EPA Regulation of Greenhouse
Gases
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on Slide Master
Industrial Energy Consumers of America
November 16, 2009
PRESENTED BY
Peter Glaser
Troutman Sanders LLP
401 9th Street, NW
Suite 1000
Washington, DC 20004
202.274.2950
www.troutmansanders.com
argaret Campbell
Troutman Sanders LLP
600 PeacMhtree Street, NE
Suite 5200
Atlanta, GA 30308-2216
404.885.3410
CURRENT STATE OF PLAY
• Congress
• EPA
• Copenhagen in
December
• Courts
Supreme Court
Massachusetts v. EPA Decision
April 2007
Greenhouse gases are
Clean Air Act “air
pollutants” which EPA
must regulate if it finds
endangerment to public
health or welfare
Case was in the context
of GHG emissions from
new motor vehicles, but
precedent applies to
sources across the
economy
EPA Endangerment Finding
Proposed April 2009 –
now at OMB and will be
finalized before
Copenhagen
Finds that elevated
concentration of six
GHGs in atmosphere
endangering both public
health and welfare
because of climate
change effects
Who Will Be Regulated?
• Autos first – Strengthened mpg standards
proposed 9/15/09, to be finalized by
3/31/10 – manufacturers support, dealers,
others may oppose – EPA says minimal
cost – comments due 11/28
• Large industrial sources next, including
powerplants, refineries, industrial boilers,
etc.
→ PSD for GHGs when auto regs finalized
→ Series of NSPS rulemakings likely
beginning next year for categories of
stationary sources
WHO ELSE?
Numerous petitions to EPA by enviros
in queue to regulate mobile sources:
heavy trucks, planes, locomotives,
ships, mobile engines – timing
uncertain, proposals likely next year
PSD Conundrum: Will EPA Be
Forced to Regulate Small
Sources?
Statutory threshold
for PSD is 250 tpy:
1.2 million new
regulated sources (!)
Statutory threshold
for Title V is 100 tpy:
6.1 million new
regulated sources (!!)
“Tailoring” Rule
EPA has proposed
“tailoring” rule to limit
PSD/Title V to 25,000+
tpy CO2e sources so as
not to gridlock permit
system – legal issues
BUT: 100/250 tpy
thresholds will remain in
effect under state law
unless changed. So EPA
has not solved the
problem and this will
affect both large and
small sources
Comments due 12/28
“Johnson Memorandum”
Reconsideration
Are GHGs already
“regulated pollutants”
even before EPA makes
endangerment finding
and regulates?
EPA Administrator
Johnson: No
EPA Administrator
Jackson: On further
review, we agree
CAN AND WILL EPA PROPOSE
CAP-AND-TRADE?
• ANPR explored possibility of capand-trade as Section 111 New
Source Performance Standard
• Questionable legal authority.
Enviros challenged in CAMR
• Because of legal and political issues,
EPA not likely to do in short term
LARGE STATIONARY SOURCE
REGULATION
PSD Permitting
Automatically becomes
effective when EPA
issues auto regs
NSPS
Rulemakings for source
categories likely
beginning next year
PSD Permitting
• CAA requires permits for new and modified
facilities for “regulated” pollutants. GHGs
will become “regulated” pollutant when
auto regs go into effect. At that time new
“major” sources of GHG emissions and
“major modifications” will require PSD
permit.
• Permits will require BACT (Best Available
Control Technology)
• What is BACT? Case-by-case balancing of
environmental, economic and energy
factors. Must be commercially feasible.
WHAT IS BACT?
• Stack CO2 controls not commercially feasible at this
time
• Best guess: near-term, BACT will be improved
thermal efficiency
• Thermal efficiency standards will have little effect on
new facilities; could require capital upgrades to
improve operating efficiency at existing facilities but
only if they modify
• EPA Guidance Document?
LARGE INDUSTRIAL SOURCES CAN
EXPECT SPECIAL ATTENTION
• Enviros will want unrealistic efficiency
improvements
• Enviros may want CCS immediately
- Two-phase controls?
- 10% biomass co-firing?
• Aggressive lbs CO2/MWh standard
designed to force conversion to
gas/renewables/CCS?
The Modification Conundrum
for EGUs and Other Large
Industrial Facilities
• Modified = physical or operational change
to existing facility that significantly
increases emissions
• Tailoring rule sets CO2 significance level at
10,000-25,000. Can they do that? Even
25,000 not a lot for large source, but 250
tpy is nothing
• Is there anything left of RMRR exemption
to modification?
New Source Performance
Standards
• Similar to BACT: until CCS economically
feasible, NSPS will be improvements in
thermal efficiency
• Key fact: Unlike BACT, ultimately NSPS
will apply to new and existing facilities,
whether or not existing facilities modify
• But different process, timetable for new
and existing-modified vs. existingnonmodified
NSPS Timing
• New and Existing-Modified:
- Series of one-year EPA rulemakings. Powerplants
first up, with proposals beginning next year
- Requirements likely to apply immediately upon
rulemaking becoming effective
• Existing-Nonmodified:
- Both EPA and States must adopt standards – will
take several years start-to-finish
- Likely several-year compliance period thereafter:
For first source category targets (EGUs), likely
2014+ before sources must comply, with possible
phased compliance
Tort Decisions
• 4 lawsuits asserting claims for tort of global warming
• All 4 dismissed by the courts, but 2 dismissals were
reversed on appeal – 2d and 5th Circuits
• 1 settled and the other will be appealed to 9th Circuit
which will likely reverse
• Rehearing and then cert petitions to Supreme Court
• Effect on legislation?
GHG Regulation Is Not All EPA Has In
Store for Industry, Particularly Power
Sector
• New standards for ozone, PM-2.5, SO2
and NOx; post-CAIR; MACT for HAPs;
NSR enforcement
• Companies must assess cumulative
regulatory effects
• Will weight of new regulation start leading
to closures of older facilities?
GHG Comment Deadlines
Coming Up Fast
• 11/27 – Auto Rule
• 12/7 – Johnson Memorandum
• 12/28 – Tailoring Rule