A VIEW FROM TEXAS: FIFTH CIRCUIT VACATES EPA DISAPPROVAL OF TEXAS FLEXIBLE PERMIT PROGRAM

Posted on August 30, 2012 by Patricia Finn Braddock

On August 13, 2012, the United States Court of Appeals for the Fifth Circuit held that the Environmental Protection Agency’s (EPA) disapproval of the Texas Flexible Permit Program (TFPP) had been arbitrary and capricious, an abuse of discretion, not in accordance with law, and unsubstantiated by substantial evidence on the record taken as a whole.  Accordingly, the Fifth Circuit granted the petition for review, vacated EPA’s disapproval of the Texas plan and remanded the matter to EPA.

The TFPP, a Minor new source review (NSR) permit program, had been submitted to EPA in November 1994 as a revision to the Texas State Implementation Plan (SIP).  The TFPP authorized modifications to existing facilities without additional regulatory review provided the emissions increase would not exceed an aggregate limit specified in the permit.

Despite the mandate in the Clean Air Act (CAA) that EPA approve or disapprove a SIP revision within eighteen months of its submission, EPA failed to make a determination on the TFPP for more than sixteen years.  By the time that EPA announced its disapproval, the State of Texas had issued approximately 140 permits under the TFPP.  And despite the excessive delay in announcing its disapproval of the TFPP, EPA found time to promptly notify flexible permit holders in Texas that their facilities were operating without a SIP-approved air permit and that they were risking federal sanctions unless SIP-approved air permits, requiring current Best Available Control Technology, were obtained.

The State of Texas and ten industry and business groups subsequently filed suit challenging EPA’s disapproval, which had been based on three primary arguments: 1) the program might allow major sources to evade major NSR; 2) the provisions for monitoring, recordkeeping and reporting (MRR) are inadequate, and 3) the methodology for calculating permit emissions caps lacks clarity and is not replicable.  Two of the justices on the 3-judge panel court rejected each of EPA’s contentions, with the third justice dissenting.

The majority rejected EPA’s contention that the TFPP allowed major sources to evade Major NSR because the TFPP includes three rules that affirmatively require compliance with Major NSR, and EPA could not identify a single provision in the CAA or the CAA implementing regulations that empowered EPA to disapprove a SIP that did not also contain an express negative statement that the Minor NSR permit could not be used to evade Major NSR.  Further the court noted that in its briefings, EPA had conceded that language explicitly prohibiting circumvention of the Major NSR requirements is not ordinarily a minimum NSR SIP program element.  75 Fed. Reg. at 41,318-19.

The majority also rejected EPA’s contention that the TFPP allowed the Texas Commission on Environmental Quality executive director too much discretion in determining MRR requirements in a Minor NSR permit and that this amount of discretion is contrary to EPA policy.  The court found that EPA could not identify an independent and authoritative standard in the CAA or its implementing regulations that required MRR requirements to be specified in a SIP, rather than based on the size, needs, and type of facility authorized in a Minor NSR permit.  In addition, the court found that EPA failed to identify the purported policy of disfavoring “director discretion” in any comments that EPA submitted to the State of Texas on the TFPP regulations or in EPA’s disapproval of the requested Texas SIP revision.  Thus, the court held that the purported policy is not in the record on which the court must review EPA’s disapproval under the APA.  Although not a factor in its decision, the majority also noted that “other recent EPA action tends to not only undercut the assertion of such a policy but also to give the impression that EPA invented this policy for the sole purpose of disapproving Texas’ proposal.”

Finally, the majority rejected all of the arguments EPA gave for finding the TFPP to be deficient.   Among other things, the court concluded that EPA could not identify a single provision in the CAA or EPA’s Minor NSR regulations  that requires a state to specify the method of calculating emissions caps or to demonstrate replicability in its SIP or as a condition of approval of a state’s Minor NSR program.    Similar to its comments on EPA’s second contention, the majority also noted that EPA appears to have adopted the third test solely for application to the TFPP.

Due to the uncertain status of the TFPP and the risk of federal enforcement, most flexible permit holders requested that the flexible permits be altered to reflect that the authorization meets the air permitting requirements already in the EPA-approved Texas SIP.  Thus, EPA succeeded in gutting a Minor NSR permit program that it had wrongly disapproved, but it did not achieve any substantive changes in permit requirements.  Although the majority vacated EPA’s disapproval of the TFPP and remanded the matter to the agency, EPA is not likely to act and facilities in Texas are not likely to decide on whether to pursue new flexible permits until after the November election.

Waiting for Godot . . . Oops! The Decision’s Finally Out

Posted on August 29, 2012 by Andrea Field

The Cross-State Air Pollution Rule (Transport Rule) [76 Fed. Reg. 48208] adopted by EPA in mid-2011 -- requires sources in the eastern U.S. to reduce their emissions substantially.  Numerous states and industry groups challenged the rule in the D.C. Circuit, and many of the petitioners asked the court to stay the rule pending litigation.  One motions panel of the court stayed the Transport Rule in late 2011, and then a subsequent panel directed that all briefing in the case be completed -- and oral argument be held -- within approximately 100 days after the stay was issued.     

That the case was put on such a tight briefing schedule led many litigants to speculate that the court wanted to resolve the case quickly and would issue its decision within 60 days of the April 13, 2012 oral argument.  When mid-June came and went with no decision, many of those same litigants then predicted the decision would come by mid-July so as not to interfere with the judges’ summer vacations.  In support of their mid-July prediction, they also claimed that the head of EPA’s Air Office, Gina McCarthy, agreed with them.  In early July, Ms. McCarthy had indeed told some state regulators that the court would issue its decision on Friday, July 13, but she had quickly added that her prediction should not be taken too seriously because she had been wrongly predicting the imminent issuance of the decision for the past thirty days.  Nonetheless, several in the media reported her prediction as gospel, prompting all involved to stay glued to the D.C. Circuit’s website on Friday, July 13. 

As one of those waiting for the court to issue its opinion on the Transport Rule, I was reminded of a similar waiting game in which I was involved in 1997.  In May of that year, I had argued a case before a three-judge panel in the Fourth Circuit, where I had found one judge to be sympathetic to my argument, one judge to be antagonistic (but nicely so, because this was the Fourth Circuit after all), and the third judge to be a cipher.  As soon as oral argument ended, my client started bombarding me daily with the same question:  when would the court issue its decision?  I couldn’t answer that question (no matter how often I was asked), but I thought retired Fourth Circuit Judge James Marshall Sprouse might have insights into the court’s decision-making process.  He had been gracious enough  – and patient enough -- to help me prepare for oral argument in my case (and to help me persuade the client to eliminate some of the more bombastic points from the argument).   

Gamely consulting his crystal ball and taking into account that the case had been argued so late in the term, Judge Sprouse suggested that (1) if there was no dissent, then the court might issue its decision by the end of July; (2) if one judge dissented, then there might be a delay of another one to two months; and (3) if each of the three judges wrote a separate opinion or if one of the jurists was trying to be Solomon-esque -- finding areas of agreement and areas of disagreement with each of the other two judges on the panel -- then there might not be a decision until well into the fall.  Judge Sprouse was spot on in my case:  the decision -- which fell into Category 3 -- was issued in late October 1997.

Back to the present now.  The D.C. Circuit issued its decision on the Transport Rule on August 21, 2012.  In an opinion by Judge Brett Kavanaugh, joined by Judge Thomas Griffith, the court held that the Transport Rule exceeds EPA’s statutory authority in two respects, by (1) requiring upwind states to reduce emissions by more than their own significant contributions to nonattainment in other states, and (2) failing to allow states the initial opportunity to implement the emission reductions required by the Transport Rule.  Judge Rogers wrote a stinging dissent.

I leave it to my ACOEL colleague Dave Flannery and his more detailed description of the decision below.  I will add only that although Judge Sprouse passed away eight years ago, the timing of the decision was just what he might have predicted.

Interstate Air Transport Rule Vacated by the D.C. Circuit

Posted on August 28, 2012 by David Flannery

EPA was handed a setback in its efforts to establish aggressive controls on the energy industry in general, and the electric power industry in particular, when the D.C. Circuit issued its August 21, 2012 decision vacating the Cross-State Air Pollution Rule (CSAPR).  EME Homer City Generation LP v. EPA, Case. No. 11-1302.

Significantly, the D.C. Circuit’s order not only vacated and remanded CSAPR, but also directed EPA to continue administering the previously-in-effect Clean Air Interstate Rule (CAIR) pending the promulgation of a valid replacement for CSAPR. 

In a 2 to 1 decision, the court ruled that CSAPR exceeded EPA’s authority in two areas: 

     a.    CSAPR impermissibly required upwind states to reduce more than their “significant contribution” to  downwind non-attainment; and
     b.    CSAPR deprived upwind states of the initial opportunity to implement any required emission reductions by immediately imposing a Federal Implementation Plan. 


Significantly, the opinion of the court sets forth a roadmap for the development of a CSAPR replacement rule. This is accomplished by the court’s establishing “several red lines that cabin EPA’s authority.” In many cases the court offers specific examples of the types of calculations that EPA would have to make in order to determine permissible emission reductions. These “red lines” and example calculations are summarized below: 

     1.    EPA cannot force an upwind state to reduce more than its own contribution to a downwind state minus what level EPA determines to be insignificant. 

Example:  If 3 units were set at the level of insignificance and an upwind state’s contribution to nonattainment in a downwind state is 30 units, then the most reduction that could be required of the upwind state would be 27.

     2.    EPA’s authority to force reductions on upwind states ends at the point where the downwind state achieves attainment.

