Transcript NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

Federal Regulatory Developments
Affecting Coal:
EPA and Congress
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PRESENTED BY
Peter Glaser
Troutman Sanders LLP
401 9th Street, NW
Suite 1000
Washington, DC 20004
202.274.2950
www.troutmansanders.com
Montana Coal Council
Kalispell, MT
July 21, 2009
It’s High Noon for Coal in
Washington
• Climate Change
Legislation
• EPA Endangerment
Finding
• Almost every other
air quality regulation
affecting use of coal
is back to square one
Waxman-Markey
• Passed House June 26, 2009
• First bill to pass either House that
mandates GHG Reductions
• 1427 pages (!)
• 300+ page Manager’s Amendment
Filed at 3:00 A.M. the day of vote
What’s In Waxman-Markey?
• Cap-and-trade program for capped
sources, principally large industrial sources
emitting ≥ 25,000 tpy CO2e and accounting
for 85% of U.S. GHG emissions.
• Targets and Timetables
- 3% below 2005 when program starts in
2012
- 17% below by 2020
- 58% below by 2030
- 83% below by 2050
- Delayed compliance dates for certain
industrials, NG LDCs
Allowance Allocations to EGU
Sector
• 43.75% of allowances allocated at
no-cost to EGU sector in 2012 and
2013
• Declining to 7% in 2029 and then
none thereafter
NSPS for Coal Mines?
Bill directs EPA to issue New Source
Performance Standards for uncapped
sources, which would include coal
mine methane emissions
Source: Climate Policy Group
Source: Climate Policy Group
Source: Climate Policy Group
U.S. carbon market seen
rocketing to $2T
"Make no mistake, these carbon
markets can be the world's
largest commodity markets in a
few short years," Commissioner
Bart Chilton of the Commodity
Futures Trading Commission told
a carbon market gathering in
Chicago.
E&E Daily, Jun. 10, 2009
Senator Dorgan
7/16/09
"My preference would be that we not take up the Waxman
Markey bill, as such. I know a lot of work has gone into that
legislation, but my preference would be that we start in a
different direction. I do not have a problem with capping
carbon...I'm for a low-carbon future, but in my judgment,
those who would bring to the floor of the United States
Senate a replication of what has been done in the House with
over 400 pages describing the 'cap-and-trade' piece of
capping carbon, will find very little favor from me and I would
suspect from some others as well. There are better and
other more direct ways do this to protect our planet. But, I've
been to the floor many, many, many times talking about
what has happened with credit default swaps, what's
happened with CDO's, what happened with the oil futures market,
on and on and on. If what has happened gives anybody confidence,
then they're in a deep sleep and just don't understand it."
The Senate
• 6 Committees have jurisdiction over
bill, leading committee is Boxer’s
EPW
• Reid asks for all Committees to
complete work by late-September
• So bill can be brought to floor in
October/November
Key Substantive Concerns for
Coal
• Targets and timetables aligned with
technology (CCS) development
• Allowance allocations to allow
utilities to keep utilizing coal without
undue cost
• Liberal provisions for offsets
• Support for CCS
Key Political Considerations
• Northeast/West Coast vs. Heartland
• Ag Sector Strength
• Overwhelming complexity of bill and of
harmonizing work of different committees
in Senate, plus between House and Senate
• Health Care
• Unemployment Rate
• Copenhagen in December
• Don’t underestimate President’s
determination
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EPA Proposes Endangerment Finding
on April 17, 2009
• Finds that elevated concentration of six
GHGs in atmosphere constitute “air
pollution” endangering both public health
and welfare because of climate change
effects
• Finds that four of these GHGs, including
CO2, emitted by new motor vehicles cause
or contribute to this air pollution
• Does not propose regulations to control
these emissions – but once endangerment
finding final, EPA must regulate
→ Comments filed June 23, 2009
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What Happens Next?
President announces agreement with
automakers on May 19 on motor vehicle fuel
economy regulations that will include GHG
regulations under CAA – actual proposal
expected this Summer before endangerment
finding is finalized
Endangerment finding will be finalized later
this year
Auto GHG regulations will be finalized some
time next year
What Happens Next?
EPA will move to set standards for
large coal-fired EGUs later this year
Numerous petitions in queue to
regulate GHG emissions from a
variety of other sources
Strategic Considerations on EPA
vs. Congress
• EPA and Congressional leadership
are trying to use threat of CAA
regulation as sword to soften up
industry on cap-and-trade – offering
to exempt capped sources from CAA
regulation as part of bill
• National legislation is preferable to
CAA regulation by a mile, but not at
any cost
• Two-front battle to get a sensible
climate change program
GHG REGULATION: HOW MUCH PAIN?
Other EPA
• Post-CAIR (in East)
• CAIR for West – Wild Earth
Guardians Lawsuit seeks to control
interstate transport of SO2 and NOX
in West
• Post-CAMR
• Ozone and PM2.5 NAAQS
• Regional Haze
• Etc.