Thursday, July 24, 2014

Failed Talks Leave It Up To Court To Rule On GHG Limits For Stalled Permits

EPA and backers of a planned power plant have failed to reach agreement on a schedule for the agency to issue a long-delayed air permit for the facility, leaving it up to a federal court to rule on the potentially precedent-setting question of whether regulators can set permit limits on greenhouse gas (GHG) and other pollutants that are regulated after the permits were first sought but before they were issued.

The developers of the proposed California Avenal Power Center, LLC say EPA is unlawfully holding up the permit -- initially filed in 2007 -- by requiring it to comply with a new nitrogen dioxide (NO2) air standard that was issued in 2010 long after the developers first applied for the permit.

Critics say EPA's approach is effectively a new policy that is delaying permits to the point of establishing a construction freeze -- warning as well that the delay could be further prolonged if EPA decides to enforce new GHG standards, effective Jan. 2, on the plant, as well as upcoming ozone standards or any other standards issued during EPA's permit review.

Developers of the project have sued EPA, charging the permit delay is a violation of the Clean Air Act. Last month, the U.S. District Court for the District of Columbia Dec. 20 ordered a stay in the case -- Avenal Power Center LLC v. EPA -- until Jan. 7, to "allow the parties flexibility in attempting to resolve the case."

But in a Jan. 7 notice to the court, Avenal's lawyers say that despite their best efforts, EPA "[has] been unable or unwilling to offer a resolution that would remedy their admitted violation of the Clean Air Act. Avenal has no viable choice but to resume this litigation."

The developers ask the court to "order [EPA] to immediately make a final decision on Avenal's [prevention of significant deterioration (PSD)] permit based on the standards and requirements that were in place as of the date on which Defendants were legally required under the Clean Air Act to make such a decision," according to the notice.

Petitioners add in a footnote that "Avenal's argument that EPA does not have the authority to withhold Avenal's permit based on a new requirement that was not adopted until after the permit should have been issued applies equally to" new GHG rules.

EPA also filed a Jan. 7 notice, agreeing that settlement talks "have not been successful thus far."

The agency adds "that it plans to move forward with Plaintiff's permit application, including providing the public an opportunity to comment on the Agency's proposed decision pursuant to the applicable legal procedures," while noting that "the earliest it could issue a decision on Plaintiff's permit application, pursuant to [its notice and comment permitting requirements] is May 27, 2011."

EPA had planned to finalize the permit last year but then in a Nov. 30 filing to the court said it could no longer meet its Dec. 31 deadline, after the company failed to demonstrate compliance with the NO2 requirement, according to the agency.

Whether EPA will impose GHG limits on the proposed Avenal plant remains unclear. Agency officials appeared to indicate in their best available control technology (BACT) guidance for GHG controls released in November that permits approved before Jan. 2, including those facing ongoing challenges, will not be subject to GHG limits but will be subject to other agency requirements and standards.

The BACT language, contained in a footnote in the guidance, says, it will subject permits "issued" after Jan. 2 to the requirements, defining "issued" to "describe the time when a permitting authority issues a PSD permit after public comment on a draft permit or preliminary determination to issue a PSD permit. . . . [T]he date a permit is issued is not necessarily the same as the date the permit becomes effective or final agency action for purposes of judicial review."

Moreover, EPA says in the guidance that GHG limits will not apply to permits that face ongoing challenges after the rules go into effect. "Thus, EPA does not intend to require PSD permits that are issued prior to Jan. 2, 2011, to address GHGs, even if the permit is not effective until after Jan. 2, 2011, by virtue of a delayed effective date or an appeal to the Environmental Appeals Board."

Last Updated on Monday, 10 January 2011 19:38

As Interim Step, States May Push EPA To Implement Bush Ozone Standard

State air regulators in the Northeast and elsewhere are raising concern over EPA's recent delay in issuing a revised ozone national ambient air quality standard (NAAQS) and may soon push the agency to fully implement the contested Bush EPA standard issued in 2008 rather than wait for EPA to issue and implement a new standard.

