Slides and Audio from Reed Smith's Quarterly Environmental and Energy Law Resource Telesiminar

This post was written by David Wagner.

On Wednesday, Reed Smith held its quarterly environmental and energy law resource teleseminar and the slides and audio are available. We discussed current or emerging issues under five general categories. The categories and discussion included:

  • Legislation/Rules — We reviewed the key points and effective dates related to the New Source Performance Standards for the oil and gas industry as well as for utilities and refineries.
  • Litigation — A big environmental litigation issue involving the oil and gas industry is the aggregation of air emissions from diverse sources and we discussed recent challenges to air permits involving this issue. We also discussed the U.S. Supreme Court's recent denial of certiorari in Morrison Enterprises v. Dravo Corporation and the implications on CERCLA cost recovery and contribution claims.
  • Policy and Technology — On this front, our presentation focused on a recent DOE report on the need for additional disclosure, and the policy implications related to the interplay between the U.S. Environmental Protection Agency and Federal Energy Regulatory Commission.
  • International Issues — Here we provided a brief preview of the upcoming COP in South Africa and the fate of the Kyoto Protocol
  • State Issues — On the state level, we focused on California and summarized recent developments regarding the implementation of the California Global Warming Solutions Act (aka AB32) and California's “Green Chemistry” Initiative.
     

Join Us for Reed Smith's Environmental and Energy Law Resource Teleseminar on October 5

This post was written by David Wagner.

We expanded the scope of our quarterly teleseminar to include hot topics in environmental and energy law and invite you to join us. It’s on Wednesday, October 5, 2011 from 12 to 1 pm ET. There’s no cost but we do ask you to R.S.V.P. At the teleseminar, we’ll provide a regulatory update on five major legal developments in the environmental and energy law world:

  • Legislation/Rules — The hottest issue in new rules is the New Source Performance Standards for the oil and gas industry as well as for utilities and refineries. Our team will review the high points and effective dates, what industry should look out for, and likely challenges.
  • Litigation — A current issue in litigation, especially in the oil and gas industry, is aggregation of air emissions from diverse sources. We will discuss recent challenges to air permits involving this issue. Also, our team is challenging a CERCLA 107/113 appeal for cert to the United States Supreme Court – tune in to hear the latest in that area.
  • Policy and Technology — The policy framework behind fracking is in its infancy and studies to determine or influence policy framework abound. Our team will discuss recent DOE and USGS papers, as well as industry studies, concerning emissions. In addition, we will touch on the significance of the U.S. Supreme Court in Sackett v. EPA. We will also tackle the policy implications of interplay between the U.S. Environmental Protection Agency and Federal Energy Regulatory Commission.
  • International Issues — In the international arena, all eyes are on the upcoming COP in South Africa and the fate of the Kyoto Protocol. Our team will discuss these issues, as well as their implications for EU business and EU greenhouse gas regulations.
  • State Issues — We will focus on California with a summary of recent developments regarding the implementation of the California Global Warming Solutions Act (aka AB32) and California's “Green Chemistry” Initiative.

To sign up, please email Sandy Petrakis.

USEPA Delays Proposed Greenhouse Gas Emissions Rule for Power Plants

This post was written by Jennifer Smokelin.

On June 13, the U.S. Environmental Protection Agency (USEPA) indicated that it would take additional time to review input on proposed greenhouse gas emissions limits on New Source Performance Standards for new and existing power plants. The Agency stated that it will propose the new rules by September 30, 2011, instead of the original deadline of July 26. USEPA still plans to finalize the rules in late May 2012.

New Source Performance Standards are technology-based emissions limits issued under Section 111 of the Clean Air Act that apply to new and in some cases existing facilities in a specific industrial sector. NSPSs are a set of rules distinct from (and potentially broader than) the Tailoring Rule, the set of regulations now in effect to control greenhouse gases from large industrial sources. The proposed NSPS will apply to all sources within a source category and, in this case, the source category is power plants. Currently, under the Tailoring Rule, USEPA only requires the largest industrial facilities to obtain prevention of significant deterioration permits under new source review provisions of the Clean Air Act when they expand or make modifications that increase emissions. Those permits require the facilities to install best available control technology, which is determined for each individual facility, while the NSPS impose uniform emissions limits for the industry nationwide.

