EPA’s Newest Attempt at Aggregating Emission Sources in the Oil & Gas Industry

EPA has proposed to resolve an issue that has vexed the oil and gas industry for years—how to determine which operations compose a single “source” for permitting decisions.  Unfortunately, the proposed resolution introduces new ambiguities.  The proposal comes as part of President Obama’s Climate Action Plan, but in reality is the latest chapter in EPA’s storied history[1] of attempting to establish a clear policy to determine when emissions from physically separate sources should be aggregated for purposes of determining permitting obligations under the Clean Air Act. Continue Reading

EPA Releases Additional Elements of President Obama’s Climate Action Plan

On August 18, 2015, EPA released additional components of President Obama’s Climate Action Plan.  The four separate actions are intended to reduce greenhouse gases and other emissions from the oil and natural gas sector.  The newly-released components include:

1) Additional New Source Performance Standards;

2) New Control Techniques Guidelines;

3) Proposed revisions to the regulatory definition of covered oil and gas equipment; and

4) A proposed Federal Implementation Plan for Indian Country New Source Review.

Each is discussed in turn. Continue Reading

CFTC Holds Energy and Environmental Markets Advisory Committee Meeting to Discuss Impact of Embedded Volumetric Optionality Guidance and Recent Trade Option Proposal

On July 29, 2015, the CFTC’s Energy and Environmental Markets Advisory Committee met and heard from a panel on the impact that the initiatives regarding trade options and forwards with embedded volumetric optionality (EVO) will have on energy and environmental markets. In May 2015, the CFTC amended its seven-part guidance on distinguishing forward contracts with embedded volumetric optionality from commodity options and, in a separate rulemaking, the CFTC proposed to narrow the trade option exemption to the swaps regulations applicable to commodity options. Continue Reading

D.C. Circuit Remands Several Upwind States’ SO2 Emissions Budgets But Sides with EPA on all other Challenges to Cross-State Air Pollution Rule

On July 28, 2015, the U.S. Court of Appeals for the District of Columbia Circuit remanded without vacatur several states’ maximum emission allowances, or “emissions budgets,” for sulfur dioxide (SO2) and nitrogen oxides (NOx) under the Cross-State Air Pollution Rule (CSAPR) back to the Environmental Protection Agency (EPA). EME Homer City Generation, L.P., v. EPA, No. 11-1302 (D.C. Cir.). CSAPR is EPA’s emissions trading program to curb interstate air pollution from power plants under the Clean Air Act’s good neighbor provision. Continue Reading

Clean Power Plan: EPA Issues Final Carbon Reduction Rule for Existing Stationary Sources

On August 3, 2015, the United States Environmental Protection Agency (EPA) released the final version of the Existing Source Performance Standards (ESPS) component of the Obama Administration’s Clean Power Plan (CPP), setting the first-ever carbon dioxide emission reduction goals for States. Environmental Protection Agency, Carbon Pollution Emission Guidelines for Existing Stationary Sources, 40 CFR Part 60, Docket No. EPA-HQ-OAR-2013-0602, RIN 2060-AR33 (April 3, 2015). When fully implemented by 2030, the CPP is expected to reduce CO2 emissions from the power sector by 32% over 2005 levels. The final version includes significant changes from the original proposal, 79 Fed. Reg. 34829 (June 18, 2014). Continue Reading

A Little Late . . . or Just In Time?

On June 29, 2015, the Supreme Court issued its latest opinion in an environmental rule challenge, this to the Mercury and Air Toxics Standard, or MATS.  Michigan et al. v. EPA¸ Slip Opinion, No. 14-46, U.S. (June 29, 2015).  The Court held that EPA had not reasonably considered cost in the “capacious” “appropriate and necessary” standard when determining to regulate power plant mercury emissions.  The Court reversed the D.C. Circuit’s decision in White Stallion Energy Center, LLC v. EPA, 748 F. 3d 1222 (2014) (per curiam) and remanded the proceeding, stating that EPA must factor cost into its “appropriate and necessary” determination.  The Court passed no judgment on whether EPA can meet that burden.  The D.C. Circuit will issue a remand order that will provide further guidance to the regulated community, including a schedule for EPA to re-issue its “appropriate and necessary” justification, possibly including a stay or vacature of the existing rule. Continue Reading

Consent Decrees May Not Preclude Certain Claims in Citizen Suits

On June 17, 2015, an Ohio district court ruled that a consent decree in a separate Illinois action did not preclude certain claims asserted in a citizen suit under the Clean Air Act (CAA).  Graff v. Haverhill N. Coke Co., No. 1:09-cv-670 (S.D. Ohio June 17, 2015).  Generally, a consent decree precludes citizen suit plaintiffs from pursuing separate claims.  The idea is that the claims were previously litigated under the doctrine of res judicata.  However, in Graff the court permitted citizen plaintiffs to continue pursuing claims that the government did not allege or specifically address in a consent decree.

In 2009, the citizen plaintiffs originally filed suit in relation to the defendants’ operation of a coke processing plant near the citizen plaintiffs’ property.  However, in 2013, the U.S. EPA, the State of Illinois and the State of Ohio (the Governments) filed a separate action in Illinois for CAA violations against some of the same defendants.  U.S. v. Gateway Energy & Coke Co., LLC, No. 3:13-cv-616 (S.D. Ill.).  The parties in the Illinois action ultimately entered into a consent decree, which dealt in part with the defendants’ coke processing plant in Ohio. Continue Reading

FERC Eliminates Paper Copy Requirement for Trial Exhibits

On June 18, 2015, the Federal Energy Regulatory Commission eliminated the requirement in Rule 508 of the Commission’s Rules of Practice and Procedure, 18 CFR 385.508, that paper copies be provided of all exhibits introduced as evidence in Commission trial-type evidentiary hearings.  The final rule eliminating this requirement was issued as Order No. 811 in Docket RM15-5-000, Revised Exhibit Submission Requirements for Commission Hearings.  The elimination of the paper copy requirement for exhibits is designed to facilitate a shift toward electronic hearing procedures, increase efficiency, reduce costs associated with providing paper exhibits and facilitate compilation and transmittal of the hearing record to the Commission in electronic format. Continue Reading

EPA Finds No Widespread Drinking Water Impact from Hydraulic Fracturing

On June 4, the Environmental Protection Agency (EPA) released a draft of its landmark study to assess the impact of hydraulic fracturing on drinking water.  U.S. EPA Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources (External Review Draft), EPA, Washington, DC, EPA/600/R-15/047, 2015.  Continue Reading

Murray Energy Decision Requires the Energy World to Wait

In a much-watched case, on June 9, 2015, the D.C. Circuit Court of Appeals issued an opinion denying the petition of Murray Energy for an extraordinary writ that would have stopped EPA from promulgating its Carbon Pollution Standards.  Murray Energy had based its petition on two sections of the Clean Air Act, Sections 111(d) and Section 112.  Murray Energy argued that EPA was prohibited from regulating greenhouse gas pollution from power plants under Section 111(d) because EPA was already regulating other kinds of pollutants from those plants under Section 112.  Because the rule is still a proposal, the Court held, as many expected, that the action was premature.  The Administrative Procedure Act and the Clean Air Act prohibit judicial challenges until a rulemaking is final.  EPA had argued that it could change the basis for the rulemaking based on comments received and that the Court should not pre-judge the issue.  The Court agreed that no grounds existed to “circumvent bedrock finality principles.” Continue Reading