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.

EPA IN THE DC CIRCUIT - WHERE HAS ALL THE DEFERENCE GONE?

Posted on September 23, 2008 by Linda Bochert
  • June 2007: DC Circuit Hands EPA and Industry Two Defeats:  Court Rejects EPA MACT Air Rules for Commercial and Industrial Boilers and Plywood and Composite Wood Products
  • February and July 2008: DC Circuit to EPA: Multi-Pollutant Strategy for Interstate Clean Air Fails to Meet Clean Air Act Requirements

Several recent cases have raised the following question in my mind: can EPA win an air case in the DC Circuit?

They teach us in law school that governmental agencies can expect a reasonable degree of deference from a reviewing court when exercising statutory authority to develop regulations to implement Congressional directives. States and entities subject to EPA’s regulations need something to rely on, and expect EPA and the Courts to provide some degree of predictability and certainty in the application of the regulations. Yet deference is nowhere to be found in the DC Circuit’s recent reviews of several EPA regulations implementing the Clean Air Act (CAA). And in each of the cases discussed below, the Court opted for the most dramatic remedy – vacatur of the offending rule.

These decisions can be sliced and diced from a variety of perspectives. At the least I think they raise vexing concerns about deference and choice of remedy. What do you think – are these the trend or the anomalies? Is this a real concern or much ado about nothing?

 

Here are my examples:

 1. June 2007: Commercial and Industrial Boiler MACT Rules

On June 8, 2007, in Natural Resources Defense Council v. EPA, No. 04-1385 (D.C. Cir. June 8, 2007) (NRDC I) the DC Circuit struck down two EPA rules setting air toxics limitations for commercial and industrial boilers and solid waste incinerators: National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (Boilers Rule) and Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (CISWI Definitions Rule).

At issue were the emission standards for hazardous air pollutants (HAPs) emitted from commercial and industrial solid waste incinerators and industrial boilers and the appropriate setting of the Maximum Achievable Control Technology (MACT) standard.

The challenge was brought by environmental petitioners Natural Resources Defense Council, Sierra Club, and the Environmental Integrity Project. The Court agreed with them that EPA had impermissibly narrowed the definition of “commercial or industrial waste” in the CISWI Definitions Rule in violation of the plain language of section 129 of the Clean Air Act. Because the Boilers Rule was dependent on that same definition, both rules were rejected by the Court. EPA and industry representatives, including the Coalition for Responsible Waste Incineration, Utility Air Regulatory Group, and Utility Solid Waste Activities Group, contended that EPA’s definition was within the agency’s discretion, but the Court was not persuaded.

 

2. June 2007: Plywood and Composite Wood Products MACT Rules

On June 19, 2007, the DC Circuit dealt a second blow in a challenge to EPA’s rules to regulate HAPs from processing plywood and composite wood products (PCWP). Also named Natural Resources Defense Council v. EPA, No. 04-1323 (D.C. Cir. June 19, 2007) (NRDC II), this case was also brought by the Natural Resources Defense Council, Sierra Club and the Environmental Integrity Project against EPA. EPA was supported by industry groups, including the American Forest and Paper Association.

The two rules involved in this case were the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products (2004 Rule) and the National Emission Standards for Hazardous Air Pollutants: Plywood and Composite Wood Products; List of Hazardous Air Pollutants, Lesser Quantity Designations, Source Category List (2006 Rule), with the primary challenge to the 2006 Rule. Example of operations regulated by these rules include sawmills with lumber kilns, hardwood and softwood plywood and veneer plants, particleboard/fibreboard and other reconstituted wood product plants, and engineered wood product plants.

Once again, the issue was the appropriate MACT standard. In this case the pivotal elements were EPA’s decisions in the 2004 Rule to create a “low-risk subcategory” and in the 2006 Rule to extend the compliance deadline from October 2007 to October 2008.

 

3. February 2008: Clean Air Mercury Rule (CAMR)

On February 8, 2008, the DC Circuit struck down CAMR in New Jersey v. EPA, No. 05-1097 (D.C. Cir. Feb. 8, 2008). CAMR was the result of EPA’s decision to remove oil and coal-fired electric utility steam generating units (EGUs) from the list of sources of hazardous air pollutants (HAPs) and instead regulate mercury emissions from these EGUs through a cap-and-trade program similar to the Clean Air Interstate Rule (CAIR).

