In testimony before the Senate Appropriations Subcommittee on Interior and Related Agencies on March 3, 2010, Administrator Lisa Jackson of the Environmental Protection Agency indicated that EPA plans to move forward with adopting the Greenhouse Gas (“GHG”) Tailoring Rule (74 Fed.Reg. 55,292) later this month.  The Tailoring Rule is intended to ameliorate the impact of GHGs becoming “regulated pollutants” under the Clean Air Act Prevention of Significant Deterioration and Title V programs, which would otherwise be fully triggered by the enactment of another EPA proposed rule concerning GHG emissions from cars and light duty trucks. (74 Fed.Reg. 49,454)

The primary GHGs are carbon dioxide (‘CO’), methane (‘CH4”) and nitrous oxides (“N2O”). To put these on an equal footing for purposes of comparison of their global warming potential, they must be converted to carbon dioxide equivalents. The common unit is referred to as a carbon dioxide equivalent or CO2e. While methane and nitrous oxides are emitted in lesser quantities than CO2, they have a much higher global warming potential. To convert to tons CO2e, use by the factors below (all in metric tons):

• 1 ton of carbon dioxide = 1 ton CO2e
• 1 ton of methane (CH4) = 23 tons CO2e
• 1 ton of nitrous oxide (N2O) = 310 tons CO2e

Thus, sources emitting 75,000 TPY of CO, 3,260 TPY methane, or 242 TPY of nitrous oxide, or any combination of these that totals 75,000 TPY CO2e will be subject to the PSD requirements of the tailoring rule at the outset (all in metric tons).

Administrator Jackson indicated in response to questions from Senator Lisa Murkowski of Alaska that EPA is considering adopting regulations under the New Source Performance Standards for GHGs from electric power plants and perhaps for other sources later. She hinted that these control rules would likely affect sources at a threshold of somewhere between 50,000 and 75,000 TPY. Murkowski quizzed the Administrator concerning why EPA is moving towards regulation of GHGs if she favors Congressional legislation to address GHGs. Jackson responded that the approach under the Tailoring Rule will not be inconsistent as EPA is likely to have a significant role in regulating GHGs under any Congressional action. She also indicated that EPA was required to address whether GHGs endanger public health and welfare pursuant to the United States Supreme Court decision in Massachusetts v. EPA (127 S.Ct. 1438)(2007).
 

The February 10, 2010 Federal Register contains a notice of EPA's final decision that the Baton Rouge ozone nonattainment area “has attained the 1-hour ozone National Ambient Air Quality Standard (NAAQS)." (The Baton Rouge area consists of the parishes of Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge.) EPA found that the ambient monitoring data for 2006-2008 demonstrated attainment and noted there were no exceedances of the standard in 2009. Although this 1-hour ozone standard was revoked in 2005 and replaced with a more stringent 8-hour standard, some of the SIP requirements associated with the old 1-hour standard were continued under the Clean Air Act’s “anti-backsliding” provisions. The EPA action, known as a "Clean Data Policy Determination," formally suspends several requirements associated with the Louisiana Department of Environmental Quality’s (“LDEQ’s”) State Implementation Plan (“SIP”) as long as the area continues to achieve the 1-hour standard. These suspended requirements include “a severe attainment demonstration, a severe reasonable further progress plan (RFP), applicable contingency measures plans, and other planning State Implementation Plan (SIP) requirements related to attainment of the 1-hour ozone NAAQS.”

The January 5, 2010 Guidance referred to by EPA clearly stated that once an area meets either the old 1-hour ozone standard or the new 8-hour ozone standard, the obligation to have a Section 185 fee program is discontinued. Because the Clean Data Policy Determination in the February 10th Federal Register confirms that the Baton Rouge Area has met the 1-hour standard, it is expected that EPA will soon make a determination that no Section 185 program is needed. Such a decision would avoid a significant adverse economic impact to the community.

It should be noted that the 5-Parish Baton Rouge Area has also achieved attainment with the 8-hour ozone standard and the LDEQ also submitted a request for a Clean Data Policy Determination to the EPA for that 8-hour standard, thus providing further support for discontinuation of any requirement to adopt a Section 185 fee program. It is expected that EPA will soon propose such a determination for public comment. LDEQ also submitted a request to EPA last August for a determination that the Baton Rouge Area should be redesignated to full attainment with existing ozone standards. The full redesignation requires not only a Clean Data determination, but also approval of a maintenance plan to ensure continued attainment.

The EPA notice also indicated that the existing requirements for nonattainment new source review (“NNSR”) “may change after the area is redesignated and has an approved maintenance plan.” EPA indicated that at that time, the Louisiana Prevention of Significant Deterioration (“PSD”) requirements would apply within the area in lieu of the NNSR requirements. EPA is likely to propose full redesignation of the area to attainment within the next few months.

EPA and LDEQ are subject to a pending lawsuit filed by the Louisiana Environmental Action network (“LEAN”) in the U.S. District Court for the District of Columbia last year arguing that one or both of the agencies should impose a Section 185 fee program, a 1-hour severe NNSR program, and other requirements of the old 1-hour standard on sources within the Baton Rouge Area. The Baton Rouge Chamber of Commerce, the Louisiana Chemical Association, and the Louisiana Mid-Continent Oil and Gas Association have moved to intervene in that lawsuit.

The EPA Federal Register notice of the Clean Data Policy Determination for Baton Rouge is available here.

In the January 20, 2010 Louisiana Register, the Office of Conservation, Louisiana Department of Natural Resources issued a Notice of Intent to amend Statewide Order 29-B to incorporate new rules for the evaluation and remediation of groundwater conditions at exploration and production sites.

The proposed rules can be found at this link.   As part of the proposal, Conservation has published a draft manual entitled “Exploration and Production Waste Site Evaluation and Remediation Procedures Manual” or “SERP Manual.”   A copy of the SERP Manual can be found here. 

Conservation will accept comments on the proposal through March 8, 2010.   A public hearing on the proposal is scheduled for March 1, 2010, at 9:00 a.m. (CST).   Anyone with interests involving energy exploration and production sites should carefully review the proposal.

During the past few years, the Louisiana Legislature has adopted many “green” initiatives as part of climate and energy policies. The state has placed a strong emphasis on increasing both renewable energy generation and energy efficiency. The following is a list of some of these important initiatives:

• The Louisiana Renewable Energy Development Act allows Grid Tied Net Metering systems throughout the state, which allows electric utility customers, who wish to install a net metering facility, to reduce their monthly electricity bill by using electricity that is generated from solar, wind, hydroelectric, geothermal, or biomass resources. See La. R.S. 51:3061-51:3063 (2003).
   

• The Louisiana Biofuel Standard requires all gasoline to contain two percent ethanol and that two percent of all diesel must be biodiesel. The standard is set to go into effect six months after the time when the state has either (i) 50 million gallons of ethanol in annual production or (ii) 10 million gallons of biodiesel. See La. R.S. 3:4674, 3:4674.1, and 3:3712 (2006).

• Wind and Solar Energy Tax Exemptions provides an individual income tax credit of up to for the installation of a wind or solar energy systems on residential property, which may be carried forward for 10 tax years. According to “Green Scene” magazine, this is one of the most progressive pieces of legislation in the country. The credit shall be equal to 50% of the first $25,000 dollars of the cost of each wind energy system or solar energy system, including installation costs. It applies to a wind or solar system that is purchased and installed on or after January 1, 2008. The credit may be used in addition to any federal tax credits earned for the same system. See LAC La. R.S. 47:6030. (2007). In addition, equipment used for solar power is exempt from property taxation. See La. R.S. 47:1706.

• The Louisiana Geologic Sequestration of Carbon Dioxide Act establishes a comprehensive regulatory program for the control of injection, storage, and use of carbon dioxide under the auspices of the Office of Conservation within the Department of Natural Resources (DNR). The act further establishes liability limits for operators with transfer of liability for storage operations to the Geologic Storage Trust Fund (run by the state) after a specified time. Finally, the act provides authority for expropriation of pipeline servitudes, storage facilities and other associated facilities necessary for carbon sequestration operations upon a determination of public convenience and necessity. See La. R.S. 30:1101-30:1111 and La. R.S. 19:2 (2009).

