Weekly Analysis - June 21, 2013
Last Updated on Friday, 21 June 2013 15:57
Obama Climate Plan Faces Key Hurdles . . . Conservatives Push For Carbon Tax . . . Oil Industry Seeks To Reduce EPA Fuel Rules' Cost Impacts . . . Natural Gas Seen As Mid-Term Option To Cut GHGs . . . Utility Industry Touts Ozone Precursor Emission Cuts . . . Corps Spurns Call For Coal Export GHG Analysis . . . Obama Bid To Boost Renewables On Grid Prompts Utilities' Cost Concerns. More on these and other developments below:
Obama Climate Plan Faces Key Hurdles; Conservatives Push For Carbon Tax
President Obama's imminent announcement of a climate change strategy is facing early hurdles over the plan's likely focus on using the Clean Air Act to impose new greenhouse gas (GHG) rules, with a pending Supreme Court case and political opposition to such rules creating potential problems.
While not unexpected, the GOP and state criticism could complicate the administration's path forward on finalizing pending climate new source performance standards (NSPS) for both existing and newly constructed power plants. However, EPA claims it has authority to set such rules under the air law and Congress would not need to pass new legislation to approve the policies.
But the Supreme Court is weighing whether to take up a case challenging EPA's use of existing Clean Air Act authorities to regulate GHG emissions. An adverse ruling for the agency could undermine its plan to use the NSPS program to regulate utilities' GHGs.
The plan has also rekindled talk among some conservatives about pushing a carbon tax as an alternative to new rules, though prospects for Congress approving a tax are seen as slim.
Obama's climate strategy, which he could announce as early as next week, will focus on energy efficiency, renewable energy, and Clean Air Act rules, according to remarks by the president's top climate advisor, Heather Zichal during a June 19 climate policy forum in Washington, D.C. The strategy would not require lawmakers to approve legislation or provide new funding, something widely seen as virtually impossible given divisions in the 113th Congress.
In closed-door meetings in recent weeks, Obama has reportedly told donors that he will in July debut major plans to use his executive authority to address climate change, following a pledge in his January inaugural address to use such power on the issue if Congress did not pursue climate legislation. The plan is seen by some as a bid to mitigate opposition to Obama's expected approval of the Keystone XL tar sands pipeline from Canada, which critics say will boost GHGs.
But House Speaker John Boehner (R-OH) and attorneys general (AGs) from 21 states are pushing back on the administration's plan to use its Clean Air Act authority to limit GHGs from existing and newly constructed power plants. At a June 20 press conference, when asked about the president's likely plan to set "aggressive" new rules on power plants, Boehner said, "I think this is absolutely crazy. Why would you want to increase the cost of energy and kill more American jobs at a time when the American people are still asking the question, where are the jobs?"
The group of state AGs meanwhile are urging EPA to fight any attempt by other states and environmentalists to force settlement talks over a potential suit seeking a deadline for the utility GHG rules. Advocates of the policies -- who recently urged EPA to make energy efficiency a compliance option in the NSPS for existing utilities -- are holding off on such litigation until they see details of Obama's plan.
Looming in the background of the administration's pending actions on GHG rules is a forthcoming Supreme Court decision on whether to review an appellate ruling upholding EPA's authority to regulate carbon emissions. Thomas Lorenzen, a former top Department of Justice attorney, says the court's decision will be a close call. He says there are factors that make Coalition for Responsible Regulation v. EPA, "a potentially attractive case for the Supreme Court" -- including that the court did not specifically review the effect of granting EPA Clean Air Act authority to regulate motor vehicle GHG emissions on stationary sources in its 2007 Massachusetts v. EPA holding that the law allowed the agency to regulate the emissions.
The new debate over future GHG regulations also comes as the National Academies' National Research Council has released a long-awaited study of the federal tax code that finds it currently has little overall effect on GHG emissions, but the study backs the idea of a carbon tax or similar market mechanisms to directly address climate change.
Conservative backers of a carbon tax are warning fellow conservatives to embrace the idea of a "revenue neutral" tax coupled with regulatory reforms or risk getting steamrolled by what they argue would be more onerous policy proposals on GHGs pushed by "liberals" and EPA.
Oil Industry Presses EPA To Ease Cost Impacts From Major Fuel Policies
Oil industry officials are pressing EPA to take several steps to lessen the potential adverse economic impacts of major fuel air rules, including an outright waiver of its renewable fuel standard (RFS).
For EPA's proposed "Tier III" fuel air rule, the American Petroleum Institute (API) is seeking data on the agency's planned emissions credit trading system in order to assess whether projected cost savings from allowing refiners to bank and trade credits for cutting gasoline sulfur content ahead of the rule's compliance deadlines may be less than EPA predicts.
The data could heighten API's fears of high costs under the Tier III rule and could give the group another route to challenge the agency's claims that overall compliance will only cause gasoline prices to increase by about a penny per gallon. API has touted estimates by the firm Baker & O'Brien that it says highlight massive costs for refiners under the rule that they will pass on to consumers through gas price increases of up to 9 cents per gallon.
