It has been over a year since US EPA issued its first GHG regulations for light duty vehicles in 2010 and took the position that these regulations triggered GHG permitting requirements for stationary sources under the Clean Air Act Prevention of Significant Deterioration (PSD) program. Despite legal challenges to these rules, as of January 2, 2011, large sources that wish to install new or modified equipment are required to evaluate GHG emissions during the permitting process. Those exceeding GHG emission thresholds must incorporate Best Achievable Control Technology (BACT) requirements for GHGs into their permits. Eight months of GHG permitting has provided insight into EPA’s concerns over BACT determinations in such state-issued permits. Evaluation of the issues raised by US EPA in these permitting actions can be used by future permittees to address controversial issues up front and avoid potential challenges and delays to their projects.

US EPA’s major concerns have focused on:

1)     lack of concrete, enforceable requirements;

2)     lack of documentation; and

3)     lack of continuous compliance measures.

While US EPA suggested in its GHG BACT Guidance1 that add-on control devices and emission limits may not be appropriate in some circumstances, US EPA has made clear in its comments on state-issued permits that a numeric standard in the form of an operating standard or emission limitation is still expected. Permit requirements of “good combustion practices” or “high efficiency unit” alone are generally insufficient unless accompanied by a specific design or efficiency standard. If permits lack a numerical emission limit, the permitting agency must explain why such a limit was not feasible.2

The second sticking point with the agency is documentation. US EPA’s GHG BACT Guidance acknowledges that lower-emitting processes and energy efficiency measures may be more appropriate than control technology and emission limits, but requires the latter be evaluated for feasibility. US EPA expects documentation as to why specific control technologies are infeasible for each project, including carbon capture and sequestration for some industries. Applicants have an opportunity to significantly influence state feasibility evaluations by providing thorough documentation to the permitting agency at the application stage.3

To address its final point of concern, US EPA has uniformly required continuous emission monitoring systems (CEMs) for CO2 to demonstrate continuous compliance with GHG requirements. This expectation applies whether the source is subject to a combustion efficiency standard or a numeric GHG emission limit. However, a CO2 CEM alone is not sufficient to demonstrate compliance with GHG emission limits. Permits also must include the emission factors (or references to emission factors) that will be used to calculate emissions of the other five GHG pollutants.4

Despite ongoing legal challenges to US EPA’s authority to regulate GHGs, GHG permitting marches on and remains a risk for sources seeking to install new or modified equipment. Keeping apprised of how the states and US EPA are regulating GHGs in PSD permits is imperative to assessing costs and risks for any major project with PSD implications.

1 US Environmental Protection Agency, Office of Air and Radiation, PSD and Title v Permitting Guidance for Greenhouse Gases (March 2011) (GHG BACT Guidance).

2 See Letter from Deborah Lebow Aal, EPA, Region 8, to Cheryl Heying, UDEQ, re: Pacifcorp Lake Side Power Plant (Mar. 4, 2011); Letter from U.S. EPA, Region 6, to Tegan Treadaway, Administrator, LDEQ, re: Nucor Steel (Jan. 7, 2011) (hereinafter “Nucor Steel”).

3 Region V has encouraged one state to simply adopt the applicant’s CCS feasibility analysis to fulfill the documentation requirements. See Letter from Genevieve Damico, EPA Region 5, to Andrew Stewart, WDNR, re: WE Energies – Biomass Fueled Cogeneration Facility (Mar. 4, 2011).

4 See Letter from Pamela Blakly, EPA Region 5, to Mary Ann Dolehanty, MDEQ, re: Wolverine Power (May 19, 2011); Letter from Becky Weber, EPA Region 7, to John Mitchell, Kansas Dept. of Health & Envt., re: Abengoa Bioenergy Biomass of Kansas LLC (Apr. 1, 2011); Nucor Steel, supra at 2.