The extension will also not affect USEPA's deadline to propose performance standards for petroleum refineries by December 15. As we discussed on the blog in December 2010, this is a separate settlement agreement that requires USEPA to issue the final petroleum refinery rule by November 15, 2012 (See American Petroleum Institute v. EPA, D.C. Cir., No. 08-1277, settlement reached December 23, 2010).

Second of Three Teleseminars on Marcellus Shale Clean Air Permits Examined Greenhouse Gas Issues

This post was written by David Wagner.

This week, Reed Smith teamed up with AECOM to present its second seminar on clean air permit issues related to oil and gas development in the Marcellus Shale. At the event, we discussed greenhouse gas (GHG) emission sources, GHG reporting requirements, the federal Tailoring Rule (including Prevention of Significant Deterioration and Title V issues), New Source Performance Standards, and single stationary source determinations for the oil and gas industry. If you missed it, here are the slides and audio. The event featured Jennifer Smokelin and David Wagner of Reed Smith and Tom Bianca of AECOM.

At the first teleseminar, we discussed the Pennsylvania Department of Environmental Protection’s (DEP) air permitting process, focusing on the general permits applicable to oil and gas activities (GP-5, GP-9, GP-11), requests for determinations, and the permit exemption list, as well as DEP’s proposals to narrow the oil and gas permit exemption list and modify GP-5. Check back for details on the remaining teleseminar that will address aggregation issues.

Along with Other Emissions, USEPA's Proposed Standards for Coal- and Oil-Fired Electric Utility Boilers Target Mercury, Particulate Matter and Carbon Dioxide

This post was written by Mark Mustian.

On March 16, 2011, the U.S. Environmental Protection Agency (USEPA) proposed a new regulation in its decades-long attempt to regulate air toxics emissions and criteria air pollutants from large coal- and oil-fired boilers used in electricity generation. While this is USEPA’s first national standard to reduce mercury emissions from electric utility boilers, the proposal would also regulate other air toxics, especially particulate matter, and would reduce carbon dioxide emissions. In addition, the proposed regulation would modify New Source Performance Standards for electric utility boilers. This post provides some background information, a summary of the proposed regulation, a brief analysis of its costs and benefits, and the next steps.

 

How We Got Here

Back in December 2000, USEPA announced a finding that it was “appropriate and necessary” to regulate coal- and oil-fired electric utilities under Section 112 of the Clean Air Act. This finding, known as the Utility Air Toxics Determination, triggered a requirement for USEPA to propose regulations to control air toxics emissions. A few years later, on March 15, 2005, USEPA issued the final Clean Air Mercury Rule (CAMR). It established “standards of performance” limiting mercury emissions from new and existing utilities, and created a market-based cap-and-trade program to reduce nationwide utility emissions of mercury in two phases.

At the same time that USEPA issued CAMR, it issued a determination that regulation of electric-generating utilities was not “appropriate and necessary” under Section 112. CAMR instead regulated emissions under Section 111 of the Clean Air Act. The two regulatory actions were appealed by various parties, and CAMR was vacated February 9, 2008, by the United States Court of Appeals for the District of Columbia Circuit. The court also vacated USEPA’s determination that regulation under Section 112 of the Clean Air Act was not required. Last week’s proposed regulation is intended to replace the vacated CAMR, and has been proposed in compliance with the December 2000 “appropriate and necessary” determination.

In addition to replacing the 2005 CAMR, the proposed regulation replaces amendments to
the New Source Performance Standards (NSPS) for particulate matter (PM), sulfur dioxide (SO2), and nitrogen oxides (NOx) that were promulgated February 27, 2006. During the course of litigation over this regulation, USEPA requested, and was granted, voluntary remand without vacatur.

Summary of the Proposed Regulation

The proposed regulation would generally apply to existing and new coal- and oil-fired units that sell electricity equal to more than one-third of their potential electric output capacity, and greater than 25 MWe electrical output to any utility power distribution system. The regulation would also apply to units that burn solid oil-derived fuel (petroleum coke-fired) and units that burn processed coal refuse. In addition, the regulation would apply to integrated gasification combined cycle (IGCC) units that utilize coal or petroleum coke as their energy source.

