October 15, 2009Client Alert

Environmental Protection Agency Anticipates Regulating Green House Gas Emissions under the Clean Air Act by March 2010; Proposes New Green House Gas Emissions Threshold for “Major” Stationary Sources

In April 2009, Environmental Protection Agency ("EPA") published a proposed finding that greenhouse gas ("GHGs") emissions from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. If finalized, EPA’s proposed endangerment finding would require GHGs to be regulated pursuant to the Clean Air Act ("CAA").

Anticipating its endangerment finding to be finalized soon, EPA published a proposed rule in September that would regulate GHG emissions from new motor vehicles pursuant to the CAA. EPA anticipates the motor vehicle rule to be finalized by March 2010 and, according to EPA’s interpretation of the CAA, once that rule is finalized, it will trigger EPA regulation of GHGs under other provisions of the CAA, including New Source Review ("NSR") and Title V permitting programs for stationary sources of GHGs. The NSR and Title V operating permit programs currently apply to "major sources" - those that emit at least 100 or 250 tons per year ("TPY") of pollutants regulated under the CAA.

Last week, EPA published another proposed rule that would significantly increase the NSR and Title V applicability threshold, but only for GHG emissions. The so-called tailoring rule is designed for two phases of implementation. Among other things, phase one of the tailoring rule would only require new or modified stationary sources that emit at least 25,000 TPY of GHGs to comply with NSR and Title V requirements. The purpose of phase one is to substantially reduce the number of stationary sources that will be subject to NSR and Title V permitting once GHGs are regulated under the CAA. Within five years of finalizing the tailoring rule, EPA would be required to complete a study that, i) evaluates the actual administrative burden resulting from the proposed GHG permitting thresholds; ii) considers alternative thresholds; and iii) evaluates the development of streamlining techniques for the NSR and Title V programs. EPA would then be required to propose and promulgate phase two of this rulemaking, which would be informed by that study. EPA’s fact sheet on the proposed tailoring rule can be found here.

EPA will accept public comments on the proposed rule for 60 days after it is published in the Federal Register.

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