A key appellate court is strongly underscoring an earlier ruling that effectively blocked private parties from appealing remand orders issued by district courts until EPA or any other agency subject to the remand takes final action required by the order, a ruling that one legal expert says could lead to significant delays in judicial resolutions.

The U.S. Court of Appeals for the 9th Circuit ruled Aug. 2 in Pit River Tribe, et al. v. United States Forest Service, et al. that a California tribe could not appeal a lower court order remanding lease extensions for a geothermal energy project because a remand order is not a final court action subject to appellate court jurisdiction.

The court says parties seeking to appeal a remand order generally have an opportunity to participate in the remand decision and that the agency may eventually decide in favor of the appellant.

The Department of Justice (DOJ) is already seeking to apply the 9th Circuit’s ruling more broadly, urging the 2nd Circuit in an Aug. 11 letter to deny an industry effort to appeal a lower court order remanding an EPA pesticide registration to the agency for reconsideration.

At issue in the 9th Circuit case was whether the Pit River tribe could appeal a lower court order remanding to the Bureau of Land Management (BLM) its earlier decision to extend for five years leases for a planned Calpine geothermal energy project.

The tribe, as well as Calpine, argued that the lower court order remanding the leases to BLM was appealable. But the court, citing its 2004 ruling in Alsea Valley Alliance v. Department of Commerce, said the remand order does not meet its three-part test for determining whether remand orders are considered final to qualify for appellate jurisdiction as required by sections 1291 and 1292 of United States Code.

Under the Alsea three-part test, remand orders are considered final -- and subject to appellate jurisdiction -- where the district court “conclusively resolves a separable legal issue,” where the remand order forces the agency to apply a “potentially erroneous rule which may result in a wasted proceeding” and where appellate review would “be foreclosed if an immediate appeal were unavailable.”

“Because an agency cannot appeal its own decision, ‘only agencies compelled to refashion their own rules face the unique prospect of being deprived of review altogether,’” the court wrote, citing Alsea.

In the new ruling, the court concludes that the “reasoning of Alsea remains persuasive” because “Pit River will have an opportunity to participate in the agencies’ process on remand. Indeed, it is possible that the agencies may decide that no geothermal power production should occur on the land and decline to extend Calpine’s leases. . . . As it stands now, the remand order is not a final order.”

The law expert says the ruling came as a surprise because it was not a core issue in the case, which centered on the substance of BLM’s legal ability to extend the leases, rather than the contents of the remand order. The remand issue “wasn’t a reason it was” at the 9th circuit, the source says. “But the court wanted to clarify when it would hear appeals” from remand orders.

The source notes the decision “doesn’t set any new law but it is troubling because it is reinforcing the earlier decision [in Alsea] and applying it to a new set of facts. . . . The 9th Circuit is saying we really want to stick to this rule.”

The source adds that most other circuits do not have a case clearly stating their position on appeals of remand orders but some circuits are beginning to cite the 9th Circuit’s ruling and adopt that approach.

For example, the 9th Circuit in Pit River says the 8th Circuit issued a similar ruling in 2009 in Izaak Walton League of America v. Kimbell -- a case challenging a snowmobile trail authorized by the U.S. Forest Service. A district court remanded the environmental assessment to the agency with instructions to prepare a more detailed environmental impact statement. The 8th Circuit rejected hearing appeal of the remand order, because it was not a final decision and in doing so cited Alsea, according to the Pit River ruling.

Meanwhile, DOJ is already citing the remand restrictions in a separate case being heard in the 2nd Circuit, Bayer CropScience v. Natural Resources Defense Council, over the company’s effort to appeal a lower court order remanding EPA’s registration of the pesticide spirotetramat.

In an Aug. 11 letter to the 2nd Circuit, U.S. Attorney Preet Bharara says Pit River “surveys the law on appeals by private parties from district court decisions remanding to administrative agencies . . . [and] does not affect the rule deeming remand orders to be non-appealable. . . . The 9th Circuit concludes the aggrieved private party ‘will have an opportunity to participate in the agenc[y’s] process[] on remand’; further, ‘it is possible that the agenc[y] may decide’ in that party’s favor on remand, which would render any interlocutory circuit-court decision ‘entirely unnecessary.’”

The source familiar with the Pit River case says the government in the 2nd Circuit case appears to be seeking to limit interlocutory review -- which address legal questions -- by applying the standard set under Alsea which allows such reviews only “where the lower court has denied or granted injunctive relief. In Pit River, the respondents argued that the district court had effectively denied injunctive relief to the tribe and therefore, Alsea Valley did not apply.”

The 9th Circuit Pit River ruling means “only the government can appeal where a remand to [an] agency is involved and this rule holds true even if the lower court decides a legal issue, unless that decision involves a request for injunctive relief.” -- Dawn Reeves

The court says parties seeking to appeal a remand order generally have an opportunity to participate in the remand decision and that the agency may eventually decide in favor of the appellant.

Environmentalists have followed through on their threat to file challenges with EPA’s Environmental Appeals Board (EAB) over the air permit agency air chief Gina McCarthy signed May 27 for the proposed Avenal natural gas-fired power plant in California, which exempts the facility from EPA’s greenhouse gas (GHG) and stricter nitrogen dioxide (NO2) emissions limits.

Earthjustice on behalf of Sierra Club in a June 27 filing with EAB says EPA’s determination that it would grandfather the project from having to meet the GHG and NO2 limits “is contrary to the plain language” of the Clean Air Act, and adds that even if the agency did have such authority it “has failed to demonstrate the facts necessary to support such an approach here.”

The Center for Race, Poverty & Environment’s (CPRE) separate June 25 filing with EAB also argues that the emissions exemptions in the permit are unlawful under the Clean Air Act, the Administrative Procedure Act and the Constitution’s due-process and equal protection clauses.

The center also challenges as unlawful EPA Administrator Lisa Jackson’s decision to have McCarthy issue the permit instead of the EPA Region IX administrator who would typically give the final sign-off on air permits for facilities in California and other states in the region. The petition also says EPA’s decision to grant the permit is discriminatory because it does not address the project’s disproportionate cumulative impacts to nearby disadvantaged communities.

Avenal filed suit in the U.S. District Court for the District of Columbia in 2010 against EPA for failing to issue its prevention of significant deterioration (PSD) permit within the one-year Clean Air Act deadline. McCarthy signed the PSD permit, which was appealed to EAB, May 27. The company argued in the case, Avenal Power Center LLC v. EPA, that Jackson must sign the final permit so it could only be appealed in court rather than to EAB because permits are not considered final during EAB review.

Instead, U.S. District Judge Richard Leon ruled May 26 that EPA had to issue a final permit by Aug. 27, meaning EAB could conduct an abbreviated review. However, it is unclear what would happen if EAB sides with environmentalists and remands the permit back to EPA because it would be impossible for a new permit to be issued by Aug. 27. One environmentalist attorney says, “EPA has put themselves in a really tough position,” and adds the only way the agency could meet the court order under a remand scenario would be to “deny the permit and redo the process.” Industry has said the only way EPA could meet the court order was for EAB to deny review.

EAB quickly issued a June 27 letter to EPA’s Office of General Counsel saying that EPA needs to respond to the challenges by next month, a move that follows efforts by the board to accelerate air permit reviews that is seen as a response to the Avenal suit claims that lengthy EAB permit reviews violate the air law requirement that the agency grant or deny permits within one year.

“In light of the U.S. District Court order in Avenal Power Center LLC v. [EPA], your response to the petition must be received no later than July 11, 2011,” the letter says. “Due to the time-sensitive nature of PSD permit appeals, the board will apply a presumption against the filing of reply briefs and sur-replies. The board will not hold oral arguments in this case.”

CPRE’s petition says EPA “in approving the energy project’s permit without requiring compliance with new federal air quality standards, attempts to rewrite the rules in order to permit the construction of this major new power plant in one of the most polluted environmental justice communities in the country.”

