Energy and Environment Monitorwww.eem.jacksonkelly.com

EPA Causing Job Losses

Policy experts from the National Center for Public Policy Research are urging President Obama to pull the reins on the EPA in order to stimulate the economy. 

Tom Borelli, Ph.D., Director of the National Center’s Free Enterprise Project, stated that “The EPA is infecting the business environment with a plague of new regulations and is compounding its affliction on the economy by denying permits for job creating projects.” 

The effect of new EPA regulations has already been felt by utility companies.  American Electric Power, Duke Energy and Southern Company have recently announced closures of coal-fired power plants as a result of the excessive costs of meeting new EPA standards.  These closures are likely to cause layoffs, increases in electric costs and potential power shortages, thus intensifying negative economic conditions. 

Additionally, states that are dependent upon coal for energy are likely to be harmed by new EPA regulations.  Ohio, for example, is projected by the National Economic Research Associates to lose 53,500 job-years by 2020 as a result of the EPA’s Cross-State Air Rule and the Utility MACT Rule.  The Report also predicts that the average price of electricity in Ohio could increase as much as 12.9 percent by 2016. 

“Obama needs to examine his options to stop EPA’s regulatory madness,” said Deneen Borelli, full-time fellow at the National Center’s Free Enterprise Project.  “Halting the EPA is an economic emergency.  Obama’s homework while on vacation in Martha’s Vineyard should be to find a way to control the EPA that does not require Congressional action.  All Obama needs is the will to do the right thing for the American people.” 

This article was authored by Douglas J. Crouse, Jackson Kelly PLLC. For more information on the author see here.

USEPA Continues to Support Carbon Capture and Sequestration

United States Environmental Protection Agency (USEPA) recently proposed its latest rule to continue its support of the deployment of carbon capture and sequestration (CCS) technologies.  CCS is one option available to help mitigate greenhouse gas emissions from fossil fuel combustion.  CCS is a three step process by which the carbon dioxide is captured from the emissions of combustion of fossil fuels, transported via pipeline, and then injected deep underground in appropriate geologic formations for long term storage.  CCS should prevent the carbon dioxide from escaping to the earth’s atmosphere and help mitigate the ecological effects of fossil fuel combustion.  

In its latest proposal (available at http://federalregister.gov/a/2011-19915), USEPA proposes to exclude carbon dioxide streams injected for geologic sequestration in Class VI wells designated for CCS under the Safe Drinking Water Act (SDWA) from the Resource Conservation and Recovery Act (RCRA) hazardous waste regulations.   According to the agency, the proposed management of these carbon dioxide streams does not present a substantial risk to human health or the environment.  Therefore additional regulation under RCRA is unnecessary.  USEPA expects this proposal to reduce barriers to the use of CCS technologies and to reduce the uncertainty associated with identification of such carbon dioxide streams under RCRA subtitle C.  

This proposal is intended to complement other rulemaking including:  the final rules under the Clean Air Act that require reporting by facilities that capture or inject carbon dioxide streams and SDWA regulations for CCS wells.  This proposal is consistent with President Obama’s interagency task force on carbon dioxide sequestration and helps the U.S. support the deployment of clean energy technologies.  Comments to the proposed rule are due on or before October 7, 2011.  More information on the proposed rule can be found at http://www.epa.gov/epawaste/nonhaz/industrial/geosequester/index.htm. 

This article was authored by Laura G. Swingle, Jackson Kelly PLLC. For more information on the author see here.

WV Carbon Dioxide Working Group Issues its Final Report

The West Virginia Carbon Dioxide Sequestration Working Group (“Working Group”) has completed its Report to the Legislature dated July 1, 2011.  This final report was prepared and submitted in compliance with the Carbon Dioxide Sequestration Act, W.Va. Code §22-11A-1 et seq., passed by the legislature in 2009.  The Working Group was charged by the Legislature with studying all issues related to the sequestration of carbon dioxide in order to help encourage the widespread use of carbon dioxide sequestration (“CCS”) in West Virginia.  W. Va. Code §22-11A-6.  Carbon dioxide sequestration (“CCS”) is one option available to help mitigate the troubling effects of climate change due to anthropogenic greenhouse gas emissions from fossil fuel combustion.  CCS is a three step process by which the carbon dioxide is captured from the emissions of combustion of fossil fuels, transported via pipeline, and then injected deep underground in appropriate geologic formations for long term storage.  This should prevent the carbon dioxide from escaping to the earth’s atmosphere and help mitigate the ecological effects of fossil fuel combustion. 