EPA has asked the U.S. Court of Appeals for the District of Columbia Circuit to grant it permission to extend the release date for the final revised standard -- which had been due this past summer -- until July 29, while litigation over the matter is held in abeyance. States supportive of a stricter standard had asked for a Dec. 31 deadline for a new standard, which would replace the Bush-era standard that was set at 75 parts per billion (ppb).

The Obama administration granted states' and activists' request to reconsider the standard and in January proposed to tighten the NAAQS to a level between 60 and 70 ppb, within the range recommended by its Clean Air Scientific Advisory Committee (CASAC). But EPA has since repeatedly delayed issuance of a final standard.

The Obama EPA is yet to issue final designations for which areas are in or out of attainment with the Bush ozone standard. Attainment designations determine deadlines for nonattainment states to craft state implementation plans (SIPs) outlining how they intend to cut pollution and meet the standard, with varying compliance dates based on the severity of a state's nonattainment. States may soon push EPA to quickly finalize those designations.

Without final designations in place, states are in limbo as they do not know the severity of their nonattainment or the compliance deadlines they may face under whatever designation EPA ultimately issues.

The Clean Air Act requires EPA to issue final designations within two years from the issuance of a new standard. The Bush administration's issuance of an ozone standard in March 2008 means that EPA should, under the air law, have issued final designations by March 2010. "However, EPA may extend that date by up to one year if EPA has insufficient information," according to the agency in its fall 2010 Unified Agenda of pending rules.

EPA notes that if the agency issues a new NAAQS as a result of its reconsideration of the Bush standard, "the requirement to designate areas for the replaced 2008 NAAQS would no longer apply." Nevertheless, the agency in the agenda says that it intends to issue final designations sometime in March.

EPA has also stalled on issuing implementing guidance for the 2008 standard, meaning that states are currently subject to the weaker ozone standard of 85 ppb issued in 1997. State officials say that the delay in issuing a revised standard is delaying health benefits of a stricter limit and creating regulatory uncertainty.

Pressure From States

States may push EPA to issue final designations so they know what ozone cuts they will need to make and can begin working on developing their SIPs to cut pollution and meet the standard.

One Northeast air official says the delay in issuing designations for a revised standard means "we would not only have a prolonged period of retaining an 85 ppb NAAQS, but its replacement would be in place a short time before it is replaced by a delayed replacement. Staying on this delayed timeline cheats states and industry of regulatory certainty."

The source says that some states are now planning to push EPA to pursue full implementation of the 2008 Bush standard to secure cuts in ozone levels. The source says, "despite our objections to the 2008 ozone NAAQS currently in abeyance, we now feel it would be much better [for] EPA to restart its timeline and move along with designations for a 75 ppb NAAQS rather than remain on a less protective 85ppb standard for an extended period of time."

EPA has not yet issued implementation guidance for its 2008 ozone NAAQS, and the process of states designating areas attainment or nonattainment for the standard is now due to be completed by March 12. This follows an extension of one year EPA granted because there was insufficient information to complete designations by March 12, 2010.

However, according to the agency's website, if EPA issues a new ozone standard before then, designations for the 2008 standard will no longer be necessary, and a new process for completing designations for the new standard on an accelerated schedule will apply instead. EPA also plans to issue implementation guidance concurrently with its forthcoming new ozone NAAQS, which would supersede any guidance for the 2008 standard.

Formalizing the implementation of EPA's 2008 ozone standard would give CASAC more time to prepare its next scheduled NAAQS review, the source argues. EPA is due to begin its next ozone NAAQS review with a proposal in June 2013, and a final standard in March 2014, according to the agency's website.

The source argues that support for such a stance is likely "pretty much unanimous in the Northeast," a region with major ozone pollution problems, much of them caused by upwind emissions in states to the west and south.

A Midwestern state regulator active within the National Association of Clean Air Agencies (NACAA), which includes air regulators from around the country, says that the idea of simply implementing the Bush 2008 standard pending any stricter NAAQS has more widespread support than just the Northeastern states.

The state officials also say that waiting for the issuance of a revised standard might do more harm than good, especially if the delay leads to a weakening of the standard compared to the proposed limit.

