Washington (Platts)--19Dec2008

The outgoing head of the US Environmental Protection Agency declared
Thursday that limits on carbon dioxide emissions need not be considered
binding in pre-construction permits for new coal-fired power plants unless the
agency or Congress mandate such limits.

In a Thursday memo to all regional EPA administrators, Administrator
Stephen Johnson clarified that only those pollutants that are currently
regulated under the federal Prevention of Significant Deterioration (PSD)
permitting program of the Clean Air Act should be subject to mandatory
emissions limits.

"I believe that a pollutant should not become subject to mandatory
emissions limitations under the PSD program until the Administrator (or
Congress) has decided that such pollutants should be directly controlled by
regulation," wrote Johnson.

A PSD permit is required before any new major stationary source of
emissions can be built or an existing stationary source is modified if it
emits one or more of the "regulated" air pollutants in an area that currently
meets national ambient air quality standards.

Johnson's memo, which goes into effect immediately, responded to a
decision by EPA Region 8's Environmental Appeals Board regarding an appeal of
a PSD permit granted to Deseret Power Electric Cooperative in August to build
a new coal-fired unit in Utah. The appeals board directed EPA to reconsider
whether to impose a limit on carbon dioxide and to develop a record on which
to base the determination.

Sierra Club had challenged that permit on the grounds that the US Supreme
Court ruled in the 2007 Massachusetts v. EPA decision that CO2 was an air
pollutant and could be regulated by the agency under the law.

The environmental group also said that utilities are required to monitor
CO2 emissions under the Clean Air Act.

But Johnson shot that argument down, saying monitoring data is for
information only, not for regulation purposes.

"My determination that emissions limitations should not be required under
the PSD program on the basis of monitoring and reporting requirements alone
does not reflect a decision on the larger question of whether EPA's authority
under the Clean Air Act should be used to address greenhouse gas emissions,"
said Johnson.

He added that EPA has already initiated an Advanced Notice of Proposed
Rulemaking on whether to regulate greenhouse gases. If EPA decides to regulate
such emissions upon completing its rulemaking process then PSD permits should
contain limits on carbon dioxide, he said.

Vicki Patton, attorney for Environmental Defense, said: "America deserves
better than a lump of dirty coal in its stocking and a planet in its peril."

With this memo, EPA has paved the way for new coal-fired power plants to
be built without any provisions for controlling greenhouse gas emissions,
Patton added.
--Amena Saiyid, amena_saiyid@platts.com