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January 22, 2015

EPA Reviews National Ambient Air Quality Standards for Ozone, and Other Recent CAA Developments

The ACTA Group

EPA Reviews National Ambient Air Quality Standards For Ozone: On December 17, 2014, the U.S. Environmental Protection Agency (EPA) issued a proposed rule revising the air quality criteria for ozone (O3) and related photochemical oxidants and National Ambient Air Quality Standards (NAAQS) for O3. 79 Fed. Reg. 75234. EPA proposed to revise the primary standard to a level within the range of 0.065 to 0.070 parts per million (ppm), and to revise the secondary standard to within the range of 0.065 to 0.070 ppm, which air quality analyses indicate would provide air quality, in terms of three-year average W126 index values, at or below a range of 13-17 ppm-hours. EPA proposed to make corresponding revisions in data handling conventions for O3 and conforming changes to the Air Quality Index (AQI); to revise regulations for the prevention of significant deterioration (PSD) program to add a transition provision for certain applications; and to propose schedules and convey information related to implementing any revised standards. EPA proposed changes to the O3 monitoring seasons, the Federal Reference Method (FRM) for monitoring O3 in the ambient air, Federal Equivalent Method (FEM) procedures for testing, and the Photochemical Assessment Monitoring Stations (PAMS) network. Along with proposing exceptional event schedules related to implementing any revised O3 standards, EPA proposed to apply this same schedule approach to other future revised NAAQS and to remove obsolete regulatory language for expired exceptional event deadlines. EPA is proposing to make minor changes to the procedures and time periods for evaluating potential FRMs and equivalent methods (including making the requirements for nitrogen dioxide consistent with the requirements for O3) and to remove an obsolete requirement for the annual submission of documentation by manufacturers of certain particulate matter monitors. For additional information, see the Executive Summary, Section I.A. Comments on the proposed rule are due March 17, 2015.

EPA Delays Implementation Deadlines For Cross-State Air Pollution Rule: On November 21, 2014, EPA Administrator Gina McCarthy signed an interim final rule that delays the implementation deadlines for its Cross-State Air Pollution Rule (CSAPR). On December 3, 2014, EPA issued a rule that also revises the CSAPR’s emissions allowances that utilities can use to comply with the air trading program. 79 Fed. Reg. 71674. The revised implementation deadlines are necessary to comply with a ruling by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), which initially imposed a stay on implementing CSAPR in 2011 while it heard litigation over the rule, then issued a 2-1 ruling in August 2012 vacating the rule. But the Supreme Court in an April 2014 decision overturned that ruling and reinstated the CASPR. The high court’s 6-2 decision rejected claims that the emissions cap-and-trade program violated the Clean Air Act (CAA), and sent litigation over the rule, EME Homer City Generation, L.P. v. EPA, back to the D.C. Circuit to address remaining issues that the appellate court never addressed in its ruling. EPA subsequently asked the court to lift the stay so that it could reinstate CSAPR; the court lifted the stay on October 23, 2014. In the interim final rule, EPA delayed the implementation dates for the CASPR’s Phase 1 emissions budgets to 2015 and 2016, and compliance with the rule’s Phase 2 emissions budgets to 2017. In a Notice of Data Availability (NODA) issued on December 3, 2014, EPA reset the pollution allowances for individual power plants to compensate for the three-year delay in implementation of the CSAPR.

U.S. And China Reach Historic Accord On Climate Change: In a surprise announcement that capped months of secret negotiations, on November 11, 2014, President Obama and Chinese President Xi Jinping announced an historic pact that commits each country to ambitious goals to cap greenhouse gas (GHG) emissions. Under the agreement, the U.S. will slash its GHG emissions between 26 and 28 percent below 2005 levels by 2025, which far outpaces the 17 percent reduction goal President Obama set in 2009. China agreed that its GHG emissions would peak by 2030 or earlier. This is the first-ever commitment by China to stop its GHG emissions from growing by 2030. The White House hopes that the agreement will help inject momentum into the global climate negotiations slated to take place next year in Paris at the Framework Convention on Climate Change (FC3). The U.S. intends to submit its 2025 goals to the FC3 as an “Intended Nationally Determined Contribution” no later than the first quarter of 2015. Specifically, the U.S. and China agreed to the following:

