Climate, Energy, & Air Weekly Update - July 11-15, 2011

The EPA adopted a less stringent option in finalizing new standards for sulfur dioxide and nitrous oxide . . . The agency also sent a revised ozone standard to the White House for consideration . . . The House of Representatives approved FY2012 appropriations for the Department of Energy that would cut energy efficiency and renewable energy programs.  The bill also would delay implementation of light bulb efficiency standards for one year. . . Committees in the House approved bills that would: delay EPA power sector regulations until after completion of a cumulative impacts analysis, preclude EPA regulation of coal ash as a hazardous waste; and streamline environmental impact analysis requirements for certain renewable energy projects . . . The Senate Energy and Natural Resources Committee approved bills that would: establish a Clean Energy Development Authority, promote residential and commercial energy efficiency, authorize R&D programs at DOE to promote new nuclear reactors, and reform and reauthorize funding programs for electric vehicles.  VNF will not issue an update next Monday in light of holiday travel.

Executive Branch

• President Establishes Interagency Working Group to Facilitate Energy Exploration in Alaska.  President Obama has issued an executive order that establishes an interagency working group to share information and coordinate policy and permitting relating to the development of offshore and onshore oil and gas resources in Alaska.  Led by the Deputy Secretary of the Interior David Hayes, the working group’s membership will include representatives of EPA; the Departments of Energy, Commerce, Defense, Homeland Security, and Agriculture; the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects; the Council on Environmental Quality; the Office of Management and Budget; the Office of Science and Technology Policy; and White House national security staff. In addition to facilitating environmental reviews and processing of Federal permits for energy exploration in Alaska, the group will also serve as a primary point of contact for Federal coordination with the State of Alaska.  The executive order is available at http://www.whitehouse.gov/the-press-office/2011/07/12/executive-order-interagency-working-group-coordination-domestic-energy-d. 
• EPA Submits Amended Ozone Air Quality Standard to OMB.  The Environmental Protection Agency (EPA) has submitted a final rule amending the National Ambient Air Quality Standards (NAAQS) for ozone for review by the Office of Management and Budget, indicating that the new air quality standard is close to being promulgated.  According to the trade press, the rule also includes separate instructions to states on the implementation of the NAAQS as well as provisions governing monitoring of ozone levels.  EPA last issued a NAAQS for ozone in 2008; however, soon after the inauguration of President Obama, the Agency announced in 2009 that it would reconsider the NAAQS and suspended implementation of the 2008 standard.  Once the new standard is promulgated, states will be required to submit implementation plans designed to achieve compliance with the standard within deadlines set forth in the Clean Air Act.
• EPA Proposes Secondary NAAQS for SO₂ and NO₂.  EPA has issued a proposed rule to revise the secondary NAAQS for sulfur dioxide (SO₂) and nitrogen dioxide (NO₂).  In contrast to “primary” NAAQS, which are designed to protect public health, secondary NAAQS are designed to protect public welfare.  The standards in question were originally established in 1971, and have not been revised since.  A report prepared by Agency staff in September 2010 noted that NO₂ and SO₂ emissions are presently causing significant acid rain problems in Vermont, New York, and Pennsylvania, and recommended that the Agency adopt a novel “multipollutant” standard that would simultaneously address both of these pollutants.  However, the proposal does not mark a significant change from current policy, because the proposed level of the secondary NAAQS is identical to the current primary NAAQS for SO₂ and NO₂.  EPA also declined to adopt the staff’s proposal for a multipollutant standard, noting that the Agency plans to collect further data over the next five years.  EPA will accept public comment on the proposal for 60 days after it is published in the Federal Register, and expects to release a final rule in March 2012.  The proposal is available at http://www.epa.gov/airquality/nitrogenoxides/pdfs/NOxSOxNPR7-12-11.pdf. 
• DOI Releases Draft Environmental Assessment for Offshore Windfarms Off Eastern Seaboard.  The Department of Interior (DOI) released a draft environmental assessment of potential leases to operate offshore wind farms in Federal waters off the coast of Delaware, Maryland, New Jersey, and Virginia.  The assessment, which will be subject to public comment until August 11, 2011, will be used to determine whether the issuance of leases and subsequent initial testing of offshore wind power in these four states would have significant environmental impacts.  When finalized, the assessment will clear the path for DOI to hold sales of offshore wind leases in the designated areas later this year.  Further environmental assessments will be required once individual commercial projects are proposed to be constructed in the applicable offshore areas.  DOI’s assessment is available at http://www.boemre.gov/offshore/RenewableEnergy/PDFs/MidAtlanticWEAs_DraftEA.pdf. 
• DOE, EPA Unveil New Energy Star Recognition for “Most Efficient” Products.  The Department of Energy (DOE) and EPA, which jointly manage the voluntary Energy Star label for energy-efficient consumer products, announced a new pilot program under which the agencies plan to annually recognize the best-performing products within five categories of major appliances.  In 2011, this “Most Efficient” designation is being awarded for clothes washers, heating and cooling equipment, televisions, and refrigerator-freezers; additional product categories may be added in future years.  Manufacturers whose products are among the first to be recognized under this new program include Electrolux/Frigidaire, Kenmore, Crosley, LG, Samsung, Insignia (Best Buy), Panasonic, and Rheem.  Approximately 5 percent of products currently on the market will qualify for this top tier recognition.  Products recognized as “Most Efficient” will not receive an additional label; instead, the agencies will distribute a list of the products through retailers and through the agencies’ websites.  The criteria for “Most Efficient” designation are available at http://www.energystar.gov/me-criteria; a list of qualifying products is available at http://www.energystar.gov/mostefficient.

