Last week, the US Environmental Protection Agency (EPA) took the next step in its controversial plan to regulate carbon dioxide and other greenhouse has (GHG) emissions in the absence of Congressional law with a new "Guidance" document meant to provide guidelines to state EPA offices on how to proceed with its existing plans.

Many believe the EPA overstepped its authority in taking on GHG emissions as a regulatory matter to begin with, and now not surprisingly there is strong debate over how much effectiveness and business impact the new guidelines will have, with many business groups concerned the rules will add costs and slow new factory construction.

TheGreenSupplyChain.com has waded through the 96-page EPA document, and offer highlights below. The full document is available at the EPA web site for those readers who want their own look. (See PSD and Title V Permitting Guidance For Greenhouse Gases.)

The EPA's effort to take on GHG emissions in the absence of action in Congress to regulate them using cap and trade or some other mechanisms is highly controversial and began in December, 2009, when EPA found that elevated atmospheric concentrations of six GHGs endanger both public health and welfare. Under the Clean Air Act, this gave the EPA the authority to take action to reduce greenhouse gas emissions on its own.

That began with new GHG emissions rules for cars and light trucks set to begin with model year 2012, and then in June of this year a document that "tailored" existing EPA rules and processes used for a wide variety of other pollutants for GHGs. This latest document then provides guidance on how local EPA offices should move forward with the principles in the tailoring document.

Hope we haven't lost you yet.

The good news in a sense is that the overall approach of "permitting" for GHG emissions should be well-familiar to most businesses that will be affected. The bad news is how this will actually move forward in coming years is far from clear.

The Guidance deals with two primary areas:

• The Prevention of Significant Deterioration (PSD) process and permits, which concern new facilities or those for which "significant modifications" are made.

• "Title V" permitting requirements for greenhouse gases (GHGs), which are annual permits required for now existing facilities to operate

In both cases, the EPA says it is targeting the "largest" GHG emitters that in total represent some 70% of emissions from "stationery" sources, and that - for now - smaller business should be unaffected.

EPA air official Gina McCarthy told Reuters that sources that pollute less than 50,000 metric tons per year would not be regulated until 2016, if ever.

New Facilities or Significant Modifications

Beginning on January 2, 2011, GHGs are a regulated pollutant under the PSD major source permitting program when they are emitted by new sources or modifications in amounts that meet the Tailoring Rule’s set of applicability thresholds, which phase in over time.

For PSD purposes, GHGs are a single air pollutant defined as the aggregate group of the following six gases: 

• carbon dioxide (CO2)
• nitrous oxide (N2O)
• methane (CH4)
• hydrofluorocarbons (HFCs)
• perfluorocarbons (PFCs)
• sulfur hexafluoride (SF6)

In January, permitting requirements including a GHG emissions review will start to apply to all new facilities already subject to PSD requirements for other pollutants and with planned or potential GHG emissions of at least 75,000 tons per year.  

In July, those requirements will also apply to facilities not currently subject to PSD and with actual of emissions of 100,000 tons of planned or potential GHG emissions.

Companies performing modifications to existing facilities that would increase GHG emissions by at least 75,000 tons per year starting in January would be subject to GHG PSD requirements as well if they are already under PSD, with a similar expansion of those affected in July.

The major impact of this is that these permits/approval  must demonstrate a company is using best available control technologies (BACT) to minimize GHG emission increases when facilities are constructed or significantly modified.

Of course, as the EPA document admits, the state of BACT for GHG emissions is an immature science at best, and is always subject to the specifics of each situation. However, the document does place a premium on "energy efficiency" as the foundation of reducing GHGs, the net of which is that some point, specific energy decisions could be required of plants (say use of solar power) where feasible. Over time, other operational required could be prescribed.

Existing Facilities

Under the Clean Air Act, major sources (and certain other sources) must apply for, and operate in accordance with, an operating permit that contains conditions necessary to assure compliance with all Clean Air Act requirements applicable to that facility as part of the on-going "title V" process.  

Now, GHG gas emissions will be part of that permitting process, although with limited short term impact because there are not yet -"yet" being the key word - any EPA limits on GHGs. But, reporting of each facilities GHG emissions will be required, though details here are also sketchy. Again, this applies only to the larger GHG emitters. 

"Although the requirements contained in the GHG reporting rule currently are not considered applicable requirements under the title V regulations, the source is not relieved from the requirement to comply with the GHG reporting rule separately from compliance with their title V operating permit," the Guidance says. " It is the responsibility of each source to determine the applicability of the GHG reporting rule and to comply with it, as necessary."

The document also says that there may be additional EPA fees to cover the cost of the new GHG title V review requirements.

Reaction is Mixed

As expected, most environmental groups praised the action, though many say it is too late in coming and isn't tough enough yet in enforcement.

The EPA calls its strategy a “common sense approach” and insists that its future permitting decisions will take into account the cost and technical feasibility of GHG reduction — a response to one of the many objections raised by business groups and some states.

What the EPA is asking business to do, by some views, is simply to try their best to emit less greenhouse gases, especially through the use of more energy-efficient systems and processes, with little real teeth or penalties in the rules.

Still, The American Iron and Steel Institute (AISI) raised concerns that the regulation of stationary sources will “discourage new investments and impose new costs on manufacturing industries.”

The National Association of Manufacturers (NAM) says it is still studying the document, but says "While we are still in the process of reviewing the document, manufacturers remain very concerned with the EPA’s overreaching agenda, and today’s release of the greenhouse gas permitting guidance raises more questions than answers. The EPA continues to create uncertainty for manufacturers as we move closer to the January 2, 2011 deadline. While the agency has requested public comment, the short timeframe will hinder stakeholders’ ability to provide robust feedback," according to its president and former Michigan governor John Engler.

Rebutting some criticism to the contrary, the EPA's McCarthy stated emphatically that there is no reason to believe that permitting will cause any slow-down, bottle-neck or moratorium on the construction of new facilities in the affected industries - a potentially big issue given the high level of unemployment currently in the US.

Any reaction to this EPA Guidance? Can you even understand what all this means? How do you think this will play out? Let us know your thoughts at the Feedback button below.

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