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.

Supreme Court grants cert in Connecticut v. AEP

Posted on December 7, 2010 by Michael Gerrard

The U.S. Supreme Court announced yesterday morning that it has granted certiorari in Connecticut v. American Electric Power, the case seeking an order compelling several electric utility companies to reduce their greenhouse gas emissions, based on common law nuisance theories. Justice Sotomayor recused herself; she had been on the Second Circuit panel that heard the argument below, though she had been promoted to the Supreme Court before the Second Circuit issued its ruling allowing the case to proceed.

New Mexico Promulgates a Cap and Trade Rule

Posted on November 23, 2010 by Larry Ausherman

Earlier this month, the State of New Mexico adopted a rule designed to cap greenhouse gas (“GHG”) emissions in New Mexico and implement the State’s participation in a cap and trade market based on the design guidelines of the Western Climate Initiative (“WCI”). But it is too soon to tell how the New Mexico GHG rule will shake out. The future of cap and trade in New Mexico depends on many developments that range from the election of a new governor who will take office in January 2011, the fate of California’s cap and trade program, and the potential that the New Mexico GHG rulemaking will be appealed. An additional New Mexico only greenhouse gas cap and reduction proposal will also be considered by the New Mexico Environmental Improvement Board (“EIB”) in early December. 

 

 

            On November 2, 2010, after lengthy and contentious debate, EIB narrowly adopted the GHG rule that was proposed by the New Mexico Environment Department (“NMED”) last spring. The rule provides for a cap and trade program for certain GHG emissions in New Mexico that could start as early as 2012. The program would not be initiated without participation of other states with GHG emissions sufficient to provide a base of at least 100 million metric tons of CO2 equivalent emissions.  This requirement is designed to avoid the State’s implementing a trading program alone. For all practical purposes, because the trigger for implementation is a base of at least 100 million tons, the New Mexico cap and trade program will not be able to move forward without implementation of the California program. Of the 7 initial participating WCI states, only New Mexico and California are moving forward at this time to implement a cap and trade program.        

 

The New Mexico GHG rule would apply to about 63 large industrial facilities that emit GHGs in the State. The affected facilities include primarily power plants and large oil and gas operations. After the rule becomes effective, the affected facilities would be required to reduce emissions by 2% annually until 2020 or be required to acquire offset credits for emissions from other jurisdictions or external trading programs. The State would initially provide allocations for baseline emissions for those currently existing regulated facilities without charge.  

 

 

            Also in November, the EIB adopted mandatory reporting and verification rules. The rules require sources emitting more than 10,000 metric tons of CO2e emissions to report emissions. Those sources with greater than 25,000 metric tons of CO2 equivalent emissions are required to obtain third-party verification of emissions.   This rule is scheduled to go into effect on January 1, 2011, regardless of whether the cap and trade rule goes into effect. NMED estimates that 130 to 150 sources will be affected by the reporting rule. 

 

 

            Challenges to New Mexico’s GHG rule are likely. The margin of the EIB vote on the rule was narrow, four to three in favor. Moreover, on the day EIB adopted the rule, the New Mexico voters elected a new governor, Susanna Martinez. The Republican governor-elect’s campaign positions included opposition to WCI and the GHC initiatives of the current Democratic governor, Bill Richardson. It seems likely that the new GHC rule will not meet with favor in a Martinez administration. The change of administration is particularly important because to date, Governor Richardson’s support for New Mexico GHG initiatives has been critical to their adoption. New Mexico’s participation in WCI was initiated by Executive Order, and NMED’s efforts to implement the WCI cap and trade program in the state legislature have been unsuccessful. 

 

 

            In addition to the recently adopted GHC cap and trade and reporting and verification rules that were proposed by NMED, an additional petition by The New Energy Economy that would put a cap on GHG emissions in New Mexico is scheduled for decision by the EIB in early December. The New Energy Economy petition asks EIB to mandate that large facilities emitting greenhouse gases must reduce their emissions by 3% every year from 2010 levels, regardless of the development of a cap and trade market in the region.   If adopted, the program would sunset in 2020, and also be suspended in any year that a source begins reducing GHG emissions pursuant to a multi-jurisdictional or national GHG reduction program.

 

 

            The future will tell us which of the two votes taken on November 2 will prove most important. Some key opponents to the New Mexico GHC rule have expressed support for a federal cap and trade effort, but other very significant concerns remain, particularly regarding GHG proposals that are merely state or regional. In New Mexico, as in the rest of the country, the GHG trading market is far from open.

California Takes Dead Aim at Global Warming

Posted on November 22, 2010 by Jose R. Allen

One of the most striking campaign ads to hit the air waves during the run-up to the recent mid-term elections was the "Dead Aim" ad aired by Joe Manchin, the Senator-elect from West Virginia. The ad featured Manchin walking through an open field with a rifle cradled in his arms. He stops, deliberately loads a single cartridge into the firing chamber of the rifle, takes aim at a distant target and fires. The camera then zooms in on the target of Manchin's single, clean shot: a fictitious Senate bill titled, "Cap and Trade." The ad ends with Manchin staring directly into the camera and promising that, "I will take dead aim at the Cap and Trade bill because it is bad for West Virginia." 

 

 

In California voters were far more hospitable to climate change regulation in general and a cap-and-trade program in particular. Just days before California voters went to the polls to defeat a ballot initiative aimed at delaying implementation of California's landmark global warming law (AB 32), the California Air Resources Board (ARB) released for public comment proposed regulations to implement a state-wide cap-and-trade program. The cap-and-trade program would place an overall cap on the amount of GHG that can be emitted by all sources covered by the program. The ARB would then issue allowances equal to the cap to regulated sources. The cap would be gradually reduced between 2013 and 2020 to achieve the GHG gas emissions reduction target established by AB 32. Sources subject to the cap-and-trade program would have to reduce their GHG emissions to achieve their allocated emissions limits or use offset credits to satisfy a portion of their compliance obligations. 

 

 

What was used for target practice in a Senate campaign in West Virginia is used in California as the key part of the strategy to reduce GHG emissions. Only time will tell whether it will be open season on cap-and-trade programs or whether such programs are the wave of the future.

