This New Suit is a Little Tight: Absurdity and the Greenhouse Gas “Tailoring Rule”
Posted: January 18th, 2012Author: All4 Staff
On May 13, 2010, U.S. EPA issued the final rule known as the Prevention of Significant Deterioration (PSD) and Title V Greenhouse Gas (GHG) Tailoring Rule (GHG Tailoring Rule). It was subsequently published in the Federal Register on June 3, 2010 (75 FR 31514) and became effective on August 2, 2010. The GHG Tailoring Rule sets the timing and establishes thresholds for addressing GHG emissions from stationary sources under the Clean Air Act (CAA) permitting programs.
GHGs will become “subject to regulation” under the CAA on January 2, 2011 as a result of the action taken by U.S. EPA on April 1, 2010, which finalized the Light Duty Vehicle Rule (LDVR) controlling GHG emissions. That action established GHG standards for these vehicles and thus made GHGs “subject to regulation” which triggered CAA permitting requirements for GHGs from stationary sources. The CAA major source permitting program emission thresholds for criteria pollutants (e.g., lead, sulfur dioxide, nitrogen dioxide, etc.) are 100 and 250 tons per year (tpy), depending on source category. However, these thresholds are not realistic for GHGs which are emitted by numerous sources in much greater quantities. Without the GHG Tailoring Rule, the New Source Review (NSR) and Title V Operating Permit rules would apply to all stationary sources that emit or have the potential to emit (PTE) more than 100 or 250 tons of GHGs per year, and at these levels, tens of thousands of additional PSD permits and millions of additional Title V operating permits would be required. In an effort to relieve these overwhelming air permitting burdens, the PSD and Title V GHG Tailoring Rule “tailors” the existing requirements of the PSD and Title V Operating Permit programs to limit which facilities will be required to obtain PSD and Title V permits related to GHG emissions.
How do you define “GHG pollutant” for PSD and Title V purposes?
For the purposes of PSD and Title V regulations, GHG is defined as it is in the LDVR, as a single pollutant quantified by summing six (6) specific gases evaluated using a common metric of carbon dioxide equivalent (CO2e). This is referred to as the “Sum-of-Six Well-Mixed GHG.” The six (6) gases which require consideration are as follows:
- Carbon dioxide (CO2)
- Methane (CH4)
- Nitrous Oxide (N2O)
- Hydrofluorocarbons (HFC)
- Perfluorocarbons (PFC)
- Sulfur hexafluoride (SF6)
For each of these six (6) gases, emissions are first normalized to a CO2e basis by multiplying the mass emissions of each individual gas by its respective global warming potential (GWP). The GWP values used for this calculation are those codified in the Mandatory Reporting of Greenhouse Gases Rule at 40 CFR Part 98, Subpart A, Table A-1. A source’s total GHG emissions are then equal to the sum of the CO2e of each of the six (6) gases. A source’s total GHG emissions are compared to the appropriate CO2e permitting thresholds discussed below for determining whether the source is subject to PSD and/or Title V permitting requirements.
When will PSD applicability begin for GHG emission sources?
The PSD permitting requirements established by the GHG Tailoring Rule will be implemented in two (2) initial steps which are detailed below.
Step 1 – January 2, 2011 to June 30, 2011
During Step 1 no sources will become major for PSD based solely on GHG emissions. Only sources that are currently subject to the PSD program will be subject to permitting program requirements for GHG emissions under PSD. U.S. EPA refers to these as “Anyway Sources.” During Step 1, if a source undergoes major new construction or major modification permitting and exceeds thresholds for non-GHG PSD pollutants (e.g., SO2, NOX), the source will become subject to the new PSD requirements for GHG emissions if the project related GHG emissions increase exceeds 75,000 tpy or more on a CO2e basis. A source that is determined to be subject to the PSD requirements for GHG emissions will be required to conduct a Best Available Control Technology (BACT) analysis for GHG emissions if both of the following conditions are met:
The GHG emissions (construction) or net GHG emissions increase (modification) calculated as the sum-of-six well-mixed GHGs on a mass basis (i.e., no GWP applied) exceeds 0 tpy (this is an initial screen to exclude sources or changes that have no mass increase of GHGs),
The GHG emissions (construction) or net GHG emissions increase (modification) calculated as the sum of the six-well-mixed GHGs on a CO2e basis (i.e., GWP applied) equals or exceeds 75,000 tpy CO2e (this is the significance level that determines permitting applicability).