     3.    The extent to which an upwind state’s contribution is significant depends on the relative contribution to nonattainment of other upwind states.  The obligation to reduce emissions in the upwind states must be allocated “in proportion to the size of their contributions to downwind non-attainment.” 

Example 1:  Assume that the relevant national ambient air quality standard (NAAQS) is 100 units, that the ambient level of the at-issue pollutant in downwind state A is 150 units, and that state A is contributing 90 units to that overall concentration.  Assume also that three upwind states are each contributing 20 units to the total ambient concentration in downwind state A.  Under those circumstances, downwind state A is entitled to at most 50 units of relief -- with the 3 upwind states each contributing 16 2/3 units. 

Example 2:  If the scenario in Example 1 were changed only to the extent that the upwind states contributed 10, 20 and 30 units respectively, the upwind states would be obligated to reduce their contributions by 8 1/3, 16 2/3 and 25 units, respectively. 

Example 3:  If the air quality measurement in Example 1 was 180 units and downwind state A contributed 120 of those units, with 3 upwind states contributing 20 units each, then downwind state A is entitled to at most 60 units of relief to be distributed proportionately among the upwind states.

     4.    EPA may consider costs, but only to further lower an individual state’s emission reduction obligation.  EPA may do this in a way that benefits some upwind states more than others.  The objective of reducing the control obligation of an upwind state would be to prevent exorbitant costs from being imposed on certain upwind states. 

     5.    EPA must ensure that the combined obligations of the various upwind states do not produce more control than necessary for the downwind state to achieve the NAAQS. 

Example:  If state A reduces 5,000 tons of NOx to achieve its largest downwind emission reduction obligation while state B reduces 2,000 tons for the same purpose, and if EPA modeling then shows that “all downwind non-attainment” would be resolved if the combined reduction of the two states were 10% lower, then EPA would be obligated to reduce the emissions reduction obligation of the upwind states by 10%.

 

The court’s ultimate holding on this aspect of the CSAPR decision is: 

States are obligated to prohibit only those “amounts” of pollution “which will . . . contribute significantly” to downwind attainment problems – and no more.  Because the Transport Rule exceeds those limits, and indeed does not really try to meet those requirements, it cannot stand.

Even as EPA considers its next steps in the wake of the decision, states and regulated sources will begin to focus on how to develop and implement a program to address interstate air quality that satisfies the new ground rules that have been established by the court.

Three Strikes Against Deference in the Same Month

Posted on August 27, 2012 by Robert Brubaker

In split decisions over a two-week period on entirely different Clean Air Act issues, three different Circuits refused to give deference to EPA interpretations.

The merits of the three decisions – concerning the latitude States have in designing "minor" new source permitting programs approvable in their State Implementation Plans, the attributes that make a source "major" for Clean Air Act permitting purposes, and the limits on EPA's authority to manage emissions transported from one State to another – are far reaching and significant on many levels.  One interesting common thread underlying the merits is how the three different Circuits approached the doctrine of deference.

In Texas v. EPA, No. 10-60614 (5th Cir., Aug. 13, 2012), the Fifth Circuit vacated EPA's disapproval of a State Implementation Plan revision Texas submitted to make its Minor New Source Review rules more flexible (by using a "bubble" concept for reducing the types of minor changes needing separate preconstruction permits).  The Court dismissed EPA's position that the Texas rules conflicted with EPA's policy against State Implementation Plan provisions that allow "director discretion."  The majority concluded "[t]here is, in fact, no independent and authoritative standard in the CAA or its implementing regulations requiring that a state director's discretion be cabined in the way that the EPA suggests" and "[t]therefore, the EPA's insistence on some undefined limit on a director's discretion is . . . based on a standard that the CAA does not empower EPA to enforce."

In Summit Petroleum Corp. v. U.S. EPA, Nos. 09-4348 and 10-4572 (6th Cir., Aug. 7, 2012), the Sixth Circuit vacated EPA's determination that, because they are "functionally related," natural gas production wells are "adjacent" to the gas processing plant to which the output of the wells is pipelined.  The practical consequence is that if the wells and the plant are "adjacent," their potential emissions would be aggregated and would exceed the threshold level requiring a Title V permit, whereas if they are not "adjacent," they would be separately subject to less onerous "minor" source permitting requirements.  The Court relied upon the dictionary definition, etymology, and case law on the meaning of "adjacent" to conclude that "adjacency is purely physical and geographical."  The Court wrote "we apply no deference in our review of EPA's interpretation of ['adjacent']" since the word is "unambiguous," and "we hold that the EPA has interpreted its own regulatory term in a manner unreasonably inconsistent with its plain meaning . . .."

In EME Homer City Generation v. EPA, No. 11-1302 (D.C. Cir., August 21, 2012), the D.C. Circuit vacated EPA's Cross-State Air Pollution Rule (CSAPR), also known as the Transport Rule, requiring 28 States to curtail sulfur dioxide and nitrogen oxide emissions from one State deemed by EPA to "contribute significantly to nonattainment" of National Ambient Air Quality Standards for ozone or fine particulate matter in another State, or to "interfere with maintenance" of such standards in another State.  The Court held that the way in which EPA quantified allowable emissions from the various States exceeded the Agency's statutory authority, and that EPA's preemptive implementation of State Implementation Plan requirements was "incompatible with the basic text and structure of the Clean Air Act" and contrary to the "first-implementer role" reserved for the States by the Act.  The Court concluded that EPA's interpretation of the "good neighbor" provision – one of more than 20 State Implementation Plan requirements in Section 110(a)(2) of the Act – offended the principle that Congress does not "hide elephants in mouseholes" (citing the Supreme Court's 2001 decision in Whitman v. American Trucking Ass'ns).  EPA's interpretation of its authority to promulgate Federal Implementation Plans before giving the States an opportunity to submit State Implementation Plans after EPA determined the level of "good neighbor" emission reductions required was rejected on both step 1 and step 2 Chevron grounds.

Three swallows do not a summer make, but if Courts continue to delve more deeply into the merits of EPA decisionmaking under the Clean Air Act and similar statutes in this era of Congressional gridlock, the consequences could be profound for supporters and opponents of EPA actions.

Judicial Activism and Judicial Restraint: The 5th Circuit Vacates EPA's Disapproval of Texas SIP Revisions Concerning Minor Sources

Posted on August 14, 2012 by Seth Jaffe

On Friday, in Texas v. EPA, the 5th Circuit Court of Appeals vacated EPA’s decision rejecting Texas’s SIP revisions that would have implemented (and did implement, for 16 years) a Flexible Permit Program for minor NSR sources. While genuflecting at the altar of deference to agency decisionmaking, the Court concluded that EPA’s rejection was not based on either EPA factual determinations or on its interpretation of federal, as opposed to state, law.  The Court also concluded that EPA had not in fact relied on the reasons given in its briefs, and refused to defer to EPA’s “post hoc rationalizations.” The Court thus gave essentially no deference to EPA’s decision.

The interesting part of the decision was the dissent by Judge Patrick Higginbotham, a Reagan appointee. Judge Higginbotham took the majority to task for “not faithfully applying the deferential arbitrary and capricious standard.” He then persuasively demonstrated why the Texas program, as written, did violate the Clean Air Act.

After dismantling the majority’s logic, he then addressed the practical heart of the case – EPA’s 16-year delay in rejecting the SIP revisions. While criticizing EPA for the delay, Judge Higginbotham pointed out that there is a statutory remedy for EPA’s failure to rule on the revisions – a suit under section 7604(a)(2) of the CAA – a remedy never pursued by Texas.

What’s important about this case is that is an excellent example of why judicial restraint is so often “more honor’d in the breach than the observance.” (It’s been a while since I’ve quoted Shakespeare.) When a federal agency unwinds state policy after a sixteen-year delay, it’s very tempting for courts to engage in judicial activism, if that’s what it takes to go upside the agency’s head. The harder course, requiring more discipline, is to remain true the ideal of judicial restraint – that a court is not to substitute its judgment for an agency acting pursuant to an act of Congress. Therefore, Judge Higginbotham’s conclusion seemed worth note:

"As so often with political debate in search of a legal forum, its utility lies largely in pleasure of expression. Angst over perceived federal intrusion into state affairs ought be eased by the reality that laws enacted by Congress are laws of the States. Congress passed the Clean Air Act and made it enforceable by the EPA. The State was represented in that decision by two senators and its thirty-two other elected members of Congress. It also bears mentioning that its former governor was resident in the White House for eight of the years in passage here. The Clean Air Act is not foreign law. I dissent."

5th Circuit Upholds EPA Approval of Affirmative Defense for Unplanned Startup, Shutdown, and Malfunction Events

Posted on August 7, 2012 by Karen Crawford

On July 30, the United States Court of Appeals for the Fifth Circuit Court of Appeals handed down an opinion finding that EPA was within its authority to approve in part and to disapprove in part the most recent revisions to the state implementation plan (“SIP”) that Texas submitted to EPA in 2006 [Luminant Generation Co. LLC v. EPA, No. 10-60934 (5th Cir. July 20, 2012)]. EPA's action, effective on January 10, 2011, allowed an affirmative defense for unplanned startup, shutdown, and malfunction (“SSM”) events, but it disapproved the portion of the SIP revision providing an affirmative defense against civil penalties for planned SSM events. 

