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April 1, 2010Client Alert

EPA Confirms Its Intent to Begin Clean Air Act Regulation of GHGs in January 2011

On March 29, 2010, Environmental Protection Agency (“EPA”) confirmed its intent to begin regulating greenhouse gas emissions (“GHGs”) in January 2011, pursuant to its Clean Air Act (“CAA”) authority. The announcement came in the form of EPA’s final interpretation of when a pollutant becomes “subject to regulation” in the CAA Prevention of Significant Deterioration (“PSD”) pre-construction and Title V operating permitting programs.

By way of background, shortly after the 2007 U.S. Supreme Court decision in Mass v. EPA, which required EPA to determine whether GHGs “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare,” EPA issued a CAA PSD permit for a waste-coal-fired electric generating unit. This PSD permit did not include any emission control requirements for carbon dioxide or other GHGs. Environmental petitioners challenged issuance of that PSD permit, claiming the Mass v. EPA decision required EPA to regulate GHGs in the CAA PSD permitting program. The Environmental Appeals Board remanded the PSD permit to EPA to consider whether, based on the Mass v. EPA decision, carbon dioxide and GHGs were now “subject to regulation” pursuant to the CAA. On December 18, 2008, former EPA Administrator Stephen L. Johnson issued the agency’s interpretation of that phrase; on December 31, 2008, a number of organizations petitioned EPA to reconsider Johnson’s interpretation. On February 17, 2009, EPA Administrator, Lisa Jackson granted the petition for reconsideration; and on March 29, 2010 Jackson issued the agency’s final reconsideration of the “subject to regulation” interpretation.

EPA’s final interpretation provides that CAA permitting requirements for specific pollutants are not triggered by signing a rule into law, publication in the Federal Register, or the “effective date” of a rule as identified in a Federal Register notice. Rather, CAA permitting requirements are triggered when a nationwide regulation requiring emissions controls for a pollutant takes effect. For example, EPA stated, “If finalized as proposed, the rule limiting GHG emissions for cars and light trucks would trigger these requirements in January 2011 -- the earliest 2012 vehicles meeting the standards can be sold in the United States.” Using this example, EPA is reiterating its expectation that the motor vehicle rule and the related stationary source “tailoring rule” will be finalized very soon and will take effect by January 2011. See this prior Michael Best Client Alert for discussion on the proposed motor vehicle and tailoring rules.

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