Clean Air Act (CAA)

Introduction

The 1970 CAA (“CAA”) [the 1970 CAA was technically an amendment of the 1963 CAA] and its amendments, including the CAA Amendments of 1990 (“CAAA”), are designed to “protect and enhance the nation's air resources so as to promote the public health and welfare and the productive capacity of the population.” the CAAA consists of eleven sections, known as Titles, which direct the Environmental Protection Agency (“EPA”) to establish national standards for ambient air quality and for EPA and the States to implement, maintain, and enforce these standards through a variety of mechanisms. State and local governments oversee, manage, and enforce many of the requirements of the CAAA. 

Greenhouse Gas (GHG) emissions are discussed last.  There are no new GHG provisions in the CAA; the CAA has not been revised since 1990. The new GHG regulations are rules the EPA has added to adapt the CAA to GHG control.

Overview

Despite a major reduction in emissions after the 1970 CAA, as of 1990 many areas of the U. S. were not in compliance with the National Ambient Air Quality Standards (“NAAQS”). These "nonattainment areas" are an important subject of the CAAA. The CAAA provide more stringent requirements than the original CAA. The CAAA is organized into eleven titles. Of these, Attainment and Maintenance of Ambient Air Quality Standards, Mobile Sources, Toxic Air Pollutants, Enforcement, and Permits are applicable to stationary sources. Stratospheric Ozone Depletion is applicable to all types of facilities, but has only a relatively small effect on stationary sources. Acid Rain Control and four other miscellaneous titles have little or no applicability to stationary sources.

NAAQS

The most widespread urban pollution problem is ozone. This problem and the lesser problems of “CO” pollution and particulate matter (dust) pollution in urban areas are caused by the diversity and number of urban air pollution sources. One component of urban smog, VOC, comes from, automobile emissions, petroleum stationary sources, chemical plants, dry cleaners, gasoline stations, printing shops, and other operations. Another key component, NOx comes from the combustion of fuel for transportation, utilities and industries. The CAAA addresses the urban ozone, CO, and particulate matter. Specifically, the CAAA clarifies how areas are designated "attainment." EPA is delegated the authority to define the boundaries of "nonattainment" areas. These are geographical areas whose air quality does not meet Federal air quality standards designed to protect public health. 

The CAA and CAAA (“Acts”) require EPA to set NAAQS for pollutants considered harmful to public health and the environment. The Acts establish two types of national air quality standards. Primary standards are limits to protect public health, including the health of "sensitive" populations such as asthmatics, children, and the elderly. Secondary standards set limits to protect public welfare, including protection against decreased visibility, damage to animals, crops, vegetation, and buildings. 

The EPA Office of Air Quality Planning and Standards (“OAQPS”) has set NAAQS for six principal pollutants, called "criteria" pollutants.

State Implementation Plans (“SIPs”)

Geographic areas that meet NAAQS for a given pollutant are classified as attainment areas; those that do not meet NAAQS are classified non-attainment areas. Under §110 of the CAAA, each State must develop a SIP to identify sources of air pollution and to determine what reductions are required to attain and maintain NAAQS.   The CAAA establishes provisions defining when and how the federal government can impose sanctions on areas of the country that have not met certain conditions.

Nonattainment Requirements

Ozone Nonattainment Areas

For the pollutant ozone, the CAAA establishes nonattainment area classifications ranked according to the severity of the areas' air pollution problem. The classifications are marginal, moderate, serious, severe, and extreme, and after 2008, a new type of area called “former Subpart 1” area. EPA assigns each nonattainment area to one of these categories, thus triggering varying requirements the area must comply with in order to meet the ozone standard. As mentioned, nonattainment areas will have to implement different control measures, depending upon their classification. Marginal areas, for example, are the closest to meeting the standard, which are required to conduct an emissions inventory and institute a permit program. Nonattainment areas with more serious air quality problems must implement various control measures. The worse the air quality of the area, the more controls the area has have to implement. 