At the state level, the Legislature in its legislative findings made it is clear that CCS will play an important role in preserving West Virginia’s economy that heavily relies on the exploitation of fossil fuels.  More specifically the Legislature mandated that the Working Group:

• “develop a long-term strategy for the regulation of carbon dioxide in West Virginia”
• “[r]ecommend any legislation that the working group may determine to be necessary or desirable to clarify issues regarding the ownership and other rights and interest in pore space”
• “[r]ecommend methods of facilitating the widespread use of carbon dioxide sequestration technology throughout West Virginia.”

Id. 

Recommendations 

            In its report, the Working Group makes several recommendations to facilitate CCS development including the legislative proposal of the West Virginia Carbon Dioxide Sequestration Act.  In accordance with W. Va. Code §22-11A-6(h)(1)-(10) the final report addresses the following:

• A recommendation of the appropriate methods to encourage the development of carbon dioxide sequestration technologies;
• An assessment of the economic and environmental feasibility of large, long-term carbon dioxide sequestration options;
• A recommendation of any legislation the working group may determine to be necessary or desirable to clarify issues regarding the ownership and other rights and interests in pore space;
• A recommendation of the methods of facilitating the widespread use of carbon dioxide sequestration technology throughout West Virginia;
• Identification of geologic sequestration monitoring sites to assess the short-term and long-term impact of carbon dioxide sequestration;
• An assessment of the feasibility of carbon dioxide sequestration in West Virginia and the characteristics of areas within the state where carbon dioxide can be sequestered;
• An assessment of the costs, benefits, risks and rewards of large-scale carbon dioxide sequestration projects in West Virginia;
• An assessment of the potential carbon dioxide sequestration capacity in this state;
• Identification of areas of research needed to better understand and quantify the processes of carbon dioxide sequestration; and
• An outline of the working group’s long-term strategy for the regulation of carbon dioxide sequestration in West Virginia.

The Working Group suggests that West Virginia will be faced with having to significantly reduce the state’s emissions of greenhouse gases in the near future in light of the fact that the United States Environmental Protection Agency (“USEPA”) has designated carbon dioxide and other greenhouse gases as “regulated” pollutants and there is a strong desire on the federal level to reduce greenhouse gas emissions.  According to the report, the state currently emits approximately 102 million metric tons of greenhouse gases each year with about 86 million metric tons of that being emitted from coal-fired power plants and the state is one of the nation’s largest exporters of electric power to other states.  Thus the Working Group evaluated whether CCS technology is a partial solution to greenhouse gas reduction.

In addition to considering the feasibility of CCS in West Virginia, the Working Group evaluated geological and technical considerations to conclude “there is potential for sequestration of captured carbon dioxide in West Virginia.”  Since CCS is a feasible option with available geologic storage, it became necessary for the Working Group to also identify and attempt to find solutions to the significant policy, regulatory and legal issues raised by CCS projects.  The Working Group had to evaluate and resolve those issues that are impediments to the commercial development of CCS, while balancing the need to protect the rights to harvest oil, natural gas, coalbed methane, coal and other minerals.

Property Ownership and Acquisition

Initial efforts to understand the policy implications of CCS focused on property ownership and acquisition.  After reviewing activities in other states and by organizations, the Working Group proposed that the legislature dedicate certain pore space below 2,500 feet to public use to facilitate the legislative objective of encouraging the commercial development of CCS.  While this recommendation would make West Virginia the first state to do so, the rationale for supporting the public use of certain reservoirs is multifaceted.  First, it is too costly to acquire rights not necessary under the traditional method of property acquisition: (a) title work is estimated at $100 million/project, (b) usage rights would be costly, and  (c) transaction costs would be associated with any taking of the property.  Second, the public interest in removing greenhouse gases and mitigating climate change outweighs the private land use.  Third, the courts have held that not all use of private land results in compensable taking.  See, Causby v. United States, 328 U.S. 258 (1946); see also, Penn Central Transportation Company v. City of New York, 438 U.S. 104 (1978); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982);  FPL Farming, Ltd. V. Texas Natural Resource Conservation Commission, No. 03-02-0047, 2003 WL 247183 Tex.App.-Austin, Feb. 6, 2003); Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).  Finally, the public use of certain reservoirs for CCS is consistent with CCSReg and the National Coal Council positions.

