By Mary Ellen Ternes
BP, Plc Deepwater Horizon Update: Operation Static Kill
As of this writing, the April 20, 2010, BP Deepwater Horizon explosion and subsequent oil spill in the Gulf of Mexico appears to be contained and the well sealed. After several failed attempts to cap the 5,000 foot deep well, BP installed a containment cap on July 14, halting the flow of oil from the deepwater horizon well for the first time since April 20, 2010. On August 4, BP began operation “static kill” to seal off the well, pumping several thousand barrels of mud successfully through the containment cap into the well. BP officials have stated that BP intends to complete the relief well as the ultimate solution for permanently closing the well. The relief well should be finished by mid-August.
From April 20 through August 4, the BP well released an estimated 4.9 million barrels of oil. On August 4, the National Incident Command (NIC), released an interagency report, “BP Deepwater Horizon Oil Budget: What Happened To the Oil?” providing its estimate of the quantity of BP Deepwater Horizon oil that has been released from the well and the fate of that oil. The report provides the following estimates: burning, skimming and direct recovery from the wellhead removed one quarter (25%) of the oil released from the wellhead; one quarter (25%) of the total oil naturally evaporated or dissolved, and just less than one quarter (24%) was dispersed (either naturally or as a result of operations) as microscopic droplets into Gulf waters; the residual amount — just over one quarter (26%) — on or just below the surface as light sheen and weathered tar balls, has washed ashore or been collected from the shore, or is buried in sand and sediments. Oil in the residual and dispersed categories is in the process of being degraded. This means that an estimated 1.27 million barrels of oil remain in the environment. Impacts to the environment, water quality and ecosystems, will continue to be studied for the foreseeable future.
This event has, and will continue, to be the driver for responsive policy shifts, including restructuring of regulatory programs governing oil and natural gas drilling. Just before their August recess, on July 28, 2010, Congressional leaders introduced proposed legislation intended to rewrite oil and natural gas production policy in response to the BP spill. The proposals address safety and environmental standards for drilling in federal waters, provide Congress with direct oversight of offshore energy production, require responsible parties to pay all damages arising from their spill by removing the current $75 million liability cap, and legislate the termination of the Minerals Management Service. The Senate version would raise the federal oil-spill trust fee from 8 cents a barrel to 45 cents a barrel, covering the costs of the bill (est. $15 billion), and also provide rebates for compressed natural gas motor vehicles and residential energy efficiency. These proposals add to challenges created by President Obama’s suspension of deepwater drilling inquiries and Democrat’s proposals to rescind tax breaks for fossil fuel producers.
EPA Clean Air Act Greenhouse Gas Rulemaking:
EPA Promulgates Final Greenhouse Gas "Tailoring Rule"
As discussed in previous updates, on September 30, 2009, EPA proposed its “Tailoring Rule,” intended to raise the Prevention of Significant Deterioration (PSD) thresholds of 100 and 250 tons per year, and Title V permitting threshold of 100 tons per year, for greenhouse gas (GHG) emissions to minimize the number of stationary sources that would be impacted by the automatic application of PSD and Title V to such low emissions rates of GHG. These thresholds are triggered as a result of EPA’s Endangerment and Cause or Contribute Findings, published in the Federal Register on December 15, 2009, and the mobile source rules (“Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards”) promulgated on May 7, 2010. EPA issued these findings and rules in response to the Supreme Court’s 2007 decision Massachusetts v. EPA, in which the Supreme Court determined that GHGs are “air pollutants” under the CAA.
On June 3, 2010, EPA promulgated its Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule. 75 Fed. Reg. 31514 (June 3, 2010). While EPA had proposed an initial threshold of 25,000 short tons of carbon dioxide equivalent (“CO2e”) emissions, in its final rule, EPA raised the threshold to 75,000 tons per year of CO2e. Permitting pursuant to the Tailoring Rule will be implemented in two steps. In “Step 1,” beginning January 2, 2011, GHG sources will become subject to PSD for their GHG emissions if they undergo PSD permitting anyway, either for new construction or for modification projects based on emissions of non-GHG pollutants, as long as they increase their GHG emissions by 75,000 tons per year of CO2e, or more. These sources will undergo BACT only if GHG emissions from new construction or modification, on a purely mass basis, exceed zero tons per year, and, GHG emissions or increases equal or exceed 75,000 tons per year CO2e. In Step 1, Title V sources will be required to address GHGs as part of their Title V permitting when they apply for, revise or renew their Title V permits.
In Step 2, beginning July 1, 2011, sources with the potential to emit 100,000 CO2e or more, as well as another other regulated New Source Review pollutants over the 100 or 250 ton statutory thresholds) will be considered major sources under PSD. Any physical change or change in the method of operation at a major source resulting in a net GHG emissions increase of 75,000 tons per year CO2e or more will be subject to PSD review (assuming an increase in GHG emissions based purely on mass). Title V sources will continue to include GHG in Title V permitting in Step 2 as well as long as they remain subject to Title V based upon emissions of nonGHG emissions. However, sources with GHG emissions exceeding 100,000 tons per year CO2e will be required to obtain a Title V permit regardless of nonGHG emissions, as long as the mass GHG emission rate exceeds 100 tons per year.
