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ICAC Webinar
November 15, 2017
Federal Environmental Regulation in the Trump Administration
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Introductions
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• Michael Goo, Regulatory Counsel (ICAC) and Partner (AJW)
• Block Andrews, Strategic Environmental Solutions Director, Burns and McDonnell
• Tony Licata, Partner, Licata Energy and Environmental Consultants
Presenters
Overview
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1. Existing Policies: Options to Change, Key Rulemakings
2. Clean Power Plan
3. Mercury and Air Toxics Rule (MATS)
4. Other EPA Rules – Ozone, CSAPR, Steam Electric ELG, Coal Ash
5. EPA’s 2018 Budget
6. Key Takeaways
7. Resources: EPA and ICAC
8. NSR Review/Update
Agenda
Options to Change Existing Policy
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- Executive Orders are limited and cannot change law or regulation
Executive Orders
Rulemakings
Legislative Actions
- Finalized rulemakings cannot be repealed (or delayed) except through notice and comment process
- Revision or repeal requires a reasonable basis, not just policy change, consistent with factual record
- Finalized rules remain in effect during litigation unless a judicial stay is granted
- Congress can change law (Clean Air Act)
- Congress can defund specific agency activities
- Congress can overturn regulation (Congressional Review Act)
Legislative Actions Regarding Prior Rules
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For Rules Promulgated After June 12, 2016 - Special Procedure to Pass Laws Overturning Rules
CRAs Signed into Law By Trump
• Stream Protection Rule
• Transparency For Oil Company Payments to Foreign Governments
• Non-subsistence take of Wildlife on National Wildlife Refuges in Alaska
BLM Methane Rule CRA Failed.
No CRA attempt on CSAPR.
Clock has expired.
Congressional Review Act
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Key EPA Rulemakings Rule Status
EPA Clean Power Plan In litigation & under stay from the Supreme Court. Case now held in abeyance.
EPA Mercury and Air Toxics
Standard (MATS) Supplemental cost consideration: under review with case held in abeyance.
OzoneCase is held in abeyance but designations are required—EPA is late in issuing nonattainment
designations.
Cross State Air Pollution Rule (CSAPR) Update rule (finalized September 2016)—litigation held in abeyance, but rule implementation
is ongoing.
Regional HazeTexas Court denies EPA request to delay Texas Plan.
Steam Electric ELG Fifth Circuit case is held in abeyance—EPA has finalized a two year delay of key requirements.
Coal Ash
EPA grants petition to review certain portions of the rule, including GW monitoring and
beneficial reuse.
Oil and Gas Methane Rule Court twice denies request by EPA to simply delay rule implementation for two years.
PM NAAQS2012 NAAQS revision to 12 ug/m3 upheld by D.C. Circuit. Implementation Rule released July
2016.
• CPP Issued October 23, 2015.
• CPP Stayed by Supreme Court (Feb 9, 2016)
• Oral Argument in DC Circuit (September 27, 2016)
• Court Granted Motion to hold the Case in Temporary Abeyance on April 28, 2017 and then issued a further order holding the case in abeyance in August of 2017, requiring the filing of 30 day status reports.
Clean Power Plan
Clean Power Plan Litigation Limbo
Judges Tate and Millet Concurred:
“
“”
”
The Supreme Court’s stay now operates to postpone application of the Clean Power Plan indefinitely while
the agency reconsiders and perhaps repeals the Rule…combined with this court’s abeyance, the stay has
the effect of relieving EPA of its obligation to comply with that statutory duty for the indefinite future.
That in and of itself might not be a problem but for the fact that, in 2009, EPA promulgated an
endangerment finding, which we have sustained…That finding triggered an affirmative statutory
obligation to regulate greenhouse gases. See Massachusetts v. EPA, 549 U.S. 497, 533 (2007).
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Clean Power Plan
October 10, 2017: Proposed Repeal of CPP; Possible Advanced Notice of Proposed Rulemaking (ANPRM) for CPP
Replacement.
• Changes key legal interpretation:
▪ Reductions must occur at the source.
▪ Generation shifting cannot be considered BSER.
• Revises cost/benefit methodology
▪ Co-benefits approach and approach to energy efficiency valuation.
▪ Analysis concludes repealing CPP saves 33 billion dollars per year.
• Comments due January 16, 2018 on proposed repeal package.
• Repeal Package announces that EPA will issue an ANPRM for a replacement rule.
