Alice Kaswan on CPRBlog {Bio}
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EPA’s New Source Proposal: The “Category” Question

On September 20, 2013 the EPA proposed new source performance standards for greenhouse gas emissions for new power plants.  Although the agency repackaged and fine-tuned an earlier proposal, issued in April 2012, it continues to hold the coal industry’s feet to the fire.  The proposal makes clear that new coal-fired power capacity cannot be built without major reductions in carbon emissions. The agency’s new proposed rule continues to convey a critical message to utilities contemplating new energy-generation investments: utilities can no longer develop uncontrolled high-emission energy sources; future energy investments must either be lower-carbon or control carbon.  The agency’s proposal provides clear parameters for future investments that set the nation on a more sustainable energy path.

This essay focuses on a critical difference between the September 2013 proposal and the earlier April 2012 proposal: how EPA has categorized electricity-generating units (EGUs).  In this essay, I first explain the standard setting process, and then explain EPA’s decision to combine coal and natural gas facilities in its April 2012 proposal and its retreat from that approach in the September 2013 proposal.  I then discuss the legal and policy implications of that shift.  Although the change in categories did not make much difference in the standards set, it did shift the likely areas of legal controversy, and marks a shift in the agency’s posture in shaping utilities’ energy choices.

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GHG Trading and Co-Pollutants: Expanding the Focus

I agree with David Owen’s recent blog post that David Adelman’s article, The Collective Origins of Toxic Air Pollution: Implications for Greenhouse Gas Trading and Toxic Hotspots, makes significant contributions to our awareness of the sources of toxic pollution and our collective responsibility for reducing emissions.  He focuses on the distributional implications of GHG trading for associated co-pollutants, addressing two important environmental justice issues: the extent to which its impacts on industrial emissions could lead to changes in relative levels of toxic emissions, and the extent to which a GHG trading program could exacerbate racial disparities. He focuses on the degree to which a trading program would cause industrial hotspots or racial disparities, and his analysis shows that a GHG trading program for industrial sources would, in most instances, not play a substantial role in causing either of these consequences, largely because mobile and nonpoint sources are the primary cause of most air toxics hotspots. Those observations are important to the debate about a GHG trading program’s distributional implications for toxics hotspots.

I write to add one additional consideration to the analysis: a GHG trading program’s implications for cumulative pollution levels.  Even if a GHG trading program would not cause an industrial hotspot – would not substantially change relative air toxics levels -- the value of small changes in cumulative pollution is also relevant to the larger debate over a GHG trading program’s impacts on air toxics hotspots.

I start by acknowledging Adelman’s valuable insights about industry’s relative role in air toxics pollution.  Because Adelman’s concern is the role of industry in creating hotspots, his definition of hotspots focuses on industry’s absolute and relative contribution to air toxics pollution. He defines a countywide industrial hotspot by industry’s absolute contribution: a county is considered an industrial hotspot if industry contributes a cancer risk greater than 10 per million. He defines a census tract industrial hotspot where industry’s absolute contribution to cancer risk exceeds 20 per million and industry’s relative contribution is at least 30% of total air toxics emissions. Using this definition, industrial hotspots are relatively rare: nationwide, only 12 counties and 240 census tracts (out of 65,000 census tracts) are industrial hotspots of air toxics. Nationwide, mobile and nonpoint sources, not industry, are primarily responsible for air toxics pollution. (As Adelman observes, the same is not true for all criteria pollutants; energy facilities significantly contribute to sulfur dioxide emissions and, to a somewhat lesser extent, to nitrogen oxide emissions. But this blog, like his article, focuses primarily on air toxics, not criteria pollutants.)

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Environmental Justice and GHG Cap-and-Trade: It's More than a Complaint

California environmental justice groups filed a complaint last week with the federal Environmental Protection Agency arguing that California’s greenhouse gas (GHG) cap-and-trade program violates Title VI of the federal Civil Rights Act, which prohibits state programs receiving federal funding from causing discriminatory impacts.  They allege that the cap-and-trade program will fail to benefit all communities equally, and could result in maintaining and potentially increasing GHG emissions (and associated co-pollutant emissions) in disadvantaged neighborhoods that already experience disproportionate pollution.