Potential For Pushback

With the GOP majority in the House likely to closely scrutinize EPA's upcoming rules, and many Republicans hostile to the tightened ozone standard and other air rules, any attempt by the agency to issue a stricter NAAQS could face push-back from Congress and attempts to block it, state officials say.

The Northeastern regulator says that states are still evaluating their options for calling on EPA to implement the Bush standard. One option would be a joint request to EPA with Mid-Atlantic regulators under the auspices of the Ozone Transport Commission (OTC), a body of state officials that has pushed EPA for stricter ozone standards and a broader range of control programs to limit ozone. "I suppose OTC could send a letter to EPA on the matter, but I don't see it happening immediately with all the uncertainties introduced from the previous election," the source says.

The situation is further complicated by the fact that many OTC states are parties to the consolidated litigation brought by environmentalists and industry against the 2008 ozone NAAQS. In that litigation, State of Mississippi, et al,, v. EPA, these states intervened to try and force a reconsideration and tightening of the NAAQS.

Ten of the OTC states were among a group of 14 states, plus New York City and the District of Columbia, which filed a motion with the D.C. Circuit Nov. 15 asking the court to impose a hard deadline of Dec. 31 for EPA to issue the NAAQS. The states asked the court to end abeyance in the litigation if EPA misses the deadline.

States and clean air activists say they are weighing their legal options in response to EPA's latest delay. A source with the American Lung Association (ALA) says that although ALA remains determined to obtain the most health-protective standard possible, "we are also concerned as always . . . that slippage is an issue."

On Dec. 17, the 14 states filed a reply to EPA's motion saying the agency needs until July 29 to issue a revised NAAQS. The states note that they had asked the court for a Dec. 31 deadline to issue the standard, but now say they need time to craft a response to EPA's motion, and ask the court to give it until Jan.10 to submit that reply, a request the court subsequently granted Dec. 20. -- Stuart Parker

Last Updated on Monday, 10 January 2011 16:16

Industry Filing Outlines Broad Challenges To EPA Cement Air Rule

The Portland Cement Association (PCA) in a new legal filing outlines a broad range of arguments it will raise in a lawsuit over EPA's strict maximum achievable control technology (MACT) and new source performance standards (NSPS) to cut air toxics and criteria pollutant emissions from the cement sector, expanding on narrower criticisms of the MACT it raised in a petition for EPA to reconsider the rule.

PCA is leading industry's opposition to EPA's Sept. 9 final rule establishing the combined MACT and NSPS. In comments on the proposed version of the rules, PCA listed several criticisms. The organization then filed a petition asking EPA to reconsider the rule Nov. 5, and the same day filed a lawsuit challenging the rule in the U.S. Court of Appeals for the District of Columbia Circuit.

In the petition for reconsideration, PCA focused largely on EPA's approach to setting MACT "floors," or minimum emissions standards. PCA said EPA failed to include any provisions on air toxics emissions from clinker storage piles in its proposal, even though these subsequently appeared in the final rule. PCA claims this deprived industry of the chance to comment on the clinker rules, in violation of the Administrative Procedures Act (APA).

PCA said the MACT floor calculations were inaccurate, and criticized provisions relating to startup, shutdown and malfunction events. PCA also said that a related proposed air rule for incinerators and to define solid waste "eviscerate the statistical underpinning" of the MACT by changing which plants would be regulated under the standard, undermining "the critical calculations" used to set the MACT, PCA said.

But in a Dec. 20 non-binding statement of issues filed in the cement MACT/NSPS litigation, PCA takes a broader swipe at EPA, reiterating many of the arguments in its petition while raising other concerns about the rule, including that EPA failed to account for natural variability in the chemical content of limestone -- the main raw material in cement. By not accounting for such variability, the MACT and NSPS standards are inaccurate and infeasible, PCA says.

In the statement of issues in the suit PCA v. EPA, the organization says that in briefing it will question "whether it was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" for EPA to "fail to properly account for the variability in emissions from stationary sources regulated by the NSPS Rule; fail to rely on sufficient or reliable data to establish the regulations; and rely on an insufficient factual and legal basis to regulate modified facilities."