RIGHTS OF CITIZENS MAY DEPEND ON TIME ZONE

Posted on October 4, 2010 by Brian Rosenthal

Under the Clean Air Act (CAA), how long must an operator worry whether a citizen suit will be filed claiming its facility construction modification triggered Prevention of Significant Deterioration (PSD) permit requirements? The answer may depend on when and where the modification occurred. If a company violates its duty to obtain a preconstruction permit under the CAA’s PSD permitting requirement, it may be subject to a later citizen suit for failing to operate with a proper permit or failing to incorporate best available control technology (BACT). The United States Court of Appeals for the Eighth Circuit joins the Eleventh Circuit by concluding the CAA’s PSD provisions are reviewed when construction or modification is initiated and are not ongoing, operating requirements. While there is no statute of limitations for CAA citizen suit actions, the general federal five year limit applies from claim accrual. Thus, in the reviewed case because the last challenged modification was constructed more than five years before the filed citizen suit, the court found the citizen suit untimely. PSD permits are for construction and do not set operating requirements. BACT and PSD go “hand in hand”, so because PSD permitting could not be timely claimed, neither could the claim as to control technology be sustained. Operators in the Sixth Circuit however may not be so safe—that circuit has held State Implementation Plan (SIP) regulations contain operating requirements, but hold the claim in Kentucky, Michigan and Ohio--the Sixth Circuit contrary case may be limited to Tennessee or any other state with an SIP allowing for permit issuance post-construction. Sierra Club v. Otter Tail Power Co., No. 09-2862 (8th Cir. August 11, 2010).

EPA'S CLIMATE EFFORTS TAKE CENTER STAGE

Posted on August 6, 2010 by Deborah jennings

With Congress failing to act on climate change, attention turns to EPA’s efforts to regulate greenhouse gases (GHGs) pursuant to its authority under the Clean Air Act (CAA). On December 7, 2009, the EPA issued its Endangerment Finding for GHGs, concluding under the CAA’s mobile source section that GHGs endanger public health and welfare, and that GHG emissions from motor vehicles contribute to climate change. See 74 Fed. Reg. 66,496 (Dec. 15, 2009). The determination was a direct response to the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), holding that because GHGs are considered “air pollutants” under § 202(a) of the CAA, EPA has authority to regulate them if it determines that they endanger public health or welfare.

Although the Endangerment Finding does not itself impose any requirements on regulated entities, it sets in motion a chain of events culminating in the regulation of GHGs emissions from stationary sources under the CAA. First, it is the predicate for EPA’s rule, signed jointly with the Department of Transportation (DOT) on April 1, 2010, to create GHG emission standards and Corporate Average Fuel Economy (CAFE) standards for light duty vehicles (e.g., cars, light-trucks). See 74 Fed. Reg. 49,454 (proposed on Sept. 15, 2009); 75 Fed. Reg. 25324 (finalized on May 7, 2010). This will dramatically improve fuel economy, requiring automobile companies to meet a combined average fleet of 250 grams of CO2 per mile, or 35.5 miles per gallon by 2016. Additionally, on May 21, 2010, President Obama directed the EPA and DOT to create GHG and CAFE standards for medium- and heavy-duty trucks for Model Years 2014-2018, which currently average only 6.1 miles per gallon. He also directed the agencies to extend the national program for cars and light-duty trucks to Model Years 2017-2025.
 

The implications of the initial mobile source rule cannot be overstated. According to EPA, as soon as the rule “takes effect” on January 2, 2011, GHGs will become “subject to regulation” under the CAA and therefore must be regulated from stationary sources as well. Stationary sources producing relatively low threshold quantities of GHGs would become subject to the Title V and Prevention of Significant Deterioration (PSD) permitting programs, and potentially stringent pollution controls associated with the latter. In a related rulemaking, EPA announced that the rule would “take effect” no earlier than January 2, 2011, so that PSD for GHGs would not be triggered until that date. 75 Fed. Reg. 17004 (Apr. 2, 2010).

In anticipation of the automobile GHG standard triggering PSD for stationary sources, EPA recently finalized a “Tailoring Rule” to raise the statutory threshold for regulation under the PSD and Title V programs to insulate smaller GHG sources from being subject to such requirements. See 74 Fed. Reg. 55,292 (Oct. 27, 2009) (proposed rule); 75 Fed. Reg. 31,514 (June 3, 2010) (final rule). Under the CAA, sources emitting 100 or 250 tons per year (tpy) of a “regulated pollutant” are subject to the PSD program, while Title V permitting requirements apply to sources emitting 100 tpy or more. By increasing these thresholds to 75,000 or 100,000 tpy of GHGs under the final rulemaking, EPA hopes to protect smaller entities, such as small farms and businesses, from the prospect of onerous GHG controls. While significantly paring down the number of potentially regulated entities, the final Tailoring Rule would still cover 67% of GHG emissions from stationary sources in the United States.

Under the final rule, EPA will phase in the PSD and Title V permitting requirements in two initial stages. First, between January 2, 2011 and June 30, 2011, only sources currently subject to the PSD permitting program for pollutants other than GHGs would be subject to additional permitting requirements for their GHG emissions under PSD. Thus, where a new or modified source exceeds significant emissions thresholds for a traditional PSD pollutant and also increases GHGs by 75,000 tpy CO2e, it will be required to install Best Available Control Technology (BACT) to reduce GHG emissions. These controls are determined on a case-by-case basis during the PSD permitting process, taking into account, among other things, the cost and effectiveness of the control technology. While BACT has yet to be determined, it is very likely to carry significant teeth for new and modified facilities, and will undoubtedly be less flexible than purchasing carbon credits to offset a facility’s emissions. Similarly, only sources currently subject to the Title V operating permit program would be required to meet applicable GHG requirements. No sources would be subject to CAA permitting requirements based solely on their GHG emissions at this time.

Under Step 2 (July 1, 2011 to June 30, 2013), new construction projects emitting at least 100,000 tpy CO2e of GHGs and modifications of existing facilities increasing GHG emissions by 75,000 tpy CO2e will be subject to PSD permitting requirements, regardless of whether they significantly increase emissions of any other pollutant. Title V operating permit requirements will apply to sources emitting at least 100,000 tpy of GHGs. The rules will require certain sources, such as solid waste landfills and industrial manufacturers, to acquire permits for the first time.

