Climate, Energy, & Air Update - Sep. 3 - 18, 2013

September 18, 2013

Standing by for EPA’s re-proposed GHG standards for new power plants, which are expected to include a CCS-based standard for coal-fired power plants . . . Ron Binz, President Obama’s nomination to FERC, had a heated confirmation hearing in the Senate . . . EPA and the Army Corps of Engineers have sent OMB a proposed rule designating the “waters of the United States” subject to their permitting authorities . . . The Shaheen-Portman bill is still awaiting action in the Senate . . . The House wrestles with appropriations bills . . . EPA files its brief in the Supreme Court proceeding on the Cross-State Air Pollution Rule.

EXECUTIVE BRANCH
  • EPA Expected to Set CCS-Based GHG Standard for Coal Plants. President Obama’s June 2013 climate policy address gave the Environmental Protection Agency (EPA) a September 20 deadline to re-propose its greenhouse gas (GHG) New Source Performance Standards for new fossil fuel-fired power plants, which will replace the agency’s original April 2012 proposal. EPA is expected to propose separate standards for new coal- and new natural gas-fired power plants. In addition, according to several reports, the standard for coal-fired power plants will be based on a GHG limit only achievable through application of carbon capture and sequestration (CCS) technology. EPA will be acting under its authority under § 111 of the Clean Air Act, which requires any standard of performance to be based on an emission limitation achievable using the “best system of emission reduction” that EPA determines has been “adequately demonstrated” after “taking into account” cost and energy requirements. For a discussion of issues and options with EPA’s development of GHG emission standards for power plants, see the VNF white paper here: http://www.vnf.com/1102.

  • EPA & Army Corps Submit Proposed Joint Rule Clarifying Clean Water Act Jurisdiction to OMB and Release a Draft Study Supporting the Proposed Rule. On September 17, EPA and the U.S. Army Corps of Engineers (Army Corps) sent the White House’s Office of Management & Budget (OMB) a proposed joint rule that purports to clarify which “waters of the United States” are jurisdictional under the Clean Water Act. The Clean Water Act prohibits the discharge of any pollutant into “navigable waters” except as authorized by the statute and gives both the EPA and Army Corps authority to issue permits allowing for the discharge of pollutants and dredge and fill material into U.S. waters. However, the statute only gives permitting authority to the agencies if the waters are considered “waters of the United States.” EPA and Army Corps announced in 2012 their intention to undertake a rulemaking to clarify “considerable debate and uncertainty” stemming from two recent U.S. Supreme Court decisions on what constitutes “waters of the United States” under the statute. It is speculated that the joint proposed rule will expand EPA’s and Army Corps’ Clean Water Act jurisdiction, to include ephemeral streams and wetlands. Additionally on September 17, the agencies released a draft scientific study, “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence” that according to the EPA “will provide the scientific basis needed to clarify CWA jurisdiction, including a description of the factors that influence connectivity and the mechanisms by which connected waters affect downstream waters.” The study is available here: http://www.eenews.net/assets/2013/09/17/document_pm_01.pdf. The EPA is accepting comments on the draft study until October 31, 2013. The joint proposed rule is under review at OMB.

  • Obama Nominates Appointees for Senior DOE Positions. President Obama has nominated two individuals to fill Department of Energy (DOE) positions for which they have been serving on an “acting” basis. The President is nominating Bradley Crowell to be Assistant Secretary for Congressional and Intergovernmental Affairs. The President is nominating Christopher Smith to be Assistant Secretary for Fossil Energy.

