Preview Newsletter
ACC AM Jan 26
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(ACC Mentioned) Wage Growth Is Finally Here -- If You've Got The Skills Employers Need
Jan 25, 2016 | Washington Bureau
By Kent Hoover
Wages are going up even as hiring and sales stay flat, according to a survey of business economists. Nearly half say their companies have increased their workers’ pay over the past three months, according to the National Association for Business Economics survey. That’s up from 33 percent in NABE’s October survey... -
(ACC Mentioned) Steel Industry Pushing for OSHA Changes to Acid Regulations
Jan 26, 2016 | BNA Daily Environment Report
By Brian Dabbs
The steel industry is pushing OSHA to harmonize its process safety management (PSM) thresholds for hydrochloric and hydrofluoric acids with Environmental Protection Agency standards, arguing that alignment advances the Obama administration's goal of improving agency coordination to avert catastrophes. -
(ACC Mentioned) Chemical Safety Bill Could Pass Congress This Year
Jan 25, 2016 | Asbury Park Press
By Nicole Gaudiano
hemical safety legislation named for the late Sen. Frank Lautenberg of New Jersey is among the major measures that stand a chance of passing Congress during this busy election year. New Jersey lawmakers have played a key role in crafting the bills, which would update the 1976 law allowing the Environmental Protection Agency to regulate... -
EPA Inspector General Renewing CSB Oversight Plan
Jan 26, 2016 | BNA Daily Environment Report
By Stephen Lee
Continuing its ongoing tough oversight, the Environmental Protection Agency's inspector general said it is beginning to update its list of key management challenges and internal control weaknesses at the U.S. Chemical Safety and Hazard Investigation Board. The Office of Inspector General is especially looking for evidence of waste... -
Pipeline Reauthorization Lobbying Spikes in Last Quarter
Jan 26, 2016 | BNA Daily Environment Report
By Rachel Leven
The number of organizations who paid to lobby on pipeline safety reauthorization increased 140 percent in the final quarter of 2015 from lobbying during July through September of the same year, as the law expired and Congress began acting. The 2012 authorization law for pipeline safety programs housed under the Pipeline and Hazardous... -
(ACC Mentioned) Industry Coalition to Defend Against Stronger Ozone Rule
Jan 26, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
A coalition of 14 industry associations wants to intervene in support of the Environmental Protection Agency in litigation brought by environmental groups who want even stronger national ozone standards (Murray Energy Corp. v. EPA, D.C. Cir., No. 15-1385, motion filed 1/22/16). -
Top Colorado Regulator Favors Tankless Drill Sites
Jan 26, 2016 | BNA Daily Environment Report
By Tripp Baltz
A top state regulator in Colorado said “tankless” oil and gas facilities would minimize the effects of large drilling operations in Colorado's urban areas. Matt Lepore, director of the Colorado Oil and Gas Conservation Commission, said Jan. 25 at a commission hearing that regulatory staff favors encouraging the industry “to build new pipeline... -
Utilities Must Contain Odors, Emissions From Gas Leak
Jan 26, 2016 | BNA Daily Environment Report
By Carolyn Whetzel
A South Coast Air Quality Management District hearing board ordered Southern California Gas Co. to take steps to contain odors and air pollution resulting from the massive natural gas leak at its underground storage field near Los Angeles. The Jan. 23 stipulated order of abatement requires the utility to minimize the gas leaking from... -
Lobbyists Swarm Congress Over Carbon Rules Resolutions
Jan 26, 2016 | BNA Daily Environment Report
By Anthony Adragna
Despite the low odds of gaining enough votes to block President Barack Obama's signature environmental regulations, more than 40 groups reported lobbying Congress during the fourth quarter of 2015 on the Congressional Review Act resolutions to kill the rules. -
Supreme Court Backs Federal Authority In Power Saving Rule
Jan 25, 2016 | PoliticoPro
By Darius Dixon
The Supreme Court rejected a challenge to an administration-supported rule on Monday that promotes electricity conservation, handing a big victory to environmentalists and federal power regulators. The 6-2 decision overturned a federal appeals panel ruling and affirmed the Federal Energy Regulatory Commission’s... -
U.S. Supreme Court Upholds FERC's Demand Response Program
Jan 26, 2016 | BNA Daily Environment Report
By Rebecca Kern
The U.S. Supreme Court ruled 6-2 that the Federal Energy Regulatory Commission has authority to run its demand response energy conservation program in the wholesale energy markets (FERC v. Elec. Power Supply Assoc., U.S., No. 14-840, 1/25/16). “This is a huge win for FERC today, but more importantly... -
FERC Court Victory Gives Greens Hope For Climate Case
Jan 25, 2016 | PoliticoPro
By Alex Guillén
The Supreme Court's decision Monday to uphold a complex rule for electric utilities based on a favorable reading of a decades-old law is a good omen for the centerpiece of President Barack Obama's climate agenda, environmentalists said. While there are significant differences between the demand response rule at the center of FERC’s... -
Reliability, Trading Options Favored in Federal Climate Plan
Jan 26, 2016 | BNA Energy & Environment Blog
By Andrew Childers
The Environmental Protection Agency should accept comments on any federal plan imposed on states in order to implement carbon dioxide standards for power plants and take steps to ensure any federal plan would not jeopardize the reliability of the electrical grid, states and utility groups said. -
Industry Coalition to Defend Against Stronger Ozone Rule
Jan 26, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
A coalition of 14 industry associations wants to intervene in support of the Environmental Protection Agency in litigation brought by environmental groups who want even stronger national ozone standards (Murray Energy Corp. v. EPA, D.C. Cir., No. 15-1385, motion filed 1/22/16). -
Environmentalists Suspend Suit Over EPA's MSGP
Jan 25, 2016 | InsideEPA
Environmentalists have suspended their consolidated challenges to the federal Clean Water Act (CWA) multi-sector general permit (MSGP) for industrial stormwater in order to allow more time for mediated negotiations with EPA and industry they hope will produce a settlement, but could resume litigation if no agreement is reached by March 22.
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(ACC Mentioned) Wage Growth Is Finally Here -- If You've Got The Skills Employers Need
Jan 25, 2016 | Washington Bureau
By Kent Hoover
Wages are going up even as hiring and sales stay flat, according to a survey of business economists.
Nearly half say their companies have increased their workers’ pay over the past three months, according to the National Association for Business Economics survey. That’s up from 33 percent in NABE’s October survey, and is the highest percentage reporting pay raises since 2005. Only 4 percent reduced pay.
Plus, 58 percent expect their companies will increase wages and salaries over the next three months.
Wage growth has lagged the rest of the economy, so this increase is welcome news.
The outlook for sales isn’t as robust, however. The survey found that 47 percent of businesses reported sales growth in the fourth quarter, while 15 percent said sales were down. That’s a net increase of 32 percent, the same number that was reported during the previous quarter.
So why are wages growing when sales and hiring are flat?
“in a lot of areas, it ties in with the difficulty our respondents keep telling us they’re having in hiring qualified workers,” said Jim Smith, chief economist for Parsec Financial in Asheville, N.C.
That’s true in industries such as construction, where skilled welders, plumbers and electricians are in short supply, and in manufacturing, where there’s a shortage of trained plant operators and instrument technicians.
But Smith also sees a shortage of qualified workers in industries where skills aren’t so specialized, such as the hospitality industry. In western North Carolina, where the unemployment rate is only 3 percent, “companies are beating the bushes” to find qualified workers, he said.
“There are a lot of bidding wars out there all over the country, and that raises wages and salaries,” Smith said.
This is great news for workers who have the skills employers need.
But it’s also a sign that some young adults would be better off going to trade school than college, said Kevin Swift, chief economist for the American Chemistry Council.
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(ACC Mentioned) Steel Industry Pushing for OSHA Changes to Acid Regulations
Jan 26, 2016 | BNA Daily Environment Report
By Brian Dabbs
The steel industry is pushing OSHA to harmonize its process safety management (PSM) thresholds for hydrochloric and hydrofluoric acids with Environmental Protection Agency standards, arguing that alignment advances the Obama administration's goal of improving agency coordination to avert catastrophes.
