By Mary Ellen Ternes
Gulf of Mexico Oil Spill
Deepwater Horizon, April 20, 2010
At about 10:00 pm, the evening of Tuesday, April 20, 2010, a fire broke out on the Deepwater Horizon oil rig in the Gulf of Mexico, a rig reportedly leased by BP PLC, while owned and operated by drilling contractor Transocean Ltd. The rig sank into the Gulf on Thursday, April 22, 2010, at which time the Coast Guard reportedly stated that it saw no evidence of surface or underwater oil leaking from the well which is located at a depth of about a mile. However, a significant leak was then reported to be coming from a riser on the rig. Remote controlled submersibles were initially used in an attempt to stop the leak, with no success. The “blowout preventer” intended to stop such an event reportedly did not work. On May 8-9, 2010, an attempt to use a secondary containment “dome” as a capture and directional method of containing the oil failed due to hydrate formation inside the top of the dome blocking the outlet. Other attempts to mitigate the release include drilling relief wells, which will require months to complete. Dispersants continue to be heavily employed, with some application from planes during rough seas. Eleven workers remain missing and are presumed deceased.
While President Obama unveiled plans to expand offshore oil and gas drilling on April 2, 2010, given the magnitude of this oil spill, and the anticipated far-reaching consequences of this spill, there seems little doubt that this oil spill will impact the Obama Administration’s consideration of these new off-shore drilling plans. Other issues that will probably be considered include degree of federal oversight of preventative measures, particularly in deepwater environments where normal operation may not be reliable, method of implementation, such as required use of audio control devices capable of remote operation, in addition to large scale dispersant use and other measures to protect natural resources.
Water: Recommended Disclosure of Risks Arising from Water Shortages
Last quarter, we discussed the Securities and Exchange Commission’s Guidance regarding public companies’ disclosure of business risks arising from climate change. Building on this SEC guidance, a nationwide group of investors and public interest groups, Ceres, released, “Corporate Reporting on Water Risk: A Benchmark Study of 100 Companies.” This report highlights reported failures by public companies to disclose business risks arising from water shortages and recommends that public companies also disclose water risk factors.
Use of Clean Water Act to Address Climate Change? Read This!
Pursuant to a March 22, 2010 Federal Register Notice, EPA is considering utilizing Clean Water Act (CWA) authority to address ocean acidification, as part of a settlement with the Center for Biological Diversity (CBD) in a case filed in the Western District of Washington. Specifically, the CBD alleged that excessive amounts of carbon dioxide absorbed in ocean water acidifies the ocean posing a risk to marine life, causing Washington state’s ocean waters to fail to achieve water quality standards.
The use of the CWA to address climate change indirectly by identifying ocean acidification as the water quality impairment seems remote. The goal of the CWA, "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters,” is achieved through establishing the Impaired Waters Listing and Total Maximum Daily Load (TMDL) Program. Through this program, lists of "water-quality limited segments," are developed including segments that will not meet water quality standards for a particular pollutant even after a technology-based CWA permit is in place, as well as a pollutant “budget” or Total Maximum Daily Load (TMDL), the maximum amount of a pollutant that can enter a waterbody, also known as the loading capacity, so that the waterbody will meet applicable water quality standards. The TMDL allocates that pollutant load to point sources (Wasteload Allocation or WLA) and nonpoint sources (Load Allocation or LA) which include both anthropogenic and natural background sources of the pollutant. Approved wasteload allocations for point sources must be implemented in applicable National Pollutant Discharge Elimination System (NPDES) permits.
This CWA program does not include a regulatory program to address nonpoint sources of pollutants such as sources of air deposition. However, implementation measures outside the TMDL can identify specific voluntary programs or State-required reductions in air emissions that could be used to address particular air sources contributing to ocean acidification.
EPCRA: Lifting Stay on Requirement to Report Hydrogen Sulfide Pursuant to EPCRA 313
Watch out petroleum bulk terminals and other H2S sources, EPA has announced that it is considering lifting its 1994 administrative stay of the H2S reporting requirements under EPCRA 313. EPA has finished its review and believes H2S is harmful, i.e., that “hydrogen sulfide can reasonably be anticipated to cause serious or irreversible chronic human health effects at relative low doses and thus is considered to have moderately high to high chronic toxicity.” See 75 Fed. Reg. 8889 (Fed. 26, 2010), available here. EPA’s reconsideration of H2S in the EPCRA may be relied upon by environmental advocacy groups in petitions to list H2S as a Hazardous Air Pollutant (HAP) governed by CAA Section 112.
