EPA Maintains Tailoring Rule Thresholds for Greenhouse Gas Permitting...But the Clock is Ticking

Last month, the D.C. Circuit Court of Appeals rejected challenges to U.S. EPA's Tailoring Rule which establishes the permitting threshold for greenhouse gas (GHG) pollutants.  On July 3rd, EPA issued a rulemaking that will maintain the current GHG thresholds for the immediate future.  The question is how long before environmental groups push EPA to lower the thresholds?

Tailoring Rule

Pursuant to the Clean Air Act, any facility that emits more the 100/250 tons per year of a pollutant regulated under the Act must go through EPA's New Source Review  (NSR) program.  As part of NSR, new sources or existing sources that are modified must demonstrate they have installed Best Available Control Technology (BACT) to reduce emissions of each regulated air permit.

Once EPA promulgated the Tailpipe Rule to control GHG emissions from vehicles, GHG's became a "regulated pollutant" for purpose of NSR.  Once GHGs became a  "regulated pollutant" any source that emits GHGs above applicable thresholds would trigger NSR.

Because GHGs are emitted in much greater quantities than typical Clean Air Act pollutants, EPA was concerned that application of the 100/250 ton per year threshold to GHGs would trigger thousands of permits. EPA and the States did not have the capacity to process that number of permits. 

To address the situation, EPA promulgated the Tailoring Rule to temporarily raise the permitting thresholds.  Under the first stage of the Tailoring Rule, new facilities that emit 100,000 tons per year of carbon dioxide-equivalent and existing facilities that increase their emissions by 75,000 tons per year of carbon dioxide-equivalent will trigger NSR.

EPA Must Eventually Lower GHG Thresholds

In the July 3rd action, EPA said that the States and EPA did not have the capacity to process additional NSR permit that would be required if it lowered the threshold.  Therefore, it kept the trigger thresholds at 100,000 and 75,000 tons per year. EPA pointed to the economy's impacted on federal and state budgets as one reason that permitting authorities lacked additional capacity to process a greater number of permits.

EPA has announced that it will study the burdens associated with lowering GHG thresholds by April 30, 2015.  EPA has said, following completion of the study, that it will review the permitting thresholds and determine if they should be lowered by April 30, 2016.

The EPA must eventually lower the thresholds.  The 100/250 ton per year trigger threshold for NSR is in the Clean Air Act.  EPA amend the trigger threshold through rulemaking (i.e. the Tailoring Rule).  To support the Tailoring Rule, EPA relied on legal precedent that EPA says provides it authority to adjust the statutory thresholds through rulemaking temporarily.

How Long Before EPA is Pressured to Lower the Thresholds?

In their comments to EPA's proposed rule, environmental groups urged EPA to lower the permitting thresholds.  In an article appearing in BNA, David Doniger, policy director for the Natural Resource Defense Council's (NRDC) Climate Center, indicated the organization would support EPA position...for now.

“Certainly, this holding things level knocks the legs out from under the feverish claims that EPA was on the march to get to hotdog stands,” Doniger said. “This signals that there's great reluctance on EPA's part to get beyond the largest sources.”

While the NRDC and other groups are willing to hold off for now, its clear that their expectation is EPA will lower the thresholds in 2016.  It will be very difficult for EPA to maintain that there is no ability to process additional permits by that date. 

EPA Applies Plantwide Applicability Limits (PALs) to GHGs

A PAL is a site-specific plantwide emission level for a pollutant that allows the source to make changes at the facility without triggering the requirements of the PSD program, provided emissions do not exceed the PAL level.  Instead of a facility having to analyze each emission unit as a potential modification that may exceed NSR thresholds, the PAL says as long as overall plant emissions form all sources do not exceed the PAL, the facility will not trigger NSR.

In the July 3rd rulemaking, EPA is  revising the PAL regulations to allow for GHG PALs to be established on a CO2e basis.  This should provide more flexibility and reduce the number of permits that would otherwise be triggered through plant modifications.

 

EPA's Delay Tactic Avoids Real Change

On Monday, EPA announced it was delaying its proposed rules that would apply greenhouse gas emission standards to power plants. EPA said it would push the proposal back from July to September to allow more time to consider comments. EPA still expects to finalize the rule by May 2012.  

Its no secret that EPA regulations have been the focus of intense scrutiny due to the costs and the potential impacts on the country's struggling economic recovery.  Over the last several months EPA has delayed rule after rule.  The delays include:

  • Greenhouse gas rules for power plants (NSPS)
  • Industrial/Commercial boiler rule (MACT)
  • Ozone Federal Air Quality Standards (NAAQS)
  • Fine Particle Air Quality Standards (NAAQS)

Each time EPA delays one of the major rules, it claims the delay is to consider more information or to allow for more public comment.  Yet the frequency of the announced delays coupled with the timing suggests the Obama Administration is concerned with protecting the fragile economic recovery or it is simply responding to intense political pressure.

Debate Pitting Economy Versus the Environment Intensifies

EPA's regulatory actions are under intense pressure on Capitol Hill.  Republicans and some conservative Democrats have targeted the EPA rules, in particular those that impact power plants due to their potential to raise energy prices or de-rail the recovery. 

While the announced delays may temporarily reduce the pressure on the Agency, in reality the delays have done nothing to cool down the rhetoric used on both sides.  For example, Lisa Jackson testified before the Senate and disparaged lobbyists who had advocated against the new EPA rules:

“While Americans across the country suffer from this pollution, special interests who are trying to gut long-standing public health protections are now going so far as to claim that these pollutants aren't even harmful. These myths are being perpetrated by some of the same lobbyists who have in the past testified before Congress about the importance of reducing mercury and particulate matter. Now on behalf of their clients, they're saying the exact opposite.”

On the other side, AEP highlighted potential impacts to the economy last week by announcing the potential closure of a number of power plants and huge new compliance costs if the EPA rules moved forward.  AEP said it would retire nearly 6,000 megawatts (MW) of coal-fueled power generation and switch to natural gas at many of its plants at an estimated cost of $6 billion to $8 billion by the end of the decade.This from a Press Release issued by AEP:

"We have worked for months to develop a compliance plan that will mitigate the impact of these rules for our customers and preserve jobs, but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25 percent of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and invest billions of dollars in capital to retire, retrofit and replace coal-fueled power plants. The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling,” said Michael G. Morris, AEP chairman and chief executive officer.

EPA Delays Are Simply a Pyrrhic Victory

Each time EPA announces a delay, the Agency claims it will take a second look at its proposals.  Yet, EPA seems very unlikely to make any fundamental changes.  While some may view the announced delays as victories, it is only so long before either the rules will be released by EPA or  EPA will be compelled by the courts to act. 

A popular political strategy has been to attack the science behind EPA's proposals in hopes of deflecting the proposal entirely.  This "all or nothing" approach is unlikely to ultimately succeed given the 60 votes needed in the Senate to make changes to the statutes that shape the rules. 

Rather than challenge the science in hopes of avoiding regulations altogether, it would be good to see meaningful policy discussion around the regulatory approach behind these major proposals:

  1. Ozone and Fine Particle-  Time frames for compliance need to be reasonable and should be properly coordinated with existing federal rules that will drive down emissions.  Also, as our air gets cleaner, improvements become more difficult.  Do we cross a threshold where costs should be part of the equation in setting standards? 
  2. Greenhouse gas-  Application of the New Source Review program to greenhouse gas emissions is a recipe for disaster.  While Cap and Trade became a dirty word, it offered a far more flexible approach than command and control regulations.
  3. Commercial/Industrial Boilers-  EPA's method for establishing the standards was based upon cherry picking the best emission rates for each individual pollutant from units across the country.  A real effort needs to be made at looking at what is realistically achievable.