It adds, “EPA’s proposed action violates the plain language of the Clean Air Act, undermines clear congressional intent in adopting the PSD program, has no rational factual basis, ignores public health impacts in nearby communities, and discriminates against Latino residents in Kettleman City, Huron and Avenal. [EPA’s] decision is based on clearly erroneous finding of facts and conclusions of law, and also involves important matters of policy and discretion that this board should carefully review.”

The petition also says the permit is flawed because it does not demonstrate compliance with the new NO2 standard, does not identify disproportionate impacts and was issued while EPA is actively investigating claims of discrimination over the state’s approval process of its portion of the permit.

“EPA is conducting its PSD permitting program in a manner that subjects residents of Avenal, Huron and Kettleman City to discrimination based on their race and national origin,” by providing “people of color living near the energy project with fewer health protections and assurances than those afforded to other communities,” the petition says.

EPA has finalized its approval of New Jersey's petition asking the agency to curb emissions from a Pennsylvania power plant that cross into the Garden State, which will force the utility to implement pollution cuts similar to emission reduction mandates it faces under other EPA air rules.

In a final rule released Oct. 31, EPA follows through on its March 31 proposal to grant New Jersey's petition to cut interstate emissions under section 126 of the Clean Air Act. The section allows states to request EPA intervention for the agency to impose pollution reduction mandates on emission sources in neighboring states that are harming the petitioning state's ability to meet or stay in attainment with EPA's national ambient air quality standards (NAAQS).

The petition asked EPA to find that sulfur dioxide (SO2) emissions from the coal-fired Portland Generating Station in Northampton County, PA, were crossing the state line to New Jersey, harming the Garden State's ability to meet EPA's 1-hour SO2 NAAQS.

EPA's final rule requires a combination of emission limits for the facility that will achieve near-term pollution cuts and eliminate the plant's contribution to New Jersey's air quality violations within three years, according to an agency fact sheet.

According to the final rule, some comments EPA received on its proposal urged the agency to defer acting on the petition, and instead harmonize the schedule and requirements of the approval with other pending and final utility rules. The other rules include EPA's final Cross-State Air Pollution Rule (CSAPr) trading program to cut utility emissions of SO2 and nitrogen oxides in 27 states, and a pending final rule to cut air toxics from coal- and oil-fired power plants.

EPA in its response to comments says it is “sensitive to the desirability and advantages of harmonized regulatory requirements and the fact that GenOn -- owner of the Portland Generating Station -- will have to make pollution control investment decisions for meeting CSAPR and the air toxics rule. “We recognize the value for GenOn in having the ability to make informed investment decisions that optimize strategies for addressing these pollutants concurrently,” EPA says.

Still, the agency says that the final requirements of CSAPR are now known, and the final air toxics rule will not regulate SO2 directly -- although the proposed version of the rule predicts that its acid gas limits will have “substantial” co-benefits of reducing SO2 emissions.”

The final section 126 response “provides flexibility for Portland to develop a specific compliance strategy that protects air quality and public health, while maximizing cost effectiveness. Actions taken to meet these [emission] limits are similar to those the facility would need to comply with other Clean Air Act requirements” including CSAPR and the air toxics rule, EPA says in the fact sheet.

In the final rule, EPA also says it would not be appropriate to defer action on the petition because the Clean Air Act requires decisions on section 126 petitions within 60 days, and that time period has already passed for New Jersey's request. “We could not delay lawfully this rulemaking by any significant time period to coincide with the date for the final [air toxics] rule,” EPA says.

Senate Democrats appear to be backing away from plans to hold a hearing into President Obama's decision to block EPA from tightening its ozone air standard, even as a key GOP senator continues to push for a hearing to investigate alleged flaws in how the agency reviews the standard.

Following Obama's decision in September to scrap the agency's pending rule to strengthen its 2008 ozone standard from 75 parts per billion (ppb) to 70 ppb, Sen. Thomas Carper (D-DE) -- chair of the Environment & Public Works Committee's (EPW) clean air panel -- vowed to hold a hearing calling on White House officials to “explain these actions and the possible ramifications.”

But Carper and a staffer for the senator in comments to Inside EPA Nov. 15 suggested there is less need for a hearing now that EPA has provided answers to some questions about its response to the president's decision, including what level of ozone standard EPA is now implementing. Carper has supported a tightening of the existing ozone standard.

The Carper staffer said, “some of the concerns that we initially had . . . have subsequently been addressed by the EPA administrator in testimony provided on the House floor. For example, what standard are they going to be implementing,” in lieu of a 70 ppb limit.

The staffer did not elaborate on what testimony she was referring to. However, EPA Administrator Lisa Jackson at a Sept. 22 House Energy and Commerce Committee oversight panel hearing said that the agency's now-defunct final rule would have tightened the ozone limit to 70 ppb. EPA recently released the text of the rule as sent for White House review.

Following the president's decision, EPA air chief Gina McCarthy issued a memo saying the agency will push ahead with implementing the Bush-era ozone national ambient air quality standard of 75 ppb. The agency never implemented the Bush standard pending the outcome of its reconsideration of the 2008 standard, leaving in place the 1997 ozone limit of 80 ppb.

Carper -- speaking on the sidelines of an event in Washington, DC, celebrating 21 years since the passage of the 1990 Clean Air Act amendments -- told Inside EPA, “We live to fight another day. At least we are not living 14 years behind” with the 1997 standard.

“One of the things I was troubled by was that it appeared for a while that we were going to be stuck trying to have to live on your 1997 standard. And we have been able to at least get beyond that and to a standard that was proposed a couple of years ago.”

A Senate Republican source says the GOP remains keen on a hearing to raise questions about the president's decision. “It's stunning that the Democrats on the [EPW] Committee would appear to be silent on a decision of this magnitude -- especially one they so vehemently disagree with. One can only conclude politics trumps principle,” the source adds.

Sen. James Inhofe (R-OK), ranking member on EPW, sent an Oct. 26 letter to Carper and EPW Chairwoman Barbara Boxer (D-CA) seeking a hearing “as soon as possible,” arguing that Obama's decision highlights the senator's ongoing concerns about EPA's process for revising its national ambient air quality standards and the role played by EPA's scientific advisers in that process.

Contacted by Inside EPA the same day as Inhofe's letter last month, a Boxer spokeswoman would only say that EPW “generally announces hearings one week in advance of the hearing date.” According to the committee's website, the only hearing slated for the rest of this month is a Nov. 17 hearing on the Safe Chemicals Act, which would reform the Toxic Substances Control Act.

Meanwhile, activists led by the American Lung Association (ALA) continue to pursue litigation over the president's decision to scrap the tighter ozone standard, and are also requesting all information relating to presidential and vice-presidential involvement in the decision in a Freedom of Information Act request, which to date EPA has not replied to, an ALA source says.

McCarthy To Tout GHG Rules In First Speech, House Panel Weighs EPA's FY14 Funding

EPA Administrator Gina McCarthy will give her first major speech as agency chief this week, which is expected to focus on the agency's climate policy agenda. House lawmakers will hold an appropriations committee markup of a bill that would significantly cut EPA's funding. And the Senate environment panel will hold a hearing as part of its review of toxic chemicals regulation.

At EPA

Newly confirmed EPA Administrator Gina McCarthy is slated to give her first speech as agency chief when she delivers remarks July 30 at Harvard Law School, with a focus on her agenda as administrator and the agency's climate change agenda and efforts to cut carbon pollution.

The speech is seen by observers as part of a broader effort by the Obama administration and its allies to promote the president's second-term climate plan, which includes a centerpiece directive for EPA to craft first-time greenhouse gas (GHG) rules for existing and future power plants. McCarthy's speech at the college in Cambridge, MA, could touch on these and other GHG policies.

