A Review of Some Major Federal Climate Activities

1. A Review of Some Major Federal Climate Activities EPA, CenSARA, and Region 6 States Multimedia Inspection/Enforcement Workshop April 6, 2010 James W. Yarbrough U.S. EPA-Region 6

2. Outline • Greenhouse Gas (GHG) Mandatory Reporting Rule • Endangerment and cause or contribute to findings • Tailoring Rule • GHG vehicular emissions and Combined Automotive Fleet Economy (CAFE) standards • Geosequestration Regulations • Executive Order 13514 • Summarizing: What more may happen in 2010? • Partnerships

3. Presentation borrowed heavily from work of • Sandra Rennie • Brian Graves • Kitty Sibold • Scott Mathias • Bucky Green

4. National Greenhouse Gas Reporting Rule • Effective January 1, 2010 • Requires emitters > 25,000 mt CO2-e per year and 16 “all-in” source categories to annually report to EPA 6 GHG pollutants • Does not require GHG controls

5. Background • Directed by Congress in 2008 Appropriations Act • Proposal signed March 10, 2009 • Public Comment Period (April 10 – June 10, 2009) • Final rule signed September 22, 2009 • Published in Federal Register October 30, 2009 • Took effect January 1, 2010

6. Purpose of the Rule Requires reporting of greenhouse gas (GHG) emissions from all sectors of the economy in the United States Provides accurate and timely data to inform future climate change policies and programs Does not require control of GHG

7. Key Elements of the Rule Annual reporting of GHG by: 25 source categories 5 types of suppliers of fuel and industrial GHG Motor vehicle and engine suppliers (except light duty sector) 25,000 metric tons CO2e per year reporting threshold for most sources; capacity-based thresholds where feasible Monitoring begins January 1, 2010; first reports due March 31, 2011 Direct reporting to EPA electronically EPA verification of emissions data Coming up: FR notices in 2010 on new source categories, electronic reporting, CBI

8. Region 6 involvement thus far • Fielding questions from industry, municipalities, consultants • Giving speeches and presentations via webinars • Helped plan and implement and participated in January 27-28, 2010, training with NPRA in Houston

9. About 10,000 U.S. Facilities Covered

10. What GHGs are Reported? CO2 CH4 (methane) N2O (nitrous oxide) Fluorinated GHGs HFCs (hydrofluorocarbons) PFCs (perfluorocarbons) SF6 (sulfur hexafluoride) Other fluorinated gases

11. Who Reports? • Facility based reporting for all source categories for which there are methods • Limited exceptions for a few reporters (e.g., fuel importers, vehicle and engine manufacturers outside of the light-duty sector)

12. All-in Source Categories Electricity Generation if report CO2 year-round through Part 75 Adipic Acid Production Aluminum Production Ammonia Manufacturing Cement Production HCFC-22 Production HFC-23 Destruction Processes that are not collocated with a HCFC-22 production facility and that destroy more than 2.14 metric tons of HFC-23 per year Lime Manufacturing Nitric Acid Production Petrochemical Production Petroleum Refineries Phosphoric Acid Production Silicon Carbide Production Soda Ash Production Titanium Dioxide Production Municipal Solid Waste Landfills that generate CH4 equivalent to 25,000 metric tons CO2e or more per year Manure Management Systems that emit 25,000 metric tons CO2e or more per year [Note: EPA will not be implementing subpart JJ of the Mandatory GHG Reporting Rule using funds provided in its FY2010 appropriations due to a Congressional restriction prohibiting the expenditure of funds for this purpose.] *Source categories are defined in each subpart.

13. Stationary Combustion Units Ferroalloy Production Glass Production Hydrogen Production Iron and Steel Production Lead Production Pulp and Paper Manufacturing Zinc Production Threshold Source Categories Note: Report if emissions are >25,000 metric tons CO2e per year from all source categories, combustion units, and miscellaneous use of carbonates.

14. Source Categories Not Included in Final Rule EPA plans to further review public comments and other information before deciding on these subparts: Electronics manufacturing Ethanol production Fluorinated GHG production Food processing Magnesium production Oil and natural gas systems Sulfur hexafluoride (SF6) from electrical equipment Underground coal mines Industrial landfills Wastewater treatment Suppliers of coal Geologic sequestration Facilities with these source categories could be covered by the rule based on GHG emissions from stationary fuel combustion sources.

