House hearing on energy exports includes discussion of climate impacts . . . Environmental groups and State of New York will not sue EPA just yet for failing to finalize a proposal setting GHG emission standards for new power plants . . . U.S. and China announces agreement to reduce HFCs . . . White House issues Executive Order promoting inter-agency coordination on transmission corridors for renewable energy . . . Senate passes farm bill with significant energy provisions . . . 7th Circuit upholds MISO plan allocating transmission costs for renewables – but also rules unconstitutional a Michigan RPS provision denying credits for of out-of-state wind energy.

• U.S., China Agree to Work Together to Reduce HFCs. On June 8, the Obama Administration announced a new agreement with China to collaborate on reducing the production and use of a class of greenhouse gases (GHGs) known as hydrofluorocarbons (HFCs). The gases, which are widely used in refrigerators, air conditioners, and industrial applications, are much more potent GHGs than carbon dioxide due to their greater ability to retain heat. HFCs first became widespread as alternatives to ozone-depleting substances known chlorofluorocarbons (CFCs), which are being phased out under an international agreement known as the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). HFC production and use is expected to grow significantly in future years, and these chemicals could therefore play an important role in accelerating future climate change. The new agreement between the U.S. and China calls for the countries to work together through the mechanisms of the Montreal Protocol to reduce the production and use of HFCs in both developed and developing countries. For more information, see this White House Press Release: http://www.whitehouse.gov/the-press-office/2013/06/08/united-states-and-china-agree-work-together-phase-down-hfcs.
  
  
• White House Memorandum Calls for Inter-Agency Coordination on Transmission Project Approval, Development of Energy Transmission Corridors. On June 7, President Obama signed a presidential memorandum that directs federal agencies to create an “integrated, interagency pre-application process” for “significant” electric transmission projects on federal lands. The memorandum also directs the federal government to develop and promote the use of “energy corridors” over federal lands in order to expedite the permitting of transmission projects. The measures, which build on the 2012 President’s Executive Order 13604, are expected to expedite the permitting of new transmission lines that cross federal lands, and could help to better connect remote renewable energy resources with demand. The Presidential Memorandum is available at: http://www.whitehouse.gov/the-press-office/2013/06/07/presidential-memorandum-transforming-our-nations-electric-grid-through-i. For more information on Executive Order 13604, see our June 18, 2012 Update.
  
  
• EPA Withdraws 2012 PM_2.5 Guidance Following D.C. Circuit Decision. On June 6, EPA withdrew recently-issued guidance for how states should implement the National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM_2.5). EPA explained that it had issued the guidance for implementation of the 2006 NAAQS standard for PM_2.5 under an interpretation of the Clean Air Act that the D.C. Circuit rejected in a recent case involving EPA’s implementation guidance for the 1997 PM_2.5 Standards (see Natural Resource Defense Council v. EPA, No. 08-1250 (D.C. Cir. Jan. 4, 2013)). EPA, which recently revised the NAAQS for PM2.5, indicated that it will follow the D.C. Circuit’s recent interpretation when it issues guidance for implementation of the new NAAQS. EPA’s notice of withdrawal is available here: http://www.epa.gov/ttn/naaqs/pm/pdfs/implementationguidancewithdrawmemo.pdf. For more information on the D.C. Circuit decision, see our January 16, 2103 Update: http://www.vnf.com/news-alerts-791.html.
  
  
• Additional Developments:
• June 5: The U.S. Department of Agriculture (USDA) announced it would create “regional climate hubs” to provide technical assistance to farmers in addressing the impacts of storms, droughts, invasive species, and forest fires that could be exacerbated by climate change. USDA also announced the availability of an online tool for farmers to calculate the GHG impacts of altering their farming practices. See http://www.usda.gov/wps/portal/usda/usdahome?contentid=2013/06/0114.xml.
  
  
• June 7: Canada announced that it would harmonize its vehicle emission rules with EPA’s proposed Tier 3 Emissions Standards for new vehicles. The proposed rules would tighten emissions standards and place new limits on the sulfur content of gasoline. See http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=39A1F461-3AB8-451D-BE25-8915C241C870.
  
  
• June 10: The Department of Interior Bureau of Land Management has extended the comment period for proposed rules on hydraulic fracturing on public lands. The new deadline for comments is August 23, 2013. See https://www.federalregister.gov/articles/2013/06/10/2013-13708/oil-and-gas-hydraulic-fracturing-on-federal-and-indian-lands.
  
