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Related Practices
Related Practices

EPA Proposes to Uphold Johnson Memorandum

Beveridge & Diamond, P.C., October 22, 2009

On October 7, 2009, EPA proposed to issue a rule that would uphold the Bush Administration’s “Johnson Memorandum.”  74 Fed. Reg. 51,535 (Oct. 7, 2009).  Issued in 2008, the Johnson Memorandum reflected EPA’s position that carbon dioxide (CO2) and other greenhouse gases (GHGs) are not considered pollutants “subject to regulation” under the Clean Air Act (CAA), thus exempting these pollutants from “Best Available Control Technology” (BACT) requirements under the Prevention of Significant Deterioration (PSD) program.  The Obama Administration had previously indicated that it would reconsider the Johnson Memorandum, in order to allow for public comment.  This proposal now begins that public comment process.  The new Administration’s preferred interpretation, however, would retain the Bush Administration’s approach.

Background

The current proposal, once finalized, will resolve an issue first raised in 2007, when the Supreme Court’s decision in Massachusetts v. EPA concluded that CO2 and other GHGs were “air pollutants” under the CAA.  In light of this decision, various environmental groups concluded that if GHGs were “air pollutants” under the CAA, they must also be “pollutants subject to regulation” under the PSD program.  Because PSD permits must require BACT for all “pollutants subject to regulation” under the CAA, these groups began challenging PSD permits that did not require BACT for GHGs. See, e.g., In re Deseret Power Electric Cooperative, PSD Appeal No. 07-03 (EAB Nov. 13, 2008).  These challenges met with partial success:  in Deseret Power, the EAB rejected the Sierra Club’s claim that EPA must regulate GHGs, but at the same time found that the Agency had not sufficiently explained the basis for its conclusion that GHGs were not “pollutants subject to regulation.”  The EAB accordingly ordered EPA to reconsider the issue.

In response to this decision, the Bush Administration issued the so-called “Johnson Memorandum.”  Memorandum from Stephen Johnson, EPA Administrator, to EPA Regional Administrators, RE: EPA’s Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program (Dec. 18, 2008).  The Johnson Memorandum set forth a more detailed explanation of EPA’s official interpretation:  that only those pollutants that were subject to actual emissions controls were “subject to regulation” under PSD.

This clear statement of policy was short-lived.  On December 31, 2008, Sierra Club and others petitioned EPA to reconsider the Johnson Memorandum.  On February 17, 2009, the new Obama Administration granted the Petition and announced its intent to conduct a rulemaking on the issue to allow for public comment.

The New Proposal

EPA’s proposal presents five potential interpretations of the phrase “subject to regulation.”  These include:

  • The interpretation set forth in the Johnson Memorandum, i.e., that only those pollutants subject to an “actual control” requirement will be considered “subject to regulation” under PSD. 
  • A pollutant will be considered “subject to regulation” if EPA regulations require “monitoring or reporting” of that pollutant.
  • A pollutant will be considered “subject to regulation” if it is regulated under any State Implementation Plan (SIP). 
  • A pollutant will be considered “subject to regulation” at the time of an endangerment finding for that pollutant under the CAA. 
  • A pollutant will be considered “subject to regulation” as soon as EPA grants a waiver under section 209 of the CAA, which allows California to establish its own automobile emission standards in some situations. 

EPA states that it favors retaining the interpretation set forth in the Johnson Memorandum, because it “best reflects [EPA’s] past policy and practice, is in keeping with the structure and language of the statute and regulations, and best allows for the necessary coordination of approaches to controlling emissions of newly identified pollutants.”  74 Fed. Reg. at 51,539.  However, the Agency has requested comments on all five interpretations.  EPA also requested comments on several other related issues, including whether the CO2 monitoring and reporting requirements established under the Acid Rain Program were regulations promulgated “under the Act,” the timing of when PSD regulatory requirements should apply, whether EPA should codify the final interpretation of “subject to regulation” in relevant CAA regulations, and the consequences of a given interpretation on the scope and timing of the triggering of the PSD program for GHGs.

EPA is accepting comments on this proposal until December 7, 2009.  At the end of the day, if EPA issues its final light duty vehicle GHG emission standards before the “Johnson Rule” is final, the rule will have little impact on regulation of GHGs for purposes of PSD (because the light duty standards would be the actual control requirements the Johnson Rule proposes as the triggering mechanism).  Still, however, the rule could apply to any new pollutant that EPA seeks to regulate in the future, so the principles are important for the regulated community.  Therefore, companies should consider filing comments on the proposal.

For additional information, or if you have any questions, please contact David Friedland at dfriedland@bdlaw.com or (202) 789-6047; Laura McAfee at lmcafee@bdlaw.com, (410) 230-1330; or Sean Roberts at sroberts@bdlaw.com or (202) 789-6017. 

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