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January 24, 2012 Environment Group/Washington Food Industry Environmental Council Environmental Issues Presentation Patrick Traylor Adam Kushner Adam Siegel.

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Presentation on theme: "January 24, 2012 Environment Group/Washington Food Industry Environmental Council Environmental Issues Presentation Patrick Traylor Adam Kushner Adam Siegel."— Presentation transcript:

1 January 24, 2012 Environment Group/Washington Food Industry Environmental Council Environmental Issues Presentation Patrick Traylor Adam Kushner Adam Siegel

2 2 Overview General overview of energy/environmental policy (Kushner) Boiler Air Toxics Rules Update (Traylor & Kushner) Cross-state Air Pollution Rule (Traylor & Kushner) Mercury and Air Toxics Standards (Traylor & Kushner) Clean Air Act Climate Change Program (Traylor & Kushner) CAFOs (Siegel) EPA Chemical Safety and Management Initiatives, Dioxin (Kushner)

3 3 OverviewEnergy and the Environment Direct impacts to food industry –GHG PSD rules –Boiler air toxics rules –CAFO rules –Categorical standards (e.g., grain elevator NSPS) –Chemical safety and management initiatives –Dioxin regulation

4 4 OverviewEnergy and the Environment Indirect impacts to food industry –EPAs power plant rules (CSAPR, MATS, GHG NSPS) –Land-based natural gas (and now oil) energy extraction –Renewable fuel standards (RFS) and alternative fuels –Increased domestic refining Planned expansions to crack sour crude Air toxic impacts –Domestic energy development –And, of course, climate issues....

5 Boiler Air Toxics Rules Rule package –Emissions standards for area source industrial, commercial, and institutional boilers –Emissions standards for major source industrial, commercial, and institutional boilers –Emissions standards for commercial/industrial solid waste incinerators –Identification of non-hazardous materials that are solid waste Procedural posture –Original MACT/CISWI rules vacated by D.C. Circuit –Finalized replacement rules on March 21, 2011, but stayed by EPA pending reconsideration –Proposed reconsidered rules on December 23, 2011 –D.C. District Court vacated EPAs stay on January 9, 2012 –EPA informed Senator Ron Wyden on January 18, 2012, that EPA will issue no action assurance letters to affected sources pending finalization of December proposal 5

6 Boiler Air Toxics Rules Modifications from 2011 rule –The non-hazardous solid waste proposal modifies somewhat the definition of biomass so as to allow more materials traditionally used as a fuel to be classified as a non-hazardous solid waste (and therefore exempting combustion of these materials from the CISWI rule) –The major source boiler rule sets new emission limits for particulate matter that are different for each solid fuel subcategory, and sets new, more variable carbon monoxide limits –The major source boiler rule replaces dioxin limits with work practice standards –The amendments continue to allow major source gas-fired boilers to qualify for work practice standards, and continue to exempt area source gas-fired boilers from the rule –For affected area sources, initial compliance tune-ups are due within two years instead of one year –Seasonal affected area source boilers have an extended tune-up compliance schedule 6

7 Boiler Air Toxics Rules Discussion 7

8 Cross-state Air Pollution Rule Procedural posture –Original Clean Air Interstate Rule vacated/remanded by D.C. Circuit –Finalized replacement rules on July 6, 2011, with an effective date of January 1, 2012 –Finalized supplemental rule on December 15, 2011, adding five states –D.C. Circuit stayed final rule on December 30, 2011 –Expedited briefing schedule in litigation that consolidated some 45 challenges to the rule, with final briefs due March 16, 2012 Brief overview of the rule –Address transport issues in eastern U.S. –Protect downwind states from upwind state impacts –28 states required to reduce annual NO x (54%) and SO 2 (73%) and seasonal ozone emissions to assist in attaining the 1997 ozone and 2006 fine particle ambient air quality standards –Establishes a NO x and SO 2 budget for each state, which the states allocate to their power plant sources 8

9 Cross-state Air Pollution Rule Discussion 9

10 Mercury Air Toxics Standards Nationwide scope: All coal- and oil fired utilities > 25 MW (burning coal for average of 10% of last three years); Objective: Reduce mercury, metals, arsenic, nickel, hydrochloric acid and hydrogen fluoride. Typical controls: Hg (SCRs, activated carbon injection, non-Hg metals (electrostatic precipitators), Acid gases and SO 2 (scrubbers). Deadlines: 3 years from effective date, plus 1 additional year (by statute) (still not published in the Federal Register) Reliability Issue: –EPA enforcement office policy memo to address reliability critical units and secure a possible 5th year –Congressional Research Service concluded on January 9, 2012: MATS not expected to harm reliability; cost increases within the normal range of historical price fluctuations 10

