Climate, Energy, & Air Update - April 11-24, 2013

April 24, 2013

EPA proposes effluent guidelines for power plants . . . President’s proposed budget prioritizes renewables, calls for cuts to fossil fuel tax preferences . . . Senate confirms Sally Jewell as Interior Secretary . . . House passes cybersecurity bill; Obama threatens veto, citing insufficient consumer protections . . . House Energy & Commerce Committee approves bill to require Keystone XL approval . . . Shaheen-Portman energy efficiency bill re-introduced, with House companion version . . . D.C. Circuit holds that EPA can veto already-issued Clean Water Act dredge-and-fill permit . . . Environmental groups and like-minded States file notices of intent to sue EPA over delayed GHG emission standards for new power plants . . . Petitions arrive at Supreme Court seeking reversal of D.C. Circuit decision upholding endangerment finding and Tailoring Rule . . . D.C. Circuit holds that utility group lacks standing to challenge EPA-environmental group settlement on timetable for issuing effluent guidelines for power plants . . . New lawsuit challenges California allowance auctions as impermissible “tax.”

EXECUTIVE BRANCH
  • EPA Issues Proposed Updates to Effluent Limitation Guidelines for Steam-Generating Power Plants.  On April 19, EPA proposed an update to its Clean Water Act effluent limitations guidelines (ELGs) for steam-generating electric power plants.  The change to the technology-based ELGs—which EPA has not updated since 1982—would affect about 1,200 nuclear- and fossil-fuel fired power plants, and would impose more stringent effluent limits for discharges of mercury, zinc, phosphorus, selenium, and other toxic pollutants.  EPA estimates the changes would reduce annual discharges of the regulated pollutants by 470 million to 2.62 billion pounds and cost the industry between $185 million to $954 million per year to implement.  In its proposed rule, EPA also seeks public comment on how to align its ELG rule with a separate rule on utility coal ash disposal that EPA proposed under the Resource Conservation and Recovery Act (RCRA) in 2010.  Comments will be due 60 days after publication in the Federal Register.  Under a 2010 consent decree, EPA is required to finalize the rule by May 22, 2014.  For more on the proposed ELGs, visit http://water.epa.gov/scitech/wastetech/guide/steam-electric/proposed.cfm. Also, see the Judicialsection below for an article about a legal challenge to the EPA timetable for proposing and finalizing an effluent guidelines rule. 

  • President’s Budget Proposal Prioritizes Renewables, Envisions Cuts to Fossil Fuel Tax Preferences.  The Obama Administration’s proposed budget for fiscal year 2014, which provides a starting point for Congressional debate over federal funding levels for the next ten years, proposes to eliminate approximately $44 billion in tax preferences for the oil, natural gas, and coal industries over ten years, while increasing tax preferences and research and development funding for renewable energy and energy efficiency.  Among the tax preferences the Administration proposes to eliminate are: expensing of intangible drilling costs, the domestic manufacturing deduction, the percentage depletion for oil and natural gas wells, and the percentage depletion for hard mineral fossil fuels.  Meanwhile, the Administration proposes to extend the renewable energy production tax credit and the energy efficiency commercial property tax deduction for ten years, while boosting funding for renewable energy, energy efficiency and advanced vehicles at the Department of Energy (DOE) and elsewhere in the federal government.  In a surprise move, the Budget also suggests that the government-owned Tennessee Valley Authority (TVA) could be partly or entirely privatized in order to allow it to invest in new infrastructure without exceeding its statutory debt level.  To access the full budget proposal, visit http://www.whitehouse.gov/omb/budget/Overview.

  • India Files WTO Complaint over Domestic Preferences in U.S. Renewable Energy Programs.  On April 17, India filed a “request for consultations” with the World Trade Organization (WTO) suggesting that some U.S. programs may violate the WTO’s prohibitions on so-called “local content” requirements.  As part of its action at the WTO, India requests that the U.S. provide information on preferences for domestic workers and manufacturing in federal, state, and local renewable energy programs.  India’s complaint follows a similar complaint filed in February by the U.S. Trade Representative, Ron Kirk, over India’s own alleged preferences for renewable energy equipment produced by Indian companies.  A request for consultations is the first step in the WTO’s dispute resolution process.  The current dispute is the latest in a series of recent trade disputes between the U.S., Europe, China, India, Vietnam, and others over subsidies and trade preferences for renewable energy manufacturing and technology.