Several groups of Environmental Petitioners (including the Environmental Integrity Project,  Sierra Club, Environmental Texas Citizen Lobby, Citizens for Environmental Justice, Texas Environmental Justice Advocacy Services, Air Alliance Houston, and Community In-Power and Development Association) challenged EPA’s partial approval of that part of the SIP which created an affirmative defense for unplanned SSM events.  The State of Texas and several Industry Petitioners and Intervenors (Luminant Generation Company, Sandow Power Company, Big Brown Power Company, Oak Grove Management Company, Texas Oil & Gas Association, Texas Association of Business, Texas Association of Manufacturers, and Texas Chemical Council)  challenged that part of EPA’s action which disapproved the creation of an affirmative defense against civil penalties for planned SSM events.

A three-judge panel of the Fifth Circuit determined that EPA's decision was valid unless "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."  Applying that standard of review and citing myriad cases upholding the premise that a state is afforded "broad authority to determine the methods and particular control strategies [it] will use to achieve the statutory requirements," including consistency with the Clean Air Act and the attainment and maintenance of NAAQS of the Act, (referenced throughout the opinion as Chevron deference), the court found the EPA's administrative decision-making process had been "consistently formal and deliberative prior to and during its promulgation of final rules under the Act." In particular, the court cited the reasoning EPA set forth in the final rule to explain its decision approving the portion of the state's SIP which "squarely adheres to its past policy guidance" and observed that EPA’s decision was "the result of a formal and deliberative decision-making process."  The court also found that the EPA's interpretation of the Clean Air Act was based on a permissible construction of the statute because the agency found: (1) the affirmative defense for unplanned SSM activity was narrowly tailored; (2) the affirmative defense did not interfere with the Act's requirement that a SIP's emission limitations be continuous or with the state's ability to enforce emission limitations; and (3) the affirmative defense did not interfere with any other applicable requirement of the Act, including the attainment of national ambient air quality standards (NAAQS).  The court was not persuaded by Environmental Petitioners' arguments, in part because the wording of the affirmative defense excludes all emissions that could "cause or contribute to an exceedance of the NAAQS, PSD increments, or a condition of air pollution" and thereby was not inconsistent with EPA's past policy and guidance, referencing a 1999 Memorandum of Steven A. Herman relating to excess emissions during SSM events.

In evaluating the state’s and Industry Petitioners' arguments, the court – after applying virtually the same analysis and criteria – found that EPA had not been arbitrary or capricious in disapproving an affirmative defense for planned SSM events.  In reaching that conclusion, the court relied in large part on the premise that such events and excess emissions from such events were "avoidable."  Further, in upholding the disapproval and denying Texas’s and Industry Petitioners’ request for relief, the court observed that EPA's reasons provided for the disapproval "conform to minimal standards of rationality."

Do states have an independent, fiduciary obligation under the “Public Trust Doctrine” to protect air quality and to do so by regulating greenhouse gases (GHGs)?

Posted on July 30, 2012 by Jeff Civins

Based on a doctrine going back to Roman times – the “Public Trust Doctrine,” a consortium of national and state environmental organizations have brought a series of lawsuits, naming minors as plaintiffs, seeking declarations that federal and state governments have an independent, fiduciary responsibility to protect the quality of air as a public natural resource and to do so by regulating GHGs.  Though generally unsuccessful, they have obtained two recent rulings that have lent some credence to their efforts.  These rulings raise fundamental questions regarding the bases for government regulation to protect the environment.

On July 9, 2012, a Travis County district court judge, in response to the plea to the jurisdiction of the Defendant Texas Commission on Environmental Quality (TCEQ), found that the agency’s “conclusion that the public trust doctrine is exclusively limited to the conservation of water is legally invalid.”  Bonser-Lain v. Texas Commission on Environmental Quality, Case No. D-1-GN-11-002194 (201st Dist. Ct., Travis County, Tex.).  According to the court, the doctrine includes all the natural resources of the state.  The court, however, also found that the agency’s refusal to exercise its authority, based on current litigation by TCEQ against EPA regarding the ability of EPA to regulate GHGs, was a reasonable exercise of discretion.  The plaintiffs had filed a petition for rulemaking with the agency, which the agency had denied, that would have required, among other things, that GHG emissions from fossil fuels be frozen at 2012 levels and that a plan be developed to implement the corresponding reductions.

On June 29, 2012, a New Mexico district court judge, without much explanation, denied in part that state’s motion to dismiss a similar lawsuit, which sought a declaration that the state had failed to comply with its public trust obligation to protect the atmosphere.  Sanders-Reed v. Martinez, Case No. D-101-CV-2011-01514 (Santa Fe County First Judicial District Court, NM).  The court’s ruling allowed the law suit to go forward.   

This series of suits and the decisions in these two cases raise fundamental questions about the bases for governmental regulation to protect the environment.  First, should the atmosphere be considered a public trust resource?  Although air is included in the definition of a natural resource under Superfund, it is different than other natural resources, e.g., land, fish, wildlife, biota, water, groundwater, and drinking water supplies, in that it is not something that can be captured and conserved or its use managed.  Even assuming air is properly categorized as a public trust resource, should an independent common law duty be imposed on states requiring them to take action to protect it?  As a practical matter, all states do have extensive regulatory schemes to protect air quality.  What additional benefit does the imposition of a common law duty create?  If a duty is to be imposed, should it be translated into specific requirements to compel a specific result, and, if so, based on what guidance.  Are the specifics of air quality protection better left to federal and state legislatures and the agencies that implement their legislation?  Finally, with regard to GHG emissions, in addition to concerns about identifying appropriate requirements, are they better managed on the federal and international level because, unlike traditional air pollutants, their impact is global rather than regional?  These questions all appear to be political ones, better handled in forums other than the courts.

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Not a Good Start for Challenges to EPA NAAQS Revisions: The District of Columbia Court of Appeals Affirms EPA's New NOx NAAQS

Posted on July 18, 2012 by Seth Jaffe

Yesterday, in American Petroleum Institute v. EPA, the D.C. Circuit Court of Appeals affirmed EPA’s revisions to the National Ambient Air Quality Standard for NOx. The revisions adopted, for the first time, an hourly NAAQS for NOx, in addition to the annual standard.

API made a number of assertions that EPA had been arbitrary and capricious in its review of the scientific evidence concerning potential short-term impacts. The most important were EPA’s reliance, in part, on a study which had not been the subject of peer review, and EPA's alleged failure to consider a study suggesting that short-term impacts had not been demonstrated.

The Court rejected both complaints. With respect to the first, API asserted that EPA violated its own requirements when it relied on an internal analysis that had not been peer-reviewed. The Court’s response was short, but certainly not sweet:

Perhaps the API should have had its brief peer-reviewed. In quoting the EPA’s Review Plan, the API omits the first and most relevant word of the following sentence: “Generally, only information that has undergone scientific peer review … will be considered.” Of course, “generally” here indicates the practice in question will not invariably be followed. A bad start for the petitioners.

To which I can only say, ouch.  Significantly, the Court noted that EPA did have its internal analysis reviewed by the Clean Air Scientific Advisory Committee, and it stated that review by CASAC qualifies as peer review.

Regarding the second claim, the Court concluded that EPA had considered the skeptical study.  Moreover, EPA gave reasons why it rejected the conclusions of the study.  This was enough for the Court.

I have previously pointed out that the Court’s review of EPA’s NAAQS in recent years has pretty much made the CASAC the final arbiter of the validity of EPA NAAQS promulgations. If EPA’s decision is supported by CASAC’s review – as it was here – EPA’s NAAQS will be affirmed. If, on the other hand, as was the case with EPA’s PM2.5 NAAQS, EPA promulgates an NAAQS that ignores CASAC advice, EPA’s standard is not likely to survive judicial review.

Yesterday’s decision only confirms this analysis. CASAC did not merely review the one paper that API had challenged; it proposed a short-term standard that was similar to and certainly consistent with the standard that EPA ultimately adopted. I’m not sure that Congress meant to delegate to CASAC the determination whether NAAQS adopted by EPA are arbitrary and capricious, but I think that that is where we are today.

To which API can only say, ouch.

Update on Climate Change Tort Litigation

Posted on June 29, 2012 by David Buente

The body of caselaw rejecting climate change tort claims seeking judicially-imposed restrictions on greenhouse gas emissions, which I reviewed in a prior post on January 3, 2012, continues to grow.  That post predicted that (i) none of these suits were likely to succeed, given the U.S. Supreme Court’s holding last year in Connecticut et al. v. American Electric Power Co. et al. (“AEP”) that common law “nuisance” claims seeking such restrictions are displaced by the Clean Air Act, but nevertheless (ii) plaintiffs would continue to repackage and pursue the claims in different courts under different common law labels.  Both predications have proved accurate.

Two of the cases summarized in that post, Comer et al. v. Murphy Oil USA et al. and Alec L. et al. v. Jackson et al., have since been dismissed by the presiding district courts.  In Comer, where a group of Mississippi landowners sued scores of national electric utilities and other companies for damages caused by Hurricane Katrina, claiming that the defendants’ greenhouse gas emissions constituted a common law “nuisance,” the court held that the claims were preempted by the Clean Air Act and, further, that they presented non-justiciable political questions and plaintiffs lacked standing.  In Alec L., where a group of plaintiffs sued several federal agencies under the “public trust” doctrine, seeking an order mandating greenhouse gas regulations, the court likewise held that the claims could not be recognized as a matter of federal law and, in any event, would be displaced by the Clean Air Act.  A third case, Native Village of Kivalina v. ExxonMobil Corp. et al., remains pending before the Ninth Circuit, following the district court’s dismissal of the complaint on grounds that the “nuisance” claims were non-justiciable and plaintiffs lacked standing. 

