EPA's New Greenhouse Gas Tailoring Rule: Analysis of Immediate Air Permitting Considerations

Author:Ms Patricia Sharkey, Neal J. Cabral, David L. Rieser and Gordon R. Alphonso
Profession:McGuireWoods LLP

While a comprehensive climate bill addressing climate change may be stalled in Congress, EPA has now mapped out when it will begin to require permits for greenhouse gases (GHG) under the Clean Air Act (CAA). On May 13, 2010, EPA released the final version of what is known as the "Tailoring Rule." Absent Congressional action or a judicial stay, these new air pollutants will be subject to regulation in some facility construction and modification permits beginning January 2, 2011 - just seven months from now. At this point, no one knows what monitoring, capture, control or reductions will be required for this ubiquitous and entirely different category of pollutants.

The rule is called a "Tailoring Rule" because it is designed to cut the task of GHG permitting down to a size that is administratively workable. EPA has decided that GHG regulation, at least in the near term, will apply only to facilities or modifications to facilities with the potential to emit 75,000 tons and 100,000 tons per year (tpy) - rather than at the 100 tpy or 250 tpy levels applicable to traditional pollutants or the 25,000 tpy level EPA originally proposed for GHG.

EPA explains that without limiting GHG regulation to sources that emit GHG emissions at these thresholds state permitting agencies could be facing the impossible task of regulating 81,000+ facilities, a three hundred fold increase, in permit applications under the Clean Air Act "Prevention of Significant Deterioration" (PSD) permitting program and 6.1 million facilities, a 400-fold increase, under the Clean Air Act Title V permitting program. Even with the "regulatory relief" provided by the higher thresholds for GHG permitting, EPA anticipates an additional 900 facilities will require pre-construction and modification permits for the first time and 550 facilities will require CAA operating permits for the first time. Many other facilities already subject to PSD and Title V permitting will also now be required to address GHG emissions for the first time.

Given the potential impact of this rule in the immediate future, any company currently in an air pollution pre-construction permitting process or contemplating new facility projects or existing facility modifications should calculate its facility-wide and/or project-specific GHG potential to emit to determine whether GHG permitting will be triggered. If GHG emissions exceed the thresholds in the Tailoring Rule, companies should consider options either for avoiding GHG permitting...

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