environotes

U.S. EPA Proposes One-Year Extension of SPCC Plan Compliance Deadline
Applicability of Case-by-Case MACT Subject of Notice of Intent to Sue and Proposed Rule
IDEM Letter Explains State’s Approach to the Tailoring Rule
IDEM Revisions to Total Petroleum Hydrocarbon Procedures for Ground Water Could Significantly Impact Petroleum Remediation Site Closures
U.S. EPA Proposes “Transport Rule” to Replace CAIR

U.S. EPA Proposes One-Year Extension of SPCC Plan Compliance Deadline

By Andy Bowman, Chair, Environmental Law Department, Bingham McHale LLP

In December 2006, December 2008 and November 2009, U.S. EPA published final rules making amendments and technical corrections to the Spill Prevention, Control and Countermeasure (SPCC) Rule. These amendments became effective on January 14, 2010 and established a compliance deadline of November 10, 2010 by which owners and operators of regulated facilities must prepare or amend their SPCC Plans and implement those Plans. The SPCC Rule applies to owners and operators of non-transportation facilities that drill, produce, store, process, refine, transfer, distribute, use or consume oil or oil products that could be reasonably expected to discharge oil to navigable waters or adjoining shorelines. Facilities are required to have a SPCC Plan if they have aboveground oil storage capacity greater than 1,320 gallons or completely buried oil storage capacity greater than 42,000 gallons.

Since the initial amendments to the SPCC Rule were finalized in July 2002, the U.S. EPA has extended the compliance deadline several times to enable owners and operators adequate time to review the December 2006, December 2008 and November 2009 amendments and then make appropriate changes to their SPCC Pans. On August 3, 2010, U.S. EPA published notice of a proposal to further extend the compliance deadline from November 10, 2010 to November 10, 2011 for certain regulated facilities. 75 FR 45572 (August 3, 2010). The proposed compliance deadline extension would apply to all regulated facilities other than drilling, production or workover facilities that are completely offshore or that have both offshore and onshore components and all onshore facilities required to have and submit a Facility Response Plan (FRP). Facilities required to have an FRP are those with storage capacities of 1 million gallons or more that could cause substantial harm or those with storage capacities at or above 42,000 gallons and that transfer oil to or from a vessel over water. These excepted facilities would remain subject to the November 10, 2010 compliance deadline.

If the proposed extension of the compliance deadline is finalized, owners or operators of facilities, other than the excepted facilities, will be required to make any necessary amendments to their SPCC Plans and fully implement the amended Plans by November 10, 2011. To be eligible for the compliance extension, owners or operators of facilities in operation before August 16, 2002 must continue to maintain their existing SPCC Plans. If a regulated facility comes into operation after August 16, 2002 but before November 10, 2011, the owner or operator will need to prepare and implement its SPCC Plan on or before November 10, 2011. Facilities becoming operational after November 10, 2011 will be required to prepare and implement a SPCC Plan before beginning operations.

U.S. EPA is taking comments on the proposed extension of the compliance deadline until August 18, 2010.

Additional information is available at http://www.epa.gov/emergencies/content/spcc/index.htm.

Applicability of Case-by-Case MACT Subject of Notice of Intent to Sue and Proposed Rule

By Larry Kane, Partner, Environmental Law Department, Bingham McHale LLP

Sierra Club has raised contentions of failure to make a case-by-case MACT determination in its notice of intent to sue U.S. EPA concerning a Title V permit issued to a power plant in Maysville, Kentucky (East Kentucky Cooperative’s Hugh L. Spurlock Generating Station). Sierra Club asserts in its notice, dated June 22, 2010, that EPA failed to respond within the 60 days allotted by the Clean Air Act (CAA), 42 U.S.C. §7661d(b)(2), to a petition by Sierra Club objecting to the Title V operating permit.

One of the main issues raised in the notice (and the earlier petition) is the alleged failure of the state permitting agency to impose case-specific MACT emission limits on the source to control various hazardous air pollutants (HAPs), including certain metals, such as mercury, arsenic and lead, as well as hydrogen chloride, hydrogen fluoride and dioxins. A MACT rule has not been adopted by EPA for steam electric generating units and the 2005 Clean Air Mercury Reduction Rule (CAMR) was vacated by the federal courts.