• Advanced Biofuel Industry Development Initiative, has been described as one of the most comprehensive and far-reaching biofuels development programs in the nation. Called the “field to pump” strategy, it creates pilot programs and incentives. It creates two pilot programs – one for Advanced Biofuel Variable Blending Pumps which will involve blending of fuels with advanced biofuel percentages between 10 and 85 % until January 1, 2012. During the pilot, the Louisiana Department of Agriculture and Forestry (LDAF) will monitor the equipment used to dispense the ethanol blends to ascertain that the equipment is suitable and capable of producing accurate measurement. The second pilot calls for trial use of hydrous ethanol blends of E10, E20, E30 and E85 in motor vehicles specifically selected for test purposes until January 1, 2012. During this period the LDAF will monitor the performance of the motor vehicles. An income tax credit of ten cents per gallon of advanced biofuel is available to qualified small advanced biofuel manufacturing facilities. The credit applies only to the first ten million gallons of advanced biofuel produced in a tax year and expires on December 31, 2012. The act requires state agencies to purchase/lease only vehicles capable of using alternative fuels. Finally it provides a pricing discount for members of any governmental body, state educational institution, or instrumentality of the state on the price of E20, E30 or E85 advanced biofuel at a price equal to 15% less per gallon than the price of unleaded gasoline for use in any motor vehicle.

• Alternative Fuel Vehicle Incentives provide an incentive to persons or corporations to invest in qualified clean-burning motor vehicle fuel property by allowing credits against income tax liability, which equal fifty percent of the cost of the qualified clean-burning motor vehicle fuel property. See La. R.S. 47:6035 (2009).

• The Green Jobs Tax Credit provides a corporate or income tax credit for qualified capital infrastructure projects in Louisiana that are directly related to industries including but not limited to the energy efficient and advanced drive train vehicle industry and the biofuels industry. The tax credit is worth up to $1 million per state-certified green project, calculated on the base investment costs of the project, for up to a total of $5 million per year. See La. R.S. 47:6037 (2009).

• Sustainable Energy Financing Districts, authorizes “creation of sustainable energy financing districts by local governmental subdivisions and provides for issuance of bonds and property assessment programs for solar and energy efficiency projects.” This will allow local governments and subdivisions to incur debt for the purposes of providing these “energy financing districts” with necessary funds to cover the cost of energy efficiency improvements or renewable energy improvements. These loans are made directly by the district to the home or property owner, and can be paid back over a twenty year period. Property owners can even make arrangements to pay back loans through its payment of annual property taxes. See La. R.S. 33:130.790 – 793 (2009).

In addition to these legislative efforts, Governor Bobby Jindal issued a green Executive Order in 2008 which, among other things, required the Division of Administration to set energy efficiency goals for state facilities, office buildings; required each department of the executive branch to adopt a program to reduce solid waste and adopt recycling programs; directed the Division of Administration to review its purchasing practices to ensure 100% compliance with existing state requirements related to energy conservation, to adopt best energy purchasing practices and to develop or increase standards for such products as appliances, light bulbs, smart chargers, and computers using Energy Star as a minimum standard. See Executive Order BJ-2008-8.

In 2007, the Louisiana Public Service Commission developed a “Geaux Green” program whereby customers of regulated utilities can choose to purchase green power in blocks from their local utilities. Such power is generated from renewable fuels (Louisiana agricultural by-products such as rice hulls and bagasse) and is priced somewhat higher than power from traditional fuels. The cost is $2.25 per month per 100 kilowatt-hours (kWh) of electricity. A typical household uses from 1000 to 1500 kWh per month. A customer can choose to purchase only 100 kWh or any multiple of 100. Thus far, Entergy has been the only utility to offer the program; however, SWEPCO and CLECO are working with potential renewable fuels suppliers and may join.

The Louisiana Department of Natural Resources (LDNR) manages two long-standing programs that have been successful at promoting real energy efficiency measures. The first of these, the Home Energy Rebate Option or “HERO” is a LDNR program that provides cash rebate payments to Louisiana residents who have made energy efficiency improvements of 30% or more - currently applicable only to existing homes. Since its inception in 1999, the HERO program has awarded more than 17,000 grants valued at over $24 million. LDNR estimates a savings of 1529 kilo tons of CO2, over 2,000 tons of NOx reduction and over 3,000 tons of SO2 reduction. The latter program, the Home Energy Loan Program (HELP) provides home owners the ability to obtain 5-year loans to improve the energy efficiency of their existing homes. LDNR subsidizes one half of the financing for the energy efficient improvements, up to $6,000, at a low interest rate to participating lenders.

The Louisiana Department of Environmental Quality (LDEQ) is developing written procedures to implement Louisiana’s antidegradation policy (1). These implementation procedures will significantly affect the permitting of wastewater discharges under the Louisiana Pollutant Discharge Elimination System (LPDES) program, especially the permitting of new or expanded discharges.

The antidegradation implementation procedures being developed by LDEQ will set forth, in some detail, the means that LDEQ will employ to protect “high quality,” or Tier 2 (3), state waters when permitting wastewater discharges. Degradation of such waters will be allowed. That is, LDEQ will not be prohibited from permitting new and expanded discharges in Tier 2 waters. However, any resulting degradation of Tier 2 waters either must not be significant or, if significant, the social and economic benefits from the activity causing the discharge must outweigh the harm caused to the receiving water body. Permitting of discharges causing significant degradation of Tier 2 waters will be allowed only after a Tier 2 review, which is similar to an environmental assessment.

When finalized by LDEQ, the new antidegradation policy implementation procedures will answer the following important questions:

• What are Tier 2 (high quality) waters?
• What discharges to Tier 2 waters constitute significant degradation (necessitating a Tier 2 review)?
• What is required for a Tier 2 review? (5)

LDEQ is working closely with interested members of the public, including environmentalists and the regulated community, as well as EPA Region 6, to address these questions in the new implementation procedures (6). As part of this effort, LDEQ intends to solicit additional input via a Potpourri notice in an upcoming Louisiana Register. If you believe that your facility will have new or expanded discharges (or you intend to change the receiving water body for your existing facility discharges), you should review the new draft implementation procedures carefully and comment thereon appropriately. 

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(1) See, LAC 33:IX.1109.A (antidegradation policy); LAC 33:IX.1119 (implementation plan for antidegradation policy); and 40 C.F.R. 131.12.

(2) Pursuant to the Clean Water Act, LDEQ has evaluated each Louisiana surface water (river, lake, stream, etc.) and determined its “designated uses”; i.e., primary and secondary contact recreation (the so-called “fishable/swimmable uses), fish and wildlife propagation, drinking water supply, agriculture, etc. LDEQ likewise has developed “water quality standards”--numerical criteria or general policy statements--that LDEQ applies to each water body to ensure that its designated uses are met. LDEQ applies the water quality standards through the LPDES permitting process in three ways. First, through the normal LPDES permitting process, when the LDEQ permit writer compares a technology-based permit limit for a particular pollutant in a facility discharge to the water-quality based permit limit for such pollutant and includes the more stringent of these limits (the lower limit) in the LPDES permit. Second, by developing total maximum daily loads (TMDLS) and waste load allocations (WLAs) when a state water body fails to meet one or more of its designated uses and then incorporating such TMDLs/WLAs in LPDES permits that authorize discharges to the affected water body. Third, through the antidegradation policy when making LPDES permitting decisions.

(3) Under the federal antidegradation protocol (which is generally being followed by the state), waters are divided into three tiers: (a) Tier 1, which are waters of sufficient quality to meet existing designated uses but whose quality is not such as to be considered “high quality”; (2) Tier 2, “high quality” waters; and (c) Tier 3, outstanding natural resource waters, such as waters of national and state parks and wildlife refuges and waters of exceptional recreational or ecological significance, in which no degradation is allowed. 

(4) See, e.g., La. R.S. 30:2018 and the “IT” questions as set forth by the Louisiana Supreme Court in Save Ourselves, Inc. v. Louisiana Environmental Control Commission, 452 So. 2d 1152 (La. 1984).

(5)  The Tier 2 review does not have to be the same as an environmental assessment or “IT” response.

(6) EPA Region 6 also is preparing guidance on the development of antidegradation implementation procedures, which LDEQ will likely follow.

Two days before the end of the 2009 Legislative Session, the Louisiana Legislature adopted the Louisiana Geologic Sequestration of Carbon Dioxide Act. Introduced as HB661, the final amended bill passed both the House and Senate unanimously. There are three major facets to the law: establishment of a comprehensive regulatory program for the control of injection, storage, and use of carbon dioxide under the auspices of the Office of Conservation within the Department of Natural Resources; establishment of liability limits for operators with transfer of liability for storage operations to the Geologic Storage Trust Fund (run by the state) after a specified time; and authority for expropriation of pipeline servitudes, storage facilities and other associated facilities necessary for carbon sequestration operations upon a determination of public convenience and necessity.

The legislation transfers liability for long term storage (with a few exceptions) to the State ten years after the completion of injection, thus providing more certainty to encourage storage of carbon dioxide that will in turn assist in combating global warming. The ten year period can be altered by rule. To fund this potential liability, the law creates a Geologic Storage Trust Fund that will be funded by fees to be paid by the injection well operator. Until liability transfers to the state, the operator of the injection well, and only the operator, will be liable for compliance with injection and storage requirements. The fiscal note for the bill indicates that LDNR intends to use four full time persons to implement the program – an attorney, a geologist, and engineer, and an administrative assistant. Until the Geologic Storage Trust Fund is funded, operating funds will come from the Oil and Gas Trust Fund.

