November 2017

The Plywood and Composite Wood Products MACT October 2017 ICR

This article is available as a podcast episode on ALL4’s Air Quality Insider

The U.S. Environmental Protection Agency (U.S. EPA) issued an Information Collection Request (ICR) on October 5, 2017 to a long list of facilities in the Plywood and Composite Wood Products (PCWP) industry. If you have a facility that is part of this industry sector and you received one of these letters you now know that U.S. EPA has the authority under Section 114 of the Clean Air Act to have you spend a significant amount of time over the next few months compiling information about equipment and potential hazardous air pollutant (HAP) emissions at your facility. In this instance, EPA is requesting information for facilities regulated under the federal National Emissions Standards for Hazardous Air Pollutants or NESHAP rules. These regulations are also referred to as the Maximum Achievable Control Technology (MACT) standards, and in this case the current PCWP MACT standards are cited at 40 CFR Part 63, Subpart DDDD.

The ICR mailed out in October included two different spreadsheets and substantial detailed instruction and guidance to aid facilities in completing and submitting the requisite information. All of the same information included with the request and some additional resources, can be viewed and downloaded from U.S. EPA’s website. Along with all of U.S. EPA’s guidance, the National Council for Air and Stream Improvement (NCASI), the independent, non-profit research group that provides substantial environmental support to the forest products industry, conducted training webinars in November for member companies on details for assisting facilities in completing their ICR responses.

Even with the U.S. EPA and NCASI resources, regulated entities will need to plan and account for the time and resource commitment required to respond to the ICR. With responses due back to U.S. EPA by February 9, 2018, it may make sense to bring in outside resources to aid in the ICR response efforts. ALL4 has substantial experience with the PCWP industry and with compiling ICR responses. We can provide support at various levels ranging from gathering and compiling facility data, to completing the U.S. EPA spreadsheets, to submitting the data electronically, or to taking on responsibility for the entire response effort from start to finish. Given that facilities have a number of other critical year-end responsibilities that must be attended to, and taking into account various out-of-office schedules with the upcoming holiday, and then adding in the year-end reports that will need to be compiled during January, the early February response due date could be problematic from a resource availability perspective.

If you have questions about the ICR content or would like to talk about how we might assist your facility, please reach out to John Egan (610.422.1114 or jegan@all4inc.com).

TCEQ Air Quality 101 Blog Series: Everything is Bigger in Texas – Including Air Quality Modeling

Most environmental managers aren’t exposed to air quality modeling requirements unless they’re dealing with a large project that trips the Prevention of Significant Deterioration (PSD) construction permitting program’s Significant Emission Rate (SER) thresholds for one (or more) criteria pollutants. However, there are several states across the U.S. that have state-specific air quality modeling requirements for minor (those projects that are not subject to PSD permitting) source permitting programs. I’ve had the pleasure of assisting clients navigate these state-specific air quality modeling requirements in many states and local jurisdictions across the country.

In the past couple of years, my colleagues and I have had the opportunity to work through the Texas Commission on Environmental Quality’s (TCEQ’s) air quality modeling requirements associated with the minor New Source Review (NSR) permitting program. They say, “everything is bigger in Texas”, and this can be applied to air quality modeling requirements as well.

TCEQ has three different types of modeling analyses that are required to be performed as part of Minor NSR permitting, only one of which has “de-minimis” thresholds to avoid completing screening or refined air dispersion modeling. These three analyses are:

Minor National Ambient Air Quality Standards (NAAQS) Analysis
State Property Line Analysis
Health Effect Analysis

Although TCEQ does have a lot of air quality modeling requirements [I’ve focused on minor NSR permits but other permitting programs like TCEQ permit by rules (PBRs) and nonruled standard permits (NRSP) also have air quality modeling requirements albeit with a few more “off-ramps” available], they also do a good job of providing guidance in their Air Quality Modeling Guidelines document (aka APDG 6232) to perform these analyses. However, a strong background in air dispersion modeling is required to understand a lot of it. To that end I’ll distill the three analyses above into useful information that potential permittees in Texas ought to know.

