In a dramatic reversal from the Bush Administration, the Department of Justice and U.S. EPA are renewing their New Source Review enforcement efforts against coal-fired power plants.  The NSR lawsuits originally commenced during the Clinton years have resulted in billions of dollars in new controls and hundreds of millions in civil penalties. 

The industry had breathed a sigh of relief when the Bush EPA announced they were not going to pursue additional cases.  Now the industry faces the prospect of a new round of very costly litigation, controls and penalties.

U.S. EPA issued a press release announcing the first new NSR complaint:

Coal-fired power plants collectively produce more pollution than any other industry in the United States. They account for nearly 70 percent of sulfur dioxide emissions each year and 20 percent of nitrogen oxides emissions. Emissions from coal-fired power plants have detrimental health effects on asthma sufferers, the elderly and children. Additionally, these emissions have been linked to forest degradation, waterway damage, reservoir contamination and deterioration of stone and copper in buildings.

To combat these adverse effects, the EPA and the Justice Department are pursuing a national initiative, targeting electric utilities whose coal-fired power plants violate the law.

The suits reverse the Bush Administration decision to only conclude the Clinton era NSR lawsuits and to not pursue new cases unless the involve violations of the Bush era  NSR regulations. In 2006, former EPA enforcement chief Grant Nakayama told Congress he would pursue investigations of coal-fired power plants only if they appeared to fall out of step with the administration’s series of proposed and final changes to the NSR program .  On October 13, 2005 Marcus Peabody, Assistant Administrator, issued a memorandum to U.S. EPA’s Office of Enforcement Compliance Assurance directing the office to pursue only cases involving violation of the Bush era NSR rules. 

The NSR directive is just one of many Bush evironmental policy and regulatory decisions that the Obama Administration has reversed.  Utility representatives said the Obama administration’s efforts to ramp up NSR enforcement came as no surprise.

On February 25th, the Department of Justice has sued Louisiana Generating, alleging that the NRG Energy subsidiary violated New Source Review requirements by operating the Big Cajun 2 Power Plant without also installing and operating modern pollution control equipment after the generating units had undergone major “modifications.”(DOJ Press Release)

This follows a similar lawsuit filed earlier in February against Westar Energy, Inc for failing to install Best Available Control Technology (BACT) at one or more of its coal-fired power plants.  The complaint alleges that for more than a decade, the Jeffrey Energy Center has operated without the best available emissions-control technology required by the New Source Review provisions of the Clean Air Act to control emissions of sulfur dioxide, nitrogen oxide and particulate matter, contributing to formation of fine particulate matter, smog and acid rain.
 

No doubt the President’s budget includes a very ambitious proposal cap and trade proposal to address Climate Change.  The President Budget provides an overview of the proposal in the EPA budget:

After enactment of the Budget, the Administration will work expeditiously
with key stakeholders and Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050. This program will be implemented through a cap-and-trade system, a policy approach that dramatically reduced acid rain at much lower costs than the traditional Government regulations and mandates of the past.
Through a 100 percent auction to ensure that the biggest polluters do not enjoy windfall profits, this program will fund vital investments in a clean energy future totaling $150 billion over 10 years, starting in fiscal year 2012. The balance of the auction revenues will be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy.

The budget blueprint Obama sent to Congress yesterday foresees revenue of $645.7 billion by 2019 from the sale of permits to polluters from 2012. Obama proposes to use the money raised to pay for other priorities, such as tax breaks for the lower and middle class. Another $150 billion will be used to help spur development of renewable energy. 

Early reaction to Obama’s plan has been mixed with most recognizing he will have an enormously tough road ahead to pass a Climate bill with the framework he is proposing.

100% Auction… how about 30%?- President Barack Obama may need to give away as much as 70 percent of greenhouse-gas emissions permits to win support for his cap-and-trade program, Merrill Lynch & Co said.

McCain Blasts Obama Proposal– “I don’t think cap and trade should be used for the purposes of generating revenue,” McCain

 Environmental groups were jubilant at Obama’s proposals on climate change-"It’s a hugely important policy direction and another sign that Obama gets it when it comes to building a clean energy economy," said Gene Karpinski, president of the League of Conservation Voters.

