Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

This post was written by Lawrence Demase, Douglas Everette, Robert Frank, Arnold Grant, Todd Maiden, Jennifer Smokelin, Robert Vilter and David Wagner.

As we look forward to 2012, the environmental and energy attorneys at Reed Smith will be on top of a range of issues, and offer the following analysis of what we view, in no particular order, to be 10 key issues likely to affect you and your business in 2012. This post is based on input and analysis from Reed Smith attorneys across the United States. The 10 issues to watch are:

1. Offshore wind power generation
2. Renewable energy incentive programs
3. Hydraulic fracturing regulation
4. Aggregation
5. Greenhouse gas litigation
6. California's cap-and-trade program
7. California's Green Chemistry program
8. New mercury standards for coal and oil-burning power plants
9. Fallout from CERCLA decision in Burlington Northern and Santa Fe Railway Co. v. U.S.
10. Conflict minerals and disclosure requirements

Please return to blog regularly and participate in our quarterly teleseminar to get updates and analysis on these and many other environmental and energy issues.

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On Wednesday, Reed Smith held its quarterly environmental and energy law resource teleseminar and the slides and audio are available for download. We were ambitious and discussed 10 key issues likely to affect you and your business in 2012. Our high level discussion was on the following:

1. Offshore wind power generation
2. Renewable energy incentive programs
3. Hydraulic fracturing regulation
4. Aggregation
5. Greenhouse gas litigation
6. California's cap-and-trade program
7. California's Green Chemistry program
8. New mercury standards for coal and oil-burning power plants
9. Fallout from CERCLA decision in Burlington Northern and Santa Fe Railway Co. v. U.S.
10. Conflict minerals and disclosure requirements

Be sure that we will monitor and analyze these issues and many other environmental and energy issues through the year on our blog and in future teleseminars.

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Please join us for this upcoming one-hour teleseminar. As part of our quarterly teleseminar series, the Reed Smith Energy and Natural Resources group will provide insight into the top ten environmental and energy issues to watch in 2012. This complimentary program is on Wednesday, January 25, 2012 from 12 to 1 pm ET. Please use the link below to register.

Topics will include:

• Hydraulic fracturing regulation
• Aggregation
• Greenhouse gas litigation
• California's cap-and-trade program
• Chemicals regulation (possible TSCA reform and California's Green Chemistry)
• New mercury standards for coal and oil-burning power plants
• Renewable energy incentive programs
• Offshore wind power generation
• CERCLA: Fallout from Burlington Northern and Santa Fe Railway Co. v. U.S.
• Conflict minerals and disclosure requirements

Speakers: Larry Demase (Pittsburgh), Douglas Everette (Washington D.C.), Bob Frank (Philadelphia), Arnold Grant (Chicago), Todd Maiden (San Francisco), Jennifer Smokelin (Pittsburgh), Robert Vilter (New York), and David Wagner (Pittsburgh). To read more about our speakers, please click the attorney's name.

After registration, you will be provided with the dial-in number and a link to view the presentation on the web. At the conclusion, you will have the opportunity to participate in a question-and-answer session. We look forward to you joining us!

TO REGISTER: Please, click here.

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This post was written by Luke Liben and Nicolle Bagnell.

As we've discussed, the Pennsylvania Department of Environmental Protection (PADEP) issued a draft policy regarding limitations on aggregating emissions from Marcellus shale gas facilities on October 12, 2011. The draft policy utilizes a distance of 1/4 mile as the main criteria for determining if plants in proximity to one another should be viewed as individual minor sources of emissions, or one major source of emissions. In a letter dated November 21, 2011, Diana Esher of the Environmental Protection Agency (EPA), Region III Air Protection Division, reportedly said the new draft policy “appears to alter the conventional way in which aggregation determinations have been made federally and by PADEP.” Ms. Esher also reportedly indicated that the draft policy could be interpreted to allow emissions sources to escape otherwise strict emission standards by shaking the designation of a “major” source. However, as noted by Kathryn Klaber, head of the Marcellus Shale Coalition, the bright line 1/4 mile test provides an easy to understand, easy to enforce, and predictable rule. The public comment period for PADEP’s draft policy closed on November 21, 2011.

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This post was written by Mark Mustian.

On December 2, the U.S. Environmental Protection Agency (USEPA) proposed revisions to a series of controversial regulations aimed at controlling emissions of hazardous air pollutants (HAPs) from industrial, commercial, and institutional boilers. These revisions are to regulations finalized in March, and then delayed in May. The regulations in question are actually three separate, but interrelated regulations. USEPA is proposing revisions to emission standards for (1) Major Source Industrial, Commercial, and Institutional Boilers and Process Heaters; (2)Area Source Industrial, Commercial, and Institutional Boilers; and (3) Commercial/Industrial Solid Waste Incinerators. By way of terminology, know that a major source is a stationary source which has the potential to emit 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants. Also, an area source is a stationary source that is not a major source. And a commercial/industrial incinerator is any unit at a commercial or industrial facility which combust solid wastes.

The new proposed regulations are revisions to the regulations finalized back in March. USEPA is not proposing to revoke the previously finalized regulations. Instead, they are proposing to amend the existing regulations, based upon additional data and upon the input from the regulated community and interested parties. The impact of each proposal is discussed after the jump.

As you'll see below, USEPA is not proposing to significantly modify the structure of regulation developed for the March rulemaking but the proposed changes will increase flexibility and reduce some monitoring requirements and cost. Nonetheless, we still expect that many existing boilers will not be able to comply with the new requirements. In order to comply, they will likely need to look at alternatives, such as fuel switching, boiler rebuild or add-on controls, which will likely increase costs for the facility. The facilities most affected by these regulations will be major source facilities, facilities operating large solid fuel boilers, and solid waste incinerators. Those groups in particular need to start preparing for compliance. Unless the regulations get tossed out by the courts, it is likely that the requirements in their current form will be imposed upon the regulated community.

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This post was written by Todd Maiden, Donald Ousterhout and Brendan McNallen.

On October 20, the California Air Resources Board ("CARB") approved the final regulation for the California cap-and-trade program authorized by California's Global Warming Solutions Act (AB 32). As anticipated, CARB approved recent modifications to the regulation proposed in July and September 2011, paving the way for a cap-and-trade program with a compliance start date of January 1, 2013 for most entities covered by the regulation.

Under the cap-and-trade program, certain facility operators, including the operators of electricity generating facilities located in California, electricity importers and self-generators of electricity, will need to comply with California's mandatory reporting regulation if such entity's reported annual emissions in any year from 2008 to 2011 equal or exceed thresholds identified in the regulation. The applicability threshold for most facility operators, including electricity generating facilities, is currently set at 25,000 metric tons or more of carbon dioxide equivalent ("CO2e") per data year. An entity that has emissions from combustion of biomass-derived fuels is required to report and verify its emissions under the mandatory reporting regulation, but emissions from certain source categories (including the geothermal generating units and facilities) and certain biomass fuels (including biodiesel, fuel ethanol and agricultural crops or waste) will not be subject to the compliance obligation.

An entity that meets or exceeds the thresholds in the regulation in any year from 2008 to 2011 must register with CARB by January 31, 2012. An entity cannot hold a compliance instrument discussed below until the CARB Executive Officer approves the entity's registration.

The final regulation incorporates modifications to the regulation proposed in July and September 2011, including adjusting the start date for the first compliance period from January 1, 2012 to January 1, 2013. A covered entity must surrender one compliance instrument for each metric ton of CO2e emissions to meet its annual and triennial compliance obligations (as calculated pursuant to formulas set out in the regulation) beginning with the emissions data report for 2013 emissions, and for each subsequent year in which the covered entity has a compliance obligation.

Compliance instruments include allowances, CARB offset credits or sector-based offsets credits. Two auctions for emissions allowances are slated for 2012—on August 15 and November 14—and auctions will then be held quarterly beginning in 2013. The final regulations set forth the requirements for, and procedures for obtaining, CARB-issued offset credits, registry offset credits and sector-based offset credits, including the requirement that greenhouse gas emission reductions must be real, additional, permanent, quantifiable, verifiable and enforceable.

If you would like additional information about the California cap-and-trade program or have questions about your company's compliance obligations, please contact one of the the authors.

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This post was written by Larry Demase, Lou Naugle and Jennifer Smokelin.

Yesterday, we reported on the Pennsylvania Department of Environmental Protection’s (DEP) announcement of a proposed technical guidance for single stationary source determinations for oil and gas operations (the Single Source Guidance). Here’s our analysis of the proposal, including some background information, a discussion of the guidance and our thoughts on its potential impact.