Unfortunately, meaningful discussion seems unlikely in today's political environment. 

EPA BACT Guidance for GHGs- Tough Sledding for First Permits

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. 

 

EPA "Endangerment Finding" Sets in Motion Regulation of Greenhouse Gases

Today, a day that will likely live in environmental law infamy....the EPA Administrator Lisa Jackson finalized the "endangerment finding" in response to the U.S. Supreme Court's ruling in EPA v. Massachusetts which was issued way back in April 2, 2007.  While the Supreme Court found that greenhouse gases were air pollutants covered by the Clean Air Act, it did not say the Act mandated regulation.  Rather, the Court said EPA was required to make additional findings regarding the danger presented by greenhouse gases before regulations would kick in. 

The magic language for emission standards from motor vehicles appears in Section 202(a) of the Clean Air Act.  Under Section 202(a), EPA is required to determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare (so called "endangerment finding").   If EPA makes a positive finding- meaning emissions endanger public health and welfare- it then promulgate greenhouse gas emission standards for motor vehicles.  Today, the Administrator made an positive determination.

Today's major announcement is the necessary precursor to mandatory emission standards for vehicles.  More importantly, it sets in motion regulation of greenhouse gases from all sources, not just motor vehicles.   Here are the steps that lead to that result:

  1. Positive "endangerment finding"
  2. Finalize regulations setting emission standards from motor vehicles- March 2010?
  3. Greenhouse gases (GHGs) become a "regulated pollutant" under the Clean Air Act- once a "regulated pollutant" other regulations in the Clean Air Act are automatically triggered.
  4. Most notably, on the same day vehicle standards are finalized, New Source Review (NSR) standards would include review of emissions of GHGs from new or expanding sources.  No new regulatory action is required for NSR to apply to GHGs, it will automatically happen.

EPA realizes the process that has been set in motion for much broader regulations which is why it proposed the Greenhouse Gas Tailoring Rule in the Fall. (see prior post, EPA Risky Climate Change Regulatory Approach) The Tailoring Rule attempts to temporarily reduce the scope of the NSR program to only larger emission sources of GHGs. 

Now that a positive endangerment finding has been finalized, broad GHG regulation is absolutely inevitable.  Short of Congressional action, the existing Clean Air Act will be used to regulate GHG emissions.  An outcome, even the EPA itself has said it does not prefer.  Note the press release from EPA:

President Obama and Administrator Jackson have publicly stated that they support a legislative solution to the problem of climate change and Congress’ efforts to pass comprehensive climate legislation. However, climate change is threatening public health and welfare, and it is critical that EPA fulfill its obligation to respond to the 2007 U.S. Supreme Court ruling that determined that greenhouse gases fit within the Clean Air Act definition of air pollutants. 
 

Congressional refusal to act swiftly on climate change legislation is putting us dangerously close to a chaotic regulatory scheme under existing Clean Air Act authority.  In fact, as noted above, Congress has to act to take us off the path.  Refusing to act, in order to blame President Obama is too large a price to pay to score a few political points. 

EPA Begins Process of Determining BACT for CO2

U.S. EPA has initiated the process for determining what controls it will require should it finalize its proposal to regulate large industrial sources of greenhouse gases (GHGs).  As discussed in a prior post, the first phase of the program would cover sources emitting more than 25,000 tons of CO2 or equivalent emissions.  In subsequent phases of the program smaller sources would likely be covered.

Under EPA's proposal GHGs would become a pollutant covered under its New Source Review (NSR) program.  NSR requires new or modified sources that emit over established thresholds to install Best Available Control Technology (BACT).  The question is...what are the "best available" controls for reducing GHG emissions? 

I was interviewed for a story appearing in Climatewire that discussed the complexities involving in determining BACT for GHGs.  Unlike many mainstream media newspaper articles, the Climatewire article does an excellent job of providing an analysis of the issues related to implementation of this complex regulatory program. 

Two major issues:

  1. What is BACT going to be for non-utility pollution sources? 
  2. How on earth will EPA determine BACT for a wide variety of sources by its stated deadline of March 2010?

Efficiency improvements co-firing biomass are the two most likely candidates for utility sources.  But less analysis is known regarding potential methods to reduce GHGs emissions from other potentially covered sources like cement and steel production facilities. 

The preamble to U.S. EPA's proposed NSR GHG regulations makes clear the Agency believe the rules must be finalized by March 2010 because they must coincide with the rule regulating GHGs from light duty vehicles.  It seems like an impossible task to determine BACT for the range of sources that will be potentially covered in less than six (6) months.   Without established BACT standards, there is likely to be massive uncertainty and delays in permitting. 

[A complete re-printing of the Climatewire article is available in the extended entry with their permission]

photo: everystockphoto- cjohnson7

 

An E&E Publishing Service

REGULATION: EPA struggles to define best carbon-reducing technologies (Friday, October 9, 2009)

Jessica Leber, E&E reporter

With U.S. EPA set to soon regulate greenhouse gas emissions from large industrial sources, the biggest question -- what exactly that means -- is still far from an answer.

In late September, the agency issued its controversial proposal to include greenhouse gases, for the first time, in Clean Air Act permits for major new stationary pollution sources.

Under the rule, permits for new industrial facilities that release more than 25,000 tons of emissions a year would require what's termed "best available control technology" (BACT) to limit their greenhouse gas releases. And when existing facilities make major upgrades that trigger permit reviews, they, too, would have to meet BACT requirements.

But with carbon capture and sequestration still years from commercial viability, how BACT will be defined is up in the air. "There's no add-on, magic technology widget thingy that controls CO2," said David Bookbinder, the Sierra Club's chief climate counsel.

Absent a widget, EPA's proposal leaves the BACT question open to discussion. When the rule takes effect, EPA will have to issue guidance to state and regional permitting authorities, which ultimately evaluate each permit on a case-by-case basis.

"We don't want to have a judgment yet going into this," said Peter Tsirigotis, director of the sector policies and programs division within EPA's air office. "Now, we're just throwing a bunch of things out to the wall and seeing what sticks."

He spoke this week to the agency's Clean Air Act Advisory Committee, a panel of outside experts that is planning to complete its recommendations on the issue over the next six months.

A quick and complicated timetable

By the end of next March, EPA plans to finalize the first greenhouse gas standards for motor vehicles. To do that, the agency will have to officially declare these emissions pollutants under the law -- a finding that will force the agency to put rules in place for industrial sources, as well. That means that by as soon as next spring, applicants for new permits might need to consider their greenhouse gas emissions.

States will ultimately bear the responsibility to decide what technologies fit the bill. Bill Becker, executive director of the National Association of Clean Air Agencies, said states will be looking for EPA to issue clear and simple, legally consistent, up-to-date guidelines about what BACT is and what it is not.

"We are plowing new ground here," Becker said. "We will be under intense pressure to make decisions on a timely basis, because time is money for regulated sources."

The process for determining BACT is fraught with complications. For every individual permit, states need to consider the energy and environmental impacts and, most significantly, the cost of requiring pollution controls. Then permitting authorities weigh a spectrum of options -- from the Porsches of pollution control technologies to requiring nothing -- and determine what doesn't bust the bank account based on the price per ton of pollution avoided.

For conventional air pollutants, EPA runs a clearinghouse filled with real BACT examples in every region of the country, and for many types of sources, as a basis for comparison. "For carbon dioxide, you're going to have an empty clearinghouse right now," said Joe Koncelik, an environmental lawyer who represents various industries for Frantz Ward LLP.

Defining the undefined

And, of course, everyone has his own ideas about what makes up the menu of BACT options.