Obama team will be pragmatists on climate change-  "Todd Stern, the Obama administration’s new top climate-change negotiator, wants to tamp down on the expectations. He talks tough and is all for the shift to a low-carbon economy, but he’s not an ideologue. And he may well be reflecting the White House’s pragmatism in the face of numerous challenges."  Its hard to see the pragmatism in a 100% auction, very small offset proposal.

 

In National Farm Bureau Federation v. EPA, the D.C. Circuit Court of Appeals has granted environmental group petition for review of the NAAQS for fine particle pollution known as PM 2.5.  Environmental groups and industry groups both challenged portions of EPA’s standard.  The EPA had decided to maintain the annual standard at 15 μg/m3.  The Court concluded the EPA lacked a valid scientific basis to support their decision:

We conclude the EPA failed adequately to explain why, in
view of the risks posed by short-term exposures and the
evidence of morbidity resulting from long-term exposures, its
annual standard is sufficient “to protect the public health [with]
an adequate margin of safety,”

We conclude the EPA has failed reasonably to explain why
it believes its daily standard will “provide an appropriate degree
of protection from health effects associated with short-term
exposures to PM2.5.” Id. at 61,174/3. We therefore remand the
annual standard to the EPA for further consideration of whether
it is set at a level requisite to protect the public health while
providing an adequate margin of safety from the risk of shortterm
exposure to PM2.5

The Court also granted the petition for review of the secondary NAAQS for the fine PM brought by the environmental groups.  The Court said EPA unreasonably concluded that the NAAQS are adequate to protect the public welfare from adverse effects on visibility. 

The Clean Air Scientific Advisory Committee (CASAC),along with medical and public health groups who submitted comments, challenged the EPA’s proposal to retain the existing level of the primary annual fine PM standard at 15 μg/m3 . They urged the EPA to lower the level to somewhere between 12 and 14 μg/m3. The CASAC and several public commenters also objected to setting the secondary standards for fine PM at the same level and averaging time as the primary standards, arguing that they were insufficient to protect against adverse visibility effects.

The Court decided not to vacate the annual standard, but only remand it for Agency review.  The Court left open the possibility EPA could provide a better explanation for maintaining the standard at 15 μg/m3.  However, based on the strong opposition to the standard and CASAC’s recommendation to lower the standard, EPA will most certainly oblige.

So what is the potential impact of a lower PM 2.5 standard? The yellow and orange dots are areas that have readings below the 15 μg/m3 but within the CASAC recommendations.  Of course its not just more potential non-attainment areas, it is also the red dots finding it much hard to reach attainment. 

States will need to be aggressively looking at diesel reductions as well as a stronger CAIR program to reach the standards.

 

 

 

 

 

On February 18th another permit, Northern Michigan University Ripley Heating Plant, for a new coal facility was remanded by U.S. EPA’s Environmental Board of Review.  The Board remanded the permit because the State (the Michigan Department of Environmental Quality), in issuing the permit, failed to address whether CO2 was a regulated pollutant under the Clean Air Act.  The most interesting aspect of the decision is that the Board apparently gave absolutely no weight to former EPA Administrator Johnson’s Memo which said CO2 was not a "regulated pollutant" and therefore new permits need not consider BACT controls for CO2.  Here is what the Board said on the issue:

 

For the reasons set forth in that decision (Deseret Power), we similarly remand the CO issue here, directing MDEQ, guided by our findings in Deseret, to undertake the same consideration whether the CAA’s “pollutant subject to regulation” language requires application of a BACT limit to CO emissions.

The Board does not elaborate or even address the Johnson memo.  Therefore, it is impossible to know whether new EPA Administrator Jackson’s grant of the Sierra Club’s petition for reconsideration rendered the Johnson Memo meaningless.  That seems like a difficult legal conclusion to reach given the fact Jackson’s action specifically did not block the effectiveness of the Johnson memo while it was undergoing review.

The permit had authorized Northern Michigan University (NMU) to construct a new circulating fluidized bed (“CFB”) boiler at the Ripley Heating Plant on its campus in Marquette, Michigan. As permitted, the CFB boiler will function as a cogeneration unit that provides both electrical power and heat to NMU’s facilities through the burning of wood, coal, and natural gas

Another interesting aspect of the decision was the Board also remanded the BACT analysis for the SO2 limit.  The permit called for a mix of fuels- mainly wood and coal.  The Board found there was not enough information provided to justify the limited amount of wood which would lower SO2 emissions.  The Board also questioned the fuel choice relative to coal.  It said the MDEQ needed to provide more information as to why lower sulfur coal was not required to lower SO2 emissions.