GOP senators who oppose EPA climate rules are attacking the utility GHG regulations and other climate controls, releasing a report doubting climate science and the need for EPA rules.

A panel of ICF International energy experts will hold a July 30 webinar to discuss the pending new source performance standards (NSPS) for existing and newly constructed utilities, focusing on their effect on power generation markets, implications for power prices, generating assets, their owners, and investors and other issues, according to the firm's website.

Advocates of the NSPS rules are launching a counter-effort including McCarthy's speech, plans for the president and members of the energy Cabinet in coming months to try and build public support for Obama's climate plan, and other public outreach efforts to defend the effort. The push-back comes a month after Organizing for Action -- a nonprofit political arm created to defend Obama's policies -- started a campaign to build public support for Obama's climate agenda.

Whichever side is able to win the campaign for public opinion on the rules could therefore strengthen its position ahead of expected floor debates in the House and Senate on efforts to stymie the climate policies through stand-alone legislation or amendments to bills.

Meanwhile, EPA is holding a July 30-Aug. 1 Community Involvement Training Conference in Boston, MA, to discuss bolstering community input in environmental policy.

The event includes panel discussions of topics including options for advancing environmental justice in environmental decisionmaking; an EPA employees-only discussion of the agency's new equity screening tool known as “EJ Screen,” case studies from the Department of Defense on public engagement, and other topics.

Echoing the impacts of Obama's climate action plan across all aspects of the agency, the agenda also includes a discussion on raising awareness of climate change in urban communities.

Meanwhile, EPA is hosting a webinarto discuss community input for risk management decisions at vapor intrusion sites as part of its Community Involvement Training Conference. The July 30 session is part of the agency's growing effort to better address risks from vapor intrusion, which occurs when contaminants in groundwater and soil vaporize and migrate into the lower floors of buildings potentially causing exposure. EPA is currently working to develop a guidefor mitigating vapor intrusion risks, though industry is concerned that the agency's proposal will be overly burdensome.

Following the 90-minute session, EPA officials are also expected to participate in a second webinar also taking place July 30 on vapor intrusion hosted by the Bureau of National Affairs.

EPA is expected to issue its response July 30 in a pending lawsuit that challenges the agency's approval of two neonicotinoid pesticides that environmentalists and beekeepers claim are killing pollinators. Environmentalists and beekeeping groups March 21 filed suit in the U.S. District Court for the Northern District of California, seeks to suspend the registrations of clothianidin and thiamethoxam, and also challenges EPA's handling of pesticides, saying the agency uses conditional registrations to rush toxic pesticides to market without adequate review.

A group of EPA advisors is preparing to review aspects of the agency's Endocrine Disruptor Screening Program (EDSP) related to weight of evidence, the latest in a series of meetingspeer reviewing Tier I screening in the program. EPA's Science Advirsory Panel (SAP) will meet July 30-Aug. 2in Arlington, VA, to review EPA's weight-of-evidence process for the first tier of screening. The SAP has already raised concerns about EDSP and whether the tests used in the program are sufficient.

EPA is hosting a webinar July 31 on its pending Integrated Risk Information System (IRIS) assessment for inorganic arsenic in an effort to gain more stakeholder feedback prior to the assessment's completion.The session (https://epa.connectsolutions.com/arsenic_webinar/ ) will feature a presentation on arsenic's carcinogenicity by EPA scientist Dr. Andrew Kligerman. Arsenic has long been under review by the agency.

Though a draft was released in 2010, industry and Republicans claimed it was overly stringent and would have driven costly and unattainable regulatory requirements. EPA scrapped the draft and has been working on a new assessment, which is required by Congress to be submitted for review by the National Academy of Sciences when completed.

And EPA's Children's Health Protection Advisory Committee (CHPAC) will meetAug. 1-2 in Washington, DC, to review a series of EPA activities that could effect children, including the agency's pending risk assessment for trichloroethylene (TCE) and its guidance for assessing environmental justice issues in regulatory analysis. In addition, the advisory group will discuss recent advice for agency science advisors to determine a maximum contaminant load level for perchlorate and finalize its recommendations on the agency's human health benchmarks for pesticides in water.

In Congress

The House Appropriations Committee is slated to hold a July 31 markup of EPA's fiscal year 2014 funding bill, a measure that in its current form would cut EPA's budget by $2.8 billion, or 33 percent from current funding levels, the bulk of which comes from EPA's state and tribal assistance, along with measures to block dozens of new or pending agency rules and policies.

The legislation would also completely eliminate funding for new brownfields grants, drastically cutting back the popular program just as EPA is touting its effectiveness and the Senate is considering a bipartisan bill to reauthorize the redevelopment grants and target them to rural communities.

The Senate Environment & Public Works Committee hosting a July 31 hearing entitled “Strengthening Public Health Protections by Addressing Toxic Chemical Threats” as part of its effort to look at whether and how to reform the decades-old Toxic Substances Control Act (TSCA).

The hearing comes as Republicans and some Democrats are pushing for approval of a compromise bill, S. 1009, that would reform the law, but falls short of requests by advocates. Environment committee Chairman Barbara Boxer (D-CA) does not support the bill and has pledged to combine it with certain provisions from an environmentalists'-backed bill, S. 696, and other measures in a chairman's markup, raising questions over whether Republicans will continue to support the legislation.

Members of the Senate Energy & Natural Resources Committee will hold a July 30 hearing to discuss the Nuclear Waste Administration Act, a comprehensive bill that marks an attempt by senators to move beyond an impasse over permanent disposal of the country's commercial and defense nuclear waste. Without agreement on a permanent repository, spent fuel has been stored on-site at commercial reactor facilities around the country, including areas at risk for earthquakes and other natural disasters, the senators said at the time of introducing the bill.

The bill would create a new independent agency to oversee nuclear waste, removing the Energy Department's management of the program; authorize the construction of interim storage facilities; and authorize one or more permanent waste repositories, established through a consent-based process, among other measures.

Other Events

The Department of Energy is holding the first meeting of three to take comments on a draft $8 billion loan guarantee solicitation to fund advanced fossil fuel power plant technology as part of President Obama's second-term climate change agenda. The July 31 meeting in Washington, D.C., will be followed by two additional meetings on Aug. 14 and Aug. 27.

The Texas Environmental Superconference takes place Aug. 1-2 in Austin, TX, with a focus on key environmental policy areas including air, waste, water and energy regulation.

For example, the agenda for the eventincludes panels where EPA Region VI officials, environmentalists, state officials, lawyers and others will discuss the latest in case law on solid waste, air quality, and other topics.

Meanwhile, officials from California EPA will host a stakeholder workshopJuly 30 to gain input on its proposal to expand chemical warning labels under the state's controversial chemical labeling law, Proposition 65. The session is aimed at gaining input on what information should be included on a product warning label in an effort to determine how to expand the warnings, one of a slew of changes Gov. Jerry Brown (D) is proposing to make to the program.

McCarthy To Tout GHG Rules In First Speech, House Panel Weighs EPA's FY14 Funding

At EPA

GOP senators who oppose EPA climate rules are attacking the utility GHG regulations and other climate controls, releasing a report doubting climate science and the need for EPA rules.

Meanwhile, EPA is holding a July 30-Aug. 1 Community Involvement Training Conference in Boston, MA, to discuss bolstering community input in environmental policy.

Echoing the impacts of Obama's climate action plan across all aspects of the agency, the agenda also includes a discussion on raising awareness of climate change in urban communities.

Following the 90-minute session, EPA officials are also expected to participate in a second webinar also taking place July 30 on vapor intrusion hosted by the Bureau of National Affairs.

In Congress

Other Events

The Texas Environmental Superconference takes place Aug. 1-2 in Austin, TX, with a focus on key environmental policy areas including air, waste, water and energy regulation.