API is also urging EPA to voluntarily initiate a waiver of the RFS due to economic "harm" by citing a new study claiming the RFS is driving up fuel costs, a push that if successful could require EPA to provide long-sought clarity on how to prove "harm" in order to justify a waiver. API's push is limited for now to meetings with EPA and the White House in recent weeks, and the group has yet to decide whether to file a formal Clean Air Act wavier petition.
In California, oil company officials are criticizing newly floated draft alternative compliance options for California's landmark low-carbon fuel standard, saying the proposals to provide potential economic relief to industry under the rule amount mainly to giving the state cash to comply, providing no assurance there will be real carbon emission reductions.
Gas Seen As Mid-Term Option To Curb GHGs But Long-Term Doubts Persist
Energy and climate analysts are pushing for expanded use of natural gas as way to leverage the fuel's greenhouse gas (GHG) benefits relative to coal in the near- and mid-term, but few have begun to identify longer-term GHG controls for the sector that most say are necessary to achieve climate goals. Gas industry officials, however, are resisting calls to strengthen regulation of the sector.
The International Energy Agency (IEA) June 10 issued a report that cautioned without new GHG control policies, the United States may have cut GHG emissions as much as it can through increased use of natural gas and indicated that rising gas prices are making higher-emitting coal more competitive. The IEA report recommends four low-cost policies that the United States and other countries should adopt to curb GHG emissions from the energy sector in the short term.
The policies include increased use of efficiency measures in buildings, industry and transport, whose costs would be more than offset through reduced fuel bills; limiting the construction and use of the least-efficient coal-fired power plants; acting to halve expected releases of methane -- a potent GHG -- from the oil and gas industry; and partially phasing out fossil fuel consumption subsidies.
Similarly, the nonpartisan Center for Climate and Energy Solutions earlier this month issued a report, "Leveraging Natural Gas to Reduce Greenhouse Gas Emissions," that generally encourages increased use of gas in the short- and medium-terms, together with increased use of renewable energy sources and limits on methane emissions that result from increased production and use of gas.
The report, funded in part by the natural gas industry, notes that releases of methane from increased gas production and distribution -- which environmentalists want EPA to regulate -- "have the potential to be a significant climate issue."
Utilities Tout Emission Cuts; Corps Spurns Calls For Coal Export GHG Analysis
A coal industry group is touting data showing coal-fired utilities in upwind states have made deeper cuts to ozone-forming emissions than industrial and mobile sources, which might suggest a need for the Ozone Transport Commission (OTC) of Eastern states to shift its focus away from utilities as it pursues new air rules designed to curb emissions from upwind states.
Eugene Trisko, an attorney and energy economist who is a consultant for the American Coalition for Clean Coal Electricity (ACCCE), highlighted the long-term pollution trends at OTC's June 13 annual meeting in New Haven, CT. The data show the relative share of total ozone precursor emissions from coal-fired power plants in the Northeast, Midwest and Southeast have dropped from 14.9 percent in 1999 to 7.7 percent in 2011.
The data could bolster continued efforts from the coal sector at past OTC meetings to demonstrate that a large portion of ozone-forming volatile organic compounds and nitrogen oxides come from mobile and others sources, rather than primarily from coal electric generating units.
In another important development for the sector, the Army Corps of Engineers is rejecting demands by environmentalists and some public officials for a comprehensive "area-wide" environmental impact statement (EIS) that reviews the effects of new coal export terminals in the Pacific Northwest and takes into account the global warming impacts from coal combustion abroad.
The comments from the Corps are its first public indication that it intends to pursue neither an area-wide EIS nor an analysis of the greenhouse gas (GHG) impacts from exported coal when evaluating the terminals. Prior Corps statements telegraphed some skepticism about a broad review but also suggested the Corps was at least weighing the notion of an area-wide EIS.
Obama Bid To Boost Renewables On Grid Prompts Utility Cost Concerns
President Obama's recent memorandum directing the Department of Energy (DOE) and other agencies to better coordinate on power transmission siting and create "energy corridors" to bring more renewable energy onto the electric grid is prompting utility concerns over potentially massive costs and other adverse impacts from the plan.
Energy corridors are federally designated transmission line projects that cut across regions to relieve the problem of congestion, where electricity is constrained because there are not enough facilities to connect the electricity being produced to centers of demand. DOE was given authority under the 2005 energy law to designate corridors, but the authority was broadly contested and the agency's authority was reversed as the result of a legal challenge.
Obama's memo attempts to overcome the previous questions over DOE's authority by establishing energy corridors on federal lands, while also working to eliminate the existing siting and permitting barriers within the government that have delayed vital energy transmission projects, according to industry sources. The memo attempts to try and streamline what is currently an uncoordinated process for approval of the projects, the sources say.
The memo details principles for DOE and other departments on transmission development on federal lands, directing them to begin forming recommendations on ways to accelerate siting and permitting of new and pending multi-state transmission projects called corridors. It also directs the agencies to collaborate with a federal steering committee on infrastructure permitting, established under a separate executive order, that would include EPA in the corridor planning process.
But Obama's memo is prompting some utility officials to raise cost concerns. One source says the language is reminiscent of a controversial policy memorandum issued last year by then-Secretary of Energy Steven Chu, which directed the the federal power authorities that run the grid in the West to reconfigure the system to accommodate wind and solar resources, ignoring their statutory directive to support hydro power and keep rates low.