Background

First, you should know that aggregation is the process of determining whether emissions from multiple operations should be aggregated into a single source for air permitting purposes. A significant issue related to oil and gas operations is whether emissions from individual operations such as wells, processing plants and compressor stations should be combined so that they become major sources for permitting purposes, subject to Title V requirements and New Source Review. When aggregation is at issue, individually the operations are not considered “major” for any contaminant.

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This post was written by Nicolle Snyder Bagnell and Ariel Nieland.

The Pennsylvania Department of Environmental Protection announced today that it has submitted its technical guidance for single source determinations for oil and gas operations to the Pennsylvania Bulletin for public comment. The Department's guidance deals with the determination of whether two or more stationary sources should be aggregated together and treated as a single source of air emissions for the purposes of air permitting requirements. Specifically, the guidance involves three sets of regulations: the federal Prevention of Significant Deterioration, or PSD, regulations; the Pennsylvania nonattainment New Source Review regulations; and the Title V program. Click here for the full text of the technical guidance.

The public may comment on the air aggregation determination guidance until November 21, 2011.

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This post was written by David Wagner.

On Wednesday, Reed Smith held its quarterly environmental and energy law resource teleseminar and the slides and audio are available. We discussed current or emerging issues under five general categories. The categories and discussion included:

• Legislation/Rules — We reviewed the key points and effective dates related to the New Source Performance Standards for the oil and gas industry as well as for utilities and refineries.
• Litigation — A big environmental litigation issue involving the oil and gas industry is the aggregation of air emissions from diverse sources and we discussed recent challenges to air permits involving this issue. We also discussed the U.S. Supreme Court's recent denial of certiorari in Morrison Enterprises v. Dravo Corporation and the implications on CERCLA cost recovery and contribution claims.
• Policy and Technology — On this front, our presentation focused on a recent DOE report on the need for additional disclosure, and the policy implications related to the interplay between the U.S. Environmental Protection Agency and Federal Energy Regulatory Commission.
• International Issues — Here we provided a brief preview of the upcoming COP in South Africa and the fate of the Kyoto Protocol
• State Issues — On the state level, we focused on California and summarized recent developments regarding the implementation of the California Global Warming Solutions Act (aka AB32) and California's “Green Chemistry” Initiative.
   

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This post was written by David Wagner.

We expanded the scope of our quarterly teleseminar to include hot topics in environmental and energy law and invite you to join us. It’s on Wednesday, October 5, 2011 from 12 to 1 pm ET. There’s no cost but we do ask you to R.S.V.P. At the teleseminar, we’ll provide a regulatory update on five major legal developments in the environmental and energy law world:

• Legislation/Rules — The hottest issue in new rules is the New Source Performance Standards for the oil and gas industry as well as for utilities and refineries. Our team will review the high points and effective dates, what industry should look out for, and likely challenges.
• Litigation — A current issue in litigation, especially in the oil and gas industry, is aggregation of air emissions from diverse sources. We will discuss recent challenges to air permits involving this issue. Also, our team is challenging a CERCLA 107/113 appeal for cert to the United States Supreme Court – tune in to hear the latest in that area.
• Policy and Technology — The policy framework behind fracking is in its infancy and studies to determine or influence policy framework abound. Our team will discuss recent DOE and USGS papers, as well as industry studies, concerning emissions. In addition, we will touch on the significance of the U.S. Supreme Court in Sackett v. EPA. We will also tackle the policy implications of interplay between the U.S. Environmental Protection Agency and Federal Energy Regulatory Commission.
• International Issues — In the international arena, all eyes are on the upcoming COP in South Africa and the fate of the Kyoto Protocol. Our team will discuss these issues, as well as their implications for EU business and EU greenhouse gas regulations.
• State Issues — We will focus on California with a summary of recent developments regarding the implementation of the California Global Warming Solutions Act (aka AB32) and California's “Green Chemistry” Initiative.

To sign up, please email Sandy Petrakis.

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This post was written by Jennifer Smokelin.

By September 30 of this year, 28 industrial sectors -- including power plants, petroleum refineries and landfills -- will be required to submit their 2010 greenhouse gas data under the U.S Environmental Protection Agency's (USEPA) Greenhouse Gas Reporting Program. You may recall that the September 30, 2011 deadline was pushed back from March 31. To facilitate the reporting, USEPA launched a new and improved greenhouse gas reporting tool this week known as the electronic Greenhouse Gas Reporting Tool, or e-GGRT, that will allow the top emitters in the country to submit their 2010 greenhouse gas pollution electronically. USEPA expects to receive 2010 greenhouse gas data from approximately 7,000 large industrial greenhouse gas emitters, including power plants, petroleum refineries and landfills. To provide a sense of the scale of the program, these emitters are responsible for 70 percent of the United States' greenhouse gas emissions. The Agency plans to publish non-confidential greenhouse gas data collected through the tool by the end of 2011

USEPA has indicated that, under the GHG Reporting Program, entities required to submit data must register with e-GGRT no later than 60 days before the reporting deadline, or August 1, 2011. If you have missed the August 1 deadline, USEPA still strongly encourages all reporting entities to register as soon as possible, and has stated that a good faith effort to register as soon as possible after the August 1 deadline "will be taken into consideration". This cryptic statement is open to interpretation and if you have not registered and wish to use e-GGRT, we recommend you register immediately then confirm with USEPA that your registration is accepted before relying on the registration to report using e-GGRT.

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This post was written by David Wagner.

Aggregation is the process of determining whether emissions from multiple locations should be aggregated into a single source for air permitting purposs. In the Marcellus Shale play, it's a big environmental issue and Reed Smith environmental attorneys are focused on it in a few ways. Reed Smith represents a defendant in an aggregation case and we also examined aggregation issues in a teleseminar yesterday. The teleseminar, presented with AECOM, discussed U.S. Environmental Protecton Agency guidance, federal aggregation cases, state aggregation cases and some of the pitfalls of aggregation. Feel free to review the slides and the audio from the event.

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This post was written by Steve Nolan.

In previous posts, we have reported the vacation of the Clean Air Interstate Rule (CAIR) in 2008, CAIR's subsequent, temporary resuscitation later that year, and the 2010 release of the draft Transport Rule which was proposed to replace CAIR. On July 7, 2011, the U.S. Environmental Protection Agency (USEPA) released the final version of this rule, now renamed the Cross-State Air Pollution Rule (Cross-State Rule).

The Cross-State Rule is specifically directed at emissions from electric generating units in classes 2211, 2212 and 2213 of the North American Industry Classification System. Like CAIR, the new rule is intended to help downwind states achieve USEPA's National Ambient Air Quality Standards (NAAQS) for fine particulate matter and ozone. Also like CAIR, the new Cross-State Rule actually regulates sulfur dioxide (a chemical precursor of fine particulate matter) and nitrogen oxides (a chemical precursor of both fine particulate matter and ozone) generated by upwind states.

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This post was written by Jennifer Smokelin.

As anticipated in an earlier blog post and discussed during a recent Reed Smith teleseminar, on July 1 the U.S. Environmental Protection Agency (USEPA) issued a final rule to defer biomass from greenhouse gas (GHG) regulation for three years so that USEPA can properly study biomass emissions and make a considered determination regarding regulation of GHG emission from biomass. Over this time period, municipal solid waste landfills releasing GHGs from decomposing biomass and industrial plants that burn woody biomass will not need permits before starting construction or expansion and will not need Title V operating permits. However, facilities that co-fire biogenic and fossil fuels would still be required to count the fraction of CO2 associated with fossil fuel combustion towards their Prevention of Significant Deterioration (PSD) applicability determination. Further, the deferral would not apply to other GHGs (e.g., methane) or non-greenhouse gas pollutants that are otherwise subject to PSD and Title V permitting at landfills or industrial facilities.

In the final rule, USEPA will defer for three years the consideration of biogenic CO2 emissions under the Tailoring Rule. To facilitate the deferral, USEPA revised the definition of the term “subject to regulation” to exclude biogenic CO2 emissions from stationary sources. The deferral would apply only to CO2 emissions from the combustion and decomposition of biologically-based material. And such emissions will not count towards the PSD applicability determination for greenhouse gases. Some emissions that would be deferred by the rule include:

• CO2 generated from the biological decomposition of waste in landfills, wastewater treatment or manure management processes;
• CO2 from the combustion of biogas collected from biological decomposition of waste in landfills, wastewater treatment or manure management processes;
• CO2 from fermentation during ethanol production or other industrial fermentation processes;
• CO2 from combustion of the biological fraction of municipal solid waste or biosolids;
• CO2 from combustion of the biological fraction of tire-derived fuel; and
• CO2 derived from combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material.