The Specialty Steel Industry of North America, Steel Manufacturers Association and American Iron and Steel Institute filed a petition in mid-January to harmonize PSM with EPA Risk Management Program regulations on the two highly hazardous chemicals (HHCs).
Steel producers are responding to the Occupational Safety and Health Administration's June 5, 2015, revision to PSM, a change that now forces manufacturers to comply with those requirements if HHCs are used in specified amounts at 1 percent purity or greater. The previous policy required PSM compliance if the concentration limits exceeded the maximum commercial grade.
Industry Complains of Uncertainty
That change has caused uncertainty in the steel industry, which regularly uses HCL and HF, and prompted some industry officials to launch burdensome processes to implement the new PSM compliance directive, said Joe Green of Kelley Drye & Warren LLP in Washington, counsel on the petition, in an interview with Bloomberg BNA on Jan. 25.
“The OSHA concentration limits were much higher, and now they've come back and said it's 1 percent,” said Green. “Now there's confusion and we're asking for relief.”
Following the deadly 2013 ammonium nitrate explosion in West, Texas, President Barack Obama issued an executive order to push forward with new chemical regulations to better safeguard American workers and communities from similar disasters. That order called on OSHA and the EPA to revise their respective PSM and RMP programs, and OSHA is now targeting April for completion of the required Small Business Regulatory Enforcement Fairness Act process.
The petition urges OSHA to revise the PSM concentration limits for HCL to the EPA's 37 percent limit in the RMP, while also revising the PSM concentration limits for HF to the EPA's 50 percent RMP limit. The steel industry supports a PSM overhaul, but needs quick action on those two acids to stave off legal challenges, the petition says. Only 11 of the HHCs in OSHA's PSM program have unique concentration limits.
Revision ‘Imperative.'
“It is imperative that OSHA act on this petition request promptly and not defer the concentration limit issue for HCL and HF acids until completion of the rulemaking process,” the petition said. “A PSM rulemaking will take an extended period of time during which steel companies and others will be challenged by inconsistencies between the PSM and RMP programs.”
The June 5 memo excuses PSM compliance if “partial pressure of the chemical in the vapor space under handling or storage conditions is less than 10 millimeters of mercury.”
An OSHA spokeswoman declined to comment, citing ongoing litigation related to the petition. The American Chemistry Council is challenging the June 5 memo. The petition has no legal affiliation with the ACC challenge.
In another Bloomberg BNA interview on Jan. 25, Mike Wright, United Steelworkers director of health, safety and environment, criticized the petition but pledged to listen to the steel industry arguments and consider its analysis.
Harmonization Goal ‘Misses the Point.'
The argument that OSHA regulations should reflect EPA standards “misses the point” that the two agencies are targeting different safeguards, said Wright. OSHA is charged with protecting workers, while the EPA aims to avert dangerous spillover into communities.
“At this point we haven't made up our minds on the petition, based on our initial reading, but we don't think it passes muster,” said Wright. “It will make things more convenient for industry and won't protect a single worker.”
Wright also flatly rejected the notion that the steel industry urgently needs reconsideration of HCL and HF concentration limits.
“OSHA should get to this one at some point and do the necessary analysis, but this petition should not jump in line,” he said. “So far industry has made its case. Simply saying harmonization is the goal misses the point that workers need certain protections.” Wright pointed to HF as particularly dangerous, saying a 5 centimeter burn with the acid can be lethal without an antidote.
Still, OSHA owes the steel industry a response, Wright said.
“We've petitioned OSHA in the past for things under different administrations and they've ignored us,” he said. “We don't believe they should ignore petitions no matter where they come from, but we also don't think this should be at the top of the queue.”
Meanwhile, Green said steel industry groups are approaching the specter of OSHA citation in different ways. Some manufacturers are waiting for OSHA to roll out more rulemaking and enforcement directives, and others are starting to develop PSM programs, he said,, adding that OSHA has not yet cited any steel producers with the revised memo to his knowledge.
Rulemaking Puts Industry in ‘Limbo.'
The looming OSHA rulemaking on PSM could bring new regulations for HCL and HF, at which point industry would have squandered resources used to comply with the June 5 memo, said Green.
“We're in this limbo right here,” he said. “If steel mills are required to present a program, and a year later, the regulations change, that would be a big waste of time and resources.” PSM requires development and implementation of a multifaceted policy to decrease the likelihood of disasters.
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(ACC Mentioned) Chemical Safety Bill Could Pass Congress This Year
Jan 25, 2016 | Asbury Park Press
By Nicole Gaudiano
hemical safety legislation named for the late Sen. Frank Lautenberg of New Jersey is among the major measures that stand a chance of passing Congress during this busy election year.
New Jersey lawmakers have played a key role in crafting the bills, which would update the 1976 law allowing the Environmental Protection Agency to regulate chemicals.
The legislation is important to New Jersey, which ranks ninth among states in chemical production. That production accounts for more than 49,000 direct jobs in the state, according to the American Chemistry Council.
Rep. Frank Pallone, D-N.J., who co-authored the House version, said lawmakers and staff are meeting informally to reconcile differences between the House and Senate measures. He hopes to pass a final bill within the next few months.
“The will is there and the support is there,” said Pallone, top-ranking Democrat on the House Energy and Commerce Committee. “The effort is very bipartisan and the industry and the public health community and environmental community are all determined to do this and do it as quickly as possible.”
The current Toxic Substances Control Act authorizes the Environmental Protection Agency to regulate chemicals in consumer products, but the 1976 law is widely considered outdated. Even EPA’s efforts to ban asbestos, a known carcinogen, were overturned in federal court in 1991.
The EPA has said about 1,000 chemicals currently in use need review. Both the House and Senate bills set deadlines for EPA action, and they are designed to exclude the financial impact on manufacturers as a consideration when the EPA assesses chemicals' safety.
Pallone said the legislation would expedite EPA action against the most dangerous chemicals – Persistent, Bioaccumulative Toxins – and help protect vulnerable populations, including children, minorities and workers in New Jersey.
“You have a lot of workers who come into contact with these unregulated chemicals on a daily basis, and I think it’s really important when you’re talking about vulnerable populations that you address their concerns,” he said. “That was a major priority of mine.”
The Senate version that passed in December by voice vote is named for Lautenberg, who died in 2013, in honor of his years of work to reform the law. Pallone said lawmakers agree the final bill will retain the New Jersey Democrat’s name.
Sen. Cory Booker, D-N.J., a co-sponsor of the Senate bill, said in a statement, "One of my top priorities this year is pushing the Senate and House to reach agreement on a strong bill to protect New Jerseyans and finally finish the work that New Jersey's own Frank Lautenberg championed for so long."
The chemical industry, eager for certainty and weary of varying state chemical safety laws, lauded passage of the legislation. But some environmentalists say the bills fall short of what’s needed.
Each bill would impose a safety standard weaker than the one for pesticides, according to an Environmental Working Group blog post. The group also wrote that neither bill would require adequate reviews to get enough dangerous chemicals out of commerce, and the bills would limit state action on chemical safety.
Original Senate legislation would have blocked states from taking action on a chemical when the EPA begins a review, which could take seven years for some chemicals.
That bill already had strong support in April when Booker, a member of the Senate Environment and Public Works Committee, announced an agreement he helped negotiate that would pause – rather than terminate – state action when EPA publishes the scope of its review, unless the state receives a waiver.
The pause would lift when EPA makes its safety determination. But both the House and Senate bills would block state action in varying degrees later in the process, when EPA issues its final rules.
Booker said at the time that the changes would allow states to still have “significant authority to regulate potentially harmful substances.”
But Scott Faber of the Environmental Working Group said that role isn’t significant enough.
“The states have really been the only cop on the beat for the last 30 years,” Faber said. “Restricting their ability to complement EPA would be a waste of all this expertise.”
Sen. Barbara Boxer, D-Calif., one of Lautenberg's closest friends in the Senate, initially opposed the legislation as unworthy of his legacy and urged fellow senators on the plane ride to his funeral to oppose it, a move that “horrified” Lautenberg’s widow Bonnie, according to Politico.
