In a memorandum dated December 18, 2008, EPA Administrator Stephen Johnson instructed all EPA Regional Administrators of “EPA’s definitive interpretation of 40 C.F.R. 52.2 1 (b)(50) . . . [that a] ‘regulated NSR pollutant . . . exclude[s] pollutants for which EPA regulations only require monitoring or reporting but . . . include[s] each pollutant subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control of emissions of that pollutant.”

Leaving aside for the moment the substance of Administrator Johnson’s analysis of the prior Agency interpretations, the scope of EPA’s authority under the Clean Air Act and even issues related to whether this decisions represents sound public policy, the form of the interpretive memorandum appears to be an effort to tie the Obama Administrations hands on the issue.

On page 2 of the memorandum, Administrator Johnson states: “This memorandum is intended to reduce ambiguity by setting forth an initial interpretation of EPA’s regulation at 40 C.F.R. §  52.21(b)(50).”  Sixteen pages later, in the context of discussing “public participation concerns,” Mr. Johnson refers to a passage in the EAB Deseret Power decision in which the EAB questions whether EPA may alter an interpretation from 1978 without going through notice and comment rulemaking.

The memorandum addresses cases cited by the EAB and concludes that “these court decisions have also recognized that an Agency has the flexibility to establish an initial interpretation of a regulation without engaging in a notice and comment process.”  (Emphasis added.)  Assuming Administrator Johnson’s analysis of the court decisions is correct, he has not only laid the groundwork for defense of his memorandum as one not requiring notice and comment rulemaking, but also set the framework for requiring any change of interpretation by the Obama Administration to be achieved only through full-fledged notice and comment rulemaking.

For now at least, EPA has settled the issue of whether permitting authorities must perform BACT analyses for carbon dioxide emissions.  Whether and for how long the Obama Administration allows that interpretation to stand is another in a growing line of “top priority” issues that lay waiting on the new EPA Administrator’s desk.

For further information about this topic, please contact Akin Gump.