Finally, EPA plans on exploring a third step, which may expand permitting requirements for sources emitting at least 50,000 tpy of GHGs, but will not require permitting for facilities emitting below that threshold. Sources exceeding the 50,000 tpy threshold would not be subject to permitting requirements until at least April 2016.

As part of this flurry of new climate change regulatory activity, EPA also approved a Mandatory Greenhouse Gas Reporting Rule, requiring fossil fuel or industrial GHG suppliers, vehicle and engine manufacturers, and facilities emitting greater than 25,000 tpy GHGs to submit annual reports to EPA reporting their emissions. 74 Fed. Reg. 56,260 (Oct. 30, 2009). The information gathered will be used to create a national GHG registry covering 85-90% of national emissions, while also informing future policy decisions. Facilities must commence monitoring on January 1, 2010 and submit to EPA their first annual reports containing 2010 data by March 31, 2011.

Although most of EPA’s measures are sure to be challenged in court, they represent an extremely critical foundation for greenhouse gas controls in the U.S. EPA action under the Obama Administration has all but ensured that U.S. businesses will operate in a carbon-constrained environment.

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.

COUNTING DUST

Posted on July 6, 2010 by Roger Ferland

Concern is growing in western states about EPA's recent refusal to adequately  consider elevated PM-10 levels resulting from natural events as a factor in determining nonattainment.In 2005, Congress amended Clean Air Act Section 319 to require EPA to adopt rules for states to petition to exclude certain measured or modeled ambient air quality data from the determination whether a state was attaining National Ambient Air Quality Standards (“NAAQS”), because the data was affected by “exceptional events.” In general, exceptional events are those caused by natural, rather than anthropogenic sources. On March 22, 2007, EPA adopted a rule establishing the procedures and criteria to “exclude, discount, weigh, or make adjustments” to data based on the exceptional event finding. 72 Fed. Reg. 13561, 13562. 

 

From its adoption, the rule was criticized either for going too far to find exceptional events or not far enough. Particularly unhappy with the rule was the Western States Air Resources Council or WESTAR, an association of air quality managers from the western states. Criticisms include the charge that the rule did not contain clear criteria for making an exceptional event demonstration and generally ignored the real world natural conditions in the western deserts. In addition, WESTAR and others maintained that EPA acted much too slowly and inconsistently on state petitions for exceptional event determinations. In response, EPA has promised to issue guidance that would address these concerns.

 

On May 25, 2010, EPA rejected a petition for exceptional event status covering four high wind-related PM-10 NAAQS exceedances at a single monitor in Phoenix, Arizona. As a result, EPA will be compelled to disapprove the CAA Section 189(d) PM-10 nonattainment area plan for the Phoenix area. State officials expressed shock at the rejection because they believed that they had worked closely with EPA technical staff to develop a data package that would satisfy the rule criteria. They complained that their data had either been ignored or summarily dismissed. 

 

Officials from other western states attacked the EPA decision immediately and demanded new rules rather than the less legally-binding guidance promised by EPA. Although the controversy over EPA’s exceptional events rule and its implementation has been generally confined to PM-10 issues in the arid west, the adoption of a significantly more stringent 8-hour ozone NAAQS in August, and the huge increase in the size and number of nonattainment areas that will result from the new standard is likely to make the dysfunctional rule a national concern.

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.

Everything is Connected to Everything Else

Posted on February 25, 2010 by Mary Nichols

In his 1971 book, The Closing Circle, ecologist Barry Commoner outlined an informal set of "laws of ecology” governing life on Earth. I have found the “First Law” especially helpful in governing the California Air Resources Board. It says, “Everything is connected to everything else.”

 

Commoner wrote this brilliantly simple principle in the context of ecosystems. But I find this law of nature reliably guides my thinking on how best to develop policies and regulations to mitigate and adapt to climate change.

 

 The brain trusts that the Air Resources Board has assembled for these climate change solutions are a kaleidoscope of experts in energy, public health, urban planning, economics, venture capital, automotive and building design, forestry and dairy management – to name just some of the disciplines.

 

This holistic approach to problem solving is a relatively recent development at the ARB. In my first stint as board chairman, 1978 – 1983, engineers pretty much ran the air pollution control shop. Chemical engineers reformulated gasoline to be lead-free. Mechanical engineers redesigned exhaust systems to remove ozone-forming emissions. A big part of my job then was to phase out leaded gasoline and phase in catalytic converters.

 

The ARB, where I’m once again chairman, continues to rely on engineers for ever-cleaner fuels and engines. But our expanded mission of fighting global warming (Assembly Bill 32) has vastly diversified the expertise we require, the audiences we reach and the interests we regulate.

 

We recently expanded our venue from vehicles to entire transportation systems. We’re now at the forefront on streamlining freight operations across the board, from ships to ports to freeways and rail yards.

 

We entered the field of energy regulation last fall when Governor Schwarzenegger directed the ARB to implement an accelerated Renewable Portfolio Standard – by 2020 utilities must generate at least 33 percent of their electricity from sources such as solar and wind power that do not rely on fossil fuels.

 

At the same time, we’ve proposed the nation’s first plan for a broad-based cap-and-trade system to use market forces to reduce global warming emissions.

 

And, in what is perhaps our most eye-opening move afield, the ARB is venturing in land use – as yet another way to reduce climate-altering vehicle emissions. Under a new state “sustainable communities” law (Senate Bill 375), the board this year will be setting emission reduction targets for passenger cars and trucks in 18 urban areas in the state. But – significantly – we’re leaving it to local government to decide how best to achieve those goals. Regional transportation planning authorities will be working with counties and cities to develop planning measures such as compact and mixed-use housing that will lower the average household’s vehicle miles traveled.

 

The growing diversity and collaboration reflects a broader shift toward more integrated environmental problem solving, not just at the ARB or in California, but across continents. It’s a more holistic approach driven by the urgency of global warming and the lure of profit in the transition to a low-carbon economy. It reflects the interconnectivity of climate change itself.

