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.

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.

The Emerging National Climate Program

Posted on April 30, 2009 by Robert Wyman

As Congress debates comprehensive climate legislation, the EPA considers its options and responsibilities under the Clean Air Act, and states and regions continue to develop their own programs, it is important to consider the potential risks of dual or overlapping federal and state programs. A federal climate program will be vastly superior to a patchwork of state and regional programs. Congressional action is preferred, but even a federal EPA program would likely be superior to a state or regional approach.

 

There are several obvious reasons why a federal climate program would be superior to a patchwork of state programs.  Successfully stabilizing the climate will require nothing less than the transformation of our energy and transportation systems. As some detractors of climate proposals have noted, near-term cap and trade programs will reduce emissions, but will not do nearly enough to make the progress needed to stabilize the climate. That will require long-term and broad scale changes to the way all nations generate and use energy. While states are valuable laboratories, there is little question that only the federal government can support the required scale of research and development, invest in the necessary infrastructure (including an adequate national transmission system and transportation fuel supply system) and otherwise establish and support markets of sufficient scale to stimulate needed change. Likewise, federal action is necessary to ensure that our climate policy is integrated with other high priority national goals, such as energy and transportation security, reliability and affordability. There is an emerging consensus as to the appropriateness of near-term comprehensive federal action, tempered by concerns about its economic impact during a severe recession and by debate regarding program design.

 

If there is a federal program and, if, as expected, it includes a cap and trade program, there should not be overlapping state cap and trade programs. The reasons for this conclusion were nicely illustrated yesterday by the highly-regarded economics consulting firm, National Economic Research Associates (NERA), in the second of its Climate Policy Economic Insights newsletters. As noted in the NERA document, if a state program is more stringent than the federal program, then the allowance price in that state will be higher than the federal allowance price because sources regulated in that state will face a higher cost abatement curve than sources subject only to the federal program. A good illustration of this problem is the emerging California climate program. Early estimates of the marginal cost of a carbon allowance in California at the compliance year 2020 are in excess of $100 per annual ton of carbon dioxide equivalent (CO2e) emissions (see “Analysis of Measures to Meet the Requirements of California’s Assembly Bill 32,” Precourt Institute for Energy Efficiency, Stanford University, Discussion Draft September 27, 2008, at 14-16). By contrast, EPA’s initial estimate of the marginal cost at 2020 of the Waxman-Markey Discussion Draft is expected to be in the range of  $17-22/ton CO2e (see EPA Preliminary Analysis of the Waxman-Markey Discussion Draft, April 20, 2009, at 3, 15). This cost differential is not in the least surprising, as California GHG sources have been subject for many years to ambitious renewable portfolio standards (requiring up to 20% of electricity to be supplied to investor-owned utility customers by 2010) and aggressive energy-efficiency standards, among other strategies. Requiring California sources to reduce their emissions further will simply cost more because the lower-cost options along their cost abatement curve are no longer available. Note that this is very different from requiring all sources to meet a common performance standard, in which case state-by-state costs per ton would be much closer. Indeed a national trading program based on a performance standard (e.g., carbon intensity) would likely reward California sources for their early actions.

 

The bottom line is that sources in states with more stringent carbon reduction programs will pay more for their next ton of carbon than their competitors elsewhere, potentially more than five times more. This might be warranted if GHG emissions had a local health impact, but it is not warranted given that GHG emissions impacts are global in nature and the location of the reduction generally is not of concern (except for the unusual, and easily segregated, situations in which there are co-benefits of reducing criteria pollutants). Notably, at a recent visit to Washington, DC, by Southern California elected officials and business leaders, one visitor urged Senate EPW Chair Barbara Boxer to consider preempting state programs to avoid disadvantaging California businesses. Senator Boxer answered that no California source would pay more for a ton of carbon than anyone else in the country. This is a reassuring statement, but one that can only be true if federal legislation preempts state climate programs. Fortunately, the Waxman-Markey draft appears to recognize the potential problems of overlapping federal and state programs, as it contains a partial preemption (through 2017) of state cap and trade programs.

 

Even if federal legislation preempts state cap and trade programs, there is a strong likelihood that so-called “complementary” measures may still be implemented at the state level. Such measures include several programs of strategic importance, such as renewable power and transmission investments, low carbon transportation fuel standards, and, in California’s case, comprehensive motor vehicle regulations. The Waxman-Markey Discussion Draft appears to recognize the value of undertaking these strategic programs instead at a federal level. While state leadership in each of these areas is to be recognized and lauded, once robust federal programs are in place state programs in these critical areas should be transitioned to the federal programs in a manner that minimizes, and even eliminates, the economic inefficiency associated with compliance with multiple programs.

 

Some states (again, California is a prime example) will develop complementary command and control measures to reduce GHG emissions in other sectors or for other categories for which the state regulation is not strategic. That is to say that the measures’ value will be primarily in reducing emissions, not in advancing a technology or fuel of critical national or regional importance. It may be that some of these measures are warranted at the state level. A good example would be energy efficiency programs to retrofit buildings or local or state initiatives to reduce energy consumption or vehicle miles traveled through smart land use and transportation planning. Except in such situations where states and localities offer unique advantages in structuring such programs, once Congress enacts (or EPA implements) a robust GHG cap and trade program, states should avoid the adoption of additional GHG regulations where the carbon cap already provides an adequate incentive for reducing emissions on a national basis.

