Rolling Thunder?

Posted on August 18, 2016 by Steve McKinney

Today, the U.S. EPA and Department of Justice announced that Harley Davidson has accepted defeat on defeat devices.   The icon of rebellion lost its black luster years ago when bankers, professors, and, of all things, lawyers, became the most noticeable owners and riders of their iron horses.   The Gucci sunglasses betrayed the weekend gangsters to mere citizens who at first trembled at the rumble of Harley motors. 

But now, the historic purveyor of the rawest available form of horsepower has agreed to stop selling popular “super tuners” for “Super Glides”, “Fat Boys”, “Road Kings”, “Electra Glides” and other iconic rides.   The engine tuner kits are guaranteed to raise the rumble another notch or two.   The problem?   Emissions.   What?!  Yes, emissions. 

Well, actually cheating about emissions.  EPA says Harley’s “super tuned” engine emissions are higher than the emissions certified for stock engines.   I’m shocked.  The aftermarket nature of these horsepower enhancers does not matter.   Harley is not supposed to help rabble rousing bikers exceed their emissions allowances, says EPA.

Wow.  Is blaming Harley for breaking the rules within the rules?  Has the last hope of rebellion been reduced from “rolling thunder” to a Vespa’s whine?  I would take my stack of Harley t-shirts out in the backyard tonight for a ceremonial bonfire, but Birmingham has banned open burning until November.

LEAKS And PUMPS And TANKS, Oh My!!!

Posted on July 8, 2016 by Karen Crawford

In May 2016, EPA finalized updates to its New Source Performance Standards (NSPS) for the oil and gas industry which amended 40 CFR Part 60, Subpart OOOO and added new requirements (Subpart OOOOa) to those established for Volatile Organic Compounds (VOCs) and sulfur dioxide (SO2) established for this industry sector in 2012.  Importantly, the new requirements address reductions of greenhouse gas (GHGs) emissions, specifically methane.  In its Executive Summary, EPA discussed the efforts by the agency to “complement” and “improve” the existing rules issued in 2012, stressing the agency’s efforts to engage states and stakeholders and solicit comments prior to its 2015 proposal or the rule.  EPA also stressed it worked closely with the Bureau of Land Management to avoid conflicts and evaluated existing state and local programs to attempt to limit conflicts, where possible.

After promulgation of both the 2012 rule and 2013 amendments, the agency received petitions for reconsideration raising numerous issues, including the regulation of GHGs.  EPA has addressed some of petitioners’ issues in 2015 amendments addressing storage vessels as well as in this rule, adding standards for methane and addressing storage vessel control device monitoring and testing; initial compliance requirements for bypass devices that divert emissions from control devices; recordkeeping requirements for repair logs for control devices which fail a visible emissions test, clarification of the due date for the initial annual report; emergency flare exemptions from routine compliance tests; leak detection and reporting for open-ended valves or lines; compliance period for leak detection and repair (LDAR) for newly affected process units; exemption to notification requirement for reconstruction of most types of facilities; and disposal of carbon from control devices.   However, in a footnote, EPA makes clear it intends to complete its reconsideration process in a subsequent notice.

One interesting aspect of the 2016 rule publication is the extensive discussion of how the 1979 source category listing, “crude oil and natural gas production” is defined.  The agency takes great pains to justify its broad authority over the industry to include not only production, but also processing, transmission and storage equipment.  The EPA concludes that its category listing need not be revised to support the additions and amendments of this rule (even though it does clarify some wording), and sets out its justification for including the entire sector in its 2009 endangerment finding relating to GHGs.

EPA concluded that the Best System for Emissions Reduction (BSER) is the same for GHGs as it is for VOCs, so there are no changes required for equipment that was covered by the 2012 rule.  Newly regulated sources covered by the 2016 rule include: heretofore unregulated hydraulically fractured oil well completions, pneumatic pumps, fugitive emissions from well sites and compressor stations; sources regulated under the 2012 regulation for VOCs for which GHGs are now also regulated (hydraulically fractured gas well completions and equipment leaks at natural gas processing plants); and certain equipment that is used across the source category for which subpart OOOO regulates emissions of VOCs from only a subset (pneumatic controllers, centrifugal compressors and reciprocating compressors), with the exception of compressors located at well sites.

In addition to emission reductions, LDAR utilizing optical gas imaging semi-annually is required for well sites and compressor stations. (Method 21 at a repair threshold of 500 ppm may be used.)  Initial monitoring surveys must take place by June 3, 2017 or within 60 days of the startup of production, whichever is later.  Repairs must be made within 30 days and a resurvey is required within 30 days of repair. Also, a monitoring plan that covers collection of fugitive emissions components is required to be developed and implemented for well sites and compressor stations. At natural gas processing plants, equipment leaks of methane (GHGs) are subject to the same requirements as those for VOCs.  The compliance period begins on November 30, 2016.

And, the rule embraces “next generation” electronic reporting via EPA’s CDX, for enhanced accessibility and transparency to the public, as soon as the forms and systems are available.  Professional engineers are required to provide certifications of technical infeasibility of connecting a pneumatic pump to an existing control device and to design closed vent systems.

Finally, there is a complicated discussion of EPA’s interpretation of UARG v. EPA, which merely results in EPA concluding that the rule should not affect applicability of Title V permit or PSD/NSR applicability determinations for “anyway” sources, even though, if not otherwise required to obtain and comply with a Title V permit, emissions of GHGs (methane) alone will not subject a source to Title V permit requirements.

U.S. EPA Updates Air Standards for Tanks Used in Oil and Natural Gas Sector

Posted on October 4, 2013 by Chester Babst

EPA is still working the kinks out of its New Source Performance Standards (NSPS) for the Oil and Natural Gas Sector, i.e., 40 C.F.R. 60 Subpart OOOO, referred to by many as the “Oil and Gas NSPS” and by some as simply “Quad O”.  EPA first published the proposed Oil and Gas NSPS on August 23, 2011, in conjunction with proposed revisions to three other air regulations affecting various segments of oil and natural gas operations.  The proposal prompted more than 150,000 public comments and kindled a national discussion on emissions at natural gas well sites.  The final Oil and Gas NSPS rule was published in August 2012.  Although the rule is most famous for establishing the first federal air standards for hydraulically-fractured natural gas wells, the rule also set significant volatile organic compound (VOC) standards for “storage vessels” used by the oil and natural gas industries.

Several stakeholders responded to the August 2012 rulemaking by filing petitions for administrative reconsideration of the Oil and Gas NSPS.  On April 12, 2013, EPA published a notice granting reconsideration for a number of issues and proposing revisions to the storage vessel standards, in particular.  Evidently, EPA significantly underestimated the number of storage vessels coming online in the field when it developed the August 2012 final rule, which required individual storage tanks with VOC emissions of 6 tons or more per year to achieve at least 95% reduction in VOC emissions.  Tanks are commonly used at natural gas well sites, for example, to store condensate, crude oil, and produced water.  In light of an updated tank estimate, EPA recognized that additional time would be needed for manufacturers to produce a sufficient number of VOC control devices. 

Most recently, on September 23, 2013, EPA published final revisions to the storage vessel requirements in the 2012 Oil and Gas NSPS.  Per the revised rule, which was immediately effective, an individual tank may be considered an affected facility if its construction, modification or reconstruction commenced after August 23, 2011; it has potential VOC emissions of 6 tons or more per year; and it contains crude oil, condensate, intermediate hydrocarbon liquids, or produced water.  EPA made a number of important adjustments in the revised rule, chief among them an extension of the compliance date to give tank owners and operators more time to purchase and install controls.  For the so-called “Group 1” storage vessels (which were constructed, modified or reconstructed between the August 2011 original proposal and the April 2013 proposal), the deadline to control VOC emissions is now April 15, 2015.  For “Group 2” storage vessels (i.e., vessels that come online after April 12, 2013), the compliance deadline is April 15, 2014.  Notably, pursuant to the revised Oil and Gas NSPS, operators only have until October 15, 2013 to estimate potential VOC emissions of Group 1 storage vessels for purposes of determining whether the rule applies.

Meanwhile, the agency is continuing to evaluate other issues raised in the reconsideration petitions that were submitted in response to the August 2012 rulemaking.  EPA has stated in the past that it intends to address the remaining issues by the end of 2014.

Interstate Air Transport - The Next Steps

Posted on April 12, 2013 by David Flannery

The August 21, 2012 decision of the D.C. Circuit Court in EME Homer City Generation LP v. EPA, Case No. 11-1302, not only vacated the Cross State Air Pollution Rule (CSAPR), it also provided a detailed framework (including the math) for how future plans should be developed by States to implement national ambient air quality standards (NAAQS) through the “good neighbor” provisions of the Clean Air Act.  This case has already been the subject of various posts to this Blog.  This article will provide an update of activities that have occurred in recent weeks as state and federal agencies, NGOs and the regulated community respond to the decision and its implications for implementing the various NAAQS (past, present and future). 

Let me begin by noting that on March 29, 2013, EPA and various environmental organizations filed for a writ of certiorari with the U.S. Supreme Court. Even as EPA was filing for such a writ, EPA has scheduled two meetings this month with states to obtain input on technical and policy decisions. In these meetings, EPA is offering its interpretation of the court decision and its views about various options that exist for conducting the required analyses through the shared responsibility of EPA and the states. 

