Environmental, Land Use and Natural
Resources Alert
December 8, 2009
Authors:
Stanford D. Baird
stanford.baird@klgates.com
+1.919.743.7334
Thomas R. Carey
tom.carey@klgates.com
+1.312.807.4365
David A. Franchina
dave.franchina@klgates.com
+1.704.331.7543
Ashley A. Peck
ashley.peck@klgates.com
+1.206.370.5893
Elizabeth Thomas
liz.thomas@klgates.com
+1.206.370.7631
K&L Gates includes lawyers practicing
out of 35 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous GLOBAL
500, FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies,
entrepreneurs, capital market
participants and public sector entities.
For more information, visit
www.klgates.com.
Greenhouse Gas Emission Control: BACT to
the Future
On September 30, 2009 the United States Environmental Protection Agency
(“USEPA”) issued its now famous (or in some quarters infamous) proposed
“Tailoring Rule” aimed at regulating “greenhouse gas” or “GHG” emissions from
large facilities. The Tailoring Rule essentially shoehorns GHG emission control (for
re-defined “new major stationary sources” and “major modifications” at existing
major stationary sources) under the Clean Air Act’s (“CAA”) Prevention of
Significant Deterioration (“PSD”) construction permit program. Under the PSD
program, facilities are required to institute “Best Available Control Technology” or
“BACT” to control pollution emissions.
While USEPA has stated that control of GHG emissions would be better served
through new legislation, it has indicated that it will do so under the framework of the
CAA if Congress does not act. This willingness was clearly demonstrated on
December 7, 2009, when the agency issued its much-anticipated “endangerment
finding,” providing further underpinning for CAA regulation of GHGs. This
endangerment finding reflects the agency’s scientific determination that elevated
atmospheric concentrations of carbon dioxide (and five other GHGs) pose a risk to
human health and the environment through their anthropogenic impacts on climate
change. Although issued in the context of regulations applying to GHG emissions
from motor vehicles, once these regulations become effective (likely by June 2010),
the endangerment finding virtually ensures that GHG emissions will become
regulated pollutants under the CAA – unless preempted by new Congressional
legislation. If USEPA continues along this track, GHG emissions will be controlled
through the CAA’s PSD construction permit program – unless successfully
challenged in court.
If the proposed Tailoring Rule survives in its current form, new or modified facilities
subject to PSD construction permit requirements may need to establish BACT to
control GHG emissions. But what types of BACT are currently available to control
GHG emissions? Not many – at least not yet. Instead, USEPA plans to develop
supporting information to assist state authorities as they begin to address permitting
actions for GHG emissions, which started last October when USEPA established the
Climate Change (“CC”) Work Group.
The CC Work Group has been tasked to discuss and identify the major issues
and potential barriers to implementing the PSD Program under the CAA for
GHGs, especially what constitutes BACT for GHGs.
Environmental, Land Use and Natural Resources Alert
In announcing the formation of the group, USEPA
stated, in part:
Addressing the challenge of climate change will
require a well-coordinated effort. Actions by
USEPA to provide information and policy
guidance to assist states and regulated entities
implementing measures to reduce GHGs under
the Clean Air Act would facilitate more efficient
and consistent implementation, particularly in
key areas such as permitting under the
Prevention of Significant Deterioration (PSD)
Program and the assessment of Best Available
Control Technology.
BACT determinations for any given facility are
typically negotiated between the permittee and state
air permitting authorities on a case-by-case basis and
screened through the lens of an energy,
environmental, and economic impact analysis. To
assist the states and permittees in this regard,
USEPA has established a searchable central
database of air pollution technology to promote the
sharing of such information and to aid in the
selection of appropriate emission controls for any
given project. Neither this database nor the proposed
Tailoring Rule, however, provides any guidance on
what types of technical controls will constitute
BACT for various GHG emission sources. This will
be the job of the CC Work Group. And they have
their work cut out for them. Why? Because currently
there are no CO2-capture technologies – like
scrubbers or oxidizers – that can be slapped onto an
emission source for BACT purposes.
The most cost-effective way recognized to control
GHG emissions is through increasing petroleumbased fuel burning efficiencies (less fuel use = less
CO2 emissions) in boilers, engines, and other fuel
combustion devices. Other emission “controls”
could include switching from high CO2 emission
fuels like coal and fuel oil to lower emission fuels
like natural gas. While carbon capture and
sequestration are being studied at several levels,
these technologies likely will not be commercially
available for many years – if at all. The USEPA’s
Environmental Appeals Board rendered a decision
recently that instructed USEPA to demonstrate why
integrated gasification combined cycle (“IGCC”) for
a proposed coal-fired power plant should not be
considered BACT for the facility. IGCC is a
technology that turns coal into “synthesis gas”
before it is combusted. The process is extremely
clean and more efficient than traditional coal-fired
systems, but very expensive to construct and
operate. Furthermore, the proposed Tailoring Rule
potentially applies to numerous facilities outside the
utility sector (e.g., agriculture, chemical
manufacturing, transportation equipment
manufacturing, waste management, etc.). Use of
IGCC, increased efficiency, or fuel changes may be
limited for such facilities for BACT purposes.
The CC Work Group will focus, in part, on
developing information and guidance to help
USEPA establish the technical, economic, and
environmental performance characteristics of
potential GHG BACT options. In addition, the
Work Group has been tasked to identify and discuss
approaches to enable state and local permitting
authorities to apply the BACT criteria for GHGs in
a consistent, practical, and efficient manner. It will
also help permitting authorities and the regulated
community keep to a minimum the legal challenges
to GHG BACT determinations that are likely as this
new area of law is developed.
The CC Work Group held its first meeting on
November 4, 2009 and reportedly established
several issue-based teams. One team has been
tasked to focus on how states can make the BACT
process work, including how to assemble and
analyze data needed to make BACT determinations
for GHGs. Another team will focus on defining
GHG source types. Other teams will focus on
potential GHG BACT technologies to be considered
and others that should be ruled out.
The CC Work Group is expected to convene for a
six-month period through March 2010 – the date
USEPA’s related GHG mobile source regulations
are slated to be promulgated. The CC Work Group
will issue a draft interim report on or before
December 31, 2009. A draft final report is expected
on or before March of 2010. The draft final report is
expected to be approximately ten pages (or less) in
length and identify technical, economic,
environmental and other information that would be
useful to enable sources and permitting authorities
to implement BACT for GHGs. The proposed
length of the draft final report suggests that it will
be merely a starting point for GHG BACT analysis
December 8, 2009
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Environmental, Land Use and Natural Resources Alert
rather than a comprehensive guide. It also suggests,
in the words of Shakespeare’s Polonius (right-hand
man of Hamlet's stepfather, King Claudius) that at
least in the eyes of USEPA, “brevity is the soul of
wit,” for GHG BACT purposes.
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December 8, 2009
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