Environmental update 

Environmental Update

February 18, 2015 | By Andrew Skroback in New York

The US Environmental Protection Agency missed a January 2015 deadline to finalize a rule to control carbon dioxide emissions from new power plants. It announced, at the same time, that it would also miss a June deadline to finalize a corresponding “Clean Power Plan” rule to reduce emissions from existing or modified power plants.

Although the two rules have been subject to different comment periods and will be based on different provisions of the Clean Air Act — section 111(b) for new plants and section 111(d) for existing and modified plants — EPA intends to defer completion of both to an unspecified date in “mid-summer.”

EPA said that it will also simultaneously issue a model implementation plan that it is developing for states to follow as a guide to drafting their own state implementation plans for existing and modified plants. EPA could impose the model plan on any states that fail to come up with their own plans to meet CO2 emissions targets.

The agency said the delay is needed because new issues have been identified that will have to be addressed by better coordinating the rules covering new, existing and modified plants.

EPA extended the comment period earlier for the proposed rule governing existing and modified plants to December 1, 2015 and received more than two million comments. The proposal would require states to reduce carbon dioxide emissions from existing plants by 30% from 2005 levels by 2030. The delay may allow EPA to address a number of predictable consequences in a more coordinated fashion, including potential system reliability issues. However, the move also appears designed to delay efforts by Republicans in Congress to block the initiative.

Opponents argued that the rules will accelerate closures of older, dirtier coal-fired power plants and essentially prohibit new coal facilities from being built due to the need for expensive carbon-capture technology to meet the expected standards. A number of states and industry groups have already sued EPA over the proposals and other suits are expected. A three-judge panel in the US Court of Appeals for the District of Columbia will hear oral arguments on April 16 in several lawsuits challenging whether EPA has authority to regulate carbon dioxide emissions from existing power plants under section 111(d) of the Clean Air Act that been consolidated under the names In re Murray Energy Corp. and Murray Energy Corp. v. EPA.

Congress is also expected to get into the act. The Senate majority leader, Mitch McConnell (R-Kentucky), tried procedural moves to derail the existing plant rule in 2014 when it was first proposed, but the effort was considered premature because the proposed rule was not final. Congress could try to bar use of federal funds to implement the final rule in a “must pass” spending bill that may be hard for President Obama to veto without shutting down part of the government.

California Cap-and-Trade

The California Air Resources Board — CARB, for short — decided in November that 88,955 offset credits in the state cap-and-trade program are invalid. Each credit allows the holder to emit one ton of carbon dioxide equivalent. The regulated entities that hold the invalid credits will have to buy new credits or reduce emissions.

Utilities and other entities that are subject to the California cap-and-trade program may use offset credits to meet up to 8% of annual compliance requirements. CARB has adopted offset protocols for urban forest projects, livestock methane digester projects as well as projects that destroy ozone-depleting substances and capture methane from mines. Offset credits may be generated by these types of projects.

In May 2014, CARB notified holders of 231,154 offset credits that it was investigating whether the credits are valid. The credits were transferred into a special CARB account pending the results of the investigation. They could not be sold or transferred in the meantime.

The offset credits were generated by two separate offset projects to destroy ozone-depleting substances at the Clean Harbors incineration facility in El Dorado, Arkansas. CARB regulations allow invalidation of offsets if the “offset project activity and implementation of the offset project was not in accordance with all local, state, or national environmental and health and safety regulations during the Reporting Period for which the [CARB] offset credit was issued.”

CARB did not question whether the offsets were real, quantified or verified. Instead, it invalidated the 89,955 credits associated with one of the two destruction projects because the El Dorado facility was alleged to be in non-compliance with the federal Resource Recovery and Conservation Act. CARB determined that the other 142,199 offsets were created during destruction of ozone-depleting substances that were generated after the alleged violation was cured.

CARB said Clean Harbors failed to dispose of the waste after destroying ozone-depleting substances as a hazardous waste in violation of the law. Clean Harbors was not in compliance for two days in early February 2012. Clean Harbors entered into a consent agreement with EPA in April 2014 that settled these as well as other alleged violations at the facility.

Future purchasers of credits should weigh the risk of invalidation when negotiating to purchase credits and consider obtaining insurance to cover the risk.

Northern Long-Eared Bats

The US Fish and Wildlife Service said in January that it is considering listing the northern long-eared bat as “threatened” — rather than “endangered” — under section 4(d) of the Endangered Species Act.

The Fish and Wildlife Service first proposed listing the bat as endangered in October 2013 after finding there has been a severe decline in the species due to white-nose syndrome, a fungal disease affecting cave-hibernating bats. The bat is found in 37 states, from Maine to North Carolina on East Coast, west to Oklahoma and north into the Dakotas, Montana and Wyoming. White-nose syndrome is found in most areas where the bats live, but is particularly severe in the northeast.

The Endangered Species Act prohibits any “take,” including harming, harassing or killing, of endangered and threatened species, unless a permit has been granted.

An endangered listing indicates that the species is in danger of extinction in a significant part of the area where it lives, while a threatened designation indicates the species is likely to become endangered in the foreseeable future. If a species is listed as threatened, the Fish and Wildlife Service may order protective measures deemed necessary and advisable for conservation of the species without unduly burdening persons with regulations that do not further its conservation.

In areas of the country affected by white-nose syndrome, companies would still be allowed to engage in forest management practices, maintenance and limited expansion of transportation and utility rights-of-way, removal of trees and brush to maintain prairie habitat, and limited tree removal projects if these activities protect bat maternity roosts and hibernacula. The strongest restrictions would apply during the two-month pup-rearing season in June and July when the bats occupy their hibernacula and are most vulnerable. Incidental takes of bats would be allowed, without the need for permits, in parts of the country that are not affected white-nose syndrome.

Various energy and timber groups argue that an endangerment listing would severely harm their industries and have been pressing for the less severe “threatened” listing. However, the proposed rule may offer only limited relief compared to an “endangered” listing because it would not exempt incidental takes associated with wind, solar, mining, construction, agricultural and oil and gas activities.

The Fish and Wildlife Service has extended the time to April 2, 2015 to make a final decision about how imperiled the bats are currently. The latest proposal appeared in the Federal Register on January 16, 2015. The public comment period runs through March 17, 2015.

— contributed by Andrew Skroback in Washington, DC