Finally, the Midwest Ozone Group (MOG), a coalition of electric power generation interests, has developed a position statement on how the court opinion might be implemented including the identification of the following seven rules taken from the court opinion. 

1.    Basic rule - An upwind State’s obligation is limited to its own significant contribution and it cannot be directed to reduce emissions to account for any other factors impacting a downwind State’s nonattainment.
2.    Proportionality of Downwind States - A downwind State is responsible for above-NAAQS amounts that are not attributable to significant contributions from upwind States.
3.    Proportionality of Upwind States - The ratio of an individual upwind State contribution to the total contribution of all upwind States should be used as scalar to determine how the total upwind contribution is allocated among upwind States.
4.    The Role of Costs - EPA may reduce some or all of the obligations of upwind States to avoid the imposition of unreasonable costs.
5.    Insignificance - Once contributions are determined, a State is not required to address more than that contribution amount minus the significance threshold. 
6.    NAAQS Attainment - Once an area meets the NAAQS, no additional upwind emission reductions are required.
7.    Over-Control - When multiple downwind areas are concerned, reductions associated with one downwind area should be reviewed in other areas to ensure unnecessary over control is not achieved

The full position statement can be found here.

The MOG position statement is accompanied by a presentation prepared by Alpine Geophysics which applies an example set of modeling data to these rules to illustrate how the rules might be applied as well as the significant technical and policy questions that remain.  The Alpine Geophysics presentation can be found here.

Climate Change and Cost Benefit Analysis: Cass Sunstein Is Talking, But Is Anyone Listening?

Posted on November 16, 2012 by Seth Jaffe

Sunday’s New York Times had an op-ed piece by Cass Sunstein, recently departed head of the Office of Information and Regulatory Affairs, advocating for sensible measures to address global climate change. Sunstein’s argument is that

"Economists of diverse viewpoints concur that if the international community entered into a sensible agreement to reduce greenhouse gas emissions, the economic benefits would greatly outweigh the costs."

I don’t disagree with anything he says; I only wonder whether anyone is paying attention. On one hand, while Sunstein notes that President Obama supports cost-benefit analysis, Democrats in Congress – and many environmentalists – have long been skeptical, treating environmental questions as moral issues that should not be subject to something as crass as cost-benefit analysis.

Republicans used to support cost-benefit analysis. Indeed, Sunstein opens the op-ed with a discussion of the Reagan administration’s support of the Montreal Protocol on ozone-depleting chemicals. However, for the past ten years or so, Republicans have abandoned cost-benefit analysis for something much simpler – cost analysis. Today, if regulations cost too much – whatever that means – then they are “job-killers” and thus bad, even if the benefits exceed costs, sometimes by several multiples.

Maybe four years at MIT brainwashed me into blind acceptance of quantitative analysis, but this stuff doesn’t seem that hard to me. It is profoundly depressing that a significant number of environmentalists look only to the benefits of environmental regulation, while a similar percentage of conservatives now only look at its costs.

Somehow, we’ve got to get the twain to meet.

Odor Regulations Stink

Posted on September 6, 2012 by Kevin Finto

Federal and state regulators have, over the years, frequently received complaints about odor.  Because the problem is a common one -- and because the origins of environmental law lie, in part, in the common law of public nuisance -- one might think we would have developed a consistent, practical way of regulating odor.  We haven’t.  No federal laws address odor, and the  various state laws and rules addressing odor are a hodge-podge of not fully-considered  ideas. 

This is likely due in part to the subjective nature of odor:  one person’s stench may be another person’s sweet smell of success.  More importantly, though, there is no commonly accepted way of quantifying or measuring odor.  If you cannot define something precisely and cannot agree on how to measure it, it necessarily follows that you will have a hard time regulating it.    There have been attempts to use odor measurement technologies including the scentometer or field olfactometer, but they ultimately rely on subjective human olfactory assessment.  While some states allow them as a guide, it does not appear that any statutory or regulatory scheme has adopted their use, and in fact, some states legislatures have adopted resolutions prohibiting their agencies from using such technologies for enforcement purposes.

So what is a regulator to do?  Consider the efforts made by one state, my beloved Commonwealth.  Virginia has tried to cram the square peg of odor into the round hole of the Best Available Control Technology (“BACT”) requirement of the Clean Air Act’s prevention of significant deterioration of air quality (“PSD”) preconstruction permitting program.  Applying the BACT process to odor may have sounded like a good idea back in the day when the PSD rules were first adopted and BACT was a sexy new acronym, but implementation of the BACT approach for odor has not been easy. 

At the outset, there is the difficulty that the BACT process applies only to things that are “pollutants” under the Clean Air Act.  Not everything that regulators want to regulate under the Clean Air Act, however, is considered a “pollutant” under the Act.  (If you doubt this, recall that it took many years of agency action and litigation and decisions by the United States Courts of Appeals and the Supreme Court before it was generally accepted that carbon dioxide is a pollutant under the Clean Air Act.)  And so it is with odor, which is defined by Webster’s Dictionary as  “a quality of something that stimulates the olfactory nerves or the stimulation itself.  In short, odor is definitely not a “typical” Clean Air Act pollutant.  (Interestingly, certain substances that are pollutants, also carry the name “aromatic” if they also happen to be organic compounds with a cyclical structure, but I digress.) 

Even if one can accept that “odor” is a “pollutant,” though, can the BACT process be applied to it?  Not really.  ”Best available control technology” means “an emission limitation based on the maximum degree of reduction of [a pollutant . . .] which the permitting authority . . . , taking into account energy, environmental, and economic impacts and other costs, determines is achievable . . . .” Clean Air Act § 169(3).  And typically BACT is determined through a top-down approach, i.e., one starts with the most stringent emission limitation theoretically achievable and then moves down from there only if the various costs of that approach are too high.  How can such an approach work for odor, though, when we do not have a unit measure for odor, much less a quantitative scale for objectionable scent.  Without such a measure or scale, it is effectively impossible to evaluate whether the environmental, economic or energy costs of reducing odor are reasonable or cost-effective.

So, if my beloved Commonwealth doesn’t now have the answer, let me cast my net more broadly and ask if anyone knows of a good practical scheme for regulating odor.

A VIEW FROM TEXAS: FIFTH CIRCUIT VACATES EPA DISAPPROVAL OF TEXAS FLEXIBLE PERMIT PROGRAM

Posted on August 30, 2012 by Patricia Finn Braddock

On August 13, 2012, the United States Court of Appeals for the Fifth Circuit held that the Environmental Protection Agency’s (EPA) disapproval of the Texas Flexible Permit Program (TFPP) had been arbitrary and capricious, an abuse of discretion, not in accordance with law, and unsubstantiated by substantial evidence on the record taken as a whole.  Accordingly, the Fifth Circuit granted the petition for review, vacated EPA’s disapproval of the Texas plan and remanded the matter to EPA.

The TFPP, a Minor new source review (NSR) permit program, had been submitted to EPA in November 1994 as a revision to the Texas State Implementation Plan (SIP).  The TFPP authorized modifications to existing facilities without additional regulatory review provided the emissions increase would not exceed an aggregate limit specified in the permit.

Despite the mandate in the Clean Air Act (CAA) that EPA approve or disapprove a SIP revision within eighteen months of its submission, EPA failed to make a determination on the TFPP for more than sixteen years.  By the time that EPA announced its disapproval, the State of Texas had issued approximately 140 permits under the TFPP.  And despite the excessive delay in announcing its disapproval of the TFPP, EPA found time to promptly notify flexible permit holders in Texas that their facilities were operating without a SIP-approved air permit and that they were risking federal sanctions unless SIP-approved air permits, requiring current Best Available Control Technology, were obtained.

The State of Texas and ten industry and business groups subsequently filed suit challenging EPA’s disapproval, which had been based on three primary arguments: 1) the program might allow major sources to evade major NSR; 2) the provisions for monitoring, recordkeeping and reporting (MRR) are inadequate, and 3) the methodology for calculating permit emissions caps lacks clarity and is not replicable.  Two of the justices on the 3-judge panel court rejected each of EPA’s contentions, with the third justice dissenting.

The majority rejected EPA’s contention that the TFPP allowed major sources to evade Major NSR because the TFPP includes three rules that affirmatively require compliance with Major NSR, and EPA could not identify a single provision in the CAA or the CAA implementing regulations that empowered EPA to disapprove a SIP that did not also contain an express negative statement that the Minor NSR permit could not be used to evade Major NSR.  Further the court noted that in its briefings, EPA had conceded that language explicitly prohibiting circumvention of the Major NSR requirements is not ordinarily a minimum NSR SIP program element.  75 Fed. Reg. at 41,318-19.

The majority also rejected EPA’s contention that the TFPP allowed the Texas Commission on Environmental Quality executive director too much discretion in determining MRR requirements in a Minor NSR permit and that this amount of discretion is contrary to EPA policy.  The court found that EPA could not identify an independent and authoritative standard in the CAA or its implementing regulations that required MRR requirements to be specified in a SIP, rather than based on the size, needs, and type of facility authorized in a Minor NSR permit.  In addition, the court found that EPA failed to identify the purported policy of disfavoring “director discretion” in any comments that EPA submitted to the State of Texas on the TFPP regulations or in EPA’s disapproval of the requested Texas SIP revision.  Thus, the court held that the purported policy is not in the record on which the court must review EPA’s disapproval under the APA.  Although not a factor in its decision, the majority also noted that “other recent EPA action tends to not only undercut the assertion of such a policy but also to give the impression that EPA invented this policy for the sole purpose of disapproving Texas’ proposal.”

