Category: Environmental Law

PFAS — What’s all the Fuss?

Recently, per- and polyfluoroalkyl substances (PFAS) have been the subject of much publicity, major ongoing litigation over alleged personal injury and property damage, and statutory and regulatory action. In Massachusetts and New Hampshire, contamination incidents, lawsuits, and concerns over drinking water impacts have led to proposals for adoption of extremely low (parts per trillion) drinking water guidelines or enforceable standards. Nationally, although there are drinking water “advisories,” the U.S. Environmental Protection Agency (EPA) is considering whether to start rulemaking to identify PFAS as “hazardous substances” under the federal Superfund law, and whether to adopt enforceable maximum contaminant levels as national drinking water standards.

What’s all the fuss? Although manufacturers stopped making two of the most well-known PFAS (PFOA and PFOS) over a decade ago, PFAS are a category of substances that includes hundreds of compounds, and a number of them appear to have toxic effects. PFAS had – and continue to have – a variety of uses in a multitude of products, and therefore have been manufactured or used (and sometimes released) at a large number of facilities. Commercial products have included, among others, cookware, food packaging, personal care products, and stain resistant chemicals for apparel and carpets. Industrial and commercial uses included photo imaging, metal plating, semiconductor coatings, firefighting aqueous film-forming foam, car wash solutions, and rubber and plastics. As a result, PFAS are present in the environment, and have been detected in certain drinking water systems. Further, PFAS are still being manufactured and used, but discharge of PFAS in air and water typically have not been regulated. PFAS also are highly mobile and highly persistent in the environment, and, therefore, will be present for scores of years.

Although the toxicological risks for many PFAS have not yet been determined with confidence, PFOA and PFOS have been tested fairly extensively. Manufacturers point out that not all PFAS have the same chemical structures and toxicity. Nevertheless, the Conservation Law Foundation and other environmental advocates are petitioning for regulation of the entire class.

Because PFAS haven’t yet fallen under most federal regulatory schemes, many states have been “filling the gap” with guidance and regulatory action. In Maine, PFAS are already the subject of guidance and regulations by the Maine Department of Environmental Protection (DEP). The most recent DEP Remedial Action Guidelines (RAGs, 2018) for PFOA, PFOS, and PFBS issued by Maine include:

  • Soil RAGs as low as 0.0095 ppm
  • Groundwater residential use RAG as low as 0.40 ppb
  • Fish tissue guidelines for recreational anglers as low as 0.052 ppm

And under DEP Chapter 418, Screening Levels for Beneficial Use have been set for certain PFAS as low as 0.0025 ppm.

It is clear there will be more regulation and legislation at federal and state levels. Further, litigation has commenced in a number of states (including Maine) for perceived or real damages from PFAS contamination under negligence and other tort theories.

What to do? Depending on where you sit, here are a few actions to consider.

  • If you are unsure whether you use PFAS, a limited review of safety data sheets may identify PFAS chemicals.
  • Determine if you stored, used, or currently use PFAS, and consider the potential toxicity of the specific compounds and potential impact of potential regulations.
  • If you stored or used PFAS in the past, consider whether there were potential releases or residuals that could pose health risks or liability risks.
  • If you are considering purchasing a business or real property, consider whether PFAS may have been used or released on site, and the potential risk and liability issues. Note that because PFAS are not federal “hazardous substances” they are not within the scope of the standard Phase I Environmental Site Assessment.
  • If you generate or ship wastes that may contain PFAS, consider voluntary testing and the possibility that testing may soon be requested or required.
  • If you use groundwater as drinking water or for production use, consider whether PFAS may be present from historic or recent uses.
  • Keep posted on national and state regulatory and legislative developments.
©2019 Pierce Atwood LLP. All rights reserved.
This post was written by Kenneth F. Gray and Thomas R. Doyle of Pierce Atwood LLP.

EPA Sued to Issue Pending Methylene Chloride Prohibition Rule in Final

On January 14, 2019, in the U.S. District Court for the District of Vermont, the Vermont Public Interest Group; Safer Chemicals, Health Families; and two individuals (plaintiffs) followed up on their earlier notice of intent to sue and filed a complaint against Andrew Wheeler and the U.S. Environmental Protection Agency (EPA) to compel EPA to perform its “mandatory duty” to “address the serious and imminent threat to human health presented by paint removal products containing methylene chloride.”  Plaintiffs bring the action under Toxic Substances Control Act (TSCA) Section 20(a) which states that “any person may commence a civil action … against the Administrator to compel the Administrator to perform any act or duty under this Act which is not discretionary.”  Plaintiffs allege that EPA has not performed its mandatory duty under TSCA Sections 6(a) and 7.  TSCA Section 6(a) gives EPA the authority to regulate substances that present “an unreasonable risk of injury to health or the environment” and TSCA Section 7 gives EPA the authority to commence civil actions for seizure and/or relief of “imminent hazards.”  Plaintiffs’ argument to direct EPA to ban methylene chloride is centered on the issue of risk to human health only, however, stating that it presents “an unreasonable risk to human health” as confirmed by EPA.  Under TSCA Section 20(b)(2), plaintiffs are required to submit a notice of intent to sue 60 days prior to filing a complaint which they did on October 31, 2018.

