Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

On June 3, 2010, the USEPA issued its final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (75 FR 31,514).  On the very same day, a legal foundation, House Republicans, businesses and business organizations sued the EPA saying EPA does not have the authority to issue the new rule.

The tailoring rule phases the applicability criteria to determine which stationary sources become subject to GHG emission permitting requirements under PSD and Title V Clean Air Act programs.

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The EPA has just announced its final rule for greenhouse gas emissions from large fixed sources such as power plants and refineries. Starting in January of next year large facilities already required to obtain Clean Air Act permits for other emissions will have to seek a greenhouse gas permit if such admissions increase by 75,000 tons/yr or more. Six months later the requirements will expand to cover all new facilities with emissions of at least 100,000 tons/yr and older installations with modifications that result in increases of 75,000 tons/yr or more. The rule covers not only CO2 but also methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. It's anticipated that the rules will be expanded to additional sources effective July 2013.

The EPA believes that these new standards will avoid overwhelming permitting burdens that otherwise would have fallen on the government and most sources of greenhouse gas. The EPA notes that without this rule the permitting and "best available control technology" burdens would fall on operations with emissions as low as 100 tons/yr producing "an absurd result" - not to mention an immense political backlash propelled by an impossible to administer regulatory scheme. Instead, conceding in essence the slippery slope objection, expansion of the regulations to smaller emitters will proceed "one-step-at-a-time". Had the rules become effective for all emitters at once an estimated 6 million U.S. farms and businesses would have suddenly become subject to the permitting process with the time from application to permit approval lengthening to a decade or more.

The CliffsNotes version is here: Fact Sheet and here's the Final Rule

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On Monday, USEPA Administrator Jackson outlined decisions she has made related to greenhouse gas regulation/permitting. The short read is as follows:

In the letter, the Administrator outlines several of the decisions she has made for 2010-2011:

No facility will be required to address greenhouse gas emissions in Clean Air Act permitting of new construction or modifications before 2011.

For the first half of 2011, only facilities that already must apply for Clean Air Act permits as a result of their non-greenhouse gas emissions will need to address their greenhouse gas emissions in their permit applications.

EPA is considering a modification to the rule announced in September that required large facilities emitting more than 25,000 tons of greenhouse gases a year to obtain permits demonstrating they are using the best practices and technologies to minimize GHG emissions.

EPA is considering raising that threshold substantially to reflect input provided during the public comment process.

EPA does not intend to subject smaller facilities to Clean Air Act permitting for greenhouse gas emissions any sooner than 2016.

[Update:  The Administrator was responding to a letter sent by a group of Senators (D) from coal producing states challenging EPA's potential regulation of greenhouse gases.  A copy of the related news release, with a link to the Senators' letter, can be found here.  Senator Rockefeller's response to the Administrator's letter can be found here, stating in part, “As I evaluate the EPA’s letter, I remain committed to presenting legislation that would provide Congress the space it needs to craft a workable policy that will protect jobs and stimulate the economy.”  Read:  Legislation to suspend EPA's authority to regulate GHG's for some period of time.]

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The Washington Post is reporting that 36 Senators introduced legislation yesterday to block USEPA from regulating greenhouse gas emissions under the Clean Air Act.  Essentially, the Senators don't think the Clean Air Act was drafted to address greenhouse gases and that Congress should act - not the USEPA under ineffective laws.  You can read the Washington Post article here.

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On Friday, October 16, 2009, the 5th Circuit ruled that plaintiff landowners had standing under Mississippi tort common law to assert causes of action for negligence, private and public nuisance, and trespass against oil companies for their release of greenhouse gases, which caused rising sea levels and increased the ferocity of Hurricane Katrina. The action is pending as a putative class action against the oil companies and has been remanded to a Mississippi district court for further proceedings. See the decision here.

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Today the U.S. EPA reversed itself and granted California’s Greenhouse Gas (“GHG”) waiver request, allowing the State of California to enforce its own GHG emission standards for new motor vehicles – starting this model year. President Obama recently announced a new national policy to increase motor vehicle fuel efficiency and reduce GHG pollution; new national motor fuel standards would start with model year 2012 vehicles. Once the national program goes into effect, California has stated that it will find automakers in compliance with its state standards, so long as automakers are in compliance with national standards. It will be interesting to see how the two standards will dovetail together at that time. For a history of California’s waiver request, see here.

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A Vorys attorney recently had the opportunity to participate in a small group lunch with a member of the House Energy and Commerce Committee this week and shared several insights into the status of the Waxman climate change bill. First and foremost, it was clear to this Committee member that Chairman Waxman does not have the votes to move the bill as presently written out of the Energy and Commerce Committee.  Blue Dog Democrats from the Midwest have said quite clearly that they will not vote for the current bill unless it is changed to, as one Blue Dog member put it, "make it less punitive to coal states."

There are a significant number of issues now being negotiated between the Blue Dogs and Chairman Waxman, including the level of energy that must be produced from renewable sources and the target date for achieving that goal; the variety of technologies that will be included in the definition of biomass energy production; and perhaps the biggest issue, whether CO2 emission allowances will be auctioned or distributed for free. The Blue Dogs are almost uniformly opposed to using the auction of allowances to pay for other unrelated government programs, like healthcare reform.

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Today the U.S. EPA proposed a rule that would require approximately 13,000 large source facilities to annually report their greenhouse gas emissions.  The facilities covered include fossil fuel suppliers, industrial chemical suppliers, motor vehicle and engine manufactures and large direct GHG emitters (defined as facilities that emit 25,000 metric tons or more of GHG emissions).  The proposed rule will soon be published in the Federal Register; a pre-publication copy can be found here.

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