Since the existing law is silent on whether carbon dioxide can be injected into formations bearing oil or natural gas, the working group has developed recommendations that clarify this issue and protect oil, natural gas, coal, coalbed methane, and other mineral formations capable of being produced in commercial quantities.  The legislation proposed by the Working Group would require the applicant to have all necessary property rights, which shall be addressed during the permitting process.  A necessary property right shall not include the right to use a reservoir below 2,500 feet, which does not have a current or reasonably forseeable use.  If no impairment of an existing use is found, the WVDEP permit will give the operator the right to inject carbon dioxide below 2,500 feet.  If use impairment occurs after permit issuance, a mutually agreeable plan may be approved to undertake such use in a manner that would not interfere with the CCS facility.

In the event a necessary property right must be obtained, the proposal allows for the amalgamation of property rights, while preserving other eminent domain authority.  If a CCS project impairs the use of a “necessary” property right there are three options for proceeding: (a) alter the CCS project; (b) negotiate acquisition of rights, or (c) condemn or pool.  To streamline the process the Working Group proposes the use of tax records to initiate condemnation or pooling.  However, condemnation and pooling will not be allowed to obtain rights to mineral formations or formations above 2500 feet, obtain rights of other CCS facilities or to be used for pipelines used to withdraw carbon dioxide.  In any event compensation may not consider value of the reservoir for purposes of CCS. 

Other property issues were addressed and recommendations were made including: the preservation of inverse condemnation for per se physical taking of necessary property rights and the CCS operator is relieved of tort liability for any taking.

Liability

Another interesting aspect of the report is the way the Working Group addresses liability throughout the operational and post closure phases of a project.  The Working Group recommends certain limitations on liability as appropriate during the operational phase of a project.  In addition, it suggests a multistep process for liability transfer, which will only occur 10 years post-closure once WVDEP has determined that the facility does not leak in addition to meeting other regulatory requirements.  This liability transfer should be authorized during the post-closure period to promote CCS activities. To assure that the operator bears responsibility for post closure liabilities, the operator will be required to fund a trust fund in an amount that is actuarially determined to be adequate to respond to the risks the facility may create. Ownership of the sequestration facility shall transfer to a quasi-public entity or the federal government upon the issuance of a certificate of completion by the secretary of the WVDEP.

Fees

Fees are addressed as well.  The Working Group recommends that there will be three separate mechanisms for obtaining fees: (1) an application fee; (2) an operational phase fee managed in an administrative fund for operation costs that may not exceed the lesser of $150,000 per year or 1 cent per tonne of injected carbon dioxide, which may also be used to defray the expenses of regulatory agencies other than the WVDEP; and (3) a post closure fee managed in a trust fund for post operation costs.  This post closure trust fund should be established by collecting a fee of 7 cents per tonne of injected carbon dioxide (with a $50,000,000 cap) during the operational phase of the project to provide funds to maintain the facility in the post closure phase, to purchase insurance, and if necessary to respond to claims.  Provision should be made for the handling of subsequent sequestration facilities.

Where to Find the Report 

While permitting, property issues, liability and fees are perhaps some of the most intriguing aspects of the report, the Working Group proposes comprehensive legislation designed to address the issues and overcome the hurdles to allow for the aggressive deployment of CCS in West Virginia.  The report is posted on the web site of West Virginia Department of Environmental Protection and can be obtained at:

http://www.dep.wv.gov/executive/Documents/WVCCS%20Working%20Group%20Final%20Report%20-%20June%2030,%202011.pdf

 This article was authored by Laura G. Swingle, Jackson Kelly PLLC. For more information on the author see here.

Extension to Greenhouse Gas Reporting Deadline for 2010 Reporting Period

EPA recently issued a final rule extending the deadline for reporting 2010 data under the Greenhouse Gas (GHG) Reporting Program to September 30, 2011. The original deadline was March 31, 2011.  

EPA's GHG Reporting Program requires the reporting of GHG data from large emission sources across a range of industry sectors, as well as suppliers of products that would emit GHGs if released or combusted. The data is intended to help guide policy decisions and the development of future programs which the EPA might implement to reduce these emissions. 

Entities submitting data through the electronic GHG reporting tool (e-GGRT) must register using e-GGRT no later than 60 days before the reporting deadline. Thus, the new deadline for registering with e-GGRT is August 1, 2011. The rule changes ONLY the deadline for entities required to report 2010 emissions. It does not change the reporting deadline for future years and does not change what data must be reported. 

Some underground coal mines are required to report 2010 emissions. For example, an underground mine with associated large stationary combustion sources such as thermal dryers and with emissions above the triggering threshold may be required to collect data in calendar 2010 and report by March 31, 2011. The extension applies to those mines. 