The "heavy emphasis on renewables" in Obama's memo is reminiscent of the Chu memo, along with other language including the use of the word "resiliency" and its goal of modernizing the electric grid, according to the source. The language makes "our ears perk up" because of concerns over who pays for the construction of these resources and the use of transmission policy to drive a specific policy goal, the source says.
Weekly Analysis - June 7, 2013
Carbon 'Cost' Revision May Drive Debate On Future GHG Rules . . . Obama Administration Support For Natural Gas Seen As Climate Policy . . . GOP Concessions Fail To Win Democratic Backing For Coal Ash Bill . . . Environmentalists Struggle In Push For Strict EPA Utility Air, Water Rules . . . House, Senate Scrutiny Could Inform Key Changes To EPA's RFS . . . Utilities Urged To Stem Revenue Loss From 'Distributed' Power . . . More on these and other developments below:
White House Carbon 'Cost' Revision May Drive Debate On Future GHG Rules
The White House's recent revision to the value it assigns the "social cost of carbon" (SCC) may drive a debate over the need for future greenhouse gas (GHG) rules, with critics of federal climate controls warning that the revised values could help justify regulations they say are unnecessary.
The Obama administration's changes in some cases double a $21-per-ton average for the SCC that it had previously assigned to the measure. The May 2013 "Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis" is used to calculate the regulatory benefits of curbing emissions, which allows it to be used to justify rules and other policy measures. The administration updated the SCC to include a range of estimates, based on the year carbon cuts are made. The increased value is likely to aid a series of pending policy measures aimed at curbing GHG emissions, including EPA's pending rule governing emissions from power plants.
However, the Institute for Energy Research is criticizing the new SCC values, saying it will allow EPA and other agencies "to justify costly regulations on energy producers, regardless of the insignificant impact on global temperatures" those rules would bring.
One of the rules that could potentially be affected by the SCC revision is EPA's delayed new source performance standards (NSPS) that would impose GHG limits on newly constructed power plants, and a related rule imposing GHG limits at existing utilities.
With the fate of the rules unclear, Xcel Energy is touting principles for the penidng NSPS for existing power plants that include credit for state clean energy programs and acknowledging utilities' early action extending back roughly a decade -- steps the company says would allow states flexibility and recognize costs already incurred to reduce emissions.
Utilities meanwhile are claiming that EPA's failure to issue a final GHG NSPS for newly constructed power plants within one year after the April 2012 proposed version means the rule is "terminated" and can never be finalized, saying EPA can only proceed if it proposes and takes comment on a new version of the rule. The argument offers a rebuttal to a potential lawsuit from environmentalists and some states trying to force issuance of the final climate NSPS.
Obama Administration's Support For Natural Gas May Serve As Climate Policy
Observers are debating whether the Obama administration is embracing natural gas as a default climate change mitigation policy, rather than proactively implementing a suite of new regulations to reduce greenhouse gas (GHG) emissions from a variety of sources. Some observers cite ongoing administration actions to promote and defend increased production and development of natural gas and the White House's reluctance to implement GHG-reduction measures as revealing the administration's preferred climate policy.
Actions to promote natural gas include the Department of Energy recently granting conditional approval for a liquified natural gas export terminal to be built in Texas, and the Bureau of Land Management recently issuing a long-awaited proposal governing hydraulic fracturing for extraction operations on public lands. The proposal would strengthen existing well integrity standards, impose first-time chemical disclosure requirements and address wastewater management. But environmentalists have attacked the proposal as woefully inadequate.
The administration's support for natural gas aligns it closely with many Republicans' views that gas is an effective way to reduce GHGs, some experts say. And some industry officials believe that focusing on natural gas expansion should be the administration's only climate change mitigation policy going forward. "I don't see a need for separate climate policy to continue the move [to reduce GHG emissions] that we have already seen," Martin Durbin, president and CEO of America's Natural Gas Alliance, told a Natural Gas Roundtable luncheon May 30.
But others disagree. Michael Levi, an energy expert at the Council on Foreign Relations, says Obama's climate policy is not natural gas but is "evolving and ongoing." He says the regulatory aspect of Obama's first term climate policy focused on cutting emissions from vehicles while the second term will focus on stationary sources.
The debate over Obama's climate change policy comes as calls from stakeholders, academic researchers and others at a recent two-day National Research Council workshop called for improved and more comprehensive data on GHGs, human health effects and social stressors, and other information needed to establish a risk assessment framework that could be applied to fracking operations, which has significantly increased natural gas production in the United States.
In California, state lawmakers have rejected several high-profile bills to crack down on fracking with new air and water regulations seen as a model for the federal government and other states. While environmentalists have mostly blamed heavy industry lobbying for killing the bills, they acknowledge that Gov. Jerry Brown (D) has indicated he supports fracking while also directing state regulators to develop new regulations for the practice.
The debate over natural gas also comes as EPA's Inspector General (IG) is launching the preliminary research phase of a review of the agency's efforts to limits releases of the potent GHG methane from pipelines used in natural gas distribution, a plan that follows the IG's finding that the agency must improve its approach for assessing emissions from the gas sector.