  • U.S. and China Form Working Group to Discuss “Forceful” Action on Climate Change.  On April 13, the U.S. Department of State announced a new U.S.-China Climate Change Working Group that will discuss “forceful, nationally appropriate action” to reduce GHG emissions.  The new Working Group, which will be led by State Department Climate Envoy Todd Stern and Chinese Vice Chairman of the National Development and Reform Commission Xie Zhenhua, will attempt to find common ground on “technology, research, conservation, and alternative and renewable energy” cooperation between the two countries, in anticipation of the U.S.-China Strategic and Economic Dialogue, which will be held in Washington in July.  The State Department’s press release on the Working Group is available here: http://www.state.gov/r/pa/prs/ps/2013/04/207465.htm.

  • DOE: U.S. Should Move Ahead with Interim Nuclear Waste Storage; Cut Losses on Yucca Mountain.  On April 11, Peter Lyons, the Assistant Secretary of Energy for Nuclear Energy, told a House Appropriations Subcommittee that the nation should “cut [its] losses” from the stalled proceeding to develop Yucca Mountain into a repository for spent nuclear fuel, and proceed instead with developing an interim storage facility and the consent-based approach to developing a repository that is similar to that proposed by the President’s Blue Ribbon Commission (BRC) on America’s Nuclear Future.  In 2010, the Department of Energy withdrew its Nuclear Regulatory Commission application for a license to develop the Yucca Mountain repository, and has since indicated that it prefers a consent-based approach to developing a repository.  Van Ness Feldman provided outside counsel to the Blue Ribbon Commission.  For additional information on the BRC’s recommendations, see our Jan. 30, 2012 Alert and the BRC’s website at www.brc.gov/.

  • Additional Executive Branch Developments:
    • April 15: EPA’s 2011 Inventory of U.S. Greenhouse Gas Emissions and Sinks shows a 1.6 % drop in U.S. emissions from 2010.  The decrease is mostly due to decreased use of coal and increased consumption of natural gas and hydroelectric power, as well as a milder winter.  To read the full report, visit http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html.
    • April 15: The Internal Revenue Service has issued guidance on obtaining the 2013 renewable electricity production tax credit and the energy investment tax credit.  To be eligible, taxpayers must have conducted “significant physical work” in 2013 on the project for which they claim the credit, or have incurred at least 5 percent of the total cost of the project in 2013 while continuing to make efforts towards completion. 
    • April 16: At a Congressional hearing on the U.S. Department of Agriculture’s (USDA) budget for 2014, Agriculture Secretary Tom Vilsack indicated the USDA would roll out a series of new initiatives to study climate change impacts on agriculture and to encourage sustainable farming practices that can mitigate climate change.  Read the full USDA budget request here.
CONGRESS
  • Senate Votes to Confirm Secretary of the Interior. On April 10, the Senate voted 87-11 to approve the nomination of Sally Jewell to be Secretary of the Interior.  The vote took place after Sen. Jim Risch (R-ID) lifted a hold on Jewell’s nomination.  She was sworn-in on April 12 and will take the place of the outgoing Secretary, Ken Salazar.

  • Senate Committee Holds Hearing on EPA Nominee.  On April 11, the Senate Environment and Public Works Committee held a hearing entitled "Hearing on the Nomination of Gina McCarthy to be Administrator of the U.S. Environmental Protection Agency."  McCarthy, currently EPA’s Assistant Administrator for the Office of Air and Radiation, focused her testimony on EPA’s agenda, including: protecting clean water sources, combating climate change, and updating chemical safety laws.  Committee Members brought up a wide range of issues, from greenhouse regulation to lands issues.  The webcast and written testimony are available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=d71fd4b6-ce77-3a98-46a0-fb02b0cae0ed