For municipal solid waste landfill owners, it's worth restating the obvious: because CO2 generated from the biological decomposition of waste in landfills and CO2 from the combustion of biogas collected from biological decomposition of waste in landfills is deferred for three years, this deferral could be significant to your operation.

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This post was written by David Wagner.

Last week, we discussed recent international and U.S. developments related to greenhouse gas regulation, and here are the slides and audio from the event. In particular, we addressed:

• How the uncertain future of the Kyoto Protocol and the Clean Development Mechanism affect U.S. business (You can also find details on this issue here)
• What your business needs to know for compliance and planning related to step 2 of USEPA's greenhouse gas Tailoring Rule
• Implications of the court's "cap and trade" ruling in Association of Irritated Residents v. California Air Resources Board
• Developments in state courts including upcoming decisions on insurers' obligation to defend and/or indemnify covered insureds for public nuisance, and other types of claims based on third-party allegations of damages from climate change
   

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This post was written by Jennifer Smokelin.

On June 13, the U.S. Environmental Protection Agency (USEPA) indicated that it would take additional time to review input on proposed greenhouse gas emissions limits on New Source Performance Standards for new and existing power plants. The Agency stated that it will propose the new rules by September 30, 2011, instead of the original deadline of July 26. USEPA still plans to finalize the rules in late May 2012.

New Source Performance Standards are technology-based emissions limits issued under Section 111 of the Clean Air Act that apply to new and in some cases existing facilities in a specific industrial sector. NSPSs are a set of rules distinct from (and potentially broader than) the Tailoring Rule, the set of regulations now in effect to control greenhouse gases from large industrial sources. The proposed NSPS will apply to all sources within a source category and, in this case, the source category is power plants. Currently, under the Tailoring Rule, USEPA only requires the largest industrial facilities to obtain prevention of significant deterioration permits under new source review provisions of the Clean Air Act when they expand or make modifications that increase emissions. Those permits require the facilities to install best available control technology, which is determined for each individual facility, while the NSPS impose uniform emissions limits for the industry nationwide.

The extension will also not affect USEPA's deadline to propose performance standards for petroleum refineries by December 15. As we discussed on the blog in December 2010, this is a separate settlement agreement that requires USEPA to issue the final petroleum refinery rule by November 15, 2012 (See American Petroleum Institute v. EPA, D.C. Cir., No. 08-1277, settlement reached December 23, 2010).

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This post was written by David Wagner.

It's time for Reed Smith's (free) quarterly climate change report. Please join us via telephone on Thursday, June 16, 2011 from 12 p.m. to 1 p.m. EDT for a regulatory update on significant international, national and state issues concerning climate change and the future of greenhouse gas regulation. The topics are:

• International update: how the fate of the Clean Development Mechanism and the Kyoto Protocol affect U.S. business
• USEPA's greenhouse gas Tailoring Rule - Step 2: what your business needs to know for compliance and planning
• Implications of the court's "cap and trade" ruling in Association of Irritated Residents v. Cal. Air Resources Board
• State court update: upcoming decisions on insurers' obligation to defend and/or indemnify covered insureds for public nuisance, and other types of claims based on third-party allegations of damages from climate change
   

If you would like to attend this teleseminar, please email Sandy Petrakis.

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This post was written by Mark Mustian.

The U.S. Environmental Protection Agency (USEPA) is delaying the effective dates for final rules regulating Industrial, Commercial, and Institutional Boilers and Process Heaters, and for Commercial/Industrial Solid Waste Incinerators. We discussed these rules, known as the Boiler MACT rules, in more detail when they were published on March 21. As we noted, USEPA was likely to reconsider the Boiler MACT rules, and additional changes were expected. On May 16, USEPA issued a notice that they were delaying the compliance dates for the Boiler MACT rules until either the proceedings for judicial review of the regulations is complete, or until the Agency completes its reconsideration of the rules. The purpose of the delay is straightforward: to allow USEPA to seek additional public comment before requiring thousands of facilities to make significant capital investments that may not be reversible if the standards are revised following reconsideration.
 

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This post was written by Nicolle Bagnell and Ariel Nieland.

In late April, the Pennsylvania Department of Environmental Protection (DEP) rescinded its policy requiring field inspectors to obtain approval prior to taking enforcement actions against Marcellus Shale drilling operators. The stated purpose of the "pilot" policy, which went into effect on March 23 and was regarded as an unusual step for the DEP to take, was to promote consistency throughout the state with regard to Marcellus development, permitting, and enforcement. In response to the agency's rollback of the policy, a DEP spokesperson explained that the notice of violation process is now "just as it was."

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This post was written by Nicolle Bagnell and Ariel Nieland.

Yesterday, Pennsylvania Department of Environmental Protection (DEP) announced today the results of the latest in a series of air quality studies near Marcellus Shale natural gas operations. This study, which was conducted in Bradford, Lycoming, Sullivan and Tioga counties, did not find any emission levels that would pose a public health concern. “The results show there are no emission levels that would be of concern to the health of residents living and working near these operations,” DEP Secretary Mike Krancer said. “They are consistent with the results of our air monitoring in southwest and northeast Pennsylvania, the other two areas of the state with the most Marcellus drilling.”  

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This post was written by David Wagner.

We’re in – LexisNexis has selected Reed Smith's Environmental Law Resource blog as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. We were recognized as "preeminent thought leaders in the blogosphere" who "offer some of the best writing out there." LexisNexis found that our blog contains "a wealth of information for all segments of the environmental law and climate change industry, and includes timely news items, expert analysis, practice tips, frequent postings and helpful links to other sites and sources."

The 50 honorees were grouped into 10 categories and our blog was one of just 4 blogs honored under the "Litigation" category.

We’re thrilled and certainly appreciate the recognition. Even more importantly, we appreciate your interest in our blog.

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This post was written by Steven Regan.

On March 28, 2011, House Bill No. 1211 (Printer’s No. 1321) (“HB 1211”) was referred to the Pennsylvania House Committee on Environmental Resources and Energy. HB 1211 would amend section 205 of the Pennsylvania Oil and Gas Act (58 P.S. § 601.205) to add an arbitrary two mile well location restriction. Under the proposed amendment, “[A] permit for a well intending to produce from an unconventional shale formation shall not be issued by the department unless it is located not less than two miles from the nearest well drilled into an unconventional shale formation. . . The well spacing requirements under this subsection shall not be waived.” HB 1211 defined an unconventional shale formation as a “shale formation that typically produces natural gas through high volume hydraulic fracturing or horizontal well bores,” and includes the Rhinestreet, Burket, Marcellus, Mandata and Utica shale formations and other formations designated by the department (DEP)”.

Rather than impose a strict, arbitrary well spacing requirement, the purpose of the Oil and Gas Act to “permit the optimal development of the oil and gas resources of Pennsylvania . . .” (58 P.S. § 601.102(1)) could be easily served if wells producing from unconventional shale formations were governed by the existing well spacing requirements under Section 407 of the Oil and Gas Conservation Law (58 P.S. § 407), e.g., factors such as the surface topography, a well spacing plan and other available geological and scientific data.

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This post was written by David Wagner.

Please join us for the second of three teleseminars on air quality issues affecting oil and gas development in Marcellus Shale On Tuesday, April 12, 2011 from 12 p.m. - 1 p.m., Reed Smith and AECOM will discuss the Pennsylvania Department of Environmental Protection’s issues related to greenhouse gases in the Marcellus Shale. In particular, we will cover (1) sources of greenhouse gases, (2) reporting, and (3) Title V implications. This event will feature Jennifer Smokelin and David Wagner of Reed Smith and Tom Bianca of AECOM. To participate, please contact Sandy Petrakis by April 11.

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This post was Eric McLaughlin and John Lynn Smith.

The California Air Resources Board (CARB) hit a road block on the way to implementing a key element of its plan to reduce global warming when a California court found that the agency’s adoption of the plan violates the California Environmental Quality Act (CEQA), creating uncertainty for the regulated community whose operations are subject to the cap-and-trade program central to that plan.

At issue is CARB’s implementation of its Scoping Plan, the key document that specifies the various greenhouse gas (GHG) reduction measures to achieve the goals of California’s Global Warming Solutions Act of 2006, commonly known as AB 32. A ruling by San Francisco Superior Court Judge Ernest Goldsmith, finalized on March 18, 2011 (Ruling), granted a Petition for Writ of Mandate challenging the Scoping Plan, primarily due to the agency’s failure to adequately consider alternatives to its adopted cap-and-trade program.

While the Ruling is a significant impediment to the GHG reduction measures in CARB’s Scoping Plan and AB 32 as a whole, it is a temporary one that is unlikely to threaten the long-term implementation of those measures. The Ruling does, however, require CARB to analyze the impacts of alternatives to the Scoping Plan’s cap-and-trade program, and to provide that analysis to the public, in order for the Scoping Plan to move forward. In the interim, the Ruling creates uncertainty for those members of the regulated community whose operations are subject to the first round of the cap-and-trade program, which is scheduled to take effect in January 2012.
 