GOP Concessions Fail To Win Democratic Support For Coal Ash, Waste Bills
House Republicans have advanced a package of measures scaling back EPA's waste management and cleanup authorities, but a series of revisions they made to the legislation -- including dropping controversial judicial review requirements and revising a bill preempting EPA's coal ash rules -- failed to attract any new Democratic support.
During a June 6 markup, the House Energy & Commerce Committee's energy and economy subcommittee approved on a party-line vote four measures that Republicans say are intended to bolster state authorities, sending them on to the full committee for its consideration.
The legislative package includes a bill, H.R. 2218 offered by Rep. David McKinley (R-WV), that preempts EPA's authority under the Resource Conservation & Recovery Act (RCRA) to regulate coal ash and setting criteria for state permit programs. House Republicans revised H.R. 2218 to address key concerns raised by EPA and the Congressional Research Service about prior versions of the legislation, adding deadlines for the creation and implementation of state permit programs and procedural criteria for the agency to oversee such programs.
The bill also still lacks a safety standard that Democrats and environmentalists say is essential to ensure state programs are adequately protective. In addition, the criteria that the revised bill include appears to fall short of substantive elements sought in the past by Rep. Henry Waxman (D-CA).
House, Senate Scrutiny Of RFS May Affect GHG Analysis, Corn Ethanol's Role
House and Senate scrutiny of EPA's renewable fuel standard (RFS) could potentially inform a push for significant changes to the program, including how the agency assesses renewable fuels' lifecycle greenhouse gas (GHG) emissions and whether corn ethanol should continue to qualify for the RFS.
Oil and biofuel groups are pitching competing plans to House lawmakers for revising EPA's assessment of lifecycle GHGs of fuels under the RFS, with oil groups seeking more use of uncertainty in the process and biofuels groups suggesting EPA revise its assessment of fuels' impacts on land use.
The suggestions -- outlined in recent comments on a bipartisan House Energy & Commerce Committee white paper on the RFS' GHG impacts -- target a central component of the fuels program. The RFS sets annual targets for blending renewable fuels into the motor vehicle fuel supply, and requires that qualifying biofuels achieve certain minimum thresholds of lifecycle GHG reductions compared to conventional fossil fuel gasoline. A lifecycle analysis weighs all the GHG emissions associated with the entire production and use of a specific fuel.
In the Senate, Saxby Chambliss (R-GA) is pushing amendments to the pending Farm Bill that would effectively bar corn ethanol from qualifying for the RFS by creating new definitions for both renewable and advanced biofuels to promote other sources such as biomass-based fuels in lieu of corn ethanol.
One of the amendments the senator is offering would redefine "renewable fuel" to only include fuel produced from renewable biomass used to replace or reduce fossil fuels in transportation fuel and after a set date falls under the new definition of "advanced biofuel" as outlined in the amendment.
The amendment would revise the Clean Air Act to declare that a fuel may only be considered a renewable fuel for purposes of the RFS if it qualifies as an advanced biofuel -- and ethanol derived from corn is specifically excluded from the definition of advanced biofuel. Chambliss offered four amendments that would revise the definitions, applying for different years of the RFS, and the measures could gain support from groups that have criticized the RFS for diverting corn from food to fuel production, which they say is driving up corn prices and limiting supplies.
Environmentalists Struggle In Push For Tougher Power Plant Air, Water Rules
Environmentalists are struggling on two major fronts to force regulators to implement more stringent air and water pollution controls on power plants.
First, EPA is rejecting environmentalists' legal claims that the agency maximum achievable control technology (MACT) air toxics rule for existing power plants sets air quality monitoring mandates that are too weak compared with the agency's revised MACT rule for newly constructed utilities, saying the rules are based on different sets of data.
Environmentalists suing over the MACT for existing utilities in the U.S. Court of Appeals for the District of Columbia Circuit case White Stallion Energy Center LLC v. EPA submitted a May 13 letter to the court highlighting the fact that EPA imposed stricter monitoring requirements in its April 24 revisions to the new source MACT. They say that, in contrast, the agency erred by not requiring tough monitoring in the existing source MACT.
But the Department of Justice on EPA's behalf submitted a May 16 letter to the court saying environmentalists are wrong to compare the rules for existing and new plants, which rely on different administrative records.
Environmentalists are also facing limitations in their push for states to require stringent water quality controls at power plants. State permit writers are reluctant to issue strict Clean Water Act (CWA) permits governing power plants' and other facilities' cooling water systems before EPA completes its pending rule, says a recent report from EPA's Inspector General (IG).
In the May 23 report "EPA Oversight Addresses Thermal Variance and Cooling Water Permit Deficiencies But Needs to Address Compliance With Public Notice Requirements," the IG wrote that in interviews EPA officials said state determinations of best technology available as required under CWA section 316(b) -- which governs National Pollutant Discharge Elimination System (NPDES) permits for cooling water structures -- "are complicated by a reluctance of permit writers to require the installation of new technologies, which may require expensive capital investments, prior to finalization of standards" by EPA.
