MEMORANDUM 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON. D.C. 20460 

OF"ICE OF 

AIR AND RADIATION 

SUB.JECT: Next Steps and Preliminary Views on the Application of Clean Air /\ct Permitting 

Programs to Greenhouse Gases Following the Supreme Court's Dec ision in Utility Air 

Regulatory Group 1·. Environmental Protection Agency 

FROM: 

TO: 

Janet G. McCabe. Acting Assistant Administrator 

Office of Air and Radiation 

Cynthia G iles. Assistant Administrato 

Office or Enforcement and Complianc 

Regional Administrators. Regions 1-10 

On .lune 23. 2014. the United States Supreme Court issued a decision addressing the application of 

stationary source permitting requirements to greenhouse gases (GHG). Utility Air Regulatory Group 

(UA Ru) v. Em·ironme111a/ Proteclivn Agency (EPA) (1 o. 12-1146). The EPA actions at issue in the case 

included those generally known as the --Tailoring Rule .. and the ··Timing Decision:· In very brief 

summary, the Supreme Court sa id that the EPA may not treat greenhouse gases as an air pollutant for 

purposes of determining whether a source is a major source required to obtain a Prevention of 

Significant Deterioration (PSD) or title V permit. The Supreme Court also sa id that the EPA could 

continue to require that PSD permits. otherwise requ ired based on emissions of conventional pollutants, 

contain limitations on GHG emissions based on the application of Best Avai lable Control Technology 

(BACT). The EPA is continuing to examine the implications of the Supreme Courfs decision, including 

how the EPA will need lo revise its permitting regulations and related impacts to state programs. 

There will be further federal court action to apply the decision, but we know that you, as well as o ur 

partner agencies in state, loca l and tribal governments, have questions regarding how the decision affects 

PSD and title V permitting requirements in the meantime. Some of these questions have near term 

impl ications, in particular those related to pending PSD and title V permitting actions. The EPA intends 

to acti vely engage with stakeholders on time-sensitive actions, such as permit appli cations, state 

program submissions, and stationary source construction that may no longer need to meet certain 

penTiitting requirements. The EPA is likely to take other steps in the longer term and to respond to 

further court action in this case as needed. 

I 1terne1 Adt rn~s (URL) • hflP"''Wl'lw epa.1ov 

Recycled/Recyclable • f' 1 le I w1l" Vegeta"le 01 Ba el lrK n 100 PostCC">Urnf>r. Pr'.• Chlu1 "' Free Recycled Pap•ff 
2 

Pending further EPA engagement in the ongoing judicial process before the District of Columbia Circuit 

Court of Appeals (D.C. Circuit), the EPA plans to act consistent "vith its understanding of the Supreme 

Court's decision. This memorandum has two parts. First. it explains how the EPA intends to proceed at 

this point with respect to permit applications for Tailoring Rule ''Step 2" sources and PSD modifications 

that were previously classified as major based solely on GHG emissions (thus requiring that the sources 

get permits). Second. this memorandum provides preliminary guidance in response to several questions 

regarding ongoing permitting requirements for '·anyway sources .. and some additional issues pertaining 

to permitting requirements for "Step r sources. We belie\'e that the status of pending permit 

applications and whether certain projects need to apply for PSD and title V permits in light of the 

Supreme Court decision may be the most immediate questions. 

1. Permit Applications for Sources and Modifications Previouslv Classified as "Major" Based 

Solely on Greenhouse Gas Emissions ("Step 2" Sources) 

In order to act consistent with its understanding of the Supreme Court's decision pending judicial action 

to effectuate the final decision, the EPA will no longer require PSD or title Y permits for Step 2 sources. 

More specifically, the EPA wi II no longer apply or enforce federal regulatory provisions or the EPAapproved PSD State Implementation Plan (SIP) provisions that require a stationary source to obtain a 

PSD permit if greenhouse gases are the only pollutan t (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 (e.g., 40 CFR 52.2l(b)(49)(v)). Nor does the EPA 

intend to continue applying regulations that would require that states include in their SIP a requirement 

that such sources obtain PSD permits. 

