"Seeking

CAIR

Consensus,"

InsideEPA.com

(August

22,

2008),

<

www.insideepa.com/secure/docnum.asp?docnum=8222008

blogcair&f

=epa

2001.

ask

>.

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Seeking

Consensus

The

House

Energy

&

Commerce

Committee

is

floating

draft

legislativelanguage

to

codify

the

first

phase

of

EPA's

vacated

clean

air

interstate

rule

(CAIR),

in

a

bid

to

gather

consensus

for

the

plan

among

lawmakers,

states,

activists,

industry

and

the

Bush

administration.

"Based

on

discussions

with

representatives

of

States,

environmental

groups,

the

electricity

industry

and

other

Hill

staff,

it

appears

that

there

is

a

broad

range

of

preferred

outcomes

ranging

from

no

legislation

this

year

to

full

codification

ofCAIR,"

Democratic

energy

panel

staff

wrote

in

an

Aug.

22

e-mail

to

various

stakeholders,

attaching

draft

lanIDill~

that

would

codify

the

first

phase

of

the

rule

vacated

last

month

by

the

U.S.

District

Court

of

Appeals

for

the

District

of

Columbia

Circuit.

States,

environmentalists

and

some

energy

companies

favor

a

bill

to

codify

just

the

first

phase

of

CAIR,

a

cap-and-trade

program

for

reducing

power

plant

emissions.

However,

the

White

House

Council

on

Environmental

Quality

(CEQ)

and

some

utilities,

including

Southern

Company,

reject

that

idea

and

favor

an

approach

that

would

revive

and

codify

all

phases

of

the

rule.

CAIR

would

have

mandated

nitrogen

oxide

and

sulfur

dioxide

cuts

starting

in

2009

and

2010

respectively,

with

a

second,

more

stringent

phase

for

both

pollutants

beginning

in

2015.

The

email

notes

the

limited

timetable

Congress

has

to

pass

such

a

measure

into

law,

making

a

broad

consensus

imperative

for

such

an

effort

succeed.

"Given

the

very

short

time

remaining,

any

CAIR

legislation

would

have

to

be

passed

on

the

suspension

calendar

in

the

House

(which

requires

a

two-

thirds

majority)

and

by

unanimous

consent

in

the

Senate.

Having

your

feedback

will

be

very

helpful

as

we

seek

to

determinewhether

such

consensus

exists

and

as

we

prepare

to

best

inform

the

members

on

this

issue

upon

their

return,"

the

e-mail

from

Lorie

Schmidt,

House

energy

senior

counsel

on

air

quality

and

climate

change,

and

Laura

Vaught,

policy

coordinator

for

Rep.

Rick

Boucher

(D-VA),

chair

of

the

energy

committee's

panel

on

air

quality.

As

eXIlected,

the

draft

language

also

includes

a

provision

that

would

block

EPA

from

finalizing

until

Feb.

1,2009,

its

proposed

change

to

the

emissions

test

used

to

determine

whether

facilities

trigger

Clean

Air

Act

new

source

review

requirements.

A

CEQ

spokeswoman

says

the

White

House

is

considering

"legislative

and

legal

options

to

immediately

and

fully

restore"

CAIR.

An

environmentalist

says

consensus

among

stakeholders

remains

elusive.

"The

fly

in

the

ointment

continues

to

be

Southern

Company

and

the

White

House,

who

insist

on

full

codification

of

CAIR

or

nothing,"

the

source

said,

adding,

"They're

not

going

to

get

phase

two."

8222008_

blogcair

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

R/?~/?OOR

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Andrew

Childers,

"Air

Pollution:

White

House,

Congressmen

Offer

Alternatives

to

Interstate

Rule

Vacated

by

Appeals

Court,"

Daily

En~ironment

Report

(August

25,

2008),

RNA,

Inc.,

<

www.pubs.bna.com/

ip/bna/DEN.NSF/eha06b6z2c861

>.

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Air

Pollution

White

House,

Congressmen

Offer

Alternatives

To

Interstate

Rule

Vacated

by

Appeals

Court

News

The

White

House

and

Democrats

on

the

House

Energy

and

Commerce

Committee

are

circulating

separate

draft

proposals

to

codify

the

Clean

Air

Interstate

Rule--either

in

whole

or

in

part--torespond

to

a

federal

court

decision

that

threw

out

a

major

Environmental

Protection

Agency

regulation

to

curb

air

pollution

in

the

eastern

United

States.

The

draft

legislative

language

offered

by

the

House

Democrats

would

simply

extend

a

portion

of

CAIR

requiring

the

first

phase

of

emissions

reductions

to

begin

in

2009,

which

would

give

Congress

time

to

draft

comprehensive

legislation

to

address

the

court

ruling.