In response, New Jersey, and several other states, municipal governments and environmental groups, challenged CAMR claiming that EPA had no authority to delist the EGUs without providing a “specific finding” under section 112(c)(9) of the CAA. Because EPA did not make this specific finding, the Petitioners claimed that not only was the delisting invalid, but CAMR was also flawed because it was based upon this delisting decision. The DC Circuit agreed with the Petitioners, vacating both the delisting rule and CAMR.

 

4. July 2008: Clean Air Interstate Rule (CAIR)

On July 11, 2008, the D.C. Circuit vacated CAIR in North Carolina v. EPA, No. 05-1244 (D.C. Cir. July 11, 2008).

The multi-party challenge to CAIR was brought by the state of North Carolina, several electric utilities (SO2 Petitioners), specific electric utilities in Texas, Florida and Minnesota, one municipality, and the Florida Association of Electric Utilities (FAEU). The electric utilities in Texas, Florida and Minnesota challenged CAIR’s applicability to them because of their location and emissions amounts. North Carolina, the SO2 Petitioners, and FAEU brought substantive challenges to the regulation, claiming that EPA did not have the discretion to act as it did, or it did so unreasonably.

The Court agreed with North Carolina and the SO2 Petitioners, holding that CAIR failed to meet the requirements of the CAA and finding “EPA’s approach – regionwide caps with no state-specific quantitative contribution determinations or emissions requirements – is fundamentally flawed.”

 Is vacatur the best remedy?

 In all four of these cases, the Court chose to vacate rather than remand the rules. The dissent in the CISWI/Boilers Rules case unsuccessfully argued that remand without vacating the rules was preferable“[b]ecause the rules would ensure greater protection to public health and the environment during the time EPA will need to develop and promulgate new rules.” The majority was unpersuaded and preferred no rules at all. Is that really the best option for the environment?

And the language the Court uses implies more than a lack of deference. In vacating CAIR, a decision described as “unexpected” by both proponents and opponents, the Court described the rule as “fundamentally flawed” and directed EPA to “redo its analysis from the ground up.” In vacating CAMR, the Court characterized EPA as “deploy[ing] the logic of the Queen of Hearts.” What’s going on here?

Kansas Agency Denies Air Quality Construction Permit for Coal-Fired Generating Units Based Solely on Projected CO2 Emissions

Posted on February 19, 2008 by Charles Efflandt

On October 18, 2007, the head of the Kansas Department of Health and Environment (KDHE), Secretary Roderick Bremby, denied an air quality permit application for two proposed 700-megawatt coal-fired generating units to be constructed in Holcomb, Kansas. The application was submitted by Sunflower Electric Power Company as part of a planned $3.6 billion expansion of an existing facility. The Secretary’s decision to deny the permit was based solely on the projected carbon dioxide emissions from these units and the impact of such emissions on climate change. Carbon dioxide is not specifically regulated as an air pollutant in Kansas.

In announcing his decision, which rejected the recommendation of agency staff that the permit be granted, the Secretary stated “I believe it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment and health if we do nothing.” The expanded facility was projected to release an estimated 11 million tons of carbon dioxide annually. The Secretary did not indicate at what level projected carbon dioxide emissions would, in his opinion, threaten human health and the environment. Thus, the Secretary left open the question of how other CO2 emitting facilities would be regulated in Kansas in the future. Although a number of states have entered into regional initiatives or enacted legislation designed to reduce greenhouse gas emissions over time, it is believed that KDHE’s outright denial of an air quality permit based solely on perceived “excessive” emissions of an unregulated greenhouse gas is a first in the nation.

