USEPA Draft Report Indicates Likely Ground Water Contamination From Fracking

This post was written by Mark Mustian.

On December 8, U.S. Environmental Protection Agency (USEPA) Region 8 released a draft report detailing the results from an investigation of suspected ground water contamination from natural gas drilling and gas production near Pavillion, Wyoming. After four rounds of sampling, detailed analysis, and an evaluation of various explanations, USEPA concluded that "the data indicates likely impact to ground water that can be explained by hydraulic fracturing." Furthermore, EPA stated that the data suggested "enhanced migration of gas has occurred within groundwater at depths used for domestic water to supply and to domestic wells." In its study, USEPA measured a variety of organic compounds, including benzene, xylenes, gasoline range organics, and diesel range organics. USEPA also measure measured pH, alkalinity and inorganic chemical compounds which were indicative of chemicals used in fracking solutions. The concentrations and depth profiles were such that USEPA was unable to identify an alternative contamination scenario which would explain the findings. The explanation which best fit the facts was that "inorganic and organic constituents associated with hydraulic fracturing have contaminated ground water supply at and below the depth used for domestic water supply."

Though opponents of hydraulic fracturing may seize upon this report as proof of the dangers of shale gas production, it is important to look beyond the surface of this report to understand that the situation in Pavillion, Wyoming is unique, and is not indicative of conditions in other parts of the country. Hydraulic fracturing in the Pavillion gas field occurred within zones of gas which were located within an underground source of drinking water. Hydraulic fracturing occurred at unusually shallow depths in the region, while many domestic water wells are screened unusually deep. USEPA's review of well completion reports showed instances of poor cement bonding on the completed wells. Furthermore, the geology of the region shows little lateral and vertical continuity of hydraulically fractured tight sandstones and no laterally continuous shale units to stop upward vertical migration of constituents of hydraulic fracturing. Finally, there were numerous unlined surface pits in the area used for storage of drilling wastes and produced water. In other words, the conditions in the region were unique and not like the conditions present in other parts of the country where hydraulic fracturing is utilized.

The report is interesting, and in some ways, useful. But it is just one link in a long chain of information which much be collected in order to properly understand the possible impacts of hydraulic fracturing and shale gas production.

USEPA Proposes Changes to March 2011 Rules for Boilers, Process Heaters and Incinerators

This post was written by Mark Mustian.

On December 2, the U.S. Environmental Protection Agency (USEPA) proposed revisions to a series of controversial regulations aimed at controlling emissions of hazardous air pollutants (HAPs) from industrial, commercial, and institutional boilers. These revisions are to regulations finalized in March, and then delayed in May. The regulations in question are actually three separate, but interrelated regulations. USEPA is proposing revisions to emission standards for (1) Major Source Industrial, Commercial, and Institutional Boilers and Process Heaters; (2)Area Source Industrial, Commercial, and Institutional Boilers; and (3) Commercial/Industrial Solid Waste Incinerators. By way of terminology, know that a major source is a stationary source which has the potential to emit 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants. Also, an area source is a stationary source that is not a major source. And a commercial/industrial incinerator is any unit at a commercial or industrial facility which combust solid wastes.

The new proposed regulations are revisions to the regulations finalized back in March. USEPA is not proposing to revoke the previously finalized regulations. Instead, they are proposing to amend the existing regulations, based upon additional data and upon the input from the regulated community and interested parties. The impact of each proposal is discussed after the jump.

As you'll see below, USEPA is not proposing to significantly modify the structure of regulation developed for the March rulemaking but the proposed changes will increase flexibility and reduce some monitoring requirements and cost. Nonetheless, we still expect that many existing boilers will not be able to comply with the new requirements. In order to comply, they will likely need to look at alternatives, such as fuel switching, boiler rebuild or add-on controls, which will likely increase costs for the facility. The facilities most affected by these regulations will be major source facilities, facilities operating large solid fuel boilers, and solid waste incinerators. Those groups in particular need to start preparing for compliance. Unless the regulations get tossed out by the courts, it is likely that the requirements in their current form will be imposed upon the regulated community.

Major Source Industrial, Commercial, and Institutional Boilers and Process Heaters Requirements

Key Requirements in Rule Finalized in March 2011

In the March rulemaking, USEPA established significantly more stringent standards for major source boilers and process heaters, when compared to area source boilers. The March requirements were as follows:

  • For all new and existing natural gas- and refinery gas-fired units, the final rule establishes a work practice standard, instead of numeric emission limits. The operator will be required to perform an annual tune-up for each unit. Units combusting other gases can qualify for work practice standards by demonstrating that they burn “clean fuel,” with contaminant levels similar to natural gas.
  • For all new and existing units with a heat input capacity less than 10 million British thermal units per hour (MMBtu/hr), the final rule establishes a work practice standard instead of numeric emission limits. The operator will be required to perform a tune-up for each unit once every 2 years.
  • The final rule establishes a work practice standard instead of numeric emission limits for all new and existing “limited use” boilers. The operator will be required to perform a tune-up for each unit once every 2 years. These units are operated less than 10 percent of the year as emergency and backup boilers to supplement process power needs.
    The final rule establishes numeric emission limits for all other existing and new boilers and process heaters located at major sources (including those that burn coal and biomass). The final rule establishes emission limits for:
  1. Mercury
  2. Dioxin
  3. Particulate Matter (PM)
  4. Hydrogen Chloride (HCl)
  5. Carbon Monoxide (CO)
  • The final rule requires monitoring to assure compliance with emission limits. The largest major source boilers must continuously monitor their particle emissions. All units larger than 10 MMBtu/hr must monitor oxygen as a measure of good combustion.
  • Existing major source facilities are required to conduct a one-time energy assessment to identify cost-effective energy conservation measures.

Changes Proposed in December 2011

The proposed regulatory changes do not significantly modify the overall regulatory scheme from the March rulemaking. However, the proposed changes will allow for additional flexibility, and somewhat higher limitations in certain instances. The proposed changes include:

  • New subcategories for light and heavy industrial liquid fuels.
  • New PM emission limitations for each specific type of solid fuel (coal, biomass).
  • New emission limitations for CO based upon newly submitted data.
  • Alternative of using metals emission limitations in place of using PM as a surrogate.
  • Replacement of the dioxin emissions limits with work practice standards.
  • The removal of the requirement for continuous monitoring for biomass units.
  • Allowing CO compliance based upon either stack testing or continuous monitoring.
  • Removal of the hydrogen sulfide specification from the "clean fuel" standard.

Area Source Industrial, Commercial, and Institutional Boilers Requirements

In the rule finalized in March 2011, USEPA set emission standards for large coal-fired boilers. In particular, for new boilers, limitations were imposed for mercury, particulate matter (PM), and carbon monoxide (CO). For existing boilers, the rule established new limitations for PMs and CO. Also, new large biomass and oil fired boilers had new limitations for PMs only. All remaining area source boilers were subject to either a work practice standard or a management practice that required performing a boiler tune-up every 2 years. In the December proposed rulemaking, USEPA is not proposing major changes to these rules. The most significant change is to allow compliance determinations for CO to be based upon measurement of oxygen levels in the boiler stack, as opposed to the actual monitoring of CO levels. This will simplify the instrumentation requirements. USEPA also extended the initial compliance schedule for tune-ups, added an affirmative defense provision for malfunctions, added in a category for seasonal boilers, and included an exemption for temporary boilers.

Commercial/Industrial Solid Waste Incinerators Requirements

Key Requirements in Rule Finalized in March 2011

The category of commercial/industrial solid waste incinerators (CISWIs) is a much smaller category than the other two being regulated. EPA estimates that there are 95 CISWI units currently in operation in the United States. The March rulemaking imposed significant new requirements on these units, including the following:

  • Emission limits for mercury, lead, cadmium, hydrogen chloride, particulate matter, carbon monoxide, dioxins/furans, nitrogen oxides and sulfur dioxide.
  • New stack testing and monitoring requirements.
  • Annual inspections of emission control devices
  • Annual visible emissions test of ash handling operation.

USEPA expected that most units would be required to install add-on controls to comply with the new requirements. In some cases, USEPA expected the regulated community to select an alternate disposal option (landfill) as opposed to installing the necessary controls.

Changes Proposed in December 2011

In the proposed regulation, USEPA is requesting comments on various proposed changes to the March rulemaking. The proposed changes include:

  • Revision of the subcategory of Energy Recovery Units (ERUs)
  • Establishment of limitations on fuel switching provisions
  • Revision of the definition of cyclonic burn barrels
  • An affirmative defense for malfunction events
  • Revisions to the CO monitoring requirements
  • New stack test requirements for CO
  • New definition of homogeneous waste
  • Revised emission limits for waste-burning kiln and ERU subcategories
  • Removal of CO monitoring with CO continuous emission monitoring systems (CEMS) requirements
  • Removal of oxygen correction requirements for ERUs during startup/shutdown
  • Replacement of continuous PM monitoring for large ERUs with other specific monitoring requirements

USEPA Plan to Study Fracking Criticized by House Republicans on Energy and Environment Panel

This post was written by Luke Liben and Nicolle Bagnell.

This past Thursday, in a hearing titled "Fostering Quality Science at EPA: The Need for Common Sense Reform," Republicans on a U.S. House of Representatives energy and environment panel criticized a recently released U.S. Environmental Protection Agency plan to study any potentially detrimental effects of fracking on drinking water supplies. Perhaps informed by Secretary Krancer's Capitol Hill testimony from the day before, the Republican panel members were quick to point out that roughly 1.2 million wells have already been drilled using this technique, and there has yet to be a documented report of drinking water contamination. As such, these committee members found the EPA's suggested use of government funds to be lacking in common sense. The EPA responded by noting that until studies were done, or evidence of detrimental effects were sought, it was clear that no such evidence could be found. You can find more information here.

USEPA Announces Final Study Plan to Assess Hydraulic Fracturing

This post was written by Jennifer Smokelin.

This week, the U.S. Environmental Protection Agency (USEPA) announced its final hydraulic fracturing study plan and indicated that initial research results are expected by the end of 2012 with a final report in 2014. The overall purpose of the study is to understand the relationship between hydraulic fracturing and drinking water resources. The final study plan looks at the full cycle of water in hydraulic fracturing, from the acquisition of the water, through the mixing of chemicals and actual fracturing, to the post-fracturing stage, including the management of flowback and produced or used water as well as its ultimate treatment and disposal. Earlier this year, USEPA announced its selection of locations for five retrospective and two prospective case studies.

