Sandy’s Aftermath: A First Thought

Posted on November 26, 2012 by Michael Rodburg

Perhaps the most surprising aspect of Superstorm Sandy’s destruction of the Jersey Shore is that some people were taken by surprise.  For decades, a central focus of coastal zone management and waterfront development restrictions has been to protect the fragile and shifting barrier islands, wetlands, and estuaries of the 130 miles of New Jersey at the intersection of land and ocean.  New Jersey’s Coastal Areas Facilities Review Act and its Waterfront Development Act contain among the toughest limitations in the nation to control growth and development and protect an environmentally sensitive ecosystem.  Over the decades, thousands and thousands of decisions have been made by legions of bureaucrats on projects big and small regarding application of land use regulations and the terms of permits and other approvals intended to preserve dunes, reduce beach erosion, prevent flooding and avoid loss of life and property as well as protect the environment.  Sandy seems to have made a mockery of the effort in the blink of an eye.

Sandy was not a black swan event—something heretofore not even contemplated and hence, unforeseeable.  The USGS modelers and their European counterparts had it right almost from the beginning.  Scientists have modeled not only storm tracking itself with better and better forecasts and therefore more warnings, but even the severity and effects of storm events.  These models have predicted the height and location of the storm surges and the resulting erosion and flooding with reasonable accuracy.  Plug in the real time coordinates and other data, and the models told us that the waves would attack the dunes and erode them back into the sea; that storm surge would carry the sand inland and that inundation would occur once the beach and dunes had surrendered to the sea and storm.

In Sandy’s immediate aftermath, two related themes have emerged to justify rebuilding in place.  Many have advocated continuing business as usual; after all, if this was the storm of the millennium, we have a thousand years before we have to worry about a similar event occurring again.  Others have suggested that by undertaking protective measures, we humans are still capable of living anywhere we choose. We just need bigger and better sea walls, flood gates, and other barriers; let the engineers figure it all out.  Eventually, however, these views will inform a more deliberate discussion about our ability to adapt to changing climate conditions—how and where shall we choose to confront Nature and how and where will we let her do as she is wont to do.  With billions of dollars at stake, this debate will get contentious, to be sure.  Climate change and weather volatility will not be easily accommodated.  The role of government in the process—as regulator, facilitator, first responder and insurer of last resort—will come under review.  The two character Chinese pictograph for the word “crisis” consists of the characters for “danger” and “opportunity.”  The crisis that is Sandy should remind us that we should not squander the opportunity to rethink our priorities and arrive at a better way to confront this danger in the future.

EVALUATING THE SUCCESS OF STATE GREENHOUSE GAS REDUCTION PROGRAMS: THE COST OF IGNORING COSTS

Posted on November 16, 2012 by Stephen Leonard

Massachusetts’ ambitious plan to address greenhouse gas emissions on a state-wide basis attracted private money last month to measure its success and costs.  Boston-based Barr Foundation’s grant of $230,000 will establish a “performance management tool” to track and measure the success of initiatives undertaken under Massachusetts’ Global Warming Solutions Act (“GWSA”). Supporters expect it to “serve as a national and regional model that other states can adopt to analyze” their own greenhouse gas reduction efforts. The GWSA, enacted in 2008, requires extremely ambitious reductions in greenhouse gas emissions within Massachusetts in the coming decades: an 80% emissions reduction goal by 2050 and 10-25% by 2020 from a 1990 emissions baseline  The act directed the Secretary of Energy and Environmental Affairs to set the 2020 reductions and adopt a plan for achieving them.

The planning and regulatory documents issued since enactment recognize that the success of a single state’s effort to address the causes of climate change cannot be measured by the impact of its own reductions in greenhouse gas emissions in effecting changes in the global climate. The effect will simply be too small to measure.  Instead, the state’s plan touts the beneficial effects of spurring economic development through the encouragement of green energy and other high tech businesses, the reduction of localized pollution, and the stabilization of energy prices. The success of the program in “bending the curve” of rising greenhouse gas emissions, however, rests entirely on its ability to serve as an example to other political entities – states mainly but, ultimately, geopolitical entities through broader global participation.

In December 2010, the Secretary of Energy and Environmental Affairs released the Massachusetts Clean Energy and Climate Plan for 2020 setting the reduction target at 25% below 1990 baseline. The Executive Summary summarizes reductions anticipated from existing and expected programs (table at page 6).  Policies relating to Buildings (9.8% or more than one third of the 25% reduction), Electricity (7.7%) and Transportation (7.6%) account for the vast majority of the reductions.  Within each sector, reductions are characterized as either “Existing Policy” (e.g., Federal and California vehicle efficiency and GHC standards – 2.6% reduction), “Expanded Policy” (e.g., advanced building energy codes – 1.6% reduction), or “New Policy” (e.g., Green DOT, the Massachusetts’ transportation agencies fulfillment of their sustainability commitment – 1.2% reduction).  The Barr Foundation’s grant will help create the “dashboard” that presumably will take into account the likelihood of adoption of new programs or the expansion of existing ones and the ultimate efficacy of any of the programs, as it tracks the progress of the Massachusetts program.