All areas exceeding the ozone standard have to gather baseline emissions inventories and perform photochemical modeling. Photochemical modeling attempts to replicate a past high ozone episode, then future scenarios are modeled to determine what control strategies are necessary to attain the mandated standard. 

Attainment strategies usually are cleaner vehicles and fuels, cleaner consumer products and equipment, use restrictions and economic incentives. Federal measures include cleaner automobiles, trucks, and off-road equipment. The Federal mobile source control requirements for ozone are contained in the Reformulated Fuels Program.  The Houston control strategy for 1-hour ozone included a large reduction of NOx in so called “grandfathered” or existing major sources, such as, power plants, stationary sourceies, and chemical plants. These are typically called Reasonably Available Control Measures (“RACM”). Also, specifically the Houston plan called for VOC requirements in existing point sources; EPA typically calls these controls Reasonably Available Control Technology (“RACT”). Ozone SIPs must also demonstrate Reasonable Further Progress (“RFP”). RFP must show a 15 percent reduction in the first three years and a six percent reduction in each subsequent three year period until attainment is demonstrated. Finally, new sources must undergo Nonattainment New Source Review (“NNSR”) as described below. 

Carbon Monoxide and Particulate Matter (both PM2.5 and PM10) Nonattainment Areas

The CAAA establishes similar programs for areas that do not meet the federal health standards for the pollutants CO and particulate matter. Areas exceeding the standards for the CO and PM10 particulate matter pollutants are divided into "moderate" and "serious" classifications. Depending upon the degree to which they exceeded the CO standard, areas were required to implement programs introducing oxygenated fuels and/or enhanced emission inspection programs, among other measures. There are currently no CO nonattainment areas. 

Depending upon their classification, areas exceeding the particulate matter standards have to implement either RACM or best available control measures (BACM), among other requirements. There are two particulate standards. They are PM2.5, or particulates less than 2.5 microns in diameter, and PM10, or particulates less than 10 microns in diameter. Further, there are two PM2.5 standards (one annual standard promulgated in 1997 and a shorter term 24 hour standard promulgated in 2006). Nationwide there are 39 nonattainment areas for the 1997 standard and 31 nonattainment areas for the 2006 standard. None are in Texas. 

The PM10 areas are divided into "moderate" and "serious" nonattainment classifications.  Nationwide there are 37 “moderate” nonattainment areas for the PM10 standard and 8 “serious” nonattainment areas for the PM10 standard. One “moderate” nonattainment area is in El Paso, Texas.    

SO2 and Lead Nonattainment Areas

There are two SO2 standards. They are the primary standard, which is designed to protect human health and the secondary standard, which – to oversimplify it - is designed to protect “welfare” and property. Areas exceeding the SO2 standards have to implement either RACM or BACM on SO2 point sources, among other requirements. The Federal mobile source control requirements for SO2 are contained in the Highway Diesel Fuel Program. Nationwide, there are four areas violating both the primary and secondary standards and five areas (two are in the Mariana Islands [Guam]) violating the primary standard only. None are in Texas. 

Areas exceeding the lead standards have to implement either RACM or BACM on lead point sources, among other requirements. The Federal mobile source control requirements for lead are contained in the Leaded Gasoline Removal Program. Nationwide, there are two areas violating the lead standard. None are in Texas. 

NO2 Nonattainment Areas

Depending upon the degree to which they exceeded the NO2 standard, areas were required to implement programs introducing enhanced emission inspection programs, along with RACM for NO2 point source emissions. A secondary NO2 standard was proposed in 2009. No nonattainment areas for the secondary NO2 standard have yet been announced by EPA. 

Emission Standards for Mobile Sources

Title II of the CAAA pertains to mobile sources, such as, automobiles, trucks, buses, and airplanes. Reformulated fuel, automobile pollution control devices, and vapor recovery nozzles on gas pumps are some methods EPA uses to regulate mobile air emission sources. These standards reduce tailpipe emissions of VOC, CO, and NOx on a phased-in basis, which began in model year 1994. Automobile manufacturers had to reduce vehicle emissions resulting from the evaporation of gasoline during refueling. 

