Law and the Environment

Channel 11 Interview on West, Texas Explosion and Federal and State Statutes Regarding Ammonium Nitrate

I was interviewed by Jack Fink, a reporter at Channel 11 in Dallas, Texas to discuss the legal issues relating to applicable federal and state statutes that may relate to any reporting or approval for storage of ammonium nitrate.  The interview took place on April 30, 2013.  We discussed more detail, but the quote during the news cast focused on the potential for criminal prosecution, particularly where there are knowing acts to put people in danger of death or serious injury.  This is known as the "knowing endangerment" provision that is contained in some of the federal and state environmental statutes.

Some of the federal statutes that may apply to the West, Texas facility and the storage of ammonium nitrate include, the Chemical Facility Anti-Terrorism Standards Act, which is administered by the Department of Homeland Security, the Emergency Planning and Community Right to Know Act, administered by the EPA, and the federal Clean Air Act, administered by the EPA and delegated in part to certain states.  The Clean Air Act requirements that may apply would be the Risk Management Plan requirement.

The applicability of these statutes to storage of ammonium nitrate, reporting, and other requirements depends on the statute and regulations issued under those statutes, as well as the specific facts of any case.

 

 

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EPA Region 6 Reportedly Reached First Agreement with Company Holding a Disputed Texas Permit

Region 6 of the US Environmental Protection Agency (EPA) reportedly reached agreement with Flint Hills Resources' East Corpus Christi refinery owned by a subsidiary of  Koch Industries Inc.  The details of the arrangement were not known.  A series of companies are fighting the EPA approach, but some companies are seeking resolution of the uncertainty brought on by EPA challenging the flexible permits issued by the Texas Commission on Environmental Quality.

EPA Continues Rejection of Texas Clean Air Act Permitting Programs

The US Environmental Protection Agency continues to disprove of the air emissions permitting program established by the State of Texas under the federal Clean Air Act.  On September 15, 2010, the EPA disapproved the Texas Major and Minor New Source Review programs. 

EPA is disapproving the Major Nonattainment NSR SIP requirements for implementation of the 1997 8-hour ozone national ambient air quality standard (NAAQS) and the 1-hour ozone NAAQS. EPA is disapproving the submitted Standard Permit (SP) for Pollution Control Projects (PCP) because EPA concluded that it does not meet the requirements of the CAA for a minor NSR Standard Permit program.

EPA is also disapproving a submitted severable definition of best available control technology (BACT) that is used by TCEQ in its Minor NSR SIP permitting program.  EPA is not addressing the submitted
revisions concerning the Texas Major PSD NSR SIP, which the agency says will be addressed in a separate action.

The State of Texas has sued EPA over its prior actions disapproving of permitting programs.  The Sierra Club has filed suit to force EPA to address certain permitting actions it alleges are inconsisent with the Clean Air Act.

EPA Issues Finding That Lays Foundation for Regulating Greenhouse Gas Emissions under the Federal Clean Air Act

In a long expected finding, the U.S. Environmental Protection Agency (EPA) issued a regulatory decision that lays the foundation for EPA to regulate greenhouse gas emissions under the federal Clean Air Act (CAA).  The decision announced on Friday, April 17, 2009 is entitled Proposed Endangerment Finding and Cause or Contribute Findings for Greenhouse Gases  and was published in the Federal Register.  This is a major step by the Obama Administration to attempt to force Congress to pass a climate change bill regulating greenhouse gases.  Time magazine may have said it best in an article entitle EPA's CO2 Finding: Putting a Gun to Congress's Head.  Whilee it was known that EPA was working on and would announce the finding, the actual announcement has gained enormous coverage in the media and serves as the Administration's opening salvo in its ultimate work to try to convince enough senators to vote for a bill to get beyond the 60 votes need to bypass a filibuster.

The EPA regulatory decision follows a U.S. Supreme Court decision two years ago that concluded the EPA under the Bush Administration had failed to articulate why greenhouse gases should not be regulated as emissions from automobiles.  In so doing, the Court indicated that greenhouse gases were pollutants under the Clean Air Act.  Now that EPA is going to issue a final regulatory decision after 60 days of public comment and several public hearings, it is clear that EPA can, and will, take action absent Congressional action.

Regulation under the Clean Air Act is messy and may not include a cap and trade program, but simple command and control in the form of emission reductions without the ability to trade for other facility allowances or domestic or international offsets.  This would not be good for industry.

