Overview of Major Environmental Regulations

1. Overview of Major Environmental Regulations Jenn Klein Director of Energy & Environmental Policy Ohio Chamber of Commerce

2. Regulations are Coming

3. Environmental vs. Tax Code Regulations

4. Upcoming Major Regulations • EPA’s 309-page Semi-annual Regulatory Agenda was last published December 7, 2009. The following items are listed as “major” rules—those likely to result in an annual effect on the economy of $100 million or more or meets other criteria specified in the CRA (5 U.S.C. 801, et seq.). • Criteria and Standards for Cooling Water Intake Structures • National Primary Drinking Water Regulations: Radon • Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide Geologic Sequestration Wells • Standards for the Management of Coal Combustion Residuals Generated by Commercial Electric Power Producers • Revisions to the Spill Prevention, Control, and Countermeasure (SPCC) Rule • NAAQS Review for Carbon Monoxide • Combined Rulemaking for Industrial, Commercial and Institutional Boilers and Process Heaters at Major Sources of HAP and Industrial, Commercial, and Institutional Boilers at Area Sources • Implementing Periodic Monitoring in Federal and State Operating Permit Programs • NAAQS Review for Particulate Matter • NAAQS Review for Sulfur Dioxide • Review of the Secondary NAAQS for Oxides of Nitrogen and Oxides of Sulfur • Clean Air Transport Rule • PSD/Title V GHG Tailoring Rule • Reconsideration of the 2008 Ozone NAAQS • NESHAP Portland Cement Notice of Reconsideration • NAAQS Review for Nitrogen Dioxide • Review of the NSPS – Portland Cement • Renewable Fuels Standard Program • NESHAP for Reciprocating Internal Combustion Engines • EPA/NHTSA Joint Rulemaking to Establish Light-Duty GHG Standards and CAFÉ Standards • NAAQS Review for Ozone • NESHAPs for Coal- and Oil-Fired Electric Utility Steam Generating Units • GHG Mandatory Reporting Rule • Lead: Clearance and Testing Requirements for the Renovation, Repair and Painting Program • Lead: Amendment to the Opt-out and Recordkeeping Provisions in the Renovation, Repair, and Painting Program

5. Ozone SO2/NO2 CAIR Water Beginning CAIR Phase I Seasonal NOx Cap SO2 Primary NAAQS Revised Ozone NAAQS Reconsidered Ozone NAAQS Effluent Guidelines Final rule expected Effluent Guidelines Compliance 3-5 yrs after final rule Proposed CAIR Replacement Rule Expected SO2/NO2 Secondary NAAQS Next Ozone NAAQS Revision Final CAIR Replacement Rule Expected CAIR Vacated 316(b) Compliance 3-4 yrs after final rule Effluent Guidelines proposed rule expected 316(b) final rule expected CAIR Remanded NO2 Primary NAAQS CO2 Regulation PM-2.5 SIPs due (‘06) Begin CAIR Phase I Annual SO2 Cap PM-2.5 SIPs due (‘97) Next PM-2.5 NAAQS Revision Beginning CAIR Phase II Annual SO2 & NOx Caps Begin CAIR Phase I Annual NOx Cap Final Rule for CCBs Mgmt New PM-2.5 NAAQS Designations Beginning CAIR Phase II Seasonal NOx Cap '11 '12 '13 '16 '15 '17 '08 '09 '10 '14 CAMR & Delisting Rule vacated HAPS MACT final rule expected Begin Compliance Requirements under Final CCB Rule (ground water monitoring, double monitors, closure, dry ash conversion) HAPS MACT Compliance 3 yrs after final rule Compliance with CAIR Replacement Rule HAPs MACT proposed rule Proposed Rule for CCBs Management Final EPA Nonattainment Designations 316(b) proposed rule expected PM2.5 Ash Hg/HAPS CO2 5