EPA is attempting to limit the effects of the Tailoring Rule by first, narrowing the definition of "potential to emit" to reflect something closer to actual emissions. Second, EPA is considering adopting "general permits" for GHG sources. Finally, EPA continues to focus on developing a workable method of applying the CAA's "Best Available Control Technology" (the requirement that automatically applies to new major GHG sources/major modifications).
State implementation of these new thresholds, and generally, state permitting of GHG emissions, depends upon the scope and use of current language in existing state law, and states’ abilities to modify this language if necessary. States regulating air pollutants via “subject to regulation” language may not need to initiate responsive rulemaking. EPA requested states to submit information regarding their method of implementation sixty days after promulgation, i.e., by first week of August, 2010. EPA is continuing its development of technical data and information concerning available and emerging GHG control measures, including a GHG Mitigation Strategies Database, RACT/BACT/LAER Clearinghouse enhancements and GHG technical white papers that will provide information on control techniques and measures for the largest GHG emitting industrial sectors (e.g., power plants, industrial boilers, cement plants, refineries, iron and steel, pulp and paper and nitric acid plants). Before the end of 2010, EPA has committed to provide general guidance for applying the PSD requirements, including BACT, for GHGs and training workshops with example BACT analyses for EPA Regions and States.
EPA Confirms CAA GHG Endangerment Assessment
On July 29, 2010, EPA denied ten petitions to reconsider its 2009 Greenhouse Gas Endangerment and Cause and Contribute Findings, including petitions from Coalition for Responsible Regulation, Competitive Enterprise Institute, Ohio Coal Association, Peabody Energy Company, State of Texas and the U.S. Chamber of Commerce, among others. With its denial, EPA issued a Response to Petitions in three volumes: Volume I, “Climate Science and Data Issues Raised by Petitioners”; Volume 2, “Issues Raised by Petitioners on EPA’s Use of IPCC”; Volume 3, “Process Issues Raised by Petitioners.”
In Volume 1, EPA addresses petitioners’ questions regarding the reliability of global temperature data, e-mail discussions regarding temperature data, assertions that warming has slowed or stopped, questions regarding data sets maintained by NOAA, NASA and the Climatic Research Unit (CRU), and assertions that new studies not previously considered contract key conclusions in the Endangerment Finding. In Volume 2, EPA addresses claims regarding asserted errors in the IPCC’s Fourth Assessment Report, assertions of bias within the IPCC, characterizations by petitioners of undue reliance by the U.S. Global Change Research Program and the National Academy of Sciences on the IPCC, and suggestions that EPA’s process was not rigorous. In Volume 3, EPA addresses process issues raised by the petitioners including those regarding consideration of the CRU e-mails, the separate and independent nature of the USGCRP and NRC assessments, issues regarding integrity of peer-reviewed literature and freedom of information act requests.
Legal Challenges to EPA Greenhouse Gas Rulemakings
Over fifty lawsuits have been filed in the D.C. Circuit Court of Appeals challenging EPA’s issuance of greenhouse gas rulemaking, including challenges to the EPA’s Endangerment Finding, mobile source rules (“Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards”), Tailoring Rule and Mandatory GHG Reporting Rule. Many of these challenges are driven by concerns arising from EPA’s permitting of stationary source GHG emissions, which is triggered by EPA’s Endangerment Finding and the mobile source rules.
In addition to these CAA GHG based rule challenges, additional lawsuits have been filed challenging EPA’s decades old Prevention of Significant Deterioration rules, asserting that EPA’s new GHG rules reopen the PSD rules for such challenges. See for example, Petition for Review, American Chemistry Council v. U.S.EPA, Case No. 10-1167 (D.C. Circuit) (July 6, 2010) (petitioning the court to review Prevention of Significant Deterioration Rules, 43 Fed. Reg. 26,388 (June 19, 1978)).
Notes
Due to time and space limitations, please note the limited following issues and forgive the lack of more, and more detailed, coverage:
As of July 12, 2010, four additional industry sectors will be required to report GHG emissions pursuant to the GHG reporting rule
On July 15, 2010, EPA published its formal disapproval of the Texas air quality permit program’s use of a “Qualified Facilities” exemption rule due to noncompliance with the Clean Air Act major new source review rules. 75 Fed. Reg. 41312 (July 15, 2010). EPA’s disapproval affects 122 permits issued pursuant to this exemption. To address these permits, EPA has created a voluntary compliance audit program for Texas flexible permit holders.
With the Summer release of the Home Box Office production, “GasLand,” EPA has moved forward with its study of hydraulic fracturing and the potential impacts on drinking water, human health and the environment.
On May 10, 2010, EPA withdrew its 2008 RCRA Fuels Exclusion for “emission-comparable fuels.” This conditional exclusion had recognized the fuel value of hazardous secondary materials and conditionally designated them as “not discarded,” and thus not “solid wastes.” Now, ECF is regarded as discarded material and regulated as hazardous waste.