July 1, 2012 marks the due date for sources subject to EPA’s Greenhouse Gas Tailoring Rule to file operating permit applications consistent with the new rules. The Tailoring Rule established a 3-step phase-in for the regulation of greenhouse gas (“GHG”) emitters. The first step regulates greenhouse gas emissions from those sources already subject to the Clean Air Act’s Prevention of Significant Deterioration (“PSD”) and Title V operating permit programs. During the second phase of the rule, which became effective July 1, 2011, those sources that were not otherwise considered major sources but which have the potential to emit GHGs above the rule’s 100,000 ton CO2 equivalent threshold must submit a Title V permit application within twelve months after the source becomes subject to the operating permit program. So, if a source became subject to the Title V program on July 1, 2011, the effective date of Phase 2, then a permit application must be submitted no later than July 1, 2012.
EPA estimated that 200 new Title V permit applications would be submitted as a result of Step 2 of the rule. Considering only 18 permits were issued in 2011 that included GHG conditions (the bulk of those issued by EPA and Michigan), how GHG permitting will be handled remains to be seen in most states. An increased administrative burden on state agencies from these additional applications is also anticipated. Even prior to the Tailoring Rule’s existence, many states were already backlogged, with some taking more than twelve months to process Title V permit applications.
EPA recognized the administrative burdens and uncertainties the Tailoring Rule poses when it proposed Step 3 of the rule in late February this year. Instead of reducing the emissions threshold to capture additional GHG emitters under Step 3, EPA proposed to simply maintain the current Step 2 thresholds. The agency’s primary justification for the proposal is that permitting authorities have received few applications for GHG PSD and Title V permits and have not yet developed the expertise needed to handle an increase in the number of applications expected from lower thresholds.
The July 1, 2012 Title V application filing deadline is quickly approaching for those sources that became major GHG emitters as of July 1, 2011. Meanwhile, the D.C. Circuit is expected to issue its decision on the validity of the Tailoring Rule in the near future. The Rule has been heavily contested, with more than 100 parties backing lawsuits in the D.C. Circuit that challenge the validity of the rule. The court heard oral argument in late February 2012 and a decision is expected this summer. (For a previous discussion of the tailoring rule and state implementation efforts, see http://sustainability-counsel.com/2010/09/27/ghg-tailoring-rule-implementation-strategies-a-state-by-state-analysis/).