 

Seasoned Congressional observers will recognize that, despite best efforts, Congress may not be able to enact a federal cap and trade program in the near term. If the Senate’s recent budget amendment is any indication of the prospects of legislation this year, 89 Senators voted to oppose climate legislation if it would have the effect of increasing electricity or fuel prices. Of course, raising the price of energy to reflect the environmental impact of carbon emissions is one central purpose of a cap and trade program. So the Senate vote is a danger sign to the prospects for passage. Senator Boxer’s subsequent amendment, which sought support for returning allowance auction revenues to consumers to neutralize the program’s overall price impact, garnered 54 votes, but still 6 shy of what would be required to prevent a filibuster.

 

Recognizing that Congress may not succeed in passing a federal cap and trade program this year, EPA should develop an appropriate federal framework backstop program. This course would be a natural progression from EPA’s recent proposal to find that GHG emissions endanger public health and welfare. When considering agency regulation of GHGs, EPA’s 2008 Advanced Notice of Proposed Rulemaking (ANPR) showed a deep understanding of the potential risks of regulating GHG emissions under the Clean Air Act on the one hand, and of the possible path forward that could avoid significant economic injury on the other. Following this path, EPA should be prepared to develop a national GHG program under section 111(d) of the Act. As suggested by the Waxman-Markey Discussion Draft, to ensure ultimate consistency with emerging federal legislation and to minimize economic risk, the EPA should not treat GHGs as criteria or hazardous air pollutants, nor should the agency apply the Act’s new source review program to GHG sources. Likewise, using the full scope of administrative discretion likely to be recognized by the courts as appropriate in this extraordinary context, EPA should focus on the largest GHG sources (above 25,000 annual tons) and apply Title V only to those sources already subject to the Title V program for other pollutants. If Congressional action is delayed, then, applying section 111 of the Act, EPA should develop appropriate performance standards or benchmarks for existing and new GHG sources that would form the basis of a national averaging and trading program similar to the program that was used to remove lead from gasoline. This program would initiate investment in carbon reductions and provide a basis for the creation and use of GHG emission reduction credits. It also could easily transition either to a Congressional cap and trade program or, if Congress cannot act promptly, to an EPA-administered national cap and trade program, with full recognition and value to any credits generated under the initial phase of the program. While Congressional action is clearly preferable, an EPA national trading program would be better than a patchwork of state programs for the reasons noted above.

WAXMAN/MARKEY GREENHOUSE GAS REDUCTION BILL

Posted on April 24, 2009 by Mark Walker

On March 31, 2009, U.S. House Representatives Henry Waxman and Edward Markey released a discussion draft of the "American Clean Energy and Security Act of 2009". The bill is intended as an all-in-one clean energy, energy efficiency and greenhouse gas reduction law. The draft bill weighs in at a svelte 648 pages, anorexic in comparison to the recent 1073 page "Stimulus" bill, increasing the likelihood that it will actually be read. Bolstered by the EPA's 4/17/09 proposed findings that greenhouse gases threaten public health and contribute to the threat of climate change, this bill will now start winding its way through legislative review, possibly eliminating the need for independent EPA action on greenhouse gases. The House Subcommittee on Energy and Environment began hearings on the discussion draft on April 21, 2009. The  draft bill and administrative summaries can be reviewed here

The Waxman/Markey bill calls for U.S. reductions of greenhouse gas emissions to 97% of 2005 levels by 2012, 80% by 2020, 58% by 2030 and 17% by 2050. The bill utilizes the Clean Air Act as the authority to establish the declining limits, but otherwise exempts greenhouse gases from CAA regulation as criteria and hazardous air pollutants, from new source review, and from consideration in determining whether a stationary source requires a Title V permit.

Let the criticism (and bloggers) begin. Concerns have already been voiced about costs of compliance and raising the cost of conventional energy to the middle class. Some groups are critical of the bill because it allows carbon offsets, a perceived area of potential abuse. Some groups believe that the bill is not strict enough, making too many concessions at the outset, increasing the likelihood that it will be diluted through further legislative compromise. And then there is that pesky question of what to do with the revenues (taxes) generated from the anticipated cap and trade program (consumer rebates, deficit reductions, investment in sustainable energy programs, etc.). This is a greenhouse gas reduction bill to watch.

Cap and Trade, CO2, and the Economy

Posted on April 14, 2009 by David Tripp

Cap and Trade for air pollution emissions reductions has a proven track record as an effective tool in reducing pollution – but can it work on CO2? Sulfur dioxide (SO2), perceived in the 1980s as the major air pollution threat, was reduced by 10 million tons over a 10-year period starting in 1990, according to EPA, without extensive delays and litigation associated with other environmental campaigns. How did it work so well? The marketplace, backed by the Clean Air Act, was used to create incentives for companies to reduce their SO2 emissions and earn “credits” for each ton of SO2 eliminated. Those credits could then be sold to other companies which needed more time to meet SO2 Clean Air standards.