With heightened attention due to the impact of Hurricane Sandy, congressional Democrats and the Obama administration are expanding their climate change focus to craft policies and advocate for resources that make communities more resilient to withstand natural disasters, including measures that cut carbon emissions, promote clean energy and strengthen infrastructure.

The push comes as bipartisan majorities in both chambers approved $50 billion for states harmed by Sandy, including $600 million in funds for EPA to distribute to New York and New Jersey to help wastewater and drinking water utilities become more resilient to the effects of future disasters.

Led by Senate Majority Leader Harry Reid (D-NV), almost two dozen Senate Democrats Jan. 22 introduced S. 7, a Sense of the Senate resolution and one of Reid's priorities, that calls for Congress to “prepare and protect communities from extreme weather, sea-level rise, drought, flooding, wildfire, and other changing conditions exacerbated by carbon pollution,” though it does not explicitly address “climate change.”

Among other things, the measure calls for investments in new and existing infrastructure to withstand extreme events, to promote investment in clean energy infrastructure, energy efficiency and other measures, and to promote the development of clean energy technologies that reduce demand for oil.

The measure echoes language in President Obama's Jan. 21 inaugural address, where he vowed to respond to the threat of climate change. “Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms,” Obama said..

One municipal source says Reid's resolution, which is cosponsored by 21 Democratic senators, could become a vehicle for upcoming legislation, such as a bill expected to be introduced by Sen. Ben Cardin (D-MD) later this year that calls for creating a permanent EPA program to make water infrastructure more resilient to storm events.

The source says the recent Senate vote to approve supplemental funding for states harmed by Sandy – where nine Republicans joined with 53 Democrats to approve the bill in a 62-36 vote -- could bolster prospects for Cardin's legislation. "Ultimately, I don't know how [Cardin's bill] will fare, but the Sandy bill makes an excellent case."

The source says Sandy "made a lot of congressmen more aware that the state of water infrastructure in the country is very crummy and very susceptible to these kinds of storms and weather and this is a service that needs to be dependable. I would certainly hope we'll get more support [when Cardin bill gets debated].”

All Senate Democrats in attendance voted for the supplemental spending bill, along with several key Republicans whose states have been harmed by the effects of extreme weather and other events thought to stem from climate change, including Sens. David Vitter (R-LA), the ranking Republican on the environment committee, Richard Shelby (R-AL), the ranking Republican on the appropriations committee and Lisa Murkowski (R-AK), the ranking Republican on the energy committee. Other Republicans supporting the measure include Sens. Roger Wicker (R-MS), Lamar Alexander (R-TN) and Dean Heller (R-NV).

Meanwhile the Obama administration is taking a series of steps that could add to the policy formulation.

EPA's National Environmental Justice Advisory Committee (NEJAC) is launching a new work group to address how climate change impacts, including increased storm surges, contribute to cumulative adverse impacts suffered by disadvantaged communities, an effort that is seeking to draw lessons from the effects of Hurricane Sandy.

The NEJAC Storm Surge work group, which is being led by full NEJAC chairwoman Elizabeth Yeampierre and New Jersey member Nicky Sheats, will be fully convened in February and the group is still seeking members, NEJAC officials said on a Jan. 23 conference call.

The charge of the group was not released but it could make recommendations later this year for steps all waterfront communities to take in advance of future storms, including hardening electric and heating infrastructure, and collecting pre-storm sampling so a baseline can be established – all lessons learned in the wake of Sandy which struck Oct. 29.

Yeampierre said the group will focus on how storm surges impact industrial waterfront communities. She also referenced Obama's inaugural commitment to tackle climate change and noted that it is “really impossible” to discuss the issue without also addressing environmental justice due to poor and minority communities' vulnerability to climate change effects.

Despite the name, the work group is likely to focus on broader issues beyond storm surge, according to input from other members on the call. For example, New York activist Peggy Shepherd of WE ACT said she wants to address community resiliency, noting that 80,000 public housing residents who live in a designated New York City flood zone lost power, heat and running water for at least a week. “I would like to see the EPA . . . really invest in people and residents to really develop community resiliency,” she said.

Yeampierre said the effort could provide an opportunity for EPA to work with the Department of Housing and Urban Development on resiliency in public housing.

Another NEJAC member, Edith Pestana of Connecticut, said energy infrastructure must also play a role so residents have access to heating and cooling systems during extreme weather events.

NEJAC member Kim Wasserman of Chicago warned that what New York has gone through is only an indicator of what's to come for other cities – an alarm that was first triggered in 2005 in New Orleans after Hurricane Katrina.

On the NEJAC call, Wasserman asked about the extent of soil and water sampling in the disadvantaged communities conducted after Sandy. In response, NEJAC presenter Eddie Bautista of New York noted that EPA testing was not a high priority post-storm and the testing that was conducted was limited by the Federal Emergency Management Agency.

Juan Camilo Osorio also of New York advocated for widespread pre-event testing so a baseline can be established.

Yeampierre noted that EPA Region II is drafting a proposal to process dredge material from a Superfund site near Red Hook, NY, after concerns arose that the material is continuing to drift near residences.

Meanwhile, the Sandy Regional Environmental Justice Assembly convened Jan. 26 to discuss its pending response to a Dec. 7 Obama executive order establishing a Hurricane Sandy task force, which is to issue recommendations in June.

The assembly, comprised of New York and New Jersey equity groups, had also sent Obama a Nov. 30 letter urging him to address equity issues as part of the response to the storm. The letter notes that the communities hit hardest are “the homes of many people – public housing residents, working-class homeowners, immigrants, elders and small businesses – who even before the storm, felt, with some justice, that they were distant from the region's centers of power, and excluded from decisions that affected their lives. Conditions in the weeks following the storm have borne out many peoples' concerns that city and state officials neither fully understand nor prioritize what happens in the [disadvantaged communities' harmed by Sandy]”

Bautista said the regional assembly intends to ask the task force to use “several billion dollars” of the $50 billion recovery package to boost disadvantaged communitities' resiliency and develop policies to reduce their vulnerability.

Bautista and Camilo Osorio both updated NEJAC on the work of the waterfront justice project while Bautista noted in a Jan. 24 followup interview that the group has been working on the issue since 2010 when New York City began a waterfront revitalization project as part of an update to its coastal zone management plan (CZMP). Bautista noted that the six New York waterfront communities are not just vulnerable to hurricanes but even to large storms such as Nor'easters.

The group was successful in convincing New York to include for the first time in its draft CZMP guidance for handling and storing hazardous chemicals – including developing best management practices that includes steps as simple as storing chemicals on a second floor. However, the plan only applies to new permit applicants. “So everything that's there is grandfathered,” Bautista said, calling the CZMP “an insufficient tool box. So what we've been saying is we've got to figure out a way to get to the businesses that are already there.”

The hearing for the latest draft was set for Oct. 29 but had to be canceled because of Sandy. “Ironies abound,” Bautista noted, adding that since then the city has “gone back to the drawing board” trying to strengthen the plan to make it even more adaptable and resilient. A revised draft has yet to be released.

Post-Sandy, city planning officials agreed to launch an open industrial uses study in waterfront areas– a good first step that should also be expanded to include closed industrial uses, according to Bautista. He also said that the NEJAC work group is being launched “not a moment too soon.”

Bautista said while recovering from Sandy will take years, “We want to make sure we are at the table” to win funding “so when the next of these severe weather events hit, we're less vulnerable than we were before.” – Dawn Reeves and Amanda Palleschi

Meanwhile the Obama administration is taking a series of steps that could add to the policy formulation.

Yeampierre said the effort could provide an opportunity for EPA to work with the Department of Housing and Urban Development on resiliency in public housing.

Another NEJAC member, Edith Pestana of Connecticut, said energy infrastructure must also play a role so residents have access to heating and cooling systems during extreme weather events.

Juan Camilo Osorio also of New York advocated for widespread pre-event testing so a baseline can be established.

