Prevention of Significant Deterioration Permitting for Greenhouse Gases Providing Option for Rescission of EPA Issued Tailoring Rule Step 2 Prevention of Significant Deterioration Permits

FACT SHEET

Prevention of Significant Deterioration Permitting for Greenhouse Gases: Providing
Option for Rescission of EPA-Issued Tailoring Rule Step 2 Prevention of Significant

Deterioration Permits

ACTION

® On April 30, 2015, the Environmental Protection Agency (EPA) issued a direct final rule to
narrowly amend the permit rescission provisions in the federal Prevention of Significant
Deterioration (PSD) regulations. This action will allow the rescission of Clean Air Act PSD
permits issued by the EPA or delegated state and local permitting authorities under Step 2 of
the Greenhouse Gas Tailoring Rule.

® In UARG v. EPA, the U.S. Supreme Court said that the EPA may not treat greenhouse gases
(GHG) as an air pollutant when determining whether a source (or modification of a source) is
required to obtain a PSD preconstruction permit or title V operating permit. The Court
determined that the EPA regulations implementing that approach for determining whether a
PSD or title V permit is necessary (i.e., Step 2 of the Tailoring Rule) are invalid.

® Based on that opinion, the D.C. Circuit vacated certain provisions implementing Step 2 of the
Tailoring Rule. As a result, "anyway sources" - those that trigger PSD permitting
requirements based on emissions of other air pollutants and also have GHG emissions above
the current threshold still must have carbon pollution limits in their permits. "Step-2"
sources, those that triggered permitting requirements based solely on their GHG emissions,
no longer are required to get a permit.

® This rule does not rescind any permits. The rule only provides the regulatory mechanism that
the EPA and delegated state and local permitting authorities need to rescind PSD Step 2
permits issued under the invalid regulations. These permitting agencies already have the
necessary regulatory authority to revise any title V permits that incorporated PSD Step 2
permitting requirements.

® On July 24, 2014 and December 19, 2014, the EPA issued memoranda that announced the
Agency's preliminary views and next steps on the application of PSD to GHGs following the
UARG v. EPA Supreme Court decision, including our intent to amend the rescission
regulations to enable rescission of Step 2 permits. The memoranda can be found on
our GHG permitting website: http://epa.gov/nsr/ghgpermitting.html.

* The EPA is issuing a direct final rule without a prior proposed rule because the Agency
views this as a non-controversial amendment.

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BACKGROUND

® Congress established the New Source Review (NSR) program as part of the 1977 Clean Air
Act (CAA) Amendments. NSR is a preconstruction permitting program that serves two
important purposes:

1. It ensures the maintenance of air quality standards when major stationary sources
such as factories, industrial boilers and power plants are constructed or modified. In
areas that do not meet the national air quality standards, nonattainment NSR ensures
that new emissions do not slow progress toward cleaner air. In areas that meet the
standards, including pristine areas like national parks, NSR's PSD program ensures
that new emissions will not cause air quality to deteriorate significantly and will
continue to attain air quality standards.

2. The NSR program ensures that state of the art control technology is installed at new
plants or at existing plants that are undergoing a major modification.

® On June 3, 2010, the EPA published the final Tailoring Rule, which phased in permitting
requirements for greenhouse gas emissions from stationary sources under the CAA
permitting programs. The final Tailoring Rule set thresholds for GHG emissions that define
when permits under the NSR PSD and title V permit programs were required for new and
existing industrial facilities based on the level of greenhouse gas emissions from a source.

® Step 1 of the Tailoring Rule (January 2, 2011 to June 30, 2011) only applied to sources that
were subject to the permitting programs before greenhouse gases were regulated under the
Clean Air Act (i.e., those sources that were newly-constructed or modified in a way that
significantly increased emissions of a pollutant other than GHGs). During this time, no
sources were subject to CAA permitting requirements due solely to GHG emissions.

® Step 2 of the Tailoring Rule began on July 1, 2011, and allowed PSD and title V
requirements to apply to additional sources based solely on GHG emissions if those
emissions exceeded certain regulatory limits. The Step 2 permitting regulations for GHG-
only sources are the portion of the GHG permitting regulations that the U.S Supreme Court
found to be invalid in UARG v EPA. This regulation authorizes rescission of PSD permits
issued by EPA and delegated permitting authorities to PSD Step 2 sources.

ADDITIONAL INFORMATION

• Interested parties can download information on this action from EPA's Web site at:
http://epa.gov/nsr/actions.html.

• The notice of proposed rulemaking and other background information are also available
either electronically in www.regulations.gov. EPA's electronic public docket and comment
system. Docket ID No. is EPA-HQ-OAR-2015-0071.

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