Fuel quality was improved by reductions in gasoline volatility and sulfur content of diesel fuel. New programs requiring "reformulated" gasoline were initiated in 1995 for the nine cities with the worst ozone problems. Higher levels of alcohol supplemented oxygenated fuels were produced for sale in areas during the winter months if that area exceeds the NAAQS for CO. 

The major fuel reformulation requirements to reduce emissions from mobile sources are contained in four programs: the Oxygenated Fuels Program, the Highway Diesel Fuel Program, the Reformulated Fuels Program, and the Leaded Gasoline Removal Program. 

Oxygenated Fuels Program

The Oxygenated Fuels Program required that by November 1992, all gasoline sold in (previously designated) CO nonattainment areas must have a minimum of 2.7 percent oxygen by weight for at least four winter months. The higher oxygen content lowers the levels of CO produced during combustion. In California's CO nonattainment areas, the winter fuel oxygen content is set lower (around two percent) because higher oxygen levels increase NOx emissions - the Los Angeles area was also in NO2 nonattainment. Because of the program, the domestic capacity to produce oxygenates for oxygenated fuels has increased. This requirement has triggered significant investments in oxygenate production facilities at both stationary sources and at nonstationary sources stand-alone facilities that produce ethanol from grain and other oxygenates. Because of the “anti-backsliding” provisions of the CAAA, this program must be maintained even though most, if not all, areas are in attainment for CO. 

Highway Diesel Fuel Program

The Highway Diesel Fuel Program (“HDFP”) required that the sulfur content of all highway diesel fuel be reduced from 0.5 percent to 0.05 percent (by weight) by October 1, 1993. Stationary sourceies with capacities below 50,000 barrels of crude oil throughput per day were given the option of trading sulfur reduction credits as a way to comply until December 31, 1999. Also, the cetane index must be maintained above 40. The cetane index measures the self-ignition quality of diesel fuel. In refineries, construction of desulfurization downstream units (catalytic hydrocracking and hydrotreating  was required to comply with the HDFP requirements. Small refineries, if not wishing to invest in the new units, had the option of producing only distillate fuel oil for non-highway use. Diesel fuel and distillate fuel oils can be switched. However, after October 1993, distillate fuel oils and diesel fuels with more than 0.05 percent sulfur were marked with a dye to prevent sale for highway use. 

Reformulated Fuels Program

The Reformulated Fuels Program, a/k/a Reformulated Gasoline (“RFG”) Program, required the use of RFG by early 1995 (or at the latest 1998) in nine U. S. metropolitan areas with the highest ozone levels. Eighteen other areas opted in. RFG was required to have a minimum oxygen content of two percent by weight, a maximum benzene content of one percent by volume, and no lead or manganese. By 1998, the tailpipe emissions of VOCs and toxic air pollutants (TAPs) were reduced by 15 percent. By 2000, TAPs were reduced by 20 percent, VOC was reduced by 25 percent, and NOx was reduced by 5 percent. The RFG rules required the largest process changes of all the highway programs. Gasoline formulation had to be upgraded to reduce the VOC emissions from motor vehicles. Catalytic reforming was decreased to lower the levels of aromatics and hydrotreating was increased to meet the reduced sulfur limits. 

Leaded Gasoline Removal Program

The sale of leaded gasoline for use in motor vehicles was prohibited after 1995. Prior to this, the 1970 CAA had already reduced lead content substantially. 

