As we previously reported, in May 2015 US EPA issued a direct final rule allowing for the rescission of certain preconstruction (“PSD”) permits issued by US EPA and delegating permit review authority to states under Step 2 of the Greenhouse Gas (“GHG”) Tailoring Rule. Step 2 of the Tailoring Rule set in motion PSD permitting for “GHG-only” sources, meaning sources permitted solely due to their greenhouse gas emissions. However, on August 19, 2015, US EPA took an additional direct final action to remove the Step 2-related sections of the PSD and Title V GHG Tailoring Rule regulations that the D.C. Circuit specifically identified as vacated after the US Supreme Court’s decision in Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). The Supreme Court’s decision affirmed in part and reversed in part the D.C. Circuit’s earlier decision in Coalition for Responsible Regulation v. EPA, 684 F.3d 102 (D.C. Cir. 2012). Specifically, in the Amended Judgment, the D.C. Circuit vacated PSD permitting requirements in 40 CFR 51.166(b)(48)(v) and 40 CFR 52.21(b)(49)(v) and the provisions that required further action to consider phasing-in GHG permitting requirements into the PSD permit and Title V operating permit programs at lower GHG emission thresholds at 40 CFR 52.22, 70.12, and 71.13.

US EPA highlighted that it is the Agency’s interpretation that states are not precluded from “retaining permitting requirements for sources of GHG emissions that apply independently under state law even where those requirements are no longer required under federal law.” Potential GHG-only sources that are unsure whether state regulators are enforcing Step 2 locally should carefully review state laws prior to construction or modification activity that could trigger state GHG permitting requirements.

US EPA classified this second direct final rule as being ministerial in nature as it merely implements the decision of the D.C. Circuit’s Amended Judgment. Therefore, no comment period is available for this rule. However, US EPA did note that it plans to propose future revisions to definitions in the PSD regulations to reflect the D.C. Circuit’s Amended Judgment. Because the future revisions will not be purely ministerial, they will be open to notice and comment. We will continue to provide updates as US EPA takes additional action.