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On July 1, 2011, EPA signed the Deferral for CO2 Emissions from Bioenergy and Other Biogenic Sources under the Prevention of Significant Deterioration (PSD) and Title V Programs. According to the pre-publication copy of the rule currently available on EPA’s website, the final rule becomes effective immediately upon the date of its publication in the Federal Register, which is expected to follow the rule signing by one to two weeks. EPA justifies this immediate effective date, rather than the typical 30 day delay, by citing that the deferral eliminates uncertainty in the permitting process and that affected parties need not modify their behavior to accommodate the rule.

Although EPA’s deferral will be immediately effective at the federal level, the applicability and effective date of this rule modification in a particular state will vary. The biogenic deferral is effective immediately upon publication for Title V and PSD permitting programs implemented by EPA under 40 CFR part 71 and 40 CFR 52.21, respectively (i.e., delegated programs). However, the deferral is optional for any state, local, or tribal permitting authorities that implement the Title V and PSD permitting programs under 40 CFR part 70 and 40 CFR 51.166, respectively (i.e., SIP-approved programs).

Though not mandatory, EPA encourages states that expect to receive permit applications from a number of biomass facilities to submit the necessary SIP revisions or Title V program revisions to implement this three-year deferral. According to EPA, if a state was able to implement the Final Tailoring Rule without making any changes to state regulations, then it is likely that the state will be able to implement the deferral without regulatory changes. If permit program revisions were necessary for a state to implement the Final Tailoring Rule, then revisions will likely be necessary to implement the deferral.

EPA is implementing the deferral by amending the definition of “subject to regulation” in its PSD and Title V regulations. Only biogenic CO2 emissions will be deferred; therefore, a source must still consider other GHGs (e.g., methane and nitrous oxide) emitted from the combustion of biomass fuel when determining whether a stationary source meets the PSD and Title V applicability thresholds. It should also be noted that this action does not affect compliance obligations for biogenic CO2 emissions under EPA’s mandatory GHG reporting rule (codified under 40 CFR 98). Following a technical review of the net carbon cycle impact of biofuels, EPA plans to make additional rules within the three-year deferral period that will establish an approach for accounting for these emissions on a permanent basis.

Since this deferral is intended to temporarily exclude biogenic CO2 emissions from the definition of “subject to regulation,” as that term was defined in the Tailoring Rule, questions may arise regarding whether existing permits will require modification because of the deferral, or whether permits issued during this three-year period will need to be modified after the deferral. According to EPA’s rulemaking package, “this rule does not require that a PSD permit issued during the deferral period be amended or that any PSD requirements in a PSD permit existing at the time the deferral takes effect, such as BACT limitations, be revised or removed from an effective PSD permit for any reason related to the deferral or when the deferral expires.” In other words, if a source is subject to BACT conditions for biogenic CO2 emissions as a result of a PSD permit issued before the effective date of the deferral, the deferral does not require that these conditions be removed. Similarly, unless a separate permitting action is triggered, PSD permits issued during the deferral period need not be modified when the deferral expires and biogenic CO2 emissions are no longer eligible to be excluded.

If the deferral is not effective in a particular state at the time a PSD permit is issued, then the permit must include appropriate BACT limitations for GHGs. EPA’s interim guidance for biogenic CO2 emissions, entitled “Guidance for Determining Best Available Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy Production,” is intended to assist permitting authorities with establishing BACT for biogenic CO2 emissions prior to the effective date of the deferral. Specifically, this document supports the conclusion that the combustion of biomass fuels can be considered BACT for biogenic CO2 emissions at stationary sources.

Trinity recommends that potentially affected sources, particularly sources with PSD and Title V permits in progress, communicate with their permitting authority to determine whether the authority intends to adopt the deferral and when it would likely become effective.