Reid Vapor Pressure Regulations (“RVP”) of 1989 and 1992

EPA promulgated RVP regulations to reduce VOC emissions from automobile engine crankcases. During the summer months, higher RVP gasoline cause increased emissions from engine crankcases and carburetors. These regulations limit the volatility of motor gasoline, which is sold during the summer, in some U. S. urban areas. The program was two phases. The first phase began in 1989 and the second phase began in 1992. The Phase I standards limited the average summer RVP (RVP is a measure of volatility) to a maximum of 10.5 pounds per square inch (“psi”) and 9.0 psi in certain areas of the country. The Phase II standards set a nationwide summer maximum RVP of 9.0 psi and, in some southern cities, the standard was set at 7.8 psi. Phase II stayed in effect through the summer of 1994 in the nine RFG areas. In 1995, the RFG Program took the place of the RVP regulations. Phase I was met by reducing the butane component of gasoline. Butane has high octane. Crude unit, catalytic cracking unit, and alkylation unit throughputs were increased. This was done to make up for the reduction of butane octane and volume. Phase II standards were met by increased downstream processing and the use of high-octane component with lower RVP. The RVP regulations were complied with by large capital investments in facilities, which produced the required blending components. 

Hazardous Air Pollutants

Under CAA and CAAA Title I, EPA establishes and enforces Maximum Achievable Control Technology (“MACT”). For National Emission Standard for Hazardous Air Pollutants (“NESHAPs”), which are nationally uniform standards oriented towards controlling particular hazardous air pollutants (“HAPs”), the EPA established standards for eight pollutants under the CAA (1970). Because of litigation, which attacked a weakness in the CAA, EPA published only a few standards under the CAA NESHAPs. 

EPA was given new ammunition by Title III of the CAAA. This Title directs EPA to develop a list of sources that emit any of 187 HAPs (it was originally 189; two have been delisted), and to develop regulations for these categories of sources. EPA first listed 174 categories and developed a schedule for the establishment of emission standards. The emission standards are being developed for both new and existing sources based on MACT. MACT is defined as the control technology achieving the maximum degree of reduction in the emission of the HAPs, taking into account cost and other factors. There are currently issued 129 MACT standards. This number is less than 174, because some categories have been delisted and standards for other categories have yet to be promulgated. 

The list of source categories must include: (1) major sources emitting 10 tons/year of any one or 25 tons/year of any combination of those pollutants; and, (2) area sources (smaller [non-major] sources, such as dry cleaners). EPA then issues MACT standards for each listed source category according to a prescribed schedule. These standards are based on the best demonstrated control technology or practices within the regulated industry. Under the CAAA, EPA was required to issue standards for forty source categories within two years (by 1992) of passage of the new law. The remaining source categories will be controlled according to a schedule that ensures all controls will be achieved within 10 years (by 2000) of enactment. EPA did not meet this schedule. Companies that voluntarily reduce emissions according to certain conditions can get a six year extension from meeting the MACT requirements. Eight years after MACT is installed on a source, EPA must examine the risk levels remaining at the regulated facilities and determine whether additional controls are necessary to reduce unacceptable residual risk. 

The CAAA, Section 112(r), requires a Risk Management Plan (“RMP”) for facilities that store large quantities of toxic, hazardous or flammable chemicals. Each facility’s RMP must address plans for the prevention of releases from that facility and establish a plan for responding to potential chemical releases and accidents at the facility. The CAAA also establishes a Chemical Safety Board to investigate accidental releases of chemicals

Standards of Performance for New Stationary Sources (a/k/a New Source Performance Standards [“NSPS”])

The NSPS were originally established under Title I of the CAA. NSPS takes advantage of the concepts that (1) “new” sources should be able to operate more cleanly than existing sources and (2) it is more cost-effective to install controls when the source is “new.” NSPS establish the minimum level of control of certain pollutants that specific categories of sources constructed after a prescribed date (usually the proposal date of that NSPS) must achieve. The emissions limits under NSPS are based on the best technological system of continuous emission reduction available, taking into account costs and other factors of applying the technology. NSPS are uniform emission standards for new stationary sources, which fall within precisely defined industrial categories. These standards apply to sources constructed or “modified” (a complex definition found in NSPS, Subpart A) after the date prescribed in the standard for the industrial category. There are currently issued 90 NSPS standards. 