The cited legal support for the decision is an opinion of the Kansas Attorney General that, notwithstanding specific statutes or rules regulating air emissions, K.S.A. 65-3012 gives KDHE the broad authority to take any permitting or other action deemed necessary should the Secretary make a factual determination that a particular emission constitutes an air pollutant and that such emissions threaten health or the environment. The “factual determination” supporting the Secretary’s conclusion that carbon dioxide is an air pollutant and that this particular facility’s projected carbon dioxide emissions would constitute a threat to health and the environment is not apparent from the permit denial decision.

On November 16, 2007, Sunflower Electric Power Corporation filed two lawsuits seeking to overturn KDHE’s permit denial decision challenging the legal authority for the agency’s decision.

Not surprisingly, the KDHE’s permit denial decision has generated substantial controversy. A media campaign was immediately launched by those opposing the KDHE’s decision. The theme of that campaign is that the Secretary’s claimed authority could logically be extended to other facilities and potentially other unregulated emissions to the general detriment of the state and its ability to attract and retain business.

In a subsequent action perceived as an attempt to diffuse this criticism, the Secretary announced the decision to approve an air quality permit for an ethanol plant, notwithstanding the facility’s carbon dioxide emissions. Although the projected CO2 emissions from the ethanol facility are substantially less than those of the proposed coal-fired generating plant, the KDHE’s approval of the ethanol plant permit did not elaborate on the specific factual and scientific bases for distinguishing the facilities. Thus, it remains unclear in Kansas what quantity of projected carbon dioxide emissions may exceed the unspecified level deemed by KDHE to constitute an unacceptable global warming threat.

State law-makers in both chambers of the legislature are presently considering several bills directed at the Secretary’s permit denial decision. Provisions of the various bills include legislation specifically “over-turning” the Secretary’s decision, the enactment of phased-in limitations on CO2 emissions with a “carbon tax” penalty for violators, and a variety of alternative energy incentives and requirements. Most of the bills being considered are being opposed by the governor and environmental groups as being hastily conceived and inadequate to meet the future health and regulatory challenges of greenhouse gas emissions in the state.

For more information please contact Charles Efflandt, practice group leader of the Environmental and Natural Resources team, Foulston Siefkin L.L.P., Wichita, Kansas http://www.foulston.com.

California v. U.S. EPA--Fighting for the Last Word on Mobile Source Greenhouse Gas Emissions

Posted on February 19, 2008 by Lee A. DeHihns, III

Following the United States Supreme Court’s landmark decision in Massachusetts v. EPA, deciding that greenhouse gases are a pollutant under the Clean Air Act, a federal-state skirmish has emerged in the climate change arena over mobile source emissions. The United States Government estimates that the transportation sector accounts for approximately one-third of all greenhouse gas emissions in the U.S. Over the past months, the question of how to reduce those emissions has evolved into a dramatic political and legal battle, pitting California’s Governor Arnold Schwarzenegger against U.S. President George Bush. 

The stage for this tussle was set long ago when Congress adopted the federal Clean Air Act and included in the law a special provision for California. Specifically, Section 209(a) of the Clean Air Act prohibits individual states from adopting emission standards for new motor vehicles. However, in recognition of California’s unique smog problems, a subsection (b) was added to enable California to adopt standards more stringent than federal standards so long as it applies for and obtains a waiver from the U.S. EPA. As one court recently explained, under Section 209(b), “Congress has essentially designated California as a proving ground for innovation in emission control regulations.” Other states are then free to adopt California’s standards pursuant to Section 177 of the Clean Air Act, so long as the standards are adopted at least two years before the model year that they regulate. 

In 2002, California invoked its unique Clean Air Act authority to address greenhouse gas emissions from mobile sources. In particular, the State passed AB 1493 requiring the California Air Resources Board to develop and adopt regulations for the greenhouse gas emissions of passenger automobiles and light duty trucks. In September of 2004, the Air Resources Board adopted standards that apply to such vehicles beginning with model year 2009. As required by the Clean Air Act, California then requested a waiver from the U.S. EPA so that the standards could enter into force. While the waiver request was pending, no less than sixteen other states lined up to adopt California’s standards—for all practical purposes, the California standards were poised to become the de facto national standard.  

