Emissions

The Obama EPA: A First Look

Issue 4 and Volume 113.

By Robynn Andracsek, P.E., Burns & McDonnell and Contributing Editor

Changes at the Environmental Protection Agency since January 20, 2009 have been anything but subtle. There are new priorities, new philosophies and a sense of urgency that was absent from the Bush administration EPA.

The change in tone is clear from President Obama’s appointment of Lisa Jackson, former head of the New Jersey Department of Environmental Protection, as EPA administrator, and Carol Browner, former EPA administrator, to the new position of special adviser to the president on climate change and energy (the so-called “climate czar”). Add to this a proposed EPA budget of $10.5 billion (the largest in the agency’s 39-year history and a 40 percent increase from 2008) and the message is unmistakable: environmental protection is now a high priority (just in case you slept through the elections).

Early Action

Action came almost immediately. On February 6, EPA and Administrator Lisa Jackson initiated an “impartial review” of former Administrator Stephen L Johnson’s decision denying California permission to set standards controlling greenhouse gases from motor vehicles. According to EPA’s press release, “The Clean Air Act gives EPA the authority to allow California to adopt its own emission standards for motor vehicles due to the seriousness of the state’s air pollution challenges. There is a long-standing history of EPA granting waivers to the state of California.” At the end of the day, California will get its waiver. A public hearing on the waiver was held March 6.

On February 9, EPA stayed the New Source Review Aggregation Amendments, which describe when a source must “combine nominally-separate physical changes and changes in the method of operation for the purpose of determining whether they are a single change under NSR and result in a significant emissions increase.” This rule was issued at the end of the Bush administration and was challenged by the Natural Resources Defense Council, which argued the rule created a loophole for avoiding NSR. The rule’s advocates argued it clarified the notion that projects must be combined for NSR applicability only if they are “substantially related” and that projects scheduled more than three years apart were presumed to be separate.

A second major step came February 17 when Administrator Jackson ordered reconsideration of former Administrator Johnson’s December 2008 memo stating that CO2 is not a regulated NSR pollutant. The inclusion of CO2 has played a major role in permitting the 110 MW Deseret Bonanza coal-fired unit in Utah, among others. However, the December memo was not entirely discarded; EPA can continue to issue NSR permits that do not include CO2 until the matter is resolved.

On February 24,, the U.S. Circuit Court of Appeals for the District of Columbia ruled that EPA’s 2006 National Ambient Air Quality Standards (NAAQS) for fine particulate matter were “contrary to law and unsupported by adequately reasoned decision making.” Former Administrator Johnson lowered the daily PM2.5 standard from 65µ/m3 to 35µ/m3 but did not change the annual PM2.5 standard. A recommendation from the Science Advisory Committee (CASAC) called for cutting the annual standard from 15 µ/m3 to between 12 and 14 µ/m3. Given Administrator Jackson’s pledge at her confirmation hearing to let science rule, the standard is likely to be lowered.

Enforcement to the Forefront

The change in administration may be most strongly felt by recipients of recent Section 114 letters and Notices of Violations. Numerous cases were held up at the Office of Enforcement and Compliance until the change in political atmosphere enabled these agency actions to be supported rather than repressed. Settlements run into the millions of dollars and provide a potential new source of EPA funding. Enforcement settlements since the inauguration include (in millions of dollars):

  • Clean Air Act
    – BP Texas City—$161 pollution controls, $12 civil penalty
    – Frontier Refining (Kansas)—$127 pollution controls, $1.23 civil penalty
    – Wyoming Refining—$14 pollution controls, $0.15 civil penalty
    – Kentucky Utilities—$135 pollution controls, $1.4 civil penalty
  • Clean Water Act
    – Patriot Coal (West Virginia)—$6.5 civil penalty.

Additionally, lawsuits were filed in February against Westar Energy’s Jeffrey Energy Center, a coal-fired power plant in Kansas, and Louisiana Generating Big Cajun 2 Power Plant, a coal-fired power plant in Louisiana, for alleged Clean Air Act violations.

Owners of existing coal-fired utilities who have not yet entered into a settlement or installed controls can probably expect their NSR 114 letter is in the mail.

Greenhouse Gases: Speculation is rampant about carbon regulation. The question is no longer if regulation will happen but what will it look like. Regardless of cap and trade or carbon tax, the underlying principle is to decrease power consumption by making electricity more expensive. Regulation will take 18 months to two years to put in place. Concerns already have arisen over how small a source should be pulled into the regulation. Administrator Jackson has indicated that some level of exemption will be offered.

CAIR: The Clean Air Interstate Rule (CAIR) won a death row reprieve while EPA develops a replacement. Rumors abound that CAIR’s limitations on SO2 and NOX will be supplemented with mercury and CO2 regulation. In the meantime, the power industry remains in limbo as to whether or not they should install new controls and operate existing ones. These decisions cannot be made on a financial basis until a new allowance system is put in place.

Coal Ash Regulation: Last December 22, 1 billion gallons of coal-ash sludge spilled out of its containment ponds at TVA’s Kingston, Tenn. power plant. Up to now, such waste had not been classified as “hazardous” and was lightly regulated. Senate hearings have been held on the accident and public furor may lead to stricter coal plant waste storage regulation, as promised by Administrator Jackson during her confirmation hearing.

Coal Plant Delays and Cancellations: The U.S. swings from favoring coal- to gas-fired generation depending on the price of each fuel. The pendulum is now swinging away from coal based on a future of carbon regulation and the difficulty in obtaining a non-challenged air permit. Numerous plants have been cancelled or delayed (for example, NV Energy’s Ely Energy Center and Entergy’s Little Gypsy) or are having difficulties obtaining permits (for example, Northern Michigan University’s Ripley Heating Plant and Sunflower Electric’s Holcomb project).

With the incentivized growth in wind and other renewables, the need for stable, baseload generation (and its accompanying transmission infrastructure) is growing. The question is how long it will take for the government and public interest groups to acknowledge that—as with all things in life—a balance is needed. The initial indication from the Obama EPA is that this is the time to overcompensate for the perceived prejudice of the Bush EPA, not the time to seek an environmental equilibrium.

References: 1. 74 FR 7193; 2 http://cfpub.epa.gov/compliance/cases/

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