This study got its start in a 2010 budget report in which the U.S. House of Representatives Appropriation Conference Committee identified the need for a focused study of hydraulic fracturing. Since then, USEPA has held a series of public meetings across the nation to receive input from states, industry, environmental and public health groups, and individual citizens.

USEPA Announces Schedule to Develop Natural Gas Wastewater Standards for Shale Gas and Coal Bed Methane under Clean Water Act

This post was written by Jennifer Smokelin.

The U.S. Environmental Protection Agency (USEPA) announced today that it will propose a rule for wastewater from coal bed methane in 2013 and a proposed rule for shale gas wastewater in 2014. The announcement is part of the effluent guidelines program (Clean Water Act § 304(m)), which sets national standards for industrial wastewater discharges based on best available technologies that are economically achievable.

To ensure that these wastewaters receive proper treatment and can be properly handled by treatment plants, USEPA will gather data, consult with stakeholders, including ongoing consultation with industry, and solicit public comment on a proposed rule for coal bed methane and for shale gas. The time frame for coal bed methane is shorter because USEPA feels it already has a leg up on data necessary for the coal bed rule whereas there is more information to gather with regard to shale gas wastewater.

A Few More Details

Hydraulic fracturing is a method of releasing natural gas from highly impermeable rock formations by injecting large amounts of fracturing fluids at high pressures to create a network of fissures in the rock formations and provide the natural gas a pathway to travel to the well for extraction. Geologic pressure within the shale formation forces these fracturing fluids back to the surface, where they are referred to as “produced water” or shale gas wastewater. Based on a review of available data, USEPA is initiating a rulemaking to control wastewater produced by natural gas extraction from underground shale formations. Under this proposed rulemaking, EPA will consider standards based on demonstrated, economically achievable technologies, for shale gas wastewater that must be met before going to a treatment facility.

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.

With Proposed Hazardous Waste Exemption, USEPA Shows Support for CCS

This post was written by David Wagner.

As we previewed a few months ago, the U.S. Environmental Protection Agency (USEPA) recently proposed a rule to exclude CO2 streams from Resource Conservation and Recovery Act (RCRA) regulations if they meet certain conditions, including injection for the purpose of geologic sequestration into specific wells regulated under the Safe Drinking Water Act. The proposed rule, which was published on August 8, comes on top of an earlier Safe Drinking Water Act regulation finalized in December 2010 that sets requirements for geologic sequestration, including the development of a new class of injection well called Class VI, established under USEPA’s Underground Injection Control (UIC) program. The UIC Class VI requirements are designed to ensure that wells used for geologic sequestration of CO2 streams are appropriately sited, constructed, tested, monitored, and closed in a manner that ensures USDW protection.

In developing the proposed rule, USEPA determined that CO2 streams captured at power plants and industrial facilities destined for a UIC Class VI well for the purposes of geologic sequestration would be a RCRA solid waste, as it is a “discarded material” as defined in RCRA § 1004(27). In its discussion of the rule, USEPA indicated that, while there is little information available to conclude that CO2 streams would qualify as a RCRA subtitle C hazardous waste, there is the potential for some CO2 streams to meet the definition of a hazardous waste. USEPA concluded that the management of CO2 streams under the proposed conditions does not present a substantial risk to human health or the environment, and will encourage the geologic sequestration of CO2, in a safe and environmentally protective manner.

The proposed exclusion, if finalized, may apply to generators, transporters, and owners or operators of treatment, storage, and disposal facilities engaged in the management of CO2 streams that would otherwise be regulated as hazardous wastes under the RCRA subtitle C hazardous waste regulations as part of geologic sequestration activities. This includes entities in the following industries: operators of CO2 injection wells used for geologic sequestration; and certain industries identified by their North American Industry Classification System (NAICS) code: oil and gas extraction facilities (NAICS 211111); utilities (NAICS 22); transportation (NAICS 48-49); and manufacturing (NAICS 31-33).
 

USEPA Finalizes Guidance on Mountain-top Mining

This post was written by Mark Mustian.

Last year we discussed the U.S. Environmental Protection Agency's (USEPA) interim guidance for permitting of mountain-top mining and surface mining projects and the likelihood of revisions based on comments USEPA would receive. More than 60,000 comments later, USEPA revised and issued the Final Appalachian Mining guidance. While not legally binding, the guidance document published yesterday is intended to provide guidance to states in the Appalachian region on permitting issues related to mountain-top mining and surface mining projects. The guidance addresses the current best available science, identifies permitting strategies that comply with the requirements of the Clean Water Act (CWA) and provides assistance to USEPA staff in reviewing and approving permits issued by both the states and by the U.S. Army Corps of Engineers (USACE).

Mining and the NPDES Program

In particular, the guidance document seeks to ensure that mining projects are properly permitted under the requirements of the CWA's National Pollutant Discharge Elimination System (NPDES). (A quick aside: all of the states in the Appalachian coal mining region are currently authorized by USEPA to administer the NPDES program.) The CWA and USEPA’s implementing regulations require that NPDES permits contain (1) technology-based effluent limitations, which represent the degree of control that can be achieved by point sources using various specified levels of pollution control technology; and (2) more stringent limitations, commonly known as water quality-based effluent limits, when necessary to ensure that the receiving waters meet applicable water quality standards. During reviews of the NPDES permits issued over the last few years for surface-mining projects in the Appalachian region, USEPA identified concerns about how effectively states were achieving the necessary protection of the receiving streams, and concluded that states could be more effective in gathering water quality data and documenting their permitting processes. As a result, the new guidance identifies key elements which should be evaluated by states to ensure compliance with CWA requirements. USEPA identified the following elements that should be evaluated and documented as part of the permitting process:

  • Effluent and Receiving Water Characterization - USEPA recommends that states utilize their broad authority granted under the CWA to require permittees to provide sufficient data to fully characterize their proposed discharges, and to utilize all available ambient water quality and biological data on receiving streams in permit development.
  • Reasonable Potential Evaluation - The CWA and USEPA regulations require regulation of all pollutants which have the reasonable potential to cause or contribute to an excursion above any applicable water quality standard. USEPA notes that permitting authorities should use all available guidance and resources to develop appropriate limitations to protect water quality standards.
  • Develop Appropriate Permit Limitations - Appropriate limitations may include chemical specific limitations, limitations based upon whole effluent toxicity, limitations based upon bioassessment procedures, and/or best management practices.

Future Mining Activities and Total Dissolved Solids

The issue which could potentially have the largest impact on future mining activities is the issue of Total Dissolved Solids (TDS). TDS consists of dissolved minerals such as chlorides and sulfates, and at high concentrations, TDS constitutants are toxic to aquatic organisms. In the guidance document, USEPA notes that of the Appalachian states, only Pennsylvania and Ohio have numeric criteria which specifically regulate the discharge of dissolved solids. USEPA identifies a TDS level (as measured by conductivity) of 300 μS/cm as an appropriate protective level for instream concentrations. If states properly implement regulations limiting the discharge of dissolved solids, it will likely have a dramatic impact on the ability of mining companies to obtain a discharge permit. Removal of dissolved solids from water entails significant investment, both in capital and operating costs.

Strategies for Reviewing Section 404 Permits

Surface mining activities are also regulated under Section 404 of the CWA for the discharge of dredge or fill material into the waters of the United States. Permits are issued by the USACE, with review and approval by USEPA. The guidance document provides detailed strategies for regulators in USEPA Regions 3, 4 and 5 to use in reviewing Section 404 permits and ensuring that proposed permits are in compliance with the requirements of the CWA and state requirements on water quality. Of particular interest is the discussion regarding control of dissolved solids under a Section 404 permit, where the NPDES permit issued by the State may not be sufficiently protective. This creates the possibility that future control of dissolved solids could incorporated at the federal level, as opposed to the state level.
 

What to Know about Aggregation in Marcellus Shale

This post was written by David Wagner.

Aggregation is the process of determining whether emissions from multiple locations should be aggregated into a single source for air permitting purposs. In the Marcellus Shale play, it's a big environmental issue and Reed Smith environmental attorneys are focused on it in a few ways. Reed Smith represents a defendant in an aggregation case and we also examined aggregation issues in a teleseminar yesterday. The teleseminar, presented with AECOM, discussed U.S. Environmental Protecton Agency guidance, federal aggregation cases, state aggregation cases and some of the pitfalls of aggregation. Feel free to review the slides and the audio from the event.

The Long and Winding Rule: USEPA's Cross-State Air Pollution Rule the Latest to Address Interstate Air Pollution

This post was written by Steve Nolan.

In previous posts, we have reported the vacation of the Clean Air Interstate Rule (CAIR) in 2008, CAIR's subsequent, temporary resuscitation later that year, and the 2010 release of the draft Transport Rule which was proposed to replace CAIR. On July 7, 2011, the U.S. Environmental Protection Agency (USEPA) released the final version of this rule, now renamed the Cross-State Air Pollution Rule (Cross-State Rule).

The Cross-State Rule is specifically directed at emissions from electric generating units in classes 2211, 2212 and 2213 of the North American Industry Classification System. Like CAIR, the new rule is intended to help downwind states achieve USEPA's National Ambient Air Quality Standards (NAAQS) for fine particulate matter and ozone. Also like CAIR, the new Cross-State Rule actually regulates sulfur dioxide (a chemical precursor of fine particulate matter) and nitrogen oxides (a chemical precursor of both fine particulate matter and ozone) generated by upwind states.

By 2014, USEPA estimates that the Cross-State Rule will reduce emissions of sulfur dioxide by 6.4 million tons per year from covered states compared with emissions in 2005, the last year before CAIR came into effect. This represents a 73 percent reduction from 2005. The corresponding figures for nitrogen oxide are a reduction of 1.4 million tons, representing a 54% change. Less stringent reductions will be required by 2012.

The states are allocated initial emissions allowances, and the new rule, like CAIR, establishes a cap-and-trade marketing scheme. However, because of the circuit court's holding in which it vacated CAIR in 2008, out-of-state trading is only allowed to a limited extent.

