Making Good on Obama's Climate Change Action Plan, Part 2

This is the second in a three-part series on energy, environment and US law in light of the launch of President Obama's National Climate Action Plan. In it, we continue our discussion with Robert McKinstry, Jr., Practice Leader for Ballard, Spahr's Climate Change and Sustainability Initiative.

Part one of interview with attorneys from Ballard, Sphar on climate policy and president Obama's National Climate Action Plan

In Part 1, McKinstry began recounting the long, arduous path of three major federal initiatives via which the Obama Administration aims to significantly reduce greenhouse gas and air pollutant emissions across society and the economy: the issuance of the EPA's Cross-State Air Pollution Rule (CSAPR), issuance of the Mercury and Air Toxics Standards Rule (MATS), and the EPA's efforts to regulate and reduce carbon and greenhouse gas emissions under the Clean Air Act (CAA). Having discussed CSAPR, we move on to the second and third of these federal regulatory initiatives.

MATS: the Mercury and Air Toxics Standards Rule

Finalized by EPA in December 2011, the Utility MACT or “Mercury and Air Toxics Standards Rule” (MATS) requires existing and new coal-fueled power plants to limit emissions of toxic air pollutants, such as mercury, arsenic and metals, by installing the best available emissions control technology by 2015.

Initially enacted in 1990, the Clean Air Act (CAA) empowers the EPA to establish the standards and guidelines via which state governments develop plans to regulate toxic air pollutants. However, though proven technologies existed, no federal standards requiring power plants to limit their emissions of toxic air pollutants had been established until the MATS ruling.

MATS finalizes standards to reduce power emissions of mercury and other toxic air pollutants under sections 111 and 112 of the CAA. Setting emissions limits based on the best available control technology (BACT), it requires the EPA to set emissions standards for existing sources “that are at least as stringent as the emissions reductions achieved by the average of the top 12 percent best controlled sources.”

Though CSAPR and MATS imposes additional costs on polluters, the EPA's new source performance standards (NSPS) apply only to new and modified power plants. The omission of existing power plants actually creates a perverse market incentive, McKinstry explained. Excluding existing coal and oil-fueled power plants from NSPS provides an incentive for power utilities to keep older, more polluting plants up and running rather than modifying or decommissioning them or replacing them with new, cleaner power generation capacity.

Massachusetts vs. EPA: A landmark ruling

As opposed to mercury and air toxic emissions, the EPA has not and said it doesn't intend to set ambient air quality standards for carbon and greenhouse gas (GHG) emissions, standards which typically precede the establishment of emissions limits (national performance standards), reduction targets and state implementation plans to realize them. More fundamentally, the EPA's effort to deem CO2 a pollutant has been vociferously challenged in the courts for some 13 years' running.

Concerned with rising CO2 levels in the atmosphere, the Clinton Administration determined that the Clean Air Act could be applied to CO2 and other greenhouse gases back in 1998. Opponents thwarted any attempts to move forward, however.

That changed in April 2007 in Massachusetts vs. the EPA, wherein the US Supreme Court, in a 5-4 decision that was deemed “a sharp rebuke to the Bush administration,” ruled that not only does the EPA have authority under the Clean Air Act to regulate carbon and greenhouse gas emissions from new automobiles and light-duty vehicles, but that it could not avoid doing so without providing a scientific basis for inaction. It also gave the EPA the leeway to move forward without having to establish national ambient air quality standards for carbon and other greenhouse gas emissions, McKinstry noted.

By concluding that the EPA could consider CO2 and other greenhouse gases pollutants, the Supreme Court's ruling was a precedent-setting milestone in the effort to regulate US carbon and greenhouse gas emissions. It paved the way for the EPA to not only establish standards and guidelines for mobile sources of CO2, but for also for stationary sources, such as power plants, oil refineries, other industrial plants, and factories. It would not go unchallenged.

As the EPA began the long, arduous process of developing a broader, more comprehensive institutional framework and mechanisms to limit and reduce CO2 emissions, the Coalition for Responsible Regulation Inc. and other plaintiffs challenged the Supreme Court ruling. Of even greater import, the Bush administration issued an advance notice of rulemaking that delayed implementation.

The situation changed radically when President Obama took office. EPA began “providing a number of opportunities for stakeholders to have a say in how it should actually implement this,” McKinstry recounted. “They reached a settlement, agreeing to regulate mobile sources under rule 202 [of the CAA] and for heavy duty vehicle emissions, which the Bush administration refused to do,” as well as agreeing to limit carbon and greenhouse gas emissions limits and standards to new, not existing or even modified, power plants.

Significantly, one of the first, and fundamental, things the Obama Administration EPA did in the wake of Massachusetts vs. EPA was make an endangerment finding, concluding that carbon dioxide (CO2) and greenhouse gas (GHG) emissions can threaten the health and well-being of the American public.

Setting limits on fossil fuel power plants' carbon emissions

As McKinstry elaborated, the EPA in March 2012 proposed a limit on carbon and GHG emissions of 1,000 tons per megawatt-hour (MWh) for new source coal and fossil fuel-fired power plants of greater than 25 MW capacity. Based on the emissions vented to the atmosphere by current commercial natural gas combined cycle power plants, the EPA watered this down, reasoning that new coal-fueled generation capacity may be desirable for reasons of national energy security, drastic changes in market conditions or other factors.

The EPA said it will maintain the new standard, but gave fossil fuel power plant operators the option of meeting it based on 30-year averaging, McKinistry noted.

“New coal-fired or pet coke-fired units could meet the standard either by employing carbon capture and storage (CCS) of approximately 50 percent of the CO2 in the exhaust gas at start up, or through later application of more effective CCS to meet the standard on average over a 30-year period,” the EPA wrote in its proposed rulemaking.

Meanwhile, opponents were mustering their resources. In total, “a cluster of four rulings was appealed by opposing interests,” McKinstry explained: the EPA's endangerment finding, bypassing the need for national ambient air quality standards, the "Tailpipe Rule" in which it set emissions standards for car and light-duty vehicles, and the "Timing" and " Tailoring" rules, which specify requirements for major stationary sources of greenhouse gases to obtain new construction and operating permits.

Initially rebuffed in December 2011, the Coalition for Responsible Regulation and other plaintiffs' appeal of the Supreme Court's decision in Massachusetts vs. EPA was heard in the US Court of Appeals for the District of Columbia last year. The Appeals court in June 2012 upheld the Supreme Court's decision and subsequently, in December, denied a petition to rehear the case.

The Coalition of Responsible Regulation hasn't quit yet. In April, it filed a petition requesting the Supreme Court rehear to review the Appeals court's ruling. Word in the legal community is that the petition is unlikely to be accepted, according to McKinstry.

The tale doesn't end there, however...To be continued

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