 

How did the overall reductions occur? Using the implementing authority of Title IV of the Clean Air Act, 42 U.S.C. § 7651, successive “Phase-down” reductions of SO2 emissions were required. Under Phase I, (1995) certain large emitters of SO2 were to reduce the concentration of SO2 in their emissions to 2.5 lbs/mm Btu, or less. Later, in Phase II, (2000), all emitters above 75MW capacity were to reduce SO2 emissions to 1.2 lbs/mmBtu, or less. To help incentivize early compliance, and reduce the economic impact on individual companies, the companies making reductions were issued a credit for each ton of emissions reduction, and could apply the credit to use at another unit owned by the company, keep the credit for future use, or sell the credit through a market established by the Chicago Board of Trade. EPA reports that with these incentives, the national total of SO2 air emissions has been reduced by 50% since 1990.

            Does President Obama want to reduce CO2? You betcha! In August, 2002, then-Senator Obama proposed a reduction of CO2 from 1990 levels by eighty percent, to occur by 2050. The same goals appeared during the Presidential campaign. This is a very ambitious and potentially costly goal. The Congressional Budget Office has estimated a cost of $15 billion to the national economy over 10 years to meet this ambitious goal, but if certain economic safeguards are used, a deficit reduction savings of $80 billion could occur.

            A big change has occurred since then – Obama, as President, has stated Goal Number 1 is to restart the economy. This is a goal shared by nearly all. Congress and the President have begun implementing a stimulus package which would put nearly a trillion dollars into the economy, facing criticism that the debt burden this will place on future investors and generations will frustrate economic recovery. At the same time, Congress and EPA are intent on legislative or administrative action to reduce CO2.

            Can Cap and Trade work to reduce CO2 in a money-constrained economy? Political leaders appear to have concluded that CO2 reductions must be implemented quickly, and Cap and Trade may be the most efficient vehicle, and has been shown to work under the Clean Air Act model for SO2 . A more pointed question is whether Cap and Trade for CO2 should be utilized to generate a tax revenue stream to reduce the national deficit. During his March 24, 2009 news conference, Obama made reference to a budget outline he had sent to Congress earlier, which included hundreds of billions of dollars in revenue to the government through implementation of Cap and Trade. This plan was dubbed a “Cap and Tax” approach to CO2 reduction. In the latest development, in a Senate vote on April 2, 2009, 67 members of the Senate voted to require at least 60 votes to adopt any new cap and tax on carbon energy. These political maneuverings appear to emphasize the momentum by Congress, with public support, to adopt some form of Cap and Trade for CO2 that does not become a hidden tax or result in economic dislocations or hardships on a national or wide-scale regional basis.

            What are the safeguards needed to implement Cap and Trade, but not damage the economy? Most of these have been identified already:

·                    Safety valve provisions. National and regional economic disruptions caused by CO2 reduction requirements should be eligible for relief through any new legislation. Loss of jobs, disruption of the potential for job creation or job preservation and similar hardships should be grounds for flexibility on deadlines and enforcement actions.

·                    Realistic goals should be adopted. President Obama’s earlier proposed eighty percent reduction now may seem more than the country can afford. Congress should adopt more realistic goals, and be prepared in the future to make adjustments if needed.

·                    Research and development for carbon capture and storage must be accelerated. The stalemate over finding and proving technologies to capture CO2, and to safely sequester CO2 should be addressed in setting national priorities, something akin to the World War II stimulus for factories to supply war material.

·                    A “Price-Anderson”-style act for risks associated with carbon storage or sequestration should be adopted. Only when developers, investors and financiers learn they can avoid major, long term liability or loss of equity in the event of an unplanned release of CO2, will the markets be encouraged to get behind carbon capture and sequestration.

            These are not insolvable problems. Realistic goals, flexibility in the design and implementation of a national Cap and Trade system for CO2, and allowing the market to work as it did for SO2 reductions should reduce CO2 significantly without impeding economic recovery.

Clock Ticking on Comments In Response to EPA's Proposed Mandatory GHG Reporting Rule

Posted on April 14, 2009 by Mary Ellen Ternes

 

While we wait for EPA’s GHG Endangerment Assessment and new GHG legislation, the EPA’s proposed mandatory greenhouse gas (GHG) reporting rule was published in the Federal Register, at Mandatory Reporting of Greenhouse Gases, proposed rule, 68 Fed. Reg. 16448 (April 10, 2008)

This proposed rule would require calculation and reporting of carbon dioxide (CO2), methane (CH3), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) in carbon dioxide equivalents by most major industrial and commercial sources of these gases with CO2 equivalent (CO2e) emissions over 25,000 tons per year. 

 

 

The sources covered by the proposed rule range from cement production to food processing, landfills to pulp and paper manufacturing. The rule also specifically requires separate reporting by suppliers of coal and coal-based liquid fuels, petroleum products, natural gas, natural gas liquids and industrial GHGs and manufacturers of vehicles and engines. Compliance with the proposed rule would appear to be challenging for those sources which emit hard to quantify, or never before quantified, fugitive emissions of GHGs. The proposed rule contemplates reporting by approximately 13,000 facilities, with the first annual report due in 2011 for the calendar year 2010.  EPA states that the reporting methods were built upon preexisting voluntary programs such as the U.S. Greenhouse Gas Inventory and The Climate Registry. 

