copyright holland & hart llp 2008. all rights reserved. the deseret power case and implications...
TRANSCRIPT
Copyright Holland & Hart LLP 2008. All Rights Reserved.
The Deseret Power Case and The Deseret Power Case and Implications for CO2 Regulation Implications for CO2 Regulation
Under the Clean Air ActUnder the Clean Air Act
Presented by
Lawrence E. VolmertHolland & Hart LLPDecember 16, 2008
3
Copyright Holland & Hart LLP 2008. All Rights Reserved.
MASSACHUSETTS v. EPA Massachusetts v. EPA, 549 U.S. 497 (2007) held that CO2
and other greenhouse gases (GHG) are “pollutants” and EPA has authority to regulate them.
• If endangerment, “shall” regulate vehicle emissions.• Discretion regarding manner, timing and content of
regulations.• Did not preclude considerations of “policy concerns.”
Remanded to EPA to determine whether GHGs are reasonably anticipated to endanger public health or welfare.
4
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Address two developments from Massachusetts v. EPA.• Deseret Power case.• Advanced Notice of Proposed
Rulemaking.
MASSACHUSETTS v. EPA
5
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Sierra Club appealed PSD permit for the Bonanza Power Plant.• Permit should have included Best
Available Control Technology for CO2 emissions.
• BACT required for pollutants “subject to regulation” under the CAA.
• Massachusetts did not determine whether CO2 is “subject to regulation.”
Deseret Power
6
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Sierra Club argued:• Section 821 of the Clean Air Act
Amendments of 1990 requires monitoring and reporting of CO2 emissions.
• This is “regulation” of CO2 under the CAA and therefore CO2 is subject to BACT.
EPA argued that “subject to regulation” means imposition of emission controls.
Deseret Power
7
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
EAB rejected Sierra Club and EPA arguments and remanded to EPA.• “Subject to regulation” does not
clearly mean § 821 regulationopen to interpretation.
• Rejected EPA arguments that its historical interpretationthat “subject to regulation” means emission controls--precluded CO2 BACT.
8
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
Status:• EPA has authority to interpret “subject
to regulation,” except on grounds EAB rejected.
• Could find that requirement to monitor is not a reasonable basis for imposing controls.
• Pollutants currently deemed subject to regulation have either had endangerment finding (NAAQS, NSPS), or Congressional determination of need for control (MACT).
9
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
Short-term Impact on permitting.• PSD-approved States—have
discretion.Georgia Court ruled must do BACT for
CO2.Utah and Montana boards did not
require CO2 BACT.
• PSD-delegated States and tribal lands—likely to be appealed to EAB, and meet same fate until Deseret remand addressed.
10
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
Impact may be temporary.• If EPA makes endangerment
findings in Massachusetts remand, CO2 will be regulated.
• If, in Deseret remand, EPA decides CO2 is subject to regulation, CO2 will be regulated.
• New Administration likely to act.
11
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
• Should coal-fired power plants, other major sources of regulated pollutants, and/or 250 ton sources of CO2 be doing “voluntary” CO2 BACT, as a precaution?
12
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power Practical Effects If CO2 ultimately “subject to
regulation”• What is impact on recently-issued permits or
permits issued in the meantime?• Bigger issue is possible massive expansion of
PSD applicability. 250 tons/year of CO2? Sierra Club says no one wants to regulate small
sources—office buildings, apartment complexes, schools.
But does EPA have discretion to ignore plain language of CAA?
ANPR suggests maybe could argue absurd result or administrative necessity to avoid having small sources subject to PSD—but authority is not clear.
13
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
Apart from PSD applicability threshold for CO2, for major sources of traditional PSD pollutants CO2 BACT might be required for significant emitters.
14
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
If CO2 BACT applies—What is required?• Capture and storage?• Efficiency?• Fuel switching?
BACT does not require “redefinition” of the proposed source.• Debate over IGCC.
15
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
Even if CO2 capture is feasible and cost effective, with reasonable CO2 energy penalties:• To reduce emissions to atmosphere,
need sequestration.• Pending EPA rule on sequestration.• Geological data.• Commercial demonstration and
monitoring.• When will sequestration be doable?
16
Copyright Holland & Hart LLP 2008. All Rights Reserved.
Deseret Power
How to advise clients considering uncertainties?
17
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
ANPR• Discussion of endangerment, no
proposal.• discusses how GHGs might be regulated
under various provisions of CAA.NAAQS/SIP process.NSPS.MACT.
• Discusses impact of regulation on PSD/NSR
18
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
Administration and several federal agencies say CAA is ill-suited to regulate GHG.• Widespread impact on economy,
“touch every household in the land.”
• Likely ineffectual at reducing concentrations of GHG.
19
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
CAA provisions that might apply to GHG.• If endangerment for vehicles,
strong case for endangerment under stationary source provisions.
20
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
NAAQS—GHG/climate change global in nature, difficult to fit in local/regional SIP process.• Direct vs. indirect• Cap and trade?• Consequences of nonattainment?• Avoid NAAQS lack of adverse
impacts at current levels?
21
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
NSR/PSD—likely would extend PSD to thousands of small sources not currently regulated• EPA suggests might avoid PSD for
small sources through principles of absurd result or administrative necessity—but authority is not clear
• Sierra Club suggests EPA should issue guidance saying that BACT will not apply to small sources.
22
Copyright Holland & Hart LLP 2008. All Rights Reserved.
ANPR
NSPS • Selection of source categories—level
of emissions, cost?• Appropriate for global scope of climate
change?• Endangerment not prerequisite for
already-listed source categories?• Sierra Club argues must be CCS for
coal plants.• Current remand for utility steam
generating units.