EPA Regulations: Not A Moratorium on Industrial Construction

Industry concerns about new permitting requirements are exaggerated. Here's why.

Last week a U.S. Appellate court ruled that the U.S. Environmental Protection Agency (EPA) should not be blocked from proceeding with a modest pre-construction permitting program covering greenhouse gases from the nation’s largest power plants and industrial facilities. The decision rejected a request from the State of Texas and major industries that sought to delay the permitting program until after a final decision in the lawsuit challenging EPA’s finding that greenhouse gases endanger public health and welfare.

The court’s decision allows EPA and states to move forward on January 2, 2011, with the implementation of the preconstruction permitting program for a very small number of large plants that would require a pre-construction permit for other reasons. To obtain the permit, these large power plants and industrial facilities¹ must accept an emissions limitation reflecting the installation of the “best available control technology" (BACT) for greenhouse gas (GHG) emissions as well as other regulated pollutants emitted above regulatory thresholds.

In response to the court’s decision, Scott Segal, an industry representative from the lobbying firm Bracewell Giuliani, doubted that regulators could be ready to issue the necessary permits by January. Mr. Segal went on to repeat a common charge from EPA critics that regulatory unpreparedness will lead to an “effective construction moratorium for industrial and power projects,” thus hindering our nation’s economic recovery.

These claims are incorrect for the following reasons:

• From January 2 to July 1, no company planning a new project will have to apply for a pre-construction permit covering its GHG emissions unless the project would have needed a permit anyway because the project emits other pollution in large amounts. In other words, not only is there no moratorium, but there is little added permitting burden in the first 6 months of 2011.

• States will be able to use the first six months of 2011 to build additional administrative capacity for permits they will need to process beginning July 1. EPA has issued permitting guidance and has committed to assist permitting authorities to ensure a smooth transition to GHG permitting.

• Every state except Texas has agreed to this path forward. Most states are ready for these regulations and they have considerable flexibility to implement BACT in a manner that is sensitive to the concerns of regulated industries based on the specific facts presented with each project proposal.

The permitting agencies in the states are required to carefully consider potential cost impacts on industry. In issuing these regulations, EPA is carrying out its legal obligation to protect human health and the environment, as numerous administrations—Republican and Democrat—have interpreted that obligation.

For more WRI analysis on EPA regulations, please see our web series “EPA, Greenhouse Gases, and the U.S. Economy:”

• What Are Limits on EPA? Clean Air Act Holds Answers
• EPA, The Clean Air Act, and U.S. Manufacturing
• For EPA Regulations, Cost Predictions Are Overstated
• Response to EEI's Timeline of Environmental Regulations For the Utility Industry