The BACT requirements for fuel choice are interesting.  For instance, once (not if) CO2 is regulated would BACT require a coal and biomass mix which can lower emissions of CO2?  This could be very good news for biomass producers who blend biomass with coal to form briquettes or pellets. 

I was asked by a reader (Associate Law Professor at UT) to provide a free advertisement about a fellowship program for lawyers interested in teaching energy law.  I don’t put advertisements on  my blog, but I thought this may be an interesting opportunity for some of my readers.  The information below was provided by my reader.

The University of Texas School of Law is seeking applicants for an energy law fellowship. Fellows will be jointly affiliated with the Law School’s Emerging Scholars Program and the Robert S. Strauss Center for International Security and Law. Fellows do not need to have a specific interest in security issues.

The Emerging Scholars Program offers two-year fellowship to help attorneys prepare for tenure-track faculty positions in U.S. law schools. The Program is designed to give talented attorneys the chance to develop a scholarly agenda and publish one or more articles in preparation for the academic job market. Fellows will be full participants in the rich intellectual life of the Law School, and will receive substantial faculty assistance with their projects.

(see the extended entry for more information)

 

 

Continue Reading University Texas Law School Offers Fellowship in Energy Law

I have been following discussion regarding the green elements of the Presidents Stimulus Package, known as the American Recovery and Reinvestment Act of 2009.  There is certainly a lot directed toward environmentally related projects, especially renewable energy development.  Leading some to call these provisions the "Green New Deal." 

What is the real story behind some of the spending that has been reported?  You certainly can find information all across the web and on government sites that simply lists the amount of money in the bill and which program it has been directed.  However, detail about what the money will really be used for can be hard to find.

Bottom line, some provisions are better than others.  For instance, much of the money directed toward U.S. EPA will pay for existing projects.  This includes prior grant applications, clean ups already under contract or projects previously selected for funding.  So, for many of you expecting great new opportunities for EPA related projects, I don’t think the bill offers you that much. (with the exception of diesel engine related grants- see below).

The renewable energy side of the equation is a totally different story.  There are continued and new tax incentives as well as new grant opportunities.  There is a lot in the bill and it will literally pay to stay on top of what is available. 

I.  EPA Side- the American Recovery and Reinvestment Act of 2009 specifically includes $7.22 billion for projects and programs administered by EPA. 

Below is a description of the major areas of funding as well as an analysis of whether this funding presents new opportunities. EPA has established a web site page with helpful links that discuss the opportunities in the Stimulus Bill relative to the money designated for EPA.

Brownfields:  There is over $100 million directed to U.S. EPA’s brownfield redevelopment program.  I was intrigued regarding this new slug of money for it could present another great opportunity for clients outside of the Clean Ohio program.  However, after asking for more details from U.S. EPA, I learned that this money is basically already spent.  The U.S. EPA intends to use it for projects that requested funding back in 2008 but were not funded due to an over abundance of proposals.  While its good news more projects are getting funded, I believe U.S. EPA could have even received better project proposals if they would have allowed for new applications. 

Diesel Emission Retrofits Act (DERA):  The Stimulus directed over $300 million in new money to fund the DERA program. DERA is the federal grant program that pays for diesel engine retrofits, repowers and replacements.  Last years allocation was only $50 million for the entire country.  So the Stimulus does provide real, new money for this program.  U.S. EPA intends to spend the money quickly so watch U.S. EPA’s website and Recovery.gov to jump in with your project.

Underground Storage Tank (USTs) Cleanups: $200 million was provided to U.S. EPA’s Leaking Underground Storage Tanks (LUST) Program, EPA provides resources to states and territories for the oversight, enforcement and cleanup of petroleum releases from underground storage tanks (USTs). EPA estimates that every year 7,570 new releases occur which just adds to the sites that have not yet been completed.  There could be as many as 116,000 sites requiring clean up actions in 2009. However, it appears the funding will be used to help pay for clean ups of abandoned tanks rather than create a new grant program.  Here is additional detail from the from the Convenience Store News regarding the Stimulus package:

Other measures relevant to c-stores include a final approval of $200 million for the Leaking Underground Storage Tank (LUST) Trust Fund, which assists in the cleanup of abandoned gas stations, but will not pay for inspections or to assist state reimbursements programs.

