Schiff Hardin LLP February 19, 2010

USEPA Proposes to Prematurely End Reliance on
PM10 Surrogate Policy

On February 11, 2010, the United States Environmental Protection Agency (USEPA) published a proposed rule (Proposed Rule1 ) that, if promulgated, would prevent sources of air pollution from using emissions of particulate matter less than 10 micrometers (PM10) as a surrogate for demonstrating compliance with the Prevention of Significant Deterioration (PSD) requirements for particulate matter less than 2.5 micrometers (PM2.5). USEPA has scheduled a public hearing for February 26, 2010, and is accepting comments on the Proposed Rule until March 15, 2010.

USEPA previously published a final rule on May 16, 2008 (2008 Final Rule), which, among other things, established significance thresholds for PM2.5 and its precursor pollutants, and instructed most states to stop using the so-called "PM10 Surrogate Policy" to demonstrate compliance with PSD requirements for PM2.5. The 2008 Final Rule did, however, provide a three-year grace period (until May 2011), during which states with approved PSD State Implementation Plans (SIPs) were permitted to use the PM10 Surrogate Policy while they revised their SIPs to incorporate the 2008 Final Rule. It further included a grandfathering provision, at 40 C.F.R. § 52.21(i)(1)(xi), which allowed the PM10 Surrogate Policy to continue to be used as the basis for approving PSD permits with respect to emissions of PM2.5 for permit applications submitted prior to July 15, 20082. USEPA now proposes to prematurely eliminate the three-year grace period and to repeal the grandfathering provision.

Serious ramifications potentially stem from USEPA's proposed early elimination of the PM10 Surrogate Policy. Not all states with SIP-approved PSD programs have amended their SIPs to address PM2.5. Some such programs may not set significance thresholds for PM2.5; accordingly, any increase in PM2.5 emissions at a source could be considered significant and, thus, potentially trigger PSD.

USEPA's proposed repeal of the grandfathering provision may have a more limited impact. According to USEPA, it will affect roughly two dozen sources with pending permit applications. Should the Proposed Rule become final, USEPA believes that affected sources will likely need to submit additional information to evaluate compliance with the PSD requirements.

Please contact any of the attorneys in Schiff Hardin's Environmental Group for questions regarding implications of USEPA's Proposed Rule.

1 See USEPA Proposed Rule, "Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM2.5); Notice of Proposed Rulemaking to Repeal Grandfathering Provision and End the PM10 Surrogate Policy," 75 Fed. Reg. 6827 (Feb. 11, 2010).

2 The grandfathering provision has been stayed for most of the period of time since it was promulgated.

RECENT ENVIRONMENTAL PUBLICATIONS

"SEC Guidance," Environmental Update (February 02, 2010)
"USEPA Proposes Revised NO2 Standards," Environmental Update (February 2, 2010)
"SEC Approves Interpretive Guidance on Climate Change Disclosures," Environmental Update (January 29, 2010)
Environmental Update (January 19, 2010)

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