EPA Targets Refineries, Power Facilities, Large Sources in GHG Permit Tailoring Rule

Author:Mr Kevin Ewing and Sandra Y. Snyder
Profession:Bracewell & Giuliani LLP
 
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On May 13, 2010, the United States Environmental Protection Agency ("EPA") issued its final tailoring rule for greenhouse gas ("GHG") emissions that determines which stationary sources need to obtain GHG permits. Click Here for final rule. The Clean Air Act ("CAA") expressly imposes a requirement that stationary sources with emissions that exceed either 100 or 250 tons per year (depending on the type of source) must obtain permits from EPA. Because thousands of sources, including small businesses, hospitals, and schools, may release more than 250 tons of GHG emissions per year, EPA developed a tailoring rule that purports to phase in the permit requirement, starting with large stationary sources. EPA fears that if thousands of sources needed to regulate their GHG emissions, the agency would be overwhelmed by the need to issue the Prevention of Significant Deterioration ("PSD") and Title V operating permits for all of these sources.

Yet, by tailoring the requirement to apply (initially) only to power generation facilities, refineries, cement production facilities, and other large industrial plants, EPA appears to be re-writing the permitting thresholds in the CAA – an activity that only Congress has the authority to undertake.

EPA originally proposed the GHG Tailoring Rule in October 2009, stating that GHG emission permits would be required at stationary sources emitting at least 25,000 tons of GHGs per year. However, after receiving approximately 450,000 comments from the public on the proposal, EPA's final rule raises that threshold and phases in the sources that would need to obtain permits. The rule established the following timeline for sources needing to obtain permits:

Effective Date

Type of Permit

Types of Sources

(thresholds in CO2e)

January 2, 2011

PSD

Sources that are currently subject to the PSD program for non-GHG pollutants and that increase GHG emissions by at least 75,000 tons/year and significantly increase non-GHG pollutant emissions.

Title V

New and existing facilities subject to Title V requirements for non-GHG pollutants.

July 1, 2011

PSD

New construction projects that emit GHG emissions of at least 100,000 tons per year; or existing sources that emit or have the potential to emit at least 100,000 tons per year of GHG emissions and that undertake a modification increasing net...

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