In addition, “public trust” claims have now been filed in nearly all fifty states.  Some of these take the form, like Alec L., of common law tort litigation, with non-profit groups and individuals suing state officials and agencies in state courts, seeking injunctive orders directing the promulgation of greenhouse gas regulations.  Several of these cases have already been dismissed, including in Alaska and Oregon (both on political question and justiciability grounds); none has proceeded past the pleading stage.  Other claims take the form of administrative petitions, asking the relevant state agencies to issue greenhouse has regulations.  Many of these petitions, in more than 30 states so far, have already been denied; none has been granted.

The unanimous rejection of these claims should presumably, at some time, begin to deter the filing of further climate change litigation.  But that tipping point does not seem yet to have occurred.  At least for the immediate future, it appears likely that plaintiffs will continue to use – and, to many minds, distort – the common law tort system to pursue the political goal of greenhouse gas regulation. 

Legal Winds from New Directions Buffet California’s GHG Cap-and-Trade Program

Posted on June 28, 2012 by Michael R. Barr

Late in the fall of 2011, the California Air Resources Board adopted its groundbreaking cap-and-trade rules (CTR) for greenhouse gasses. ARB faced stiff headwinds at every step.  This month, one lingering legal tempest subsided while a new legal gale appeared on the horizon.  Each involves novel environmental justice claims and could snuff out CTR and similar programs in other states.

First, balmier breezes for CTR:  in a decision filed June 19, 2012, the California Court of Appeals rejected a 2009 mandamus petition filed by the Association of Irritated Residents (AIR) and other groups and upheld ARB’s climate plan under the “California Global Warming Solutions Act of 2006” (Cal. Health & Safety Code §38500 et seq., also known as “AB 32”).   The court recognized the magnitude of ARB’s challenge under AB 32 and held: “After reviewing the record before us, we are satisfied that the [ARB] has approached its difficult task in conformity with [AB 32], and that the [GHG] measures that it has recommended reflect the exercise of sound judgment based upon substantial evidence.  Further research and experience likely will suggest modifications to the blueprint drawn in the [ARB] scoping plan, but the plan‘s adoption in 2009 was in no respect arbitrary or capricious.” (p. 22).

In its 2009 mandamus petition, AIR et al. had challenged ARB’s overall plan to implement AB32, partly on the grounds that the plan’s CTR element did not adequately protect already overburdened local communities. The petitioners preferred “direct regulation” of GHGs at sources, another major element of ARB’s plan.  They asserted that the full benefits of AB 32 to communities surrounding major sources could only be obtained by controlling GHG emissions at each GHG source, rather than by adopting the CTR.  CTR would allow GHG sources to acquire and trade GHG allowances and/or GHG offsets resulting from GHG reductions in other communities, states, provinces or countries. 

Now, a new tempest:  earlier this month, AIR et al. filed a new complaint with EPA under title VI of the federal Civil Rights Act alleging that ARB had discriminated against African/American, Latino and Asian/Pacific Islander residents throughout California by adopting and implementing CTR. The title 6 complainants ask EPA to require, as a condition of continuing to provide federal financial assistance to ARB, that ARB reverse its decision to approve the CTR and adopt less discriminatory alternatives.  It is impossible to say how or when EPA will respond. 

Forecast:  ARB will continue to try to implement CTR on schedule in spite of all legal flurries. 

A lot is at stake now.  Under the CTR, ARB plans to conduct its first auction of GHG allowances in November of this year, which could raise tens of millions of dollars. Starting January 1, 2013, refineries, power plants and other major GHG sources throughout California must properly account for all of their GHG emissions and later surrender qualifying GHG allowances and/or GHG offsets to ARB for every ton of GHGs emitted during the first compliance period (2013-14).  Later this month, ARB plans to link its CTR to a similar program in the Canadian Province of Québec.  Please see the June 11, 2012 ARB Notice.

But all regulated and other interested parties are left with new questions about how these legal winds may affect:

•    The willingness of regulated companies and GHG traders to bid tens of millions or more for GHG  allowances at ARB auctions.
•    The willingness of other states to adopt cap-and-trade programs and link them to the ARB CTR.  U.S. states are now vulnerable to federal title VI complaints as soon as they adopt their own cap-and-trade programs.
•    The ability of ARB to contain the costs of AB 32 and minimize leakage by adopting the CTR and linking it to other cap-and-trade programs, as provided by AB 32.
•    The continued ability of California to maintain its own climate program and achieve its climate goals.

It surely looks like more westerlies are approaching the CTR on the legal radar.

Two Strikes Against Common Law Approaches to Climate Change: The Atmosphere Is Not A Public Trust

Posted on June 7, 2012 by Seth Jaffe

Last week, the District Court for the District of Columbia dismissed the so-called “public trust” climate change law suit. I will certainly give the plaintiffs in these cases credit for both originality and persistence. Legal merit and good public policy are another matter.

In any case, the plaintiffs sued EPA and various other federal agencies, seeking a finding that the agencies have failed adequately to protect a public trust asset, also known as the atmosphere, from climate change. The plaintiffs requested an injunction requiring that the agencies take actions necessary to reduce CO2 emissions by 6% yearly, beginning in 2013.

It did not take the Court long to dismiss plaintiffs’ arguments – and the case. The Court’s opinion has two critical holdings. First, since there can be no diversity action against the United States, the plaintiffs do not have access to federal courts unless there is a federal question. However, as the Court noted, the public trust doctrine is a creature of state law; there is no federal public trust doctrine.

Secondly, the Court concluded that, even if there ever had been a federal public trust doctrine, any such doctrine has been displaced by the federal Clean Air Act. Here, the Court relied squarely on the Supreme Court’s recent decision in American Electric Power v. Connecticut. The plaintiffs here tried to limit AEP to displacement of public nuisance claims, but the Court was having none of it, pointing out that AEP clearly stated that it was not federal public nuisance claims that were displaced by the CAA, but federal common law claims generally that were displaced.

Moreover, notwithstanding the plaintiffs’ creativity, the Court noted that:

"The question at issue in the Amer. Elec. Power Co. case is not appreciably different from the question presented here—whether a federal court may make determinations regarding to what extent carbon-dioxide emissions should be reduced, and thereafter order federal agencies to effectuate a policy of its own making. The Amer. Elec. Power. Co. opinion expressed concern that the plaintiffs in that case were seeking to have federal courts, in the first instance, determine what amount of carbon-dioxide emissions is unreasonable and what level of reduction is practical, feasible and economically viable."

And that really is the issue. Even if one believes that the government should be taking more aggressive action on climate change – and I certainly am among those who think it should be doing so – having the courts decide what level of reductions are necessary, and by when, is nuts. It’s just not a way to make public policy on the most complex environmental issue of our time.

Back to the drawing board for citizen plaintiffs. I can’t wait to see what they come up with next.

GHG Oral Argument: The Best Chance to Avoid the Tailoring Rule's Absurd Results

Posted on April 17, 2012 by John Milner

On February 28 and 29, 2012, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Coalition for Responsible Regulation v. EPA, No. 09-1322 et. al., consolidated challenges to the U.S. Environmental Protection Agency (EPA) ’s greenhouse gas (GHG) regulations.  These regulations are being challenged by a coalition of industry groups and some states (the Coalition).  The Coalition argues that the EPA does not have the authority to regulate GHGs from stationary sources under the Clean Air Act (CAA)’s Prevention of Significant Deterioration (PSD) permitting program without Congress amending the law.

The Coalition is asking the Court to vacate EPA’s rules regulating greenhouse gases, including the so-called Tailpipe and Tailoring Rules, on the grounds that  they are contrary to the Clean Air Act and deviate from the explicit emission permitting thresholds in the CAA.  As Peter Keisler, a lawyer for the National Association of Manufacturers (NAM) argued, “the agency crossed the line from stationary interpretation to statutory revision” and violated the law by raising the emissions thresholds far above those provided for by Congress in the CAA in order to avoid issuance of an unmanageable number of PSD permits in the short term . 

The PSD program applies to new major sources or major modifications at existing sources for pollutants where the area the source is located is in attainment or unclassifiable with the National Ambient Air Quality Standards (NAAQS).  As Keisler explained to the court, 83% of the GHG emissions from stationary sources would be regulated if EPA addressed greenhouse gas emissions solely in permits for the larger sources already subject to PSD requirements based on their emissions of criteria pollutants. 

As Keisler then explained, under EPA’s Tailoring Rule which requires permits based solely on greenhouse gas emissions, 86% of the GHG emissions from stationary sources would be regulated – “a very tiny increment of difference, but a huge difference” in the number of sources that would now be regulated.  And this increment of difference between 83% to 86% would translate into stationary sources never before regulated and now required to meet all PSD requirements, including implementation of costly best available control technology (BACT).

A decision by the Court is expected this summer. 

Having participated in oral argument preparation and having observed both days of the oral arguments, it is my impression that the NAM arguments against EPA's Tailoring Rule provide the Coalition with the best chance for victory.  NAM’s sound interpretation of the CAA and Congressional intent, coupled with the "avoidance of absurd results" doctrine, would blunt EPA's quantum leap through the CAA to create non-statutory GHG emission thresholds capturing only an additional 3% of stationary sources that were previously unregulated and would now have to bear crippling air pollution control costs for no real environmental benefit.  This is the real absurdity of EPA's Tailoring Rule that I hope the court's decision will remedy.

EPA Proposes Carbon Dioxide Emissions Standard for New Fossil Fuel Power Plants

Posted on April 13, 2012 by Daniel Riesel

By Daniel Riesel and Vicki Shiah, Sive Paget & Riesel, PC

On March 27, the U.S. Environmental Protection Agency proposed a rule limiting carbon dioxide (“CO2”) emissions from new power plants fired by fossil fuels such as coal or natural gas.  The rule applies to new fossil fuel-fired electric utility generating units in the continental United States; they do not apply to existing units or new “transitional” units that already have received preconstruction air emission permits and that start construction within 12 months of the proposed rule’s publication in the Federal Register.