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This post was written by Mark Mustian.

On March 16, 2011, the U.S. Environmental Protection Agency (USEPA) proposed a new regulation in its decades-long attempt to regulate air toxics emissions and criteria air pollutants from large coal- and oil-fired boilers used in electricity generation. While this is USEPA’s first national standard to reduce mercury emissions from electric utility boilers, the proposal would also regulate other air toxics, especially particulate matter, and would reduce carbon dioxide emissions. In addition, the proposed regulation would modify New Source Performance Standards for electric utility boilers. This post provides some background information, a summary of the proposed regulation, a brief analysis of its costs and benefits, and the next steps.

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This post was written by Jennifer Smokelin.

Dubbed a sister bill to the “FRAC Act” (which targets water emissions from hydraulic fracturing), last week Reps. Jared Polis (D-CO), Maurice Hinchey (D-NY) and Rush Holt (D-NJ) introduced the “BREATHE Act,” for “Bringing Reductions to Energy’s Airborne Toxic Health Effects.” According to a release from Rep. Polis, the bill specifically:

• Closes the NESHAP exemption. While some emissions requirements exist for individual wells, oil and gas drilling is exempted from aggregated “major source” requirements under the National Emission Standards for Hazardous Air Pollutants (NESHAP).
• In practical terms, would prompt the industry to follow NESHAP’s required use of best available and currently used emissions control technology.
• Closes the hydrogen sulfide (H2S) exemption. Hydrogen sulfide, which emitted from oil and gas operations, is currently exempt from regulation as a hazardous air pollutant under the Clean Air Act.

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This post was written by Jennifer Smokelin.

On March 14, the U.S. Environmental Protection Agency (USEPA) made good on a promise to consider excluding emissions of carbon dioxide (CO2) from bioenergy and other biogenic sources (biomass) for the purposes of the Best Available Control Technology (BACT) analysis and applicability to the Prevention of Significant Deterioration (PSD) program. It published a proposed rule that would defer, for a period of three years, greenhouse gas (GHG) permitting requirements for CO2 emissions from biomass-fired and other biogenic sources. USEPA is also making available a guidance document, Guidance for Determining Best Available Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy Production, to assist facilities and permitting authorities with permitting decisions until the proposed rule is finalized. USEPA will accept public comments on the Proposed Deferral (but not, of course, on the Guidance) for 45 days following publication in the Federal Register. Also, look for a hearing in Washington, D.C. on the matter, tentatively scheduled for 15 days after publication in the Federal Register.

After a background discussion of the issue, this post addresses the significant actions the Proposed Deferral and Guidance take with regard to: (1) timing, (2) applicability, and (3) the co-firing question.

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This post was written by David Wagner.

The U.S. Environmental Protection Agency issued a final rule today 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, and the new deadline falls just about 2 years after the initial rule was issued. Under the GHG Reporting Program entities required to submit data must register with the electronic GHG reporting tool (e-GGRT) no later than 60 days before the reporting deadline. With the extension, the new deadline for registering with e-GGRT is August 1, 2011.

The GHG Reporting Program primarily covers GHG-emitting facilities, fossil fuel suppliers, and industrial gas suppliers whose aggregate GHG emissions exceed 25,000 metric tons carbon-dioxide equivalent per year. It also covers facilities in certain emissions intensive source categories (e.g., cement manufacturing and petroleum refining). 

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This post was written by David Wagner .

As always, we covered the latest in greenhouse gas regulation in our quarterly teleseminar and here are the audio and slides from yesterday’s event. We discussed:

• Possible delays in the implementation of the Tailoring Rule (Larry Demase)
• GHG permitting and biomass: EPA's permitting deferral and its affect on industries that use biomass (Jennifer Smokelin)
• Congressional efforts to develop a Clean Energy Standard (David Wagner)
• Developments in a recent California court decision addressing what additional work the California Air Resources Board must perform prior to implementing AB32 (Todd Maiden)

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This post was written by Mark Mustian.

After some ten years in the making, last week the U.S. Environmental Protection Agency (USEPA) issued a final rule aimed at regulating emissions of hazardous air pollutants from industrial, commercial, and institutional boilers located at major source facilities. A major source facility emits or has the potential to emit 10 or more tons per year (tpy) of any single air toxic or 25 tpy or more of any combination of air toxics. USEPA also finalized a related rule to reduce emissions from industrial, commercial, and institutional boilers located at area source facilities. An area source facility has the potential to emit less than 10 tpy of any single air toxic or less than 25 tpy of any combination of air toxics.

The rules, known as the Boiler Maximum Achievable Control Technology or “Boiler MACT” rules, will affect a significant number of entities. USEPA estimates that there are about 13,800 boilers located at large sources of air pollutants, including refineries, chemical plants, and other industrial facilities. USEPA estimates that there are about 187,000 boilers located at small sources of air pollutants, including universities, hospitals, hotels and commercial buildings that may be covered by these standards.

For key requirements of the Boiler MACT rules and some implications, please click on “continue reading.”

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This post was written by Jennifer Smokelin.

Here’s another change in environmental policy related to Marcellus Shale by the new Pennsylvania Governor. On February 26, 2011, the Pennsylvania Department of Environmental Protection (DEP) published a notice rescinding the Interim Guidance for Performing Single Stationary Source Determinations for the Oil and Gas Industries (initially published in December 2010). They also announced the intent to re-open the public comment period on the proposed Air Quality Permit Exemptions Policy and Proposed Revisions to the General Plan Approval and/or General Operating Permit for Nonroad Engines (found here).

In its notice, DEP indicated that it is appropriate to seek a comprehensive public comment period on all three of these topics together to guide the Department on what, if any, guidance or action might be taken on any one or more of them. Further, DEP acknowledged outright that there are a number of potentially interrelated air quality topics regarding gas exploration and extraction activities within the Marcellus Shale which should be considered together, that is: (1) performing single stationary source determinations; (2) General Plan Approval and/or General Operating Permit BAQ-GPA/GP-11; and (3) the list of air quality plan approval and operating permit exemptions which were topics covered in the actions noted previously. With regard to the exemption list, DEP is particularly interested in comments related to Exemption B.38 on oil and gas exploration and production facilities and operations. Public comments will be accepted until May 26, 2011.

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This post was written by David Wagner.

It's really nice to be recognized. In fact, we're thrilled that LexisNexis has nominated Reed Smith's Environmental Law Resource as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. Even better, they grouped the 50 nominees into 11 categories and our blog was one of just 7 blogs nominated under the "Litigation" category. LexisNexis selected the nominees based on "timely topics, quality writing, frequent posts and that certain something 'extra' that keeps a web audience coming back for more."

We certainly appreciate your interest in our blog and, if you want to support our nomination, LexisNexis is inviting comments.

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This post was written by David Wagner.

Reed Smith has teamed up with AECOM to present three teleseminars on air quality issues affecting oil and gas development in the Marcellus Shale. At the first teleseminar on February 11, 2011, we discussed the Pennsylvania Department of Environmental Protection’s (DEP) air permitting process, focusing on the general permits applicable to oil and gas activities (GP-5, GP-9, GP-11), requests for determinations (RFDs) and the permit exemption list, as well as DEP’s proposals to narrow the oil and gas permit exemption list and modify GP-5. Click here for the teleseminar’s audio recording and here for the handout. The event featured Larry Demase and Jennifer Smokelin of Reed Smith and Tom Bianca of AECOM.

Check back for details on the remaining two teleseminars that will address greenhouse gases and aggregation.

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This post was written by Nicolle Bagnell and Ariel Nieland.

Yesterday the Pennsylvania Department of Environmental Protection (DEP) released the results of its short-term study of potential negative impacts to air quality resulting from Marcellus Shale natural gas operations in Northeastern Pennsylvania. According to the DEP, the results from the study indicated no emissions levels of any compounds that would trigger cause for concern over air-related health issues associated with drilling activities in the region. To collect samples for the study, the DEP conducted air monitoring surveys over a period of four weeks at various drilling sites in Susquehanna County, including an operating gas well, compressor stations, and a well site currently being fracked, as well as in Loyalsock State Forest in Sullivan County. The survey was aimed at monitoring for volatile organic compounds generally associated with petroleum products, such as benzene and xylene, along with other pollutants. Although the sampling did detect emissions of various natural gas constituents and related compounds (ethane, methane, carbon monoxide, etc.), none of the emissions were at concentrations that would rise to the level of constituting a health concern.

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This post was written by Jennifer Smokelin and  David Wagner .

