The Environmental Protection Agency (EPA) Thursday announced it has finalized a rule designed to curb the greenhouse gas (GHG) emissions of the largest stationary polluters, such as power plants and industrial facilities, while shielding millions of the smaller emitters of GHGs from the permitting requirements of the Clean Air Act (CAA). But manufacturers and chemical companies were troubled by the rule, saying the agency had its sights on eventually regulating even small emitters.

The timing of the the Obama administration's final "tailoring" rule is interesting, coming one day after Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) released their long-awaited climate change bill to a less-than-enthusiastic response (see related story). The administration appears determined to follow through on its pledge to regulate GHG emissions under the CAA if Congress fails to pass climate change legislation. However, the EPA rule may very well wind up in the courts (see Daily GPI, Oct. 1, 2009).

The EPA said its rule would apply to the large plants that emit 70% of the GHGs. Starting in January 2011 the CAA permitting requirements for GHGs will kick in for large facilities that are already obtaining CAA permits for other pollutants. These facilities will be required to include GHGs in their permit if they increase these emissions by at least 75,000 tons per year (t/y).

And in July 2011 CAA permitting requirements will expand to cover all new facilities with GHG emissions of at least 100,000 t/y and modifications at existing facilities that would increase GHG emissions by at least 75,000 t/y, according to the agency.

The new rule significantly raises the current threshold -- 100 to 250 t/y -- for companies to seek a permit under the CAA. As a result of the higher emissions threshold, millions of small emitters -- hospitals, apartments and shopping malls -- will be spared the permitting requirements of the CAA.

The EPA estimates that approximately 900 additional permitting actions covering new emission sources and modifications to existing sources will be subject to agency review each year. It said 550 sources will need to obtain operating permits for the first time because of their GHG emissions.

Earlier this year, the agency's tailoring rule came under fire from three major natural gas associations that said it could cause significant permitting delays for the gas industry (see Daily GPI, Jan. 26).

"We believe that the proposed tailoring rule will negatively impact the production, delivery and use of natural gas to the detriment of our shared emission-reduction goals," wrote the Interstate Natural Gas Association of America, Independent Petroleum Association of America and Natural Gas Supply Association in a letter to EPA Administrator Lisa Jackson (see Daily GPI, Jan. 26).

Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, also has expressed concern with the EPA's plan to use its CAA authority to regulate GHG emissions. While the agency's minimum threshold is set at 75,000 t/y, "the EPA plans to ratchet it [the threshold] down to catch the smallest emitters. Their goal is to catch everyone," said Murkowski spokesman Robert Dillon.

Manufacturing and chemical companies expressed the same sentiment. "Manufacturers are deeply troubled by the EPA's agenda and continued overreach in an effort that could eventually result in the agency's regulating everything from small factories to farms to hospitals," said Keith McCoy, vice president of energy and resources policy for the National Association of Manufacturers.

"The 'tailoring rule' takes the country in the wrong direction by using the Clean Air Act to expand the power of the EPA and allow the agency to choose which energy sources American consumers will use," he said.

The American Chemistry Council said it was "extraordinarily concerned" by the final rule. "By 2016, as many as six million U.S. sources of greenhouse gas emissions could be required to obtain a permit to build or modify facilities. This could include many of America's smallest sources," the group said.

Murkowski and Sen. Blanche Lincoln (D-AR), chair of the Senate Agriculture Committee, are leading the charge in the Senate against EPA's December endangerment finding, which provides the legal trigger for the agency to regulate emissions under the CAA (see Daily GPI, Dec. 8, 2009). The determination found that carbon dioxide and other GHG emissions pose a threat to public health and welfare.

The two senators introduced a "disapproval resolution" that, if ratified by both houses, could negate the EPA endangerment finding, and thus the agency's ability to use the CAA to regulate GHGs (see Daily GPI, Jan. 22). The deadline for a vote on the "disapproval resolution" is June 7, Dillon said. The resolution would only require 51 votes to pass the Senate. A similar disapproval resolution to negate the endangerment finding is pending in the House.

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