EPA is required under a settlement agreement with environmentalists to release the final rules setting new technology-based guidelines for intake structures at existing power plants by June 27, but at press time the White House had not yet begun its formal review, a process that usually takes 90 days, suggesting the final rule could be delayed beyond the current deadline.
Utilities Urged To Stem Revenue Losses Due To 'Distributed' Clean Power
A Federal Energy Regulatory Commission (FERC) member is urging utilities to stem potential revenue losses expected with the growth of "distributed" generation (DG) -- decentralized smaller power sources such as solar generators -- as increasing demand for cleaner DG sources could prompt conventional utilities to shutter.
Philip Moeller, a long-running FERC commissioner, said in a May 30 keynote address given at the U.S. Energy Association's annual public policy meeting held in Washington, D.C. that DG could adversely impact the economics of the traditional power market -- beginning in California and the Southwest in the next few years -- by soaking up revenues from traditional power providers and making it harder for more centralized generators to compete.
Weekly Analysis - June 14, 2013
Last Updated on Friday, 14 June 2013 14:13
Environmentalists Ramp Up Push For Strict Federal Fracking Rules . . . House Lawmakers Query RFS' Benefits, Waiver Policy . . . E15 Critics Push High Court Review Of EPA Waiver . . . DME Fuel Could Boost Trucking Sector . . . National Academies Reviews Climate 'Geoengineering' Options . . . EPA Fights Opposition To Supreme Court Hearing Air Transport Rule Appeal . . . More on these and other developments below:
Environmentalists Ramp Up Push For Strict Federal Regulation Of Fracking
Environmentalists are ramping up their push for EPA, the Interior Department (DOI) and other agencies to develop stringent regulations for hydraulic fracturing, seeking help in their effort by asking the chair of the Senate energy panel to pressure for strict agency rules.
In a recent letter to Senate Energy & Natural Resources Committee Chairman Ron Wyden (D-OR), the Natural Resources Defense Council and Sierra Club ask for his help in convincing EPA to revise its oil and gas drilling new source performance standards (NSPS) air rule to include first-time emission control requirements for fracking from oil wells. To bolster their case, environmentalists cite an EPA air plan for North Dakota that imposes stricter controls than the NSPS.
The EPA plan, a federal implementation plan (FIP) specific to the Fort Berthold Indian Reservation in North Dakota's Bakken Shale, is designed to address what the agency says are "regulatory gaps" in the NSPS, and imposes controls for flaring, or burning off, of emissions. Environmental groups in their June 5 letter to Wyden cite the FIP as a model for revising the drilling NSPS.
EPA has proposed to make revisions to certain provisions in the NSPS, but they would largely grant industry requests for exemptions. Environmentalists are claiming EPA's proposal would violate the Clean Air Act because it offers industry overly broad exemptions from the rule and does not meet a "best system of emissions reduction" requirement under the air law.
Wyden meanwhile is poised to seek clarification from the Department of Interior (DOI) on how it plans to ensure that it can enforce controversial provisions in its pending fracking regulation that allow drillers to report their chemical usage to the voluntary FracFocus database.
FracFocus critics fear that allowing disclosure to the state-run database is inadequate in part because there is limited opportunity to enforce against parties that falsely certify the data as accurate.
Wyden's upcoming query is in line with his pledge to consider a combination of federal measures -- either administrative and legislative -- to help states manage the shale gas boom.
Environmentalists are also seeking stricter regulation of fracking chemicals through EPA's recent Toxic Substances Control Act (TSCA) significant new use rule. The rule requires companies to submit data on environmental and health effects for 15 chemicals, including a substance used in fracking. This has prompted observers to question whether the rule hints at future agency attempts to regulate fracking under TSCA.
While the rule "does not implement a broad reporting requirement for hydraulic fracturing chemicals, it points to the likelihood of increased reporting for these substances," write attorneys with Morgan Lewis in a May 15 National Law Review article. "What is unclear, for the moment, is whether this new rule is a stopgap measure or a preview to a comprehensive proposal for TSCA reporting requirements for hydraulic fracturing chemicals."
House Lawmakers Query Renewable Fuel Standard's Benefits, Waiver Policy
Signaling further congressional scrutiny of EPA's renewable fuel standard (RFS), House lawmakers are raising questions over the program's energy security benefits and the agency's definition of "economic harm" necessary for groups seeking a waiver of the RFS mandates.
The House Energy & Commerce Committee is querying the energy security benefits of the RFS, issuing a bipartisan white paper that seeks input from oil, renewable fuel and other industry groups on whether there is a need to modify the program in order to help further displace reliance on foreign fuels. The paper is the fourth in a series examining a variety of areas impacting the RFS.
Previous white papers -- seen as laying the groundwork for possible energy panel hearings on the RFS -- asked for comment on the program's impacts on fuel compatibility, the agricultural sector, and its assessment of greenhouse gases (GHGs) from fuels. A pending fifth and final paper will assess fraud in the RFS credit market.
The June 7 security white paper questions the RFS' role in energy security benefits given the United States' changing energy dynamics due to newly found oil and gas supplies; increased vehicle fuel economy; growing use of natural gas and electric vehicles; and overall lower gasoline demand -- though the committee takes no policy positions.