The law provides that the injected carbon dioxide will “at all times be deemed the property of the party that owns such carbon dioxide, whether at the time of injection, or pursuant to a change of ownership by agreement while the carbon dioxide is located in the storage facility…and in no event shall such carbon dioxide be subject to the right of the owner of the surface of the lands or of any mineral interest therein….” This occurs until ten years after the cessation of injection operations, unless a different time period is specified in the rules. At such time, the Commissioner will issue a certificate of completion of injection operations, upon a showing by the storage operator that the reservoir is reasonably expected to retain mechanical integrity and the carbon dioxide will reasonably remain emplaced. Upon issuance of the certificate, both liability for, and ownership of, the remaining project, including the stored carbon dioxide, transfers to the state. The liability release does not apply if the owner, operator, or generator intentionally and knowingly concealed or intentionally and knowingly misrepresented material facts related to the mechanical integrity of the storage facility or the chemical composition of any injected carbon dioxide.

The law allows property to be expropriated by private entities for the underground storage of carbon dioxide, “including but not limited to surface and subsurface rights, mineral rights, and other property interests necessary or useful for the purpose of constructing, operating, or modifying a carbon dioxide facility.” However, before any expropriation, the Conservation Commissioner must issue a certificate of public convenience and necessity after a public hearing in the parish where storage operations are located. As a condition precedent, the Commissioner, must have determined that the reservoir sought to be used is suitable and feasible for such use and meets all regulatory requirements. The eminent domain authority is to be exercised pursuant to the procedures found in existing law regarding expropriation, La. R.S. 19:2,

No sequestration operation can adversely affect any reservoir which is producing or is capable of producing oil, gas, condensate, or other commercial minerals in paying quantities, unless all owners in such reservoir have agreed thereto or, if all owners do not agree, then at least three-fourths of the owners must agree and the Commissioner must find that the minerals capable of production in paying quantities have been produced or the reservoir has a greater value as a reservoir for carbon dioxide storage than for the production of the remaining volumes of original oil, gas, condensate, or other commercial minerals.

The legislation has been sent to the Governor for final signature. If signed, it will become effective on August 15, 2009.
 

The EPA has proposed a rule that would require mandatory reporting of greenhouse gas (GHG) emissions from large sources in the United States.  The proposed rule was signed by the EPA Administrator on March 10, 2009 and published in the Federal Register on April 10, 2009 (74 Fed. Reg. 16,448).  As proposed, the rule will require reporting of stationary source GHG emissions for the 2010 calendar year by March 31, 2011.  According to the EPA, the proposed rule is intended to “collect accurate and comprehensive emissions data to inform future policy decisions.”

GHG compounds covered by the proposed rule include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other fluorinated gases, including nitrogen trifluoride and hydrofluorinated ethers. Certain listed direct-emission sources must comply with the reporting requirements and include the following sectors: adipic acid production; aluminum production; ammonia manufacturing, cement production, HCFC-22 production; certain specified HCFC-23 destruction processes; lime manufacturing; nitric acid production; petrochemical production; petroleum refineries; phosphoric acid production; silicon carbide production; soda ash production; titanium dioxide production; electric power systems that exceed certain nameplate capacities; electricity-generating facilities that exceed certain emission levels; electronics manufacturing facilities that exceed certain production levels; landfills that generate methane in amounts equal to or greater than 25,000 metric tons of carbon dioxide equivalent per year certain manure management systems; and certain underground coal mines. The EPA found that nearly all of the above facilities emit more than 25,000 metric tons of carbon dioxide equivalent per year and that only a few facilities emit marginally below this level. Suppliers of coal, petroleum products and natural gas are also covered.

The only agricultural source of GHG emissions covered by the proposed rule is manure management systems that have emissions equal to or greater than 25,000 metric tons of carbon dioxide equivalent per year. Enteric fermentation (emissions of methane from the digestive system of cattle and other ruminant livestock), rice cultivation, field burning of agricultural residues, composting, and agricultural soils will not be subject to the reporting requirements of the rule.

There is no requirement in the proposed rule for mandatory third-party verification for the emissions reports. EPA estimates that compliance with the reporting requirements will cost the private sector $160 million in the first year and $127 million in following years. Public hearings were held in Virginia and California in April 2009. Written comments must be received today (June 9, 2009). The text of the proposed rule and additional information can be found here.  

On April 3, 2009, the National Environmental Development Association (NEDA) filed a petition for rehearing en banc on a controversial decision (Sierra Club v. EPA) by the D.C. Circuit Court of Appeals. In that case, decided December 19, 2008, the court vacated the Startup, Shutdown, Malfunction (SSM) rules contained within the NESHAP General Provisions, 40 C.F.R. Part 63, Subpart A. The exemption has been in place since the EPA adopted the General Provisions to 40 C.F.R. Part 63 in 1994 pursuant to Section 112 of the federal Clean Air Act. Until this decision, sources were exempted from MACT technology-based emission limits if all elements of the SSM exemption were satisfied. Sources were nevertheless required by the general duty clause to minimize emissions to the greatest extent possible. The appeal stems from proposed rulemakings by the EPA in 2002, 2003 and 2006 to revise the SSM requirements.

NEDA also argued that the decision would have ‘draconian consequences’ on the nation’s manufacturing industries if the decision were not reversed. NEDA’s petition states that “because most MACT standards are based on normal operations, sources may not be able to comply with such standards during SSM events.” (Id., p. 12). In addition, compliance with MACT standards during startup and shutdown may not be possible for certain types of pollution control equipment.
 

If the decision is upheld, it may call all existing MACT rules into question. Because all of the MACT rules were premised upon the existence of the SSM exemption, the revocation of the exemption could allow regulated entities to challenge the underlying MACT rules (ironically, under the constructive reopening doctrine) as being too stringent without the consideration of data from SSM periods for development of the MACT floor. MACT standards would then need to be evaluated on a source category by source category basis for SSM events. The case will have significant impacts if the initial decision by the three-judge panel is allowed to stand.
 

On December 19, 2008, the D.C. Circuit Court of Appeals issued a startling ruling vacating the Startup, Shutdown, Malfunction (“SSM”) rules contained within the NESHAP General Provisions, 40 C.F.R. Part 63, Subpart A. Sierra Club v. Environmental Protection Agency (Docket Nos. 02-1135, 03-1219, 06-1215, 07-1201). The Sierra Club asked the court to strike down the SSM exemption – an exemption that has been in place since the EPA adopted the General Provisions to 40 C.F.R. Part 63 in 1994 pursuant to Section 112 of the federal Clean Air Act (CAA). Until this decision, sources were exempted from MACT technology-based emission limits if all elements of the SSM exemption were satisfied. Sources were nevertheless required by the general duty clause to minimize emissions to the greatest extent possible. In 2002, 2003 and 2006, the EPA promulgated rulemakings to revise these SSM requirements.

1. Sources must comply with their SSM plans during periods of SSM;
    
2. SSM plans must be reviewed and approved by permitting authorities like any other applicable requirement;
    
3. SSM plans must be unconditionally available to the public, which could participate in evaluating their adequacy in the permit approval process; and (4) SSM plan provisions must be directly enforceable requirements.

The dissenting opinion noted that the 1994 SSM rules did not require SSM plans to be submitted as part of a Title V permit application or approved by permitting authorities. Further, although not noted by the dissent, it was never clear that SSM plans were to be “unconditionally” available to the public for review – as in many cases agency confidentiality rules would allow the agency, but not the public, to review such plans. Regardless, the majority found that because the 2002-2006 amendments no longer required that the SSM plan be a part of the permit, no longer required public review, and no longer even required a facility to comply with the plan in order to claim the benefit of the SSM exemption, the EPA had “constructively reopened” the SSM exemption and the Sierra Club could now challenge the underlying 1994 rules.

On the merits, the Sierra Club asserted that both the original and subsequent rulemakings unlawfully and arbitrarily failed to assure compliance with CAA requirements. In vacating the SSM exemption, the D.C. Circuit agreed, stating that “[b]ecause the general duty is the only standard that applies during SSM events - and accordingly no section 112 standard governs these events - the SSM exemption violates the CAA’s requirement that some section 112 standards apply continuously.” The court read CAA Sections 112 and 302(k) together to find that Congress required some “continuous section 112-compliant standards.” (Section 112 provides “emissions standards” must require MACT standards. Section 302(k) defines “emission standard” as “a requirement…which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis.”) Emphasis added.