Everything is Connected to Everything Else

Posted on February 25, 2010 by Mary Nichols

In his 1971 book, The Closing Circle, ecologist Barry Commoner outlined an informal set of "laws of ecology” governing life on Earth. I have found the “First Law” especially helpful in governing the California Air Resources Board. It says, “Everything is connected to everything else.”

 

Commoner wrote this brilliantly simple principle in the context of ecosystems. But I find this law of nature reliably guides my thinking on how best to develop policies and regulations to mitigate and adapt to climate change.

 

 The brain trusts that the Air Resources Board has assembled for these climate change solutions are a kaleidoscope of experts in energy, public health, urban planning, economics, venture capital, automotive and building design, forestry and dairy management – to name just some of the disciplines.

 

This holistic approach to problem solving is a relatively recent development at the ARB. In my first stint as board chairman, 1978 – 1983, engineers pretty much ran the air pollution control shop. Chemical engineers reformulated gasoline to be lead-free. Mechanical engineers redesigned exhaust systems to remove ozone-forming emissions. A big part of my job then was to phase out leaded gasoline and phase in catalytic converters.

 

The ARB, where I’m once again chairman, continues to rely on engineers for ever-cleaner fuels and engines. But our expanded mission of fighting global warming (Assembly Bill 32) has vastly diversified the expertise we require, the audiences we reach and the interests we regulate.

 

We recently expanded our venue from vehicles to entire transportation systems. We’re now at the forefront on streamlining freight operations across the board, from ships to ports to freeways and rail yards.

 

We entered the field of energy regulation last fall when Governor Schwarzenegger directed the ARB to implement an accelerated Renewable Portfolio Standard – by 2020 utilities must generate at least 33 percent of their electricity from sources such as solar and wind power that do not rely on fossil fuels.

 

At the same time, we’ve proposed the nation’s first plan for a broad-based cap-and-trade system to use market forces to reduce global warming emissions.

 

And, in what is perhaps our most eye-opening move afield, the ARB is venturing in land use – as yet another way to reduce climate-altering vehicle emissions. Under a new state “sustainable communities” law (Senate Bill 375), the board this year will be setting emission reduction targets for passenger cars and trucks in 18 urban areas in the state. But – significantly – we’re leaving it to local government to decide how best to achieve those goals. Regional transportation planning authorities will be working with counties and cities to develop planning measures such as compact and mixed-use housing that will lower the average household’s vehicle miles traveled.

 

The growing diversity and collaboration reflects a broader shift toward more integrated environmental problem solving, not just at the ARB or in California, but across continents. It’s a more holistic approach driven by the urgency of global warming and the lure of profit in the transition to a low-carbon economy. It reflects the interconnectivity of climate change itself.

Everything is Connected to Everything Else

Posted on February 25, 2010 by Mary Nichols

In his 1971 book, The Closing Circle, ecologist Barry Commoner outlined an informal set of "laws of ecology” governing life on Earth. I have found the “First Law” especially helpful in governing the California Air Resources Board. It says, “Everything is connected to everything else.”

 

Commoner wrote this brilliantly simple principle in the context of ecosystems. But I find this law of nature reliably guides my thinking on how best to develop policies and regulations to mitigate and adapt to climate change.

 

 The brain trusts that the Air Resources Board has assembled for these climate change solutions are a kaleidoscope of experts in energy, public health, urban planning, economics, venture capital, automotive and building design, forestry and dairy management – to name just some of the disciplines.

 

This holistic approach to problem solving is a relatively recent development at the ARB. In my first stint as board chairman, 1978 – 1983, engineers pretty much ran the air pollution control shop. Chemical engineers reformulated gasoline to be lead-free. Mechanical engineers redesigned exhaust systems to remove ozone-forming emissions. A big part of my job then was to phase out leaded gasoline and phase in catalytic converters.

 

The ARB, where I’m once again chairman, continues to rely on engineers for ever-cleaner fuels and engines. But our expanded mission of fighting global warming (Assembly Bill 32) has vastly diversified the expertise we require, the audiences we reach and the interests we regulate.

 

We recently expanded our venue from vehicles to entire transportation systems. We’re now at the forefront on streamlining freight operations across the board, from ships to ports to freeways and rail yards.

 

We entered the field of energy regulation last fall when Governor Schwarzenegger directed the ARB to implement an accelerated Renewable Portfolio Standard – by 2020 utilities must generate at least 33 percent of their electricity from sources such as solar and wind power that do not rely on fossil fuels.

 

At the same time, we’ve proposed the nation’s first plan for a broad-based cap-and-trade system to use market forces to reduce global warming emissions.

 

And, in what is perhaps our most eye-opening move afield, the ARB is venturing in land use – as yet another way to reduce climate-altering vehicle emissions. Under a new state “sustainable communities” law (Senate Bill 375), the board this year will be setting emission reduction targets for passenger cars and trucks in 18 urban areas in the state. But – significantly – we’re leaving it to local government to decide how best to achieve those goals. Regional transportation planning authorities will be working with counties and cities to develop planning measures such as compact and mixed-use housing that will lower the average household’s vehicle miles traveled.

 

The growing diversity and collaboration reflects a broader shift toward more integrated environmental problem solving, not just at the ARB or in California, but across continents. It’s a more holistic approach driven by the urgency of global warming and the lure of profit in the transition to a low-carbon economy. It reflects the interconnectivity of climate change itself.

Regional Climate Programs in Line for Shakeup, Voluntary Markets To Remain

Posted on February 2, 2010 by Deborah Jennings

By Deborah Jennings and Andrew Schatz, DLA Piper US LLP[1]

 

As comprehensive climate legislation stalls in Congress, increased attention is being paid to alternative climate regimes, particularly the prospect of Environmental Protection Agency (EPA) regulation and regional and voluntary climate initiatives. Regional initiatives have faced their share of challenges during their infancy and, to varying degrees, may incur more with the development of a federal cap-and-trade program or EPA regulation of greenhouse gas (GHG) emissions under the Clean Air Act (CAA).

 

The Regional Greenhouse Gas Initiative (RGGI) and the California Global Warming Solutions Act (AB 32) are the most advanced climate initiatives in the U.S. California’s AB 32 requires measures to reduce California’s GHG emissions by 174 million metric tons of CO2 equivalent, or 29%, by 2020. California recently issued a draft cap and trade regulation covering 600 of the state’s largest industrial and electric generating stationary sources. The RGGI program is more mature with a cap-and-trade program that commenced in 2009. It “stabilizes” CO2 levels during 2009-2014 and reduces emissions 10% by 2019.