The

White

House

approach

would

enact

CAIR

in

its

entirety,

effectively

writing

into

law

the

rule

that

was

vacated

by

the

U.S

Court

of

Appeals

for

the

District

of

Columbia

Circuit.

Copies

of

the

draft

legislation

were

provided

to

BNA

Aug.

22.

CAIR,

issued

at

40

C.F.R.

Parts

51-52,

would

have

used

an

emissions

trading

scheme

to

curb

ozone

and

fine

particle

pollution

from

power

plants

in

upwind

states

in

order

to

help

downwind

states

attain

EPA

air

quality

standards.

The

rule

would

have

required

28

states

and

the

District

of

Columbia

to

revise

their

state

implementation

plans

to

reduce

emissions

of

sulfur

dioxide

and

nitrogen

oxides,

which

are

precursors

of

particulate

matter

and

ozone,

respectively.

Nitrogen

oxide

reductions

were

scheduled

to

begin

in

2009,

with

sulfur

dioxide

reductions

to

follow

in

2010;

secondary

reductions

for

each

were

slated

for

2015.

The

rule

was

challenged

by

North

Carolina,

which

advocated

stricter

protections

for

downwind

states,

as

well

as

several

energy

companies

that

disputed

EPA's

authority

to

set

new

emissions

caps

under

the

provisions

of

CAl

R

The

D.C.

Circuit

July

11

struck

down

the

agency's

method

for

allocating

emissions

allowances

for

upwind

states

and

its

interpretation

of

protections

for

downwind

states,

leading

the

court

to

vacate

the

entire

rule

(North

Carolina

v.

EPA

D.C.

Cir.,

No.

05-1244,

7/11/08;

(134

DEN

A-5,

7/14/08

2i).

EPA

has

not

yet

decided

how

it

will

respond

to

the

decision,

spokesman

Tim

Lyons

told

BNA

Aug.

22.

However,

the

agency

did

receive

an

extension

of

the

deadline

to

file

an

appeal

from

the

court

to

Sept.

24.

House

Looks

at

Temporary

Fix

The

draft

language

offered

by

the

Energy

and

Commerce

Committee

Democrats

would

codify

the

first

phase

of

CAIR,

which

would

have

taken

effect

in

2009,

carrying

the

requirements

through

either

2011

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

plants

(153

DEN

A-2,

8/8/08

~).

Since

1980,

EPA

regulations

have

defined

emissions

increase

as

an

increase

in

a

plant's

actual

emissions

measured

on

an

annual

basis.

However,

the

agency

is

trying

to

narrow

the

definition,

which

would

restrict

the

circumstances

under

which

new

source

review

applies

at

power

plants.

The

Senate

Environment

and

Public

Works

committee

held

a

public

hearing

on

the

CAIR

decision

July

29

where

most

members

favored

a

legislative

fix

to

deficiencies

in

the

rule

raised

by

the

court.

Brian

McLean,

director

of

EPA's

Office

of

Atmospheric

Programs,

also

told

the

committee

he

would

favor

a

legislative

solution

to

CAIR

rather

than

another

rulemaking

that

could

be

challenged

in

court

(146

DEN

A-6,

7/30108

~).

The

Environment

and

Public

Works

Committee

has

not

yet

offered

any

legislation

in

response

to

the

decision,

a

spokesman

said.

Sen.

Tom

Carper

(D-Del.)

has

used

the

CAIR

decision

to

push

his

long-

stalled

Clean

Air

Planning

Act,

which

would

stipulate

even

deeper

emissions

cuts,

including

new

limits

on

mercury,

but

his

staff

said

he

would

be

"open"

to

supporting

the

House

language

for

a

two-

year

fix.

White

House

Would

Adopt

Whole

Rule

The

draft

legislation

being

circulated

by

the

White

House

Council

on

Environmental

Quality

would

adopt

CAIR

wholesale

rather

than

simply

codifying

the

first

phase.

"This

is

one

draft

option

being

explored,"

CEQ

spokeswoman

Kristen

Hellmer

said

in

a

statement.

"We

are

looking

at

both

legal

and

legislative

options

that

will

immediately

and

fully

restore

the

rule-

any

delay

or

half

measures

will

come

at

a

significant

cost

to

public

health,

the

environment,

economic

development,

and

good

jobs."

But

environmental

groups

say

the

draft

legislation

presented

to

them

by

CEQ

Chairman

James

Connaughton

during

a

recent

telephone

conference

call

would

prevent

EPA

from

further

strengthening

CAIR

until

all

court

challenges

and

appeals

have

been

resolved.