  • Expand Joint Clean Energy Research and Development: This is a renewed and expanded commitment to the U.S.-China Clean Energy Research Center (CERC). This will include:
    • Extending the CERC mandate for an additional five years from 2016-2020;
    • Renewing funding for the three existing tracks: building efficiency, clean vehicles, and advanced coal technologies with carbon capture, use, and sequestration (CCUS); and
    • Launching a new track on the interaction of energy and water (the energy/water nexus).
  • Advance Major Carbon Capture, Use and Storage Demonstrations: Expanding the work under the Climate Change Working Group (CCWG) and under the CERC, and partnering with the private sector, the U.S. and China will undertake a major carbon capture and storage project in China that supports a long term, detailed assessment of full-scale sequestration in a suitable, secure underground geologic reservoir. The U.S. and China will make equal funding commitments to the project and will seek additional funding commitments from other countries and the private sector. In addition, both sides will work to manage climate change by demonstrating a new frontier for carbon dioxide (CO2) use through a CCUS project that will capture and store CO2 while producing fresh water, thus demonstrating power generation as a net producer of water instead of a water consumer. This CCUS project with Enhanced Water Recovery will eventually inject about one million tons of CO2 and create approximately 1.4 million cubic meters of fresh water per year, the White House estimated.
  • Enhance Cooperation on Hydroflurocarbons: Building on the historic Sunnylands agreement between President Xi and President Obama regarding Hydroflurocarbons (HFC), the U.S. and China will enhance bilateral cooperation to begin phasing down the use of high global warming potential HFCs, including through technical cooperation on domestic measures to promote HFC alternatives and to transition government procurement toward climate-friendly refrigerants.
  • Launch a Climate-Smart/Low-Carbon Cities Initiative: Urbanization is a major trend in the 21st century, and cities worldwide account for a significant percent of global GHG emissions. In response, the U.S. and China are establishing a new initiative on Climate-Smart/Low-Carbon Cities under the U.S.-China CCWG. Under the initiative, the two countries will share city-level experiences with planning, policies, and use of technologies for sustainable, resilient, low-carbon growth. This initiative will eventually include demonstrations of new technologies for smart infrastructure for urbanization. As a first step, the U.S. and China will convene a Climate-Smart/Low-Carbon Cities Summit where leading cities from both countries will share best practices, set new goals, and celebrate city-level leadership.
  • Promote Trade in Green Goods: The U.S. announced that Commerce Secretary Penny Pritzker and Energy Secretary Ernest Moniz will lead a Smart Cities/Smart Growth Business Development Mission to China April 12-17, 2015, focused on green infrastructure, energy efficiency, and environmental trade sectors. The mission will highlight the benefits of sustainable urbanization, technologies to support China’s air pollution and climate goals, and green buildings opportunities.
  • Demonstrate Clean Energy on the Ground: The U.S. will undertake a number of additional pilot programs, feasibility studies, and other collaborative efforts to promote China’s energy efficiency and renewable energy goals. These will include expansion of cooperation on “smart grids” that enable efficient and cost-effective integration of renewable energy technology, as well as the implementation through a U.S. and Chinese private sector commercial agreement of a first-of-its-kind 380 megawatt (MW) concentrating solar plant in China.

The announcement was greeted with opposition by GOP leaders. Congressional Republicans pledged to do everything they could to undo the Obama Administration’s emissions targets for power plants. The U.S.-China announcement is a “nonbinding charade,” stated Senator Jim Inhofe (R-OK), the leading Republican critic on climate policy. Inhofe, the likely incoming Chair of the Senate Environment and Public Works Committee who has long disputed the science on global warming, vowed to use his perch in Congress to restrain the Administration on energy and climate policy. “This announcement is yet another sign that the president intends to double-down on his job-crushing policies no matter how devastating the impact for America’s heartland and the country as a whole,” stated Speaker of the House John Boehner of Ohio. Senator Mitch McConnell of Kentucky, the soon-to-be majority leader, was no less critical. “This unrealistic plan, that the president would dump on his successor, would ensure higher utility rates and far fewer jobs,” he stated.

EPA Expands Administrative Enforcement Process To Include Ship Air Pollution Fines: On November 6, 2014, EPA issued a direct final rule to expand its administrative civil penalty procedures to include air pollution penalties assessed under the Act to Prevent Pollution from Ships. 79 Fed. Reg. 65897. EPA’s administrative enforcement proceedings apply EPA’s enforcement of environmental statutes including the CAA and the Clean Water Act (CWA). It was established to provide “uniform procedural rules” for administrative enforcement adjudications conducted by EPA’s administrative law judges or regional judicial officers. EPA stated that applying its administrative enforcement proceedings to ship air pollution, based on engine and fuel standards, “will provide for the efficient and effective adjudication, including administrative appeals, of such proceedings consistent with statutory requirements.” It will also provide “consistency and uniformity” in all of EPA’s administrative penalty proceedings. EPA considers the rule noncontroversial. If adverse comments are received by December 8, 2014, EPA will withdraw the rule. EPA also proposed the same rule on November 6, 2014. 79 Fed. Reg. 65910. Comments are due by December 8, 2014.