Minor NAAQS Analysis

The Minor NAAQS (as it’s referred to in Texas) analysis is very similar to a PSD air quality modeling analysis, and entails utilizing screening and, if required, refined air dispersion modeling to assess a project’s impact against the NAAQS. Similar to PSD air quality modeling, the Minor NAAQS analysis is a two-step process (It feels like I should be making some reference to the Texas two-step, but I’ll refrain). Step one involves modeling the project related emissions (or only the emissions increases from existing sources plus the potential emissions from any new sources), and comparing the resulting concentrations to the Significant Impact Levels (SILs). If you can demonstrate project-related impacts are less than the SILs, you’re done. If not, you have to move onto a full NAAQS analysis which involves modeling all the emissions sources at your site at their full potential to emit rates, as well as also bringing in local sources and background concentrations (from ambient monitoring stations) into the modeling analysis for comparison to the NAAQS.

What’s important to point out is the TCEQ minor NSR modeling requirement doesn’t include any emissions de-minimis levels and therefore air quality modeling is always required as long as your project increases a criteria pollutant emissions rate. Also, since this is a state program, TCEQ has more flexibility in allowing use of modeling techniques than if this were a PSD level air quality modeling analysis. Therefore, I would recommend not being shy about presenting alternative modeling techniques to TCEQ that you wouldn’t otherwise consider for a PSD project.

State Property Line Standards Analysis

State Property Line standards are Texas specific ambient standards for hydrogen sulfide (H₂S), sulfur dioxide (SO₂), and sulfuric acid (H₂SO₄). Additionally, Galveston, Harris, Jefferson, and Orange counties have county specific State Property Line standards for SO₂. The State Property Line air quality modeling analysis is very similar to a minor NAAQS analysis in that there is no de-minimis emissions threshold and therefore, air quality modeling is always required as part of a minor NSR permit application. However, if you are able to demonstrate compliance with the 1-hour SO₂ NAAQS as part of the minor NAAQS analysis, typically you shouldn’t have any problem with the State Property Line analysis. This is because the State Property Line standards were developed before the 1-hour SO₂ NAAQS was implemented in 2010 and the 1-hour SO₂ NAAQS is much more stringent which also carries over the sulfur State Property Line standards H₂S and H₂SO₄.

Health Effects Analysis

The last type of air quality modeling analysis required as part of minor NSR permitting is a Health Effects Analysis. The Health Effects Analysis involves evaluating the ambient impacts of non-criteria pollutants to an effects screening level (ESL) developed by TCEQ for over 7,000 air toxics. It is here where I always like to point out that all Hazardous Air Pollutants (HAPs) are air toxics (or ESLs in TX) but not all air toxics are HAPs. This is quite obvious by the number TCEQ air toxics however, it usually means more time is necessary to calculate these air toxics as part of the emissions inventory

Unlike the minor NAAQS and State Property Line standard analyses, there is a de-minimis emissions threshold which, if met, removes the minor NSR permitting requirement to conduct screening or refined air quality modeling. However, determining the de-minimis emissions threshold is a somewhat involved process laid out in TCEQ’s Modeling and Effects Review Applicability (MERA) Air Permit Reviewer Reference Guide (aka APDG 5874). I do have to give TCEQ credit because the MERA reference guide was just updated in September 2017 and streamlined the ESL evaluation from a 12-step process down to a 7-step process (however, there are a lot of sub-steps associated with each step, see the picture below of the new 7-step process). Within those steps the air quality modeling requirements are similar to the minor NAAQS analysis in that first, project-related emissions are evaluated, and then a site wide analysis (with local sources) is required if initial ESL thresholds aren’t met.

Click to view image full size

The Bottom Line

If you’re permitting any sources in the state of Texas, sooner or later you’re going to be faced with having to conduct an air quality modeling analysis. With more stringent NAAQS, as well as State Property Line and ESLs considerations, it is becoming increasingly more important to pay closer attention to your emissions limits, emissions release characteristics, and who your neighbors are. If we were sitting at a bar enjoying a tasty Texas microbrew, I could certainly share a few stories of sources that surprisingly had to be modeled as well as those that had issues with identifying passing modeling scenarios for sources you might not think. It can quickly get complicated but our time in the “modeling trenches” and relationship with TCEQ modelers have positioned us to tackle even the trickiest of modeling challenges. If you need assistance determining if air quality modeling is required for your next project in Texas and what the scope of the modeling is, please reach out to myself or our Houston Office Director Kristin Gordon. We have the modeling Staff and Texas experience at ALL4 to assist you with your air quality modeling needs no matter how big or small your air quality modeling project.