Finally, the majority rejected all of the arguments EPA gave for finding the TFPP to be deficient.   Among other things, the court concluded that EPA could not identify a single provision in the CAA or EPA’s Minor NSR regulations  that requires a state to specify the method of calculating emissions caps or to demonstrate replicability in its SIP or as a condition of approval of a state’s Minor NSR program.    Similar to its comments on EPA’s second contention, the majority also noted that EPA appears to have adopted the third test solely for application to the TFPP.

Due to the uncertain status of the TFPP and the risk of federal enforcement, most flexible permit holders requested that the flexible permits be altered to reflect that the authorization meets the air permitting requirements already in the EPA-approved Texas SIP.  Thus, EPA succeeded in gutting a Minor NSR permit program that it had wrongly disapproved, but it did not achieve any substantive changes in permit requirements.  Although the majority vacated EPA’s disapproval of the TFPP and remanded the matter to the agency, EPA is not likely to act and facilities in Texas are not likely to decide on whether to pursue new flexible permits until after the November election.

Waiting for Godot . . . Oops! The Decision’s Finally Out

Posted on August 29, 2012 by Andrea Field

The Cross-State Air Pollution Rule (Transport Rule) [76 Fed. Reg. 48208] adopted by EPA in mid-2011 -- requires sources in the eastern U.S. to reduce their emissions substantially.  Numerous states and industry groups challenged the rule in the D.C. Circuit, and many of the petitioners asked the court to stay the rule pending litigation.  One motions panel of the court stayed the Transport Rule in late 2011, and then a subsequent panel directed that all briefing in the case be completed -- and oral argument be held -- within approximately 100 days after the stay was issued.     

That the case was put on such a tight briefing schedule led many litigants to speculate that the court wanted to resolve the case quickly and would issue its decision within 60 days of the April 13, 2012 oral argument.  When mid-June came and went with no decision, many of those same litigants then predicted the decision would come by mid-July so as not to interfere with the judges’ summer vacations.  In support of their mid-July prediction, they also claimed that the head of EPA’s Air Office, Gina McCarthy, agreed with them.  In early July, Ms. McCarthy had indeed told some state regulators that the court would issue its decision on Friday, July 13, but she had quickly added that her prediction should not be taken too seriously because she had been wrongly predicting the imminent issuance of the decision for the past thirty days.  Nonetheless, several in the media reported her prediction as gospel, prompting all involved to stay glued to the D.C. Circuit’s website on Friday, July 13. 

As one of those waiting for the court to issue its opinion on the Transport Rule, I was reminded of a similar waiting game in which I was involved in 1997.  In May of that year, I had argued a case before a three-judge panel in the Fourth Circuit, where I had found one judge to be sympathetic to my argument, one judge to be antagonistic (but nicely so, because this was the Fourth Circuit after all), and the third judge to be a cipher.  As soon as oral argument ended, my client started bombarding me daily with the same question:  when would the court issue its decision?  I couldn’t answer that question (no matter how often I was asked), but I thought retired Fourth Circuit Judge James Marshall Sprouse might have insights into the court’s decision-making process.  He had been gracious enough  – and patient enough -- to help me prepare for oral argument in my case (and to help me persuade the client to eliminate some of the more bombastic points from the argument).   

Gamely consulting his crystal ball and taking into account that the case had been argued so late in the term, Judge Sprouse suggested that (1) if there was no dissent, then the court might issue its decision by the end of July; (2) if one judge dissented, then there might be a delay of another one to two months; and (3) if each of the three judges wrote a separate opinion or if one of the jurists was trying to be Solomon-esque -- finding areas of agreement and areas of disagreement with each of the other two judges on the panel -- then there might not be a decision until well into the fall.  Judge Sprouse was spot on in my case:  the decision -- which fell into Category 3 -- was issued in late October 1997.

Back to the present now.  The D.C. Circuit issued its decision on the Transport Rule on August 21, 2012.  In an opinion by Judge Brett Kavanaugh, joined by Judge Thomas Griffith, the court held that the Transport Rule exceeds EPA’s statutory authority in two respects, by (1) requiring upwind states to reduce emissions by more than their own significant contributions to nonattainment in other states, and (2) failing to allow states the initial opportunity to implement the emission reductions required by the Transport Rule.  Judge Rogers wrote a stinging dissent.

I leave it to my ACOEL colleague Dave Flannery and his more detailed description of the decision below.  I will add only that although Judge Sprouse passed away eight years ago, the timing of the decision was just what he might have predicted.

Judicial Activism and Judicial Restraint: The 5th Circuit Vacates EPA's Disapproval of Texas SIP Revisions Concerning Minor Sources

Posted on August 14, 2012 by Seth Jaffe

On Friday, in Texas v. EPA, the 5th Circuit Court of Appeals vacated EPA’s decision rejecting Texas’s SIP revisions that would have implemented (and did implement, for 16 years) a Flexible Permit Program for minor NSR sources. While genuflecting at the altar of deference to agency decisionmaking, the Court concluded that EPA’s rejection was not based on either EPA factual determinations or on its interpretation of federal, as opposed to state, law.  The Court also concluded that EPA had not in fact relied on the reasons given in its briefs, and refused to defer to EPA’s “post hoc rationalizations.” The Court thus gave essentially no deference to EPA’s decision.

The interesting part of the decision was the dissent by Judge Patrick Higginbotham, a Reagan appointee. Judge Higginbotham took the majority to task for “not faithfully applying the deferential arbitrary and capricious standard.” He then persuasively demonstrated why the Texas program, as written, did violate the Clean Air Act.

After dismantling the majority’s logic, he then addressed the practical heart of the case – EPA’s 16-year delay in rejecting the SIP revisions. While criticizing EPA for the delay, Judge Higginbotham pointed out that there is a statutory remedy for EPA’s failure to rule on the revisions – a suit under section 7604(a)(2) of the CAA – a remedy never pursued by Texas.

What’s important about this case is that is an excellent example of why judicial restraint is so often “more honor’d in the breach than the observance.” (It’s been a while since I’ve quoted Shakespeare.) When a federal agency unwinds state policy after a sixteen-year delay, it’s very tempting for courts to engage in judicial activism, if that’s what it takes to go upside the agency’s head. The harder course, requiring more discipline, is to remain true the ideal of judicial restraint – that a court is not to substitute its judgment for an agency acting pursuant to an act of Congress. Therefore, Judge Higginbotham’s conclusion seemed worth note:

"As so often with political debate in search of a legal forum, its utility lies largely in pleasure of expression. Angst over perceived federal intrusion into state affairs ought be eased by the reality that laws enacted by Congress are laws of the States. Congress passed the Clean Air Act and made it enforceable by the EPA. The State was represented in that decision by two senators and its thirty-two other elected members of Congress. It also bears mentioning that its former governor was resident in the White House for eight of the years in passage here. The Clean Air Act is not foreign law. I dissent."

Not a Good Start for Challenges to EPA NAAQS Revisions: The District of Columbia Court of Appeals Affirms EPA's New NOx NAAQS

Posted on July 18, 2012 by Seth Jaffe

Yesterday, in American Petroleum Institute v. EPA, the D.C. Circuit Court of Appeals affirmed EPA’s revisions to the National Ambient Air Quality Standard for NOx. The revisions adopted, for the first time, an hourly NAAQS for NOx, in addition to the annual standard.

API made a number of assertions that EPA had been arbitrary and capricious in its review of the scientific evidence concerning potential short-term impacts. The most important were EPA’s reliance, in part, on a study which had not been the subject of peer review, and EPA's alleged failure to consider a study suggesting that short-term impacts had not been demonstrated.

The Court rejected both complaints. With respect to the first, API asserted that EPA violated its own requirements when it relied on an internal analysis that had not been peer-reviewed. The Court’s response was short, but certainly not sweet:

Perhaps the API should have had its brief peer-reviewed. In quoting the EPA’s Review Plan, the API omits the first and most relevant word of the following sentence: “Generally, only information that has undergone scientific peer review … will be considered.” Of course, “generally” here indicates the practice in question will not invariably be followed. A bad start for the petitioners.

To which I can only say, ouch.  Significantly, the Court noted that EPA did have its internal analysis reviewed by the Clean Air Scientific Advisory Committee, and it stated that review by CASAC qualifies as peer review.

Regarding the second claim, the Court concluded that EPA had considered the skeptical study.  Moreover, EPA gave reasons why it rejected the conclusions of the study.  This was enough for the Court.

I have previously pointed out that the Court’s review of EPA’s NAAQS in recent years has pretty much made the CASAC the final arbiter of the validity of EPA NAAQS promulgations. If EPA’s decision is supported by CASAC’s review – as it was here – EPA’s NAAQS will be affirmed. If, on the other hand, as was the case with EPA’s PM2.5 NAAQS, EPA promulgates an NAAQS that ignores CASAC advice, EPA’s standard is not likely to survive judicial review.

