What Does a Second Term for President Obama Mean for Environmental Regulation?

Through out the long and contentious election process the focus of the debate was getting America back to work.  Much of the debate centered on tax policy and budget cuts.  However, the President was accused of "over-regulation" which Mitt Romney argued cooled the economic recovery.

As part of the debate over regulation, environmental regulation was discussed.  The President was accused of waging "a war on coal."  Governor Romney also asserted that the President's climate change regulations represented an over-reach.

Now that the election is over and the President has won a second term, what does a second term really mean for forthcoming environmental regulation.  Most observers believe the President will be more emboldened in terms of environmental regulation now that he doesn't need to worry about re-election. 

Below are some of the areas in terms of environmental regulation that the Obama Administration will likely push forward with:

  1. Climate Change-  Some of environmental groups supporting President Obama hope that he will push forward with a major piece of legislation on climate change.  In the President's first term, Democrats came close to passing a cap-and-trade bill that would have put in place the largest new environmental program since creation of the EPA and the early environmental statutes (Clean Air Act, Clean Water Act, Superfund).  In reality, new legislation on climate change looks very unlikely.  The Re publican's still control the House and the margin is thin for the Democrats in the Senate.  Instead, the Administration will continue to implement climate change regulations under EPA's existing authority under the Clean Air Act.  This will likely mean lowering the carbon emission thresholds that trigger New Source Review and Title V permitting utilizing the Tailoring Rule.  It also means establishing emission standards for new major sources (i.e. New Source Performance Standards).
  2. Ozone-  The President came into office promising to undo the Bush era ozone standard of .75 ppm stating the standard was not based on science.  While the EPA proposed lowering the ozone standard it ended up punting on four separate occasions due to pressure from the business community.  Now it appears almost a certainty that the EPA will finally move forward with a lower standard of .70 ppm.
  3. Coal-Fired Power Plant Emission Reductions-  This past August the D.C. Circuit Court vacated U.S. EPA's Cross-State Air Pollution Rule (CSAPR) also known at the "Transport Rule." The Transport Rule was the second attempt by EPA to establish emission standards for existing coal-fired power plants.  The Transport Rule was blamed for potentially forcing the closure of a significant number of existing power plants threatening to driving up energy prices.  CSAPR was the Obama's Administration's effort to fix the issues the predecessor Bush era program known as the Clean Air Interstate Rule (CAIR) which was also struck down by the Courts.  In the Obama Administrations second term, EPA will once again attempt to fix this massive regulation.
  4. Fracking Regulation-  The natural gas industry continue to boom in Pennsylvania, Ohio and West Virginia.  The massive reserves found in the Marcellus and Utica Shale formations promise to provide home grown energy for a century.  Fracking is used to access these deep reserves that were previously not accessible.  Fracking uses deep wells and then breaks up the rock to release the gas.  Environmentalists are very concerned with the air emissions, water pollution and potential to contaminate groundwater from the fracking process. The Obama Administration moved slowly in putting in place new regulations in his first term.  EPA did establish federal air permitting requirements for new wells.  The Obama Administration also created a federal agency fracking working group to look at the process and recommend new regulations and coordinate between federal agencies.  It is very likely that in a second term will be proactive developing new regulation.
  5. Support for Renewable Energy-  The Obama Administration is likely to continue its strong support for renewable energy like wind, solar and biomass.  Its possible the President will explore a federal renewable energy standard similar to the renewable energy portfolio standards (RPS) imposed in many states.  An RPS mandates a certain percentage of power production must be provided by renewable energy sources.  It is possible the President will try and impose such a mandate nationally.  This still seems unlikely given the make up of Congress.  More likely is that the Obama Administration will continue financial support for the industry through tax breaks, grants and loans.
  6. Boiler MACT- In a second term, President Obama is likely to implement long-delayed emissions regulations for industrial boilers that apply to a whole array of industry. The  Boiler MACT (Maximum Achievable Control Technology), was proposed in 2004  before being delayed by litigation in the Courts.  EPA issued a new proposal in 2011 which was again delay due to controversy surrounding the sweeping new standards.  EPA may issue the final rules as soon as December.
  7. The Role of the Courts-  Many of the areas of regulation discussed above are involved in protracted litigation.  Challenges to climate change regulation are still pending.  EPA's re-write of CASPR will be challenged again.  There could be more challenges to the final boiler MACT rule.  The final ozone rule will almost certainly be challenged.  The petroleum industry will likely challenge any new fracking regulation.  Overall, the second term will not only see significant new regulation but major uncertainty as proposals, both new and old, will be challenged in the Courts.  Businesses like certainty.  In the world of environmental regulation that almost never seems to be the case.
     

 

EPA Won't Seek to Enforce Boiler MACT Deadlines After Recent Court Decision

In my prior post, I discussed the recent federal court ruling with found EPA's self-imposed stay of the Boiler MACT illegal.  Following the Court's ruling, concern was immediately raised by industry that they would be subject to the original deadlines that appear in the 2011 rulemaking. 