The court noted that EPA had not attempted to justify the SSM rules under Section 112(h) of the CAA. This statutory provision allows EPA to relax a MACT standard “if it is not feasible in the judgment of the Administrator to prescribe or enforce [a numerical] emission standard for control…” Presumably the majority was suggesting that EPA could use Section 112(h) to establish SSM requirements (work practice standards or different numerical emission limits) in lieu of MACT standards during SSM events, but that it had not done so. The dissent argued that the majority should not rest its opinion on this point because the parties had not been given the opportunity to brief this issue. This is a critical point, because the MACT standards are based on actual data demonstrating the capabilities of the best performing facilities (for new sources – the top 5% performers were used for the MACT floor; for existing sources the top 12% of sources); however, for all but a handful of MACT standards, SSM data was excluded from the data base for determining the floor.

The court’s decision to vacate the exemption rather than rescind the 2002-2006 rules was criticized in the dissent as a dangerous precedent. Per 42 U.S.C. § 7607(b)(1), a petition for judicial review must be filed within 60 days from the date notice of an action appears in the Federal Register. Because public notice for the original rulemaking was published on March 16, 1994, any challenge brought after May 16, 1994 is automatically barred. The majority opinion sidestepped the barrier by adopting the Sierra Club’s argument that the subsequent rulemakings significantly changed the context for the SSM exemption and allowed it to be “re-opened” for comment.

But, what is sauce for the goose is sauce for the gander. Because all of the MACT rules were premised upon the existence of the SSM exemption, the revocation of the SSM exemption should now allow constructive reopener by regulated entities to challenge the underlying MACT rules as being too stringent without the consideration of data from SSM periods for development of the MACT floor. This raises the possibility that all MACT standards will require reopener to evaluate SSM data on a source category by source category basis.

The full impact of this decision is yet to be determined. Because the deadlines to request a rehearing and/or appeal have not yet run, the decision is not yet final. The deadline for requesting a rehearing is 45 days after entry of judgment as EPA is a party. The deadline for requesting appeal is 90 days after denial of rehearing or a final decision or rehearing, or if no rehearing is requested, it is 90 days after entry of the judgment. The EPA or American Chemistry Council, intervenor, are likely to request a rehearing on the matter or file an appeal, or both.
 

I.  LDEQ Recently Issued Proposed Rule Pursuant to Louisiana Mercury Risk Reduction Act to Reduce Use of Mercury-Containing Products and to Force Proper Disposal or Recycling of Mercury-Containing Products

In the August 2008 publication of the Louisiana Register, the Louisiana Department of Environmental Quality (“LDEQ”) issued a proposed rule that will supplement the procedures and requirements set forth in the Louisiana Mercury Risk Reduction Act (La. R.S. 30:2571–2588) for manufacturers of mercury-added products offered for sale, users of mercury-added products in drinking water and wastewater treatment systems, and dismantlers of end-of-life productions that contain mercury-added products within Louisiana (hereinafter “Proposed Rule”). See, La. Admin. Code Tit. 33, §§ 2701, 2703, 2705, 2707, 2709, 2711, 2713, 2715, 2717, 2719, and 2721 (2008). The Proposed Rule was published after the LDEQ’s consideration of numerous comments received in response to a rule published by the LDEQ in the December 2007 Potpourri Section of the Louisiana Register.

The Louisiana Mercury Risk Reduction Act was enacted in June 2006. The law was the first of its kind and provided the LDEQ with the authority to regulate mercury-added products and also gave the LDEQ the authority to handle unregulated mercury sources. The stated intent of the Louisiana Mercury Risk Reduction Act was to “achieve significant reductions in environmental mercury by encouraging the establishment of effective state and local waste reduction, recycling, and management programs while encouraging non-mercury alternatives.” La. R.S. 30:2571(C).

A. Notification of LDEQ by Manufacturer of Sale or Distribution of Mercury-Containing Products

The Proposed Rule maintains the requirement that no mercury-added products are to be offered for final sale or use or distributed for promotional purposes in Louisiana without prior written notification by the manufacturer to the LDEQ and establishes the specific requirements a manufacturer must follow for such notification. La. Admin. Code Tit. 33, §2707(C). The notification procedures in the Proposed Rule do not vary from the requirements set forth in La. R.S. 30:2574(A). Id. A noteworthy change made in the Proposed Rule is the establishment of a 90-day deadline for a manufacturer to update and revise the information in the notification whenever a change in the information occurs or when otherwise requested by the LDEQ. La. Admin. Code Tit. 33, §2707(C). In addition, the Proposed Rule maintains a manufacturer’s right to request that certain information submitted in response to the notification procedures contained in the Proposed Rule remain confidential. La. Admin. Code Tit. 33, §2707(D).

The Louisiana Mercury Risk Reduction Act at Section 2575 (A) – (D) restricted the sale, use, or distribution of certain mercury-added products, which is generally defined as “a product, commodity, chemical, or a product with a component that contains mercury or a mercury-compound intentionally added to the product, commodity, chemical, or component in order to provide a specific characteristic, appearance, or quality or to perform a specific function or for any other reasons.” La. R.S. 30:2573(A)(4). The specific mercury-added products restricted by the Louisiana Mercury Risk Reduction Act at Section 2575 (A) – (D) were: (A) mercury-added novelties (defined as “a mercury-added product intended mainly for personal or household enjoyment or adornment . . . include[ing], but not limited to, items intended for use as practical jokes, figurines, adornments, toys, games, cards, ornaments, yard statues and figures, candles, jewelry, holiday decorations, items of apparel, including footwear, or similar products.”); (B) mercury fever thermometers provided to consumers and patients without prescriptions; (C) bulk elemental or chemical mercury for primary or secondary schools; and (D) mercury dairy or natural gas monometers. La. R.S. 30:2575 (A)-(D).

The Proposed Rule sets forth specific notification procedures for manufacturers that produce and sell the particular types of mercury-added products to notify retailers about the restrictions on the sale of those items at La. Admin. Code Tit. 33, §2709(B). Further, the Proposed Rule requires the manufacturers of such mercury-added products to maintain records that document the notification of the retailers. See, La. Admin. Code Tit. 33, §2709(C).

B. Exemptions to Phase-Out Provisions for Sale or Distribution of Mercury-Containing Products

The Proposed Rule also sets forth a procedure whereby a manufacturer of a mercury-added product subject to the phase-out provisions of La. R.S. 30:2576 can petition the LDEQ for an exemption. The phase-out provisions in La. R.S. 30:2576 allow manufacturers of mercury-added products to apply to the LDEQ for an exemption from the limits on total mercury content set forth in subsection (A) of the statute for a product or category of products. See, La. R.S. 30:2576(E). The authority of the LDEQ to grant exemptions to the mercury phase-out provisions of the Louisiana Mercury Risk Reduction Act is described, in pertinent part, as follows:

The Department of Environmental Quality may grant with modifications or conditions as an exemption for a product or category of products if it finds that a system exists for the proper collection, transportation, and processing of the mercury-added product. Such a system may include direct return of a waste product to the manufacturer or an industry or trade group that supports a collection or recycling system, or other similar private and public sector efforts and it considers each of the following criteria:

(1) Use of the product is beneficial to the environment or protective of public health or protective of public safety.
(2) There is no technically feasible alternative to the use of mercury in the product.
(3) There is no comparable non-mercury-added product available at reasonable cost.

La. R.S. 30: 2576(F). Under the Proposed Rule, La. Admin. Code Tit. 33, §2711(B), the following information must be provided in each application for an exemption from the phase-out provisions of the Louisiana Mercury Risk Reduction Act.

Applications for exemption from mercury-added product phase-out must contain the following information:

1. documentation of the basis for the requested exemption or renewal of exemption;

2. a description of how the manufacturer will ensure that a system exists for the proper collection, transportation and processing of the products at the end of their useful lives;

3. documentation of the readiness of all necessary parties to perform as intended in the planned system;

4. a statement of the consistency of the exemption request with the practices of other IMERC states;

5. criteria considering whether use of the product is beneficial to the environment or protective of public health or protective of public safety, and if so, how;

6. criteria considering whether there exist any technically feasible alternatives to the use of mercury in the product, and, if so, a description of such alternatives; and

7. criteria considering whether any comparable non-mercury added products are available at a reasonable cost, and if so, a description of such products and their costs.

Procedurally, once a manufacturer has made an application for an exemption from the phase-out provisions of the Louisiana Mercury Risk Reduction Act then the LDEQ has 180 days from the date of the application to decide whether to grant the exemption. La. Admin. Code Tit. 33, §2711(E). A longer time period for deciding on whether to grant the application for exemption can be taken if there is mutual consent of the LDEQ and the applicant. Id. Once an exemption is granted, it may be renewed by reapplication by the manufacturer and findings by the LDEQ of continued eligibility. La. Admin. Code Tit. 33, §2711(F). Such renewal can occur one or more times, but each renewal is limited to a period of no longer than two years. Id.

