Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

Some Details and Acronyms

Under the first proposed rule, the SIP call, USEPA is proposing a finding of SIP substantial inadequacy for only the 13 states mentioned above (again, the "Presumptive Sip Call List").  For the most part, in all other states USEPA is proposing a finding of SIP substantial adequacy (the "Presumptive Adequate List").  If any of the Presumptive SIP Call List states are not in a position to submit to USEPA a corrective SIP revision within 12 months after USEPA signs the final action, USEPA will promulgate a FIP that will provide authority to issue PSD permits.  USEPA intends to finalize the SIP call on or about December 1, 2010. 

Nonetheless, for each of the presumptive adequate list states, USEPA is soliciting comments in the SIP call on whether their SIPs do or do not apply the PSD program to GHG sources.  USEPA is not at this time proposing a FIP for the states on the "presumptive adequate" list.  However, if EPA concludes after comment on the rule that a state's SIP does not apply to GHG sources, then USEPA will proceed to issue a finding of substantial inadequacy and a SIP call on the same schedule as the already-listed-as-presumptive-inadequate states.  If a newly listed state is not able to submit to USEPA a SIP revision that applies the PSD program to GHG sources by the SIP call deadline, then USEPA proposes to promulgate a FIP for that state without further notice and comment.  Thus, any state listed on the Presumptive Sip Call List (and any state that feels it might be added to such list after the comment period) should consider the comment period for the SIP call notice to be their opportunity to comment on the FIP as well.

Unlisted Jurisdictions: Inter alia, Allegheny County, Pennsylvania and Several California Counties

Again, the 13 states with "presumptive inadequate" SIPs are Alaska, Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon and Texas.  All other states for the most part are on the "presumptive adequate" list - which means they should not expect a SIP call unless USEPA decides to the contrary at the close of the comment period on the SIP call notice. 

There are several unlisted jurisdictions.  An example of this is Pennsylvania.  Pennsylvania is on the presumptive adequate list (the list of states that appear to apply PSD to GHG sources).  However, USEPA specifically excepted solely Allegheny County from the Presumptive Adequate List when listing Pennsylvania.  In addition, Allegheny County, Pennsylvania, does not appear on the Presumptive SIP Call list.  According to USEPA, the Agency has determined that Allegheny County (among others) does not have an approved PSD SIP.  USEPA has determined that in Allegheny County, the applicable regulatory authority is USEPA's regulations, found at 40 CFR 52.21, and presumably has determined that no changes need to be made to apply PSD to GHG sources.  It is worth noting that the docket record reflects that USEPA made this determination without input from Allegheny County, according to USEPA sources.  This could be because Allegheny County did not respond to a 60-day letter request from USEPA regarding adequacy under the Tailoring Rule.  Allegheny County may not have made a determination internally whether its air regulations require revision to apply PSD to GHG sources.  There is only USEPA unchallenged assertion at this point.  Thus it is still not clear whether Allegheny County air regulations require revision - that is, whether conflicting provisions create ambiguity within Allegheny County air regulation as to whether it applies to GHGs.  If USEPA's conclusion remains unchallenged, sources in Allegheny County can expect the proposed FIP (that is, the provisions of 40 CFR 52.21 limited solely to GHGs) to apply to PSD permitting after January 2, 2011 in accordance with the Tailoring Rule and its phased-in approach.

Another example of unlisted jurisdictions is California.  Four California Air Quality Management Districts (AQMD) appear on the Presumptive Adequate list (Mendocino, Monterey Bay Unified, North Coast Unified, and Northern Sonoma County).  One California AQMD appears on the Presumptive Sip Call List (Sacramento Metropolitan). All other AQMDs in California are unlisted  -  presumably because USEPA has determined that these jurisdictions (among others) do not have an approved PSD SIP.  This means that sources commenting on the USEPA proposed action have localized interests - that is, comments on and objections to USEPA's proposed action may vary from site to site.  Companies with multiple facilities in California should coordinate responses carefully.