Congress

• FY 2012 Energy and Water Appropriations Bill Approved by House of Representatives.  The House of Representatives approved a bill funding the Department of Energy (DOE), Army Corps of Engineers, and other water and energy programs for fiscal year (FY) 2012.  Numerous energy-related amendments were offered to the bill, which dramatically cuts funding to DOE energy efficiency and renewable energy programs.  Some of the more noteworthy amendments include: an amendment to divert $1 billion of unspent high-speed rail funds to states affected by flooding of the Mississippi and Missouri rivers; a measure to temporarily ban the use of appropriated funds to pay the salaries of DOE employees who carry out a weatherization assistance program created by the 2009 stimulus law; an amendment to prohibit the use of appropriated funds for international activities carried out by DOE’s Office of Energy Efficiency and Renewable Energy in China; an amendment to temporarily relieve the Department of Defense of the requirement to purchase only fuels with GHG emissions that are the same or less than petroleum (for more information, see last week’s Climate, Energy, and Air Update at http://www.vnf.com/news-policyupdates-610.html); and a measure to restore the ARPA-E advanced energy research program’s budget to FY 2011 levels.  The bill also includes a measure to delay implementation of DOE’s light bulb efficiency rules for one year (see below).   This week’s House action is not the final word on these issues.  The Senate has not completed consideration of this legislation.  After Senate action, which is not expected in the immediate future, a final version of the legislation would still need to be agreed upon by both Houses of Congress and need a signature by the President before becoming law.  One noteworthy development with regard to the action by the House this week is that the bill was considered under a rule that allowed consideration of many amendments.  This “open rule” allows up or down votes on amendments by the full membership of the House and reflects a commitment to this practice by the House majority leadership.  The text of the bill is available online here.
• Senate Panel Approves Several Clean Energy and Climate-Related Bills.  The Senate Energy & Natural Resources Committee approved a number of bills to promote clean energy, nuclear power, energy efficiency, and electric vehicles.  The Clean Energy Financing Act of 2011, which the Committee approved unanimously after a bipartisan amendment to reduce its estimated cost, would create a Clean Energy Deployment Administration within DOE to help commercialize clean energy technologies that have been unable to attract financing from other channels.  Other bills approved by the Committee with bi-partisan support would promote residential and commercial energy efficiency, authorize research and development programs at DOE to promote new nuclear reactors, and reform and reauthorize grant and loan guarantee programs to promote electric vehicles. 
• Bill to Repeal Federal Light Bulb Efficiency Standards Defeated, Similar Measure Adopted Days Later.  A bill sponsored by Rep. Joe Barton (R-TX) to repeal sections 321 and 322 of the Energy Independence and Security Act of 2007 (EISA), which mandated the phase-out of  energy-inefficient light bulbs by 2014, was defeated.  The bill was offered in a stand-alone fast-track vote on the House floor that required a two-thirds majority to pass.  However, a related measure to halt, for one year, DOE’s implementation of the EISA light bulb rules was subsequently added to the Energy and Water Appropriations Bill through an amendment offered by Rep. Michael Burgess (R-TX) (see discussion above at “FY 2012 Energy and Water Appropriations Bill Approved by House of Representatives.”).