 

In its first year, RGGI has generated several concerns. Unlike other cap-and-trade programs, such as the NOx Budget Trading Program, which distributed allowances to regulated entities, but incentivized them to invest in emission controls, RGGI states decided to sell emissions allowances. Under RGGI, a utility must both purchase allowances and pay for emission controls. The sale of allowances makes RGGI look more like a tax on energy and inevitably will lead to higher energy costs. 

 

RGGI’s offset program is also restrictive, thereby narrowing compliance options. Although the model rule provides for use of offsets for reduction of emissions in certain categories such as landfill methane capture and afforestation, this opportunity is undercut by the requirement to demonstrate economic “additionality.” To be useable, these offsets must have been generated by projects that are not “economically attractive absent the revenue stream provided by an emissions offset.” This subjective test does not recognize the reality that many of these projects are economically marginal and need more than one source of revenue. This economic additionality requirement undercuts the creation of offsets. 

 

Noticeably absent from RGGI is Pennsylvania, one of the largest coal-fueled utility states in the Northeast.  Because    Pennsylvania and other big coal states are included in larger electricity dispatch regions, CO2 regulation and increased cost on RGGI utilities will result in increased demand for electricity from the unregulated utilities in the same power region. A clear example of this is PJM, which oversees electric supply in the coal states of Ohio, Pennsylvania, Virginia, and West Virginia, as well as the RGGI states of Delaware, Maryland, and New Jersey. Untaxed electricity with   high carbon-content from non-RGGI generators will be preferred and sold in larger quantities than more expensive power, thereby undercutting the objective of reducing emissions. This is the “leakage” phenomenon.

 

RGGI and other state and regional regulatory climate programs may be eliminated under proposed federal climate legislation. The House bill specifically pre-empts state and regional cap-and-trade programs between 2012 and 2017. Pre-emption concerns may already be impacting the RGGI market, where prices for 2012 allowances are barely above the Reserve Price. 

 

In the meantime, EPA is forging ahead with its own GHG regulations. Last Fall, it made a GHG  “endangerment” finding and required quantification and reporting of GHG emissions. EPA will soon finalize the regulation of GHGs from light-duty vehicles, setting in motion a statutorily required process to regulate GHGs from major stationary sources that are modified or constructed. Among the class of stationary sources that will be affected are municipal solid waste landfills, which are the source of approximately one fourth of methane emissions in the US. Once regulated by EPA, construction or modification of these sources would require GHG control and would no longer generate “offset” allowances because controls would be now required by law.

 

Notwithstanding potential federal climate policy, the voluntary carbon markets should continue to flourish based on experience to date. Global voluntary carbon markets nearly doubled in 2008 and are expected to increase. Europeans purchased half of these offsets for noncompliance purposes.  This continued interest in voluntary markets is partly motivated by individuals and corporations choosing to reduce their carbon footprint. Our law firm, for example, has purchased carbon credits since 2008 to offset air travel emissions as part of a Sustainability Initiative. As national awareness of climate issues continues to grow, voluntary carbon markets are likely to expand and thrive.



[1] The views presented in this article are the authors’ alone and not DLA Piper US LLP or its clients.

More on a New Ozone NAAQS: EPA's Clean Air Science Advisory Committee Endorses EPA's Proposed Range

Posted on February 1, 2010 by Seth Jaffe

EPA has proposed lowering the NAAQS to a range of from 0.060 ppm – 0.070 ppm. Earlier this week, EPA’s Clean Air Science Advisory Committee, or CASAC, met and endorsed EPA’s proposed range. Some CASAC members did express concern about EPA’s proposed secondary seasonal standard, intended to protect crops and forests. However, overall, the CASAC seal of approval is pretty much the end of this argument.

It is important to recall how we got here. CASAC already endorsed the 0.060 ppm – 0.070 range several years ago, before EPA’s last ozone standard was issued. It was EPA’s refusal to follow the CASAC recommendations, and instead propose a 0.075 ppm standard, which led to litigation challenging the standard and the current controversy. 

It is difficult to overstate the weight given the CASAC’s views. Indeed, EPA’s fine particulate standard was vacated in significant part because EPA failed to follow CASAC’s recommendations.

Thus, a standard that does not comport with CASAC’s recommendations would likely be rejected by the courts as arbitrary and capricious. However, I suspect that CASAC’s influence also runs the other way. Assuming that EPA does indeed promulgate a revised NAAQS in the 0.060 ppm – 0.070 ppm range, and assuming that industrial interests challenge the new standard, it will be very difficult to establish that the new standard is arbitrary and capricious if it has been endorsed by CASAC. 

As I noted in connection with the fine particulate standard, it’s not obvious to me that this is a good thing. Depending on whose ox is being gored, anyone can get up on a soapbox and say that they want science to be free of politics. However, these are really policy decisions. It’s one thing to acknowledge that these are complicated issues and we thus have to allow Congress to delegate its authority to the EPA administrator. It’s another effectively to delegate the decision further to the CASAC, which is about as obscure an acronym body as we have. Do we really want standards which will result in compliance costs in at least the tens of billions of dollars being made by groups which truly are not accountable in any meaningful way?

Ozone and the Citizen

Posted on January 12, 2010 by Alan Gilbert

Accompanied by a considerable public relations effort, the United States Environmental Protection Agency proposed new national ambient air quality standards for ozone on January 7, 2010. The agency wants to reduce the primary 8-hour ozone standard from its current value of 0.075 parts per million, promulgated by the last administration in March 2008, to a level in the range from 0.060 to 0.070 parts per million. Using its reconsideration of the 2008 standard as a platform, EPA emphasized that more careful attention should be paid to the recommendations of its Clean Air Scientific Advisory Committee. That, it says, is just good science.

 

The country will face considerable difficulty and expense meeting the proposed primary standard nationwide, especially at its lower range. Based on monitoring data from 2006 to 2008, EPA predicts that a proposed primary standard set at 0.060 parts per million would be violated in all but 24 of the counties monitored counties nationwide for the pollutant.