Further, PCA says its judicial challenge will examine an array of other issues, including EPA's potential APA violations in setting the rules. These include whether EPA violated the plain language of the air law; adopted an unreasonable interpretation of the law; failed to conduct reasoned decision-making; failed to subject parts of the rule to the required notice of and public comment; and failed to consider the full cost of its rules.

The PCA lawsuit is key because it is seen as the first major legal test for EPA's planned multipollutant approach to rules, issuing combined NSPS and MACT standards for a slew of industry sectors.

But a related multipollutant rulemaking for the utility sector has been split into two, an EPA spokeswoman says. The agency still intends to propose the MACT in March, but the proposed NSPS -- which EPA recently said would include greenhouse gas (GHG) limits to resolve states' and activists' lawsuits -- will not be out until July.

Environmentalists, meanwhile, have also filed a legal challenge to the cement NSPS in the case Downwinders at Risk, et al. v. EPA, saying that EPA erred by failing to include GHG limits in the rule.

Activists say EPA must include GHG limits in air standards now that GHGs are regulated under the Clean Air Act through the agency's first-time vehicle GHG rules and "tailoring" GHG permit rules. The petitioners in a Nov. 20 statement of issues say they will ask "whether EPA acted contrary to law or arbitrarily and capriciously by failing to promulgate emissions guidelines for greenhouse gas emissions from existing Portland cement plants" and by failing to require states to submit state implementation plans to implement such GHG standards.

Environmentalist petitioners including Sierra Club have also petitioned the court to overturn an "affirmative defense" provided in the cement NSPS that allows industry to exclude excess air emissions generated by malfunction events that meet EPA's "narrow" definition of an unavoidable malfunction. Activists oppose the provision of any malfunction exemption, especially as the same affirmative defense has now been incorporated into several other air rules, such as those reducing "residual risk" posed by air toxics in several industry sectors.

Environmentalists have also intervened on EPA's behalf in the PCA suit, defending the remaining aspects of the agency's stringent emissions limits. -- Stuart Parker

Last Updated on Monday, 10 January 2011 16:05

EPA Says Ozone Fee Guide 'Interpretive' Rule Exempt From Court Review

EPA in a new legal brief says its guidance allowing states to propose alternatives to imposing fees on emission sources contributing to ozone pollution is at most an "interpretive" rule not subject to court review, in a bid to have a federal appeals court reject environmentalists' lawsuit asking the court to vacate the guidance.

In the Jan. 7 brief filed with the U.S. Court of Appeals for the District of Columbia Circuit the agency also reiterates arguments that the guidance is not a final agency action subject to legal review because it does not impose any requirements on states or the regulated community. EPA also reiterates its claim that environmentalists lack standing to sue over the guidance because they cannot prove any injury from the document.

The Natural Resources Defense Council (NRDC) is suing to have the court vacate EPA's Jan. 5, 2010, guidance on imposing Clean Air Act section 185 fees. The section requires states in "severe" or "extreme" nonattainment with EPA's old 1-hour ozone ambient air standard to impose fees on stationary sources within their jurisdiction for every ton of nitrogen oxides and volatile organic compounds the sources are emitting above a certain baseline.

Severe and extreme nonattainment states are required to include the fees as provisions in the state implementation plans (SIPs), blueprints for meeting EPA's national ambient air quality standard (NAAQS).

EPA issued a stricter 8-hour ozone NAAQS in 1997 and then in 2004 issued a rule revoking the 1-hour NAAQS. When the agency issued the 2004 rule it said that the fee obligation continues even though the 1-hour standard no longer exists, due to a requirement in section 172(e) of the Clean Air Act.

The section requires "anti-backsliding" measures to prevent pollution increases when EPA weakens a NAAQS. It says nothing about what to require when tightening a NAAQS. EPA says there is a gap in the law on that issue that its guidance tries to address by saying the section 185 fees continue to apply.

But some stakeholders have raised concerns over the adverse economic impacts of imposing the fees -- $8,766 per ton of emissions above the baseline, adjusted for inflation -- and asked EPA to offer alternatives. The agency's guidance does not scrap the requirement to meet the section 185 requirement but says EPA will at least review SIP revisions submitted to EPA that outline alternatives if they would cut pollution to an equal extent as the fees.

