Articles Posted in GHGs

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In June, at the end of its 2021-2022 Term, the United States Supreme Court issued a ruling with far reaching implications for the ability of the Environmental Protection Agency (“EPA”) to regulate Greenhouse Gas (“GHG”) emissions and any attempt to limit the impacts of climate change. In a ruling by the conservative majority of the Court in West Virginia v. Environmental Protection Agency, the Court held that an EPA regulation attempting to regulate GHG emissions exceeded the authority of the EPA. The decision is unusual as the rule was never fully implemented. While the rule, known as the Clean Power Plan, adopted in 2015, was intended to implement what the EPA found was  the “best system of emission reduction” or ” the BSER, for the kind of existing source at issue”, the rule was stayed by the Court in 2016.

The rule was based on an analysis undertaken by the EPA.

Having decided that the BSER was one that would reduce carbon pollution mostly by moving production to cleaner sources, EPA then set about determining ‘the degree of emission limitation achievable through the application’ of that system. … The Agency recognized that, in translating the BSER into an operational emissions limit, it could choose whether to require anything from a little generation shifting to a great deal. It settled on what it regarded as a ‘reasonable’ amount of shift, which it based on modeling how much more electricity both natural gas and renewable sources could supply without causing undue cost increases or reducing the overall power supply. The Agency ultimately projected, for instance, that it would be feasible to have coal provide 27% of national electricity generation by 2030, down from 38% in 2014.”

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Last week the U.S. District Court for the District of Columbia ruled on oil and gas Lease 257 issued by the U.S. Government for 80.8 million acres of the Gulf of Mexico pursuant to the Bureau of Ocean Energy Management’s (“BOEM”) 2017–2022 Program. The ruling in Friends of the Earth v. Haaland, among other things addressed issues of climate change. If upheld, the determination may have far reaching impacts.

The action, against various federal officials alleged that the issuance of the Lease violated the National Environmental Protection Act (“NEPA”) and the Administrative Procedure Act (“APA”). The Court addressed four cross motions for summary judgment.

The Lease involves the portion of the Gulf of Mexico known as the Outer Continental Shelf. “The Outer Continental Shelf Leasing Act (“OCSLA”) is the statutory framework under which the Department of the Interior may lease areas of the Outer Continental Shelf. 43 U.S.C. 1334; Ctr. for Biological Diversity v. U.S. Dep’t of Interior,563 F.3d 466, 472 (D.C. Cir.2009) [hereinafter “Biological Diversity”]. OCSLA sets forth a four-stage process for potential oil and gas production that is “pyramidic in structure, proceeding from broad-based planning to an increasingly narrower focus as actual development grows more imminent.” State of Cal. ex rel. Brown v. Watt, 668 F.2d 1290,1297 (D.C. Cir. 1981).”

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The  Court of Appeals for the D.C. Circuit determined that, under the Clean Air Act, the EPA lacked authority to stay implementation of a new rule on Greenhouse Gas (GHG) Emissions. In Clean Air Council v. Pruitt, the Court  found that the stay was arbitrary, capricious and in excess of the authority of the EPA Administrator.

In June 2016, the then EPA administrator issued a rule regarding leaks of methane and other oil and gas pollutants. The rule required,  among other things, an “initial monitoring survey” be conducted by June 3, 2017. In April, 2017 the new EPA administrator, Scott Pruit, issued a letter indicating the EPA would reconsider the rule and intended to issue a 90 day stay of the rule, as permitted under the Clean Air Act (CAA).  The required notice of reconsideration was published on June 5, 2017, two days after the initial monitoring was to have been completed. The notice provided for the following reconsideration and 90 day stay:

“…reconsideration on four aspects of the methane rule: (1) the decision to regulate low-production wells, (2) the process for proving compliance by “’alternative means,’” (3) the requirement that a professional engineer certify proper design of vent systems, and (4) the decision to exempt pneumatic pumps from regulation only if a professional engineer certified that it was “’technically infeasible’” to route such pumps “’to a control device or a process.’” 82 Fed. Reg. at 25,731–32. In addition, the notice “’stay[ed] the effectiveness of the fugitive emissions requirements, the standards for pneumatic pumps at well sites, and the certification by a professional engineer requirements’” for 90 days “’pending reconsideration.’” 82 Fed. Reg. at 25,732. The notice explained that the stay had gone into effect on June 2, 2017—that is, three days before the notice was published in the Federal Register. 82 Fed. Reg. at 25,731.”

