Climate, Energy, & Air Update - May 23 - June 5, 2013

June 5, 2013

FERC Chairman Wellinghoff plans to step down . . . House Natural Resources Committee Chairman Doc Hastings (R-WA) released draft legislation promoting off-shore drilling . . . D.C. Circuit upheld EPA toxics regulation for lead smelter, rejecting industry and environmental group challenges . . . House passed a bill to resolve conflicts between DOE reliability orders to power plants and EPA regulations . . . EPA extended comment deadline for Tier III rule.

EXECUTIVE BRANCH
  • FERC Chairman Wellinghoff to Step Down. On May 24, Federal Energy Regulatory Commission Chairman Jon Wellinghoff confirmed that he would not serve an additional term when his current term expires on June 30. During his tenure as Chairman, FERC issued several rules and initiatives aimed at easing the integration of renewable energy and demand response resources into the national electric market. During his tenure, FERC also issued Order 1000, which substantially revamped the regional transmission planning and investment process. (For additional information on Order 1000, see our July 25, 2011 Alert.) Wellinghoff is expected to continue serving as a Commissioner at FERC until his replacement is nominated and confirmed by the Senate.

  • EPA Proposes Rule to Allow States More Flexibility in Implementing Ozone Standards. On May 30, EPA released a proposed rule that would give states additional flexibility to implement EPA’s Clean Air Act National Ambient Air Quality Standards (NAAQS) for ozone. Under the proposed rule, states would have the option of submitting all implementation plan requirements within 30 months after an area has been designated as being out of compliance with the NAAQS, rather than submitting each component of the plan according to different statutory deadlines. Because states’ “reasonably available control technology (RACT)” plans would ordinarily be required within 24 months of designation, the proposed rule would allow states additional time to develop this plan, as long as states submit their “reasonable further progress” plans at the same time. In addition, EPA’s proposed rule would give states additional flexibility in meeting their reasonable further progress milestones. For example, EPA’s proposal would allow states to substitute nitrogen oxides (NOx) reductions and reductions achieved by other EPA rules (e.g., EPA’s Tier III vehicle emissions rule) for reductions in volatile organic compounds (VOCs) that would otherwise be required by their implementation plans. Comments on the rule are due 60 days after publication in the Federal Register. The proposed rule is available here: http://www.epa.gov/air/ozonepollution/pdfs/Ozone%20SIP%20Req_Proposal_FRN_5-28-13%20disclaimer.pdf.

  • Interior Announces New Offshore Wind Energy Auction, Additional Renewable Energy Approvals. On June 4, the U.S. Department of Interior (DOI) announced that it would make available for offshore wind energy leasing all 164,750 acres of the recently designated “Wind Energy Area” off the coasts of Massachusetts and Rhode Island. The auction, which will take place between July 29 and July 31, will make available two separate leases encompassing the northern and southern regions of the Wind Energy Area. DOI has not yet announced when it will make available for leasing acres in a second Wind Energy Area off the coast of Virginia. In addition to the lease sale announcement, Secretary of the Interior Sally Jewel announced on June 3 that DOI had approved three new solar and geothermal energy projects on public lands in Nevada and Arizona. For more information on the offshore lease auction, visit: http://www.doi.gov/news/pressreleases/interior-announces-first-offshore-renewable-energy-lease-sale.cfm.

  • EPA Forms Work Group to Develop Water Quality Criteria for Ocean Acidification. On May 29, EPA announced that it would convene an expert work group to study the causes of ocean acidification and identify water quality criteria for ocean acidification under the Clean Water Act (CWA). The development of water quality criteria could lead to future restrictions on the addition of certain pollutants to water bodies that states determine are “impaired” based on the water quality criteria. Ocean acidification has been linked to increased concentrations of carbon dioxide in the atmosphere. EPA’s decision to convene the expert group came in response to a petition by the Center for Biological Diversity, which has sued EPA in the past to force the agency to address the impact of ocean acidification on corals and sea life through the CWA.

  • EPA Extends Comment Deadline for Tier III Vehicle Fuel and Emissions Rule. On May 29, EPA announced that it would extend the deadline for comments on its proposed “Tier III” restrictions on air emissions from vehicles and the sulfur content of gasoline. The new deadline for comments is July 1, 2013. For additional information, see our April 2, 2013 Alert: http://www.vnf.com/1109.