C. Labeling Requirements for Sale or Distribution of Mercury-Added Products

In General

The Proposed Rule maintains the requirement that manufacturers, and not wholesalers or retailers, are responsible for assuring that mercury-added products are labeled correctly. La. Admin. Code Tit. 33, §2713(A). See also, La. R.S. 30:2577. The Proposed Rule requires that the labels affixed to mercury-added products must:

(1) be clearly visible to the product purchaser prior to sale and at the point of sale;

(2) be printed in English using a 10 point font or larger;

(3) be mounted, engraved, molded, embossed, or otherwise affixed to the product using materials that are sufficiently durable to remain legible throughout the life of the product;

(4) bear the wording “Contains Mercury” or equivalent wording; and

(5) state that the product cannot be placed in the trash and must be recycled, handled as a universal waste, or disposed of as a hazardous waste.

La. Admin. Code Tit. 33, §2713(C).

Labeling of Products Where Packaging Covers Label on the Product

Additionally, if a product is sold in packaging that covers the label on the product itself, the Proposed Rule requires:

(1) that the packaging itself be labeled, and

(2) that the label on the package:

(a) be visible at the time of purchase;

(b) bear the wording “Contains Mercury” in a 10 point or larger font;

(c) identify the mercury-added component within the package;
and

(d) bear the wording “Dispose of according to local, state, and federal laws.” or “Do not place in trash. Dispose of as a hazardous waste.” or some equivalent wording.

La. Admin. Code Tit. 33, §2713(F).

Products Made Before Labeling Requirements Effective

If a manufacturer has products that are packaged but not sold before the labeling requirements go into effect, the manufacturer can seek an exemption from the labeling requirements. See, La. Admin. Code Tit. 33, §2713.

Labeling Requirements for Internet, Catalog, and Telephone Sales

What is more, where a mercury-added product is sold on the internet, through a catalog, or by telephone and the labeling on the product or the package is not visible, the consumer must be made aware before the purchase or receipt that there is mercury in the product by placing a label or providing other information in the sales literature. La. Admin. Code Tit. 33, §2713(G).

Labeling of Mercury-Added Products That Are Component Parts of Another Product

Furthermore, the Proposed Rule continues to require that where the mercury-added product is a component part of another product, that both the product containing the mercury-added component and the component itself have to be labeled. La. Admin. Code Tit. 33, §2713(E).

D. Alternative Labeling

Alternative labeling can be allowed pursuant to La. R.S. 30: 2579. According to the Proposed Rule, a manufacturer seeking to be allowed to use the alternative labeling must apply to the LDEQ. La. Admin. Code Tit. 33, §2715(B). The application for alternative labeling must contain the following information:

(1) documentation of the justification for the requested alternative, which can include claims that compliance with the labeling requirements in the Louisiana Mercury Risk Reduction Act is not feasible or that federal law preempts the state labeling requirements;

(2) a description of how the alternative labeling ensures that consumers of mercury-added products will be made aware of the mercury content prior to the purchase or receipt of the product;

(3) a description of how a person disposing of the product will be made aware of the need for proper disposal;

(4) documentation of the readiness of all necessary parties to implement the proposed alternative; and

(5) a description of the performance measures to be used by the manufacturer to prove that the alternative labeling is providing effective pre-sale notification and pre-disposal notification.

La. Admin. Code Tit. 33, §2715(B).

If alternative labeling is approved, the approval is valid for a period of no more than two years and can be renewed for following two-year intervals, with such renewal applications being due six months before the renewal anniversary date. La. Admin. Code Tit. 33, §2715(C),(D).

E. Written Plan for Collection System Indicating Disposal or Recycling Method Required to Be Submitted by Manufacturer to Allow for Sale or Distribution of Mercury-Added Products in Louisiana

General Requirements

If any manufacturer wants to offer any mercury-added products for sale in Louisiana that contain more than 10 milligrams of mercury, the manufacturer must submit a written collection system to the LDEQ. La. Admin. Code Tit. 33, §2717. The proposed collection system shall include the following information:

(1) the manufacturer’s name, mailing address, and if available, Internet address;

(2) the contact person’s name and phone number;

(3) documentation describing a public education program, including implementation dates, that will inform the public about the purpose of the collection system program and how to participate in it;

(4) identification of the targeted capture rate for the mercury-added product, product category, or component;

(5) a plan for implementation of the proposed collection system, including documentation demonstrating the financing thereof;

(6) documentation of the willingness of all necessary parties to implement and participate in the program, and their contact information;

(7) a description of the performance measures to be used to demonstrate that the collection system is meeting capture rate targets;

(8) a description of additional or alternative actions that will be implemented to improve the collection system and its operation in the event that the program targets are not met;

(9) a description of a recycling or disposal plan;

(10) a signed certification stating that the person signing:

(a) has personally examined and is familiar with the information submitted within the collection system plan and all attachments; and

(b) is authorized to sign the certification by the entity on whose behalf he is signing.

La. Admin. Code Tit. 33, §2717(C).

Actions Required by Manufacturer Upon Implementation of Approved Collection System Plan

Within one year after the LDEQ has approved a collection system plan, the manufacturer or entity that submitted the plan for the manufacturer must “ensure that a convenient and accessible recovery system . . . is in full operation.” La. Admin. Code Tit. 33, §2715(D). Furthermore, two years after the collection plan is implemented, and every two years thereafter, the manufacturer or entity that submitted the plan for the manufacturer must “submit a report on the effectiveness of the collection system.” La. Admin. Code Tit. 33, §2715(D).

Exemptions to Development and Submission of Collection System Plan

Exemptions to the requirements for development and submission of collection system plans are allowed for mercury-added products that are “intended to be totally consumed in use, such as cosmetics, pharmaceuticals, and reagents and other laboratory chemicals. . . .” La. Admin. Code Tit. 33, §2715(E).

Furthermore, a manufacturer can apply for an exemption for the requirement of the development and submission of a collection system plan by submitting an application to the LDEQ that contains, at minimum, the following information:

(1) the amount of mercury in the mercury-added product;

(2) the total amount of the mercury-added product sold in Louisiana;

(3) the total amount of the mercury-added product disposed of in Louisiana;

(4) the feasibility of a collection system; and

(5) the overall risk to human health and the environment posed by the mercury-added product.

La. Admin. Code Tit. 33, §2715(F). Such an exemption shall be granted by the LDEQ within 180 days from the submission of the application for the exemption, unless a longer time is mutually agreed upon by the applicant and the LDEQ. La. Admin. Code Tit. 33, §2715(G). Exemptions from the development and submission of a collection plan may be renewed by reapplication by the manufacturer one or more times and each renewal may be for a period of no longer than two years. La. Admin. Code Tit. 33, §2715(H).

F. Specific Rules for Scrap Metal Facilities

The Proposed Rule at La. Admin. Code Tit. 33, §2719 provides specific rules and regulations for the disposal ban and proper management of mercury in scrap metal facilities. The Proposed Rule bans any person from crushing, baling, shearing, or shredding a motor vehicle “unless the person has made a reasonable effort, to the extent safe and practicable, to remove, or verify the removal of, the mercury-containing convenience lighting switches and antilock braking system components.” La. Admin. Code Tit. 33, §2719(B). The person removing or verifying the removal of the mercury-containing components will be required to maintain a written certification of the removal or the verification of the removal of the mercury. La. Admin. Code Tit. 33, §2719(B). Any person who receives the crushed, baled, sheared, or shredded motor vehicle scrap must also obtain the certification that the scrap had any mercury containing convenience lighting or braking systems removed and also are required to conduct a visual examination that the mercury-containing components had been removed. La. Admin. Code Tit. 33, §2715(C).

The Proposed Rule also bans any person from crushing, baling, shearing, or shredding appliances or white goods containing mercury-containing switches or other mercury-added products unless the person made an effort to verify that the mercury-containing components had been removed. La. Admin. Code Tit. 33, §2719(D). Verification of removal of mercury-added products in the white goods would be accomplished by the adoption of a best management practice governing mercury-added products in white goods and maintenance of written certification of the screening and removal of mercury-added products by the person removing or verifying the removal of the product. La. Admin. Code Tit. 33, §2719(D). Any person who receives the crushed, baled, sheared, or shredded white goods must also obtain the certification that the appliances had any mercury-containing products removed and also are required to conduct a visual examination that the mercury-containing components had been removed. La. Admin. Code Tit. 33, §2715(E).

G. Best Management Practices [“BMP”] for Health Care Facilities

In accordance with La. R.S. 30:2583, the Proposed Order establishes the BMP for Health Care Facilities using a mercury-added product. See, La. Admin. Code Tit. 33, §2721. The key provisions of the BMP for Health Care Facilities require any health care facility using a mercury-added product, a formulated mercury-added product, or a fabricated mercury-added product to:

(1) Maintain a MSDS on any elemental mercury used. La. Admin. Code Tit. 33, §2721(A).

