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Supreme Court Issues Opinion on Tailoring Rule

September 01, 2014
Author: Stan Parton

About this time last year, we published a blog that detailed a Court of Appeals decision to vacate the Environmental Protection Agency’s temporary deferment of the Greenhouse Gas (GHG) Tailoring Rule for biogenic emissions. The Tailoring Rule establishes the criteria power plants and refineries must abide by to comply with Clean Air Act Standards for carbon emissions. The EPA makes no distinction between fossil (coal, gas and oil) and biogenic (wood) emissions sources under the rule.

In October 2013, the Supreme Court announced its plan to review the overall validity of the Tailoring Rule (Utility Air Regulatory Group v. Environmental Protection Agency). On June 23, 2014, the Court ruled the Tailoring Rule invalid by a 5-4 decision.

The Court ruled that greenhouse gas emissions are irrelevant when determining if a facility must obtain prevention of significant deterioration (PSD) permits per the Clean Air Act. It was the opinion of the Court that the EPA went beyond its statutory authority granted under the Clean Air Act when requiring permits based on GHG emissions.

While other emissions require these permits, greenhouse gas emissions alone cannot trigger their requirement, according to the Court. This ruling is significant for pulp and paper facilities, as they are among the small industrial sources of emissions typically exempt from such permits.

The Court did, however, find that greenhouse gas emissions do come into consideration when other emission sources require a facility to obtain a permit. This caveat illustrates the ongoing need to determine how wood biomass as a renewable energy source fits into the climate change puzzle. The EPA has not yet resolved the ongoing issue of how to treat biogenic emissions sources.

Before the Court of Appeals ruled it invalid, the EPA’s three-year deferment of how to treat carbon emissions generated from biomass was set to expire on July 1. Despite the appeals court decision and a July 1 date that has come and gone, the EPA has not communicated how it intends to treat biogenic carbon emissions.

The only information available is a proposed rule - Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units - the EPA issued on January 8 this year. A portion of the rule states:

“Issues related to accounting for biogenic CO2 emissions from stationary sources are currently being evaluated by the EPA through its development of an Accounting Framework for Biogenic CO2 Emissions from Stationary Sources. In general, the overall net atmospheric loading of CO2 resulting from the use of a biogenic feedstock by a stationary source, such as an EGU [electric generating unit] , will ultimately depend on the stationary source process and the type of feedstock used, as well as the conditions under which that feedstock is grown and harvested.”

This seems to indicate the EPA is on track to account for the benefits of biomass in energy production, but when it will do so remains unknown. Administrator Gina McCarthy has indicated she hopes the Agency will complete the accounting framework sometime this year, and some industry experts expect a final rule to be handed down any day now.

While we wait for the EPA to answer how it will treat biogenic carbon emissions, the decision of the Supreme Court indicates biogenic carbon is at the very least no worse than fossil carbon. It is time for policy makers to adopt an accounting framework that shows the true benefits of biomass.

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