6. Climate Change LITIGATION Against Government/Industry LEGISLATION REGULATION Federal torts: CT v. AEP Comer Kivalina ACES Boxer KGL Moran Approp Rider Clean Water Act Murkowski CRA 16 Industry lawsuits vs. Endangerment Clean Air Act Endangered Species Act NEPA SEC State torts? (common law nuisance) 17 State challenges to Endangerment CBD Settlement (Acidification) CEQ Climate Guidance Climate Risk Disclosure Polar Bear Endangerment Industry challenges to Tailoring Rule International Law Claims Tailpipe Rule / CA Waiver Categorical Exclusions NIMBY suits to stop projects Moran Approps Rider “Tailoring” Rule Permit challenges (e.g. Deseret) Murkowski CRA and Litigation

7. Mandatory GHG Reporting Rule • December 29, 2009 – US EPA’s mandatory greenhouse gas (GHG) reporting rule becomes effective • Sources required to submit GHG emissions are suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year (31 industry sectors in total) • Important deadlines: • January 21, 2010 – Potentially affected entities will need to begin collecting data • April 1, 2010 – Potentially affected entities must begin following all applicable monitoring and QA/QC requirements established by the rule, unless they request and US EPA approves an extension • January 28, 2010 – Requests for an extension to utilize "best available monitoring methods" after April 1, 2010 must be filed with US EPA

8. But Wait, There’s More… • March 23, 2010 – US EPA proposes new rule that expands who must submit GHG emissions • New rule would apply to the oil and natural gas sector, industries that emit fluorinated gases, and from facilities that inject and store carbon dioxide underground for the purposes of geologic sequestration or enhanced oil and gas recovery • Under these proposals, newly covered sources would begin collecting emissions data on January 1, 2011 with the first annual reports submitted to US EPA on March 31, 2012 • The proposed rule also requires all facilities in the reporting system to provide information on their corporate ownership

9. American Clean Energy & Security Act • Passed House 219-212 (U.S. Rep. Waxman (D-CA) and U.S. Rep. Markey (D-MA) • Cuts GHG emissions 17% from 2005 levels by 2020 and by 83% by 2050 • Establishes a cap-and-trade program with 85% of the credits allocated and 15% auctioned • Establishes trade sanctions by imposing tariffs on carbon-intensive imports • Directs US EPA to set emission standards on sources that are not covered by the cap-and-trade system • Creates a Renewable Portfolio Standard that requires retail electricity suppliers to generate 6% of their energy from renewable sources starting in 2012 and ending with 20% in 2020 • Reduces electricity demand 15% by 2020

10. American Power Act Introduced by U.S. Sen. Kerry (D-MA) and U.S. Sen. Lieberman (I-CT) Reduces carbon emissions 17% by 2020 and over 80% in 2050 Only those that emit 25,000 tons per year will need to comply with reduction targets Includes a hard "price collar," or upper and lower limits, on the price of pollution permits The manufacturing industry would not be required to reduce emissions until 2016 Consumers would get rebates and energy discounts to offset any price increases Sets aside $2 billion for the development of "clean coal" technology Gives $54 billion in loan guarantees to promote the construction of new nuclear facilities Allows coastal states to opt-out of drilling up to 75 miles from their shores

11. Regulating Under Clean Air Act • April 2, 2007 - U.S. Supreme Court rules in Massachusetts v. EPA that the CAA authorizes US EPA to regulate tailpipe GHG emissions • September 30, 2009 – US EPA announces proposal requiring large industrial facilities that emit at least 25,000 tons of GHGs a year to obtain construction and operating permits covering these emissions • May 13, 2010 – US EPA formally announces phased-in approach for regulating GHG emissions from stationary sources • January 2011 – sources already permitted under the CAA for other pollutants will need to get a permit regulating their GHG emissions if they increase emissions by at least 75,000 tpy • July 2011 – permitting expands to cover all new facilities with GHG emissions of at least 100,000 tpy and modifications at existing facilities that would increase by at least 75,000 tpy