Superfund Cleanups: $600 million was provided to U.S. EPA’s superfund program.  However, these funds will be obligated mostly through existing contracts and Interagency Agreements.  In 2009 there could be as many as 20 Superfund sites ready for construction, but not funded due to budget shortfalls. The Recovery funds will begin to address those sites, plus accelerate construction at many of 600 sites where work has been limited in the past by funding constraints.

Clean Water State Revolving Fund and Drinking Water State Revolving Fund: $4 billion for assistance to help communities with water quality and wastewater infrastructure needs and $2 billion for drinking water infrastructure needs. A portion of the funding will be targeted toward green infrastructure, water and energy efficiency and environmentally innovative projects. (guidance on the green infrastructure component)

Ohio EPA has begun soliciting projects for its Drinking Water and Wastewater Revolving Loan Programs.  However, projects must already have been planned and reviewed by Ohio EPA for inclusion on project planning lists.  For instance, drinking water projects must be on the Drinking Water Project Priority List (PPL).

II.  Renewable Energy- the American Recovery and Reinvestment Act of 2009 bill is anticipated to provide around $43 billion for renewable energy in the form of tax breaks and other incentives

The extended entry includes a summary of the renewable energy incentives and investment as assembled by the American Council on Renewable Energy (ACORE). (the link provides you a hard copy of the ACORE document- which does a great job of assembling the relevant information for renewable energy incentives- or see the extended entry for a summary).

Continue Reading Green New Deal? Green Trinkets and Empty Packages in the Stimulus Bill

Kudos to those in Cleveland  responsible for launching the country’s first community based carbon offset fund- the Cleveland Carbon Fund.  It is an innovative approach to offsetting your personal or business carbon footprint.  Richard Steubi’s Cleantech blog describes the difference between the Cleveland Fund and other offsetting options:

"There are already several options in the marketplace for interested parties to acquire emissions offsets to mitigate their carbon footprint. However, customers of these services usually do not know where the emission reductions will occur. For instance, if I use a service like TerraPass to offset the emissions from my next airline flight, I don’t know exactly where the emission reductions will occur. Looking at the emission reduction projects sponsored by TerraPass, they span the width of the entire U.S."

Similar to other carbon funds, green conscious individuals or businesses can calculate their carbon footprint then make a donation to offset their carbon emissions. However most other funds use donations to purchase renewable energy credits to fund renewable energy projects or carbon credits.  The Cleveland Carbon Fund uses donations to fund  and provide technical support for specific projects right here in Cleveland.   An example of the types of projects funded include:

Compact Fluorescent Lamp (CFL) Installation
 [I]t is estimated that $20,000 from the Cleveland Carbon Fund could fund local community development organizations to install 8,000 CFLs in 1,000 low-income homes across Cleveland. In five years, this initiative would save these homeowners $250,000 and reduce carbon emissions by 2,000 tons at a cost of $5 – $10 per metric ton of carbon reduced.

Showerhead Replacement
Low-flow showerhead valves use half as much water while providing the same level of pressure. According to the Department of Energy, installing these valves saves $11 in water heating every three months…a $30,000 grant from the Cleveland Carbon Fund could fund non-profit organizations to install these valves in more than 200 low-income homes…This project would save Cleveland homeowners almost $10,000 in hot water heating and annually reduce carbon emissions by more than 100 tons at a cost of less than $10 per metric ton of carbon dioxide reduced.

Home Weatherization
For approximately $50,000, the Cleveland Carbon Fund can support more than 20 weatherization projects in low-income neighborhoods across the community, employing many local citizens. Sealing and insulating homes to better retain heat during the winter will save Cleveland homeowners more than $5,000 in energy bills and reduce carbon emissions by 40 tons each year.