Efforts to track the success of the Massachusetts program will build on the work done by MassINC, a Boston-based “independent think tank” that earlier this year released a book-length report titled “Rising to the Challenge/Assessing the Massachusetts Response to Climate Change.” This very thoughtful work looks specifically at Massachusetts’ progress to date and likely future success in emission reductions in various sectors; it provides useful capsule descriptions of other state’s programs and of regional and foreign initiatives. And it discusses the crucial issue of the economic costs and benefits of the program, as that will be a prime determinant of the program’s ability to be a role model for other jurisdictions. 

The MassINC report recognizes that data on the subject of economic costs and benefits are subject to extremely complex and differing interpretations.  The report notes there is general agreement in Massachusetts that “it is desirable to reduce greenhouse gases and develop clean energy [,] it is more difficult to reach consensus when the subject turns to the cost of addressing climate change ….”   Id. at 75.  Nonetheless, a convincing explanation of the specific costs and benefits of various courses of action is a necessary component of any successful program because the ultimate effectiveness of a state’s program rests on its attractiveness as a model for other jurisdictions – including those with different views of the appropriate tradeoffs between environmental protection and economic development.

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.

Corporate Disclosure of Climate Change Risks Since the SEC Interpretive Guidance

Posted on August 3, 2012 by Christopher Davis

In February 2010, the U.S. Securities and Exchange Commission (“SEC”) issued interpretive guidance that clarified corporate disclosure obligations regarding climate change-related risks and opportunities. While the guidance didn’t create any new legal requirements, it indicated that climate-related issues can have a material impact on companies that requires appropriate disclosure. It also offered examples of the ways in which companies may be impacted, including from regulations, international accords, litigation, and physical impacts from water quality and quantity issues. 

A recent Ceres report, “Physical Risks from Climate Change: A Guide for Companies and Investors in Disclosure and Management of Climate Impacts,” released in May 2012, highlights the economic impacts of extreme weather events on companies and their supply chains in seven key sectors.

More than two years after the release of this guidance, what is the state of corporate disclosure on climate change issues? Two recent reports by Ceres examined climate-related disclosure in multiple sectors.

Clearing the Waters: A Review of Corporate Water Risk Disclosure in SEC Filings,” released June 18, 2012, examined corporate disclosure on a key climate-related issue—water risks—to see what impact the interpretive guidance had on disclosure practices. The report analyzes changes in water risk disclosure by more than 80 companies in eight water-intensive sectors: beverages, chemicals, electric power, food, homebuilding, mining, oil and gas, and semiconductors. It found that significantly more companies are disclosing exposure to water risk in 2011 compared to 2009, with a focus on physical risk. For example, 87 percent of companies surveyed now report physical risk exposure versus 76 percent in 2009, with the biggest increases coming from the oil and gas sector. There was also a meaningful increase in the number of companies connecting water issues to climate change as part of a long-term trend.

The report recommends, however, that companies make further efforts to include quantitative data and performance targets in financial filings to clarify how they are actually responding to these water-related risks. Without this level of specificity, as well as more information on water management systems, it remains difficult for investors to incorporate these factors into their decision-making. 

Another new Ceres report, “Sustainable Extraction? An Analysis of SEC Disclosure by Major Oil & Gas Companies on Climate Risk and Deepwater Drilling Risk,” released August 2, 2012, examines climate change disclosure in one carbon-intensive industry: oil and gas. The report examined the financial filings that ten of the world’s largest oil and gas companies filed in 2011, a year after the interpretive guidance was issued. While six of the ten companies provided fair disclosure on efforts to manage their own greenhouse gas emissions, the disclosures reviewed in the report were generally disappointing. Particularly on regulatory risks—both direct and indirect—the level of specificity, comprehensiveness, and quality of analysis varied widely across the ten companies’ filings, showing a clear need for further attention and due diligence on material climate risks.

Climate change is a complicated issue for companies to address in their financial filings, particularly with emerging and shifting regulatory regimes and the complexity of modeling the physical impacts of a changing climate. Good climate disclosure that meets the requirements of the SEC guidance and is useful to investors requires the collaboration of a company’s senior legal, environmental, financial and operational managers and advisors. The above-referenced Ceres reports provide a window into the current state of climate-related disclosure and offer recommendations for companies to improve how they address their climate-related risks.

Update on Climate Change Tort Litigation

Posted on June 29, 2012 by David Buente

The body of caselaw rejecting climate change tort claims seeking judicially-imposed restrictions on greenhouse gas emissions, which I reviewed in a prior post on January 3, 2012, continues to grow.  That post predicted that (i) none of these suits were likely to succeed, given the U.S. Supreme Court’s holding last year in Connecticut et al. v. American Electric Power Co. et al. (“AEP”) that common law “nuisance” claims seeking such restrictions are displaced by the Clean Air Act, but nevertheless (ii) plaintiffs would continue to repackage and pursue the claims in different courts under different common law labels.  Both predications have proved accurate.