Yesterday’s decision only confirms this analysis. CASAC did not merely review the one paper that API had challenged; it proposed a short-term standard that was similar to and certainly consistent with the standard that EPA ultimately adopted. I’m not sure that Congress meant to delegate to CASAC the determination whether NAAQS adopted by EPA are arbitrary and capricious, but I think that that is where we are today.

To which API can only say, ouch.

EPA Proposes Carbon Dioxide Emissions Standard for New Fossil Fuel Power Plants

Posted on April 13, 2012 by Daniel Riesel

By Daniel Riesel and Vicki Shiah, Sive Paget & Riesel, PC

On March 27, the U.S. Environmental Protection Agency proposed a rule limiting carbon dioxide (“CO2”) emissions from new power plants fired by fossil fuels such as coal or natural gas.  The rule applies to new fossil fuel-fired electric utility generating units in the continental United States; they do not apply to existing units or new “transitional” units that already have received preconstruction air emission permits and that start construction within 12 months of the proposed rule’s publication in the Federal Register.

Covered power plants would be required to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour.  This standard favors natural gas over coal.  EPA states that “[n]ew natural gas combined cycle power plant units should be able to meet the proposed standard without add-on controls.”  By contrast, coal-fired power plants would not be able to meet this standard without carbon capture and storage technology, which is still under development and is expected to be quite costly – though EPA expects that the cost of such technology will decrease over time.

It is not clear whether the proposed regulation will have a significant effect on the energy industry, as the standard appears to reinforce current trends rather than require radical changes.  In the preamble to the proposed rule, EPA notes that, at present, “the industry generally is not building” coal-fired power plants and is not expected to do so “for the foreseeable future,” while natural gas is becoming more common as an energy source.   According to EPA, the 1,000 lb/MWh standard is already being met by 95% of natural gas-fired combined cycle power plants that commenced operation between 2006 and 2010.

The proposed rule (a New Source Performance Standard under Section 111 of the Clean Air Act) results from a settlement between EPA and a group of states and environmental groups.  These plaintiffs sued EPA in opposition to the agency’s refusal, in 2006, to establish greenhouse gas emission standards for new and modified power plants.  EPA was required to revisit this decision in the aftermath of the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA, which affirmed EPA’s statutory authority under the Clean Air Act to regulate greenhouse gas emissions.

Under the settlement giving rise to the standard proposed last week, EPA had also agreed to establish CO2 emissions guidelines for existing fossil fuel power plants.  EPA has yet to propose such standards, and the time frame for its doing so is uncertain; EPA Administrator Lisa Jackson recently stated, "[w]e don't have plans to address existing plants."

The full text of the proposed rule is available here.  Public comments are being accepted under Docket ID No. EPA‐HQ‐OAR‐2011‐0660 at www.regulations.gov for 60 days after the proposed rule’s publication in the Federal Register.

Don’t Mess With Texas – EPA Loses Battle With TCEQ

Posted on April 2, 2012 by Eva O'Brien

If you live in Texas or have driven through the state, you know that our popular anti-litter campaign slogan is “Don’t Mess With Texas.”  This slogan may have also been appropriate for the 5th Circuit’s recent decision in Luminant Generation Company, et al. v. U.S. Environmental Protection Agency, No. 10-60891, slip op. (5th Cir. Mar. 26, 2012), where the court came down hard on the U.S. Environmental Protection Agency (“EPA”) for its very late disapproval of revisions to Texas’s State Implementation Plan (“SIP”) pertaining to standard permits for  pollution control projects (“PCPs”).   

In Luminant, the 5th Circuit noted that the federal Clean Air Act (“CAA”) “prescribes only the barest of requirements” for New Source Review (“NSR”) of minor new sources of air pollutant emissions.  It found that EPA had not identified a single violation of the CAA or EPA’s regulations and thus had no legal basis for its disapproval of the PCP Standard Permit provisions, striking down as arbitrary and capricious the “three extra-statutory standards that the EPA created out of whole cloth.”  Id. at 21.  Two of those standards referenced Texas law and a third was based on too much agency discretion in permit issuance.

Noting that EPA failed to act until three years after the 18 month statutory deadline for EPA action had passed, the court ordered EPA to expeditiously reconsider the SIP revision submission made by the Texas Commission on Environmental Quality (“TCEQ”), and compared the “sweeping discretion” given to the states in developing their SIPS to EPA’s “narrow task” of “ensuring” that the Texas regulations “meet the minimal CAA requirements that govern SIP revisions to minor NSR, as set forth in 42 U.S.C. § 7410 (a)(2)(C) and § 7310(l).”  Id.  The court then stated that this limited review “is the full extent of EPA’s authority in the SIP-approval process because that is all the authority that the CAA confers.”  Id. at 21-22.

For the past several years, the TCEQ and EPA have butted heads over various aspects of Texas’s SIP.  This was the third of three cases heard by the 5th Circuit on SIP reviews, albeit the first in which a decision has been rendered.  Oral arguments were held in the other two pending cases last fall – the first relating to Texas’ Qualified Facilities program, Texas Oil & Gas Association, et al. v. U.S. EPA, No. 10-60459 (5th Cir. filed Jun. 11, 2010), and the second relating to Texas’s Flexible Permit Program, Texas v. U.S. EPA, No. 10-10614 (5th Cir. filed Jul. 26, 2010). 

Of these three cases, the EPA’s disapproval of Texas’s Flexible Permit Program has caused the most tension between the agencies.  That program provides facilities with flexibility to reduce emissions by the most cost-effective means through allocation of emissions on a facility-wide basis rather than by source point, and has been a basic tenet of permitting in Texas since 1994.  The end result of the Flexible Permit Program—which Texas considers akin to the federal Plantwide Applicability Limit (“PAL”) under the New Source Review program—not only gave facilities greater flexibility and control, but actually reduced emissions and provided for compliance with all state health standards, as well as all applicable federal Clean Air Act requirements. 

Given that EPA’s delay in disapproving these last two aspects of the Texas SIP was even more egregious (effectively up to sixteen years), it is likely that the 5th Circuit will view the EPA’s actions in those cases with a similarly critical eye.  We in Texas hope that the court continues to call EPA to task for its past unpopular and unwarranted decisions with respect to Texas’s SIP.

Where You Stand Depends on Where You Sit: Utility MACT Edition

Posted on August 30, 2011 by Seth Jaffe

As the deadline passed last week for submitting comments on EPA's Utility MACT rule, it's worth taking a big picture look at how the commenters line up. Big utility groups, such as the Edison Electric Institute and the American Public Power Association are looking for EPA to delay the rules. The basic argument is that it is going to take a long time to comply. EEI states that so many facilities will require extensions that the number of requests will create a backlog that will itself essentially create compliance problems.

However, it is not just environmental and public health groups that filed comments in support of the MACT rule. Exelon, which has a large nuclear fleet, submitted comments in support of the rule. In fact, Exelon referred to the "overblown critique" of the Utility MACT proposal, stating that the "lack of a national standard for toxic emissions continues to be a barrier to investment in new, cleaner generation capacity." Industry supporters are not limited to Exelon. The Clean Energy Group, which includes PG&E, Calpine, and other generators with large gas fleets, also focused on the "business certainty the electric sector needs to move forward with capital investment decisions."

In looking at these comments, it is worth keeping in mind that the Utility MACT rule is only one of nine rules under development by EPA that would impose costs on coal-fired power plants. This confluence of rules has been referred to as the "train wreck" for coal-fired power plants. While the Utility MACT rule may impose the greatest costs - and achieve the greatest benefits, according to EPA - many are concerned about the cumulative impact on coal-fired capacity. Earlier this week, the Congressional Research Service attempted to debunk the train wreck perspective:

The primary impacts of many of the rules will largely be on coal-fired plants more than 40 years old that have not, until now, installed state-of-the-art pollution controls. Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel - natural gas - continues to be low, almost regardless of EPA rules.

In any case, what's the argument against promulgation of these rules on the same time frame? Isn't that a good thing? There may be coal-fired plants which could sustain the capital investment required to comply with Utility MACT, but not the added cost of cooling water intake improvements to comply with new Clean Water Act requirements or the added cost of new disposal requirements if coal ash is regulated as a hazardous waste. Isn't it better to know about all of these rules up front, so that facilities can plan for the total cost of all the rules? Wouldn't a facility have legitimate cause to complain if the rules were instead issued seriatim, so that the facilities did not know about the full range of regulatory compliance costs when they make the decision whether to invest to comply with the first rule or instead to shut down?