Background

On January 19, 2017, EPA issued a proposed rule under TSCA Section 6 to prohibit the manufacture (including import), processing, and distribution in commerce of methylene chloride for consumer and most types of commercial paint and coating removal (82 Fed. Reg. 7464).  EPA also proposed to prohibit the use of methylene chloride in these commercial uses; to require manufacturers (including importers), processors, and distributors, except for retailers, of methylene chloride for any use to provide downstream notification of these prohibitions throughout the supply chain; and to require recordkeeping.  EPA relied on a risk assessment of methylene chloride published in 2014, the scope of which EPA stated included “consumer and commercial paint and coating removal.”  The proposed rule stated that in the risk assessment, EPA identified risks from inhalation exposure including “neurological effects such as cognitive impairment, sensory impairment, dizziness, incapacitation, and loss of consciousness (leading to risks of falls, concussion, and other injuries)” and, based on EPA’s analysis of worker and consumer populations’ exposures to methylene chloride in paint and coating removal, EPA proposed “a determination that methylene chloride and NMP in paint and coating removal present an unreasonable risk to human health.”  The comment period on the proposed rule was extended several times, ending in May 2017, and in September 2017 EPA held a workshop to help inform EPA’s understanding of methylene chloride use in furniture refinishing.

No further action was taken to issue the rule in final, however, until December 21, 2018, when EPA sent the final rule to the Office of Management and Budget (OMB) for review.  On the same day, EPA also sent another rule to OMB for review titled “Methylene Chloride; Commercial Paint and Coating Removal Training, Certification and Limited Access Program,” which has not previously been included in EPA’s Regulatory Agenda; very little is known about this rule.  Plaintiffs do not refer to it in the complaint but there is speculation, based on its title, that this second rule may allow for some commercial uses of methylene chloride.

Commentary

We recall the lawsuit filed by the Natural Resources Defense Counsel (NRDC) in 2018 challenging EPA’s draft New Chemicals Decision-Making Framework document as a final rule.  The current action further reflects the commitment of detractors of EPA to use the courts and every other means available to oppose the Administration’s TSCA implementation efforts.  Whether and when this court will respond is unclear.  What is clear is that the case will be closely watched, as the outcome will be an important signal to the TSCA stakeholder community regarding the utility of TSCA Section 20(a)(2) to force non-discretionary EPA actions that the Administration may be disinclined to take.

 

©2019 Bergeson & Campbell, P.C.

Senate Approves Nominations of Three Key Environmental Posts

In the last hours of the 115th Congress, the Senate on January 2, 2019, approved the nominations of three individuals to serve in key environmental posts:

Alexandra Dapolito Dunn — EPA Toxics Office:  The Senate approved the nomination of Alexandra Dunn to serve as the Assistant Administrator of the U.S. Environmental Protection Agency’s (EPA) Office of Chemical Safety and Pollution Prevention (OCSPP).  Ms. Dunn had been serving as the administrator for EPA Region 1.  She previously was executive director and general counsel for the Environmental Council of the States (ECOS).  Prior to joining ECOS, Ms. Dunn served as executive director and general counsel for the Association of Clean Water Administrators.  Ms. Dunn also has extensive experience in environmental education, having served as dean of Environmental Law Programs at the Elisabeth Haub School of Law at Pace University.  In addition, she has taught at the Columbus School of Law, Catholic University of America, and, most recently, as an adjunct associate professor of law at the American University’s Washington College of Law.  Ms. Dunn received a B.A. in political science from James Madison University and a J.D. from the Columbus School of Law.  More information on Ms. Dunn’s confirmation hearing is available in our blog item Senate EPW Committee Holds Hearing on Nomination of Alexandra Dunn to Lead OCSPP.

Mary Neumayr — CEQ: The Senate also approved the nomination of Mary Neumayr to head the White House’s Council on Environmental Quality (CEQ).  Ms. Neumayr currently serves as chief of staff for the CEQ.  Prior to joining CEQ in March of 2017, she served in a variety of positions with the Committee on Energy and Commerce in the U.S. House of Representatives, including Deputy Chief Counsel, energy and environment in 2017; Senior Energy Counsel from 2011 to 2017; and Counsel from 2009 to 2010.  Ms. Neumayr also served as Deputy Counsel for environment and nuclear programs at the U.S. Department of Energy from 2006 to 2009, and Counsel to the Assistant Attorney General for the environment and natural resources division at the U.S. Department of Justice from 2003 to 2006.  Prior to her government service, Ms. Neumayr was in private legal practice from 1989 to 2003.  She received her B.A. from Thomas Aquinas College and her J.D. from the University of California, Hastings College of the Law.

