Climate, Energy, & Air Update - Oct. 10 - 23, 2013

October 23, 2013

Supreme Court grants cert on narrow GHG permitting issue . . . Congressional committee considers LNG exports . . . Senate passes bill on US-Mexico gas exploration . . . Ninth Circuit rejects citizen suit on refinery GHG emissions.

EXECUTIVE BRANCH

  • EPA Seeking Input on Upcoming Existing Source GHG Rules. Consistent with President Obama’s Climate Action Plan, EPA is reaching out to stakeholders on an impending rulemaking to set greenhouse gas (GHG) emission standards for existing power plants. Specifically, EPA has posted four questions, seeking feedback on particular policy design issues it expects to face in writing the existing source regulations. In order to receive answers to these and other policy design questions, EPA has planned 11 “listening sessions” around the country. However, among the causalities of early October’s government shutdown were the first two of these sessions in Boston and Philadelphia, which have now been rescheduled. EPA’s posted questions are available at http://www2.epa.gov/sites/production/files/2013-09/documents/20130923statequestions.pdf. A full list of listening session dates and locations can be found at http://www2.epa.gov/carbon-pollution-standards/public-listening-sessions.

  • DOE Auctions Fisker. In the midst of the government shutdown, the U.S. Department of Energy held an auction for its $192 million 2009 loan to the startup car manufacturer Fisker Automotive. DOE picked an investor group led by Hong Kong investor Richard Li and is now finalizing the deal. The loan purchaser will have the opportunity to restart the dormant car manufacturer unencumbered by DOE’s loan, but will also face significant creditor obligations. Bids for the auction were due October 7, and DOE received bids from at least three bidders, including the group run by Mr. Li.

  • In Other Developments…

    • On October 21, the Department of Energy issued a proposed rule allowing some equipment to gain certification under the federal energy conservation standards through mathematical modeling rather than testing. Modeling must be validated by DOE, and manufacturers must have a good compliance record to be eligible to use modeling. This alternative efficiency determination method (AEDM) would apply to various types of commercial refrigeration, HVAC, and water heating equipment. Comments on the proposed rule are due November 21, 2013. DOE’s announcement in the Federal Register is available at http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-TP-0024-0074.

    • As part of its SunShot Initiative, the Department of Energy pledged more than $60 million to support projects that lower the cost of solar installation. DOE’s commitment includes support for companies that are improving the efficiency of solar technology, and for curriculum development and other education projects. An announcement of this funding commitment is available at http://www.doe.gov/articles/energy-department-announces-60-million-drive-affordable-efficient-solar-power. More information about the SunShot initiative is available at http://www1.eere.energy.gov/solar/sunshot/.

    • The Department of Agriculture announced the availability of $181 million of loan guarantees for the construction or retrofit of commercial-scale advanced-biofuel refineries. Applications will be due January 30, 2014. USDA’s announcement is available online, here.

CONGRESS

  • House Subcommittee Holds Forum on LNG Exports. On October 10, the House Energy and Commerce Committee’s Subcommittee on Energy and Power hosted a forum entitled “Geopolitical Implications and Mutual Benefits of U.S. LNG Exports.” Participants included Members of the Subcommittee on Energy and Power and representatives from nine countries. According to committee-issued documents, the intent of the hearing was to provide “an opportunity for members to hear a broad range of international perspectives on U.S. LNG exports, the current policies governing these exports, and the potential impacts increasing exports would have on global markets.” A full list of participants and additional information is available at http://energycommerce.house.gov/event/geopolitical-implications-and-mutual-benefits-us-lng-exports.

  • Senate Passes International Agreement on Natural Gas Development. On October 12, the Senate passed by unanimous consent S. 812, a bill to enact the terms of an agreement between the US and Mexico concerning the development of oil and gas reservoirs that cross the international maritime boundary between the two countries in the Gulf of Mexico. If enacted, the agreement will govern how to explore, develop, and share revenue from all oil and gas resources along the Gulf of Mexico’s maritime border. In June, the House passed a similar bill, H.R. 1613, the “Outer Continental Shelf Transboundary Hydrocarbon Agreements Authorization Act.” The two chambers will now work to resolve the differences between the two bills. Additional information on the agreement is available at http://www.state.gov/r/pa/prs/ps/2013/05/208650.htm.

  • Booker Elected to Replace Late Senator Lautenberg. On October 16, Newark, NJ Mayor Cory Booker won a special election to serve the remaining 15 months of the late Senator Frank Lautenberg’s (D-NJ) term. Senator-elect Booker will restore the Senate to a ratio of 55 Democrats and 45 Republicans.