As we look forward to 2011, the Environmental Team at Reed Smith will be on top of a range of environmental issues, but offers the following analysis of what we view, in no particular order, to be 11 key climate change or greenhouse gas-related issues likely to affect you and your business in 2011 – call it “11 Climate Change Issues for ’11.” This post focuses on regulatory and transactional issues and we will analyze the outcomes of GHG-related court challenges as they unfold. Please return to blog regularly for updates and analysis on these and many other issues.

The 11 climate change issues are listed below.

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This post was written by Larry Demase.

In response to challenges by various states and environmental groups to U.S. Environmental Protection Agency’s (USEPA’s) New Source Performance Standards for new electric generating units (“EGUs” or “power plants”) and new process facilities at petroleum refineries (“Refineries”), USEPA has agreed to propose New Source Performance Standards (“NSPS”) for greenhouse gas (“GHG”) emissions from those sources. In addition, it has agreed to issue guidelines for GHG emissions from existing EGUs and Refineries. Promulgation of these rules will be governed by Sections 111(b) and 111(d) of the Clean Air Act and 40 C.F.R. § 60.22.

In the case of EGUs, the agreements require USEPA to sign a proposed rule by July 26, 2011 and after considering public comments to sign, no later than May 26, 2012, a final rule. In the case of Refineries, the proposed rule must be signed December 10, 2011 and the final rule by November 10, 2012. Mindful of the delays that often take place in EPA’s rulemaking, the separate agreements require EPA to regularly update state and environmental groups of USEPA’s progress in developing these rules.
 

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This post was written by David Wagner.

If you missed Reed Smith's Quarterly Climate Change Teleseminar on December 16, 2010, feel free to listen to an audio recording of the event while watching the slide show. We discussed:

• Significant developments at COP16 (Jennifer Smokelin)
• The Impact of California's new "Proposition 26" on the implementation of California's Global Warming Solutions Act (aka "AB 32") (Eric McLaughlin)
• USEPA's issuance of PSD and Title V Permitting and BACT Guidance for GHG sources subject to the "Tailoring Rule" (Larry Demase)
• Recent Carbon Capture and Storage Developments (David Wagner)
• Issues and problems to consider regarding 2011 GHG emissions monitoring & reporting (Douglas Everette)

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This post was written by Jennifer Smokelin.

Last year, after months of build up, politicians, scientists, environmental activists, and Reed Smith attorneys flocked to Copenhagen for COP15: a conference that many hoped would produce a binding international agreement on carbon emissions and an actionable plan for addressing climate change. These goals, of course, weren't realized. Nearly twelve months later, the Conference of the Parties convened once again, this time in Cancun, Mexico. The issues, controversies, and conflicts were very similar.

The outcome of COP 15 last year was the Copenhagen Accord – an agreement that was not adopted by the UN congress as a whole because of the objections of 5 countries. The outcome of this year’s COP (over the objection of one country, Bolivia) are the Cancun Agreements. The Cancun Agreements are a lot less than the comprehensive agreement that many countries wanted and leave open the question of whether any of its measures, including emission cuts, will be legally binding. This is a modest step in international climate negotiations and in its modesty highlights the international discord on the subject and punts a lot of the harder decision to future COPs. For example, the Cancun Agreements declare that deeper cuts in carbon emissions are needed, but do not specify any given mechanism for achieving the pledges each country has made.
 

The following is a summary of progress (or lack thereof) on key international issues.

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This post was written by David Wagner.

Please join us on Thursday, December 16 from Noon to 1 p.m. (EST) for our quarterly report on climate change. In this one-hour teleseminar, Larry Demase, Jennifer Smokelin, Todd Maiden, Douglas Everette and Dave Wagner will span the globe and discuss:

• Significant developments at the global climate change conference, COP 16
• The Impact of California's New "Proposition 26" on the Implementation of California's Global Warming Solutions Act (aka "AB 32")
• USEPA's Issuance of PSD and Title V Permitting and BACT Guidance for GHG Sources Subject to the "Tailoring Rule"
• Recent Federal Requirements Related to Carbon Capture and Storage
• Issues and Problems to Consider Regarding 2011 GHG Emissions Monitoring & Reporting

To register for the event, please click here.

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This post was written by Mark Mustian.

In late November, the U.S. Environmental Protection Agency (USEPA) determined that 17 counties in 11 states across the country are not meeting the National Ambient Air Quality Standards (NAAQS) for lead. These areas were designated as “nonattainment” because their 2007 to 2009 air quality monitoring data showed that they did not meet USEPA’s health-based standards.

As a result of the designation, states with these nonattainment areas must develop a State Implementation Plan that meets the requirements of Sections 172(c) and 191 of the Clean Air Act and provides for attainment of the NAAQS as expeditiously as practicable, but no later than December 31, 2015. This designation, which covers such heavily populated areas as Los Angeles County, Tampa, FL and Cleveland, OH, will require the states to develop and implement monitoring programs, develop emission inventories, and adopt control strategies to limit lead emissions within the non-attainment areas.

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This post was written by Jennifer Smokelin.

From the U.S. Environmental Protection Agency’s (USEPA’s) BACT guidance to recent rules finalized by USEPA, all signs appear a “go” for USEPA to give the nod to carbon capture and sequestration (CCS) as a control technology of greenhouse gas (GHG) emissions in the future. In the second “niche” article on the blog, this post takes a look at USEPA’s references in the BACT guidance to carbon sequestration and asks whether this portends CCS being listed in USEPA’s central data base of air pollution technology information known as the RACT/BACT/LAER Clearinghouse in the near future. At this point, the answer is definitely possibly.

Prior to the release of the BACT guidance, industry groups had worried that USEPA would require facilities to use costly CCS technology to trap carbon dioxide and store it underground, but the guidance does not go that far.

The guidance states that: “[w]hile CCS is a promising technology, EPA does not believe that at this time CCS will be a technically feasible [best available control technology, or BACT] option in certain cases.”" It adds that ”[a] permitting authority may conclude that CCS is not applicable to a particular source, and consequently not technically feasible, even if the type of equipment needed to accomplish the compression, capture, and storage of GHGs are determined to be generally available from commercial vendors.” The BACT Guidance also states that “there may be cases at present where the economics of CCS are more favorable (for example, where the captured CO2 could be readily sold for enhanced oil recovery)….

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This post was written by Jennifer Smokelin.

As the first of several “niche” articles analyzing the U.S. Environmental Protection Agency’s (USEPA) “Prevention of Significant Deterioration (PSD) and Title V Permitting Guidance for Greenhouse Gases” (BACT guidance), this blog post takes a look at a specific Title V issue: Title V permitting for sources with pending Title V renewal applications not issued in draft before January 2, 2011 (“Renewal Sources”). 

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This post was written by Jennifer Smokelin.

The U.S. Environmental Protection Agency (USEPA) recently released the final piece of the greenhouse gas (GHG) permitting puzzle, a guidance entitled “PSD and Title V Permitting Guidance for Greenhouse Gases.” With the January 2011 implementation of the Tailoring Rule requiring large industrial sources to obtain permits for GHG emissions, this guidance aims to assist permitting authorities in enacting GHG permitting programs. In particular, the 97-page document addresses Prevention of Significant Deterioration (PSD) applicability to GHG and BACT (Best Available Control Technology), and other PSD requirements. The guidance also discusses Title V applicability requirements and GHGs, as well as permitting requirements for Title V permits with regard to GHGs.

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This post was written by David Wagner.

Although this doesn’t make anything official, it’s an interesting development: the National Association of Clean Air Agencies (NACAA) reported yesterday that, with the onset of greenhouse gas (GHG) permitting only two months away, every state but one -- Texas -- is poised to ensure that sources can obtain preconstruction permits under the Clean Air Act come January 2, 2011.

As we’ve discussed on the blog, certain larger GHG emission sources will be subject to permitting requirements for planned construction projects under the Tailoring Rule starting on January 2, 2011. While most states already have the authority to permit GHGs under preconstruction permit – or Prevention of Significant Deterioration (PSD) – programs, USEPA proposed two rules to fill gaps in 13 state permitting programs that do not allow for the regulation of GHG emissions from industrial sources. The first proposed rule seeks to allow states that are not prepared to regulate GHGs to revise their State Implementation Plans. The second rule outlines USEPA's plan to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet the requirements by January 2011.

NACAA, which is an association of air pollution control agencies in the United States, reviewed the air permitting program responses of the 13 states at issue. According to the NACAA report, air permitting agencies in all states on USEPA’s list (except for Texas) “have indicated that they will either revise their PSD rules by January 2, 2011 or very shortly thereafter, or accept a Federal Implementation Plan (FIP) that will give EPA authority to issue the GHG portion of PSD permits until state rules are revised." This provides some assurance that sources required to apply PSD controls to their GHG emissions will be able to obtain the necessary permits and avoid construction delays. NACAA’s state-by-state summary is available here.
 