Kelvin Droegemeier — OSTP:  Finally, the Senate also approved Kelvin Droegemeier to serve as the director of the White House Office of Science and Technology Policy (OSTP).  A meteorologist from the University of Oklahoma, Mr. Droegemeier previously served as Oklahoma Governor Mary Fallin’s secretary of science and technology.  He was also previously on the National Science Board for 12 years during the George W. Bush and Barack Obama administrations.

©2018 Bergeson & Campbell, P.C.

Four Themes from the National Climate Assessment that May Impact Your Business Strategy

As climate change is integrated more and more into the planning of corporate opportunities and risks, the Fourth National Climate Assessment released last week may be a valuable resource to assess how climate change may impact your business strategy on the horizon.

The assessment, which outlines potential region-by-region impacts from climate change, can be used as a tool to assist companies in understanding the range of possible climate impact. Drafted by experts within the federal government and led by the National Oceanic and Atmospheric Administration (NOAA), the report provides a summary of the science and modeling used to predict changes in the United States’ climate over the next century, including providing certain economic impact assessments and estimates.

Four modeled scenarios with varying ranges of temperature increases were used in the assessment and impacts were qualified by confidence ranges and likelihood of the suggested impacts. The report discusses population changes, economic changes, and geographic changes that may result from climate change.

Containing a massive amount of both elementary and highly sophisticated information and model results, the assessment may prove to be extremely useful to both public and private companies to plan business growth and opportunities and to identify risks to current business models. The data may be specific enough to identify potential mitigation and adaptation actions for specific facilities to consider implementing.

Four Highlighted Themes

The following themes are indicative of those found throughout the assessment.

  1. “Climate change creates new risks and exacerbates existing vulnerabilities in communities across the United States, presenting growing challenges to human health and safety, quality of life, and the rate of economic growth.” Summary Finding No. 1.

  2. “Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century.” Summary Finding No. 2.

  3. “Climate change affects the natural, built, and social systems we rely on individually and through their connection to one another. These interconnected systems are increasingly vulnerable to cascading impacts that are often difficult to predict, threatening essential services within and beyond the Nation’s borders.” Summary Finding No. 3.

  4. “Impacts from climate change on extreme weather and climate-related events, air quality, and the transmission of disease through insects and pests, food, and water increasingly threaten the health and well-being of the American people, particularly populations that are already vulnerable.” Summary Finding No. 6.

Midwest Adaptation and Mitigation

According to the report, while climate change might be easier to highlight on the coasts, the Midwest may also experience costs related to increased heat and precipitation events. The report indicates that the Midwest may experience a significant increase in the number of 100 degree days, with Chicago experiencing as many at 60 days per year by the end of this century. This extreme heat may increase mortality, affect transportation, or affect the ability of workers in outdoor jobs or spaces without temperature controls. With near-term planning and adaptation, however, the report notes that many of these impacts can be minimized.

The report highlights that higher heat and precipitation may affect farming and yields, but that adaptation and mitigation can help. For example, the assessment notes that adding buffer zones at agricultural farm fields in the Midwest can minimize damage and soil loss caused by extreme precipitation events.

Other actionable insights from the report directed to the Midwest include:

  • Promoting biodiversity can minimize the impacts of an increasing insect population and diseases that strike a particular species of plants or humans.

  • Planned development growth can decrease habitat and biodiversity loss as well as control storm-related damage.

  • Planned development and agricultural land use can impede the further degradation of the Great Lakes, which is experiencing higher temperatures, lower amounts of winter ice and earlier temperature stratification. These temperature changes may also impact manufacturing facilities that use water from the Great Lakes.

Overall, the assessment recommends adoption of mitigation and adaptation plans in the near future to avoid the most deleterious effects of climate change.

© 2018 Schiff Hardin LLP

ARTICLE BY

Jane E. Montgomery
Schiff Hardin LLP

U.S. Court of Appeals for the Fourth Circuit’s Decision to Vacate Mountain Valley Pipeline Nationwide Permit

On November 27, 2018, the U.S. Court of Appeals for the Fourth Circuit issued the most recent in a series of decisions from various courts affecting the federal permitting and construction of interstate pipelines. Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Nov. 27, 2018). In this instance, the Circuit held that the U.S. Army Corps of Engineers violated the Clean Water Act when it verified that construction of the Mountain Valley Pipeline project could proceed pursuant to Nationwide Permit 12 in the State of West Virginia.[1] This decision will have an impact on the flexibility of federal and state agencies when it comes to permitting projects under the Clean Water Act Nationwide Permit program.

The Mountain Valley Pipeline project is a 304-mile natural gas pipeline proposed to run through West Virginia and Virginia. Earlier this year, the Corps had reinstated its verification that the project met the requirements of Nationwide Permit 12 – a general permit that provides authorization for certain discharges associated with the construction of linear energy infrastructure. The Circuit vacated the Corps’ verification in its entirety, leaving the project with no authorization under the Clean Water Act.