  • EPA Approves California Clean Air Act Waiver for Non-Road Vehicles. On May 24, EPA granted California’s request for a waiver that would allow it to impose more stringent state air emissions standards on certain non-road diesel vehicles. The vehicles, including “yard trucks” and “hostlers,” are used at a variety of facilities, including ports. California’s rules require that owners of these non-road vehicles begin phasing out older diesel engines and replacing them with newer, lower-emission models. The Clean Air Act generally preempts states from establishing emission standards for new motor vehicles, but the statute allows EPA to grant the state of California a waiver to promulgate its own standards if the state demonstrates that its standards are at least as protective as federal standards, and that the standards are necessary to meet California-specific air quality goals.
CONGRESS
  • House Votes on Reliability Bill. On May 22, the House passed H.R. 271, the “Resolving Environmental and Grid Reliability Conflicts Act of 2013,” by voice vote. H.R. 271 addresses potential conflicts between the authority of the Department of Energy to direct emergency operation of electric generating facilities to maintain the reliability of the bulk power system and the authority of EPA to enforce environmental laws.

  • Senators Introduce Bipartisan Bill to Prevent Spike in Gas Prices. On May 23, Senators Amy Klobuchar (D-MN), Al Franken (D-MN) and John Hoeven (R-ND) introduced S. 1073, the “Gas Price and Refinery Capacity Relief Act.” In order to avert potential future shortages resulting from simultaneous refinery closures, H.R. 1073 would require refineries to report their maintenance schedules to the Department of Energy. The Senators introduced this legislation in response to an increase in regional gas prices of 80 cents over the past month and 30 cents in the past week because of both unexpected and planned shutdowns at gasoline refineries. Additional information on the bill is available at http://www.klobuchar.senate.gov/newsreleases_detail.cfm?id=342893&.

  • Senate Committee Holds Confirmation Hearing. On May 23, the Senate Environment and Public Works Committee held a hearing entitled "Hearing on the Re-nomination of Allison Macfarlane to be a Member of the Nuclear Regulatory Commission.” Macfarlane was appointed to be the Chair of the NRC after Gregory Jaczko resigned from the post in May, 2012. The nomination hearing is the first step in the process to confirm Macfarlane to a full 5-year term. Both Democratic and Republican members of the Committee have stated that they expect her nomination to move forward with little opposition. A webcast of the hearing and opening statements are available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=b3b96468-c536-70d1-2b46-f5ad70060002.

  • House Subcommittee Holds Hearing. On May 23, the House Natural Resources Subcommittee on Water and Power held a legislative hearing on three bills. One of the bills considered by the committee, H.R. 745, would reauthorize the Desalination Act of 1996. Another, H.R. 1963, authorizes non-federal hydropower development on federal conduits through administrative and regulatory reforms. A full witness list and webcast of the hearing are available at http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=334040.

  • Bill Re-Introduced to Limit EPA. On May 23, Congressman David McKinley (R-WV) introduced H.R. 2127, a bill limiting the EPA’s ability to finalize a rule establishing greenhouse gas emission standards for power plants. If enacted, the bill would prohibit EPA from setting such standards unless and until the agency – supported by a report published by the Energy Information Administration, Comptroller General, National Energy Technology Laboratory, and Department of Commerce – has determined that carbon capture and sequestration technologies are viable. The bill would also prevent the EPA from setting a single standard that would apply both to coal-fire and natural gas-fired power plants. During the last Congress, McKinley introduced an identical bill numbered H.R. 6172. The House Energy and Commerce Subcommittee on Energy and Power held a hearing on that bill in 2012 but no further action was taken in the House.

  • Bicameral Letter to GAO regarding the NRC. On May 23, House Energy and Commerce Chairman Fred Upton (R-MI) and Senate Environment and Public Works Committee Ranking Member David Vitter (R-LA) sent a letter to Government Accountability Office (GAO) Comptroller General Gene Dodaro. The letter requests that the GAO examine the methods and procedures currently being utilized by the Nuclear Regulatory Commission (NRC) to conduct a cost analysis when developing and proposing new policies. A copy of the letter and press release are available at http://energycommerce.house.gov/letter/letter-gao-requesting-examination-cost-benefit-analysis-procedures-nrc.