TCEQ Air Quality 101 Blog Series: Texas Compliance

After working as an environmental consultant at All4 Inc. (ALL4), I can look back on my time in the oil and gas industry and recollect all the practices we put in place to improve environmental performance. Given the vitality of the industry and our lack of experience with regulations associated with compliance activities, there were many hurdles that we had to overcome to both ensure compliance and reduce risk.

As an air quality consultant, I now help many clients that are in the position I’ve been in with regards to compliance and risk reduction on a daily basis. The primary difference is that I now work with a suite of clients from various industrial sectors and regions. Contemplating the differences, I realized that strategies to ensure regulatory compliance and risk reduction reflect a common mindset and structured approach, regardless of industrial sector or region. Because the bulk of my experience is in Texas, I feel compelled to share my own “Top Five” list of strategies to both ensure compliance and reduce risks associated with Texas air quality regulations. Please read on as I discuss common requirements and my recommendations.

Compliance requirements come in many shapes and sizes

Facilities in Texas are typically subject to an array of various Federal and State air quality requirements. The breadth and magnitude of the applicable air quality requirements will vary with the complexity of the facility and will be spelled out in an Operating Permit(s) as well as the facility’s New Source Review (NSR) Permit(s), and any Standard Permits or Permits by Rule (PBRs). Each permit will also have unique reporting requirements associated with it.

At the Federal level, key regulations include the National Emissions Standards for Hazardous Air Pollutants (NESHAP) in 40 CFR Part 63 and the Standards of Performance for New Stationary Sources (NSPS) at 40 CFR Part 60. The NESHAP and NSPS rules establish emissions standards and specify notification, monitoring, recordkeeping, reporting, and testing requirements for various source categories. For example, 40 CFR Part 63, Subpart ZZZZ – National Emissions Standards for Hazardous Air Pollutants for Stationary Reciprocating Internal Combustion Engines, a NESHAP rule, regulates stationary reciprocating internal combustion engines (RICE) and its requirements can include compliance testing, parametric monitoring, and everything in between based on an engine’s specifications.

For the oil and gas industry, 40 CFR Part 60, Subpart OOOOa – Standards of Performance for Crude Oil and Natural Gas Facilities for which Construction, Modification or Reconstruction Commenced After September 18, 2015, an NSPS rule, requires periodic Leak Detection and Repair (LDAR) surveys based on the type of affected facility. Compliance with emissions testing and LDAR requirements typically require a third party to perform the work and generate compliance reports. The emissions testing and LDAR programs require notifications and report submittal to the Administrator [typically delegated from the U.S. Environmental Protection Agency (U.S. EPA) to the Texas Commission on Environmental Quality (TCEQ)] and possibly electronically through the Compliance and Emissions Data Reporting Interface (CEDRI) system located on U.S. EPA’s application for transmitting electronic environmental data known as the Central Data Exchange (CDX).

Many NESHAP and NSPS rules specify the use of continuous monitoring systems (CMS). CMS can be direct via continuous emissions monitoring systems (CEMS) and/or indirect via continuous parametric monitoring systems (CPMS). CMS requirements are prevalent in rules impacting many manufacturers including the Portland cement, glass, petroleum refining, and chemical manufacturing industries. While each rule’s subpart specifies CMS and related monitoring provisions, the common monitoring requirements of the “General Provisions” cannot be overlooked.

State-specific rules include their own set of requirements but generally include the same basic components as Federal rules. At the state level in Texas, facilities may be required to submit routine reports throughout the year to TCEQ. In Texas, that involves the 30 TAC 101.10 Annual Emissions Inventory Updates (AEIU) requirements as well as the Title V operating permit reporting requirements of 30 TAC 122.145 and 122.146 for semiannual monitoring reports, semiannual deviation reports and annual compliance certifications [also referred to as Permit Compliance Certification (PCC)], respectively. AEIUs must be submitted to TCEQ via the State of Texas Environmental Electronic Reporting System (STEERS), the electronic reporting portal in Texas. Compliance with routine reporting requirements can be difficult without finely-tuned monitoring and recordkeeping programs in place.

The Highly Reactive Volatile Organic Compounds (HRVOC) requirements in 30 TAC 115, Subchapter H require additional monitoring and emissions control requirements on select equipment in the Houston-Galveston-Brazoria (HGB) area. An example is the requirement to install and operate CMS on vents and flares subject to the rule.