Senate Democrats and environmentalists are pressuring President Obama to nominate a replacement for outgoing EPA Administrator Lisa Jackson who has a “demonstrated record” on reducing key pollutants, including carbon emissions, a development that underscores the renewed attention that climate change policies are receiving particularly after his inaugural address.

The push, laid out in a Jan. 29 letter signed by Senate Environment & Public Works Committee Chairwoman Barbara Boxer (D-CA) and 15 Democratic colleagues, is one of several pending decisions the president faces that may test his renewed commitment as laid out in his Jan. 21 speech to tackle climate change, including the pending Keystone pipeline and whether and how to move forward on long-delayed EPA rules.

A key environmentalist says the Senate letter could be seen as an argument for the president to nominate California's air chief Mary Nichols, a former Clinton official who has led California's groundbreaking efforts to establish a model climate change program.

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The possible nomination of Nichols, or some other climate luminary, would likely spark a vigorous debate with Senate Republicans and other climate regulation opponents over the administration's regulatory push to combat climate change. Obama's willingness to engage in such a fight could be the signal some environmentalists are waiting for that the president is serious about defending EPA's policies and making climate change a legacy issue.

An anticipated decision on the proposed construction of the Keystone XL pipeline poses another test of the administration's renewed commitment to climate change. Environmentalists have made the Keystone project -- which would deliver carbon-intense tar sands oil from Canada to refiners in the Gulf Coast -- a litmus test for climate change warriors.

Rep. Henry Waxman (D-CA), a leading voice for federal climate legislation and strong ally of environmentalists, was compelled to issue “clarifying remarks” stressing his opposition to Keystone after a Jan. 24 press conference in which he said the administration's climate change policy “must be much bigger and more ambitious than just rejecting the Keystone pipeline.”

But Waxman's comments may suggest a pathway for the Obama administration to approve Keystone, a major priority for business groups, by simultaneously cracking down on the greenhouse gases from the production and use of petroleum and fossil fuels. Waxman said such a policy should include EPA GHG performance standards for new and existing refiners and power plants, stronger Department of Energy efficiency standards and a phase-out of hydrofluorcarbons under the Montreal Protocol.

On another front, the Obama administration and congressional Democrats are expanding renewed efforts to address natural disasters, particularly amid the continuing cleanup following Superstorm Sandy, to include measures that cut carbon emissions and promote clean energy sources. The effort is an apparent attempt to expand long-standing approaches to climate adaptation, which are generally supported by industry, to include new mitigation and emission-control efforts.

A new fight over the benefits of biofuels may pose another challenge for EPA and the Obama administration's climate change policies. Just as EPA is proposing a new round of renewable fuel standards, a former international climate change negotiator in the Clinton administration, Frank Loy, and a group of federal researchers have released a study that questions the greenhouse gas-reduction benefits of bio-based fuels The new findings may put EPA in the hot seat as it faces pressure from ethanol producers to revise its lifecycle assessment of the fuel to take into account new production efficiencies that the industry says reduce greenhouse gases.

And lastly, an element of the Obama administration's push for expanded natural gas use, a key component of its broader strategy for promoting less-carbon-intense fuels, has come under attack from environmentalists. A Department of Energy study evaluating the benefits of exporting liquefied natural gas (LNG) is being blasted by environmentalists who say the review fails to address new estimates of toxic air emissions and greenhouse gases from expanded natural gas production. DOE is required under the Natural Gas Act to weigh whether exports to non-free trade nations, including Japan and China, are consistent with the public interest.

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The Government Accountability Office's (GAO) decision to list potential fiscal liabilities from climate change as a “high risk” area in need of major reform is driving a new congressional debate on the issue -- though Republicans' continued reluctance to legislate on the issue makes it almost certain the administration will move forward with EPA's greenhouse gas (GHG) rules and other mitigation and adaptation measures as President Obama is vowing.

In its biennial list of government programs at “'high risk' for waste, fraud, abuse, and mismanagement or needing broad-based transformation,” the congressional watchdog said for the first time that climate change poses significant financial risks to the federal government due to potential damage to its extensive infrastructure, such as defense installations; increased liabilities for property and crop insurance programs; and increased emergency aid to respond to natural disasters.

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The Feb. 14 GAO listing backs Democrats' broad new message that addressing climate change requires both an adaptation approach -- improving infrastructure “resiliency” -- and a mitigation approach by regulating GHGs.

GAO's decision has already prompted House Oversight & Government Reform Committee Chairman Darrell Issa (R-CA) to agree to a request from Rep. Elijah Cummings (D-MD), the panel's ranking Democrat, to hold hearings on the issue and to urge other committees of jurisdiction to do the same.

“I believe we need to kick off the first hearing related to that risk and I look forward to scheduling that hearing and also suggesting that other committees of jurisdiction do their oversight related specifically to those areas,” Issa said at a Feb. 14 hearing.

That is a change from Republicans on the House energy committee who have long rejected calls from panel ranking member Rep. Henry Waxman (D-CA) to hold hearings on climate change and have instead argued that increased natural gas production would have the effect of reducing GHGs.

Issa may have agreed to hold a hearing but Congress is not likely to agree to new policies anytime soon.

President Obama and congressional Democrats appear to favor pushing Republicans to debate the issue but leaving it up to the administration to act. In his Feb. 12 State of the Union address, Obama called on Congress to develop policies to craft both adaptation and mitigation approaches. “If Congress won’t act soon to protect future generations, I will. I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy,” he said.

In the Senate, Sens. Bernie Sanders (I-VT) and Barbara Boxer (D-CA), chairwoman of the environment committee, unveiled legislation imposing a carbon fee and are promising to move the legislation within the first few months of the year. In addition to imposing a fee, the bill seeks to restore EPA's authority to regulate hydraulic fracturing, with Democrats arguing that such regulation is needed because regulation of GHGs is driving increased natural gas production -- an argument that is likely to resurface.

But the bill is not likely to advance soon. The president and other top administration officials have opposed imposition of a carbon fee absent Republican support. And no other Democrats are supporting the bill, though Sanders said Senate Majority Leader Harry Reid (D-NV) is generally “sympathetic” on the issue.

Republicans are opposing the bill. Sen. David Vitter (R-LA), the ranking member on the environment committee, said a carbon tax would cause energy prices to “skyrocket” and increase “the cost of nearly everything built in America.”

Speaker John Boehner (R-OH) said Feb. 13 that he would take up a climate bill in the House once it was passed by the Senate. “If the president wants to impose a national cap-and-trade energy tax, I would hope that Senate Democrats take it up,” Boehner said.

With prospects for legislation slim, it appears almost certain that the administration will move forward with EPA rules setting GHG standards for power plants and other measures -- a point the president effectively reiterated in his Feb. 14 “Fireside Hangout,” hosted by Google Plus.

“We can make sure that new power plants that are being built are far more efficient than the old ones,” he said. "The truth is if you produce power using old power plants, you're going to be emitting more carbon -- but to upgrade those plants, energy's going to be a little bit more expensive, at least on the front end," he added.

Although he did not explicitly mention EPA's rules, he suggested that eventually Congress will need to act to mandate GHG limits across the economy. But he acknowledged that steps to regulate GHGs will face economic challenges. “At the core, we have to do something that's really difficult for any society to do, and that is to take actions now where the benefits are coming down the road, or at least we're avoiding big problems down the road," he said.

Still, he noted he is optimistic that progress can continue to be made without slowing economic growth. Pointing to successful GHG and fuel economy rules for passenger vehicles, Obama noted his administration can do the same in other areas, such as with buildings and appliances.

And he said that while the legislative process is gridlocked, his role is to continue to raise the profile of the issue. “Part of my job, I think, is to use the bully pulpit to help raise people's awareness because if the public cares about [an issue], Congress eventually acts. If the public doesn't, it's very hard to get big stuff done.”