Although not directly implicated for the electric generating source category, a similar issue suggested by the notice of intent to sue is the status of a source, relative to the case-by-case MACT requirements of Section 112(j) of the CAA (sometimes referred to as the MACT “hammer” provisions), when a NESHAP setting MACT standards for the source’s industrial category has been vacated by the courts pursuant to a legal challenge. Should sources in the affected source category be insulated from Section 112(j) requirements while EPA addresses deficiencies in the NESHAP pursuant to a vacatur order? Conversely, should sources in such a source category be construed to subject to EPA’s “failure to promulgate a [MACT] standard” within the meaning of Section 112(j)(2)? EPA clearly favors the latter interpretation, as is evident from a proposed rule published March 30, 2010, at 75 FR 15655, to resolve the question of Section 112(j) applicability under such circumstances. The proposed rule would make the 112(j) case-by-case MACT requirements obligatory in all industrial source categories where the pertinent MACT rule has been vacated. EPA’s position is stated in the proposed rule as:

“. . . EPA’s long-standing position is that section 112(j) applies in the case of the complete vacatur of a section 112(d) rule establishing MACT standards for an initially listed major source [category]. We are proposing language changes within the rule to clarify the applicability of section 112(j) in the case of such a complete vacatur. Specifically, we are proposing to revise the definition of the affected sources to identify the triggering mechanism for section 112(j) . . . to when ‘there is no section 112(d) standard in place on or after the section 112(j) deadline.’ This is consistent with EPA’s view that when there has been a complete vacatur of a section 112(d) rule establishing MACT standards, there has been in effect a ‘[f]ailure to promulgate a standard’ within the meaning of section 112(j).” 75 FR at 15658.

If EPA’s proposed rule is final adopted, it will immediately affect major HAP sources in the following source categories: Polyvinyl Chloride and Co-polymers Production, Brick and Structural Clay Products Manufacturing, Clay Ceramics Manufacturing, and the Industrial, Commercial and Institutional Boilers and Process Heaters.

IDEM Letter Explains State’s Approach to the Tailoring Rule
By Jennifer K. Thompson, Partner, Environmental Law Department, Bingham McHale LLP

On July 23, 2010 the Indiana Department of Environmental Management (“IDEM”) submitted its response to the United States Environmental Protection Agency (“U.S. EPA”) regarding how it will implement the Prevention of Significant Deterioration (“PSD”) and Title V Greenhouse Gas (“GHG”) Tailoring Rule (the “Tailoring Rule”). IDEM’s letter states that the State of Indiana intends to apply the meaning of the term “subject to regulation” as established by U.S. EPA in the Tailoring Rule when IDEM implements its PSD and Part 70 permitting programs.

U.S. EPA had asked states to submit a letter on or before August 2, 2010 explaining how the state will implement the Tailoring Rule. U.S. EPA has advised that it will move forward with finalizing a proposal to limit its approval of existing State Implementation Plans for any state that is unable or unwilling to adopt the federal tailoring approach.

IDEM’s response letter explains that Indiana will need to undertake rulemaking to implement the changes included in the Tailoring Rule. IDEM plans to initiate rulemaking to incorporate the Tailoring Rule in mid-August 2010 and hopes to complete same in March of 2011. However, IDEM points out that an additional emergency rulemaking will be necessary to make GHG regulatory threshold changes effective on January 2, 2011.

In addition to being the deadline to respond to U.S. EPA, August 2, 2010, is also the appeal deadline for states to challenge the legality of the Tailoring Rule with the D.C. Circuit Court of Appeals. It is unclear at this time whether IDEM will appeal the Tailoring Rule; however, the State of Indiana has joined the Endangerment Finding litigation currently before the D.C. Circuit Court of Appeals as an intervenor in support of three petitioners, Virginia, Alabama, and Texas. Indiana has submitted to the court the following preliminary nonbinding issues:

With respect to its Endangerment Finding, the U.S. EPA exceeded its statutory authority, abused its discretion, and acted arbitrarily and capriciously by violating the Clean Air Act section 307(d), the Administrative Procedures Act, the “Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by the EPA,” and other applicable law.

With respect to its Endangerment Finding, the U.S. EPA exceeded its statutory authority, abused its discretion, and acted arbitrarily and capriciously in violation of Clean Air Act section 307(d) by re-delegating its statutory responsibilities to perform an endangerment analysis to a foreign entity, the Intergovernmental Panel on Climate Change (IPCC), and other organizations, and relying upon “assessments” from this foreign entity and other organizations.

U.S. EPA’s Endangerment Finding, together with the text of 42 U.S.C. § 7521, demonstrate that the outer limits of the non-delegation precedents of the Supreme Court have been exceeded, violating the Separation of Powers principle under the U.S. Constitution, rendering the Endangerment Finding unlawful.

Based on the issues raised by Indiana in its Endangerment Finding intervention, it is possible that an appeal of the Tailoring Rule could be pursued.