Energy efficiency is one that almost everyone agrees upon. The Bush administration, in its consideration of the issue last year, said that efficiency is one of the few potentially cost-effective carbon controls right now, according to Roger Martella, the agency's general counsel at the time. But the new administration, he said, may be willing to look at many more possibilities.

For the power sector, that might require power companies to consider co-firing with biomass or co-generating with waste heat, said Bookbinder. It also, he said, could mean that plants might need to consider switching fuels, from coal to natural gas, for example, or consider building new super-efficient, carbon-capture-ready facilities, such as integrated gasification combined cycle (IGCC) plants.

The latter option has already been subject to intense legal debate. At issue is whether EPA or states can make an applicant reconsider its entire plant design. "IGCC is a totally different process than a coal plant. It's a big chemical plant, in a way," said John Kinsman, a senior director for the environment at the Edison Electric Institute, a utility trade group.

EPA, he said, has never typically required an applicant to build a nuclear plant, for example, instead of a coal plant.

The question is still not settled. In a recent decision, EPA's Environmental Appeals Board sent the permit for the proposed Desert Rock Energy Facility, an embattled 1,500-megawatt pulverized coal power plant in New Mexico, back for review, in part because the agency did not at least consider an IGCC design. (E&ENews PM, Sept. 25).

BACT to the drawing boards

Determining carbon controls beyond the power sector may prove an even greater challenge. The new Clean Air Act requirements will apply to a whole host of sources, from steel manufacturers to cement kilns.

"Given the time frame, I don't see how EPA is going to determine what BACT is for whole sets of industry categories," said Koncelik.

Meanwhile, EPA and the advisory committee may also consider entirely new alternatives never discussed before. "The question is: How do we balance the need for a very quick solution with the opportunities that exist to encourage innovation?" said EPA's Tsirigotis.

That could mean allowing utilities to use energy demand reduction and response programs to meet BACT requirements, said Kinsman.

That could also mean allowing companies to buy carbon offsets instead of reducing their own emissions, an option that was raised for discussion at the advisory committee meetings this week.

Becker was wary of the offset option. For one, there would be major questions about whether offsets would even be legal.

Second, he said, allowing companies to purchase emission reductions in other areas of the country would ignore the air quality improvements that carbon-control technologies could provide. Increasing the efficiency of a boiler, for example, would also reduce other conventional air pollutants that only have regional effects.

The advisory committee this week agreed to look at innovative options, but not at the expense of immediately practical approaches. "What we very much don't want to have is a pie-in-the-sky, potentially illegal, recommendation that interferes with the committee reaching an agreement," Becker said.

Ultimately, experts agreed, the agency's first pass will be fought in the courts.

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About ClimateWire

ClimateWire is written and produced by the staff of E&E Publishing, LLC. It is designed to provide comprehensive, daily coverage of all aspects of climate change issues. From international agreements on carbon emissions to alternative energy technologies to state and federal GHG programs, ClimateWire plugs readers into the information they need to stay abreast of this sprawling, complex issue.

Copyright 2009, E&E Publishing, LLC. Reprinted with permission. www. ClimateWire.com

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Major Climate Change Court Decision: Georgia Appeal Court Well Reasoned Decision Overturns CO2 Ruling

Today, a Georgia Appeals Court overturned a lower court's ruling that invalidated an air permit for a coal-fired power plant on the basis of climate change.  In June 20, 2008 Georgia's Fulton County Superior Court invalidated a permit for construction of a 1200-megawatt coal-fired power plant. The Court said the Georgia Environmental Protection Division should have considered CO2 a "regulated pollutant" under the Clean Air Act and required controls as part of the permit. 

When the lower Court decision was issued it marked the first time a State Court had invalidated a permit issued under the New Source Review (NSR) program for failing to consider CO2 a "regulated pollutant."  The decision sent major shock waves around the Country. 

Since the lower Court decision, a series of administrative appeal rulings and EPA proposals on climate change have been issued. The decisions have resulted in a complex regulatory web.  Lost was a clear indication whether CO2 should be considered a "regulated pollutant" under the Clean Air Act. 

The Georgia Appeals Court decision is well reasoned and navigates the various court and administrative rulings as well as EPA proposed rulemakings.  The Court's final conclusion...as it stands right now CO2 is not a regulated pollutant under the Clean Air Act.  Until U.S. EPA promulgates actual regulations requiring reduction of CO2 emissions or controls, permits issued under the NSR program need not consider a facility's CO2 emissions. 

Here is a key paragraph from the decision that succinctly sets forth the Court's reasoning:

This ruling (lower Court's invalidation of the permit)...would impose a regulatory burden on Georgia never imposed elsewhere.  It would compel [the State] to limit CO2 emissions in air quality permits, even though no CAA (Clean Air Act) provision or Georgia statute or regulation actually controls or limits CO2 emissions, and even though (to this Court's knowledge) no federal or state court has ever previously ordered controls or limits on CO2 emissions pursuant to the CAA.  It would preempt ongoing Congressional efforts to formulate a CO2 emissions policy for all the State...If accepted it would engulf a wide range of potential CO2 emitters in Georgia-and Georgia alone- in a flood of litigation over permits, and impose far-reaching economic hardship on the State.  We reverse this ruling.

Here are some the items I feel the Court got right in its ruling (keep in mind I'm not making pronouncements about climate change, I am just saying I think the legal analysis is well reasoned).

  1. Analysis of Impact of Massachusetts v. EPA-  The landmark Supreme Court ruling only says that CO2 and other greenhouse gases are "pollutants" under the Clean Air Act.  Until EPA adopts affirmative regulations requiring controls or emissions limits on CO2, it will not be considered a "regulated pollutant" under the Clean Air Act.  Only "regulated pollutants" must be evaluated as part of the New Source Review Program.
  2. Johnson Memo is Determinative for Now (prior post)-  In Deseret Power, the Environmental Appeals Board said U.S. EPA retained discretion to decide whether monitoring requirements applicable to CO2 which currently exist in the Clean Air Act are enough to raise CO2 to the status of "regulated pollutant" under the Act.  Former EPA Administrator Stephen Johnson, in one of his last acts, issued a memo setting for EPA's formal determination that monitoring was insufficient to raise CO2 to the status of "regulated pollutant."  New EPA Administrator Jackson granted a request to reconsider the Johnson memo, however she did not go as far as to stay the effectiveness of the Johnson memo during the review.  The Court finds that the current state of the law is that monitoring is not enough to raise CO2 to the status of regulated pollutant.
  3. Formal EPA Rulemaking is Required to Trigger Regulation of CO2-  The Court concludes that until U.S. EPA completes a formal rulemaking that actually requires controls or emission limits on sources of CO2, permits can be issued without considering CO2 as a pollutant. 
  4. Rejection of IGCC as Part of BACT Analysis-  The Court also follows prior Court decisions on the issue of requiring all coal plants to be IGCC plants.  It overturned the lower Court ruling that would have required analysis of IGCC as pollution control under the Best Available Control Technology (BACT) requirement.  In rejecting a required analysis of IGCC, the Court found that BACT analysis, as set forth in the New Source Review Program, does not require redesign of a facility from a pulverized coal to a syngas plant.

 

What U.S. EPA's Formal Recognition of Cleveland's Improved Air Quality Means for Businesses

Yesterday, U.S. EPA announced a proposed rulemaking to formally recognize Cleveland and nearby counties as achieving the 1997 8-hour ozone standard (.085ppb).  As discussed in a previous post, this is very good news for Northeast Ohio businesses in any of the following counties: Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, and Summit.  U.S. EPA is taking comments on the proposed action until July 13th.

Three years ago the best experts thought it was impossible for Northeast Ohio to achieve the ozone standard by the 2010 deadline.  As a result, draconian measures were suggested by U.S. EPA, including "bumping up" to the next higher non-attainment classification "serious."  Such an action would have made economic growth in the area much more difficult.  It would also have increased environmental compliance costs for area businesses. 