 

There is a second public hearing on the proposed rule on April 16, 2009, at the Sacramento Convention Center, Sacramento, CA. More information is provided here.

Clean Water Advocates and Industrial Sector Battle Over Connecticut's Industrial Stormwater Permit

Posted on March 23, 2009 by Gregory Sharp

By Gregory A. Sharp

Murtha Cullina LLP

March 23, 2009

 

The Connecticut Department of Environmental Protection (“DEP”) has proposed to revise and renew its General Permit for the Discharge of Stormwater Associated with Industrial Activity. The renewal has prompted environmental groups to seek enhanced notice and public participation requirements and has provoked the regulated community to seek an overhaul of the structure of the General Permit.

 

The previous General Permit was adopted in 2002, modified in 2003, and expired on September 30, 2007. It was unilaterally extended on October 1, 2007 and October 1, 2008 through March 31, 2008 without change by DEP to provide ongoing coverage to approximately 1,500 registrants. Companies in Connecticut with industrial SIC codes are required to register if they have a discharge of stormwater through a conveyance to waters of the United States, and are not otherwise exempt.

 

Connecticut’s Industrial Stormwater scheme historically was a one-size-fits-all general permit. It allowed eligible companies to authorize their stormwater discharges by filing a registration form, similar to the Notice of Intent in the federal program. The filing of the registration, along with a fee, conferred coverage under the permit, subject to its terms, unless the Commissioner requested an individual permit application.

 

The 2002 permit required the preparation and certification by a P.E. or C.H.H.M. of a stormwater pollution prevention plan (“SWPPP”), adherence to generic best management practices (“BMPs”), annual monitoring of stormwater discharges from qualifying storm events for an expansive list of chemical and physical parameters, including whole effluent toxicity, and a set of Target Values for the parameters based on the 80th percentile of the monitoring data collected in previous years.

 

Historically, the permit had not been particularly controversial, had been relatively easy for DEP to administer, and enabled the agency to develop a significant stormwater data base which it could sort by SIC Code and use to prioritize enforcement. Significant enforcement cases over the past 10 years focused on non-stormwater discharges, such as those from vehicle washing, which commingled with stormwater, or in some cases, discharged directly through stormwater systems.

 

During the summer of 2008, DEP announced that it would be revising the permit. It sought to update its 80th percentile Target Values to reflect the monitoring data acquired since the prior permit was adopted in 2002, and it proposed Action Levels at the 95th percentile of prior monitoring results which would require follow-up action by registrants to investigate the source of the exceedances and modify their BMPs and SWPPPs.

 

Two events conspired to radically change DEP’s approach to the General Permit renewal. On September 27, 2008, the U.S. Environmental Protection Agency (“EPA”) adopted its Multi-Sector General Permit for Stormwater Associated with Industrial Activity (73 FR 56372), and on October 8, 2008, the Connecticut Fund for the Environment and the Connecticut Soundkeeper, Inc. intervened in the DEP proceedings convened to renew the permit, and several industrial stakeholder organizations quickly joined the fray.

 

The environmental groups sought significant changes to the permit scheme arising from federal appellate decisions interpreting the Clean Water Act to require the opportunity for public notice and comment not only on the General Permit and its terms, but also on the individual discharger’s Notice of Intent and its proposed pollution control measures.

 

The leading case relied upon by the environmental intervenors is Environmental Defense Center, Inc. et al. vs. U. S. Environmental Protection Agency et al., 344 F. 3d 832 (9th Cir., 2003). In that case, environmental groups challenged the EPA’s Phase II regulations for municipal storm and sanitary sewers (“MS4s). The regulations authorized the use of general permits and required the use of BMPs identified in an NOI filed by the MS4 in seeking authorization under the general permit. Consistent with its prior practice, EPA did not require NOIs to be subject to public notice or public hearings.

 

The environmental petitioners challenged the rule, because it did not require EPA to review the content of the MS4 dischargers’ Notices of Intent and the substance of the stormwater controls adopted by the dischargers, and it did not contain requirements for public participation in the NPDES permitting process.

 

The Ninth Circuit remanded the rule on both counts. As to the review of the discharger’s individually proposed pollution control measures, the court, relying on Section 402 (p) of the Clean Water Act, 33 U.S.C. § 1342(p), held “stormwater management programs that are designed by regulated parties must, in every instance, be subject to meaningful review by an appropriate regulating entity to ensure that each such program reduces the discharge of pollutants to the maximum extent practicable.” Id. at 856.

 

As to the public participation aspects, the court held that, because it was the NOIs and accompanying documents, not the general permit itself, that contain the substantive information on pollution control measures to reduce discharges to the maximum extent practicable, if the Rule does not make NOIs available to the public or provide for public hearings on NOIs, the Rule violates the intent of the Act, as embodied in 33 U.S.C. § 1342 (a)(1) and (j).

