Last week, the heads of US EPA’s Office of Air and Radiation and Office of Enforcement and Compliance Assurance jointly issued a memorandum to regional administrators clarifying the Agency’s position on permitting greenhouse gas (GHG) emissions under the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V programs. The memowas issued in response to the US Supreme Court’s UARG v. EPA decision, which, as discussed in more detail in our previous blog post, ruled that GHG emissions alone could not trigger PSD and Title V permitting requirements, but that GHGs could be regulated under PSD if they are emitted from a source that is already subject to PSD regulation because of other emissions (so-called “anyway” sources).

Consistent with the Supreme Court’s opinion, the memorandum announces that US EPA will no longer require PSD or Title V permits for sources identified as “major” solely because of GHG emissions, effectively rescinding Phase II of EPA’s Tailoring Rule in advance of the rulemaking that will be needed to formally incorporate the Supreme Court’s decision into US EPA’s permitting regulations.  The memorandum further states that, going forward, US EPA will not enforce federal regulations or EPA-approved SIP provisions that require PSD or Title V permits for these sources.  Moreover, while biogenic CO­2 sources are subject to separate rulemaking, the memorandum makes clear that US EPA’s decision applies to these sources as well, and will be incorporated into US EPA’s biogenic CO­2 assessment framework.

For “anyway” sources, the memorandum confirms that US EPA will continue to apply the 75,000 tons per year CO2e significance threshold established in the Tailoring Rule and that US EPA will not require GHG BACT limits for sources that are under the 75,000 tpy limit.  The memorandum states that EPA may revisit the issue of a de minimis GHG limit in the future, after incorporating stakeholder input, but US EPA’s memorandum does not establish a timetable for deciding if or when it will revise the significance threshold or propose a separate de minimis CO2e level.

For permittees who have already applied for or obtained GHG-based PSD or Title V permits, the memorandum recognizes that there may be additional work involved in removing permit terms that can no longer be supported by federal law.  It floats the idea of converting existing permits and pending permit applications into minor source permits, but ultimately leaves the question of how to handle these issues to future guidance and future discussions, recommending that the regional offices work with state, local, and tribal permitting authorities to decide how best to address these issues.  At the same time, US EPA leaves the door open to increased state-level GHG regulation, noting that there may be situations where states will choose to retain GHG limits under state law even though there is no longer a federal equivalent. The memorandum also declines to comment on the effect of the UARG decision on permittees who have obtained Plantwide Applicability Limitations (PALs) for GHGs, indicating that future guidance will be issued on the subject.

UARG v. EPA should soon return to the D.C. Circuit, where the Circuit Court will be able to provide additional clarification on what remains of the Tailoring Rule.  In the meantime, US EPA’s memorandum provides a helpful early assessment from the Agency and an assurance to permittees that they will be able to rely on the Supreme Court’s UARG decision without waiting for a rulemaking or an order from the D.C. Circuit to formally incorporate the Supreme Court’s holdings into their permitting requirements.