Automobile manufacturers challenged those regulations in federal courts in both Vermont and California, arguing that the state automobile emission standards for greenhouse gases constituted fuel efficiency standards, and that fuel efficiency standards are exclusively regulated by the federal government under the Environmental Policy and Conservation Act (“EPCA”).[1] Both courts rejected the manufacturers’ challenges, deciding that federal law did not preempt California’s ability to affect fuel economy through the regulation of greenhouse gas emissions from automobiles, so long as the U.S. EPA granted a waiver under the Clean Air Act—the stage was set for a showdown between California and the U.S. EPA.

The U.S. EPA played its hand slowly. During the summer of 2007, the U.S. EPA held hearings on California’s waiver request. Perhaps foreshadowing its upcoming decision on the request, the U.S. EPA then announced in the fall that it would begin its own “Rulemaking To Address Greenhouse Gas Emissions From Motor Vehicles,” planning for the adoption of federal regulations by October 2008. Finally, the shot was fired on December 19, 2007, when Stephen Johnson, the U.S. EPA Administrator, held a press conference announcing his agency would not grant a waiver to California’s regulation. At the same time, President Bush signed a new energy bill, the Energy Independence and Security Act of 2007, requiring a fleet average of thirty-five miles per gallon by 2020 and an annual production of thirty-six billion gallons of renewable fuels by 2022.[2] In making the announcement, Johnson specifically cited Bush’s recent signing of the bill and said, “The Bush administration is moving forward with a clear national solution, not a confusing patchwork of state rules. I believe this is a better approach than if individual states were to act alone.”

Retaliation came swiftly. Little more than two weeks after Johnson’s announcement, California, along with 15 other states and five environmental groups, petitioned the Ninth Circuit on January 2, 2008, for review of the waiver denial.  In the lawsuit, California will need to make the case that its regulation under Section 209 was necessary to “meet compelling and extraordinary conditions.”  As a coastal state with limited fresh water resources, the effect of climate change on California may indeed be severe, involving rising sea levels, a reduction in the Sierra snow pack, and higher temperatures that would exacerbate the state’s ozone nonattainment problem, which is already the worst in the nation. A recent Stanford University study added fodder to this argument when it found Californians’ health will be disproportionately affected by greenhouse gas emissions, because the state is home to six of the most polluted cities in the United States. California will also need to make the case under section 209, that its standards “will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards.” To that end, the California Air Resources Board released a January 2, 2008, assessment that concludes the federal law, even when fully implemented, will not be as effective as California’s standards at reducing greenhouse gas emissions from new vehicles. Even if California is successful, California’s regulation will have to be modified as it was to apply to 2009 model cars—models that will shortly be coming to market. 

The EPA’s first legal maneuver in response to California’s petition may be to request a transfer from the Ninth Circuit to the more agency-friendly D.C. Circuit. Most challenges of EPA regulations must be filed in the D.C. Circuit—the relevant jurisdictional trigger being whether the action has “nationwide scope or effect.”  While the issue of the waiver makes its way through the courts, the U.S. EPA’s rulemaking will also go forward. To meet its goal of final action by October 2008, the U.S. EPA will have to move quickly, with the public comment period coming by summer 2008 at the latest. 

As these battles are fought, looming on the horizon is a general election in November, and a new federal administration beginning in January of 2009. If the U.S. EPA adopts regulations in October 2008 that do not go as far as the California standards, yet another legal challenge seems almost inevitable, if for no other reason than to stall any final rule until the administration changeover. When the dust does settle, presumably in 2009, the road to mobile source emission reductions will finally be paved.

Michèle Corash is a partner in the international law firm of Morrison & Foerster LLP and a member of the firm’s environmental law practice group. She served as General Counsel of the United States Environmental Protection Agency (EPA) from 1979 to 1982 and previously as Deputy General Counsel for the U.S. Department of Energy and Special Assistant to the Chairman of the Federal Trade Commission. Ms. Corash has consistently been listed in American Lawyer’s Corporate Counsel among the “Best Lawyers in America for Environmental Law” and in numerous other publications as being at the top of her field. She represents companies on a broad range of state, national and international environmental issues and claims regarding exposure to toxic substances. With the experience of being a former General Counsel of the EPA, Ms. Corash is well versed, and has been for many years, in the evolving area of clean technology, renewable resources and climate change. She advises clients on the many issues now facing corporations as they face the challenges of new technologies, infrastructures, markets and regulatory regimes.