12. So, What’s the Problem? • The CAA sets out statutory thresholds for regulations at 100 tons per year (28 specified categories of sources such as power plants and refineries) and 250 tons per year of any regulated pollutant for all other sources • Point of Reference – Average American household emits approximately 10-12 tons of CO2 per year and an average commercial building or office emits more than 250 tons per year • Ohio has adopted the CAA threshold limits • US EPA does not have the authority to arbitrarily raise the statutory threshold levels as set forth in the CAA • Even if they did, states who have adopted the CAA threshold levels would need to revise state law before they could exempt smaller sources • CAA does not explicitly authorize the use of cap-and-trade and other cost-saving, market-based approaches

13. Permitting Consequences • If states were to require permits under the 100/250 ton per year threshold: • Prevention of Significant Deterioration reviews would increase from about 280 per year to over 40,000 • Facilities requiring Title V operating permits would increase from less that 15,000 to over 6,000,000 • 14,700 existing Title V permits would require addition of greenhouse gas terms

14. Who Would be Regulated?

15. GHG Global Emissions

16. Boiler MACT • June 4 – US EPA released rules that will impose stricter hazardous air pollutant emission limitations and other requirements on operators of new and existing boilers and process heaters. • These new rules replace the National Emission Standards for Hazardous Air Pollutants that were established in 2004 and subsequently vacated by the D.C. Circuit Court in 2007. The court ruling requires US EPA to have new rules in place by December 16, 2010. The proposed rules include: • Major Source Boiler MACT • Area Source Boiler MACT • Commercial and Industrial Solid Waste Incineration Units (CISWI Rule) • These rules could affect boilers used in manufacturing, processing, mining, refining and other industries; stores/malls, laundries, apartments, restaurants, hotels/motels and other commercial facilities; medical centers; educational and religious facilities; and municipal buildings • US EPA estimates cost of compliance around $9.5 billion • Industry estimates cost of compliance over $20 billion

17. Utility MACT • March 15, 2005 – US EPA issued the Clean Air Mercury Rule (CAMR) which established mercury emission standards for new and existing power plants • February 8, 2008 – US Court of Appeals (District of Columbia) vacated US EPA’s rule removing power plants from the Clean Air Act list of sources of hazardous air pollutants, thereby effectively destroying the legal basis for CAMR • April 15 , 2010 – Court grants US EPA’s motion to enter into a consent decree with a group of environmental plaintiffs • According to the consent decree US EPA must issue a draft rule by March 16, 2011 and the rule must be final by November 16, 2011 • Power plants will then have 36 months to specify and install control equipment to meet a compliance deadline of November 2014 • Expect rule to regulate MACT standard for emissions of mercury and HAPs such as arsenic, lead, nickel, chromium and hydrochloric acid

18. Clean Air Transport Rule • March 10, 2005 – US EPA finalized the Clean Air Interstate Rule (CAIR) which placed controls on emissions from nitrogen oxide (NOx) and sulfur dioxide (SO2) • On December 23, 2008 – D.C. Circuit Court of Appeals granted US EPA's petition to remand CAIR to the agency to be "fixed“ • August 2, 2010 – US EPA releases the replacement to CAIR, otherwise known as the Transport Rule, as well as associated proposed Federal Implementation Plans (FIPS) • Differences between CAIR and the Transport Rule are : • Steeper reductions of NOx and SO2 than proposed under CAIR • Virtual elimination of the cap-and-trade mechanism established under CAIR, by assigning each State a firm emission budget which it may not exceed • Accelerating the time frame for reductions to coincide with the attainment deadlines faced by the States

19. Coal Combustion Waste • May 4, 2010 – US EPA released proposed rule regulating coal combustion waste • US EPA is proposing two options for regulating the waste. The two options are: • RCRA Subtitle C Regulation – Regulate as a hazardous waste (estimated cost for disposal $150/ton) • RCRA Subtitle D Regulation – Regulate as a non-hazardous waste (estimated cost for disposal $10-15/ton) • Both regulatory options allow for continued "beneficial use" of coal ash, and both options contain first-time provisions requiring protective liners, groundwater monitoring, and enhanced structural integrity for impoundments