The chart to the left shows the various federal pollution reduction programs that are mandated based upon non-attainment classification.  The chart shows the higher the classification of non-attainment the more federal mandates that will apply.

Northeast Ohio has been at a distinct disadvantage relative to other areas of the state due to its ozone non-attainment status.  It is the only "moderate" non-attainment are in the State.  This results in increased compliance costs for area businesses and also placed restrictions on economic growth not applicable to the rest of the State.  These disadvantages would have been magnified if the Cleveland-Akron-Lorain area was forced to have "bumped up" to serious non-attainment.

Once U.S. EPA finalizes the redesignation to attainment, these disadvantage disappear.  Cleveland-Akron-Lorain will be able to compete equally for new business growth opportunities.  All of this should be really good news for business and the citizens in Northeast Ohio.

The Plain Dealer failed to capture this fact in its coverage of the U.S. EPA ozone announcement.  Instead it focused on the temporary nature of the Cleveland-Akron-Lorain attainment status.  U.S. EPA has adopted a stricter ozone standard (.075ppb) which will likely be applied in 2010.  Current air monitoring shows Northeast Ohio around .084 ppb for ozone which means the same eight counties will once again be deemed "non-attainment" for ozone.   

While it is true the attainment status is temporary, concentrating only on this aspect of the story misses the broader picture.  If the area failed to achieve the 1997 ozone standard it would have faced more regulation and impediments to growth.  Now it appears unlikely that Cleveland-Akron-Lorain will receive a higher non-attainment classification than other major metropolitan areas in the State.  This means it will be able to compete equally with Columbus and Cincinnati for new jobs in the future even if it is once again considered "non-attainment."

The temporary attainment status may present a short window of opportunity for area businesses.  If a business was looking to expand its facility or construct a new facility that would be considered  a "major source" of air pollution, it may be able to obtain requisite permits easier than previously.  But businesses will have to be quick to take advantage if such a window presents itself.  U.S. EPA is set to make formal designation under the new .075 ppb ozone standard in 2010.  At most this means businesses could have a year to act.

Remedy in Cinergy NSR Case Forces Shut Down of Units

As an indication the New Source Review (NSR) enforcement actions are alive and well, today an Indiana federal court has ordered the shut down of units that triggered NSR and failed to install controls.  In addition, the Court required Cinergy to surrender allowances to compensate for "irreparable harm" caused by the operation of the units in violation of the Clean Air Act

The Federal District Court in Indiana issued its decision in the remedy phase of the New Source Review (NSR) enforcement action against Cinergy Corporation's Beckjord, Ohio plant.  A jury trial was held in May of 2008 to determine whether certain projects triggered NSR.  The jury found that four projects performed at the facility "a reasonable power plant owner or operator would have expected a new increase of 40 tons of SO2 and/or NOx "(NSR major modification trigger levels).  Following the jury's verdict, the Court moved into the remedy stage to determine what relief to grant the plaintiffs for the violations.

The Courts decision is an interesting exercise of looking its crystal ball.  Based on calculations of emissions and modeling, the Court projected environmental harm caused by failure to comply with NSR. 

To determine harm, the Court first determined the type of pollution controls that would have been installed had Cinergy complied with NSR requirements (BACT/LAER).  Those controls established the baseline emissions that should have been emitted since the projects were completed.  All emissions above the baseline were considered  "excess emissions" that resulted in environmental harm and potential health impacts.

It was pretty evident which direction the Court was heading when it included the following statement in its order:

With respect to SO2 emissions, Dr. Fox testified that the annual excess emissions of SO2 is approximately 23,000 tons...Putting this into perspective, this rate is approximately equivalent to the amount of SO2 emitted by 324,000 heavy-duty diesel trucks, which is the total number of trucks registered in Indiana, Ohio and Kentucky.

The analysis of environmental harm and potential health impacts was very similar to the exercise undertaken by the North Carolina Court in the nuisance claims against coal fired power plants (see post, "Nuisance Finding Gives Downwind States New Ammo in Long Cross-Border Pollution War").  Here is what the Court examined to gage harm caused by "excess emissions":

  • How did the SO2 and Nox emission impact pm 2.5 and ozone attainment
  • What were mercury emission impacts
  • Potential health impacts from fine particle pollution
  • Damage to the environment from acid rain

After finding irreparable harm from these impacts the Court ordered:

  1. Shut down of three units by Sept. 2009
  2. Until Sept. 2009, the three units must be run so as not to exceed baseline levels that are based BACT/LAER controls
  3. Permanently surrender SO2 allowances in an amount equal to total SO2 emissions from May 22, 2008 until September 30, 2009

For those who though the NSR consent decrees carried with them pretty dramatic remedies, this decision shows you take an equivalent risk by going to trial. 

 (Photo: DanieVDM/everystockphoto.com)

What Would BACT be for CO2?

With recent developments in climate change litigation, including the Deseret Power decision, it appears we are moving ever closer to requiring control of CO2 from coal fired power plants and other major sources of CO2.   Outgoing EPA Administrator Johnson may have delayed things temporarily by issuing his memo in response to Deseret Power. However, incoming EPA Administrator Jackson has pledged to quickly review the California waiver request that would allow the State to set CO2 emission standards for cars. If that happens, the dominoes will soon fall requiring controls for CO2 for all major sources under the Clean Air Act.

A positive "endangerment finding" in response to the California Waiver request will trigger a host of other regulations. Those would include requiring emission controls from new major sources of CO2 and other greenhouse gases under EPA's New Source Review permit program. 

If new or modified sources are required to control CO2, then as part of their permit they will be required to install Best Available Control Technology (BACT) to reduce CO2 emissions if located in an area that meets federal air quality standards.  More stringent limits (Lowest Achievable Emission Rate- LAER) apply in areas that don't meet air quality standards. 

The focus of all the recent litigation has been on whether to require CO2 controls as part of a BACT permit review.  But that begs a very interesting question....What would BACT be for CO2?

I was asked this very question during a recent interview I had with a reporter from Inside EPA.  That sent me to research the issue.   My review shows to things:  1) there is a wide divergence of opinion among experts as to what BACT would likely be;  and 2) EPA has a fair amount of discretion to determine the BACT standard for CO2.  Once it is decided that BACT must be required to control CO2 (and other greenhouse gases), Industry insiders expect EPA would take at a minimum 6 months to decide the issue.

Reading the tea leaves, I think we can begin to decipher an answer as to what BACT may constitute.  We certainly can eliminates some suggestion offered by pundits based upon how EPA has applied the BACT standard in the past.  Here is what we know....

  1. There are no current EPA endorsed technologies for controlling CO2EPA's current RACT/BACT/LAER clearinghouse doesn't have anything on CO2.  The clearinghouse is used to identify various control technologies that would be deemed to meet the various standards on specific industries or technologies. 
  2. BACT is a site-specific, case-by-case decision which means uncertainty.  In testimony  House Government Reform and Oversight Committee, attorneys Peter Glaser and John Cline stated the following: "Since BACT determinations for CO2 have no regulatory history at this time, and can vary by type of facility and from state-to-state, businesses wishing to construct new sources or modify existing ones would have no basis for planning what the regulatory requirements will be."
  3. Case law and regulatory decisions of EPA establish parameters for the BACT analysis.  As detailed below, case law in the context of BACT for coal plants can be extrapolated to CO2.  The same general guidelines used to evaluate controls for other pollutants (SO2, CO, mercury, NOx) will be used for CO2. 