Certain industry groups have already begun to work to promote their version of a cap and trade program.  The group USCAP, which stands for United States Climate Action Partnership, has issued a document entitled A Blueprint for Legislative Action, providing a general outline of a climate change program based on cap and trade.

The one question that will likely play out is how the world will look if Congress does not pass a bill or passes late next year or even later.  Permits for coal=fired power plants and other greenhouse gas-emitting facilities are already being challenged, and environmental groups and other plaintiffs are challenging the permits in court as not meeting CAA requirements to address all pollutants including greenhouse gases.  If EPA issues a final decision that greenhouse gases are an air pollutant, do these cases then have a much greater change of success?  Will EPA and the states be required to address greenhouse gas emissions in federal Title V permits?  These are the types of questions that will come to the fore relatively quickly.

What about cement kilns, lime plants, refineries, natural gas processing plants, manufacturing plants, will they be challenged as well?  Coal-fired power plants may not be the only plants whose permits are challenged.

One need not look beyond the administrative case of In re Deseret Power Cooperative.  This was a case in which the permit for a power plant in Utah that was challenged because the plant permit did not address CO2 emissions under the Prevention of Significant Deterioration program under the CAA. the challengers argued the plant should implement the Best Available Control Technology or "BACT" to achieve greenhouse gas, largely CO2 emissions. 

The EPA Appeals Board remanded the issue back to the EPA, then under the Bush Administration, not to require such technology or reductions as the Appeals Board concluded that the decision was not supported by the administrative record.  The Appeals Board called on EPA to address the issue of CO2 and other greenhouse gases being pollutants governed by the CAA.

Other cases have been brought against various sources and several petitions have been filed with the EPA to regulate mobile sources and stationary sources.

With the finding by EPA, all such permits, petitions, and proceedings could be affected.  Could this be a snowball effect with EPA and states finding themselves forced to regulate greenhouse gas emissions before Congress makes any final decisions whether to regulate greenhouse gas emissions?  The next year promises to be a challenging time for industry as they face a great deal of uncertainty as to how greenhouse gases will be regulated and how individual facilities and companies will be affected.  It appears more likely that some form of greenhouse gas regulation will be required.  For those companies that may be affected, it is time to develop a corporate strategy to address the risks and any opportunities that greenhouse gas regulation may bring.

Georgia State Court Rejects Air Permit for Coal-Fired Power Plant for Lack of Regulation of Carbon Dioxide

On June 30, 2008,  the Fulton County Superior Court in Georgia revoked a permit for construction of a proposed 1200-megawatt coal-fired power plant in the state.  The court truled that the permit issued to Longleaf Energy by the Georgia Environmental Protection Division failed to consider the best available pollution control technology (BACT) for reducing the proposed plant’s estimated annual emissions of 8-9 million tons of carbon dioxide (CO2).  The defense had argued that a BACT analysis was not required because CO2 is not a pollutant subject to regulation under the federal Clean Air Act. The court found that the U.S. Supreme Court’s decision in Massachusetts v. EPA, in which the Court found that CO2 met the definition of pollutant under the Act.  The ruling by the Georgia court appears to be the first time a court has rejected an air emissions permit as a result of the environmental agency to regulate CO2 emissions.

The defendants reportedly will appeal the court’s decision.

EPA Denies Texas Governor's Request to Reduce by Half the Renewable Fuels Mandate

The Environmental Protection Agency (EPA) denied a Texas request to reduce the national biofuels mandate in half for a year, EPA Administrator Stephen Johnson said today.

Texas Gov. Rick Perry requested that EPA lower the 2008 renewable fuel standard from 9 billion gallons to 4.5 billion gallons.  He claims that the mandate is causing higher food and feed costs, and therby hurting the Texas economy.

"The [renewable fuel standard] is strengthening the nation's energy security and supporting America's farming communities," Johnson said. The mandate "will remain an important tool in our ongoing effort to reduce greenhouse gas emissions and lessen our dependence on foreign oil in aggressive yet practical ways."

New Federal Greenhouse Gas Reporting Regulations

EPA is set to propose new federal greenhouse gas reporting rules in September.  Under a provision inserted into the Omnibus Spending Bill in late 2007, the EPA must propose rules by September of this year and issue final rules by June 2009.  I have been keeping in touch with my contacts at EPA and the draft rule will be issued in little over a month..