Covered power plants would be required to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour.  This standard favors natural gas over coal.  EPA states that “[n]ew natural gas combined cycle power plant units should be able to meet the proposed standard without add-on controls.”  By contrast, coal-fired power plants would not be able to meet this standard without carbon capture and storage technology, which is still under development and is expected to be quite costly – though EPA expects that the cost of such technology will decrease over time.

It is not clear whether the proposed regulation will have a significant effect on the energy industry, as the standard appears to reinforce current trends rather than require radical changes.  In the preamble to the proposed rule, EPA notes that, at present, “the industry generally is not building” coal-fired power plants and is not expected to do so “for the foreseeable future,” while natural gas is becoming more common as an energy source.   According to EPA, the 1,000 lb/MWh standard is already being met by 95% of natural gas-fired combined cycle power plants that commenced operation between 2006 and 2010.

The proposed rule (a New Source Performance Standard under Section 111 of the Clean Air Act) results from a settlement between EPA and a group of states and environmental groups.  These plaintiffs sued EPA in opposition to the agency’s refusal, in 2006, to establish greenhouse gas emission standards for new and modified power plants.  EPA was required to revisit this decision in the aftermath of the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA, which affirmed EPA’s statutory authority under the Clean Air Act to regulate greenhouse gas emissions.

Under the settlement giving rise to the standard proposed last week, EPA had also agreed to establish CO2 emissions guidelines for existing fossil fuel power plants.  EPA has yet to propose such standards, and the time frame for its doing so is uncertain; EPA Administrator Lisa Jackson recently stated, "[w]e don't have plans to address existing plants."

The full text of the proposed rule is available here.  Public comments are being accepted under Docket ID No. EPA‐HQ‐OAR‐2011‐0660 at www.regulations.gov for 60 days after the proposed rule’s publication in the Federal Register.

Don’t Mess With Texas – EPA Loses Battle With TCEQ

Posted on April 2, 2012 by Eva O'Brien

If you live in Texas or have driven through the state, you know that our popular anti-litter campaign slogan is “Don’t Mess With Texas.”  This slogan may have also been appropriate for the 5th Circuit’s recent decision in Luminant Generation Company, et al. v. U.S. Environmental Protection Agency, No. 10-60891, slip op. (5th Cir. Mar. 26, 2012), where the court came down hard on the U.S. Environmental Protection Agency (“EPA”) for its very late disapproval of revisions to Texas’s State Implementation Plan (“SIP”) pertaining to standard permits for  pollution control projects (“PCPs”).   

In Luminant, the 5th Circuit noted that the federal Clean Air Act (“CAA”) “prescribes only the barest of requirements” for New Source Review (“NSR”) of minor new sources of air pollutant emissions.  It found that EPA had not identified a single violation of the CAA or EPA’s regulations and thus had no legal basis for its disapproval of the PCP Standard Permit provisions, striking down as arbitrary and capricious the “three extra-statutory standards that the EPA created out of whole cloth.”  Id. at 21.  Two of those standards referenced Texas law and a third was based on too much agency discretion in permit issuance.

Noting that EPA failed to act until three years after the 18 month statutory deadline for EPA action had passed, the court ordered EPA to expeditiously reconsider the SIP revision submission made by the Texas Commission on Environmental Quality (“TCEQ”), and compared the “sweeping discretion” given to the states in developing their SIPS to EPA’s “narrow task” of “ensuring” that the Texas regulations “meet the minimal CAA requirements that govern SIP revisions to minor NSR, as set forth in 42 U.S.C. § 7410 (a)(2)(C) and § 7310(l).”  Id.  The court then stated that this limited review “is the full extent of EPA’s authority in the SIP-approval process because that is all the authority that the CAA confers.”  Id. at 21-22.

For the past several years, the TCEQ and EPA have butted heads over various aspects of Texas’s SIP.  This was the third of three cases heard by the 5th Circuit on SIP reviews, albeit the first in which a decision has been rendered.  Oral arguments were held in the other two pending cases last fall – the first relating to Texas’ Qualified Facilities program, Texas Oil & Gas Association, et al. v. U.S. EPA, No. 10-60459 (5th Cir. filed Jun. 11, 2010), and the second relating to Texas’s Flexible Permit Program, Texas v. U.S. EPA, No. 10-10614 (5th Cir. filed Jul. 26, 2010). 

Of these three cases, the EPA’s disapproval of Texas’s Flexible Permit Program has caused the most tension between the agencies.  That program provides facilities with flexibility to reduce emissions by the most cost-effective means through allocation of emissions on a facility-wide basis rather than by source point, and has been a basic tenet of permitting in Texas since 1994.  The end result of the Flexible Permit Program—which Texas considers akin to the federal Plantwide Applicability Limit (“PAL”) under the New Source Review program—not only gave facilities greater flexibility and control, but actually reduced emissions and provided for compliance with all state health standards, as well as all applicable federal Clean Air Act requirements. 

Given that EPA’s delay in disapproving these last two aspects of the Texas SIP was even more egregious (effectively up to sixteen years), it is likely that the 5th Circuit will view the EPA’s actions in those cases with a similarly critical eye.  We in Texas hope that the court continues to call EPA to task for its past unpopular and unwarranted decisions with respect to Texas’s SIP.

A Belated Thank You to Hunton & WIlliams from Sierra Club for PSD?

Posted on March 27, 2012 by Richard Lazarus

I attended on February 28th and 29th the oral arguments in the D.C. Circuit for what are euphemistically referred to as the “Greenhouse Gas Cases” now pending before that court. Two days of arguments, with 17 different attorneys presenting oral argument.  Perhaps not surprisingly, the judges weren’t the only ones who lost track of which issues were being addressed by different advocates.  The advocates themselves seemed to forget at times and repeatedly walked over each other’s lines.  It reminded me why the Supreme Court is so reluctant to allow for divided argument even in circumstances when the case for divided argument is otherwise quite compelling.

I will leave it to others to dwell on what the D.C. Circuit is likely to do, and instead will don my academic garb for an ironic aside on the history of the CAA’s PSD program. In watching the oral arguments, I was reminded about the extraordinary role that Hunton & Williams has played since the emergence of modern environmental law serving as environmental counsel for the powerplant industry including in this latest round.  One would be hard-pressed to identify any other law firm that has been such a constant and consistent voice on behalf of industry during the past four-plus decades of environmental litigation, especially on air pollution matters.

With the benefit of hindsight, however, those industrial clients might have fared a bit better had Hunton & Williams made one discrete exception to the consistency of its record.  The PSD program today finds its origins in the Supreme Court’s 1973 affirmance by an equally divided Court in Fri v. Sierra Club of a district court ruling that embraced the Sierra Club’s claim that the Clean Air Act, as drafted in 1970, required EPA to prevent “significant deterioration” of areas of the nation that were at the time cleaner than national ambient air quality standards.   The papers of Justice Harry Blackmun, which can be found in the Library of Congress, reveal, however, that Sierra Club achieved that affirmance after Hunton & Williams filed an amicus brief in the case in support of Edison Electric’s contention that the Clean Air Act did not require such a program. That filing apparently prompted Justice Lewis Powell – a former Hunton & Williams partner – to recuse himself from the case (after sitting at oral argument), resulting in the 4/4 split.  There is little doubt, based on his other pro-business votes in environmental pollution cases how Justice Powell would have voted had he not recused himself. The most certain upshot would have been an EPA victory and therefore the Agency never would have had to promulgate PSD regulations in compliance with the High Court’s ruling. And the absence of those initial PSD regulations would have dramatically shifted the political dynamic when Congress was amending the statute in 1977.

What I have always found especially odd about the firm’s amicus filing in the PSD case is that this was not the first time Justice Powell had recused himself in light of Hunton & William’s participation in a case before the Court, including on behalf of the powerplant industry as amicus curiae.  The Justice had done so consistently since joining the Court, which makes one wonder what the firm was thinking when it filed the amicus brief in Fri v. Sierra Club.  Interestingly, Justice Powell ended that recusal practice soon afterwards.  Perhaps the Justice received a very unhappy communication from either Henry Nickel or his close friend at the firm, George Freeman, regarding the necessity of a recusal in those circumstances?  Of course, I have no knowledge whether such a communication ever in fact occurred, but it does not take a lot of imagination to speculate that some folks at Hunton were likely exceedingly unhappy about the Justice’s recusal in light of the Court’s 4/4 affirmance. 

In all events, and regardless of the outcome of the recent greenhouse gas cases before the D.C. Circuit, the Sierra Club’s thank-you note to Hunton & Williams would seem long overdue. 

No Title V Permit "Shield" Protection in the Future in Wisconsin

Posted on March 26, 2012 by Michael McCauley

On December 12, 2011, the Wisconsin Department of Natural Resources (WDNR) issued a policy statement on including Permit "Shield" Statements in Title V air operating permits for sources located in Wisconsin.  A copy of the new policy can be found here.  WDNR's previous policy was to include a statement in Title V permits, indicating that the permittee's compliance with all emission limitations and conditions in the permit constituted compliance with all applicable requirements for the source under the federal Clean Air Act and Wisconsin Law.

In the December 12 policy statement, WDNR decided that in the future, the agency would not include permit shield protection in new Title V air permits, unless (among other things), the permit applicant conducts (and submits to WDNR) a comprehensive written explanation of "every change over the entire life" of each emissions unit at the facility to ensure that none of the changes made to the unit or maintenance activities on the unit constituted a "modification" within the meaning of federal and Wisconsin New Source Review rules.  See Items 5 and 6 on page one of the Executive Summary in WDNR's policy document.

