EPA published the Clean Power Plan (“CPP”) regulations in the Federal Register late last month. The CPP is the landmark climate change rule championed by the Obama Administration that requires reductions in greenhouse gas emissions from existing power plants nationwide. Almost immediately, opponents lodged petitions seeking review of the rule, with some petitioners also seeking a stay of the rule.
The latest edition of the K&L Gates Environmental Policy Quarterly focuses on (1) EPA’s Carbon Pollution Standards and Clean Power Plan, (2) congressional efforts to streamline environmental reviews of infrastructure projects, and (3) EPA’s draft Assessment on the Potential Impact of Hydraulic Fracturing on Drinking Water Resources. We are delighted to include contributions by a number of K&L Gates lawyers who focus on these matters on a daily basis.
EPA’s recently issued Clean Power Plan (“CPP” or “Plan”) affects every state differently. The Plan has a decidedly nationwide impact—reducing the United States’ power plant greenhouse gas emissions 32 percent by the year 2030. But the Plan functions entirely on a state-by-state level, treating each state in a different way based on its unique emissions profile. In this way, the Plan seeks to harness the power of federalism to achieve its ambitious goals.
While the target-based approach is in some ways similar to the structure of EPA’s National Ambient Air Quality Standards (NAAQS), the CPP has revised and reordered certain elements, and has modified the targets for carbon dioxide (CO2) reductions required by individual states. Although NAAQS are set on a nationwide basis, under the CPP every state has a different carbon target based on a calculus that includes the state’s emissions profile and energy mix. Thus, some states (like Montana and West Virginia) are subject to greater emission reductions than other states (like Idaho and Maine). And while states have some flexibility to determine how to meet their targets, the devil will be in the details, as evidenced by EPA’s compliance pathway chart.
In 2007, the Supreme Court told the U.S. Environmental Protection Agency (EPA) it was wrong to conclude that it lacked the authority to regulate greenhouse gases (GHGs) emitted from vehicles, because GHGs are an “air pollutant.” Since then, the energy and power industries in particular have watched as the EPA took that ruling and developed regulations focused on limiting GHG emissions from stationary sources. EPA not only regulated GHGs from utilities, but expanded the program to almost any source of GHGs (landfills, electronics manufacturers, office buildings), and then “tailored” the rule to limit what everyone agreed were onerous and unnecessary impacts. In a 5-4 decision, the Supreme Court again reversed the EPA, this time telling it that it cannot regulate entities’ GHG emissions if they do not otherwise need a Clean Air Act (CAA) permit. While the decision provides relief to building owners, hospitals, bakeries, dry cleaners, many manufacturers, and just about every other type of business that uses heating and air conditioning, the power industry itself (meaning those that need CAA permits anyway) did not fair as well because the Court upheld EPA’s authority to require them to implement “best available control technology” (BACT) to limit GHGs. This alert describes the decision, and addresses the question most relevant to the regulated community: How much will this decision matter? Read More
Renewable energy will play a major role in EPA’s latest proposal to cut greenhouse gas emissions from electric generating facilities. On June 2, 2014, EPA Administrator Gina McCarthy proposed a new regulation for cutting carbon pollution from existing electric generating units (EGUs). This rule is perhaps the most significant action to date in the President’s Climate Action Plan announced last year. The rule will require EGUs to reduce their CO2 emissions by 30% by 2030 from 2005 levels. EPA assigned a CO2 goal for each state but lets states choose how best to meet the goal. Read More
Introduction
On May 19, 2014, the Environmental Protection Agency (EPA) released a long-delayed final rulemaking regulating cooling water intake structures at existing facilities under Section 316(b) of the Clean Water Act (CWA). For more than two decades, environmental advocates have pushed EPA to issue a rule under Section 316(b) in order to protect aquatic organisms, such as fish and shellfish, that become pinned against cooling water intake structures (impingement) or are drawn into cooling water systems (entrainment). Previously, EPA issued rules governing cooling water intakes at new facilities. The latest rulemaking addresses intakes at existing facilities. If unchallenged in court, this final rule would conclude what has been more than twenty years of litigation between EPA and environmental organizations.
Section 316(b) requires that the location, design, construction, and capacity of cooling water intake structures for facilities having a National Pollutant Discharge Elimination System (NPDES) permit “reflect the best technology available for minimizing adverse environmental impact.” [1] The final rule seeks to minimize environmental harm associated with cooling water intake structures by identifying the best technology available (BTA) to reduce impingement and entrainment for certain categories of existing facilities and new units at existing facilities. These new requirements will be implemented through NPDES permits under Section 402 of the Clean Water Act. Read More
Yesterday the U.S. Supreme Court upheld the U.S. Environmental Protection Agency’s (“EPA”) regulation of cross border air pollution. In a 6-2 ruling,[1] the Supreme Court reversed the D.C. Circuit, holding that EPA’s cross border air pollution rule (the “Transport Rule”)[2] did not violate the Clean Air Act (“CAA”) by establishing a new federal scheme for regulating upwind emissions that drift over state lines. The decision likely will impact those power plants in “upwind states” that contribute to cross border air pollution by imposing more stringent air emissions limits for those facilities. However, the decision may also spur an increase in development of renewable energy and lower emission natural gas fired plants.