In March, Boxer, top-ranking Democrat on the Environment and Public Works Committee, unveiled competing legislation designed to set up a rapid schedule for reviewing chemicals and apply tougher health standards. But in December, she said she supported the Senate-passed bill because it had been “vastly improved,” and people affected by toxic chemicals would have their voices heard as the bills are merged.
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EPA Inspector General Renewing CSB Oversight Plan
Jan 26, 2016 | BNA Daily Environment Report
By Stephen Lee
Continuing its ongoing tough oversight, the Environmental Protection Agency's inspector general said it is beginning to update its list of key management challenges and internal control weaknesses at the U.S. Chemical Safety and Hazard Investigation Board.
The Office of Inspector General is especially looking for evidence of waste, fraud, abuse or mismanagement, the agency said in a Jan. 21 letter to CSB chairman Vanessa Sutherland.
The OIG also said it wants to meet with safety board staff in February to discuss the process and plans to issue a proposal by the end of June. The CSB is currently working with the inspector general on five audits, including one begun in 2015 under the Federal Information Security Modernization Act, concerning the protection of federal data, a governance project and an audit of the use of CSB purchase cards.
Since taking over the agency in August 2015, Sutherland has worked to overhaul CSB's internal procedures. The board has updated its code of conduct, which Sutherland said, during a Jan. 20 public meeting, is “crucial to having consistent, equitable and transparent agency operations.” She also said the CSB will focus on human capital and performance management as part of its fiscal 2016 action plan.
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Pipeline Reauthorization Lobbying Spikes in Last Quarter
Jan 26, 2016 | BNA Daily Environment Report
By Rachel Leven
The number of organizations who paid to lobby on pipeline safety reauthorization increased 140 percent in the final quarter of 2015 from lobbying during July through September of the same year, as the law expired and Congress began acting.
The 2012 authorization law for pipeline safety programs housed under the Pipeline and Hazardous Materials Safety Administration (Pub. L. No. 112–90) lapsed Sept. 30. The House still doesn't have legislation on the issue, but the Senate has begun to address it under the SAFE PIPES Act (S. 2276) that was introduced Nov. 10. It would reauthorize these programs through 2019.
The new authorization that will set funding levels and policy mandates moving forward is garnering interest from pipeline and energy entities such as the Pacific Gas and Electric Co. and the American Petroleum Institute, as well as environmental group Blue Green Alliance. Political observers have told Bloomberg BNA that they expect the legislation to be completed by early or mid-2016 (08 DEN B-24, 1/13/16).
Bloomberg BNA identified “clients” or the groups that are paying for lobbying activities on pipeline safety reauthorization issues by searching for and vetting through filings that identified “S. 2276,” “SAFE PIPES Act” and “pipeline safety reauthorization,” among other search terms. Senate filings disclosing fourth quarter lobbying activities were due Jan. 20.
Spike Follows Expiration, Bill
At least 15 companies, environmental groups and industry organizations disclosed in Senate records lobbying on pipeline safety reauthorization discussions during the third quarter of 2015. That number spiked to at least 36 entities for the time period from October to December 2015.
There was a somewhat steady interest in pipeline safety reauthorization in the first three quarters of 2015, even without congressional legislation present. At least 11 entities for January through March and 13 entities for April through June disclosed being a lobbying client on pipeline safety reauthorization discussions, Senate records show.
On Dec. 9, the Senate Commerce, Science and Transportation Committee passed S. 2276, a largely “clean” bill that would lower maximum funding levels and require that existing mandates be examined and addressed before PHMSA begins new pipeline safety rules. A Senate Majority Leader spokesman directed Bloomberg BNA to the committee, and a committee spokesman didn't immediately respond to Bloomberg BNA's message requesting details on next steps for the bill (237 DEN A-9, 12/10/15).
House Transportation and Infrastructure Committee spokesmen didn't immediately respond to Bloomberg BNA's message asking whether the House would introduce its own bill. The federal government was closed Jan. 25.
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(ACC Mentioned) Industry Coalition to Defend Against Stronger Ozone Rule
Jan 26, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
A coalition of 14 industry associations wants to intervene in support of the Environmental Protection Agency in litigation brought by environmental groups who want even stronger national ozone standards (Murray Energy Corp. v. EPA, D.C. Cir., No. 15-1385, motion filed 1/22/16).
Many members of the industry coalition, which includes the U.S. Chamber of Commerce, the American Petroleum Institute, the American Chemistry Council and the National Association of Manufacturers, are challenging the EPA's decision to revise the ozone standards from 75 parts per billion to 70 ppb, a level that the industry groups argue is unattainable for parts of the U.S. However, the business coalition said it's in its interest to also defend the EPA from litigation brought by the Sierra Club and others that are expected to allege that the Clean Air Act required the agency to set even stronger standards.
The ozone rule (RIN 2060-AP38), released in October, is projected by the EPA to cost as much as $1.4 billion annually to implement.
William Kovacs, senior vice president for environment, technology and regulatory affairs at the U.S. Chamber, said in a Jan. 22 statement that the agency's 70 ppb standards would “stifle economic expansion” across the U.S.
“The even more stringent standard sought by these special interest groups would force a far greater number of cities and counties into EPA's economic ‘penalty box,’ and would be devastating to American business,” Kovacs said.
The business groups filed a Jan. 22 motion with the U.S. Court of Appeals for the District of Columbia Circuit asking for leave to intervene on behalf of the EPA in litigation brought by environmental and public health groups. Several of those organizations, including the American Lung Association, the Sierra Club and the Natural Resources Defense Council, have already sought to intervene on behalf of the EPA in the challenges brought by industry groups and states that oppose the 70 ppb standards (227 DEN A-1, 11/25/15).
Louisiana, which opposes the stronger ozone standards, also requested intervenor status in the ozone litigation. If granted, Louisiana would join Arizona, Arkansas, Kentucky, New Mexico, North Dakota, Oklahoma, Texas, Utah and Wisconsin in challenging the EPA rule.
Attainability Questioned
Several of the industry groups that were seeking to intervene Jan. 22 also filed their statement of issues with the D.C. Circuit, which highlights the legal questions they intend to raise in their lawsuit against the ozone rule.
The industry groups said they intend to question whether the EPA's decision to tighten the ozone standards is illegal because the agency failed to adequately consider the attainability of the regulation. The business coalition highlighted the challenge posed by high levels of background ozone—uncontrollable sources of ozone-forming pollution that may cause an area to fall into nonattainment of the ozone rule.
Several western states raised concerns that elevated background levels caused by naturally-forming ozone, pollution from outside the U.S. and pollution resulting from wildfires and other uncontrollable events could make it very difficult to meet 70 ppb standards. The issue of attainability was previously highlighted by Murray Energy Corp. and a coalition of five state governments in November filings with the D.C. Circuit (231 DEN A-15, 12/2/15).
The other legal issues highlighted by the U.S. Chamber and the other industry petitioners are:
• whether the EPA's decision to rely on alternative regulatory mechanisms, such as the exceptional events policy that allows for data caused by uncontrollable events to be excluded from consideration in determining compliance, fails to “cure the unlawfullness” of setting unattainable standards;
• if the EPA violated the Clean Air Act by failing to take into account all relevant contextual factors, including possible adverse economic and energy effects of setting more stringent ozone standards; and
• whether the EPA provided a reasonable explanation for an altered interpretation of relevant scientific evidence.
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Top Colorado Regulator Favors Tankless Drill Sites
Jan 26, 2016 | BNA Daily Environment Report
By Tripp Baltz
A top state regulator in Colorado said “tankless” oil and gas facilities would minimize the effects of large drilling operations in Colorado's urban areas.
Matt Lepore, director of the Colorado Oil and Gas Conservation Commission, said Jan. 25 at a commission hearing that regulatory staff favors encouraging the industry “to build new pipeline facilities” in lieu of storing hydrocarbons on-site in tanks. “We want to push hard in the direction of tankless facilities,” he said.