• EPA-Interior Appropriations Bill Approved by Full Committee; Committee Adds Additional Air-related Riders.  The House Appropriations Committee approved an FY 2012 EPA-Interior Appropriations bill that cuts funding to EPA and the Department of Interior and delays the implementation of numerous climate and air rules.  Committee members added additional amendments to the bill that was approved last week by the Appropriations Subcommittee on Interior, Environment and Related Agencies (see last week’s Climate, Energy, and Air Update at http://www.vnf.com/news-policyupdates-610.html).  Adopted amendments included a measure by Rep. Cynthia Lummis (R-WY) that would delay implementation of EPA’s rule regulating emissions of mercury and other toxic pollutants from coal-fired power plants until after EPA studies the cumulative impacts of a number of recently-proposed rules aimed at power plants, and an amendment by Rep. Steve Austria (R-OH) that prevents EPA from implementing the next wave of GHG emission standards affecting new motor vehicles or granting waivers to allow states to impose their own GHG vehicle standards during the next fiscal year.  A list of adopted amendments is available at http://appropriations.house.gov/UploadedFiles/Amendments_Adopted_to_Interior.pdf.  The Committee’s report is available at http://appropriations.house.gov/UploadedFiles/FY_2012_INTERIOR_FULL_COMMITTEE_REPORT.pdf.
• House Committee Approves Bills Requiring Cabinet-Level Economic Analyses of EPA Rules, State Regulation of Coal Ash.  The House Energy & Commerce Committee approved two energy-and-environment related measures.  One of these measures, H.R. 2401, would require cabinet-level economic analyses of the cumulative impacts of a number of recent EPA air and  waste regulations affecting power plants.  The bill would also delay EPA’s implementation of rules to address cross-border air pollution and reduce mercury and toxic air pollutants from power plants until after these studies can be completed.  The other bill, H.R. 2273, would establish a framework under which states could establish regulations to address coal ash subject to certain oversight by EPA; the bill also would preclude regulation of coal ash as a “hazardous waste.” However, in a letter responding to a request from Ranking Member Henry Waxman (D-CA), EPA indicated that H.R. 2273 would not provide EPA necessary oversight authorities.  EPA’s letter is available online here.  The full text of H.R. 2401 (the TRAIN Act) is available at http://republicans.energycommerce.house.gov/Media/file/Markups/Energy/070811/HR2401.pdf.  The most recent version of H.R. 2273 (the coal ash bill) is available online here.
• Senate Committee Holds Hearing on Solar, Geothermal Energy Bills.  The Senate Energy & Natural Resources Committee held a hearing to examine two bipartisan bills that would boost solar and geothermal energy production.  The first, S. 1108, would set a goal to power 10 million homes and businesses with solar power by 2020 and reduce the cost of solar energy to $1 per watt.  The measure would also provide grants to encourage communities to streamline local permitting to reduce the costs of installing solar on homes and businesses.  The second, S. 1142, would promote geothermal energy development by establishing a federal loan program to finance the mapping and development of high-risk exploration wells and improvement of geothermal technologies.  The full text of S. 1108 is available at http://sanders.senate.gov/files/CAM11187.pdf.  The full text of S. 1142 is available at http://www.gpo.gov/fdsys/pkg/BILLS-112s1142is/pdf/BILLS-112s1142is.pdf.
• House Committee Approves Quartet of Bills to Exempt Renewable Energy Projects from Certain Aspects of NEPA Review.  The House Natural Resources Committee approved four bills that would exempt some aspects of renewable energy projects from analysis under the National Environmental Policy Act (NEPA).  The renewable energy-related bills approved by the Committee are: H.R. 2170, which limits analysis of projects under NEPA to the proposed project location or a no-action alternative; H.R. 2171, which exempts some geothermal exploration wells from NEPA; H.R. 2172, which exempts temporary wind infrastructure such as meteorological towers on public lands from NEPA analysis; and H.R. 2173, which exempts temporary infrastructure for offshore wind energy projects from NEPA.  Ranking Member Edward Markey (D-MA) opposed the bills, calling them “Trojan horses” that “wouldn’t increase development of wind, solar, and geothermal projects, but instead promote more litigation and fewer alternatives.” Additional information, including the archived webcast of the markup, opening statements from the Chairman, links to the full text of each bill, and a list of amendments is available at http://naturalresources.house.gov/Calendar/EventSingle.aspx?EventID=250546.