 

Using this precedent the environmental groups in Connecticut challenged the DEP’s past practice of not publishing notice of registrations for the Industrial Stormwater Permit and not providing for public review of the site-specific SWPPPs mandated by the General Permit. In the most recent draft of the General Permit, the agency has agreed to publish notice on its website of registrations received each month, and provide a means by which the public can review the SWPPPs.

 

On the industry side, trade associations advocated for a Connecticut General Permit that would emulate the federal Multi-Sector permit. The advantage of the federal approach to industry was that EPA designated 29 industrial sectors and tailored its generic control measures and monitoring requirements to each sector. Although the EPA permit requires quarterly monitoring for sector specific “Benchmark” pollutants, the number of parameters measured is far less than Connecticut’s prior permit and does not include toxicity. The Benchmark concept incorporated in the permit requires those dischargers for which the average of four quarters of monitoring data exceed the Benchmark concentration to investigate the reasons for the exceedance and modify their control measures and SWPPP. For certain sectors, EPA also adopted enforceable effluent limitations.

 

On February 4, 2009, DEP issued a new proposed draft which adopts ten sectors modeled on the federal permit with semi-annual monitoring. The previously proposed “Action Levels” have become “Benchmarks” to track the federal language. DEP’s proposal retains the broad spectrum of parameters to be included in the monitoring program, including toxicity, but makes some sector specific adjustments. The toxicity monitoring requirement carries with it no Benchmark. The draft also adds annual monitoring for parameters for which receiving waters have been designated impaired or subject to Total Maximum Daily Load restrictions.

 

The Benchmark values for Copper, Lead and Zinc are based on Connecticut’s Water Quality Standards. The Benchmarks for remaining parameters (pH, O&G, COD, TSS, TPh, TKN, and NO3), are based on the 50th percentile of the previously acquired monitoring data. Industry has objected to the Benchmarks set at the 50th percentile as arbitrary (not water-quality based), overly stringent, and impossible for many sites to achieve.

 

The DEP is still taking comments, and expects to go to notice on a new proposal in April. In the meantime, the DEP has published notice that it intends to extend the 2002 General Permit once again until September 30, 2010, but it will require re-registration and a pro-rated fee of $300 for the October 1, 2007 to September 10, 2010 time period.

Another Loss For the Bush EPA; The D.C. Court of Appeals Remands the Fine Particulate Standard

Posted on February 27, 2009 by Seth Jaffe

The batting average of the Bush administration EPA in appeals of its regulatory proposals may now have dropped below the proverbial Mendoza line. This week, the Court of Appeals for the District of Columbia remanded a substantial part of EPA’s particulate rule. That the Bush administration could achieve results where the Mendoza line is even a close metaphor is a testament to just how low its stock has fallen in the courts.

 

The case itself is important for a number of reasons, but is too lengthy for detailed analysis here. Highlights include:

·                     First, the basic holding: the court remanded EPA’s primary annual standard for PM2.5, because EPA did not justify that the 15 ug/m3 standard was sufficient to protect public health with an adequate margin of safety. Second, the court also remanded EPA’s determination of the secondary, public welfare, standard for PM2.5.

·                     The court gave great weight to the role of the Clean Air Science Advisory Committee (CASAC) and staff recommendations in the regulatory process. After this decision, EPA is going to think twice about choosing a regulatory course difference than that recommended by CASAC and staff. On balance, I think that this is a bad thing and more evidence of the collateral damage from the extreme positions taken by the Bush administration. After all, while the Clean Air Act sets some boundaries, these are ultimately policy decisions that should be made by the President and his or her chosen staff, not by a committee no one’s heard of or low-level staff.

·                     Unlike the chaos created when the court vacated the CAIR regulations, the court appears to have learned its lesson. This time around, the court remanded the rule, but left the standard in place for now.

·                     The court’s decision to remand the public welfare standard will have implications for current efforts to implement the its Regional Haze Rule. The extent to which this decision throws Haze Rule implementation back to the drawing board may not be known for some time.

How many more cases can the Bush administration lose after it’s already out of office? At least one. Greenwire reports today about speculation that this decision means that the EPA rules regarding the nitrogen oxide NAAQS may also be in trouble.

The interesting question in all this is the extent to which the abysmal record of the Bush EPA in defending its decisions in the courts will damage EPA’s credibility and thus result in a long-term weakening of the deference given EPA by the courts. At this point, my assumption is that, in the long run, these cases will be seen as an aberration and courts will resume their prior practice of granting EPA substantial deference. Of course, whether that is a good thing or not is a separate question.

Another Loss For the Bush EPA; The D.C. Court of Appeals Remands the Fine Particulate Standard

Posted on February 27, 2009 by Seth Jaffe

The batting average of the Bush administration EPA in appeals of its regulatory proposals may now have dropped below the proverbial Mendoza line. This week, the Court of Appeals for the District of Columbia remanded a substantial part of EPA’s particulate rule. That the Bush administration could achieve results where the Mendoza line is even a close metaphor is a testament to just how low its stock has fallen in the courts.