Hazardous Waste
Hazardous Waste Entities, take note, on March 18, 2010, EPA published by direct final rule technical revisions to the hazardous waste rules largely to conform portions of these rules to other promulgated rules and include corrections where appropriate. Rules impacted include: general requirements, 40 CFR part 260; hazardous waste identification requirements, 40 CFR part 261; manifesting and hazardous waste generator requirements, 40 CFR part 262; hazardous waste transporter requirements, 40 CFR part 263; related manifesting and emergency preparedness requirements, 40 CFR parts 264 and 265; requirements for recycling of hazardous wastes in a manner constituting disposal, 40 CFR part 266; land disposal restrictions requirements, 40 part 268; hazardous waste permit program requirements, 40 CFR part 270.
Clean Air Act New Source Review: Best Available Control Technology for Greenhouse Gases
Regarding EPA’s greenhouse gas CAA rule development, you may recall that, in the wake of the U.S. Supreme Court’s decision in Massachusetts v. EPA, 549 U.S. 497 (2007), on December 7, 2009, EPA issued an Endangerment Finding, and a Cause or Contribute Finding pursuant to CAA 202(a), which supports EPA’s promulgation of its GHG Emission Standards for Light-Duty Vehicles, just finalized on April 1, 2010. These standards are the first standards subjecting GHG emissions to regulation pursuant to the CAA.
As previously reported, the result of these actions are significant in that they will automatically trigger application of the Prevention of Significant Deterioration (PSD) requirement to GHG emissions pursuant to CAA 165 and 169, which apply the Best Available Control Technology (BACT) emissions control requirement to "each pollutant subject to regulation" under the CAA. EPA implements these statutory provisions through 40 CFR 52.21(b)(50), which applies BACT to all “regulated NSR pollutants.” Due to the PSD thresholds of 100 and 250 tons per year, and Title V permitting threshold of 100 tons per year, EPA proposed a “Tailoring Rule,” to raise the PSD and Title V thresholds to levels recognizing the higher emission rates of greenhouse gases, 25,000 short tons of carbon dioxide equivalent (CO2e) greenhouse gas emissions per year. The 25,000 ton CO2e threshold is also somewhat consistent with EPA’s Mandatory Greenhouse Gas Reporting Rule, promulgated on December 30, 2009, which utilizes a threshold of 25,000 metric tons of CO2e from some source categories.
However, more recently, EPA has announced that it expects to raise this PSD threshold to a level “substantially higher” than 25,000 short tons of CO2e. This direction seems to be provide relief at the outset, however, CAA sources realize that CAA permitting utilizes a “potential-to-emit” approach, rather than the actual emissions targeted by EPA’s Mandatory GHG Reporting Rule. Thus, even a threshold of 75,000 short tons of CO2e would seem in the same ballpark as the threshold adopted for the mandatory reporting rule. Also, EPA announced that it will delay permitting of stationary source GHG emissions until 2011, and will consider GHGs “subject to regulation” only when the mobile source mission standards mandate compliance, rather than the effective date of the mobile source rule.
With respect to PSD implementation, evaluation and application of the PSD BACT is one of the most litigious aspects of the PSD CAA permitting process, and it can be most costly. In February, 2010, EPA’s Clean Air Act Advisory Committee (CAAC) Climate Change Workgroup issued its first Interim Phase I Report regarding application of PSD BACT to GHG emissions. Industry is waiting to see EPA’s final approach, which EPA indicates may rely heavily upon energy efficiency concepts. EPA has stated it intends to issue guidance to assist states in evaluating BACT for greenhouse gas emissions by the end of 2010.
Additionally, with respect to the GHG Reporting Rule, on April 12, 2010, EPA issued New Proposed Subparts for: Reporting of GHG injection and geologic sequestration, Subpart RR; Petroleum and natural gas systems, Subpart W; Additional sources of fluorinated GHGs, Subparts I, L, DD, QQ and SS. These subparts were initially proposed on April 10, 2009 but revised and reproposed after public comment. Under these proposals, newly covered sources would begin collecting emissions data on January 1, 2011 with the first annual reports submitted to EPA on March 31, 2012.
EPA has also announced its intent to finalize without reproposal the following subparts which had also been included in the original proposed rule: Industrial landfills, Subpart HH; Wastewater treatment facilities, Subpart II; Underground coal mines, Subpart FF; and Magnesium production, Subpart T.