  • EPA & Army Corps Submit Proposed Joint Rule Clarifying Clean Water Act Jurisdiction to OMB and Release a Draft Study Supporting the Proposed Rule. On September 17, EPA and the U.S. Army Corps of Engineers (Army Corps) sent the White House’s Office of Management & Budget (OMB) a proposed joint rule that purports to clarify which “waters of the United States” are jurisdictional under the Clean Water Act. The Clean Water Act prohibits the discharge of any pollutant into “navigable waters” except as authorized by the statute and gives both the EPA and Army Corps authority to issue permits allowing for the discharge of pollutants and dredge and fill material into U.S. waters. However, the statute only gives permitting authority to the agencies if the waters are considered “waters of the United States.” EPA and Army Corps announced in 2012 their intention to undertake a rulemaking to clarify “considerable debate and uncertainty” stemming from two recent U.S. Supreme Court decisions on what constitute “waters of the United States” under the statute. It is speculated that the joint proposed rule will expand EPA’s and Army Corps’ Clean Water Act jurisdiction to include streams and wetlands that are seasonal or otherwise intermittent if they are connected to downstream waters during those periods. On September 17, the agencies released a draft scientific study that they have said will form the scientific basis of their proposed rule: “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence.” The study is available here. The EPA is accepting comments on the draft study until October 31, 2013. The joint proposed rule is under review at OMB.

  • EPA Inspector General: Agency Should Improve Monitoring in the Renewable Fuel Standard Program. On September 5, the EPA Office of Inspector General issued a report entitled “The EPA Should Improve Monitoring of Controls in the Renewable Fuel Standard Program.” The Renewable Fuel Standard (RFS) program is a Clean Air Act program that requires transportation fuels to include increasing volumes of various kinds of biofuels. Under the RFS, fuel providers demonstrate compliance by holding Renewable Identification Numbers (RINs), which correspond to gallons of biofuels that have been produced and blended into fuel sold for transportation purposes. In 2011 and 2012, the RFS program was plagued by fraudulently-generated RINs. The Inspector General’s report includes several recommendations for EPA to improve its monitoring of RIN generation activities, including a recommendation that EPA require electronic submission and tracking of third-party reviews and attest engagements. The agency has endorsed the findings of the report. The report is available here: http://www.epa.gov/oig/reports/2013/20130905-13-P-0373.pdf.

  • National Lab Study Finds Wind Farms Do Not Depress Real Estate Prices. A study by DOE’s Lawrence Berkeley National Laboratory waded into the controversial issue of wind farms and real estate prices, finding that wind projects have no measurable impact on real estate values in neighboring communities. The study evaluated more than 50,000 home sales in nine states in which the homes were located within 10 miles of a wind farm. The study, which built on a 2009 study, found “no statistical evidence” that the proximity of a wind turbine depressed real estate prices. The study, “A Spatial Hedonic Analysis of the Effects of Wind Energy Facilities on Surrounding Property Values in the United States,” is available at: http://emp.lbl.gov/sites/all/files/lbnl-6362e.pdf.

CONGRESS
  • Senate Continues to Debate Shaheen-Portman Efficiency Bill. The Senate continues debate on S. 1392, the “Energy Savings and Industrial Competitiveness Act,” which was championed by Senator Shaheen and Senator Rob Portman (R-OH). As currently drafted, S. 1392 would create several low-cost tools to reduce barriers for private sector energy users and drive adoption of off-the-shelf efficiency technologies. Having started debate briefly before the Senate recessed for the August Work Period on August 1, the chamber resumed consideration of the bill after two unexpected delays: a debate on Syria and later a lockdown of the Senate due to the shootings at the Navy Yard. As of press time, Senators have offered more than 60 amendments. Additional information on the legislation is available at http://www.shaheen.senate.gov/priorities/issues/energy/.

  • Senate Committee Holds Hearing on FERC Nominee. On September 17, the Senate Energy and Natural Resources Committee held a hearing to consider three nominees. Only one was met with controversy: Ron Binz, the nominee to replace Jon Wellinghoff as Chairman of the Federal Energy Regulatory Commission. Various conservative organizations sent letters to the Committee opposing Binz’s nomination, stating that his political leanings would cause electricity prices to skyrocket. During her opening statement, Senate Energy and Natural Resources Ranking Member Lisa Murkowski (R-AK) expressed concerns with Binz’s record and indicated she would oppose his nomination. A full list of witnesses, webcast and testimony are available at http://www.energy.senate.gov/public/index.cfm/hearings-and-business-meetings?ID=28204b8c-7aed-412c-8529-3ea2eee55d83 and comments by Ranking Member Murkowski (R-AK) are available at http://www.energy.senate.gov/public/index.cfm/republican-news?ID=dab97fc4-2e1a-4e92-a640-9c1eb226d9da.