Yesterday, Administrator Jackson responded to a letter from Senator Ron Wyden regarding the EPA's position in light of the Court's ruling:

Regarding the impact of the recent court decision, we have carefully reviewed the effect that vacating the stay may have on new and existing sources and plan to address potential impacts. Specifically, using our enforcement discretion, the EPA will issue a no action assurance letter shortly, informing sources that EPA will not enforce any of the administrative notification requirements for new or existing boilers and incinerators in the 2011 Rules for a period of time while the EPA works to take final action on the proposal to reset these dates. For existing boilers and incinerators, these administrative notification requirements are the only obligations sources would otherwise have under the 2011 Rules prior to when the EPA intends to finalize the reconsideration process.

EPA also intends to reset the compliance clock once the final rule is issued:

Finally, the EPA recognizes that industry needs sufficient time to comply with these standards. As a result, the reconsideration proposal included a provision that would set new, later deadlines for meeting the standards set forth in the reconsideration proposal. While this is subject to the public comment
process, it was the EPA's intent in the proposed rule to allow the compliance clock to "reset" to provide the industry the full length of time - three years - provided in the Clean Air Act for compliance with the rules once they are finalized.

For a copy of Administrator Jackson's letter to the Senator, click here

 

 

Court Throws Out EPA's Self-Imposed Stay of Boiler MACT

On February 11, 2011, EPA issued two rules regulating hazardous air pollutants (HAPs) from thousands of industrial sources.  First, the "Boiler MACT" imposed standards on industrial, commercial and institutional boilers and process heaters.  Second, the "CISWI" imposed standards on commercial and industrial solid waste incinerators.   

Both rules were very controversial due to their wide coverage and cost of compliance.  Industry complained that EPA, on prior versions of the rules, failed to analyze real world data regarding standards.  Their failure resulted in standards that industry charged no facility had actually achieved in practice.

Environmental groups alleged that the rules were long overdue and EPA was simply delaying the rules due to pressure from industry.  When the rules were issued in February 2011, the Sierra Club filed challenged in the Court of Appeals.  EPA also announced that it was reconsidering the rules to take more time to analyze the data provided by industry during the comment period.

On May 18, 2011, two days before the rules were to take effect, EPA self-imposed a stay on the effectiveness of both rules.  EPA's stay was referred to as its "Delay Notice."  In the federal register announcement regarding the Delay Notice, EPA said the stay would be effective until judicial review proceedings were over or it completed its reconsideration of the rules, whichever occurred earlier.

EPA said the Delay Notice was necessary in order to avoid requiring thousands of facilities to comply with standards that soon may change.  EPA argued that once facilities began making investments to meet the standards, those investments would be irreversible.

The Court did not find any of EPA's justifications for the Delay Notice valid.  The Court even denied EPA's request to remand the Delay Notice so that EPA could provide better justification for the action.  The Court threw out the stay and issued an order requiring EPA to take immediate action to comply with its order. (Click here for Court's decision throwing out the stay of the Boiler MACT)

EPA had indicated it was going to complete is reconsideration by April 2012.  Therefore, it was able to delay the rules for most of the period it originally intended to complete its reconsideration.  However, now EPA will have no choice but to issue both rules.  More importantly, thousands of faculties across the country will likely be facing compliance deadlines with the clock beginning to tick this Spring.

U.S. EPA Stays Boiler Rule and Seeks Even More Comments

On March 21, 2011, U.S. EPA issued final air toxic standards for industrial and commercial boilers.  The rules regulated emissions of hazardous air pollutants (HAP) from industrial, commercial, and institutional boilers and process heaters located at major sources of HAP emissions (the "Major Source Boiler MACT").  The EPA also issued final rules regulating emissions from commercial and industrial solid waste incineration units (the "CISWI Rule"). 

While the rules were issued, EPA also announced that it would reconsider the rules to address certain technical issues.  Some of those technical issuesunder EPA review include:

  • Revising major subcategories in the major source rule;
  • Establishing work practice standards for limited use major source boilers;
  • Standards for biomass and oil-fired source boilers based on available control technology; and
  • Providing an affirmative defense for malfunction events.

The effective date for each of the new rules was supposed to be May 20th.  However, the industry has provided significant input that the standards are not realistic and will be too costly. A number of business associations filed motions for reconsideration and requested a stay of the effective date while EPA completed its reconsideration of the rules.

Yesterday, EPA announced it  has issued a temporary stay of their effectiveness and will seek comments through July 15, 2011. 

Thus, the long and winding road of this rule package just got a little longer.  The Agency consistently seems to miss the mark necessitating pulling back from its proposals and gathering more data. 

Below is a portion of U.S. EPA's announcement:

Following the April 2010 proposals, the agency received more than 4,800 comments from businesses and communities, including a significant amount of information that industry had not provided prior to the proposals. Based on this input, EPA made extensive revisions to the standards, and in December 2010 requested additional time for review to ensure the public’s input was fully addressed. The court only granted EPA 30 days, resulting in the February 2011 final rules. The agency is reconsidering the standards because the public did not have sufficient opportunity to comment on these changes, and, as a result, further public review and feedback is needed.

EPA will accept additional data and information on these standards until July 15, 2011.

 

Quick Hits: Boiler MACT Delayed; S.C. to Hear Climate Change Nuisance Case

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.