Environmental Business Alert

Date: Aug 02, 2012

DC Circuit Upholds SO2 NAAQS

The U.S. Court of Appeals for the District of Columbia Circuit ("DC Circuit") held in National Environmental Development Association's Clean Air Project v. EPA, No. 10-1252 (Jul. 20, 2012) that EPA did not act arbitrarily and capriciously in significantly lowering the 1-hour sulfur dioxide ("SO2") national ambient air quality standards ("NAAQS") to 75 parts per billion. The Court also dismissed a procedural challenge to the method EPA uses to determine whether covered areas are in attainment with the SO2 NAAQS. Industry petitioners alleged that EPA acted arbitrarily and capriciously in setting the 1-hour SO2 NAAQS at a level lower than necessary to protect human health. The petitioners argued that EPA misapplied American Thoracic Society guidelines on what constitutes an adverse effect of air pollution. They also alleged that EPA cherry-picked epidemiologic studies supportive of more restrictive standards, while disregarding others favorable to less stringent standards, and did not rely on statistically significant data. Citing American Trucking Associations, Inc. v. EPA, 283 F.3d 355 (D.C. Cir. 2002) for the proposition that courts must defer to agencies in matters of science, the court found that EPA rationally explained its reliance on the scientific evidence supporting the 75 ppb standard. In addition, EPA has discretion to set NAAQS at a concentration below the level that has been demonstrated to have a statistically significant association with negative health effects.

Industry and state petitioners also argued that EPA failed to follow the notice and comment rulemaking procedure required under the Administrative Procedures Act ("APA") because EPA announced in the preamble to the Final Rule that it anticipated using computer-modeling, as well as air-monitoring, to determine whether attainment of the NAAQS has been achieved in most cases. Petitioners argued that this hybrid approach was never discussed in the 2009 Proposed Rule, and thus violated the APA. The court disagreed, finding that the challenged preamble statements did not impose a legal obligation to use computer modeling and thus did not constitute reviewable "final agency action" under either the Clean Air Act ("CAA") or the APA.

EPA Environmental Appeals Board Finds Agency Review of Hydraulic Fracturing Wastewater Wells Insufficient

On June 28, 2012, the EPA Environmental Appeals Board ("EAB") remanded two underground injection control ("UIC") permits to Region 3 for failing to account for and consider all drinking water wells within the "area of review" of the injection wells before granting these permits to Bear Lake Properties. The permits at issue in In re Bear Lake Properties, were some of the first issued for wastewater disposal wells at hydraulic fracturing operations in Pennsylvania's Marcellus Shale. The EAB appears to have been concerned about hasty decision making on the part of the Region, as it identified significant and unexplained inconsistencies in the record. Examples of inconsistencies identified by the Board included EPA's failure to explain a discrepancy in the number of wells identified in an initial survey and those in a post-comment period supplemental survey. The EAB directed the Region to make "specific and detailed findings" to demonstrate that it has identified and considered all drinking water wells within the area of review.

GHG Tailoring Rule Will Maintain Current Permitting Thresholds

On July 12, 2012, EPA published the final greenhouse gas ("GHG") "tailoring rule," which will maintain current GHG permitting thresholds under the Prevention of Significant Deterioration ("PSD") and Title V programs of the CAA. This means that new sources will be subject to PSD permitting requirements if they emit or have the potential to emit 100,000 tons per year ("tpy") or more carbon dioxide equivalent, as opposed to the 100 tpy threshold set forth in the Act. Existing facilities that undertake a modification increasing GHG emissions by at least 75,000 tpy will also be subject to PSD permitting if they meet the 100,000 tpy threshold. In addition, Title V permitting requirements will apply to both new and existing sources meeting the 100,000 tpy threshold. As discussed in our previous alert, EPA determined that state permitting authorities still do not have sufficient capabilities and resources to regulate a broader universe of sources, and so Step 3 of the tailoring rule will not revise the GHG permitting thresholds, but will instead maintain a focus on the nation's largest stationary source emitters. The Agency also finalized two "streamlining" provisions: (1) allowing companies to set enforceable plant-wide emissions limits for GHGs; and (2) allowing sources with only the potential to meet the GHG emissions threshold to set enforceable GHG emissions limits to avoid triggering PSD permitting requirements.