Most underground coal mines are not required to report 2010 emissions, however, and the rule granting an extension is not applicable to underground coal mines required to begin reporting 2011 emissions by March 31, 2012. For those underground coal mines, the first deadline under the GHG Reporting Rule is the preparation of a Monitoring Plan by March 31, 2011.   

This article was authored by Matthew S. Tyree, Jackson Kelly PLLC. For more information on the author see here.

U.S. EPA Extends GHG Reporting and Registration Deadlines

In early March, U.S. EPA announced it was deferring the original deadline of March 31, 2011, for reporting 2010 data under the Greenhouse Gas (GHG) Reporting Program until sometime later this year.  U.S. EPA followed up on that announcement and published a final rule in the Federal Register on March 18, 2011, deferring the original deadline for reporting year 2010 greenhouse gas emissions until September 31, 2011.  76 Fed. Reg. 14,812.  The final rule took effect upon publication and changes only the deadline for reporting for 2011.  It does not change the reporting deadline for future years and does not change what data must be reported.  U.S. EPA states in the preamble to the final rule that its intent to publish non-confidential 2010 data by December 2011 remains unchanged.  U.S. EPA also states in its press release that it plans to have the final uploading tool, called the Electronic Greenhouse Gas Reporting Tool (e-GGRT), available this summer.  Because the regulatory deadline for reporters of 2010 GHG data to register in e-GGRT is at least 60 days before the reporting deadline (40 CFR §98.4(d)), the March 18, 2011 final rule extending the reporting deadline also has the effect of extending the registration deadline to at least 60 days before September 30, 2011.  For the text of the final rule, click here. 

The final rule affects only those facilities and suppliers required to begin monitoring emissions on January 1, 2010, under U.S. EPA’s GHG Reporting Program, which is codified at 40 CFR Part 98.  The affected reporters include facilities and suppliers in the following source categories:  

Source Categories Covered by March 18, 2011 Final Rule	40 CFR Part 98	Federal Register notice
General Stationary Fuel Combustion Sources	Subpart C	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Electricity Generation	Subpart D	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Adipic Acid Production	Subpart E	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Aluminum Production	Subpart F	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Ammonia Manufacturing	Subpart G	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Cement Production	Subpart H	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Ferroalloy Production	Subpart K	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Glass Production	Subpart N	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
HCFC–22 Production and HFC–23 Destruction	Subpart O	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Hydrogen Production	Subpart P	74 Fed. Reg. 56260, 75 Fed. Reg. 66434, 75 Fed. Reg. 79092
Iron and Steel Production	Subpart Q	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Lead Production	Subpart R	74 Fed. Reg. 56260
Lime Manufacturing	Subpart S	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Miscellaneous Uses of Carbonate	Subpart U	74 Fed. Reg. 56260
Nitric Acid Production	Subpart V	74 Fed. Reg. 56260, 75 Fed. Reg. 66434, 75 Fed. Reg. 79092
Petrochemical Production	Subpart X	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Petroleum Refineries	Subpart Y	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Phosphoric Acid Production	Subpart Z	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Pulp and Paper Manufacturing	Subpart AA	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Silicon Carbide Production	Subpart BB	74 Fed. Reg. 56260
Soda Ash Manufacturing	Subpart CC	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Titanium Dioxide Production	Subpart EE	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Zinc Production	Subpart GG	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Municipal Solid Waste Landfills	Subpart HH	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Suppliers of Coal-based Liquid Fuels	Subpart LL	74 Fed. Reg. 56260
Suppliers of Petroleum Products	Subpart MM	74 Fed. Reg. 56260, 75 Fed. Reg. 66434
Suppliers of Natural Gas and Natural Gas Liquids	Subpart NN	74 Fed. Reg. 56260, 75 Fed. Reg. 66434, 75 Fed. Reg. 79092
Suppliers of Industrial Greenhouse Gases	Subpart OO	74 Fed. Reg. 56260, 75 Fed. Reg. 79092
Suppliers of Carbon Dioxide	Subpart PP	74 Fed. Reg. 56260, 75 Fed. Reg. 79092

The following eleven source categories are not affected by the March 18, 2011 final rule.  Facilities and sources in these source categories, except Manure Management, report for the first time in 2011.  U.S. EPA will not be implementing GHG reporting for Manure Management because Congress prohibited the expenditure of funds in U.S. EPA’s fiscal year 2010 appropriations (Continuing Appropriations Act of 2011, Public Law 111-242) for this purpose.  