Further details of the Cross-State Rule’s implementation will become apparent as USEPA issues federal implementation plans for each of the states impacted by the rule. It is intended that the federal implementation plans will ultimately be replaced by state implementation plans. Furthermore, the reductions required of electric generating units in the near future may be further increased by USEPA’s new fine particle NAAQS and reconsidered ozone NAAQS, both of which are proposed to be released later this summer.
 

MSW Landfills Take Note: CO2 Emissions from Bioenergy and Other Biogenic Sources Issued 3-Year Deferral from Clean Air Act Permitting Requirements

This post was written by Jennifer Smokelin.

As anticipated in an earlier blog post and discussed during a recent Reed Smith teleseminar, on July 1 the U.S. Environmental Protection Agency (USEPA) issued a final rule to defer biomass from greenhouse gas (GHG) regulation for three years so that USEPA can properly study biomass emissions and make a considered determination regarding regulation of GHG emission from biomass. Over this time period, municipal solid waste landfills releasing GHGs from decomposing biomass and industrial plants that burn woody biomass will not need permits before starting construction or expansion and will not need Title V operating permits. However, facilities that co-fire biogenic and fossil fuels would still be required to count the fraction of CO2 associated with fossil fuel combustion towards their Prevention of Significant Deterioration (PSD) applicability determination. Further, the deferral would not apply to other GHGs (e.g., methane) or non-greenhouse gas pollutants that are otherwise subject to PSD and Title V permitting at landfills or industrial facilities.

In the final rule, USEPA will defer for three years the consideration of biogenic CO2 emissions under the Tailoring Rule. To facilitate the deferral, USEPA revised the definition of the term “subject to regulation” to exclude biogenic CO2 emissions from stationary sources. The deferral would apply only to CO2 emissions from the combustion and decomposition of biologically-based material. And such emissions will not count towards the PSD applicability determination for greenhouse gases. Some emissions that would be deferred by the rule include:

  • CO2 generated from the biological decomposition of waste in landfills, wastewater treatment or manure management processes;
  • CO2 from the combustion of biogas collected from biological decomposition of waste in landfills, wastewater treatment or manure management processes;
  • CO2 from fermentation during ethanol production or other industrial fermentation processes;
  • CO2 from combustion of the biological fraction of municipal solid waste or biosolids;
  • CO2 from combustion of the biological fraction of tire-derived fuel; and
  • CO2 derived from combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material.

For municipal solid waste landfill owners, it's worth restating the obvious: because CO2 generated from the biological decomposition of waste in landfills and CO2 from the combustion of biogas collected from biological decomposition of waste in landfills is deferred for three years, this deferral could be significant to your operation.

In Case You Missed It, Here Are Slides and Audio from Reed Smith's June 16 Climate Change Event

This post was written by David Wagner.

Last week, we discussed recent international and U.S. developments related to greenhouse gas regulation, and here are the slides and audio from the event. In particular, we addressed:

  • How the uncertain future of the Kyoto Protocol and the Clean Development Mechanism affect U.S. business (You can also find details on this issue here)
  • What your business needs to know for compliance and planning related to step 2 of USEPA's greenhouse gas Tailoring Rule
  • Implications of the court's "cap and trade" ruling in Association of Irritated Residents v. California Air Resources Board
  • Developments in state courts including upcoming decisions on insurers' obligation to defend and/or indemnify covered insureds for public nuisance, and other types of claims based on third-party allegations of damages from climate change
     

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).

Reed Smith's Quarterly Climate Change Regulatory Teleseminar is on June 16

This post was written by David Wagner.

It's time for Reed Smith's (free) quarterly climate change report. Please join us via telephone on Thursday, June 16, 2011 from 12 p.m. to 1 p.m. EDT for a regulatory update on significant international, national and state issues concerning climate change and the future of greenhouse gas regulation. The topics are:

  • International update: how the fate of the Clean Development Mechanism and the Kyoto Protocol affect U.S. business
  • USEPA's greenhouse gas Tailoring Rule - Step 2: what your business needs to know for compliance and planning
  • Implications of the court's "cap and trade" ruling in Association of Irritated Residents v. Cal. Air Resources Board
  • State court update: upcoming decisions on insurers' obligation to defend and/or indemnify covered insureds for public nuisance, and other types of claims based on third-party allegations of damages from climate change
     

If you would like to attend this teleseminar, please email Sandy Petrakis.

Boiler MACT Rules Put on Hold By USEPA

This post was written by Mark Mustian.

The U.S. Environmental Protection Agency (USEPA) is delaying the effective dates for final rules regulating Industrial, Commercial, and Institutional Boilers and Process Heaters, and for Commercial/Industrial Solid Waste Incinerators. We discussed these rules, known as the Boiler MACT rules, in more detail when they were published on March 21. As we noted, USEPA was likely to reconsider the Boiler MACT rules, and additional changes were expected. On May 16, USEPA issued a notice that they were delaying the compliance dates for the Boiler MACT rules until either the proceedings for judicial review of the regulations is complete, or until the Agency completes its reconsideration of the rules. The purpose of the delay is straightforward: to allow USEPA to seek additional public comment before requiring thousands of facilities to make significant capital investments that may not be reversible if the standards are revised following reconsideration.
 

Pennsylvania Department of Environmental Protection Rescinds Policy; Secretary No Longer to Approve All Marcellus Field Enforcement Actions

This post was written by Nicolle Bagnell and Ariel Nieland.

In late April, the Pennsylvania Department of Environmental Protection (DEP) rescinded its policy requiring field inspectors to obtain approval prior to taking enforcement actions against Marcellus Shale drilling operators. The stated purpose of the "pilot" policy, which went into effect on March 23 and was regarded as an unusual step for the DEP to take, was to promote consistency throughout the state with regard to Marcellus development, permitting, and enforcement. In response to the agency's rollback of the policy, a DEP spokesperson explained that the notice of violation process is now "just as it was."

USEPA's Proposed Rule That Could Exempt CCS from Hazardous Waste Regulations Awaits White House Approval

This post was written by David Wagner.

A draft proposed rule that could exempt the geologic sequestration of carbon dioxide (CO2) from federal hazardous waste regulations is now moving through the regulatory process. On March 22, 2011, the U.S. Environmental Protection Agency (USEPA) sent a draft proposed rule to the White House Office of Management & Budget (OMB) that could conditionally exempt CO2 sequestered underground from Resource Conservation and Recovery Act (RCRA) requirements. It appears the rule would address the RCRA liability of owners and operators of carbon capture and sequestration (CCS) wells should CO2 leak and contaminate underground sources of drinking water. Following regulatory review by OMB, USEPA anticipates that the proposed rule will be published in the Federal Register in May 2011.

You’ll recall that on December 10, 2010, USEPA finalized a rule under the Safe Drinking Water Act’s Underground Injection Control Program (SDWA UIC Program) to create a new class of injection wells (Class VI) for geological sequestration of CO2. The new rule does not currently address the long-standing concern that owners and operators of Class VI wells could be liable under RCRA for environmental contamination should CO2 that meets the definition of a hazardous waste leak from the wells and contaminate underground sources of drinking water. The draft proposed rule before OMB explores a number of options, including a conditional exemption from the RCRA requirements for hazardous CO2 streams in order to facilitate implementation of geologic sequestration while protecting human health and the environment.

A CO2 Stream with Impurities Could Trigger RCRA Requirements

Under USEPA’s regulations, a solid waste is a hazardous waste if, among other things, it exhibits the characteristics of toxicity. While a CO2 stream is not itself a listed hazardous waste, captured CO2 could contain some impurities at levels that would require its classification as a “characteristic” hazardous waste. CO2 captured from sectors amenable to CCS, such as electric generating facilities, could contain toxic chemical constituents including arsenic, mercury, and selenium. A captured CO2 stream that meets the definition of a hazardous waste would have to comply with all applicable RCRA requirements.

As a result, the characterization of a CO2 stream as “hazardous waste” would make the RCRA waste management scheme applicable to the generation, transportation, treatment, sequestration, and/or disposal of the CO2 stream. Presumably, this could mean that underground injection and sequestration of a hazardous CO2 stream would need to meet the requirements for Class I hazardous waste wells under the SDWA UIC Program instead of the Class VI geologic sequestration wells.

But Not if the CO2 Stream is Exempt from RCRA

The draft proposed rule is not publically available, but an exemption from RCRA might allow the injection of a “characteristically” hazardous CO2 stream for the purpose of geologic sequestration to be permitted under the Class VI injection well requirements instead of Class I requirements. Interestingly, an exemption from RCRA could close a potential (and overlooked) gap that would enable owners and operators of CO2 sequestration wells to seek Class I well permits in order circumvent the stringent post-closure monitoring, care, and financial responsibility requirements imposed by the Class VI rules. On the other hand, owners and operators of CO2 sequestration wells would be able to avoid the complexities and inefficiencies of the RCRA regulatory regime. Most importantly, the exemption would provide much desired regulatory certainty to the CCS industry. Stay tuned.

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.
 

Biomass CO2 Emissions Can Wait: Three Significant Issues Related to BACT and Biomass Triggered by USEPA's Proposed Deferral

This post was written by Jennifer Smokelin.

On March 14, the U.S. Environmental Protection Agency (USEPA) made good on a promise to consider excluding emissions of carbon dioxide (CO2) from bioenergy and other biogenic sources (biomass) for the purposes of the Best Available Control Technology (BACT) analysis and applicability to the Prevention of Significant Deterioration (PSD) program. It published a proposed rule that would defer, for a period of three years, greenhouse gas (GHG) permitting requirements for CO2 emissions from biomass-fired and other biogenic sources. USEPA is also making available a guidance document, Guidance for Determining Best Available Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy Production, to assist facilities and permitting authorities with permitting decisions until the proposed rule is finalized. USEPA will accept public comments on the Proposed Deferral (but not, of course, on the Guidance) for 45 days following publication in the Federal Register. Also, look for a hearing in Washington, D.C. on the matter, tentatively scheduled for 15 days after publication in the Federal Register.

After a background discussion of the issue, this post addresses the significant actions the Proposed Deferral and Guidance take with regard to: (1) timing, (2) applicability, and (3) the co-firing question.