 

The case itself is important for a number of reasons, but is too lengthy for detailed analysis here. Highlights include:

·                     First, the basic holding: the court remanded EPA’s primary annual standard for PM2.5, because EPA did not justify that the 15 ug/m3 standard was sufficient to protect public health with an adequate margin of safety. Second, the court also remanded EPA’s determination of the secondary, public welfare, standard for PM2.5.

·                     The court gave great weight to the role of the Clean Air Science Advisory Committee (CASAC) and staff recommendations in the regulatory process. After this decision, EPA is going to think twice about choosing a regulatory course difference than that recommended by CASAC and staff. On balance, I think that this is a bad thing and more evidence of the collateral damage from the extreme positions taken by the Bush administration. After all, while the Clean Air Act sets some boundaries, these are ultimately policy decisions that should be made by the President and his or her chosen staff, not by a committee no one’s heard of or low-level staff.

·                     Unlike the chaos created when the court vacated the CAIR regulations, the court appears to have learned its lesson. This time around, the court remanded the rule, but left the standard in place for now.

·                     The court’s decision to remand the public welfare standard will have implications for current efforts to implement the its Regional Haze Rule. The extent to which this decision throws Haze Rule implementation back to the drawing board may not be known for some time.

How many more cases can the Bush administration lose after it’s already out of office? At least one. Greenwire reports today about speculation that this decision means that the EPA rules regarding the nitrogen oxide NAAQS may also be in trouble.

The interesting question in all this is the extent to which the abysmal record of the Bush EPA in defending its decisions in the courts will damage EPA’s credibility and thus result in a long-term weakening of the deference given EPA by the courts. At this point, my assumption is that, in the long run, these cases will be seen as an aberration and courts will resume their prior practice of granting EPA substantial deference. Of course, whether that is a good thing or not is a separate question.

Section 115 of the Clean Air Act - A Useful Tool for Climate Change?

Posted on February 25, 2009 by Angus Macbeth

We are not going to have Congressional action on a regime for reducing greenhouse gas emissions by the time EPA will feel compelled to respond to the Supreme Court's direction in the Massachusetts case and announce whether CO2 emissions endanger public health or welfare. If endangerment is found under Section 109 or 202 of the Act, it appears to lead to ambient air quality standards for CO2 which are then to be met through state implementation plans. By controlling the sources of CO2 within its borders, no state is likely to be able to reduce CO2 to whatever ambient level is established. This is the practical result of the fact that greenhouse gases are a global problem not a local or regional problem. Moreover, the regulation of CO2 under other portions of the Act will likely follow. Perhaps the chaos likely to ensue from following this course will push Congress to pass legislation addressing greenhouse gases. But relying on Congress to do the sensible thing may well be an imprudent course.

 

Why not try an endangerment finding under Section 115 of the Act instead? It addresses international air pollution which is what GHG emissions are. It calls for a determination of endangerment in a foreign country from sources in the United States. The determination is deemed a finding under Sec.110(a)(2)(H)(ii) of the Act; that finding may be that the relevant SIP is substantially inadequate to comply with the requirements of the Act but need not be that it is inadequate to attain the NAAQS. The affected foreign country must be invited to appear at public hearings on appropriate revision of the SIP and the United States must be given reciprocal rights by the foreign country. Making the determination and establishing reciprocity would take EPA into comparatively unfamiliar territory; starting GHG reduction through state action would follow the path that the US has already started down.

The advantages of this approach that I see are, first, that it deals with the GHG issue as a global, or at least an international, problem rather than as a local or regional one. Second, it gives the states the opportunity to proceed with cap-and-trade regimes which I think will, in some form, be the Congressional solution. Third, it may be able to avoid introducing GHG regulation into other CAA programs such as New Source Review which may be hard to untangle if and when a cap-and-trade regime is established.

The disadvantages are that it is certainly not a perfect fit with a national cap-and-trade or GHG emission tax scheme which I view as the most rational approaches that Congress might enact (though the rationality of a tax scheme is much greater than the likelihood that Congress would embrace it). If you favor command and control regulation and the complexity of New Source Review, this is not the solution for you. There are also risks in what the courts may do in interpreting Section 115 which has rarely been subjected to judicial scrutiny.

In sum, I suggest Section 115 as the best of the ill-fitting options which the Clean Air Act offers for a rational approach to reducing GHG emissions.  

EPA's Roll-Back of Bush-Era Rules Appears to Begin in Earnest

Posted on February 13, 2009 by Seth Jaffe

While a lot of attention has been paid to whether EPA would reverse the Bush EPA decision denying California’s petition to regulate greenhouse gas emissions from mobile sources,  it is now clear even outside the climate change arena that life at EPA is going to be substantially different under the current administration.  As if evidence were really needed for that proposition, EPA announced this week that it was putting on hold the NSR aggregation rule that EPA had promulgated on January 15, 2009.

The rule, which had been long sought by industry, would have provided that nominally separate projects would only have to be combined – aggregated for NSR/PSD purposes – if  they are “substantially related.” It also would have created a rebuttable presumption that projects more than three years apart are not substantially related. Responding to a request from NRDC and the OMB memo asking agencies to look closely at rules promulgated before the transition but not yet effective, EPA concluded that the rule raises “substantial questions of law and policy.” Therefore, EPA postponed the effective date of the rule until May 18, 2009 and also announced that it was formally reconsidering the rule in response to the NRDC petition.