Unlike many decisions where the issue is the Corps’ own process in promulgating the Nationwide Permit in the first instance or the Corps’ assessment of whether a specific project falls within the federal parameters of the Nationwide Permit, this matter turned on whether the Corps properly incorporated the State’s conditions into its verification and whether the State itself followed the required Clean Water Act process.

In order to use a Nationwide Permit promulgated by the Corps, a project proponent must provide the Federal permitting agency a Section 401 water quality certification from the State (or other permitting agency with jurisdiction over the water) in which the regulated discharge originates, unless the Federal permitting agency determines that the certification requirement has been waived. The State certification and its conditions then become part of the federal Nationwide Permit. With respect to Nationwide Permit 12, the State of West Virginia had issued a general certification that imposed, after public notice and comment, certain special conditions on projects seeking authorization under Nationwide Permit 12 beyond what the Corps required. Two of these special conditions were at issue in this case:

  • Special Condition A, which requires an individual state water quality certification for certain projects including those involving construction of pipelines equal to or greater than 36 inches in diameter or if crossing waters regulated under Section 10 of the Rivers and Harbors Act; and

  • Special Condition C, which requires that individual stream crossings be completed in a continuous manner within 72 hours in certain conditions.

Pursuant to these Special Conditions, in order to seek authorization under Nationwide Permit 12, Mountain Valley Pipeline was expected to obtain an individual water quality certification and to complete stream crossings within 72 hours. However, West Virginia purported to “waive” its requirement that the pipeline obtain an individual water quality certification following a series of challenges to West Virginia’s individual water quality certification, and the Corps replaced Special Condition C with an alternate condition that the Corps found to be more protective of water quality with the apparent concurrence of the State.

The Fourth Circuit held: (1) the Corps’ verification violated Section 401 of the Clean Water Act because Section 401 unambiguously requires the Corps to incorporate the State’s certification with its special conditions in the federal verification without modification; and (2) Section 401 does not allow a state to waive its special conditions without public notice and comment, meaning that the project proponent remained subject to the condition requiring that it apply for an individual state water quality certification and, therefore, the Corps’ own verification was invalid.

In reaching these conclusions, the Circuit noted that “the Corps’ interpretation would radically empower it to unilaterally set aside state certification conditions as well as undermine the system of cooperative federalism upon which the Clean Water Act is premised.” Sierra Club, No. 18-1173 at *22. With respect to the State’s action purporting to waive its special condition, the Circuit explained that “[a]llowing West Virginia to revoke, on a case-specific basis, conditions imposed in its certification of a nationwide permit would impermissibly allow the state to circumvent [the CWA’s] explicit requirement that state permit certifications satisfy notice requirements.” Id. at *31.

Assuming this decision stands, the upshot is that both the Corps and the States (at least within the Fourth Circuit) will have less flexibility in how projects are permitted when a State has issued a general water quality certification with specific conditions. The Corps will need to require that the terms of such certifications are strictly followed in order to make decisions that comply with the Clean Water Act.

[1] The Circuit’s November 27, 2018 decision supports and expands upon the Circuit’s October 2, 2018 decision to vacate the Corps’ verification on more limited grounds.  Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Oct. 2, 2018).

© 2018 Bracewell LLP
This post was written by Ann D. Navaro and Christine G. Wyman of Bracewell LLP.

EPA Proposes to Clarify Areas Excluded from Clean Air Act’s Definition of “Ambient Air”

The U.S. Environmental Protection Agency (EPA) recently proposed a revised policy to clarify what constitutes “ambient air” under the Clean Air Act, which will directly affect what areas stationary sources of air emissions must model to determine the effect of their facilities on air quality. The revised policy will most notably affect sources that have to model air quality around their facilities to demonstrate compliance with National Ambient Air Quality Standards (NAAQS), as well as sources applying for air construction permits under the EPA’s Prevention of Significant Deterioration (PSD) permitting program.

Under current EPA regulations, ambient air is broadly defined as the portion of the atmosphere (external to buildings), that the general public has access. Areas where access is not available are not “ambient.” Sources are often required under the NAAQS and the EPA’s PSD program to model facility impacts on ambient air. Thus, excluding areas from “ambient air” eliminates the need to model emissions impacts on those areas.

Through various guidance documents and letters, the EPA’s historic policy has been to only exclude those areas from the definition of ambient air that are (1) owned or under the control of the source and (2) not accessible by the public due to some physical barrier (like a fence). This policy was rooted in the EPA’s interpretation of the definition of ambient air under 40 CFR §50.1(e), rather than explicit regulatory language.

The EPA now believes that its prior characterization that “physical barriers” must exist to exclude an area as ambient air is unnecessarily limiting. Under the EPA’s revised draft policy, a source may use various “measures,” not limited to mere “physical barriers,” to preclude public access. As a result, non-ambient air can include areas subject to video surveillance, signage, security patrols, or other measures provided that the measures “provide reasonable assurance that the general public will not have access.”

What does the EPA’s revised policy mean for stationary sources if implemented as proposed?