Two of the cases summarized in that post, Comer et al. v. Murphy Oil USA et al. and Alec L. et al. v. Jackson et al., have since been dismissed by the presiding district courts.  In Comer, where a group of Mississippi landowners sued scores of national electric utilities and other companies for damages caused by Hurricane Katrina, claiming that the defendants’ greenhouse gas emissions constituted a common law “nuisance,” the court held that the claims were preempted by the Clean Air Act and, further, that they presented non-justiciable political questions and plaintiffs lacked standing.  In Alec L., where a group of plaintiffs sued several federal agencies under the “public trust” doctrine, seeking an order mandating greenhouse gas regulations, the court likewise held that the claims could not be recognized as a matter of federal law and, in any event, would be displaced by the Clean Air Act.  A third case, Native Village of Kivalina v. ExxonMobil Corp. et al., remains pending before the Ninth Circuit, following the district court’s dismissal of the complaint on grounds that the “nuisance” claims were non-justiciable and plaintiffs lacked standing. 

In addition, “public trust” claims have now been filed in nearly all fifty states.  Some of these take the form, like Alec L., of common law tort litigation, with non-profit groups and individuals suing state officials and agencies in state courts, seeking injunctive orders directing the promulgation of greenhouse gas regulations.  Several of these cases have already been dismissed, including in Alaska and Oregon (both on political question and justiciability grounds); none has proceeded past the pleading stage.  Other claims take the form of administrative petitions, asking the relevant state agencies to issue greenhouse has regulations.  Many of these petitions, in more than 30 states so far, have already been denied; none has been granted.

The unanimous rejection of these claims should presumably, at some time, begin to deter the filing of further climate change litigation.  But that tipping point does not seem yet to have occurred.  At least for the immediate future, it appears likely that plaintiffs will continue to use – and, to many minds, distort – the common law tort system to pursue the political goal of greenhouse gas regulation. 

Two Strikes Against Common Law Approaches to Climate Change: The Atmosphere Is Not A Public Trust

Posted on June 7, 2012 by Seth Jaffe

Last week, the District Court for the District of Columbia dismissed the so-called “public trust” climate change law suit. I will certainly give the plaintiffs in these cases credit for both originality and persistence. Legal merit and good public policy are another matter.

In any case, the plaintiffs sued EPA and various other federal agencies, seeking a finding that the agencies have failed adequately to protect a public trust asset, also known as the atmosphere, from climate change. The plaintiffs requested an injunction requiring that the agencies take actions necessary to reduce CO2 emissions by 6% yearly, beginning in 2013.

It did not take the Court long to dismiss plaintiffs’ arguments – and the case. The Court’s opinion has two critical holdings. First, since there can be no diversity action against the United States, the plaintiffs do not have access to federal courts unless there is a federal question. However, as the Court noted, the public trust doctrine is a creature of state law; there is no federal public trust doctrine.

Secondly, the Court concluded that, even if there ever had been a federal public trust doctrine, any such doctrine has been displaced by the federal Clean Air Act. Here, the Court relied squarely on the Supreme Court’s recent decision in American Electric Power v. Connecticut. The plaintiffs here tried to limit AEP to displacement of public nuisance claims, but the Court was having none of it, pointing out that AEP clearly stated that it was not federal public nuisance claims that were displaced by the CAA, but federal common law claims generally that were displaced.

Moreover, notwithstanding the plaintiffs’ creativity, the Court noted that:

"The question at issue in the Amer. Elec. Power Co. case is not appreciably different from the question presented here—whether a federal court may make determinations regarding to what extent carbon-dioxide emissions should be reduced, and thereafter order federal agencies to effectuate a policy of its own making. The Amer. Elec. Power. Co. opinion expressed concern that the plaintiffs in that case were seeking to have federal courts, in the first instance, determine what amount of carbon-dioxide emissions is unreasonable and what level of reduction is practical, feasible and economically viable."

And that really is the issue. Even if one believes that the government should be taking more aggressive action on climate change – and I certainly am among those who think it should be doing so – having the courts decide what level of reductions are necessary, and by when, is nuts. It’s just not a way to make public policy on the most complex environmental issue of our time.

Back to the drawing board for citizen plaintiffs. I can’t wait to see what they come up with next.

Fiddling While Rome – and the World – Burns: An Update on Climate Change

Posted on June 1, 2012 by Jeff Thaler

How can each of us leave the world to our children and grandchildren at least as healthy as when we were born? How can we more quickly move from fossil-driven economies to ones more based on renewable sources, in an increasingly carbon-stressed world? And how can policy makers, at various governmental levels, make changes in how energy projects are evaluated and developed before we use up too much of the atmosphere’s and oceans’ capacities to safely absorb carbon dioxide?

These and similar questions were tackled at two recent conferences in which I participated: a small climate change justice forum at Chicago Law School, and the much larger World Renewable Energy Forum in Denver. In Chicago, participants tackled approaches to bridging the who-pays-how-much gap between developing and developed nations – should it be per capita, or total carbon shares based on past emissions (if so from when), or a polluter-pays approach bridging past and future (next 20 years) CO2 emissions? Some say the US should pay less than China and India, others say more. Ultimately, all agreed that human-induced climate change is the single greatest threat facing human society—not just environmental, but also posing huge economic, public health, and military security costs.

