In spring 2010, EPA finalized the Greenhouse Gas (“GHG”) Tailoring Rule, which states that large industrial facilities and projects will require an air permit for their GHG emissions beginning in 2011.

On August 12, 2010, EPA issued two proposed rules to address concerns that some states will not be ready to issue permits on January 2, 2011.

In the first rule, EPA proposes to find that 13 states — Alaska, Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon, and Texas — have state implementation plans (SIP) that are “substantially inadequate” to meet CAA requirements. The plans are inadequate because they do not appear to apply prevention of significant deterioration (PSD) requirements to GHG-emitting sources. EPA is proposing an expedited schedule for these states to make changes to their implementation plans and submit corrective SIP revisions.

Because some states may not be able to develop and submit revisions to their plans before the Tailoring Rule becomes effective in 2011, in the second, companion rule, EPA proposes a federal implementation plan (FIP) that would give EPA authority to issue permits for large GHG emitters located in these states. This would be a temporary measure in place until the state can revise its own plan and resume responsibility for GHG permitting.

With certain deadlines approaching and additional guidance and regulations expected, SGR will continue to monitor the legal challenges to EPA’s GHG rules and provide updates.

The past 12 months has seen numerous changes and actions from EPA:

• On February 24, 2010, we noted that a number of lawsuits had been filed challenging EPA’s December 2009 determination that greenhouse gases (“GHG”s) endanger human health and welfare.  This year, as EPA issues additional regulations and guidance governing GHGs, more lawsuits have followed.
• In March of 2010, EPA reconsidered the “Johnson Memorandum” relating to when pollutants are subject to regulation, thereby triggering Clean Air Act permitting programs. In its reconsideration decision, EPA explained that Prevention of Signification Deterioration (“PSD”) permitting for pollutants such as GHGs is triggered when the control requirements of a nationwide GHG rule take effect — meaning stationary sources of GHGs will have to obtain permits when the EPA’s rule for regulating the tailpipe emission of cars and light trucks takes effect in January 2011. Following this issuance, industry groups sued EPA, challenging the EPA’s policy and its use of the Clean Air Act (CAA) as justification.
• In May of 2010, EPA finalized its rule regulating the GHG tailpipe emissions of cars and light trucks. While the car industry has not challenged this rule, perhaps due to a desire to have nationwide standards, some lawsuits remain.
• On June 3, 2010, EPA finalized its “tailoring” rule setting thresholds for GHG emissions that define when permitting is triggered for stationary sources.  The rule establishes a phase-in program that initially targets only the larger GHG sources.  To date, industry groups and lawmakers have challenged this rule and other challenges were filed before the August 2, 2010 deadline.  The legal challenges to EPA’s actions have been filed by various industry groups, 15 States, and 15 Members of Congress. The suits raise a number of claims, including: (i) that the GHGs rules will regulate a large portion of the U.S. economy, thereby costing billions of dollars; (ii) that the science underlying the GHG regulations is controversial; and (iii) that the agency has exceeded its authority. While many lawsuits have been filed, however, EPA also has supporters – more than 15 states have intervened in these legal challenges on the side of EPA.

For more information, please contact Steve O’Day (soday@sgrlaw.com) or Lisa Branch (lbranch@sgrlaw.com), or post comments here and we will respond as soon as possible!