At the same time, House Republicans are urging EPA to issue criteria for the "severe" economic harm factors it will consider in reviewing requests for waivers of the RFS based on such harm, saying the agency's existing approach appears "arbitrary" and subjective and therefore impossible for waiver proponents to satisfy.
But EPA's top transportation official told lawmakers that the agency reviews severe economic harm claims on a "case-by-case basis" and that a set definition of harm would ignore specific situations in each waiver request. States and some industry groups have made waiver requests in the past by claiming economic harm from the RFS' renewable fuel production mandates, but the agency has rejected all the requests by citing insufficient proof of harm.
Meanwhile, Sen. Sheldon Whitehouse (D-RI) is suggesting advocates of EPA GHG rules and climate bills should mute their push for action until after the Senate votes on EPA air chief Gina McCarthy's nomination to head the agency, saying climate rule supporters need to be "a little bit quiet" until the fight over McCarthy ends.
E15 Critics Push For High Court Review, DME Fuel Eyed To Boost Trucking
A pending Supreme Court case poses a key test for EPA's efforts to expand circulation of higher ethanol blends, and also on the issue of when groups can sue over agency regulations.
Industry critics of EPA's waiver allowing sales of ethanol blends up to 15 percent (E15) are urging the Supreme Court during its June 20 conference to grant their petition seeking review of an appellate ruling that upheld the waivers, saying the court should use the case as a vehicle to resolve a circuit split on when groups not directly regulated by EPA rules have "standing" to sue.
Citing past cases where the high court has resolved competing circuit opinions about whether an issue like standing is "jurisdictional" and must be considered by courts, the critics of the waiver say in a June 3 brief to the high court that the E15 suit gives justices a chance to definitively say whether "prudential" standing is an issue courts must consider in allowing cases to proceed.
Justices are scheduled to decide at their June 20 conference whether to take up the case, Grocery Manufacturers Association (GMA) v. EPA. If the justices decide to review the suit -- a decision that would likely not be announced until June 24 -- it could potentially lead to a significant ruling on when plaintiffs have standing to sue over EPA rules if they are not directly affected by the policies, with a decision either expanding the scope of standing or limiting the right to sue.
Meanwhile, the trucking industry and fuel production officials are touting dimethyl ether (DME), a fuel that can be derived from natural gas, as a "viable fuel for the future" that could begin to replace diesel in heavy-duty trucks without facing the distribution, storage, fueling and other infrastructure problems associated with other alternative fuels.
Promoters of the fuel say the benefit of DME is that it can be made with small-scale production modules using natural gas feedstock produced from oil drilling, biomass and wastewater treatment plants that is currently wasted because it is produced in small volumes or at remote locations. Advocates of the fuel imagine converting commercial fleets able to use the fuel and installing small-scale DME production units where the fleets operate.
National Academies Launches Review Of Climate 'Geoengineering' Options
The National Academies' National Research Council (NRC) is in the early stages of a study to assess the risks and consequences of several "geoengineering" technologies for minimizing climate change, opening the door to a debate on an approach that up to now has been shunned by experts who consider it environmentally risky and a diversion from greenhouse gas (GHG)-reduction efforts.
The NRC study -- launched quietly in April at the request of National Aeronautics and Space Administration, National Oceanic and Atmospheric Administration and the intelligence community -- will consider several possible geoengineering technologies, likely including ocean "fertilization," injection of sulfate aerosols into the atmosphere and cloud "brightening."
The NRC study, Geoengineering Climate: Technical Evaluation and Discussion of Impacts, comes amid continued questions and controversy on the merits of geoengineering, a discussion that has been percolating for years as a backdrop to discussions over GHG controls but has periodically been thrust into the limelight because of nascent experimentation and slow progress on GHG cuts.
Such technologies aim to either remove carbon dioxide from the atmosphere, an approach known as carbon dioxide removal, as is the case when fertilizing the ocean with iron, or to conduct solar radiation management using techniques such as sulfate injection to increase solar reflection and injecting seawater into the air to increase cloud formation.
Meanwhile, environmentalists are urging Rep. Chris Van Hollen (D-MD), the ranking Democrat on the House Budget Committee, to reintroduce climate "cap and dividend" legislation that could lay down a fresh legislative marker for capping climate emissions and rebating proceeds from the program to consumers that may face higher energy bills.
In California, a utility's plans to close a major nuclear power plant is likely to drive up prices for GHG allowances and offsets under the state's landmark climate trading program, as it will boost reliance on power supplies with high GHG emissions that companies must pay to offset.
EPA Fights Critics' Opposition To Supreme Court Review Of Utility Air Rule
EPA is fighting arguments raised by some states and industry groups for the Supreme Court to reject the agency's bid for review of an appellate ruling that scrapped its air transport rule to curb emissions from coal-fired power plants, saying critics of the rule are wrong to claim there needs to be a circuit split to take the case or that the issues in the suit are unlikely to recur.
The push-back, outlined in a June 3 brief by the Department of Justice on EPA's behalf, comes ahead of the high court's June 20 conference to decide whether to take the suit, EPA, et al. v. EME Homer City Generation, et al. The U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 ruling issued in August found that EPA exceeded is Clean Air Act authority in how it implemented the Cross-State Air Pollution Rule (CSAPR) utility program.