  
• June 10: President Obama has nominated Avi Garbow to serve as General Counsel for EPA. Garbow, who currently serves as the agency’s Deputy General Counsel, will need to be confirmed by the Senate before he can assume the new position. The President’s nomination of Gina McCarthy for Administrator of EPA is still pending in the Senate. The President has not announced who would replace McCarthy (who currently oversees EPA’s air and radiation programs as the Assistant Administrator for EPA’s Office of Air and Radiation) if she is confirmed.

• House Subcommittee Holds Mark-Up. On June 5, the House Energy and Commerce Subcommittee on Environment and the Economy held a mark-up of several bills, including H.R. 2218, the “Coal Residuals Reuse and Management Act of 2013.” Sponsored by David McKinley (R-WV), H.R. 2218 would give states primary authority to regulate coal ash residuals (CCRs) from power plants. The bill, which passed the House by a vote of 267-144 during the last Congress, was approved by voice vote in the Subcommittee. The full Committee is expected to vote on the bill this week. A list of bills considered by the Committee along with supporting information on each bill are available at http://energycommerce.house.gov/markup/environment-and-economy-subcommittee-markup-%E2%80%9Ccoal-residuals-reuse-and-management-act-2013%E2%80%9D-.
  
  
• House Committee Holds Hearing on RFS. On June 5, the House Oversight and Government Reform Subcommittee on Energy Policy, Healthcare and Entitlements held a hearing entitled “Up Against the Blend Wall: Examining EPA’s Role in the Renewable Fuel Standard.” According to Subcommittee Chairman James Lankford (R-OK), the intention of the hearing was to “learn what EPA can do, has done, or has not done to ease the [economic] burden on consumers” resulting from the Renewable Fuel Standard (RFS). Lankford cited a study done by economic consulting firm NERA, which found that mandating E15 could increase the cost of gasoline by 30 percent by 2015. Witnesses included Christopher Grundler, Director of EPA’s Office of Transportation & Air Quality; and Jack Gerard, President and CEO American Petroleum Institute. The hearing did not include any witnesses supportive of the RFS. A full list of witnesses and accompanying testimony are available at http://oversight.house.gov/hearing/up-against-the-blend-wall-examing-epas-role-in-the-renewable-fuel-standard/.
  
  
• Senate Passes Farm Bill. On June 10, the Senate passed S. 954, the “Agriculture Reform, Food and Jobs Act of 2013,” by a vote of 66 to 27. As passed by the Senate, S. 954 provides funding for the Biomass Crop Assistance Program (BCAP), the Biorefinery Assistance Program (BAP) and the Biomass Research and Development Initiative. The House is expected to consider a different version of a Farm Bill in the coming weeks, kicking off negotiations between the two chambers. Additional information is available at http://www.ag.senate.gov/newsroom/press/release/senate-approves-farm-bill.
  
  
• House Committee Passes Energy Bill. On June 11, the House Natural Resources Subcommittee on Energy and Mineral Resources held a hearing on H.R. 2231, the “Offshore Energy and Jobs Act.” On June 12, the full Committee voted 23 to 18 to pass H.R. 2231. Committee members offered 7 amendments, but only an “en bloc” amendment making technical corrections was accepted. As passed by the Committee, the bill would call for a new 5-year planning process for new leases in offshore areas where oil and gas exploration is currently banned. Among other things, the draft would establish a 37.5 percent revenue sharing program with states that produce oil and gas off of their shores. Information on the hearing is available at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=335881 and on the mark-up at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=337176.
  
  
• House Committee Holds Hearing on Ozone Air Quality Standard. On June 12, the House Science Subcommittee on Environment held a hearing entitled “Background Check: Achievability of New Ozone Standards.” According to committee issued documents, the purpose of the hearing was to “highlight the science behind Environmental Protection Agency’s (EPA) forthcoming National Ambient Air Quality Standards (NAAQS) for ground level ozone (“ozone NAAQS”) including EPA’s estimation of background (naturally occurring/ uncontrollable) ozone and its implications on, the achievability of, and compliance with, the NAAQS.” During his opening statement, Subcommittee Chairman Chris Stewart (R-UT) expressed concern with any attempt by EPA to lower the ozone standard below 70 ppb. A webcast of the hearing, witness list, background materials issued by the Committee, and written testimony are available at http://science.house.gov/hearing/subcommittee-environment-background-check-achievability-new-ozone-standards.
  