Denver discussions focused on how to quickly increase the amount of renewable energy used for electricity, heat and transportation. My presentation, “U.S. Renewable Law and Policy: Catch Up or The Clock Strikes Midnight”, provided an overview of existing and predicted impacts from the still-increasing carbon dioxide emissions accumulating in our air and oceans; a comparison of the direct and indirect costs of different fossil and renewable energy sources; a summary of the permitting and regulatory hurdles facing renewable energy projects; and a roadmap to level the regulatory playing field to help renewables catch up.
Brief high (or low) lights: In April 2012, the International Energy Administration warned that, under current policies, energy use and CO2 emissions will increase by a third by 2020, and almost double by 2050 – sending global temperatures at least 6⁰C higher. What would the world look like with such an increase?

What are the “true” costs of energy to be factored into pricing?  In 2009, the National Research Council’s “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use” estimated in 2005 dollars (higher now) that non-climate damages from our use of fossil fuels exceed $120 billion, with climate damages possibly being equally as large – and both numbers exclude ecosystem, infrastructure, insurance,  and national security costs.

Those bucks stop with each of us and this generation.

Earth Day 2012 Ten Things You Can Do to Help Save the Planet

Posted on April 26, 2012 by Christopher Davis

April 22, 2012 was the 42nd Earth Day, an event that passed with limited notice by most Americans and the news media. For all but a few of us who work in the field, the environment is no longer a “top 10” issue. Yet objectively, the planet is in materially worse shape than it was on the first Earth Day in 1970. As a species, we are collectively destroying the earth’s natural systems, plundering its resources and squandering its natural capital at an accelerating and unsustainable rate. The “Tragedy of the Commons” that Garrett Hardin wrote so eloquently about in advance of the first Earth Day is rapidly unfolding just as he predicted.  

On a global scale, the earth’s ecosystems are under siege.  With a human population of 7 billion, and headed for at least 10 billion fairly soon, growing greenhouse gas emissions and resultant climate change, increasing regional water scarcity, and growing global competition for dwindling resources, the trends are to put it mildly, not looking good.  It has been estimated that we are now consuming the planet’s resources, emitting pollutants and generating waste at about 1.5 times the earth’s carrying capacity. The “externalities” of our ever growing global economy are overwhelming the earth’s ability to assimilate them.
[For a fairly comprehensive and sobering account of the causes, effects and trends of global environmental degradation, I recommend Paul Gilding’s recent book, The Great Disruption.]

If we continue on our present course, our environmental, social and economic systems appear to be headed for collapse, or at least some very rough sledding with unacceptably high (and of course, inequitably distributed) human and ecological casualties.  Catastrophic and irreversible climate change is a growing possibility, if not a probability, without fundamental changes in how we use energy.  After more than 40 years of effort, and a proliferation of “green” policies and initiatives, we are clearly losing the war of environmental protection and conservation.  This is particularly disquieting for those of us who work in the environmental profession, supposedly understand these issues, and presumably care about the real world outcomes.

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Adaptation to Climate Change: Emerging Priority

Posted on January 25, 2012 by Ralph Child

There is no alternative.  Whatever the causes, pace or impacts of climate change, people, cultures, economies and eco-systems will adapt to climate change as it occurs.  What’s in question is where, how much and when adaptation will occur and with what strategic planning, distribution of costs and injury.

To date, the inevitability of adaptation has been over-shadowed by the attention to efforts to prevent global warming.  Scary projections of flooded coastal cities and wholesale ecological change have been used more to support campaigns to reduce CO2 emissions than to promote serious planning for ocean rise and changed eco-systems.  Adaptation planning has not been the priority and has even seemed a cop-out.  But as hopes to prevent or slow climate change are not realized, adaption planning is emerging as a priority.

Indeed, behind the headlines efforts to plan for adaptation are already underway.  President Obama’s initial support for cap and trade got the attention.  But he also issued an Executive Order establishing a Climate Change Adaptation Task Force that is coordinating very significant federal efforts to gather data and plan for adaptation.   Many of those efforts are collected at EPA’s webpage on adaptation.  More than a dozen states have commissioned adaptation plans, e.g., the Massachusetts Climate Change Adaptation Report.  Some universities have developed programs focused on adaptation planning, e.g., UNC’s Center for Law, Environment, Adaptation and Resources (CLEAR).  Insurers and re-insurers, public authorities responsible for long-term infrastructure, and societies of professionals such as engineers and others are putting serious consideration into what adaptation will require over time by way of changed standards for public works and buildings. 

These efforts do not yet amount to a broad plan, but are laying the foundations for adaptation planning to seep broadly into capital planning and resource protection efforts across all facets of our economy.  Compulsory central planning is probably not a politically acceptable option – but the inevitability and breadth of adaptation efforts mean that millions of decision-makers still will plan for adaptation over time.

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?

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2010 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Climate Legislation Is Dead (For Now): Long Live Conventional Pollutants

Posted on July 28, 2010 by Seth Jaffe

Climate change legislation is dead for now. I won’t pretend it’s not depressing, even though I avoid the political channels and ignore the rhetoric. For those of us who haven’t refudiated climate change science, it’s a victory for the pessimists and evidence that Congress has a hard time addressing long-range problems, even if consequential.

With respect to regulation of GHG, it’s the worst of both worlds and no one should be happy (which is why I held out hope until the end that cooler heads would prevail). We’re still going to have regulation of GHG, the mechanism being EPA’s recently promulgated Tailoring Rule for GHG. One word. Ugh. Does this really make climate skeptics happy? Do they really think that they will somehow succeed in rolling back the Tailoring Rule? I don’t think so. On the other hand, we don’t have an economy-wide cap-and-trade or carbon tax regime. Are environmentalists happy? I still don’t think so. 

