Regulation Database – PSD and Title V Permitting for Stationary GHG Sources

Tailoring Rule

Initial Rule (Steps 1 and 2): On September 30, 2009, EPA announced a proposed rule (the “tailoring rule”) focused on large facilities emitting over 25,000 tons of greenhouse gases annually. The final rule, published in June 2010, moved the threshold to 75,000 or 100,000 tons. These facilities would be required to obtain permits that would demonstrate usage of best practices and technologies to minimize emissions. The rule established new GHG emission thresholds that define when CAA permits under the New Source Review (NSR) and Title V permitting programs would be required for new or existing facilities. The rule addresses six GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and sulfur hexafluoride (SF6). The rule uses carbon dioxide equivalent (CO2e) as the preferred metric for determining GHG emissions rates for any combination of these six GHGs, but has requested comments on alternative measures.

Rule Documents:

Commentary and Analysis:

Proposed Step 3 for GHG Tailoring Rule to Focus Permitting on the Largest Emitters: On July 3, 2012 EPA issued a final rule that is the third step in EPA’s implementation of prevention of significant deterioration (PSD) permitting for greenhouse gases.  The final rule retains the greenhouse gas (GHG) permitting thresholds that were established in Steps 1 and 2 of the GHG Tailoring Rule. These emission thresholds determine when Clean Air Act permits under the New Source Review Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs are required for new and existing industrial facilities.  Under Steps 2 & 3, new facilities with GHG emissions of at least 100,000 tons per year (tpy) carbon dioxide equivalent (CO2e) and existing facilities with at least 100,000 tpy CO2e making changes that would increase GHG emissions by at least 75,000 tpy CO2e are required to obtain PSD permits. Facilities that must obtain a PSD permit anyway, to cover other regulated pollutants, must also address GHG emissions increases of 75,000 tpy CO2e or more. New and existing sources with GHG emissions above 100,000 tpy CO2e must also obtain operating permits. EPA stated that it was retaining current permitting thresholds to allow state permitting authorities more time to develop necessary permitting infrastructure and to increase their GHG permitting expertise and capacity as well as to allow EPA additional time to developed streamlined permitting approaches.   The final rule also revised EPA regulations to allow a source that emits or has the potential to emit GHGs at levels above 100,000 tpy CO2e but that have emissions of other regulated pollutants at minor source levels to apply for a source-wide emissions limit (PAL) while still maintaining its minor source status.

Litigation: Twenty-seven cases challenging the 2009 GHG Endangerment Finding, Tailoring Rule, and Timing Rule (see below) were consolidated in Coalition for Responsible Regulation v. Environmental Protection Agency (D.C. Cir. 2012). In June 2012 the Court of Appeals for the DC Circuit Court held that no petitioner had standing to challenge the Tailoring Rule or Timing Rule in addition to upholding the EPA’s Endangerment finding and interpretation of the governing Clean Air Act provisions as unambiguously correct.  On appeal in Utility Air Regulatory Group v. EPA (2014), the U.S. Supreme Court largely upheld EPA’s approach, but held that the agency could not require GHG controls under the PSD program for sources not otherwise subject to PSD regulation.

See below for information about how EPA has revised the PSD program to bring it inline with UARG v. EPA.

Timing Rule/Reconsideration Decision

EPA reconsidered a December 18, 2008 interpretive memorandum from then-Administrator Stephen L. Johnson. The memorandum discussed when the Clean Air Act’s PSD program would apply to a pollutant such as carbon dioxide. The comment period closed on December 7, 2009. The reconsideration was sent to the White House for OMB review on March 5, 2010 and finalized on March 29, 2010. The final guidance clarifies that Clean Air Act regulation of GHGs under the PSD and Title V programs will not “take effect” until at least January 2, 2011, when the “Cars Rule” is expected to take effect. Interpreting the PSD provisions of the Clean Air Act, the guidance suggests that GHGs, upon regulation under the mobile source provisions of Clean Air Act, would also be subject to regulation under the PSD program.

Litigation: 

See above.

Documents:

Proposed Revisions to PSD Program After UARG v. EPA

On August 26, 2016, the EPA proposed a set changes needed to bring EPA’s air permitting regulations in line with Supreme Court and D.C. Circuit decisions on greenhouse gas permitting. This rulemaking proposes revisions to existing PSD and title V regulations to ensure that neither the PSD nor title V rules require a source to obtain a permit solely because the source emits or has the potential to emit GHGs above the applicable thresholds.

EPA Analysis of Effect of UARG Decision on PSD Program:

Finding of Inadequacy of State Implementation Plans, Imposition of Federal Implementation Plan, and “Narrowing” Rules

Proposed rules re: inadequacy of state plans; imposition of federal plan: 

On September 2, 2010, EPA proposed a pair of rules related to implementation of the PSD program for GHGs. First, EPA proposed a finding of substantial inadequacy for 13 EPA-approved State Implementation Plans (SIPs) as they relate to GHGS. That rule also issued a call for new SIPs. Second, EPA proposed a Federal Implementation Plan to “backstop” those areas of the country without SIPs or with SIPs that are now inadequate.

Final rule re: inadequacy of state plans: 

On December 1, 2010, EPA issued a final rule finding that the EPA-approved state implementation plans (SIP) of 13 states were substantially inadequate to meet Clean Air Act (CAA) requirements because they did not apply Prevention of Significant Deterioration (PSD) requirements to greenhouse gas (GHG)-emitting sources.  In August of 2010, EPA had preliminarily determined that 13 jurisdictions lacked adequate legal authority to carry out the Tailoring Rule beginning January 2, 2011.  The December 1, 2010 Rule makes this determination final for permitting authorities in Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon, Texas, and Wyoming. In addition, EPA issued a ‘‘SIP call’’ for each of these states, which requires the state to revise its SIP as necessary to correct the inadequacies.  Seven of the above-listed states requested that EPA establish a December 22, 2010 deadline for revising their PSD regulations, thus allowing EPA to implement a federal permitting program in those states by January 2, 2011 if the deadline is missed.  Five other states indicated that they will be able to submit revisions to their PSD regulations soon after January 2, 2011 (before any sources applying for permits are adversely affected).  The state of Texas did not select a deadline and was given a default deadline of December 1, 2011 by the Final Rule to amend its PSD regulations.

