Thursday, September 26, 2013

Ninth Circuit gives green light to California low carbon fuel regulation

A federal appeals court has rejected arguments that California's pioneering low-carbon fuel standard violates the U.S. Constitution by discriminating against out-of-state ethanol and crude oil producers.

In a decision released Sept. 18 the court held that the LCFS does not transgress the Commerc Clause. Two judges on a U.S. Court of Appeals for the Ninth Circuit panel found that California law may treat fuels with different levels of carbon intensity differently because the benefits obtained for the environment outweighs that discrimination. 

"This is a great day for public health and the economy of California," Tim O'Connor, an attorney at Environmental Defense Fund and director of that organization's California Climate Initiatives, said. "The court clearly upheld a groundbreaking policy that will protect consumers and the environment by diversifying our fuel mix and providing more choices for a clean energy future."

The court's holding specifically sanctioned California's effort to take into account the greenhouse gas emission caused at all stages of a fuel's production, transportation, and distribution.

“If California is to successfully promote low carbon-intensity fuels, countering a trend towards increased [greenhouse gas] output and rising world temperatures, it cannot ignore the real factors behind GHG emissions,” the majority opinion by Judge Ronald M. Gould said.

Another noteworthy aspect of the Ninth Circuit's opinion is a recognition that states may formulate regulations that recognize the greenhouse gas emission implications of  fuel producers' entire operations:
With its long coastlines vulnerable to rising waters, large population that needs food and water, sizable deserts that can expand with sustained increased heat, and vast forests that may become tinderboxes with too little rain, California is uniquely vulnerable to the perils of global warming. The California legislature determined that [greenhouse gas] emissions from the production and distribution of transportation fuels contribute to this risk, and that those emissions are caused by the in-state consumption of fuels. Whether or not one agrees with the science underlying those views, those determinations are permissible ones for the legislature to make, and the Supreme Court has recognized that these risks constitute local threats.
The opinion also rejected a claim that the California LCFS is preempted by the federal Clean Air Act.

One of the three judges on the panel, Mary Murguia, dissented.

The LCFS is one aspect of California's multi-pronged efforts, based on the state's Global Warming Solutions Act of 2006, to reduce greenhouse gas pollution. It forces producers and distributors of fuels used in transportation systems, especially motor vehicles, to meet a gradually more rigorous schedule of reduced greenhouse gas emissions. The regulation does this by mandating a focus on the "carbon intensity" of the fuels. That term refers  to the amount of atmosphere-warming compounds produced at each stage of the process of extracting, refining, distributing, and burning the fuel.

The case is Rocky Mountain Farmers Union v. Corey, No. 12-15131.

EPA proposes carbon dioxide limits for new power plants

The Obama administration made clear Friday that it will move forward with a regulatory agenda aimed at slowing climate change as the Environmental Protection Agency announced a proposed regulation that would limit carbon dioxide emissions from new power plants.

The proposed Carbon Pollution Standard for New Power Plants was announced at the National Press Club by EPA administrator Gina McCarthy.

The overwhelming judgment of science tells us that climate change is real, human activities are fueling that change, and we must take action to avoid the most devastating consequences of climate change,” McCarthy said, according to prepared remarks. “We know this is not just about melting glaciers. Climate change – caused by carbon pollution – is one of the most significant public health threats of our time. That’s why EPA has been called to action.”

In 2007 the U.S. Supreme Court held that EPA must regulate emissions of carbon dioxide to the atmosphere because it is a pollutant that can harm public health and the environment. EPA issued the required “endangerment” finding in Dec. 2009, a decision that was upheld by the federal appeals court in Washington, DC in June 2012.

The endangerment finding relating to carbon dioxide prevents EPA from leaving carbon dioxide pollution of the atmosphere unregulated.

EPA has no choice but to adopt these regulations,” Patrick A. Parenteau, a professor of law at Vermont Law School, said. “What’s in the regulations is a subject of controversy and discussion. But they don’t have the ability to say ‘no, we won’t do it.’”

The rules announced Friday would, if finalized, distinguish between natural gas-fired power plants and coal-fired electricity generation facilities.

For large natural gas plants, a limit of 1,000 pounds of carbon dioxide per megawatt hour would be imposed; for smaller natural gas power plants, the cap would be 1,100 pounds of CO2 per megawatt hour.

Coal plants would not be allowed to emit more than 1,100 pounds of CO2 per megawatt hour. The regulation provides an avenue for coal plant operators to have some additional flexibility as to the limit by allowing them to average emissions over several years, but only if a coal plant operator agreed to accept a more stringent emissions cap.

The core of the rules, and an aspect that may serve as the prop for an expected legal attack by the affected industries, is a requirement that coal-fired power plants capture and store the carbon dioxide they now emit to the atmosphere.

Widespread adoption of the technology has been resisted by the industry on grounds that it may cause an increase in the cost of producing electricity and consume a large proportion of the energy produced by a power plant.