At a rulemaking hearing before the commission, Lepore presented the most recent draft of two proposed rules, Recommendations 17 and 20, from a special oil and gas task force convened by Gov. John Hickenlooper (D). The task force was designed to address conflicts between state and local regulation of the oil and gas industry in Colorado, with a particular focus on hydraulic fracturing and other drilling activities in large urban areas of the state.
‘Not Enough.'
Representatives of several environmental groups and community organizations testified at the hearing, saying the rules did not go far enough. Industry representatives were scheduled to address the rules later in the day.
As approved by the task force in February 2015, Recommendation No. 17 outlines a consultation process to facilitate a dialogue between operators and local governments when an operator proposes to locate a large oil and gas facility in an urban mitigation area. The commission rules define such an area as one where 22 building units or one high-occupancy building such as a school or hospital is located within a 1,000-foot radius of a drilling facility, or where 11 building units or one high-occupancy building is located within any semi-circle of a 1,000-foot radius of such a facility.
Recommendation No. 20, as approved by the task force, encourages local governments to integrate future oil and gas development into community planning and operators to consider community planning in proposing future oil and gas development.
Notice Triggers
Lepore described new requirements for companies to give notice to local governments when they have plans to build a new drilling facility in an urban mitigation area within their borders. In the latest staff draft of the proposed rules, notice requirements would be triggered either when the cumulative total measured depth of all new wells planned for the facility exceeds 90,000 feet, or, alternatively, a given number of wells to be decided by the commission or when the cumulative new and existing on-site storage capacity for produced hydrocarbons exceeds 2,000 barrels.
The proposed rules also describe the process under which operators will be required to notify local governments, he said. For example, companies would be required to give notice before deciding on a final location for the facility, Lepore said.
Although several witnesses said they were disappointed by the rules, they voiced support for new requirements that oil and gas operators notify local governments of proposals to locate a large drilling facilities in their area. Still, many environmental groups testified, the task force recommendations and the commission's attempt to turn them into rules have not assuaged local community concerns.
‘More Facilities.'
Olga Knight, a student attorney with the Environmental Law Clinic at the University of Denver Law School, speaking on behalf of the Sierra Club, said the task force was a failure. The recommendations “do not adequately recognize local governments' authority to regulate” and instead “create a process for more large-scale oil and gas operations” in urban areas of Colorado, she said.
“We came into this process with the intention of helping communities decide where to drill,” said Jacky Kowalski, speaking for a group called Adams County Communities for Drilling Accountability NOW. “Industry came in with the intent to determine how to drill. What should have been a process to determine where to drill became a process on how to drill anywhere.”
Lauren Swain, a representative of 350 Colorado, an anti-fracking group, called for the “decommissioning” of the oil and gas commission for continuing to “promote the oil and gas industry” at the expense of “protecting public health, safety, and welfare and the environment.” The commission “can no longer considered to be a legitimate state agency” and must be replaced by an entity “with the sole duty to protect the public from the harmful effects of oil and gas,” she said.
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Utilities Must Contain Odors, Emissions From Gas Leak
Jan 26, 2016 | BNA Daily Environment Report
By Carolyn Whetzel
A South Coast Air Quality Management District hearing board ordered Southern California Gas Co. to take steps to contain odors and air pollution resulting from the massive natural gas leak at its underground storage field near Los Angeles.
The Jan. 23 stipulated order of abatement requires the utility to minimize the gas leaking from a damaged well at the facility in Aliso Canyon, which services the Los Angeles basin. Other key provisions in the order require SoCalGas to permanently shut down and seal the well, fund a continuous air monitoring program and an independent health effects study, develop a leak detection program for all wells at the facility and submit a notification plan for future reportable releases of air emissions.
The five-member, quasi-judicial panel plans to meet Feb. 20 for a status report on SoCalGas's progress implementing the order, unless the utility completes all the requirements earlier, the SCAQMD said.
In a Jan. 23 written statement SCAQMD Executive Officer Barry Wallerstein said the order requires SoCalGas “to stop the leak as quickly as possible. It will also require the utility to thoroughly inspect all other wells at its Aliso Canyon facility to help prevent another major leak in the future.”
Approval of the order came at the panel's fourth hearing on SCAQMD's proposal to address the leak that began Oct. 23. More than 110 residents and elected officials testified at the hearings, voicing concerns about the health impacts of the gas leak. Some called for the complete closure of the storage field. The leaking well is one of 115 in the SoCalGas facility, located in the northern San Fernando Valley.
The SCAQMD order addresses an enforcement action issued against SoCalGas in November.
“We thank the board for the hard work they devoted to the community and to the incident response,” SoCalGas spokeswoman Kristin Lloyd told Bloomberg BNA in an e-mail. “We look forward to working with the district staff to implement the order.”
Gov. Jerry Brown (D) issued an order Jan. 6, declaring the leak an emergency and directed state agencies to take steps to protect public safety and stop by the leak. State lawmakers introduced legislation Jan. 11 calling for inspection of the oldest wells at the Alison Canyon facility and to hold SoCalGas financially accountable for the incident (07 DEN A-2, 1/12/16).
SoCalGas, a subsidiary of Sempra Energy, is drilling a relief well to stop the leak, a project not expected to be completed until the end of February. Meanwhile, the utility has paid to temporarily relocated about 2,500 residents in Porter Ranch, a neighbor downwind of the facility; bought air filters for other residents and is weatherizing other homes to keep odors out.
Citing safety concerns, SoCalGas and the SCAQMD decided against pursuing a plan to capture and burn off the leaking gas (12 DEN A-14, 1/20/16).
‘Ongoing Disappointment.'
“This is an ongoing disappointment and no one is managing this crisis situation,” Matt Pakucko, president of the Save Porter Ranch group, said in a Jan. 23 written statement. “Without strong leadership from Governor Brown, state agencies are passing the buck and letting SoCalGas continue to pollute the air and poison our communities.”
Pakucko's group wants the governor to require SoCalGas to withdraw gas from the storage field until it can be shut down.
The California Public Utilities Commission ordered the utility to maintain 15 billion cubic feet of natural gas in reserve at the facility, a move Pakucko said “undermined” the SCAQMD's ability to shutdown the facility.
An evaluation of emissions from the leak by the state's Office of Environmental Health Hazard Assessment attributed odorants used in natural gas to the headaches, nausea and nosebleeds residents of Porter Ranch and elsewhere downwind of the leak are reporting. OEHHA said levels of the chemicals, including benzene, in the reported emissions were not high enough to cause long-term harm.
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Lobbyists Swarm Congress Over Carbon Rules Resolutions
Jan 26, 2016 | BNA Daily Environment Report
By Anthony Adragna
Despite the low odds of gaining enough votes to block President Barack Obama's signature environmental regulations, more than 40 groups reported lobbying Congress during the fourth quarter of 2015 on the Congressional Review Act resolutions to kill the rules.
Organizations ranging from large coal companies like Arch Coal Inc. and Peabody Energy Corp. to major utilities like Duke Energy Corp. and Xcel Energy Inc. to industry groups like the U.S. Chamber of Commerce and the National Association of Manufacturers all reported lobbying lawmakers on the resolutions (S.J. Res 23; S.J. Res. 24).
Environmental and public health groups like the American Lung Association, Defenders of Wildlife, Earthjustice and the National Association for the Advancement of Colored People all disclosed they pushed Congress to oppose the resolutions, which would have nullified the Environmental Protection Agency's Clean Power Plan and similar carbon dioxide standards for new and modified power plants.
Entities lobbying on the resolutions were identified by Bloomberg BNA through a search of lobbying records with the House and Senate joint resolution numbers. Lobbying disclosures were due Jan. 20.
Active Despite Long Odds
The groups reported lobbying on the resolutions despite the fact the efforts faced exceptionally long odds of becoming law. Obama repeatedly vowed to defend the power plant regulations, the centerpieces of his domestic efforts on climate change, from congressional attempts to undermine them. Previous votes on similar issues showed both chambers well short of the two-thirds supermajority needed to override his veto.
