States – Clean Up Your Act: EPA Issues A Final Rule Requiring Certain States To Revise Their Permitting Regulations To Address The Effects Of Greenhouse Gases

On December 1st, the Environmental Protection Agency (EPA) issued a final rule requiring several states to revise their state implementation plans (SIP) such that New Source Review (NSR) Prevention of Significant Deterioration (PSD) permits will cover greenhouse gases (GHG). Identified in the “SIP call” are 13 states including: Arizona, Arkansas, our own California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon, Texas and Wyoming. Although our title implies finger-wagging on the part of EPA, the agency indicates it has “worked closely” with the states to “ensure a smooth transition to GHG permitting.”Industrial Facility

A bit of background: part of the 1977 Clean Air Act Amendments established the NSR permitting program. NSR permits are required prior to the construction of large, new industrial facilities or major expansions to existing plants and typically specify what construction is permitted, what emissions limits must be achieved and how the emissions source is to be operated. Since the Clean Air Act (CAA) was previously thought not to cover GHGs, these were not regulated. Then several events led to a turning of the tide: (i) on April 7, 2007, the Supreme Court found that GHGs were included in the definition of “air pollutants” in the CAA (Massachusetts v. EPA, 549 U.S. 497 (2007)), (ii) on December 7, 2009, EPA set forth the finding that GHGs threaten the public’s health and welfare. Along with a veritable firestorm of other regulations, in May 2010, EPA issued the “GHG Tailoring Rule” which established a common sense approach to GHG permitting focusing only on the largest industrial sources (e.g. power plants, refineries and cement production facilities) while sheltering millions of small businesses (e.g. farms and restaurants). This recent rule is part of the implementation of this “common sense approach” outlined in May’s rule.

The rule will allow states to issue such permits that address GHGs beginning in January 2011, or shortly thereafter. The deadlines for the states to submit their revised SIPs to EPA vary – ranging from December 22, 2010 to December 1, 2011, with California’s expected to be submitted shortly after the beginning of 2011. Athis rule is directed only at one local permitting agency: the Sacramento Metropolitan AQMD. EPA has stated that if any state (or local agency) is unable to meet it’s deadline, the agency will issue a Federal Implementation Plan (FIP) that applies only to GHGs, authorizing EPA to issue PSD permits to applicable sources within the state until that state’s SIP is approved.