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DC Circuit Court Reaffirms GHG Tailoring Rule (7/19/12)

On June 29, 2012, on the heels of the recent DC Circuit Court decision that reaffirmed the Greenhouse Gas (GHG) Tailoring Rule, EPA finalized additional regulations to continue phasing in GHG permitting requirements under the Prevention of Significant Deterioration (PSD) and Title V programs. The latest rule, “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule Step 3 and GHG Plant-wide Applicability Limits” (a.k.a. the “Step 3” Rule), leaves the current PSD and Title V applicability thresholds established under the Tailoring Rule intact, thus maintaining the status quo for GHG permitting applicability. The rule also provides guidelines for developing plant-wide applicability limits (PALs) for GHG emissions.

Under the Tailoring Rule (2010), EPA requires major sources of GHG emissions to obtain a PSD or Title V permit using a “phased” approach. PSD applicability in the first phase (“Step 1”) applies to unit modifications that result in a net GHG emissions increase of 75,000 tpy CO2e if the project also significantly increases emissions of at least one non-GHG pollutant. Under Step 1, which took effect January 2, 2011, Title V applicability applies only to those existing sources with a Title V permit. Under the second phase (“Step 2”), which took effect on July 1, 2011, new sources as well as existing sources not already subject to the Title V program that emit, or have the potential to emit at least 100,000 tpy CO2e (“major source”) will become subject to the PSD and Title V requirements. In addition, major sources that conduct a modification with a net GHG emissions increase of at least 75,000 tpy CO2e will also be subject to PSD requirements. In the third phase (“Step 3”) or the original rule, EPA committed to an evaluation of whether expansion of PSD and Title V applicability is warranted for smaller sources. The current action is a direct result of this commitment. In the “Step 3” rule, EPA concludes that further lowering of the PSD/Title V applicability thresholds is not warranted at this time because permitting agencies have not had sufficient time to implement the existing GHG requirements and increasing the number of affected facilities will only reduce the efficiency of permit implementation.

In this final rule, EPA is also updating the requirements for establishing PALs for GHG emissions. A ‘PAL’ is a facility-wide emission limit for a pollutant that enables the facility to avoid the New Source Review (NSR) permitting process as long as emissions are maintained below the PAL. The final rule allows PALs to be established on an individual mass basis (tons per year) or in terms of CO2e (tons per year) for a CO2e emissions limitation. The rule is allowing sources with GHG emissions above 100,000 tpy CO2e that are also a minor source of other regulated pollutants to apply for a GHG PAL and retain minor source status. A copy of the final rule is available in our FTP library.

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Last Revised: February 16, 2016