Source Categories Not Covered by March 18, 2011 Final Rule	40 CFR Part 98	Federal Register notice
Electronics Manufacturing	Subpart I	74 Fed. Reg. 16648, 75 Fed. Reg.18652, 75 Fed. Reg. 74774
Ethanol Production	Subpart J	74 Fed. Reg. 16648, 75 Fed. Reg. 39736
Fluorinated Gas Production	Subpart L	74 Fed. Reg. 16648, 75 Fed. Reg. 18652, 75 Fed. Reg. 74774
Food Processing	Subpart M	74 Fed. Reg. 16648, 75 Fed. Reg. 39736
Magnesium Production	Subpart T	74 Fed. Reg. 16648, 75 Fed. Reg. 39736
Petroleum and Natural Gas Systems	Subpart W	74 Fed. Reg. 16648, 75 Fed. Reg. 18608, 75 Fed. Reg. 74458
Use of Electric Transmission and Distribution Equipment	Subpart DD	74 Fed. Reg. 16648, 75 Fed. Reg.18652, 75 Fed. Reg. 74774
Underground Coal Mines	Subpart FF	74 Fed. Reg. 16648, 75 Fed. Reg. 39736
Industrial Wastewater Treatment	Subpart II	74 Fed. Reg. 16648, 75 Fed. Reg. 39736
Manure Management	Subpart JJ	74 Fed. Reg. 16648, 74 Fed. Reg. 56260
Suppliers of Coal	Subpart KK	74 Fed. Reg. 16648, 75 Fed. Reg. 39736

In the preamble to the final rule, U.S. EPA explains its rationale for the extension of the GHG reporting deadline.  In U.S. EPA’s words, the extension is necessary to:

     allow EPA to test and refine e-GGRT more extensively; give stakeholders the opportunity to test the  tool and provide feedback to EPA, allowing [the Agency] to further refine the tool and better tailor [its] training and outreach; and give reporters time to become familiar with the tool in advance of the reporting deadline, improving their reporting experience and the quality of the reported data.  76 Fed. Reg. at 14,815/2.

U.S. EPA relies upon the “good cause” exemption in Section 553(d) of the Administrative Procedure Act to publish the final rule without notice and comment and to make the final rule effective on the date of publication.  To support the “good cause” exemption, U.S. EPA points to the “cumulative effects” of the reasons for the reporting deadline extension as well as changes to the reporting system required by the various additions and amendments to Part 98, stating that these “cumulative effects did not become apparent in time for EPA to extend the reporting deadline through a notice and comment rulemaking process.” Id. at 14,816/1.  In addition, U.S. EPA states that it “received far more requests for assistance with registration in e-GGRT…than had been expected.”  U.S. EPA describes “the number and diversity of requests for clarification or assistance with registration” as “strong evidence of the necessity of stakeholder testing and advanced reporter familiarity with the reporting system” and asserts that this necessity “only recently came to light.”  Id.

This article was authored by Gale Lea Rubrecht, Jackson Kelly PLLC. For more information on the author, see here.

EPA Proposes 91% National Reduction for Mercury As Well As Reductions of Other Toxics from Power Plants And Claims That Program Will Reduce Future Cost Of Power

Citing what it terms significant human health impacts and a court mandated deadline, US EPA on March 16, 2011, announced a proposal to reduce emission of mercury and other toxics, including arsenic, chromium, nickel and acid gases. The EPA announcement is short on specifics, other than to say that its proposal will reduce mercury emissions by 91%, but EPA nonetheless states that it projects that the new standards will prevent “as many as 17,000 premature deaths and 11,000 heart attacks a year.” EPA adds that “the new proposed standards would also provide particular health benefits for children, preventing 120,000 cases of childhood asthma symptoms and about 11,000 fewer cases of acute bronchitis among children each year. The proposed standards would also avert more than 12,000 emergency room visits and hospital admissions and 850,000 fewer days of work missed due to illness.”  

 

EPA projects that construction of controls by EGUs to comply with the new standards will result in 31,000 short term construction jobs and 9,000 long term utility jobs. Significantly, EPA also estimates that the cost of compliance with the new standards will result in retirement of only 1% of the utility coal fleet, estimating that 10 GW of generating capacity will be retired out of a current total of 1104 GW of capacity. However, that retirement figure is much lower than percentages estimated by the EGU regulated community. Moreover, the estimated benefits of the program are difficult to analyze since the EPA announcement provides no details on reductions of any of the other toxics to be regulated. 