15. Endangerment and Cause or Contribute Findings • On April 2, 2007, in Massachusetts v. EPA, 549 U.S. 497 (2007), the Supreme Court found that greenhouse gases are air pollutants covered by the Clean Air Act.  The Court held that the Administrator must determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.  In making these decisions, the Administrator is required to follow the language of section 202(a) of the Clean Air Act.  • Administrator signed proposed “Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act” April 17, 2009 (published in FR April 24, 2009) • Administrator signed the final findings on December 7, 2009 • Final notice appeared in FR December 15, 2009 • Final rule was effective January 14, 2010

16. Challenges • To date 9 petitions for reconsideration of EPA’s finding have been filed • Petitioners include Arthur Randol; Coalition for Responsible Regulation, Inc. et al.; Commonwealth of Virginia; Competitive Enterprise Institute, et al.; Pacific Legal Foundation; Peabody Energy Company; Southeastern Legal Foundation et al. (includes 9 U.S. Representatives from GA, IA, and CA); State of Texas; The Ohio Coal Association.

17. State of Texas rationale for petition for review • Section 307 of the Clean Air Act directs that the Administrator “shall convene a proceeding for reconsideration” if two things are shown: - it was either “impracticable” to raise the objection during the public comment period, or the grounds for such objection arose after the period of public comment (but within the time specified for judicial review). . - the objection is of central relevance to the outcome of the rule—in this case the Endangerment Finding. • According to Texas, the State’s Petition meets both requirements: - The information on which this Petition is based came to light after the June 23, 2009 deadline for public comment ended. The deadline for seeking judicial review of the Endangerment Finding is February 16, 2010. Therefore, the grounds for the objections presented in this Petition arose after the period of public comment but within the time specified for seeking judicial review). The Endangerment Finding stipulates that “the Administrator [relied] on the major assessments of the USGCRP, IPCC, and NRC as the primary scientific and technical bases of her endangerment decision.” - The appropriateness of the Administrator’s misplaced reliance on those assessments is of central relevance to the Endangerment Finding.

18. Sen. Murkowski’s proposed joint resolution • JOINT RESOLUTION Disapproving a rule submitted by the Environmental Protection Agency relating to the endangerment finding and the cause or contribute findings for greenhouse gases under section 202(a) of the Clean Air Act. Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Environmental Protection Agency relating to the endangerment finding and the cause or contribute findings for greenhouse gases under section 202(a) of the Clean Air Act (published at 74 Fed. Reg. 66496 (December 15, 2009)), and such rule shall have no force or effect.

19. Stationary Sources and Proposed PSD and Title V Greenhouse Gas Tailoring Rule • December 18, 2008, memo from former Administrator Johnson • February 17, 2009: Administrator grants petition for reconsideration of Johnson memo but does not take action to stay Johnson memo effectiveness (Administrator Jackson to Sierra Club) • “Tailoring rule” proposed September 30, 2009 • “Tailors” NSR requirements to limit the number of facilities required to obtain NSR permits • Applicability: • Title V major source threshold: 25,000 tons CO2e • PSD permit applicability thresholds: • New sources or existing source making major modifications: 25,000 tons CO2e • Significance level for major source modification increase: 10,000 to 25,000 tons CO2e (single value to be selected) • Covers ~70% of the national GHG emissions from stationary sources • 14,000 large sources will require Title V permits (3,000 new) • 400 new/modifications will require PSD review (100 new) • Tailoring rule to be finalized in late March-April 2010 and effective January 2011?

20. Q&A on tailoring rule and other bills • Administrator Jackson reply to letter from Sen. Rockefeller and other Senators • Sen. Rockefeller’s Senate bill (companion bill in House by Rep. Rahall of WV)

21. Summary of current status • Administrator replied to Sen. Rockefeller on February 22, 2010: • No GHG permits in 2010 • Fewer than 400 permits in first half of 2011 (“only those facilities that already must apply for Clean Air Act permits as a result of their non-greenhouse gas emissions”) • Phase in for other large GHG emissions sources starting in latter half of 2011 • “Between latter half of 2011 and 2013” permitting threshold “will be substantially higher that than the 25,000-ton limit” • “EPA does not intend to subject the smallest sources to Clean Air Act permitting for greenhouse-gas emissions any sooner than 2016” • Late March-April 2010: final action on Johnson memo reconsideration to make GHG subject to regulation under CAA • BACT: “The additional time that EPA will have before permitting requirements will take effect will enable the agency and stakeholders to consider this issue carefully and thoughtfully.”

22. Tailoring Rule (continued) • Quote from NY Times March 3, 2010, article by Robin Bravender, reporting on Administrator’s appearance before Congress on March 3: “Pressed by lawmakers on both sides of the aisle, Jackson offered additional details about EPA's plans to gradually phase in climate rules for industrial sources. ‘Over the next two years, stationary sources that emit less than 75,000 tons will not be subject to permitting requirements under the Clean Air Act,’ Jackson said. ‘And it would probably be at least two years before we'd look at something like say a 50,000 threshold,’ she added.”