Similarly, the EPA will no longer apply or enforce federal regulatory provisions or provisions of the 

EPA-approved title V programs that 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 (e.g., 

the regulatory provision relating to GHG under the definition of .. subject to regulation·· in 40 CFR 7 1.2). 

The EPA also does not intend to continue applying regulations that would require title Y programs 

submitted for approval by the EPA to require that such sources obtain title V permits. 

Thus, the EPA does not intend to continue processing PSD or Title V permit applications for Step 2 

sources or require new applications for such permits in cases where the EPA is the permitting authority. 

In summary, in order to act consistently with its understanding of the Supreme Court" s decision pending 

judicial action to effectuate the final decision, the EPA ,.viii not apply or enforce the following 

regulatory requirements: 

• Federal regulations or the EPA-approved PSD SIP provisions that require a stationary source 

to obtain a PSD permit if GHG are 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 (e.g., 40 CFR 

52.21 (b)(49)(v)). 

• Federal regulations or provisions in the EPA-approved title V programs that require a 

stationary source to obtain a title V permit solely because the source emits or has the 

potential to emit GI IG above the major source thresholds. 
3 

As discussed further below, we recommend that Regional Ot1ices confer with state, local and tribal 

permitting authorities and permit applicants to discuss how to handle permit applications pending with 

those agencies. 

2. Preliminarv EPA Views Regarding Other Questions Raised by Supreme Court Decision 

The remainder of this memorandum is intended simply to provide a clear statement of the EPA's present 

understanding of the implications of the Supreme Court's decision on additional subjects regarding 

permitting requirements. The following is not intended to represent a definitive or final statement by the 

agency on these issues. En fact, the EPA expects that some changes or refinements to the following 

guidance may result as the EPA examines these matters further in the course of judicial proceedings, 

discussions with stakeholders, and forthcoming action with respect to permit applications, issued 

permits, and approval of state programs. 1 

Next Steps in the Legal Process Following the Supreme Court's Decision 

Additional steps have yet to occur in the U.S. Courts to implement the Supreme Cou11 decision. Since no 

party requested reconsideration of the Supreme Court decision by the applicable deadline under 

Supreme Court rules, the EPA expects that the Supreme Court's decision will become final shortly. 

This will be the case as soon as the Supreme Court sends its decision down to the D.C. Circuit for 

further proceedings. After this occurs, we expect that the D.C. Circuit will issue an order that leads to a 

process that identifies particular parts of the regulations adopted in the Tailoring Rule and earlier EPA 

regulations that the EPA must revise (remanding the regulations) or that are struck down (vacating the 

regulations). The EPA and the Department of Justice expect to soon begin a process of consulting with 

the parties to the litigation regarding this step of the court process. 

PSD Construction Permit Requirements 

Sources Triggering PSD Based on Pollutants Other Than GHG 

The Supreme Court upheld application of the BACT requirement to greenhouse gas emissions from new 

and modified sources that trigger PSD permitting obi igations on the basis of their emissions of air 

pollutants other than GHG (also known as "Step l " or "anyway sources"). In the EPA's current view, 

Step 1 sources remain subject to the PSD BACT requirement for GHG, as well as other pollutants, if 

they emit those pollutants at or above certain thresholds. With respect to ne\"-' "anyway sources," the 

EPA intends to continue applying the PSD BACT requirement to GHG emissions ifthe source emits or 

has the potential to emit 75,000 tons per year (tpy) or more of GHG on a carbon dioxide equivalent 

(C02e) 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: (I) the 

modification is otherwise subject to PSD for a pollutant other than GHG; (2) the modification results in 

a GHQ emissions increase and a net GHG emissions increase equal to or greater than 75,000 tpy C02e 

and greater than zero on a mass basis. 