• Schedule of ANPRM: “In the Near Future”
Clean Power Plan: Repeal, Replacement
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Clean Power Plan
• Inside the Fence Rule--BSER as heat rate improvements, efficiency upgrades?
• BSER for different coal types?
• Co-benefits approach and other approaches to cost benefit allow setting of BSER that is far less stringent.
• A revised CPP could provide opportunity to revise NSR rules for inside the fence line efficiency changes that reduce emissions.
• Litigation regarding repeal proposal by itself provides a vehicle for getting an opinion regarding the co-benefits issue.
Clean Power Plan: Replacement Rule Options
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Mercury and Air Toxics Rule (MATS)
• D.C Circuit initially upholds MATS rulemaking including consideration of co-benefits
• BUT: Supreme Court rules that the EPA procedure for considering cost was invalid (Michigan v. EPA)
• D.C. Circuit and Supreme Court Refuse to Stay Rule—rule goes into effect.
▪ EPA should have considered cost at first stage of analysis
in determining whether regulation was “appropriate
and necessary” at first step of analysis (2000).
▪ Supreme Court remanded rule to EPA without
“vacature” allowing EPA the opportunity to fix the
analysis.
▪ Supreme Court did not specifically rule on “co-benefits
issue.”
MATS Litigation
Total
MATS
Cost
$9.6B
Co-
Benefits
>37 B
Mercury
Benefits
$ 4-6 M
SCOTUS Findings
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MATS Compliance Coincides with Retirements
Record number of retirements in 2012 and 2015
coinciding with first and last years of MATS implementation in 2015-2016.
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EPA’s Supplemental Finding and Subsequent Litigation RE SCOTUS Remand
• April 16, 2016: EPA finalizes its supplemental finding.
• EPA finalized its supplemental finding and concluded once again that mercury regulation for powerplants is “appropriate and necessary.” The finding relies largely upon EPA’s RIA for the MATS rule.
• July 2016: The Supplemental Finding was challenged in court. The case was briefed and oral argument was scheduled.
• April 27, 2017: A motion to hold the case in abeyance was granted by the court with a requirement for status reports by EPA every 90 days.
MATS Litigation
MATS: EPA’s Options
MATS implementation is largely complete in terms of the installation of controls. EPA clearly is interested in the co-benefits issue, as evidenced by the Clean Power Plan.
EPA’s Options
1. Wait and see how the co-benefits issue is resolved in the context of the repeal.
2. Issue a revised “appropriate and necessary” finding that does not include co-benefits and conclude that regulation is NOT “appropriate and necessary.” Therefore, the MATS rule would be without legal basis.
3. Issue a revised “appropriate and necessary” finding that does not include co-benefits, but nonetheless conclude that a small amount of regulation is “appropriate and necessary” and leave some or all of the MATS rule in place. Such an approach would likely be more durable and flexible. Existing source MACT could be set at, or close to, the MATs limit.
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Impacts of MATS Withdrawal/Repeal/Revision
All paths will be subject to litigation and may go to the Supreme Court.
Legal History
• The D.C. Circuit has repeatedly upheld the co-benefits approach.
• SCOTUS declined to address the issue in the prior case.
Key Considerations
• Bill Wehrum (AA for Air & Radiation) will be the architect of any new solution to the mercury quandary.
• Many utilities now include MATS compliance costs in their rate base and some have suggested that repeal of MATS is no longer desirable.
• Forward leaning states would still have the ability to require compliance with MATS.
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Other EPA Rules – Ozone & CSAPR
• Ozone: EPA lowered Ozone NAAQS in 2015— from 75 PPB to 70 PPB
• Rule is currently in litigation
• April: D.C. Circuit agreed to hold the case in abeyance (90 day status reports).
• August: EPA sought to delay implementation, but abruptly reversed its decision after litigation was filed.
• EPA recently completed partial designations for areas meeting the standard, but delayed designating areas as nonattainment.
• Changing or eliminating the 70 PPB standard would involve reworking an extensive scientific record through notice and comment rulemaking.
• CSAPR: Update rule finalized in October 2016. Litigation suspended until further order of the Court. Rule remains in effect and implementation is underway.
Fifth Circuit case is held in abeyance. EPA has finalized a two year delay of key requirements.
“The final rule postpones the compliance dates for the best available technology economically achievable (BAT) effluent limitations and pretreatment standards (PSES) for
two waste streams at existing sources, bottom ash transport water and flue gas desulfurization (“FGD”) wastewater, for a period of two years.”