(2) Certify that its employees or other persons acting under its direction or control:

(i) will use the mercury only for medical, dental, research, or manufacturing purposes;

(ii) will store, use, and handle mercury in accordance with Subsection C of the Section, understanding that mercury is toxic; and

(iii) will dispose of the mercury-added products in accordance with Subsections C or F of this Section. La. Admin. Code Tit. 33, §2721(B).

(3) Develop, maintain, and follow a Mercury Management Plan (MMP) that is designed to eliminate or capture mercury in waste. La. Admin. Code Tit. 33, §2721(C).

Certain minimum requirements for the MMP are set forth therein and include: having an inventory of mercury-containing devices; a timeline for reduction and eventual elimination of mercury-containing equipment; safe mercury management/handling protocols; discarding and recycling of mercury-containing items and maintenance of records of the disposal and/or recycling at the facility for three (3) years and specific disposal requirements for the facilities receiving the disposed items; safe and proper management and storage of mercury-containing devices in leak-proof, sealed, labeled containers that will not allow transmission of mercury vapors; establishment of an environmental preferable purchasing policy (EPP) for mercury products and a process to regularly review mercury use reduction and elimination progress; and any other aspects of the BMP developed by the American Hospital Association or the American Medical Association. La. Admin. Code Tit. 33, §2721(C).

Additionally, the Proposed Rule set forth the minimum standards for a health care facility’s Dental Amalgam Management Plan that is required to be developed, maintained and complied with by any health care facility using dental amalgam. La. Admin. Code Tit. 33, §2721(D). The purpose of the Dental Amalgam Management Plan is to capture mercury in dental amalgam waste and excess. La. Admin. Code Tit. 33, §2721(D).

III. Public Hearing Date and Written Comment Deadlines

The public hearing on the Proposed Rule is scheduled for September 25, 2008 and written comments on the Proposed Rule are due by October 2, 2008.
 

Several developments concerning the Spill Prevention, Control, and Countermeasure (SPCC) regulations occurred in 2006 and 2007. Thoughtful planning and continued tracking of these developments will be necessary to ensure compliance.

EPA revised the SPCC plan requirements in 2006 to:

• Provide the option to self-certify SPCC Plans in lieu of review and certification by a Professional Engineer for facilities that have an aboveground oil storage capacity of 10,000 gallons or less and meet other qualifying criteria.
  
• Provide an alternative to the general secondary containment requirement without requiring a determination of impracticability for qualified oil-filled operational equipment.
  
• Define and exempt particular vehicle fuel tanks and other on-board bulk oil storage containers (called motive power containers).
  
• Exempt mobile refuelers from the sized secondary containment requirements for bulk storage containers.
  
• Remove SPCC requirements for animal fats and vegetable oils for certain types of facilities.
  
• Extend the SPCC compliance dates for farms.

The purpose of the extension is to allow the owner or operator time to prepare or amend and implement the SPCC Plan in accordance with the July 2002 (67 Fed. Reg. 47042, July 17, 2002) and December 2006 (71 Fed. Reg. 77266, December 26, 2006) amendments. A further purpose was to allow facilities to prepare for any subsequent modifications to the SPCC requirements that would result from additional substantive requirements that were anticipated to be proposed later in 2007. In fact, EPA did propose additional refinements to the rule in October 2007 (72 Fed. Reg. 58378, October 15, 2007). 

The October 2007 proposed rule has numerous amendments. All SPCC-regulated facilities (not just oil production facilities) would be potentially affected by these proposals. EPA’s summary of the proposal states that the amendments will provide:

• clarity on the general secondary containment requirements; 
• flexibility in the security requirements; 
• flexibility in the use of industry standards to comply with integrity testing requirements; 
• additional flexibility in meeting the facility diagram requirements; and 
• clarity on the flexibility provided by the definition of “facility.” 

In addition, the October 2007 proposal has amendments specific to oil production facilities that:

• exclude oil production facilities from the loading/unloading rack requirements; 
• modify the definition of “production facility”, consistent with the proposed amendments to the definition of “facility”; 
• extend the timeframe by which a new oil production facility must prepare and implement an SPCC Plan; 
• exempt flow-through process vessels at oil production facilities from the sized secondary containment requirements, while maintaining general secondary containment requirements and requiring additional oil spill prevention measures; 
• exempt flowlines and intra-facility gathering lines at oil production facilities from all secondary containment requirements, while establishing more specific oil spill prevention measures; and 
• clarify the definition of “permanently closed” as it applies to an oil production facility. 

Other proposed revisions to the SPCC rule included in the 2007 proposed rule relate specifically to farms and facilities handling animal fats and vegetable oils. The proposed rule can be viewed in its entirety here.

Environmental litigators face unique challenges in dealing with the expert phase of a lawsuit.  For example, a lawsuit involving alleged environmental contamination of soil, groundwater, or surface waters may require the use of experts such as environmental/civil engineers, hydrogeologists, hydrologists, geologists, soil scientists, agronomists, analytical chemists, toxicologists, environmental chemists, risk assessment experts, wetlands scientists, health physicists, biologists, and statisticians. 

These experts must often present difficult and complicated technical information in a way that can be understood by judges, lawyers, and juries, who in most cases are not engineers and scientists.  In some cases, environmental litigators face the task of having to deal with many of these disciplines simultaneously.  Before any of these experts can testify at trial, however, each expert and his or her work must satisfy evidentiary standards applicable to expert testimony, many of which are grounded in the principles laid out in the U.S. Supreme Court decision in Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993).

This article provides a review of recent decisions where the opinions of environmental experts, from disciplines mentioned above, have been the subject of Daubert challenges based on the reliability of methods or principles and how those challenges were successfully presented or defended. 

Download the entire article. 

* Reprinted with permission from the American Bar Association, Natural Resources & Environment, Vol. 22, No. 4, Spring 2008.

The Louisiana Department of Environmental Quality recently finalized revisions to the “Comprehensive Toxic Air Pollutant Emission Control Program” set forth in LAC 33:III.Chapter 51 of the Louisiana Air Quality Regulations. A final rulemaking, first initiated in September 2005, was published in the December 20, 2007 Louisiana Register and can be obtained at the following web address: http://www.deq.louisiana.gov/portal/tabid/2644/Default.aspx.  Unlike some states, Louisiana has its own air toxics program, which applies to major sources of “toxic air pollutants” as defined in LAC 33:III.5103. State toxic air pollutants include all federal “hazardous air pollutants” set forth in Clean Air Act § 112, and also 13 other pollutants, including ammonia, sulfuric acid, nitric acid, and hydrogen sulfide.

The final rulemaking, published in AQ-256, provides for the following revisions:

2.        a clarification of the definition of “virgin fossil fuel” and a related exemption in LAC 33:III.5103 to exclude both refinery fuel gas and certain types of plant produced fuel with a Btu value greater than 7,000 Btu/lb and that is generated onsite and collected by a “fuel gas system” as defined in 40 CFR 63, Subpart G;

3.        the deletion of certain regulations pertaining to air toxic compliance plans;

4.        an exemption from the Standard Operating Procedure requirements set forth in LAC 33:III.5109.C for sources complying with applicable federal MACT standards in 40 CFR Part 63;

5.        a requirement that the LDEQ review the ambient air standards listed in LAC 33:III.5112 at least every three years, instead of annually;

6.        the replication of a complete exemption from the Louisiana Air Toxics Program for “electric utility steam-generating units;” and

7.        the deletion of certain provisions no longer effective since the original promulgation of the Chapter 51 air toxic regulations in 1991.

The LDEQ is continuing to review proposed revisions to the ambient air quality standards for TAPs. Ambient standards for toxic air pollutants are set forth in LAC 33:III.5112. In the September 20, 2007 Louisiana Register, the LDEQ proposed to revise the ambient standards for existing TAPs and also proposed to add new short-term standards for Class I TAPs. Various industry groups submitted comments on the proposed revisions to the rulemaking (AQ-281) on October 25, 2007. In response, the LDEQ requested additional information for specific TAPs, including sulfuric acid, MEK, and ammonia in a Potpourri Notice published on December 20, 2007. The deadline to submit comments on this notice was March 4, 2008. According to an LDEQ spokesperson, the Department intends to finalize the AQ-281 rulemaking in 2008 after reviewing all relevant comments. 

The European Commission recently released a preliminary package of broad climate change policies that would affect industry, energy generation and transportation in the European Union. The goals of the climate change policies are to: (1) to reduce greenhouse gas emissions by twenty percent (20%) below 1990 levels by the year 2020; (2) to increase the proportion of power generated by renewable resources to twenty percent (20%) of total energy consumption; and (3) to institute a mandate that ten percent (10%) of the fuel consumed by the European vehicles to be from biofuel sources.            

