EPA Finalizes Rule Requiring Use of Best Technologies to Reduce Greenhouse Gases from Large Facilities On May 13, 2010, the U.S. Environmental Protection Agency finalized a new rule that will regulate greenhouse gas (GHG) emissions from stationary sources under the Prevention of Significant Deterioration (PSD) program and the Title V operating permit program. Impacted stationary sources will be required to demonstrate the use of best available control technologies (BACT) and energy efficiency measures to minimize GHG emissions when facilities are constructed or significantly modified. This new rule will capture most refineries and factories. The final rule can be found at,
Kerry, Lieberman Introduce the American Power Act of 2010 On May 12, 2010, Senators John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) introduced The American Power Act of 2010. The American Power Act would impose emissions limits on approximately 7,500 U.S. factories and power plants and would cover only those operations that emit more than 25,000 tons of greenhouse gases (GHGs) per year. The Senate bill would cover electric utilities beginning in 2013, while delaying emissions caps until 2016 for energy-intensive manufacturing such as steel and cement making. Companies would comply by holding or purchasing emissions allowances for each ton of GHGs they emit. Transportation sector emissions, which account for approximately one-third of all U.S. emissions, would be covered by providing for further regulation of mobile source GHG emissions under the Clean Air Act, and requiring oil companies to purchase carbon emissions allowances at a set prices but excluding them from the carbon market. The 987-page bill can be found at, Key points include: GHG Cap: The American Power Act would cut U.S. GHG emissions 17% from 2005 levels by 2020, and by 83% by 2050, consistent with the climate legislation (H.R. 2454) passed by the House last June. GHGs that would be limited are: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons emitted as a byproduct, perfluorocarbons, and nitrogen trifluoride. The bill would also provide for a separate, more urgent limit-and-reduction schedule for super-GHGs and black carbon. Offsets: The Senate bill would establish an annual limit on GHG emission offsets of 2 billion tons, up to one-quarter of which could be international offsets. The bill would require the Secretary of Agriculture and the Administrator to jointly establish an advisory committee to provide scientific and technical advice on the establishment and implementation of the offset program. Carbon Market: The Senate bill would set a specific price on carbon, with floor and ceiling rates that would range from $12 per ton of carbon emissions to $25 per ton, which would increase depending on inflation. The bill marks an abandonment of previous efforts to have a single economy-wide mechanism for trading pollution credits. This version of the bill envisions separate programs for utilities, transportation and manufacturing. Restrictions would take effect in 2013 for power plants and transportation fuels, and in 2016 for manufacturers. Clean Air Act: The Senate bill provide that GHGs may not be added to the list of hazardous air pollutants on the basis of their effect on climate change alone, under Clean Air Act section 112(b)(2). It would also preempt EPA from using its section 111 authority to issues standards for covered entities that directly emit GHGs. Additionally, the bill would roll in state cap-and-trade programs like the Regional Greenhouse Gas Initiative. Coal: The Senate bill would amend the Clean Air Act to establish performance standards for new coal-fueled power plants permitted in 2009 or later. "Clean" coal technologies would be invested in through annual incentives of $2 billion for researching and developing carbon capture and sequestration methods. Transportation: While the transportation sector will still be subject to regulation under the Clean Air Act, producers and importers of refined products would not be able to buy or trade emissions allowances with other companies under the Senate bill. Instead, the price of carbon would be the same across the industry, and all refiners and fuel providers will see the same price each quarter. Offshore Drilling: States would be permitted to opt out of offshore drilling up to 75 miles from their coast. Current law allows such drilling to occur three miles off the shore. States that do allow offshore drilling would receive 37.5% of the revenues "to help protect their coastlines and coastal ecosystems." Nuclear Power: The Senate bill emphasizes the development of nuclear power, increasing funding for nuclear loan guarantees to $54 billion. It provides a 10% tax credit for the construction of certain nuclear power facilities and allows tax-exempt bonds to be used for public-private partnerships for advanced nuclear power facilities. International Policy: The bill stipulates that, in the event that no global agreement on climate change is reached, an international reserve allowance program would be implemented. This would require that imports from other countries that have not taken action on limiting emissions pay a comparable amount at the border in order to avoid carbon leakage. The prospects for passage of the bill remain uncertain. While Senator Reid is expected to meet with committee chairs early next month to discuss reconciling provisions in the American Power Act with other pending energy bills, many analysts are doubtful that the Bill will garner the necessary Republican support for passage. Critics have pointed to the transportation provisions as a "gas tax," with concerns raised over the fact that the bill's carbon price will be translated into greater fees imposed on consumers for home heating oil and gasoline.
Gibson Dunn attorneys Stacie B. Fletcher and Caeli A. Higney contributed to this issue of the Climate Change Newsletter. Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice. If you would like NOT to receive future issues of the Climate Change newsletter from the firm, please send an email to climatechange@gibsondunn.com with the words 'UNSUBSCRIBE Climate Change' in the subject line. Thank you. Please visit our website at www.gibsondunn.com |
MAY 2010
Kerry, Lieberman Introduce the American Power Act of 2010
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