But Republican leaders in both chambers said it was important to put members on record about Obama's regulatory efforts. The Senate passed both resolutions 52 to 46 on Nov. 17, while the House sent them to the president's desk after approving them on Dec. 1.
After Obama vetoed both resolutions Dec. 18, senators and other aides said Congress was unlikely to try to override the presidential vetoes (15 DEN A-13, 1/25/16).
Many of the groups have reported lobbying on the EPA power plant regulations broadly for more than a year and a significant number of them are also involved in ongoing litigation challenging the final rules.
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Supreme Court Backs Federal Authority In Power Saving Rule
Jan 25, 2016 | PoliticoPro
By Darius Dixon
The Supreme Court rejected a challenge to an administration-supported rule on Monday that promotes electricity conservation, handing a big victory to environmentalists and federal power regulators.
The 6-2 decision overturned a federal appeals panel ruling and affirmed the Federal Energy Regulatory Commission’s authority to offer incentives to reduce power consumption during peak demand periods by paying large users to curb their electricity use, policies that green groups say help open the power grid up to more renewable sources like wind and solar.
"Demand response" programs help grid operators avoid blackouts and keep consumer costs down, reducing the need for generators to turn on older, dirtier power plants.
Many power plant operators in electricity markets across the Northeast and parts of the Midwest have seen their profits shrink from lower energy prices, and they fear greater competition from demand response providers will further erode demand for electricity.
Those power companies had argued that the demand response rule had unfairly given FERC authority in the retail power markets, which have traditionally been governed by the states. But the court's ruling Monday affirmed the FERC's ability to regulate those programs since they affect the wholesale power market, and it said the agency had properly assessed how much the businesses that cut their power consumption should be paid.
The Federal Power Act "should not be read, against its clear terms, to halt a practice that so evidently enables FERC to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market," the high court said in its ruling in the case, FERC v. Electric Power Supply Association.
In addition to the support of the court's more liberal justices, FERC’s demand response rule, known as Order No. 745, won the backing of Chief Justice John Roberts and Justice Anthony Kennedy.
Justice Samuel Alito had recused himself from the case, leaving FERC's critics hoping for a 4-4 stalemate that would cement the appeals court decision to kill the regulation.
Writing for the majority, Justice Elena Kagan wrote that “although (inevitably) influencing the retail market too, the Rule does not intrude on the States’ power to regulate retail sales," adding that "in choosing a compensation formula, the Commission met its duty of reasoned judgment. FERC took full account of the alternative policies proposed, and adequately supported and explained its decision.”
She added: “Compensation for demand response ...directly affects wholesale prices. Indeed, it is hard to think of a practice that does so more.”
Justices Antonin Scalia wrote a dissent, which was joined by Justice Clarence Thomas.
“[T]he majority is wrong even on its own terms,” Scalia wrote, “for the rule at issue here does in fact regulate ‘retail electricity sales,’ which are indisputably ‘matters . . . subject to regulation by the States’ and therefore off-limits to FERC.”
The agency's win is seen as a big loss for large “baseload” power sources like coal, natural gas and nuclear in the Northeast and parts of the Midwest, which have seen their profits decline over the last several years as electricity consumption has eased and renewables grew. Now they have to compete with industrial customers and others who will at times be paid at market rates to reduce their electricity use without having the costs of operating and maintaining a power plant themselves.
The North American Electric Reliability Corp. projected that demand response programs could reduce consumption by more than 17,000 megawatts across the U.S. this winter.
Environmentalists cheered the decision as paving a path to lower carbon emissions and renewable energy.
“Today’s Supreme Court decision is a victory for all Americans who want greater choice and value broader customer access to clean, low-cost energy,” Environmental Defense Fund President Fred Krupp said in a statement. “Demand response is helping millions of Americans get low-cost, clean and reliable electricity.”
Allison Clements, director of the Sustainable FERC Coalition at the Natural Resources Defense Council, said the decision was key "because demand response is flexible and fast-acting, it enables the affordable integration of more wind and solar power into the electricity transmission grid."
During oral arguments in October, Scalia was the most vocal critic of the rule. But FERC supporters held out some hope that Roberts or Kennedy would rule in the agency's favor despite their concerns that it might have an outsize influence on retail power markets.
While Order No. 745 involved energy markets, some utilities that see a well-paid demand response market as threat to their profits had also argued that that industry should be excluded from capacity markets.
Capacity markets set up by some regional grid operators are intended to act as an insurance policy by paying generators to keep power plants available in the event that demand jumps unexpectedly. After the frigid winter of 2013-2014, PJM raised its capacity payments, which plant operators can use to buy fuel or upgrade equipment, while also instituting stiffer penalties for plants that don't deliver when called upon.
But on the same day that the D.C. Circuit Court of Appeals struck down Order 745 in May 2014, utility FirstEnergy called on FERC to invalidate PJM’s capacity results queuing up commitments for its 2017/2018 window, which were still pending at the time.
“While Order No. 745 involved energy markets, the Court’s rationale necessarily extends to include capacity markets as well,” the company said at the time. This is because PJM’s capacity market allowed demand response providers to be paid for the reduction in power usage. And those capacity payments account for about 90 percent of DR providers’ revenue in PJM, which is the largest overall power market in the country.
A few months later the New England Power Generators Association filed a similar complaint with FERC, telling the agency that ISO-New England’s capacity market needed to “disqualify” demand response participation.
Although the Court of Appeals for the D.C. Circuit would need to issue an order to reflect the Supreme Court’s decision, the FERC may not have a reason to change current tariffs that involve demand response programs. In fact, according to earlier analyses by ClearView Energy Partners, those requests will likely fail to sway FERC in light of Monday’s Supreme Court decision.
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U.S. Supreme Court Upholds FERC's Demand Response Program
Jan 26, 2016 | BNA Daily Environment Report
By Rebecca Kern
The U.S. Supreme Court ruled 6-2 that the Federal Energy Regulatory Commission has authority to run its demand response energy conservation program in the wholesale energy markets (FERC v. Elec. Power Supply Assoc., U.S., No. 14-840, 1/25/16).
“This is a huge win for FERC today, but more importantly, a huge win for consumers,” Jon Wellinghoff, the former FERC chairman who created FERC's oversight of demand response programs, told Bloomberg BNA Jan. 25.
FERC's program compensates large industrial customers, like Wal-Mart Stores Inc., for not using electricity during high energy demand periods.
In its Jan. 25 decision, the Supreme Court reversed a ruling from the U.S. Court of Appeals for the District of Columbia Circuit. The justices found that the Federal Power Act permits FERC to regulate demand response programs and that doing so doesn't impinge on states' authority.
The Supreme Court heard arguments in the case in October 2015 (199 DEN A-15, 10/15/15).
The justices also found that FERC's decision to compensate demand response providers at the same price paid to generators is not arbitrary and capricious. The Electric Power Supply Association, which represents electricity generators, had sued FERC, claiming that FERC's demand response program encroached on state authority in the retail markets and that the compensation scheme was arbitrary and capricious.
FERC's Chairman Norman Bay in a Jan. 25 statement said, “I am pleased with today's Supreme Court decision on demand response. This decision means that consumers will continue to see the significant benefits of demand response, which enhances competition in the markets, reduces wholesale prices and helps makes the grid more reliable.”
EnerNoc, a software company that provides demand response services to large companies and was a petitioner in the case, said, “Today's decision is a tremendous win for all energy consumers, for the economy and for the environment.”
John Shelk, the Electric Power Supply Association's president and chief executive officer, told Bloomberg BNA Jan. 25 that he was not able to comment on the case yet.
Justice Elena Kagan delivered the opinion, joined by Chief Justice John Roberts and Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. Justice Antonin Scalia wrote a dissenting opinion, which Justice Clarence Thomas joined. Justice Samuel Alito recused himself from the case.
FERC Wholesale Rates Indirectly Affect Retail Markets
Market operators established demand response programs 15 years ago, because during periods of peak demand it was cheaper and more reliable on the grid to pay consumers not to use power than it was to pay less-efficient, more costly power plants to generate more electricity.
