EPA Provides Option for Rescinding EPA-Issued Tailoring Rule Step 2 PSD Permits



On April 30, 2015, EPA issued a direct final rule to narrowly amend the permit rescission provisions in the federal Prevention of Significant Deterioration (PSD) regulations found in 40 CFR 52.21 (w). This rule provides the regulatory mechanism for EPA and delegated authorities to rescind PSD Step 2 permits issued under the Greenhouse Gas (GHG) Tailoring Rule.

The U.S. Supreme Court determined the permitting requirements under Step 2 of the Tailoring Rule to be invalid in Utility Air Regulatory Group (UARG) v. EPA. As a result, "anyway sources" – those that trigger PSD permitting requirements based on emissions of other air pollutants and also have GHG emissions above the current threshold still must have carbon pollution limits in their permits. "Step-2" sources, which became applicable to the Tailoring Rule on July 1, 2011, are those sources that triggered permitting requirements based solely on their GHG emissions. Step 2 sources are no longer required to obtain a permit. Facilities potentially affected by this rule include:  (1) sources classified as major for PSD purposes solely on the basis of their potential GHG emissions, and (2) sources emitting other pollutants above the major source threshold that experienced a modification resulting in an increase of only GHG emissions above the applicable levels.

The new rule does not address the requirements for states that have approved PSD program through their State Implementation Plan (SIP) or the rescission of PSD permits issued by states and local programs with such approved programs. Facilities in those states with state-issued Step 2 permits should contact their State Agencies regarding the fate of those permits.

EPA's Office of Enforcement and Compliance Assurance (OECA) issued a Memo on December 14, 2014, that narrowly tailored No Action Assurance for sources with EPA-issued Step 2 PSD permits. OECA's No Action Assurance Memo asserts that EPA will exercise its enforcement discretion not to pursue enforcement of the terms and conditions relating to GHGs in a source's EPA-issued Step 2 PSD permit, and for related GHG terms and conditions that are contained in the source's Title V permit, if any.

As part of the rescission process for EPA-issued Step 2 PSD permits, some sources may also need to revise their Title V permits. A separate rule making is not needed by EPA for that process; facilities should work with their respective agencies to rescind those permits.

EPA is publishing this rule without a prior proposed rule because it views this action as a non-controversial amendment and anticipates no adverse comment. The rule will be in effect 60 days after its publication in the Federal Register.