  
• Energy Secretary Testifies in House Subcommittee. On June 13, the House Energy and Commerce Subcommittee on Energy and Power held a hearing entitled “The Fiscal Year 2014 U.S. Department of Energy Budget.” According to Committee documents, the hearing was intended to review the Department of Energy’s funding priorities, specifically: major budget changes; planned rulemakings; priority science and research; loans and grants; management and security; and enforcement activities. The sole witness was Energy Secretary Ernest J. Moniz, who covered topics ranging from energy exports to cyber security. A webcast of the hearing, background materials issued by the Committee and written testimony are available at http://energycommerce.house.gov/hearing/fiscal-year-2014-us-department-energy-budget.
  
  
• House Subcommittee Holds Hearing on Toxics Control Act. On June 13, the House Energy and Commerce Subcommittee on Environment and the Economy held a hearing entitled “Title I of the Toxic Substances Control Act: Understanding Its History and Reviewing Its Impact.” The intention of this hearing was to “enhance the Subcommittee’s understanding of current law and its operation.” While no legislation has been introduced in the House, much of discussion focused on S 1009, the “Chemical Safety Improvement Act” sponsored by the late Senator Frank Lautenberg (D-NJ). S. 1009, as a result of recent negotiations in the Senate, has bipartisan support and 20 cosponsors, including Senate Environment and Public Works Committee Ranking Member David Vitter (R-LA). A full list of witnesses, webcast and background materials are available at http://energycommerce.house.gov/hearing/title-i-toxic-substance-control-act-understanding-its-history-and-reviewing-its-impact.
  
  
• House Committee Releases Draft Spending Bill, Holds Mark-Up. On June 17, the House Appropriations Committee released the initial draft of the fiscal year 2014 Energy and Water Development, and Related Agencies Appropriations bill. As currently drafted, the bill would provide $30.4 billion, a cut of $2.9 billion below the fiscal year 2013 enacted level and a reduction of $4.1 billion compared to the President’s request. This level is approximately $700 million below the level caused by sequestration for these programs. Specifically, the draft cuts Energy Programs by $1.4 billion, Army Corps of Engineers by $104 million, and Bureau of Reclamation by $104 million. On June 18, the House Appropriations Subcommittee on Energy and Water held a mark-up of the draft bill. No amendments were offered and the Subcommittee passed the bill by a voice vote. According to Subcommittee Members, there will be several amendments offered when the full committee takes up the bill in the coming weeks. Additional information, including a summary of the draft and audio recording of the mark-up, is available at http://appropriations.house.gov/news/documentsingle.aspx?DocumentID=339186.
  
  
• House Subcommittee Holds Hearing on Energy Exports. On June 18, the House Energy and Commerce Subcommittee on Energy and Power held a hearing entitled “U.S. Energy Abundance: Regulatory, Market, and Legal Barriers to Export.” Witnesses included Christopher Smith, Principal Deputy Assistant Secretary and Acting Assistant Secretary for Fossil Energy; Jennifer Moyer, Acting Chief for the Regulatory Program at the U.S. Army Corps of Engineers (Corps); and KC Golden, Policy Director for Climate Solutions. Committee members and witnesses discussed the existing infrastructure available to export LNG, the permitting processes currently in place, and concerns about the effects of various national energy policies on climate change. The most exciting debate, however, surrounded the current review of the Corps regarding three coal export terminals proposed for Washington State. When asked about the Corps’ ability to study the impact these terminals would have on climate change, Corps Acting Regulatory Chief Jennifer Moyer said “many of the activities of concern to the public, such as rail traffic, coal mining, shipping coal outside of U.S. territory, and the ultimate burning of coal overseas, are outside the Corps' control and responsibility for the permit applications related to the proposed projects.” A list of witnesses, webcast and written testimony are available at http://energycommerce.house.gov/hearing/us-energy-abundance-regulatory-market-and-legal-barriers-export.

• New York State and Environmental Groups Will Delay Filing Suit Against EPA to Force a CO₂ Standard for New Power Plants. On June 17, New York state officials and three environmental groups announced that they would not immediately file suit against the EPA for failing to finalize a carbon dioxide (CO₂) new source performance standard (NSPS) for new fossil fuel-fired power plants. Under the CAA, the EPA was required to finalize the CO₂ NSPS within one year after the agency released the proposed rule, which occurred on April 13, 2012. After EPA missed the deadline, New York state and the environmental groups sent individual notices of intent (NOI) to sue EPA. See a VNF Update on the NOI here: http://www.vnf.com/1214. However, these groups have decided to delay filing suit against the EPA amid public rumors that President Obama plans to announce major federal action to combat climate change sometime in July.
  