FERC's Order 745, issued in March 2011 and at the heart of this case, required these market operators to pay industrial and large business customers for their power reductions in dollar amounts comparable to actual electricity generation (52 DEN A-1, 3/17/11).
The justices were asked whether FERC overstepped into the state retail electricity markets, which it doesn't oversee, by compensating demand response programs in the wholesale markets. The majority court opinion found that FERC affects retail rates when it sets wholesale rates.
Kagan wrote, “It is a fact of economic life that the wholesale and retail markets in electricity, as in every other known product, are not hermetically sealed from each other. To the contrary, transactions that occur on the wholesale market have natural consequences at the retail level. And so too, of necessity, will FERC's regulation of those wholesale matters.”
“In sum, whatever the effects at the retail level, every aspect of the regulatory plan happens exclusively on the wholesale market and governs exclusively that market's rules,” Kagan wrote.
In his dissenting opinion, Scalia wrote that he disagrees with the majority opinion giving deference to the agency's interpretation of the Federal Power Act.
‘Working Its Way Backwards.'
William Scherman, a partner at Gibson Dunn and a former general counsel at FERC, said the Supreme Court ruling appears to have stretched the interpretation of the Federal Power Act in FERC's favor.
“This ruling goes beyond FERC's wildest jurisdictional dreams,” Scherman told Bloomberg BNA Jan. 25. “This is an activist court looking for a particular outcome that it wants to achieve, and working its way backwards.”
He said an outcome of the ruling could be that there will be a need for stronger performance standards to hold demand response programs accountable.
He said that those standards would be needed for both demand response operators and generators “to ensure demand response is real, it's actually reducing demand and that it's there when it's called upon.”
“Those performance standards should be sufficiently exacting, since the court blesses double compensation for DR providers,” he said. The double payment for demand response providers would come about because they would receive both the cost savings from not consuming an increment of electricity at a particular price, plus a wholesale market payment for not consuming that same increment of electricity.
Win for Consumers, Environmentalists
The high court ruling was a big win for consumers and environmentalists alike, said Allison Clements, director of the Sustainable FERC Coalition at the Natural Resources Defense Council.
“The Supreme Court's decision is great news for consumers and the environment. It gives consumers more opportunity to save, and even make money through smarter electricity use. Also, because demand response is flexible and fast-acting, it enables the affordable integration of more wind and solar power into the electricity transmission grid,” Clements said in a Jan. 25 statement.
Wellinghoff said, “What's at stake is hundreds of billions of dollars for consumers and the ability for consumers to control their energy costs in an effective and efficient way.”
He predicted the court ruling could be the beginning of the end for centralized power plants, and a greater reliance on distributed energy generation, including solar roof panels.
Disappointment From Electric Coops
Meanwhile, the National Rural Electric Cooperative Association said it was disappointed in the court ruling and how it could affect rates for consumers who get their electricity from coops. The association represents not-for-profit, consumer-owned rural electric companies that provide electricity for 12 percent of the U.S. population.
“We are concerned that by giving this pricing authority squarely to FERC, the court has diminished the ability of state public utility commissions and the cooperative and municipal boards to protect the interest of consumers. NRECA will continue to advocate for compensation levels that benefit coop owner-members,” Jay Morrison, the organization's vice president of regulatory affairs, said in a Jan. 25 statement.
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FERC Court Victory Gives Greens Hope For Climate Case
Jan 25, 2016 | PoliticoPro
By Alex Guillén
The Supreme Court's decision Monday to uphold a complex rule for electric utilities based on a favorable reading of a decades-old law is a good omen for the centerpiece of President Barack Obama's climate agenda, environmentalists said.
While there are significant differences between the demand response rule at the center of FERC’s Supreme Court victory and the landmark EPA climate rules expected to reach the high court as soon as next year, they share some common themes. In both cases, federal agencies are using relatively old laws to address relatively new problems. Now Washington’s environmental attorneys are combing the FERC decision for hints about how the justices will one day rule on EPA’s Clean Power Plan.
“The fact that the Court gave an agency room to apply its statutory authority to develop an effective, cost-minimizing solution to a complex problem is generally helpful,” said Sean Donahue, an attorney representing the Environmental Defense Fund in the carbon rule litigation.
Denise Grab, a senior attorney at New York University School of Law Institute for Policy Integrity, which supports the Clean Power Plan, said the decision in the FERC case shows that the court is willing to consider whether new approaches are appropriate under old laws.
The Federal Power Act was passed in 1935, decades before electric utilities began effectively paying their largest customers to use less power at peak periods; these "demand response" programs mostly did not begin until the 1980s and 90s. Likewise, the Clean Air Act was last amended in 1990, when members of Congress did not see climate change as the biggest environmental issue, noted Grab.
“Even if in 1935 Congress didn’t necessarily specifically contemplate demand response, it’s clear that that would fall within the spirit of the statute and what the statute is intended to achieve, and the balance of power that that statute is to strike,” Grab said.
But EPA critics say the FERC win provides few clues about the ultimate fate of the carbon rules, given differences between the laws guiding the two agencies.
“This is not about ‘federal authority’ but rather the authority that Congress gave to either FERC or EPA under the pertinent statutes,” said Bill Bumpers, an attorney at Baker Botts who represents several utilities and the National Association of Home Builders in lawsuits against EPA's carbon rule.
In the majority opinion, Justice Elena Kagan wrote that the Federal Power Act “should not be read, against its clear terms, to halt a practice that so evidently enables FERC to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market.”
That key line might help bolster EPA’s chances when it comes to the Clean Power Plan. The Supreme Court has ruled twice since 2007 that EPA has the authority to regulate climate change-driving greenhouse gases and that it must do so if it finds they endanger public health or welfare, a determination the agency made in 2009. But the court never said exactly how EPA should go about regulating greenhouses gases, or how far it can go, and the lawsuits against the Clean Power Plan press heavily on those questions.
Of course, there is no guarantee that the Supreme Court ultimately will land in EPA’s favor when it reviews the Clean Power Plan, as it is widely expected to do as early as 2017.
One key difference between the FERC and EPA rules is that Congress explicitly endorsed demand response when it directed FERC to establish a demand-response plan as part of the 2005 energy bill, said Scott Segal, director of the Electric Reliability Coordinating Council, an industry group. On the other hand, EPA stepped in only after Congress failed to establish a cap-and-trade program to limit carbon emissions. The decision in the FERC case “should give no comfort to supporters of the Clean Power Plan,” Segal said.
Some observers argued that the FERC decision is the latest example of the high court taking a broader view when it comes to high-profile policy issues.
The same 6-2 majority voted in 2014 to uphold EPA’s Cross-State Air Pollution Rule, a complicated regulation meant to curb pollution that floats across state lines. And Chief Justice John Roberts rustled conservative feathers last year when he sided with the liberal wing to uphold a key part of Obamacare — again by weighing the wider context of the law.
“This seems to be their M.O. When it’s a big policy issue that has wide-ranging impact that they think is the right thing to do, they’re going to give the agency a lot more deference,” said Brian Potts, an attorney with Foley & Lardner who is not directly involved in the Clean Power Plan litigation. Potts believes the carbon rule to be unlawful, but thinks the Supreme Court will uphold it.
“I think this case is another example of if you just stood aside and read the statutes, you’d question whether FERC could do this,” he added. “But the court is sort of saying, ‘Look, there’s a really good reason to do this, so we’re going to give them the benefit of the doubt.’”
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Reliability, Trading Options Favored in Federal Climate Plan
Jan 26, 2016 | BNA Energy & Environment Blog
By Andrew Childers
The Environmental Protection Agency should accept comments on any federal plan imposed on states in order to implement carbon dioxide standards for power plants and take steps to ensure any federal plan would not jeopardize the reliability of the electrical grid, states and utility groups said.
The EPA needs to establish a procedure that would allow states or utilities to petition the agency to reconsider any federal plan imposed upon states under the Clean Power Plan in order to address any reliability concerns that may arise, utilities said. Additionally, the agency should be required to consult with the Federal Energy Regulatory Commission as part of that review, the National Rural Electric Cooperative Association said in its comments on the proposed federal plan.
