UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460



## JAN 1 22011 THE ADMI NISTRATOR

The Honorable JeffMerkley United States Senate Washington, D.C. 20510

Dear Senator Merkley:

Thank you for your recent letter about the way that carbon dioxide ("C02") emissions from biomass burning will be treated in Clean Air Act pennitting ofconstructionprojects at large stationary sources. As you know, biomass canbe part ofa national strategy to reduce dependence on fossil fuels, and efforts are underway to foster the expansion ofrenewable
resources and promote biomass as ways ofaddressing climate change and enhancing forest management.

Last July, EPA solicited views from the public on approaches to accounting for C02 emissions from biomass and otherbiogenic sources, including whether some orall ofa source's biomass C02 emissions couldbe discounted based on a detennination that they are canceled out by the C02 absorption associated with growing the fuel. EPA received infonnation supporting the conclusion that certain biomass such as waste materials whose inevitable decomposition will result in greenhouse gas emissions anyway have only very limited climate impacts when combusted as fuel. EPA also, however, received information indicating that the use ofcertain other biomass as fuel could have more significant climate impacts.

In November, EPA announced that it was reviewing the public's comments with the goal ofdeciding whether the Clean Air Act would allowthe use ofsome kind ofdiscounting system
or other method reflecting the net impacts ofbiomass combustion in detennining the applicability ofthe pre-constructionpennittingrequirement to C02 emissions from biomassfired units. Your recent letter urges EPAto make a positive detennination and to start a rulemaking promptly.

As ofJanuary 2,2011, only those large stationary sources thattrigger the preconstructionpennitting requirement for otherpollutants need to address greenhouse gases such
as C02. No source will be subject to the pre-construction pennitting requirement solely because ofits greenhouse gas emissions until after July 1, 2011. That is oneresult ofthe Tailoring Rule that EPA issued last year. With the approach ofJuly 1in mind, I am announcing today that, by that date, EPA will complete a rulemaking to defer for three years the application ofthepreconstructionpennitting requirement to biomass and otherbiogenic C02 emissions.

Internet Address (URL)

_ httpl/www.epa go'l Recycled/Recyclable

_ Printed with Vegetable Oil Based Inks on 100% Postconsumer. Process Cilionne Free Recycled PaperThe purpose ofthe deferral is to give EPA time to effectuate a detailed examination of the science associated with biogenic C02 emissions and to considerthe technical issues that the agency must resolve in orderto account for biogenic C02 emissions in ways that are scientifically sound and also manageable inpractice.

EPA will ensure thatpartners within the federal government and scientists outside ofit with relevant expertise play meaningful roles in the examination. Following the examination's completion, EPA will use its work product in establishing, by notice-and-commentrulemaking, the system for determining the applicability ofthe Clean Air Act'spre-constructionpermitting requirement to projects that result in biomass and other biogenic C02 emissions. EPA'sintent is to ensure that both the scientific examination and the resulting rulemaking are completed within the three-year deferral period mentioned above.

Concurrent with the proposal to defer application ofthe pre-constructionpermitting requirement (known as "Prevention ofSignificant Deterioration," or "PSD")to biomass and otherbiogenic C02 emissions, EPA intends to issue interim guidance to help permitting authorities establish a basis for concluding thatthe best available control technology (or "BACT," which is one ofthe statutory conditions for receiving a permit) for greenhouse gas emissions at such sources is simply combustion ofbiomass fuels. As noted above, under the Tailoring Rule, as ofJanuary 2,2011, large stationary sources that become subject to PSD for otherpollutants will need to address greenhouse gases such as C02. Ifsuchpermits are issued before July 1,2011,then existing regulations might require that the permits meet the BACT requirement for greenhouse gas emissions during an interim period oftime. In guidance issued lastNovember, EPA explicitly recognized that a permitting authority might determine that certain types ofbiomass by themselves are BACT for greenhouse gas emissions after considering the environmental, energy, and economic benefits ofusing the fuel. EPA's supplemental guidance will provide a basis thatpermitting authorities may use to supportthe conclusion, during the interim period, that BACT for C02 at such sources is simply the combustion ofbiomass fuel.

I hope you will see the steps described in this letter as following through on myprior commitmentto exercise whatever discretion the Clean Air Act affords to avoid discouraging the
use ofrenewable, domestically·produced fuel in powerplants and factories. Ifyou have additional questions, please do not hesitate to contact me orto have your staffcontact David McIntosh in EPA's Office ofCongressional and Intergovernmental Relations.