California's Greenhouse Gas Cap and Trade Program Enjoined

Posted on June 8, 2011 by Robert Wyman

By: Bob Wyman and Aron Potash, Latham & Watkins LLP


A San Francisco Superior Court ruling on May 20, 2011, enjoins California from undertaking any further work to implement a greenhouse gas (GHG) cap and trade program until the California Air Resources Board (CARB) comes into compliance with the California Environmental Quality Act (CEQA) by more fully analyzing alternatives to cap and trade. While a setback to CARB, which had been planning to conduct spring workshops and summer rulemaking to finalize important unresolved aspects of its planned cap and trade program, the ruling in Association of Irritated Residents v. California Air Resources Board is less damaging than it could have been to CARB’s efforts to achieve the GHG emission reductions required by the Global Warming Solutions Act of 2006 (AB 32). The court’s earlier March 18 statement of decision threatened to put the brakes on not just the cap and trade program but also CARB’s entire suite of GHG reduction measures, including the low carbon fuel standard, the renewable electricity standard and other initiatives. So the court’s final order is significantly narrower in scope. Nonetheless, the cap and trade scheme is the centerpiece of the first economy-wide program in the United States to limit GHG emissions, and it is unclear whether that part of CARB’s program can commence as originally planned on January 1, 2012. While it works to complete a new CEQA alternatives analysis, CARB will almost certainly also appeal the judgment and seek a stay to keep cap and trade implementation on track.


This roadblock to California’s cap and trade plan was brought about when the Association of Irritated Residents (AIR) and others filed a petition for a writ of mandate alleging that CARB substantively and procedurally failed to comply with CEQA in approving the Scoping Plan, CARB’s detailed roadmap for reducing GHG emissions under AB 32. AB 32 was enacted in 2006 and requires the state to reduce GHG emissions to 1990 levels by 2020. CARB was charged with implementing AB 32 and approved the Scoping Plan in December 2008. Since that time, CARB approved a number of regulations contemplated by the Scoping Plan, including the GHG cap and trade program in December 2010. Many significant aspects of the cap and trade program remain unresolved, however, and CARB workshops and rulemakings were planned for this spring and summer with the intention of finalizing such critical program components matters as the allocation of free GHG allowances, the use of auction revenue, the generation and use of offsets, and the designation of GHG intensity benchmarks for regulated sectors.


In its March 18 statement of decision, the court found that CARB violated CEQA by failing fully to evaluate possible alternatives to the measures described in the Scoping Plan. Focusing on the cap and trade program, the court wrote: “ARB’s extensive evaluation of the proposed cap and trade program…provides the public with information about cap and trade only. CEQA requires that ARB undertake a similar analysis of the impacts of each alternative so that the public may know not only why cap and trade was chosen, but also why the alternatives were not.” The March 18 decision specifically criticized the Scoping Plan CEQA analysis for failing to discuss in detail a carbon fee alternative to cap and trade. Cap and trade is not a “fait accompli,” the court wrote.


The court set forth its remedy in the new May 20 ruling, ordering that its writ “shall specifically enjoin ARB from engaging in any cap and trade-related Project activity that could result in an adverse change to the physical environment until ARB has comes [sic] into complete compliance with ARB’s obligations under its certified regulatory program and CEQA, consistent with the Court’s Order. This includes any further rulemaking and implementation of cap and trade…” The Court also ordered CARB both to take no action in reliance upon the Scoping Plan as it relates to cap and trade and to set aside the executive order approving and certifying the CEQA analysis of the Scoping Plan. Although the intent of the ruling appears to be to halt work only on the cap and trade component of the AB32 program, this second portion of the court’s order potentially opens the court’s decision and the validity of the other Scoping Plan measures to attack on the ground that a court may only have the authority either to invalidate a CEQA approval in its entirety or not to invalidate any portion at all. The court’s path of partially invalidating a CEQA action remains an uncertain area of California law.


CARB will almost certainly appeal the decision and seek a stay of the judgment during the course of the appeal. The next battle in this case will likely involve CARB arguing that its appeal of the court’s writ automatically stays the judgment—allowing cap and trade rulemaking to continue apace—and AIR arguing that CARB will have to obtain a writ of supersedeas in order to stay the judgment. This battle will hinge in part on how the reviewing court characterizes the lower court’s writ (e.g., whether it is prohibitory or mandatory in nature) and on the whether the reviewing court sees the lower court order as overbroad in its limitations on CARB’s rulemaking activities.

EPA Stays New Boiler MACT Standards

Posted on May 20, 2011 by Karen Aldridge Crawford

By:  Karen Aldridge Crawford and Stacy Kirk Taylor

Facing opposition from a number of business groups and trade organizations and resistance from Capitol Hill, EPA announced on Monday, May 16, 2011 that it was staying indefinitely the effective dates for the new emission standards for boilers (i.e. the boiler MACT standards) that the EPA issued in February of this year.

Acting under a court mandated deadline, EPA finalized the new regulations in February even though the regulations as enacted varied significantly from the initial draft rules issued for comment. Given the significant difference, EPA tried to provide an opportunity for further comment and input, but the Court denied EPA's request for a 15 month extension for issuing a final rule. As a result, EPA went ahead and issued the final rule but immediately issued a reconsideration notice and agreed to continue to receive public comments. This left the regulated community in the untenable position of investing a significant amount of money into technology to comply with the final regulation, when EPA was still reviewing the final regulations and therefore the requirements could change (in which case one may have invested significant money into an unnecessary or misdirected technology).

With an effective date for the new regulations of May 20, 2011, several industry groups, including the National Association of Manufacturers, the American Petroleum Institute, the American Chemistry Council, and the U.S. Chamber of Commerce, petitioned the EPA for a stay of the effective date. A stay would extend the effective date of any new regulations beyond the deadline provided under the Clean Air Act. EPA, however, acting under authority provided agencies in the Administrative Procedures Act to delay new rules "when justice so requires," agreed to a stay the new regulations to provide EPA an opportunity to seek and adequately consider additional comments on the new regulations before requiring facilities to make significant investment in technology. EPA also announced that it will continue to collect data and comments from stakeholders until July 15 of this year, at which point it will start reworking the new rules. 

The Importance of Accurate and Complete Title V Air Permit Compliance Certifications

Posted on March 24, 2011 by Michael McCauley

At this time of year, most companies with facilities which have Title V air operating permits have either filed, or are preparing to file, annual compliance certifications and semi-annual compliance monitoring reports with their state air agencies. It is good to remember how important these documents are and why special attention must be paid to insure they are completed accurately and wisely.

Here are some thoughts on why Title V compliance certifications and semi-annual monitoring reports are so important:

  1. Each permitted facility should take great care in developing its annual compliance certification – especially if the plant is reporting "deviations" or "exceptions" from the permit requirements or violations of the permit limits. Such a certification must be viewed as a self-reported "Notice of Violation" and as an important, first-step enforcement document. The permitted facility should not just report problems and non-compliance items without also describing and explaining the corrective actions which have been taken to resolve the problems.
  2. Once a Title V certification is filed with a state agency and/or federal EPA, the facility can be fairly certain state and federal enforcement staff will be looking at it with a view toward possibly commencing formal enforcement proceedings to resolve any problems which are identified. Even if the state and federal agencies exercise their enforcement discretion and choose not to act, environmental groups can and sometimes do file citizen enforcement lawsuits to directly enforce the terms of the permit in federal court. Because the violations are "self-reported," a federal court will almost certainly impose some level of civil penalty in a Citizen Suit. If that happens, the defendant company must not only pay the civil penalty -- but also the attorneys fees and costs of the plaintiff environmental group which commenced and pursued the action.
  3. For the above reasons, it is important that all Title V compliance certifications be reviewed and approved by company counsel -- either in-house attorneys or outside counsel -- in advance of filing. This process is especially true if exceptions or deviations are being reported. Counsel should also be involved to insure the "reasonable inquiry" requirements have been met before the "Responsible Official" of the company signs the certification. If the certification is not true, accurate and complete, both the responsible official and the company can be subject to prosecution.
  4. These suggestions apply to companies of all sizes which are subject to the Title V air permit program. If a company does not have an in-house lawyer on staff, it should consider seeking the advice of outside counsel. It is important to have the right kind of legal advice available in this area. Simple mistakes and oversights made in the Title V certification process can later prove to be very expensive.
  5. Like anything else, this process can be managed effectively so that a company can avoid unnecessary risks of legal liability. However, it takes foresight, planning and knowledge of the process in order to navigate safely through the Title V compliance certification process.
  6. And remember the old adage: "An ounce of prevention can be worth a pound of cure!"

EPA Takes Measured Approach on First-Time GHG Permit Limits

Posted on March 7, 2011 by Deborah Jennings

 

In its first acts since GHG limits took effect under Prevention of Significant Deterioration (PSD) regulations, EPA has tried to walk a fine line between imposing stringent controls and not overplaying its hand in the face of Congressional reluctance.

 

 

In response to the first state-issued PSD permit with GHG controls since GHG limits went into effect January 2, EPA Region VI officials are seeking stronger GHG limits than Louisiana is requiring. The Louisiana Department of Environmental Quality (DEQ) recently finalized a PSD permit for a new iron and steel facility by Nucor Corp. on January 27, but declined to make any changes to GHG limits in the draft permit, including those suggested by EPA. It is unclear whether EPA will object to the permit’s issuance, but EPA was clearly dissatisfied with the permit for failing to establish a mass or CO2-equivalent limit, instead proposing a limit of “good combustion practices” based on an efficiency limit. “When determining a PSD permit limit, a permitting authority must establish a numeric emissions limitation that reflects the maximum degree of reduction achievable for each pollutant subject to BACT,” EPA stated in its January 7 letter to LDEQ. EPA also faulted the permit for failing to: include adequate monitoring for CO2 control; evaluate carbon capture and sequestration as an available technology; include a BACT analysis explaining how the control technology was selected; and provide baseline GHG emissions rates from the plant. Essentially EPA’s comments largely follow the agency’s position that GHG permitting should not differ from other air pollutants. 

