Federal Court Vacates GHG Permitting Deferral for Biogenic Sources



On July 12, 2013, the US Court of Appeals for the District of Columbia (DC Circuit) vacated the 2011 EPA temporary deferral that exempted biogenic greenhouse gas (GHG) sources from requirements to obtain a permit for those GHG emissions under the Clean Air Act (CAA). The DC Circuit ruled that EPA did not have authority under the act to treat biogenic GHG emissions differently than other pollutant emissions for Prevention of Significant Deterioration (PSD) and Title V permitting. The EPA deferral had the two-part effect of a) delaying Title V permitting requirements for biogenic GHG emissions, and b) exempting sources from PSD permitting requirements for biogenic GHG emissions, until July 21, 2014. 

Background

The path to this ruling is long and convoluted. EPA subjected stationary sources to regulation for GHG via an endangerment finding in 2009 which grouped six gases under the definition of GHG: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).1 After EPA’s decision to regulate these new gases under the CAA, EPA issued the Tailoring Rule which limited the types of sources and projects that the CAA would regulate based on GHG emissions.2

Shortly after issuance of the Tailoring Rule, EPA issued a Call for Information (CFI) regarding biogenic sources and bioenergy (July 15, 2010), which was followed shortly by a petition for reconsideration from the National Alliance of Forest Owners (NAFO) specifically related to CO2 emissions from biomass combustion. EPA granted the petition and proposed to defer applicability of the CAA to biogenic CO2 emissions for three years to allow further consideration of the issues surrounding biogenic CO2.3  EPA then issued a final biogenic deferral.4

Between the proposed and final deferral rules, the Center for Biological Diversity (CBD) and other groups filed a challenge to EPA’s granting of the NAFO  petition for reconsideration. That CBD petition led to the July 2013 ruling vacating the biogenic deferral rules.

GHG Photo1

The Deferral Rule

The deferral rule is simple and quite short, impacting only one paragraph in each of the state and federal sections for the PSD and Title V programs (40 CFR 51, 52, 70, 71).  Looking at 40 CFR 52 for example,

For purposes of this paragraph, prior to July 21, 2014, the mass of the greenhouse gas carbon dioxide shall not include carbon dioxide emissions resulting from the combustion or decomposition of nonfossilized and biodegradable organic material originating from plants, animals, or micro-organisms including products, by-products, residues and waste from agriculture, forestry and related industries as well as the nonfossilized and biodegradable organic fractions of industrial and municipal wastes, including gases and liquids recovered from the decomposition of non-fossilized and biodegradable organic material).

For the three year period of deferral, biogenic emissions did not count for CAA purposes. The practical impact of this deferral is disputed, with varying claims in the court case regarding actual facilities where the deferral rule resulted in different requirements.  The potential impact is clear. Consider two examples.

  • New 50 MW biomass power plant.  Traditional pollutant emissions are all less than 250 tpy, the site has a 250 tpy PSD major source threshold, and PSD would not be triggered but for potentially GHG.  Biogenic GHG emissions would be approximately 500,000 tpy, which is well beyond the 100,000 tpy GHG trigger level for a new facility. With the deferral, the project does not trigger PSD for any   pollutant. Without the deferral, the project would trigger PSD for GHG as well as CO, NOX, PM/PM10 / PM2.5 at minimum.
  • Existing pulp mill undergoing an expansion project to increase liquor firing rate on the recovery boiler.  With the deferral, any CO2 emissions from liquor firing are excluded, while without they must be counted towards the 75,000 tpy GHG trigger level for an existing facility.

Similar examples could be developed across a range of industries, from landfills with landfill gas emissions, to wood products industries, to bio-energy industries.

The Court Decision

Despite the brevity of the actual rule, there were many challenges to and comments on the rule, as evident by the nearly 200 page Summary of Public Comments and Responses document issued June 28, 2011. The court ruling agreed with key adversarial comments in that document.

The 2-1 ruling rejected the legal doctrines upon which EPA issued the deferral rule.

  1. De minimis
  2. One-step-at-a-time
  3. Administrative necessity
  4. Absurd results

The latter three doctrines were also used for the Tailoring Rule. The Tailoring Rule was upheld, but without considering these doctrines on their merits.  Here, the court did consider each on the merits. EPA’s one-step-at-a-time doctrine was vacated based on EPA’s inability to explain in the rulemaking how the deferral rule was a step on the road to full compliance with the statutory mandate. The administrative necessity doctrine was rejected since EPA rejected a “middle ground option” arbitrarily and capriciously. The absurd result doctrine was rejected for relying upon the Tailoring Rule absurd results rationale, since the Tailoring Rule and deferral rule have different objectives.

The Path Ahead

EPA and intervenors have several options, including a request for rehearing or en banc rehearing, as well as a request for a remand. As of publication, the court has yet to issue the mandate and thus the ruling is not yet in effect.  The original deadline to file for rehearing or rehearing en banc was August 26, 2013, but via order on that day the court has extended the deadline until 30 days after the Supreme Court decides whether to hear a pending challenge to EPA’s decision to regulate CO2 (UARG v. EPA, 12-1146). In the same August 26 order, the court denied environmental petitions request to issue the mandate at that time. The Supreme Court is expected to issue a decision on whether or not it will hear the CO2 challenge by approximately October 7, 2013, which would translate to an early November deadline for the biomass case filing.

GHG Photo2

Assuming the ruling stands, facilities that used the exemption are likely to be required to obtain retroactive PSD permits. In an analogous fashion, electric utility units that did not trigger CAA §112(g) due to the Clean Air Mercury Rule (CAMR) were required to obtain 112(g) permits after CAMR was vacated by the courts. Similarly, facilities that used the deferral to determine that they were not subject to Title V permitting requirements will likely need to revisit their emission calculations and determine if a Title V permit is required. Lastly, going forward, all facilities will need to assess the total GHG impact from future projects, including biogenic VOC.

1 See http://epa.gov/climatechange/endangerment/

2 75 FR 31514, June 3, 2010.

3 76 FR 15246, March 21, 2011.

4 76 FR 43490, July 20, 2011.