 

EPA’s proposed rule provides up to 4 years for EGU facilities to meet the standards and EPA notes that, once the standards are fully implemented, they will prevent 91 percent of mercury in coal from being released into the air. The announcement does not specify the amounts of reductions of any of the other toxics the standard will cover.   

 

EPA estimates in its proposal announcement that, for every dollar spent to reduce EGU emissions, there will be a concomitant health and economic benefit of up to $13. Total health and economic benefits of the proposed standard are estimated by EPA at as much as $140 billion on an annual basis. EPA future cost of power projections also predict that the cost of power as a result of compliance with the new standards will be lower by 2030 than the EIA 2030 future cost projections without the proposed rule in place. Those cost estimates will undoubtedly be the subject of voluminous public comment since it is difficult to understand how the estimated cost of power in 2030 without the rule can be higher than the estimated cost of power with the rule in place as shown on EPA slides used during the announcement.

 

The EPA announcement also notes that the proposed standard “puts a premium on important input and feedback from stakeholders to inform any final standard,” adding that “the public comment period, which will last 60 days after appearing in the Federal Register, will allow stakeholders including the public, industry and public health communities, to provide important input and feedback, ensuring that any final standard maximizes public health benefits while minimizing costs.”

 

EPA will hold public hearings in Philadelphia, Atlanta, and Chicago on the proposal on dates yet to be determined.

 

This article was authored by Skipp Kropp, Jackson Kelly PLLC. For more information on the author see here. 

Supreme Court Grants Certiorari in American Electric Power Co. v. Connecticut

On December 6, 2010 the U.S. Supreme Court granted certiorari review of the Second Circuit Court of Appeals September 21, 2009 decision in Connecticut v. American Electric Power, 582 F.3d 309 (2d Cir. 2009), which will allow the Supreme Court to decide whether states and/or private parties using the federal common law of nuisance can collect damages for injury and ultimately decide upon a remedy that would order emissions caps on greenhouse gases (GHGs).  Cert. granted Am. Electric Power Co., et al v. Connecticut, et al.,--- S.Ct. ----, 2010 WL 4922905 (U.S. 2010). 

By way of background, the Plaintiffs, who include eight states (Connecticut, New York, California, Iowa, New Jersey, Rhode Island, Vermont, and Wisconsin), New York City, and three land trust groups, sued the Defendants, who include six major electric utilities (American Electric Power Company Inc., American Electric Power Service Corporation, Southern Company, Tennessee Valley Authority, Xcel Energy, Inc., and Cinergy Corporation) under a nuisance claim for the alleged environmental harm and contribution to global warming resulting from their respective greenhouse gas (GHG or GHGs) emissions.  Plaintiffs sought monetary damages and a remedy of a cap on Defendants’ carbon dioxide emissions and a 3% annual reduction in carbon dioxide emissions for the next ten years. 

The Second Circuit reversed the district court’s decision that Plaintiffs’ claims constituted a political question and is therefore barred, and remanded the case back to the district court.  The Second Circuit held, “[f]ederal statutes have not displaced Plaintiffs’ federal common law of nuisance claim. The complaints against Defendant-Appellant TVA may not be dismissed on the grounds of the political question doctrine or the discretionary function exception.”  Id. at 392. 

This article was authored by Laura G. Swingle, Jackson Kelly PLLC. For more information on the author see here.

16th Session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP-16) in Cancun, Mexico

The 16^th Session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP-16) is in session until December 10, 2010 in Cancun, Mexico.  EPA representatives spoke at the U.S. Center at COP-16 on December 7, 2010 about the ongoing federal efforts of EPA to mitigate climate change.  See, Sarah Goldfarb, Associate Editor, U.S. State Department’s blog DipNote, U.S. Center at COP-16: Reducing Greenhouse Gases in the United States (Dec. 8, 2010). 

The U.S. Environmental Protection Agency (EPA) is continuing to move forward on its path to address greenhouse gas emissions.  At the U.S. Center on December 7, representatives of the EPA highlighted domestic regulatory, programmatic, and voluntary activities that are occurring at the federal level. 

According to Sarah Goldfarb, Gina McCarthy, Assistant Administrator for the Office of Air and Radiation at the EPA, highlighted domestic actions that the EPA is taking to address climate change, particularly greenhouse gases. Id.  McCarthy first referred to COP-15 Copenhagen in 2009, where the EPA had identified climate change as one of its top priorities for 2010. McCarthy said the EPA remains committed to its decision that greenhouse gases pose a danger to human health and the environment. 

