Stationary GHG Source Controls
April 1, 2010Recent regulatory developments provide hints regarding how EPA intends to regulate stationary sources of greenhouse gas (GHG) emissions under the federal Clean Air Act.
Timing. The first is timing. As we previously reported, on March 29, 2010, EPA released a notice entitled "Reconsideration of Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs." The practical effect of that notice, which constitutes final agency action, is that major stationary sources of GHGs will not be subject to permitting requirements until January 2, 2011, at the earliest. However, in that same notice, EPA stated that sources would not be grandfathered. That means that permits that are still open on January 2, 2011 will need to incorporate the GHG controls that might otherwise apply to the facility. The practical meaning is that facilities that believe that they will be subject to GHG controls need to start planning today, particularly if facility changes are planned that might trigger permitting under the New Source Review (NSR) or Prevention of Significant Deterioration (PSD) programs.
Emissions Aggregation. The second pertains to the scope of the emissions at a facility, or emissions related to it, that might trigger NSR/PSD permitting. The trend is that the Obama Administration may take a more expansive view than the Bush Administration of emissions that trigger NSR/PSD permitting, which means that - despite claims by EPA that it will only target truly large emitters of GHGs initially - EPA intends to proactively target GHG emitters. This trend was revealed in a proposed rule entitled "Prevention of Significant Deterioration and Nonattainment New Source Review: Aggregation Reconsideration" that EPA published on March 30, 2010.
In a nutshell, in one of its last acts, the Bush Administration, in January 2009, established an interpretation of the existing NSR rules regarding when facility and related emissions must be aggregated for purposes of determining if permitting thresholds are exceeded. The Natural Resources Defense Council (NRDC) filed a petition for reconsideration of that interpretation, which the Obama Administration has just granted.
The January 2009 interpretation only required facility emissions to be aggregated when activities are "substantially related." That interpretation also stated that, before emissions could be aggregated, changes must have more in common than timing and the notion that they support the basic operations of the facility. Moreover, the January 2009 interpretation provided that facility modifications that are separated by 3 or more years will be presumed not to be "substantially related."
In the proposed rule issued on March 30, 2010, EPA indicated that it was taking comment on a variety of issues raised by the NRDC in its petition for reconsideration of the January 2009 interpretation. In total, we read the proposal to suggest that EPA is inclined to back away from its "substantially related" standard in a manner that broadens the scope of emissions that must be considered in NSR/PSD permitting.
We are particularly worried what EPA's new interpretation, if finalized as proposed, may mean for compression-related emissions associated with carbon capture and storage projects. In particular, will pipeline emissions for carbon dioxide compression be associated with the relevant stationary source in a manner that makes NSR/PSD permitting for the source more likely to be triggered.
Remaining Pieces. EPA has at least two more cards to play. The first is the so-called Tailoring Rule that EPA proposed last fall and has yet to finalize. When finalized, that rule will "tailor" the major source applicability thresholds for PSD and the Title V programs under the Clean Air Act. Based upon available information, it now seems possible that EPA will "tailor" these programs to initially only apply to sources with emissions in excess of 75,000 tons per year of carbon dioxide equivalent. It also now seems likely that EPA's issuance of the Tailoring Rule will be delayed; it was originally supposed to be finalized by late March 2010.
The second is what EPA considers to be "Best Available Control Technology" (BACT) for purposes of the Clean Air Act. The Clean Air Act Advisory Committee is working on a report on this topic that, when finalized, will be closely read. EPA's issuance of guidance on BACT technology for GHGs will go a long way towards informing stationary sources what technologies they will need to consider deploying to meet the new GHG emission control requirements.