First, why does biomass get special treatment? In short, two words: carbon cycle. The combustion (direct or indirect) of biomass as a fuel indisputably places CO2 in the atmosphere. But this carbon is part of the current carbon cycle: it was absorbed during the growth of the biomass over the previous few months or years and, provided the land continues to support growing plant material, a sustainable balance is maintained between carbon emitted into the atmosphere and absorbed into the biomass. In sum, the carbon used to construct biomass is absorbed from the atmosphere as carbon dioxide (CO2) by plant life, using energy from the sun.

Second, what is biomass? While it can mean different things to different people, this post cares about how USEPA defines it. USEPA defines biomass as “biogenic CO2 emissions,” in turn defined as emissions of CO2 from a stationary source directly resulting from the combustion or decomposition of biologically based materials other than fossil fuels. Examples include, but are not limited to:

  • CO2 generated from the biological decomposition of waste in landfills, wastewater treatment or manure management processes
  • CO2 from the combustion of biogas collected from biological decomposition of waste in landfills, wastewater treatment or manure management processes
  • CO2 from fermentation during ethanol production
  • CO2 from combustion of the biological fraction of municipal solid waste or biosolids
  • CO2 from combustion of the biological fraction of tire-derived fuel
  • CO2 derived from combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material

It is important to note that non-CO2 emission from combustion of biomass (methane, nitrous oxide) are not part of USEPA’s definition and thus are not subject to the Proposed Deferral and Guidance.

The applicability to both PSD and the Title V programs is dependent on whether the stationary source meets certain emissions thresholds. On June 3, 2010, USEPA issued the Tailoring Rule and established two steps to implement PSD and Title V. Tailoring Rule Step 1 began January 2, 2011. Step 1 applies to sources subject to PSD or Title V anyway because of their emissions of other pollutants (“anyway” sources) and that have the potential to emit 75,000 tpy CO2e (or to increase emissions by that amount for modifications). Tailoring Rule Step 2 begins July 1, 2011. In addition to anyway sources, Step 2 applies to new facilities emitting GHGs in excess of 100,000 tpy CO2e, and facilities making changes that would increase GHG emissions by at least 75,000 tpy CO2e, and that also exceed 100/250 tpy of GHGs on a mass basis.
The question raised by these threshold determinations is: does biomass “count” for purposes of meeting these thresholds?

To answer this question, USEPA published a Call for Information in July 2010 to obtain scientific and technical information concerning GHG resulting from the use of biomass and PSD. Some data supported the conclusion that certain biomass materials, such as waste whose inevitable decomposition will result in greenhouse gas emissions anyway, have only very limited climate impacts when combusted as fuel. However, other data indicated that the use of certain other biomass as fuel could have more significant climate impacts.

This contradiction led USEPA to announce January 12, 2011 that it will undertake an expedited rulemaking to be completed by July 1, 2011 to defer application of pre-construction permitting requirements to biomass for a period of three years. During that time, USEPA proposed to initiate a scientific examination with partners from other federal agencies and scientists outside the government with relevant expertise to assist the agency in determining how CO2 emissions from biomass should be handled under PSD. Further, in the interim, USEPA indicated it will issue guidance that states and local agencies can use to conclude that BACT for GHG at biomass sources is combustion of biomass fuels alone.

Summary of Three Significant Issues in Proposed Deferral and Guidance
As noted above, the Proposed Deferral and Guidance take significant actions with regard to (1) timing, (2) applicability, and (3) the co-firing question.

Timing and the Proposed Deferral
First, note that no biomass source is deferred until the Proposed Deferral is finalized as a final rule. USEPA indicated final action on the Proposed Deferral by July 2011. This is a very ambitious timeline, particularly in light of the admissions by USEPA in the Proposed Deferral that the deferral of biomass will require State Implementation Plan revisions for certain states under the Clean Air Act. These facts call into question whether USEPA can meet the deadline of July 2011. And keep in mind that as the deadline is extended, it increases the likelihood that PSD and Title V permitting provisions will apply to biomass sources.

Applicability and the Proposed Deferral and Guidance
The scope of the Proposed Deferral is wider than the scope of the Guidance. Whereas the Proposed Deferral applies to “all sources of biogenic CO2 emissions,” the Guidance applies merely to “bioenergy facilities.” This means that to the extent a biomass facility does not fit into the definition of “bioenergy facility,” the source is left without guidance (except as biomass is addressed in the GHG BACT guidance) with regard to the applicability of the PSD and Title V programs until the Proposed Deferral is finalized (again, potentially a longer period of time than optimistically estimated by USEPA).

The good news is that the Guidance definition of “bioenergy facility” is quite broad and defined as “a facility that generates energy via the combustion of biologically-derived material other than fossil fuels, for example, wood, biosolids, or agricultural products. This could be undertaken either alone or in addition to traditional fossil fuels.” See Guidance, footnote 1. The last sentence of the definition includes co-firing or mixed fuel facilities – and greatly extends the reach of the Guidance.
However, even if the facility qualifies as a “bioenergy” facility, USEPA has left the door open to walk away from a strict application of the Guidance by stating that USEPA believes the analysis described in Guidance will be sufficient in most cases to support the conclusion that utilization of biomass fuel alone is BACT for a bioenergy facility.
 

The Co-Firing Question
The Proposed Deferral states that for stationary sources, co-firing fossil fuel and biologically based fuels and/or combusting mixed fuels (e.g., tire-derived fuels, municipal solid waste), the biogenic CO2 emissions from that combustion are included in the deferral. However, the fossil CO2 emissions are not.

USEPA acknowledged that various methods are available to calculate that fraction of biogenic CO2 emissions from co-firing facilities. USEPA is specifically requesting comments regarding: (1) whether the deferral should specify whether co-firing biomass faculties should use a specific method for determining biogenic CO2 emission; and (2) other ways to ensure there is an accurate estimate of how much biogenic CO2 is subject to deferral at co-firing facilities, particularly when combusting mixed fuels. This is an important opportunity for co-firing facilities’ voices to be heard on this important issue.

Notes from the USEPA's Science Advisory Board Panel for the Review of Hydraulic Fracturing Study Plan

This post was written by Nicolle Bagnell and Ariel Nieland.

Reed Smith, represented by Nicolle Bagnell, attended the Science Advisory Board Panel's public meeting on March 7, 2011 in Washington D.C. The purpose of the panel, comprised of a distinguished group of 22 professors and practitioners ranging in expertise from public health, hydrogeology, water quality engineering and environmental justice, is to provide an independent review of the U.S. Environmental Protection Agency's (USEPA's) proposed Hydraulic Fracturing Study Plan for scientific soundness of the draft plan. The panel was selected from nominations made in response to a request in the Federal Register last July. In addition to the Panel's review, USEPA received over 300 sets of public comments on the draft plan. There were also twelve speakers who provided 5-minute commentaries either in person or by phone and roughly 50 members of the public who attended the meetings.

The meetings began with a presentation from USEPA giving an overview of the Draft Study Plan, along with a discussion of the proposed case studies, which include both retrospective and prospective case studies to be conducted in North Dakota, Texas, Pennsylvania, and Colorado. In the Marcellus, two retrospective studies are planned for Bradford and Susquehanna Counties and Wetzel, Greene and Washington Counties. Prospective studies are planned in Washington County at a Range Resources site and also at a Chesapeake site that will likely lie outside of the Marcellus, but has not yet been selected. After the overview concluded, public comments were heard. Public Commenters included Gary Slagel of Consol Energy on behalf of the Marcellus Shale Coalition, Tim Stewart representing the Western Energy Alliance, Susan Olliver, a New York landowner in favor of natural gas production, Dennis Degner of Range Resources, Cynthia Lane of the American Water Works Association, Sara Gingold of Food and Water Watch, Amy E. McDonnell from the Chesapeake Bay Foundation, Lauren Pagel of Earthworks, Briana Mordick of the Natural Resources Defense Council, Lynn Howard Ehrle from the International Science Oversight Board, Jeff Zimmerman from Damascus Citizens for Sustainability and Friends of the Upper Delaware River and Deborah Cowden, a physician. Generally, the commentators raised issues regarding the breadth and scope of the plan, some arguing it is too broad and others believing it is too narrow, concerns about the sources being used, and calls for unbiased information to be provided to the public as quickly as possible. Concerns were also raised about the treatment of wastewater before it is discharged, particularly in the Marcellus region, and the impact on humans from multiple chemical exposure. Copies of the speakers' written comments are available here.

Once the public comment period concluded, the panel discussed its 5 charges from Director of the Office of Science and Policy and the contents of the draft plan. Those charges generally asked the panel to comment on the appropriateness of the water lifecycle identified by USEPA to characterize hydraulic fracturing to be used as the framework of the plan, whether the research questions identified by USEPA are correct questions, whether the research approach identified is sufficient, whether the proposed research activities adequately answer the questions, and whether the proposed research will be able to identify the key impacts, if any, of hydraulic fracturing on drinking water resources and provide relevant information on the toxicity and exposure pathways of chemicals associated with hydraulic fracturing. Lively discussion, and at some points debate, ensued as the experts discussed comments, critiques and questions about the proposed plan. In particular, it seemed that the panel wanted some of the terms used, such as "water quality," to be better defined. The panel also agreed that the research questions were too general and needed to be made more specific to comply with the requirements of a scientific approach to answering the questions. Another overarching theme to the discussion was the need to study the interrelatedness of not just the many steps to drilling, but also the impact of increased drilling in a region over many well sites.

Once completed, the Panel will provide comments to the USEPA for consideration before the final Study Plan is published.

USEPA Issues Final Boiler MACT Rules

This post was written by Mark Mustian.

After some ten years in the making, last week the U.S. Environmental Protection Agency (USEPA) issued a final rule aimed at regulating emissions of hazardous air pollutants from industrial, commercial, and institutional boilers located at major source facilities. A major source facility emits or has the potential to emit 10 or more tons per year (tpy) of any single air toxic or 25 tpy or more of any combination of air toxics. USEPA also finalized a related rule to reduce emissions from industrial, commercial, and institutional boilers located at area source facilities. An area source facility has the potential to emit less than 10 tpy of any single air toxic or less than 25 tpy of any combination of air toxics.

The rules, known as the Boiler Maximum Achievable Control Technology or “Boiler MACT” rules, will affect a significant number of entities. USEPA estimates that there are about 13,800 boilers located at large sources of air pollutants, including refineries, chemical plants, and other industrial facilities. USEPA estimates that there are about 187,000 boilers located at small sources of air pollutants, including universities, hospitals, hotels and commercial buildings that may be covered by these standards.