 

 

While EPA sought to send a strong message to Louisiana, it has taken a lighter approach on stalled permits, exempting several of them from the new GHG limits.  In response to several PSD permit applications that have languished with EPA, the agency noticed its intent to exempt several permits that have yet to be issued from complying with emissions limits that took effect after the permit application date. The proposed new policy arose, as stated in EPA’s January 31 declaration in Avenal Power LLC v. EPA, exempting Avenal’s proposed 600 MW natural gas combined cycle power plant from GHG limits, the new SO2 hourly NAAQs (effective Aug. 23, 2010), and new hourly NO2 limits. The decision was made after Avenal applied for a permit in 2007 and sued EPA for failing to comply with PSD regulations requiring the agency to act on the permit within one-year of the application. EPA will issue a public notice requesting comment on the proposed policy. If the final policy is consistent with EPA’s declaration, several similarly situated entities whose permits have been delayed by EPA inaction could find themselves free from GHG limits in their newly issued permits.   

A New Twist on Potential to Emit

Posted on February 15, 2011 by Michael L. Hardy

Seasoned Clean Air Act lawyers have grappled with the application of the concept of "potential to emit" in permit applications and in other regulatory settings. In virtually every decade since the 1970's, there has been a significant judicial ruling, codified regulation or guidance document that attempts to elucidate the principles of "potential to emit" for purposes of permitting and enforcement.

A recent decision of the Court of Appeals of Ohio, Tenth Appellate District (which sits in Columbus, Ohio) undertook a review of the significant case and regulatory developments on the topic. State of Ohio ex rel Ohio Atty. Gen. v. The Shelly Holding Co, et. al., resulted from an appeal of a lengthy enforcement case over the alleged failure to secure the proper permits for asphalt plants. The concept of "potential to emit" played a significant role in the enforcement case at the trial court.

 

Ohio alleged that Shelly violated the air pollution laws at a number of its asphalt plants and portable generators by failing to obtain appropriate Title V "major source" permits before commencement of operations, among other things. Shelly, on the other hand, maintained that these plants were minor sources by reason of the restrictions Shelly voluntarily imposed on operations to keep emission levels below the regulatory triggers. After a lengthy bench trial leading to a record of over 2000 pages, the court found in favor of the State on 13 of 20 counts and assessed a civil penalty of $350,123.52 against Shelly. Nevertheless, Ohio appealed on several grounds, including the trial court's application of the "potential to emit" to the defendants' facilities.

According to Ohio, "potential to emit" requires a stationary source's potential emissions to be calculated on the basis of the source's maximum capacity to generate emissions – that is, worst case conditions 24 hours per day, 365 days per year, or 8,760 hours per year, unless there was a federally enforceable permit that imposed temporal or capacity limits on the operations. The trial court accepted Shelly's self-imposed limits, which it had placed in its permit applications, as effective limits for determining the "potential to emit" and rejected Ohio's insistence that federally enforceable limitations represent the only exception to the maximum design capacity as the basis for "potential to emit." Under Ohio's argument, "federally enforceable" limits as the only exception would arise through a permits issued through Title V notice and comment procedures.

The Court of Appeals reversed on the grounds that a source owner's voluntary restrictions are insufficient. While the restrictions need not be federally enforceable, they must be legally or practically enforceable by the state. Thus, they could arise from a duly granted permit to install or permit to operate under state law. The problem in this case is that Ohio's permit backlog meant there were periods of operation without formal permits to operate. But the Court of Appeals decided that "…an owner cannot be penalized for the Ohio EPA's failure" and delays. The appellate court remanded the case to the trial court to reconsider the scope of the penalties in light of its instructions. The state agency's delay in properly processing the state issued permits could affect the amount of penalties.

Another interesting issue arose from Shelly's failure to pass a stack test. The trial court accepted Shelly's argument that a stack test does not represent normal operating conditions, but rather is "snap test and does not relate to day-to-day operations, so that only the day of the (failed) stack test should constitute a violation and warrant a fine." Failing at high load conditions does not mean that it would fail at lower load levels. Rejecting the trial court's conclusion, however, the appellate court directed the trial court, in determining the number of days of violation, to presume that the violation continued until a subsequent stack test passed. Thus, the appellate court seems to disregard other ways, like engineering calculations, to show compliance during normal day-to-day operations.

Shelly has not sought to appeal this decision to the Ohio Supreme Court, but is currently preparing to do so.

ARE THE NAAQS AN OBSOLETE CONCEPT?

Posted on February 8, 2011 by Roger Ferland

* My thanks to Gary E. Marchant, J.D., Ph.D., Lincoln Professor of Emerging Technologies, Law & Ethics, Center for Law, Science & Innovation at Arizona State University. He is the brains behind this blog entry.

 

One of the founding principles of the Clean Air Act is the National Ambient Air Quality Standards or NAAQS. Attainment and preservation of the NAAQS is the goal of State Implementation Plans, the permit system is intended to protect the NAAQS and most of the technology-based emission limitations are for the control of NAAQS-based pollutants. However, several of the premises for setting the NAAQS are no longer either scientifically or legally supportable.

After almost forty years, the criteria for establishing the NAAQS are settled.

  • The level of the NAAQS must protect public health with "an adequate margin of safety."
  • In setting NAAQS, EPA cannot consider the cost or feasibility of achieving it.
  • The NAAQS must not only protect the general public, but also there must be an absence of adverse effects on "susceptible" or "sensitive" subgroups and individuals.
  • According to EPA, "susceptible" subgroups and individuals can be defined by:
    • Life stages, e.g., children, the elderly or pregnant women
    • Prior immune reactions
    • Disease state, e.g., asthmatics
    • Prior damage to cells or all systems
    • What is called "genetic polymorphism," the small, but significant percentage of the population who have genetic susceptibilities to certain toxins

 

The problem is that if EPA declares that the NAAQS must prevent adverse health impacts on this range of susceptible subgroups and individuals, the only level that can prevent adverse effects across the range is zero.

For the last three decades the achievement of no adverse clinical effects with an adequate margin of safety has caused the NAAQS to be set at lower and lower concentrations. Indeed, the controversy over a more and more stringent ozone NAAQS was heightened by a recent EPA study that showed decreased lung functions among even healthy individuals at 0.060 µ/m3. These, however, are only clinical adverse effects. If all toxcogenomic or gene expression changes that are indicative of a toxic response are considered, it is hard to justify any concentration but zero for the NAAQS. As EPA has acknowledged in criteria documents for the PM-10, lead, ozone and NOx NAAQS, genomic susceptibility plays an adverse role in responses to inhalation of these pollutants, particularly with respect to specific individuals or certain groups. For these individuals or groups there is no concentration of NAAQS pollutants that will guarantee an adequate margin of safety. For example, 100,000 Americans have a condition called an alpha-1 antitrypsin deficiency. People with this condition are predisposed to emphysema and other serious lung diseases from exposure to any level of smoke or dust. Similar genetic susceptibility to any level of certain pollutants above zero can be shown for a wide range of pollutants, individuals and genetically sensitive groups.

The point in all of this is that if we continue to require a no adverse effects with an adequate margin of safety as a minimum criterion for the NAAQS with no consideration of cost or practicable achievability, the inevitable result will eventually be a scientific train wreck.
 

USEPA Continues the Evolution of Its Clean Air Transport Rule

Posted on January 31, 2011 by David Flannery

EPA proposed its Clean Air Transport Rule (CATR) on August 2, 2010. The CATR would require extensive additional emissions controls on Electric Generating Units, or EGUs, in a 31 state area, purportedly for the purpose of attaining ozone and PM2.5 NAAQS and eliminating “significant contribution” to nonattainment (transport) from upwind states to downwind states.

 

The electric power industry submitted extensive comments on the CATR which provided EPA with new studies that demonstrate EPA’s failure to account for dramatic improvements in air quality in recent years and its failure to recognize future air quality improvement due to existing regulatory requirements. In particular, this data show that the proposed CATR ozone objectives can be achieved with no new controls beyond the existing regulatory requirements. The same study also concluded that PM2.5 objectives of the proposed CATR can be achieved with no new controls beyond the existing regulatory requirements, with the possible exception of additional local controls at the Allegheny County, PA and Brooke County, WV locations.

 


On January 7, 2011, EPA published its third Notice of Data Availability (NODA) with respect to CATR. The latest NODA provides data on potential allocation mechanisms and seeks comments on alternative approaches. EPA received numerous comments on allocation issues as a result of proposing the CATR. Following up on the comments, EPA analyzed allocation mechanisms for existing EGUs and is now providing data that it believes might support two alternative allocation mechanisms.
 

The two options include:

Option 1, which would allocate a state’s existing unit budget based on each unit’s proportionate share of the state’s total historic heat input. For each covered unit, annual heat input values for the baseline period of 2005 through 2009 would be identified using data reported to EPA or, where EPA data are unavailable, using data reported to the Energy Information Administration (EIA). For each unit, the three highest, non-zero annual heat input values within the 5-year baseline would be selected and averaged. 