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This post was written by David Wagner.

If you missed Reed Smith's Third Quarter Teleseminar on Climate Change, feel free to listen to an audio recording of the event while watching the slideshow. The report discussed:

• U.S. Congressional activity in light of the Senate's failure to pass climate change legislation last summer;
• The likelihood that California's Proposition 23 will pass in November, how that would affect AB 32 (California's Global Warming Solutions Act), and practical implications for California businesses;
• How the U.S. Environmental Protection Agency, in attempting to regulate greenhouse gases, is trying to fill some gaps in State Implementation Plans while potentially creating new regulatory gaps in the process; and
• How the uncertainty of credits under the Clean Development Mechanism is affecting carbon allowance prices.

Our Fourth Quarter Climate Change Report is scheduled for December 16, 2010. Please contact us to sign up or look for more information on the blog.

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This post was written by David Wagner.

To follow up from earlier posts, the U.S. Environmental Protection Agency has rescheduled the public hearing on its proposed rule to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet federal requirements. The hearing will be held on September 14, 2010 in Arlington, VA and logistical details are here. We’ve discussed this proposed rule and a related proposal requiring 13 states to revise their State Implementation Plans in some detail in this recent post.

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This post was written by Jennifer Smokelin and David Wagner.

On August 23, 2010, the U.S. Environmental Protection Agency (USEPA) postponed the public hearing on its plan to take over greenhouse gas (GHG) permitting programs related to construction or modification projects. The hearing was scheduled to be held in Arlington, VA on August 25, 2010, and was delayed because the draft rule has not yet been published in the Federal Register. USEPA has not set a new date for the hearing. As we discussed in a blog post last week, USEPA has proposed two rules to fill gaps in 13 state permitting programs that do not allow for the regulation of GHG emissions from industrial sources. The first proposed rule seeks to allow states that are not prepared to regulate GHGs to revise their State Implementation Plans. The second rule outlines USEPA's plan to establish a Federal Implementation Plan that would take over permitting programs in states that do not meet the requirements by next January, when USEPA’s Tailoring Rule would be in effect.

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This post was written by Jennifer Smokelin and David Wagner.

Here's the issue:  Certain larger emission sources of greenhouse gases (GHGs) will be subject to permitting requirements for planned construction projects starting January 2, 2011.  In 13 states, the permitting programs (known as the Prevention of Significant Deterioration (PSD) permitting program) do not apply to sources of GHGs.  Thus, emission sources in those states would be unable to obtain a PSD permit that covers GHG emissions, and would potentially be unable to undertake construction or modification projects on or after January 2, 2011.  The states are Alaska, Arkansas, Connecticut, Florida, Idaho, Kansas, Oregon, Texas, and portions of California, Arizona, Kentucky, Nebraska, and Nevada.

Here's USEPA's proposed solution:  The Agency recently proposed two rules that would fill the gap in the permitting programs for these 13 states: (1) the SIP call and (2) the FIP.  Under the first proposed rule, the U.S. Environmental Protection Agency (USEPA) would issue a "SIP call," requiring the 13 states to revise their State Implementation Plans (SIPs).  According to USEPA, the PSD program in these jurisdictions is "presumptively inadequate" because they do not allow for the regulation of GHG emissions. All other states would be required to review their rules and inform USEPA if they would not be able to issue PSD permits for greenhouse gas emissions. 

Under the second rule, USEPA proposes to establish a FIP - a Federal Implementation Plan for the 13 "presumptive inadequate" states, and for any other state in which USEPA determines that the state PSD program does not meet requirements for regulation of GHGs. Only the states deemed by USEPA to be inadequate would need the federal plan.  In other words, in any states that do not update their regulations within 12 months after USEPA signs the final action, the second proposed rule would give the Agency the authority to take over until the state can assume the responsibility.

What this might mean to regulated entities:  A state that has to amend its rules, especially the 13 "presumptive inadequate" states, would likely have difficulty making the changes by USEPA's deadline, which is within 12 months after USEPA signs the final action.  If USEPA steps in as planned, new sources and modification projects might be unusually delayed while USEPA works through the GHG portions of permitting applications.

What this might mean in Allegheny County and most California counties:  It's hard to say.  Allegheny County and most of the Air Quality Management Districts in California are in a "grey area" - that is, they are not listed on either the Presumptive SIP Call or the Presumptive Adequate Lists.  USEPA has determined that these jurisdictions (among others) do not have an approved PSD SIP.  See additional discussion below.

What's next:  The two rules have not yet been formally proposed with publication in the Federal Register, and comments on the rules would be due 30 days after publication.  USEPA has scheduled a public hearing on the matter for August 25, 2010 in Arlington, Virginia.

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This post was written by Jennifer Smokelin.

Implementing the Environmental Protection Agency’s (USEPA’s) regulation of greenhouse gases (GHGs) under the Clean Air Act (CAA) is a three link chain, and each link in the chain is necessary and determinative of the success of the program as a whole. If any link fails, so does USEPA’s ability to regulate GHGs under the CAA. The three links are: (1) the Endangerment Finding; (2) the Tailoring Rule; and (3) the Best Available Control Technology (BACT) guidance. Previous articles in this blog and other blogs as well as teleseminar presentations by Reed Smith’s Environmental Team have discussed the likelihood of success to challenges to the Endangerment Finding. This post will briefly describe challenges to what is likely the weakest link in USEPA’s GHG regulation chain: the Tailoring Rule.

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This post was written by Larry Demase and Steve Nolan.

Last week, the U.S. Environmental Protection Agency proposed the Transport Rule to reduce sulfur dioxide and nitrogen oxide emissions from utilities in 31 eastern and midwestern states and in the District of Columbia. The proposed rule is in response to a 2008 court decision by the U.S. Court of Appeals for the D.C. Circuit, which vacated USEPA’s 2005 Clean Air Interstate Rule. In this Reed Smith client alert, we summarize the new rule and highlight issues for which USEPA is soliciting public comments.

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This post was written by Phil Lookadoo and Jennifer Smokelin.

The future of greenhouse gas (GHG) regulation in the United States, as well as the future mix of electric power generation sources, is linked to the fate of climate and energy legislation in Congress. With all eyes on the Senate recently released Kerry-Leiberman comprehensive climate and energy legislation and what by most accounts is its slim chances for passage, let’s consider the possibility that Congress will fail to pass climate or energy legislation.

If that is the case, this does not mean no regulation of greenhouse gases and no energy reform. It simply moves the discussion to another government branch, namely, the Executive Branch, and in particular the U.S. Environmental Protection Agency (USEPA) and the Federal Energy Regulatory Commission (FERC). In other words, if Congressional climate and energy legislation fails to pass, executive branch initiatives gain in importance, and these initiatives will proceed apace regardless of Congressional inaction.

A Shift to USEPA Regulation of GHGs

USEPA can be expected to move forward with regard to regulating GHGs from stationary sources. On December 7, 2009, in compliance with the US Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), USEPA issued its Endangerment Finding, opening the door to USEPA regulation of GHGs under the existing Clean Air Act (CAA). Although the Endangerment Finding is currently being challenged in the Federal Circuit, challenges to the Endangerment Finding will not likely impede further EPA action to regulate GHGs under the CAA. However, challenges to these USEPA further actions are likely.

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This post was written by Mark Mustian and Larry Demase.

On December 23, 2009, the Pennsylvania Supreme Court issued a decision in PPL Generation v. Commonwealth of Pennsylvania. The state Supreme Court upheld the lower court’s determination that the Pennsylvania Mercury Rule (“PA Mercury Rule”) was unlawful, invalid and unenforceable. The lower court case was decided January 30, 2009 (No. 446 M.D. 2008, Commonwealth Court of Pennsylvania), and a discussion of that decision can be found here.

The Pennsylvania Supreme Court’s decision in favor of PPL Generation puts an end to state efforts to specially regulate mercury emissions from electric generating units (“EGUs”) in Pennsylvania, at least until such a time as the USEPA promulgates new federal mercury regulations, or until enabling legislation is passed in Pennsylvania authorizing the adoption of mercury regulations. Thus, EGUs in Pennsylvania will not be required to comply with the state mercury rule’s limits on mercury, which were to become effective January 1, 2010.

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This post is written by Larry Demase.