1 Since it provides genera l guidance on these issues, the remainder of this memorandum does not itself create any rights or 

impose any new obligations or prohibitions, and is not intended to be a basis for enforcement actions. The guidance that 

follows from this point may not be appropriate for all situations. and EPA retains the discretion to approach issues differently 

than recommended here in specific situa1ions that may arise. 
4 

The part of the Supreme Court opinion that affirmed application of BACT to greenhouse gases at 

" anyway sources., also noted that the EPA may limit application of BACT to greenhouse gases to those 

situations where a permit applicant's source has the potential to emit GHG above a specified threshold 

(or de minimis) level. The Supreme Court explained that the EPA would need to justify its de minimis 

threshold on proper grounds. In the meantime, to ensure compliance with the Clean Air Act at present, 

the EPA intends to continue applying BACT to GHG at "anyway sources" and processing PSD permit 

applications for "anyway sources" using a 75,000 tpy C02e threshold to determine whether a permit 

must include a BACT limitation for greenhouse gases, pending further developments. Such further 

developments may include action by the D.C. Circuit, input received by the EPA from stakeholders in 

connection with the court process, experience applying this approach in individual permitting actions, 

and further EPA action to consider whether to promulgate a de minimis level and what level would be 

appropriate. Thus, for now, the EPA believes the best course of action with respect to " anyway sources" 

is to continue applying existing regulations. 

Sources Triggering PSD Solely Based on CTHCi Emissions 

Subject to the considerations discussed below, headquarters recommends that Regional Offices confer 

with state, local, and tribal permitting authorities and permit applicants to explore their plans to respond 

to the Supreme Court's decision. These conversations should examine whether, in light of the Supreme 

Court decision, there is flexibility under state, local and tribal laws to determine that Step 2 sources no 

longer are required to obtain PSD permits prior to the completion of any actions to repeal or revise such 

regulations to in light of the Supreme Court decision. The EPA understands that some states have 

provisions in their laws that may automatically modify state-law permitting requirements based on the 

Supreme Court's decision. To the extent such provisions were approved by the EPA as part of a SIP, 

Regional Offices should encourage such states to contact the EPA to discuss implementation of those 

provisions. We do not read the Supreme Court decision to preclude states from retaining permitting 

requirements for sources of GHG emissions that apply independently under state law even where those 

requirements are no longer required under federal law. 

Regional Offices should be mindful that even if the EP !\ is not requiring Step 2 sources to obtain a PSD 

permit under federal law, such sources likely have a continuing obligation to obtain minor source 

construction permits under the applicable SIP as a result of their emissions of non-GHG pollutants. 

Thus, we recommend discussing with state, local, and tribal permitting authorities and permit applicants, 

the feasibility of converting pending permit applications into minor source permit applications and 

proceeding on that basis where appropriate. 

We plan to provide additional views in the future with respect to Step 2 sources that have already 

obtained a PSD permit, but our general thinking at this time is that it may be appropriate to ultimately 

remove GHG BACT limitations from such permits and to convert such permits into minor source 

permits where this is feasible and minor source requirements remain applicable. We encourage Regional 

Offices to contact states to discuss their ability to proceed consistent with the outcome of the Supreme 

Court decision on individual permitting matters. 
5 

Title V Operating Permits 

While the EPA will no longer apply or enforce the requirement that a source obtain a title V permit 

solely because it emits or has the potential to emit greenhouse gases above major source thresholds, the 

agency docs not read the Supreme Court decision to affect other grounds on which a title V permit may 

be required or the applicable requirements that must be addressed in title V permits. For example, the 

EPA currently believes it is still appropriate for a title V permit to incorporate and assure compliance 

with greenhouse gas BACT limits that remain applicable requirements under a PSD permit issued to a 

Step 1 "anyway source.'· 

We recommend that Regional Offices confer with state, local, and tribal permitting authorities and 

permit applicants regarding their plans to respond to the Supreme Court's decision. These conversations 

should examine whether, in light of the Supreme Court decision, there is flexibility under state, local, 

and tri bal la\VS to determine that Step 2 sources are no longer required to obtain title V permits prior to 

the completion of any actions to repeal or revise such regulations in light of the Supreme Court decision. 

To the extent that any approved state, local or tribal title V programs have provisions in their laws that 

may automatically modify state, local or tribal-law permitting requirements based on the Supreme 

Court's decision, Regional Offices should encourage such permitting authorities to contact the EPA to 

discuss implementation of those provisions. Similar to state-law construction permitting requirements, 

the Supreme Court decision does not preclude states from continuing to require that certain types of 

sources obtain operating permits meeting requirements that apply independently under state law. Thus, 

we recommend that Regional Offices advise sources to consult with their individual permitting 

authorities regarding operating permit requirements after the Supreme Court's decision. 