  1. Sources will have additional flexibility to determine what areas must be modeled for air quality analyses;
  2. The EPA’s proposed interpretation is a change in policy rather than a change in regulation, meaning that sources should still consider how their respective state or local permitting authorities interpret the meaning of ambient air;
  3. The draft policy appears to address only measures that a source can implement to preclude public access (e.g. install signs or physically patrol the area), as opposed to other physical conditions beyond fences that might already exist to preclude public access, such as roadways – this may be addressed in the final version of the EPA’s policy.

The EPA is accepting comments on its “Draft Revised Policy on Exclusions from ‘Ambient Air’” through December 21, 2018.

 

© 2018 Schiff Hardin LLP
This post was written by David M. Loring of Schiff Hardin LLP.

New Report Reveals Sources of Foodborne Illnesses

  • On November 9, 2018, the Interagency Food Safety Analytics Collaborations (IFSAC) released a report on foodborne illnesses caused by four pathogens. The data in the report, titled, “Foodborne illness source attribution estimates for 2016 for Salmonella, Escherichia coli O157, Listeria monocytogenes, and Campylobacter using multi-year outbreak surveillance data, United States,” came from 1,255 foodborne disease outbreaks that occurred from 1998 through 2016. According to the report:
    • Salmonella illnesses came from a wide variety of foods;
    • E. coli O157 illnesses were most often linked to Vegetable Row Crops (such as leafy greens) and Beef;
    • Listeria monocytogenes illnesses were most often linked to Dairy products and Fruits; and
    • Campylobacter illnesses were most often linked to Chicken after removing Dairy outbreaks from the estimates.
  • The analysis to develop the report involved a method developed by IFSAC to estimate foodborne illness source attribution (see our blog on IFSAC research on how to categorize foods linked to foodborne disease outbreaks). IFSAC includes the Centers for Disease Control and Prevention (CDC), the U.S. Food and Drug Administration (FDA), and the U.S. Department of Agriculture’s Food Safety and Inspection Service (USDA-FSIS).
  • Each year in the United States, foodborne disease caused by known pathogens results in an estimated 9 million people becoming sick, 56,000 hospitalizations, and 1,300 deaths, according to the report. The pathogens in the report were chosen because of the frequency or severity of the illnesses they cause. CDC estimates that, combined, the four pathogens cause 1.9 million foodborne illnesses in the United States each year. The four pathogens also were selected because targeted interventions can have a major impact in reducing foodborne illness caused by these pathogens.
© 2018 Keller and Heckman LLP

Army Corps Issues Guidance for Dam and Culvert Removal Credits

The Army Corps of Engineers recently issued a Regulatory Guidance Letter (RGL) that sets out factors that should be considered by district engineers when determining the amount of mitigation credits that may be allowed for removal of dams or other structures in rivers and streams. These mitigation credits may be used or sold as compensatory mitigation required by Army Corps permits issued for projects that result in impacts to waters of the United States.

There are approximately 14,000 dams in New England, many of which were built in the 19th century, and thousands of undersized or poorly designed culverts. These dams and culverts impair river and stream values. The Corps’ mitigation credit RGL is significant because, in the past, when a dam was removed or culvert replaced the positive environmental effects were not easily quantified. Further complicating the mitigation credit analysis is the fact that dam removal or culvert replacement sometimes results in short-term wetland loss.

The new RGL describes specific considerations for making credit determinations. Further, the RGL makes it clear that wetland loss resulting from dam removal will not require compensatory mitigation. Perhaps most importantly, the RGL gives district engineers latitude to determine the number of mitigation credits produced and to consider local conditions in their determinations, although they will still prefer on-site and in-kind mitigation (meaning, to mitigate impacts that occur nearby and are of the same type as the mitigation project, e.g., fish passage credits could be used for fish passage impacts).

For owners that have been considering removing dams or other in-water structures, this guidance may offer opportunities, but we should caution that those opportunities are constrained by limited availability of mitigation banks and the effort needed to create one, by the need for close coordination and agreement with any available in lieu fee programs, and by limited availability of in-kind permittee-responsible mitigation needs. If those constraints can be overcome, the RGL will allow the long-term value of the removal to be considered and more consistently credited and monetized through mitigation banks or in-lieu fee programs or, if such programs are not available, for the dam owner’s own mitigation responsibilities.

 

©2018 Pierce Atwood LLP. All rights reserved.

Congress Enacts Legislation to Promote New Hydropower Development

On October 23, 2018, President Trump signed into law the America’s Water Infrastructure Act of 2018 (AWIA), S. 3021, a comprehensive water resources bill that includes provisions specifically targeted to promote new hydropower development.  The AWIA includes a package of hydropower bills that were previously approved by the U.S. House or Senate.  These include bills to promote new hydropower development at non-powered dams, new closed-loop pumped storage hydropower, new hydropower at qualifying conduit facilities, as well as longer preliminary permit terms and start of construction deadlines for new projects.  The legislation also provides incentives for redevelopment and modernization at existing projects during the license term.