The proposed regulation would set emission limitations on coal-fired units for total particulate matter (a surrogate for toxic non-mercury metals), hydrogen chloride (a surrogate for toxic acid gases) and mercury. For liquid-oil fired units, the regulated pollutants would be total hazardous air pollutant (HAP) metals (determined through fuel analysis), hydrogen chloride, and hydrogen fluoride. All subcategories would also have a work practice standard for organic HAPs, including emissions of dioxins and furans.

For the revised NSPS, USEPA has an unusual proposed plan. For facilities that begin construction between February 28, 2005 and one day after publication of the proposed new rule, the emission standards set in the 2006 final rule would apply. For new construction after that date, the proposed regulation would apply amended standards for PM, SO2 and NOx.

The regulation contains numerous other provisions, including alternate limitations for demonstrating compliance; new monitoring and testing requirements; new Startup, Shutdown and Malfunction requirements; and the ability to demonstrate compliance through emissions averaging.

The regulation would also require installation of a mixture of control systems. USEPA does not identify a specific set of controls to be installed, as this will be dependent upon the type of fuel being burned, the age of the boiler, the type of boiler, and other site-specific factors. USEPA has identified the types of technologies that are applicable, including wet and dry scrubbers, dry sorbent injection systems, activated carbon injection systems, and baghouses. Each facility will need to make an individual determination of the appropriate control technologies for its system.

Brief Analysis of the Real Costs and Benefits

The proposed regulation is somewhat misleading. The proposal is considered by many to simply be a regulation of mercury emissions by coal-fired power plants which is intended to replace the 2005 Clean Air Mercury Rule. However, an analysis of the facts behind the regulation make it clear that the expected benefits from mercury controls are minimal compared with the other claimed benefits from the regulation. In fact, analysis of the mercury control section of the regulation alone shows a very poor cost-to-benefit ratio. Depending upon the discount rate selected, the estimated benefits from mercury controls are in the range of $450,000 to $5.9 million per year. However, the annual costs for mercury controls are much higher. USEPA puts the annualized costs for Activated Carbon Injection (ACI) control at more than $2 billion per year. ACI technology would only be required for control of mercury emissions.

The main benefit from the new regulation comes from control of particulate matter, in particular, control of very small particles that are less than 2.5 microns in diameter (PM2.5). USEPA estimates that economic benefits from control of PM2.5 would range from $53 billion to $140 billion per year, dwarfing the costs of the new regulation. USEPA obtained these benefits by determining that the controls would prevent 6,800 to 17,000 premature deaths, 11,000 nonfatal heart attacks, 5,300 hospitalizations for respiratory and cardiovascular diseases, 850,000 lost work days and 5.1 million days when adults restrict normal activities because of respiratory symptoms exacerbated by PM2.5. It is interesting to note, however, that USEPA is not specifically regulating PM2.5, but particulate matter in general. The main reason for this is the difficulty in accurately sampling and analyzing particles of that size.

Another interesting and controversial finding (at least in today’s political atmosphere) by USEPA is that the proposed regulation would result in $570 million per year in carbon dioxide-related benefits. By benefits, USEPA of course means a reduction in carbon dioxide emissions. A reduction in carbon dioxide emissions means a reduction in the use of coal to generate electricity. Even though USEPA is projecting only a 2 percent reduction in coal usage as a result of this regulation, and even though it states that it does not expect a major change in the electricity generation mix, it is almost guaranteed that many people will characterize the regulation as a back-door attempt by USEPA to control greenhouse gases and reduce coal usage.

Next Steps

Following publication of this regulation in the Federal Register, the public comment period will run for 60 days. USEPA will also hold public meetings during the comment period. With respect to a final rule, USEPA is operating under a consent decree requiring it to publish a notice of final rulemaking by November 16, 2011. However, look for a very large number of comments and a possible extension of the deadline.

This regulation will have a significant cost impact, both upon the regulated industry and upon the general public. Interested parties are strongly urged to closely review this proposal and the associated documents (such as the Regulatory Impact Analysis), and provide input and comments to USEPA during the review period. Please contact us with any questions.