On May 13, 2010, the U.S. Environmental Protection Agency (EPA) announced the final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (the "Tailoring Rule"), which limits GHG emissions from stationary sources under the Clean Air Act (CAA). The Tailoring Rule affects new sources and modifications to existing sources, when either results in GHG emissions exceeding the Tailoring Rule's thresholds. The goal is the reduction of GHG emissions from the largest sources. The first phase of the Tailoring Rule, which takes effect on January 2, 2011, does not impact either small businesses or farms. The GHG emissions limits on new cars under the Light-Duty Vehicle Greenhouse Gas Emissions Standards and Corporate Average Fuel Economy Standards (the "Clean Cars Rule") are also effective as of January 2, 2011.

The final Tailoring Rule increases the thresholds that were set forth in the EPA's September 2009 tailoring proposal. This original proposal sought to require permits from facilities that released more than 25,000 tons of GHGs annually. The Tailoring Rule as promulgated will be phased in in three parts. The first phase will run from January 2, 2011 to June 30, 2011, and impact only sources already subject to Prevention of Significant Deterioration (PSD) and/or Title V permitting requirements for other non-GHG pollutants. For newly constructed sources, GHG emissions of 75,000 tons per year (tpy) total will trigger the Best Available Control Technology (BACT) requirement for GHG emissions, and for modifications, a 75,000 tpy increase to existing GHG emissions will trigger the requirement. In the second phase, from July 1, 2011 to June 30, 2013, new sources emitting a total of 100,000 tpy or more of GHGs and modifications to existing sources that cause a 75,000 tpy or more increase of GHG emissions will need PSD permits as a consequence solely of their GHG emissions. Also, any facility emitting 100,000 tpy or more of GHGs will require a Title V operating permit. According to EPA, with this threshold, about 550 facilities will have to obtain a Title V permit for the first time; 15,000 affected facilities already have Title V operating permits.

During the third phase of the Tailoring Rule, EPA must pursue another rulemaking to address additional GHG emissions permitting requirements. That rulemaking is to conclude by July 1, 2012, and take effect July 1, 2013. EPA will consider whether to require permits for sources emitting more than 50,000 tpy of GHGs and exclude permanently certain small sources from GHG permitting requirements. It may also consider whether and how to streamline permitting burdens. While many more sources could be affected by this phase of the rule, according to EPA, permits for sources emitting less than 50,000 tpy of GHGs will not be required until at least April 30, 2016.

The six regulated GHGs will be measured in terms of their carbon dioxide equivalent (CO2e); the rationale is that different gases have different global warming potential. The regulated gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

There is potential for a legal challenge to the final Tailoring Rule. Petitions for judicial review of EPA's "endangerment finding," the legal basis for regulation of GHGs under the Clean Air Act, are currently pending before the United States Court of Appeals for the District of Columbia Circuit. If these petitions are successful, there will no longer be a basis for EPA's asserted authority to regulate GHG mobile source emissions under the Clean Cars Rule and GHG stationary source emissions under the Tailoring Rule.

The Tailoring Rule for stationary source GHG emissions is available here.

The Clean Cars Rule is available here.