  • House Committee Leaders Introduce New WRDA Legislation. On September 11, the Democratic and Republican leadership of the House Transportation & Infrastructure Committee held a press conference to announce the introduction of H.R. 3080, the “Water Resources Reform and Development Act of 2013.” As introduced, H.R. 3080 would reauthorize the Water Resources Development Act. Chairman Bill Shuster (R-PA), Ranking Member Nick Rahall, II (D-WV), Subcommittee on Water Resources and Environment Chairman Bob Gibbs (R-OH), and Subcommittee on Water Resources and Environment Ranking Member Tim Bishop (D-NY) spoke about provisions in the bill that are intended to streamline the permitting process and explained that there are no earmarks included. Additionally, the foursome spoke at length about the streamlining efforts dubbed 3x3x3. In an attempt to reform the study process in the permitting system, H.R. 3080 would mandate that studies may only take three years, cost no more than $3 million dollars and work through no more than three levels within the Corps (District, Regional and HQ). The Committee intends to mark-up the measure on September 19. A summary of the bill and full text are available at http://transportation.house.gov/WRRDA.

  • House Committee Holds Hearing on MSA Reauthorization. On September 11, the House Natural Resources Committee held a hearing entitled "Reauthorization of the Magnuson-Stevens Fishery Conservation and Management Act (MSA)." The hearing comes as the Act is set to expire at the end of this month and a National Academies of Sciences (NAS) report entitled “Evaluating the Effectiveness of Fish Stock Rebuilding Plans in the United States” was released. Witnesses testified that current law needs more flexibility. Specifically, Executive Director of the West Coast Seafood Processors Association Rod Moore said that “it is essential that the MSA provide our fisheries with the maximum amount of flexibility consistent with sound science and reasonably prudent conservation.” Moore called for flexibility in annual catch limits so that there could be a “multiple year period in which an overall limit would be set but annual harvest could fluctuate based on fishing conditions, weather, water temperature, and any of the multitudes of other variables that affect harvest.” The full list of witnesses and webcast are available at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=347456. The NAS report is available at http://www.nap.edu/catalog.php?record_id=18488.

  • Committee Leaders Send Letter to Moniz on Wind Integration. On September 10, House Natural Resources Committee Chairman Doc Hastings (R-WA) and Ranking Member Peter DeFazio (D-OR) penned a letter to Energy Secretary Ernest Moniz expressing concerns with the possible implementation of an Energy Imbalance Market (EIM) in the Pacific Northwest. The letter urges Secretary Moniz to gather “regional electric customer input before implementing new proposals that could force additional operating costs on the Bonneville Power Administration . . . and the Western Area Power Administration.” The letter is available at http://naturalresources.house.gov/uploadedfiles/09_10_13_hastings_defazio_ltr_to_sec_moniz.pdf.

  • House Subcommittee Holds Hearing on Nuclear Waste. On September 10, the House Energy and Commerce Subcommittee on Environment and the Economy held a hearing entitled “Implementing the Nuclear Waste Policy Act – Next Steps.” The hearing focused on actions by the Nuclear Regulatory Commission (NRC) to implement the August 13, 2013 order from the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) directing the NRC to resume its review of the DOE license application to construct a nuclear waste repository at Yucca Mountain. The hearing also focused on what DOE is going to do to assist NRC in complying with the order. The D.C. Circuit previously ruled that the NRC violated the Nuclear Waste Policy Act by halting consideration of the DOE’s license application for Yucca. The Committee heard from two witnesses: U.S. Nuclear Regulatory Commission Chairman Allison M. Macfarlane; and DOE Assistant Secretary for Nuclear Energy Peter B. Lyons. The witnesses testified that the NRC is considering using some of the money to complete the Safety Evaluation Report required by the court order, but there was heated debate about the availability of funds to complete the report. A webcast and committee issued documents are available at http://energycommerce.house.gov/hearing/implementing-nuclear-waste-policy-act-%E2%80%93-next-steps.

