On January 2, 2011, EPA will for the first time regulate greenhouse gas emissions from stationary sources. This comes as a result of a series of regulatory developments during the past year, culminating with EPA’s regulation of GHG emissions from light-duty vehicles, which becomes effective on January 2, triggering GHG regulatory requirements for stationary sources under the Clean Air Act’s Prevention of Significant Deterioration (PSD) program.

In anticipation of that effective date, EPA has undertaken several additional rulemakings. Most notably, EPA issued its Tailoring Rule, which limits GHG permitting requirements to larger facilities, sharply reducing the number and type of stationary sources that are likely be affected by the PSD permitting requirements. Following on that rule, EPA has now offered additional proposed GHG-related regulations designed to further prepare for the new PSD permitting program requirements taking effect early next year. The newest proposal attempts to ensure that states are prepared to issue GHG emissions permits under the program and creates a means by which EPA can step in and issue permits if necessary.

The rules propose:  

  1. a finding that the State Implementation Plans (SIPs) of thirteen states are “substantially inadequate” to apply the Clean Air Act PSD program to sources that emit GHGs;
  2. a “SIP Call,” requiring the thirteen states to revise their SIPs to correct the deficiency; and
  3. a Federal Implementation Plan (FIP), which will give EPA the authority to issue PSD permits if any of the thirteen states fail to amend their SIPs.  

EPA has indicated with respect to these thirteen states that “absent further action, GHG sources that will be required to obtain a PSD permit for construction or modification on and after January 2, 2011, will be unable to obtain that permit and therefore may be unable to proceed with planned construction or modification.” EPA is accepting comments on the proposed rules through October 4, 2010.

In anticipation of the early 2011 start date, EPA has consulted with states, including a review of SIPs and other state laws, in order to determine if each state had the authority to apply the PSD program to sources of GHG emissions. Upon completion of the review, EPA determined that thirteen states, including Alaska; parts of Arizona; Arkansas; Sacramento, California; Connecticut; Florida; Idaho; Kansas; parts of Kentucky; Nebraska; Clark County, Nevada; Oregon; and Texas lacked the authority to apply the PSD program to GHG sources. EPA determined that some SIPs explicitly preclude application of the PSD program to sources that emit GHGs. In other cases, EPA determined that while the SIP may have been appropriate, state constitutions or other state laws would limit PSD applicability.

Relying on its authority under CAA § 110(k)(5), EPA concluded that the SIPs for these thirteen states are “substantially inadequate” and issued a SIP Call, requiring the affected states to submit a “corrective SIP revision that applies the PSD program to GHG sources.” EPA projects that the rule will become final on December 1, 2010 with corrective SIP revisions due from affected states within 12 months of that date and, if a state does not submit corrective SIP revisions by that deadline, EPA will immediately issue a finding to that effect and promulgate a FIP. EPA has indicated that the FIP will basically mirror the regulations found at 40 CFR 52.21, with minor adjustments so that it applies to emissions of GHGs.