Environmental update

Environmental update

April 01, 2014 | By Andrew Skroback in New York

The US Environmental Protection Agency clarified in late January how and when air permit deadlines for commencing construction of new facilities may be extended. The standard prevention of significant deterioration air permit requires the holder to start construction of his project within 18 months after the permit is received. New EPA guidelines allow the permitting authority to extend the deadline without extensive re-analysis. 

PSD air permits are required to construct new, or make major modifications to, projects in areas that comply with ambient air quality standards if the project qualifies as “major” under the regulations. Power plants are prime examples of projects required to have such a permit. In such cases, the PSD permit program also requires the project to use the best available control technology, or “BACT,” to control air emissions.

The Clean Air Act does not set a deadline by which a project must commence construction once it receives its PSD permit, but agency regulations require that permittees must begin within 18 months or get an extension. The need to get an extension is often cause for significant uncertainty for developers and potential lenders, particularly at complex or controversial projects.

Any request for an extension in the future should include a detailed justification of why the project cannot commence construction by the deadline. Among the factors that could justify an extension are ongoing litigation over the project or the PSD permit itself, impediments to obtaining other necessary permits, trouble securing financing or other economic impediments to commencing operations, and direct impacts from natural disasters. Permittees should apply for an extension before the deadline expires.

The first request for an initial 18-month extension appears likely to be granted under the new EPA guidance absent unusual circumstances. While any extension allows the agency to take a fresh look at the emissions analyses on which the permit was originally granted, and extensions are granted on a case-by-case basis, the guidance suggests that a substantive re-evaluation should generally not be required for the agency to grant a first permit extension. This is an acknowledgement that what qualifies as best available control technology does not tend to change rapidly.

Additional extensions beyond the first may be harder to get. Project managers should take special care to demonstrate that the failure to commence construction was beyond their control and be prepared to provide an updated substantive analysis of the project and its emissions technology. EPA believes that it is more likely that technology and air quality considerations will become outdated when construction does not begin for 36 or more months after the initial permit was issued.

While construction-start deadlines are usually extended in 18 month increments, the agency has discretion to make the period shorter or longer if the permittee demonstrates the necessary justification. The agency also continues to have discretion to grant subsequent extensions without technical re-review, but we expect new reviews to be required in most cases for additional extensions beyond the first one.

Other factors that can complicate the extension process include cases where construction has yet to commence, but a regulatory change relating to relevant emissions has occurred. For example, EPA may take a harder look where permittees have been “grandfathered” from having to demonstrate compliance with new or revised PSD requirements that took effect after the original permit was issued. Similarly, if a PSD permit was issued in an area that changed from attainment to nonattainment for one or more ambient air quality standards, additional regulatory review is more likely. Permit holders asking for extensions should address any special circumstances in their extension applications.

Importantly, the guidance states that a new public notice and comment period will not be necessary for permit extensions that do not involve reconsideration or amendment of the substantive conditions of the permit.

Natural Gas 

EPA is seeking input on how best to incorporate new data from recent studies of methane emissions from natural gas fields, pipelines, storage facilities and distribution lines into its annual calculations of such emissions. The new data suggests that methane gas emissions occur at significantly lower levels than previously estimated by EPA. The finding is particularly noteworthy because methane is thought to be a significantly more potent greenhouse gas compared to the same amount of carbon dioxide.

The studies are ongoing. The Environmental Defense Fund, oil and gas companies, and the University of Texas at Austin are jointly conducting some of the key studies. 

EPA made the announcement in February as part of its release of its latest draft estimates of greenhouse gas emissions from a variety of emissions sources. EPA will review upcoming data from the studies for potential updates to next year’s 1990 to 2013 inventory report.

Some have used EPA’s existing estimated methane emissions data to claim that total carbon emissions from gas-fired power plants are as great or greater than from coal-fired power plants.

The new data, which focuses more on direct emissions testing, are welcome news to the natural gas industry as some groups continue to press for specific regulatory controls on emissions of methane from natural gas production. EPA opted against imposing direct methane controls in its recent final new source performance standards for the power sector.

The draft inventory report says emissions of methane from the natural gas sector dropped by nearly 17% since 1990 as a result of voluntary industry efforts and regulatory controls, including increased use of technologies such as plunger lifts and more efficient pipeline materials.

NOx and SO2 

A US court of appeals unanimously upheld EPA’s new source performance standards, or “NSPS,” in March that set emissions limits on conventional air pollutants from power plants. 

At issue was a 2012 rule that sets emission limits, testing and monitoring requirements for nitrogen oxides, sulfur dioxide and particulate matter from coal and oil-fired power plants that commenced construction after May 3, 2011. 

The disputed rule had replaced an earlier utility NSPS for conventional pollutants released in 2009. The case is called Utility Air Regulatory Group v. EPA.

The court is expected to rule soon on a separate industry challenge to a related 2012 EPA rule imposing maximum achievable control technology standards to curb mercury and other air toxics from utilities.

Solar Panels 

The California Department of Toxic Substances Control abandoned as flawed a pending proposal to establish new regulations for disposing of solar photovoltaic panels that are considered hazardous waste. The department made the announcement in February.

Instead, state regulators will ask EPA for approval to implement federal “universal waste” regulations in California under the federal Resource Conservation and Recovery Act. Once granted, California will be able to develop a state-specific program for disposing of PV panels that contain toxic compounds. 

While some environmentalists suggest the state legislature is better positioned to determine how toxic waste from PV panels should be recycled or disposed of safely and bills may be introduced in the legislature to address this, a number in industry support the new regulatory plan so long as it does not bring undue costs and burdens to the industry.  


California expects the first large-scale replacement of existing panels will occur over the next 10 years as older solar panels are swapped out for newer technology.