EPA Issues Final Rule Tailoring Greenhouse Gas Permitting Requirements Under the Clean Air Act

Author:Mr Ronald Tenpas, Christopher J. McAuliffe, William H. Lewis, Levi McAllister and Jeffrey N. Hurwitz
Profession:Morgan Lewis

On May 13, the Environmental Protection Agency (EPA) issued a final rule (Tailoring Rule) that addresses Clean Air Act (CAA) permitting requirements for greenhouse gas (GHG) emissions. EPA's Tailoring Rule—the fourth action in an ongoing EPA effort to regulate GHG emissions—establishes GHG emission level thresholds that determine when stationary source facilities must seek and obtain permits under the CAA's New Source Review Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs. The Tailoring Rule is, in part, the product of the complicated interaction under the CAA between EPA's decision to regulate GHG emissions from automobiles, and the related effect that decision has on the permitting and regulation of GHGs from stationary sources, such as manufacturing and industrial facilities.

Background of EPA's GHG Regulatory Efforts

EPA's GHG regulations are rooted in a 2007 U.S. Supreme Court decision holding that GHGs, such as carbon dioxide, are air pollutants as that term is used in the CAA.1 As a result of the Supreme Court's decision, EPA was required to analyze GHG emissions from motor vehicles (light-duty vehicles) and determine whether such emissions may reasonably be anticipated to cause or contribute to air pollution that endangers public health or welfare. Under the CAA, an affirmative "endangerment" finding would then obligate EPA to regulate GHG emissions from motor vehicles.

On December 7, 2009, EPA's Administrator completed the first action in EPA's effort to regulate GHG emissions when the Administrator determined that motor vehicle GHG emissions may reasonably be expected to endanger public health and welfare. On April 1, 2010, the EPA completed its effort to regulate motor vehicle GHGs when it followed the endangerment finding with a final rule establishing standards for GHG emissions from light-duty vehicles, beginning with model year 2012.

This action on motor vehicles also had implications for regulation of GHGs from stationary sources. Thus, on March 29, 2010, EPA addressed the circumstances under which a pollutant is "subject to regulation" for purposes of the CAA. In EPA's view, a pollutant that is "subject to regulation"—even if that regulation is directed at controlling the pollutant from mobile sources such as autos—is covered under the CAA's, PSD, and Title V permitting programs for stationary sources. This is often called the "triggering effect" of the light-duty vehicle rule.

Under EPA's interpretation,...

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