Overview of PSDTitle V Greenhouse Gas Tailoring Rule and

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					   Overview of PSD/Title V
Greenhouse Gas Tailoring Rule
             and
   PSD Interpretative Memo
      Reconsideration

        Brendan McCahill
            Region 1
     Why the Tailoring Rule is needed
• By rule/policy, PSD and Title V permitting programs under the Clean Air
  Act apply to major sources and modifications of “regulated NSR
  pollutants.”
   – GHG are not currently “regulated” and thus are not covered by these
     programs
   – There are concerns about how we would administer these programs if GHG
     become “regulated”
   – The first “regulation” of GHG will likely be with Light Duty vehicle rule
     promulgation.
• Specifically the concerns about regulation of GHG stem from the fact
  that:
   – By statute, for Title V, the major source threshold is 100 tons/year.
   – By statute, for PSD, the threshold is 250 tons/year (100 tons/year for some
     categories).
       • For PSD modifications, any change at a major source that results in “any increase”
         of GHGs would trigger PSD unless we establish a “significance level” that
         excludes smaller modifications.
   – GHGs (especially CO2) are emitted in much greater mass than conventional
     pollutants, so very small sources exceed the 100/250 ton per year levels.

                                                                                       2
  Why we need the Tailoring Rule
• For title V, millions of smaller sources would be newly
  classified as major for GHG.
   – About 15,000 major sources now
• For PSD, tens of thousands of smaller new sources and
  modifications each year would be newly classified as major
  for GHG.
   – About 300 new major sources/modifications per year now
• The administrative burdens of permitting large numbers of
  newly-subject sources would cause severe disruption to the
  existing programs.
   – Many of these sources are in commercial/residential categories that
     have no experience with CAA permitting
• Tailoring these programs to address large numbers of small
  sources is necessary to provide a common sense approach
  to GHG regulation.
                                                                      3
        How would the Tailoring Rule
              Address This?
• Proposes to raise the “major source” thresholds and PSD
  “significance levels”
   – PSD and Title V: major source size raised to 25,000 tons/year CO2e
     (sum of 6 gases)
   – PSD significance level: raised to a number within the range of
     10,000-25,000 tons/year CO2e (sum of 6 gases)
   – Proposal takes comment on other levels.
   – Proposal also takes comment on use of CO2e metric/6 gases
       • Use of CO2e (sum of six gases) improves source flexibility, simplicity,
         and consistency with GHG control regulations/climate endpoint.
• Facilities above these levels would still be required to obtain
  permits.
   – Facilities that remain covered are responsible for nearly 70 percent of
     stationary source GHG emissions.
   – Facilities proposed for exclusion comprise only 7 percent.
• Small farms, restaurants, office buildings, etc. would not
  need to get permits.                                                             4
         Selection of Proposed Levels
•   Selection driven by what is necessary to meet congressional intent as closely as
    possible and what is administratively feasible.
     – Must choose lowest level that we judge possible to administer
•   25,000 tons per year CO2e (and 10,000-25,000 tons per year CO2e for
    modifications) is proposed as the lowest level at which the program could be
    administered for the next six years, because:
     – Going lower (we evaluated 1,000, 5,000, and 10,000 tpy) starts to rapidly increase
       commercial and residential source applicability.
     – Going higher (we evaluated 50,000 and 100,000) is likely harder to justify with
       administrative necessity because coverage is less than we have now.
•   At proposed levels, GHG regulation would add workload to permitting authorities,
    but proposal suggests it would not overwhelm them:
     – About 3,000 sources to Title V’s current universe of 15,000 sources.
     – Fewer than 100 sources and modifications per year to PSD’s current universe of 300
       permits per year.
     – Most of the added sources are large municipal solid waste landfills with major amounts
       of methane.
     – A large share (but not all) of existing major source population will also be major for
       GHG.
•   Promotes coverage of nearly 70% of GHG emissions (see next slide). Lower
    thresholds yield small increases in coverage but significant increases in burden.
                                                                                        5
Additional Information About 25,000 ton/year Level

                                    Existing Facilities Exceeding GHG Permitting Thresholds
                                                     (By Sector based on PTE)                                  25,000 level
                                                                                                               excludes all but
                                                                                                               the largest
                           20,000                                                                              commercial and
                           18,000                                                                              multi-family
                                                                                                               residential sources
                           16,000
# of Existing Facilities