  • Update on Appropriations. On September 10, House Appropriations Committee Chairman Hal Rodgers (R-KY) introduced a Continuing Resolution (CR) to maintain current funding past September 30 through December 15 to avoid a government shutdown. There were no controversial riders in this version. The House was set to vote on this measure on September 11. However, the House Republican Leadership pulled the bill from the schedule after it became clear that there were not enough votes for passage. The House is rumored to be voting on a new version this Friday, but House Majority Leader Eric Cantor (R-VA) did alert Members that “pending ongoing discussions on the continuing resolution, the House may need to be in session during the week of September 23rd and possibly into the weekend.” The Senate has not taken action on a CR to date. A summary and text of the CR proposed by Chairman Rodgers is available at http://appropriations.house.gov/news/documentsingle.aspx?DocumentID=348977.

JUDICIAL BRANCH
  • EPA Petitions Seventh Circuit to Rehear Prevention of Significant Deterioration Enforcement Case. On September 3, the EPA filed a petition for rehearing with the U.S. Court of Appeals for the Seventh Circuit (Seventh Circuit) asking the court to reverse its July 8 ruling in the case United States v. Midwest Generation LLC, No. 12-1026 and 12-10517. The Midwest Generation case involved the appeal of an enforcement action brought by the EPA against five Illinois power plants for allegedly violating the Clean Air Act’s Prevention of Significant Deterioration (PSD) program by modifying power plants without first obtaining the necessary permits and authorizations. The Seventh Circuit struck down the EPA’s enforcement action after finding that it was barred by a five-year statute of limitations (SOL). For more information, please see a VNF CEA Update here: http://www.vnf.com/news-policyupdates-861.html. EPA’s petition for rehearing argued that “the panel’s decision very oddly turns the Clean Air Act’s Prevention of Significant Deterioration program… into a program requiring construction permits and the construction but not operation of pollution control equipment.” EPA has lost similar arguments before the Eighth, Eleventh, and most recently the Third Circuit. Only the Sixth Circuit has upheld EPA’s position that the PSD permitting requirements are ongoing obligations, not subject to a federal SOL.

  • Fourth Circuit Finds Energy Company was Authorized to Dispose of Drilling Waste on Private Land. The U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) recently upheld a district court’s finding that Chesapeake Appalachia, L.L.C. did not commit a common law trespass when it disposed of natural gas drilling waste on a landowners’ property because the company had the proper permits, Whiteman v. Chesapeake Appalachia, L.L.C., No. 12-1790. The Fourth Circuit found that since Chesapeake owned the mineral rights to the landowners’ property and was properly licensed to conduct natural gas drilling operations, the company was likewise authorized to dispose of drilling waste onto the private land, even though the company did not have rights to the above-surface land. The court found it persuasive that the landowners failed to present sufficient evidence to show that Chesapeake’s drill waste pits imposed a “substantial burden” on the surface land.

