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The U.S. Supreme Court ruled on June 23 in Utility Air Regulatory Group (UARG) v. EPA  that EPA is prohibited under the Clean Air Act (CAA) from regulating stationary sources via the Title V and Prevention of Significant Deterioration (PSD) programs based solely on greenhouse gas (GHG) pollutants. Publicly owned treatment works (POTWs) will benefit from this decision because the vast majority are considered non-major sources under the CAA and potentially faced future Title V and PSD permitting due to GHG emissions generated onsite by burning of biogas and/or biosolids, process emissions, or other sources of GHG emissions.

The Court’s decision will keep many POTWs out of the Title V and PSD programs altogether and allow others to narrow the scope of their Title V obligations. This Advocacy Alert provides details on the decision and its implications for NACWA members. NACWA has long advocated to exempt POTWs from CAA permitting requirements based solely on GHG emissions, both in separate federal litigation and with EPA. This week’s ruling by the Supreme Court is consistent with NACWA’s advocacy to avoid GHG permitting for POTWs, and the Association is pleased with the outcome. Members with any questions about the decision and its impact should contact Nathan Gardner-Andrews at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or Cynthia Finley at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Background

In 2010, EPA determined that it was required under the CAA to regulate GHG emissions from stationary sources via the Title V and PSD programs, and the Agency issued a Tailoring Rule to clarify which stationary sources would be covered. Under the Tailoring Rule, POTWs that reached the specified GHG emission thresholds would need to meet CAA permitting requirements. EPA also issued a separate deferral rule that would have deferred regulation of biogenic emissions under the Tailoring Rule for three years. Biogenic emissions include emissions from wastewater treatment processes and the combustion of biogas and biosolids, as well as the combustion of other biomass, such as agricultural and forest products.

EPA’s decision to exempt biogenic sources was challenged in a separate federal lawsuit by environmental activist groups before the U.S. Court of Appeals for the District of Columbia. NACWA participated in that case to help defend the biogenic exemption, but the D.C. Circuit ultimately struck down the exemption in July 2013. However, because a number of separate legal challenges had been filed to EPA’s underlying efforts to regulate GHG emissions from stationary sources – all of which were ultimately consolidated into the UARG case -- the D.C. Circuit stayed its decision on the biogenic exemption pending resolution by the Supreme Court of the UARG case.

In this week’s UARG decision, the Supreme Court reviewed the Tailoring Rule and how EPA sought to regulate GHG emissions for stationary sources under the CAA. The Court affirmed EPA’s authority to regulate GHGs from stationary sources but rejected the way EPA proposed to implement that authority. The Court held that EPA cannot impose Title V or PSD permitting requirements on stationary sources based only on emissions of GHGs. At the same time, the Court ruled that sources already subject to PSD permitting requirements (so-called “anyway” sources because they are required to undergo PSD permitting “anyway” for conventional, non-GHG emissions) could be required to include greenhouse gas emissions in their best achievable control technology (BACT) analyses.

POTW Title V Permit Determinations

The Court’s decision will affect the number and scope of Title V permits required for POTWs. For the vast majority of POTWs that are not already considered major source emitters under Title V, this ruling prohibits EPA from using GHG emissions alone to require that a POTW obtain a federal operating permit. Whether the GHGs are biogenic is now irrelevant because all GHGs are excluded from the major source determination for Title V purposes. The decision will not affect the small number of POTWs that are required to obtain Title V permits because they are currently major sources for non-GHG pollutants.

The Court’s decision may also affect the scope of Title V permitting for the POTWs required to obtain a Title V permit due to the Sewage Sludge Incinerator (SSI) rule. POTWs that operate incinerators for biosolids management have been required to apply for a Title V permit as one of their new obligations under the SSI rule. For POTWs that did not previously have a Title V permit, the SSI rule allows the permitting authority to issue a Title V permit that covers only the SSI unit. Prior to the UARG decision, GHG emissions in excess of the major source threshold would have been a justification for issuing a facility-wide Title V permit. After the Court’s decision, these POTWs would be justified in asking the permit authority to limit the scope of the Title V permit to their SSI units as allowed under the SSI rule. Note, however, that some states may choose to proceed with facility-wide Title V permitting on the basis that they have the discretion to be more stringent than what federal rules require.

POTW Prevention of Significant Deterioration (PSD) Permitting

The Court decision also narrows the circumstances when POTWs will trigger major source PSD permitting obligations. PSD applies only to major stationary sources. Under the UARG decision, POTWs can no longer be considered major PSD sources based on their GHG emissions alone. The Court determined that the PSD program will only regulate GHG emissions at existing sources that are major for a non-GHG pollutant and for which PSD is triggered by a modification causing a significant net emission increase of non-GHG pollutants.

Very few POTWs in the country are major PSD sources based on non-GHG emissions. Fewer still will undergo modifications that trigger PSD based on a significant net emission increase of non-GHG pollutants. However, to the extent a POTW triggers PSD anyway based on its non-GHG emissions, the Court found that EPA could require the source apply BACT to GHG emissions resulting from the PSD project. But the Court also affirmed EPA’s discretion to set a de minimis level for GHGs below which a project would not be required to apply GHG BACT. More agency rulemaking on this issue is expected in the future to establish this necessary justification. NACWA will work closely with EPA to set a de minimis level that would further exclude POTWs from PSD requirements for GHGs.

State Regulations May Be More Stringent

The Court decision did not address whether states could be more stringent in their treatment of GHGs.  Thus, the decision may not be self-executing in states that have adopted the Tailoring Rule into their state rules.  States may need to act to remove their Tailoring Rule provisions to implement this decision.  States may also need to consider how biogenic GHGs are treated in their regulations.  POTWs should consult with their state regulators to determine the status of permitting requirements in their state.

Conclusion

POTWs benefit from the U. S. Supreme Court’s UARG v. EPA decision in the following material ways:

1. 1. The Court decision eliminates the risk that GHGs will increase the number of POTWs subject to Title V and PSD permitting, without further debate over whether biogenic sources should be exempt or not. Unless POTWs are already considered CAA major sources subject to Title V and PSD for conventional, non-GHG emission, they do not have to worry about new permitting requirements based solely on GHG emissions from onsite processes such as burning of biogas and/or biosolids, process emissions, or other sources of GHG emissions.
   2. By eliminating GHGs as a trigger for Title V permitting, POTWs obtaining new Title V Permits under the SSI rule for their incinerators are better able to avoid facility-wide Title V permits and limit their federal operating permit burden to their SSI units only.
   3. While the Court affirmed EPA’s authority to impose GHG BACT on the major sources that trigger PSD based on non-GHG emissions anyway, POTWs will rarely trigger PSD permitting when GHGs are excluded from the applicability determination.

POTWs should check with their state regulators to determine how their state is implementing the decision and if their state is imposing more stringent requirements related to GHGs. NACWA will continue to track developments on this issue and report to the membership as appropriate.