  • House Committee Shuffles Subcommittees.  On April 10, House Energy and Commerce Committee Chairman Fred Upton (R-MI) announced that Congressman Ralph Hall (R-TX) has moved to the Subcommittee on Energy and Power, swapping assignments with Congresswoman Cathy McMorris Rodgers (R-WA) who will take his slot on the Subcommittee on Health.  The announcement is available at http://energycommerce.house.gov/press-release/upton-announces-updates-subcommittee-rosters

  • House Subcommittee Holds Hearing on Various Lands Bills.  On April 11, the House Natural Resources Subcommittee on Public Lands and Environmental Regulation held a legislative hearing to consider six bills.  Various members of Congress, local representatives and nongovernmental organizations testified on the bills.  A full list of the bills considered, witnesses testimony, and background documents are available at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=326329

  • House Science Committee Holds Mark-Up.  On April 11, the House Science Committee voted 18 to 17 to pass H.R. 875.  Sponsored by Congressman Jim Sensenbrenner (R-WI), H.R. 875 would authorize funding for a National Academy of Sciences study evaluating the effects of ethanol blends on vehicle and marine engine systems.   Congressman Alan Grayson (D-FL) was the only Member to offer amendments, three of which were accepted by voice vote; one was withdrawn.  The Committee also voted 21 to 16 to pass H.R. 1422, the "EPA Science Advisory Board Reform Act of 2013."  Sponsored by Chris Stewart (R-UT), H.R. 1422 would alter the requirements for participants and communication amongst members of any Science Advisory Board (SAB) at the EPA.  The full list of amendments, text of each bill, committee documents and list of recorded votes are available at http://science.house.gov/markup/full-committee-markup-hr-875-H.R

  • House Energy & Commerce Subcommittee Holds Hearing on Legislation to Restrict EPA Regulations. On April 12, the House Energy & Commerce Subcommittee on Energy & Power held a hearing on H.R. 1582, “The Energy Consumers Relief Act of 2013.” The bill would prohibit EPA from finalizing any energy-related rule estimated to cost more than $1 billion if the Secretary of Energy determines that the rule will cause significant adverse effects to the economy.  Subcommittee Chairman Ed Whitfield (R-KY) said the bill would help provide a more accurate analysis of how regulations increase costs for the public and businesses.  Although EPA and DOE declined an invitation to testify at the hearing, EPA submitted a statement for the record that raises concerns about the legislation, including that it would impede the agency’s ability to fulfill its obligations to protect public health and the environment.  The witnesses representing the American Fuel & Petrochemical Manufacturers, the Industrial Energy Consumers of America, and the Electric Reliability Coordinating Council offered support for the bill.  The representatives of the Center for Progressive Reform and the American Thoracic Society spoke in opposition to the legislation. Here is a link to the hearing page: http://energycommerce.house.gov/hearing/legislative-hearing-energy-consumers-relief-act-2013 and the “Energy Consumers Relief Act of 2013” is available at http://energycommerce.house.gov/press-release/subcommittee-unveils-draft-legislation-protect-consumers-higher-energy-costs.

  • House Subcommittee Holds Hearing on PMA Budget.  On April 16, the House Natural Resources Subcommittee on Water and Power held a hearing entitled “Examining the Proposed Fiscal Year 2014 Spending, Priorities and the Missions of the Bureau of Reclamation, the Four Power Marketing Administrations and the U.S. Geological Survey’s Water Program.”   The Committee specifically explored the spending priorities outlined in the President’s Fiscal Year 2014 budget requests for the Bureau of Reclamation, the four Power Marketing Administrations (PMAs), and the U.S. Geological Survey’s Water Program.   All four Power Marketing Administrators testified.  Written testimony is available at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=326533.  