  • Ninth Circuit Remands Lower Court Decision that Found California’s Low Carbon Fuel Standard Unconstitutional. The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) reversed a district court’s series of summary judgment decisions that held that California’s Low Carbon Fuel Standard (LCFS) program violates the dormant Commerce Clause, and remanded the case for the district court to evaluate the program under a different test. Rocky Mountain Farmers Union v. Goldstene, No. 12-15131. The LCFS program requires California fuel providers to reduce the “carbon intensity” of fuel sold in the state, and rates various fuels based on their “life-cycle” GHG emissions. Out-of-state ethanol producers challenged the program after its enactment, arguing that the regulations discriminate against interstate commerce by assigning their fuel a higher carbon-intensity value than in-state fuel on account of the higher emissions associated with the production and importation of out-of-state ethanol. Out-of-state crude oil producers also sued the state for discriminatory treatment under the program. The District Court for the Eastern District of California granted motions for summary judgment on claims that the LCFS violates the dormant Commerce Clause with respect to ethanol because it “facially discriminates” against out-of-state producers, and also because it constitutes “extraterritorial regulation.” The district court also issued a preliminary injunction. See the VNF alert here. In its September 18 opinion, the Ninth Circuit reversed and remanding, holding that the LCFS does not facially discriminate against out-of-state ethanol, nor does it violate the prohibition on extraterritorial regulation. The court vacated the preliminary injunction and remanded to the lower court to consider whether the LCFS ethanol provisions “discriminate in purpose or in practical effect.” If so, the court should apply “strict scrutiny” to those provisions. If not, the court should apply what is known as the Pike balancing test, which will require the plaintiffs to show that the LCFS imposes a burden on interstate commerce that is “clearly excessive” in relation to its local benefits. The court further held that the LCFS does not discriminate against out-of-state crude oil in purpose or practical effect.

  • D.C. Circuit Grants Requests to Extend Deadline to Petition EPA’s GHG Permitting Program. On September 4, the D.C. Circuit granted a request from the State of Texas and a power industry group’ to extend the deadline to petition the court for rehearing the court’s decision denying petitions for review of EPA’s greenhouse gas (GHG) permitting program (Texas v. EPA, No. 10-1425) and petitions for view of certain EPA’s GHG regulations (Utility Air Regulatory Group v. EPA, No. 11-1037). The D.C. Circuit granted the deadline extensions until 30 days after the U.S. Supreme Court decides whether or not to hear appeals of the D.C. Circuit’s related decision in Coalition for Responsible Regulation v. EPA, No. 09-1322. The U.S. Supreme Court is expected to make a decision on the certiorari petitions during its upcoming term, which begins next month.

  • Environmental Groups Petition for Rehearing in Ozone NAAQS Case. On September 6, several states and environmental groups filed a petition with the D.C. Circuit asking the court to reverse its July 23 decision upholding the EPA’s health-based National Ambient Air Quality Standards (NAAQS) for ozone, Mississippi v. EPA, No. 08-1200. The groups petitioning have argued that a three-judge panel of the D.C. Circuit erred when it upheld the ozone NAAQS because the EPA failed to address how the standard protects public health with an adequate margin of safety and because the ruling conflicts with court precedent. To support these arguments, the environmental groups are relying on a 2009 decision by the D.C. Circuit that remanded the EPA’s fine particulate matter NAAQS after the court found that the EPA’s standard failed to sufficiently protected the public health with an adequate margin of safety.

  • EPA Files Brief with Supreme Court in Cross-State Air Case. On September 4, the EPA filed a brief with the Supreme Court in support of its position that the D.C. Circuit incorrectly invalidated the agency’s Cross-State Air Pollution Rule (CSPAR), EPA v. EME Homer City Generation, LP, No. 12-1182. CSPAR would require 28 upwind states to reduce their power plant emissions of nitrogen oxides and sulfur dioxides to help downwind states comply with NAAQS for both ozone and particulate matter. The EPA’s brief argues in part that the D.C. Circuit incorrectly found that the Clean Air Act required EPA to quantify an upwind state’s obligation to reduce emissions and allow states to develop their own state implementation plans (SIPs) before the EPA could issue a federal implementation plan. EPA’s brief states that the CAA has no such requirement and that it had given states adequate time to develop SIPs, which they had failed to develop. The brief also argues that the court erred when it considered industry groups’ legal arguments that were not properly raised during the public comment period for the CSAPR, and therefore, should not have been addressed during the proceedings. For more information on the Supreme Court’s grant of certiorari, see a VNF CEA Update here.  

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