Federal New Source Review (NSR): Nonattainment (Area) New Source Review (NNSR) and (Attainment Area) Prevention of Significant Deterioration (PSD) Review

NNSR Review

A NNSR determination proceeds as follows. First, a determination must be made that the source is located in a nonattainment area. Second, a determination must be made that the source modification is a modification for the purposes of nonattainment review. Third, a determination must be made that either (1) the existing site is major or (2) the project by itself is major. Typically a source with criteria pollutant emissions ranging between 25 and 100 tpy, depending on the seriousness of the nonattainment area classification, is a major source. A major HAPs source can also be a major source.  Fourth, a “netting” calculation must be performed.  Fifth, a determination must be made that the net emission increase triggers a “major modification.” Major modification triggers are any “physical change” in, or change in the method of operation of a major stationary source that would result in a certain emissions increase (typically 40 tpy [net increase]). Routine maintenance, repair and replacement (“RMRR”) activities and certain other emissions are excluded from “physical change.” 

If the project meets one of the above triggers, it is either a major new source or a major modification in a non-attainment area and must undergo NNSR. NNSR comprises five basic steps. In Step 1, the applicant must determine that the Lowest Achievable Emission Rate (“LAER”) control technology requirement is met. LAER considers the technical practicability, but not economic reasonableness of control options. See the Best Available Control Technology (“BACT”) discussion below. In Step 2, the applicant performs a statewide compliance review of facilities owned by the applicant - all must be in compliance. Step 3 is an Alternative Site Analysis for the facility. Step 4 requires the facility to meet emission offset requirements – all emission increases must be offset. Step 5 is a Public Notice requirement.  

PSD Review

If the project meets one of the above NNSR triggers but is in an attainment area, it is either a major new source or a major modification in an attainment area and must undergo PSD review. Typically a new source with criteria pollutant emissions between 100 and 250 tpy, depending on the “source category” (process) classification of the source, is a major PSD source. There are 28 listed “source categories” in the 100 tpy classification; all other (non-listed) “source categories” are in the 250 tpy classification. Note the difference between the PSD and NNSR definitions of a new major source. However, the definition of a PSD modification is similar to the NNSR modification definition.

PSD review comprises four basic steps. In Step 1, the applicant must determine that BACT is applied. BACT considers the technical practicability and economic reasonableness of control options using a rather complex three tiered approach. In Step 2, the applicant must perform an air quality analysis. This analysis uses dispersion models to determine if the project’s proposed emissions are likely to exceed the NAAQS and PSD increments.  In Step 3, the applicant must determine whether air monitoring required. If so, the applicant must perform ambient air monitoring for one year. In Step 4, the applicant must determine an impacts analysis on soils, vegetation, visibility and impact on Class 1 areas (for example, National Parks) located within 100 kilometers of the facility. 

Regional Haze Rule

On June 15, 2005, EPA issued final amendments to its July 1999 regional haze rule. These amendments require emissions controls known as best available retrofit technology or BART for industrial facilities emitting air pollutants that reduce visibility. The BART requirements of the regional haze rule apply to: (1) facilities built between 1962 and 1977, (2) facilities that have the potential to emit more than 250 tons a year of visibility-impairing pollutants, and (3) facilities that fall into one of 26 categories, including petroleum stationary sources. Some of these facilities previously have not been subject to pollution control requirements for these pollutants. Under the final BART guidelines, states are required to conduct source-by-source BART determinations to identify which facilities must install controls and the type of controls to be used. If the three criteria presented above are met, the source is considered to be BART eligible. In order for states to determine if the BART eligible units located at the source are subject to BART requirements, it must be demonstrated that emissions from the BART eligible units are anticipated to cause or contribute to any visibility impairment in Class I areas.   A Class I area is defined by 40 C.F.R. § 81.400 as:

Subpart D, §§ 81.401 through 81.437 lists those mandatory Federal Class I areas, established under the Clean Air Act Amendments of 1977, where the Administrator, in consultation with the Secretary of the Interior, has determined visibility to be an important value. The following listing of areas where visibility is an important value represents an evaluation of all international parks (IP), national wilderness areas (Wild) exceeding 5,000 acres, national memorial parks (NMP) exceeding 5,000 acres, and national parks (NP) exceeding 6,000 acres, in existence on August 7, 1977. 