U.S. Fines Hyundai And Kia $100 Million In Record CAA Case: On November 3, 2014, EPA and the U.S. Department of Justice announced an historic settlement with automakers Hyundai and Kia that will resolve alleged CAA violations based on their sale of close to 1.2 million vehicles that will emit approximately 4.75 million metric tons of GHGs in excess of what the automakers certified to EPA. In a consent decree lodged in federal court, the automakers agreed to pay a $100 million civil penalty, the largest in CAA history, to resolve violations concerning the testing and certification of vehicles sold in the U.S. The companies also agreed to spend approximately $50 million on measures to prevent any future violations and to forfeit 4.75 million GHG emission credits that the companies previously claimed, which are estimated to be worth over $200 million. EPA and the California Air Resources Board (CARB) claim that the car companies sold close to 1.2 million cars and SUVs from model years 2012 and 2013 whose design specifications did not conform to the specifications the companies certified to EPA, which led to the misstatements of GHG emissions. Hyundai and Kia also allegedly gave consumers inaccurate information about the real-world fuel economy performance of many of these vehicles. Hyundai and Kia reportedly overstated the fuel economy by one to six miles per gallon, depending on the vehicle, EPA claims. Similarly, they understated the emissions of GHGs by their fleets by approximately 4.75 million metric tons over the estimated lifetime of the vehicles.

UN Report Urges Rapid End To Use Of Fossil Fuels: The unrestricted use of fossil fuels must end soon if the world is to avoid dangerous climate change. That is the central message of a stark new report from the United Nations (UN) Intergovernmental Panel on Climate Change (IPCC). The IPCC urges that by 2050, most of the world’s electricity must and can be produced from low carbon sources. Fossil fuels, without carbon capture and storage (CCS), should be phased out “almost entirely” by 2100, the report states. The report was issued on November 2, 2014, in Copenhagen, after a week of intense debate between scientists and government officials. The report states the world faces “severe, pervasive and irreversible” impacts without effective action on carbon. The report suggests renewables will have to grow from their current 30 percent share to 80 percent of the power sector by 2050. In the longer term, the report states “fossil fuel power generation without CCS is phased out almost entirely by 2100.” Three previous reports from the IPCC, issued over the past year, have outlined the causes, impacts, and potential solutions to climate change. The most recent report distills these three reports into one, with the intention of informing politicians engaged in attempts to deliver a new global treaty on climate by the end of 2015. It re-states many familiar positions:

  • Warming is “unequivocal” and the human influence on climate is clear;
  • Since the 1950s, the observed changes are unprecedented over decades to millennia;
  • The period from 1983 to 2012 was likely the warmest 30-year period of the last 1,400 years;
  • Warming impacts are already being seen around the globe; and
  • Without concerted action on carbon, temperatures will increase over the coming decades and could be almost 5 degrees Celsius above pre-industrial levels by the end of this century.

Politicians have agreed that a rise of 2 degrees Celsius is the threshold of danger. In this report, the IPCC authors outline a number of routes to keep to that level by the end of the century. Countries will need to adapt rapidly, but almost all scenarios see near zero emissions by 2100.

Federal Agencies Release Sustainability And Climate Change Adaptation Plans: On October 31, 2014, federal agencies released plans for reducing GHG emissions and preparing for climate change impacts such as flooding, sea level rise, severe weather, and temperature extremes. These Sustainability Plans and Climate Change Adaptation Plans coincide with the fifth anniversary of President Obama’s 2009 Executive Order on Environmental, Energy and Economic Performance, which set aggressive energy, climate, and environmental targets for agencies. The plans are available online.

