By Roy Belden
The news in late May that Russia will ratify the Kyoto protocol means that power companies operating in countries outside the United States will have to take steps to limit carbon dioxide.
Russian President Vladimir Putin unexpectedly announced on May 21 that Russia would move rapidly to ratify the protocol. The protocol to the “United Nations Framework Convention on Climate Change” was adopted in 1997 and sets deadlines for reducing greenhouse gas emissions. The first compliance period is 2008 to 2012.
Just last December, a senior aide to Putin said Russia would not ratify the Kyoto protocol in its current form because the treaty would hamper economic growth in Russia. Russia’s abrupt turnaround may have been driven by concessions that Russia received from the European Union, including an invitation to join the World Trade Organization and an agreement to allow gas prices paid to Russian producers to double by 2010.
The Kyoto protocol will enter into force after it has been ratified by 55 or more countries whose combined emissions levels represent at least 55% of the carbon dioxide or CO2 emissions from industrialized Annex I countries in 1990. As of April 15, 2004, 122 nations had ratified the treaty, and those nations accounted for 44.2% of the 1990 CO2 emissions. Russia alone accounts for 17.4% of the 1990 CO2 emissions. The United States has rejected the treaty citing serious concerns about the potential effect of implementing dramatic reductions in greenhouse gas emissions on the US economy and asserting that large developing countries, such as China and India, should also be obligated to cut greenhouse gas emissions if the US is expected to do so.
Notwithstanding the Bush administration’s objections to implementing mandatory greenhouse gas emission reductions, state governments in the United States are pressing forward with their own efforts to address climate change issues on a statewide or regional basis. In May, the Connecticut legislature passed legislation that calls for the reduction in greenhouse gas emissions to 1990 levels by January 1, 2010, and 10% below the 1990 levels by January 1, 2020. The Connecticut legislation also requires the state Department of Environmental Protection to report annually on the progress toward achieving the mandated reductions. The measure had not yet been signed into law by the Connecticut governor as the NewsWire went to press.
Massachusetts Governor Mitt Romney released a comprehensive climate change protection plan in May that calls for the same levels of reductions in greenhouse gas emissions as Connecticut. The plan urges all sectors to partner with the state in reducing greenhouse gas emissions to 1990 levels by 2010. The plan calls for a further 10%reduction in greenhouse gas emissions by 2020 to be achieved through strict standards for coal-fired plants, the promotion of renewable energy, increased energy efficiency and cleaner burning vehicles. The Connecticut and Massachusetts efforts follow up on a regional commitment that the Conference of New England Governors and Eastern Canadian Premiers adopted in August 2001 to address greenhouse gas emissions.
In related news, an organization of state and local air pollution control officials unveiled a model mercury rule that states may consider as an alternative to the federal approach. Under the EPA rule, states have the option of participating in an EPA-managed cap-and-trade program or electing to adopt their own state programs. The model rule promoted by the state and local officials organization provides two options. The first option calls for an 80% reduction in mercury emissions by 2008, followed by a 90 to 95% reduction by 2012. The second option would require coal-fired power plants to reduce mercury emissions by 90 to 95% by 2008 with a possible four-year delay if pollution controls to reduce NOx (nitrogen oxide), SO2 (sulfur dioxide) and particulate matter are also installed. The EPA clean air mercury rule requires approximately a 50% nationwide reduction in mercury emissions by 2010 and about a 70% reduction by 2018. New Hampshire, New Jersey, Pennsylvania and other states are moving on their own to adopt mercury reduction standards that are more stringent than the clean air mercury rule. New Hampshire, for example, appears to be heading toward adopting an 80% reduction target by 2013. New Jersey has already adopted a mercury reduction target of 90% or 3.00 mg per megawatt hour by the end of 2007.