However, on June 16, 2017 another notice was issued advising of the intent to reconsider the entire 2016 rule and to extend the stay for two years. After the suspension, several environmental groups brought the action seeking alternatively a stay or  vacating the actions of the EPA Administrator, on the grounds that the: “…EPA’s stay violates CAA section 307(d)(7)(B) because “’all of the issues Administrator Pruitt identified could have been, and actually were, raised (and extensively deliberated) during the comment period.’”

The EPA and industry parties argued that the stay and reconsideration was not a final agency action and therefore the Court lacked jurisdiction to review it. The Court concluded it does have jurisdiction due  to the nature of the action.

“…EPA has not only concluded that section 307(d)(7)(B) requires reconsideration, but it has also suspended the rule’s compliance deadlines. EPA’s stay, in other words, is essentially an order delaying the rule’s effective date, and this court has held that such orders are tantamount to amending or revoking a rule.”

The Court noted that, as the initial monitoring was to be completed by June 3 and repairs of leaks performed within thirty days of June 3, with potential penalties of non-compliance, “[t] he stay—which EPA made retroactive to one day before the June 3 compliance deadline—eliminates that threat, see 82 Fed. Reg. at 25,731, and thus relieves regulated parties of liability they would otherwise face.”

The Court went on to say that the EPA’s argument that the Court could impose a stay upon a regulation being imposed but could not prevent the EPA’s stay of a regulation, would have a “perverse result”. It further noted that the CAA provides specific criteria be met in order to permit the stay of a final rule. The test is ” that it was “’impracticable to raise’” an objection during the public comment period and the objection is “’of central relevance to the outcome of the rule.’” Only when these two conditions are met does the statute authorize the Administrator to stay a lawfully promulgated final rule.”

In addressing the EPA’s lack of authority to issue the stay in this instance the Court held:

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In October the State of Washington will implement a program to require reduction of Green House Gas (GHG) emissions. The State Department of Ecology issued a new rule last week requiring a gradual reduction in emissions for those who, starting with 2017,  emit 100,000 metric tons or more of carbon pollution.  The threshold for requiring compliance gradually reduces until 2035. The “Covered GHG Emissions” include those from stationary sources, petroleum producers and importers  and natural gas distributors.

The rule requires calculating emissions and keeping records for no less than ten years. There are provisions that permit trading reduction of carbon emissions called Emission Reduction Units (ERUs).

“WAC 173-442-140 Exchanging emission reduction units. Covered parties may transfer ERUs under the conditions in this section
(1) Required documentation.
(a) Documentation of an ERU transfer may consist of contractual arrangements, memoranda of understanding, or other similar records with sufficient detail to document the transfer of the ERU from one covered party to another.
(b) The transfer of ERUs occurs between accounts in the registry established in WAC 173-442-230.
(2) Tracking emission reduction units. The covered party must document each transfer of an ERU in the compliance report in a format specified by ecology and in the registry established in WAC
(3) Role of third-parties in transactions.
(a) Entities other than covered parties may facilitate, broker, or assist covered parties to transfer ERUs recorded in accounts in the registry, but they may not hold ERUs.
(b) Only covered parties, ecology, and voluntary participants may hold ERUs.”

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The Governor of California is  expected to sign a Bill adopted by the California Legislature that further expands what has been called the Country’s most aggressive climate change legislation aimed at reducing Greenhouse Gases (GHGs). The new Act calls for a significant reduction in GHGs by 2030. The Act is also tied to another Bill just passed by the Legislature, Assembly Bill 197 of 2015-2016, that modifies the authority of the State Air Resources Board.

The legislation is administered by a State Air Resources Board. The companion Bill 197 would implement a legislative oversight committee to ensure the Air Resources Board acts in a manner that, among other things, ensures that plans ” …identify for each emissions reduction measure, including each alternative compliance mechanism, market-based compliance mechanism, and potential monetary and nonmonetary incentive the following information:

(a) The range of projected greenhouse gas emissions reductions that result from the measure.