In response to the decision of the United States Supreme Court in Massachusetts, et al. v. Environmental Protection Agency, et al, 127 S.Ct. 1938 (2007), yesterday USEPA announced its finding, long anticipated, that greenhouse gases threaten the public health and welfare of the American people. This so-called endangerment finding also includes USEPA’s decision that greenhouse gas emissions from on-road vehicles contribute to the threat to human health and the environment and purportedly supports USEPA’s proposed greenhouse gas standards for light duty vehicles. According to Administrator Lisa Jackson, the Agency’s endangerment finding is also intended to support its proposed rule requiring new or modified source of greenhouse gases to utilize “best available control technology” to control or reduce emissions of greenhouse gases. 

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This post was written by Rose Standifer.

California has moved one step closer to implementing a comprehensive cap-and-trade program for greenhouse gas (GHG) emissions. On Tuesday, November 24, 2009, the California Air Resources Board (CARB) released a preliminary draft of regulations for a GHG cap-and-trade program. The regulations are far from complete. Key components of the program, such as how to allocate emission allowances, have not yet been developed. CARB will be holding a public workshop to discuss the preliminary draft on Monday, December 14, 2009 and will be accepting comments on the preliminary draft through Monday, January 11, 2010. An updated draft will be issued in Spring 2010, with the goal of issuing final regulations in September 2010 and launching the cap-and-trade program on January 1, 2012.

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This post was written by Rose Standifer and Jennifer Smokelin.

Mandatory reporting of greenhouse gases (GHG) is now required nationwide. On Tuesday, September 22, 2009, the U.S. Environmental Project Agency (EPA) issued its Final Mandatory Reporting of Greenhouse Gases Rule. The final rule requires mandatory reporting of GHG from most large GHG emissions sources in the United States. The stated purpose of the rule is to collect accurate and timely emissions data to inform future policy decisions. Reporting requirements begin on January 1, 2010. Initial reports, covering emissions during 2010, are due on March 31, 2011.

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This post was written by Jennifer Smokelin.

Last Friday, the U.S. Environmental Protection Agency found that climate-warming greenhouse gases, including carbon dioxide, pose a danger to human health and welfare, according to the New York Times. EPA sent its finding to the Office of Management and Budget for review. Once the budget office clears the finding, it can be signed by Lisa P. Jackson, EPA’s Administrator, Lisa P. Jackson. There is also likely to be a public comment period on the proposed finding, but likely none that will prevent the endangerment finding from being finalized.

EPA has been charged for decades with regulating air pollutants under the Clean Air Act and, as the Supreme Court recognized in Massachusetts v. EPA (2007), GHG emissions are air pollutants subject to Clean Air Act regulations. An endangerment determination would confirm the Agency’s power, but also its obligation, to regulate greenhouse gases now.

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This post was written by Larry Demase and Steve Nolan.

On Feb. 24, 2009, in American Farm Bureau v. Environmental Protection Agency, No. 06-1410, the District of Columbia Circuit Court of Appeals ruled that the most recent version of the National Ambient Air Quality Standards (NAAQS) for fine particulate matter promulgated by the Environmental Protection Agency (EPA) in 2006 were contrary to law and unsupported by reasoned decisionmaking. The court upheld the coarse particulate NAAQS that were promulgated as part of the same rulemaking. 

The 2006 NAAQS established a 24-hour primary standard for fine particulate matter based on short-term exposure studies, and an annual standard of 15 μg/m3 based exclusively on long-term exposure studies. However, the Clean Air Scientific Advisory Committee (CASAC), an independent scientific advisory committee established under the Clean Air Act, and EPA’s own staff, had recommended a more stringent annual standard because of short-term health effects of fine particulate matter. By statute, EPA was required to explain its rejection of CASAC’s recommendation, and the court found that it had failed to do so adequately.

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This post was written by Jennifer Smokelin and Larry Demase.

On Mar. 10, EPA announced a proposed rule in response to the FY2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110–161) that requires mandatory reporting of greenhouse gas (GHG) emissions from large sources in the United States.  In general, EPA proposes that both upstream production facilities such as fuel suppliers and downstream emitting sourcess of GHG are to report. Emission sources include electric generators, manufacturers of vehicles and engines, food processors, lime production facilities and facilities that emit 25,000 metric tons or more per year of GHG emissions.  Annual reports to EPA are required.  The gases covered by the proposed rule are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE).  EPA is using its authority under the Clean Air Act to develop the rule and it states that the rule is relevant for determining  how to use Sections 111, 112 and 129 of the Clean Air Act  to establish standards for sources emitting GHGs.  EPA estimates that the expected cost to comply with the reporting requirements to the private sector would be $160 million for the first year.  In subsequent years, the annualized costs for the private sector would be $127 million. This rule will begin the process of shifting the focus of GHG regulation away from the states. 

The proposed rule will soon be published in the Federal Register under Docket ID No. EPA-HQ-OAR-2008-0508.  The proposed rule will be open for public comment for 60 days after publication in the Federal Register. Two public hearings will be held during the comment period.  Click here for a pre-publication copy of the proposed rule and preamble.
 

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This post was written by Jennifer Smokelin.

 In President Obama's Feb. 24, 2009 address to Congress, he called on "Congress to send me legislation that places a market-based cap on carbon pollution." His address, coupled with the President's FY 2010 budget proposal, outlined the Administration's plans to develop a comprehensive energy and climate change plan to invest in clean energy, end our addiction to oil, address the global climate crisis, and create new American jobs that cannot be outsourced. After enactment of the budget, the Administration indicated it will work expeditiously with key stakeholders and the Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020, and approximately 83 percent below 2005 levels by 2050. The Obama Administration anticipates that this program will be implemented through a cap-and-trade system, a policy approach that was used to regulate sulfur dioxide emissions and which significantly reduced acid rain at much lower costs than the traditional government regulations and mandates of the past. Through a 100 percent auction to ensure that the biggest polluters do not enjoy windfall profits, the government projects that this program would fund investments in a clean energy future totaling $150 billion over 10 years, starting in FY 2012. The balance of the auction revenues would be returned to public programs to assist families, communities, and businesses in the transition to a clean energy economy.

 Given this emphasis, we are likely looking at federal legislation this year in the form of a federal cap and trade program (although this may be delayed somewhat due to the economic crisis). Stay tuned to this blog for comments regarding what will it look like, what business opportunities to expect, and what you can do now to shape legislation.
 

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This post was written by David Wagner.

In the past few weeks, we've discussed mercury regulation on the state and federal levels.  Now it's time to report on a significant international development.  On Feb. 20, the Governing Council of the United Nations Environment Programme (UNEP) announced a decision by more than 140 countries, including the United States, to begin negotiations of a legally binding agreement on mercury.  The United States had opposed a legally binding mercury treaty during the previous administration. 

The UNEP decision represents the first coordinated global effort to address mercury, and the final treaty could include a variety of binding and voluntary approaches to address and reduce mercury pollution.  Although the decision did not discuss details of the future agreement, it broadly stated that the treaty address atmospheric emissions of mercury, and the U.S. delegation indicated that the treaty bring "particular attention to sectors that have the greatest global impact, such as coal-fired power plants."  The decision also stated that the treaty include provisions addressing mercury in products and waste.  Preliminary meetings will be held this year with negotiations set to begin in 2010 and conclude by 2013.

Return to this blog for updates on the range of efforts to address mercury pollution.  We'll discuss UNEP's activities, including how certain industries will be affected.  We will also be following legal developments by EPA and state agencies. 

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This article was written by Jennifer Smokelin.

On Feb. 4, the U.S. Department of Justice, on behalf of EPA, filed suit against Westar Energy, Inc. in St. Marys, Kansas for allegedly failing to install the best available control technology at one or more of its coal-fired power plants. The complaint, brought under the New Source Review ("NSR") provisions of the Clean Air Act, revives a line of NSR enforcement cases many thought was dead during the previous administration -- and revives an initiative targeting coal-fired power plants that the Clinton administration began in 1999.  While there remains little clear guidance as to what projects at existing facilities may trigger NSR, the complaint against Westar Energy, Inc. is a signal to utilities to prepare for renewed regulatory attention to NSR enforcement and potential litigation over past, and potentially future, modifications.

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This post was written by Dave Wagner.

On Feb. 23, 2009 the U.S. Supreme Court declined to consider an appeals court decision that had struck down EPA's Clean Air Mercury Rule, an emissions cap-and-trade approach related to the regulation of mercury from coal- and oil-fired power plants. It appears EPA will now develop new mercury standards for power plants.

 In the D.C. Circuit Court decision last year, the court vacated the rule, finding that EPA had improperly removed power plants from a list of regulated source categories under a section of the Clean Air Act that requires strict regulation of hazardous air pollutants, including mercury. Following this decision, both EPA and the Utility Air Regulatory Group, a group of electric utility companies and industry trade groups, petitioned the Supreme Court to review the matter. Then earlier this month, the Obama Administration withdrew its petition, conceding that EPA had not made the health and environmental impact findings required by the Clean Air Act to remove a source category. Left with the industry group's petition, the Supreme Court denied cert. (Docket 08-352) on Monday.

