The Federal Nexus In EPA GHG Permitting: Additional Burdens On Permit Applicants

Introduction

Beginning on January 2, 2011, the U.S. Environmental Protection Agency (the EPA) began permitting greenhouse gases (GHGs) through the Prevention of Significant Deterioration (PSD) program of the Clean Air Act (the CAA).1 Most states directly issue GHG PSD permits, but EPA currently retains authority to issue GHG permits in Arizona, Arkansas, Florida, Idaho, Oregon, Texas, and Wyoming.2 Permit applicants in these states will find themselves confronted with additional federal permitting requirements. When EPA retains authority to issue PSD permits, the requirements of the Endangered Species Act (the ESA)3 and the National Historic Preservation Act (the NHPA)4 become part of the PSD permitting process.5 This article highlights the unique burdens GHG permit applicants face in states where EPA issues GHG PSD permits, as exemplified by the Lower Colorado River Authority's (LCRA) experience with federal GHG permitting for its Thomas C. Ferguson natural gas-fired power plant (the Ferguson plant).6

GHG PSD Permitting

Under the PSD program, major stationary sources7 in attainment areas must obtain a permit prior to beginning construction or performing certain modifications.8 PSD permitting includes a review of potential control technologies as well as an air quality impact review.9 Since 2011, EPA and various state permitting authorities have issued over sixteen air quality permits reflecting Best Available Control Technology determinations for GHGs.10

The Federal Nexus

Although GHG requirements represent new obligations for PSD permit applicants, environmental laws outside of the CAA also play a role in GHG permitting when the EPA issues the permit. Before discussing the additional laws implicated by EPA's issuance of PSD permits, we note first that curiously, one major environmental law is not: The National Environmental Policy Act (NEPA).11 Generally, NEPA requires federal agencies to analyze the consequences of "major Federal actions significantly affecting the quality of the human environment."12 Regulations promulgated by the Council on Environmental Quality (CEQ) state that a "major Federal action" includes the "[a]pproval of specific projects . . . by permit or other regulatory decision . . ."13 On its face, NEPA and its implementing regulations seem to cover the EPA's issuance of a PSD permit. This would require that GHG PSD permit applicants prepare an Environmental Assessment (EA) or, if necessary, a more extensive Environmental Impact Statement (EIS) as part of their permit application to EPA.14 Section 7(c) of the Energy Supply and Environmental Coordination Act (ESECA) of 1974, however, exempts actions taken by EPA under the CAA, such as PSD permitting, from the requirements of NEPA.15 ESECA's statutory bypass of NEPA's substantial obligations means that EPA cannot require permit applicants to prepare an EA or an EIS for their projects.

Regrettably, permit applicants cannot avoid other federal environmental analyses triggered by the EPA's issuance of a PSD permit. Section 7 of the ESA requires that federal agencies consult with the U.S. Fish and Wildlife Service (USFWS) and/or the National Marine Fisheries Service (NMFS) (collectively referred to as the Service) to "insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species."16 Additionally, section 106 of the NHPA requires any Federal agency with the authority to license a project to take into account the effects of the project on historic properties, and afford the Advisory Council on Historic Preservation (ACHP) a reasonable opportunity to comment.17

1. The Endangered Species Act

   EPA's issuance of a PSD permit may trigger ESA section 7 consultation with the Service. Generally, the ESA prohibits the taking of endangered or threatened wildlife species (referred to as listed species).18 The term "taking" is broadly defined and means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to engage in such conduct.19 ESA section 7 requires that federal agencies ensure that any activity an agency funds, authorizes, or carries out does not jeopardize the continued existence of a listed species or result in the destruction or adverse modification of a listed species' designated critical habitat.20 Any federal permitting decision with the potential to impact a listed species requires consultation with the Service. Consultation is required only for actions that "may affect" a listed species or critical habitat.21

   A federal agency must analyze all the impacts, including any air emissions associated with the proposed project, on listed species within the project area. Under a strict reading of the ESA, the argument could be made that sources of substantial GHGs and any resulting marginal effects on climate from those GHG emissions may result in an unlawful take of a listed species. This would require consultation under section 7 to analyze the effects of a proposed project's GHG emissions. Several federal agencies, however, have determined that they do not need to consult under section 7 with respect to GHGs.22 Thus, permit applicants are generally not required to analyze the effects of GHGs on listed species within the project area. Instead, applicants must analyze only the effects of regulated criteria pollutants, volatile organic compounds (VOCs), hazardous air pollutants (HAPs), and heavy metals. And so, perversely, a permitting obligation triggered by GHG emissions requires consideration of all environmental effects other than those from GHG emissions.

   The requirements of the ESA impose substantial burdens on permit applicants. First, applicants must review the Service's and the relevant state agency's current list of threatened or endangered species found in the project's "Action Area."23 Regulations define the Action Area as "all areas to be affected directly or indirectly by the Federal action and not merely the immediate area involved in the action."24 Indirect effects are those that are caused by the action and are later in time, but still are reasonably certain to occur.25 If no species or their critical habitat is affected by the proposed project, no...