EPA proposes backstop rules to help GHG Tailoring Rule Rollout

As the U.S. Environmental Protection Agency continues to roll out the details for the so-called greenhouse gas (GHG) tailoring rule, Step 1 of which is set to take effect on Jan. 2, 2011, EPA last week announced two expedited rulemakings designed to plug regulatory gaps that could impair the GHG Tailoring Rule’s implementation.

EPA announced last week that 13 states have non-compliant state implementation plans (or SIPs) in that they do not clearly identify GHGs as pollutants subject to the Prevention of Significant Deterioration (PSD) program permitting.  As a result, large existing sources in those states that might be increasing their GHG emissions by more than 75,000 tons per year (the GHG Tailoring Rule first step threshold) cannot obtain a PSD permit that covers GHGs as required by the GHG Tailoring Rule.

EPA is therefore proposing to launch a “SIP Call” to those 13 states and any other state that determines its own program is inadequate to cover GHGs. 

Separately, recognizing that some states may not act quickly enough to allow for compliance by the January 2, 2011 implementation of the GHG Tailoring Rule, EPA announced that, for the first time since the Clean Air Act was enacted, the EPA plans to issue its own Federal Implementation Plan (or “FIP”) for GHGs to allow for the EPA to issue its own federal PSD permit to sources above the thresholds that are located in states not yet compliant with the rules.

These gap-filling regulatory developments are aimed at facilitating GHG Tailoring Rule compliance by the biggest sources of GHG emissions. It covers large industrial facilities such as power plants, cement kilns and oil refineries that are responsible for 70% of the GHGs from stationary sources.

Beginning January 2^nd, the GHG Tailoring Rule permitting requirements will apply for large facilities already permitted as major sources under the Clean Air Act for non-GHG pollutants, such as sulphur dioxide and nitrogen oxides. These facilities will have to account for GHGs in their applications if they increase GHG emissions by at least 75,000 tons of carbon dioxide equivalent a year.  Subsequent regulatory triggers apply in the future under the GHG Tailoring Rule.

Effective July 1, 2011, the GHG Tailoring Rule will extend to all new facilities with GHG emissions of at least 100,000 tons a year and modifications at existing facilities that increase GHG emissions by at least 75,000 tons a year.

EPA said last week in a statement that the results of these new expedited rulemakings would be temporary measures in place until states revise their SIPs and assume responsibility for GHG permitting. EPA is expediting its rulemaking process to ensure the rules are finalized before the January 2^nd start. A public hearing has been scheduled on its proposals for August 25^th and EPA will accept written public comments over the next 30 days.