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EPA issues final 'tailoring' rule

U.S. EPA today issued its final "tailoring" rule for greenhouse gas emissions, a contentious policy aimed at shielding small polluters from rigid Clean Air Act permitting requirements.

EPA's rule "tailors" permitting programs to limit the number of facilities that would be required to obtain New Source Review and Title V operating permits based on their greenhouse gas emissions. EPA said the threshold would cover power plants, refineries and other large industrial plants while exempting smaller sources like farms, restaurants, schools and other facilities.

Beginning next January, facilities that must already obtain New Source Review permits for other pollutants will be required to include greenhouse gases in their permits if they increase their emissions of the gases by at least 75,000 tons of carbon dioxide equivalent per year.

On July 1, 2011, EPA will extend the requirements to new construction projects that emit at least 100,000 tons of greenhouse gases and existing facilities that increase their emissions by at least 75,000 tons per year, even if they do not exceed thresholds for other pollutants. Sources that emit at least 100,000 tons of greenhouse gases per year will also be required to account for greenhouse gas emissions in their Title V operating permits starting next July.

Between July 1, 2011, and June 30, 2013, EPA estimates about 550 sources will need to obtain operating permits for the first time due to their greenhouse gas emissions. Most of those sources will likely be solid waste landfills and industrial manufacturers, according to EPA. About 900 new facilities and modifications per year will trigger New Source Review permitting requirements based on greenhouse gas emissions.

New and upgraded facilities that are subject to the requirements will be required to install the "best available control technology" to control their greenhouse gas emissions. EPA is preparing to issue guidance for industries about how it will define that standard.

The Clean Air Act's current thresholds for regulating "conventional pollutants" like lead, sulfur dioxide and nitrogen dioxide are 100 or 250 tons a year. But while those thresholds are appropriate for those pollutants, EPA says, they are not feasible for greenhouse gases, which are emitted in much larger quantities.

Without the tailoring rule, EPA air chief Gina McCarthy said today, about 6 million facilities could need permits when EPA's greenhouse gas standards for automobiles kick in next January, making greenhouse gases officially "subject to regulation" under the Clean Air Act. "We did not want that fact lingering out there for long," she said.

EPA will complete another rulemaking by July 1, 2012, taking comment on phasing in additional sources and whether certain small sources can be permanently excluded from permitting requirements. Such a rulemaking would not require permitting for sources that emit less than 50,000 tons of greenhouse gases annually, EPA said.

No sources that emit less than 50,000 tons per year will be subject to permitting requirements until at least April 30, 2016, according to the rule.

"After extensive study, debate and hundreds of thousands of public comments, EPA has set common-sense thresholds for greenhouse gases that will spark clean technology innovation and protect small businesses and farms," EPA Administrator Lisa Jackson said in a statement.

"There is no denying our responsibility to protect the planet for our children and grandchildren. It's long past time we unleashed our American ingenuity and started building the efficient, prosperous clean energy economy of the future."

EPA said the rule will encompass facilities that are responsible for 70 percent of the greenhouse gases from stationary sources.

Thresholds raised from proposal

EPA's initial thresholds have been increased substantially from the limits laid out in the agency's proposal last September, which sought to require permits from facilities that release more than 25,000 tons of carbon dioxide equivalent annually (E&ENews PM, Sept. 30, 2009).

Under the proposal, EPA estimated that 14,000 large industrial sources would need to obtain greenhouse gas permits, and about 3,000 of those sources would be newly subject to Clean Air Act operating permit requirements.

Jackson signaled earlier this year that EPA was planning to "substantially" raise the thresholds from its proposed rule to exempt more facilities from permitting requirements, in part because state regulators had argued that the rule would impose significant administrative burdens and could create regulatory backlogs (E&ENews PM, March 3).

McCarthy said today agency officials realized the 25,000-ton limit was going to reach sources it did not intend to cover, including large apartment buildings and other commercial sources "that clearly were not appropriate at this point to even consider regulating."

Environmentalists today were quick to offer support for the tailoring rule.

"It's clear that EPA is trying to fine-tune it and make sure that the permit requirements are truly limited to the biggest sources," said Clean Air Watch President Frank O'Donnell. "I think the EPA is trying to act very responsibly, and they're trying to say to the Congress and the public, 'We're not the green monsters you think we are.'"

But despite EPA's decision to raise the thresholds from the proposal, industry representatives maintained their position that the Clean Air Act is an inappropriate vehicle for regulating greenhouse gas emissions and that the rule is based on shaky legal ground.

"The Clean Air Act is not designed to regulate greenhouse gas emissions, and this tailoring rule doesn't fix the problems with the Clean Air Act doing it," said Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute.

Feldman and others fear that EPA's rule could be overturned in court because it seeks to alter limits that were laid out plainly by Congress.

McCarthy said today that while she expects challenges to all of EPA's rulemakings, "We think that this phased approach is not only legally correct but it's the best way that we can achieve the intent of Congress when they passed the Clean Air Act."

Click here to read the final rule.

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