To those in industry, the aggregation rule was not a radical anti-environmental roll-back of environmental protection standards.  Rather, it was more of a common-sense approach towards making the NSR program simpler and clearer.  It is one of my pet peeves with the prior administration, however, that it gave regulatory reform a bad name.  

In any case, I feel as though I should open a pool regarding what will be the next Bush-era rule to be tossed overboard.  We surely won’t have to wait long for it to happen.

UPDATE ON NAAQS OZONE LITIGATION

Posted on December 18, 2008 by John Crawford

On March 27, 2008, the Environmental Protection Agency (EPA) announced the final Ozone NAAQS Rule which requires airborne concentrations of ozone to be lowered from 80 ppb (actually 84 ppb due to rounding allowances) to 75 ppb for both primary and secondary standards. Industrial and manufacturing groups balked at the more stringent standard, claiming it was unnecessary and would place an undue hindrance on economic development. In opposition to this viewpoint, environmental groups contend that the new standard fails to adequately protect human health and the environment and that the standard should be lower.

 

Not surprisingly, due to the contrasting views, the standard was challenged. Asserting that the Ozone NAAQS Rule was too stringent, the State of Mississippi filed a Petition for Review,  in Mississippi v. EPA, No. 08-1200 (D.C. Cir., filed May 23, 2008). Shortly thereafter, the Missouri Department of Natural Resources and a number of trade/industrial groups intervened on behalf of Mississippi. Environmental groups, led by the American Lung Association, Appalachian Mountain Club and Natural Resources Defense Council, also filed a challenge to the ozone standard in American Lung Association v. EPA, No. 08-1203 (D.C. Cir.) which was later consolidated with the Mississippi case.

 

The various arguments, both for and against the standard, have not yet been briefed. In fact, Harold Pizzetta, lead attorney for the State of Mississippi, has stated that the two sides have yet to come to an agreement on a briefing schedule, leading one to conclude that there is likely very little the two camps will agree on.  

 

The question as to why Mississippi led the charge/challenge against the new ozone standard is an interesting one. While current data suggest the new standard will have direct impacts on only 13 of Mississippi’s 82 counties, the counties impacted are among the leaders in the state’s economy. Among those Mississippi counties that would not meet the 75 ppb standard are DeSoto County, the state’s and one of the nation’s fast growing counties, and Jackson County, home to the state’s largest employer and numerous other manufacturing facilities. Mr. Pizzetta believes the cost of compliance with the standard – while specifically not a factor the Court may consider – provides justification for the state’s challenge.  Additionally, Pizzetta stated that scientific evidence suggests that the data used by EPA in setting the standard was flawed.   Moreover, Mississippi’s leaders believe the 75 ppb standard will be met in the short term if the Clean Air Interstate Rule (CAIR) is implemented. To that end, the state has joined with some of the same groups and entities that it opposes in the ozone litigation and requested that the D.C. Circuit stay the vacatur of CAIR.   

 

In opposition to Mississippi’s argument, the environmental groups will likely point to the work by the Clean Air Scientific Advisory Committee (CASAC) which recommended that the primary ozone standard be set within the range of 60 – 70 ppb.   In addition, it’s believed that EPA originally sought to set the standard within this range and was overruled by the White House.   Thus, EPA is left in a precarious situation in that the agency must justify why its standard is neither too strict nor too lenient.   The current view by a number of environmental litigators is that the current litigation will be decided on the scientific evidence and not on a constitutional argument, as the 1997 ozone NAAQS litigation was in the American Trucking case.

 

In regard to the actual timeframes for action set forth in the ozone rule, states must make initial designations of attainment/non-attainment by March 2009, with EPA making final designations by March 2010. Thereafter, State Implementation Plans (SIPs) must be submitted to EPA by 2013, with attainment to be achieved between 2014 and 2030, depending on severity. Based on the movement of the existing litigation, it’s doubtful a decision will be made prior to the time period set for final designations. Additionally, litigants do not believe the court will enter a stay of the new rule. 

 

As a result, states will be left with no choice but to make designations in conformity with the 75 ppb standard.

 

Article written by:   

            Gary Rikard

            Michael Caples

            Butler, Snow, O’Mara, Stevens & Cannada, PLLC

            P.O. Box 22567
            Jackson, MS 39225-2567

Environmental Appeals Board Tees Up Carbon Dioxide Issue to Obama Administration

Posted on December 4, 2008 by Stephen M. Bruckner

In a decision that will have far-reaching implications for coal-fired power plants, EPA's Environmental Appeals Board ("EAB") ruled on November 14, 2008 that EPA's Region 8 must reconsider whether carbon dioxide ("CO2") is a regulated air pollutant covered by the Clear Air Act's Prevention of Significant Deterioration ("PSD") permitting program. Because there is so little time left for EPA to finalize its decision, the EAB's ruling effectively drops this hot button issue squarely on the doorstep of the incoming Obama administration.