CSAPR would have established an emissions trading program for sulfur dioxide (SO2) and nitrogen oxides (NOx) from power plants in 28 states in the eastern half of the country. The rule was a replacement for the Bush-era Clean Air Interstate Rule (CAIR) that the D.C. Circuit remanded to EPA after finding legal flaws in the rule. Eastern states say an air transport rule to curb SO2 and NOx from upwind states is vital to helping them attain EPA's national ambient air quality standards.
Meanwhile, environmentalists are suing coal-mining firms and railroads in an effort to force them to limit the water pollution impacts of transporting the fuel and its byproducts, seeking a novel court ruling that cars carrying coal and other pollutants are "point sources" requiring discharge permits under the Clean Water Act -- an untested interpretation of the law that the plaintiffs say could require industry to seek permits for individual rail cars.
In a June 5 complaint in Sierra Club, et al. v. Burlington Northern Santa Fe Railway Company, et al, filed in the U.S. District Court for the Western District of Washington, Sierra Club and others argue that when coal and coal dust are dislodged from open-top train cars during transportation and fall into a jurisdictional water body, they amount to a "discharge of a pollutant" under the CWA.
Weekly Analysis - May 31, 2013
Texas Rules, Senate 'Forums' Highlight State-Federal Fracking Debate . . . Pending Court Actions Raise Stakes For Coal Utility Permitting . . . Judge's Opinion, EPA Opposition May Stymie Bid For High Court Review Of E15 Waivers . . . EPA Seeks To Boost Use Of CHP For Grid Resiliency . . . More on these and other developments below:
Texas Rules, Senate 'Forums' Highlight State-Federal Debate Over Fracking
Texas' recent tightening of its hydraulic fracturing rules is spurring environmentalists to call it a model for federal fracking rules even as others say it shows adequate state regulation, while Senate energy panel "forums" are weighing the scope of any federal rules -- highlighting the ongoing debate over whether states or the federal government should take the lead on regulating fracking.
Environmentalists hope that Texas' May 24 final rule amending and tightening its "Rule 13" on well construction for oil and gas operations will prompt stricter fracking rules at the federal and state level. They say Texas' recent tightening of the standards should help to bolster their push for strengthening a pending Bureau of Land Management (BLM) regulation governing fracking operations on federal land, and for stricter fracking rules in other states.
Among the changes Texas adopted in its rules are new or clarified standards for pressure testing of well casings; testing and monitoring requirements where the vertical distance between fracking and groundwater supplies is less than 1,000 vertical feet; and requirements to "isolate and control" gas migration and zones with the potential to cause damage to well materials.
Sierra Club describes the standards as "significant progress" in a broader ongoing effort to modernize a range of Texas drilling standards. The Environmental Defense Fund (EDF) plans to make an example of the Texas regulation and a similar rule approved in 2012 in Ohio in upcoming comments to BLM on its latest version of proposed fracking regulation.
However, some lawmakers and other opponents of federal fracking rules have touted existing or pending state regulations as a reason to minimize new federal burdens. Stricter state controls on fracking could potentially bolster those claims in opposition to federal rules.
But environmentalists counter that the varying state requirements have created a patchwork of oil and gas extraction regulation and want BLM's pending rule to set a floor on minimum fracking controls that states could then opt to exceed.
At the same time, Senate Energy & Natural Resources Committee Chairman Ron Wyden (D-OR) is asking participants in a series of natural gas forums to provide views on two hot-button issues associated with regulating fracking -- whether to require disclosure of fracking fluids prior to injection and whether fracking causes water contamination. Wyden's move could open the door to discussion on possible legislative efforts to advance new fracking regulations.
Wyden's request that natural gas panel participants provide comments on disclosure of fracking fluids and possible water contamination came during a May 23 forum where senators, industry, states and environmentalists sparred over the need for new federal environmental requirements to regulate shale gas development. Wyden asked several times whether there was a need for some kind of "federal minimum standard" or "backstop" along with "appropriate deference to the states."
While Wyden appeared to leave the door open to future legislation, saying during the hearing that he plans to consult with his Senate colleagues "about ideas about how we might proceed," he added that "there is not a bill that is going to be sprung on people."
Pending Court Actions Raise Stakes For Future Coal Power Plant Permitting
Several ongoing legal fights over how EPA permits and enforces pollution rules on coal-fired power plants are raising the stakes for the future economics and operation of the utilities.
For example, key appellate courts appear to be leaning toward rejecting agency arguments that new source review (NSR) enforcement actions are subject to a general five-year statute of limitations. This could limit EPA's ability to enforce some NSR permits for energy facilities subject to the permitting program, such as coal-fired power plants.
Separately, EPA in a new legal filing is broadly rejecting a utility industry lawsuit claiming flaws in the agency's new source performance standard (NSPS) to reduce conventional pollutants from new and existing power plants, with the agency saying it has Clean Air Act authority for its emissions testing requirements and several other provisions.
In the suit, Railroad Commission of Texas, et al., v. EPA, now before the U.S. Court of Appeals for the District of Columbia Circuit, industry is seeking broader regulatory exemptions and fewer testing requirements for particulate matter (PM) than EPA has required, in one of several related challenges to the agency's suite of regulations governing the utility sector. The case challenges two final NSPS rules, issued in January 2009 and February 2012.
