In a much anticipated move, the Trump Administration has proposed the Affordable Clean Energy (ACE) rule as a replacement for the Obama Administration Clean Power Plan (CPP).  While the CPP was controversial from the start for it broad regulation of the power industry, the ACE rule will be controversial as it signifies a 180 degree turn from aggressive climate change regulation of the energy sector.

Overview of CPP

The CPP was finalized on October 23, 2015.  The fundamental goal was to reduce CO2 emissions from the energy sector (one of the largest contributors to greenhouse gas emissions) by 32% by 2030 compared to 2005 levels.  The reductions were to be achieved through significant emission reductions from coal power plants coupled with incentives to move toward renewable energy and energy efficiency.

The CPP was touted a being flexible by giving states freedom to choose among various “building blocks” to achieve the necessary reductions.  States could either choose to regulate emissions from individual power plants or set a statewide cap of total CO2 emissions from its power sector.

Each state was given its own target for reductions (i.e. hard cap on emissions).  Under the rule, states must submit their plans (referred to as State Implementation Plans or SIPs) by 2018 and start achieving reductions by 2022.  If a state failed to adopt an approvable SIP by the deadline, EPA would impose its own Federal Implementation Plan (or FIP) to achieve the necessary reductions.

The CPP was controversial from the start. Many believed the structure of the plan as an overall regulation of the energy sector went significantly beyond EPA’s legal authority. The entire CPP hinged on the EPA’s authority under Section 111 of the Clean Air Act.  Under Section 111, the CPP set emissions standards across the entire energy sector thereby changing the mix of production to natural gas and renewables. The  crux of the legal challenge to the CPP was that Section 111 only allowed EPA to impose controls at individual power plants (i.e. within the “fence line”), not broadly across the energy sector. In February 2016, in a rare move, the Supreme Court issued a stay of the effectiveness of the CPP while the legal challenges to the CPP were heard in lower courts.

Why Replace the CPP?

The Trump Administration exited the United States from the Paris Agreement, the international accord on climate change.  President Trump and former Administrator Pruitt repeatedly questioned whether climate change was occurring.  Trump called the CPP a “job-killing regulation.”  Then why not simply repeal the CPP  with no replacement?

To repeal the CPP, the Trump Administration must go through the formal rulemaking process.  The Administration would have to justify, legally, why it is getting rid of the plan.  Complicating any effort to simply get rid of climate change regulation of the power sector was the Supreme Court prior ruling in Massachusetts. v. EPA  that the regulation of greenhouse gas emissions was required under the Clean Air Act.  Furthermore, the Obama Administration had already asserted that Section 111 of the Clean Air Act provide EPA the legal authority to regulate CO2 emission from power plants.  Therefore, given the prior Supreme Court ruling and EPA’s prior legal statements, it would be very difficult for the Administration to develop a legal justification for why there should be no regulation of CO2 emissions from the power sector.  The Administration likely decided a more prudent move would be to replace the CPP with a more flexible and less stringent rule.

Affordable Clean Energy Rule

The ACE rule reconsiders EPA’s authority under Section 111 of the Clean Air Act.  While EPA still maintains it has authority to regulate C02 emissions, it believes that authority is limited to requiring specific improvements at individual coal fired power plants  (i.e. within the “fence line).  The standards in ACE are based on a list of candidate heat rate improvement measures (either technologies or operational changes).  ACE removes the push toward natural gas and renewables.  ACE also removes the ability of states to set statewide CO2 caps on emissions as well as the trading program that would have allowed states to trade amongst themselves to more cost effectively achieve necessary emission reductions.

Under the ACE rule, each state must develop custom compliance schedules that include the selected emission standard and compliance deadlines.  States must submit the plans for EPA’s review within three years of the final EPA rule.  This effectively pushes the compliance deadline for states from 2018 under the CPP to likely 2022.  However, units are given up to 24 months to comply, which effectively pushes compliance deadlines further to 2025.

ACE also aims to encourage energy efficiency by redefining the applicability of the New Source Review (NSR) rules for power plants.  Under NSR, a facility must apply for a permit every time there is a “major modification” to an existing plant.  Under the existing NSR rule a change to facility is considered a “major modification” by measuring the change in annual emissions.  Critics of this approach argue this actually discourages energy efficiency upgrades because: 1) utilities may not adopt energy efficient upgrades due to the lengthy permitting process required; and 2) utilities may want to run plants that are more efficient more often and determining whether a upgrade constitutes a “major modification” based on annual emissions discourages increased operation of more efficient plants.  ACE proposes to change the measure for major modifications to an hourly emission test.  This change could greatly reduce the applicability of NSR to existing plants thereby avoiding the lengthy permitting process and encouraging operations of more efficient plants.  Critics argue NSR ensured the plants could not extend there useful life without adopting new emission reduction technologies.

Despite the radically different approaches to regulate CO2 from the power sector, EPA projects that the reductions under ACE are very similar to CPP.  This is because market forces will continue to push more closures of coal fired power plants as the country moves more to natural gas.  However, critics argue ACE contains no hard cap on emissions, therefore, the projected reductions are not guaranteed.

What is Next for CPP and ACE?

ACE must undergo a sixty day comment period before the rule can be finalized.  If ACE is made final, numerous legal challenges will certainly ensue.  Once again, the future of climate change regulation in the United States will be decided in the courts.

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.

 

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. 

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. 

 

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. 

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

 

Continue Reading EPA Begins Process of Determining BACT for CO2

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.

 

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.

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)

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.

Continue Reading What Would BACT be for CO2?