To ensure an alternative is not less stringent than section 185 mandates, states must provide data comparing emissions reductions and expected fees under section 185 to the proposed alternative.

NRDC in its Nov. 5 opening brief said EPA lacks legal authority to allow alternatives and says the agency failed to comply with the Administrative Procedure Act (APA) by failing to pursue a notice-and-comment rulemaking on the guidance.

Guidance 'Not Substantive'

EPA in its new brief in NRDC v. EPA says that even if the court finds that the guidance is not a non-binding policy statement and that NRDC has standing, the suit should still be denied because the guidance would be "at most" an interpretive rule exempt from court review rather than a "substantive" rule subject to legal challenge.

EPA cites the court's ruling in 1987 in American Hospital Association v. Bowen that says substantive rules "grant rights, impose obligations, or produce other significant effects on private interest or which effect a change in existing law or policy." Interpretive rules by contrast "merely clarify or explain existing law or regulations, are essentially hortatory and instructional, and do not have the full force and effect of a substantive rule."

The court in a 1993 ruling in American Mining Congress v. Mine Safety & Health Administration also established four criteria to determine when a rule is substantive and subject to notice-and-comment requirements: whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action; whether the agency has published in the rule in the Code of Federal Regulations; whether the agency has explicitly invoked its general legislative authority; or whether the rule effectively amends a prior rule.

"NRDC does not dispute that that second and fourth criteria have not been met here," EPA says, adding that the agency also does not believe that the guidance meets the first and third criteria.

In absence of the guidance EPA would still be required to review SIP revisions containing ozone control measures. "The Guidance merely explains how EPA will approach that task," EPA says.

"In any event, the Guidance is not a substantive rulemaking simply because it invites States for the first time to submit alternative programs; this Court has held rules to be interpretive rather than substantive even when they alter primary conduct," EPA argues. The agency also says its guidance does not modify legislative requirements, because it merely outlines EPA's plan for reviewing SIP revisions that include alternatives to the fees.

"[T]he Guidance grants no right, imposes no obligations, produces no significant effects on private interests, and effects no changes to existing law or policy" and is not a substantive rule, EPA says.

EPA also uses the new filing to reiterate several prior defenses of the guidance to challenge NRDC's lawsuit. At one point in the filing, EPA says the guidance is a non-binding "informational device."

The guidance is not a final agency action subject to court review, EPA says, it is a non-binding policy statement that explains EPA's views on the section 185 fee requirements. "The Guidance explains that States may choose to create and submit alternative, but equivalent, programs to the section 185 fee program and EPA may choose, through notice-and-comment rulemaking, to approve or disapprove such programs," the agency says.

"Specifically, the Guidance itself envisions many more steps that must be taken before the views expressed in it have any implications for the regulated community," EPA says. For example, if a state submits a SIP revision for EPA approval that includes a proposed alternative to the section 185 requirements, EPA will review that submission and then issue a Federal Register notice to take comment on the agency's decision on the SIP.

EPA also reiterates its argument that the guidance is non-binding because it does not require states to propose alternatives to the fees. The guidance does not raise any enforcement implications, and there is nothing in the guidance that EPA or states "could rely on to require compliance by the regulated community."

The guidance is also not ripe for review, EPA says, because no state has submitted a SIP revision that includes alternatives to the section 185 fee program and therefore EPA has not approved any such program.

The Court's review would benefit from the development of a record showing how the approaches outlined in the Guidance are applied to a specific nonattainment area. Moreover, NRDC will have the same arguments available to it at that time. EPA has not applied the guidance to any SIP revision nor has a state submitted one. "Thus, EPA has yet to put its policy into action and . . . is not bound to do so," according to the agency's brief.

Without a record of EPA action on a SIP revision the court cannot determine whether or not EPA improperly exercised its discretion to determine the equivalency of an alternative program, EPA says. -- Anthony Lacey

Last Updated on Monday, 10 January 2011 16:11

Florida, Industry Oppose EPA Effort To Consolidate Nutrient Criteria Suits

Florida and industry groups are opposing EPA's request for a federal district court in the state to consolidate all existing litigation over the agency's landmark numeric nutrient criteria for Florida's lakes and flowing waters, though EPA says the move is necessary to avoid having differing rulings on the same legal challenges to the criteria.