This evaluation is done by conducting long-range transport air dispersion modeling to determine if emissions from the BART eligible units (see the definition of BART eligible units above) at a source will impair visibility in any Class I area more than 0.5 deciviews (a measurement of visibility impairment based on extinction of light). In plain English for example, a 500 tpy BART eligible unit is estimated to impair visibility in a defined Class I area 500 miles away. That is, one tpy equals one mile.     

An example would be a cement plant in Waco, Texas, which was built in 1963 and emits 800 tpy of NOx (a visibility-impairing pollutant). The plant is in one of the 26 named categories (cement) and is, therefore, a BART eligible unit. Assume this plant is 500 miles from Big Bend National Park (a Class I area as defined by 40 C.F.R. § 81.400). Since 800 (tpy) exceeds 500 (miles), the cement plant would be estimated to impair visibility in a Class I area. Therefore, it would be subject to emission controls under the regional haze rule.

Title V Permits

Title V of the CAAA created an operating permit program for all "major sources" (and certain other sources). One purpose of the operating permit is to include in a single document all air emissions requirements and regulations that apply to a given facility. 

This program clarifies and makes more enforceable a source's pollution control requirements. Previously, a source's pollution control obligations were scattered throughout numerous hard-to-find provisions of state and federal regulations, and in many cases, the source was not required under the applicable State Implementation Plan (“SIP”) to submit periodic compliance reports to EPA or the states. The Title V permit program codifies all of a source's obligations with respect to its pollutants into one permit document. Also, that source must file periodic reports identifying the extent to which it has complied with those obligations. The program provides a mechanism for states to administer, with federal oversight, significant parts of the air toxics program and the acid rain program. The permit fee provisions augment a state's resources to administer pollution control programs by requiring source “user fees” to cover part of the costs of a state's air pollution program. 

Each permit issued to a facility is for a fixed term of usually five years. All sources subject to the permit program must submit a complete permit application within 12 months of the effective date of the program. The state permitting authority must determine whether or not to approve an application within 18 months of the date it receives the application. (Most states failed to meet these deadlines). 

After EPA receives its copy of the application, it has 45 days to review the permit and to object to the permits as necessary. If EPA fails to object to a permit that violates the CAAA or a SIP, “any person” may petition EPA to object within 60 days following EPA's 45-day review period. Then, EPA must grant or deny the permit within 60 days. Judicial review of EPA's decision on a citizen's petition can occur in the Federal court of appeals. 

Enforcement

The CAAA contains a broad array of authorities to make the law more readily enforceable, thus bringing it up to date with the other major environmental statutes. EPA has authority to issue administrative penalty orders up to $200,000, and to issue field citations up to $5000 for lesser infractions. Civil judicial penalties are enhanced. Criminal penalties for knowing violations are upgraded from misdemeanors to felonies, and new criminal penalties for knowing and negligent endangerment were added. Sources must certify their compliance, and EPA has authority to issue administrative subpoenas for compliance data. EPA is authorized to issue compliance orders with compliance schedules of up to one year. 

The citizen suit provisions allow citizens to seek penalties against violators, with the penalties going to a U. S. Treasury fund for use by EPA for compliance and enforcement activities. The government has the right to intervene. Citizen plaintiffs are required to provide the EPA with copies of pleadings and draft settlements. 

Stratospheric Ozone Protection

The Stratospheric Ozone Title is applicable to all types of facilities, primarily because ozone-depleting chemicals are used in many types of refrigeration systems.

Recent Developments

EPA GHG Regulation under the CAA

In 2007, the Supreme Court held in Massachusetts v. EPA (“Massachusetts”) that the term "air pollutant" in the CAA includes GHG.    The ruling held that the Act requires EPA to consider the science of climate change in determining whether greenhouse-gas pollution endangers public health or welfare.   As a result of the Court's decision, EPA began treating greenhouse-gas emissions as air pollution under the CAA and to determine whether those emissions endanger Americans' health or welfare. In late 2009, EPA determined that GHG emissions do endanger Americans' health and welfare.   This finding was supported when the U. S. Global Change Research Program found that risks to human health will increase as a result of human-induced global warming.  