The Environmental Protection Agency released a final rule in November that explains what someone buying property must do to satisfy the “all appropriate inquiries” due diligence standard for recognizing certain defenses to potential Superfund liability associated with prior releases of hazardous substances. Under Superfund, liability may be imposed on a current “owner or operator” of a facility even if that entity did not contribute to pollution on a site. The new “all appropriate inquiries” rule will take effect on November 1, 2006.
In the interim, EPA will recognize either compliance with the new rule or completion of a phase I environmental site assessment conducted as in the past.
There are three defenses under Superfund to potential liability based on satisfying the “all appropriate inquiries” due diligence standard. The defenses are provided for the following categories of landowners:“innocent landowner,” “contiguous property owner” and “bona fide prospective purchaser.”
Under Superfund, an “innocent landowner” may be protected from liability if he or she acquires property without the knowledge that it is contaminated or likely to be contaminated and the landowner is not affiliated with or a counterparty to a contract with the entity that caused the contamination (other than a contract for sale or a service contract). Likewise, a “contiguous property owner” who acquires property that is or may become contaminated by an offsite source may be protected from liability if he or she demonstrates not only a lack of knowledge, but also no reason to know that the property was or could be contaminated by a release of hazardous substances from a neighboring property. In order to meet the requirement that a contiguous property owner did not know about any potential contamination at the property, a phase I report satisfying the “all appropriate inquiries” standard must be performed.
Under the third available defense, a “bona fide prospective purchaser” must purchase the property after January 11, 2002, complete a phase I site assessment and not be affiliated with or be a counterparty to a contract with an entity that is responsible for the contamination. Nevertheless, a person may qualify as a bona fide prospective purchaser even if he or she purchases the property knowing that it is contaminated or might be contaminated from the offsite migration of contaminants.
In the preamble to the new rule, EPA confirmed that a phase I report meeting the “2005 ASTM phase I report standards” will fully comply with the new rule. Further, EPA also recognizes that phase I reports prepared in conformance with the rule will be valid for one year prior to the acquisition date. Phase I reports older than that will need to be updated within one year prior to the date the property is acquired.
The Environmental Protection Agency announced in late November that it will reconsider four issues tied to the “clean air interstate rule.”The clean air interstate rule requires 28 eastern states and the District of Columbia to reduce nitrogen oxide, or NOx, and sulfur dioxide, or SO2, emissions from power plants and other pollution sources by 2015.
Several states, utilities and environmental groups filed petitions for reconsideration with EPA. Many of these same parties also filed lawsuits in the US appeals court in Washington challenging the rule. EPA will generally grant a petition for reconsideration if the petitioner can demonstrate that the objection is of central relevance to the rule and that it was impractical to raise the issue during the public comment period.
The first issue being reconsidered with whether there were inequities in the method used to apportion SO2 allowances to states that elect to use the EPA model SO2 trading rule. One petitioner argued that the allocation penalizes utilities with units that have lower emission rates because they may end up buying surplus allowances from utilities with high emission rate units that install pollution controls.
The second issue concerns EPA’s use of specific fuel adjustment factors to establish NOx budgets for each state. Several utilities argue that states that rely heavily on natural gas and oil to generate electricity are being required to make more significant reductions in NOx emissions than states that use coal. This is due to the way EPA granted greater weight in the fuel adjustment factors to states with more coal-fired units.
The third issue addresses the modeling inputs EPA used to determine whether Minnesota should be included in the PM2.5 portion of the clean air interstate rule. The fourth issue relates to whether Florida should be included in the ozone region under the rule.
The clean air interstate rule assigns each of the 28 affected states an emissions budget. Each state must comply in one of two ways. It can participate in an EPA administered cap-and-trade program that ratchets down NOx and SO2 emissions from power plants in two stages starting with an initial NOx cap in 2009 and an SO2 cap in 2010 followed by lower caps for both pollutants in 2015. Alternatively, a state may propose other emission reduction measures, including roping in other sectors besides power plants to spread the reductions across a wider number of facilities.