Option 2, which would yield the same initial allocation pattern as Option 1 (based on historic heat input) but would then add a constraint (i.e., a limit on allocations) based on a unit’s reasonably foreseeable maximum emissions under the proposed Transport Rule trading programs. For those units with heat input-based allocations that would exceed historic emissions, this option would limit allocations so that the units would not be given allowances in excess of their reasonably foreseeable maximum emissions.

 


EPA is requesting comments through February 4, 2011 on the two allocation options and four other issues, including (1) the implications of the alternative allocation methodologies for the proposed assurance provisions; (2) an alternative approach to calculate allowance surrender requirements at the designated representative level for the assurance provisions; (3) a methodology for distributing allowances to new units that locate in Indian country within the Transport Rule region; and (4) possible options for states wishing to submit State Implementation Plans (SIPs) providing for state allocation of allowances in the Transport Rule trading programs. The NODA included references to state auctions of allowances in the description of acceptable options.

 


In other developments related to the transport rule, U.S. EPA announced in December 2010 that it needs until July 29, 2011, to complete the ozone NAAQS. With its second transport rule intended to implement this revise ozone standard, it is now uncertain as to when that proposal can be expected.

Regulatory Uncertainty and Structural Unemployment

Posted on January 26, 2011 by Kevin Finto
Almost every day we hear about the seemingly glacial pace of the current recovery and the unfortunate persistence of unemployment.  Some of the discourse has focused on regulatory uncertainty, more specifically, the numerous and amorphous dictates of health care and financial reform and whether they are a cause of structural unemployment.  Less often we hear similar concerns about EPA’s rule for green house gases.
 
 
            More pernicious to unemployment than these high profile government actions, however, are relatively small revisions to the law through agency actions on permits, orders and guidance, without the benefit of any rulemaking required by the Administrative Procedure Act (“APA”). This pattern of agency behavior creates not only uncertainty as to what the law is but also the perception, if not the real risk, that an agency might change the law at any time. This uncertainty inhibits the trust and confidence necessary for investment that create employment. A couple of recent examples illustrate this risk.
 
Particulate Matter Regulation
 
            Particulate matter has been regulated under the Clean Air Act since its inception. Over time, the regulated form or portion of the particulate matter has changed as EPA has focused on fine particulate and its potential for respiratory damage. In 1985 EPA issued regulations establishing National Ambient Air Quality Standards for PM10 (particulate matter with an aerodynamic diameter less than 10 microns).  Over time, EPA developed techniques for measurement, control, monitoring and modeling of PM10. In 1997, EPA defined a new pollutant, PM2.5 (particulate matter with an aerodynamic diameter les than 2.5 microns) and a new NAAQS for it. EPA recognized, however, that agencies and the regulated community lacked the “necessary tools to calculate emissions of PM2.5 and related precursors and project ambient air quality impacts.” and authorized use of PM10 as a surrogate for PM2.5.  This policy was affirmed in rulemakings in 2005 and 2008 (the latter established a transitional period through 2011 to direct regulation of PM2.5).
 
 
            A little over a year (and a change in Administrations) later, in the context of acting on a petition for an objection to a Title V permit for an individual power plant, EPA abruptly did an about face, declaring that “permit applicants and permitting authorities [must] determine whether PM10 is a reasonable surrogate for PM2.5 under the facts and circumstances of the specific permit at issue, and not proceed on a general presumption that PM10 is always a reasonable surrogate for PM2.5.” Remarkably, the Trimble Order provides no explanation whatsoever as to how the new “requirement” to conduct a case-by-case assessment overrides the transition rule for SIP-approved states established through notice and comment procedures in the PM2.5 NSR implementation rule. Moreover, the order fails to explain why the court opinions “that are properly read as limiting the use of PM10 as a surrogate” – all of which predated the 2008 PM2.5 NSR implementation rule somehow have greater force and effect now than they did at the time the transition policy was established in the implementation rule.
 
 
            EPA has vigorously insisted on the reasonableness analysis prescribed in the Trimble Order, regulated entities have been forced to attempt to comply with it and state agencies have enforced it. Clearly, EPA’s statements have the requisite practical binding effect to bring them under the purview of the APA. More importantly, this previously unknown requirement for a reasonableness analysis is not a trivial one, especially for projects that are in the middle of permitting, engineering design, financing or even construction. Attention must be diverted from making the project a reality to figuring out how to comply with a new requirement. Like so many recent pronouncements, in Trimble County, EPA made a policy pronouncement but provided no tools to implement it. That is a recipe for regulatory uncertainty leading to structural unemployment.
 
 
Prior Converted Croplands
 
            A more recent Corps decision regarding the treatment of prior converted croplands puts a finer point on the APA implications of rulemaking by permit, order or guidance. Under the Clean Water Act, a permit is required to discharge fill material to waters of the United States, including wetlands. In 1993, the Army Corps of Engineers, which administers the permit program issued a rule excluding prior converted croplands, i.e. lands that were drained to grow commodity crops prior to 1985, are not wetlands because they no longer exhibit the characteristics or serve the function of wetlands.   The only way for such lands to revert to Corps jurisdiction is for them to be abandoned as croplands and revert to their wetlands state. In July of 2009, the Jacksonville District Office of the Corps issued an “Issue Paper” in which it determined for the first time that prior converted cropland that is converted to non-agricultural uses are subject to Corps jurisdiction, regardless of there characteristics or function as wetlands. The Issue Paper, which was written in response to jurisdictional determinations for five limestone quarries, was sent to the Corps Headquarters for review and it was affirmed as agency policy. It was not, however, subject to notice and comment rulemaking.
 
 
            In a challenge brought by affected landowners, the United States District Court for the Southern District of Florida found that the Issue Paper was a rulemaking adopted without the required notice and comment under the APA and therefore was not valid.   The court explained that the rulemaking process was not a mere technicality because that procedure provided the agency with diverse public comment, accorded fairness to interested parties and allowed the development of record for judicial review. The Corps argued that the Issue Paper was a mere policy statement, but the court disagreed stating that it resulted in a shift in rules and a new binding norm regarding what the Corps considers wetlands from which district offices were not free to deviate in individual cases.
 
 
            Both Trimble County and New Hope Power Company reflect exactly the type of agency activity – the reversal of years of agency practice by a permit, order or guidance document and without a valid rulemaking – that creates regulatory uncertainty and structural unemployment. No matter how much private or stimulus money is thrown at it, no project can truly be “shovel ready” (i.e., fully designed, planned and financed) when there is no way to determine whether it complies with the law or whether the rules that apply to it will change while it is under construction. 

Preserving the Tallgrass Prairie in the Face of Stringent Air Quality Standards: The Flint Hills Smoke Management Plan

Posted on January 17, 2011 by Charles Efflandt

It is an environmental truism that increasingly stringent air quality standards can cause collateral damage – typically economic in nature. It is less common for such standards to directly impact preservation of a significant North American ecosystem.

Comprising a vast area in eastern Kansas and northeast Oklahoma, the Flint Hills ecosystem remains today the last unfragmented expanse of tallgrass prairie on the continent. Roughly two-thirds of all tallgrass prairie in North America is contained in the Flint Hills. The Flint Hills provide a unique ecosystem for numerous mammals, birds, reptiles and cattle (the surrogate for the bison that once roamed this area and that served as a keystone species in maintaining biodiversity). The U.S. Fish & Wildlife Service and The Nature Conservancy have both identified the Flint Hills as a priority conservation action site.

Fire is a critical ecological driver in the tallgrass prairie. Lightning is nature’s tool for this process of ecological renewal. The burning of large sections of the Flint Hills was practiced for centuries by Native Americans. In more modern times, controlled burning has been utilized by conservation agencies and organizations, as well as by ranchers, as an ecological and agricultural management tool. Tallgrass prairie preservation requires frequent burning to prevent the encroachment of woody species and maintain the integrity of the plant communities and wildlife habitat. From an agricultural perspective, the burning and renewal of the tallgrass has been shown to significantly increase the productivity of the rangeland for cattle ranching purposes.
 

Such frequent and widespread burning, however, creates health concerns. Air modeling has shown transport of PM and ozone precursors as far east as Tennessee during the burning season. Air pollutants from Flint Hills burning have also adversely impacted or threatened the NAAQS attainment status of areas in Kansas and Missouri. With more stringent ozone regulations imminent, this conflict between ecological preservation and compliance with air quality standards will be exacerbated.

A recent ACOEL posting suggested, in the climate change context, that the severe economic consequences of the traditional legislative/regulatory process can and should be mitigated through creative voluntary community effort. With the ecologically and agriculturally beneficial practice of tallgrass burning on a collision course with NAAQS attainment, such an approach was recently embraced by the U.S. EPA, Kansas Department of Health and Environment, conservation and agricultural organizations and academia. The December 2010 approval of the Flint Hills Smoke Management Plan was the result of over a year of collaborative effort by these stakeholders. The key elements of the Plan include:

  • A new website with a predictive plume modeling tool for public and private decision-making.
  • Development of fire management practices to mitigate adverse health consequences and NAAQS violations associated with controlled burning.
  • A comprehensive data collection effort to better characterize prairie burning and its consequences.
  • Proposed limited legal restrictions on open burning during critical time periods.
  • Extensive outreach and education efforts, including prescribed fire training programs, public-private information sharing, and media exposure.
  • A pilot project in the spring of 2011 in two Kansas counties to implement the predictive computer modeling and fire management practices.

