Ohio Environmental Law Blog : Ohio Environmental Lawyer & Attorney : Joseph Koncelik : Frantz Ward Law Firm : Environmental Regulation, Land Use, Compliance : Cleveland, Ohio

On December 17th, Ohio EPA re-issued a huge set of rules that impact industry, developers and the farming community.  The surface water quality rule package includes interrelated sets of rules dealing with the following areas of regulation:

• Stream Mitigation-   Contains an entirely new proposal for how to determine the amount of mitigation required for stream impacts.
• Section 401 Water Quality Certifications-  Creates an entirely new permit for "isolated stream" (streams that fall outside of federal jurisdiction under Section 404 of the Clean Water Act).
• Antidegredation-  sets standards for reviewing any impacts that would lower water quality.
• Water Quality Standards-  establishes new standards for wastewater discharges and other water quality impacts.

The Agency had originally released three of the packages (all except stream mitigation) back in the fall of 2008 (Click here for 2008 post).  In 2008, the rules were deemed highly controversial.  Some industry groups described the package as the largest overhaul of water quality rules in thirty years.

Curious Timing for Re-Release

After a flurry of activity in 2008, the rules were essentially shelved for almost two years.  Ohio EPA made the decision to try and move forward with some of the less controversial components independently. 

Now, the entire package is being re-released with the stream mitigation proposal included.  The Agency has established a public comment deadline of March 8, 2011. 

The Agency's decision to release these rules in late December a few weeks after the election and a few weeks prior to Governor Kasich being sworn in can only be described as curious.  Following the election, Director Korleski submitted his resignation and Governor Kasich has yet to announce a new Director of Ohio EPA.  It is quite possible a new Director could not be named until after March 8, 2011. 

Any new Director will almost certainly want to review, in detail, this massive rule package and understand the issues.  Given this uncertainty why release the rule package now and set an aggressive deadline for public comments?  In my mind, it only sets the stage for the rules to be pulled once again to allow for complete analysis by the new leadership team.

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The D.C. Circuit Court of Appeals has rejected an industry request to delay implementation of U.S. EPA's greenhouse gas permitting requirements.  Industry had requested a stay on the effectiveness of the rules while it proceeds with its full legal challenge to the Agency's Endangerment Finding. 

(Prior Post Discussing Lawsuit and Industry Arguments for Blocking the Effectiveness of the EPA GHG Rules)

Beginning in a matter of weeks, large new and modified sources of greenhouse gases will be required to analyze available methods for reducing emissions of GHGs as part of the federal permitting process- New Source Review Program.

Attention will now most assuredly turn to Congress which will debate legislative proposals to place either a temporary or permanent hold on implementation of the EPA rules.  However, there is no doubt such legislation is not going to happen quickly.  Therefore, implementation of the EPA requirements will commence in January.

Best coverage of the story appeared in the Washington Post.  The article offered these two perspectives on the Court's decision:

Scott Segal, a lobbyist at Bracewell Giuliani, a firm that represents utilities, refiners, cement companies and manufacturers, said that if companies can't meet requirements, then "the court may have ensured an effective construction moratorium for industrial and power projects. Given the state of the economy, the decision is certainly not a welcome holiday present."

But Nilles said that companies were exaggerating the difficulty of meeting EPA standards. He said that years ago when regulations about acid rain were imposed, "industry promised that the sky would fall, and it didn't."

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Boiler MACT Rules-  On December 7th, EPA filed a motion with the Court requesting more time in order to re-propose the Boiler MACT rules and allow for public comment.  In EPA's motion to the Court, EPA sets forth following timetable if its motion is granted to move impending January deadline is moved to April: it will publish revised proposals no later than June 1, 2011, and promulgate the final emission standards no later than April 13, 2002. 

EPA states that more time is needed because significant issues with the proposed standards were raised in the public comment period and it needs more time to evaluate the technical merits of those comments.  This from EPA's motion:

As evidenced by the number of comments, which include a substantial amount of
additional new data, the major source boilers, area source boilers, and CISWI rules will have far reaching effects. Estimates of the monetized value of the public health benefits for all three rules combined range from $18 billion and $44 billion. The economic impacts of implementation of these standards will also be significant and vary by rule. For example, the nation-wide capital cost for the proposed major source boilers rule was estimated to be $9.5 billion in the year 2013, with a total national annual cost of $2.9 billion in the year 2013. The major source and area source boilers rules are expected to apply at almost 200,000 boilers at over 90,000 facilities. On balance, given the broad impact these rules will have, EPA believes that the overall public interest is best served by allowing EPA to re-propose the rules so that the Agency will be able to issue emission standards that are based upon a thorough consideration of all available data and reduce potential litigation risks.

Many are very relieved that EPA has decided to take a second look at its proposed standards.  The rules have wide ranging applicability and huge costs associated with them.

U.S. Supreme Court to Hear Climate Change Nuisance Case-  The Supreme Court has agreed to hear an appeal of Second Circuit's decision in American Electric Power v. Connecticut.  The lower court allowed several states, municipalities, and environmental groups to pursue a federal public nuisance action against a group of electric power producers for their emissions of greenhouse gases (GHGs). 

