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On March 8, 2012, the U.S. Environmental Protection Agency
announced a
proposed rule representing the final phase of the Agency's
three-phase "Tailoring Rule" approach to regulating
greenhouse gas emissions from new and modified stationary sources
under the Clean Air Act. EPA's proposal declines to extend
regulation of greenhouse gas emissions to smaller sources and seeks
to streamline permitting for sources that are already
regulated.
The EPA previously laid out the first and second
phases of the Tailoring Rule, with "Phase 1" taking
effect in January 2011 and "Phase 2" taking effect in
July 2011. During the first two phases, EPA established greenhouse
gas emission thresholds, above which permits are required for new
stationary sources and major modifications to existing stationary
sources under the major source permitting requirements of the Clean
Air Act's Prevention of Significant Deterioration
("PSD") and Title V operating permit programs. These
thresholds were designed to limit regulation of greenhouse gas
emissions to only the largest emitters.
In Phase 3, EPA considered whether smaller sources of greenhouse
gases should be regulated and ultimately determined that such
sources should not be regulated because state air permitting
capabilities "have not improved to the extent necessary for
additional sources to be brought into the system." If
finalized as proposed, the Tailoring Rule would continue to apply
to only the following categories of large greenhouse gas
emitters:
New and existing facilities with potential carbon dioxide
equivalent ("
CO2e") emissions above 100,000 tons per year
(and potential greenhouse gas emissions of at least 100 tons per
year on a mass basis) would be required to obtain Title V operating
permits;
New facilities with potential CO2e emissions of
100,000 tons per year or more (and 100 or 250 tons per year of
potential greenhouse gas emissions on a mass basis, depending on
the source) would be required to obtain preconstruction PSD
permits;
Existing facilities with potential CO2e emissions of
100,000 tons per year or more (and 100 or 250 tons per year of
potential greenhouse gas emission on a mass basis, depending on the
source) that make changes that increase their potential
CO2e emissions by 75,000 tons per year or more, would
need to obtain PSD permits; and
Facilities triggering PSD permit requirements due to emissions
of other regulated pollutants also would be required to address any
potential CO2e emissions increases of 75,000 tons or
more in the PSD permit.
In addition to maintaining existing thresholds, EPA proposes to
streamline the permitting process through two approaches. First,
EPA proposes to increase flexibility and improve the usefulness of
"plantwide applicability limitations" or "PALs"
for greenhouse gas emissions. EPA proposes to allow permitting
authorities to issue greenhouse gas PALs on either a mass basis or
a CO2e-basis, and to allow PALs to be used in
determining whether a project should be deemed a major modification
that subjects the facility's greenhouse gas emissions to
regulation. Second, EPA proposes to allow issuance of
"synthetic minor" permits for greenhouse gas emissions
when EPA itself (as opposed to a state or local agency) is the PSD
permitting authority.
EPA is expected to issue a final rule this summer.
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