Compliance with air quality requirements for Texas facilities can be a daunting task, but it does not need to be. From my industry and consulting experience, my top six compliance and risk reduction strategies for Texas facilities are presented below.

Top Six Compliance/Risk Reduction Strategies for Texas (because 5 was not enough):

1. Confirm Applicability and Establish a Compliance “System”

Once the regulatory requirements have been identified, compliance systems need to be set up to determine the best way to comply with the regulations.
Identify clear compliance mechanisms for each applicable air quality requirement as the rules don’t always provide a clear direction on exactly how to demonstrate compliance. We call these “grey areas” and it’s important to document your approach to compliance where the rule doesn’t provide clear direction.

2. Perform Frequent Data Reviews

By increasing the frequency of data review, you can save yourself headaches down the road.

Reviewing monitored data just to look for aberrations and inconsistencies can catch or even prevent potential deviations.
More frequent reviews can save you valuable time as you approach reporting deadlines.
Identifying potential issues ahead of time can sometimes head off compliance issues, or at least minimize them.

3. Incorporate Third-Party Report Oversight

In addition to confirming that testing or LDAR inspections were completed, frequent review of third-party reports can improve other compliance aspects.

Guaranteeing the tests are done correctly, using the appropriate methods, and under the necessary operating conditions.
Ensuring proper communication, timing, and direction for personnel gathering data. This minimizes delays in receiving the final reports and ensures expectations can be met.
Maintaining awareness of compliance limits and data trends can prevent potential deviations. The sooner you can identify a potential problem, the sooner you can prevent (or fix) it!

4. Provide Training

Knowledgeable personnel will decrease your out-of-compliance risk.

Provide regular training at all levels of the company.
External training equips your environmental staff to better understand the regulations, which improves their knowledge regarding compliance activities required on a daily, weekly, monthly, and annual basis.
Internal training allows your environmental staff to share the knowledge gained from external training with personnel across your own company.
Both types of training provide the environmental staff and their fellow employees an improved understanding of how to meet their facility’s requirements, prevent future non-compliance, and allow personnel to remain updated with updated applicable regulations.

5. Perform Regular Self-Audits and Periodic Third-Party Audits

Auditing has been shown to be an effective means to ensure that compliance systems are operating as intended (or not).

Conducted under the Texas Environmental, Health & Safety Audit Privilege Act, such audits can provide your company protection by self-disclosing any issues that may arise.
Allows companies to correct any ongoing problems via a corrective action program in advance of a State or Federal inspection (which could result in costly violations).

6. Develop and Implement Robust Recordkeeping Systems

Robust recordkeeping is your key to compliance documentation. These systems need to be consistent, robust, and validated.

A well-designed and maintained Excel spreadsheet can be just as useful as automated recordkeeping.
In my experience, one of the greatest possible pitfalls in generating compliance records is human error. For example, employees keeping hardcopy logbook records for their daily checks, may not input the information until weeks later. When the employee finally gets around to transferring the data onto a spreadsheet, they could misplace the record, forget a vital piece of information, or outright mistype the data. In instances like these, using computer generated reports, or implementing a data validation step can make or break your compliance records. This can especially help when trying to keep accurate emissions for AEIU.

Where do you stand?

A robust air quality compliance and recordkeeping system will enhance compliance and reduce environmental risk. Further, it will provide your environmental staff with peace of mind when preparing annual compliance certification documentation for signature by the responsible official. ALL4 can serve as a valuable resource during the development, implementation and maintenance of your compliance system. We provide training, compliance reviews, audits, monitoring and recordkeeping systems, and record reviews. If your facility’s environmental compliance is keeping you up at night, don’t hesitate contact us.

On the Not-So-Distant Horizon: CERCLA and EPCRA Reporting Requirements for Air Releases for Livestock Operators

In a few short days, many of us will be sitting down to enjoy a nice turkey dinner, and unless you’re having a good hunting season, those turkeys are probably farm-raised. In other farm-raised animal related news, there are some looming air emissions reporting requirements for livestock operators. Although historically exempt from reporting hazardous substance air releases under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Emergency Planning and Community Right to Know Act (EPCRA), farms releasing hazardous substances from animal waste will be required to submit these reports in the very near future. On April 11, 2017, the U.S. Court of Appeals (Court) struck down U.S. Environmental Protection Agency’s (U.S. EPA) final rule which exempted most farms from these requirements. In addition, on October 27, 2017, U.S. EPA issued preliminary guidance documents which outlined reporting obligations for livestock operators.