While the complaint reflects real concerns about the distributional impact of a GHG cap-and-trade program on associated co-pollutants, it’s important to keep the complaint in perspective.  Neither it, nor previous lawsuits, present the multi-faceted set of environmental justice arguments on GHG cap-and-trade. An earlier suit challenged the sufficiency of the state agency’s alternatives analysis under California’s environmental review law, and this claim raises potential disparate impacts under Title VI. The legal claims reflect available causes of action, and should not be taken as the full measure of the groups’ opposition to cap-and-trade.

For example, California environmental justice groups mistrust the basic effectiveness of cap-and-trade given a history of problems in RECLAIM, a southern California criteria pollutant trading program, weaknesses in the ETS, Europe’s GHG trading program, and the current “slack cap” in the northeastern states’ RGGI program. Another concern is that cap-and-trade programs lack the participatory features of traditional permitting processes.  The greater administrative efficiency and flexibility that industry celebrates cut off the slow, individualized, public-hearing process that allows local communities to participate (however weakly) in the emissions decisions of the facilities in their midst. Thus, it would be a mistake to attempt to discern the complete “environmental justice” position on cap-and-trade solely from the causes of action articulated in the lawsuits.

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Applying the Clean Air Act to Greenhouse Gases: What Does It Mean for Traditional Pollutants?

EPA’s March 27 release of a proposed rule to control greenhouse gas (GHG) emissions from new fossil-fuel power plants has reignited the long-standing debate over whether the Clean Air Act is an appropriate mechanism for controlling industrial sources. Congressional bills to repeal EPA’s CAA authority have been repeatedly (though unsuccessfully) introduced. Many environmentalists, while welcoming EPA’s initiative in the absence of any alternative, have suggested that new federal climate legislation would be preferable to applying the CAA.

In a recently published article, Climate Change, the Clean Air Act, and Industrial Pollution, published in a UCLA Journal of Environmental Law and Policy symposium on the Clean Air Act and GHG regulation, I take up a slice of the complex debate about the value of the CAA.  I explore how using the Clean Air Act to reduce GHGs from stationary sources, including industrial and fossil-fuel electrical generating facilities, would affect many other pollutants, termed co-pollutants. Though co-pollutant impacts are only one of many relevant factors, the inquiry helps shed light on the benefits and drawbacks of the Clean Air Act as a climate policy mechanism, both on its own terms and in comparison with a frequently proposed alternative – a cap-and-trade program. The article reveals that there are no easy answers, and contributes to a more nuanced understanding of the CAA in particular and climate policy choices more generally.

An initial question demands an answer: if we’re talking about GHG controls, why should we care about their impacts on other pollutants? Ultimately, addressing climate change will require fundamental transformations in our energy and industrial infrastructure, changes with widespread environmental, economic, political, and social implications. Climate policies premised on a vision that integrates those implications, co-pollutant implications among them, will provide greater benefits and fewer drawbacks than a narrow focus on GHG reductions alone. Given the strong connection between GHGs and their co-pollutants, climate policies are likely to have significant co-pollutant consequences that could, in some instances, impact our assessment of alternative climate policies.  In the energy sector, for example, continued reliance on coal combined with carbon capture and sequestration would substantially increase co-pollutant emissions, while increased energy efficiency or renewable energy would reduce co-pollutant emissions.

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Greenhouse Gas Standards for New Power Plants: Glass Half-Full and Half-Empty

With congressional action on climate change at a standstill, EPA’s new source performance standards (NSPSs) for greenhouse gases (GHGs) from new power plants should be applauded.  As required by the Clean Air Act, the agency is doggedly moving forward to establish emission standards for GHGs, air pollutants that unquestionably endanger human health and welfare. EPA deserves praise for setting a strong standard and proposing it notwithstanding political heat. The glass is half-full.

While attention is properly focused on what EPA has accomplished, it is important not to lose sight of what could be better. One concern is the standard’s flexibility: it lets new power plants (presumably coal-fired) violate the standard now and catch up in the future (presumably through the installation of carbon capture and storage (CCS)). In the somewhat unlikely event that utilities take advantage of that flexibility, it could give coal-fired power continued and environmentally damaging new life. A second, and more fundamental concern, is EPA’s silence on existing power plants. Notwithstanding Clean Air Act requirements, the agency has indicated that it has “no plans” to establish emission guidelines on existing power plants, the largest single source of GHG emissions in the United States. The glass is half-empty. I hope the glass will fill once the next election is over.