  • Shutdown Ends. On October 16, the Congress approved and the President signed into law H.R. 2775 (Public Law No: 113-4), continuing appropriations for fiscal year 2014. H.R. 2775 funds the federal government (generally at sequester levels) until January 15, 2014, and extends the debt ceiling to the point that is expected to be reached on February 7, 2014. Additional information is available at http://www.vnf.com/1082.

JUDICIAL BRANCH

  • Supreme Court Will Take Up Issue of Clean Air Act Permitting for GHGs. On October 15, the U.S. Supreme Court agreed to hear challenges to a determination by the EPA that, under the Clean Air Act, increases in GHG emissions from new and modified major stationary sources trigger a requirement for those sources to obtain Prevention of Significant Deterioration (PSD) permits. In 2012, the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) upheld this EPA determination in Coalition for Responsible Regulation v. EPA, 684 F.3d 102. Notably, the Supreme Court denied petitions for certiorari challenging other EPA actions upheld by the D.C. Circuit, including the Agency’s determination that GHGs endanger public health and welfare (the Endangerment Finding), and its promulgation of GHG emission standards for new light duty motor vehicles (the Tailpipe Rule). Finally, the Court did not take up the D.C. Circuit holding that none of the challengers had standing to challenge an EPA rule that restricted the application of PSD and Title V permitting only to those facilities with emissions of GHGs over certain numerical thresholds (the Tailoring Rule). For more information, see our issue alert at http://www.vnf.com/1078.

  • Environmentalists Sue EPA Over Ocean Acidification. On October 16, the Center for Biological Diversity (CBD) sued the EPA after the agency approved a list of impaired waters in Washington and Oregon that did not include portions of ocean waters that have become polluted because of acidification, Ctr. for Biological Diversity v. EPA, No. 2:13-cv-01866. Under the Clean Water Act (CWA), states are required to list which “waters” within their jurisdiction are impaired with pollutants. Specifically, section 303(d) of the CWA, requires the EPA to disapprove lists of impaired waters if they do not identify all waters that are threatened by a pollutant that has been shown to degrade the water quality. CBD is asking that the court force EPA to disapprove Oregon’s and Washington’s lists of impaired waters because the lists do not include ocean waters impaired by acidification. Ocean acidification results when the ocean absorbs carbon dioxide emissions from the atmosphere, which then causes the ocean’s pH levels to drop, making the water more acidic.

  • Ninth Circuit Reverses Decision in Oil Refineries Case. On October 17, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) found that environmental groups in the state of Washington do not have standing to file a Clean Air Act citizen suit against state agencies for failing to regulate GHG emissions from refineries, Washington Environmental Council v. Bellon, No. 11-cv-00417. In order to have standing to sue, the environmental groups had to prove that injuries were directly caused by GHG emissions from the oil refineries. In overruling a lower court decision in favor of the environmental groups, the Ninth Circuit found that the “chain of causality between Defendants’ alleged misconduct and their [environmental groups] injuries is too attenuated.”

  • Petroleum Groups Petition EPA to Reconsider Renewable Fuel Mandate and Provide EPA with Notice of Intent to Sue. On October 11, the American Petroleum Institute (API) submitted a petition to the EPA asking the agency to reconsider its decision to require petroleum refiners and importers to blend a minimum of 16.55 billion gallons of renewable fuels into the nation’s fuel supply in 2013. Under the Energy Independence and Security Act of 2007, EPA is required to finalize renewable fuel requirements by November 30 of each year, and is required to rely on data from the Energy Information Administration (EIA) to set the requirements. EPA did not produce the 2013 requirements until August 2013, and because of this delay, had asked EIA to provide the agency with updated renewable fuels data before setting the 2013 requirements. API’s petition argues that EPA had no authority to use updated EIA data and should have relied on EIA’s previous data, which API argues would have justified a smaller volume requirement. Additionally, on October 17, API sent a Notice of Intent to sue the agency if EPA misses the November 30 deadline for setting the 2014 renewable fuel requirements.

  • Industry Groups Cannot Intervene in Ozone NAAQS Rulemaking Case. On October 9, a federal court in California denied a motion brought by several industry groups to intervene in a lawsuit to compel EPA to comply with a deadline under the Clean Air Act for reviewing a National Ambient Air Quality Standard for ozone, Sierra Club v. EPA, No. 13-cv-2809. The court found that the prospective intervenors had “no significant protectable interest” in the action because the Sierra Club lawsuit only addresses an alleged obligation to review the NAAQS by a particular deadline but does not reach the issue of whether and how EPA would revise it. As the court noted, “[t]he content of EPA’s standards is not at issue in this litigation, only its timely compliance with the review deadlines established in the Act." 

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