Final rules re: imposition of federal plan; “narrowing” PSD program to focus on largest sources: 

On December 23, 2010 the Environmental Protection Agency passed a series of rules to ensure that every state has the authority to issue permits to large new and modified sources for greenhouse gas emissions beginning Jan. 2, 2011. The final rule imposes a federal implementation plan (FIP) as early as December 23 on states that do not allow them to begin issuing GHG permits or that have not modified their state implementation plans (SIPs) and the laws and regulations underlying them such to allow permitting. EPA also acted to narrow SIP-approved Prevention of Significant Deterioration (PSD) programs to the GHG thresholds promulgated in the Tailoring Rule, ensuring that smaller sources do not need to obtain federal permits.  Lastly, EPA issued Final Title V Permitting Programs Under the Greenhouse Gas Tailoring Rule, narrowing SIP approvals to the Tailoring Rule thresholds for Title V programs in 33 states.

Rules Ensuring Authority to Permit GHGs Under the PSD Program:

Rules Focusing GHG Permitting Initially on the Largest Sources:

Subsequent Federal Intervention in PSD Program Implementation

Since its initial 2010 rulemakings on the inadequacy of state plans and need for federal intervention (see above), EPA has asserted federal authority over the implementation of the GHG PSD program on the following occasions:

Final Action to Ensure Authority to Issue Permits under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan for Jefferson County, Kentucky

On January 10, 2011, EPA found that the Louisville Metro Air Pollution Control District (LMAPCD) failed to submit a revised state implementation plan to cover GHG permitting for Jefferson County by their selected deadline (January 1, 2011) and issued a federal implementation plan (FIP) to giving EPA the authority to issue PSD permits for sources of GHG emissions in Jefferson County, KY until the LMAPCD submits a revised plan that is approved by EPA.

Final Rule Covering GHG Permitting in Texas

On April 22, 2011 EPA issued a final Federal Implementation Plan (FIP) for the state of Texas under Section 110 of the CAA.  The FIP allows EPA to assume responsibility for administering PSD permitting requirements for GHG emissions and replaces the interim FIP issued in December 2010.  Under the final FIP, EPA will continue to manage the GHG-related aspects of PSD permit applications in Texas until the state revises its SIP to come into compliance with the Tailoring Rule.  The FIP does not interfere with Texas’ authority to issue PSD permits for conventional pollutants.  In response to the issuance of the FIP, Texas files a petition for review in the U.S. Court of Appeals for the D.C. Circuit.

Please note: this section is still under development (additional interventions may be added).

BACT Guidance: PSD and Title V Permitting

An EPA guidance document issued in November 2010, revised in March 2011, provides information for permitting authorities and regulated entities concerning GHG emission controls in PSD and Title V permits. That guidance is supplemented by white papers specific to various stationary source types.

Guidance Documents

EPA White Papers on GHG Control Measures for Different Sources:

Other Resources for States:

Treatment of Fugitive Emissions in the New Source Review Permitting Program – Interim Replacement Stay

On March 8, 2011 EPA issued an interim final rule to stay a December 2008 Bush Administration Rule known as the “Fugitive Emissions Rule.”  The Fugitive Emissions Rule allowed fugitive emissions (involving emissions that do not pass through a stack, chimney, vent or other similar opening) to be excluded when determining the applicability of PSD permitting requirements for major modifications of certain sources.  This stay replaces the stay EPA issued on March 31, 2010, that was to be effective through October 3, 2011.  EPA intends to finalize its reconsideration of the Fugitive Emissions Rule by October 2012.  EPA intended to finalize its reconsideration of the Fugitive Emissions Rule by October 2012, although a final rule has not been issued.

Vacated Rule Deferring GHG Permitting Requirements for CO2 Emissions from Biomass and Other Biogenic Sources 

In July 2011, EPA issued a final rule deferring, for three years, GHG permitting requirements for carbon dioxide (CO2) emissions from biomass-fired and other biogenic sources. This deferral was intended to allow the agency further time to investigate whether biomass burning is carbon neutral if the biomass is taken from sustainably managed forests. This decision was then to inform the EPA’s decision whether or not to require a permit under the PSD program.

Litigation: 

A challenge to EPA’s authority to exempt biomass burning and landfill sources filed by the Center for Biological Diversity ended with the D.C. Circuit Court’s vacating the Deferral Rule. The D.C. Circuit Court held that once the EPA made the endangerment finding for carbon dioxide the agency did not have the authority under the CAA to exempt major stationary sources from permitting requirements. The Court also acknowledged that the EPA commissioned study may find that biomass fuels are carbon neutral in which case the EPA’s decision to exempt biomass would be legitimate.

Additional New Source Review Guidance

On November 26, 2019, EPA issued guidance revising key Clean Air Act definitions in a way that could relax permitting requirements across a number of industries. The guidance narrows EPA's reading the word of "adjacent" in deciding whether different operations run by the same company qualify as a single source significant enough to require a pre-construction permit under the New Source Review (NSR) program. The new guidance instructs EPA to look at "physical proximity" as opposed to "functional interrelatedness," and could allow some operators to avoid the need for an NSR permit where such a permit would have previously been required. As discussed, the NSR requirement triggers the need for greenhouse gas controls for certain sources.