Now lets turn to a review of experts who have offered their opinion as to which technologies should be considered BACT for CO2.  Here is one guess from the blog Cleanergy.org:

BACT for CO2 is unlikely to mean carbon capture and storage (yet), since it's not readily available, but it will probably mean some combination of co-generation (making use of waste heat from electricity generation), efficiency improvements, and/or fuel switching/co-firing with biomass. Ultimately, President-elect Obama's EPA gets to decide how BACT is defined for CO2, a process which will take at least a year. 

Joseph Romm, author of the blog Climate Progress, offered his opinion of what BACT for CO2 may look like.

Certainly it is going to slow down the permitting of any new coal plant dramatically, until the EPA figures out the answer to the $64 billion question: What is BACT for CO2 for a coal plant? That will probably take the Obama EPA at least 12 months to decide in a rule-making process. But from my perspective it could/should/must include one or more of:


a) Co-firing with biomass — up to 25% cofiring has been demonstrated
b) Highest efficiency plants
c) Cogeneration
(i.e. recycled energy)
d) (possibly even) Gasification with, yes, carbon capture and storage (CCS)

Here are some other opinions as to possible technologies that would qualify as BACT for coal-fired power plants:

  1. Solar Thermal at a Coal Power Plant- mix the steam from solar thermal with steam from the boiler to reduce emissions. 
  2. Highly Efficient Boilers-  Jeff Holmstead, former Chief Air Official for U.S. EPA, has said he  BACT would be for CO2 right now given costs and development of other control technology.

But let's look at the legal guidance associated with BACT.  In doing so, some of the technologies suggested seem "not ready for prime time" or would not be considered a control technology but rather a different type of generation. 

BACT is determined through a case-by-case evaluation of control technology alternatives and involves a complicated weighing of economic, environmental, energy and other factors. BACT can even be no control measure if that weighing process fails to identify a technically and economically feasible technology for controlling the pollutant in question.

A detailed discussion of the permitting process and legal aspects of a BACT analysis is provided below.  The single biggest consideration is that BACT takes the project as proposed and establishes the lowest achievable emission rate for the various pollutants.

This means BACT cannot fundamentally change the design of the proposed project.  This is why EPA has rejected establishing IGCC as BACT.  If the permit applicant is proposing a traditional pulverized coal boiler, then limits must be established based upon what is achievable for that type of boiler.

This eliminates many of the control technologies suggested by pundits:

  1. IGCC- would force a redesign and would be rejected
  2. Solar Thermal Combined with a Coal Boiler- would be rejected as forcing a redesign
  3. Carbon Capture and Storage- This one is interesting.  Under BACT you must take the geographical location of the project into consideration.  If the geologic considerations would make CCS infeasible for the project it could not be required.  In addition, CCS is certainly not ready for prime time and could not be required as part of BACT for any site right now.

Some other technologies are more likely to be considered BACT:

  1. High Efficiency Boilers- this would likely be required to reduce emissions
  2. Co-firing with biomass-  depending on the project, this could be required.  Co-firing reduces CO2 emissions.  BACT does involve consideration of "clean fuels", however co-firing biomass would likely be rejected if it caused a major redesign of the facility.
  3. Coal Drying- By removing moisture from the coal you can reduce CO2 emissions.  Similar to co-firing biomass this could be required if it doesn't force a major redesign of the project.

What are the legal components of a BACT determination?

Here is the Clean Air Act definition of BACT:

The term “best available control technology” means an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation under
this chapter emitted from or which results from any major emitting facility, which the permitting authority, on a case-by-case basis, taking into account energy,
environmental, and economic impacts and other costs, determines is achievable for such facility through application of production processes and available
methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control of each such
pollutant.

EPA's New Source Review Manual calls for a "top down analysis" of control technologies for each regulated pollutant emitted by the proposed source.  All potential control technologies are identified at the start and as you work down the steps you see if any should be eliminated.  The most effective control technology remaining after Step 5 is then considered BACT.  Here are the five distinct steps of the "top down analysis":

  1. Identify all potential control options
  2. Eliminate technology infeasible controls- the control technology must be "demonstrated" to work on a commercial scale over a sufficient period of time.
  3. Rank remaining control technologies by control efficiency
  4. Consider the energy, economic and environmental effects of the control technology-  proposed technologies can be eliminated based upon cost effectiveness or because they reduced energy efficiency.
  5. Select the most effective control technology that was not eliminated in Step 4 of the process.

Here are some key considerations that can be gleaned from case law surrounding BACT determinations:

  • Case-by-case analysis- Each project is examined on its own.  Examine the proposed fuel, type of source and geographic location when establishing emission limits.  BACT is not a universal control standard for all projects.  Instead, it takes each project case-by-case and determines what is the lowest achievable limit.
  • "Achievable"- the established emission limit must have been met on a continual basis. Optimum performance is not the test, rather the limit must be consistently met over a period of time.  The limit will often include a "safety factor" or "cushion" to ensure the limit can be met over the life of the facility.
  • "Available" control technology- must be demonstrated at a commercial sized source for a sufficient period of time.
  • Does not redefine the source-  Must look at the proposed design of the project and go from there in setting limits.  You cannot force a redesign.  For instance, BACT could not require renewable energy generation instead of coal. 
  • Can consider economic, environmental or energy impacts in eliminating control technologies-  cost can be a consideration in choosing a control technology.  For instance, if the cost effectiveness of a control technology is low it can be eliminated from consideration.

 

Ohio Finalizes Emission Trading Bank for Offsets

Ohio EPA wants to make it easier for economic development to occur in areas like Cleveland, which are designated "non-attainment" with the federal air quality standards (NAAQS) such as ozone or PM 2.5.   Federal regulations require companies looking to build or expand in these areas to offset their emissions.  Offset is achieved by securing the requisite emission reducition credits from existing companies in the non-attainment area. 

In the past a company had no idea whether sufficient eligible emission reductions had occurred that would allow them to fully offset their emission increases.  Available emission reduction credits was not public information.  This lack of information may have dissuaded companies from considering non-attainment areas for expansion.  This hurts areas like Cleveland which is non-attainment for both ozone and P.M. 2.5.

Ohio EPA will now be establishing a state-wide emission trading bank to help facilitate communication between companies that hold emission trading credits and those that need to purchase the credits to build or expand.  The emission trading bank is in reality a web site that will list the available credits by non-attainment area and pollutant.  It's kind of like a giant advertising billboard for companies holding credits they want to sell.  As further explained below, credits will be listed in the bank as either "verified" or "unverified." 

Ohio EPA has finalized the rules that will govern the emission trading bank, known as the emission reduction credits (ERC) rules.  See,OAC Chapter 3745-111. The rules will become effective on January 8, 2009.  

Basic Overview of Offset Requirement: Under U.S. EPA's New Source Review (NSR) program a company looking to build or expand a facility in a non-attainment area may be required to offset its air emissions before receiving a permit (Permit to Install and Operate- PTIO) to construct the facility from Ohio EPA.  Only new or expanded facilities that are "major" sources need offset their emission.  Generally, a "major" source is a source that will emit over 100 tons of the non-attainment related pollutant or 40 tons if it is an expansion of an existing source.  However, these thresholds vary depending upon the pollutant and how the severity of the non-attainment designation.

Ohio EPA's ERC Program is Voluntary:  There is no requirement to participate in Ohio EPA's emission trading bank.  The ERC rules only apply to those who elect to list their emission credits on Ohio EPA's website.  Private transactions between companies outside of the Ohio EPA's emission trading bank is still permissible.

ERC Program Will List Verified and Unverified Credits:  A company who holds ERC's may elect to have them reviewed and certified by Ohio EPA before listing them.  If Ohio EPA validates the credits they will be considered "verified" and will be listed as such on the web site.  The company will be issued a ERC certificate with a unique number for tracking purposes.

