Ryan Whaley Coldiron Shandy

On September 2, 2010, EPA published two proposed rules designed to “fix” state air permit programs to ensure that the agencies in charge of issuing permits to construct or modify stationary sources of air emissions – such as power plants – will be able to regulate greenhouse gases through those permits.  This is the latest step in the winding and complicated route EPA has taken in order to regulate greenhouse gas emissions.

·        In an April 2007 opinion in the case Massachusetts v. EPA, the United States Supreme Court decided that greenhouse gases are “air pollutants” as that term is used in the Clean Air Act.  Accordingly, the Supreme Court directed the EPA to determine whether greenhouse gas emissions from new motor vehicles cause or contribute to air pollution.

·        In response to the Supreme Court’s Massachusetts v. EPA opinion, which declared that greenhouse gases are “air pollutants”, former EPA Administrator Stephen Johnson issued a memorandum in December 2008 which clarified that an air pollutant is only “subject to regulation” if the Clean Air Act or EPA regulations require controlling the emissions of that pollutant.  At that time there were no rules in place to regulate greenhouse gases, so the Johnson Memo effectively declared that permitting agencies could not regulate greenhouse gases when issuing permits to construct or modify stationary sources.

·        A year later, again in response to the Supreme Court’s directive in Massachusetts v. EPA that EPA determine whether greenhouse gas emissions from new motor vehicles cause or contribute to air pollution, the current EPA Administrator, Lisa Jackson, signed findings – collectively called the “Endangerment Finding” – that (1) six greenhouse gases threaten public health and welfare, and (2) emissions of those greenhouse gases from new motor vehicles contribute to greenhouse gas pollution which in turn threatens public health and welfare

·        Because EPA found in the “Endangerment Finding” that greenhouse gases threaten public health, EPA became compelled by Clean Air Act Section 202(a) to regulate greenhouse gases for light-duty vehicles.  Accordingly, last spring EPA published its Light-Duty Vehicle Rule (“LDV Rule”), which established federal regulation of greenhouse gases for new motor vehicles.

·        The LDV Rule in turn prompted what EPA considers to be a duty to regulate greenhouse gases when issuing permits to construct or modify stationary sources.  The EPA had previously revisited the Johnson Memo and determined that because greenhouse gases would become “subject to regulation” if and when the LDV Rule became effective, regulating greenhouse gas emissions from new motor vehicles would also render greenhouse gases “subject to regulation” in a way that triggers regulation of greenhouse gases for construction or modification of stationary sources.  Because greenhouse gases from new motor vehicles will be regulated at the beginning of 2011, EPA decided that the agencies which issue air permits to stationary sources must also begin regulating greenhouse gases at the beginning of 2011.

EPA’s decision that air permitting agencies must regulate greenhouse gases has raised several problems, including the problem that many states’ laws (the “State Implementation Plans” or “SIPs”) do not have rules in place that allow the state agencies to regulate greenhouse gases for stationary sources.

That is why EPA has published its proposed “SIP Fix” rule in the September 2, 2010 Federal Register.  The SIP Fix is actually two proposed rules: the first proposed rule lists the states that do not have rules in place which will allow the air permitting agencies to regulate greenhouse gases, and the second proposes that unless those states fix their laws by January 2, 2011, or at least set a deadline for fixing their laws, then EPA will take over their permitting programs for permits to construct or modify stationary sources.

For those states that do not revise their SIPs by January 2, 2011, and, as a result, do not issue construction permits which regulate greenhouse gases, EPA will withhold the federal approval for construction required by the Clean Air Act.

Moreover, for those states which refuse to revise their SIPs or fail to do so before an agreed-upon deadline, EPA will immediately issue a Federal Implementation Plan.  In other words, EPA will override the state permitting program and will assume exclusive authority to issue permits for construction or modification of greenhouse gas sources.

The proposed “SIP Fix” can be accessed by clicking the following links: http://edocket.access.gpo.gov/2010/pdf/2010-21701.pdf (the “SIP Call” identifying the states that do not have rules in place which will allow the air permitting agencies to regulate greenhouse gases) and http://edocket.access.gpo.gov/2010/pdf/2010-21706.pdf (the “Federal Implementation Plan” or “FIP”).