McCarthy outlined the following initiatives taken by EPA since Copenhagen: the first greenhouse gas standards for passenger vehicles; the first proposed greenhouse gas standards for medium and heavy truck tailpipes; the first greenhouse gas permitting requirements for smokestacks; the first year of collecting greenhouse gas data under the Mandatory Greenhouse Gas Reporting Program; and increased use of renewable fuels in motor vehicles. Id. 

McCarthy noted other EPA goals, including reducing the amount of greenhouse gas pollution added to the atmosphere.   McCarthy said the EPA must establish a series of regulations that will require the electricity generating industry to become much cleaner. She also discussed other power sector actions on the EPA agenda: addressing ozone and particle pollution that travels across state lines; reducing hazardous air pollutants, such as mercury, from electric utilities; and setting emissions standards for electric utilities for particles pollution, nitrogen oxides, and other pollutants.  Id. 

The lack of federal climate change legislation does not seem to dampen EPA’s enthusiasm for regulating greenhouse gases under the Clean Air Act.  McCarthy said, "While we look forward in the United States to engaging in climate change legislation, it is by no means stopping this administration from taking progressive steps to reduce greenhouse gases as we go into COP-17 in Durban, South Africa."  Id. 

This article was authored by Laura G. Swingle, Jackson Kelly PLLC. For more information on the author see here.

FTC Argues for Industry Confidential Business Information in EPA Rulemaking

In a development that may prove useful to industry generally in its efforts to protect confidential business information requested by EPA in the context of a variety of EPA rulemaking procedures, the Federal Trade Commission (FTC) has taken the position that EPA must restrict confidential business information submitted by companies to the EPA because failure to do so could facilitate illegal price coordination between competitors.

 

The particular context of the FTC position was the FTC’s comments on EPA's proposed final rule (see 75 FR 39094, 7/07/2010; 75 FR 43890 7/27/2010) concerning confidentiality determinations for greenhouse gas data, which, if finalized, would make companies' annual data publicly available, pursuant to the Clean Air Act. In EPA’s proposed final rule, EPA divides data into 22 categories providing each category with its own set of restrictions relative to confidential business information.   There are three different tiers of confidentiality: publicly released emissions data; non-emission data that is not classified and is publicly released; and confidential non-emission data that cannot be released due to its sensitive nature.

 

EPA has for some time in the context of information gathering for the promulgation of various industry specific standards – e.g., NSPSs, NESHAPs, -- taken the position that emission data , which includes any information necessary to determine type or rate of emissions, cannot qualify as confidential business information.   [ (See EPA’s 1991 Policy on the Release of Emission Data, 56 FR 7042 ( 1991)] For instance “process design capacity" and "hourly maximum design rate" are excluded from CBI as "emission data".  . 

 

According to FTC, three of the categories that EPA has classified as “emission data” in the context of the greenhouse gas data:

 

• inputs to emission equations;
• unit/process “static” characteristics that are not inputs to emission equations; and
• unit/process operating characteristics that are not inputs to emission equations. 

Include data about a company's production, throughput, raw material consumption, capacity and future operations, which could contain “potentially sensitive competitive business information” that could tip competitors to critical trade secrets.

 

FTC’s stated interest in this issue is that publishing such information could make it easier for companies to tacitly or explicitly coordinate their pricing decisions, especially in the presence of certain market conditions like transparency, high concentration, barriers to entry, similar products and low elasticity of demand.

 

FTC and the U.S. Department of Justice classify this type of activity as “coordinated interaction”, which can take blatantly illegal forms — like collusive agreements among competitors — but it can also manifest itself in activity which does not directly contravene antitrust laws.

 

For instance, companies could be engaging in “coordinated interaction” if they are retrieving critical information on emission output through a government database which makes it easier for companies to predict competitor’s reactions to price changes, thwart incentives to offer discounts and make price increases seem more feasible and appealing.

FTC warns that if EPA does not take care to conceal information, rivals will be given information which results in anti-competitive behavior. 

 

FTC said it would like to see more restrictions to information submitted in the “inputs to emission equations” category, which can reveal information about an entity's capacity, as well as any other material related to capacity and forward-looking operational information.

 

FTC suggested that an industry-by-industry approach may make it easier for EPA to determine whether information can be publicly released at the outset, or if such information should be redacted or released on a delayed schedule.

 

Regardless of whether or not EPA takes FTC’s comments seriously and revises its determinations, companies will have better/more credible arguments for the protection of information requested by EPA based on FTC’s position.. 

This article was authored by Barbara D. Little, Jackson Kelly PLLC. For more information on the author see here.

