The U.S. Environmental Protection Agency issued a new rule to require permits for emissions of carbon dioxide and other greenhouse gases from stationary sources on May 13, 2010. The rule will take effect in 2011 unless Congress adopts a new legislative framework to address climate change.

Starting in 2011, the EPA's rule will require new and modified sources covered by the rule to adopt best available control technology for GHGs. The EPA is in the process of developing guidance for BACT determinations on GHGs.

The EPA's rule limits the initial scope of regulation to very large commercial facilities, including electrical generating plants and oil refineries. Most small businesses, including small farms, restaurants and apartment buildings, will not be covered.

The new permitting rule for stationary sources is in addition to the mandatory GHG reporting rule that the EPA finalized in 2009 and that will require annual reports of GHG emissions to the EPA starting in 2011. However, at least for now under the EPA's new rule, the thresholds for permitting of GHG emissions are higher than the thresholds for reporting of GHG emissions. (Click here to read Mandatory Greenhouse Gas Reporting Rules Finalized: First Step Toward Regulating Carbon Emissions.) As a result, a facility that must report GHG emissions under the 2009 rule will be required to obtain a permit for those emissions only if the emissions exceed the higher thresholds in the new rule.

The new permitting rule follows from the 2007 decision in Massachusetts v. EPA, in which the U.S. Supreme Court found that GHGs are "air pollutants" under the Clean Air Act. In late 2009, the EPA issued findings that GHGs endanger public health and welfare and that GHG emissions from new motor vehicles contribute to GHG pollution. (Click here to read EPA Makes it Official: Greenhouse Gases Threaten Public Health and Welfare.) As a result, starting on January 2, 2011, the EPA will be regulating both light-duty vehicles and stationary sources with GHG emissions over certain limits.

The EPA's new rule phases in permitting of GHG emissions from stationary sources through a two step process:

• Step 1, starting January 2, 2011. Permitting of GHG emissions under the Prevention of Significant Deterioration and Title V programs will only be required for sources that would require permits anyway due to the emission of non-GHG pollutants. No source will be required to have a PSD or Title V permit based on GHG emissions alone. For sources that require a permit anyway, the PSD permitting threshold for new or increased GHG emissions will be 75,000 tpy. 
• Step 2, starting July 1, 2011. Permit requirements will be expanded to require PSD and Title V permits for sources with GHG emissions over certain levels even if the sources would not require permits based on emissions of non-GHGs alone. The thresholds for expanded permitting coverage of GHGs will be 100,000 tpy for new and existing sources. Permits will also be required for increased GHG emissions of 75,000 tpy or more from sources that already have the potential to emit at least 100,000 tpy.

EPA estimates that, with the rule in place, the additional burden under the PSD program will be 1,600 permitting actions, costing $36 million to administer. Of these 1,600 permitting actions, 700 will be for sources that already require permits due to non-GHG emissions, and 900 will be due to GHG emissions alone. In the case of the Title V program, 15,550 sources will require permits, costing permitting authorities $69 million. Of the 15,550 sources, 15,000 already have operating permits and only 550 more (primarily solid waste landfills and industrial manufacturing plants) will require permits due to GHG emissions alone.

During 2011 and 2012, the EPA will also consider whether to phase in regulation of smaller GHG sources. The EPA will also undertake a study, to be completed by April 30, 2015, to address the burden of expanding the scope of regulation. Based on the study, the EPA is required to adopt a revised rule by April 30, 2016. Until the study and revised rule have been completed, EPA may not regulate stationary sources with the potential to emit less than 50,000 tpy of GHGs.

The EPA's rule is expected to increase pressure on Congress to adopt climate change legislation that would impose new methods of controlling GHGs and significantly limit EPA's authority to regulate GHGs. Furthermore, court challenges to the rule are anticipated.

In addition to carbon dioxide (CO₂), the GHGs subject to regulation under the EPA's rule include methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), petrofluorocarbons (PFCs) and sulfur hexafluoride (SF₆). The five additional gases have substantially more potential per ton to cause global warming than CO₂. Accordingly, emissions of the other five gases are measured in terms of CO₂ equivalents (CO₂e), and the total GHG emissions from a source is the sum of all CO₂e emissions.