EPA Promulgates PSD/Title V GHG Tailoring Rule

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After receiving nearly a half-million public comments on the subject, on May 13, 2010, EPA finalized an approach for tailoring Clean Air Act permitting programs to address greenhouse gas (GHG) emissions - the so-called PSD and Title V GHG Tailoring Rule.  The final rule, published in the Federal Register on June 3rd (75 FR 31514), is intended to limit permitting requirements initially to only large utility and industrial sources that account for an estimated 70 percent of GHG emissions from all stationary sources.  The regulation will be implemented in phases with the first phase beginning in January 2011.

PSD Implications

Under “Step 1” of the rule implementation, after January 2, 2011, a new industrial source that is major for at least one non-GHG pollutant and that will emit or have the potential to emit 75,000 tpy CO2e or more will be subject to Prevention of Significant Deterioration (PSD) permitting requirements for GHGs [i.e., Best Available Control Technology (BACT) for GHGs].  An existing major industrial facility undertaking a modification that results in a PSD-significant emissions increase for at least one non-GHG pollutant and that will also result in an increase of GHG emissions of 75,000 tpy CO2e or more will also be subject to PSD permitting requirements for GHGs.  Essentially, a facility must already be triggering PSD via non-GHG pollutants and also exceed the new 75,000 tpy CO2e threshold before PSD requirements for GHG pollutants can also be triggered.  Guidance on the permitting process and PSD BACT requirements will be forthcoming from EPA. 

Under “Step 2” of the rule implementation, after July 1, 2011, a new PSD major source threshold of 100,000 tpy CO2e will become effective.  A new source with potential GHG emissions above 100,000 tpy CO2e will be subject to PSD permitting requirements for GHGs.  Modifications to existing major sources (defined relative to the new 100,000 tpy threshold for CO2e or the 100/250 tpy threshold for traditional NSR regulated pollutants) that result in an increase of GHG emissions by 75,000 tpy CO2e or more will be subject to PSD permitting requirements for GHGs.  So, unlike under Step 1, following July 1, 2011, PSD for GHG pollutants can be triggered regardless of whether PSD is also triggered for non-GHG pollutants.

For determining PSD (or Title V) major source or major modification applicability, the quantity of GHGs emitted must not only equal or exceed the new higher 100,000 tpy and 75,000 tpy thresholds on a CO2e basis, but the sum of emissions of each GHG pollutant not adjusted for their global warming potential must also exceed the applicable threshold for non-GHG regulated pollutants (i.e., 100 tpy for Title V or 100 tpy/250 tpy for PSD, depending on whether the source is on the list of 28 PSD categories).

Title V Operating Permits

With respect to the Title V permitting program, beginning January 2, 2011, new or existing Title V major sources will also be subject to Title V requirements for GHGs.  That means, for example, that existing major sources renewing their Title V permit after January 2, 2011 will have to address GHGs in their applications.  However, until a facility actually triggers PSD for GHGs, there are no applicable requirements with respect to GHGs to incorporate into a Title V permit, so other than including GHG emissions in Title V applications, little more would need to be done.  There has been no guidance from EPA on what de minimis thresholds (e.g., for insignificant activities) would be applied relative to GHG emissions provided in Title V applications.

Beginning July 1, 2011, facilities with potential CO2e emissions of 100,000 tpy or more will be subject to Title V permitting requirements (i.e., even if they were previously not a major Title V source via comparison of non-GHG pollutants to traditional thresholds).  If the facility was not previously subject to Title V at that time, a Title V permit application would need to be submitted in accordance with federal and/or state/local requirements, which is typically within one year of meeting the applicability criteria.  Therefore, most non-Title V sources that become newly subject to Title V via the Tailoring Rule will need to submit initial applications by July 1, 2012 (or sooner depending on specific state program procedures).

Future Reductions in Applicability Thresholds

By July 1, 2012, EPA plans to solicit comments on whether to further reduce GHG permitting thresholds under PSD and Title V, but no lower than 50,000 tpy.  The Tailoring Rule gives EPA flexibility to propose rulemaking on potentially lower thresholds by July 1, 2012 with an effective date of July 1, 2013.  By April 30, 2015, EPA must determine whether further reductions to levels below 50,000 tpy are warranted and, if so, EPA must promulgate reduced levels by April 30, 2016.

Path Forward

This rule is the latest step by EPA in regulating GHG emissions via current mechanisms available through the CAA, following the December 2009 Endangerment Finding and the April 2010 Light Duty Vehicle rule.  In the meantime, Congress continues to consider alternate or supplemental means of addressing GHG emissions through cap-and-trade legislation such as the American Power Act draft bill issued May 12, 2010.

Industrial sources that are existing PSD major sources planning significant modifications or planning for new construction of large emitting facilities should pay close attention to this rule.  For comprehensive classroom training on NSR/PSD permitting, including the PSD/Title V Tailoring Rule, consider attending Trinity's two-day NSR/PSD Permitting Workshop.  Or, for immediate assistance, contact your local Trinity office at (800) 229-6655.