“Accordingly, EPA should request consultation with and guidance from FERC in matters relating to reliability of the bulk electric system as contained in a petition for relief and shall give deference to FERC's response,” NRECA said.
The EPA has proposed the federal plan (RIN 2060-AS47; 80 Fed. Reg. 64,966) as part of its Clean Power Plan (RIN 2060-AR33), which sets carbon dioxide emissions limits on the fleet of existing power plants. State regulators are charged with implementing the rule, but the EPA would impose a federal plan on states that do not submit adequate plans of their own. The federal plan is also intended to serve as a guide to states as they develop their own compliance strategy (149 DEN B-4, 8/4/15).
As proposed, the EPA's federal plan would establish either a mass-based trading system, which would cap total carbon dioxide emissions from each state's power sector, or a rate-based trading system that would limit emissions per megawatt-hour of electricity generated. Though the EPA has proposed two options, it has indicated it may only finalize one.
Comments on the proposed rule were due Jan. 21. The EPA anticipates issuing the final plan in August.
Reliability Safety Valve Needed
Utilities and states said the EPA's proposed federal plan does not do enough to ensure that the reliability of the electricity grid is considered as part of any federal plan imposed upon a state.
“EPA asserts that a trading program will address any reliability problems that may arise, but it is unwise to depend on an unproven program that won't be finalized for several more years to preserve the reliability of our electric system,” the Electric Reliability Coordinating Council, an industry trade group, said in its comments. “Reliability problems create significant economic and safety threats and should be treated as more than a passing concern by EPA.”
NRECA also argued that emissions trading is “not a sufficient substitute for a robust reliability safety valve provision.”
The Clean Power Plan includes a reliability provision that allows a one-time reprieve from the emissions standards for a period of 90 days to account for any event that may jeopardize reliability. States would subsequently amend their plans to reflect those increased emissions. However, the proposed federal plan includes no similar provision, making it effectively more stringent than the Clean Power Plan's requirements and potentially disadvantaging utilities subject to a federal rather than a state plan, NRECA said.
The North Carolina Department of Environmental Quality also recommended in its comments that the EPA take additional steps to ensure grid reliability under the federal plan. While the EPA has proposed setting aside some allowances for reliability under mass-based trading plans, North Carolina recommended those allowances be added to state budgets rather than being culled from those allotted to utilities. The EPA also needs to consider a similar provision for rate-based trading plans, the state said.
“Only allowing a set-aside for mass allowances and not [emissions rate credits] may unduly penalize states utilizing a rate-based plan,” North Carolina said. “Therefore, we recommend EPA provide rate-based credits from an emergency reserve pool to support affected [electric generating units] after an unforeseen reliability event.”
Plans Should Be Subject to Comment
In order to ensure that reliability and other considerations are fully addressed as part of any federal plan, the proposed plan should be subject to a public notice and comment period, utilities said.
“EPA has invited comments on its staged approach to finalizing one or more model trading rules in the summer of 2016 while finalizing federal plans on a state-by-state basis only upon taking predicate action (such as a whole or partial disapproval of or a finding of failure to submit) on states’ plans,” NRECA said. “Under this iterative approach, states and industry will not have the benefit of knowing what type of federal plan would apply should the state fail to submit a state plan or EPA disapproves a state plan.”
Instead, the EPA should subject any federal plan for a state to a notice and comment period so utilities can adequately prepare to comply and highlight any issues the EPA should address in the plan, utilities said.
“Denying the public an opportunity to comment would also deprive EPA of valuable state-specific information,” NRECA said. “In addition, in signaling that it does not plan to provide for public comment when a state receives a federal plan, EPA appears to assume that all federal plans will be identical, or at least substantially similar, and will not account for state-specific circumstances or needs. Such a cookie-cutter approach would be inflexible and unworkable and would almost certainly be found by a court to be arbitrary and capricious.”
Two Trading Options Favored
While the EPA has said it only intends to include one trading option in its final federal plan, states and utilities said the agency should consider including both a mass-based and rate-based trading system in the final rule. States are free to explore emissions trading programs as part of their Clean Power Plan compliance strategies, but they can only trade with states that have established similar rate-based or mass-based trading programs.
“Because both the rate- and mass-based model trading rules serve as guidance to states as they develop and finalize their compliance plans, EPA should finalize both types of model trading rules,” the Electric Reliability Coordinating Council said. “ERCC also urges EPA to finalize both a mass-based and a rate-based federal plan and then decide, when the agency actually adopts a federal plan for a particular state, which type should be adopted in that state. This approach will be especially important for states that are working on plans but are not able to finalize them before the applicable deadline.”
Some states also favored keeping both trading options in the final federal plan because many have yet to make a decision on which approach will suit them best and initial compliance plans are due to the EPA by Sept. 6.
“The selection of a state plan approach and more specifically a state's decision to adopt a mass-based or a rate-based approach depends on a variety of factors that may include stakeholder feedback, results from economic modeling or even decisions taken by other states in the country,” the Georgia Environmental Protection Division said in its comments. “Most states do not have sufficient data to decide on a plan approach at this time.”
The state also recommended that the EPA allow states that opt for a mass-based compliance plan to generate emissions rate credits generated from biomass or nuclear power to trade those credits with states that choose a rate-based compliance plan.
The Sierra Club in its comments also urged the EPA to retain as many options as possible to ensure states and utilities have the utmost flexibility to meet the Clean Power Plan's requirements.
“Yet by committing at this early time to just one program design for all [federal plans], EPA would eschew the rule's inherent flexibility in favor of an unnecessarily rigid stance,” the Sierra Club said. The agency should not foreclose any of its [federal plan] design options at this time. It is prudent for EPA to defer deciding on a FP approach until the need for a [federal plan] is triggered.”
However, the nine states in the Northeast's Regional Greenhouse Gas Initiative in their comments urged the EPA to adopt only the mass-based program, which aligns with what they are already doing (15 DEN A-12, 1/25/16).
“A mass-based approach simplifies compliance and enforceability, and avoids accounting complexities associated with rate-based approaches,” the RGGI states said. “For example, renewable energy and energy efficiency programs act as complementary policies under a mass-based program that need not be separately accounted for or made federally enforceable.” States already have extensive experience administering mass-based air pollution trading programs under similar EPA initiatives such as the Acid Rain Program, the RGGI states said.
Allowance Proceeds Should Foster Renewables, Justice
Environmental advocates and renewable energy producers said any federal plan for a state should be designed in order to foster growth of clean generation while protecting the most vulnerable populations from any rate increases that may result from compliance.
The Business Council for Sustainable Energy, a coalition of energy efficiency, natural gas, propane, and renewable energy companies, said in its comments that not all renewable energy sources are given equal eligibility to generate emissions rate credits under a rate-based compliance plan. Additionally, the emissions monitoring, reporting and verification burdens can be significant.
“For energy efficiency activities, EPA should consider defining compliance crediting mechanisms similar to Renewable Energy Certificates (RECs),” the council said. “Translating energy savings into carbon savings is already in practice in independent system operators’ accounting mechanisms such as the PJM Environmental Information Services’ Generation Attribute Tracking System.”
The Sierra Club said that allowances awarded under a mass-based plan should be auctioned off to utilities with the proceeds used to expand use of renewable energy and energy efficiency but with a portion set aside specifically to address any impacts the rule may have on economically or socially vulnerable populations, citing California's A.B. 32 as a model.
“EPA should encourage that a percentage of revenues be invested in environmental justice communities and address job creation, leaving to the states and their communities the decision of how to exactly invest those monies,” the Sierra Club said.
The RGGI states cited their own experience as an example of how to reinvest funds raised from auction allowances in new energy efficiency and renewable energy programs.
“The RGGI experience overwhelmingly demonstrates the value of reinvesting the proceeds in programs that benefit ratepayers and reduce carbon emissions,” the nine states said. “RGGI proceeds have powered an investment of over $1 billion in the energy future of the RGGI states.”