If you have any questions regarding these proposed rules, please do not hesitate to contact Larry Demase, Todd Maiden, Jennifer Smokelin or Dave Wagner.

On August 12, 2010 EPA issued the final “Tailoring Rule.” The rule sets forth USEPA’s determination as to which GHG sources will be covered under the CAA and at what point these sources will be covered. Without the Tailoring Rule, even small sources would need to get permits for their GHG emissions when the Agency’s emission limits trigger CAA permitting rules for industrial facilities. The CAA’s emission thresholds for “conventional pollutants” such as lead and sulfur dioxide are 100 or 250 tons a year, but USEPA has indicated that those limits are not feasible for GHGs, which are emitted in much larger quantities.

So far there are numerous challenges to the Tailoring Rule. Last week, the U.S. Court of Appeals for the District of Columbia Circuit consolidated 20 of the lawsuits against USEPA’s Tailoring Rule. The case’s court date has not yet been set. Unlike challengers to the Endangerment Finding who don’t want USEPA to act, most of the challengers to the Tailoring Rule (in particular the environmental groups) don’t think USEPA is going far enough to regulate GHGs under the rule.

These challenges to the Tailoring Rule likely have some merit. The crux of these challenges focus on the threshold and timing determinations in USEPA’s final Tailoring Rule. USEPA initially proposed to regulate industrial sources that emit more than 25,000 tons of carbon dioxide per year, but the final rule set a significantly higher emission threshold with plans to phase in smaller sources over time. Starting in January 2011, only sources that already have to apply for permits for other pollutants and emit more than 75,000 tons of GHGs per year would be affected. And starting in July 2011 new and modified plants that emit more than 100,000 tons of GHGs per year would be affected. This effectively leaves major industrial sources under the 75,000 threshold unregulated until at least 2016 and perhaps beyond. Challenges to the Tailoring Rule claims that this switch from 25,000 to 75,000 tons in the Final Rule is arbitrary and capricious with no scientific basis in the record to support it.

Interestingly, one of the most significant challenges to the Tailoring Rule has been brought by the Center for Biological Diversity (CBD). This challenge, filed on August 2, 2010, has been getting a lot of press lately, likely due to the CBD's impressive track record. This non-profit organization has picked legal battles it is likely to win, claiming that 93 percent of its lawsuits result in favorable outcomes.

Last year, USEPA finalized the first-ever GHG mandatory reporting requirement (MRR) in October of 2009. That rule required 31 industry sectors, covering 85 percent of total U.S. GHG emissions, to track and report their emissions.

In addition to those 31 industries, USEPA is now proposing to collect emissions data from the oil and natural gas sector, industries that emit fluorinated gases, and from facilities that inject and store CO2 underground for the purposes of geologic sequestration or enhanced oil and gas recovery. In a move broader than expected, covered facilities include onshore petroleum and natural gas producers, offshore petroleum and natural gas producers, onshore natural gas processing, natural gas transmission, underground natural storage, liquefied natural gas (LNG) storage, LNG import and export facilities, and natural gas distribution facilities. Methane is the primary GHG emitted from oil and natural gas systems and is more than 20 times as potent as CO2 at warming the atmosphere. USEPA’s proposed rule sets the reporting threshold for methane at 1250 tons per year.

USEPA expects to publish the final rule later in 2010 so that data collection for this source category can begin on January 1, 2011 with the first annual reports submitted to EPA on March 31, 2012. USEPA estimates that the proposal would cover 85 percent of the total GHG emissions from the U.S. petroleum and natural gas industry with approximately 3,000 facilities reporting. Due to the unique characteristics of these industry segments, the proposed definition of “facility” for onshore and offshore petroleum and natural gas production, and natural gas distribution differ from the definition of facility applied in the remainder of the MRR.

The proposals will be open for public comment for 60 days after publication in the Federal Register. The agency will also hold public hearings on these proposals on April 19, 2010 in Arlington, Va. and April 20, 2010 in Washington, D.C.