The proposed measures include:

• an improved emissions trading system that allows firms in one European Union country to buy allowances in any other country;

• an emission reduction target for sectors not covered by the emissions trading system, including transportation, buildings, agriculture, and garbage, so that all sectors and individuals in the European Union are contributing;

• legally binding targets for each European Union country that increases the share of renewable energy sources in the overall energy mix; and

• new rules for carbon capture and underground storage and certain environmental subsidies to encourage investment in those endeavors.

In order to meet the goal of decreasing greenhouse gas emissions by twenty percent (20%), the Emissions Trading System will be changed to require power generators that currently receive their carbon credits for free to purchase at least two-thirds (2/3) of them at auctions beginning in 2013 and to purchase all of the credits by 2020. The European Commission wanted to extend the same requirement to all of Europe’s high-polluting industries, but the recently-released policies exempted those “sectors vulnerable to international competition” from having to purchase credits. Those industries excepted include steelmaking, aluminum, and concrete. Industries that are not required by the recent policies to comply with the Emissions Trading System would have to reduce their emissions by ten percent (10%). 

The package of proposed legislation sets forth quotas for each country’s required reduction of greenhouse gas emissions and for each country’s use of renewable energy sources. However, the proportion of reduction in greenhouse gas emissions and the use of renewable energy sources by each country are not equal. 

The package of climate change policies must be adopted by the European Parliament and a majority of the twenty-seven (27) European Union governments, a process that could take until 2009. In addition, the President of the European Commission estimated that the cost to implement the climate change policies would be about $87.4 billion per year, though there is argument that the cost could be twice that.

For more information, see the European Union’s website here.

On December 21, 2007, EPA published notice of its adoption of a final rule to “clarify” the recordkeeping and reporting requirements for projects that do not constitute a major modification under the prevention of significant deterioration (“PSD”) and nonattainment new source review (“NNSR”) programs when calculated by the baseline actual emissions to projected actual emissions (“BAE to PAE”) methodology, but which have a “reasonable possibility” to result in a significant emissions increase.  72 Fed. Reg. 72607. The final rule defines “reasonable possibility” as either: 1) where the difference between BAE and PAE is > 50% of the significance level for the regulated pollutant; or 2) where the difference between BAE and PAE prior to subtraction of the emissions excluded from PAE through the “capable of accommodating/demand growth” exclusion is > 50% of the significance level for the regulated pollutant. However, the recordkeeping and reporting requirements differ depending upon whether “reasonable possibility” is triggered by scenario 1) or 2). 

            The existing PSD and NNSR rules provide that when the BAE to PAE methodology is used and as a result it is concluded that the project does not trigger the major modification “significance” levels, but where there is a “reasonable possibility” that such levels would be increased, then the source has certain recordkeeping and reporting obligations. These existing requirements are:

            (a)       Before beginning construction, the source must maintain a record of a description of the project, identification of affected emissions units, a description of the applicability test used, the BAE, the PAE, the amount of emissions excluded from the PAE due to the capable of accommodating/demand growth exclusion, and any netting calculations, if applicable. [Collectively called “Pre-project Recordkeeping.]

            (b)       If the affected emissions unit is an electric utility steam generating units, the information in (a) must be submitted to the administrative authority before the owner/operator begins actual construction.

            (c)       The owner/operator must monitor the emissions of any regulated NSR pollutant from an emissions unit, calculate and maintain a record of emissions in TPY for a period of 5 years following completion of the change (10 years if the change increases the design capacity or PTE of the emissions unit).

            (d)       If the emissions unit is an existing electric utility steam generating unit, a report of annual emissions is due 60 days after the end of each year.

            (e)       For an emissions unit other than an existing electric utility steam generating unit, a report of annual emissions is also due 60 days after the end of each year if the emissions exceed the BAE by more than a significant amount and exceed the pre-project projection calculated by the BAE to PAE method.

[Under Louisiana law, these existing recordkeeping and reporting rules are found in LAC 33:III.504.D.9 for NNSR and LAC 33:III.509.R.6. for PSD.]

            Unfortunately, the existing rules did not define when there was a “reasonable possibility” to exceed the major modification significance levels - the trigger for the requirement to comply with such recordkeeping and reporting rules. The new EPA rule addresses this issue by defining “reasonable possibility.”   The new rule provides two ways that a “reasonable possibility” exists and establishes separate recordkeeping/reporting requirements associated with each methodology. Where the difference between BAE and PAE is at least 50% of the significance threshold, then all of the recordkeeping, monitoring and reporting requirements stated in (a) through (e) above are applicable. For example, under NNSR, if the significance value for a major modification is 25 TPY of NOx, then the requirements would become applicable if the source determines pre-project that the difference between BAE and PAE is at least 12.5 TPY of NOx. 

The other way that “reasonable possibility” is defined in the new EPA rule is where the difference between BAE and the PAE before exclusion of emissions the unit is capable of accommodating (including demand growth emissions) is at least 50% of the significance value for a major modification. However, if this is the case that triggers reasonable possibility, only the Pre-project Recordkeeping obligations of paragraph (a), above, apply, not all of the monitoring and reporting obligations in (b)-(e). For example, under PSD, if a source determines that the BAE for CO is 800 TPY, and the PAE prior to determination of emissions the unit(s) is capable of accommodating is 1000 TPY, but that the unit is capable of accommodating 180 TPY of increased CO emissions unrelated to the change, then because the difference between BAE and PAE, without consideration of the emissions the unit is capable of accommodating is 200 TPY, and is more than 50% of the CO significance level (100 TPY), there is “reasonable possibility.” The source would be required to maintain records required by LAC 33:III.509.R.6.a.

All states must adopt provisions at least as stringent as the new federal “Reasonable Possibility Rule” into their state implementation plans within 3 years. In Louisiana, the Department of Environmental Quality was already following the proposed EPA rule as guidance on defining what “reasonable possibility” meant under existing LAC 33:III.504 and 509. However, the proposed EPA rule applied the recordkeeping and reporting requirements only when the difference between BAE and PAE was at least 50% of a major modification significance level; it did not include demand growth emissions or other emissions the unit was capable of accommodating into the equation for determining reasonable possibility as does the final rule. Thus, the practical impacts of the final rule in Louisiana are: 1) reasonable possibility is clearly defined; and 2) the Pre-Project Recordkeeping requirements are extended to projects where the difference between BAE and PAE prior to subtraction of the “demand growth/capable of accommodating” exception exceeds the 50% of the major modification level threshold.

On August 22, 2007, the Louisiana First Circuit Court of Appeal rendered a decision – In the Matter of Waste Management of Louisiana, L.L.C. (Docket No. 2006 CA 1011) – that may affect the Louisiana Department of Environmental Quality’s approval of previous pollution control projects under PSD/NNSR provisions. Appellants LEAN and Concerned Citizens of Livingston Parish asked the court to reverse the lower court’s affirmation of LDEQ’s issuance of a Title V air permit issued to Woodside Landfill in 2004. In 2003, LDEQ exempted from PSD review a pollution control project to install a gas collection and control system and bioremediation area at the landfill. The later-issued Title V permit included conditions for the flare that was installed as part of the project. It is unclear from the facts stated in the opinion whether the original 2003 authorization-to-construct the project or the 2004 permit also authorized an expansion of the landfill. EPA issued a letter of no objection to the Title V permit.

In short, the court ruled that the LDEQ and Woodside Landfill could not apply the PCP exemption as a federal standard term or condition simply because the title V program requires the inclusion of all “federally applicable requirements” in Part 70 operating permits, including the requirement to undergo PSD review. The court indicated that the “landfill expansion and the flare installation at issue” qualified as a major modification to a major source, that required PSD review. The court, however, supplied no facts to indicate that it was a “major modification;” rather, the decision implies that it could have been and thus needed PSD review. In addition, the court noted that because Louisiana already had an approved state implementation plan (SIP) which included an approved PSD program, any rule exempting pollution control projects would not be effective until properly approved by EPA as part of the SIP. LDEQ never adopted such PCP exemption, nor was it approved in the Louisiana SIP. Because the Part 70 permit issued by LDEQ to Woodside Landfill failed to include the necessary PSD review, the First Circuit vacated its issuance, meaning that it is null and void. (The decision may be appealed to the Louisiana Supreme Court.) 

The decision could retroactively affect other permit actions that were based upon the pollution control project exemption. It is unclear at this point whether the LDEQ will require prior permit actions or projects to be reevaluated based on the Waste Management decision. One example would be a project required to reduce hazardous air pollutant (HAP) emissions pursuant to a MACT standard that may have had incidental increases in criteria pollutants. At the time of this writing, the LDEQ has not provided a written response to the judicial decision, but one may be forthcoming in the near future.

In June, we reported that a three judge panel of the District of Columbia Court of Appeal had issued a decision in NRDC v. EPA, Docket 04-1385, to vacate both the Commercial and Industrial Solid Waste Incineration (“CISWI”) Unit Rule and the National Emission Standard for Hazardous Air Pollutants Rule for Industrial, Commercial, and Institutional Boilers and Process Heaters (the “Boiler MACT”).  That report indicated that the court’s decision could be stayed by a timely request for hearing or a stay order. 