So, what is CERCLA and EPCRA?

CERCLA and EPCRA require facilities to report releases of hazardous substances that are equal to or greater than their reportable quantities (RQ) within any 24-hour period. Following a hazardous substance reportable release, a facility owner or operator must notify federal authorities under CERCLA and state and local authorities under EPCRA. The purpose of this requirement is to notify officials of potentially dangerous releases so that they can evaluate the need for a response action. CERCLA and EPCRA also provide a reduced reporting requirement for “continuous releases” of hazardous substances that exceed the RQ. A “continuous release” is defined as a release of a hazardous substance that is “continuous” and “stable in quantity and rate”. U.S. EPA considers emissions from animal waste to be a continuous release.

What do I have to do if I’m a livestock operator?

First and foremost, you should begin quantifying air emissions of regulated substances to determine if they exceed the applicable RQ. Typical hazardous substances associated with animal waste include ammonia and hydrogen sulfide, but there may be others at your farm. In addition, there are some substances/scenarios that are exempt from reporting (e.g., normal application of fertilizers).

Currently no reporting is required since the Court has yet to issue its mandate enforcing the April 11, 2017 decision. However, once the mandate is issued, farms will be required to submit the appropriate notifications and subsequent reports to the applicable federal, state, and/or local authorities for all substances which are deemed a “reportable release”. U.S. EPA has posted guidance on their website related to the livestock CERCLA/EPCRA reporting requirements.

Stay tuned. In the meantime, if you have any questions about the specific requirements or how to get started on your air emissions estimates please don’t hesitate to reach out to me at 610.933.5246, extension 143!

U.S. EPA’s Input on the Future of Air Quality Dispersion Modeling

On September 25^th, the U.S. Environmental Protection Agency (U.S. EPA) held their 2017 Regional/State/Local Modelers’ Workshop in Raleigh, NC. Though I had originally planned to be in my beautiful hometown of Savannah, Georgia for my mom’s tenth 39^th birthday, I couldn’t miss out on the opportunity to learn more about the revisions to 40 CFR Part 51, Appendix W (also known as the Guideline on Air Quality Models), and to gain insights on the future of air quality modeling…sorry, mom!

I won’t drown you with the details of the revisions to Appendix W (which, as you know, were released in December 2016). However, if you would like more information regarding these revisions, I encourage you to read previously posted ALL4 blogs. Here, you’ll find many articles, as well as contact information for our modeling team should you have any specific needs.

So, in the spirit of getting to the point, here is the latest:

The significant impact level (SIL) guidance for particulate matter less than 2.5 microns in diameter (PM_2.5) and Ozone (O₃) is currently in Washington D.C., awaiting review by the Office of Management and Budget (OMB). The EPA expects the guidance to be issued in December 2017.

The U.S. EPA is continuing to develop the Model Clearinghouse. This will serve as a recordkeeping database for all approvals of alternate modeling techniques to ensure fairness, consistency, and transparency in the modeling community.

You may have heard of “unofficial” updates/guidance to the “Puzzle Book” (you know, the DRAFT New Source Review Workshop Manual that included ultra-conservative modeling guidance) . Be wary of using anything from these unofficial documents without input from your local permitting authority, as the U.S. EPA was expressly clear that they did not participate, review, or endorse these documents. In general, if in doubt about utilizing “unofficial” modeling approaches, techniques, or assumptions, contact your Regional Office for guidance (or call ALL4 for support).

U.S. EPA plans to release an AERMOD System Development Plan. The document will be a formal statement of U.S. EPA’s planned scientific updates (i.e., does not apply to bugs, usability enhancements, etc.) to AERMOD, AERSCREEN, AERMET, and AERMAP. The U.S. EPA’s estimated date of release is early 2018, with intentions to update the plan annually thereafter. Let’s all keep our fingers crossed that this document is released in a timely manner, as it will be invaluable to know the goals and concerns of the U.S. EPA as we strategize our air quality modeling options.

As always, the future of air quality dispersion modeling is going to be exciting and adventurous, yet challenging to navigate. The ALL4 modeling team is here to help! For all your modeling needs, reach out to any of the ALL4 modeling team members.