• October 2017: Administrator Pruitt announced that he would reconsider BAT effluent limitations and PSES in the 2015 rule that apply to bottom ash transport water and FGD wastewater. EPA will provide an opportunity for public comment on any proposed revisions to the 2015 final rule.
• EPA does not intend to conduct a rulemaking that would potentially revise BAT effluent limitations and PSES in the 2015 rule for fly ash transport water, flue gas mercury control wastewater, and gasification wastewater, or any of the other requirements in the 2015 rule.
Other EPA Rules
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Steam Electric ELG
• EPA has granted two petitions to reconsider substantive provisions of the final rule regulating coal combustion residuals (CCR) as nonhazardous waste under subtitle D of the Resource Conservation and Recovery Act (RCRA).
• The petition from the Utility Solid Waste Activities Group (USWAG) seeks reconsideration of 11 specific provisions of the final CCR rule, including:
1. Provisions prohibiting the use of alternative points of compliance for ground water contamination,
2. Regulating inactive surface impoundments, and
3. Defining what activities constitute beneficial use of CCR.
• Should EPA decide to revise specific provisions of the final CCR rule, it will go through a notice and comment process.
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Other EPA Rules
Coal Ash
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EPA Future Budget Uncertain
• The Trump Budget released on March 16, 2017, would cut the EPA budget by 31%.
• House has passed Appropriations
• Senate has not reported from Appropriations from Committee---expected to go direct to Senate Floor
• December 8th deadline—probably another Continuing Resolution
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Key Takeaways
• Very few new federal environmental rules going forward;
• Delay/failure to Defend Existing Rules in litigation is complicated;
• Permanent replacement of rules is much harder;
• Impacts to budget and re-tasking of agency mission can have lasting effects.
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EPA and Federal Agency Regulatory Websites
https://www.regulations.gov/: Search for and submit comments to Federal rules/regulations
https://www.epa.gov/laws-regulations/regulatory-reform: Learn about regulatory reform -
the public’s role, the President’s actions taken
https://yosemite.epa.gov/opei/RuleGate.nsf/content/allrules.html?opendocument:
Regulatory development and retrospective review tracker
https://yosemite.epa.gov/opei/RuleGate.nsf/: Search rules by name, phrase, topics, effects,
and learn how you can get involved in the regulatory review process.
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ICAC Resources: Regulatory Updates
ICAC Regulatory Tracker
- ICAC tracks the status of regulations, court cases, and policies of importance to
members.
- One resource for this information is the ICAC Regulatory Tracker, which is updated
regularly and provides key status updates and dates on Clean Air Act-related
regulations.
(Last updated on 11/14/17)
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ICAC Resources: Regulatory Updates
www.icac.com/regulations
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ICAC Resources: RTRs
What is an RTR?An RTR (Risk and Technology Review) is an effort to evaluate both risk & technology, as required
by the Clean Air Act, following the application of maximum achievable technology (MACT)
standards.
Why Does EPA Conduct RTRs?Section 112(f)(2) directs EPA to conduct risk assessments on each source category subject to
MACT standards, and to determine if additional standards are needed to reduce residual risks.
EPA is required to review and revise the MACT standards as necessary, taking into consideration developments in practices, processes and control technologies.