 

In the part of the country where I live ― my office is in Colorado ― a new standard is going to be extremely difficult to meet, especially at the lower range of the proposal. In our area of the West, monitoring shows that we are, for the most part, quite close to either side of the current 2008 standard. The populous Northern Front Range region of the state reports ozone values of 0.071 parts per million to 0.086 parts per million. Colorado’s state health department, like many others in the West, is struggling mightily to form compliance strategies that will substantially improve ozone air quality in areas that today do not meet the existing standard.

 

Ozone pollution generally is formed in the atmosphere near the ground in very complex reactions that exploit energy from sunlight to transform a mix of volatile organic compounds, nitrogen oxides, carbon monoxide and methane. Control of ozone focuses on industrial facilities, the generation of electricity, motor vehicle exhaust gases, gasoline vapors, and chemical solvents. These are the major sources of volatile organic compounds and nitrogen oxides generated from human activities.

 

Ozone is particularly difficult to control because of pollutant transport. Precursor pollutants and ozone often arrive near a monitor in a complicated mix of local emissions and emissions carried by the wind from hundreds of miles away. A knowledgeable local air quality expert, quoted in an editorial printed on January 11, 2010, told The Denver Post that the lower range of EPA’s proposed standard is “close to background” levels for the Front Range of Colorado.

 

As in any primary national ambient air quality standard proceeding ― where the goal under the Clean Air Act is to protect the public’s health with a margin of safety ― fundamental, difficult and interesting questions must be addressed and answered. Who is EPA trying to protect through its proposed standard? It is focusing upon people with lung disease, especially children with asthma, elderly people, and people who are active outdoors, but it emphasizes protection of children. In her speech when the proposed standard was released, Lisa Jackson, the Administrator of EPA, told her audience of her 13-year old son’s difficulty with asthma on days with high ozone levels. What is EPA protecting these people from? It is protecting against reduced lung function and irritation in their airways, aggravation of asthma and susceptibility to respiratory infection, and aggravation of chronic lung diseases. What does science have to say about the level of air pollution that supplies that protection? Usually even more important, what does the science not have to say ― what are the unknowns and assumptions we must make, given the limits to our knowledge? And ― dare I write it? ― is control possible at the levels suggested by the science available to us? At what cost and with what set of benefits?

 

In any event, I was particularly struck by a comment reported in our local newspaper when the standard was announced. My reaction may be an over-reaction, but what I read seemed eerily familiar to me and a bit worrisome. The Denver Post reprinted remarks by the  Director of EPA’s Air Programs in Region 8. She reportedly said that residents can begin to make a difference to lower ozone levels by riding the bus and bicycling more instead of driving, weed-whacking and lawn mowing after sunset, and maybe ditching leaf-blowers and switching to push mowers. EPA Increases Burden on Denver to Reduce Smog,The Denver Post, January 8, 2010, p. B-1.

 

I was a young engineer working for EPA during its foray into federal indirect source controls in the late 1970’s. The remarks I read in the newspaper brought back memories of those days. I hope the group of people currently in charge at EPA remember, too.

 

An indirect source, as defined in Section 110 (a)(5)(C) of the Clean Air Act, is “a facility, building, structure, installation, real property, road, or highway which attracts, or may attract, mobile sources of pollution.” More plainly, in the early 1970s federal indirect source controls were designed to force people not to drive their cars to particular areas, if air quality might be imperiled, by forbidding or regulating the businesses that drew those people. In early 1973, responding to a court order, EPA proposed approaches like limiting the number of parking spots at airports, malls, sports venues and amusement parks, forcing parking garages to be smaller, and limiting or rejecting the development of real estate projects that would draw people in their cars. 38 Fed. Reg. 9599 (April 18, 1973). Later that year, the EPA instructed the states to consider these strategies in preconstruction indirect source review. 38 Fed. Reg. 15834 (June 18, 1973) (promulgation of state implementation plan requirements for “mobile source activity associated with . . . buildings, facilities, and installations.”). 

Even a very young engineer could tell that EPA’s approach was a disaster. Ordinary people (as distinct from the business people operating electric generating stations, paint booths, or oil and gas pipelines) were extremely unhappy when the federal government wanted to make their ordinary activities ― driving their cars to a shopping center or to watch a sporting event ― difficult or forbidden. And, of course, the states resented federal intrusion into traditional areas of state and local land use controls. It is also quite easy today to imagine how unhappy the powerful real estate developers were, too.

The reaction was predictable (at least in hindsight) and rapid. Congress forbade EPA from pursuing indirect source regulation in the interest of meeting air quality standards. In a 1974 supplemental appropriations act, Pub. L. No. 93-245, 87 Stat. 1071 (1974), Congress denied EPA budget funds and administrative authority “to administer any program to tax, limit, or otherwise regulate parking facilities.”  Permanent changes to the Clean Air Act came with the 1977 Amendments to the Clean Air Act, when restrictive language was added that is still codified in Section 110(a)(5) of the Clean Air Act. You can read more in a federal Court of Appeals opinion about the controversy and its aftermath, Manchester Environmental Coalition v. EPA, 612 F.2d 56 (2nd Cir. 1979) (successful challenge to EPA’s approval of Connecticut’s revocation of its implementation plan’s indirect source review program). You can get the flavor of this controversy by reading the discussion in the House Report that accompanied H.R. 6161, the House bill underlying the Clean Air Act Amendments of 1977. H.R. Rep. No. 294, 95th Cong., 1st Sess., 220-221 (May 12, 1977).

Today some states and political subdivisions choose to use indirect controls on air pollution in their programs. The San Joaquin Valley Air Pollution Control District in California and the State of Wisconsin have programs that are easily found on the Internet, for example.

But EPA is still forbidden to impose indirect source controls upon the states. And the remarks of the regional air quality official about the ozone proposal strike me as suggesting federal regulation that will be perceived in a quite similar and unhappy way by ordinary citizens. Is EPA going to force people to use push lawnmowers? To throw away their leaf blowers and weed whackers?