  • House Science, Space & Technology Subcommittees Hold Joint Hearing on Wind Energy Incentives. On April 16, the House Science, Space & Technology Subcommittee on Energy and the Subcommittee on Oversight held a joint hearing to determine the efficiency and effectiveness of wind energy incentives.  Energy Subcommittee Chairman Cynthia Lummis (R-WY) advocated for phasing out the Production Tax Credit, and Oversight Subcommittee Chairman Paul Broun (R-GA) criticized the large number of tax breaks that apply to the wind power industry.  Frank Rusco, Director of Natural Resources and the Environment for the Government Accountability Office (GAO), testified about the GAO’s review of federal programs that promote wind energy, including the extent to which they might provide duplicative support and whether agencies assess applicant need for support.  Robert Gramlich, testifying on behalf of the American Wind Energy Association, questioned the research method of the GAO report and emphasized that incentives for wind energy have provided excellent value to the country.  Here is a link to the hearing page: http://science.house.gov/hearing/oversight-subcommittee-and-energy-subcommittee-joint-hearing-assessing-efficiency-and.

  • Natural Resources Subcommittee Holds Hearing on Keystone Legislation. On April 16, the House Natural Resources Subcommittee on Energy & Mineral Resources convened a hearing on H.R. 3, “The Northern Route Approval Act,” which would allow the construction, operation and maintenance of the Keystone XL Pipeline without a presidential permit. Subcommittee Chairman Doug Lamborn (R-CO) talked about the energy and job creation benefits of the pipeline and criticized the Obama Administration for not approving it.  Representatives from the National Association of Manufacturers, the International Union of Operating Engineers and the American Fuel & Petrochemical Manufacturers offered their support for the legislation while the witness testifying on behalf of Oil Change International spoke in opposition to the Keystone XL Pipeline.  Here is a link to the hearing page: http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=327152.

  • House Subcommittee Holds Hearing on WRDA.  On April 16, the House Transportation and Infrastructure Subcommittee on Water Resources and Environment held a hearing entitled “The Foundations for a New Water Resources Development Act.”  Witnesses included Warren Williams, President of the National Association of Flood & Stormwater Management Agencies; and Adolph Ojard, Chairman of the U.S. Legislative Policy Council for the American Association of Port Authorities.  A full list of witnesses, webcast and committee-authored documents are available at http://transportation.house.gov/hearing/foundations-new-water-resources-development-act

  • Energy & Commerce Committee Approves Keystone Legislation. On April 17, the House Energy & Commerce Committee voted 30 to 8 to pass H.R. 3, the “Northern Route Approval Act.”  Three members of the minority – Reps. Gene Green (D-TX), John Barrow (D-GA), and Jim Matheson (D-UT) – voted with Republicans in approving the legislation, which allows for the construction, operation and maintenance of the Keystone XL Pipeline without a presidential permit.  A day earlier, the House Energy & Commerce Subcommittee on Energy & Power voted 17 to 9 to pass the bill, with Reps. Green (D-TX) and Barrow (D-GA) siding with Republicans.  Here is a link to the markup: http://energycommerce.house.gov/markup/full-committee-vote-hr1549-bill-affirm-policy-us-regarding-internet-governance-and-hr3.

  • Senate Energy & Natural Resources Committee Holds Hearing on DOE Budget.  On April 18, Daniel Poneman, Deputy Secretary and Chief Operating Officer of DOE, testified on the Department’s budget request of $28.4 billion for FY 2014.  The Deputy Secretary highlighted funding for programs to produce more domestic energy, make energy more efficient, and invest in clean energy technology.  Chairman Ron Wyden (D-OR) noted the budget’s dramatic reductions in fossil energy and nuclear energy, and to a lesser extent in water power and fuel cells.  Ranking Member Lisa Murkowski (R-AK) also focused on DOE’s decreased support for unconventional fossil energy technologies, marine hydrokinetics and hydropower research.  Here is a link to the hearing: http://www.energy.senate.gov/public/index.cfm/hearings-and-business-meetings?ID=e0014b0f-a147-4543-bd5e-ff13cd780d79.

  • House Passes Cybersecurity Legislation. On April 18, the House voted 288 to 127 to pass H.R. 624, the “Cyber Intelligence Sharing and Protection Act.”  Also known as “CISPA,” the legislation would alter the way the federal government and the private sector share information on pending cybersecurity threats.  The day before the House voted on the bill, the President released a statement threatening to veto the legislation due to concerns about protecting private consumer information.  Here is a link to the vote: http://clerk.house.gov/evs/2013/roll117.xml and the Statement of Administration Policy on CISPA: http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/113/saphr624r_20130416.pdf.