For key requirements of the Boiler MACT rules and some implications, please click on “continue reading.”

Requirements for Boilers at Major Source Facilities

For boilers located at major source facilities, the following requirements are being implemented:

  • For all new and existing natural gas- and refinery gas-fired units, the final rule establishes a work practice standard, instead of numeric emission limits. The operator will be required to perform an annual tune-up for each unit. Units combusting other gases can qualify for work practice standards by demonstrating that they burn “clean fuel,” with contaminant levels similar to natural gas.
  • For all new and existing units with a heat input capacity less than 10 million British thermal units per hour (MMBtu/hr), the final rule establishes a work practice standard instead of numeric emission limits. The operator will be required to perform a tune-up for each unit once every 2 years.
  • The final rule establishes a work practice standard instead of numeric emission limits for all new and existing “limited use” boilers. The operator will be required to perform a tune-up for each unit once every 2 years. These units are operated less than 10 percent of the year as emergency and backup boilers to supplement process power needs.
  • The final rule establishes numeric emission limits for all other existing and new boilers and process heaters located at major sources (including those that burn coal and biomass). The final rule establishes emission limits for:
    • Mercury
    • Dioxin
    • Particulate Matter (PM)
    • Hydrogen Chloride (HCl)
    • Carbon Monoxide (CO)
  • The final rule requires monitoring to assure compliance with emission limits. The largest major source boilers must continuously monitor their particle emissions. All units larger than 10 MMBtu/hr must monitor oxygen as a measure of good combustion.
  • Existing major source facilities are required to conduct a one-time energy assessment to identify cost-effective energy conservation measures.

Requirements for Boilers at Area Source Facilities

Area source facilities will be required to meet the following:

  • For new boilers, the final rule requires the following:
    • Coal-fired boilers, with heat input equal or greater than 10 million Btu per hour, are required to meet emission limits for mercury, PM, and CO.
    • Biomass and oil-fired boilers, with heat input equal or greater than 10 million Btu per hour, must meet emission limits for PM.
    • Boilers with heat input less than 10 million Btu per hour must perform a boiler tune-up every two years.
  • For existing boilers the final rule requires the following:
    • Coal-fired boilers, with heat input equal or greater than 10 million Btu per hour, are required to meet emission limits for mercury and CO.
    • Biomass boilers, oil-fired boilers, and small coal-fired boilers are not required to meet emission limits. They are required to meet a work practice standard or a management practice by performing a boiler tune-up every 2 years. By improving the combustion efficiency of the boiler, fuel usage can be reduced and losses from combustion imperfections can be minimized. Minimizing and optimizing fuel use will reduce emissions of mercury and all other air toxics.
    • All area source facilities with large boilers are required to conduct an energy assessment to identify cost-effective energy conservation measures.

What This May Mean: More Gas and Less Coal

The obvious result from these new regulations will be to drive a move away from the use of coal as a fuel supply and to replace coal usage with natural gas. The majority of the existing coal fired boilers in the country will need to be retrofit with new, potentially very costly, air pollution control devices. Facilities which burn natural gas as a fuel can expect to see much lower costs for compliance with the new regulations. Facilities affected by this new rule will need to look closely at their costs for compliance in order to determine the most cost-effective solution for their situation.

Specific industries will also have compliance issues which are not adequately resolved in the current regulation. For example, manufacturers of coke for the iron and steel industry generate excess coke oven gas (COG) from their operations. These gasses are typically burned in a boiler to recover the heat value as opposed to flaring. However, COG may not qualify as a “clean fuel”. It may be necessary for coke plants which burn COG to install new controls on their boilers, even if they do not burn coal.

But Are They Really Final?

These new regulations have generated significant industry interest, and numerous and detailed comments were submitted during the draft period of the regulations. Most industry groups feel that USEPA has significantly underestimated the costs for compliance, and that EPA’s determination of the emission limitations is incorrect from both a technical and statistical basis. USEPA has recognized the continued debate, and has announced that they may reconsider certain portions of the rules and has requested additional comments and data submissions by the affected parties.

The final rules are due to be published in the federal register sometime this month.
 

A New Year's Surprise: USEPA Agrees to Propose GHG Emission Standards for New and Existing Power Plants and Petroleum Refineries

This post was written by Larry Demase.

In response to challenges by various states and environmental groups to U.S. Environmental Protection Agency’s (USEPA’s) New Source Performance Standards for new electric generating units (“EGUs” or “power plants”) and new process facilities at petroleum refineries (“Refineries”), USEPA has agreed to propose New Source Performance Standards (“NSPS”) for greenhouse gas (“GHG”) emissions from those sources. In addition, it has agreed to issue guidelines for GHG emissions from existing EGUs and Refineries. Promulgation of these rules will be governed by Sections 111(b) and 111(d) of the Clean Air Act and 40 C.F.R. § 60.22.

In the case of EGUs, the agreements require USEPA to sign a proposed rule by July 26, 2011 and after considering public comments to sign, no later than May 26, 2012, a final rule. In the case of Refineries, the proposed rule must be signed December 10, 2011 and the final rule by November 10, 2012. Mindful of the delays that often take place in EPA’s rulemaking, the separate agreements require EPA to regularly update state and environmental groups of USEPA’s progress in developing these rules.
 

Unexpected in these settlements, which were filed in the U.S. Court of Appeals for the District of Columbia Circuit, is the agreement by USEPA to propose guidelines for existing EGU and Refinery sources, since they were not the subject of the original litigation by the states and environmental groups. See State of New York v. EPA, No. 06-1322 (EGUs) and American Petroleum Institute v. EPA, No. 08-1277 (Refineries). EPA’s agreement, however, is consistent with the Obama Administration’s promise to achieve its climate change goals through existing regulatory authority, since new enabling legislation appears to be foreclosed by the make up of the new Congress. It is also possible USEPA may extend its rulemaking to sources other than EGUs and Refineries.

NSPS must reflect the degree of emission limitation achievable through the application of the best system of emission reduction the USEPA determines is cost effective and has been adequately demonstrated. In the agreements USEPA states that it believes there are cost effective control strategies for reducing GHGs from both EGUs and Refineries. Once the NSPS rules are formally promulgated, states may develop and submit to USEPA a procedure for implementing and enforcing them within the state. Once the guidelines for existing sources are issued, EPA will issue calls to the states to amend their implementation plans to include a plan for controlling GHG emissions based on those guidelines. States may take into consideration the remaining useful life of existing sources within its borders in applying GHG emission limitations to those sources. See Section 111(d)(1) of the Clean Air Act.

The agreements do not specify the content of the NSPS or the guidelines.

USEPA Identifies 17 Counties in 11 States Violating Lead Standards

This post was written by Mark Mustian.

In late November, the U.S. Environmental Protection Agency (USEPA) determined that 17 counties in 11 states across the country are not meeting the National Ambient Air Quality Standards (NAAQS) for lead. These areas were designated as “nonattainment” because their 2007 to 2009 air quality monitoring data showed that they did not meet USEPA’s health-based standards.

As a result of the designation, states with these nonattainment areas must develop a State Implementation Plan that meets the requirements of Sections 172(c) and 191 of the Clean Air Act and provides for attainment of the NAAQS as expeditiously as practicable, but no later than December 31, 2015. This designation, which covers such heavily populated areas as Los Angeles County, Tampa, FL and Cleveland, OH, will require the states to develop and implement monitoring programs, develop emission inventories, and adopt control strategies to limit lead emissions within the non-attainment areas.

Moreover, the November 22, 2010 rulemaking is just phase 1 of USEPA's evaluation, and more non-attainment determinations are expected next year. In order to collect and evaluate additional monitoring data, USEPA put off a final decision on many areas of the country until October 15, 2011. The second phase of the rulemaking may greatly increase the number of areas considered to be in non-attainment. For example, in USEPA Region 3 (Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, and West Virginia), USEPA only identified non-attainment regions for the Commonwealth of Pennsylvania. All other states within Region 3 were deferred until October 2011.


In 2008, USEPA revised the National Ambient Air Quality Standards for lead and lowered the standard from a level of 1.5 μg/m3 to a level of 0.15 μg/m3. In addition, the Administrator changed the averaging time and form of the standard to a rolling 3-month average evaluated over a 3-year period. The rule also established new requirements for lead monitoring networks, including the requirement that new lead monitors be located in close proximity to the largest lead emissions sources by January 1, 2010. The final rule revising the lead NAAQS was published in the Federal Register on November 12, 2008, and became effective January 12, 2009.

Federal Takeover Averted? Recent Survey Reports that 49 U.S. States Will Have GHG Permitting Programs Ready to Go by January 2011

This post was written by David Wagner.

Although this doesn’t make anything official, it’s an interesting development: the National Association of Clean Air Agencies (NACAA) reported yesterday that, with the onset of greenhouse gas (GHG) permitting only two months away, every state but one -- Texas -- is poised to ensure that sources can obtain preconstruction permits under the Clean Air Act come January 2, 2011.

As we’ve discussed on the blog, certain larger GHG emission sources will be subject to permitting requirements for planned construction projects under the Tailoring Rule starting on January 2, 2011. While most states already have the authority to permit GHGs under preconstruction permit – or Prevention of Significant Deterioration (PSD) – programs, USEPA proposed two rules to fill gaps in 13 state permitting programs that do not allow for the regulation of GHG emissions from industrial sources. The first proposed rule seeks to allow states that are not prepared to regulate GHGs to revise their State Implementation Plans. The second rule outlines USEPA's plan to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet the requirements by January 2011.

NACAA, which is an association of air pollution control agencies in the United States, reviewed the air permitting program responses of the 13 states at issue. According to the NACAA report, air permitting agencies in all states on USEPA’s list (except for Texas) “have indicated that they will either revise their PSD rules by January 2, 2011 or very shortly thereafter, or accept a Federal Implementation Plan (FIP) that will give EPA authority to issue the GHG portion of PSD permits until state rules are revised." This provides some assurance that sources required to apply PSD controls to their GHG emissions will be able to obtain the necessary permits and avoid construction delays. NACAA’s state-by-state summary is available here.
 

USEPA Requests Information on Fracking Fluid Constituents

This post was written by Nicolle Bagnell and Ariel Nieland.