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The U.S. Court of Appeals for the District of Columbia Circuit issued a decision this week rejecting a challenge to a series of EPA reguations aimed at curtailing GHG emissions from both vehicles and stationary sources. In Coalition for Responsible Regulation, Inc. v. Environmental Protection Agency, the Court summarized its decision as follows:

“Following the Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007)-which clarified that greenhouse gases are an “air pollutant” subject to regulation under the Clean Air Act (CAA)-the Environmental Protection Agency promulgated a series of greenhouse gas-related rules. First, EPA issued an Endangerment Finding, in which it determined that greenhouse gases may “reasonably be anticipated to endanger public health or welfare.” See 42 U.S.C. § 7521(a)(1). Next, it issued the Tailpipe Rule, which set emission standards for cars and light trucks. Finally, EPA determined that the CAA requires major stationary sources of greenhouse gases to obtain construction and operating permits. But because immediate regulation of all such sources would result in overwhelming permitting burdens on permitting authorities and sources, EPA issued the Timing and Tailoring Rules, in which it determined that only the largest stationary sources would initially be subject to permitting requirements.

Petitioners, various states and industry groups, challenge all these rules, arguing that they are based on improper constructions of the CAA and are otherwise arbitrary and capricious. But for the reasons set forth below, we conclude: 1) the Endangerment Finding and Tailpipe Rule are neither arbitrary nor capricious; 2) EPA’s interpretation of the governing CAA provisions is unambiguously correct; and 3) no petitioner has standing to challenge the Timing and Tailoring Rules. We thus dismiss for lack of jurisdiction all petitions for review of the Timing and Tailoring Rules, and deny the remainder of the petitions.”

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The United Nations Climate Change conference has begun with reports of criticism of the failure of industrialized nations to agree to meaningful targets for emission controls and financial and technical support to developing nations. A substantial amount of the criticism by environmentalists has reportedly been directed at the Bush Administration. Apparently to underscore this criticism, the chief of the U.S. delegation has purportedly indicated that there will not be agreement on specific emissions goals for 2020.

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The New York State Department of Environmental Conservation (DEC) has created an Office of Climate Change which has as its purpose developing “responses needed for significant emissions reductions.” In addition to working on the Regional Greenhouse Gas Initiative (RGGHI) a ten state cap and trade program to reduce CO2 emissions, the office is developing regulatory programs including integrating a climate change element into government decision making.

Silverberg Zalantis LLC has recently contributed to this discussion in an article published in the New York Law Journal. The article entitled “Ultimate Challenge to SEQRA” discusses the use of New York’s SEQRA regulations to address climate change issues during the environmental review process for new projects. In addition, it is our understanding that the Office of Climate Change is looking at possible modifications to the SEQRA regulations in order to implement a more standardized review of GHGs and related issues during the review process.

The Office of Climate Change is also reviewing a wide range of related topics including the need for adaptation techniques and new technologies such as biofuels and carbon capture and storage. No doubt this office will be an important resource to the State of New York in addressing climate change issues going forward.

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One of the interesting aspects of the movement to address greenhouse gas (GHG) emissions is the many layers of government that are getting involved in how to curb global warming and confront the problems of climate change. In October, 2008 Sonoma County California issued its Community Climate Action Plan. The detailed and ambitious plan notes: “(e)very historic change is preceded by a massive collection of individual actions. Because we cannot foresee how change will occur, each action is critical.”

The multi-faceted plan seeks to achieve the previously announced goal of the county and all of the nine cities in the county to reduce GHG emissions to 25 percent below 1990 levels by 2015. The four categories of action include: (1) investment in energy and water efficiency to reduce demand, (2) smart transit and land use by shifting to electric vehicles, walking and bicycling from fossil fuel vehicles, (3) invest in renewable energy resources and jobs and (4) protect forests and farmland and convert waste into energy in order to “conserve and capture.”

Some of the details of the plan demonstrate the need for an extraordinary level of legislative and financial commitment, which if successful may serve as a model for many communities. Among the proposals are to retrofit 80 percent of the buildings in the county to make them more energy efficient, strengthening land use regulations to encourage transit oriented mixed use development and creating incentives for small scale solar, wind and hydro power installations.

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