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RTR Court-Ordered Deadlines from 2017 LitigationFinal Rule Court-Ordered Deadline Source Category Part 63, Subpart Notes
3/13/2020a Auto and Light Duty IIII Coating3/13/2020a Metal Coil SSSS Coating3/13/2020a Metal Can KKKK Coating3/13/2020a Plastic Parts PPPP3/13/2020a Hydrochloric Acid Production NNNNN HCl - wet scrubbers (not DSI)3/13/2020a Integrated Iron and Steel FFFFF Integrated w/Coke ovens 3/13/2020a Asphalt Processing & Roofing Manufacturing LLLLL EPA sent survey to <10 entities3/13/2020a Misc. Metal Parts MMMM Coating
3/13/2020a Ethylene Processes YYGrowing industry - emissions testing program
3/13/2020a Boat Manufacturing VVVVRelated to reinforced plastics - styrene (thermal oxidizer)
3/13/2020a Reinforced Plastics and Composites Production WWWWRelated to boats - styrene (thermal oxidizer)
3/13/2020a Organic Liquids Distribution EEEE Related to MON3/13/2020a Paper and Other Web JJJJ Coating3/13/2020a Stationary Combustion Turbines YYYY Gas turbine controls, SSM (NOx, CO, VOC)
3/13/2020a Misc. Organic NESHAP (MON) FFFFA number of diff processes (22 source cats into 1)
3/13/2020a Solvent Extraction for Vegetable Oil GGGG3/13/2020a Engine Test Cells/Stands PPPPP EPA getting info back from survey issued3/13/2020a Cellulose Products Manufacturing UUUU
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3/13/2020a Site Remediation GGGGG3/13/2020a Municipal Solid Waste Landfills AAAA Fugitive emissions, coacting landfill gas (Hg)
12/31/18 or 6/30/20b Leather Finishing Operations TTTT Coating12/31/18 or 6/30/20b Wood Building Products QQQQ Coating12/31/18 or 6/30/20b Fabric Printing OOOO Coating12/31/18 or 6/30/20b Metal Furniture RRRR Coating12/31/18 or 6/30/20b Large Appliances NNNN Coating12/31/18 or 6/30/20b Friction Materials Manufacturing QQQQQ Solvent Recovery12/31/18 or 6/30/20b Wet-Formed fiberglass HHHH Thermal Oxidizer ~ 10 facilities12/31/18 or 6/30/20b Misc. Coating Manufacturing HHHHH Paint - solvent emissions12/31/18 or 6/30/20b Taconite Iron Ore Processing RRRRR All in Minnesota, >10 facilities12/31/18 or 6/30/20b Lime AAAAA Manufacturers of lime; HCl 12/31/18 or 6/30/20b Rubber tire XXXX12/31/18 or 6/30/20b Iron and Steel Foundries EEEEE Mostly particulate; CO emissions12/31/18 or 6/30/20b Plywood and Composite Wood Products DDDD ICAC can assist
RTR Court-Ordered Deadlines from 2017 Litigation - Continued
Find this List on the ICAC Website on the Domestic Conventional Pollutants Page
Under ‘Resources’
http://www.icac.com/DomConvPollutants
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Questions? Comments?
Michael Goo [email protected]
Haley Armstrong [email protected]
Clare [email protected]
Thank You!
New Source
Review
Block Andrews, P.E.:
What Triggers NSR for an Existing Unit
A Physical modification or
Change in method of operation
That results in a net emissions increase
Over the significance levels
EPA’s Two Step Test
for PSD Applicability
PSD Significant Emission Rates (SER)
Pollutant tons/year
CO 100
PM10 15
PM2.5 10 (direct)
NOX 40
SO2 40
VOC 40
CO2 75,000
► First Step
• Determine if the modification is either a
physical or an operational change.
• Routine Maintenance, Repair, and
Replacement activities (RMRR) are
excluded.
• The meaning of “routine” is critical
but not defined.
• No exclusion for energy efficiency
improvements
► Second Step
• Will emissions increase above the
PSD “significant emission rate”
thresholds as a result.
• tpy not lb/hr
PSD Netting
►Netting
• Future Potential = Maximum projected annual emissions
in next 5 years
• Baseline actual = Look back 5 years and pick most
representative 24-month emissions
• If Future Potential Emissions > Baseline Actual Emissions
then check to see for each pollutant if the emissions
increase is significant. If so, then that pollutant is subject
to NSR.
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Is the Modification a Physical
or an Operational Change?
►Excludes routine maintenance, repair and replacement (RMRR)
activities
► “Routine” is not defined
• Landmark court case, 1990 Wisconsin Electric Power Company (WEPCO)
v. Reilly.
• Determined RMRR by “nature & extent, purpose, frequency, and cost”
• No single factor is dispositive (conclusive)
• No activity is categorically exempt
So, What Has Trigger NSR?
►New construction (new burners)
►Non “Routine” modifications and repairs (economizer, steam
turbine, air heater, feedwater heaters)
►Efficiency improvements (economizer, steam turbine, air heater,
feedwater heaters)
►Re-dispatch that is coincidental to repairs
►Fuel conversions
So, What New Construction Has Triggered NSR?
