The New Year marks the trigger for the applicability of two federal regulations governing emissions of greenhouse gases—the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (Tailoring Rule) and the Final Mandatory Reporting of Greenhouse Gases Rule (GHG Reporting Rule)—to several categories of sources.

Tailoring Rule

2011 marks the beginning of a nationwide program that directly regulates greenhouse gas emissions in the United States. While the U.S. Environmental Protection Agency (EPA) has made efforts to implement these regulations in phases, the EPA predicts that this program will eventually cover 70% of the country's greenhouse gas emissions.

January 2, 2011 is the applicability date for "Step 1" of the Tailoring Rule, which set GHG emission thresholds for permitting under the Clean Air Act's Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs for certain sources. Step 1 includes sources that are already subject to PSD and/or Title V permitting programs. Importantly, no source is subject to these permitting requirements in Step 1 due to GHG emissions alone.

Sources that are already subject to the PSD program for non-GHGs must include GHG requirements in their PSD permits and establish Best Available Control Technology (BACT) for their GHG emissions if they:

  • are a newly constructed facility with the potential to emit 75,000 tons per year of carbon dioxide equivalent (CO2e) or more; or
  • make changes to the facility that increase net GHG emissions by 75,000 tons per year CO2e and significantly increase emissions of at least one non-GHG pollutant.

Sources that are already subject to Title V must include GHG requirements in their Title V permits when they apply for, renew, or revise their permits.

Although several entities have challenged the Tailoring Rule in the United States Court of Appeals for the D.C. Circuit, the rule is effective January 2, 2011, for Step 1 sources as the court denied motions to stay the implementation of the rule pending the outcome of the lawsuit. Step 1 sources should therefore immediately begin working with the relevant major source permitting authority to meet the requirements of the Tailoring Rule if they have not taken such steps already. This interaction is especially critical for Step 1 PSD sources given the uncertainty surrounding BACT for GHGs.

GHG Reporting Rule

The New Year marked the end of the first monitoring period for many of the original source categories under the GHG Reporting Rule. Facilities within these source categories must submit initial compliance reports by March 31, 2011. Facilities reporting under the stationary fuel combustion source category (Subpart C) may submit abbreviated emissions reports for 2010. For more information, see this article from January 2010.

Reporting facilities should be careful to note regulatory changes that the EPA made to compliance requirements during 2010, including among other things a recent announcement that reporting of certain data elements would be deferred until the EPA can better assess confidentiality concerns with respect to the public availability of the data.

Also as of January 1, sources covered by the following subparts of the GHG Reporting Rule must begin facility-level data collection for development of their 2011 monitoring reports:

  • Subparts I, L, DD, QQ, and SS—Sources of Fluorinated Greenhouse Gases

Covering approximately 385 facilities in the following source categories: electronics manufacturing (including semiconductors, photovoltaic cells, LCDs, and micro-electro-mechanical systems), fluorinated gas production, import/export of pre-charged equipment or closed-cell foams containing fluorinated GHGs, use of electric transmission and distribution equipment, and the manufacture of electric transmission and distribution equipment.

  • Subpart W—Petroleum and Natural Gas Systems

Covering approximately 2,800 sources in the onshore and offshore petroleum and natural gas production, onshore natural gas processing, onshore natural gas transmission compression, underground natural gas storage, liquefied natural gas storage and import/export, and natural gas distribution sectors.

  • Subparts RR and UU—Geologic Sequestration and Injection of Carbon Dioxide

Covering certain facilities that inject carbon dioxide underground for geologic sequestration and facilities that inject carbon dioxide underground for any reason, including enhanced oil and gas recovery.

Companies that are potentially subject to the rule should be taking several important steps:

1) If not known already, companies should act quickly to determine whether any of their facilities are subject to the reporting rule. Facilities that are close to but under the reporting threshold should still be prepared to demonstrate that they are not subject to the rule.

2) If companies have determined that they do have facilities subject to the rule, they should have proper methodologies in place so that they can be sure to meet the rule's requirements. Among other things, this means having adequate and consistent monitoring procedures that will allow compliance with both the reporting and recordkeeping requirements.

3) Companies should understand several special provisions that may apply to certain facilities in 2011 such as the limited use of "best available monitoring methods."

If 2010 was any indication, we can expect to see continued significant activity in the area of greenhouse gas emissions regulation in 2011. Facilities that may be subject to these programs not only need to be ready to meet any compliance obligations, but should also be carefully monitoring changes to those obligations as these complex regulatory programs continue to evolve. Likewise, other significant changes could occur as these regulatory programs wind their way through the court system, and further legislative action is not out of the question. Stay tuned...

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