EPA will be proposing several approaches to measuring and reporting greenhouse gas emissions, and then will recommend an approach.  The Agency then will be looking for comments from the public and industry on the approach they will ultimately take in the final rules that will be issued next year.

According to my contacts at EPA, several issues will arise:

• Threshold of emissions that will have to be reported--EPA is looking at 1,000, 10,000, or 100,000 tons per year as a cutoff, below which no reporting would be necessary.  Since proposed legislation in Congress would regulate sources at or above 10,000 tons per year, this may be the likely threshold that EPA will adopt.
• Who reports, the individual facility or the company?--This an issue EPA will address in the proposed rule.
• Data flow--this is a question of to whom will the information be submitted, whether to EPA or to states.
• Methodology for estimating emissions--EPA is planning on using established methodologies as much as possible, whether from the API, the Climate Registry, or those adopted by California.
• Reporting frequency--the agency is evaluating whether reports will be submitted annually or more frequently.
• Which gases must be measured and reported?--EPA appears to be leaning toward regulating all six greenhouse gases, including CO2, methane, and nitrous oxides.
• Verification--the agency is debating whether a third party must verify the emissions estimates.  As EPA is anticipating climate change legislation and carbon credit trading, EPA may require third-party verification in preparation for award of carbon allowances and a carbon credit trading market.

Thes rules will potentially impact a significant portion of industry and business and the US economy.  Numerous comments on the proposed rules are expected.  The final outcome will not be known until June of next year.  It is also possible that a new presidential administration will alter the approach proposed by the Bush Administration. 

In any event, these rules once proposed will have a significant effect on many businesses.  Companies with significant emissions may want to begin the process of identifying sources of greenhouse gas emissions and estimating those emissions in preparation of future reporting obligations, particulalry those with numerouls sources at numerous facilities.

EPA Plans for Issuing Draft and Final Greenhouse Gas Emission Reporting Rule

As mentioned in a prior post, the U.S. Environmental Protection Agency (EPA) is currently working on a draft rule to establish a federal, nationwide, and economy-wide greenhouse gas emission rule.  EPA has announced a schedule for the process and the existing protocols it is considering.  The Agency appears determined to move forward with issuing a draft rule by September of this year. 

The schedule is as follows:

January 2008 to September 2008:  Establish EPA Work group (completed);

                                                   Develop draft rule and supporting analysis;

                                                   Conduct outreach; and

                                                   Conduct inter and intra-Agency review of the draft rule.

September 2008:                          Propose and publish draft rule.

October 2008 to June 2009:          Conduct public comment period and hearings;

                                                   Review comments;

                                                   Develop final rule and supporting analysis;

                                                   Conduct inter and intra-Agency review of the final rule.

June 2009:                                   Publish final rule.

One of the critical issues is establishing the protocols that must be used for different types of sources and industry sectors.  The EPA is looking to regulate all six greenhouse gases:  carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexafluoride.  The Agency is looking at regulating both upstream sources--fossil fuel and chemical producers and importers, and downstream sources--direct emitters--large industrial emitters.

The threshold amount of emissions that will bring a facility or source into the reporting regime must be determined by EPA. The Agency has stated that it is reviewing thresholds of existing mandatory and voluntary reporting programs to determine the appropriate trigger or threshold above which reporting will be required.  EPA has further said, "The rule is not expected to affect smaller operations where emissions are difficult to measure or where there are a large number of small sources."

The frequency of reporting must also be addressed.  EPA is reviewing the frequency of reporting under other programs to determine the frequency (annual or quarterly) of greenhouse gas emission reporting under the developing rule.

Finally, the protocols for estimating emissions from various sources must be adopted by the Agency. EPA has the discretion to use existing methodologies under Section 821 of the Clean Air Act for electric generating facilities.  Other sources that are being considered include:  federal programs--such as Title IV ; state programs--such as the Climate Registry, California's system, and RGGI; corporate programs--such as the World Resources Institute/World Business Council for Sustainable Development; industry programs--such as the American Petroleum Institute, the CSI protocol (cement), and the International Aluminum Institute.

Companies who have not already begun to take measure of their greenhouse gas emissions can refer to the above-mentioned protocols and begin to evaluate the level of emissions from relevant facilities and sources at those facilities.  This will allow future planning as to the potential for their operations to be required to make federal reports once the reporting rule is issued.

