EPA to Issue Permits in Texas for New, Modified Sources of Greenhouse Gases

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The Environmental Protection Agency announced Dec. 23 that it will issue permits in Texas for new and modified sources of greenhouse gas emissions beginning Jan. 2.

EPA is taking the action because Texas has refused to implement greenhouse gas emissions permitting. Texas is the lone state to do so, as all other states have said they are taking steps to begin issuing permits.

EPA also announced several other rules to facilitate permitting for greenhouse gas emissions.

Under EPA rules, greenhouse gas emissions permitting and control requirements will take effect Jan. 2 under prevention of significant deterioration (PSD) provisions of the Clean Air Act. PSD requires new and modified sources to get permits for emissions of regulated air pollutants and to control those emissions using best available control technology (BACT), determined individually for each source.

EPA said Texas will continue to issue PSD permits for other air pollutants.

Since August, Texas has said it will not allow PSD permitting for greenhouse gas emissions. This has raised concerns about industries unable to improve their facilities because they would not be able to get valid PSD permits. EPA, though, has said it will take action to ensure that PSD permitting for greenhouse gas emissions will proceed in Texas (232 DEN A-4, 12/6/10).

Error-Correction Provisions of Air Act Used.

Texas, joined by other states and a host of industry organizations, has sued EPA to stop PSD permitting for greenhouse gas emissions and other actions to regulate greenhouse gas emissions. A federal appeals court Dec. 10 denied a motion by Texas and others to stay the EPA rules (237 DEN A-13, 12/13/10).

In its action Dec. 23, EPA said it is issuing an interim final rule that determines the agency made an error when it originally approved the Texas clean air state implementation plan because Texas did not address how the program would apply to pollutants newly subject to regulation and did not provide assurances that the program has adequate legal authority to apply to such pollutants.

EPA said it is using error-correction provisions of the Clean Air Act to convert its previous approval to a partial approval and partial disapproval of the state plan.

This will allow EPA to issue a federal implementation plan that gives it the authority to issue PSD permits to large sources in Texas, the agency said.

The interim final rule will take effect when it is published in the Federal Register. EPA also is issuing a proposed rule that will allow it to take public comment on its takeover of PSD permitting for greenhouse gas emissions in Texas.

EPA Calls Action 'Appropriate.'

“This action is appropriate because the state of Texas has made it clear that it will not apply PSD permitting requirements to GHGs,” EPA said in a fact sheet.

Gina McCarthy, EPA assistant administrator for air and radiation, told reporters during a telephone news conference Dec. 23 that all EPA is trying to do is ensure businesses in Texas can get PSD permits and that they have somewhere to go to file permit applications.

McCarthy also said EPA is “anxious to work with them,” referring to Texas authorities, to benefit industries and relieve EPA of having to take action.

The Texas Commission on Environmental Quality issued a statement saying the EPA action “is neither a common sense approach nor a reasonable approach. The EPA cannot measure reductions in CO2 or any other GHG with this new regulation, and the EPA cannot correlate this new regulation to any environmental or health benefit.”

TCEQ said no action taken by Texas or any other state will have a measurable impact on carbon dioxide levels in that state or worldwide.

Jeffrey Holmstead, former EPA assistant administrator for air and radiation and attorney with Bracewell & Giuliani representing energy companies, told BNA that while he would not say that a court definitely will find EPA's Texas action illegal, “it's a stretch.”

“It certainly goes well beyond what the act normally allows,” Holmstead said. The legal theory EPA uses and the amount of time it is giving states to comply “creates serious legal vulnerabilities,” he said.

Other Permitting Rules Issued.

In addition, EPA is issuing a finding that seven states have failed to submit state implementation plans to allow PSD permitting for greenhouse gas emissions. These states, Arizona, Arkansas, Florida, Idaho, Kansas, Oregon, and Wyoming, failed to submit revisions to their plans by Dec. 22.

These states have agreed to a voluntary federal implementation plan for PSD permitting for greenhouse gas emissions. The EPA finding gives the agency the legal basis to issue such a plan in those states.

EPA also announced the federal implementation plan that will apply in those seven states.

Two additional rules announced by EPA will allow states to limit PSD permitting requirements for greenhouse gases to the largest sources, according to the agency.

Some state implementation plans include the statutory emissions threshold for PSD requirements of 100 tons per year for some source categories and 250 tons for all other sources. At this threshold level, PSD requirements for greenhouse gases could apply to thousands of sources each year.

The two rules will limit EPA approval of state implementation plans so that the plans apply PSD permitting requirements and Clean Air Act Title V requirements for operating permits to only the largest sources of greenhouse gas emissions.

Tailoring Rule Targets Large Sources.

The greenhouse gas tailoring rule published by EPA June 3 limited greenhouse gas emissions control and permitting requirements to the largest sources. From Jan. 2 until June 30, only sources already subject to PSD for other pollutants and that would increase greenhouse gas emissions by 75,000 tons per year of carbon dioxide-equivalent would be subject to PSD for greenhouse gas emissions (75 Fed. Reg. 31,514).

From July 1, PSD will apply to new sources with emissions greater than 100,000 tons per year, or modifications to existing sources that increase emissions by 75,000 tons per year.

The PSD permit “narrowing” rule applies the tailoring rule thresholds for PSD permitting to state implementation plans.

The Title V narrowing rule applies the tailoring rule thresholds for Title V permitting to the state plans.

By Steven D. Cook

More information on the EPA greenhouse gas permitting actions is available at http://www.epa.gov/nsr/actions.html#dec10.