Contact information: mcorash@mofo.com or (415) 268-7124



[1] Adopted in 1975, EPCA provides for the establishment of national corporate average fuel economy (“CAFÉ”) standards that apply to all passenger automobiles and light duty trucks.

[2] Coincidentally, at the same time, the European Commission adopted a proposal for legislation to dramatically reduce the average carbon dioxide (“CO2”) emissions of new passenger cars by 2012. If adopted by the European Parliament, the proposal requires, by 2012, a fleet average of 130 grams of CO2 emissions per kilometer, with another 10 grams per kilometer reduction from alternative sources such as biofuels and more efficient air-conditioning. Considering Europe’s cars currently emit on average 160 grams of CO2 per kilometer, this represents an almost twenty percent reduction of CO2 emissions in four years. 

California v. U.S. EPA--Fighting for the Last Word on Mobile Source Greenhouse Gas Emissions

Posted on January 8, 2008 by Michèle Corash

Following the United States Supreme Court’s landmark decision in Massachusetts v. EPA, deciding that greenhouse gases are a pollutant under the Clean Air Act, a federal-state skirmish has emerged in the climate change arena over mobile source emissions. The United States Government estimates that the transportation sector accounts for approximately one-third of all greenhouse gas emissions in the U.S. Over the past months, the question of how to reduce those emissions has evolved into a dramatic political and legal battle, pitting California’s Governor Arnold Schwarzenegger against U.S. President George Bush. 

The stage for this tussle was set long ago when Congress adopted the federal Clean Air Act and included in the law a special provision for California. Specifically, Section 209(a) of the Clean Air Act prohibits individual states from adopting emission standards for new motor vehicles. However, in recognition of California’s unique smog problems, a subsection (b) was added to enable California to adopt standards more stringent than federal standards so long as it applies for and obtains a waiver from the U.S. EPA. As one court recently explained, under Section 209(b), “Congress has essentially designated California as a proving ground for innovation in emission control regulations.” Other states are then free to adopt California’s standards pursuant to Section 177 of the Clean Air Act, so long as the standards are adopted at least two years before the model year that they regulate. 

In 2002, California invoked its unique Clean Air Act authority to address greenhouse gas emissions from mobile sources. In particular, the State passed AB 1493 requiring the California Air Resources Board to develop and adopt regulations for the greenhouse gas emissions of passenger automobiles and light duty trucks. In September of 2004, the Air Resources Board adopted standards that apply to such vehicles beginning with model year 2009. As required by the Clean Air Act, California then requested a waiver from the U.S. EPA so that the standards could enter into force. While the waiver request was pending, no less than sixteen other states lined up to adopt California’s standards—for all practical purposes, the California standards were poised to become the de facto national standard.  

Automobile manufacturers challenged those regulations in federal courts in both Vermont and California, arguing that the state automobile emission standards for greenhouse gases constituted fuel efficiency standards, and that fuel efficiency standards are exclusively regulated by the federal government under the Environmental Policy and Conservation Act (“EPCA”).[1] Both courts rejected the manufacturers’ challenges, deciding that federal law did not preempt California’s ability to affect fuel economy through the regulation of greenhouse gas emissions from automobiles, so long as the U.S. EPA granted a waiver under the Clean Air Act—the stage was set for a showdown between California and the U.S. EPA.

The U.S. EPA played its hand slowly. During the summer of 2007, the U.S. EPA held hearings on California’s waiver request. Perhaps foreshadowing its upcoming decision on the request, the U.S. EPA then announced in the fall that it would begin its own “Rulemaking To Address Greenhouse Gas Emissions From Motor Vehicles,” planning for the adoption of federal regulations by October 2008. Finally, the shot was fired on December 19, 2007, when Stephen Johnson, the U.S. EPA Administrator, held a press conference announcing his agency would not grant a waiver to California’s regulation. At the same time, President Bush signed a new energy bill, the Energy Independence and Security Act of 2007, requiring a fleet average of thirty-five miles per gallon by 2020 and an annual production of thirty-six billion gallons of renewable fuels by 2022.[2] In making the announcement, Johnson specifically cited Bush’s recent signing of the bill and said, “The Bush administration is moving forward with a clear national solution, not a confusing patchwork of state rules. I believe this is a better approach than if individual states were to act alone.”