Judicial

• EPA Defends Authority to Issue Avenal Permit Without GHG Limits.  In a July 11 filing before the EPA Environmental Appeals Board (EAB)—an internal adjudicatory body—the agency defended its decision to issue a Prevention of Significant Deterioration (PSD) permit to a 600-megawatt natural gas-fired combined cycle power plant owned by Avenal Power Center, LLC that exempted the plant from more-stringent NO₂ limits and first-time GHG limits that took effect after the permit application was complete but was still pending before EPA.  The permit was issued without those provisions in order to comply with an earlier decision by a federal judge in Avenal Energy Center, LLC v. EPA that ordered EPA to issue the long-delayed permit for the facility on an expedited basis. The EAB’s decision in the case could affect several other stalled permits that EPA intends to issue without GHG limitations in order to comply with provisions of the Clean Air Act that require EPA to issue permits within 12 months of receiving a completed application.  In its brief, EPA argues that the Avenal permit is valid because the Clean Air Act does not expressly forbid so-called “grandfathering” of permit applications submitted prior to implementation of a new rule.  EPA’s July 11 filing is available at http://cleanenergyreport.com/iwpfile.html?file=jul2011%2Fce07122011_avenal1.pdf.
• EPA Renews Argument for Venue Change in Tenth Circuit “SIP Call” GHG Case.  EPA has filed a new motion to change the venue of a lawsuit over EPA’s GHG regulations that is currently pending before the U.S. Circuit Court of Appeals for the Tenth Circuit (Tenth Circuit).  In the motion, EPA argues that decisions over the validity of EPA’s actions in denying more than a dozen states the authority to issue new stationary source Clean Air Act (CAA) permits due to deficiencies in their GHG state implementation plans (SIPs) deal with issues that are “nationally significant” and therefore should be reviewed by the Circuit Court of Appeals for the D.C. Circuit (D.C. Circuit).  The CAA requires that “nationally significant” challenges to EPA actions under the Act be heard exclusively in the D.C. Circuit. EPA renewed its motion to transfer the Tenth Circuit case after an unrelated Tenth Circuit lawsuit dealing with EPA designations of local programs under EPA’s particulate matter regulations was transferred to the D.C. Circuit on similar grounds.  The Tenth Circuit has not yet responded to EPA’s motion for a change in venue in the pending GHG case.  However, another, related GHG lawsuit, which was originally filed in the Court of Appeals for the Fifth Circuit (Fifth Circuit), was transferred to the D.C. Circuit in February.  Like the pending Tenth Circuit lawsuit, the recently transferred Fifth Circuit suit challenged EPA’s “SIP Call,” in which the agency denied a state the authority to issue CAA permits because the state failed to adequately address new GHG rules in its state implementation plan (SIP).  EPA’s motion is available at http://cleanenergyreport.com/iwpfile.html?file=jul2011%2Fce07132011_motion.pdf.  For more on the Fifth Circuit’s February 24^th decision to transfer the related GHG case, see VNF’s Climate, Air, and Energy Update for the week of February 28 at http://www.vnf.com/news-policyupdates-564.html.

States

• Illinois Passes Legislation to Streamline Air Permitting Process.  Illinois Governor Pat Quinn (D) signed into law a bill (H.B. 1297) that is intended to simplify and streamline the state’s air permitting process through amendments to the Illinois Environmental Protection Act.  Under the new law, the Illinois Environmental Protection Agency will implement online permitting, processing and tracking; develop expedited permitting, general permitting, and permitting by rule processes for certain classes of emitters; and establish a new registration process for low-emitting sources that are intended to allow those entities to avoid the more time consuming and resource-intensive process of obtaining permits.  The text of the law is available at http://www.ilga.gov/legislation/publicacts/97/PDF/097-0095.pdf.
• Acting West Virginia Gov. Orders Emergency Rules For Marcellus Shale Development.  Acting West Virginia Governor Earl Ray Tomblin (D) issued an executive order that directs the state’s Department of Environmental Protection (DEP) to develop emergency regulations that would allow the development of natural gas resources in the Marcellus Shale formation.  Executive Order 4-11 requires the DEP to issue regulations that address such issues as water withdrawal, stream and groundwater protection, and horizontal well drilling activities.  The order also imposes requirements on natural gas companies that intend to drill in the formation.  Acting Gov. Tomblin’s executive order will provide interim authority for development of the Marcellus Shale while the West Virginia legislature finalizes long-term legislation for development of the formation that is currently being drafted.  Executive Order 4-11 is available at http://www.governor.wv.gov/Documents/20110713150559476.pdf.