The Glass is Half-Full

EPA’s proposed standard for new power plants sends a strong message that future investments in fossil fuels must take carbon emissions into account.  The standard, which must reflect the “best system of emissions reduction” for the industrial category in question, is premised on the emissions achieved by a natural gas combined cycle power plant. It is noteworthy that EPA has created a general category for power plants that holds them all to the highest standard achievable. Had EPA set separate NSPSs for coal-, natural gas-, and oil-fired power plants, then each type of plant would have been required to reduce emissions only to the extent readily achievable in that category, rather than requiring all plants to achieve the highest standard possible for fossil-fuel power plants in general. In other words, coal-fired power plants, which generally emit about twice the level of GHGs per unit of energy produced, would have been allowed to emit at a higher level than more efficient natural gas plants.

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Waiting for the GHG New Source Performance Standards: A Good Start, But Will EPA's Power Plant Controls Make a Difference?

The Clean Air Act’s potential to address the nation’s greenhouse gas emissions is slowly being unveiled.  EPA’s expected announcement of highly-anticipated new source performance standards for power plants by the end of January will reveal whether the agency has the political will to use its existing authority to re-shape the United States’ dependence upon high-carbon power.  Section 111 of the Clean Air Act is a potentially potent tool. It arguably allows EPA to re-direct new investment away from heavily-polluting coal-fired power and toward less polluting alternatives. It also gives the agency the authority to address on-going emissions from existing power plants.  Weaning the nation from its dependence on coal-fired power is essential to a new energy future.  While EPA may fear the political storm generated by the prospect of change, it has the opportunity to begin a positive transformation to a more sustainable energy infrastructure.

The current rulemaking initiative arose out of a lawsuit brought by states and environmental groups, who argued that EPA was required to develop nationwide performance standards for greenhouse gas (GHG) emissions from new and existing stationary sources.  In December 2010, EPA and the plaintiffs reached a settlement that required EPA to propose performance standards for power plants and for oil refineries.  Although both rulemakings have been delayed,  EPA sent proposed standards for new power plants to the White House Office of Management and Budget in November 2011, and now estimates that it will be authorized to release that proposed rule in late January.

We will not know the full picture of how aggressively EPA plans to use its Section 111 authority to shape the future of fossil fuel use in the electricity sector until EPA actually publishes all of the rules. In the meantime, however, the following is a guide to the issues at stake. The first critical issue is the recent decision to proceed with new source rules and delay proposals for existing sources.  Critical issues for the new source rules are whether they will force a switch away from coal and whether the agency will allow facilities flexibility in meeting the new standards, through mechanisms such as emissions trading.

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Parsing the AEP v. Connecticut Argument: Did the Court Ask the Right Questions?

The Supreme Court arguments in American Electric Power Company v. Connecticut on Tuesday raised profound issues about the respective role of the courts and administrative agencies in controlling greenhouse gas emissions from stationary sources, emissions that remain uncontrolled notwithstanding their significant climate impacts. As my CPR colleague Doug Kysar has noted, at times the Court appeared reluctant to embrace industry’s political question and prudential standing arguments, arguments that would undermine the courts’ traditional common law powers. If the Court rejects these jurisdictional arguments, the central issue would be whether EPA’s GHG regulatory actions under the Clean Air Act have “displaced” the federal common law of interstate nuisance.

If displacement is the critical issue, did the Court ask the right questions? For example, Justices Kagan, Ginsburg, and Breyer addressed the issue of institutional competence.  Directly and indirectly, their comments suggested that the plaintiff states were asking the courts to undertake a regulatory task more suited to administrative agencies. If the test were based on institutional competence, the answer would be easy: administrative agencies have greater expertise, allow for greater public input, and (at least in theory), provide a more comprehensive approach.

But to the extent the legal question is whether the Clean Air Act has displaced the federal common law, relative institutional competence isn’t the issue. The issue is whether the administrative agency is, in fact, undertaking its regulatory function. If it’s not, then the default is the federal common law, however awkward it might be relative to the regulatory approach. That courts might not be ideally suited for the task does not relate to the question of whether the common law has been displaced.

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EPA Marches On: Regulating Stationary Source GHG Emissions under the Clean Air Act

The environment received an early Christmas present from the Environmental Protection Agency yesterday, with EPA’s announcement that it would propose New Source Performance Standards (NSPSs) for greenhouse gas (GHG) emissions from power plants and refineries in 2011, and then finalize the regulations in 2012.  The decision resolves a lawsuit brought by states, local governments, and environmental groups. EPA’s initiative will impose cost-effective controls on stationary sources of GHGs, and complement the agency’s existing initiatives for mobile and stationary sources of GHGs.  While the CAA might not be as flexible or comprehensive as recently proposed congressional GHG legislation, EPA is making sorely needed progress to control the nation’s GHG emissions.