Of course, this means that few, if any, companies with facilities in Wisconsin will be requesting permit shield language in the future for their Title V air operating permit renewals.  The new WDNR policy will effectively mean that the permittee would have to put itself through what would amount to a "voluntary" Section 114 Information Inquiry on all physical changes and changes in operation for every emissions unit in the permitted facility -- going back to the original installation/construction of the equipment.  I don't know of many companies in this current economy that would have the time or resources (or the inclination) to do this.

And for what benefit?  Such a due diligence report, if it was ever actually filed with WDNR, would only invite second-guessing and additional questions on certain projects -- further delaying what has already become an interminably long process.  The environmental groups in Wisconsin would scrutinize such reports if they were ever filed with WDNR.  And in the end, you have to ask yourself, "How many Title V permit shields have ever stopped a federal NSR enforcement case from being filed and prosecuted in the first place?"

There is likely to be some "push back" on this new policy by various industry groups here in Wisconsin.  The hope is that officials in the Governor's Office and higher level WDNR officials will exercise some judgment and restraint in this matter.  We'll see how that plays out in the next several months.

EPA Enforcement: Cleaning the Cleaners

Posted on March 7, 2012 by Stephen Leonard

Businesses that use volatile organic compounds (VOCs) in their industrial processes have long been regulated under the Clean Air Act and State Implementation Plans (SIPs) approved under the Act.  The Massachusetts Department of Environmental Protection Air Pollution Control Regulations, for example, contain very specific VOC control requirements at 310 CMR 7.18 for dozens of types of businesses and industries.  They regulate manufacturing processes (vinyl, polystyrene resin); surface coating (metal furniture, metal can, large appliance, magnetic wire, automobile, metal coil, miscellaneous metal, fabric, vinyl, plastic parts, leather, wood products, flat wood paneling); finishing (textiles, automotive refinishing); and degreasing.  The regulations prohibit use of cutback asphalt, and they limit the volatile portion of the inks used in various printing lines.  And, famously, they regulate the emissions, and hence the nostalgia-inducing aroma, of bakeries.

All of this is necessary because VOCs are a precursor to ozone, one of the original six “criteria pollutants” that Congress required EPA (and the states, through their EPA-approved SIPs) to control, in order to meet the National Ambient Air Quality Standards that EPA set for those pollutants.  Notwithstanding a long history of VOC regulatory enforcement, the air quality in all of Massachusetts – indeed all of southern New England – remains in “non-attainment” with the NAAQS for ozone.

EPA Region 1, which is based in Boston, has recently focused on a particular aspect of the problem:  the release of VOCs in connection with operation of “industrial laundries”.  These facilities serve the laundering needs of many different kinds of businesses and institutions – those, like hospitals, that require a steady supply of clean uniforms, and those, like print shops, that use towels to clean their equipment and therefore need a steady supply of fresh ones.  Some of those uniforms and towels contain volatile organic compounds.  And the VOCs can be released at various stages of an industrial laundry’s process of handling them for its customers, including collection, storage, transport, and washing of laundry.

EPA’s initiative has included information requests sent pursuant to Section 114 of the Clean Air Act, 42 U.S.C. 7414, and seeking detailed information about the laundries’ collection practices, their storage equipment, their operations and materials usage and – notably – their customers.  Based on the responses, EPA has required emissions testing at certain facilities, and it has issued Notices of Violation.  In one case during the summer of 2011, the Department of Justice, on behalf of EPA, sued an industrial laundry in New Hampshire (southern New Hampshire does not attain the ozone standard), alleging that the facility’s construction and operation, without prior approval, constituted violations of, among other things, the New Source Review provisions of the Clean Air Act.  The Consent Decree which settled the case requires payment of a civil penalty, modification of operating practices, installation of pollution control equipment, purchase and retirement of Emission Reduction Credits and implementation of a Supplemental Environmental Project. 

EPA continues its enforcement efforts with respect to other facilities in New England.  Whether those efforts will ultimately be successful in bringing southern New England, or parts of it, into compliance with the NAAQS for ozone is open to question, given the persistence of the problem and the wide variety of sources for precursor pollutants.  It is clear, though, that enforcement activity with respect to industrial laundries forms a part of EPA Region 1’s ozone-control strategy.  Other regions with similar non-attainment problems may be close behind.

BRIEFING IN COMPLEX CASES: The More You Have To Say, The Fewer Words You May Have To Say It

Posted on January 30, 2012 by Andrea Field

On August 8, 2011, EPA published its very lengthy Cross-State Air Pollution Rule (CSAPR).  An indication of CSAPR’s complexity -- and its unpopularity with those affected by it -- is that its promulgation prompted states, cities, labor unions, industry trade associations, and individual industry sources to submit to EPA 62 requests for administrative reconsideration and to file 45 petitions for judicial review of the rule.  Because CSAPR is a Clean Air Act rule of “nationwide scope and effect,” under § 307(b), the 45 petitions challenging that rule had to be filed in the D.C. Circuit. 

The focus of my article today is not the content of CSAPR (though there is much in the final rule that is a cause for concern), but rather on some of the procedural difficulties faced by large groups of appellants challenging a complex EPA rule in the D.C. Circuit.  In particular, my focus is on the restrictions placed by the court on the number and length of briefs that can be filed in a case that involves 45 aligned petitioners who say they have over 55 substantive issues that they want to raise in their principal briefs. 

Under Rule 28.1(e) of the Federal Rules of Appellate Procedure (FRAP), an “appellant’s principal brief . . . is acceptable if . . . it contains no more than 14,000 words . . ..”  In a case involving only one appellant challenging a simple agency rule, the D.C. Circuit has appropriately interpreted FRAP 28.1(e) as allowing that one appellant to file a principal brief not to exceed 14,000 words.  But what happens when dozens of aligned petitioners challenge an extremely lengthy and complex agency rule?  And what happens when -- fearing the “speak now or forever hold your peace” aspects of Clean Air Act § 307(b) -- those numerous aligned appellants must address scores of different aspects of the final rule? 

In Alabama Power Co. v. Costle, the first complex Clean Air Act case brought in the D.C. Circuit, the court came up with an innovative -- and effective -- way of allowing the aligned petitioners to present their concerns.  In that case, the court’s Chief Staff Counsel oversaw a process that allowed the aligned petitioners to file a joint statement of the case and a reasonable number of separate, reasonable-length issue briefs.  (In an interview with Business Week during the litigation, the three judges hearing that case commented favorably upon the approach that their Chief Staff Counsel had developed.) 
   
In the decades following the Alabama Power litigation, however -- as the number and complexity of EPA rules has grown, spawning more lawsuits by increasingly larger numbers of appellants -- the D.C. Circuit has taken steps that have reduced substantially the number and length of briefs that parties can file.  Typically, motions panels on the court direct aligned petitioners, even very large numbers of aligned petitioners, to file just one -- or at most two -- 14,000-word briefs.  And perhaps they will allow a short additional brief to be filed by intervenors and amicus curiae in support of petitioners.  But rarely (if ever) will the D.C. Circuit take the hands-on approach that it did in Alabama Power, i.e., being actively involved in figuring out what the key issues are and ensuring that enough space is devoted to the briefing of each such issue.  Thus, it was not a surprise when, on January 18, 2012, the D.C. Circuit issued a briefing order in the CSAPR litigation, authorizing the 45 aligned petitioners to file “no more than two briefs, not to exceed a combined total of 28,000 words” and allowed intervenors and amicus curiae in support of petitioners to file just one joint “not to exceed 7,000 words[.]” 

Most appellants in these kinds of cases understand (and may even empathize with) the desire of the reviewing judges not to have to read dozens of lengthy briefs addressing the inner workings of labyrinthine Clean Air Act programs.  However, as EPA develops ever-more-complex regulatory programs -- programs that, under the terms of Clean Air Act § 307(b),  must be challenged upon promulgation -- petitioners are in a bind.  Aware that there will be a limit on the amount of space they will have in which to explain a challenged EPA program and to articulate why parts of that program are unlawful, petitioners must often choose to brief only a few issues, thus perhaps waiving their rights to challenge other program elements that are of concern. 

Conspiracy theorists among us might be questioning whether court limits on briefing serve as motivation to EPA to make new regulatory programs even more complex.  In particular, such individuals wonder whether EPA rule drafters are now producing more complicated rules because they know that the more complex new rules are, the less likely it is that rule challengers will -- under current court procedures -- be able to present their concerns fully to the reviewing court. 

This surely had to have been in the mind of one attorney who several years ago had to present oral argument in the D.C. Circuit on an issue which had to be briefed in very few words.  During argument, she was told by one of the judges that she might well have a good point, and it was just too bad that the point had not been developed more fully in her brief.  The advocate in that case is to be commended for not losing her cool and condemning a system under which words per petitioner seem to be allocated in inverse proportion to the complexity of the case(s) before the court.  But she was almost certainly thinking something along those lines.

And speaking of lines, I offer the following lines of verse to make this point: 

The rules produced by EPA
Have caused concerns for years.
But parties once thought courts would hear
Their views with open ears.
In complex cases of today,
Those ears are closed, I fear.
It seems the more you want to say,
The less the courts will hear.      