  

Will we follow this path again? I hope not. Controlling the precursors to the formation of ground level ozone at the levels now proposed by EPA is going to be terribly difficult and expensive, at best. But those controls must first have the support of citizens and their elected representatives if they are to have any chance to succeed. Whatever ambient air quality levels are eventually chosen by EPA in the ozone rulemaking, the control strategies eventually imposed by our federal government should not make people so angry that they forget why they are being protected.

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!

Kentucky Action on PM 2.5

Posted on November 19, 2009 by Carolyn Brown

As has been reported, EPA granted in part petitions to object to the merged PSD construction/Title V operating permit issued by the Kentucky Division for Air Quality for the addition of a 750 MW pulverized coal-fired boiler at the Trimble County facility owned by Louisville Gas & Electric Company (LG&E). EPA’s action occurred more than three years after the proposed permit and final PSD determination authorizing construction to commence. One ground for the grant of the petition was that the state permitting record did not contain adequate justification of use of the PM10 program as a surrogate for PM2.5 for PSD analysis.

 

Following submittal of additional information by LG&E, Kentucky issued its preliminary determination that many have argued was an attempt to regulate by Title V objection rather than by rulemaking.   Regardless, the Division for Air Quality determined that use of the PM10 Surrogate Policy has been shown to be reasonable for the Trimble County project. In short, DAQ concurred with LG&E that there was a lack of test data regarding the particle size distribution of the particulate matter for the combination of controls on the unit and noted that the control train was state of the art. DAQ also noted that PM2.5 is always a subset of PM10 and that PM10 BACT analyses implicitly include consideration of reductions of PM2.5 emissions. After considering the elements of the control train, DAQ concluded that there were “no known base technologies available” for a PC Boiler that would provide additional reduction of PM2.5

 

LG&E also addressed fugitive emission sources, the emergency generator and cooling tower in its submittal to demonstrate that use of PM10 as a surrogate was reasonable. Although a Class II Cumulative PM2.5 NAAQS analysis was not conducted, LG&E provided information from modeling exercises to further support its position that it was reasonable to rely on the PM10 surrogate policy. DAQ noted that in the absence of a final rule on significant impact levels for PM2.5, a PM2.5 emissions inventory and regulatory dispersion modeling system, it was not possible to conduct a cumulative PM2.5 NAAQS analysis. 

Kentucky Action on PM 2.5

Posted on November 19, 2009 by Carolyn Brown

As has been reported, EPA granted in part petitions to object to the merged PSD construction/Title V operating permit issued by the Kentucky Division for Air Quality for the addition of a 750 MW pulverized coal-fired boiler at the Trimble County facility owned by Louisville Gas & Electric Company (LG&E). EPA’s action occurred more than three years after the proposed permit and final PSD determination authorizing construction to commence. One ground for the grant of the petition was that the state permitting record did not contain adequate justification of use of the PM10 program as a surrogate for PM2.5 for PSD analysis.

 

Following submittal of additional information by LG&E, Kentucky issued its preliminary determination that many have argued was an attempt to regulate by Title V objection rather than by rulemaking.   Regardless, the Division for Air Quality determined that use of the PM10 Surrogate Policy has been shown to be reasonable for the Trimble County project. In short, DAQ concurred with LG&E that there was a lack of test data regarding the particle size distribution of the particulate matter for the combination of controls on the unit and noted that the control train was state of the art. DAQ also noted that PM2.5 is always a subset of PM10 and that PM10 BACT analyses implicitly include consideration of reductions of PM2.5 emissions. After considering the elements of the control train, DAQ concluded that there were “no known base technologies available” for a PC Boiler that would provide additional reduction of PM2.5

 

LG&E also addressed fugitive emission sources, the emergency generator and cooling tower in its submittal to demonstrate that use of PM10 as a surrogate was reasonable. Although a Class II Cumulative PM2.5 NAAQS analysis was not conducted, LG&E provided information from modeling exercises to further support its position that it was reasonable to rely on the PM10 surrogate policy. DAQ noted that in the absence of a final rule on significant impact levels for PM2.5, a PM2.5 emissions inventory and regulatory dispersion modeling system, it was not possible to conduct a cumulative PM2.5 NAAQS analysis. 

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.

PROPOSED LONGLEAF FACILITY KEEPS MOVING FORWARD

Posted on November 2, 2009 by Patricia Barmeyer

Over persistent objections from the Sierra Club and a local environmental group, LS Power’s proposed new coal-fired power plant in southwest Georgia continues to make its way through the permitting and appeals process. Correcting the stunning reversal of the permit by the Superior Court on multiple grounds, the Georgia Court of Appeals overturned the Superior Court in most respects, and the Georgia Supreme Court has declined to hear the case.

 

            In May 2007 LS Power obtained a Prevention of Significant Deterioration (“PSD”) permit from Georgia EPD to construct and operate a 1200 MW pulverized coal-fired power plant, the Longleaf Energy Station. Shortly after issuance of the permit, the Sierra Club and a local environmental group filed a seventeen-count petition for administrative review. The petition contained many of the same challenges that Sierra Club has raised in other coal-fired power plant permit appeals all around the country, including the claim that the permit should have contained an emissions limitation for CO2. A state administrative law judge dismissed a number of these counts as a matter of law; the remaining counts were resolved against petitioners after a 21-day evidentiary hearing. The petitioners appealed the ALJ’s decision on six grounds, and in June of 2008, a Fulton County Superior Court judge ruled in favor of petitioners on all six grounds. The Superior Court’s decision was widely-touted by the Sierra Club, and it received national attention, as it was the first court in the country to hold that the Clean Air Act required PSD permits to include an emissions limitation for CO2

 

The business community in Georgia rallied to support Longleaf’s efforts to persuade the appellate court in Georgia to reverse the Superior Court holding, and over 100 business entities signed on to an amicus brief urging reversal. On July 7, 2009, the Georgia Court of Appeals reversed the Superior Court on five of the six grounds before the Court. Longleaf Energy Associates, LLC, et al. v. Friends of the Chattahoochee, Inc., et al., Nos. A09A0387 & A09A0388, 2009 WL 1929192 (Ga. Ct. App. July 7, 2009). 