Step 2 – July 1, 2011 to June 30, 2013
During Step 2, sources already subject to PSD for GHG emissions under Step 1 remain subject to PSD. Sources with new construction projects that emit GHGs at or above 100,000 tpy CO2e, regardless of whether they exceed permitting thresholds for other pollutants, will be subject to PSD permitting requirements. Modifications at existing facilities that increase GHG emissions by at least 75,000 tpy CO2e, regardless of other pollutants, will also be covered.
To determine whether a GHG emission source (new construction, physical change, or operational change) is considered major under PSD, both of the following conditions must be met:
1. The GHG emissions calculated as the sum-of-six well-mixed GHGs on a mass basis (i.e., no GWP applied) are 100 tpy for the 28 major facility source categories and 250 tpy for all other stationary sources,
2. The GHG emissions source emits GHGs on a CO2e basis (i.e., GWP applied) at or above 100,000 tpy CO2e.
To determine if a GHG emission source (modification at major stationary source) is subject to PSD review, both of the following conditions must be met:
1. The net GHG emissions increase resulting from the project, calculated as sum-of-six well-mixed GHGs on a mass basis (i.e., no GWP applied) equals or exceeds 0 tpy,
2. The net GHG emissions increase resulting from the project calculated as sum-of-six well-mixed GHGs on a CO2e basis (i.e., GWP applied) equals or exceeds 75,000 tpy CO2e.
When will Title V applicability begin for GHG emission sources?
The new CAA Title V permitting requirements established by the GHG Tailoring Rule will also be implemented in two (2) steps as follows.
Step 1 – January 2, 2011 to June 30, 2011
During Step 1 only sources currently subject to the Title V Operating Permit program for pollutants other than GHG will become subject to Title V requirements for GHG. That is, no source can become “major” under the Title V Operating Permit program based solely on GHG emissions during Step 1 unless the source is already subject to the Title V Operating Permit program for pollutants other than GHG. However, sources already subject to the Title V Operating Permit program will become subject to applying all Title V requirements to GHG emissions, including monitoring, recordkeeping, and reporting requirements, when these sources apply for, renew, or revise their existing Title V Operating Permits.
Step 2 – July 1, 2011 to June 30, 2013
During Step 2, sources with GHG emissions could be required to obtain a Title V Operating Permit if they do not already have one, even if Title V Operating Permit program requirements would not apply based on potential emissions of other regulated pollutants. To determine if the Title V Operating Permit program requirements apply to an existing source or a newly constructed source during Step 2, both of the following conditions need to be met:
The existing or newly constructed source emits or has the potential to emit GHGs calculated as the sum-of-six well-mixed GHGs on a mass basis (i.e., no GWP applied) in amounts that equal or exceed 100 tpy,
The existing or newly constructed source emits or has the potential to emit GHGs calculated as the sum-of-six well-mixed GHGs on a CO2e basis (i.e., GWP applied) in amounts that equal or exceed 100,000 tpy CO2e.
The requirement to obtain a Title V Operating Permit will not, by itself, result in the triggering of additional
substantive requirements for control of GHG. New Title V Operating Permits will simply incorporate whatever applicable CAA requirements related to GHG emissions (if any) apply to the source being permitted.
What happens after June 30, 2013?
In the finalized GHG Tailoring Rule, U.S. EPA also commits to undertake a rulemaking beginning in 2011 and to consider, and possibly establish, additional PSD and Title V GHG permitting requirements for smaller sources that are not currently affected by Step 1 and Step 2. During this rulemaking, U.S. EPA will propose or solicit comment on a Step 3 of the phase-in and may consider alternative approaches to permanently exclude a category of sources from PSD or Title V requirements related to GHG emissions. One of U.S. EPA’s main considerations is to determine if it is possible for U.S. EPA and other permitting authorities to administer GHG permitting programs for additional sources. U.S. EPA has committed to exploring a wide range of streamlining options which could include the following: defining Potential to Emit (PTE) for source categories, presumptive BACT emission limits for source categories, procedures for general permits and permits-by-rule, procedures for electronic permitting, and learning techniques for more efficient permitting.
