On October 3, 2016 EPA published a proposed rule designed to respond to the United States Supreme Court and United States Court of Appeals for the District of Columbia Circuit decisions regarding its tailoring rule for greenhouse gases. The Court decisions invalidated that portion of the tailoring rule that applied PSD and Title V permitting requirements to sources only because greenhouse gas emissions from the source exceeded permitting thresholds. The Supreme Court decision upheld PSD and Title V permitting requirements applied to sources that exceeded emission levels for other pollutants, as well as for greenhouse gas emissions (the so-called “anyway sources”). The Supreme Court had also noted EPA’s authority to establish a de minimus threshold below which Best Available Control Technology (“BACT”) is not required in a PSD permit but found that the 75,000 CO2e tpy threshold in the tailoring rule had not been properly justified and was not an exercise of its authority to establish a de minimus exception.

In August 2015, EPA issued a final rule which deleted sections and paragraphs from the rule that were readily severable from other provisions of the program. These removed provisions required a stationary source to obtain a PSD permit solely on the basis of greenhouse gas emissions. EPA was able to promulgate these changes as a final rule without public notice and comment because of their severability and designation as ministerial actions, which are exempt from notice and comment rulemaking procedures. The October 3, 2016 proposed rule is designed to complete the rulemaking changes to comply with the court decisions.

In drafting the tailoring rule EPA had placed the definition of greenhouse gases within the definition of the term “subject to regulation.” In this proposed action, EPA would remove those provisions from the definition of “subject to regulation” and would place a stand-alone definition of greenhouse gases within the regulations. EPA is further proposing to modify the definitions of “major stationary source” and “major modification” to include an exemption for greenhouse gases to ensure that a source is not required to obtain a permit solely because it emits or has the potential to emit greenhouse gases above the major source thresholds or significance levels.

The proposed rule also provides a justification for the de minimus level of 75,000 CO2e tpy below which BACT would not be required in those instances where a PSD permit is required. EPA reviewed the regulatory provisions for a de minimus exception as well as historical approaches taken for establishing de minimum levels in the PSD program, and found that a new and different approach was necessary for determining the de minimus level of greenhouse gases. First, EPA used its experiences with greenhouse gas BACT reviews at the 75,000 CO2e tpy level, finding that the types of sources addressed in those reviews represent the most important industry sectors in terms of emissions contributions. Second, a review of “anyway source” PSD permits that did not go through BACT review under 75,000 CO2e tpy revealed only a few cases where the proposed level may have resulted in additional greenhouse gas BACT reviews. The review revealed only a handful of PSD modification permits on a yearly basis nationwide that could be expected to increase greenhouse gas emissions in the range of 30,000 – 75,000 CO2e tpy. EPA requested comment on whether a value between 30,000 – 75,000 CO2e tpy would better represent a de minimus threshold for applying the BACT requirement to greenhouse gases but recognized that the 75,000 CO2e tpy was justifiable. EPA also requested specific comments related to the administrative and enforcement burdens associated with implementing greenhouse gas BACT review at the proposed SER level of 75,000 CO2e tpy or at a suggested alternative significant emission rate level.

The comment period for this proposed rule ended on December 16, 2016 and therefore a final rule is not likely prior to the change in administration.