Notwithstanding industry’s ongoing criticism of applying the CAA to GHGs, the initiative is hardly a surprise.  The Supreme Court made clear in its 2007 Massachusetts v. EPA decision that GHGs are “air pollutants” subject to the Clean Air Act (CAA).  As such, EPA has unquestionable authority to regulate GHG emissions from stationary sources, and has decided to develop NSPSs for two of the nation’s largest industrial sources.  According to EPA, fossil fuel power plants and petroleum refineries emit 40 percent of U.S. GHG emissions. 

The NSPS requirement will establish industry-specific emission limitations for new and modified facilities in the affected industries.  The emission limitations will take the cost and availability of control options into account.  Although utilities have feared that EPA would require them to install expensive carbon capture and sequestration (CCS) technology, EPA is unlikely to require CCS given its high cost and lack of demonstrated success.  In fact, since there are few, if any, demonstrated technologies that could otherwise remove GHGs from the emissions stream, EPA is most likely to impose measures that would increase the facilities’ energy efficiency and indirectly limit GHG emissions.  While such measures could require initial capital expenditures, they could ultimately provide cost savings to the affected industries, just as installing a new and more efficient furnace in a home would cost money up front, but save money down the line.  It is also conceivable that EPA would require a new or modified facility to switch from a more GHG-intensive fuel (like coal) to a less GHG-intensive fuel (like natural gas).  A NSPS that required fuel-switching would be more controversial, but would likely achieve greater GHG emission reductions.

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AEP v. Connecticut: Will the Supreme Court Shut the Door Again?

The environmental blogosphere is already abuzz over the Supreme Court’s grant of certiorari in AEP v. Connecticut. The case is of critical importance in determining whether the courts have a role to play in adjudicating climate change. Few believe that the courts are a good venue for developing climate policy. But for the foreseeable future, the question is whether the traditional common law can fill in for Congress’ failure to take more comprehensive action.

In AEP, Connecticut, along with several other states and public interest organizations, brought a public nuisance action against the five largest U.S. electric utility companies. The plaintiffs sought injunctive relief in the form of emissions limits on the utilities’ facilities. In 2005, the district court held that applying public nuisance law to the problem of climate change presented a nonjusticiable political question, and dismissed the case. In 2009, the Second Circuit reversed, re-opening the courthouse door to climate nuisance cases. 

Here's a look at several of the key legal issues presented by the case.

Political Question Doctrine: In this and other climate nuisance cases, the political question doctrine has been the preferred vehicle through which district courts have dismissed the cases. (See also Comer v. Murphy Oil Co. and Kivalina) The Second Circuit rejected this approach. The first key issue under the political question doctrine is whether the matter is textually committed to one of the political branches (the elected branches). On this prong, the Second Circuit stated strongly that: “In this common law nuisance case, ‘[t]he department to whom this issue has been ‘constitutionally committed’ is none other than our own – the Judiciary.”

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Cap-and-Trade is Still Alive (In California)

As “Cap-and-Trade Is Dead” continues to echo through the empty halls of Congress, California rolled out its proposed greenhouse gas (GHG) cap-and-trade program on Friday. The proposed regulations send a powerful message that, notwithstanding political paralysis at the federal level, the states are proceeding with meaningful climate action.

The proposed cap-and-trade program, to be voted on by the California Air Resources Board (CARB) at its December 2010 meeting, is scheduled to take effect in January 2012. At the outset, it will apply to the state’s large stationary sources, including manufacturing and utilities. Beginning in 2015, the program will also cover fuel distributors, including distributors of transportation fuels and natural gas or propane not covered by the program’s earlier phase.

The cap-and-trade program is just one of many emissions reduction strategies outlined in California’s scoping plan, the planning document that guides the state’s implementation of AB 32, its primary climate law. (Other strategies include vehicle emissions standards, a renewable portfolio standard, building and appliance efficiency standards, an electricity performance standard for utilities, and a host of other measures.) The cap-and-trade program nonetheless has far-reaching significance because it sets an actual cap on 85% of the state’s emissions. Although the state’s many climate strategies are all designed to reduce emissions, their actual results are uncertain, and the cap will help the state meet its specific target.

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