The Plan has been attacked by certain environmental organizations as a “smoke screen” whose objective is to facilitate EPA exemption of burning from enforcement in order to maximize beef production. These critics discount the ecological motivation for the Plan and allege that it is unlikely to adequately protect public health. I would suggest that the Plan should not be viewed as the final answer. Rather, it should be considered a working document that will evolve as the results of modeling and data collection and level of voluntary implementation are evaluated. Time will tell the extent to which the Plan can be cited as further evidence of the power of voluntary, collaborative

"No More Business as Usual": A Preview of Climate Change and the California Environmental Quality Act in 2011

Posted on January 5, 2011 by Patrick Dennis

As goes California, so goes the rest of the nation? That could be the case with respect to climate change and the regulation of greenhouse gas (GHG) emissions. Climate change and the implications of California’s Global Warming Solutions Act of 2006 (also known as AB 32) continue to remain a topic of great debate and speculation nationwide, as well as in California. AB 32 recently survived an initiative challenge during California’s November 2010 election cycle, and deadlines established in AB 32 to meet greenhouse gas reduction goals continue to loom. Recently, Governor Arnold Schwarzenegger, who just left office a few days ago, gave remarks at a California Air Resources Board meeting and acknowledged the “great, great benefits” from the creation of green jobs and venture capital being provided to GHG reduction projects. However, the Governor’s excitement for the benefits of AB 32 and climate change initiatives were tempered by California’s economic reality. According to the Governor:

 


We have to be sensitive because it is an economic downturn and this Air Resources Board knows that they have to be sensitive. But we have to reach our goal by 2020, our reductions of 25 percent and we’ve got to go and have our 33 percent of renewables by 2020. There are no two ways about that.

 


So what does this mean as we look forward to 2011 with a new Governor and lingering fiscal issues?
 

One area of law where climate change is bound to remain an active topic of discussion, and likely litigation and regulatory development, is with respect to the California Environmental Quality Act (CEQA). At the time AB 32 was adopted, there was uncertainty about the type of greenhouse gas emissions analysis that would be required under CEQA, and opponents of development projects filed several lawsuits to challenge projects on that basis. The early California State superior court decisions after passage of AB 32 ran the gamut from not requiring climate change analysis or a discussion of AB 32 , to finding an environmental impact report inadequate for failing to make a meaningful attempt to determine the project’s effect on global warming simply because it was “speculative”. In 2007, California adopted SB 97, which directed the Governor’s Office of Planning and Research (OPR) to develop recommended amendments to the State CEQA Guidelines for addressing greenhouse gas emissions , with the goal of creating a coordinated policy – instead of a “piecemeal approach dictated by litigation .” The amendments became effective in March 2010.

 


Despite the adoption of the CEQA guidelines amendments, how state and local agencies should analyze and, when necessary, mitigate greenhouse gas emissions still remain somewhat of a mystery, because the amended guidelines and most local governing bodies have fallen short of providing a clear threshold as to what constitutes a significant impact under CEQA, and what should be done to mitigate the impact. However, what we can anticipate for 2011 is that project applicants must “do something” – business as usual (i.e. developing projects without evaluating and, as necessary, reducing GHG emissions) will likely not suffice. The amended guidelines have been adopted, models for quantifying GHG emissions are available, and state and local agencies such as the Attorney General’s Office ) and various air quality management districts have provided recommended mitigation measures and performance-based and numeric thresholds related to climate change. The California Court of Appeal also weighed in on the “do something” mantra in April 2010 in concluding that an environmental impact report was inadequate because it improperly deferred an evaluation of GHG mitigation measures. It held that, “[d]ifficulties caused by evolving technologies and scientific protocols do not justify a lead agency’s failure to meet its responsibilities under CEQA by not even attempting to formulate a legally adequate mitigation plan.”

 


All in all, with AB 32 left intact, the adoption of the new CEQA Guidelines, and the CARB regulatory package for implementation of AB 32 likely to be put in place, 2011 promises to be an active year in California’s legal and regulatory environment – one that the nation will continue to closely monitor as California takes the lead.

Tailoring Rule Gets Further Alteration (or Nip and Tuck EPA Style)

Posted on December 30, 2010 by Karen Aldridge Crawford

On December 30, 2010, just days before the first Greenhouse Gas (GHG) regulations are to become effective, EPA issued another final rule to clarify and narrow the applicability of those regulations. 75 FR 82254 (12/30/10).

 

After reviewing the “60-day letters” received by EPA from most of the states, the agency realized its initial strategy for regulating GHG emissions was flawed in those states that had approved Title V permitting programs Those state programs were based on Clean Air Act and federal regulatory provisions in 40 CFR Parts 52 and/or 70 that established the threshold for major source determinations as 100 tons per year (tpy) for certain air pollutants subject to regulation, rather than the 100,000 tpy threshold on a carbon dioxide equivalent (CO2e) which EPA determined should apply to GHG emissions (the Tailoring Rule).

 

While some state laws and regulations were worded broadly enough to be consistent with the initial Tailoring Rule, many states would be required to modify their program to only regulate GHG emissions at the higher Tailoring Rule threshold upon the January 2. 2011 effective date of the new rule. Otherwise, those states’ programs would require regulation of GHG emissions at the original threshold of 100 tpy, which would inundate the states with many more permit applications than EPA’s regulations actually intended.

 

The provisions in both Part 52 and Part 70 applicable to the affected state programs are revised to read, “… EPA approves such provisions only to the extent they require permits for such sources where the source emits or has the potential to emit at least 100,000 tpy CO2e, as well as 100 tpy on a mass basis, as of July 1, 2011.” EPA has stated this language means that GHGs are regulated at 100,000 tpy and all other pollutants subject to regulation are regulated at the 100 tpy mass-based threshold.

 

It will be interesting to watch whether the courts’ interpret this additional “clarifying” language to be clear and legal.

Happy New Year? With the Advent of Greenhouse Gas Regulation Only Days Away, Many in Industry Might Prefer, Instead, to Turn Back the Clock

Posted on December 28, 2010 by John Crawford

By James R. Farrell

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

 

 

Regulation of greenhouse gas (GHG) emissions has become a reality. Although the Supreme Court’s 2007 ruling in Massachusetts v. EPA deserves much of the credit for EPA’s aggressive response to global warming, congressional inaction on comprehensive climate change legislation ultimately set in motion the agency-driven agenda that has led our country to an historic yet extremely controversial crossroads in environmental regulation. The Supreme Court’s conclusion that GHGs constitute air pollutants as defined by the Clean Air Act required EPA to determine whether GHG emissions from motor vehicles cause or contribute to climate change that is reasonably anticipated to endanger the public health or welfare; however, the Court’s requirement for regulatory action did not preclude the possibility of a legislative response.

 

 

Despite the dim prospects for comprehensive climate change legislation today in the wake of the turbulent 2010 mid-year elections, the political landscape appeared far more favorable little more than eighteen months ago. On June 26, 2009, the House had narrowly passed the American Clean Energy and Security Act of 2009 (the “Waxman-Markey Bill”) by a vote of 219-212. The Waxman-Markey Bill featured a cap and trade component to regulate GHG emissions, and the bill would have required a seventeen percent reduction in GHG emissions from 2005 levels by 2020 and an eighty percent reduction by 2050. 

 

 

In the Senate, Senators John Kerry (D-MA), Joseph Lieberman (I-CT), and Lindsay Graham (R-SC) had been hard at work on a comparable climate change bill dubbed the American Power Act. In early 2010, the bill appeared to have bipartisan support due in large part to its provision for expanded offshore drilling, an early and significant concession by the bill’s sponsors. But when the Deepwater Horizon exploded on April 20th, everything changed. As public outrage at the offshore drilling industry grew daily in response to the unprecedented magnitude of the oil spill, it triggered a proportional decrease in political will for comprehensive climate change legislation. By the time the American Power Act was introduced on May 12th, Senator Graham had already withdrawn his support insisting that the ongoing and more immediate threat posed by the Gulf oil spill had “made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support . . . .”

 

 

In the end, the legislative response to climate change that had once appeared likely – if not imminent – never materialized. In contrast, EPA has wasted no time since Massachusetts v. EPA engaging in regulation-making intended to address climate change. The culmination and cornerstone of this fervent EPA activity is EPA’s Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (the “Tailoring Rule”), which will usher in a new and hotly contested era of GHG regulation on January 2, 2011. The Tailoring Rule’s phased-in approach to regulation means that the regulatory net it casts will gradually widen with time, initially targeting those stationary sources known to be the largest emitters of GHG emissions but eventually encompassing some smaller sources as well. 

 

 

Whether or not you’ll be ringing in the new year this year likely depends on your political persuasion. For many environmental groups who have lobbied tirelessly for greenhouse gas regulation, 2011 is a long-awaited (and soon to be much-celebrated) new year. For many in industry, however, 2011 is likely to be a year of nostalgia filled with no less than 365 opportunities to remember fondly the less regulated days of yesteryear. Happy New Year!

 

 

Butler, Snow, O’Mara, Stevens & Cannada, PLLC (www.butlersnow.com)

·        John A. Crawford

·        Michael D. Caples

·        James I. Palmer, Jr.