Unintended Consequences and the Big Band Sound

Posted on January 20, 2012 by Kevin Finto

My father introduced me to the big band sound he grew up with in the ‘20s, ‘30s and ‘40s.  In addition to the musical skirmishes between the powerful brass and elegant woodwind sections that highlighted the genre, he was fond of the lyrics.  One of his favorite ditties was a playful calypso tune written by Sy Oliver and Trummie Young, first recorded by Jimmie Lunceford in 1939.  The enlightened refrain gives the recipe for being highly effective -- “Tain’t what you do, it’s the way that you do it – that’s what gets results.”  At about the same time Lunceford was leading his show band, sociologist Robert J. Merton was focusing on avoiding the wrong results.  He popularized the concept of “unintended consequences,” the gist of which is humans cannot fully control the outcome of their actions so be careful what you do and for what you ask.  Seventy-five years later, EPA’s recent proliferation of regulations with short time fuses and no existing or foreseeable means of compliance demonstrates no such careful thought.

Merton’s analysis provided five causes for unintended consequences:  ignorance, error, immediate interest, basic values and self-defeating prophecy.  While these five causes could form the outline for comments on almost any rule, the one that might be most applicable to EPA’s recent flurry of regulatory activity is what Merton called “the imperious immediacy of interest” which refers to instances where the actor’s paramount concern with the immediate action excludes the consideration of further or other unforeseen consequences of the same act.  The speed in which the recent rules have been promulgated, the leap in technology that they require, and the brevity of the time period by which compliance is required are unprecedented and seem destined to result in unintended consequences.

Examples of these rules include the corporate average fuel economy (“CAFE”) standards which EPA established in 2009.  Under the CAFE standards, Model Year 2011 vehicles must achieve 27.3 mpg.  The requirement is ratcheted up to 35 mpg by 2016, and a whopping 54.5 mpg by 2025.  Those developing the standards were warned that the standards would result in the production of smaller, lighter and deadlier cars.  The developers not only required increased mileage, they limited greenhouse gases (GHGs), including CO2 emissions, from motor vehicles – the first time that GHGs were regulated as air pollutants under the Clean Air Act.  Standard developers also recognized that regulating GHGs as pollutants for mobile sources would also trigger regulation of GHGs from stationary sources under the Clean Air Act’s prevention of significant deterioration of air quality program.  The latter was not an unintended consequence, but where such regulation might lead our economy and society is anyone’s guess.  We need only look at the recent reports of spontaneous combustion of electric vehicles to get some idea.

Another example is EPA’s issuance of the cross-state air pollution rule which afforded electric generating facilities only four months between its promulgation and the date of compliance on January 1, 2012.  EPA promulgated the rule amid warnings by states and others that the electric system reliability was jeopardized.  Fortunately, the D.C. Circuit stayed the rule on December 30.  Similarly, EPA pushed out the EGU MACT standard after allowing itself only a few months to consider tens -of -thousands of comments on the proposed rule.  Such speed of promulgation without regard for unintended consequences has EPA staffers concerned about the quality of their work product.  Perhaps it’s time to revisit the requirements for regulatory impact analysis to consider new rules in light of Merton’s five causes of unintended consequences and Lunceford’s catchy tune.  The alternative may be to sing another tune Lunceford popularized -- Blue in the Night.


EPA Proposes New Boiler MACT Standards

Posted on January 5, 2012 by Karen Crawford

By: Karen Aldridge Crawford and Stacy Kirk Taylor
      Nelson Mullins Riley & Scarborough

On December 2, 2011, EPA proposed its fourth round of regulations governing industrial boilers and process heaters (i.e. the boiler MACT standards).  [EPA Notice]  Although additional changes are unlikely (given that this is EPA's fourth set of revisions), EPA is providing a 60-day comment period and does not expect to finalize the regulations until spring (likely April) of 2012.

EPA maintains that the reworked regulations provide greater flexibility, reduce the number of boilers to which the regulations would actually apply, and will ultimately cut the cost of implementation by nearly 50% from the original 2010 proposed rules.  Groups such as the National Association of Manufacturers, however, remain opposed and continue to press for a legislative fix if EPA fails to sufficiently consider the added expense that even the newly proposed regulations will impose on goods manufactured in the United States.  In response to EPA's issuance of the proposed rules, Senator James Inhofe (R-Okla.) of the Senate Committee on Environment and Public Works stated that, although he appreciated EPA's acknowledgment of the potential economic impacts and efforts to revise the rules, the revised rules would still have too great an economic impact on the United States.  Sen. Inhofe then pressed Senate Majority Leader Harry Reid (D-Nev.) to allow a vote on the House-passed EPA Regulatory Relief Act. 

[Inhofe's Comment]   

According to EPA, the major source proposal, which is the part of the proposed regulations that impose actual control technology, would now cover less than 1% of the boilers in the United States (approximately 14,000 boilers).  For boilers located at smaller facilities, such as universities, hospitals, and commercial buildings, only a very small number would actually have to take any additional steps to comply with the proposed rule; the vast majority would simply be required to perform maintenance and routine tune-ups.  Highlighting some of the specific changes, the proposed regulations:

•    Set new emission limits for mercury, hydrogen chloride, particulate matter, and carbon monoxide (the last two of which serve as surrogates for metallic and organic pollutants), many of which, however, are as stringent or actually more stringent than the limits provided in the previous version of the regulations.

•    Increase the number of boiler subcategories (for which subcategory-specific emissions limits are proposed) to fourteen.

•    Eliminate the numeric emission limit for dioxins/furans, noting in the preamble that the level     previously proposed could not be accurately measured with existing technology, and instead tackle dioxin/furan emissions by imposing work practice standards that include periodic tune-ups to ensure good combustion. 

•    Provide greater flexibility than was previously allowed by providing for the use of a variety of     alternative emissions limits and compliance demonstration methods (for example, a facility with more than one boiler can now choose to average emissions as long as the source as a whole is less than 90% of the applicable standard). 

•    Eliminate requirement for continuous monitors for particulate matter. 

•    Revise the compliance deadlines, providing three years from publication of the final rule to comply (the June 4, 2010 date of the initial proposed regulations, however, will remain the date for determining whether a unit is considered a "new" or "existing" unit).  

In conjunction with reworking the boiler MACT standards, EPA revisited the Commercial/Industrial Solid Waste Incinerators (CISWI) rules and the Non-Hazardous Secondary Material (NHSM) rules to provide greater clarity and flexibility as to what types of secondary materials constitute a non-waste fuel.  The changes to the regulations also expressly classify a number of secondary materials as non-wastes when used as fuel and provide a mechanism for requesting such a determination from EPA for other materials.

So What If It Is in the SIP …

Posted on December 15, 2011 by Carolyn Brown

EPA’s Draft Guidance for 1-Hour SO2 NAAQS SIP Submissions has been out for public comment since this fall and, after an extension published on October 28, 2011 at 76 FR 66925, the comment period will close December 2, 2011.  Many parts of this draft guidance may trigger comments, but one particularly troubling aspect from a programmatic perspective is EPA’s discussion in Appendix B of infrastructure SIP requirements under Clean Air Act Section 110(a)(2).


Section 110 of the Clean Air Act requires states to prepare plans for implementation, maintenance and enforcement of the National Ambient Air Quality Standards (NAAQS) and to submit those plans to EPA for approval.  The statute specifies in general terms the required content of these State Implementation Plans (SIPs).  EPA has issued regulations at 40 CFR Part 51 that address the requirements for SIP submittals.  When changes to the NAAQS occur such that the state will need to update its SIP to show how it will attain and maintain the new or revised NAAQS, EPA’s regulations allow states to certify that their existing approved infrastructure SIPs are adequate to address the elements of Section 110 and then focus on specific changes to address the new or revised standard.


The particularly disturbing portion of EPA’s draft guidance is the discussion of how to  address existing approved SIP provisions that treat excess emissions from startup, shutdown and malfunction events in a manner that EPA views to be inconsistent with agency guidance, or how to address variance and director’s discretion provisions that EPA says “do not comport with EPA policy.”  Guidance, at B-3.  EPA says it is “discussing options for resolving these issues” and notes that it has negotiated a settlement agreement to specify a deadline of August 31, 2012 to respond to a Sierra Club petition over SSM provisions in 39 states.  EPA then goes further:  “Therefore, as general guidance, EPA can advise that states not make infrastructure SIP submissions that rely on previously approved but potentially flawed provisions.”  Id., at B-4.  


There are mechanisms under the Clean Air Act to address deficiencies in SIPs – guidance from EPA to ignore approved SIP provisions is not one of the options.  As the Supreme Court recognized in General Motors Corp. v. United States, 496 U.S. 530, 540 (1990), the existing SIP that has been approved under Section 110 of the Clean Air Act is the legally enforceable SIP.  In that enforcement action, the issue was the ability to enforce an existing SIP provision where a revision had been adopted by the state and EPA had not acted on the request to approve the revision in a timely manner.  The suggestion in the draft guidance that existing approved SIP provisions be ignored based on EPA policy does not comport with the Clean Air Act or case law. 

South Coast Launches Major NSR Reform Effort

Posted on December 12, 2011 by Robert Wyman

After several years of rapidly escalating offset prices, the South Coast Air Quality Management District (SCAQMD) has launched a major effort to consider near- and long-term reforms to the offset component of its nonattainment new source review (NSR) program (under 11/15/11 “New Source Review Roundtable Discussion on Emission Offsets” heading).

Congress added the offset requirement as part of the 1977 amendments to the Clean Air Act (CAA).  The idea was to ensure that new economic activity would not thwart progress made by states as they executed their state implementation plans (SIPs).  Under the CAA offset requirement, major new and modified stationary sources are required to offset their projected net emission increases by reducing surplus emissions from other sources.  As predicted during the most recent Congressional overhaul of the Clean Air Act in 1990, however, increased stationary source regulation, tighter major source definitions (e.g., 10 tons per year in the South Coast), and higher (greater than 1:1) offset ratios have finally squeezed some regional offset markets to the point where the offset program now impedes even the cleanest economic growth.