Reestablishment of a Wool Fiberglass Manufacturing Compliance Deadline

Update to the article, Extension of a Wool Fiberglass Manufacturing Compliance Deadline, published on August 14, 2017.

Due to the receipt of “adverse comment,” U.S. EPA is withdrawing the direct final rule for the National Emissions Standards for Hazardous Air Pollutants (NESHAP) located at 40 CFR Part 63 Subpart NNN. Under this action, facilities subject to Subpart NNN would have been provided an additional year to comply with the emissions limits for flame attenuation (FA) lines. However, because the action was withdrawn, the owners or operators of FA lines subject to the emission limits for formaldehyde, phenol, and methanol published in Subpart NNN, must demonstrate compliance with the emissions limits by July 31, 2017.

During the development of this blog update, U.S. EPA was contacted by ALL4 to determine the regulatory intent of this action. ALL4 was informed that U.S. EPA has reassessed their intentions for flame attenuation lines within the past year. In a separate proposed action, U.S. EPA has proposed to subcategorize the bonded flame attenuation production lines, therefore capturing emissions data from the lines with lower “pull rates,” and designating emission limits for these lines in their own subcategory. Further, U.S. EPA intends to change this rule again in December 2017.

Needless to say, there will be additional action regarding Subpart NNN in the near future. If you have questions about this action or if you’d like assistance complying with this currently-passed emissions compliance deadline, please contact ALL4 at 610-933-5246.

The Clean Power Plan – Where Does It Stand, Where Are Things Headed?

On October 16, 2017, U.S. EPA proposed repeal of the Clean Power Plan (CPP). The CPP is more formally entitled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units.” Under the CPP, states would be responsible for implementing plans to achieve unique state-specific carbon dioxide (CO2) reduction goals for existing electric generating units (EGUs), so that by 2030 a nationwide 30% reduction in CO2 emissions would be achieved from the power sector over 2005 baseline levels. Since original promulgation, there has been a lively amount of legal activity that’s ensued. Let’s take a moment to review the highlights:

October 23, 2015 – Original promulgation of the CPP.
October 23, 2015 – Immediate filing of petitions against the CPP challenging that U.S. EPA has overstepped its legal authority in issuing the rule. Petitions are consolidated into one case (West Virginia v. EPA, No. 15-1363).
February 9, 2016 – Issuance of a stay by the U.S. Supreme Court while West Virginia v. EPA litigation is underway by the United States Court of Appeals for the District of Columbia Circuit (Court of Appeals). The stay orders U.S. EPA to halt enforcement of the CPP until a ruling on West Virginia v. EPA is made by the Court of Appeals.
September 17, 2016 – Oral argument for West Virginia v. EPA is heard in the Court of Appeals.
March 28, 2017 – President Trump issues the Presidential Executive Order on Promoting Energy Independence and Economic Growth (Order) directing U.S. EPA to suspend, revise, or rescind various Obama-era regulations intended to regulate GHG emissions from power plants, including, but not limited to, the CPP.
March 28, 2017 – U.S. EPA files a motion in response to the Order to hold West Virginia v. EPA in abeyance indefinitely, pending completion of U.S. EPA’s review and any resulting forthcoming rulemaking.
April 28, 2017 – The Court of Appeals agrees to pause West Virginia v. EPA litigation for 60 days, requiring U.S. EPA to provide monthly status reports with respect to CPP review and future rulemaking, while the case is in abeyance.
August 8, 2017 – The Court of Appeals, on its own motion, orders that West Virginia v. EPA litigation remain in abeyance for an additional 60 days, and that U.S. EPA continue to provide monthly updates with respect to CPP review and future rulemaking.
October 10, 2017 – The most recent 60-day abeyance period for West Virginia v. EPA ends.
October 16, 2017 – U.S. EPA proposes repeal of the CPP, indicating that it will accept public comment on the proposed repeal until December 15, 2017 and hold a public hearing if requested prior to October 31, 2017.
October 16, 2017 – U.S. EPA files an additional request to the Court of Appeals for indefinite extension of the abeyance for West Virginia v. EPA.

How do these various actions fit together and do they give us an indication of where things might still be headed? If you’re a member of the power sector, you’re likely feeling the stress of confusion and uncertainty. In this article, we’ll explore the proposed repeal, the role of the President’s March 28, 2017 Executive Order, what a replacement rule could look like, what a repeal without replacement rule could mean, the still influential role of West Virginia v. EPA as well as the Supreme Court stay, and the status of the other power sector CO2 actions which appeared in the Federal Register on October 23, 2015.

