EPA Issues Step 3 of the Tailoring Rule: Did Anyone Hear the Tree Fall?

On Friday, EPA released “Step 3” of the GHG Tailoring Rule. The big news is no news at all. EPA left the GHG permitting thresholds unchanged, at 100,000 tons per year of carbon dioxide equivalent for new facilities and increases of 75,000 tpy of CO2e for existing facilities. In a phrase repeated in EPA’s fact sheet, keeping the thresholds unchanged is part of EPA’s “common sense … approach” to GHG permitting.

The proposal does include two options to allow GHG sources to streamline permitting, both of which may be of real value to some sources:

  • Provisions to “improve the usefulness of plantwide applicability limitations (PALs) for GHG.”  Allowing compliance with GHG limits on a plantwide basis will provide meaningful additional flexibility for many facilities.
  • Use of synthetic minor permits to limit GHG emissions below GHG permitting thresholds. While the universe of facilities that can take advantage of this provision may be limited, it will be of significant benefit to facilities that can limit their emissions. Avoiding the PSD permitting meat grinder is always a plus.

To me, the most significant aspect of Friday’s announcement was how quietly it passed. There are several takes on this. One is that everyone is devoting their attention at this point to the litigation, and no one’s going to care much about rules tweaks until the litigation has been decided. The climate change skeptics only care about killing the entire program. The climate change advocates support the rule, but are just biding their time until either a cap-and-trade program or a carbon tax has renewed political viability. In the meantime, the boiler rule and utility MACT rules are seen to have more significance than the Tailoring Rule.

It may also be that the lack of fanfare means, in part, that GHG regulation has quietly become the norm. While the litigation is going on, GHG PSD review is slowly becoming part of the fabric of life for large emitters. Personally, I don’t think that this is a good thing, because the PSD/NSR program remains the least efficient way to regulate GHG emissions, notwithstanding EPA’s efforts to, as they say, tailor the program. I still dream that, if the Tailoring Rule is upheld, stakeholders will move back to talking about market-based approaches (as compared to the NSR program, I couldn’t care less whether it’s cap-and-trade or a carbon tax) to limiting GHG emissions.

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