When the Environmental Review Board (EAB) issued its decision in Deseret Power, the Sierra Club and many others across the Internet declared victory claiming the decision would block permits for new coal fired power plants for the immediate future. Looks like they may have been premature…
The EPA issued a significant interpretive memorandum in response to the Deseret Power case which states CO2 is not a regulated pollutant under the Clean Air Act. While more litigation will ensue, the permitting process can move forward on pending permits for new coal plants.
Background on Deseret Power
At issue in Deseret Power was whether controls were required (BACT) for CO2 for new coal-fired power plants. Under the Clean Air Act, controls are required for CO2 if it is a "regulated pollutant." The Sierra Club pointed to provisions requiring monitoring of CO2, arguing those provisions were sufficient to be deemed "regulation." EPA said monitoring requirements were insufficient and that past interpretations dictated a conclusion that monitoring was not enough to qualify as regulation.
As indicated in my post on the decision, the EAB in essence punted on the issue. They rejected the Sierra Club’s argument that the plain text of the Clean Air Act required regulation. They also rejected the EPA analysis that past interpretations required it to conclude monitoring was not enough to trigger the need for controls. However, the EAB said EPA has discretion to decide whether monitoring is enough to trigger the need to control through a new binding interpretation of what is sufficient to be considered a "regulated pollutant."
EPA Fills the Vacuum Left By the EAB
Here is Administrator Johnson’s review of the EAB order, recognizing the discretion his agency retains:
The Board agreed with the Region and OAR that the statutory phrase "subject to regulation under this Act" is ambiguous. However, as discussed above, the Board also concluded that the Region’s reason for not including a BACT limit for C02 in the permit – that it was bound by a historic interpretation of the phrase "subject to regulation" – was not supported by the administrative record for the permit. Id. Thus, the Board remanded the permit to the Region to "reconsider whether or not to impose a C02 BACT limit in light of the Agency’s discretion to interpret, consistent with the CAA, what constitutes a ‘pollutant subject to regulation under this Act."’ The EAB also encouraged EPA offices to consider whether to undertake an action of nationwide scope to address the interpretation of the phrase "subject to regulation under the Act."
After citing to EPA’s discretion, EPA concludes monitoring is insufficient to trigger controls for CO2:
EPA interprets the definition of "regulated NSR pollutant" in 40 C.F.R. 8
52.21(b)(50) to exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either a provision in the Clean Air Act or regulation promulgated by EPA under the Clean Air Act that requires actual control of emissions of that pollutant. This interpretation is supported by the language and structure of the regulation and sound policy considerations.
EPA supports its interpretation by looking at the dictionary definitions of the words "subject to regulation." However, this justification is pretty close to the one put forward to the EAB in the appeal which the EAB rejected. EPA further supports this interpretation by arguing it amounts to sound public policy:
Furthermore, an interpretation that preserves the Agency’s ability to gather information to inform the Administrator’s judgment regarding the need to establish controls on emissions without automatically triggering such controls in no way limits the Agency’s authority to require controls on emissions of a particular pollutant when the Administrator determines they are warranted. This
interpretation preserves the Administrator’s authority to require control of individual pollutants through emissions limitations or other restrictions under various provisions of the Act, which would then trigger the requirements of the PSD program for any pollutant addressed in such an action.
EPA also attempts to create a better record in support of its interpretative ruling by citing to a series of previous permitting decisions that are consistent with this approach. The permits arguably "demonstrate that EPA has not in practice issued PSD permits establishing emissions limitations for pollutants that are subject to only monitoring and reporting requirements."
- More Litigation to Follow: This interpretative memo will be challenged. EPA certainly builds support for its interpretation, most notably by citing to a series of prior permit decisions that are in harmony with its interpretation. However, it is principally relying on a similar textual interpretation of the phrasing of the Clean Air Act that had, in part, been rejected by the EAB in Deseret.
- EPA Rushed to Issue the Memo Before the Change in Administration: The EAB recognized EPA had discretion to go either way in deciding to regulate CO2 under the Clean Air Act. The Bush Administration did not want to allow this decision to be made by the next Administration, so it issued the memo without allowing for public comment which would have delayed finalization of the memo. Administrator Johnson justifies cutting out public comment by citing to the need to keep the permitting process moving forward because a large number of permits put in limbo following Deseret.
- The Bush Administration’s action ties the Obama Administration hand for the short term: Administrator Johnson’s memo cites to a series of cases that "recognized that an Agency has the flexibility to establish an initial interpretation of a regulation without engaging in a notice and comment process." This memorandum is meant to be that "initial interpretation", which means the Obama Administration could not change it without going through a formal rulemaking process with a public comment period. In the short term, this action keeps the permit processing moving forward for nearly 100 pending permits.