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EPA Regulation of Greenhouse Gases: The View from Washington

Troutman Sanders LLP/Trinity ConsultantsJuly 20, 2010

PRESENTED BY

Peter GlaserTroutman Sanders LLP401 9th Street, NWSuite 1000Washington, DC 20004202.274.2950

www.troutmansanders.com

Topics

• Endangerment Finding• Light-Duty Vehicle (LDV) Rule• Johnson Memo Reconsideration• Tailoring Rule • EPA GHG BACT Guidance• NSPS• Litigation

Endangerment Finding74 Fed. Reg. 66496 (Dec. 15, 2009)

• Endangerment Finding: elevated concentrations of six GHGs constitute “air” pollution endangering public health and welfare: CO2, CH4, N20, HFCs, PFCs and SF6

• “Cause or Contribute” Finding: the four of these GHGs that are emitted by new light-duty motor vehicles cause or contribute to this air pollution (CO2, CH4, N20, HFCs)

• EPA: These findings trigger a requirement that we regulate GHG emissions from new light-duty motor vehicles

LDV GHG Rule75 Fed. Reg. 25324 (May 7, 2010)

• Joint DOT MPG - EPA gCO2/mi. standard

• Key Point – EPA: EPA regulation of GHG emissions from LDVs makes the six GHGs regulated air pollutants under the PSD and Title V permit programs

Johnson Memo Reconsideration(75 Fed. Reg. 17004 (Apr. 2, 2010)

• Affirms Administrator Johnson’s 12/08 Memo that GHGs are not regulated air pollutants under PSD and Title V until EPA issues regulations actually controlling GHG emissions. Rejects environmental group position that GHGs were first regulated in 1990 CAA Amendments.

• EPA’s auto rules are such regulations triggering regulation of GHGs under PSD and Title V

• GHGs will be deemed to be regulated under PSD and Title V beginning 1/2/11 when auto rule “takes effect”

• Will apply to any PSD permit then in process

• Prior to 1/2/11: (a) states encouraged to use BACT for non-GHGs to reduce GHGs and (b) any state authority to require GHG BACT before 1/2/11 preserved

Tailoring Rule75 Fed. Reg. 31514 (Jun. 3, 2010)

• Addresses problem that statutory PSD thresholds are 100/250 tpy and Title V threshold is 100 tpy. Literally millions of sources have PTEs above 100 tpy for GHGs

• Provides for 4-step phase-in (tailoring) of requirements

- Step 1 - 1/2/11: Sources subject to PSD “anyway” will be required to do GHG BACT if increase emissions by 75,000 tons per year. Title V only for “anyway” sources.

- Step 2 - 7/1/11: New sources above 100,000 tpy and existing sources that increase emissions by 75,000 tpy subject to PSD. Title V threshold = 100,000 tpy.

Tailoring Rule

- Step 3: EPA will do rulemaking commencing 2011 and concluding 7/1/12 to determine lower thresholds, but commits that no source below 50,000 tpy will be regulated for six years. Also look at streamlining and possible permanent exemption of “certain smaller sources.”

- Step 4 - future study to determine whether sources with lower thresholds will be regulated and how, complete a rule by 4/30/16.

Problem with State Regulation

• Many States run their own PSD and Title V programs under state law

• EPA recognizes tailoring rule may not allow states, under state law, to avoid regulating sources down to statutory 100/250 tpy thresholds

• Final tailoring rule: states may “interpret” their laws to regulate only sources exceeding tailoring rule thresholds

• But asks states to confirm by 8/2 that they can do so

• Further regulatory proposal in process to address this issue

EPA GHG BACT Guidance

• CAAAC GHG Task Force

• Phase one report 2/10 on policy issues• Phase two report soon on using energy

efficiency as GHG BACT

• EPA sector-by-sector technical guidance rolling out beginning this Summer

• ORD GHG Mitigation Strategies Database• RACT/BACT/LAER Clearinghouse

Enhancements• GHG Control Measures White Papers

• Policy guidance by end of year

New Source Performance Standards

• Expect NSPS for CO2 from various source categories already listed and possibly for currently unlisted

• EGU coal boilers: proposed and finalized in coordination with EGU MACT? Proposed 3/11, final 11/11?

• Expect eventual adoption of NSPS for new and modified sources and then existing-unmodified sources

Litigation

• Appeals filed by numerous industry groups of endangerment finding, Johnson Memo Reconsideration and LDV Rule. Deadline for filing appeal of tailoring rule is 8/2

• Only one environmental group has filed a challenge of any of the regs – of Johnson Memo Reconsideration

• 17 states on each side

• Stay of regulation?

• Don’t expect decision until latter part of 2012 at best