EPA Issues Greenhouse Gas Reporting Requirements for Underground Coal Mines and Three Other Source Categories

The U.S. Environmental Protection Agency (EPA) announced on June 29, 2010, that it is finalizing requirements under its national mandatory greenhouse gas (GHG) reporting program for underground coal mines, industrial wastewater treatment systems, industrial waste landfills and magnesium production facilities. EPA intends to use the data from these sectors to “provide a better understanding of GHG emissions” and that the data “will help EPA and businesses develop effective policies and programs to reduce them.”

 

EPA noted that methane is the primary GHG emitted from coal mines, industrial wastewater treatment systems and industrial landfills and that it is more than 20 times as potent as carbon dioxide at warming the atmosphere. The EPA announcement continued to say that the main fluorinated GHG emitted from magnesium production is sulfur hexafluoride, “which has an even greater warming potential than methane, and can stay in the atmosphere for thousands of years.”

 

These affected source categories must begin collecting emissions data on January 1, 2011, and submit initial annual reports to EPA by March 31, 2012.

 

EPA also, in a separate proposed rule, opened a public comment period regarding which industry related GHG information would be made publicly available and which would be considered confidential. All emission data are public under the Clean Air Act, However; some non-emission data may be considered confidential if it relates to information which, if made public, could harm the competitiveness of a business. EPA provided as an example of data that may be confidential data under its proposal information reported by fossil fuel and industrial gas suppliers related to production quantities and raw materials.

 

The GHG reporting program requires suppliers of fossil fuels or industrial GHGs and large direct emitters of greenhouse gases to report to EPA. EPA asserts that collecting GHG data “will allow businesses to track emissions and identify cost effective ways to reduce emissions.”

 

Under the Greenhouse Gas Reporting Program, owners and operators of facilities that are subject to quarterly sampling of mine ventilation systems by the Mine Safety and Health Administration (MSHA) must report emissions from underground coal mines and all other source categories located at the mine for which methods are defined in the rule.  Owners and operators are required to collect emission data; calculate GHG emissions; and follow the specified procedures for quality assurance, missing data, recordkeeping, and reporting. Total annual methane emissions are to be calculated as the sum of quarterly methane that is liberated from ventilation wells and shafts and degasification systems, less the quantity that is collected and destroyed.

 

Each underground coal mine meeting the MSHA threshold must monitor the following parameters for their mine ventilation air:

 

1)   Quarterly volumetric flow rate of gas for each ventilation monitoring point;

2)   Quarterly methane concentration for each ventilation monitoring point;

3)   Quarterly temperature values at the time, location, and conditions for which measurements are made;

4)   Quarterly pressure values at the time location, and conditions for which measurements are made; and

5)   Quarterly moisture content at the time, location, and conditions for which measurements are made.

 

Each underground coal mine using a degasification system (deployed before, during, or after mining operations) must also monitor the following parameters:

 

1)   Weekly volumetric flow of methane liberated from each degasification monitoring point;

2)   Weekly methane concentration from each degasification monitoring point;

3)   Weekly temperature values at the time, location, and conditions for which measurements are made;

4)   Weekly pressure values at the time, location, and conditions for which measurements are made; and

5)   Weekly moisture content at the time, location, and conditions for which measurements are made.

 

For methane liberated from degasification systems, companies are not required to monitor each well. Rather, Continuous Emissions Monitoring Systems (CEMS) may be used to monitor aggregate methane from more than one well, as long as methane from all wells is monitored and the methodology for estimating total emissions from all wells is documented.

 

Each underground coal mine where methane is destroyed or transported offsite for destruction must monitor the following parameters:

 

1)   Continuous volumetric flow of gas at each destruction device or point of offsite transport for destruction;

2)   Continuous methane concentrations of gas at each destruction device or point of offsite transport for destruction;

3)   Continuous temperature values of gas at each destruction device or point of offsite transport for destruction;

4)   Continuous pressure values of gas at each destruction device or point of offsite transport for destruction; and

5)   Continuous moisture content of gas at each destruction device or point of offsite transport for destruction.

 

A 60-day public comment period on the proposed rules will begin when the notice is published in the federal register. For more information on the final rule to add reporting requirements for four source categories, see:

http://www.epa.gov/climatechange/emissions/remaining-source-categories.html, and for more information on the proposal on data confidentiality, see:

http://www.epa.gov/climatechange/emissions/CBI.html 

 

This article was co-authored by Skipp Kropp and Matthew S. Tyree, Jackson Kelly PLLC. For more information on the authors see (Kropp) here and (Tyree) here.