Proposed Repeal

On October 16, 2017, U.S. EPA proposed repeal of the CPP, indicating that it would accept public comment on the legal interpretation for repeal addressed within the proposal until December 15, 2017. A public hearing will be held if requested prior to October 31, 2017. U.S. EPA’s initial review of the CPP fulfills a requirement of the March 28, 2017 Executive Order to review, and if appropriate, initiate proceedings to suspend, revise, or rescind the Clean Power Plan. The preamble to the proposal clarifies that the change in legal interpretation that U.S. EPA is proposing and seeking comment on is that the CPP exceeds U.S. EPA’s statutory authority, which sounds similar to the underlying theme of West Virginia v. EPA.

The preamble goes on to explain that Section 111(d) of the CAA requires U.S. EPA to promulgate emission guidelines for existing sources that reflect the ‘‘best system of emission reduction (BSER),” but that all other CAA Section 111 regulations promulgated to date are based on a BSER that can be applied to or at a single source. “The CPP departed from this practice by instead setting CO2 emission guidelines for existing power plants that can only realistically be effected by measures that cannot be employed to, for, or at a particular source.” What U.S. EPA speaks to here is their “beyond the fenceline” argument, where they warn that power generators would need to fully alter their energy portfolios to comply with the CPP (“such as a grid-wide shift from coal-fired to natural gas-fired generation, and from fossil fuel-fired generation to renewable generation”) rather than comply with the rule through facility-specific (“inside the fence”) efficiency improvements. Supporters of the CPP have long said the “beyond the fenceline” argument is weak given that the power sector has been fuel-switching as a technique to comply with other rules for years, offering that it would be difficult to argue that requiring only efficiency improvements could ever constitute BSER.

The preamble further states that U.S. EPA “has not determined the future scope of any potential rule under CAA Section 111(d) to regulate GHG emissions from existing EGUs, and, if it will issue such a rule, when it will do so and what form that rule will take. (U.S. EPA) is considering the scope of such a rule and is intending to issue an Advance Notice of Proposed Rulemaking (ANPRM) in the near future. That ANPRM will solicit information on systems of emission reduction that are in accord with the legal interpretation proposed in this notice (i.e., those that are applicable at and to an individual source).”

Despite that ANPRMs are used to begin rulemaking processes, since an ANPRM for the CPP was already issued 10 years ago that resulted in the submittal and consideration of 4.3 million public comments, and since the proposed repeal included such language as “and, if it will issue such rule,” some have regarded the ANPRM as a potential stalling tactic that could potentially result in repeal without replacement. However, what is clear in the immediate future is that the ANPRM is going to be focused on the “beyond the fenceline” argument – that is, reversing the CPP’s BSER formula for setting GHG reduction targets. U.S. EPA has already sent the draft ANPRM to the Office of Management and Budget (OMB) for review, and that process typically takes about 90 days before being published in the Federal Register.

Prospects for a Replacement Rule

In an October 18, 2017 interview with Time Magazine, U.S. EPA Administrator Scott Pruitt relieved some of the uncertainty people had around the ANPRM when he implied that a replacement rule, as opposed to a repeal without replacement, is in the future. “We’ve been spending many months evaluating Section 111 of the Clean Air Act to ask and answer the question what authority exists…There is some modest authority…for us to take action.” These affirming comments were surprising, as many have speculated that Pruitt has no intention to regulate GHG from the power sector, and may even go as far as to use the ANPRM to tee up a review of the Endangerment Finding. His comments during the interview, however, suggested that the Endangerment Finding is held as a separate issue. And in leaving the Endangerment Finding untouched (although not necessarily embraced), U.S. EPA maintains some obligation to replace the CPP.