BACKGROUND

Each individual bill that comprises the AWIA has been pending before Congress in one form or another for several years.  Certain of these provisions were included in the comprehensive energy bill that failed to pass at the end of 2016.  Since then, the bills have each been individually reintroduced before Congress and followed individual tracks.  They were only recently combined into the AWIA bill.  The bill passed the Senate by unanimous consent on September 4, 2018.  It passed the House by a vote of 99-1 on October 10, 2018, with Congressman Mike Lee of Utah as the sole dissenting vote.

THE AWIA

The AWIA is composed of five major categories of hydropower reform: (1) extending preliminary permit terms and start of construction deadlines for new construction projects; (2) promoting new, small conduit hydropower facilities; (3) promoting hydropower development at existing nonpowered dams; (4) promoting development of closed-loop pumped storage projects; and (5) incentivizing investments and modernization projects at existing hydropower facilities.

First, the AWIA amends the Federal Power Act (FPA) to authorize the Federal Energy Regulatory Commission (FERC) to issue preliminary permits for up to four years, instead of the previous three-year limit.  The legislation also authorizes FERC to extend a preliminary permit once for no more than four years, as opposed to the previous two years.  This increases the total possible preliminary permit term from the current limit of five years to a possible eight years.  The AWIA also codifies FERC’s current practice of issuing a new preliminary permit after the expiration of a permit under extraordinary circumstances.  With regard to newly licensed projects, the AWIA authorizes FERC to extend the time a licensee has to commence construction under a license for up to eight years beyond the two years allotted under the license.  Prior to enactment of the AWIA, FERC could extend the license once for no more than two years.  This increases the total possible time to commence construction of a newly licensed project from four years to 10.  These changes should facilitate developers’ ability to take projects from feasibility investigation to project completion without the recurring fear of expiring permits and frequent need for special legislation to extend license construction deadlines.

The AWIA also amends FERC’s current policy on the collection of annual charges for new projects.  Under current regulations, private licensees of unconstructed projects must begin paying annual charges on the date by which they are required to commence construction, or if that deadline is extended, no later than four years after the issuance date of the license (i.e., no later than four years after license issuance).  The legislation changes this policy to provide that annual charges for unconstructed projects commence at the later of (1) the date by which the licensee is required to commence construction, or (2) the date of any extension of the construction commencement deadline.  Because FERC is now authorized under the AWIA to extend the commence construction deadline for up to eight years, this provision of the legislation delays the start of annual charges up to 10 years after license issuance.  These provisions of the AWIA do not distinguish between private licensees and state and municipal licensees, who under current regulations are not required to start paying annual charges until the commencement of project operations.  However, the language appears to permit commencement of annual charges at a later date, allowing FERC to preserve its current regulations on the timing of annual charges paid by state and municipal licensees.

Second, the AWIA directs FERC to issue a rule establishing an expedited process for licensing non-federal hydropower projects at certain existing nonpowered dams.  In establishing this expedited process, the legislation requires FERC to convene an interagency task force with appropriate federal and state agencies and Indian tribes to establish licensing procedures that, to the extent practicable, ensure that such projects will not result in any material change to the storage, release, or flow operations of the nonpowered dam.  This appears aimed at ensuring, if possible, that federal licensing will not result in impairment of dams for their existing nonpower purposes such as irrigation and water supply.  Qualifying projects must not have been previously authorized for hydropower and must use for generation the withdrawals, diversions, releases, or flows from an existing dam, dike, embankment, or other barrier that is or was operated for the control, release, or distribution of water for agricultural, municipal, navigational, industrial, commercial, environmental, recreational, aesthetic, drinking water, or flood control purposes.  Qualifying projects also must not propose to materially change the operations of the nonpowered dam.  The expedited licensing process would result in an order not later than two years after receipt of a completed license application.  The AWIA also directs FERC and the Secretaries of the Army, the Interior, and Agriculture, within 12 months, to develop a list of existing nonpowered federal dams with the greatest potential for non-federal hydropower development.  The Secretary must provide the list to Congress and make it available to the public.

Third, the AWIA directs FERC to issue a rule establishing an expedited process for licensing closed-loop pumped storage projects.  Like the provisions for expedited licensing of projects at existing nonpowered dams, the legislation requires FERC to convene an interagency task force to coordinate the regulatory authorizations required to construct and operate closed-loop pumped storage projects.  Although leaving to FERC to develop a definition for “closed-loop pumped storage,” qualifying pumped storage projects must cause little to no change to existing surface and groundwater flows and uses and be unlikely to adversely affect species listed as threatened or endangered under the Endangered Species Act.  This would appear to narrow the class of qualifying projects considerably.  An expedited licensing process would result in an order not later than two years after receipt of a completed license application.  The AWIA also directs FERC to hold a workshop to explore potential opportunities for development of closed-loop pumped storage projects at abandoned mine sites and provide guidance to assist applicants for such projects.