Verified credits have advantages- 1) a buyer should not have to worry as to whether the credits are valid once they turn them in to get their NSR permit; and 2) the permitting process for a new source offsetting its emissions will be faster if it uses verified credits.  For sellers of credits, the disadvantage to verified credits its the administrative costs associated with completing the process. 

Unverified credits can be included in the bank.  However, Ohio EPA's rules will not allow for the transfer of unverified credits.  A company would either have to withdraw the credits and transfer them outside the bank or go through the verification process.

What Types of Activities Generate Credits?  Other states (Pennsylvania, Michigan and New Jersey) have operated banks for a long time with a mixed degree of success.  Studies have shown that 80% of all ERC credits in other states were generated as a result of facility shut downs.  However, ERCs can be generated by installing new pollution control equipment, a change in process or reduced hours if they meet the regulatory requirements (quantifiable, reliable, enforceable and replicable).  Stationary and mobile source reductions can both result in ERCs.

What Should You Consider if You Are a Buyer or Seller of Credits? 

  1. Verified credits should be worth more- Verified credits should command a higher price.  They have already been certified by Ohio EPA and therefore carry far less risk than unverified credits.
  2. Transfer contracts should allocate risk-  All transfers of credits should be governed by well developed contracts that address the issues associated with the particular transaction.  For instance, are the credits sold "as is" or does the contract contain guarantees as to their validity.  When will payment be made?  What happens if the credits are invalidated?
  3. Assess the market-  Whether you are a buyer or seller you should assess the market before making decisions.  What types of credits are available?  How many credits are available?  If you are a buyer, make preliminary inquiries as to price to determine the viability of completing the project.

Are There ERCs in Ohio Right Now?  Ohio EPA has not established the website.  Now that the ERC rules are finalized, Ohio EPA can start to promote the bank.  Hopefully, this will lead to an expansion in the number of credits available.  Based upon limited information from Ohio EPA companies have submitted potential credits for consideration.  Submissions so far include the following types of credits in the locations specified:

Generated in Scioto County
17.75 tons of PM 2.5 ERCs
26.62 tons of SO2 ERCs
14.51 tons of NOx ERCs


Generated in Portage County
57.91 tons of VOC ERCs


Generated in Hamilton County
45.60 tons of VOC ERCs
 

 

CO2 Decision Impacts Ohio Coal Plant Permits

 

It didn't take long for the Deseret Power Decision to come back to Ohio.  The debate is over whether a permit for the proposed coal to liquid fuel plant proposed by Baard Energy and AMP Ohio's new coal power plant can move forward in light of the decision.  Here is a sampling of the debate over the Baard project as it appears in the local paper The Vindicator:

The statements came as the state EPA is on the brink of issuing an air permit for the proposed $5.5 billion Baard Energy plant that would turn coal into liquid fuel. Settles said a decision is expected to be made within the next two weeks.

The air permit would be the final permit needed to begin construction that would be a boost to the local economy. Permits regulating the plant’s effects on water and wetlands have already been approved.

In a statement, the Sierra Club said it went before the EPA Appeals Board in May of this year to request that the air permit for Deseret Power Electric Cooperative’s proposed waste coal-fired power plant in Utah be overturned because it failed to require any controls on carbon dioxide pollution.

The Sierra Club’s statement said the decision means that all new and proposed coal plants nationwide must go back and address their carbon dioxide emissions.
 

AMP Ohio's permit is facing an equal challenge.  In today'sDaily Sentinel, AMP Ohio was a bit cautious in its statements:

Carson (AMP Ohio) also pointed out, the decision was not in Ohio, which has a fully approved state permitting program, and that AMP-Ohio has worked for over a year in cooperation with Ohio EPA in meeting all requirements of Ohio law in regards to getting the plant online. Carson also pointed out the permit for the Utah plant was not denied but sent back to a regional office for reevaluation.

In a press release, the Sierra Club stated: “Two of the largest new coal proposals for Ohio, the AMP-Ohio power plant in Meigs County and the Baard liquid coal plant in Columbiana County, are likely to face setbacks from the ruling. Both companies had previously insisted that carbon dioxide should remain unregulated — an argument rejected in today’s ruling — and had resisted attempts to establish carbon limits in their air permits.”

Obviously there is a disagreement between the Sierra Club and Ohio EPA on how the decision will affect the permits at issue.  While Ohio EPA is correct that it is one federal court decision, the two cases that have had final decisions issued on whether C02 must be evaluated as part of federal New Source Review (NSR) have certainly been more in favor of requiring controls.  The Georgia State court held CO2 is a regulated pollutant and the pollution control analysis (BACT) for the new coal plant had to include controls for CO2.

The Sierra Club is a certainly overstating the decision in Deseret (see their Press Release) by claiming that all new coal plants must address CO2.  As discussed in my last post, the Environmental Appeals Board remanded the permit to U.S. EPA.  The Board said U.S. EPA has discretion to go either way- determine CO2 is a regulated pollutant or decide monitoring requirements are not enough to trigger requirements to control CO2. 

The Board did reject U.S.EPA's basis for saying historical precedent tied its hands from determining monitoring was enough to trigger regulation of CO2.  However, the Board did not say U.S. EPA couldn't develop a defensible position.

What is certain, is there is tremendous uncertainty.  From these comments we can anticipate Ohio EPA will issue the permit (known as "The Ohio River Clean Fuels LLC") without requiring analysis of CO2.  The Baard permit will be challenged and it is totally uncertain as to whether the permit will be invalidated by either a State or Federal Court in Ohio. The AMP Ohio Permit faces similar uncertainty.

Deseret Power Case: CO2 Regulation Issue Punted to Obama Administration

Talk about your pro-bowl quality punts...U.S. EPA's Environmental Appeals Board made a major one this week on the issue of climate change.  All eyes were fixated on the Board waiting for their decision on whether the Clean Air Act requires immediate regulation of greenhouse gases  (GHGs-which include CO2).  The Board's answer?  We would rather let the Obama Administration decide.

Others on the web point out this may hold up permits for coal plants while EPA deliberates on what to do next.  There is uncertainty after the decision, but other Courts don't have to follow the EAB ruling.

-See Coal Plant Stop Orders and Power Landscape Changes After Ruling

Background:  For those not keeping up to date on the latest litigation over regulation of GHGs, a major decision was issued yesterday- Deseret Power Electric Cooperative (Bonanza).  At issue in the case was whether the current language of the Clean Air Act requires immediate regulation of GHGs.

The Sierra Club appealed a federal permit that would have allowed construction of a new coal fired power plant.  The Sierra Club argued the permit was illegal because it did not require control of CO2 and the Clean Air Act (CAA) mandates regulation of the pollutant. 

Under the CAA,  EPA would have to require controls for CO2 if it is a pollutant "subject to regulation" under the Act.  The issue turned on the amount of regulation necessary to trigger this provision.  The Clean Air Act does require monitoring and reporting of CO2 for some sources.  But EPA argued monitoring is not enough, claiming that it has interpreted "subject to regulation" as meaning the Agency has set a standard requiring reductions, not just monitoring of emissions.

Implications:  A win for the Sierra Club would have had immediate and dramatic impacts on business across the country.  Hundreds of thousands of businesses, even commercial buildings may have needed a federal air permit to control CO2 emissions.  The EPA would have been overwhelmed with a tidal wave of new work. Why?

As discussed in a prior post, the permit thresholds in the CAA are extraordinarily low in the context of greenhouse gases.  Just how low?  The Act requires federal regulation for sources that emit 100 or 250 tons of a pollutant, depending on various factors.  That's fine for traditional pollutants like sulfur dioxide and soot, but ridiculous when viewed in the context of greenhouse gases.  As a comparison, California's Climate Change Program (AB-32) uses a threshold of 25,000 metric tons. 

