November 29, 2010
Authors:
Cliff Rothenstein cliff.rothenstein@klgates.com
+1.202.778.9100
Thomas R. Carey tom.carey@klgates.com
+1.312.807.4365
K&L Gates includes lawyers practicing out of 36 offices located in North America,
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On December 8, 2009 we blogged about the United States Environmental Protection
Agency’s (“USEPA”) nascent attempts to define what types of “Best Available
Control Technologies” could be utilized to control Greenhouse Gas (“GHG”) emissions. At that time, the only viable BACT identified for GHGs involved increasing petroleum-based fuel burning efficiencies (less fuel use = less CO2 emissions) in boilers, engines, and other fuel combustion devices. Other BACT emission “controls” included switching from high CO2 emission fuels like coal and fuel oil to lower emission fuels like natural gas. Carbon sequestration – a popular and much touted way to control GHG emissions – was, and is, still on the drawing board as a recognized BACT-ready control alternative, as are other BACT alternatives. See http://www.climatelawreport.com/2009/12/articles/topicalerts/greenhouse-gas-emission-control-bact-to-the-future/ .
Back then, the development of BACT alternatives for GHG emissions was recognized as an essential component of USEPA’s endeavor to use its new Tailoring
Rule to shoehorn the control of such emissions into the Clean Air Act’s (“CAA”)
Prevention of Significant Deterioration (“PSD”) construction permit program. Under the PSD program, covered facilities are required to institute BACT to control pollution emissions. While the agency – at that time – preferred that new federal cap and trade legislation be passed to address GHG emissions, it was prepared (with vigorous support from the Obama Administration) to develop a CAA-related regulatory framework to control GHG emissions if such federal legislation did not pass in Congress. USEPA’s bet that such federal legislation would pass was hedged by the agency’s establishment (in October of 2009) of a Climate Change (“CC”)
Work Group, which was tasked to determine what constitutes officially-recognized
BACT for GHGs. 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.
In short, USEPA was banking on future development of a menu of BACT option alternatives in the event that federal GHG legislation did not pass and the agency had to exercise its GHG regulatory option. At that time we entitled our blog “BACT to the Future” to emphasize the uncertainty of the future development of BACT options apart from increased emission source efficiencies and fuel changes.

Now, one year later, (following the 2010 mid-term elections) Republicans control the U.S. House of
Representatives by a wide margin and the
Democrats’ control of the Senate is razor-thin.
Result: federal cap and trade legislation is “dead” and USEPA is now cornered into pursuing the GHG regulatory option. In furtherance thereof, on
November 10, 2010 – just two months away from the January 11, 2011 date effective date of the
Tailoring Rule (when stationary sources become subject to PSD and Title V permitting when making major modifications) – the USEPA issued its BACT determination guidance, entitled “PSD and Title V
Permitting Guidance For Greenhouse Gases.” The following is a link to the guidance document: http://op.bna.com/env.nsf/r?Open=jsun-8b3mkm/a>.
And guess what? The primary BACT options identified are increased emission source efficiencies and the use of cleaner alternative fuels ( e.g.
cleaner coal, natural gas, biomass fuels – see below).
Instead of identifying other, more concrete BACT options, USEPA has essentially passed that future responsibility onto the state air permitting agencies through a series of general, well-known BACT review recommendations and by referring to a series of industry-specific BACT review “White Papers” for electric generating units, large industrial/commercial/industrial boilers, pulp and paper, cement, iron and steel industry, refineries and nitric acid plants.
Key elements of USEPA’s BACT guidance:
• The guidance recommends that state and local permitting authorities look at all available options for reducing greenhouse gas emissions, consider technical feasibility, cost and other factors, and select the best option.
• The guidance does not establish a new approach for selecting BACT nor does it prescribe a GHG
BACT for any source. Instead the guidance allows permitting authorities to use the five step process that EPA has recommended and permitting authorities have used for 30 years to determine BACT: (1) Identify all available control technologies, (2) Eliminate technically infeasible options, (3) evaluate and rank remaining technologies based on environmental effectiveness, (4) evaluate cost effectiveness of controls and energy and environmental impacts,
(5) select the BACT. The guidance also makes it clear that BACT determinations will continue to be a state, and project decision.
• Although the guidance does not prescribe a
BACT it places an emphasis on BACT options that improve energy efficiency. The guidance also indicates that while carbon capture and sequestration is a promising technology and should be identified as an available control measure, because it is currently expensive it is unlikely to be selected as BACT in most cases.
• The guidance indicates that biomass could be considered BACT after taking into consideration environment, energy and economic considerations and state and federal policies that promote biomass.
• The guidance also provides examples of how permitting requirements could apply.
One bright spot in USEPA’s BACT guidance regards the agency’s confirmation that biomass fuels can be considered a BACT alternative. The guidance makes it clear that state and local permitting authorities can consider the use of certain types of biomass by themselves as the BACT for greenhouse gas emissions.
More specifically, the guidance acknowledges that there are a variety of federal and state policies that recognize that some biomass can be part of a national strategy to reduce GHG emissions. As such, the guidance states that it is appropriate for permitting authorities to account for these policies and based on their considerations, the permitting authority may determine that with respect to the biomass component of a facility's fuel stream, certain biomass by themselves are BACT for GHG.
The guidance also notes that to assist permitting authorities in further considering these factors, and provide national consistency and certainty, EPA intends to issue additional guidance in January
2011. That guidance will provide a suggested framework for analyzing the environmental, energy and economic benefits of biomass.
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EPA also notes in the guidance that it is currently reviewing comments in response to its July 15, 2010 call for information on approaches for accounting for GHG emissions from bioenergy and other biogenic sources. These comments suggest that certain biomass feedstocks (e.g. biogas) may be considered carbon neutral, and that such carbon benefits may further inform the BACT process. As such, EPA notes in the guidance that the agency plans to determine by May 2011, whether to issue a supplemental rule that would allow a permitting agency to quantify the carbon emissions from bioenergy or biogenic sources by applying a separate accounting rule for different types of feedstocks.
The BACT guidance makes it clear that BACT for covered GHG sources will be determined by state regulatory agencies on a case-by-case basis. If the
Tailoring Rule survives the various legal challenges against it, as well as the new republican majority in the US House of Representatives, this case-by-case
BACT analysis will – in the near term – likely result in a state-by-state patchwork of BACT analyses and accompanying regulatory uncertainty. This uncertainty may also result in increased BACT legal challenges by environmental and industry groups that perceive individual BACT determinations as being either too weak or too stringent from a GHG reduction standpoint.
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