20. Cooling Water Intake Structures February 16, 2004 – US EPA finalizes the Clean Water Act 316(b) Phase II rule which established location, design, construction and capacity standards for fish protection at cooling water intake structures (CWIS) March 2007 – US EPA suspends rules based on a decision by the 2nd Circuit Court of Appeals 2010 – US EPA announces preparations to conduct a survey that seeks to quantify the amount that the public would be willing to pay to protect against the losses associated with CWIS US EPA is expected to come out with a replacement rule later this year or early next year

21. Clean-up Standards for Dioxin in Soil January 7, 2010 – US EPA released draft recommended interim preliminary remediation goals for dioxin in soil at Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and Resource Conservation Recovery Act (RCRA)sites Would issue new cleanup standards for dioxin in soil, requiring additional and more costly remedial actions at Superfund sites that have already been cleaned to meet current standards. It appears there is no new science to justify such action by US EPA. Moreover, the agency’s proposals appear to be out of step with the National Academy of Sciences, the Department of Defense, and the World Health Organization.

22. National Ambient Air Quality Standards

23. NAAQS Information • US EPA has developed standards for six specific contaminants • Sulfur dioxide – primary source; coal fired power plants • Carbon monoxide – primary source: cars and trucks • Lead – primary source; individual industrial facilities • Nitrogen oxides – primary source; any type of combustion • Particulate matter – primary source; coal fired boilers, cement plants, steel making operations • Ozone – primary source; cars, trucks, utility boilers, painting operations, refineries

24. Ohio’s Attainment Status The entire state is in attainment for nitrogen dioxide, sulfur dioxide, lead and carbon monoxide Ohio has nonattainment areas for PM2.5 Currently entire state is designated attainment for ozone, for now…

25. Reconsideration of 2008 Ozone Standard March 12, 2008 – US EPA revises the primary NAAQS for ozone from the previous standard set in 1997 at 0.084 ppm to 0.075 ppm January 7, 2010 – US EPA releases a proposal to lower the standard to a range of 0.070-0.060 ppm Under the 2008 standard of 0.075 ppm 23 out of Ohio EPA's 49 air monitors show nonattainment but under the 0.070 ppm standard 47 out of 49 monitors show nonattainment According to US EPA, the costs of reducing ozone to 0.070 ppm would range from an estimated $19 billion to $25 billion per year in 2020 and for a standard of 0.060 ppm, the costs would range from $52 billion to $90 billion

26. Issues with Ozone Redesignation Issues Related to the Reconsideration – US EPA is required to follow a specific process when a reconsideration rulemaking is undertaken and when a NAAQS is revised. In this rulemaking, US EPA admits that it has examined additional information that was not placed in the docket as part of the original rulemaking. As such, US EPA’s actions are outside the bounds of its regulatory authority. The scientific basis for revised standards is insufficient – US EPA concluded in 2008 that the new ozone standard was sufficiently protective of public health with an adequate margin of safety. The standard under consideration is unacceptable because there is no new scientific evidence to justify decreasing the standard from 0.075 ppm. Concerns with Implementation Schedule – Traditionally, states have a year after promulgation of a new NAAQS to recommend areas that should be designated as nonattainment. However, US EPA intends to give states a scant 129 days to make these recommendations. States have not yet implemented the current standard so it is premature to lower the standard – States are still in the process of executing implementation plans for both the 1997 and 2008 standards. US EPA should be focused on helping states meet these standards before they arbitrarily change them. Current technology does not exist to meet the proposed standard – US EPA’s own draft Regulatory Impact Analysis concluded that current technologies would not allow for the 2008 standard to be met, but assumed that future innovation and technological advances would become available to enable states to achieve that standard by 2020.

27. Ozone Not Ohio’s Only Problem

28. Ohio Specific Issues • Water Quality Rules (water quality standards, 401 water certification program, antidegradation and stream mitigation) • Industrial Stormwater General Permit • Construction & Demolition Debris Multi-Sector Rules • BUSTR Rules (federal Energy Policy Act of 2005) • Great Lakes Compact • Drilling on State Lands • Brownfield Redevelopment

29. Okay, Watt Now? Jenn Klein (614) 228-4201 jklein@ohiochamber.com