Fourth, the AWIA amends the FPA with respect to the criteria and process to qualify as a qualifying conduit hydropower facility.  Under the 2013 Hydropower Regulatory Efficiency Act, certain hydropower facilities located on non-federally owned conduits with installed capacity of up to 5 megawatts (MW) are not required to be licensed or exempted by FERC.  The AWIA increases the size limitation to 40 MW for such facilities.  It also reduces the time for FERC to make a qualifying conduit determination decision from 45 to 30 days after an entity files a notice of intent to construct such a facility.

Fifth, the AWIA directs FERC, when determining the term of a new license for an existing project, to give equal weight to project-related investments by the licensee under the existing license, including rehabilitation or replacement of major equipment, and investments proposed under the new license.  This is a modification to FERC’s license term policy issued in 2017, which exempts all “maintenance measures” from consideration toward a new license term.  The AWIA allows a licensee to seek a determination from FERC, within 60 days, on whether any planned, ongoing, or completed investment would be considered by FERC in determining a new license term.

IMPLICATIONS

The hydropower provisions included in the AWIA bill are a meaningful first step in modernizing the hydropower licensing process.  They are intended to generate renewed interest in new hydropower by allowing licensees more time and certainty to secure required approvals and financing for new projects, which was a challenging feat under current deadlines.  While the majority of the provisions in the AWIA are intended to promote new hydropower development, Congress also sought to promote major modernization and rehabilitation projects at existing hydropower projects by ensuring that the investments in such projects are rewarded in the term of a new license.

The AWIA does not include a number of other hydropower relicensing reforms that were included in the bipartisan Senate energy bill in 2016.  These include provisions: (1) designating FERC as lead agency for coordinating federal authorizations from all agencies needed to develop a project; (2) authorizing FERC to refer agency disputes to the Council on Environmental Quality; (3) requiring resource agencies to give equal consideration to developmental and non-developmental values when imposing mandatory conditions or prescriptions; and (4) expanding the definition of renewable energy for federal programs to include all forms of hydropower.  Unless these reforms are passed in the lame duck session, they must be reconsidered in the new 116th Congress beginning in 2019.

 

© 2018 Van Ness Feldman LLP
This post was written by Sharon White and Michael A. Swiger of Van Ness Feldman LLP.

EPA Proposes Affordable Clean Energy Rule

On August 21, 2018, the Environmental Protection Agency (EPA) issued a proposed rule pursuant to section 111(d) of the Clean Air Act (CAA) that would establish emission guidelines for states to develop plans to limit carbon dioxide (CO2) emissions from existing fossil-fired power plants.  The proposed Affordable Clean Energy (ACE) rule would replace the 2015 Clean Power Plan (CPP), which EPA is proposing to repeal (in a separate rulemaking) on the grounds that the CPP exceeded the agency’s authority under the CAA.

Core elements of the proposed ACE rule include: (1) a determination of the best system of emission reduction (BSER) for CO2 emissions from coal-fired power plants; (2) a list of “candidate technologies” states can use when setting CO2 performance standards for affected plants; (3) a new preliminary applicability test for determining whether a physical or operational change made to a power plant may be a “major modification” triggering New Source Review (NSR); and (4) new implementing regulations for establishing emission guidelines under CAA section 111(d).

Section 111(d)

EPA is proposing the ACE rule pursuant to section 111(d) of the CAA.  This section directs EPA to promulgate regulations establishing a federal-state process for setting standards of performance limiting emissions from existing sources for pollutants not otherwise regulated in other specified sections of the CAA.  Implementing section 111(d) is a three-step process.  First, EPA issues a “guideline” for states to use in developing compliance plans that include standards of performance for stationary sources within a particular source category.  The guideline identifies what EPA determines is the BSER for the relevant sources within the source category.  Second, each state submits a plan to EPA that includes standards of performance for the covered sources in the state.  Third, EPA approves or disapproves of the state plans.  If a state fails to submit an approvable plan, the CAA requires EPA to impose a federal plan.

Proposed BSER Determination

EPA is proposing to define BSER for CO2 emissions from existing coal-fired power plants as heat-rate efficiency improvements based on a range of “candidate technologies.”  This “inside the fence” BSER determination reflects a different approach than what was used in the CPP.  The CPP determined the BSER for power plants based on reductions achievable not only through inside-the-fence measures such as heat rate improvements but also through shifting of generation from higher-emitting to lower-emitting or zero-emitting plants.  As noted above, EPA has proposed to find that such an “outside-the-fence” approach to determining BSER exceeds the agency’s authority under the CAA.