  
• Seventh Circuit Rejects States’ Claim Challenging Multi-Value Projects. On June 7, the U.S. Court of Appeals for the Seventh Circuit (Seventh Circuit) rejected claims brought by Michigan and Illinois against the Midwest Independent System Operator (MISO) tariff structure, Illinois Commerce Commission v. FERC, No. 11-3421. The tariff structure was approved by the Federal Energy Regulatory Commission (FERC) in 2010 and was designed by MISO to allocate costs to 12 Midwestern states to help pay for high-voltage transmission lines—otherwise known as “multi-value projects” (MVPs). MVPs are designed to help states meet their renewable portfolio standards by moving wind-powered electricity generated in rural areas to more populated areas near the Great Lakes. Power companies and utility regulators in Michigan and Illinois challenged the tariff that MISO placed on customers’ electric bills to pay for the MVPs. The Seventh Circuit found that FERC did not exceed its authority by approving the MISO tariff. The court also rejected Illinois’ argument that MISO was forcing all customers to pay for projects that would only benefit a few members. Additionally, the court found that Michigan’s law prohibiting local utilities from complying with the state’s renewable portfolio standard requirements by using out-of-state renewable sources violates the Commerce Clause of the U.S. Constitution. Read a VNF Alert on the MISO challenge here: http://www.vnf.com/1103.
  
  
• Multiple Challenges Over Keystone Pipeline. On June 11, a Nebraska state court rejected the state’s third attempt to dismiss a challenge brought by landowners and environmentalists over the potential location of the Keystone XL Pipeline (Pipeline), Thompson v. Heineman, Neb. Dist. Ct., No. CI 12-02060. The groups challenging the Pipeline argue that a bill (L.V. 1161) adopted by the Nebraska legislature is unconstitutional because it gave the governor the authority to approve or deny proposed routes for the Pipeline, rather than allow the state’s independent Public Services Commission to make the siting determination. The court rejected the state’s argument that there was no justiciable controversy left after Gov. Dave Heineman approved a route for the Pipeline in January. Additionally on June 10, the Sierra Club filed suit against the U.S. State Department, alleging that the agency is withholding key documents related to the Pipeline in violation of the Freedom of Information Act (FOIA) and the Administrative Procedure Act (APA), Sierra Club v. State Department, N.D. Calif., No. C13-02656. The Sierra Club alleged that the consulting firm the State Department hired to complete a supplemental environmental impact statement has financial ties to TransCanada— the company developing the Pipeline. The lawsuit contends that the State Department is violating FOIA and APA by not releasing documents related to the agency’s selection of the consulting firm and the agency’s overall review process.
  
  
• Mingo Logan Coal Company Petitions D.C. Circuit for Rehearing En Banc. On June 7, a West Virginia coal company petitioned the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) to rehear its case after the court found that EPA had authority to retroactively veto part of the company’s dredge-and-fill permit. For more information about the case, Mingo Logan Co. v. EPA, No. 12-5150, see a VNF Alert here: http://www.vnf.com/1214.
  
  
• D.C. Circuit Denies Request for Rehearing Effluent Guidelines Case. On June 10, the D.C. Circuit denied the Utility Water Act Group’s (UWAG) request for an en banc rehearing after the court found the group did not have standing to challenge a consent decree entered into by the EPA and environmentalists, Defenders of Wildlife v. EPA, No. 12-5122. The consent decree set a rulemaking timeline for the agency’s determination of whether and how to promulgate revised effluent limitation guidelines for power plants. For more information on the effluent guideline challenge, see the same VNF Update here: http://www.vnf.com/1214.
  
  
• Environmentalists Test Novel Clean Water Act Lawsuit. Environmental groups have sued coal-mining firms and railroads in the U.S. District Court for the Western District of Washington, alleging that railroad cars carrying coal and other “pollutants” should be considered “point sources” under the Clean Water Act (CWA), Sierra Club, et al. v. Burlington Northern Santa Fe Railway Co., No. 2:13-cv-00967. Under the CWA, any discharge of pollutants from a “point source” into waters of the United States must comply with a National Pollutant Discharge Elimination System (NPDES) permit. If the plaintiffs are successful, railways would need to obtain a NPDES permit for each rail car carrying coal, instead of one permit for the entire train. The environmentalist petitioners claim that coal was found in almost all the samples tested from water bodies located near railroad crossing, and that the railroads themselves have estimated that a single train can lose as much as 60,000 pounds of coal during a trip. Industry and the railroads believe the lawsuit is yet another attempt by environmentalists to block plans to develop coal export terminals in the Pacific Northwest.   

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