EPA Should Pre-Approve Biomass
States and forestry groups urged the EPA to compile a list of pre-approved biomass fuels that can be used to comply with the Clean Power Plan as the agency continues to evaluate the best way to account for greenhouse gas emissions from biomass such as wood waste.
The National Alliance of Forest Owners in its comments said the EPA's Clean Power Plan discounts the role biomass can plan to reduce carbon dioxide emissions from the power sector. To correct that, the forestry group recommends the agency to defer to states on the role of biomass as they develop their own compliance plans.
“EPA must include biomass energy as a renewable energy source under both a mass-based and rate-based [federal implementation plan] and under both model state trading rules,” the group said. “After recognizing biomass as a viable compliance option in the [Clean Power Plan], it would be patently unreasonable for EPA to exclude biomass as a compliance option in a [federal implementation plan] or in a model state plan.”
The North Carolina Department of Environmental Quality also recommended the EPA establish a transparent procedure for periodically updating the list of approved biomass fuels.
The EPA has been working on a framework to evaluate and account for greenhouse gas emissions from burning biomass, which would eventually decay and release its emissions anyway. The agency's Science Advisory Board's Biogenic Carbon Emissions Panel completed its review of the agency's latest draft of the accounting framework in September 2015, but forestry groups have argued the panel's recommendations to the EPA are too complex to be successfully implemented (175 DEN A-5, 9/10/15).
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Industry Coalition to Defend Against Stronger Ozone Rule
Jan 26, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
A coalition of 14 industry associations wants to intervene in support of the Environmental Protection Agency in litigation brought by environmental groups who want even stronger national ozone standards (Murray Energy Corp. v. EPA, D.C. Cir., No. 15-1385, motion filed 1/22/16).
Many members of the industry coalition, which includes the U.S. Chamber of Commerce, the American Petroleum Institute, the American Chemistry Council and the National Association of Manufacturers, are challenging the EPA's decision to revise the ozone standards from 75 parts per billion to 70 ppb, a level that the industry groups argue is unattainable for parts of the U.S. However, the business coalition said it's in its interest to also defend the EPA from litigation brought by the Sierra Club and others that are expected to allege that the Clean Air Act required the agency to set even stronger standards.
The ozone rule (RIN 2060-AP38), released in October, is projected by the EPA to cost as much as $1.4 billion annually to implement.
William Kovacs, senior vice president for environment, technology and regulatory affairs at the U.S. Chamber, said in a Jan. 22 statement that the agency's 70 ppb standards would “stifle economic expansion” across the U.S.
“The even more stringent standard sought by these special interest groups would force a far greater number of cities and counties into EPA's economic ‘penalty box,’ and would be devastating to American business,” Kovacs said.
The business groups filed a Jan. 22 motion with the U.S. Court of Appeals for the District of Columbia Circuit asking for leave to intervene on behalf of the EPA in litigation brought by environmental and public health groups. Several of those organizations, including the American Lung Association, the Sierra Club and the Natural Resources Defense Council, have already sought to intervene on behalf of the EPA in the challenges brought by industry groups and states that oppose the 70 ppb standards (227 DEN A-1, 11/25/15).
Louisiana, which opposes the stronger ozone standards, also requested intervenor status in the ozone litigation. If granted, Louisiana would join Arizona, Arkansas, Kentucky, New Mexico, North Dakota, Oklahoma, Texas, Utah and Wisconsin in challenging the EPA rule.
Attainability Questioned
Several of the industry groups that were seeking to intervene Jan. 22 also filed their statement of issues with the D.C. Circuit, which highlights the legal questions they intend to raise in their lawsuit against the ozone rule.
The industry groups said they intend to question whether the EPA's decision to tighten the ozone standards is illegal because the agency failed to adequately consider the attainability of the regulation. The business coalition highlighted the challenge posed by high levels of background ozone—uncontrollable sources of ozone-forming pollution that may cause an area to fall into nonattainment of the ozone rule.
Several western states raised concerns that elevated background levels caused by naturally-forming ozone, pollution from outside the U.S. and pollution resulting from wildfires and other uncontrollable events could make it very difficult to meet 70 ppb standards. The issue of attainability was previously highlighted by Murray Energy Corp. and a coalition of five state governments in November filings with the D.C. Circuit (231 DEN A-15, 12/2/15).
The other legal issues highlighted by the U.S. Chamber and the other industry petitioners are:
• whether the EPA's decision to rely on alternative regulatory mechanisms, such as the exceptional events policy that allows for data caused by uncontrollable events to be excluded from consideration in determining compliance, fails to “cure the unlawfullness” of setting unattainable standards;
• if the EPA violated the Clean Air Act by failing to take into account all relevant contextual factors, including possible adverse economic and energy effects of setting more stringent ozone standards; and
• whether the EPA provided a reasonable explanation for an altered interpretation of relevant scientific evidence.
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Environmentalists Suspend Suit Over EPA's MSGP
Jan 25, 2016 | InsideEPA
Environmentalists have suspended their consolidated challenges to the federal Clean Water Act (CWA) multi-sector general permit (MSGP) for industrial stormwater in order to allow more time for mediated negotiations with EPA and industry they hope will produce a settlement, but could resume litigation if no agreement is reached by March 22.
The petitioners in Waterkeeper Alliance, et al. v. EPA, et al., filed a notice on Jan. 22 that they were withdrawing the case with the option to revive their petitions for review of the CWA permit at any time before March 22. Withdrawing the suit allows the parties to delay filing deadlines while they continue settlement talks, an attorney close to the case told Inside EPA.
“If we don't settle, we'll reinstate the petitions,” the attorney says.
Based on their non-binding statement of issues to the U.S. Court of Appeals for the 2nd Circuit as well as past public comments, the environmental groups were seen to be seeking more stringent discharge limits, monitoring requirements and review of permit applications in the MSGP, as well as potentially a national effluent limitation guideline (ELG) for the sector, and settlement talks could address any or all of those issues.
However, any successful settlement will need approval not only from the environmentalists and EPA, but from two coalitions of industry groups representing sectors subject to the MSGP, the Federal Stormwater Association and the Federal Water Quality Coalition. Both groups sought and won the right to intervene in order to defend the permit as crafted, giving them equal status in the litigation with EPA.
Waterkeeper and its co-petitioners have long argued that EPA must substantially revise its MSGP. The agency is required to re-issue the permit every five years -- the update advocates are challenging took effect July 22, 2015 -- but it has generally kept its form and stringency consistent from version to version despite requests from environmental groups.
Although the petitioners in Waterkeeper have yet to file substantive briefs to the 2nd Circuit, the groups have argued in the past that the general permit is inadequate because it relies on best management practices for facilities and narrative restrictions for stormwater-borne effluent rather than setting strict numeric limits on pollution. They have also faulted EPA for not setting a mandate for facilities to adopt federally designated best available technology to control stormwater, instead allowing permittees to choose their own compliance measures.
Similarly, the groups signaled in their statements of issues -- non-binding lists outlining arguments parties may raise -- that they would target the MSGP's approach to mandatory pollution reductions, its monitoring requirements for covered entities and EPA's oversight of new applicants, among other issues.
The statements of issues included claims that EPA is bound by the CWA to at least consider whether numeric discharge limits are feasible; that the permit does not address all pollutants likely to impair receiving waters; that its monitoring provisions are inadequate to accurately detect violations; that a provision giving new applicants automatic coverage under the MSGP unless EPA objects is unlawfully lax and lacks opportunities for public comment; and that the permit presents risks to threatened or endangered species under the Endangered Species Act.
The MSGP is only effective in states where EPA directly administers CWA permits, although many states with their own permit regimes use EPA's permit as a model.
In addition to their past arguments that the MSGP must be strengthened, all six petitioners involved in Waterkeeper also joined comments on the 2013 draft MSGP where they said that the CWA requires EPA to craft not only a more stringent general permit, but also an ELG for industrial stormwater. An ELG would apply nationally -- even in states that do not apply the MSGP or base their permits on it.
Waterkeeper and its allies were due to file their opening brief to the 2nd Circuit by May 2, but that deadline is likely to be extended if settlement talks fail and the suit is reinstated.
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