 

            The procedural posture of this case is a bit unusual. Deseret Power Electric Cooperative ("Deseret") operates a coal-fired power plant, the Bonanza Power Plant, on the Uintah and Ourah Indian Reservation in Utah. Deseret wants to build a new waste-coal-fired plant at the same location. The new plant needs a "PSD permit" to regulate its emissions under the Clean Air Act. A PSD permit requires the installation of "Best Available Control Technology", or "BACT", for regulated pollutants.

 

            Most PSD permits are issued by state environmental agencies. However, because Deseret's power plant is located on an Indian reservation, EPA's Region 8 is the permitting authority. EPA issued the PSD permit to Deseret on August 30, 2007. The Sierra Club, which had submitted comments to EPA on the proposed permit, appealed the permitting decision to the Environmental Appeals Board. Sierra Club argued that the permit violated the Clean Air Act because the Act requires BACT for each pollutant "subject to regulation" under the Act. [Clean Air Act §§ 165(a)(4), 168(3); 42 U.S.C. §§ 7475(a)(4), 7478(3)].

 

            The EAB rejected the Sierra Club's argument. The EAB carefully reviewed the Supreme Court's landmark decision in Massachusetts v. EPA, 549 U.S. 497 (2007), which held that CO2 is within the Clean Air Act's definition of "air pollutant". The EAB noted that the Massachusetts decision did not address whether carbon dioxide is a pollutant "subject to regulation" under the Clean Air Act. The EAB therefore rejected the Sierra Club's argument that the phrase "subject to regulation" has a plain meaning that requires Region 8 to establish a CO2 limit in Deseret's permit.

 

            But that was pretty much the end of the good news for EPA and Deseret. In making its permit decision on CO2, EPA Region 8 relied on prior EPA interpretations addressing when a pollutant is considered to be "regulated". The EAB ruled that the reasons cited by Region 8 for its decision were not sufficient. The EAB then sent the case back to Region 8 to 'reconsider whether or not to impose a CO2 BACT limit in light of the Agency's discretion to interpret, consistent with the CAA [Clean Air Act], what constitutes a "pollutant subject to regulation under the Act."' [Deseret decision at p. 63]. Recognizing the potential impact of its ruling and of Region 8's further consideration, the EAB observed that because the issue "has implications far beyond this individual permitting proceeding", Region 8 should decide whether it would be better to address the matter in "an action of nationwide scope". [Deseret decision, pp. 63-64].

 

            Clearly, then, the Sierra Club was denied the clear victory it sought; namely, to require BACT for carbon dioxide in all coal-fired power plant PSD permits. On the other hand, Deseret and other electric utilities seeking PSD permits are left hanging as to whether CO2 will be a regulated pollutant under the PSD program. Although EPA probably wants to resolve this case before the expiration of President Bush's term, as a practical matter, it simply cannot get it done in little more than a month. Thus, the incoming Administration must squarely confront an issue that could shape the climate change debate and, ultimately, energy policy in this country. EPA most likely will take the hint from the EAB and handle the matter through "an action of nationwide scope". How it turns out is anyone's guess, but it is fair to say that the new EPA will have more climate change hawks in policy positions than the current Agency.

Cut the Sprawl, Cut the Warming

Posted on October 7, 2008 by Jeff Thaler

For years, while Washington slept, most of the serious work on climate change has occurred in the states, and no state has worked harder than California. The latest example of California’s originality is a new law — the nation’s first — intended to reduce greenhouse gas emissions by curbing urban sprawl and cutting back the time people have to spend in their automobiles.

Passenger vehicles are the biggest single source of carbon dioxide in California, producing nearly one-third of the total. Meanwhile, the number of miles driven in California has increased 50 percent faster than the rate of population growth, largely because people have to drive greater distances in their daily lives.

The new law has many moving parts, but the basic sequence is straightforward. The state’s Air Resources Board will determine the level of emissions produced by cars and light trucks, including S.U.V.’s, in each of California’s 17 metropolitan planning areas. Emissions-reduction goals for 2020 and 2035 would be assigned to each area. Local governments would then devise strategies for housing development, road-building and other land uses to shorten travel distances, reduce driving and meet the new targets.

One obvious solution would be to change zoning laws so developers can build new housing closer to where people work. Another is to improve mass transit — in woefully short supply in California — so commuters don’t have to rely so much on cars.

The bill contains significant incentives, including the promise of substantial federal and state money to regions whose plans pass muster. In addition, and with the consent of the environmental community, the state will relax various environmental rules to allow “infill” — higher-density land use in or near cities and towns.

The bill’s architect, State Senator Darrell Steinberg, worked closely with developers and environmental groups like the Natural Resources Defense Council. The measure is the latest in a string of initiatives from the California Legislature, including a 2002 law that would greatly reduce carbon emissions from automobiles, and a 2006 law requiring that one-fifth of California’s energy come from wind and other renewable sources.

Given California’s size, these and other initiatives will help reduce global greenhouse gas emissions. Even more progress would be made if others follow. New York and 15 other states have already said they will adopt California’s automobile emissions standards when the federal government gives them the green light — which the Bush administration has stubbornly refused to do.

There is, of course, no substitute for federal action or for American global leadership on climate change, both of which the next president will have to deliver.