With the administration likely to do the heavy lifting, Congress appears likely to continue a largely partisan debate over climate change, with Democrats doing all they can to highlight Republicans' reluctance to act. House Democrats announced Feb. 15, for example, that they are creating a new “Safe Climate Caucus” whose members are planning to take to the House floor to raise the profile of the issue on every day that Congress is in session. -- Jeremy Bernstein

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Issa may have agreed to hold a hearing but Congress is not likely to agree to new policies anytime soon.

EPA's rules governing greenhouse gas (GHG) emissions from power plants and other stationary sources face continued legal and policy uncertainty as the agency is likely to delay its standards for new electricity units and the Supreme Court begins weighing whether to review EPA's permit rules and other parts of its GHG program.

The delay is likely to be sought in a bid to put the proposed rule on sounder legal footing, address concerns over the agency's proposed decision to subject coal- and gas-fired units to the same standard, as well as address possible political considerations.

The legal concerns appear especially significant because the agency fears that if the NSPS for new sources fails to clear legal hurdles, it will undermine the agency's forthcoming NSPS for existing facilities, which is environmentalists' top priority.

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EPA is said to be concerned that the proposed NSPS for new sources – which requires new coal plants to install carbon capture technology to meet a GHG emissions limit equivalent to an advanced natural gas facility without carbon controls – will hamper its flexibility in establishing an existing source standard that distinguishes between coal and gas facilities.

The agency has never before sought to regulate coal- and gas-fired utilities under the same rule, and sources say the agency has decided the issue requires more evaluation, particularly over whether the approach could conflict with what the agency might want to do in an existing source standard.

The administration proposed the NSPS last April 13 and the Clean Air Act requires the agency to finalize within one year. Former EPA General Counsel Roger Martella says EPA must finalize the new source standard before it develops an existing source rule.

The agency has not officially announced it will miss its upcoming deadline to finalize the new source NSPS proposal. But it has yet to send a draft of the final rule to the White House for review, a process that long-standing executive orders generally require to take 90 days, though if often takes much longer.

At a March 18 symposium on EPA's NSPS rules hosted by the office of Sen. Thomas Carper (D-DE), chairman of the Senate environment committee's clean air panel, Carper's senior policy advisor for energy and environment Laura Haynes noted that it is important that EPA get its rules right, to ensure they reduce emissions and grow the economy.

Environmentalists, meanwhile, are vowing to sue EPA to win a court-enforced deadline for finalizing the rule, after the agency missed consent decree deadlines to both propose and finalize new and existing source NSPS limits for power plants and refineries. They call the NSPS standards a top goal for the Obama administration in the second term.

One source says environmentalists must give the agency a 60-day notice so the earliest a suit could be filed would be in June.

But other advocates not involved in any litigation says it might be best to allow EPA the time it needs to ensure the rule is sound, rather than seek a deadline that could result in a legally vulnerable rule. For example, Conrad Schneider of the Clean Air Task Force told the Senate forum he was less concerned about the prospect of EPA delaying the new source NSPS if the agency is shoring up its legal arguments, particularly due to a high level of scrutiny expected from the U.S. Court of Appeals for the District of Columbia Circuit.

If that is the reason for the delay, Schneider said, then environmentalists should not be concerned and should instead focus on the big picture of having legally sound rules for both new and existing sources. Schneider added, however, that EPA has statutory authority to set strong, technology forcing NSPS requirements.

Several sources suggest the agency is likely to seek to change the structure of the rule, though the mechanism it will use is unclear. Some sources suggest EPA may pull back and re-issue the proposal, while others say the agency is more likely to finalize the plan but then immediately reconsider it. No one is expecting action any time soon, with some sources saying nothing is likely to happen until next year.

Martella, who served as EPA counsel during the Bush administration, told the OnPoint webcast March 20 that EPA has several options for finalizing the rule.

“They can either re-propose it, they can come out with a new rule and say we've gone back and revisited it. Same standards, but a better legal rationale, and now we're going to take comment on it again. Or the other option they have is they could finalize it, but then say we're going to reconsider parts of it, kind of close the gaps, fill the record up, and make is stronger. I do think they'd have a hard time just finalizing as it sits there, because perhaps it is one of the more legally vulnerable rules I've ever seen.”

In a prelude to possible action on the standard plants must meet, the mining industry and some of its Democratic supportersin the Senate this week called on the administration and other lawmakers to bifurcate requirements for new coal and gas plants because requiring coal plants to meet emissions levels of a gas plant requires carbon capture and sequestration (CCS), which they call an unachievable standard.

The proposed rule's standard “is unprecedented under the Clean Air Act and will have the unfortunate effect of preventing the construction of new coal plants or the upgrading of any existing sources,” Sens. Joe Manchin (D-WV), Mary Landrieu (D-LA), Joe Donnelly (D-IN), and Heidi Heitkamp (D-ND) wrote in a March 14 letter to President Obama.

Rather than maintaining the natural gas standard for coal plants, the lawmakers called for use of an “alternative approach” that sets the bar at the level of a highly efficient “supercritical” advanced coal plant and allows the agency to differentiate standards based on coal type.

Political considerations could also influence a possible EPA delay of the new source NSPS if the agency wants to release both rules at once and avoid two separate battles in Congress over the new source and existing source rules. Another reason for delaying the new utility rule may be to avoid making it an issue during the confirmation process for EPA air chief Gina McCarthy's nominationto be agency administrator.

White House energy official Heather Zichal has publicly downplayed the need for the NSPS rules, noting that it would be “wrong to fall into the trap” of thinking that “one tool will get us to where we need to be.”

Further uncertainty for EPA's stationary source GHG rules comes in the form of just-filed petitions asking the Supreme Court to overturn the appellate court ruling the upheld EPA's broader GHG regulatory program.

The groups that have filed petitions so far are generally asking the high court to overturn different portions of the ruling by the D.C. Circuit in Coalition for Responsible Regulation, et a. v. EPA, et al, which upheld EPA's initial GHG program.

In its ruling, the appellate court backed EPA's finding that GHGs from vehicles endanger public health and welfare and the agency's first-time fuel economy and tailpipe rules. The court also upheld EPA's rule to determine when the motor vehicle triggered GHG limits at stationary sources and its “tailoring” rule that limited application of GHG permits to the largest sources.

McCarthy has said the permit program is so successful that little is heard about it. “It's just not an issue,” she told a Feb. 22 forum, noting that the the permitting requirements drive co-benefits, such as more energy efficient facilities.

But UARG wants the high court to review whether its 2007 ruling in Massachusetts v. EPA finding that the agency has air act authority to regulate GHGs from motor vehicles requires the agency to extend those rules to stationary sources, and to determine whether the D.C. Circuit erred in rejecting the group's standing in the consolidated case.

PLF argues that the agency's endangerment finding – which underlies all of the GHG rules – must fall because EPA failed to submit it to the Science Advisory Board for a mandatory review.

And Virginia officials charge that the agency's endangerment finding is unlawful because it relied on the findings of the United Nation's Intergovernmental Panel on Climate Change.

Additional petitions are expected after Chief Justice John Roberts extended some groups' filing deadlines, including the Coalition for Responsible Regulation, Competitive Enterprise Institute, American Chemistry Council, the Energy Intensive Manufacturers Working Group, the Southeastern Legal Foundation and the state of Texas. – Dawn Reeves

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One source says environmentalists must give the agency a 60-day notice so the earliest a suit could be filed would be in June.

Martella, who served as EPA counsel during the Bush administration, told the OnPoint webcast March 20 that EPA has several options for finalizing the rule.

PLF argues that the agency's endangerment finding – which underlies all of the GHG rules – must fall because EPA failed to submit it to the Science Advisory Board for a mandatory review.

And Virginia officials charge that the agency's endangerment finding is unlawful because it relied on the findings of the United Nation's Intergovernmental Panel on Climate Change.