Industry and NGOs

• Texas “Flexible” Permit Holders Agree To Transition To EPA-Approved Permits.  EPA’s Region 5 office has reached agreement with the operators of all 136 industrial facilities operating under “flexible” permits issued by the Texas Commission on Environmental Quality for those permit holders to transition to new “deflexed” permits approved by EPA.  The agreement results from the agency’s decision on July 15, 2010 invalidating the Texas flexible permitting program, which was first established in 1994.  Under Texas’ flexible permitting program, a permit placed a limit on facility-wide emissions rather than on individual emissions sources at the site.  As a result, an individual source could emit more emissions than would otherwise be permissible provided that the entire facility stayed below the site-wide flexible emissions cap.  In issuing its disapproval, EPA found that the flexible permitting arrangement did not comply with the requirements of the Clean Air Act, particularly provisions of the New Source Review program that require certain major new or modified emissions sources to install best available control technology (BACT).  Texas, along with a number of industry groups, has sued EPA in the U.S. Court of Appeals for the Fifth Circuit over the agency’s decision to invalidate the program.
• AEP Shutters Mountaineer CCS Project.  American Electric Power Co. Inc. (AEP) announced that it will discontinue development of a $668 million commercial-scale carbon capture and sequestration (CCS) project located at the Mountaineer coal-fired power plant in West Virginia.  The primary factors in the decision were the low probability of obtaining regulatory approval for recovery of the costs of the CCS project and the absence of a national climate change policy.  AEP CEO Michael Morris stated that AEP would consider restarting the project when “economic and policy conditions create a viable path forward.”  The project was being developed in four phases.  Although it is discontinuing the project, AEP will complete the first phase, which involves front-end engineering and design, development of an environmental impact statement, and the development of a schedule for Phases II and III. 
• With Support of Legislators, Nonprofits Launch National Initiative To Promote EOR Using CO₂.  The Pew Center on Global Climate Change and the Great Plains Institute launched a new initiative aimed at promoting the use of CO₂ CCS technologies for purposes of enhanced oil recovery (EOR).  The initiative, labeled the National Enhanced Oil Recovery Initiative (EOR Initiative), will develop recommendations to guide state and federal policymakers in expanding the use of CO₂ for EOR.  The recommendations are expected be issued in early 2012 and will be developed by a group of 30 executives from the oil and gas, electric power, ethanol, pipeline and other industry sectors; state officials; technical experts; and environmental advocates.  The EOR Initiative was launched with the support of Sens. John Barrasso (R-WY), Kent Conrad (D-ND), John Hoeven (R-ND) and Richard Lugar (R-IN), and Rep. Mike Conaway (R-TX).  A press release announcing the EOR Initiative is available at http://www.pewclimate.org/press-center/press-releases/members-congress-support-eor-initiative.

Studies and Reports

• Soil Microbes Found to be a Major Source of GHG Emissions.  A new study published in the journal Nature estimates the impact of rising atmospheric CO₂ concentrations on the quantities of methane (CH₄) and nitrous oxide (N₂O) emitted globally by microorganisms inhabiting soils in forests, grasslands, wetlands, and agricultural fields.  The study found that these microorganisms emit significant amounts of CH₄ and N₂O—and that because high CO₂ concentrations stimulate increased microbial activity and higher soil water content, emissions of these potent GHGs from soil microorganisms will increase as CO₂ concentrations continue to rise.  These soil emissions are large enough in magnitude to cancel out approximately 17 percent of the total expected increase in the future carbon sequestration potential of the Earth’s land area.  The study abstract is available at http://www.nature.com/nature/journal/v475/n7355/full/nature10176.html.