IDEM Revisions to Total Petroleum Hydrocarbon Procedures for Ground Water Could Significantly Impact Petroleum Remediation Site Closures

By E. Ryan Murray, Attorney, Environmental Law Department, Bingham McHale LLP

On June 17, 2010 the Indiana Department of Environmental Management (“IDEM”) released revised procedures for addressing Total Petroleum Hydrocarbons (“TPH”) in ground water at petroleum remediation sites. IDEM’s June 17, 2010 announcement is available at http://www.in.gov/idem/files/risc_tph_announce_20100617.pdf. Based on conclusions and recommendations of the IDEM Risk Integrated System of Closure (“RISC”) TPH Workgroup, IDEM has determined that the routine delineation of TPH in ground water is no longer warranted at many remediation sites. The revised procedures could significantly affect the scope and expense of required investigation and remediation of sites with ground water impacted by refined petroleum products including gasoline, mineral spirits, Stoddard solvents, diesel fuel, and waste oils.

In order to implement these procedural changes, IDEM has discontinued the default TPH closure levels for ground water summarized in Chapter 8 of the RISC Technical Resource Guide. This change means TPH in ground water is no longer a constituent of concern at IDEM remediation sites with refined petroleum product contamination. Sites held up from obtaining regulatory closure because of TPH in ground water may now be eligible for closure without incurring significant remediation expenses. In addition, sites that previously obtained regulatory closure through the use of an Environmental Restrictive Covenant to address TPH in ground water may be eligible to have the use restrictions eliminated or reduced. Finally, measurement of TPH in ground water will no longer be routinely requested by IDEM project managers during site investigations and remedial monitoring unless TPH analyses are necessary to determine if municipal or private drinking water wells are affected by a petroleum release. Where a drinking water well may be impacted, IDEM remediation program project managers will have the discretion to require ground water TPH measurements.

At this time, IDEM’s procedures applicable to TPH in soil, including default closure levels and site characterization and remediation requirements, remain unchanged. Interested parties should be aware that IDEM indicated in the June 17, 2010 announcement that it is considering an expansion of the petroleum constituents of concern list and changes in how exposure pathways are evaluated at petroleum remediation sites. Information regarding changes to IDEM’s RISC policies and procedures, including revisions related to TPH and petroleum remediation sites, are available at http://www.in.gov/idem/4153.htm.

U.S. EPA Proposes “Transport Rule” to Replace CAIR

By Matt Gernand, Attorney, Environmental Law Department, Bingham McHale LLP

The U.S. EPA has proposed its long-awaited replacement to the Clean Air Interstate Rule known as “CAIR”. The replacement rule, proposed on July 6, 2010, is known as the “Transport Rule.” CAIR was promulgated by the U.S. EPA in 2005 and established a cap-and-trade program to reduce the interstate transport of SO2 and NOx emissions from power plants. CAIR was overturned by the U.S. Court of Appeals for the D.C. Circuit in 2008, but will remain in place until the U.S. EPA promulgates a replacement rule.

The Transport Rule will require that power plants in Indiana and 30 other eastern states and the District of Columbia reduce their emissions of SO2 or NOx or both (Indiana power plants will be required to reduce both) substantially below 2005 levels. Under the proposed rule, power plants would be required to begin reducing their emissions in 2012 and for power plants located in certain states, including Indiana, further reduce their SO2 emissions by 2014. The EPA is proposing to reduce emissions by setting an emissions budget for each state based on each state’s contribution to emissions which cause another state to be classified as nonattainment or interfere with another state’s maintenance of a National Ambient Air Quality Standard (NAAQS). Unlike the CAIR rule, the Transport Rule will not allow unrestricted interstate emissions trading. Instead, the Transport Rule proposes to allow limited interstate trading and intrastate trading among power plants to ensure that each state will achieve emission reductions. The proposed rule also seeks comment on two alternative approaches. The first alternative would only allow intrastate trading and the second alternative would specify an allowable emission limit for power plants but would allow companies to average the emissions of its various plants to meet the specified limit.

The Transport Rule is intended to reduce SO2 and NOx emissions in order to assist downwind states attain and maintain compliance with the current PM2.5 and ozone NAAQS. It should be noted, however, that the U.S. EPA has already proposed a more stringent ozone NAAQS and has indicated it may strengthen the PM2.5 standards. The U.S. EPA states in the proposed rule that it will propose an additional transport rule in 2011 to address any changes in the ozone standard and that each time an additional NAAQS revision occurs, it will evaluate whether further reductions from upwind states will be required and adjust the transport rule accordingly.

The U.S. EPA fact sheet for the proposed rule states that the rule will not “disrupt a reliable flow of electricity for American consumers and businesses” but does project the cost of complying with the rule to be $2.8 billion for the electric utility industry and the overall societal cost to be $2.2 billion.
EPA will take public comment on the proposed rule for 60 days following its publication in the Federal Register. A full copy of the proposed rule is available at http://www.epa.gov/airtransport/actions.html.