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Change picture on Slide Master Federal Regulatory Developments Affecting Coal: EPA and Congress Montana Coal Council Kalispell, MT July 21, 2009 PRESENTED.

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Presentation on theme: "Change picture on Slide Master Federal Regulatory Developments Affecting Coal: EPA and Congress Montana Coal Council Kalispell, MT July 21, 2009 PRESENTED."— Presentation transcript:

1 Change picture on Slide Master Federal Regulatory Developments Affecting Coal: EPA and Congress Montana Coal Council Kalispell, MT July 21, 2009 PRESENTED BY Peter Glaser Troutman Sanders LLP th Street, NW Suite 1000 Washington, DC

2 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

3 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

4 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 % below by % below by % below by Delayed compliance dates for certain industrials, NG LDCs

5 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

6 NSPS for Coal Mines? Bill directs EPA to issue New Source Performance Standards for uncapped sources, which would include coal mine methane emissions

7 Source: Climate Policy Group

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10 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

11 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."

12 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

13 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

14 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

15 Change picture on Slide Master

16 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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18 Change picture on Slide Master

19 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

20 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

21 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

22 GHG REGULATION: HOW MUCH PAIN?

23 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.

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