Appendix B EPA’s Evaluation of the June 23, 2014 United States Supreme Court Decision on Green

House Gas emissions on in frastructure SIP reviews

With respect to the infrastructure elements contained in Section 110( a)(2)(C) and (J), EPA interprets the Clean Air Act to require each state to make an in frastructure SIP submission for a new or revised NAAQS that dem onstrates that the air agency has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. One requirement of Section 110(a)(2)(D)(i)(II) may also be satisfied by demonstrating the air agency has a complete PSD permitting program correctly addressing all regulated NSR pollu tants. Texas has shown that it currently has a PSD program in place that co vers all regulated NSR pollutants, including greenhouse gases (GHGs).

On June 23, 2014, the United States Supreme Court issued a decision addr essing the application of PSD permitting requirements to GHG emi ssions. (see Utility Air Regulatory Group v. Environmental Protection Agency, 134 S.Ct. 2427) The Supreme Court said that the EPA may not treat GHGs as an air pollutant for purposes of determining whether a source is a major source required to obtain a PSD permit. The Court also said that the EPA could c ontinue to require that PSD permits, otherwise required based on emissi ons of pollutants other than GHGs, contain limitations on GHG emissions based on the appli cation of Best Available Control Technology (BACT). In order to act consistently with its understanding of the Court’s decision pending further judicial action to eff ectuate the decision, the EPA is not continuing to apply EPA regulations that would require that SIPs incl ude permitting requirements that the Supreme Court found impermissible. Specifically, EPA is not applying the requirement that a state’s SIPapproved PSD program require that sources obtain PSD permits when GHGs are the only pollutant (i) that the source emits or has the po tential 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 51.166(b)(48)(v)). EPA anticipates a need to revise federal PSD rules in light of the Supreme Court opinion. In addition, EPA anticipat es that many states will revise their existing SIP-approved PSD progr ams in light of the Supreme Court’s decision. The timing and content of subsequent EPA actions with respect to the EPA regulations and state PSD program approvals are expected to be in formed by additional legal process before the United States Court of Appeals for the District of Columbia Circuit. At this juncture, EPA is not expecting states to have re vised their PSD programs for purposes of infrastructure SIP submissions and is only evaluating such submissions to assure that the state’s program correctly

addresses GHGs consistent with the Supreme Court’s decision.

EPA has previously approved Texas SIP revision s submitted to align the state’s PSD program rules for GHGs with federal requirements. At present, EPA has determined the Texas SIP is sufficient to satisfy the infrastructure elements of Sections 110(a)(2)(C), partof (D)(i)(II), and (J) with respect to GHGs because the PSD permitting program previously approved by EPA into the SIP continues to require that PSD permits (otherwise required based on emissions of pollutants other than GHGs) contain limitations on GHG emissions based on the application of BACT. Although the approved Texas PSD permitting program may currently contain provisionsthat are no longer necessary in light of the S upreme Court decision, this does not render the infrastructure SIP submission inadequate to sati sfy the infrastructure elements of Sections 110(a)(2)(C), a portion of (D)(i)(II ), and (J). The SIP contains the necessary PSD requirements at this time, and the applicati on of those requirements is not im peded by the presence of other previously-approved provisions regarding the permitting of sources of GHGs that EPA does not consider necessary at this time in light of th e Supreme Court decision. Accordingly, the Supreme Court decision does not affect EPA’s proposed appr oval of Texas’ infrastructure SIP as to the requirements of the infrastructure elements of Sections 110(a)(2)(C) and (J) or the portion of Section 110(a)(2)(D)(i).