On June 8, 2007, a three judge panel of the District of Columbia Court of Appeal issued a decision in NRDC v. EPA, vacating both the Commercial and Industrial Solid Waste Incineration (“CISWI”) Unit Rule and the National Emission Standard for Hazardous Air Pollutants Rule for Industrial, Commercial, and Institutional Boilers and Process Heaters (the “Boiler MACT”). The decision will not become effective (meaning the CISWI and Boiler MACT Rules are still effective), until legal delays for rehearing and/or appeal have run. Moreover, two of the three judges wrote concurring opinions which strongly suggest that a stay order, with conditions, is likely to be issued if the parties so request it. With the September 13, 2007, Boiler MACT compliance deadline looming, EPA needs to provide prompt guidance to the thousands of regulated entities on their compliance obligations in light of the decision.

The Court struck down the CISWI rule due to its opinion that Section 129 already had an explicit exclusion created by Congress for cogeneration units. The existence of this exemption for just one type of energy recovery indicated to the court that Congress did not intend to exempt all units burning solid waste for energy recovery, but rather only cogeneration units. Thus, the court held that EPA went too far in its exclusion and needs to include such units under the CISWI regulatory program. As issues concerning the “floor” revolve around including these units in the database, the majority found that the CISWI rule should be vacated, not just remanded. Because thousands of CISWI units had been excluded from that rule and included in the database for the Boiler MACT rule, the court vacated the Boiler MACT rule as well.

Much of the decision addressed whether the two rules should be vacated or just remanded. Judge Henderson, the author of the opinion, and concurring Judge Randolph, both indicated vacatur was appropriate, whereas Judge Rogers thought a remand was more appropriate. Judge Randolph's concurring opinion indicated that although he was voting to vacate the rule, he would entertain a stay order which would stay the court’s decision, at least in part. He indicated that when the court vacates a rule, it can control the remedial process more effectively than it could with a remand order.   He suggested that the court would entertain a stay order with conditions to address the schedule for revising the rules and any issues about what standards should apply in the interim.

It is important to note that the court’s decision to vacate both rules will not be effective until the delays for asking for rehearing have run, or if a rehearing request is filed, until after the court reaches a final decision on rehearing. An appeal to the Supreme Court also has the potential to stay the effectiveness of the court’s decision. Thus, in the meantime both the CISWI Rule and the Boiler MACT rule remain in full effect. Affected parties should pay close attention to the developments following this decision. As has been their practice, it is likely that EPA will provide verbal guidance to state authorities within a short period of time, followed by written guidance at a later date once negotiations with the stakeholders have progressed.

A link to the decision is available at http://www.earthjustice.org/library/legal_docs/court-shuts-down-illegal-epa-incinerator-rule.pdf.

In final rules adopted on March 20, 2007, the Louisiana Department of Environmental Quality (“LDEQ”) adopted amendments to the Louisiana Hazardous Waste Rules to create a procedure by which an applicant may obtain a determination that contaminated media (soil/sediment, groundwater, and/or surface water) do not contain a hazardous waste and may be managed as nonhazardous. This procedure does not establish clean-up standards; instead, it will be used to determine whether hazardous waste rules apply to the management of such media when removed from their location or otherwise managed.

·               Submit a letter of application to the LDEQ Office of Environmental Assessment.

·               Define the Area of Investigation.

·               If the application is for contaminated soil, demonstrate that the maximum soil concentration, or the upper bound estimate of the arithmetic mean concentration, of any of the hazardous waste constituents is below the soil standard set forth in Table 1 of the new rule (LAC 33:V.106).

·               If the application is for contaminated groundwater, demonstrate that the maximum concentration of any of the hazardous waste constituents is below the groundwater standard set forth in Table 1 of the new rule.

·               Demonstrate that the medium does not have any hazardous waste characteristic.

·               Demonstrate that any applicable land disposal restriction standard of LAC 33:V.Ch.22 is met.

·               Submit a fee of $3,000 to LDEQ with the application.

          The applicant need only address the hazardous waste constituents that are associated with the hazardous waste believed to be the source of the contamination. (The constituents that are associated with each hazardous waste, with the exception of creosote, are shown in LAC 33:V.4901, Table 6. LDEQ indicated it will make case-by-case determinations for what constituents should be tested when creosote is the potential source.)

          Although it is not clear, the rule implies that sediment will be treated as though it is soil. (The only place in the rule where sediment is mentioned states “soil/sediment.”) Further, although the rule indicates that it is applicable to contaminated surface water, there are no surface water standards provided.

          The soil standards set forth in Table 1 are, for the most part, the same as the industrial soil screening standards under LDEQ’s RECAP rule, LAC 33:I.Ch.13; however, there are a few deviations from those standards, so care should be taken when making any generalized assumptions about the rule. The groundwater standards in Table 1 are generally equivalent to 100 times the drinking water MCL. In the case of both soil and groundwater, if a particular constituent does not appear in Table 1, LDEQ has provided equations in an Appendix to enable calculation of an appropriate standard.

          To many, the existence of this procedure may be a welcome addition to the LDEQ program as there has been a great deal of uncertainty in the appropriate characterization of contaminated media. Unfortunately, LDEQ chose to require that all of these NHEM determinations must be made by LDEQ and did not allow any self-implementation procedures. Many other states take the approach that such “contained-out” determinations may be self-implementing if the concentrations of hazardous constituents are below certain “look-up table” values and the testing follows certain rules and is documented. A case-by-case review by these agencies is only required if, on a site-specific basis, an applicant believes that less restrictive levels are consistent with a determination that no hazardous waste is contained-in the contaminated media.

          The new LDEQ rule also confirms the longstanding EPA guidance that even if contaminated soil is considered to still contain a hazardous waste (i.e., concentrations are above the Table 1 values), the contaminated soil may be managed within the Area of Contamination (“OAC”) without triggering the Land Disposal Restriction standards or the Minimum Technological Requirements for landfills/surface impoundments under RCRA. (New LAC 33:V.105.P.) However, the LDEQ also refused to allow these activities without prior LDEQ review and approval of the AOC. Where contaminated media is considered to still contain a hazardous waste, it may be moved within the AOC or treated in-situ only where an application has been made to LDEQ and LDEQ has approved the AOC. No fee program was established for this approval process.

          EPA’s 1998 Guidance on the Management of Remediation Waste indicates contaminated media may be removed from the OAC, then treated to remove the hazardous waste constituent to below risk-based levels set by the applicable state. In such case, if the contaminated media still contains hazardous waste at the point of generation (i.e., when removed from the OAC), then applicable Land Disposal Restrictions still apply, but the contaminated media itself is no longer considered to be a hazardous waste. LDEW appears to have adopted this guidance in its new rule (see section 106.A.2); however, this is not entirely clear and will need further explanation by the agency. Because the procedure only allows the maximum concentration as detected in the ground/groundwater (or in the case of soil, the upper bound estimate of the arithmetic mean concentration), the rule does not explicitly provide for any means to “exit” the hazardous waste classification at a later stage after treatment.

          LDEQ’s intended goal was to facilitate remediation projects by establishing a clear basis by which contaminated media could exit the universe of hazardous waste regulation while still being controlled by conservative risk based values. This is likely to be the case for large remediation projects; however, with smaller, day-to-day activities, such as installing a pipeline through a lightly contaminated area, the rules may be much more burdensome than it was under the existing EPA remediation policies. Under those policies, it was clear that incidental movement of contaminated soil during pipeline and road building activities and the like did not trigger any hazardous waste regulatory requirements. Now, an AOC concurrence determination may be required in such areas prior to any soil movement if hazardous waste was the potential source of contamination. Link to the rule:

http://www.deq.louisiana.gov/portal/portals/0/planning/regs/pdf/HW092fin.pdf.

During a presentation at the Defense Research Institute’s Toxic Torts and Environmental Law Seminar in New Orleans on Friday March 9, 2007, Dr. Pamela Williams of ChemRisk, Inc. indicated that she was preparing to publish a study on the potential for exposure to benzene from products containing trace (less than 0.1%) levels of benzene. Her study will likely conclude that measured airborne concentrations of benzene during the handling or use of petroleum-derived products in the United States have typically not exceeded workplace standards since at least the early 1980's. The Williams’ study will also likely conclude that indoor air modeling shows that workplace exposures are likely to be minimal during the application of products containing trace levels of benzene. Finally, the Williams study will likely conclude that petroleum-derived products containing trace levels of benzene are not expected to produce 8-hour TWA airborne concentrations that exceed current regulatory standards under typical product use scenarios.

Defense counsel and their clients should be looking for details on the publication of Dr. Williams study in the near future. Dr. Williams’ materials indicate that she can be reached at pwilliams@chemrisk.com.