If we have learned anything from the first few weeks of the Obama Administration its that climate change, renewable energy and sustainability will be key themes repeated early and often.  Rather than fighting this change, Ohio and Cleveland would be smart to see how they can leverage this massive impending change to grow its economy. 

Innovation and leading will be key to securing green jobs in this difficult economy.  We need to see more proposals like the Cleveland Carbon Fund in order to compete with all the other areas of the country that are actively trying to brand themselves green states and cities. 

(Photo: laszlo-photo/everystockphoto.com)

May you live in interesting times….Yesterday EPA Administrator Jackson issued a letter granting the Sierra Club’s petition for reconsideration of a Deseret Power memo issued by former EPA Administrator Johnson.  The Petition seeks reconsideration of the Johnson memo which interpreted EPA regulations defining the pollutants covered by federal permitting under the Clean Air Act.  The Johnson memo said that CO2 was not a regulated pollutant under the Clean Air Act (CAA) for purposes of permitting. 

The memo was issued following the decision by the EPA’s Environmental Board of Review in the Deseret Power case concluding the CAA was ambiguous and that EPA had discretion to determine whether CO2 was a pollutant subject to regulation.  Johnson, in one of his last acts before leaving office, tried to fill the void by issuing an interpretive memo determining CO2 was not a regulated pollutant.

There was tremendous pressure on new EPA Administrator Jackson to revoke, stay or invalidate the memo.  Such action would have effectively put on hold about a 100 pending permits for coal fired power plants.  In a prior post, I predicted that despite the pressure Jackson would take a more deliberate approach.  She has done exactly that by not issuing a stay and announcing EPA will embark on a formal rulemaking process.  (even I get one right now and then)

While Jackson has chosen to address the issue slowly, she did include language in her letter that cast a great deal of uncertainty regarding pending permits:

In the meantime, the Agency emphasizes a point noted in the memorandum itself: the memorandum does not bind States issuing permits under their own State Implementation Plans.  In addition, given the Agency’s decision to grant reconsideration of the memorandum, other PSD permitting authorities should not assume that the memorandum is the final word on the appropriate interpretation of Clean Air Act requirements.

While this statement casts some uncertainty, the Johnson memo is still legally effective.  Unlike others in the blogosphere predicting stoppage of all permitting for new coal plants,  I believe permits will still move forward in State’s willing to issue them. 

Yesterday, EPA Administrator Jackson also issued a statement regarding her decision to grant reconsideration:

“I am granting this petition because we must learn more about how this memo affects all relevant stakeholders impacted by its provisions,” said EPA Administrator Lisa P. Jackson “This will be a fair, impartial and open process that will allow the American public and key stakeholders to review this memorandum and to comment on its potential effects on communities across the country. EPA’s fundamental mission is to protect human health and the environment and we intend to do just that.”

My take on the statement is: a) EPA intends to move through a slow rulemaking process; and b) once EPA completes the rulemaking process you can pretty much count on the fact CO2 emissions will be regulated. 

 

There is good news for area businesses.  Additional compliance costs and restrictions on economic growth will be avoided that were deemed all but certain a few years ago.  The compliance costs were associated with new air pollution controls needed to achieve  U.S. EPA’s 1997 8-hour ozone standard (0.85 ppm). The deadline to meet this standard is 2009.

When I was Director of Ohio EPA,  all the modeling and projections showed there was no way Cleveland would meet the standard by the deadline. I remember giving speeches around the State with the basic theme- "we would have to de-populate Cleveland to meet the Ozone deadline."   I remember briefing the Governor that it appeared likely the Cleveland-Akron-Lorain Nonattainment Area would have to "bump up" to the next category of nonattainment-"serious."  By bumping up Cleveland would buy time to reach the standard, but the cost was a list on new federally mandated controls and restrictions.  Bump up would have had devastating impacts on the local economy.

[This is a slide taken from one of the speeches on reaching the ozone standard.  The numbers show various ozone levels at each monitor in the nonattainment area after imposing various control options.  The black number was a series of draconian measures that would have devastated the local economy.  Even after imposing those controls the models predicted continued nonattainment.]

 

 

Perhaps this is a lesson about not putting too much faith in modeling, but  based upon recent air quality monitoring Cleveland has indeed attained the 1997 8-hour ozone standard.   Area businesses may never be fully aware of the crisis that was averted.  But this is certainly good news for an area that has struggled to meet federal air quality standards.