Retaliation came swiftly. Little more than two weeks after Johnson’s announcement, California, along with 15 other states and five environmental groups, petitioned the Ninth Circuit on January 2, 2008, for review of the waiver denial.  In the lawsuit, California will need to make the case that its regulation under Section 209 was necessary to “meet compelling and extraordinary conditions.”  As a coastal state with limited fresh water resources, the effect of climate change on California may indeed be severe, involving rising sea levels, a reduction in the Sierra snow pack, and higher temperatures that would exacerbate the state’s ozone nonattainment problem, which is already the worst in the nation. A recent Stanford University study added fodder to this argument when it found Californians’ health will be disproportionately affected by greenhouse gas emissions, because the state is home to six of the most polluted cities in the United States. California will also need to make the case under section 209, that its standards “will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards.” To that end, the California Air Resources Board released a January 2, 2008, assessment that concludes the federal law, even when fully implemented, will not be as effective as California’s standards at reducing greenhouse gas emissions from new vehicles. Even if California is successful, California’s regulation will have to be modified as it was to apply to 2009 model cars—models that will shortly be coming to market. 

The EPA’s first legal maneuver in response to California’s petition may be to request a transfer from the Ninth Circuit to the more agency-friendly D.C. Circuit. Most challenges of EPA regulations must be filed in the D.C. Circuit—the relevant jurisdictional trigger being whether the action has “nationwide scope or effect.”  While the issue of the waiver makes its way through the courts, the U.S. EPA’s rulemaking will also go forward. To meet its goal of final action by October 2008, the U.S. EPA will have to move quickly, with the public comment period coming by summer 2008 at the latest. 

As these battles are fought, looming on the horizon is a general election in November, and a new federal administration beginning in January of 2009. If the U.S. EPA adopts regulations in October 2008 that do not go as far as the California standards, yet another legal challenge seems almost inevitable, if for no other reason than to stall any final rule until the administration changeover. When the dust does settle, presumably in 2009, the road to mobile source emission reductions will finally be paved.

Michèle Corash is a partner in the international law firm of Morrison & Foerster LLP and a member of the firm’s environmental law practice group. She served as General Counsel of the United States Environmental Protection Agency (EPA) from 1979 to 1982 and previously as Deputy General Counsel for the U.S. Department of Energy and Special Assistant to the Chairman of the Federal Trade Commission. Ms. Corash has consistently been listed in American Lawyer’s Corporate Counsel among the “Best Lawyers in America for Environmental Law” and in numerous other publications as being at the top of her field. She represents companies on a broad range of state, national and international environmental issues and claims regarding exposure to toxic substances. With the experience of being a former General Counsel of the EPA, Ms. Corash is well versed, and has been for many years, in the evolving area of clean technology, renewable resources and climate change. She advises clients on the many issues now facing corporations as they face the challenges of new technologies, infrastructures, markets and regulatory regimes.

Contact information: mcorash@mofo.com or (415) 268-7124



[1] Adopted in 1975, EPCA provides for the establishment of national corporate average fuel economy (“CAFÉ”) standards that apply to all passenger automobiles and light duty trucks.

[2] Coincidentally, at the same time, the European Commission adopted a proposal for legislation to dramatically reduce the average carbon dioxide (“CO2”) emissions of new passenger cars by 2012. If adopted by the European Parliament, the proposal requires, by 2012, a fleet average of 130 grams of CO2 emissions per kilometer, with another 10 grams per kilometer reduction from alternative sources such as biofuels and more efficient air-conditioning. Considering Europe’s cars currently emit on average 160 grams of CO2 per kilometer, this represents an almost twenty percent reduction of CO2 emissions in four years.