The issue of GHG emission contributing to climate change is global issue with millions of sources contributing.  The Court will examine how much a single subset of sources should be exposed to liability for their contribution to the issue.  

The lower court found the Plaintiffs showed the requisite grounds to bring the suit.  The Court found plaintiffs properly identified an injury, presented causation and redressability that should allow the suit to go forward.   The Supreme Court granted the petition to hear the appeal to review this determination.

Also at issue is whether federal nuisance actions have been displaced by U.S. EPA's recent promulgation of climate change regulations (monitoring, Endangerment Finding, Light-Duty Vehicle Rule, Tailoring Rule).  Federal nuisance actions are no longer available if it is determined that their is sufficient federal action to address the issue. 

If the Court finds federal nuisance action has been displaced by EPA's regulations, this may prove to by a phyrric victory for some.  Presumably, federal nuisance is only displaced so long as those regulation remain in place.  What should happen if congressional action delays implementation or litigation successfully overturns the Endangerment Finding?

Regardless, this will be a fascinating case to follow next year.

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With prospects dead for federal cap and trade climate change legislation, the focus for market mechanisms to reduce greenhouse gas (GHG) emissions shifts to the states.  Meanwhile, as discussed in my last post,  EPA is left moving forward with its command and control regulations to reduce GHGs under the Clean Air Act.

After the defeat of Proposition 23, California's climate change programs are moving forward including cap and trade which is planned to start in 2012. California is in talks to link their carbon trading market with New Mexico, British Columbia, Ontario and Quebec.  There is even a possibility of linking the market to the 10 Northeast states already operating a trading program for power plants- RGGI. 

Now an interesting concept is being proposed that would allow states using market mechanisms to reduce GHGs to be exempt from EPA's command and control regulations. The following appeared in article in Reuters,

U.S. states with cap-and-trade laws want the Obama administration to add their carbon markets into new federal greenhouse-gas regulations, a California environmental official said.

State-run carbon-trading programs should be "treated as equivalents or substitutes" for Environmental Protection Agency regulations for emissions tied to global warming from power plants, oil refineries and factories, Mary Nichols, Chairman of the California Air Resources Board, said yesterday in a telephone interview.

This is an interesting proposition.  Would EPA allow state cap and trade programs to replace regulations under the Clean Air Act such as New Source Review (NSR) or New Source Performance Standards (NSPS)?

It may set up an interesting dynamic where states that have adopted market mechanisms for reducing GHG emissions are put at an advantage to states subject to the myriad of EPA command and control regulations.  While cap and trade has recently received a very bad name, putting these two regulatory approaches side-by-side may breathe new life into cap and trade as a more business friendly means of reducing GHG emissions.

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As Congress failed to pass climate change legislation, U.S. EPA will begin regulating greenhouse gases (GHGs) using its existing authority under the Clean Air Act.  Beginning 2011, major sources of GHGs will be required to analyze methods for reducing emissions when seeking federal permits for expansion or construction of new sources. 

When is a federal review of GHGs triggered?

Under the Tailoring Rule, U.S. EPA established thresholds for triggering federal permit review of GHGs from new and modified sources.  Initially, only the largest sources will be covered.  The newly released guidance document contains these useful tables:

If you trigger a review of GHGs under the federal air permit program (PSD permit), then the permitting agency must determine what the Best Available Control Technology (BACT) is to reduce emission of GHGs for that source. 

Complex Case-By-Case Process Will Prove Very Difficult

Selecting BACT is no easy process. BACT reviews can become the black box of permitting.  It includes a highly complex review of all existing technologies to reduce emissions and their potential application to the source.  A business may propose what they think BACT should be, however, they have no assurance the permitting agency will concur with their choice. 

US EPA's PSD GHG guidance states all available emission reduction options for GHGs should be reviewed.  Once the options are identified, they should be evaluated based upon the following elements:

• technical feasibility;
• cost and other economic considerations;
• environmental and energy considerations.  

The permitting agency performing the review should narrow the options and select the most appropriate technology or combination of technologies from the list.  This case-by-case determination provides no certainty to industry.  This is especially true for the first permits that will trigger the review. 

No Benchmarks for First Permits

With other pollutants (SO2, NOx, CO, etc.) that have long been subject to BACT review, U.S. EPA has assembled a database of permitting actions that identify technology as well as emission limits.  This database is referred to at the BACT/RACT/LAER Clearinghouse.  U.S. EPA directs permit reviewers to consult the Clearinghouse as a first step. 

With GHGs, the Clearinghouse will provide little assistance.  There will simply be no other permits issued for similar sources that will allow permit reviewers to compare determinations.  With no benchmarks, permit reviewers will be guessing at BACT. 

U.S. EPA has released white papers on available and emerging technologies for specific industry sectors.  However, these are simply laundry lists of technologies.  Until the Clearinghouse is populated, permit reviewers will have no ability to benchmark their determinations. 

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