What Pruitt did not indicate in the interview, however, or suggest within the proposed repeal, is how long the replacement rulemaking process could take or what the replacement rule might look like. Notwithstanding the feedback U.S. EPA receives on the ANPRM, I would suspect that a narrow replacement rule that includes facility-specific, scaled-back targets, and echoes something along the lines of Building Block 1 of the CPP may eventually present itself. As a reminder, Building Block 1 of the CPP BSER requires “improving heat rate at existing coal-fired steam EGUs on average by a specified percentage.” (Building Block 2 requires “substituting increased generation from existing affected NGCC units for generation from affected steam EGUs in the specified quantities” and Building Block 3 requires “substituting generation from new zero-emitting Renewable Energy generating capacity for generation from affected EGUs in specified quantities.”) Building Block 1 was expected to be technically feasible and of reasonable cost, and already a common and well-established practice capable of achieving meaningful reductions in CO2. Such a narrow replacement would resonate with Pruitt’s comment that the Agency has “modest authority” to regulate GHG from the power sector but, I think even more importantly, be in alignment with The Oklahoma Attorney General’s Plan (OKAG Plan), written by Scott Pruitt himself in 2014. The OKAG Plan promotes state primacy and state involvement through the CAA Section 111(d) process, unit-by-unit analyses, promulgation of “inside the fence” measures, consideration of the remaining useful life of existing sources, consideration of each state’s unique economic and environmental attributes, and consistency with CAA Section 111(d). The OKAG Plan also gives each state the ability to prescribe less stringent emissions standards for particular designated facilities or classes of facilities, extension and/or formulation of individual unit compliance schedules, and adoption of more stringent emission standards or earlier compliance deadlines.

Repeal Without Replacement

If you’re a member of the power sector, you might be feeling grateful right now that a replacement rule is simply being contemplated. After all, it provides some insulation from non-governmental organization (NGO) legal actions. Not having a replacement rule effectively leaves open the door to civil suits, tort litigation, and the like from states and others regarding GHG emissions from your sector. It would also leave a void in policy that could be filled by a different administration.

U.S. EPA could also expose itself to legal risk if the court confirms that U.S. EPA is obligated to regulate GHG from the power sector. However, if the February 9, 2016 stay is indefinitely left in place, U.S. EPA’s obligation to regulate GHG from the power sector could be rendered moot. Possibly hinting at this, judges at the Court of Appeals have suggested to proponents of the rule that they approach the Supreme Court to lift the stay.

Status of West Virginia v. EPA

What would it mean if the Court of Appeals rules on West Virginia v. EPA before U.S. EPA finalizes its proposed repeal of the CPP? You may recall that on the same day of U.S. EPA proposing repeal, U.S. EPA also filed an additional request to the Court of Appeals asking that they further extend the abeyance of the West Virginia v. EPA case. Some speculate that repeated requests for abeyance may tax the patience of the Court of Appeals enough that they would rule prior to finalization of the repeal. If the Court of Appeals decides to uphold key parts of the CPP before the repeal is finalized, U.S. EPA’s efforts to repeal the rule would be undercut. On the other hand, if the Court of Appeals refrains from ruling, U.S. EPA would be relieved of identifying how it plans to satisfy its statutory duties for the indefinite future.

Status of Other Power Sector CO2 Rules

You may recall that on October 23, 2015 U.S. EPA also published the following two actions intended to reduce CO2 emissions from the power sector:

So, what are the statuses of these actions?

Consistent with the March 28, 2017 Executive Order, U.S. EPA announced on April 2, 2017 that it is “reviewing, and if appropriate, will initiate proceedings to suspend, revise, or rescind” the October 23, 2015 Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units. Prior to this announcement, these Standards of Performance were not without their own challenges; 24 states and several other parties sought separate judicial review of the Standards of Performance in State of Dakota v. EPA, No. 15-1381, with oral argument heard April 17, 2017.

Also consistent with the March 28, 2017 Executive Order, U.S. EPA withdrew the October 23, 2015 proposed Federal Plan Requirements for Greenhouse Gas Emissions From Electric Utility Generating Units Constructed on or Before January 8, 2014; Model Trading Rules; Amendments to Framework Regulations.

Conclusions

I hope this article helps remove at least some of the confusion and uncertainty surrounding the history and the future of GHG regulation for the power sector. To summarize, U.S. EPA’s proposed repeal of the Clean Power Plan will be followed by an ANPRM that specifically requests comment on what systems of emission reduction are in accordance with the CAA, which is likely to inform development of a future replacement rule. If it is a narrow replacement of the CPP, we may find that it draws from elements of Pruitt’s own OKAG Plan as well as Building Block 1 of the CPP. Repeal without replacement does not come without possible legal action by NGOs. Finally, activity by the Court of Appeals’ with respect to West Virginia v. EPA as well as activity by the Supreme Court with respect to the February 2016 stay can still influence the direction of future GHG rulemakings for the industry.

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