23. GHG Vehicular Emissions and CAFÉ Standards

24. Rapid Increase in Transportation Greenhouse Gas Emissions in US Electricity distributed to other sectors Source: US Emissions Inventory (April 2008) EPA 430-R-08-005

25. GHG (2,193 mmt CO2-eq, 2007) U.S. Transportation Sector GHG Emissions INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990-2007 (April 2009).

26. Joint Rulemaking to Establish Vehicle GHG Emissions and CAFÉ Standards • Establishes Vehicle GHG Emissions and CAFÉ Standards • EPA: standards for emissions of greenhouse gases under the Clean Air Act • DOT’s National Highway Traffic and Safety Administration: standards for fuel economy under EPCA as amended in 2007 • Proposal was published September 28, 2009 • Comments closed November 27, 2009 • This rule is not yet final. • Final rule in late March or April 2010? • Effective January 2011 in MY 2012

27. Joint Rulemaking • Standards would apply in Model Years 2012- 2016 • passenger cars • light-duty trucks • SUVs • Mini-vans • Responsible for almost 60% of all U.S. transportation-related GHG emissions • Will allow manufacturers to build a single light-duty national fleet.

28. Joint Rulemaking • By 2016 the fleet average will be 35.5 miles per gallon, that is four years earlier than the CAFE law now requires.  • Projected reduction in oil consumption of approximately 1.8 billion barrels over the life of the program. • Projected total reduction in GHG emissions of approximately 900 million metric tons. • Incentives for manufacturers to produce flex-fuel vehicles and dedicated alt fuel vehicles.

29. Joint Rulemaking: Unanswered Questions/Answers • What about Heavy-Duty vehicles and engines?/ EPA is looking at this but made no decision. • What about the California Waiver Request?/ Since EPA was acting on the joint rulemaking, California committed to adjust its GHG vehicle program to coordinate with the national program.

30. Renewable Fuel Standard 2 Rule • Final rule signed February 3, 2010 • Effective July 1, 2010, but applies to the full calendar year • EISA 2007 designed to reduce nation’s reliance on foreign oil and address global climate change • 36 billion gallons (bg) of renewables in 2022 • 11.1 bg in 2009; 12.95 bg in 2010

31. Renewable Fuel Standard Rule 2 • Analyzed lifecycle greenhouse gas (GHG) emissions from increased renewable fuels use. • RFs must achieve certain reductions in the levels of GHG emissions compared to the fuels they replace

32. Renewable Fuel Standard Rule 2 • EISA established other protective provisions • specifying where the feedstock can come from • defining the type of biomass that can be used to produce these fuels • Developed a GHG lifecycle analysis using the most curent science, peer reviewed models and data • Breaks out the various sources of GHG emissions, such as impacts from indirect land-use

33. Renewable Fuel Standard 2 Rule • Bottom line for transportation • Increases penetration of renewable fuels into the gasoline and diesel markets • Increases manufacture of flexfuel vehicles due to incentives • Potential increase in the volume of ethanol blended into gasoline to accommodate the mandate • Blend-wall question not yet answered (10 vs 15%) • Higher emissions from higher concentrations

34. Geosequestration (GS) Rule • July 25, 2008 Proposed rule for Class VI GS wells - extended comment period closed 12/24/08 and thousands of comments were received • August 31, 2009 Notice of Data Availability (NODA) - comment period ended 10/15/09 • Provided an update on ongoing projects and research • Requested comments on the use of an injection depth waiver allowing injection into non-USDW located above the lowermost USDW • Requested an update on current state GS regulation activities • April 15, 2010 Projected Final Agency Review (FAR) • OMB may request congruent timing and review of Class VI GS rule and greenhouse gas (GHG) mandatory reporting rule (MRR) to ensure there are no redundant burdens

35. Executive Order 13514 • Affects all federal agencies – “lead by example”

36. Scope of GHG Emissions 36

37. GHG Emissions Management E.O. 13514 introducednew requirementsfor federal GHG emissions quantification and reduction. Agencies must: Establish (by 1/4/10) and report a percentage reduction target for absolute Agencywide Scope 1 & 2 GHG emissions, to be achieved between FY 2010 and FY 2020 (relative to FY 2008 baseline)* Establish (by 6/2/10) and report a percentage reduction target for absolute Agencywide Scope 3 GHG emissions, to be achieved between FY 2010 and FY 2020 (relative to FY 2008 baseline)* 37 * Guidance to be issued by DOE and CEQ in April 2010