I’m left feeling a little like Rodney King. Certainly, the issue isn’t going to go away before the next Congress is sworn in.

As I have noted before, however, problems with climate change legislation don’t mean that Congress can’t enact legislation further regulating traditional pollutants. The three-pollutant bill now before the Senate already has a Republic co-sponsor, Lamar Alexander. Now, according to a report in E&E Daily, even Senator Inhofe is stating that he’s interested in working with Democrats to move three-pollutant legislation. Given the failure to move GHG legislation, hell is likely to get hotter before freezing over, but if Inhofe can really be brought on board, there’s no reason why legislation couldn’t pass.

Three-pollutant legislation shares one significant feature with the GHG issue. Like GHG regulation, efficient regulation is hampered by limitations in existing law, as we saw with the D.C. Circuit’s rejection of the trading regime in the CAIR regulations, and EPA’s much more limited trading program in the Transport Rule. Senator Voinovich, another Republican that three-pollutant legislation supporters would like to have with them, noted as much, saying that the transport rule would be a "stringent and inflexible regime." New legislation could provide for a more robust trading regime. We’ll see if that’s enough to bring Republicans on board.

I sure hope so. Right now, all we’ve got is a GHG regulatory program that won’t do much for climate change, but will cause my clients endless headaches, and a Transport Rule that’s probably the best EPA can do on traditional interstate pollution, but not nearly as cost-effective as it might be with new legislative authority. I remain an optimist, but sometimes it’s difficult.

China Points To Population Control As Climate Change Strategy

Posted on July 26, 2010 by Stephen E. Herrmann

The population issue has not received much comment when countries discuss ways to mitigate climate change and slow down global warming, according to Zhao Baige, Vice Minister of National Population and Family Planning Commission of China (NPFPC).

 

 

“Dealing with climate change is not simply an issue of CO2 emission reduction but a comprehensive challenge involving political, economic, social, cultural and ecological issues, and the population concern fits right into the picture,” said Zhao.

 

 

Zhao cites studies that link population growth with emissions and the effect of climate change, saying:

 

“Calculations of the contribution of population growth to emissions growth globally produce a consistent finding that most of past population growth has been responsible for between 40 percent and 60 percent of emissions growth,” citing the 2009 State of World Population report, released earlier by the UN Population Fund.

 

 

Although China’s family planning policy has received criticism over the past three decades, Zhao said that China’s population program has made a great historic contribution to the well-being of China’s society.

 

 

As a result of the family planning policy, China has seen 400 million fewer births, which has resulted in 18 million fewer tons of CO2 emissions a year, Zhao said. The UN report projected that if the global population would remain 8 billion by the year 2050 instead of a little more than 9 billion according to medium-growth scenario, “it might result in 1 billion to 2 billion fewer tons of carbon emissions.”

 

 

Meanwhile, she said studies have also shown that family planning programs are more efficient in helping cut emissions, citing research by Thomas Wire of London School of Economics that states: “Each $7 spent on basic family planning would reduce CO2 emissions by more than one ton” whereas it would cost $13 for reduced deforestation, $24 to use wind technology, $51 for solar power, $93 for introducing hybrid cars and $131 for electric vehicles."

 

 

Zhao admitted that China’s population program is not without consequences, as the country is entering the aging society fast and facing the problem of gender imbalance.

 

 

Whether, and, if so, how, population control should be an active part of a country’s climate control is certainly a difficult political and cultural issue – but one that fast-growing economies such as China, India, and Brazil may have to face in the coming years.

Livable Communities -- And How to Achieve Them

Posted on June 10, 2010 by Seth Jaffe

With work on financial reform almost complete, Senator Dodd announced this week that his remaining legislative priority is the enactment of the Livable Communities Act, S. 1619. There is a companion house bill, H.R. 4690. A hearing on the Senate bill will be held tomorrow.

It’s hard to be against livable communities and I may just be getting crotchety, but this legislation seems some combination of pointless and misguided. The legislative findings discuss traffic congestion, the percentage of oil used for transportation and CO2 generated from transportation, and the need to encourage and sustain compact development and historical town centers.  And we’re going to solve this – or even make a dent – by making grants to “micropolitan” statistical areas? I don’t think so.

I agree that sprawl is a problem. I support transit-oriented development. However, there are reasons why we see development where we sit it in the United States. People still like the freedom and flexibility of personal automobile use. If we think that all that driving causes externalities – and I do – I’ve got two words for you: carbon tax. Until we make people internalize the cost of their living choices, they will continue to make those same choices and money spent on encouraging livable communities will be largely wasted. If we can’t summon the political will to tax carbon, we shouldn’t pretend that we’re solving the problem by spending money on micropolitan areas.

Climate Change Work Group Phase Two - EPA Searches for Energy Efficiency and Innovation Using an Unlikely Tool

Posted on May 5, 2010 by Robert Wyman

EPA is stuck between a rock and a hard place in using the Clean Air Act to regulate greenhouse gas emissions. Having made an endangerment finding and issued final motor vehicle regulations, EPA soon (commencing January 2, 2011) must implement its Prevention of Significant Deterioration (PSD) preconstruction review program for stationary sources as one or more greenhouse gases become “regulated pollutants” under the statute. But the PSD program is hardly an ideal tool for the job, and may indeed be one of the worst.

