2022 Air Quality and Climate Highlights

Need a refresher on key developments in 2022 to prepare you for what’s next in 2023? Here’s a rundown of some high-profile happenings, along with some you might have missed.

• High Profile

1. West Virginia v. EPA: In the biggest case since Massachusetts v. EPA, in which the Supreme Court decided for the first time that EPA could regulate greenhouse gases (GHGs) under the Clean Air Act, the Court put significant boundaries on EPA’s exercise of that authority in its June 2022 holding in West Virginia. While Massachusetts acknowledged that GHGs can be regulated as an “air pollutant,” the Court said in West Virginia that EPA cannot regulate GHGs in a way that addresses a “major question” of policy unless Congress has clearly provided that authority to EPA. Specifically, the Court held EPA cannot force utilities to shift generation to resources with lower GHGs because determining the nation’s energy mix is such an important issue that Congress would have clearly provided EPA that authority if that had been its intent. Since no such clear statement of authority can be found in the Clean Air Act, “generating shifting” is off the table. EPA is now working on its next (third) attempt at regulating GHGs from the power sector — see our 2023 watchlist for more.
2. Inflation Reduction Act: With this law, Congress made changes to both the Clean Air Act and the tax laws to expand existing tax credits for efforts to address climate change. Notable among these changes was an increase in the tax credit for carbon capture and sequestration (CCS), which is expected to drive new interest and investment in this method of reducing GHGs from fossil-fuel fired power generation. Although the tax credits are now much more attractive, many significant technological, permitting, and policy barriers to wide use of CCS technology remain.
3. Environmental Justice: EPA has made significant efforts to put more meaning and force into its environmental justice policies. On the air permitting front, EPA has intervened in a couple of state-issued minor source air permits on “EJ” grounds and released a new guidance document at the end of 2022 explaining how it expects environmental justice to be considered in air permitting.
4. Ozone Transport Rule: In what will surely become one of this administration’s signature air regulations, EPA proposed a far-reaching rule in April 2022 to address the interstate transport of ozone and its precursor, nitrogen oxides (NO_x). The rule includes a significant expansion of the existing Cross State Air Pollution Rule (CSAPR) NO_x trading program to Western states, as well as dramatic tightening of the CSAPR NO_x budgets for all covered states, which is designed to force installation of selective catalytic reduction pollution controls on nearly all electric generating units. The proposal also extends to nonutility units for the first time ever, with emission limits on specific types of units in seven other industrial sectors, including natural gas transportation, pulp and paper manufacturers, glass manufacturers, and more.
5. Oil and Gas Sector Climate Rules: Following up on a November 2021 notice that EPA styled as a proposed rule, although it contained no regulatory text, EPA finally provided the text for its new climate-based emission standards for the oil and gas sector in December 2022. The proposal includes some novel options for demonstrating compliance and for pressing enforcement cases that may present new risks for the facilities that will be subject to the rules.

• Easy to Miss

1. Re-Proposal to Remove Title V Affirmative Defense: Continuing its effort to eliminate affirmative defenses from the regulations implementing the Clean Air Act, EPA reissued a 2016 proposal to eliminate the “emergency” affirmative defense under the Title V operating permit program. Sources have relied on this affirmative defense to avoid penalties for excess emissions related to unavoidable events (like the 2022 holiday cold snap, for example), but EPA’s proposal would eliminate that protection and open the door to citizen suits even where excess emissions were caused by events beyond the control of source owners. The D.C. Circuit may also address the issue of affirmative defenses in another context in 2023.
2. Proposed Fugitive Emissions Rule: In 2008, EPA finalized a rule, confirming fugitive emissions (those not emitted via a stack, such as wind-blown dust) are not included in certain permitting applicability determinations for some kinds of sources under its New Source Review (NSR) pre-construction permitting program. However, EPA stayed the rule immediately to reconsider it and now (14 years later) has issued a new proposal to force major sources to consider fugitive emissions in determining whether new projects must meet certain permitting requirements. EPA claims the new rule merely implements a longstanding policy preference, but it eliminates an exemption that has been on the books since 1980, and the change may subject new types of sources and projects to permitting.
3. Lifting of Stay on Gas Turbine Standard: EPA’s standard for formaldehyde emissions from combustion turbines, known as Subpart YYYY, had been stayed since they were first adopted in 2003, but EPA lifted that stay in 2022. EPA did so without reconsidering whether the standard remains appropriate, even though it is based on limited and now quite dated emission test results. Inability to meet the standard could force some units to retrofit with costly emission-control equipment.
4. Revision of Boiler MACT for Wood Burners: The long-running saga of rulemaking, challenges, and revisions to the boiler maximum achievable control technology (MACT) standards continued in 2022, with EPA finally responding to a loss in court that forced it to better justify the limits it imposed on wood-burning facilities. As expected, EPA revised numerous limits for these sources, many of which are now more stringent, and the new limits have already been challenged, beginning the cycle once more.
5. Revocation of New Source Review (NSR) “Second Guessing” Memorandum: At the beginning of the Trump administration, then-EPA Administrator Pruitt issued a memorandum, attempting to make sense of two confusing and split decisions from the Sixth Circuit in a long-running NSR enforcement action. In the memo, EPA indicated that it would focus its enforcement resources on projects that actually increased emissions, that it would not second-guess NSR applicability determinations made by sources as long as they met the basic requirements of the NSR regulations, and that sources were allowed to intentionally keep emissions low to avoid permitting. EPA quietly revoked this memorandum in December 2022, with no explanation or promise of substitute guidance. Whether this signals a change in EPA’s enforcement focus for 2023 remains to be seen.