The environmental community generally welcomed Friday’s announcement, lauding the administration’s action as an important step toward a functional national system of greenhouse gas emission controls.

The standard makes clear that tomorrow’s power plants won’t be built at the expense of our children’s future,” Natural Resources Defense Council president Francis Beineke said in a statement. “It signals that we’re moving, as a country, to the clean energy solutions we need. And it will help safeguard the most vulnerable among us—our children and elderly people—from smog worsened by climate change.”

Environmental Defense Fund president Fred Krupp emphasized the potential mitigation of extreme weather events that might be provided by the proposed new source performance standard.

“As communities across our country struggle with terrible floods, droughts, and wildfires, these standards will finally put a limit on the carbon pollution that new power plants emit into our skies," he said in a statement. “Cleaner power generation will protect our children from dangerous smog, extreme weather, and other serious climate impacts, and ensure that America leads the world in the race to develop cleaner, safer power technologies."

The coal and electric utility industries, meanwhile, wasted little time before expressing its displeasure.

“We intend to  make all the arguments we can against the EPA’s proposed regulation because taking away the option to build efficient new coal-fueled power plants is bad policy,” Robert M. Duncan, the president and chief executive officer of the American Coalition for Clean Coal Electricity, said in a statement.

ACCCE is a coalition of electric utility and coal interests.

Duncan also suggested that litigation challenging the proposed rules is likely.  

Parenteau said that any litigation challenging the new rules would succeed only if it convinces a panel of federal appeals court judges that an equally effective, less expensive pollution control technology is available to power plant operators.

That legal obstacle is daunting. A decision of the U.S. Court of Appeals for the District of Columbia Circuit in 1973 held that a technology-forcing rule “may fairly be projected for the regulated future, rather than the state of the art at present, since it is addressed to standards for new plants.”

That decision, in a case called Portland Cement Association v. Ruckelshaus, does constrain EPA’s discretion to some extent, as it imposes a “reasonableness” standard on the agency. A technology-forcing rule, the court said, “cannot be based on a ‘crystal ball’ inquiry.”

The proposed rule argues that CCS technology has been implemented around the nation, though several of the examples mentioned in it involve electricity generation facilities. However, none of those have actually sequestered carbon dioxide emissions.

The financial costs of compliance may prove less likely to supply a winning argument for industry. A 1999 decision of the D.C. Circuit held that EPA’s choice of a technology mandate “will be sustained unless the environmental or economic costs of using the technology are exorbitant.”

Other cases have provided some clarity to that definition, holding that a maximum achievable control technology requirement included in an emissions regulation will not be rejected unless the costs imposed by the requirement are so high as to threaten the existence of the industry.

These legal arguments will be relevant only if the Supreme Court does not re-visit its Massachusetts v. Environmental Protection Agency ruling. The justices are expected to decide, early in the new court term, whether to grant review of an appeals court decision that upheld EPA’s endangerment finding.

It’s very unlikely that the Supreme Court would grant review,” Parenteau said. “If for some reason they ruled that the EPA endangerment finding is flawed, then the house of cards falls down. That’s the foundational finding for all these rules. Everything depends on that endangerment finding.”

Parenteau explained that he thought the odds of a reversal of Massachusetts v. EPA were quite low.

“I think it’s less than a one percent chance that the Supreme Court would get five votes to challenge EPA on that,” he said.

“If the industry wants to challenge, sure, it’s going to be expensive, but what’s going to be better?” Parenteau said. “They’re going to have come forward with a better technology.”

Some members of Congress, especially those who represent coal-producing states, are staking out a backstop in case litigation proves unable to stop EPA’s effort to regulate the CO2 emissions of new power plants.

Sen. Joe Manchin, D-W.Va., issued a blistering statement accusing the Obama administration of being an “adversary” of the coal industry.

“Today’s announcement of the EPA’s new source performance standard is direct evidence that this Administration is trying to hold the coal industry to impossible standards,” he said.

Sen. Mitch McConnell, a Kentucky Republican and the chamber’s minority leader, said Friday that he would invoke a rarely-used legislative procedure in an effort to block the rules.

“I will file a resolution of disapproval under the Congressional Review Act to ensure a vote to stop this devastating EPA rule," he said in a statement.

Assuming that a CRA resolution could get passed by the Democratic-controlled Senate, it is not likely that it would be signed into law by the president. President Barack Obama signaled his commitment to an effort to rein in power plant greenhouse gas emissions when he announced a comprehensive climate change policy earlier in the year.

EPA is also working on greenhouse gas emission standards for existing electricity generation facilities.

“[W]e are committed to act on existing plants, too,” McCarthy said Friday. “However, those proposed standards are on a longer timeline. We plan to release a proposal for public comment in June of next year.”

Photo courtesy Wikimedia. 

NOTE: This article also appears at