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Stationary Source GHG Regulation Under PSD

[ 0 ] March 5, 2010 | Coalition for American Jobs

Triggering EPA regulation of greenhouse gases (GHGs) under the Prevention of Significant Deterioration (PSD) program of the Clean Air Act would cause uncertainty and delay in new investments.

  • If EPA regulates GHGs under the PSD program, as many as 6.1 million sources not currently subject to PSD would be swept into PSD review and Title V permitting as major sources of GHGs, triggering as many as 40,000 PSD permits/year.  1
  • A PSD requires a permit for new or modified sources, and the PSD thresholds are low. A major source only has to have the potential to emit 100 or 250 tons of a particular pollutant. If EPA regulates GHGs under PSD, millions of office buildings, apartments, schools and hospitals 2 would need a PSD permit before making any change that could cause more GHG emissions.
  • PSD review would require a permit authority to determine the “Best Available Control Technology” (BACT) for GHG emissions. Determining BACT requires a review of control options and alternative technologies or fuels to reduce GHG emissions. For pollutants now regulated, there is a ready body of knowledge of what constitutes BACT. Because GHGs would be new to PSD review, there is no consensus, guidance, or database for a state to determine what BACT might be for GHGs.

Regulating GHGs under PSD would overwhelm permitting authorities.

  • In general, state agencies issue PSD permits, not EPA. EPA has approved the state rules as part of the State Implementation Program (SIP) under the Act.
  • Currently, permit authorities process approximately 280 PSD permits / year. 3
  • EPA estimates that once GHGs are regulated under the PSD program, the six million covered sources will require 40,000 PSD permits per year. 4
  • Each PSD permit will be subject to public review and comment, as well as potential legal challenges.
  • Plus, EPA estimates that once subject to PSD, the 6.1 million sources will need to obtain operating permits under Title V of the Clean Air Act. 5
  • EPA has concluded that these new permitting requirements would overwhelm the authorities that issue PSD permits.

To provide relief, EPA has proposed the GHG Tailoring Rule.

  • The Tailoring Rule would delay PSD requirements for sources with the potential to emit less than a threshold level of tons of GHGs. (Proposed level: 25,000 tons or greater.)
  • The number of sources needing PSD permits would still almost double. 6

But EPA’s proposed “Tailoring Rule” unlikely will realize the goal of addressing smaller sources and making PSD permitting manageable for larger sources

EPA cannot unilaterally modify the state laws that apply to most of these newly encompassed PSD sources 7 and it will take states at least two years to modify these laws. During this period, smaller sources will be subject to PSD. Here are a few examples:

  • Illinois EPA: “We believe a reasonable estimate of the time needed to enact the needed revisions to our laws and regulations is a minimum of one to two yearsfrom the date we begin the formal process, which has not yet started.” 8
  • Kentucky DAQ: “The legislative changes required to modify the thresholds for GHGs would be closer to two years instead of the seventy-five days EPA proposes.” 9
  • Pennsylvania DEP: “It would take a number of years before DEP could fully staff or fund additional positions to implement the tailoring rule.” 10
  • New Jersey DAQ: EPA “should provide at least 2 years for states to revise statutes and rules.” 11
  • Parties have signaled an intent to challenge the Tailoring Rule, and the defensibility of EPA’s approach is in significant legal jeopardy. 12
  • Even if efficiently implemented and upheld, the Tailoring Rule will be phased out in 2016 13, and so only defers the inevitable overwhelming burden.

If EPA applies PSD review to GHGs, even under the Tailoring Rule, it is highly uncertain what legal regime would govern and how long it would take to obtain necessary air permits. This will discourage and delay investment.

Consider a business that wants to build a new plant or modify an existing plant to produce solar panels and assume that plant would not trigger PSD except if GHGs are fully regulated under PSD as EPA proposes:

  • Status Quo:  Proposed plant is not subject to PSD review:  No PSD permit required, so air permitting streamlined.  States estimate it would take only ~100 days to permit.
  • Scenario 1:  EPA regulates GHGs under PSD – but plant emits less than Tailoring Rule level. A PSD permit would be required unless and until the permitting agency adopts the tailoring rule.  There would be an estimated two year delay while the state seeks to adopt a tailoring rule that will remove the requirement.
  • Scenario 2:  EPA regulates GHGs under PSD – but plant emits more than Tailoring Rule threshold. Unless and until the state adopts a tailoring rule, the dramatic increase in permit applications will extend the time to process all PSD permits.  States have estimated a 10-fold increase in applications would extend the time to issue a permit to ~ 3 years.   Even if a state adopts a tailoring rule more quickly, it would take at least an additional 1 year to issue a PSD permit.  Given the lack of an established BACT for GHGs, the scrutiny each new permit will receive, and legal challenges that are expected as each new permit will be setting precedent for GHGs, these estimates are likely highly conservative.
  • This uncertainty, and the delay at permitting agencies inundated with PSD applications, could impose a de facto freeze on construction and expansion of facilities in this broad category for up to two years in many states.

Footnotes:

  1. EPA, GHG Tailoring Rule, 74 Fed. Reg. at 55295. ↩
  2. ‘‘A Regulatory Burden: The Compliance Dimension of Regulating CO2 as a Pollutant’’; September 2008. See Docket ID No. EPA–HQ–OAR–2008–0318–0402.1. ↩
  3. EPA, GHG Tailoring Rule, 74 Fed. Reg. at 55295, 55331. ↩
  4. Id. at 55316. ↩
  5. Id. at 55304. ↩
  6. Id. at 55331. ↩
  7. Id. at 55343. ↩
  8. See Docket ID: EPA–HQ–OAR–2009–0517–5135. ↩
  9. See Docket ID: EPA–HQ–OAR–2009–0517–3278. ↩
  10. See Docket ID: EPA–HQ–OAR–2009–0517–5057. ↩
  11. See Docket ID: EPA–HQ–OAR–2009–0517–4154. ↩
  12. Comments of the Air Permitting Forum, et al.  See Docket ID: EPA–HQ–OAR–2009–0517–5181.1 ↩
  13. EPA, GHG Tailoring Rule, 74 Fed. Reg. at 55303. ↩

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