(January 4, 2011, Weil Briefings)
On Sunday, January 2, 2011, new United States Environmental Protection Agency rules regulating greenhouse gas (“GHG”) emissions from certain large industrial plants came into effect. These new rules modify certain permitting requirements under the federal Clean Air Act, including the New Source Review Prevention of Significant Deterioration (“PSD”) and the Title V Operating Permit programs, to require that certain facilities regulated under these programs include GHG emissions in their permits. This is the first time that EPA has regulated GHG emissions from stationary sources.
Under the PSD program, a company must obtain a permit if it plans to construct a new facility, or significantly modify an existing facility, which will result in greater emissions of certain pollutants. Projects subject to PSD permitting are required to employ so-called Best Available Control Technology (“BACT”) to control emissions of regulated pollutants. EPA’s new rules now provide that any facility that triggers PSD permitting requirements for pollutants other than GHGs also will be subject to PSD requirements, including BACT, for GHGs if the new or modified facility increases GHG emissions by 75,000 tons per year. In other words, under the current rule, GHG emissions will only be regulated under the PSD programs for projects or facilities that would already be regulated under such programs due to emissions of another regulated pollutant. Similarly, only sources presently subject to the Title V Operating Permit program, which requires emitters of pollutants to obtain a permit incorporating in one document all requirements applicable to the individual emitting facility, will be subject to Title V requirements for GHGs.
Starting July 1, 2011, however, new construction projects of sources that will emit at least 100,000 tons of GHGs annually will need to meet PSD permitting requirements, including BACT requirements, even if they do not exceed the permitting thresholds for any other covered pollutant. This will be the first time that the CAA applies to emitters of GHGs alone. Modifications to existing facilities that increase GHG emissions by at least 75,000 tons annually also will be covered under PSD requirements, even if there is no increase in emissions of other pollutants. In addition, facilities that emit more than 100,000 tons of GHG annually will be subject to Title V permitting requirements, regardless of whether that facility emits any other pollutants.
While the implementation of these rules has long been expected, it did not occur without some drama. States, which generally implement the PSD and Title V permitting requirements, were required to take all steps necessary, including amending state laws, to ensure that the new permitting requirements would be implemented starting January 2. Texas, however, has refused to implement the new rules, which prompted EPA to attempt to seize control of GHG permitting from the state regulators late last year. On December 30, the United States Court of Appeals for the District of Columbia granted a motion filed by Texas to stay EPA’s action until the Court can determine whether EPA’s efforts to seize Texas’ permitting authority complied with Clean Air Act procedures. A ruling on that point is expected soon.
In addition to the Texas litigation, there are numerous legal actions working their way through the courts that challenge EPA’s authority to restrict GHG emissions under the CAA, and many more certainly will be filed if EPA seeks to enforce new BACT requirements for GHGs. Moreover, many in Congress are seeking to limit EPA’s authority to regulate GHGs, either by stripping EPA of the authority to regulate GHGs under the CAA or by denying EPA the funds to implement programs that would regulate GHGs. Thus, while the new EPA rules now are in effect, there remains much uncertainty regarding how, and even whether, these rules will be enforced. Weil will continue to monitor and report on developments relating to regulation of GHG emissions. As always, please contact the authors or your contact at Weil for more information.