New papers by industry, academics and air law experts are outlining a range of options for EPA to set greenhouse gas (GHG) performance standards at existing power plants, even as EPA officials insist they are not actively working to develop new source performance standards (NSPS) for the facilities.

One of the papers, crafted by an industry coalition whose members include Boeing, NRG, Calpine, Midwest Generation, AES, 3M, Shell and others, seeks a modest approach focused on cost-effective efficiency measures rather than the broad, flexible trading many are advocating.

Developed by the National Climate Coalition, the April 9 paper, “Using EPA Clean Air Act Authority to Build a Federal Framework for State Greenhouse Gas Reduction Programs,” warns that section 111(d) of the Clean Air Act, the section of the law under which EPA crafts the standards, “is not a tool to reshape the entire energy economy. It gives neither EPA nor the states authority to impose draconian costs on emitters or require the deployment of technologies that are not yet commercially proven and available.”

The paper adds that section 111 does authorize EPA to provide the states with guidance on the level of cost-effective GHG emissions standards and to offer implementation pathways.

A second paper, written by lawyers who represent industry clients, suggests that if EPA does adopt a flexible trading mechanism under NSPS, then it should create a “super category” of stationary sources that are not subject to the GHG standard that can nevertheless trade with power plants that are covered by the rule as a way to avoid the complications of offsets.

The paper, “Offsets Under Section 111 of the Clean Air Act: The Inconvenient Need for Additionality and the Role of Super-Categories,” was published in the March issue of the Environmental Law Reporter (ELR),

A third paper, to be published in the July issue of ELR, argues in favor of a “cap-without trade program” under section 111 that would apply “a mass-based cap to each regulated source” and include compliance flexibility that could allow end-use energy efficiency as a compliance technique. Such an approach would avoid “the legal risks involved in trying to craft an emissions trading program on the technology-based structure written into” the NSPS program, which requires that EPA identify the best system of emissions reduction that has traditionally been a specific type of pollution control equipment.

“A 'cap-without-trade' approach also provides pollution sources with continuing incentives to favor comprehensive legislation addressing climate disruption and may facilitate a negotiated solution to section 111 controversies,” according to a draft of the paper provided to Inside EPA by ELR's publisher, the Environmental Law Institute.

All three papers come after the Natural Resources Defense Council (NRDC) Dec. 4 floated a comprehensive proposal for EPA to establish a broad cap-and-trade program under section 111 that the group says would cut utility sector GHGs by 26 percent in 2020 and by 34 percent in 2025 at a cost of an estimated $4 billion in annual compliance that would be offset by $25 billion to $60 billion in benefits.

Developing the rule is a priority for environmentalists but EPA “is not currently developing any existing source GHG regulations,” EPA air chief Gina McCarthy told Senate Republicans in response to their questions about her pending nomination to lead the agency.

But even if EPA does eventually craft an NSPS, it will take at a minimum of eight years before it can be implemented at electric generating units (EGUs) if at all, says a May 6 paper issued by a new consulting firm, Element VI, created by former Sierra Club attorney David Bookbinder and former ExxonMobil climate official David Bailey.

“The most significant problem with regulating existing EGUs is the delay inherent in the applicable Clean Air Act provisions. Existing EGUs are subject to either of two separate regulatory pathways (depending solely on when they added mercury emissions control technology), and ultimately the only difference between them are the applicable compliance deadlines, which are (a) many years from now and (b) even longer,” says the paper, “EPA and EGUs: Timing is Everything.”

One source who follows development of EPA GHG rules says part of the reason for the plethora of papers now “is there's not a lot to work with because we don't know what EPA is going to do. We've known for about three years that EPA is likely to take this pathway [under section 111] . . . and we still don't have any data so we keep going farther down the rabbit hole.”

The source says the wide range of options for EPA to consider is good because the agency will have “more to hang its hat on” when it does act, while noting “diminishing returns to” to ever more deep-thought papers.

The source adds that the new papers do not go nearly as far as the earlier NRDC effort, which was a comprehensive proposal that included modeling. Some of the other papers lay out options more akin to “angels dancing on pins” because they require the reader to accept many assumptions about the scope of authority EPA will determine it has under the program.

For example, the NRDC approach and the super-category paper assume that EPA will conclude it has section 111 authority to implement a broad trading program and then each make different assumptions about where to determine how far out from the regulated source trading can happen. “The farther you get away [from the regulated source] the more legal risk you face. Most lawyers agree with that. The question is, where do you draw the line?” the source says.

Lawyer Richard B. Herzog, one of the authors of the ELR paper, says that his approach seeks to avoid some of the difficulties associated with offsets. A super-category would be limited to stationary sources that could be regulated under a GHG NSPS but are not, and find it profitable to reduce their GHGs and sell credits to the power sector. “If they can beat the price and make money, good for them.”

Such an approach, Herzog says, could “embrace a big portion of the nation's emissions.” But it is not yet known “their capacity to generate offsets at a profit. We don't know what the supply of offsets would be if EPA opened the door to these categories.”

Still, Herzog acknowledges complications to the approach, including a tricky compliance burden and the possible need to still include an offset program for non-stationary sources.

The paper says the purpose of the super-category would “be to exploit differences in the marginal cost-curves of GHG reduction at the sources included within the category” and suggests that EPA could aggregate some source categories for which it already has NSPS for non-GHG pollutants, or it could add categories for sources not subject to NSPS but that emit GHGs and are stationary sources. It also says a super-category approach could serve to provide important cost-efficiency considerations that are required under NSPS.

The source following development of the EPA GHG rules says the approach makes sense, provided EPA concludes it has that much flexibility under section 111, which is uncertain. – Dawn Reeves

The paper adds that section 111 does authorize EPA to provide the states with guidance on the level of cost-effective GHG emissions standards and to offer implementation pathways.

Still, Herzog acknowledges complications to the approach, including a tricky compliance burden and the possible need to still include an offset program for non-stationary sources.

The source following development of the EPA GHG rules says the approach makes sense, provided EPA concludes it has that much flexibility under section 111, which is uncertain. – Dawn Reeves

A California appellate court is indicating it will find that regulators violated the state's overarching environmental statute when they adopted the low carbon fuel standard (LCFS) in 2009 and is asking attorneys in the case to draft proposed remedies – one of the most important issues to be debated is whether the state should suspend the LCFS until the violations are fixed.

Both state sources and representatives of the national ethanol company that filed the suit are commenting little this week on the appellate court's call for “supplemental briefing” on possible remedies in the case. They indicate it remains unclear what the court may ultimately decide, including whether to enjoin, or halt, certain aspects of the LCFS or the entire regulation while a lower court on remand oversees how the state would remedy its apparent California Environmental Quality Act (CEQA) violations.

“It's too early for me to speculate as to any of that,” says one state source close to the case.

“I ran this by our lawyers, and unfortunately we aren’t able to comment on an active appeal,” says a spokesman for POET LLC, the national ethanol company that sued the state in 2009 over its adoption of the LCFS.

An environmental attorney says “the court has the discretion to enjoin some or all of the regulation and has discretion to put a time limit on an injunction – for example, until the CEQA/adoption issues are fixed.”

California's LCFS requires fuel suppliers to reduce the carbon intensity of gasoline and diesel 10 percent by the end of 2020 using a 2010 baseline, and is considered a model rule for other states and regions. The regulation has been extremely controversial, with the oil industry claiming that it cannot meet stringent targets that will take effect in 2015 and calling for its overhaul.

In addition, the U.S. Court of Appeals for the 9th Circuit is expected to soon issue a decision in the state's appeal of a lower court's ruling in 2012 that the LCFS violates the interstate commerce clause.

In the separate state case, the California Court of Appeal for the Fifth Appellate District sent a Feb. 26 letter to the appellants and respondents in POET LLC, et al., v. California Air Resources Board (ARB), directing them to submit supplemental briefing on several issues. The court signals it has concluded that ARB violated CEQA in multiple instances, asking the attorneys in the case to assume as much when drafting the potential remedies.