In a Jan. 6 motion EPA asks that lawsuits filed over the criteria in the U.S. District Court for the Northern District of Florida's Pensacola division be transferred and consolidated with a lawsuit filed in the same court's Tallahassee division. EPA says this will "promote judicial economy and consistency" and conserve agency resources by having all challenges to the criteria heard in the same court at the same time as challenges to EPA's authority to issue the criteria.

At press time the groups that filed in the Pensacola division, including Florida and several industry organizations, had not filed their responses to EPA's motion. But the agency's motion says that it has conferred with the plaintiffs who filed their challenges in the Pensacola division and they "oppose transfer" to the Tallahassee division.

EPA Administrator Lisa Jackson on Nov. 14 signed a final rule setting final numeric nutrient criteria rule for lakes, flowing waters, and springs in Florida, and it was available on EPA's website Nov. 15.

The same day the rule was made available, the Florida Wildlife Federation (FWF), St. Johns Riverkeeper, Inc., and the Environmental Confederation of Southwest Florida filed the first challenge to the rule in the Tallahassee division. Florida and the state's agriculture commissioner filed a challenge Dec. 7 in the Pensacola division. The Fertilizer Institute and other groups, including Florida cities and local water utility companies, also in December filed challenges to the rule in the Pensacola division. EPA says it is aware of six cases challenging the rule -- FWF's suit in the court's Tallahassee division and the remaining five filed in the Pensacola division.

FWF argues that the agency lacks regulatory precedent and justification for including a provision in the rule allowing individuals to petition EPA to have alternative criteria set for individual watersheds. Florida and industry argue that EPA lacked scientific and legal justification for imposing its own criteria on the state.

EPA in its new motion seeking to consolidate the litigation in the Tallahassee division says Congress authorized courts to transfer cases to avoid unnecessary inconvenience to the litigants, witnesses and the public and to conserve time, energy and money. A transfer requires that the action could have been brought in the district court at issue; that transfer serves the public interests; and that it is convenient for the witnesses and parties.

EPA says "there can be no dispute" that plaintiffs could all have filed suit in the Tallahassee division of the Northern District of Florida, because the criteria rule covers Northern and Central Florida.

Transferring and consolidating the cases would serve the public interest, EPA says, because all the challenges raise legal questions about aspects of the criteria rule that would be best addressed in one lawsuit. "Otherwise, different judges in different divisions will be making separate findings of fact and conclusions of law in related action," EPA says. EPA also says it should not have to simultaneously defend its rule in different divisions.

EPA also notes that Florida and its agriculture commissioner are based in Tallahassee so hearing the cases in that division would be more convenient for those plaintiffs. The only plaintiffs located in Northwest Florida are local water utilities involved in a Dec. 16 challenge to the criteria, Destin Water Users, Inc., et al. v. Jackson, et al. But EPA says those plaintiffs are members of an industry association that in November 2009 filed a lawsuit in the Tallahassee division that sought to challenge EPA's determination of the need for nutrient criteria. "Thus, it would not appear to be inconvenient for those plaintiffs to have their challenge to the rule heard" in Tallahassee, EPA says.

By contrast EPA says it would be "inconvenienced if it were required to defend related and overlapping actions simultaneously before different judges in different divisions of the same district court."

EPA says the two divisions are "equally familiar" with federal statutes such as the Clean Water Act, and says that transfer would not impose any greater cost to the parties that filed in the Pensacola division.

Even if the court does not agree that the cases should be transferring and consolidated, the court should still transfer the cases to the Tallahassee division so that EPA can then move to consolidate them, EPA says.

EPA's Jan. 6 motion notes that while Florida and industry oppose transfer of their challenges to the Tallahassee division, they consent to consolidating the five cases filed in the Pensacola division. -- Anthony Lacey

Last Updated on Monday, 10 January 2011 12:56

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