On the other hand, if the Board sided with U.S. EPA then regulation of GHGs would be delayed until either U.S. EPA completed its lengthy rulemaking process or legislation is enacted by Congress.

Decision:  The Board definitely punted.  It did not agree with the Sierra Club that the plain text of the CAA requires CO2 to be regulated.  However, it rejected the EPA's position that an analysis of its historical interpretations forecloses the possibility that monitoring requirements are sufficient to trigger the need to regulate GHGs as a pollutant. 

The Board returned the permit to the Agency for further deliberation.  The Board said it is within EPA's discretion to begin regulating GHGs because the CAA includes monitoring requirements.  The Board concludes with the following paragraph:

Accordingly, we remand the Permit to for the Region (U.S. EPA) to consider whether or not to impose a CO2 BACT limit in light of the Agency's discretion to interpret, consistent with the CAA, what constitutes a "pollutant subject to regulation under this Act."  In remanding this Permit to the Region for reconsideration of its conclusions regarding application of BACT to limit CO2 emissions, we recognize that this is an issue of nation scope that has implications far beyond this individual permitting proceeding.  The Region should consider whether interested persons, as well as the Agency, would be better served by the Agency addressing the interpretation of the phrase "subject to regulation under this Act" in the context of an action of national scope, rather than through this specific permitting proceeding.  (emphasis added)

In otherwords, we want the Obama Administration to decide this through a regulatory interpretation that will apply universally and not by us requiring it in the context of a single appeal of a permit.

(Photo: Tostie14/everystockphoto.com)

Regulation of Greenhouse Gases Under the Clean Air Act "Absurd"

ABSURD

–adjective 1.utterly or obviously senseless, illogical, or untrue; contrary to all reason or common sense; laughably foolish or false: an absurd explanation. –noun 2.the quality or condition of existing in a meaningless and irrational world.
 

It is hard to believe but there are those who think regulating greenhouse gases under the current framework of the Clean Air Act (CAA) is the right thing to do. (see post "Politics Won't Decide Whether CO2 is Regulated Under the Clean Air Act").  Some of these same individuals assert that the Bush Administration was directly responsible for U.S. EPA's Administrator Steve Johnson's description of the Clean Air Act as "ill-suited" for regulating greenhouse gases (GHGs). 

However, an unbiased assessment of the structure of the Clean Air Act shows a regulatory mess would ensue if current CAA language was used to control GHGs.  In fact, I have heard senior staff at U.S. EPA express grave concern as what may follow if regulation of GHGs was required without amendment to the Clean Air Act. 

Take the most significant problem with using the CAA to regulate GHGs-permitting thresholds.  Under U.S. EPA's New Source Review (NSR) program a federal air pollution control permit is required anytime you have a source exceed "major thresholds."  40 CFR section 52.21(b)(1)(i).  The CAA sets the major threshold at any source that has the potential to emit 250 tons of a regulated pollutant.  The limit is 100 tons for specific types of sources or sources in nonattainment areas. U.S. EPA's Title V program requires a Title V air permit for source over 100 tons. 

The 250/100 ton thresholds work for pollutants like fine particles or ozone precursors because they capture large sources.   The thresholds trigger around 200-300 NSR permits per year.  The Title V threshold has led to issuance of around 18,000 Title V air permits in the country. 

However, greenhouse gas emissions, in particular CO2, are emitted in much higher quantities. Staff at EPA working on GHG regulation say they typically start paying attention to sources that emit 10,000 tons of CO2 per year.  For comparison, California's climate change law (AB32) establishes a mandatory reporting threshold of 25,000 metric tons.

If the 250/100 tons thresholds were applied to GHGs, U.S. EPA and state EPA's would be flooded with new permits.  U.S. EPA predicts there may be some 2,000-3,000 federal NSR permit per year and perhaps as many as 500,000 Title V sources in the Country.  Included in these numbers are small sources that have never been regulated by the Clean Air Act, such as large churches, retail stores and farms with as little as 25 cows. 

The numbers I cited above were provided by U.S. EPA as estimates.  The U.S. Chamber has put out a detailed report on the number of sources that would regulated based on GHG emissions thresholds in the CAA.  While some may say the U.S. Chamber's numbers are biased, I have not seen or heard anyone refute their analysis.  Also, the Chamber's numbers are generally consistent with EPA's own projections.  In U.S. EPA's Advanced Notice of Public Rulemaking on regulation of GHGs, EPA says "application of the existing PSD (NSR) permitting program to these new smaller sources would be a very inefficient way to address the challenges of climate change." (see page 488 of the ANPR)

Those who support use of the Clean Air Act argue that U.S. EPA could adjust the permitting thresholds to capture fewer sources- an option offered by EPA in its ANPR.  The problem with this argument is that the thresholds are in the text of the CAA.  Basic legal principles say the plain text of a statute is entitled to significant deference.  

EPA's ANPR sets forth two legal arguments to adjust the thresholds- absurd results and administrative necessity.  The "absurd results" argument is that literal application of the thresholds would lead to absurd results (i.e. regulating very small sources of CO2).  The administrative necessity argument is that the burden that would ensue from application of the 250/100 ton thresholds would "prevent the agency form carrying out the mission assigned to it by Congress." (see ANPR page 497).  In other words, EPA would be overwhelmed and couldn't do its job if the thresholds are kept in tact.

I certainly can see using some of the broad concepts contained in the Clean Air Act to regulate GHGs.  However, Congressional action is needed to amend those provisions and make them fit for dealing with climate change.  Congress should not wait to act.  It is very possible a court could decide the CAA applies to GHGs without further action, thereby triggering the "absurd" results noted by EPA.

 

 

 

 

 

 

Decision on CO2 Won't Wait for EPA

Lets get everyone up to speed with events on regulation of greenhouse gases (GHGs) including CO2:

1.  Supreme Court says CO2 is a pollutant under the Clean Air Act.  In Massachusetts v. EPA decided in April of 2007, the Supreme Court held that GHGs are pollutants that may be regulated under the Clean Air Act.  But the Court did not go far enough to say EPA must regulate GHGs. At issue in this case was Section 202 of the Clean Air Act which covers regulation of greenhouse gases from motor vehicles. For a pollutant to be regulated under Section 202 it must be “reasonably be anticipated” to “endanger public health or welfare.”   Therefore, EPA must conclude GHGs from motor vehicles endager public health before regulation commences The Court remanded the Section 202 determination to EPA to make the necessary "endangerment finding." 

2.  U.S. EPA says Clean Air Act is "ill suited" to regulated GHGs-  in July 2008, the EPA released its Advance Notice of Proposed Rulemaking on GHG regulation.  Along with its release, EPA Administrator Johnson made statements that the Clean Air Act is an ill-suited vehicle for regulation of GHGs. The ANPR represents EPA's response to both the Supreme Court's decision in Massachusetts v. EPA and a number of pending petitions to regulate greenhouse gas emissions from most mobile and stationary air pollution sources. The ANPR includes extensive analysis of the science related to climate change, technologies available for reducing greenhouse gas emissions, and the various statutory provisions that may be implicated by an endangerment finding under section 202 of the Clean Air Act. It solicits public comment on a variety of important issues.

3.  Environmental Groups Argue Regulation of GHGs is Not Discretionary by EPA-   Many environmental groups have argued that the finding that GHGs are a "pollutant" under the Clean Air Act is enough to trigger immediate regulation under permitting provisions of the Act.  They argue the endangerment finding necessary for regulation under Section 202 is not necessary to begin regulating GHGs under other provisions of the Act.