POET charges ARB violated CEQA when it adopted the LCFS in 2009 in part by failing to disclose significant environmental impacts, failing to evaluate reasonable alternatives to lessen these impacts, and failing to mitigate impacts. The suit also argues that state regulators failed to respond to comments on its CEQA review that challenged certain findings. The company is seeking declaratory and injunctive relief from the LCFS.

POET is appealing a November 2011 ruling by Fresno County Superior Court that sided with ARB.

The appellate court's Feb. 26 letter asks that the parties respond to several questions by making several assumptions, including that: ARB violated CEQA by giving its “approval” to the LCFS regulations on April 23, 2009, before it completed its environmental review; ARB violated CEQA by splitting the authority to approve or disapprove the regulations from the responsibility of completing the environmental review; and ARB violated CEQA by impermissibly deferring the formulation of mitigation measures regarding the potential increase in nitrogen oxide (NOx) emissions resulting from increased use of biodiesel.

In addition, the letter tells the attorneys to assume that the appellate court will direct the Fresno County Superior Court to issue a “peremptory writ of mandate specifying what action” by ARB is necessary to comply with CEQA.

One of the questions the appellate court asks the attorneys to answer is: “Based on the three assumed CEQA violations, should this court allow the LCFS regulations to remain operative pending ARB taking the corrective action necessary to achieve CEQA compliance?”

The letter also asks the lawyers to “set forth the terms” that the appellate court should direct the trial court to include so that “ARB's decision to defer the formulation of mitigation measures for NOx emissions from biodiesel is brought into compliance with CEQA.”

POET's brief responding to the appellate court's letter is due March 18; ARB's brief is due April 2, according to the letter.

The state source says the court will likely set a date for oral argument about 30 days after the supplemental briefs are filed. “The case will be argued and then a written decision issued sometime thereafter,” the source adds.

An ARB spokesman says this week that “we can’t comment on assumptions,” declining to speculate about whether the LCFS is likely to be suspended and what impacts this may have on the regulation's targets and implementation.

The environmental attorney says it is difficult to tell at this point what action the courts will ultimately take. “It depends 100 percent on what, if anything, the court of appeal enjoins – ranging from nothing to the entire regulation,” the source says. “Fixing the NOx issue could take a couple of months; the other CEQA issues, probably less than that.”

“It's too early for me to speculate as to any of that,” says one state source close to the case.

POET is appealing a November 2011 ruling by Fresno County Superior Court that sided with ARB.

POET's brief responding to the appellate court's letter is due March 18; ARB's brief is due April 2, according to the letter.

A top Department of Energy (DOE) official is calling for the private sector to begin supporting the emerging cellulosic biofuels industry, saying such investment is necessary if the industry is to grow to commercial scale -- the latest caution about the low carbon fuel's production prospects and refiners' ability to meet EPA supply mandates.

David Danielson, DOE's assistant secretary for energy efficiency and renewable energy, told the House Appropriations Committee's energy panel March 14 that cellulosic ethanol last year reached a 10-year goal to reduce the cost of producing one gallon to $2.15 from a starting point of $9.

Noting that five biorefineries are slated to be in operation by the end of 2015, Danielson said that “at that point, we really think that it's time for the private sector to look at the data, to look at what's been going on, to take some of the innovation that we've helped to support and scale that industry, because it's really going to take the private sector to take this industry to scale.”

His comments come amidst increasing questions over cellulosic industry's ability to produce the fuel in large quantities, which is refined from biomass and is believed to be as least 60 percent less carbon intensive than conventional gasoline.

While many advocates have been bullish on the industry's prospects, the fuel has barely been produced in any quantity. The oil industry is especially concerned about limited cellulosic production because it makes it costly to comply with EPA's mandates -- under the renewable fuel standard (RFS) -- to blend millions of gallons of the fuel into the nation's fuel supply.

As a result of EPA's mandates, they are forced to purchase credits, known as renewable identification numbers (RINs), to offset the requirement, making it a costly and unfair penalty, say refiners.

Their concern has been heightened after EPA proposed aggressive blend targets of 14 million gallons for its 2013 RFS mandates, volumes that the Energy Information Administration (EIA) has said are unrealistic given that only 5 million gallons are expected.

In a report released last month, IA says it is surprised by the lack of significant progress in cellulosic ethanol development that it says fall below its “expectations” due to technology and financing difficulties, and the low cost of natural gas.

Observers say the EIA assessment is now likely to put new pressure on EPA to trim back its RFS blend targets for cellulosic biofuel in 2013. The agency Jan. 31 proposed to increase RFS blend targets for cellulosic fuel in 2013, from 8.65 million gallons that it had originally set in 2012.

EPA's targets are well below targets Congress set when it created the RFS in 2007, proposing 500 million gallons of cellulosic biofuels for 2012 and 1 billion gallons for 2013, growing to 16 billion gallons by 2022.

The EIA report -- titled “Cellulosic Biofuels Begin To Flow But In Lower Volumes Than Foreseen By Statutory Targets” -- says all its projections made since Congress mandated refiners to blend large volumes of low-carbon cellulosic biofuel into the nation's fuel supply have “anticipated large shortfalls between the [RFS] targets and the volumes of cellulosic biofuels sold.”

“Despite the growth potential over the next several years, the path to commercial biofuels has not been smooth,” EIA says, listing three major reasons that “underpin slow growth in the commercialization of biofuels,” including: “Difficulties obtaining financing in the aftermath of the debt crisis”; “Technology scale-up difficulties at startup companies”; and “Strategic corporate shifts because of increased availability of low-cost natural gas.”

The fuel's prospects as a low-carbon energy source took a further dive March 18 when the National Academies' National Research Council (NRC) released a report that downplays the use of cellulosic ethanol and its ability to contribute significantly to greenhouse gas (GHG) reduction targets over the next half-century.

The NRC report, "Transitions to Alternative Vehicles and Fuels," examines transportation sector strategies to cut GHGs by 80 percent by 2050, and curb petroleum consumption by 50 percent by 2030.

Gene Nemanich, a retired Chevron-Texaco official who helped craft the report, told reporters that the panel does not see “a lot of future” with cellulosic ethanol to achieve the targets outlined by the study. Instead, the report emphasizes the use of cellulosic-based equivalents to gasoline and diesel fuel, known as "drop-in fuels," derived from biomass to meeting the GHG and oil use reduction targets.

These drop-in fuels can be easily accommodated by the existing fueling infrastructure, unlike ethanol which cannot use pipelines to be transported because of its corrosive properties, Nemanich explained.

He says because cellulosic ethanol has failed to be commercialized and does not look promising, "we aren't placing emphasis on ethanol" derived from biomass, but on drop-in equivalents to petroleum products. These fuels are already being made and the report anticipates that production will ramp up "fairly quickly," he said.

Nevertheless, Nemanich added that more research and development is needed to help bring down the cost of these fuels, and the federal government must include this as part of a comprehensive strategy to reduce petroleum use and cut GHGs.

While EIA and others are skeptical, DOE's Danielson and other administration officials are increasingly bullish on the fuel's prospects.

“What I'm excited about is that this year the very first commercial cellulosic ethanol biorefinery will be up and running and selling commercial product in Florida,” Danielson told appropriators.

And Gina McCarthy, EPA's air chief and the nominee to be the agency's next administrator, has touted the fuel as an important step in curtailing GHG emissions.

She told an event at the Georgetown Climate Center Feb. 22 that new production of cellulosic biofuels demonstrates that the fuel is feasible and being developed, saying she expects the volume of the fuel to increase and that EPA's cellulosic projections are based on construction dates of facilities and timelines for production of the fuel. “This will happen,” she said. -- Bobby McMahon & John Siciliano