EAB ruling in In re Deseret Power Electric Cooperative opens door to a new regulatory era on climate change
The USEPA Environmental Appeals Board (EAB) issued a potentially groundbreaking decision in In re Deseret Power Electric Cooperative (PSD Appeal No. 0703) by ruling that EPA Region 8 was incorrect when it exempted a new coal fired unit at an existing Utah power plant from limiting carbon dioxide emissions and remanded the permit decision to the Region to reopen the record and reconsider its refusal to impose limits on carbon-dioxide emissions. In its November 13 decision the EAB rejected the Region 8 contention that it was not required to regulate carbon dioxide because the greenhouse gas, while a “pollutant” under the Clean Air Act, was not subject to current regulatory standards. (“We hold that this conclusion is clearly erroneous because the region’s permitting authority is not constrained in this matter by authoritative agency interpretation.”)
Under EPA’s existing Prevention of Significant Deterioration (PSD) rules, new and modified projects in areas that have acceptable air quality must install costly best available control technologies or “BACT” if the construction could cause an increase in the emissions of “pollutants.” The decision does not mandate industry to install BACT to meet greenhouse gas emission limits. Relying on the recent U.S. Supreme Court ruling in Massachusetts v. EPA, the ruling only requires the Region to develop and adequate record for its decision that does not rely on the “historical agency interpretations” regarding the regulation of CO2.
The EAB decision prominently recognizes the national importance of the climate change issue. The EAB ruling cautions that EPA “would be better served by the Agency addressing the interpretation [of CO2 regulation] in the context of an action of nationwide scope, rather than through this specific permitting proceeding.” Nevertheless, the decision clears the way for the Obama administration to impose new limits on CO2 emissions through the administrative process and permitting decisions. The Obama administration might use this decision and its administrative authority under the Clean Air Act as leverage to obtain sensible climate change legislation. The enormous cost and delay of applying PSD permitting and BACT with regard to CO2 emissions to existing facilities on construction projects of all sorts involving energy, infrastructure, and general industrial expansion would be disastrous in this sharply down economy. Nearly every large facility construction project would trip the 250 ton per year major source category if CO2 is regulated under the current Clean Air Act, causing years of delay in permitting and huge costs of retrofitting existing facilities. If Congress does not quickly address climate change through legislation, the EAB has shown through the Deseret decision that the EPA will.
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