Following the Massachusetts decision, the Bush Administration saw the CAAA as helping the administration attain the president’s “20 in 10” goal of reducing gasoline usage by 20 percent in ten years.   Congress in late 2007 adopted the Energy Independence and Security Act (“EISA”), which required increased corporate average fuel economy (“CAFE”) standards and increased use of renewable automotive fuels.   Since EISA provided the framework for attaining the president’s “20 in 10” goal, the administration decided to address GHG regulation under the CAA by issuing an Advance Notice of Proposed Rulemaking seeking comment on a variety of issues regarding GHG regulation under the CAA.   The ANPR responded to Massachusetts, the need to assess potential regulation of motor vehicle GHG emissions under CAA section 202(a), and to a number of other petitions that had been filed with the agency seeking GHG regulation.  The ANPR consisted of more than 550 pages of text and thousands of pages of supporting materials. It effectively delayed regulation of GHG under the CAAA until the Obama administration. 

Under Section 202(a) of the CAA, EPA issued GHG emissions standards for motor vehicles.  In March 2010, EPA took this action for Model Year 2012 to 2016 light-duty motor vehicles.  Concurrently with the EPA issuance of the light-duty-vehicle emissions standard, the Department of Transportation issued a rule raising the existing fuel-economy standards for the same vehicles.   The light-duty vehicle standard made GHG emissions subject to regulation under the CAAA for the first time. Under the Act's text, air pollutants that are subject to regulation under the statute are subject to the Act's PSD and Title V permit provisions for stationary sources.

Because they desired EPA to control GHG emissions, public interest and environmental groups raised challenges to pending and issued NSR and Title V operating permits. They said that CO2 was already a regulated pollutant, based on the existing requirement from the CAAA that power plants monitor and report emissions of CO2. An environmental group challenged the Deseret Electric Power Cooperative application for a construction permit for a coal-fired power plant.   In late 2008, the Environmental Appeals Board (“EAB”), on appeal of the permit, remanded the issued permit back to EPA. The opposition to the permit argued that the permit lacked provisions regarding CO2, including no BACT limits on CO2 emissions. The EAB opinion supported EPA’s position that the CAA did not mandate that CO2 (subject only to monitoring and reporting rules) be treated as subject to regulation. EAB remanded the permit to EPA because they had failed to demonstrate an adequate basis for that position. 

EPA’s response was a December 18, 2008 interpretive memorandum entitled “EPA’s Interpretation of Regulations that Determine Pollutants Covered by Federal PSD (PSD) Permit Program” from then-EPA Administrator Stephen L. Johnson (Bush administration) to the EPA Regional Administrators, addressed when the CAAA PSD program would cover a pollutant, including GHGs such as CO2. The memo indicated that the PSD Permitting Program would apply to pollutants that are subject to either a provision in the CAA or a regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant. The memo further explained that pollutants for which EPA regulations only require monitoring or reporting, such as the provisions for CO2 in the Acid Rain Program, are not subject to PSD permitting.

On March 29, 2010, the EPA completed its reconsideration of the Johnson memorandum, upholding the findings of the memorandum. The final action on reconsideration stated that GHG emissions will become "subject to regulation" under the CAAA, such as to make them a part of the Act's stationary-source permitting programs, in January 2011, when Model Year 2012 light-duty vehicles will need to comply with EPA's GHG emissions standard.  

GHG Reporting

In response to the FY2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110–161), EPA has issued 40 CFR Part 98,   which requires reporting of GHG emissions from large sources and suppliers in the United States. Part 98 is intended to collect emissions data to inform future policy decisions. Under Part 98, suppliers of fossil fuels or industrial GHGs, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHG emissions are required to submit annual reports to EPA. Part 98 was published in the Federal Register on October 30, 2009 under Docket ID No. EPA-HQ-OAR-2008-0508-2278. Part 98 became effective December 29, 2009.   The first report for calendar year 2010 is due to EPA on March 31, 2011 and for subsequent calendar years by March 31 of the year following. EPA has since extended the due date to late summer 2011.