In the event that Step 3 does include lower thresholds for PSD and Title V applicability, any new Step 3 requirements would take effect on July 1, 2013. However, U.S. EPA has indicated that Step 3 will establish a major source threshold and significance level for GHG no lower than 50,000 tpy CO2e.
One of the additional considerations of Step 3 is the “absurd results” doctrine. U.S. EPA may make decisions that certain GHG sources, while above the statutory thresholds, are small and relatively inconsequential in terms of GHG contributions and should be excluded from the requirements. U.S. EPA will also investigate the potential for exclusion of those sources that could end up with an “empty permit.” The “empty permit” would be a result of a source tripping the PSD or Title V program applicability thresholds due to GHG emissions, but not containing any applicable requirements in a permit because none apply.
In no event will sources with GHG emissions below 50,000 tpy CO2e be subject to PSD or Title V permitting during a 6-year period, nor will modifications be subject to PSD unless they increase emissions by 50,000 tpy CO2e or more. This exclusion will last until U.S. EPA takes action to establish a Step 4 to address smaller sources. By rule, U.S. EPA must take this action by April 30, 2016. This does not necessarily mean U.S. EPA will cover sources below this threshold level on April 30, 2016, it simply means that the provisions that U.S. EPA is adopting would assure that U.S. EPA does not cover such sources prior to that date. The final action could take the form of a Step 4 that would bring additional sources in. Alternatively, it could function as a final step excluding certain sources permanently based on the application of an “absurd results” rationale.
How does this affect the permit application process?
The GHG Tailoring Rule will impact the development of air permitting strategies and the preparation of related applications for a wide range of industries and facilities. Emission inventories developed to evaluate PSD applicability must now begin to include the GHG pollutants for comparison to emission
thresholds as these requirements will be effective January 2, 2011. Any pending permit applications in process on January 2, 2011 must be revised to address GHG pollutants. This includes even minor applications for projects that do not trigger the new GHG requirements but must demonstrate that the thresholds are not exceeded. Developing GHG emission inventories may require the development of new emission factors where none currently exist or in situations where the available factors do not accurately reflect the GHG emissions from project sources.
Permit applications currently being prepared for submittal should address the GHG Tailoring Rule requirements. The GHG Tailoring Rule provides no exemptions for PSD permit applications that are pending when the Step 1 phase-in begins (existing PSD source, project with > 75,000 tons CO2e). If such pending applications do not result in a final PSD permit issued before January 2, 2011, the application will need to be reopened or amended to incorporate the GHG Tailoring Rule changes. Facilities that have received permits and are authorized to construct, but do not begin actual construction by January 2, 2011, do not need to have the previously issued permit reopened or amended. Sources that will become subject during Step 2 do not need to obtain a PSD permit addressing GHG if actual construction begins before July 1, 2011. However, such sources must still obtain a PSD permit addressing non-GHG pollutants.
Existing Title V sources that become subject to GHG requirements during Step 1 must address GHG in permit renewal or revision applications. Existing sources that are not currently Title V sources but become subject to Title V for GHG during Step 2 must make their first-time submittal of applications within 12 months of becoming subject to Title V. Where a new source is required to obtain a Title V Operating Permit, the permit application or permit revision must be submitted within 12 months of commencing operation.
The PSD and Title V Tailoring Rule is a highly controversial rule that will likely be litigated. On July 6, 2010, a large and diverse group of business and industry organizations collectively petitioned U.S. EPA to reconsider, rescind, and/or revise the new rule. Among other justifications, a key basis for the petition is the petitioner’s position that the statutory provisions of the CAA limit PSD applicability based on the location of the source (attainment status) and therefore only criteria pollutants can trigger PSD. While it will be interesting to observe U.S. EPA’s response to the petition and to watch while the legal process around the new rule grinds on, those facilities that are planning new projects requiring air permits have no choice but to address the new requirements of the PSD and Title V Tailoring Rule.