                           14,000                                                    Electricity Generation
                                                                                     Industrial                25,000 is
                           12,000                                                                              consistent with
                                                                                     Oil/Gas/Coal Production
                           10,000                                                                              GHG reporting
                                                                                     Waste                     rule
                            8,000
                                                                                     Commercial
                            6,000
                                                                                     Residential
                            4,000
                            2,000
                               0
                                     5,000       10,000        25,000       50,000
                                         Permitting Threshold (tons CO2-eq/yr)
                                               Existing Facility and GHG Emissions Coverage by Permitting Threshold


                       1,200,000                                                                                                        90%


                                                                                                                                        85%
                       1,000,000   1,058,296




                                                                                                                                              % of National Stationary Source GHG Emissions
                                                                                                                                        80%

                        800,000      75%
# Facilities Covered




                                                    73%                                                                                 75%
                                                                    71%




                                                                                                                                                                  Covered
                                                                                          70%
                        600,000                                                                                                         70%
                                                                                                             68%

                                                                                                                        65%
                                                                                                                                        65%
                        400,000                                                                                                   64%
                                                278,340
                                                                                                                                        60%

                        200,000
                                                                                                                                        55%
                                                                52,888                26,898
                                                                                                         13,661     7,245      4,850
                              0                                                                                                         50%
                                     250         1000           5000                  10,000             25,000     50,000    100,000
                                                                           Threshold in tons/yr CO2-eq

                                                                         Facilities Covered     Emissions Covered



                        -At 25,000 tpy level, 68% of CO2e (87% of CO2) emissions are still
                        covered by the permit programs.
                        -For comparison, 72% of NOx is covered at the 250 tpy level)                                                                                                          7
Additional Elements of Proposal
• EPA identifies measures it will consider for streamlining
  permitting over the next several years
   – For example, general permits.
• After 5 years, EPA will evaluate whether to change
  threshold, and if so, will do a rulemaking.
• Streamlined approach to get rule in place in States.
• Does not address how to set BACT for sources left in
  program, but commits to separate process to assist with
  this.
• Also separately notes that, while it makes sense to
  remove smaller sources from permitting, there may be
  other cost effective ways to address their emissions.

                                                              8
              Implementation Issues
• Getting the Phase-in rule in place in States:
    – Will require somewhat novel approach of “narrowing” our existing approvals
      of permit programs to clarify that our approval does not include sources below
      25,000 tons/year CO2e or modifications below 10,000 tons/year CO2e.
    – States can provide SIP revision for EPA approval should they seek to
      establish lower thresholds.
• For smaller sources that are deferred due to Phase-in rule:
    – Proposal signals intent to identify cost-effective and implementable
      opportunities for reductions from these sources through means other than
      PSD during the deferral period (e.g., energy efficiency measures, renewable
      grants, etc.)
• For larger sources that do not get deferred (i.e., that remain subject to
  permit programs because they emit more than 25,000 tpy):
    – Proposal indicates intent to separately assist with challenges of determining
      BACT for new GHG pollutants by developing control-related information to aid
      in making such determinations.
    – Proposal acknowledges that Title V programs will have more workload and
      will need to collect adequate fee revenue, but this rule is not the forum for
      proposing changes to fee provisions and does not make findings of
      inadequate fee provisions in State programs.
                             Timing
• The final Tailoring rule must be signed no later than:
     • 60 days before the vehicle rule is signed (i.e., end of January
       2010), or
     • At the same time as the vehicle rule is signed (i.e., end of March
       2010)
  – The answer depends upon the result of a reconsideration
    of our interpretation of the timing of the trigger for
    regulation under the PSD rules
     • This is a part of the Johnson Memo reconsideration (next slide)
• Our approach to making the rule effective in states
  will allow us to apply higher thresholds immediately
  in all jurisdictions.
                                                                       10
              PSD Interpretative Memo
                Reconsideration
• Addresses what kind of action causes a pollutant to become “subject to
  regulation”
    – EPA preferred interpretation was stated in 2008 memo: regulation is
      triggered by nationwide CAA regulation requiring actual control of emissions.
    – Sierra Club et. al. petitioned for reconsideration and challenged memo in
      Court. EPA granted reconsideration (but did not stay memo) and Court
      challenge is held in abeyance pending reconsideration.
• Several possible interpretations have been suggested:
    –   Interpretation currently in effect (from memo)
    –   Regulation in an EPA approved State (i.e.,SIP) rule
    –   Monitoring or reporting under CAA regulation
    –   Final endangerment finding
    –   Grant of a waiver of Clean Air Act preemption of vehicle standards
• Proposal takes comment on all these interpretations, but expresses
  preference for current memo interpretation.
• Also takes comment on timing of “subject to regulation” (previous slide)

                                                                               11

				
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