Despite the likely restart of a federal approach to develop mercury regulations, keep in mind that the Pennsylvania Mercury Rule remains in the courts. Details can be found in one of our earlier postings.

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This post was written by Mark Mustian and David Wagner.

Only two months after issuing a memorandum interpreting which pollutants are covered (or not covered) by the federal Prevention of Significant Deterioration (PSD) Perrmit Program, EPA is reconsidering its approach.

On Dec. 18, 2008, Ste ve Johnson, the EPA Administrator under the previous administration, issued a memorandum that guided regulators on how to consider carbon dioxide emissions under the Prevention of Significant Deterioration (PSD) permitting program. The memo stated that EPA does not consider a pollutant (including carbon dioxide) to be "subject to regulation" until EPA has promulgated a regulation that requires emission controls. As a result, carbon dioxide would not be subject to emission limitations before a PSD permit was issued.

In a Feb. 17, 2009 letter to the Sierra Club, Lisa Jackson, EPA's new administrator, announced the Agency was opening up the memorandum for reconsideration and public comment. EPA specifically noted that the memo did not bind States issuing permits under their own authority, and that it should not be considered "the final word on the appropriate interpretation of Clean Air Act requirements". The letter added that the Agency will publish a notice of a proposed rulemaking on the matter in the near future.

 Click here for the original memo and Sierra Club letter.

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This post was written by Mark Mustian and Larry Demase.

Following a federal court decision overturning the federal Clean Air Mercury Rule, on Jan. 30, 2009, the Commonwealth Court of Pennsylvania declared the Pennsylvania Mercury Rule unlawful, invalid and unenforceable and enjoined the Commonwealth from continued implementation/enforcement of the Rule. A copy of the Court's Opinion and Order can be downloaded.

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This post was written by Lawrence A. Demase, Mark A. Mustian, Steven M. Nolan and Christopher L. Rissetto.

The Clean Air Interstate Rule (CAIR), which had been vacated in its entirety by the Circuit Court for the District of Columbia Court of Appeals in July, was revived for an indefinite period on December 23. Upon rehearing, the Court agreed with the Environmental Protection Agency that the immediate effect of vacating CAIR was counterproductive to the environment. The Court therefore partly reversed its original decision by (i) remanding CAIR to the agency for revision and (ii) reinstating CAIR until a new rule is ready to replace it. The impact of this decision is discussed in the attached article.

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This post was written by Lawrence A. Demase, Russell R. Eggert, Todd O. Maiden, Louis A. Naugle, Christopher L. Rissetto, Harley N. Trice, II, and Steven M. Nolan.

In an Environmental E-Flash in July, Reed Smith reported that the Court of Appeals for the District of Columbia Circuit had vacated the United States Environmental Protection Agency’s Clean Air Interstate Rule (“CAIR”), North Carolina v. Environmental Protection Agency, 531 F.3d 896 (D.C. Cir. 2008) (finding that CAIR had “more than several fatal flaws”).

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This post was written by  Lawrence A. Demase, Louis A. Naugle, Steven M. Nolan.

On Oct. 24, 2008, the Wall Street Journal reported that the Bush Administration, over the opposition of many members of Congress, had ordered the Environmental Protection Agency to finalize the EGU Hourly Test Rule (“Rule”), which would have allowed power plants to upgrade the plants and extend their life spans without having to install more modern emission control equipment. The gist of the Rule, which was initially proposed in May 2007, was that the definition of the term “emission increase” as used in New Source Review regulations, would require both an increase in the hourly emissions rate and an increase in actual emission for the year. The current rule defines emission increase as an increase in actual emissions measured on an annual basis.

The Administration had based its support for the Rule on the anticipated emissions reductions that would result from the Clean Air Interstate Rule (CAIR). However, as we noted in a previous e flash, CAIR was vacated in its entirety July 11¹ by the Court of Appeals for the D.C. Circuit.

The Journal reported that EPA had been asked to finalize the Rule by Nov. 1. However, the expected final version did not appear then, or at any time thereafter. Finally, Dec. 10, EPA announced that it would not finalize the Rule after all. Given the opposition of Congressional Democrats, the Rule is unlikely to be revived.

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This post was written by Lawrence A. Demase, Russell R. Eggert, Todd O. Maiden, Louis A. Naugle, Christopher L. Rissetto, Harley N. Trice, II, and Steven M. Nolan.

In an Environmental E-Flash in July, Reed Smith reported that the Court of Appeals for the District of Columbia Circuit had vacated the United States Environmental Protection Agency’s Clean Air Interstate Rule (“CAIR”), North Carolina v. Environmental Protection Agency, 531 F.3d 896 (D.C. Cir. 2008) (finding that CAIR had “more than several fatal flaws”). 

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This post was written by Lawrence A. Demase, Christopher L. Rissetto, and David W. Wagner.

On Aug. 19, 2008, a federal appeals court ruled that state and local permitting authorities may supplement, or “fix,” air pollution monitoring requirements when the U.S. Environmental Protection Agency has taken no action. In Sierra Club v. USEPA, ___ F.3d ___, 2008 WL 3834186 (D.C. Cir. Aug. 19, 2008), the U.S. Court of Appeals for the D.C. Circuit vacated a Clean Air Act rule that had prevented state authorities from issuing supplemental monitoring requirements in Title V permits regulating air pollution from stationary sources such as power plants and factories. On top of federal requirements, this decision will require environmental managers and other stakeholders to closely follow state and local developments of air monitoring and additional permitting requirements. 

Since 1997, USEPA has gone back and forth on whether to allow state and local authorities to supplement monitoring requirements where federal standards are inadequate. (Where there are no federal monitoring requirements, state and local authorities must create one and include it in the permit.) In a 2006 rulemaking, USEPA finally determined the federal agency alone could fix inadequate monitoring requirements. It promulgated a rule prohibiting state and local permitting authorities from imposing additional monitoring requirements in Title V permits, including when existing standards were deemed inadequate for assuring compliance. 71 Fed. Reg. 75,422 (Dec. 15, 2006). 

In reviewing the environmental group’s challenge, the court focused on the Clean Air Act’s mandate that “[e]ach permit . . . shall set forth . . . monitoring . . . requirements to assure compliance with the permit terms and conditions.” 42 U.S.C. § 7661c(c). USEPA and industry intervenors argued that the Act’s “[e]ach permit” mandate limits the imposition of new monitoring requirements to USEPA alone. They also argued that allowing supplementation by state and local authorities would create new emission standards not authorized by the Act. The court disagreed. Because USEPA failed to fix inadequate monitoring requirements prior to the issuance of the permits, the court found that state and local authorities must be allowed to cure those monitoring requirements before including them in the Title V permits. The court concluded that the 2006 rule violated the Clean Air Act, and vacated the rule. 

The environmental group also sought review of the monitoring requirements of the Part 70 rules, arguing that if those provisions did not allow permitting authorities from supplementing inadequate monitoring requirements, they, too, must be vacated. The court denied this petition for review, concluding that the monitoring provisions are consistent with the Clean Air Act because they could be easily and reasonably read to allow state and local permitting authorities to supplement inadequate monitoring requirements in each Title V permit issued.

Importantly, the federal appeals court left open the question of who wins when USEPA and state authorities conflict over whether a given requirement is sufficient to ensure compliance with the Clean Air Act. This may mean that the states will be required to undertake the task of deciding whether existing requirements are adequate, and providing supplemental monitoring requirements. Further, groups such as the National Association of Clean Air Agencies may step in and offer guidance to the states. In any case, environmental managers and other related stakeholders may have to identify and adjust to varying state and local standards and requirements.

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This post was written by Steven M. Nolan, Lawrence A. Demase, and Louis A. Naugle.

In a recent, much-anticipated decision in State of North Carolina v. Environmental Protection Agency, No. 05-1244 (July 11, 2008), the District of Columbia Circuit Court vacated the Environmental Protection Industry’s Clean Air Interstate Rule (“CAIR”) in its entirety. 

The immediate impact of the decision will be upon electric generators (“EGUs”), in that sulfur dioxide (“SO₂”) allowances under Title IV of the Clean Air Act will no longer be subject to expedited retirement. The new trading scheme for nitrogen oxide (“NOx”) allowances was also vacated by the decision.

The Clean Air Act imposes a duty on each state to have a State Implementation Plan which, inter alia, contains adequate provisions prohibiting in-state sources of air pollution from emitting any air pollutant in amounts that will contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to any National Ambient Air Quality Standard (“NAAQS”).

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