  • Bipartisan, Bicameral Energy Efficiency Bill Reintroduced.  On April 18, Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) introduced S. 761, a bill to promote energy savings in residential and commercial buildings and industry.  One the same day, Congressman David McKinley (R-WV) and Peter Welch (D-VT) introduced an identical companion bill in the House.  This bill is similar to S. 1000, which was introduced in the last Congress.  Pieces of S. 1000 were included in H.R. 6582, the “American Energy Manufacturing Technical Corrections Act,” which was signed into law on December 18, 2012.  Additional information on the new Shaheen-Portman bill and a webcast of the announcement event are available at http://www.shaheen.senate.gov/news/press/release/?id=57f82292-c91d-41a1-b6a5-74fa99f6349e

  • Senators Send Letter to CEQ.  On April 22, Senate Environment and Public Works Committee Ranking Member David Vitter (R-LA) was joined by 32 Senators in sending a letter to White House Council on Environmental Quality (CEQ) Chair Nancy Sutley.  The letter expresses concerns about recent reports indicating the Administration intends to finalize standards requiring agencies to address greenhouse gas (GHG) emissions under the National Environmental Policy Act (NEPA).   The letter and full list of cosigners is available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=328b29f9-d4ff-fad9-579c-f0fd733c3920&Region_id=&Issue_id

  • Senate Committee Holds Hearing on Hydro Bills.  On April 23, the Senate Energy and Natural Resources Committee held a legislative hearing to consider several bills that would provide incentives or streamline permitting for hydroelectric projects.  The committee considered S. 306, the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act”; S. 545, the “Hydropower Improvement Act of 2013”; H.R. 267, the “Hydropower Regulatory Efficiency Act of 2013”; and, S. 761, “Energy Savings and Industrial Competitiveness Act of 2013.”  During the hearing, both Chairman Wyden (D-OR) and Ranking Member Murkowski (R-AK) expressed strong support for the bills and for hydroelectric projects generally.  The leaders both noted that the number of bipartisan hydro bills before the Committee demonstrated how important hydropower can be to an “all-of-the-above” clean energy future.   Ranking Member Murkwoski even predicted that either a hydropower package or an energy efficiency package will make it President Obama’s desk for his signature.   The witness list and webcast are available at http://www.energy.senate.gov/public/index.cfm/hearings-and-business-meetings?ID=d5660354-9d29-4107-af2e-704edd02eefd

  • Senate Subcommittee Holds Hearing on Lands Bills.  On April 23, the Senate Energy and Natural Resources Subcommittee on National Parks held a legislative hearing to consider 14 lands bills.  Witnesses included Peggy O'Dell, Deputy Director for Operations at the National Park Service; and Ingrid Kolb, Director of the Office of Management at the Department of Energy.  The full list of bills considered at the hearing and the webcast are available athttp://www.energy.senate.gov/public/index.cfm/hearings-and-business-meetings?ID=9df237db-2a0f-4e28-9476-b1c5b43d454a.  
JUDICIAL

For more information on pending environmental law cases, see the VNF Environment Appellate Litigation Tracking Tool at http://www.vnf.com/litigationtracker

  • Court Finds EPA Has Authority to Partially Veto Already-Issued Clean Water Act Permit.  On April 23, the D.C. Circuit reversed a district court, finding that EPA does have authority under subsection 404(c) of the Clean Water Act (CWA) to withdraw “any defined area as a disposal site…” from a CWA dredge-and-fill permit, Mingo Logan Coal Co. v. EPA, No. 1:10-cv-00541.  Under the CWA, it is unlawful to discharge any pollutant into a water of the United States except in conformity with certain enumerated CWA provisions.  Section 404 of the CWA allows the Army Corp of Engineers (Corps) to issue dredge-and-fill permits to allow the permitted entity to discharge pollutants into waters “at specified disposal sites.”  The EPA has the authority to “veto” the Corps’ disposal site selection approval under subsection 404(c).  In this case, the Corps granted the Mingo Logan Coal Company (Mingo) a permit under section 404 of the CWA to discharge dredged or fill material from a mountain-top mine into three streams and their tributaries located in West Virginia.  At the time, EPA did not exercise its authority to veto the three selected disposal site streams.  Four years later, EPA used its authority under 404(c) to withdraw two of the three streams designated as permitted disposal sites.  Mingo sued EPA, arguing that the agency does not have post-issuance permit withdrawal authority.  While the district court agreed with Mingo, the D.C. Circuit reversed, holding that both the CWA’s statutory language and legislative history does not preclude the EPA from withdrawing a disposal site retroactively from a dredge-and-fill permit.   