4.  Litigation Ensues Over Whether Regulation of GHGs is Discretionary-  As discussed in previous posts, a number of legal challenges have been filed to the issuance of permits for construction of new coal fired power plants.  Environmental and Citizen Groups have challenged the permits on the basis the failed to control CO2 as a pollutant.  U.S. EPA and State EPA's have argued that C02 and the other GHGs are not "regulated" pollutants under the Act.  They distinguish the Massachusetts decision by saying the Court only found GHGs to be a pollutant.  Therefore, U.S. EPA must complete its rulemaking process before GHGs are regulated.  At least one State Court has already disagreed with EPA's interpretation.  A Georgia Court has already ruled the GHG are a regulated pollutant that must be considered as part of EPA's New Source Review (NSR) permitting program.

And now the latest....

While U.S. EPA methodically proceeds down its rulemaking path, it is more than likely the Courts will not wait for EPA before deciding whether CO2 is a regulated pollutant.  In fact, I believe the landmark case to decide whether regulation of GHGs must occur immediately is about to be decided.  In the case, the Sierra Club is challenging EPA’s issuance of a permit for a waste-coal-fired generating unit at a power plant in Utah that did not establish Best Available Control Technology (BACT) emissions limits for CO2

On September 12, 2008, reply briefs were filed in the case of in the Deseret Power Electric Cooperative (Bonanza) case which is before U.S. EPA's Environmental Appeals Board.   A decision in the case could be expected in the next couple of months.  To give you an idea of the level of attention this case is attracting, the following business groups filed briefs in the litigation:  U.S. Chamber of Commerce, National Association of Manufacturers, American Petroleum Institute, American Chemistry Council, etc.   

Sierra Club argues that because the Supreme Court has already determined that CO2 is an “air pollutant” under the Clean Air Act (CAA), that finding triggers EPA's obligation to establish BACT for CO2 emissions in the permit.  EPA and the business groups counter that the Supreme Court only EPA found CO2 to be a “pollutant” under the CAA, it is not yet a pollutant “subject to regulation” for which BACT is required until EPA concludes is rulemaking process. 

The Sierra Club together with New York, California and other Northeast States have put forward a novel argument that may tip the scales in their favor based upon comments I have heard from EPA officials.  The Sierra Club cites to Section 821 of the Clean Air Act which establishes monitoring requirements for CO2.  The following excerpt is from a Sierra Club brief filed in the litigation:

In § 821 Congress ordered EPA “to promulgate regulations” requiring that hundreds of facilities covered by Title IV monitor and report their CO2 emissions, and in §165, Congress required a BACT limit for “any pollutant subject to regulation” under the Act. The only possible reading of these two statutory mandates is that Congress intended that EPA apply BACT limits to CO2 pursuant to §165.

The ultimate issue boils down to whether monitoring requirements rise to the level of "regulation" of CO2 or does EPA have to establish actual air quality standards or emission limits for CO2 and other GHGs.    

The decision in this case will have massive repercussions.  If EAB decides in EPA's favor, regulation of GHG will likely be delayed for at least a couple of years.  If the EAB agrees with the Sierra Club, EPA will need to immediately begin regulating GHG in permitting actions.  As I will discuss in an upcoming post, such a decision could overwhelm EPA and the States in new permits for hundreds of thousands of new sources. 

 

 

CAIR Part II: Update on Short Term/Long Term Impacts

In my previous post on the CAIR decision, I discussed the environmental and practical ramifications of the Court's decision vacating the program.  While speaking at a large permitting seminar for manufacturer's, I had a chance to discuss the conclusions of my prior post with some State officials.  While I was correct that the CAIR decision complicates the State pollution control plans for ozone and soot, the environmental consequences discussed in my prior post need to be adjusted to account for additional factors. 

It is unclear how U.S. EPA will treat State air pollution control plans (SIPs) that rely on CAIR.  However, in the short term, not all the CAIR controls will be scuttled or switched off.  AEP and First Energy have entered into major settlements with U.S. EPA stemming from New Source Review (NSR) violations. 

These settlements require installation and operation of billions of dollars in new air pollution controls on power plants in Ohio.  The consent orders will act as a backstop now that CAIR is gone.  Perhaps some additional state actions will be needed to put additional backstops in place where no federal decree covers the plant.  In summary, it appears the Ohio may have the tools to deal with the short term issues presented by the absence of CAIR for sources within the State. 

The longer term consequences still remain and by 2015 will be felt if Congress does not act by replacing CAIR quickly.  CAIR was designed to drive a second wave of major reductions that will be very difficult to replace without some new federal program.  This second wave of reductions are essential for state's trying to meet the tougher ozone standard (.075 ppm) and soot standard (fine particle- pm 2.5).  If State's fail to meet either the ozone or soot standards, then existing businesses will likely be squeezed for additional air pollution reductions.  Also, economic development is more difficult in areas not attaining federal air quality standards.

Another consequence of the absence of a CAIR like program will be a lot more litigation between the states. It won't just be North Carolina or the East Coast suing upwind sources.  Even Ohio may be suing its neighbors like Indiana to try and force additional reductions.  

Why?  Ozone is truly a regional issue.  Even City's that some may think have no one to blame for their air pollution, such as Cleveland, in fact receive a substantial contribution from upwind sources. Take a look at the figures to the left.  They demonstrate how both ozone and P.M 2.5 are regional issues.  The majority of pollution in these major cities is from regional not local sources.

All this points to the need for Congressional action to replace CAIR to avoid a serious and costly problem for the State's and businesses.  Unfortunately, any action is very unlikely until we have a new President.

First Court Revokes Air Permit Over CO2 and Clean Air Act

For the first time a court has revoked a permit due to concerns over C02 emissions and climate change.  While there have been previous instances where states have denied permits due to concerns with C02 emissions, this is the first time a court has revoked a previously issued permit.  Notably, the Court did not base its decision on state law, rather it ruled the Clean Air Act (CAA) requires analysis and control of C02 emissions. 

Other courts are currently hearing similar challenges.  If this decision is a trend it will have major implications for any new facilities seeking an air permit.  In a future blog post I will discuss the implications of using the Clean Air Act, specifically the New Source Review provisions, to regulate CO2.  Much speculation has been made as to whether CO2 will be regulated even without action by Congress on comprehensive climate change legislation.

The CO2 decision was issued on June 20, 2008 in Georgia's Fulton County Superior Court.  The Georgia Environmental Protection Division had approved a permit for the construction of a proposed 1200-megawatt coal-fired power plant.   Environmental groups, including the Sierra Club, challenged the permit saying the plant's emission of 8-9 million tons of CO2 had to be considered. Siding with the Sierra Club, the Court overturned the State's issuance and sent the permit back to perform the analysis it said was required under the CAA. 

Note: According to Sourcewatch, between 2007 and 2008, plans for 69 coal plants have been canceled.

The Clean Air Act requires major new sources of air pollution to install the best available pollution control technology (BACT) to reduce pollutants regulated by the Act.  The parties agreed that CO2 was not evaluated as a pollutant under the BACT analysis performed by the Georgia Environmental Protection Division.  Longleaf Energy defended its permit by arguing that CO2 was not a pollutant "controlled or limited" by the Clean Air Act.  The Company also argued the U.S. Supreme Court's decision in Massachusetts v. EPA was not controlling because the Court only found CO2 to be a pollutant, it did not determine it was a "regulated pollutant" under the Act.

The Court rejected the arguments raised by Longleaf stating the BACT provisions of the Clean Air Act were broader "encompassing all pollutants that are subject to regulation under the Act, whether or not they are independently subject to NAAQS [federal air quality standards] or other general limits."  The Court found that the Supreme Court in Massachusetts v EPA did determine CO2 was a "pollutant subject to regulation."