The U.S. Environmental Protection Agency ("USEPA") announced yesterday that it sent voluntary information requests to nine companies in the oil and gas industry requesting information regarding hydraulic fracturing. Specifically, USEPA stated that it is "seeking information on the chemical composition of fluids used in the hydraulic fracturing process, data on the impacts of the chemicals on human health and the environment, standard operating procedures at their hydraulic fracturing sites and the locations of sites where fracturing has been conducted." USEPA indicated that it is seeking data as part of a broad scientific study, which Congress in 2009 directed the Agency to conduct to determine whether hydraulic fracturing has an impact on drinking water and public health. Responses to these requests have been requested within 30 days and USEPA has asked the nine recipients of the requests to inform them within 7 days if they do not plan to provide all of the requested information.

 

USEPA Reschedules Public Hearing on Proposal to Take Over Certain States GHG Air Permitting Programs

This post was written by David Wagner.

To follow up from earlier posts, the U.S. Environmental Protection Agency has rescheduled the public hearing on its proposed rule to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet federal requirements. The hearing will be held on September 14, 2010 in Arlington, VA and logistical details are here. We’ve discussed this proposed rule and a related proposal requiring 13 states to revise their State Implementation Plans in some detail in this recent post.

USEPA Postpones Public Hearing on Proposal to Take Over Certain States GHG Air Permitting Programs

This post was written by Jennifer Smokelin and David Wagner.

On August 23, 2010, the U.S. Environmental Protection Agency (USEPA) postponed the public hearing on its plan to take over greenhouse gas (GHG) permitting programs related to construction or modification projects. The hearing was scheduled to be held in Arlington, VA on August 25, 2010, and was delayed because the draft rule has not yet been published in the Federal Register. USEPA has not set a new date for the hearing. As we discussed in a blog post last week, USEPA has proposed two rules to fill gaps in 13 state permitting programs that do not allow for the regulation of GHG emissions from industrial sources. The first proposed rule seeks to allow states that are not prepared to regulate GHGs to revise their State Implementation Plans. The second rule outlines USEPA's plan to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet the requirements by next January, when USEPA’s Tailoring Rule would be in effect.

Regulated Entities in Allegheny County (PA) and Certain California Counties, Be Aware: USEPA May Take Over GHG Air Permitting Programs Related to Construction or Modification Projects

This post was written by Jennifer Smokelin and David Wagner.

Here's the issue:  Certain larger emission sources of greenhouse gases (GHGs) will be subject to permitting requirements for planned construction projects starting January 2, 2011.  In 13 states, the permitting programs (known as the Prevention of Significant Deterioration (PSD) permitting program) do not apply to sources of GHGs.  Thus, emission sources in those states would be unable to obtain a PSD permit that covers GHG emissions, and would potentially be unable to undertake construction or modification projects on or after January 2, 2011.  The states are Alaska, Arkansas, Connecticut, Florida, Idaho, Kansas, Oregon, Texas, and portions of California, Arizona, Kentucky, Nebraska, and Nevada.

Here's USEPA's proposed solution:  The Agency recently proposed two rules that would fill the gap in the permitting programs for these 13 states: (1) the SIP call and (2) the FIP.  Under the first proposed rule, the U.S. Environmental Protection Agency (USEPA) would issue a "SIP call," requiring the 13 states to revise their State Implementation Plans (SIPs).  According to USEPA, the PSD program in these jurisdictions is "presumptively inadequate" because they do not allow for the regulation of GHG emissions. All other states would be required to review their rules and inform USEPA if they would not be able to issue PSD permits for greenhouse gas emissions. 

Under the second rule, USEPA proposes to establish a FIP - a Federal Implementation Plan for the 13 "presumptive inadequate" states, and for any other state in which USEPA determines that the state PSD program does not meet requirements for regulation of GHGs. Only the states deemed by USEPA to be inadequate would need the federal plan.  In other words, in any states that do not update their regulations within 12 months after USEPA signs the final action, the second proposed rule would give the Agency the authority to take over until the state can assume the responsibility.

What this might mean to regulated entities:  A state that has to amend its rules, especially the 13 "presumptive inadequate" states, would likely have difficulty making the changes by USEPA's deadline, which is within 12 months after USEPA signs the final action.  If USEPA steps in as planned, new sources and modification projects might be unusually delayed while USEPA works through the GHG portions of permitting applications.

What this might mean in Allegheny County and most California counties:  It's hard to say.  Allegheny County and most of the Air Quality Management Districts in California are in a "grey area" - that is, they are not listed on either the Presumptive SIP Call or the Presumptive Adequate Lists.  USEPA has determined that these jurisdictions (among others) do not have an approved PSD SIP.  See additional discussion below.

What's next:  The two rules have not yet been formally proposed with publication in the Federal Register, and comments on the rules would be due 30 days after publication.  USEPA has scheduled a public hearing on the matter for August 25, 2010 in Arlington, Virginia.

Some Details and Acronyms

Under the first proposed rule, the SIP call, USEPA is proposing a finding of SIP substantial inadequacy for only the 13 states mentioned above (again, the "Presumptive Sip Call List").  For the most part, in all other states USEPA is proposing a finding of SIP substantial adequacy (the "Presumptive Adequate List").  If any of the Presumptive SIP Call List states are not in a position to submit to USEPA a corrective SIP revision within 12 months after USEPA signs the final action, USEPA will promulgate a FIP that will provide authority to issue PSD permits.  USEPA intends to finalize the SIP call on or about December 1, 2010. 

Nonetheless, for each of the presumptive adequate list states, USEPA is soliciting comments in the SIP call on whether their SIPs do or do not apply the PSD program to GHG sources.  USEPA is not at this time proposing a FIP for the states on the "presumptive adequate" list.  However, if EPA concludes after comment on the rule that a state's SIP does not apply to GHG sources, then USEPA will proceed to issue a finding of substantial inadequacy and a SIP call on the same schedule as the already-listed-as-presumptive-inadequate states.  If a newly listed state is not able to submit to USEPA a SIP revision that applies the PSD program to GHG sources by the SIP call deadline, then USEPA proposes to promulgate a FIP for that state without further notice and comment.  Thus, any state listed on the Presumptive Sip Call List (and any state that feels it might be added to such list after the comment period) should consider the comment period for the SIP call notice to be their opportunity to comment on the FIP as well.

Unlisted Jurisdictions: Inter alia, Allegheny County, Pennsylvania and Several California Counties

Again, the 13 states with "presumptive inadequate" SIPs are Alaska, Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon and Texas.  All other states for the most part are on the "presumptive adequate" list - which means they should not expect a SIP call unless USEPA decides to the contrary at the close of the comment period on the SIP call notice. 

There are several unlisted jurisdictions.  An example of this is Pennsylvania.  Pennsylvania is on the presumptive adequate list (the list of states that appear to apply PSD to GHG sources).  However, USEPA specifically excepted solely Allegheny County from the Presumptive Adequate List when listing Pennsylvania.  In addition, Allegheny County, Pennsylvania, does not appear on the Presumptive SIP Call list.  According to USEPA, the Agency has determined that Allegheny County (among others) does not have an approved PSD SIP.  USEPA has determined that in Allegheny County, the applicable regulatory authority is USEPA's regulations, found at 40 CFR 52.21, and presumably has determined that no changes need to be made to apply PSD to GHG sources.  It is worth noting that the docket record reflects that USEPA made this determination without input from Allegheny County, according to USEPA sources.  This could be because Allegheny County did not respond to a 60-day letter request from USEPA regarding adequacy under the Tailoring Rule.  Allegheny County may not have made a determination internally whether its air regulations require revision to apply PSD to GHG sources.  There is only USEPA unchallenged assertion at this point.  Thus it is still not clear whether Allegheny County air regulations require revision - that is, whether conflicting provisions create ambiguity within Allegheny County air regulation as to whether it applies to GHGs.  If USEPA's conclusion remains unchallenged, sources in Allegheny County can expect the proposed FIP (that is, the provisions of 40 CFR 52.21 limited solely to GHGs) to apply to PSD permitting after January 2, 2011 in accordance with the Tailoring Rule and its phased-in approach.

Another example of unlisted jurisdictions is California.  Four California Air Quality Management Districts (AQMD) appear on the Presumptive Adequate list (Mendocino, Monterey Bay Unified, North Coast Unified, and Northern Sonoma County).  One California AQMD appears on the Presumptive Sip Call List (Sacramento Metropolitan). All other AQMDs in California are unlisted  -  presumably because USEPA has determined that these jurisdictions (among others) do not have an approved PSD SIP.  This means that sources commenting on the USEPA proposed action have localized interests - that is, comments on and objections to USEPA's proposed action may vary from site to site.  Companies with multiple facilities in California should coordinate responses carefully.

If you have any questions regarding these proposed rules, please do not hesitate to contact Larry Demase, Todd Maiden, Jennifer Smokelin or Dave Wagner.

The Weakest Link in Greenhouse Gas Regulation? USEPA's Tailoring Rule

This post was written by Jennifer Smokelin.

Implementing the Environmental Protection Agency’s (USEPA’s) regulation of greenhouse gases (GHGs) under the Clean Air Act (CAA) is a three link chain, and each link in the chain is necessary and determinative of the success of the program as a whole. If any link fails, so does USEPA’s ability to regulate GHGs under the CAA. The three links are: (1) the Endangerment Finding; (2) the Tailoring Rule; and (3) the Best Available Control Technology (BACT) guidance. Previous articles in this blog and other blogs as well as teleseminar presentations by Reed Smith’s Environmental Team have discussed the likelihood of success to challenges to the Endangerment Finding. This post will briefly describe challenges to what is likely the weakest link in USEPA’s GHG regulation chain: the Tailoring Rule.

On August 12, 2010 EPA issued the final “Tailoring Rule.” The rule sets forth USEPA’s determination as to which GHG sources will be covered under the CAA and at what point these sources will be covered. Without the Tailoring Rule, even small sources would need to get permits for their GHG emissions when the Agency’s emission limits trigger CAA permitting rules for industrial facilities. The CAA’s emission thresholds for “conventional pollutants” such as lead and sulfur dioxide are 100 or 250 tons a year, but USEPA has indicated that those limits are not feasible for GHGs, which are emitted in much larger quantities.

