How will greenhouse gas (GHG) regulations affect new and stationary sources? Will GHGs play a role in the 2012 presidential elections? During a recent Bracewell & Giuliani LLP press conference, partners such as former EPA air administrator Jeff Holmstead, congressional/refining expert Scott Segal and former EPA enforcement official Rich Alonso took part in a discussion centering on these topics.
On Dec. 23, 2010, the EPA issued its plan for establishing greenhouse gas pollution standards under the Clean Air Act (CAA) in 2011. This included reference to New Source Performance Standards, which set the level of pollution new facilities may emit and address air pollution from existing facilities.
Holmstead said EPA is incorrect to say that new and modified sources are not yet regulated; “There’s just no standard for what they have to meet. Right now, developers are faced with undergoing a process that gives them a standard, but don’t yet know what the standard is going to be or how they’re going to get there.” This uncertainty, Holmstead said, has caused the construction moratorium.
“EPA is acknowledging that it’s going to be a couple years before people see these new permits.”
However, NSPS are more favorable than the typical EPA permitting processes, Holmstead said, and this could impact the effectiveness of the end product. “This is the big issue that EPA faces: if they do what’s sensible and reasonable for coal-fired power, they might get a 2 to 5 percent reduction in greenhouse gases.
EPA may not be willing to undergo this less strenuous process in order to reduce emissions by a few percentage points, Holmstead said.
Texas, where a federal court has denied the state’s attempts to delay U.S. environmental regulators from imposing regulations on greenhouse gases, will face construction being put on hold for at least a couple years, Holmstead said.
“I’m confident in saying that nobody in Texas will have legitimate authority to build a new project in at least two years, and that would be lightning speed.”
Segal spoke on how EPA regulations could affect political positions, and vice versa. Delays of one to two years in regards to emissions rule-making “could set up an unfortunate collision course with the presidential election.” A three-year delay on EPA’s behalf could allow the Agency to “operate from the position of political hijinks.”
While discussions have been made on how Congress will handle the greenhouse gas regulations, Segal said that Senate’s reaction to the standards will be something to watch. “Harry Reid has been a strong defender of premium renewable energy.” Among the 10 Senate Republicans, 100 percent voted for the last floor vote on a resolution of disapproval for global greenhouse gases. In addition, of the 21 Democrats up for re-election, 10 are from states in which a vote seen as favorable to greenhouse gas regulatory authority “would be a political liability.”
“That doesn’t mean they’re going to vote in favor of an amendment, it just means in 2012, they would have some ‘splainin’ to do if they voted against it,” Segal said.
The Bracewell & Giuliani team also discussed the Jan. 12 EPA announcement to defer biomass from greenhouse gas permitting requirements for three years. Alonso said that because biofuels are not yet under the structure of the CAA, this provides an incentive to build biomass. However, Alonso said that EPA has created a problem for itself.
“They have announced this as a three-year delay, but it’s not clear if this is legal.” Alonso said this policy will likely be challenged “because biomass does emit carbon.”
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