Below is additional background on the recent Ohio EPA submittals.

In 2008, Ohio EPA submitted an State Implementation Plan (SIP) for the Cleveland-Akron-Lorain nonattainment area that requested redesignation to attainment status.  This was based on monitoring data from 2005,2006 and 2007 that showed Cleveland close to attainment [0.0853 compared to 0.0853]. 

This month, February 2009 Ohio EPA has prepared an updated attainment demonstration for the Cleveland that incorporates the most recent air monitoring data from the summer of 2008.  Due to ever improving air quality, the updated monitoring data shows Cleveland complies with the Standard [0.084 compared to 0.085 standard]. 

Here is additional detail regarding the two submissions:

2008 Ohio EPA Redesignation Request to U.S. EPA
In the February 2008, Ohio EPA submitted its request to U.S. EPA to have the Cleveland-Akron-Lorain nonattainment area redesignated to attainment. The document included two key conclusions:

1) Monitoring data for 2005-2007 showed the area just above the standard. The data showed 0.853 ppm compared to the 0.85 ppm standard.

2) Ohio EPA was requesting redesignation of the Cleveland-Akron-Lorain area based upon modeling that showed it expected the area to attain the standard by 2009. This was known as the "weight of evidence" approach (WOE). Under the WOE policy, U.S. EPA can redesignate an area attainment even though monitoring data shows it has not met the standard.  However, Ohio EPA must provide the federal EPA convincing evidence the area will reach the standard by the 2009 deadline.

Ohio EPA included the following language in the January 2008 submittal to U.S. EPA:

"The (air) modeling results as well as the previously submitted weight of evidence information supports the conclusion that Cleveland-Akron-Lorain OH area should attain the eight-hour ozone standard on time.

In spite of this evidence, Ohio EPA is developing additional emission reduction options. Ohio EPA recognizes that the ozone standard is currently under review and a final revision to the standard will most likely result in a revised standard that will require additional emission reductions above those necessary to achieve the existing standards. Ohio EPA is currently in discussions with U.S. EPA and local stakeholders assessing the options available to meet the future standard, including the use of lower Reid-Vapor Pressure gasoline. "

Bottom line: Ohio EPA left open the possibility it would impose additional control measures to support its WOE demonstration to U.S. EPA.

2009 Revised Ohio EPA Redesignation Request to U.S. EPA: Ozone levels improved significantly in the summer of 2008. The average of the 2006, 2007 and 2008 ozone seasons shows an overall average of 0.84 ppm which is below the 0.85 ppm standard.

This is very good news for the Cleveland-Akron-Lorain area. This means Ohio EPA no longer has to propose a WOE approach to U.S. EPA. Rather, Ohio EPA can rely on the real monitoring data which already shows attainment with the standard. As a result, all of the language I quoted above regarding evaluating additional control options has been dropped. In the 2009 submittal Ohio EPA states:

"The Cleveland-Akron-Lorain ozone nonattainment area has attained the 1997 NAAQS for ozone and complied with the applicable provisions of the 1990 Amendments to the Clean Air Act regarding redesignations of ozone nonattainment areas…Based on this presentation, the Cleveland-Akron-Lorain ozone nonattainment area meets the requirements for redesignation under the CAA and U.S. EPA guidance….Furthermore, because the area is subject to significant transport of pollutants, significant regional NOx reductions will ensure continued compliance (maintenance) with the standard with an increasing margin of safety."

Bottom line: It appears Ohio EPA is no longer evaluating additional controls to comply with the 1997 ozone standard. In addition, the language referring to "subject to significant transport of pollutants" is a reference to the fact our ozone levels are heavily influenced by emissions from elsewhere in Ohio and the Midwest. This means continued strengthening of programs like CAIR (power plant reductions) will continue to result in improved air quality.

Of course the story does not end here… U.S. EPA is in the process of imposing the new 2008 ozone standard (0.75 ppm). Current monitoring shows Cleveland is a long way from achieving the new standard. Unfortunately, this means Cleveland-Akron-Lorain will not get out from under its nonattainment status anytime in the near future.  But at least we are no longer discussing draconian measures to meet the old ozone standard.