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

There has been major developments as a result of litigation, policy, rulemaking and legislation in the last few weeks relating to climate change and coal fired power plants.  Some changes are a result of outstanding litigation.  However, the most significant changes are indicative of the sea change that is occurring at the federal level under the Obama Administration relative to climate change. 

 Here is a review:

1. EPA will not regulate mercury by cap and trade-  EPA Administrator Jackson announced today that the Agency will be moving forward with rulemaking to regulate mercury emissions from coal plants.  "President Obama's EPA does intend to regulate mercury under section 112 of the Clean Air Act," said Jackson. Acting solicitor general Edwin S. Kneedler will drop the prior appeal of the decision in New Jersey v. EPA which struck down the Bush Administration cap and trade proposal for regulating mercury.
2. NEPA reviews of climate change impact required for oversees projects- The Obama Administration has settled an outstanding lawsuit which sought to compel NEPA reviews of climate change impacts for oversees projects financed with federal money.  Western cities and environmental groups alleged that Export-Import Bank of the United States and the Overseas Private Investment Corporation illegally provided more than $32 billion in financing and insurance to fossil fuel projects over 10 years without assessing whether the projects contributed to global warming or impacted the U.S. environment, as they were required to do under the National Environmental Policy Act (NEPA).  The settlement will require NEPA reviews and will also require future reductions of greenhouse gases.
3. BACT for coal plants does not mean IGCC-  A Texas Appeals Court rejected a challenge to a permit for a new 800 mw pulverized coal plant.  Appellants has argued the permit should have required IGCC technology as BACT instead of the proposed pulverized coal technology.  Consistent with other Court decisions looking at BACT, the Court said control technologies under BACT must be applied to the proposed project which in this case was a pulverized coal plant.
4. No Climate Change Legislation This Year-  Senator Boxer released here principles for what must be included in the Senate version of climate change legislation.  Senator Boxer said “Copenhagen is December...That’s why I said we’ll have a bill out of this committee by then.”  However, any bill passing out the committee still must pass the full senate and be reconciled with the House bill.  This schedule renders it impossible that cap and trade legislation will pass Congress in 2009.
5. EPA begins review of California Waiver Decision-  In a press release today, EPA announced they are beginning the review of the California waiver request to regulate greenhouse gas emissions from vehicles.  I think this quote from the EPA press release pretty much tells you what the outcome will be - "EPA believes that there are significant issues regarding the agency’s denial of the waiver. The denial was a substantial departure from EPA’s longstanding interpretation of the Clean Air Act’s waiver provisions. "

 (Photo: CJJohnson7/everystockphoto.com)

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All the recent climate change related litigation has overshadowed major activity around control of hazardous air pollutants (HAPs) from coal plants.  Mercury is one such HAP.  Back in February 8, 2008  in New Jersey v. EPA, the D.C. Circuit Court of Appeals threw out U.S. EPA's cap and trade program for mercury, known as the Clean Air Mercury Rule (CAMR).  

EPA's decision to create a cap and trade program for mercury was very controversial.  Those opposed said cap and trade was not meant to control toxic pollutants like mercury.  In response, a number of states rejected the CAMR rule and adopted state programs that established control requirements for every coal plant within their borders.

While the federal court declared CAMR illegal, it also made an important determination as it relates to control of HAPs from coal plants.  In order to create the cap and trade program, the Bush Administration had to undue the efforts of the Clinton Administration to establish facility specific control standards for coal plants under Section 112 of the Clean Air Act. 

In December 2000, the Clinton EPA decided to list electric generating units (EGUs) under section 112.  By listing this source category under Section 112, all existing and new plants must meet Maximum Available Control Technology Standards (MACT) for controlling emissions of HAPs.  MACT is emission controls equal to the "average emission limitation achieved by the best performing 12 percent of the existing sources."

In order to create its cap and trade program, the Bush Administration tried to de-list EGUs as a source category regulated under Section 112.  The federal court in New Jersey v. EPA found this action to be illegal.  This means that EPA must move forward with rules establishing a MACT standard for EGUs.  To date, EPA has failed to take such action.  As reported in the Charleston Gazette this week, groups have sued EPA to compel such action. 

A coalition of environmental groups has filed a lawsuit trying to force the federal government to comply with a 6-year-old mandate to reduce toxic chemical emissions from coal-fired power plants.

The suit, filed Thursday in federal court in Washington, asks for a court order requiring the U.S. Environmental Protection Agency to set limits for mercury and dozens of other hazardous air pollutants.

The new lawsuit follows a major decision by a federal court in North Carolina (Southern Alliance for Clean Energy v. Duke) that invalidated a permit for construction of a new coal plant because the permit failed to show compliance with MACT for HAPs.  The main issue in the case was whether the MACT standards apply to the on-going construction of a coal plant following the New Jersey decision.  Notably, the Court ruled that MACT did apply even though the permit was issued and construction had already began on the new source.

While mercury and other HAPs won't be controlled from existing plants until EPA finalizes its MACT standards for EGUs, at least one federal court has said new plants must meet the yet to be established standard.  This presents another avenue for environmentalists to challenge air permits for coal plants, even permits issued prior to the February 8, 2008 decision.

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The U.S. Senate Environment and Public Works Committee held a timely hearing on the effect of the Court of Appeals decision vacating CAIR.  There was testimony from US EPA, State, Utilities and one Environmental Group. 

The Senators and all who testified agreed on certain items:

• Substantial health benefits will be lost without action to replace CAIR (17,000 fewer premature deaths avoided each year)
• Tremendous uncertainty exists- the market for trading allowances collapsed following the decision (NOx trading stopped, SO2 allowance prices lost 70% of their value in a day)
• States air quality compliance is in disarray- All who relied on CAIR must redo their clean air plans (SIPs) and will find it extremely difficult to make up the reductions attributable to CAIR
• Utilities risk losing billions in investments in new pollution controls and purchases of allowances (one utility declared a $100 million dollar loss due to collapse of the allowance market)

With so much agreement, one would assume that quick legislative action is likely to address the problem.  Not so fast- Don't forget that the CAIR rule came into existence because Congress could not agree on Clear Skies (a cap and trade legislative proposal).  Those same rifts emerged during the Senate hearing.

• How many P's? (which pollutants should a program cover- NOx, SO2, CO2 or Mercury)
• How many States should be in? (28 versus a national program)
• How steep and fast should reductions be? (there is disagreement even for the two pollutants everyone agrees should be covered- NOx and SO2)

This really is going to boil down to a game of chicken.  On the one side (Democrats, downwind-Eastern states and environmental groups) on the other (Republicans, upwind-Midwest states and the utilities). 

Do those advocating for an aggressive four pollutant bill really want to risk achieving no short term benefits in hopes of more aggressive legislation in the future?   Are they willing to withstand the mess that will ensue in their States without at least a stop gap measure?  Is this really the vehicle to adopt climate change legislation?

On the other side....do Utilities want to face this much uncertainty, especially heading into an election cycle?  Are the Midwest states comfortable that CAIR reductions will be sufficient to meet tougher federal air quality standards?  Are they willing to impose even more costly controls on businesses within their State if cap and trade is taken off the table?

It appears this may be the perfect storm that may actually result in something getting done.  Lets hope so.

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