The Transport Rule establishes good neighbor obligations among 28 states for three primary pollutants: NOX, SO2, and ozone, and EPA has established National Ambient Air Quality Standards (“NAAQS”) for each of these pollutants.[3] Any state whose ambient air quality exceeds the NAAQS is considered in “non-attainment.” The CAA requires that upwind states, whose emissions cause or contribute to exceedances of NAAQS standards in downwind states, control their emissions to the extent required to avoid such contribution. The Transport Rule is made up of two basic components: it quantifies each state’s emissions reduction levels under the good neighbor provision and imposes Federal Implementation Plans (“FIPs”) to implement those reductions at the state level.
EPA calculated the necessary emissions reductions in a two stage approach. The first stage screens from its requirements all upwind states that contribute less than 1% of any downwind state’s nonattainment.[4] The second stage applies a multi-factor assessment to set reductions in those upwind states on a cost-per-ton reduction basis (which relied on the costs to install pollution reduction technology) that was distributed across all power plants in the upwind states.[5] Finally, the Transport Rule proposed to achieve cost-per-ton reductions over multiple years, beginning in 2012 and relying on a maximum budget for each pollutant that a state’s power plants may collectively emit through 2014.[6] Since EPA found that many State Implementation Plans (“SIPs”) did not properly provide for these emissions budgets, EPA invalidated those SIPs and instead required those states to comply with new state-specific FIPs. It did so without giving the states an opportunity to correct their SIPs based upon EPA’s objections, and (at least according to some) without giving the states guidance on how to address those objections.
The Supreme Court reviewed the D.C. Circuit Court’s conclusion that the Transport Rule exceeded EPA’s statutory authority to impose more stringent air quality requirements through the good neighbor provisions of the CAA. First, the D.C. Circuit Court determined that the Transport Rule exceeded CAA authority because the good neighbor provision could impose emissions reductions on upwind states that could go beyond those states’ significant contribution to downwind air pollution in other states. Second, the D.C. Circuit concluded that the Transport Rule failed to provide states with the first opportunity to implement the good neighbor reductions through their own SIPs. Instead, EPA quantified the states’ good neighbor reductions and simultaneously set forth EPA-designed FIPs to implement those obligations at the state level without first providing the states an opportunity to correct their SIPs.
The Supreme Court overturned the D.C. Circuit Court decision, concluding that EPA reasonably interpreted the good neighbor provision and that the CAA did not required EPA to give states a grace period to file revised SIPs.
It is still uncertain how the Supreme Court’s decision will ultimately affect the implementation of and reductions required under the Transport Rule. Significant issues lie ahead for EPA related to regulatory impacts and the legal implications for the Transport Rule. For example, since EPA is already several years behind the start date for the rule—January 1, 2012—the agency will likely have to issue new regulations to modify implementation dates. Likewise, EPA may need to adjust the Transport Rule to address revisions and updates to air quality standards for ozone and particulate matter. And finally, EPA may face further litigation that was stayed since the D.C. Circuit decision, or litigation related to technical revisions to the Transport Rule during the stay.[7]
Despite these issues, the Supreme Court decision presents two significant implications. First, by agreeing that EPA may foreclose a state’s ability to determine how emission reductions are to be achieved and allocated among sources, the decision may have changed the fundamental federal/state regulatory relationship under the CAA. Second, the decision demonstrates the broad deference to EPA on substantive and technical issues, and reaffirms the Court’s view that when reasonable minds differ on technical issues, EPA’s interpretation will prevail as long as it is rational and supported by the record. Both points support EPA’s continuing efforts to impose greater regulation on the fossil fuel industry, which may accelerate the adoption of new pollution control technologies or the replacement of fossil fuel energy production with alternatives that do not emit, or emit less of, these criteria pollutants.
For additional information on the decision underlying the Supreme Court’s decision, see:
[1] Justice Alito did not participate. Justices Scalia and Thomas joined in dissent.
[2] Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals, 76 Fed. Reg. 48,208 (Aug. 8, 2011).
[3] For additional details on the regulated pollutants, see 76 Fed. Reg. 48,208.
[4] EME Homer City Generation LP v. EPA, 696 F.3d 7, 11 (D.C. Cir. Aug. 21, 2012).
[5] Id. at 11-12.
[6] Id. at 12.
[7] Utility Air Regulatory Group v. EPA, D.C. Cir., No. 12-1346, 9/27/12; Wisconsin Public Service Corp. v. EPA, D.C. Cir., No. 12-1163, 4/6/12.
Copyright © 2024, K&L Gates LLP. All Rights Reserved.