By Kyle Danish and Tomás Carbonell

On September 2, 2010, the Environmental Protection Agency (EPA) took a critical step towards regulating greenhouse gas (GHG) emissions from power plants, industrial facilities, and other large sources under the Clean Air Act (CAA) by releasing two proposed rules relating to the implementation of Prevention of Significant Deterioration (PSD) permitting for GHG sources.  First, EPA proposed to find that 13 states (or permitting jurisdictions within states) lack adequate legal authority to begin issuing PSD permits for GHG sources once GHGs become regulated pollutants under the CAA on January 2, 2011.  The proposed "SIP Call" would direct those jurisdictions to submit revised state implementation plans (SIPs) to EPA by a to-be-determined deadline, or allow EPA to issue a Federal Implementation Plan (FIP) that would replace the defective SIPs in the affected jurisdictions.  Second, EPA proposed the actual FIP under which the agency would take over responsibility for issuing PSD permits for GHG sources ini states that lack authority to do so.  The rulemakings do not address state responsibility for issuing Title V permits, which will also become applicable to GHGs beginning on January 2, 2011.

This pair of proposed rulemakings is essential to clarifying the scope of state and federal responsibilities for issuing PSD permits for GHG sources, and gives a preliminary indication as to which jurisdictions may have a federally administered process for issuing PSD permits beginning in 2011. The rulemakings also raise the possibility that the 13 jurisdictions identified by EPA may temporarily lose authority to issue PSD permits for GHG sources pending the submission of revised implementation plans—permits that are required under the CAA before large facilities can be newly constructed or undergo significant modification.

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Reprinted with permission from Thomson Reuters.