Aug. 4, 2010 by Victor Flatt

Tailoring Rule Draws Multiple Challenges

Cross-posted from Flatt Out Environmental.

As expected, the EPA's "tailoring rule," under which it proposes to regulate stationary sources of greenhouse gases under the Clean Air Act (CAA) only if they produce over 75,000 tons of carbon dioxide equivalent forcing per year, has been challenged in court by numerous organizations. These include industry, several states (the usual suspects including Texas), and more surprisingly several environmental organizations.

The crux of industry and state challenges to the tailoring rule is that it is illegal pure and simple. Specifically, the challenges note that the CAA requires that when the EPA regulates stationary sources under the CAA, that it do so for sources that emit over either 100 or 250 tons per year. Of course, industry doesn't really want all of these smaller sources regulated, but they want to make it virtually impossible for EPA to regulate at all. If the EPA had to regulate all of these small sources, regulation would be virtually impossible. (EPA's primary argument for the legality of the tailoring rule is a doctrine known as "administrative impossibility"). Even if the EPA tried to, Congress would surely take action then to suspend the regulation (something that …

July 8, 2010 by Victor Flatt

On Tuesday, the EPA released its long awaited rule to replace the Bush era Clean Air Interstate Rule, invalidated by the DC Circuit in 2008’s North Carolina v. EPA. There are many things that could have been different or improved, but given the EPA’s need to get a rule out quickly to replace the existing rule, they have done a good job of addressing the flaws of the earlier rule and getting something in place.

The main problem with the previous CAIR was that in allowing full interstate trading of SOx and NOx, it was in violation of the CAA requirements in Section 110, that a state’s State Implementation Plan ensure that no other state’s attainment and maintenance is violated, and Section 126, which requires the EPA and states to control individual sources that cause a violation in another state.

In the new …

June 4, 2010 by Victor Flatt

In the little-followed but hugely important “joint federalism” system through which our environmental laws are implemented, a seismic change may be afoot that could vastly improve environmental compliance and environmental quality in the future.

Last week, Al Armendariz, the head of the Environmental Protection Agency’s Region VI, indicated that unless significant changes are made by July 1, 2010, the EPA will take over Texas’s Clean Air Act program because of failures to follow the requirements of the Clean Air Act. The EPA last week already took control of an important Title V permit in Corpus Christi, and noted specific and severe deficiencies in 39 other Texas permits, indicating that it would take over them as well. This is significant in and of itself since it shows that the EPA is willing to use its over-filing powers as much as necessary to try and correct permit …

May 21, 2010 by Victor Flatt

BP CEO Tony Hayward has been careful to say his company will pay for the "clean-up" from the oil spill -- meaning, not the damages. But if past disasters are any guide, the clean-up will be just a small fraction of the damages from the spill (the deaths, the damage of the oil to natural resources and the humans that depend on them, and more). Many media have commented that Hayward is a “jerk,” but the who-pays-for-the-damages problem isn't really about Hayward and BP. Rather, it points out a weakness with our health and safety laws not unique to this case – they do not always demand and require that industry pay for the harm it causes society.

Hayward, in fact, has been answering in the only way that he legally can while still representing the shareholders of the corporation. Why? The law (specifically the Oil Pollution Act, passed …

May 12, 2010 by Victor Flatt

The Kerry-Lieberman bill's provisions on offsets are largely similar to those in the Waxman-Markey and Kerry-Boxer bill, but include a number of changes that make more specific policy choices in the use of offsets.

First, the proposal enumerates a specific lengthy list of eligible offset categories (whereas Waxman-Markey didn't list specific categories, instead giving instruction for a regulatory decision). This change  might assist in providing market liquidity. In terms of offset regulation, there seems to be a complex dance between the EPA and the USDA, which requires consultations between the two in most cases for offset designation and removal.  The USDA is given the primary role over agricultural and forest offset approval while the EPA has a similar role over other offsets; as I've written before, this could be potentially problematic if the USDA is not up to the regulatory task.

