Greenhouse Gas Emissions

The federal government moved closer in August to regulating carbon dioxide and other greenhouse gas emissions by regulation, without waiting for Congress to act.

The US Environmental Protection Agency released two proposals in August to ensure that state agencies will be in a position to start issuing air permits covering greenhouse gases on January 2, 2011 when a new EPA “tailoring rule” takes effect.

The tailoring rule will require developers building new power plants, factories or other “sources” of emissions — or modifying existing sources — to get air permits before starting work if the greenhouse gas emissions are expected to exceed certain thresholds. The rule is part of the “prevention of significant deterioration or PSD program that already applies under the Clean Air Act to some other pollutants. Greenhouse gases are being added to the list.

The federal government relies for the most part on state agencies to issue PSD permits. States use “state implementation plans” or SIPs to implement the PSD program.

EPA had to take the action it did in August because some state air permitting programs do not currently authorize regulation of greenhouse gas emissions.

The tailoring rule phases in greenhouse gas regulation. The need for a PSD permit will initially be triggered only for existing facilities that are already subject to the PSD program and that increase their carbon dioxide or other greenhouse gas emissions by more than 75,000 tons per year of CO2-equivalent.

The EPA proposal in August would require states that lack authority under state permitting rules to regulate greenhouse gas emissions to implement the federal standards. EPA asked all states in August to examine their SIPs to make sure they cover greenhouse gas emissions. It identified a number of areas of the country that definitely require revised SIPs with respect to greenhouse gases. These areas include Alaska, Arizona, Arkansas. the Sacramento Metropolitan Air Quality Management District in California, Connecticut, Florida, Idaho, Kansas, parts of Kentucky, Nebraska, Clark County, Nevada, Oregon and Texas.

EPA recognized that states may not have the time or resources to revise their SIPs and, accordingly, it also proposed a “federal implementation plan” or FIP (as an interim measure for states that cannot or are unable to revise their SIPs by January 2, 2011.

States have 30 days after publication of the proposal in the Federal Register to provide EPA with a letter explaining how their PSD programs regulate greenhouse gas emissions.

The August proposals are the first of three proposals that are needed to put the machinery in place to regulate carbon dioxide and other greenhouse cases. Other proposals will follow to address state authority to issue operating permits and what will be considered the “best available control technology” or BACT that owners of power plants, factories and other sources will be required to employ to control covered emissions.

Clean Air Transport Rule

EPA proposed a “clean air transport rule” or CATR in July that would require reductions in emissions of nitrogen oxides (NOx) and sulfur dioxide (SO2) in most of the east and midwest.

The new proposal replaces an earlier “clean air interstate rule” or CAIR that the agency proposed in 2005 but that was sent back to the agency by the courts for further work.

Along with the proposal, EPA asked for comments on two alternatives to reduce power plant emissions of NOx and SO2.

The earlier CAIR rule would have ordered reductions in power plant emissions of NOx and SO2 in the District of Columbia and 28 eastern and midwestern states through a cap-and-trade system. NOx and SO2 can form particulate matter, and NOx is a precursor of ozone. A federal appeals court remanded CAIR to the agency in 2008 in a case called State of North Carolina v. EPA.

The new proposed rule, along with other state and EPA actions, is expected to reduce SO2 emissions by 71% and NOx emissions by 52% by 2015 compared to 2005 levels.

The new rule is based on the existing ozone national ambient air quality standard of 0.075 parts per million. EPA announced in February 2010 that this standard would be reduced to between 0.060 to 0.070 parts per million. EPA is expected to issue the final ozone standard in October and then to update the new CATR rule in 2011.

The new rule would require reductions in power plant emissions of NOx and SO2 emissions in the District of Columbia and 31 eastern and midwestern states. There would be three categories of reductions: states required to reduce annual NOx and SO2 emissions, ozone season NOx emissions or annual NOx and SO2 emissions and ozone emissions.

EPA expects power plants to meet the requirements in the new CATR by operating existing emissions control equipment more frequently, using lower sulfur coal or installing additional pollution control equipment like low NOx burners, selective catalytic reduction, or scrubbers.

The EPA proposal includes federal implementation plans for each state covered by the CATR, although each state may develop its own implementation plan. EPA is accepting comments on the proposed rule and alternatives until October 1, 2010.

Hydraulic Fracturing

The US government is taking a closer look at a technique that natural gas producers are using to reach potentially huge new supplies of gas trapped in shale rock formations, like in the Marcellus formation. The technique is called hydraulic fracturing or “fracking.” There are concerns about whether it pollutes the groundwater.

Such hard-to-reach gas could account for more than 20% of the US gas supply by 2020. According to some estimates, there is enough natural gas in the Marcellus formation in parts of Pennsylvania, New York and West Virginia to supply demand in the entire United States for 14 or more years.

Fracking refers to the process by which water, chemical additives and sand or similar material are injected under high pressure down a well. The fluids force existing fractures in the subsurface to open wider while the sand or another propping agent holds the fractures open, allowing natural gas to be extracted. The process uses tremendous amounts of water — up to two to four million gallons for a horizontal well — which also raises concerns about the availability of that much water.

Regulation of fracking is left currently largely to the states. The federal underground injection control program regulations only cover fracking related to oil, gas or geothermal wells where diesel fuel is used as a propping agent. In addition, oil and gas wells are exempted from a federal reporting requirement in the “Emergency Planning and Community Right-to- Know Act,” which requires certain facilities to report the amounts of toxic chemicals released, stored or transferred each year.

Fracking has been used by the oil and gas industry for decades. However, advances in horizontal drilling and fracking methods are leading to new scrutiny from Congress and the Environmental Protection Agency.

Reps. Henry Waxman (D.-California) and Edward Markey (D.-Massachusetts) sent letters to eight oil and gas companies in February 2010 requesting information on the types and amounts of chemicals used in fracking, whether these chemicals are used near or below a source of drinking water and how the water from fracking operations are disposed of. There have also been several bills introduced in Congress to address fracking. H.R. 2766 and S. 1215, which were introduced in June 2009, propose repealing an exemption in the “Safe Drinking Water Act” for fracking and would require disclosure of the chemicals used in the fracking process. S. 3663, which was introduced in July 2010, would amend the Emergency Planning and Community Right-to-Know Act to require companies to disclose the chemicals used in the fracking process.

The Environmental Protection Agency is studying fracking and its potential effects on drinking water supplies. It asked for comments in August on pre-and post drilling site characteristics, chemical composition of fracking fluids and water quality, sources and amounts of water used in the process, well construction and integrity and operation and management practices.

The study could lead to voluntary shortterm measures to minimize risk associated with the process. These measures could include the development by the government of best management practices addressing well construction, the chemical composition of fracking fluids and waste disposal.

After EPA announced the study, Russia announced that it would curtail natural gas production by the state gas company, Gazprom, until the study has been completed. Russia is a major producer; it may be concerned about the future of the natural gas market if fracking leads to a dramatic increase in supplies.

Any restrictions the US imposes on fracking could have a significant effect on the natural gas market, according to a 2009 study commissioned by the American Petroleum Institute. The study said US regulation could lead to a 10% loss of natural gas production within five years and, if the regulation also leads to restrictions on the fluids used in fracking, it could cause a 22% reduction in natural gas production by 2014.