EPA’s Challenge: Implementing Greenhouse Gas Regulations in the Face of State Hostility

Gregory E. Wannier
Deputy Director

As discussed previously, EPA has issued a series of four rules designed to initiate regulation of greenhouse gases (GHGs) under the Clean Air Act (“underlying regulations”).  As litigation challenging the legality of these regulations moves forward in the DC Circuit, and legislation seeking to limit EPA’s authority moves forward in Congress, EPA has promulgated a complex series of regulations controlling GHG emissions based on the assumption that both challenges to its authority will fail.  This post is the first of a series that will examine EPA’s attempts to regulate GHG emissions from large, stationary sources under the Prevention of Significant Deterioration (PSD) program of the Clean Air Act.

EPA’s PSD Regulatory Activity

Under PSD, EPA is empowered to set standards whereby regulated facilities reduce their emissions to the level achievable using the Best Available Control Technology (BACT).  In promulgating these regulations, EPA generally relies heavily on state participation: as EPA acknowledges, “[s]tates are best-suited to issue permits to sources of GHG emissions.  They have longstanding experience working together with industrial facilities under their jurisdiction to process PSD Permit applications.”

In keeping with this policy, EPA urged states to adopt State Implementation Plans (SIPs) that included provisions for regulating GHGs.  Such SIPs were required by January 2, 2011, which is the date when vehicle tailpipe regulations would activate PSD requirements.  However, not all states have been complicit in this activity: on December 13, 2010 EPA found that 13 states had inadequately prepared for issuing PSD permits for GHG emissions, and accordingly issued a SIP Call for those 13 states.  In this regulation, EPA set a series of deadlines for states and local agencies to submit adequate SIPs, between December 22, 2010, and December 1, 2011, warning these jurisdictions that if they did not submit an adequate plan, EPA would temporarily assume control of PSD permits.

Eight permitting programs (in seven states) failed to meet their December 22 deadline, which prompted EPA to establish a Federal Implementation Plan (FIP) on December 30 to “backstop” these eight areas, to ensure that large emitters of GHGs will still be able to attain permits starting on January 2, 2011.  EPA similarly found a region in Kentucky to have an inadequate SIP on January 14, and instituted a separate FIP for that area.  The remaining four jurisdictions have not yet submitted adequate SIPs, but due to a lack of new or modified emission sources, this gap in coverage is not (yet) expected to seriously impede permit procedures for GHG emissions.

The State of Texas has proven to be particularly challenging for the EPA: not only is it one of the main litigants challenging EPA’s underlying regulations (above), but it has also expressly refused to issue a SIP to regulate GHGs in its PSD permitting (see 75 Fed. Reg.  82431 in link), thus defaulting to the last possible date above to pass an adequate SIP (December 1, 2011).  In the meantime, EPA has reconsidered its 1992 approval of Texas’ current SIP, which was made with the explicit understanding that “Texas would need to take further action, such as a SIP revision, to update its PSD rules whenever EPA newly subjected another pollutant to PSD” (see 75 Fed. Reg. 82439).  Specifically, EPA ruled that given Texas’s recent recalcitrance to comply with this understanding, the original approval was made in error, and so it has partially retracted this approval.   This has allowed EPA to run PSD permitting through federal offices via its interim final rule.

Legal Challenges to EPA’s PSD Regulations

The main group of litigation challenging EPA’s PSD regulations is in the DC Circuit.  So far, five challenges to EPA’s actions above have been consolidated into one case, Utility Air Regulatory Group(UARG)  v. EPA (Docket No. 11-1037).  The other petitioners include Texas, the SIP/FIP Advocacy Group (an industry coalition whose members include the National Association of Manufacturers (NAM)), and various mining and energy industry interests.  Texas similarly filed a challenge in the 5th Circuit, but that court refused to hear the case due to Clean Air Act venue provisions, and instead transferred it to the DC Circuit to be merged with the other cases.  More recently, Wyoming filed a challenge in the 10th Circuit along with NAM and UARG.  These cases are currently facing a similar motion for transfer to the DC Circuit.  Given the CAA’s explicit requirement that issues of “national scope” be heard in the DC Circuit, the fact that EPA’s challenged regulations applied to multiple states, and the 5th Circuit precedent here, this transfer seems likely.

These suits have largely challenged EPA’s regulations on December 13, 29, and 30, 2010, which (as discussed above) generally found existing SIPs to be inadequate and established temporary federal permitting programs in response.  According to UARG’s statement of issues, filed on March 16, 2011, the challenges focus on four major questions:

  1. Whether EPA violated the CAA by not allowing three years for states to pass appropriate SIPs in accordance with EPA’s past regulations;
  2. Whether EPA used the wrong provision in the CAA to issue its SIP call;
  3. Whether EPA incorrectly assumed that SIP revisions were required to legally issue permits for GHG emissions; and
  4. Whether, even if EPA acted lawfully above, it invalidly declined to give a reasonable period of time to revise SIPs using notice and comment procedures.

Two other petitioners have short and unrevealing statements of issues; Texas has not yet filed its statement of issues.  The next post will discuss the merits of these legal challenges.

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