                                                   

Governor Vetoes Bill That Would Have Allowed Two Coal-Fired Power Plants in Kansas

In a rather stunning development, Governor Kathleen Sebelius vetoed a bill passed by the Kansas Legislature to allow two coal fired-power plants to receive their air emissions permits in a move to overturn the Kansas environmental agency to hold them back in response to the greenhouse gases they would emit. The veto in effect is a current ban on coal-fired power plants in Kansas. This development shines a spotlight on the need to develop a coherent and effective climate change and energy policy for the United States. Carbon capture and storage or sequestration will be a necessary part of those policies.

After vetoing the bill that would have allowed 11 million tons of greenhouse gases to be produced from two new coal-fired power plants, the governor signed Executive Order 08-03, which establishes the Kansas Energy and Environmental Policy Advisory Group.

"We know that greenhouse gases contribute to climate change,” Sebelius stated. “As an agricultural state, Kansas is particularly vulnerable. Therefore, reducing pollutants benefits our state not only in the short term – but also for generations of Kansans to come.”

Sebelius has named Jack Pelton, chairman, president and chief executive officer of Cessna Aircraft Company, to lead this group.

"I am so pleased that one of our most prominent business leaders has agreed to serve as chair,” Sebelius said. “Jack understands the balance between continuing to grow our economy and making sure that we protect our environment and maximize our natural assets for future generations. The Advisory Group will explore opportunities in all sectors of our economy to accomplish the goal of reducing our greenhouse gas emissions; and, at the same time, continue to take advantage of the economic prosperity provided by job growth throughout Kansas."

In her State of the State Address this past January, Sebelius discussed the need for Kansas to join 36 other states in developing a state plan to deal with climate change. The Energy and Environmental Advisory Group will develop recommendations to the governor involving opportunities to reduce greenhouse gas emissions, as well as a recommended timetable for implementation.  Other issues to be examined by this group include a study of the impact electrical production has on community economic development and the opportunities to diversify Kansas’ energy portfolio.

The process will be facilitated by the Center for Climate Strategies (CCS). Their work is supported by the Energy Foundation and the Sandler Family Supporting Foundation, which includes the Rockefeller Brothers Fund. CCS has developed climate action plans in: Arizona, New Mexico, Montana, Colorado, Washington, Minnesota, North Carolina, and Vermont. State plans are underway in South Carolina, Florida, Arkansas, Michigan, Maryland, and Alaska.

The veto decision places increasing pressure on state legislatures and the federal government to develop a coherent and national climate change and greenhouse gas management plan that incorporate an energy policy and strategy the US has lacked for decades.  It is clear that climate change policy and energy policy are inextricably intertwined, requiring policy decisions in the near future as Congress and the current President have failed to take on these issues.

One of the other key issues not discussed is the reality that coal-fired power plants must capture and store or sequester the carbon underground.  The capture phase presents some challenges but could be implemented with existing technologies.  Cost is the primary concern and utilities cannot justify the expense unless legislation requires the investment.  The transportation and storage or sequestration below ground is an old technology used to enhance oil and gas recovery.  Thus, to begin requiring new coal-fired power plants to capture the carbon dioxide from these plants and to inject it underground is a step that is critical to using a low cost source of energy in a manner that protects the environment.  By capturing the gases emitted from coal-fired power plants, other pollutants like sulfur dioxide and mercury would also removed from the emissions of the plants that would otherwise be released to the atmosphere.

This veto and effective prohibition of coal-fired power plants demonstrates it is clearly time for the sake of the utility industry and the public that we have a coherent energy and climate change policy for the United States. Hopefully, we will see consistent and dedicated work in Congress this year and leadership by a newly-elected president in 2009, whomever that party may be.

EPA's Proposed Lowering of Ozone Standard Facing Stiff Industry Opposition

The US Environmental Protection Agency (EPA) is preparing to promulgate a rule to lower the National Ambient Air Quality Standard for Ozone to 70 to 75 parts per million (ppm) from the current standard of 80 ppm.    The proposed rule was issued on July 11, 2007.  Oil industry and agriculture representatives have presented their case to EPA and the White House Office of Management and Budget last month to discuss a proposal set for release in March.  The National Association of Manufacturers has issued a study that finds that the costs would be significant if the standard becomes stricter.

Some agricultural groups believe the lowering of the concentrations will put rural areas into non-attainment zones.  They fear this will raise the cost of farming at a time when energy prices are already high. It is not clear if this proposed rule will be issued, postponed, or revised.