But in a win for EPA -- and a sign of potential stricter environmental review requirements for coal plants -- the U.S. Court of Appeals for the District of Columbia Circuit has upheld a lower court ruling requiring a full National Environmental Policy Act (NEPA) review of the Sunflower Electric Cooperative's long-planned Holcomb 2 coal-fired power plant in Kansas, likely further delaying construction of one of the few planned coal-fired power plants.
Meanwhile, fearing lengthy litigation over EPA's pending cooling water rules for power plants, environmentalists are urging states to update permits that have not been revised in accordance with statutory limits, in an effort to force adoption of site-specific controls that could eventually be used to strengthen the agency's pending policies.
In separate May 16 letters to the heads of the New Jersey and Delaware environmental agencies, environmentalists charged that the states' delays in revising permits for a refinery in Delaware and a power plant in New Jersey violate EPA policy mandates that states use their best professional judgment while they await the rule, as well as court precedents barring lengthy delays.
But a recent appellate ruling rejecting plaintiffs' efforts to order EPA to update National Pollutant Discharge Elimination System permits after the five-year statutory deadline has passed may make it difficult for environmentalists to force states to act.
Judge's Opinion, EPA Opposition May Stymie Industry Suit On E15 Waivers
An appellate judge's recent opinion and a new EPA legal filing may pose fresh hurdles to an ongoing effort by the food and oil industries to overturn the agency's waivers allowing sale of 15 percent ethanol (E15). The industries are attempting to convince the Supreme Court to review a recent appellate decision that they lack standing to challenge the E15 approval.
In a May 28 concurring opinion in a suit over an EPA air toxics rule, Association of Battery Recyclers (ABR), Inc. et al. v. EPA, Senior Circuit Judge Laurence Silberman of the U.S. Court of Appeals for the District of Columbia Circuit rebutted arguments made by fellow Judge Brett Kavanaugh, who had argued in his dissenting opinion in the E15 case, Grocery Manufacturers Association (GMA) v. EPA, that the circuit incorrectly bars suits from proceeding when the court finds that petitioners lack "prudential" standing.
Prudential standing is a judicially created concept that grants litigation rights to parties that are not directly harmed by actions, such as EPA rules, but can demonstrate that they are still within the "zone of interest" that they deserve a right to sue. According to the ABR ruling, the D.C. Circuit has established that prudential standing is "a jurisdictional issue which cannot be waived or conceded."
Silberman's dissent could bolster EPA's arguments in a May 24 brief urging the high court to reject the industry groups' petitions seeking review of the D.C. Circuit's GMA ruling. In its brief, EPA argued that the industry petitioners incorrectly claimed that the underlying appellate ruling is based on flawed conclusions on the groups' standing to sue.
Meanwhile, EPA is extending by 18 days the public comment deadline on its proposed "Tier III" fuel and vehicle emissions rule, which could help address the oil sector's criticism that the agency's previous deadline setting a 23-day comment period violated statutory requirements to give stakeholders at least 30 days to weigh in on the rule.
And the Institute for Policy Integrity (IPI) is holding off on filing a suit to try and force EPA to regulate the carbon content of motor and aviation fuel despite the end of a 180-day notice period that allows the group to sue, creating uncertainty about when -- or whether -- IPI will pursue the suit.
EPA, White House Seek To Boost Utilities' Use Of CHP For Grid Resiliency
EPA and the White House are working with utilities to try and encourage greater use of combined heat and power (CHP) and distributed power generation as key strategies for bolstering the electric grid's resiliency, including ways to overcome financial hurdles to greater use of CHP and end some utilities' opposition to reliance on CHP. Administration officials are also lauding CHP as a key feature for power infrastructure in the face of emerging climate threats.
The Obama administration hopes the talks with utilities will help in its efforts to mitigate against the risk from future extreme weather events such as Hurricane Sandy; promote greater use of CHP to meet President Obama's August 2012 executive order directing federal agencies to take steps to add 40 gigawatts of CHP to the grid by 2020; and help cut emissions associated with power generation to help the sector comply with a suite of EPA rulemakings.
Key officials from the Obama administration detailed the outreach with utilities over promoting CHP for resiliency planning at a May 23 CHP Association conference in Washington, D.C.
The administration is also moving cautiously to ensure that key infrastructure is more resilient in the face of emerging climate threats, taking some steps to advance the effort -- such as encouraging utilities to support increased use of CHP to decentralize the grid -- but resisting others, including requiring consideration of rising sea levels in wastewater infrastructure consent decrees.
Meanwhile, EPA's Inspector General (IG) has agreed to assess how well the agency has improved the energy efficiency of its facilities as a way to cut greenhouse gas (GHG) emissions, in response to an inquiry from congressional Democrats, But the IG is deferring to EPA on the lawmakers' request to assess the most effective way the agency could use its powers to cut GHGs.
Lawmakers' request for the IG report was driven by a Government Accountability Office decision to list potential federal liabilities due to climate change, such as increased crop and flood insurance risks, as a "high risk" area in need of policy reform.