So far there are numerous challenges to the Tailoring Rule. Last week, the U.S. Court of Appeals for the District of Columbia Circuit consolidated 20 of the lawsuits against USEPA’s Tailoring Rule. The case’s court date has not yet been set. Unlike challengers to the Endangerment Finding who don’t want USEPA to act, most of the challengers to the Tailoring Rule (in particular the environmental groups) don’t think USEPA is going far enough to regulate GHGs under the rule.

These challenges to the Tailoring Rule likely have some merit. The crux of these challenges focus on the threshold and timing determinations in USEPA’s final Tailoring Rule. USEPA initially proposed to regulate industrial sources that emit more than 25,000 tons of carbon dioxide per year, but the final rule set a significantly higher emission threshold with plans to phase in smaller sources over time. Starting in January 2011, only sources that already have to apply for permits for other pollutants and emit more than 75,000 tons of GHGs per year would be affected. And starting in July 2011 new and modified plants that emit more than 100,000 tons of GHGs per year would be affected. This effectively leaves major industrial sources under the 75,000 threshold unregulated until at least 2016 and perhaps beyond. Challenges to the Tailoring Rule claims that this switch from 25,000 to 75,000 tons in the Final Rule is arbitrary and capricious with no scientific basis in the record to support it.

Interestingly, one of the most significant challenges to the Tailoring Rule has been brought by the Center for Biological Diversity (CBD). This challenge, filed on August 2, 2010, has been getting a lot of press lately, likely due to the CBD's impressive track record. This non-profit organization has picked legal battles it is likely to win, claiming that 93 percent of its lawsuits result in favorable outcomes.

Climate Change Legislation is Dead. Long Live Climate Change Regulation!

This post was written by Larry Demase, Jennifer Smokelin and David Wagner.

Although an energy bill is now on the Senate floor, it is limited to energy conservation and issues related to the oil spill. It does not include a price on carbon in the form of cap and trade for any sector, and we are unlikely to see comprehensive climate legislation in September or later this year. So now what? Congressional failure to act now or later in 2010 means that, on the federal level, the U.S. Environmental Protection Agency ("USEPA") will step in and use its authority under the Clean Air Act to regulate greenhouse gases ("GHGs") from the utility, transportation and industrial sectors, and there is a small possibility that such regulation by USEPA will include a cap-and-trade program. To be sure, USEPA has already taken several steps to regulate GHGs. 

The following post discusses what will likely come out of Congress and USEPA's ongoing efforts to enact measures that regulate GHGs.

Federal Climate Change Legislation is Dead in Congress
 

What's Left of Energy Measures in the 111th Congress and What Will We Get Before the August 9 Recess?


Senate Majority Leader Harry Reid (D-Nev.) has declared that the proposed legislation he will bring to the Senate floor this week will address energy efficiency and will encompass issues related to the oil spill. A draft of the bill, titled "Clean Energy Jobs and Oil Company Accountability Act," discloses that such a bill will raise the $75 million spill-liability cap for oil companies under the short title "Big Oil Bailout Prevention Unlimited Liability Act of 2010." Further, Division C of the bill would provide $5 billion in incentives for the "Home Star" energy-efficiency retrofit program, which would provide sale rebates to encourage homeowners to make energy efficient upgrades. Further, the bill would provide tax breaks for natural gas vehicles and electrification of transportation infrastructure (Division B), and boost money for the Land and Water Conservation Fund (Division D).
In sum, the Senate is moving toward an energy measure that addresses offshore drilling and energy conservation measures. Would the president sign such a bill? Likely yes.
 

Will There be Action on Comprehensive Climate Legislation in September or in "Lame Duck" November Congressional Activity?


Probably not. Congress is expected to wrap up major legislative action by early September, at the latest – and most say that if any action is to occur, it will occur before the August 9 recess. As indicated above, there will be no comprehensive climate change legislation before the August 9 recess. Following the August 9 recess, the fall campaign season begins for the midterm Congressional elections and the Senate likely would lose focus on GHGs.
 

There is the possibility of Democrats adding cap-and-trade provisions to a House and Senate energy conference during the November "lame duck" session of Congress. The lame-duck session occurs after the November election, when much of the political pressure on lawmakers has dissipated.
 

Some observers have speculated that the House-passed Waxman-Markey bill (that includes cap and trade) could be back in play during conference, or that Democratic leaders could use a conference to ratchet up the climate provisions in a final bill. However, Republican leadership is taking pains now to ensure that does not happen. Sen. Mike Johanns (R-Neb.) recently introduced an amendment that would require the support of two-thirds of the Senate, or 67 votes, to include cap-and-trade climate legislation in a House-Senate conference report if the Senate has not already debated and approved it with the normal 60-vote threshold.
 

There is also the possibility of Congressional preemption of USEPA action. West Virginia Sen. Jay Rockefeller, a Democrat, has proposed suspending the EPA's greenhouse gas regulations for two years. Reid has not yet announced whether he will take up Rockefeller's amendment before the end of the year. Reid may face pressure to do so from within his own caucus, as several moderate Democrats voted against Sen. Lisa Murkowski's (R-Alaska) resolution to revoke EPA's "endangerment finding" on carbon emissions because they were promised a later vote on Rockefeller's toned-down version.
 

But Federal Climate Change Lives at USEPA: The Agency is Moving Ahead with Technological Controls

The Endangerment Finding


On December 7, 2009, in response to the decision of the Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007) that GHGs were air contaminants, the USEPA Administrator made two distinct findings regarding GHGs. The first, known as the Endangerment Finding, is applicable to stationary and mobile sources and concludes that GHGs threaten (endanger) the public health and welfare of current and future generations. The second finding, known as the Cause or Contribute Finding, states these same GHGs, when emitted from new motor vehicle engines, cause or contribute to GHG pollution that threaten public health and welfare. See Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202 of the Clean Air Act, Final Rule, 74 Fed. Reg. 66496 (December 15, 2009). The Endangerment Finding has the effect of triggering USEPA action under the stationary source provisions of the Clean Air Act. The Endangerment Finding has come under attack both through petitions to reconsider and legal challenges. On June 18, 2010, the District of Columbia Circuit Court of Appeals decision set aside one group of challenges to the Endangerment Finding until EPA considers pending petitions to reconsider the Endangerment Finding.
 

Mandatory GHG Emission Reporting Rule


Prior to the issuance of its Endangerment Finding, on September 22, 2007, USEPA adopted a Rule (40 C.F.R. Part 98) requiring the mandatory reporting of greenhouse gases from certain sources that emit 25,000 metric tons or more of GHGs per year. USEPA's mandatory reporting regulations do not require sources to control their GHGs emissions, but it was not long after the initial rules were promulgated that USEPA moved in that direction, further pressuring Congress to act.
 

USEPA Acts to Control GHG Emissions from New or Modified Stationary Sources: The GHG 'Tailoring' Rule

 
On May 13, 2010, USEPA issued a final rule setting thresholds for sources of GHGs that defined when permits will be required for new sources under the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act. This rule applies only to relatively large commercial sources of GHGs and is to be implemented in two steps.


The first step (January 2, 2011 through June 30, 2011) will require GHG sources subject to PSD permitting because of other types of emissions to also address GHG emissions. For these projects, GHG increases of 75,000 tpy will, inter alia, trigger the requirement that best available control technology ("BACT") is to be used to control GHG emissions.


In the second step (July 1, 2011 to June 30, 2013), PSD permitting will cover new facilities that emit GHG emissions of at least 100,000 tpy, and modified facilities that increase emissions by at least 75,000 tpy, even if they do not exceed the permitting thresholds for any other pollutant.


Requirements for new sources that are built after June 30, 2013 have not been established by USEPA, but the Agency has said it would undertake another rulemaking in 2011 on a third step for phasing in GHG in which it will address whether certain smaller sources can be permanently excluded from permitting.


This rulemaking is known as the "tailoring rule" because it limits which facilities would be subject to PSD permitting. USEPA promised to provide states with guidance related to BACT requirements for GHG sources.


In the absence of ambient air quality standards for GHGs, it is difficult to see how the Tailoring Rule will be justified under the PSD provisions of the Clean Air Act.


USEPA Cap-and-Trade Programs


USEPA has a number of successful cap-and-trade programs in place. The oldest and most successful is its Acid Rain allowance trading program designed to reduce sulfur dioxide emissions for the utility sector. It was established under Title IV of the Clean Air Act and could be a model for a GHG trading program, particularly if it is limited to electric utilities and retains the simplicity of the Acid Rain Program. There are major differences, however, between the comprehensive, economy-wide cap-and-trade programs proposed by Congress and the Acid Rain Program. Most notably, the Acid Rain Program allows no offsets. Offsets, or emission reduction credits from non-covered sources in a cap-and-trade program, are a large part of many of the economy-wide cap-and-trade programs proposed in Congress, and are widely seen as a great tool for economic development and as a way to "bring in" non-covered sources under the cap. So far, however, USEPA has eschewed cap and trade as a regulatory scheme to regulate GHG and has decided to proceed with technological controls perhaps, in part, because it believes that will encourage industry to support the more flexible cap-and-trade legislation – and, in part, because of USEPA's recent woes in the Federal Circuit Courts of Appeal with getting approval of the Clean Air Interstate Rule ("CAIR") and its progeny (discussed below).

USEPA's Cap-and-Trade Programs Vacated


If USEPA does go ahead and regulate greenhouse gases by a cap-and-trade system, it must consider how to do so with a plan that will survive judicial review. Since 2005, USEPA has seen Bush Administration cap-and-trade programs to reduce mercury, and nitrogen oxide and sulfur dioxide emissions, vacated by the D.C. Circuit Court of Appeals. The Clean Air Mercury Rule ("CAMR") and the CAIR both would have utilized a cap-and-trade system. Both approaches were rejected by the D.C. Circuit Court of Appeals: (1) CAMR was vacated in 2007, NRDC v. EPA, 489 F.3d 1364 (D.C. Cir. 2007); and (2) CAIR was vacated in 2008, North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). The U.S. Circuit Court of Appeals, however, reinstated CAIR – including the cap-and-trade system – until USEPA issued a new rule, 531 F.3d 896, 901 (D.C. Cir. 2008). On July 6, 2010, USEPA released a draft of the proposed replacement rule, the Transport Rule. It contains limited cap-and-trade provisions. It is obvious that if USEPA decides to adopt a cap-and-trade program without the benefit of legislation, it must do so very carefully. It is therefore likely that if USEPA moves forward to regulate GHGs from the utility and manufacturing sector, it will be under a "command and control" approach and technological (BACT) limitations.