  • Environmental Groups and States File Notice of Intent to Sue the EPA Over Delayed GHG Rule for New Power Plants.  On April 15, several environmental groups sent the EPA notices of intent (NOI) to sue the agency for failing to issue a final rule to establish New Source Performance Standards (NSPS) under the Clean Air Act for carbon dioxide (CO2) emitted by new fossil fuel-fired power plants.  On April 17, ten states and several cities also filed NOIs.  Under the CAA, the agency must finalize any proposed NSPS rule within one year of the proposed rule’s publication.  EPA’s issued its original proposal on April 13, 2012.  For more information about the original proposal, see the VNF alert here:  http://www.vnf.com/news-alerts-696.html

  • States and Industry Groups Petition Supreme Court to Overturn EPA Case Involving GHG Regulation.  On April 18 and 19, multiple petitions were filed seeking a writ of certiorari from the U.S. Supreme Court, under an extended deadline, to overturn the U.S. Court of Appeals for the District of Columbia Circuit’s (D.C. Circuit) finding that EPA has authority to regulate GHG emissions from stationary sources under the CAA’s prevention of significant deterioration program in Coalition for Responsible Regulation v. EPA, No. 09-1322. Petitioners include multiple states and industry groups.  For more information about the challenges at issue, see a VNF Update at http://www.vnf.com/news-alerts-820.html.

  • Court Holds that Utility Group Lacks Standing to Challenge EPA Consent Agreement on Timeline for Effluent Guidelines Rule.  On April 23, the D.C. Circuit ruled that the Utility Water Act Group (UWAG)—a coalition of utilities active on Clean Water Act (CWA) regulation of the sector—does not have standing to intervene in a settlement between EPA and environmental groups establishing a consent decree-based timeline for a notice-and-comment rulemaking to determine whether EPA should issue effluent limitations for power plants under the CWA.  Defenders of Wildlife v. EPA, D.C. Cir., No. 12-5122.  Article iii, permissive 24(b).  UWAG argued that its members would be injured by the decree because it imposes too expedited a timeline for EPA to decide whether to issue a rule, thereby denying its members adequate opportunity to comment and making it more likely that EPA will decide to regulate.  The court rejected UWAG’s arguments, holding that UWAG failed to identify any statutory procedure or authority that the decree requires EPA to violate.  In particular, the court found that UWAG failed to cite sufficient authority to support its view that the decree’s thirteen-month comment period is too short.  As discussed in the Executive Branch section of this Update, EPA proposed a power plant effluent guidelines rule on April 19.  Under the amended consent decree at issue in the Defenders decision, the agency is required to issue a final rule by May 22, 2014.  

  • Industry Groups File Suit Challenging California’s Cap-and-Trade Program as an Unlawful Tax.  A variety of industry and business groups have filed a lawsuit in a California Superior Court, arguing that a portion of the State’s cap-and-trade program amounts to an illegal tax, Morning Star Packing Co. v. CARB, Cal. Super Ct., No. 34-2013-80001464.  The lawsuit argues that the California Air Resources Board (CARB) exceeded its authority under the Global Warming Solutions Act of 2006 (A.B 32) and the state’s constitution when it created the GHG allowance auctions under the cap-and-trade program.  Under California’s cap-and-trade program, companies are allowed to purchase, at auction, allowances to cover their GHG emissions.  The petitioners assert that the auctions are equivalent to a tax because they will raise billions in revenues for the state.  Under recently passed amendments to the California Constitution, any new state tax requires at least a two-thirds approval from both chambers of the state’s legislature. 

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