 

            Most notably, the Court of Appeals squarely rejected the claim that the Clean Air Act requires an emissions limitation for CO2 in a PSD permit. The Georgia Court of Appeals held that while CO2 may be a pollutant under the Clean Air Act, it is not currently a pollutant “subject to regulation” under the Act because there are no regulations that limit or otherwise control CO2 emissions. The Court’s decision is consistent with former EPA Administrator Stephen Johnson’s December 18, 2008 memorandum which outlined EPA’s official position on this issue in response to the Environmental Appeals Board’s decision in In re: Deseret Power Electric Coop., PSD Appeal No. 07-03 (E.A.B. Nov. 13, 2008). See http://www.epa.gov/nsr/guidance.html. EPA’s new Administrator, Lisa Jackson, is currently reconsidering the Johnson memorandum but has declined to stay the effectiveness of that memorandum during her review. See id. While recent activity both at EPA and in Congress indicate that the treatment of CO2 in the context of PSD permitting may soon be changed, the Georgia Court of Appeals’ decision confirms that, at least for now, the law does not require an emissions limitation for CO2 in PSD permits. 

 

            The Court of Appeals likewise rejected the other substantive claims raised by the petitioners. The Court held that EPD was not required to consider integrated gasification combined cycle (“IGCC”) — a type of power plant in which coal is converted into a synthetic gas and that gas is then burned in a combustion turbine to produce electricity — as part of its best available control technology (“BACT”) analysis for the Longleaf facility. The Court reaffirmed a principle that many administrative tribunals and courts have previously recognized: the required scope of a BACT analysis does not extend to those pollution control technologies that would redefine the proposed source. In the case of IGCC, the Court relied on the undisputed physical and chemical differences between an IGCC power plant and the pulverized coal-fired power plant that Longleaf proposed to build to conclude that IGCC could not be applied to the Longleaf facility without redefining the proposed source. 

 

            The Court of Appeals also rejected petitioners’ challenge to the air dispersion modeling for fine particulate matter, or PM2.5. EPD and Longleaf utilized PM10 modeling as a surrogate for PM2.5 to demonstrate compliance with the PM2.5 National Ambient Air Quality Standard. The Court reasoned that at the time Longleaf’s final permit was issued, this surrogate approach was the only approved method of conducting PM2.5 modeling for purposes of PSD permitting. 

 

            On September 28, 2009, a unanimous Georgia Supreme Court denied Sierra Club’s petition for a writ of certiorari, clearing the way for the parties to proceed with a remand limited to the ALJ’s standard of review. Sierra Club has since moved for reconsideration of that denial, and a decision on that motion is expected soon. For now, however, coal project developers can look to the recent Longleaf decision as an example of a court that has properly refused to preempt the deliberations in EPA and Congress concerning the future of coal-fired power plant permitting.

Applying Clean Air Act Permit Requirements to Stationary Sources of Greenhouse Gases

Posted on October 27, 2009 by Chester Babst

I.          Introduction

 

            On September 15, 2009, EPA announced a proposed rule to regulate greenhouse gases (“GHG”) from light-duty vehicles. EPA estimates that the light-duty vehicle GHG regulation could become final as early as the first quarter of 2010, at which time carbon dioxide and the other specified GHG would become air pollutants “subject to regulation” under the Prevention of Significant Deterioration (“PSD”) and Title V permit programs.

 

            The Clean Air Act (“CAA”) “major source” applicability threshold for both permit programs is 100 or 250 tons per year (“tpy”) of any regulated pollutant, depending upon the type of facility. EPA recognized that applying these traditional thresholds to GHG could “overwhelm” permitting authorities and subject the newly expanded regulated community to increased uncertainty, delay, and costs.

 

            In response to these concerns, EPA issued a proposed rule on September 30, 2009 to address how CAA permitting requirements will be applied to stationary sources of GHG emissions. The “Tailoring Rule” would provide temporary relief for some sources, but ultimately leaves the regulated community with the same degree of uncertainty while creating additional legal issues.

 

II.         Litigation Risks

 

            Although EPA acknowledges the significant legal issues associated with agency action to change the statutory “major source” thresholds from 100/250 tpy to 25,000 tpy, it relies on a principle that administration agencies must interpret statutes in a way that avoids absurd results and a principle that administrative necessity can sometimes justify an agency’s plan to implement a statute. Having to rely on these principles as a source of its authority seems only to strengthen the argument that the CAA was not enacted to address GHG, but that is another issue that will be “teed up” by the Tailoring Rule.

 

            Because of the uncertainty regarding EPA’s authority to change the statutory thresholds, the regulated community faces the potential for citizen suits to challenge proposed projects and leaves uncertain the issues of permitting, timing, and cost. As environmental practitioners, we must be sure clients understand these uncertainties as they evaluate any plan to construct or modify their facilities.

 

III.       Permit Delay

 

            Although the Tailoring Rule would dramatically reduce the number of sources initially impacted by application of the PSD and Title V programs to stationary sources of GHG, EPA estimates that PSD permit applications will increase by approximately 100 applications per year, and sources subject to Title V will increase by 3,000. On a percentage basis, these estimates represent significant increases and will further burden permitting authorities at a time when many state agencies are facing or will face meaningful budget reductions (e.g., Pennsylvania’s recently announced 27% budget cut for the Department of Environmental Protection). At a minimum, these added permitting burdens will increase delays in obtaining necessary permits and thereby create additional uncertainty for businesses wishing to grow or modernize their facilities.

 

IV.       Best Available Control Technology for Stationary Sources of GHG

 

            Stationary sources of GHG subject to PSD will be required to install best available control technology (“BACT”). BACT for sources of currently regulated pollutants has developed over the years, so the regulated community, in most cases, has an ability to estimate the potential cost of controls. To the contrary, BACT for stationary sources of GHG is a complete unknown. While some have argued that efficiency improvements should qualify for BACT, others have insisted that traditional add-on emissions control technology is required. Once again, this debate results in cost uncertainty for any project affected by the PSD program and further frustrates business planning.

 

V.        Conclusion

 

            The Tailoring Rule does little to address significant problems and issues that will flow from the application of the PSD and Title V permit programs to stationary sources of GHG. The significant uncertainties created by EPA’s path to regulate GHG under the CAA will likely affect the timing and cost of future permitting. Environmental practitioners must be prepared to communicate these consequences to clients as they plan for the future.