EPA is accepting comments on the four issues through January 13, 2006. The agency expected to make decisions on the issues by March 15, 2006. Meanwhile, the lawsuits have been consolidated into a lead case titled North Carolina v. EPA, and a decision in the case is not expected until late 2006 or early 2007. The clean air interstate rule is generally expected to survive the legal challenges since it is modeled after a “NOx SIP call rule” that remained largely intact after a protracted legal battle.
The Environmental Protection Agency took steps in October to clarify various provisions of the pretreatment discharge standards for wastewater that is sent by industrial users to local wastewater treatment plants. The pretreatment discharge standards require municipalities to set discharge limits to control industrial discharges into local sewage collection systems.
The new rule removes certain nonessential process requirements, including an order to sample for pollutants that are not present at a particular industrial facility. Instead, the industrial plant will be granted a monitoring waiver upon certifying that the pollutants are not present. Under the final rule, municipalities will have greater authority to grant general pretreatment permits covering a category of sources and the ability to use best management practices as an alternative to numeric discharge limits. Municipalities are also granted the flexibility to approve alternative sampling techniques. While industrial discharges will still have to meet the same federal discharge limits in the locally-enforced pretreatment programs, EPA believes that the rule changes will substantially reduce the compliance costs for industrial facilities. The rule became effective on November 14, 2005.
EPA released a new analysis in late October comparing the costs to implement the Bush administration’s “clear skies initiative” to the costs of several legislative alternatives pending in Congress. The analy sis showed the clear skies proposal is the least expensive of the proposals at $5.7 billion in 2020 with expected annual health benefits of $114 to $134 billion by 2020. The costs of competing pollution control measures introduced by Senators James Jeffords (I-Vermont) and Thomas Carper (DDelaware) were $50.8 billion and $9.5 billion, respectively, by 2020 with generally much higher anticipated annual health benefits. The administration is hoping that the new analysis will prompt Congress to move on its clear skies initiative. The initiative has remained stalled, and action on it remains unlikely.
In California, two lawsuits were filed with the Alameda County superior court challenging the issuance of new conditional use permits for more than 3,000 existing wind turbines in the Altamont Pass area. The 13-year permits, issued by the Alameda County board of supervisors, imposed new conditions to reduce bird deaths, including the immediate shutdown of the most dangerous 2% of wind turbines and restrictions on winter operation when turbines pose the most danger to raptor and songbird populations. Environmental groups charge that an environmental impact review under the California Environmental Quality Act should have been completed before the permits were issued.
In Maryland, the public services commission took steps in October to implement a renewable portfolio standard that was enacted in 2004. The Maryland renewable portfolio standard separates renewable electric generation into two categories. Tier 1 facilities include solar energy, wind power, qualifying biomass and methane from landfills or wastewater treatment plants. Tier 2 includes waste-to-energy plants, the use of poultry litter as fuel and certain hydroelectric projects. Maryland utilities will be required to supply 1% of their electricity from tier 1 renewable fuels by 2006. The amount will increase to 7.5% by 2019. Utilities will need to provide 2.5% of their electricity from tier 2 sources by 2006.
A draft environmental impact statement completed in October recommends approval of a proposed liquefied natural gas terminal to be built at the Port of Long Beach in California. The Federal Energy Regulatory Commission and the Port of Long Beach jointly prepared the environmental study. The draft impact statement concludes that the proposed LNG terminal is environmentally acceptable. The terminal will have the capacity to supply 10% of the natural gas needs of California.
Finally, EPA published a proposed rule in October that would exempt the reporting of NOx emissions in amounts less than 1,000 pounds per 24 hours under Superfund and the Emergency Planning and Community Right to Know Act, provided the releases are from combustion activities and not accidents or malfunctions. Under those laws, industrial facilities are currently required to report NOx emissions if they exceed 10 pounds during any 24-hour period. Sources usually notify the government of any continuous emissions of NOx that exceed this threshold. The proposed rule will provide some administrative reporting relief to facilities that emit relatively small amounts of NOx.