EPA Issues NODA And Supplemental Proposal On Clean Power Plan: On October 30, 2014, EPA issued a NODA (79 Fed. Reg. 64543) and on November 4, 2014, EPA issued a Supplemental Proposal (79 Fed Reg. 65481). On June 18, 2014, EPA issued arguably the most ambitious and contentious rule in its history: the Clean Power Plan. 79 Fed. Reg. 34829. The proposed rule takes direct aim at the coal industry by requiring a 30 percent reduction in CO2 emissions from existing fossil fuel-fired power plants by 2030, using 2005 as the baseline year. The Clean Power Plan proposal is a centerpiece of President Obama’s Climate Change Action Plan and would, for the first time, impose regulatory limits on carbon pollution from existing power plants, the largest source of GHG emissions in the U.S. The proposal does not establish specific emission limits for existing utilities. Instead, the Clean Power Plan has two main parts: state-specific emission rate-based CO2 enforceable state goals to cut carbon pollution per megawatt hour of electricity generated, and guidelines to help states develop plans for meeting the goals. The goal is a target states must meet by 2030, while starting to make meaningful progress toward reductions by 2020. States would be required to develop plans to meet the goals, although EPA is not prescribing a specific set of measures for states to incorporate into their plans. EPA believes this approach will give states flexibility in what measures they put into the plans. Each state’s goal is a rate — a single number for the future carbon intensity of the state. Each state’s goal also would reflect that CO2 emissions from fossil fuel-fired power plants are determined both by how efficiently and how much they operate. The proposed rule would give states ten to 15 years to achieve the reductions, and states will be able to choose how to meet the goal through whatever measures reflect their particular circumstances. States can develop their own plans or develop regional, multi-state approaches. In the NODA, EPA provides additional information on three main issues raised by stakeholders and also solicits comment on these issues: the emission reduction compliance trajectories created by the interim goal for 2020 to 2029, certain aspects of the building block methodology, and the way state-specific CO2 goals are calculated. Comments are due by December 1, 2014. Comments on the Supplemental Proposal are due December 19, 2014.

EPA Expands List Of Acceptable Substitutes For Ozone-Depleting Substances: On October 21, 2014, EPA issued a Determination of Acceptability expanding the list of acceptable substitutes for ozone-depleting substances (ODS) under EPA’s Significant New Alternatives Policy (SNAP) program. 79 Fed. Reg. 62863. The rule lists as acceptable additional substitutes for use in the refrigeration and air conditioning, foam blowing, and fire suppression and explosion protection sectors. EPA’s SNAP program under CAA Section 612 authorizes EPA to develop lists of both acceptable and unacceptable substitutes for ODSs. Substitutes are used in a wide variety of industrial sectors, including refrigeration, cleaning solvents, and fire suppression. They are also regulated under the international Montreal Protocol, a treaty originally drafted to protect the ozone layer that has also become a venue to discuss limiting substances, including HFCs, with a high global warming potential. New substitutes include trans-1-chloro-3,3,3-trifluoropop-1-ene in non-mechanical heat transfer and in flexible poloyurethane foams. The list also includes R-450A for refrigeration and air conditioning, and methylal and hydrofluoroolefin-1336-mzz for a variety of foam blowing uses, according to the notice. The Determination was effective on October 21, 2014.

EPA Releases Annual GHG Emissions Data From Large Facilities; Releases Slightly Up: On September 30, 2014, EPA released its fourth year of Greenhouse Gas Reporting Program data, detailing GHG pollution trends and emissions broken down by industrial sector, geographic region, and individual facilities. In 2013, reported emissions from large industrial facilities were 20 million metric tons higher than the prior year, or 0.6 percent, driven largely by an increase in coal use for power generation. According to EPA, the Greenhouse Gas Reporting Program is the only program that collects facility-level GHG data from major industrial sources across the United States, including power plants, oil and gas production and refining, iron and steel mills, and landfills. The program also collects data on the increasing production and consumption of HFCs predominantly used in refrigeration and air conditioning. Over 8,000 large-emitters reported direct GHG emissions to the program in 2013, representing approximately 50 percent of total U.S. emissions. The data from these facilities show that in 2013:

  • Power plants remained the largest source of U.S. GHG emissions, with over 1,550 facilities emitting over 2 billion metric tons of carbon dioxide, roughly 32 percent of total U.S. GHG pollution. Power plant emissions have declined by 9.8 percent since 2010, but there was an uptick in emissions of 13 million metric tons in 2013 due to an increased use of coal.
  • Petroleum and natural gas systems were the second largest stationary source, reporting 224 million metric tons of GHG emissions, a decrease of 1 percent from the previous year.
  • Refineries were the third largest stationary source, reporting 177 million metric tons of GHG emissions, up 1.6 percent from the previous year.
  • Reported emissions from other large sources in the industrial and waste sectors increased by 7 million metric tons of GHG pollution, up 1 percent from 2012.

