Transcript EPA*s Clean Power Plan The Sky is the Limit

EPA’s Clean Power Plan
The Sky is the Limit
Richard Alonso, Bracewell & Giuliani LLP
Texas Environmental Superconference
August 7, 2015
Let’s Get This Party Started
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“Legacy Issue”
Federal standards for new plants
State standards for existing plants
Overview of Clean Power Plan
Legal vulnerabilities
What to expect over next 2 years
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A Legend In His Own Mind
• State of the Union Message – 2013, 2014, 2015
• President’s “Climate Action Plan”
• White House National Security Strategy
• Proposed 2015 Budget
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$7.4 billion to subsidize deployment of clean energy
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$4 billion for states that go beyond Clean Power Plan
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$500 million for new “Green Climate Fund”
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$239 million for EPA’s “Clean Power Plan”
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$100 million for expedited permitting of renewable energy projects
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International Efforts – World of Trouble
• Paris Conference in December 2015
• “Landmark” U.S. – China Agreement
• China’s GHG emissions to peak by 2030
• China to get 20% of power from
renewables by 2030
• U.S. to Reduce GHG emissions from
2005 levels 26-28% by 2025
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WHERE’s THE BEEF?
US Commitment:
Reduce GHG emissions from 2005 levels 26-28% by 2025
• Submitted as the U.S. “Intended Nationally Determined
Contribution” (INDC) for the Paris Conference
• No evidence of how goal was calculated
• Bookbinder analysis, shortfall of 330 MMT -http://elementviconsulting.com/president-obamas-dubiousclimate-promises/
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Where Do Reductions Come From?
Wishing Upon a Star
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Clean Power Plan
2017-2025 fuel economy standards for light duty vehicles
2019 fuel economy standards for heavy duty vehicles
Energy efficiency standards
“Actions to cut methane emissions from landfills, coal
mining, agriculture and oil & gas systems”
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Section 111(b) NSPS – Down and Out for New Coal
• Apply to any plant constructed after proposal date
• An emission rate standard that can be achieved with the
“best system of emission reduction that has been
adequately demonstrated” (BSER)
• Coal-fired units
1,100 lbs/MWh (nail in the coffin)
• NGCC > 850 mmBtu/hr 1,000 lbs/MWh
• NGCC < 850 mmBtu/hr 1,100 lbs/MWh
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Section 111(d) – the Clean Power Plan for
Existing Power Plants – The Star of the Show
• With new source standards in place, EPA can require states
to submit a plan with standards for existing sources
• EPA publishes “Emissions Guidelines” to guide states in
setting standards for existing sources
• Emissions Guidelines based on “best system of emission
reduction that has been adequately demonstrated”
• State plan must be submitted for EPA approval. If not
“satisfactory,” then EPA must impose a federal plan
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Proposed Clean Power Plan – A House of Cards
Best System of Emission Reduction includes 4 Building Blocks
• An average heat rate improvement of 6% for all existing coal-fired
plants
• Change dispatch to disfavor coal until combined cycle natural gas
plants have average capacity factor of 70%
• Requirements for construction and operation of more wind and
solar
• End-user energy efficiency programs to improve statewide
efficiency by 1.5% a year from 2020 to 2030
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Proposed Clean Power Plan – State Targets –
Picking Winners and Losers
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What’s Wrong with this Picture; On Shaky Ground
• Threshold Issue – Section 112 vs. 111(d)
• House Language – No source category regulated under Section
112 can be regulated under Section 111(d)
• Senate Language – No pollutant regulated under Section 112 can
be regulated under Section 111(d)
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Constitutional Issues
Statutory issues – “outside the fence line”
Issues with Individual Building Blocks
Multi-State Plans
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Doesn’t Have a Chance (Not A Chance in H*ll)
• “When an agency claims to discover in a long-extant
statute an unheralded power to regulate ‘a significant
portion of the American economy,’ … we typically greet
its announcement with a measure of skepticism. We
expect Congress to speak clearly if it wishes to assign to
an agency decisions of vast ‘economic and political
significance.’” UARG v. EPA, No. 12-1146, slip op. at 19
(U.S. June 23, 2014).
• “We acknowledge the potential for greenhouse-gas
BACT to lead to an unreasonable and unanticipated
degree of regulation, and our decision should not be
taken as an endorsement of all aspects of EPA’s current
approach, nor as a free rein for any future regulatory
application of BACT in this distinct context.” Id. at 28.
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Why Issue a Legally Vulnerable Rule? – Opportunity
Doesn’t Knock Twice; You Have To Start Somewhere
• The 2010 Settlement Agreement
• CO2 Standards for new and existing power plants by May 2012
• CO2 Standards for new and existing refineries by November
2012
• The Obama Legacy – June 2013 Climate Action Plan
• The U.S.- China Agreement
• The Paris Conference
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One Step At A Time
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Final Rule – Late Summer or Early Fall
Proposed Federal Plan – Before year end
Final Federal Plan – Year end 2016
State Plans due – Fall 2016, 2017,
or 2018 (for multi-state plans)
• Approval or Disapproval of 49 state plans
• Proposed Federal Plans for States that are not
participating in CCP or those with disapproved plans
• Final Federal Plans
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Possible Federal Plan – Life is A Box of Chocolates;
You Never Know What You Are Going to Get
• CO2 Trading Program
• Applicable to Sources; not
States
• Mirror of NRDC Proposal
• Credit smokestacks with
beyond fence-line activities
• Enforceability Issues
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Litigation – Fighting Like Cats and Dogs
• Petitions to Stay the Rule Pending Review – DC Circuit and
perhaps Supreme Court
• Challenge to CPP– DC Circuit
• Challenge to CPP – Supreme Court
• Challenge to Federal Plan – DC Circuit
• Challenge to Federal Plan – Supreme Court
• Challenges to State and Federal Plans – State courts and
every U.S. Court of Appeals?
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Timing of Key Legal Challenges – Time Will Tell
• DC Circuit Decision on Stay:
late 2015 - early 2016
• Possible Supreme Court
Decision on Stay: early - mid
2016
• DC Circuit Decision on CPP –
late 2016 - early 2017
• Supreme Court Decision on
CPP – Late 2017 - early 2018
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At the End of the Day
• Highly Unlikely to be Implemented
• Political and Practical Reasons
• Legal Reasons
• Final rule will be quite different from proposal
• If implemented, won’t be on proposed schedule
• Only enforcement mechanism against a State is a federal
plan
• This is not the end of GHG regulation – The Ship Has Sailed
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Contact Us
Richard Alonso
Partner
T: +1.202.828.5861
E: [email protected]
bgllp.com/alonso
Richard Alonso advises manufacturers and energy companies on
environmental, permitting, compliance and enforcement issues
before state and federal agencies.
His practice focuses on Clean Air Act issues such as complex New Source
Review applicability and permitting, mobile source regulations, EPA
rulemaking efforts, legal challenges to EPA actions, and Clean Air Act
enforcement defense and compliance counseling.
Sandra Y. Snyder
Associate
T: +1.202.828.5810
E: [email protected]
bgllp.com/snyder
Sandra Snyder represents refiners, natural gas exploration and
production companies, manufacturers, industry trade
associations, and other energy companies in environmental
litigation in state and federal courts, as well as before regulatory
agencies.
Her prior work experience as a chemical engineer at one of the world's
largest energy companies provides her with an inside understanding of
her clients’ concerns, including the interplay between environmental
compliance and business planning considerations, as well as
maintenance, safety, and equipment issues.
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