2011 Issue

30 between EPA and the state. Nor did it provide authority for EPA to require states to insert specific control measures into a SIP as long as the SIP otherwise contains measures to assure attainment of the applicableNAAQS. As the SeventhCircuit Court of Appeals observed in commenting on the proper role of a local air author- ity in fashioning control measures in a SIP maintenance plan: It is sensible for the federal agency to give localities that must pay the piper someopportunity tocall the tune. SierraClubv. EPA, 375F.3d 537, 539 (7th Cir. 2004). An even more pressing issue immediately facing industry is regu- lation of GHG emissions. The most well-known GHG is carbon dioxide, but the group also includes methane, nitrous oxide, hy- drofluorocarbons, perfluorocarbons and sulfur hexafluoride. In a well-publicized 2007 decision, Massachusetts v. EPA, 549 U.S. 497 (2007), the United States Supreme Court concluded that GHGs may constitute pollutants as that term is defined by the CAA. The immediate effect of the Massachusetts decision was to require EPA to determine whether GHGs endanger public health and welfare, and, if EPA determined the answer was yes, to require it to promulgatemore stringent fuel efficiency standards on newmotor vehicles. However, within the frameworkof theCAA, this findinghas far greater implications. For industry, these implications can most effectively be summed up in one word: uncertainty. UnlessCongressgathers thepolitical will toaddress climatechange and provide a sensible approach to regulation of GHG emissions, EPA will continue its efforts to use the CAA to regulate GHG emissions from a wide ar- ray of sources, including stationary sources such as power plants and facto- ries. Simultaneously, law- suits are challenging EPA’s methods for addressing GHG emissions and its very authority to do so, while other lawsuits are directly targeting industrial emitters of GHG with tort claims seekingabatement of andproduc- ers of GHG emissions. After theMassachusetts decision, EPA issued a findingunder theCAAdetermining that the emissionsofGHGsendanger thepublichealth and welfare. The immediate effect of this determinationwasEPA’s issuanceof stricter ef- ficiency requirements formotor vehicle fleets. The EPA, in turn, interpreted this as triggering its duty under theCAA to regulateGHGemis- sions from stationary sources. The endangerment finding and issu- ance of GHG emission standards for motor vehicles led to further regulatory action by EPA to estab- lish permitting thresholds for major sourcesofGHGemissions under the preventionof significantdeterioration (PSD) and the CAA’s Title V operating permit rules. PSDreview, requiringevaluationand installationof Best Available Control Technology (BACT), is triggered by construction or modification of a major source, which is defined by the CAA as one of a specified set of stationary sources that emits or has the potential to emit 100 tons per year (tpy) of any air pollutant or any other stationary source that emits 250 tpy. In addition, Title V’s re- quirement for an operating permit is triggered by emission of 100 tpy of any air pollutant other than hazardous air pollutants which are subject to even lower thresholds. Because nearly every source of emissions emits GHGs in much larger volume than every other pollutant regulated by the CAA, it would be impractical to trigger PSD review and Title V operating permit requirements related to every source that emits 100 or 250 tpy of GHGs. Therefore, EPA has modified the definition of major source for GHGs under a regula- tion known as the tailoring rule. Although the newly tailored GHG thresholds aremuchhigher than those in the statute, theywill begin to pull thousands of sources into additional complex and uncertain regulation beginning in 2011. Under current technology, there are no proven solutions for con- trolling carbon dioxide emissions after they are generated. Reduc- tions could most likely be achieved through increased efficiency in combustion of hydrocarbon fuels and through use of cleaner fuels (for example, choosing natural gas over coal). InNovember of 2010, EPA finally issued a proposed version of its long-anticipated PSD and Title V PermittingGuidance for GreenhouseGases, explaining what EPA believes will constitute BACT for GHGs and outlining the basic informationpermit writers andapplicantswill need inorder to address GHG emissions in PSD and Title V permits. The proposed guidance provides that permit applicants and permitting authori- ties should identify all available GHG control options that have the potential for practical application to the sourceunder consideration and encourages permitting authorities to use the discretion avail- able under the PSD program to include the most energy efficient options in BACT analyses for both GHG and non-GHG regulated NSR pollutants. While EPA publicly claims the proposed guidance merely adopts the traditional top-down methodology for evaluat- ing and applying BACT, it remains to be seen how the guidance will be applied in practice, what degree of energy efficiency will be required and at what cost. On December 21, 2010, EPA announced for public comment two proposed settlement agreements that would commit EPA to pro- mulgate rules incorporating GHG controls into the New Source Performance Standards (NSPS) for electric steam generating units (EGUs), whichalso include industrial commercial–institutional steam generating units and small industrial steam generating units, and the NSPS for petroleum refineries. These NSPS rules will establish a BACT floor for GHG emissions from new or modified EGUs and petroleum refineries and will also establish emissions guidelines under Section 111(d) of the CAA that will apply to GHG emissions fromexistingEGUs andexistingpetroleumrefineries. Theproposed settlement agreements would require the GHG rules for the EGU source category to be proposed in July of 2011 and adopted in May of 2012 and the GHG rules for the petroleum refinery source category to be proposed in December of 2011 and adopted in November of 2012. EPA’s drive to regulateGHGemissions under theCAAhas put Utah and other states in the awkward position of either hastily incorpo- rating the higher GHG permitting thresholds of EPA’s tailoring rule into state regulatory programs or creating even greater regulatory