EPA has identified a list of the “most impactful” heat rate improvement measures.  EPA is proposing that this list serve as the “candidate technologies” or “checklist” of BSER technologies, equipment upgrades, and best operating and maintenance practices for coal-fired power plants.  These candidate technologies are:

  • Neural Network/Intelligent Sootblowers

  • Boiler Feed Pumps

  • Air Heater and Duct Leakage Control

  • Variable Frequency Drives

  • Blade Path Upgrade (Steam Turbine)

  • Redesign/Replace Economizer

  • Improved Operating and Maintenance Practices

States would consider the above technologies in establishing standards of performance for existing coal-fired power plants.  EPA is proposing that performance standards will set a specific allowable emission rate expressed on a pound CO2 per MWH-gross rate for each affected unit based on the application of the appropriate candidate BSER technologies to each unit.

EPA explains in the proposed rule that it does not have sufficient information to make a BSER determination with respect to heat rate improvements at natural gas-fired simple‑cycle turbines or combined cycle turbines.  The agency is soliciting comment on this issue.  Previously, EPA determined that heat rate improvement measures at natural gas‑fired combustion turbines would not be considered BSER because such measures cannot provide meaningful reductions at reasonable cost.

State Compliance Plans

The proposed rule would provide each state with broad discretion in establishing specific performance standards for particular plants.  The proposal also allows state plans to rely on emission averaging and trading among affected coal‑fired units at a particular plant.  However, EPA has proposed that state plans should not be allowed to incorporate averaging and trading among different plants, such as a state-wide or interstate cap-and-trade program.  Nor will any credit be given for CO2 emissions reductions achieved through increased generation of renewable energy or gas-fired generation not covered under the section 111(d) regulatory program.  The proposed rule explains that such an approach would be inconsistent with EPA’s proposed “inside-the-fence” interpretation of BSER under section 111.

Permitting Under NSR Program

EPA is proposing revisions to the NSR permitting program to make it easier for power plants to adopt heat rate improvements without triggering NSR obligations.  The NSR program is a preconstruction permitting program.  An NSR permit is required not only before construction of a new major stationary source; it is also required before modifying an existing major source if the modification will result in a significant emissions increase of any NSR-regulated pollutant.  Projects that cause a significant increase in annual emissions may trigger onerous NSR permitting requirements, which include installation of state-of-art emission control technologies, prescriptive air quality modeling, and extensive public notice and comment procedures.

To avoid widespread triggering of NSR permitting requirements from heat rate improvement projects undertaken by affected coal‑fired plants, EPA is proposing to amend the NSR regulations to include an hourly emissions increase test.  Under the proposed revisions, a non-excluded physical or operational change to an electricity generating unit would only trigger NSR if the change resulted in an increase in the unit’s maximum hourly emissions rate under procedures proposed in the ACE rule, as well as a significant emission increase in annual emissions under the current NSR regulations.

As drafted, the proposed maximum hourly emission increase test would be available to any electricity generating unit, including natural gas-fired units that would not be subject to regulation under section 111(d).

States with approved NSR programs would have the option but would not be required to adopt the hourly emission increase test ultimately promulgated as part of the NSR provisions in their SIPs.  For those states with delegated NSR programs that are acting on behalf of EPA, the NSR permitting process would have to include any changes that are ultimately made to the federal NSR provisions as they would be administering the federal program.

EPA is proposing that the potential revisions to the NSR permitting program are severable from the rest of the ACE rule.

Implementing Regulations for Emission Guidelines under Section 111(d)

The proposal revises the general implementing regulations for section 111(d) that govern how EPA issues emission guidelines, and how and when states develop and submit their plans.  These changes would apply for all future section 111(d) rules.  Proposed changes include the following:

  • Timing:  The proposal updates timing requirements regarding submission of state plans and EPA action on those state plans.

    • State submissions:  EPA is proposing to provide states three years to develop state plans.  The existing implementing regulations provide nine months.

    • EPA action:  The proposal would allow EPA 12 months to act on a complete state plan submittal.  The existing implementing regulations provide four months.

    • Federal plan:  The proposal would allow EPA two years to issue a federal plan after a finding of a state’s failure to submit an approvable plan.  The existing implementing regulations provide six months.

  • Criteria for state plans:  The proposal has completeness criteria for state plans that include administrative materials and technical support for state implementation of the plan.  EPA would have six months to determine completeness and would make that determination by comparing the state’s submission against the completeness criteria.

  • Variance provisions:  The proposal provides greater flexibility to states to adopt plans that include variances from the EPA guidelines that will allow, among other things, states to take into account the remaining useful life of the unit and other relevant factors in establishing a performance standard for a particular affected unit.

Next Steps

EPA will take comment on the proposal for 60 days after publication in the Federal Register and will hold at least one public hearing.  Depending on the exact date of Federal Register publication, this means comments will be due to EPA sometime in late October 2018.

Impacts of EPA Proposal

According to EPA, the proposed ACE rule would reduce the compliance burden by up to $400 million per year when compared to the CPP.  EPA estimates that the ACE rule could reduce overall 2030 CO2 emissions by up to 1.5% from projected levels without the CPP.

 

© 2018 Van Ness Feldman LLP
This post was written by Kyle W. Danish and Stephen C. Fotis  of Van Ness Feldman LLP.