Conclusion


The next few weeks will likely solidify the fact that there will be federal regulation of emission from GHGs sources, but by everyone's "second best" source choice, USEPA. It is important to note that a failure by Congress to come to a consensus on regulating GHG emission leaves the probability (some may say certainty) of GHG emission controls by USEPA in the industrial and utility sectors starting in January 2011.

Stakeholders Speak Out to USEPA on Hydraulic Fracturing

This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

Reed Smith joined an audience of 1,200 attendees at last night's "Opportunity for Stakeholder Input on Criteria for Selecting Case Studies for Consideration in USEPA's Hydraulic Fracturing Research Study" meeting in Southpointe, PA, just outside of Pittsburgh. The standing-room only event marked the largest turnout yet in this series of public hearings sponsored by the U.S. Environmental Protection Agency (USEPA). Approximately 600 people attended the first hearing in Fort Worth, Texas on July 8, while nearly 350 attended in Denver, CO on July 13. The last hearing in the series of four will take place in Binghamton, NY on August 12.

USEPA has explained that the purpose of the hearings is to solicit input from community and industry stakeholders on the design of USEPA's upcoming study of the potential impact of hydraulic fracturing ("hydro-fracking")­—which involves pumping large volumes of water mixed with frac fluid and sand into geologic formations to extract natural gas—on groundwater and drinking water. To facilitate this goal, USEPA welcomed members of the community to register for two-minute slots of speaking time during which they could address their thoughts on the scope and design of the study, as well as on the potential costs and benefits posed by Marcellus Shale natural gas production in Pennsylvania.

It became clear from the comments of the 130 or so speakers that public concern over the potential adverse environmental and health impacts of hydro-fracking has reached fever pitch. Some concerned community members advocated for a moratorium to be placed on all Pennsylvania natural gas drilling, similar to the one currently in effect in New York state, until USEPA completes its hydro-fracking study (expected sometime in late 2012). Industry supporters expressed fears that over-regulation could chill the significant increases in job opportunities and government revenue expected in Pennsylvania as a result of Marcellus Shale natural gas development and production.

According to USEPA, the study is scheduled to begin in early 2011, with preliminary study results expected in 2012. In addition to conducting the series of four public hearings, USEPA is also soliciting comments from the public via email at hydraulic.fracturing@epa.gov on the following inquiries: (1) where should USEPA prioritize its efforts?; (2) where are gaps in current knowledge?; (3) is there data and information already in existence that USEPA should be aware of?; and (4) are there potential candidate sites or case studies that would be useful for the study?

USEPA to Host Public Meetings on Hydraulic Fracturing and its Potential Impact on Drinking Water

This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

Starting in July, the U.S. Environmental Protection Agency (USEPA) will begin holding a series of public information meetings to discuss a newly proposed study of the potential adverse effects of hydro-fracking on drinking water, including one scheduled at the Hilton Garden Hotel in Southpointe, Pennsylvania on July 22 from 6 p.m. to 10 p.m. Other meetings are in Fort Worth, Texas on July 8; Denver, Colorado on July 13; and Binghamton, New York on August 12. The purpose of the meetings is to provide the public with information about the study itself, which is still in its initial planning stages, as well as to solicit comments on its design and scope. According to USEPA, "[n]atural gas plays a key role in our nation’s clean energy future and hydraulic fracturing is one way of accessing this vital resource." However, due to the "serious concerns" that have been raised about the possible impact of hydro-fracking on human health and the environment, the relationship between the fracking technique, which involves the pumping of frac fluid (water and chemicals) and sand into shale formations to create fractures through which natural gas can flow to production wells, and its effects on water supplies needs to be better understood.

 

USEPA Increases Permitting Requirements for Surface Coal Mining Projects

This post was written by Mark Mustian.

On April 1, 2010, the U.S. Environmental Protection Agency (USEPA) published on their website a new guidance document on improving USEPA reviews of Appalachian surface coal mining operations. As we noted in our blog over a year ago, changes were likely coming to the practice of mountain-top mining. The guidance documents sets forth the standards which will be followed when evaluating the issuance of permits under Section 404 of the Clean Water Act for the discharge of dredged or fill material during surface mining operations. USEPA has identified the following standards which must be met for any future mining activities.

  • Water quality and environmental integrity must be protected
  • Mining projects must avoid and minimize environmental impacts
  • Mining impacts must be effectively mitigated
  • Water quality and biological parameters must be monitored

The standard which will likely have the most significant impact is the protection of water quality. USEPA is proposing to evaluate the impact of a project based upon an increase in conductivity in the stream. They are setting general standards which must be met for any future projects. USEPA has found that mountain-top mining causes significant and persistent increases in dissolved chemical ion levels downstream from the mining, and these increases reach levels which are acutely toxic to aquatic organisms. In conjunction with the release of the guidance document, USEPA has released a report which assesses the state of the science on the environmental impacts of mountain-top mines and valley fills on streams in the Central Appalachian Coalfields.

The guidance is intended to become effective immediately on an interim basis. However, USEPA will be publishing the guidance in the Federal Register for comment. Based upon the comments its receives, USEPA will decide whether to modify the guidance document.

The guidance document, the report on environmental impacts of mountain-top mining, and other associated documents are available here.

It's a Gas, Gas, Gas. . . USEPA's Proposes GHG Reporting from Oil and Gas Facilities

This post was written by Jennifer Smokelin.

The U.S. Environmental Protection Agency (USEPA) is proposing to include additional emissions sources in its first-ever national mandatory greenhouse gas (GHG) reporting system. On March 22, 2010, USEPA signed a proposed rule for the mandatory reporting of vented and fugitive methane (CH4) and carbon dioxide (CO2) emissions from petroleum and natural gas industry facilities emitting 25,000 metric tons or more of carbon dioxide equivalent per year. USEPA estimates the total cost of reporting to the private sector would be about $60 million for the first year and $25 million in subsequent years. This translates to an estimated average cost of $18,000 per facility for the first year and $8,000 in subsequent years.

Last year, USEPA finalized the first-ever GHG mandatory reporting requirement (MRR) in October of 2009. That rule required 31 industry sectors, covering 85 percent of total U.S. GHG emissions, to track and report their emissions.

In addition to those 31 industries, USEPA is now proposing to collect emissions data from the oil and natural gas sector, industries that emit fluorinated gases, and from facilities that inject and store CO2 underground for the purposes of geologic sequestration or enhanced oil and gas recovery. In a move broader than expected, covered facilities include onshore petroleum and natural gas producers, offshore petroleum and natural gas producers, onshore natural gas processing, natural gas transmission, underground natural storage, liquefied natural gas (LNG) storage, LNG import and export facilities, and natural gas distribution facilities. Methane is the primary GHG emitted from oil and natural gas systems and is more than 20 times as potent as CO2 at warming the atmosphere. USEPA’s proposed rule sets the reporting threshold for methane at 1250 tons per year.

USEPA expects to publish the final rule later in 2010 so that data collection for this source category can begin on January 1, 2011 with the first annual reports submitted to EPA on March 31, 2012. USEPA estimates that the proposal would cover 85 percent of the total GHG emissions from the U.S. petroleum and natural gas industry with approximately 3,000 facilities reporting. Due to the unique characteristics of these industry segments, the proposed definition of “facility” for onshore and offshore petroleum and natural gas production, and natural gas distribution differ from the definition of facility applied in the remainder of the MRR.

The proposals will be open for public comment for 60 days after publication in the Federal Register. The agency will also hold public hearings on these proposals on April 19, 2010 in Arlington, Va. and April 20, 2010 in Washington, D.C.
 

This Time We're Serious: USEPA Outlines Punitive Measures Related to Cleanup of the Chesapeake Bay Watershed

This post was written by Chris Rissetto, Lou Naugle, Bob Helland, and David Wagner.

Last week, the U.S. Environmental Protection Agency ("EPA") outlined what it terms a "rigorous accountability framework" for addressing pollution levels in the Chesapeake Bay and its tributaries. Federal efforts to cleanup the Chesapeake Bay watershed have been ongoing for over 25 years and this is the first time that EPA has outlined a number of punitive measures intended to force compliance with pollution controls by the six Chesapeake Bay states – Delaware, Maryland, New York, Pennyslvania, Virginia and West Virginia – and the District of Columbia.

The update by Reed Smith describes the regulatory regime in place to address the harmful levels of pollutants in the watershed and discusses the punitive measures along with the legal issues they raise. The update also discusses what measures are expected in 2010, especially as they relate to the Chesapeake Bay total maximum daily load (TMDL) for nitrogen, phosphorus and sediment.

USEPA Slated to Propose New Nanomaterial Rules in 2010

This post was written by David Wagner.

Last month, the U.S. Environmental Protection Agency (USEPA) reported in its Unified Agenda that two rules related to nanomaterials may be proposed this year. The first possible regulation is a reporting rule for as yet unspecified nanoscale materials under Section 8 of the Toxic Substances Control Act (TSCA). A notice of this proposed rulemaking is slated for June 2010. The second possible regulation, under Section 4 of TSCA, is a test rule for certain multi-wall carbon nanotubes as well as nanoscale clay and alumina. USEPA reported that notice of the test rule is scheduled to be published in November 2010.

The Unified Agenda, which is published twice a year, provides information about Federal regulatory and deregulatory activities, and includes descriptions about USEPA regulations currently under development or recently completed. 

With respect to the proposed reporting rule for certain nanoscale materials, USEPA reported that the “rule would propose that persons who manufacture these nanoscale materials notify USEPA of certain information including production volume, methods of manufacture and processing, exposure and release information, and available health and safety data. The proposed reporting of these activities will provide USEPA with an opportunity to evaluate the information and consider appropriate action under TSCA to reduce any risk to human health or the environment.” 

As for the proposed test rule for certain multi-wall carbon nanotubes and nanosized clays and alumina, USEPA explained that a test rule may be needed to determine the health effects of these materials. It said that “[t]he results of the tests that could be required under this rule would assist USEPA in understanding the health effects of the substance to manage/minimize any potential risk and exposure. Results could also help with establishing a correlation between the chemical/physical properties and health effects needed to protect the health of workers handling the substance.”