 

Recognizing the difficulty of its task, in late 2009 EPA commissioned a Climate Change Work Group to advise it regarding how best to implement the PSD permit program and how to define Best Available Control Technology (BACT) for sources of greenhouse gas emissions. This January the Work Group issued a Phase One report that contained some important but relatively basic recommendations.
 

Now the Agency has launched Phase Two of the Work Group effort. In an April 9 letter to Work Group Co-Chairs, EPA Assistant Administrator Gina McCarthy asked the Work Group to focus on two of the most important strategies for reducing greenhouse gas emissions – energy efficiency and innovation.

 

Most seasoned observers recognize that the PSD process currently discourages energy efficiency investments. That is because PSD rules assume that more efficient units will be used more and that such projects could cause net emission increases that trigger PSD review and require the installation of BACT. The PSD process thus significantly delays and adds cost to many energy efficiency projects. As a result, many efficiency upgrades are foregone for fear that they will trigger the PSD process. This is tragic because efficiency upgrades offer the greatest potential for near-term and cost-effective greenhouse gas reductions. See, e.g., Unlocking Energy Efficiency in the U.S. Economy (July 2009).

 

The Work Group’s task of encouragingenergy efficiency by using the instrument most responsible for chilling such investments is the policy equivalent of placing a square peg into a round hole. If the Work Group recommends expediting or exempting from PSD review appropriate efficiency projects, then there is some hope that EPA can use the program to capture as-yet-untapped efficiency and innovation opportunities that currently exist. If, on the other hand, the Work Group, and ultimately EPA, remain unwilling to clear the regulatory costs and hurdles that PSD customarily imposes, then the opportunity will be lost.

 

EPA has asked the Work Group to provide its recommendations by no later than mid July. So stay tuned.

When Do EPA BACT Requirements "Redesign the Source"? Not When EPA Says They Don't

Posted on January 7, 2010 by Seth Jaffe

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

When Do EPA BACT Requirements "Redesign the Source"? Not When EPA Says They Don't

Posted on January 7, 2010 by Seth Jaffe

Shortly before the holidays, EPA Administrator Jackson issued an Order in response to a challenge to a combined Title V / PSD permit issued by the Kentucky Division for Air Quality to an Integrated Gasification Combined Cycle, or IGCC, plant. The Order upheld the challenge, in part, on the ground that neither the permittee nor KDAQ had adequately justified why the BACT analysis for the facility did not include consideration of full-time use of natural gas notwithstanding that the plant is an IGCC facility. 

The Order may not be shocking in today’s environment – all meanings of that word intended – but the lengths to which the Order goes to avoid its own logical consequences shows just what a departure this decision is from established practice concerning BACT. BACT analyses have traditionally involved the proverbial “top-down” look at technologies that can be used to control emissions from a proposed facility. In other words, EPA takes the proposal as a given, and then asks what the best available control technology is for that facility

In EPA’s own words – from its New Source Review Workshop Manual (long the Bible for BACT analysis):

Historically, EPA has not considered the BACT requirement as a means to redefine the design of the source when considering available control alternatives. For example, applicants proposing to construct a coal-fired electric generator, have not been required by EPA as part of a BACT analysis to consider building a natural gas-fired electric turbine although the turbine may be inherently less polluting per unit product (in this case electricity).

Apt example, don’t you think? (In case you are wondering, EPA’s decision does not discuss or refer to this text from the NSR Manual.)

What was the basis for EPA’s decision here? Largely, it is that the IGCC facility will be designed to burn natural gas as well as syngas and the permittee specifically stated that it planned to combust natural gas during a 6-12 month startup period. On these facts, EPA concluded that the permittee and KDAQ had to do a better job explaining why full-time use of natural gas should be considered “to redefine the design of the source.”

As noted above, EPA went to great lengths to minimize the scope of the decision. It states that the Order:

should in no way be interpreted as EPA expressing a policy preference for construction of natural-gas fired facilities over IGCC facilities.

should not be interpreted to establish or imply an EPA position that PSD permitting authorities should conclude … that BACT for a proposed electricity generating unit is … natural gas.

does not conclude that it is not possible or permissible for the permit applicant … to develop a rationale which shows that firing exclusively with natural gas would “redefine the source.”

EPA does not intend to discourage applicants that propose to construct an IGCC facility from seeking to hedge the risk of investing in … IGCC technology by proposing … utilizing natural gas for some period….

Methinks EPA doth protest too much. If I may say so, this is a freakin’ IGCC facility. Isn’t it obvious that one doesn’t plan or build an IGCC facility if one plans to burn natural gas? Don’t you think that EPA could have taken administrative notice of what IGCC technology is?

All of EPA’s protestations about the Order’s limits may be designed to mollify IGCC supporters, but what does its rationale mean for all of the existing facilities – coal and oil – that are already capable of firing on natural gas? Next time they are subject to NSR/PSD review, must they evaluate the possibility of switching completely to natural gas? As I’ve said here before, yikes!