Environmental consideration of …

May 12, 2010 by Victor Flatt

While Kerry and Lieberman (and before two weeks ago, Graham) have tried to pitch the proposed new Senate climate and energy draft legislation as a “game-changer” the truth is that, aside from the stronger preemption language limiting the states, its effect is not terribly different from what has come before. Sure, there are sweeteners for the conservascenti, such as enhanced loan guarantees and permit streamlining for nuclear energy, continued support for carbon capture and sequestration, removal of a natural gas “penalty,” and ostensibly an opening up of now closed offshore oil areas. But whether this would be different than what would have happened by adoption of the ACES bill is questionable.

ACES also allowed the coal industry to continue with the help of monetary support of carbon capture and sequestration. As for increased offshore oil drilling, even with revenue sharing, opening new areas is going to be …

May 4, 2010 by Victor Flatt

Monday April 26 was supposed to be the day that the much anticipated Kerry-Graham-Lieberman climate change bill was to be proposed in the Senate. Hopes had gone up that there could be a legislative solution to putting a price on carbon. The carbon markets themselves had responded, pushing up the price of allocations on RGGI in the hopes that these would be allowed to qualify for the expected federal cap and trade. Then over the preceding weekend, it fell apart. Senator Graham criticized the call from Majority Leader Reid to also take up a comprehensive immigration reform bill, claiming that it was driven by Senator Reid’s own political needs to increase his chances of retaining his Nevada Senate seat.

There is no doubt that this played an important piece in the very difficult political dance that has surrounded the emergence of the KGL plan. Senator Graham …

April 23, 2010 by Victor Flatt

On Monday, the Environmental Defense Fund announced that it had reached a settlement with Tenaska Inc. to withdraw opposition to that company’s proposed “Trailblazer Energy Center,” a 600 megawatt coal fired power plant in West Texas. In return for dropping its objections, the EDF signed an agreement with Tenaska that the company will sequester 85% of the CO2 it produces, selling much of the gas to companies who will use it for enhanced oil recovery (EOR) in the West Texas Permian Basin oil field.

The agreement is stunning on many levels. Trailblazer is the first large-scale proposal (and presumably will be the first operational coal fired power plant) to sequester significant amounts of the CO2 it produces. It is also the first large-scale use of enhanced oil recovery as a market for captured CO2. Last, it firmly and finally illustrates the reality of the fate of …

Feb. 12, 2010 by Victor Flatt

The concept of cap and trade took another hit recently with disclosures that hackers had been able to get into the accounts of several holders of carbon emissions allowances in Europe and steal some of the account balance. This, along with the continued snowstorm in Washington, D.C. seems to fill those opposing a federal comprehensive cap and trade plan with glee.

While the issue of record setting snows in D.C. should be addressed with basic scientific education (trends and averages are not the same as one time events; snow often results from warmer temperatures, etc…) the issue of possible fraud in carbon trading systems deserves examination to see if there is such a systemic problem with cap and trade that it is more subject to fraud and manipulation than other markets.

The short answer to this question is “no.” The fraud perpetrated on the E …

Jan. 25, 2010 by Victor Flatt

The Supreme Court’s decision in Citizens United was not entirely unexpected, but it is appropriately seen as a breathtaking change in the way elections work in this country. The Supreme Court struck down federal campaign finance rules that limit corporate (and general organizational) spending on campaign finance ads to help or defeat candidates.

What can we expect now? One need look no further than Texas, which has no campaign restrictions in any statewide races. In Texas, large corporations and individuals have given millions of dollars to candidates and ads supporting them in one election cycle.

While this can be hugely influential on state legislation, at least legislation remains ostensibly open and in the public eye. Texas does have laws that may be seen as more favorable to corporations (such as low limits on medical malpractice compensation and a conservative tax structure), but all in all, the …

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