State and local air permitting authorities should select the best available greenhouse gas (GHG) emission reduction option for their own circumstances, according to the U.S. Environmental Protection Agency (EPA), which said it anticipates that the most cost effective option in most cases will be energy efficiency.

In a pollution permitting guidance issued Wednesday, EPA said best available control technology (BACT) should be used to evaluate all available emission reduction options, but did not define or require specific control options because "BACT is determined on a case-by-case basis." Instead, the guidance and tools issued by EPA provide basic information for permit writers and applicants, along with examples of how permitting requirements could apply.

The guidance was issued to respond to inquiries from permitting authorities and other stakeholders who asked how prevention of significant deterioration and title V permitting programs will apply to GHG emissions, EPA said.

"EPA is working closely with its partners at the state and local levels to ensure permitting for GHG runs smoothly," said Gina McCarthy, assistant administrator for EPA's office of air and radiation. "To identify GHG reduction options, EPA and the states are now ready to apply the same time-tested process they have used for other pollutants. This shows that the Clean Air Act can be used to reduce these gases in a cost effective way."

Last year the Obama administration formally declared that carbon dioxide and other GHG emissions pose a danger to the public's health and welfare, which laid the groundwork for EPA to more stringently regulate emissions from power plants, refineries, factories and vehicles -- even if Congress fails to enact climate change legislation (see Daily GPI, Dec. 8, 2009).

In May EPA finalized a GHG tailoring rule, which specifies that beginning in 2011 projects that will increase GHG emissions substantially will require an air permit (see Daily GPI, May 14). The tailoring rule covers large industrial facilities like power plants and oil refineries, which are responsible for 70% of the GHGs from stationary sources.

"Emissions from small sources, such as farms and restaurants, are not covered by these GHG permitting requirements," EPA said. The new stationary source regulations are due to go into effect on Jan. 2 and will eventually affect as many as six million U.S. industrial facilities, power plants, hospitals and agricultural and commercial establishments.

The agency said it "welcomes public feedback on the guidance over the next few weeks on any aspect that contains technical or calculation errors or where the guidance would benefit from additional clarity."

EPA's guidance and the tailoring rule were criticized by business groups and some lawmakers, including Sen. John D. Rockefeller IV (D-WV), who earlier this year introduced legislation to suspend potential EPA regulation of GHG emissions from stationary sources (see Daily GPI, March 5).

"If we want to encourage companies to invest in new technologies and create jobs, then we need a system that gives major employers the framework to do so and to succeed. I am concerned that the EPA has not provided these employers enough time to process and understand rules that they will be required to comply with in just two months time, Rockefeller said. "In fact, it is still unclear what exactly will be required to receive a greenhouse gas air permit next year, as each state will be making case-by-case decisions."

The permitting process encouraged by the EPA guidance would be "costly, complex and time-consuming," according to Marlo Lewis, Senior Fellow at the Competitive Enterprise Institute. "It would crush small businesses, if applied to them. However, before small businesses applaud EPA's tailoring rule, which temporarily exempts them from certain mandates, they should remember that Congress never authorized EPA to make climate change policy in the first place."

"The EPA is railroading job-killing regulations onto states, localities and America's businesses, during a time of uncertain economic recovery, without giving those affected adequate time to review, provide comments, or even implement the new regulations," said the American Petroleum Institute.

Republican control of the U.S. House of Representatives in the incoming 112th Congress will likely lead to a whole slew of oversight committee hearings that will call on EPA to account for some of its recent actions affecting energy (see Daily GPI, Nov. 4). The Republican-led House can be expected to "aggressively initiate oversight hearings on the EPA, particularly centering on its greenhouse gas regulatory structure," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America.

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