On July 24, 2014, the U.S. Environmental Protection Agency (EPA) Office of Air and Radiation issued a Memorandum to all EPA Regions regarding the issuance and enforcement of Greenhouse Gas (GHG) related air permits following the Supreme Court's Decision in Utility Air Regulatory Group v. Environmental Protection Agency (No. 12-1146). In Utility Air Regulatory Group, the Court held that EPA may not use greenhouse gases as a pollutant in determining whether a source is a major source required to obtain a Prevention of Significant Deterioration (PSD) or Title V permit. EPA's Memorandum explains to the regions that this decision affects sources that are only considered major sources as a result of GHG emissions ("Step 2" sources), but does not affect sources that are required to obtain a Title V or PSD permit for a conventional pollutant (e.g. particulate matter or sulfur dioxide) ("Step 1" or "anyway sources" sources).

To comply with the Supreme Court's Decision regarding Step 2 sources, EPA Regional Offices were informed that EPA will not apply or enforce "Federal regulations or EPA-approved SIP provisions that require a stationary source to obtain a PSD permit if GHG and the only pollutant (i) that the source emits or has the potential to emit above the major source thresholds, or (ii) for which there is a significant emissions increase and a significant net emissions increase from a modification." Similarly, EPA will no longer require a "stationary source to obtain a title V permit solely because the source emits or has the potential to emit greenhouse gases above the major source thresholds."

Step 1 source requirements will remain unchanged. "EPA intends to continue applying the PSD BACT [Best Available Control Technology] requirement to GHG emissions if the source emits or has the potential to emit 75,000 tons per year (tpy) or more of GHG on a carbon dioxide equivalent (CO2e) basis. With respect to modified ‘anyway sources,' the EPA intends to continue applying the PSD BACT requirements to GHG if both of the following circumstances are present: (1) the modification is otherwise subject to PSD for a pollutant other than GHG; (2) the modification results in a GHG emissions increase and net GHG emissions increase equal to or greater than 75,000 tpy CO2e and great than zero on a mass basis."

In addition to summarizing the modifications in permit requirements, the EPA also identified the next steps to be taken regarding the decision. Once the Supreme Court makes the decision final and sends the decision to the D.C. Circuit for further proceedings, the EPA and the Department of Justice will begin consultation regarding the identification of particular parts of the regulations that require revision or elimination.

Finally, EPA observed that even though it no longer intends to require permits for Step 2 sources, individual states may decide to require permits for such sources. Therefore, it is important to make sure facilities understand state air permitting requirements for GHGs in the aftermath of Utility Air Regulatory Group.

For more information regarding how the Supreme Court's Decision may impact your industry, please contact Jeff Talbert in Preti Flaherty's Climate Strategy and Environmental Groups, at 791-3000.