EPA Tries to Silence Employees Who (Weakly) Criticize Cap-And-Trade

Posted on November 11, 2009 by Rodney Brown, Jr.

Obama’s EPA finds itself embroiled in a controversy that recalls the Bush Administration: trying to control what the agency’s employees can say about climate change. Today’s controversy is more limited, and more nuanced, than earlier ones. EPA is no longer asking its employees to deny that climate change exists. Instead, EPA has asked two of its attorneys to stop identifying themselves as EPA experts when they publicly criticize a cap-and-trade system for regulating greenhouse gases. Still, I wonder why EPA cares.

EPA previously allowed the attorneys to criticize cap-and-trade as private citizens. The two wrote letters and opinion pieces claiming cap-and-trade doesn’t work, primarily because companies can buy “offsets” that allow them to continue operations without reducing their emissions. They claim a carbon tax would work better than cap-and-trade.

Their writings have not had much effect on the debate in Congress and elsewhere. So the two recently switched from the written word to YouTube, posting a carefully produced video in which they more assertively cite their EPA credentials and experience to justify their critique of cap-and-trade. And as Grist recently noted, EPA took the bait.

EPA should stop worrying about the two attorneys. The two fail to recognize that cap-and-trade works fine when it’s done right. In fact, EPA itself runs one of the most successful cap-and-trade programs in the world. Several years ago, EPA needed to reduce smog in the eastern US. Instead of using typical command-and-control regulations, EPA created the NOx Budget Trading Program. Just last month, EPA released a report on the results achieved by that program. According to EPA, “summertime NOx emissions from power plants and large industrial sources were down by 62 percent compared to year 2000 levels and 75 percent lower than in 1990.”

And the emitters were able to achieve these reductions at a lower cost by trading with other emitters who had cheaper options for compliance. Smithsonian magazine reported a recent estimate that businesses paid only $3 billion to achieve emission reductions that would have cost them $25 billion under traditional command-and-control regulation.

The two attorneys don’t even need to worry about companies finding ways to avoid compliance with the system. Last year, only two emitters failed to comply out of 2,568, even then by only a modest amount. This is not a system full of loopholes.

Finally, the two attorneys ignore the fact that their own agency, under the Obama administration, will get to write the rules for how companies comply with a carbon cap-and-trade system. Both the Waxman-Markey and Boxer-Kerry bills require EPA to write rules regulating how companies can use “offsets” to comply with the system. Surely the agency can write rules that make this cap-and-trade system work as well as the NOx system the agency already runs.

And one more thing: As Grist reports, many experts think that the alternative — a carbon tax — may not achieve the emission reductions we need. We can only guess what carbon price might lead to the right amount of emission reductions. We’ll get the tax revenues we predict, but not necessarily the carbon reductions.

So the two attorneys should lighten up on their criticisms. But even if they don’t, EPA should stop worrying about them so much.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

Another Corner Heard From: Portland (Oregon) Releases a New Climate Action Plan

Posted on November 4, 2009 by Seth Jaffe

Last week, the City of Portland, Oregon (together with Multnomah County) released an updated Climate Action Plan. The Plan presents a number of aggressive goals and targets, with ultimate goals of GHG reductions of 40% by 2030 and 80% by 2050.

The details of the Plan are obviously only relevant to those in the Portland area, but for those anticipating what regulation might look like in California, Massachusetts, and other states that have enacted or will soon enacted some version of a Global Warming Solutions Act, the Plan provides a helpful catalogue of the types of changes that might be sought. Therefore, a quick summary of some of the 2030 goals seems warranted

Reduce energy use from existing buildings by 20%-25%

All new buildings – and homes -- should have zero net GHG emissions. 

Reduce VMT by 30% from 2008 levels

Recover 90% of all waste generated

Reduce consumption of carbon-intensive foods

Expand “urban forest canopy” to cover one-third of Portland

Reduce emissions from City and County operations by 50% from 1990 levels

What’s my take? I have two immediate reactions. First, if any further evidence were needed that attaining significant GHG emission reductions is going to involve major social and economic changes, this is certainly it. 

Second, and perhaps more importantly, this Plan, and others like it, have to constitute a heavy thumb on the side of the scale arguing for comprehensive federal legislation. In the past, I’ve argued that federal legislation would be preferable to a patchwork made up of EPA regulation under existing Clean Air Act authority, public nuisance litigation, and state and regional initiatives. To that list, we can now add comprehensive local regulation. I don’t mean to be too sanguine about the ability of federal legislation to harmonize this entire process; the existing bills would not preempt most state, regional, and local regulations (other than cap-and-trade programs). Nonetheless, delays in federal enactment can only contribute to the proliferation of state, regional, and local programs, some of which may be beneficial, but many of which will be inefficient, contradictory, or both.

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

GHG Regulation under the Existing CAA: Coming Soon to a [Large] Stationary Source Near You

Posted on October 7, 2009 by Seth Jaffe

On Thursday, EPA issued its long-awaited proposed rule describing how thresholds would be set for regulation of GHG sources under the existing Clean Air Act PSD authority. Having waded through the 416-page proposal, I’m torn between the appropriate Shakespeare quotes to describe it: “Much ado about nothing” or “Methinks thou dost protest too much.”