Proposed Consent Decree Would Require EPA Review of the Municipal Solid Waste Landfill NSPS

On July 19, 2012, EPA published notice of a proposed consent decree requiring the Agency to review, and if appropriate revise, the New Source Performance Standards ("NSPS") for municipal solid waste ("MSW") landfills. The consent decree resolves allegations by the Environmental Defense Fund that EPA failed to discharge its duty under the CAA to periodically review this NSPS for necessary revisions. The Agency would have to complete its review and publish its findings or propose amendments by May 1, 2013. Any final rule would have to be promulgated by the following year (May 1, 2014). The public can submit comments on the proposed consent decree through August 20, 2012.

EPA Revises Tier I and Tier II EPCRA Forms

On July 13, 2012, EPA issued a Final Rule adding new mandatory data elements to the annual Tier I and Tier II Emergency and Hazardous Chemical Inventory Forms. Pursuant to Section 312 of the Emergency Planning and Community Right-to-Know Act ("EPCRA"), certain facilities must submit one of these forms to their State Emergency Response Commission ("SERC"), Local Emergency Planning Committee ("LEPC") and local fire department by March 1st. States have the discretion to require the filing of a Tier I form, which is more streamlined, instead of the Tier II form, which provides detailed information on the types, amounts and locations of hazardous chemicals within the facility. The final rule requires the submission of additional contact, location and administrative information on both forms. One issue of continuing concern for industry is the increased specificity of the chemical quantities that must be reported on the Tier II form. Such disclosure would make available more information about chemical inventories on hand, which is typically considered confidential business information. The new requirements will come into effect for calendar year 2013 reports, which are due March 1, 2014.

EPA Testifies on RFS2 RINs Fraud Before House Committee

At a July 11, 2012, hearing before the House Energy and Commerce Committee oversight panel, EPA revealed plans for insulating from liability companies that may have purchased fraudulent renewable identification numbers ("RINs"). As we reported, EPA had taken the position that "buyer beware" applies to companies that purchased and relied upon millions of fraudulent RINs for meeting their renewable fuel obligation. Following calls from Congress and industry, the Agency now appears to have relented and according to the testimony of an EPA official is considering promulgating a rule "to establish a third party verification system to help industry participants ensure that RINs are valid." Although industry and Congress have pressed EPA to complete this rulemaking by January 2013, EPA remains cautious and has not committed to this timeframe.

EPA Proposes Amendments to the Portland Cement NESHAP and NSPS

Following the D.C. Circuit's remand, EPA on July 18, 2012, issued proposed revisions to the NSPS and National Emission Standards for Hazardous Air Pollutants ("NESHAP") for Portland cement facilities. The proposed amendments would remove certain cement kilns currently subject to the Non-Hazardous Secondary Materials ("NHSM") rule from the scope of the NESHAP, also know as the Portland cement Maximum Achievable Control Technology "MACT." In addition, EPA proposed to revise both the Portland cement NSPS and MACT to allow operators to conduct manual stack testing in lieu of using continuous emissions monitoring systems for determining compliance with particular matter ("PM") emissions standards. The proposal would also impose less stringent PM emissions standards for those facilities that rely on manual stack testing. If finalized, the MACT and NSPS compliance dates would be extended to September 9, 2015. Comments on the proposal are due on August 17, 2012.

CARB Extends Submission Deadline for Data on Multi-Purpose Solvents and Paint Thinners

Effective December 31, 2013, persons must not sell, supply, offer for sale or manufacture for sale in California any "multi-purpose solvent" or "paint thinner" containing more than three percent by weight volatile organic compounds ("VOC"). Pursuant to the California Consumer Product Regulation ("CCPR"), manufacturers or distributors of such solvents and paint thinners (as determined by the company name appearing on the product label) must submit detailed information to the California Air Resources Board ("CARB") on their research and development efforts to achieve this VOC content limit, as well as data on product sales and composition for the year 2011, by June 30, 2012. CARB has now issued a notice extending this reporting deadline to September 17, 2012. It appears that CARB is granting this extension to obtain information beyond what is specifically required by the regulation, including information on products that are not in liquid form but otherwise meet the definition of "multi-purpose solvent" or "paint thinner"; products with the terms "acetone," "denatured alcohol," "linseed oil," "methyl ethyl ketone," "mineral spirits," "naphtha," "odorless mineral spirits," or "turpentine" in the product name; and products that are used in paint clean-up or surface preparation. CARB intends to use this information to determine whether to amend the "multi-purpose solvent" and "paint thinner" definitions, revise the method for determining VOC content, and to evaluate the feasibility of the three percent VOC limit.