In the South Coast, for example, stationary source emissions have become an ever-diminishing part the overall emissions inventory (e.g., <10% of VOC emissions).  And there are virtually no remaining surplus control opportunities for stationary sources; so the only source of traditional offsets has been the shutdown of existing facilities.  Under the South Coast rules, however, even those reductions are not made fully available as offsets until they are first discounted to current control (i.e., lowest achievable emission rate, or LAER) levels.  The drastically shrinking pool of available offsets has caused the price of offsets to rise to unprecedented levels.  PM10 offsets, for example, hit a peak price in 2009 of $350,000 per daily pound of emissions.  Recent VOC offsets have cost more than $2,400 per pound, NOx more than $50,000 per pound, SOx more than $12,500 per pound and CO more than $5,000 per pound.  All of these numbers far exceed the $10,000 per ton upper bound contemplated as control costs to comply with the EPA’s 1997 standards for ozone and fine PM.  See Presidential Memorandum, “Implementation of Revised Air Quality Standards for Ozone and Particulate Matter (“There is a strong desire to drive the development of new technologies with the potential of greater emission reduction at less cost.  It was agreed that $10,000 per ton of emission reduction is the high end of the range of reasonable cost to impose on sources.  Consistent with the State’s ultimate responsibility to attain the standards, the EPA will encourage the States to design strategies for attaining the PM and ozone standards that focus on getting low cost reductions and limiting the cost of control to under $10,000 per ton for all sources.”).  62 Fed. Reg. 38421, 38429 (July 16, 1997).

The net effect of the scarce offset supply and astronomically high prices has been to slow regional economic development to a crawl.  For example, offsets to support new natural-gas fired power plants, necessary to back up the state’s renewable power program, have been almost impossible to find and have cost from $50 to $200 million per plant.  Other facilities have faced daunting offset costs as well.  The District’s cost estimates include several shocking numbers, including $12-77,000 for emergency backup generation for a police station, $106-234,000 for a gasoline service station, up to $358,000 for a printing facility, $178-435,000 for an auto body shop, in excess of $1 million for a food processing facility (e.g., a tortilla fryer and oven), from $1-2 million for a sewage treatment plant expansion, well over $1 million for a hospital boiler and $78-115 million for landfill gas recovery.  Although California has led the national clean energy investment effort, without material reform the SCAQMD will almost certainly be unable to offset emissions from the desired low-carbon biofuel or biomass-based renewable electricity projects in the region.  The offset requirement thus threatens to prevent much of the cleanest form of economic growth in the region.

The SCAQMD has identified a handful of near-term adjustments to its NSR program that could reduce the demand for offsets.  These include, for example, the use of an annual rather than peak monthly averaging period to calculate the offset need.  Increasing offset supply will be much more difficult, however.  That is because almost all as-yet-untapped strategies (e.g., identifiable mobile and area source reductions) have been identified and targeted as part of the region’s long-term SIP and thus may to some extent be ineligible as a supply of offsets.

The time has long since come for the District to replace the current offset program with an alternative (such as a clean technology fund) that can continue to improve air quality by accelerating, rather then impeding, clean technology development in the South Coast.  In addition to satisfying air quality improvement needs, rapid clean technology development also is needed to employ an ever-growing regional population and to meet the state’s ambitious clean energy and carbon reduction goals.  There is a win-win strategy to be found.  But it will require frank acknowledgement that the Clean Air Act offset program has served its purpose and now impedes, rather than aids, progress.  Most stakeholders are ready to work together to find a better mousetrap to promote rapid investment where and when we most need it.  We need it immediately in Southern California and the South Coast deserves enormous credit for launching this critical and timely reform effort.

U.S. EPA PROPOSES REVISIONS TO CLEAN AIR ACT REGULATIONS IMPACTING THE OIL AND GAS INDUSTRY

Posted on November 21, 2011 by Chester Babst

On August 23, 2011, the United States Environmental Protection Agency (EPA) published a package of four proposed rules governing air emissions from the oil and gas natural gas industry.   For the first time, EPA is targeting emissions from gas wells drilled by hydraulic fracturing.  76 Fed. Reg. 52738 (August 23, 2011).  The proposals include source performance standard (NSPS) for volatile organic compounds (VOCs), an NSPS for sulfur dioxide, and air toxics standards for both oil and natural gas production and natural gas transmission and storage.  EPA estimates these proposed rules would apply to more than 25,000 oil and gas wells drilled each year in the United States.

The proposed rule would require industry to use “green completions” (also known as reduced emissions completions) to capture emissions at wells being prepared for production  In addition, the proposed rule establishes emission limits at pneumatic controllers and condensate storage tanks.  Natural gas processing plants would be subject to more rigorous leak detection and repair requirements, and operators would be required to comply with specific maintenance and equipment standards for compressors.  EPA also has proposed to eliminate the one ton per year benzene compliance option for glycol dehydrators at major sources.

The proposed regulations were issued pursuant to a Consent Decree with WildEarth Guardians and San Juan Citizens Alliance.  That Consent Decree resolved a complaint that alleged that EPA failed to review the NSPS and air toxic standards for the oil and gas industry pursuant to the Clean Air Act.  EPA will accept comments until November 30, 2011, and expects to issue a final rule by April 3, 2012.

 

U.S. EPA PROPOSES REVISIONS TO CLEAN AIR ACT REGULATIONS IMPACTING THE OIL AND GAS INDUSTRY

Posted on November 10, 2011 by Chester Babst

On August 23, 2011, the United States Environmental Protection Agency (EPA) published a package of four proposed rules governing air emissions from the oil and gas natural gas industry.   For the first time, EPA is targeting emissions from gas wells drilled by hydraulic fracturing.  76 Fed. Reg. 52738 (August 23, 2011).  The proposals include source performance standard (NSPS) for volatile organic compounds (VOCs), an NSPS for sulfur dioxide, and air toxics standards for both oil and natural gas production and natural gas transmission and storage.  EPA estimates these proposed rules would apply to more than 25,000 oil and gas wells drilled each year in the United States.

The proposed rule would require industry to use “green completions” (also known as reduced emissions completions) to capture emissions at wells being prepared for production  In addition, the proposed rule establishes emission limits at pneumatic controllers and condensate storage tanks.  Natural gas processing plants would be subject to more rigorous leak detection and repair requirements, and operators would be required to comply with specific maintenance and equipment standards for compressors.  EPA also has proposed to eliminate the one ton per year benzene compliance option for glycol dehydrators at major sources.

The proposed regulations were issued pursuant to a Consent Decree with WildEarth Guardians and San Juan Citizens Alliance.  That Consent Decree resolved a complaint that alleged that EPA failed to review the NSPS and air toxic standards for the oil and gas industry pursuant to the Clean Air Act.  EPA will accept comments until November 30, 2011, and expects to issue a final rule by April 3, 2012.

 

 

EPA’s Proposed New Air Standards Affecting the Oil and Natural Gas Industry

Posted on October 23, 2011 by Donald Shandy

On August 23, 2011, the United States Environmental Protection Agency (EPA) proposed new air standards for the oil and natural gas industry (the Proposed Rule).  The Proposed Rule includes EPA’s first federal air standards for wells that are hydraulically fractured, along with requirements for several other sources of pollution in the oil and natural gas industry that currently are not regulated at the federal level. There are four major air components of the Proposed Rule: (1) a New Source Performance Standard (NSPS) for volatile organic compounds (VOC); (2) an NSPS for sulfur dioxide (SO2); (3) an air toxics (NESHAP) standard for oil and natural gas production; and (4) an air toxics (NESHAP) standard for natural gas transmission and storage.


Section 111 of the Clean Air Act (CAA) requires EPA to set NSPS for industrial categories that cause, or significantly contribute to, air pollution that may endanger public health or welfare. These performance standards must reflect the degree of emission limitation achievable through the application of the “best system of emission reduction” (BSER), which EPA determines has been adequately demonstrated within the industry. 


EPA’s existing NSPS for VOCs were issued in 1985. The existing standards address only VOC leak detection and repair (LDAR) at new and modified natural gas processing plants.  Other potential sources of VOC emissions in the oil and natural gas industry currently are not subject to nationwide regulation.  EPA is proposing new standards for several processes or pieces of equipment used in oil and gas production that have not previously been subject to federal regulation, including: well completions at new hydraulically fractured natural gas wells and at existing wells that are fractured or “re-fractured,” which would require the use of “green completions”; centrifugal and reciprocating compressors; pneumatic controllers; and condensate and crude oil storage tanks.


The NSPS for SO2 were also issued in 1985 and apply only to natural gas processing plants. EPA is proposing to strengthen the performance standards for plants processing gas with the highest hydrogen sulfide content in order to further reduce sulfur dioxide emissions from these facilities.

Section 112 of the CAA requires EPA to address emissions of hazardous air pollutants (HAP) from stationary sources.  Section 112(d) requires EPA to promulgate NESHAPs applicable to major sources of HAPs.  For major sources, technology-based maximum achievable control technology (MACT) standards must reflect the maximum degree of emission reductions achievable, considering cost, energy requirements, and non-air quality benefits and environmental impacts.  Unlike Section 111 NSPS standards that apply only to new or modified sources, Section 112 standards are applicable to both new and existing stationary sources.  EPA is proposing changes to the NESHAP standards for major sources in both the natural gas production and storage and transportation subcategories.


The public comment period on the Proposed Rule currently runs through October 24, 2011.  It will be interesting to track the response from the oil and natural gas industry to EPA’s proposal.