  • House Committee Chairman Releases Draft Oil and Gas Bill. On May 30, House Natural Resources Committee Chairman Doc Hastings (R-WA) released draft legislation entitled “Offshore Energy and Jobs Act.” As currently drafted, 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. A full summary of the proposed bill is available at http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=335885.
JUDICIAL
  • D.C. Circuit Rejects Challenges to EPA’s Secondary Lead Smelter Rule. In a decision that potentially has broad implications for regulated facilities subject to air toxics standards, the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) rejected challenges to the EPA’s Secondary Lead Smelter Rule (Smelter Rule) on May 28, Ass’n of Battery Recyclers Inc. v. EPA, No. 12-1129. The court first rejected industry petitioners’ argument that the Secondary Lead Rule impermissibly regulates elemental lead as a hazardous air pollutant (HAP) rather than a criteria pollutant in violation of the Clean Air Act (CAA). The court found that the Smelter Rule did not alter the lead “National Ambient Air Quality Standards (NAAQS) level, impose an earlier NAAQS attainment date, or modify state implementation plans.” The court went on to reject environmentalists’ claims that the EPA should have revised the Smelter Rule’s maximum achievable control technology (MACT) floor. Section 112 of the CAA requires EPA to promulgate emissions standards for major sources of HAP. To implement these standards, EPA sets MACT floors, which are certain minimum stringency requirements based on the amount of emissions reduction achieved in practice by the best performing sources. Environmentalists claimed the Smelter Rule’s MACT floor was too lenient and should have been revised. In rejecting this argument, the court found that it was bound by its own 2008 decision in Natural Resources Defense Council v. EPA, 529 F.3d 1077 (D.C. Cir. 2008), where the court held that EPA does not have an obligation to set new MACT floors based on the best-performing units when issuing revised standards. The 2008 decision concerned revised air toxics standards for synthetic organic chemical facilities.

  • District Court Rejects Public Trust Doctrine Climate Lawsuit. On May 22, the District Court for the District of Columbia (D.C. District Court) denied several teenagers and two environmental groups’ claims that EPA is violating the common law “public trust” doctrine by not adequately taking action to reduce the effects of global warming and climate change. The plaintiffs sought rehearing from the D.C. District Court’s initial rejection of their case in Alec L., et al., v. Bob Perciasepe, et al. 863 F. Supp. 2d 11 (D.D.C. 2012). The court initially denied the plaintiffs’ claims based on a recent U.S. Supreme Court decision, PPL Montana, LLC v. Montana, 132 S. Ct. 1215 (2012), which found that “the public trust doctrine remains a matter of state law,” and that even if the public trust doctrine “had been grounded in federal common law at some point in time, Congress plainly displaced any such doctrine, at least in this context, through its passage of the comprehensive and field-occupying Clean Air Act.” The D.C. District Court’s recent decision reaffirmed its denial after finding that the “plaintiffs failed to establish a basis for federal jurisdiction because the public trust doctrine, upon which their claims hinged, is a creature of state common law and not federal law.” This rejection marks a recent pattern of prominent courts, dismissing climate change cases on jurisdictional grounds, prior to an evidentiary hearing stage. See a VNF Update on two other jurisdictional dismissals of climate cases here: http://www.vnf.com/news-alerts-845.html.

  • Utility Group Files Request for Rehearing to Review EPA’s Schedule for Power Plant Effluent Rule. On May 23, the Utility Water Act Group (UWAG) filed a petition with the D.C. Circuit asking the court for a rehearing en banc of a panel decision denying UWAG’s request to intervene in a 2010 consent decree entered into by the EPA and environmentalists, Defenders of Wildlife v. EPA, No. 12-05122. The consent decree established a timeline for EPA to determine whether to review, and as needed, revise its existing effluent limitation guideline rule for power plants. (EPA recently proposed a revised rule. See the VNF Alert here: http://www.vnf.com/news-alerts-839.html.) UWAG claimed that the EPA impermissibly relinquished its discretionary authority under the Clean Water Act (CWA) to review and revise the effluent guidelines when it signed the consent decree. UWAG also argued that the consent decree imposed a too stringent timeline for notice and comment procedures. UWAG argued that the structure of the consent decree made an EPA revision to revise the guideline practically a foregone conclusion. The D.C. District Court initially found that UWAG did not have standing to intervene because the group’s members would not be injured by the rulemaking and denied the groups’ request. A panel of the D.C. Circuit upheld this decision in April.

  • D.C. Circuit Dismisses Kansas Power Plant Lawsuit Over Jurisdictional Issues. The D.C. Circuit dismissed an appeal brought by Sunflower Electric Power Corp. (Sunflower), after finding that it did not have jurisdiction over Sunflower’s appeal of a nonfinal remand order, Sierra Club v. USDA, No. 12-5095. Initially, the Sierra Club had filed suit against the U.S. Department of Agriculture’s Rural Utilities Service (RUS) arguing that the RUS had violated the National Environmental Policy Act (NEPA) by failing to complete an Environmental Impact Statement (EIS) prior to approving and financially backing Sunflower’s plans to significantly expand a Kansas coal-fired electric power plant (Holcomb Expansion Project). In January 2012, the D.C. District Court determined that the Holcomb Expansion Project was a “major federal action” requiring an EIS. The court enjoined RUS from taking any further action until the agency completed an EIS and remanded the case back to RUS “to determine what further action, if any, is necessary.” Sunflower appealed the injunction and remand order, however, the D.C. Circuit found that it did not have jurisdiction over Sunflower’s appeal because private parties can only challenge a remand order after the proceedings are complete. 
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