House Energy And Commerce Committee Asks DOE To Provide Information On EPA Clean Power Plan: The House Energy and Commerce Committee on September 23, 2014, sent a letter to U.S. Department of Energy (DOE) Secretary Ernest Moniz regarding the EPA proposed Clean Power Plan rule. The Committee GOP members stated that they are trying to determine whether EPA and DOE complied with the Energy Policy Act of 2005 (EPAct05) in issuing the proposed rule. The Committee has been particularly interested in whether or not EPA adhered to this statute when it was developing its proposed GHG standards for new power plants. In the letter to Moniz, Committee leaders wrote: “Information developed in our investigation has raised questions about EPA’s compliance with [the Energy Policy Act], which strictly prohibits consideration of carbon capture technologies at facilities that have received federal funding to be ‘adequately demonstrated’ under the CAA Section 111. In particular, both documents reviewed by Committee staff and briefings with agency officials indicate EPA was not aware of these statutory limitations when it was developing the proposed standards. EPA’s failure to identify and faithfully apply statutory limitations when it decided to propose standards for new power plants in September 2013 raises questions about the underlying quality and integrity of its analyses.” The Committee asked DOE to provide the requested documents by October 7, 2014. In addition to Murphy, the letter was signed by full Committee Chair Fred Upton (R-MI), Energy and Power Subcommittee Chair Ed Whitfield (R-KY), Vice Chair of the Oversight and Investigations Subcommittee Michael C. Burgess, M.D. (R-TX), Chair Emeritus Joe Barton (R-TX), and full Committee Vice Chair Marsha Blackburn (R-TN). The letter is available online.

House Passes American Energy Solutions For Lower Costs And More American Jobs Act Despite White House Veto Threat: Before adjourning for the mid-term elections, on September 18, 2014, the House of Representatives passed the American Energy Solutions for Lower Costs and More American Jobs Act (H.R. 2). The bill is an amalgam of several energy-related measures that had been introduced in the 113th Congress. The most controversial provisions in the bill would block the EPA’s proposed Clean Power Plan, approve the Keystone XL pipeline, limit regulation of hydraulic fracturing, and expand offshore drilling. Most of the measures in H.R. 2 had already been passed by the House as separate bills. In a Statement of Administration Policy issued on September 16, 2014, the White House promised to veto H.R. 2 if it were presented to the President. “The Administration strongly opposes H.R. 2, which purports to promote and increase the Nation’s energy security, but which would undermine energy security and endanger human health and the environment,” the statement reads. The White House claims that H.R. 2 “would roll back policies that support the continued growth of safe and responsible energy production in the United States. It also would discourage environmental analysis and civic engagement in Federal decision-making. Furthermore, the bill would impose a system for automatic approval of natural gas pipeline projects that could lead to confusion, increased litigation, delay, and potential denial of the projects that the bill intends to expedite. It also would circumvent longstanding and proven processes for determining whether cross-border pipelines and electric transmission facilities are in the national interest by removing the presidential permitting requirement.” The White House’s criticism of the bill does not end there, however. “H.R. 2 would endanger public health and the environment by halting U.S. progress in cutting dangerous carbon pollution from power plants, prohibiting the Federal Government from ensuring that hydraulic fracturing activities taking place on Federal and Indian lands are managed in a safe and responsible manner, and requiring the implementation of a court-vacated rule that would not adequately protect drinking water and watersheds from strip mining.”

House Science, Space and Technology Committee Holds Hearing On Proposed Clean Power Plan: On September 17, 2014, the House Science, Space and Technology Committee held a hearing entitled “The Administration’s Climate Plan: Failure by Design.” Testifying before the Committee were John Holdren, Director, Office of Science and Technology Policy, Executive Office of the President, and Janet McCabe, Acting Assistant Administrator, Office of Air and Radiation, EPA. A web cast of the hearing, member statements, and witness testimonies are available online. The focus of the hearing was EPA’s proposed Clean Power Plan rule. Committee Chair Lamar Smith (R-TX) set the tone for the hearing in his opening statement, where he stated: “Extending well beyond the power plants themselves, this rule will increase the cost of electricity and the cost of doing business. It will make it harder for the American people to make ends meet.”

EPA Extends Comment Period On Clean Power Plan: On September 17, 2014, EPA announced that it was extending the comment period on its historic Clean Power Plan proposed rule, the centerpiece of President Obama’s Climate Change Action Plan. EPA proposed the rule on June 18, 2014, with the original comment period closing on October 16, 2014. EPA has decided to extend the comment period to December 1, 2014. EPA stated that it was responding to requests from state agencies, lawmakers, and industry groups that sought additional time to prepare comments on the sweeping proposal. Despite the comment period extension, however, EPA Administrator Gina McCarthy stated that EPA still intends to promulgate the rule in final form in June 2015.