►Burner replacements
►Example: 500 MW unit with 100 ppm CO changes burners
which lower NOx but increase CO to 110 ppm
►Would increase CO emissions by over 250 tpy
►CO significance threshold = 100 tpy
►NSR would be required for CO
Other Heat Rate Improvements Used by EPA
and HR projects that have triggered NOV
Assumed Heat Rate Improvement Potential Non-NSR Heat Rate Improvement
Activity S&L (Btu/kWh) NETL (percent)NSR NOV Project
Identified by EPA*S&L (Btu/kWh) NETL (percent)
Economizer Replacement 50 - 100 2.1 Yes 0 0
Neural Network 50 - 100 0.2 - 2.0 No 50 - 100 0.2 - 2.0
Intelligent Sootblowers 30 - 90 0.1 - 0.65 No 30 - 90 0.1 - 0.65
Air Heater/Duct Leakage 10 - 40 0.16 - 1.5 Yes 0 0
Lower Acid Dewpoint (Trona) 50 - 120 0.3 - 1.5 No 50 - 120 0.3 - 1.5
Steam Turbine Upgrades 100 - 300 0.84 - 2.6 Yes 0 0
Clean Condenser 30 - 70 0.7 - 2.4 No 30 - 70 0.7 - 2.4
Boiler Feed Pump 25 - 50 Not listed No 25 - 50 Not listed
Fan replacement/VFD 30 - 150 Not listed No 30 - 150 Not listed
Misc. AQCS upgrades 0 - 65 Not listed Yes 0 Not listed
Cooling Tower 0 - 70 0.2 - 1.0 No 0 - 70 0.2 - 1.0
Other 0 - 20 Not listed No 0 - 20 Not listed
Ash Removal System Not listed 0.1 No Not listed 0.1
Combustion system optimization Not listed 0.15 - 0.84 No Not listed 0.15 - 0.84
Feedwater heaters Not listed 0.2 - 2 Yes Not listed 0.2 - 2
Flue Gas Moisture Recovery Not listed 0.3 - 0.65 No Not listed 0.3 - 0.65
Coal Drying Not listed 0.1 - 1.7 No Not listed 0.1 - 1.7
Reduce slagging Not listed 0.4 No Not listed 0.4
Steam Leaks Not listed 1.1 No Not listed 1.1
Total 375 - 1,175 6.95 - 20.54 215 - 670 3.85 - 14.34
*Some additional activities not specifically flagged in this column to trigger NSR could still trigger NSR. For example, for steam leaks that are
significant enough that require significant replacement of parts could trigger NSR.
Summary of Utility Consent
Decrees for NSR Violations
-
10
20
30
40
50
60
70
80
90
100
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Nu
mb
er
of
Pla
nts
Mill
ion
s o
f $
Over 100 plants16 years$20 + billion750+ under investigation
NSR – An Operators View
Tony Licata
Licata Energy & Environmental Consultants, Inc.
ICAC Webinar Nov. 15, 2017
NSR Facts■ Impacts gas as well as coal projects.
■ NSR is part of Clean Air Act not an EPA regulation.
■ EPA has made a number of regulatory revisions to
the NSR programs. Portions of the 2002 rules have
been struck down and the 2003 rule was vacated by
the D.C. Circuit Court of Appeals.
■ Life extension projects – controversy.
■ NSR has helped reduce air emissions.
■ DOE meeting asked for changes required to
implement energy efficiency. EPA presence asking
for input. New study group
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Inconsistencies
■ NSR not uniformly enforced by EPA, regions or States.
■ NSR used as political tool.
■ Court rulings have been in conflict.
■ NSR applicability is determined on a case-by-case basis. EPA does not maintain complete information on NSR permits.
■ There are no standard ways among industries of reporting process design, repair, and replacement practices, and performance and cost information.
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Report 2005
NSR’s treatment of modifications has been particularly
controversial. This is partly because of the complexities
involved in determining precisely which changes qualify
as modifications.
In addition, the EPA in the late 1990s brought lawsuits
against some electricity-generating plants based on an
aggressive interpretation of its rules and a
correspondingly narrow view of which projects are
exempt from NSR as being “routine maintenance,
repair, and replacement.”
www.national-academies.org
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NSR Requires Legislative Fix
■ In order to implement energy efficiency & reliability projects on exist EGUs, there needs to be a legislative change to the current NSR rule.
■ Provide an exemption for energy efficiency and reliability projects.
■ Two bills are pending in the House to revise NSR.
■ Without fix - limits new business and plant upgrades
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NSR Impediments to Future Projects
■ 5 year averaging.
– Coal fleet capacity factor has decreased from
74.4% in 2008 to 52.7% in 2016. Averaging for
future emissions will be impacted by the look
back period.
■ Need clear definition of routine maintenance, repair
and replacement activities.
■ Waiver for significant emissions reduction of a
pollutant but may result in slight increase of another
pollutant.
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