According to an article by BNA published this morning, EPA may soon act to apply the prevention of significant deterioration (PSD) provisions of the Clean Air Act to facilities that emit more than 25,000 tons of carbon dioxide annually. Presumably, EPA's action is either an effort to exert leverage on Congress to pass pending climate change legislation or to ensure that GHG are regulated in the event that legislation doesn't pass -- or both.
Under the Clean Air Act, PSD applies to major new sources, which are defined by their emissions level -- for pollutants in identified industrial sources categories, the threshold is 100 tons per year, while for others it is 250 tons per year. Assuming that EPA moves forward with its its proposed endangerment finding, the default assumption (and the doomsday scenario presented by the Chamber of Commerce) would be that all GHG sources greater than 250 tons or 100 tons, depending on the source, would be subject to PSD regulations.
As an example, per the General Reporting Protocol's conversion factors, burning only 265.3 tons of coal or 1,173 barrels of fuel oil would produce 250 tons of CO2. However, the 25,000 ton threshold is the same used by the EPA in the endangerment finding and its proposed mandatory reporting regulations, so seems likely to be applied here as well.
As we previously noted, the EPA's official current position on this point is still the memorandum issued December 18th by former EPA Administrator Stephen Johnson, which said that since CO2 is not a regulated pollutant under the Clean Air Act, PSD does not apply. However, current EPA Administrator Lisa Jackson issued a letter on February 17 stating that the agency will reconsider this position.
As noted in the BNA article, there is reason to question EPA's authority to exempt small GHG sources from PSD requirements once GHG are found to be pollutants which endanger public health and the environment. Moreover, EPA's record in defending creative interpretations of the Clean Air Act -- even where they are generally supported, such as in the CAIR regulations -- has not been sterling.
The entire debate is likely to get messier before it is resolved.