHG emissions if the sources were subject to PSD anyway due to their non-GHG regulated air pollutants. They also applied if sources emitted or had the potential to emit at least 75,000 tpy of carbon dioxide if the source was a major new source, or increased emissions by that amount if it was an existing source that proposed to undertake a modification. For Title V, existing sources with, or new sources obtaining, Title V permits are required to address GHG emissions in those permits as necessary.

Under Step 2, PSD applies to the largest GHG-emitting sources that emit, or could emit at least 100 to 250 tpy of GHGs on a mass basis, new sources that emit at least 100,000 tpy of carbon dioxide, or existing sources that emit at that level and undertake modifications that increase emissions by at least 75,000 tpy of carbon dioxide. Under Step 2, Title V applies to sources that emit or could emit 100 tpy GHG on a mass basis, or 100,000 tpy of carbon dioxide.

Under Step 3---the rule proposed on Friday--- permitting thresholds will be kept at current levels. This means new facilities with GHG emissions of at least 100,000 tpy of carbon dioxide and existing facilities with at least 100,000 tpy of carbon dioxide undertaking modifications and which would increase GHG emissions by at least 75,000 tpy of carbon dioxide will be required to obtain PSD permits. Facilities that must obtain a PSD permit anyway, to cover other regulated pollutants, must also address GHG emissions increases of 75,000 tpy of carbon dioxide or more. New and existing sources with GHG emissions above 100,000 tpy of carbon dioxide must also obtain operating permits.

The GHG Tailoring Rule would continue to address the group of six greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

The EPA said it opted not to change thresholds after evaluating the progress of GHG permitting so far. It said it believed "state permitting authorities have not had sufficient time to develop necessary program infrastructure, and to increase their GHG permitting expertise, to make it administratively feasible to apply PSD and Title V permitting requirements to smaller sources."

As of Dec. 1, 2011, the EPA and state permitting authorities had issued 18 PSD permits addressing GHG emissions. "These permits have required new facilities, and existing facilities that have chosen to make major modifications, to implement energy efficiency measures to reduce their GHG emissions," the agency said in a statement.

The rule proposed on Friday also includes two amendments to the Tailoring Rule intended to streamline the GHG permitting process. The first would increase flexibilities and improve the usefulness of plant-wide applicability limitations (PAL) for GHGs. With a PAL, a source can make changes to the facility without triggering PSD permitting requirements---as long as emissions do not increase above the limit established by the PAL. "This would allow companies to respond rapidly to changing market conditions while protecting the environment," the EPA said.

The second approach creates a regulatory authority that would enable the EPA to issue "synthetic minor permits" for GHGs where the EPA is the PSD permitting authority. Under this proposal, a GHG source could agree to an enforceable GHG emissions limit set below a level that would trigger PSD permitting requirements. "The process for obtaining a synthetic minor permit is generally less complicated than the PSD permitting process for a major source," the agency said. "This action would give facilities a mechanism to keep themselves out of major source permitting requirements for GHG as long as the source minimizes its GHG emissions.

The proposal was issued as the agency was readying to defend the validity of its so-called endangerment finding in a landmark case that could have major implications for the U.S. electric power sector. The U.S. Court of Appeals for the District of Columbia Circuit is currently (Feb 28-29) hearing arguments on the EPA's obligations under the Clean Air Act to regulate GHGs.

In its decision for Massachusetts v. EPA, the U.S. Supreme court in April 2007 ordered the EPA to determine, with the best available science, whether GHGs endangered public health and welfare. In December 2009, the EPA formally made the endangerment finding, declaring that six GHGs --including carbon dioxide---pose health and welfare threats.

The federal court addresses arguments raised in 94 cases that have been consolidated into four. Decisions may be likely by the summer, but many industry experts predict that whatever the outcome, the ruling will be appealed to the U.S. Supreme Court, prolonging litigation for more than a year.

Industry groups and lawmakers have meanwhile called for the rules to be delayed until the court issues its decision. Others, like Rep. Ed Whitfield (R-Ky.) and 221 House lawmakers---including 14 conservative Democrats---have asked the White House to halt the EPA's GHG rulemaking because of "the devastating impact it will have on jobs and the economy," they wrote in a letter to Jeffrey Zients, the acting director of the Office of Management and Budget (OMB), on Thursday.

The OMB, meanwhile, continues its review of the EPA's New Source Performance Standards rule, meeting with both environmental groups and power companies this month. The EPA sent the rule to the OMB last November after being sued by three environmental groups and 10 states. The OMB's review has exceeded the typical 90 days required for such administrative rules.

Sources: POWERnews, EPA, Rep. Ed Whitfield