GHG Control under PSD

On May 13, 2010, the EPA issued a final rule that addressed GHG emissions from stationary sources under the CAAA permitting programs. This final rule sets thresholds for GHG emissions that define when permits under the New Source Review PSD and Title V Operating Permit programs are required for new and existing industrial facilities. This rule “tailors” the requirements of these CAAA permitting programs to limit which facilities will be required to obtain PSD and Title V permits. Facilities responsible for nearly 70 percent of the national GHG emissions from stationary sources will be subject to permitting requirements under this rule. This includes the nation’s largest GHG emitters power plants, refineries, and cement production facilities.   The “Tailoring Rule” is actually an exemption from permitting smaller GHG sources (it exempts GHG sources from PSD and Title V permitting, if the sources GHG emissions are between 100/250 tpy and 75,000 tpy). EPA estimates that applying the lower 100/250 tpy emission thresholds to GHGs would result in an additional six million Title V operating permits and 82,000 more PSD permitting actions. The total costs to permitting agencies (like TCEQ) alone would be over $22 billion per year. 

In November 2010, EPA issued general guidance for air quality permitting of GHGs: “PSD and Title V Permitting Guidance for GHG.” The guidance provides details on how to determine applicability of PSD and Title V for GHGs under the Tailoring Rule. Of most interest, however, is the discussion regarding “how to analyze BACT for GHGs?’ The guidance does not provide concrete information on what will be considered to be BACT, but instead, relying upon already established procedures for BACT analysis for other pollutants, discusses concepts that should be considered in establishing BACT for GHGs. 

The guidance applies long-standing PSD and Title V permitting requirements and processes to GHGs. Also, BACT determinations will continue to be a state, and project-specific decision. GHG BACT is not prescribed for any source type; however, the importance of BACT options that improve energy efficiency is promoted.   The general EPA Guidance Manual states that Carbon Capture and Sequestration is a promising technology in the early stage of demonstration and commercialization. While it should be identified as an available control measure in the first step of BACT, it is currently an expensive technology and unlikely to be selected as BACT in most cases. The guidance does not establish a new approach for selecting BACT for GHG emissions. Rather, permitting authorities should continue to use the current five-step process that EPA recommends and that has been used since 1977. The process starts by looking at all available emission reduction options and narrows the options by taking into account technical feasibility, cost, and other economic, environmental and technical considerations. In determining whether GHGs emission impacts are acceptable under PSD, increases in emissions subject to PSD are compared to the allowable “increment” of increases in the pollutant established in the rules. The increment prevents “significant deterioration.” A PSD permit may not be issued that would result in an exceedance of the increment. There is no increment currently established for GHGs so no analysis on that issue is required. Additionally, there is no NAAQS for GHGs so the normal PSD review to ensure protection of a NAAQS is not required for GHGs. This means that detailed air quality analyses and dispersion models will likely not be required for GHG PSD permits. 

To obtain an air quality permit in Texas, the applicant must demonstrate that proposed emissions will not cause or contribute to a condition of air pollution. A condition of air pollution occurs when air contaminants are of such concentration and duration that they adversely affect human health, animal life, vegetation or property or interfere with the normal use and enjoyment of property. Opponents of GHG permit applications would likely argue that there already is a condition of air pollution for GHGs everywhere in the state and everywhere in the world. Therefore, any increase in emissions of GHGs would “contribute” to a condition of air pollution. This is a similar argument to ones recently made by opponents of power plant permits, because of the projected impact of ozone precursor emissions on downwind ozone non-attainment areas. TCEQ has ruled that de minimis levels (insignificant levels) of increases in concentrations of air contaminants can be construed to not be a “contribution.

In 2014, SCOTUS overturned the “Tailoring Rule” by ruling that facilities only had to obtain a GHG permit for PSD permits for criteria pollutants. If the emission increase did not trigger a criteria pollutant PSD permit, a GHG permit was not required.