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Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule

Most Recent Action
A rule to implement phase three was proposed by the EPA on February 27, 2012. The EPA will accept comments on the proposed rule until April 20, 2012.

Background
The Clean Air Act (CAA) defines EPA’s responsibilities for protecting the nation’s air quality and ozone layer. The last major change to the CAA was in 1990.

In April 2007, the U.S. Supreme Court ruled that greenhouse gases (GHG), including carbon dioxide, are potentially air pollutants covered by the CAA. (Massachusetts v. EPA, 549 U.S. 497 (2007)). The court further ruled that the EPA was required to determine whether emissions of GHGs from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. The EPA subsequently made such findings, which was a prerequisite to finalizing GHG standards for light-duty vehicles.

In March 2010, the EPA Administrator signed a notice conveying the agency’s decision to regulate light duty vehicles. This in turn triggered CAA permitting requirements for stationary sources. For the first time, GHG will become subject to “actual control” requirements thus making GHG subject to regulation under the CAA for the first time.

On May 13, 2010, the EPA issued its final rule establishing its approach to regulating GHG emissions from stationary sources under the CAA permitting programs. The final rule sets GHG emissions thresholds that define when permits under the New Source Review Prevention Significant Deterioration (PSD) and Title V Operating Permit programs are required for new and existing industrial facilities.

To minimize the number of newly regulated sources, the EPA issued the “tailoring” rule to postpone Title V and PSD regulation of stationary sources for smaller sources. However, the EPA will eventually phase in the CAA permitting requirements in phases:

Under Step 1 of the Tailoring Rule, beginning in January of 2011, PSD permitting requirements applied to sources’ GHG emissions if the sources were subject to PSD anyway due to their non-GHG regulated air pollutants (“anyway” sources), and emit or had the potential to emit at least 75,000 tpy CO2e if the source is a new major source, or increases emissions by this amount if the source is an existing source that proposes to undertake a modification. For title V, existing sources with, or new sources obtaining, title V permits are required to address GHG emissions in those permit as necessary.

Under Step 2, beginning in July 2011, PSD applied to the largest GHG-emitting sources that emit or have the potential to emit at least 100/250 tpy of GHGs on a mass basis, and that are either new sources that emit at least 100,000 tpy CO2e, or existing sources that emit at that level and that undertake modifications that increase emissions by at least 75,000 tpy CO2e. In addition, under Step 2, title V applies to sources that emit or have the potential to emit 100 tpy GHG on a mass basis, and emit or have the potential to emit 100,000 tpy CO2e.

A rule to implement phase three was proposed by the EPA on February 27, 2012. The EPA proposed to keep GHG permitting thresholds at current levels. (Currently, new facilities with GHG emissions of at least 100,000 tons per year (tpy) carbon dioxide equivalent (CO2e) and existing facilities with at least 100,000 tpy CO2e making changes that would increase GHG emissions by at least 75,000 tpy CO2e are required to obtain PSD permits. Facilities that must obtain a PSD permit anyway, to cover other regulated pollutants, must also address GHG emissions increases of 75,000 tpy CO2e or more. New and existing sources with GHG emissions above 100,000 tpy CO2e must also obtain operating permits.)

Although EPA had indicated in the Tailoring Rule that it might eventually apply PSD and Title V permitting requirements to smaller sources, the preamble to the proposed rule argues that state permitting authorities are not yet ready to handle the larger volume of permit applications that would result from a lower emission threshold.

In addition, in its third step, the EPA is proposing two changes to streamline the permitting program and provide regulated industries with flexibility.
The first would increase flexibilities and improve the usefulness of plantwide applicability limitations (PALs) for GHGs. A PAL is an emissions limit applied sourcewide rather than to specific emissions points. With a PAL, a source can make changes to the facility without triggering PSD permitting requirements as long as emissions do not increase above the limit established by the PAL. This would allow companies to respond rapidly to changing market conditions while protecting the environment.

The second approach would create the regulatory authority for EPA to issue synthetic minor permits for GHGs where EPA is the PSD permitting authority. A GHG source could agree to an enforceable GHG emissions limit set below a level that would trigger PSD permitting requirements. The process for obtaining a synthetic minor permit is generally less complicated than the PSD permitting process for a major source. This action would give facilities a mechanism to keep themselves out of major source permitting requirements for GHG as long as the source minimizes its GHG emissions.

This rule is part of a group of rules known as the EPA's Regulatory Train Wreck.

Additional Information
Phase Three Proposed Rule, February 2012

Fact Sheet on Proposed Phase Three Rule, February 2012

Fact Sheet on the overall rule, June 2010

Final Rule, June 2010

Timeline Outlining Permitting Steps under the Tailoring Rule

Summary of Clean Air Act Permitting Burdens With and Without the Tailoring Rule

Fact Sheet on the two additional rules providing Federal Implementation Plans while states are revising their permitting rules

The EPA's Regulations & Standards website


Related Actions
Additional rules ensuring New Source Review Prevention of Significant Deterioration (PSD) permits that address greenhouse gases (GHG) are being issued. The first rule directs 13 states to revise their permitting plans while all other states evaluate their plans to determine if the plans are adequate. The second rule creates a federal implementation plan for PSD permits in case a state finds its permits are not adequate and cannot quickly revise them. Wisconsin has responded to the EPA's questions about implementation of these new rules.

Fact Sheet on new rules addressing greenhouse gas emissions from fossil fuel-fired power plants and refineries

On June 3, 2010 the EPA asked states if they would agree to the EPA's proposed PSD and Title V GHG rules. Wisconsin responded in the affirmative on July 28, 2010, indicating that the DNR was prepared to advance emergency rules to achieve the EPA's objectives. The DNR is currently working on rules that would incorporate the federal tailoring rules into Wisconsin's permitting rules.

On August 12, 2010, the EPA proposed two rules to ensure that businesses planning to build new, large facilities or make major expansions to existing ones will be able to obtain New Source Review Prevention of Significant Deterioration (PSD) permits that address greenhouse gases (GHG). The first is a proposed finding of inadequacy and call for revised state permitting plans to permit GHG emissions. The second is a federal plan for permitting GHG emissions.

On August 18, 2010, the EPA proposed a rule addressing issues related to when pre-construction permitting requirements under the New Source Review (NSR) permitting program would transition from the 1-hour to the 8-hour National Ambient Air Quality Standards for ozone.

Pollution permitting guidance documents were released on November 10, 2010. These documents provide the basic information that permit writers and applicants need to address GHG emissions in permits. The EPA recommends that permitting authorities use the best available control technology (BACT) process to look at all available emission reduction options. After taking into account technical feasibility, cost, and other economic, environmental and energy considerations, permitting authorities should narrow the options and select the best one. Comments were accepted until December 1, 2010.

On December 23, 2010, the U.S. Environmental Protection Agency (EPA) issued a series of rules that put the necessary regulatory framework in place to ensure that 1) industrial facilities can get Clean Air Act permits covering their greenhouse gas (GHG) emissions when needed and 2) facilities emitting GHGs at levels below those established in the Tailoring Rule do not need to obtain Clean Air Act permits.