11 Mercury Air Toxics Standards Discussion 11

12 GHG PSD Permitting Endangerment Finding (2009) –Summarizes scientific evidence to date in support of anthropogenic climate change –Describes human health and welfare effects of climate change Light-duty Vehicle GHG Emission Standards (2010) –Essentially a fuel efficiency standard, which will increase from 30.1 to 35.5 MPG in 2012-2016 –Expected to reduce CO 2 emissions by 950 million metric tons over the lifetime of the MY2012-2016 vehicles and save 1.8 billion barrels of oil –Cost of $60 billion (or $1,100 per vehicle), with benefits of $250 billion (including $130-160 per year fuel savings per vehicle) 12

13 GHG PSD Permitting Subject-to-regulation Rule (2010) Tailoring Rule (2010) –Absurd results and administrative necessity Would increase Title V sources from 15,000 to six million Would increase PSD permits from 300 per year to 40,000 per year –Lower regulatory threshold levels in phases: Phase I (January 2011-June 2011): 75,000 tpy CO 2 e and otherwise subject to PSD Phase II (July 2011-June 30, 2013): Phase I sources plus 100,000 tpy CO 2 e new sources or 75,000 tpy CO 2 net emission increase sources Phase III (July 1, 2012): Consider permanent exclusion of small sources Phase IV (April 30, 2016): Final implementation rule Oral argument in D.C. Circuit on all rules February 28 & 29, 2012 13

14 Greenhouse Gas EmissionsNew Source Performance Standards for Power Plants and Refineries Originally, EPA agreed to proposed and final standards as follows: –Power plants by July 2011 and May 2012, respectively; –Refineries by December 2011 and November 2012, respectively. Just recently sent to OMB; Pertains to new and existing sources; Lots of unknowns: –May require: Switch to natural gas Carbon sequestration implemented over a significantly long time horizon Energy efficiency improvements. 14

15 Climate Change Regulation Discussion 15

16 Chesapeake Bay CAFO Proceedings NDPES CAFO Reporting CERCLA/EPCRA Reporting from CAFOs 16

17 17 Dioxin Concern: Ubiquitous, bio-accumulative compounds. Dioxin Exposure Initiative –Initiated in 1994 –2003 draft assessment – most people at or near exposure levels had sharply increased risk cancer and other adverse health effects Would classify most forms of dioxin as carcinogen –2006 National Academy of Sciences report, which concludes: EPA overstated risk Uncertainties insufficiently quantified and assumptions not justified EPA should better communicate estimates and methods –2010 EPA draft report

18 18 Dioxin (contd) Dioxin Exposure Initiative (contd) –May 2010 EPA draft report Reassesses issues raised by NAS Proposes to set a safe daily dose for tetrachlorodibenzo-p-dioxin (TCDD)the most toxic form of dioxin –August 2011Science Advisory Board issues results of its review of EPAs May 2010 draft: Criticized EPAs choice of cancer endpoints and its failure to bound uncertainty associated with cancer risk models. –January 2012 EPA is scheduled to release non-cancer part of its re-analysis; No date set for cancer portion re-analysis. –January 10, 2012Rep. Markey urges EPA to move forward with finalizing assessment citing increased emissions (10%) and landfill disposal (18%).

19 Dioxin Discussion 19

20 Hogan Lovells has offices in: Abu Dhabi Alicante Amsterdam Baltimore Beijing Berlin Brussels Budapest* Caracas Colorado Springs Denver Dubai Dusseldorf Frankfurt Hamburg Hanoi Ho Chi Minh City Hong Kong Houston Jeddah* London Los Angeles Madrid Miami Milan Moscow Munich New York Northern Virginia Paris Philadelphia Prague Riyadh* Rome San Francisco Shanghai Silicon Valley Singapore Tokyo Ulaanbaatar Warsaw Washington DC Zagreb* "Hogan Lovells" or the "firm" is an international legal practice that includes Hogan Lovells International LLP and Hogan Lovells US LLP. The word "partner" is used to refer to a member of Hogan Lovells International LLP or a partner of Hogan Lovells US LLP, or an employee or consultant with equivalent standing and qualifications, and to a partner, member, employee or consultant in any of their affiliated businesses who has equivalent standing. Where case studies are included, results achieved do not guarantee similar outcomes for other clients. Attorney Advertising. © Hogan Lovells 2012. All rights reserved. *Associated offices

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