First, notwithstanding its length, the proposal is quite limited in scope. In essence, it has three parts:

Establishment of an applicability threshold for PSD and Title V purposes of 25,000 tons per year of CO2e.

Establishment of a PSD significance level of from 10,000 tpy CO2e and 25,000 CO2e.

Development over the next five years of means to streamline GHG regulation of sources greater than the current statutory levels of 100-250 tpy.

Basically, EPA’s position is that, once it begins to regulate GHGs as a pollutant by promulgating its mobile source rule – expected next spring – stationary source regulation under the PSD and Title V programs follow automatically. Thus, the issue for EPA at this point is not whether to regulate stationary sources, but how to do so without the entire program grinding to a halt.

Here’s where the protestation comes in. Most of the proposal is devoted to explaining EPA’s reliance of the doctrines of “absurd results” and “administrative necessity” to justify exclusion of sources that would seem to be categorically included by the explicit language of the statute. Members of the regulated community will understand the irony in EPA’s extensive discussion regarding how the purpose of the PSD program is to achieve environmental protection and economic development – and that this latter purpose would be jeopardized by regulation of sources at the 100/250 tpy threshold. I don’t think we will ever again see EPA devote this many pages to a description of its concern about economic growth.

I’m not going to predict here whether EPA will win any challenge to the higher thresholds. Certainly, the absurd results doctrine argument is the stronger of the two. It is noteworthy that the four leading environmental cases EPA cites in support of its administrative necessity argument, while acknowledging the existence of the doctrine, all went against EPA.

More relevant still is the question of who would in fact challenge this regulation and what would be the result even if the challenge succeeded. Following the debacle that resulted from vacation of the CAIR rule, what is the likelihood that a successful challenge would result in vacation of the rule in its entirety? Isn’t it more likely that the rule would stay in effect as to the large sources, with the remanding the case to EPA to promulgate rules governing smaller sources? In fact, that’s what EPA is already doing, which is probably EPA’s strongest practical argument in support of the rule.

Public comments will be due 60 days from Federal Register promulgation and there are some issues that the regulated community should consider. These include the significance threshold, and suggestions regarding how to streamline the program for smaller sources. EPA has proposed some interesting ideas, including presumptive BACT determinations and general permits. 

Bottom line? Large sources better get ready to comply. Smaller sources, take a deep breath and count your blessings – for now. 

It's Here: EPA's Final Mandatory GHG Reporting Rule

Posted on September 25, 2009 by Mary Ellen Ternes

On April 14, 2009, I alerted you to EPA’s proposed Mandatory GHG Reporting rule on April 10, 2009.  And while we are still waiting for EPA’s Endangerment Finding, and new energy legislation may not see the Senate floor in 2009, we do have a final GHG rule. On September 22, 2009, EPA Administrator Jackson signed the final Mandatory Greenhouse Gas Reporting Rule. This rule should be published in the Federal Register soon, so that it becomes effective before January 1, 2010. The rule imposes monitoring requirements beginning January 1, 2010, and reporting by impacted facilities and other entities by March 31, 2011.

 

With this rule, EPA is requiring reporting of Greenhouse Gas (“GHG”) emissions by specified GHG emission source categories that exceed 25,000 metric tons of carbon dioxide (“MTCO2”), or varying amounts of several other GHG representing equivalent amounts of emissions based upon their “global warming potential,” referred to as “CO2e.” The rule also requires emissions reporting from suppliers of fuels and industrial gases, as well as mobile source (vehicle) manufacturers. EPA finds its authority for this rule in the Clean Air Act, Sections 114 and 208. The GHGs tracked by the rule include carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and other fluorinated compounds. Those familiar with the annual Inventory of United States GHG Emissions and Sinks will recognize the sources and GHGs tracked by this rule.

 

Generally, the final rule is not significantly changed from the proposed rule. However, several source categories were reserved. Thus, this final rule does not currently require reporting of the following source categories: electronics manufacturing, ethanol production, fluorinated GHG production, food processing, industrial landfills, magnesium production, oil and natural gas systems, SF6 from electrical equipment, underground coal mines, wastewater treatment, suppliers of coal.

 

Additionally, there are several important revisions. In response to significant objections to the “once in, always in” approach for reporting requirements, EPA also included provisions allowing exit from the program upon reduction of GHG emissions below certain thresholds. Specifically, if a facility decreases its emissions below 25,000 metric tons of CO2e per year for five years in a row, or decreases its emissions below 15,000 metric tons of CO2e per year for three years in a row, the facility can apply to exit the program. Facilities can also cease reporting if they shut down GHG-emitting processes or operations.

 

In response to concern about lack of adequate preparation time, EPA added a provision allowing the use of best available monitoring methods for the initial quarter of 2010, rather than the required monitoring methods. Impacted facilities needing a longer period of time to install necessary monitoring equipment can request an extension beyond March 2010, but not beyond 2010. EPA has also modified monitoring options, changed monitoring locations and allowed use of calculations rather than monitoring to lessen the monitoring burden.

All environmental practitioners will need to become familiar with the requirements of this rule due to its broad applicability. EPA has committed to posting guidance for each subpart and conducting training. EPA has even posted an “applicability tool” computer software program to assist in applicability determinations. This guidance cannot be available soon enough. Clients need to determine applicability and prepare for implementation immediately.