With respect to title V permits that have already been issued to Step 2 sources, we recommend that such 

sources consult with their title V permitting authority to determine the appropriate next steps based on 

the source's specific permitting situation. 

Federal PSD and Title V Rules, SIP and State Title V Programs 

The Office of Air and Radiation (OAR) anticipates a need for the EPA to revise federal PSD and title V 

rules2 in light of the Supreme Court opinion. In addition, OAR anticipates that many SIPs and approved 

title V programs will be revised to effectuate the Supreme Court's decision. The timing and content of 

the EPA 's actions with respect to the EPA regulations and state program approvals are expected to be 

informed by the forthcoming legal process before the D.C. Circuit. The EPA plans to consult with 

permitting authorities to determine the most efficient and least burdensome ways to accomplish any such 

revisions to state or tribal programs. 

GHG 5-Year Studv 

In the Tailoring Rule, the EPA described next steps to include a study by April 2015, referred to as the 

"5-year study," and a possible further regulatory action, referred to as "Step 4." OJ\R believes the results 

of the Supreme Court decision eliminate the need for the 5-year study. Thus, at this time, OAR is no 

longer working on the study, and we intend to inform states collecting data requested by the EPA for 

2 The EPA is still evaluating the implications of the Supreme Cowt's decision. if any, on GHG Plantwide Applicability 

Limitations which were fina li zed under Step 3 of the Tailoring Rule. 
6 

that study that this data collection is no longer necessary. In addition. the EPA does not intend to take 

further action on Step 4. The EPA is, however, continuing to evaluate GHG permitting data as 

appropriate with regard to the possible development and justification of an appropriate GHG 

significance (or ''de minimis") level for determining the application of PSD BACT requirements to GHG 

in permitting of "anyway sources." We expect that the information that states have submitted for the 5-

year study will be useful in that effort. 

Assessment of Biogenic Carbon Dioxide CC02) Emissions 

The Supreme Court's decision did not directly address the application of PSD and title V permitting 

requirements to biogenic C02 emissions. On July 12, 2013, the D.C. Circuit issued a decision (the 

Deferral decision) overturning the EPA regulation that deferred application of these permitting programs 

to biogenic C02 emissions (the Deferral Rule). Center.for Biological Diversity v. EPA , 722 F.3d 421 

(D.C. Cir. 2013 ). However, the Deferral decision has not yet taken effect because some pa1ties have 

been waiting for the Supreme Court decision to determine whether to ask the D.C. Circuit to reconsider 

its ruling on the Deferral Rule. Furthermore. court actions against the Tailoring Rule remain pending by 

parties that contend that the Tailoring Ruic caused PSD and title V programs to apply to biogcnic 

greenhouse gas emissions. Notwithstanding these matters still pending in the courts, the Deferral Rule 

itself expired on its own terms on July 21, 2014. The EPA·s work regarding the biogenic C02 

assessment framework remains ongoing and is not directly impacted by the Supreme Court>s decision. 

Nonetheless, the EPA's current view is that the Supreme Court's decision effectively narrows the scope 

of the biogenic C02 permitting issues that remain for the EPA to address. This is because, as described 

above, the EPA will no longer apply or enforce regulatory provisions requiring PSD or title V permits 

for sources solely on the basis of their GHG emissions. Continuing our current approach, OAR 

recommends that Regional Offices consult with sources and permitting authorities on biomass related 

permitting questions as they arise. 

Conclusion 

We trust this information will be helpful as the EPA pursues next steps and await further developments 

before the U.S. Courts. Should you have questions generally concerning this memorandum, plea.se 

contact Juan Santiago, Associate Division Director of the Air Quality Policy Division, Office of Air 

Quality Planning and Standards at santiago.juan@epa.gov or 919-541-1084. Should you have questions 

generally concerning the enforcement specific aspects of this memorandum, please contact Apple 

Chapman, Associate Division Director, Air Enforcement Division, Office of Civil Enforcement at 

chapman.apple@epa.gov or 202-564-5666.