38. GHG Emissions Management (cont’d) Develop and report a comprehensive inventoryof absolute GHG emissions baseline for FY 2008. Report FY 2010 emissions to CEQ and OMB by January 2011, and annually there after We have a good Scope 1 and 2 Inventory (includes reporting labs) We are working on Scope 3 emissions Inventory Non-reporting facility energy and water use –good basis (includes Regional Offices) Business Travel Commuter Travel Supply Chain Contracts/Grants EPA Programs like Superfund (may move to Scope 1) 38

39. Water Efficiency E.O. 13514 extends existing water conservation requirements by five years: Reduce potable water use intensity by 2 percent annually through FY 2020 (for a cumulative 26 percent reduction by year-end FY 2020) relative to an FY 2007 baseline EPA is updating it’s Water Conservation Strategic Plan for the new FY 2020 targets. Preliminary findings: it’s going to be tough 39

40. High Performance Sustainable Buildings E.O. 13514 sets new requirements for high performance and sustainable federal buildings: Meet the Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings in 15 percent of Agency’s existing buildings and Agency direct leases by FY 2015, and make annual progress toward 100% compliance Beginning in 2020, ensure that all new federal buildings are designed to achieve zero-net-energy by 2030 40

41. Stormwater guidance E.O. 13514 establishes new stormwater requirements at federal facilities: EPA must issue (and did issue) Wet Weather Green Infrastructure guidance on 12/4/09 Implements guidance for Section 438 of the Energy Independence and Security Act of 2007 stormwater management requirements Stormwater management guidelines for new or redeveloped federal facilities > 5,000 square feet 41

42. Pollution Prevention, Waste Reduction E.O. 13514 expands federal requirements for alternative waste management practices: By year-end FY 2015, divert 50 percentof: Non-hazardous solid waste (recycling) Construction waste and demolition Encourage Composting Hazardous Chemical use and waste reduction 42

43. Transportation Management E.O. 13514 extends existing fuel use reduction requirements for federal fleets by five years: Reduce consumption of petroleum products in motor vehicles by 2 percent annuallythrough FY 2020, relative to an FY 2005 baseline 43

44. Environmental Management Systems E.O. 13514 reinforces existing EMS requirements: Continue implementation of formal EMS at all appropriate organizational levels Maintain EMS to achieve the sustainability goals set forth in the Executive Order 44

45. EPA and its S2P2s E.O. 13514 requires each agency to develop and submit a Strategic Sustainability Performance Plan (S2P2) Due into OMB in June, 2010, right before FY 2012 budget submission 45

46. What more may happen from a regulatory perspective in 2010?

47. Possible Graham-Kerry-Lieberman legislation • Power plants would face an overall cap on emissions that would become more stringent over time • motor fuel may be subject to a carbon tax whose proceeds could help electrify the U.S. transportation sector • industrial facilities would be exempted from a cap on emissions for several years before it is phased in. • the legislation would also expand domestic oil and gas drilling offshore and would provide federal assistance for constructing nuclear power plants and carbon sequestration and storage projects at coal-fired utilities. – “Climate Progress” February 27, 2010

48. Other related bills • Cantwell-Collins Carbon Limits and Energy for America’s Renewal (CLEAR) Act • Focuses on 2,000-3,000 upstream fossil fuel producers and importers, which must purchase carbon permits (no “Wall Street traders or speculators”; “price collar” governs permit prices • 75% of auction revenues “given back to consumers” • 25% of auction revenues go into Clean Energy Reinvestment Trust Fund • Alexander-Webb bill to encourage nuclear power (Reuters, 11/16/09) • $100 billion in loan guarantees for carbon-free electricity projects, adding to the existing $47 billion loan guarantee program. • $750 million annually for 10 years to research and development of: carbon capture and storage, advanced biofuels, batteries for electric cars, solar power and recycling used nuclear fuel. • Alexander-Carper bill to reduce Hg, SO2, NOx from power plants

49. Greenhouse gas limits are still alive, but is cap and trade dead?Mar 05, 2010 | Dave Michaels/Dallas Morning News online • “It appears that cap and trade will remain a Senate sideshow for the rest of this year.At some point, perhaps in the next couple weeks, Kerry et al. will unveil their bill, which will kick off a new flurry of lobbying by industry and enviro groups. It will likely be more modest than the House version. It will probably treat refiners better to secure the support of oil-patch Democrats like Mary Landrieu of Louisiana. It will probably make concessions for natural gas, which should win support from senators whose states have experienced the shale-gas boom.”

50. Some EPA Voluntary Partnerships Greening the 2010 Cowtown Marathon Fort Worth Texas