The

language

would

"handcuff

a

future

administration,"

Natural

Resources

Defense

Council

Clean

Air

Program

Director

John

Walke

told

BNA.

Though

she

has

not

thoroughly

read

through

the

Energy

and

Commerce

Committee

language,

Amy

Royden-Bloom,

senior

staff

associate

with

the

National

Association

of

Clean

Air

Agencies,

told

BNA

the

short-term

approach

is

generally

favored

by

the

association.

The

group

also

has

concerns

about

the

ianguage

circulated

by

the

White

House,

Royden-Bloom

said,

because

it

fails

to

address

many

of

the

concerns

raised

by

the

judges

who

overturned

CAIR.

"We're

not

in

favor

of

this

language,"

she

said,

adding

that

there

are

"problems

with

this

approach."

Desire

to

Move

Quickly

Edison

Electric

Institute

spokesman

Dan

Riedinger

told

BNA

the

power

trade

group

was

still

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

The

draft

legislative

language

codifying

CAIR

circulated

by

the

White

House

is

available

at

http':I/p'ub.bna.com/p.tcilDraftLanguage.p'df.

The

draft

legislative

language

partially

codifying

CAIR

circulated

by

House

Energy

and

Commerce

Committee

Democrats

is

available

at

http'.'//p'ub.bna.com/P.Js;j/DraftCAIR.p'df.

~

By

Andrew

Childers

Contact

customer

relations

at:

customercare@bna.com

or

1-800-372-1033

ISSN

1521.9402

COQYi!Qh!

©

2008,

The

Bureau

of

National

Affairs,

Inc.

CoQY!jght

FAQs

I

Internet

Privacy

Policy

I

BNA

AccessibilitY.

Statement

I

License

Reproduction

or

redistribution.

in

whole

or

in

part,

and

in

any

form,

without

express

written

permission,

is

prohibited

except

as

permitted

by

the

BNA

Copyright

Policy,

IillR

:/Iwww.bna.com/corplindex.

him

I#V

(

..

CJ

Search

All

Issues

J

(~

Cameros

J

httn./lnllh<.:

hn~

('om/ln/hn::l/nFN

N~P

lp:h/::l()hh7?r,Rv

1

RI?

'iI?OOR

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Rule

and

the

Federal

ImplementationPlans

for

the

Clean

Air

Interstate

Rule

as

promulgated

and

modified

by

the

Administrator

of

the

Environmental

Protection

Agency

(70

Fed.

Reg.

25,162

(May

12,2005),71

Fed.

Reg.

25,288

(April

28,

2006),

71

Fed.

Reg.

25,328

(April

28,

2006),

72

Fed.

Reg.

59,190

(Oct.

19,

2007»

are

hereby

authorized

as

consistent

with

the

requirements

of

sections

110,

301

and

Title

IV

of

the

Clean

Air

Act.

Those

rules

shall

remain

in

force

and

effect

except

as

they

may

later

be

revised

by

the

Environmental

Protection

Agency

following

notice-and-comment

rulemaking

and

affirmed

by

a

court

of

competent

jurisdiction

if

judicial

review

of

any

such

revised

rule

is

sought

in

accordance

with

the

provisions

of

42

U.S.c.

7607.

Nothing

in

this

Act

shall

abridge

any

other

right

or

remedy

under

the

Clean

Air

Act,

42

USC

7401-7671q,

including

Section

126

("Interstate

pollution

abatement")

and/or

the

right

to

petition

for

rulemaking

under

the

Clean

Air

Act,

nor

shall

anything

in

this

Act

limit

EPA's

discretion

to

entertain

such

petitions

or

to

promulgate

such

rules

and

regulations

as

are

consistent

with

the

requirements

of

the

Clean

Air

Act,

as

modified

hereby.

[White

House]

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

SECTION

1.

EPA

CAIR

rule

and

new

source

review.

(a)

Interim

legal

effect

ofCAIR

rule.-

(I)

In

general.-The

Clean

Air

Interstate

Rule

and

related

Federal

implementation

plans

promulgated

and

modified

by

the

Administrator

of

the

Environmental

Protection

Agency

on

May

15,

2005

(70

Fed.

Reg.

25

I

62),

April

28,2006

(71

Fed.

Reg.

25288

and

25328),

and

October

19,2007

(72

Fed.

Reg.59190)

shall

remain

in

force

and

effect

to

the

extent

that

such

rule

and

plans-

(A)

require

control

measures

(and

State

implementation

plan

revisions

containing

control

measures)

to

eliminate

emissions

of

oxides

of

nitrogen

and

sulfurdioxide

before

[20117

20127

777];

and

(B)

require

or

allow

participation

in

specified

trading

programs

before

[201

17

20127777].

(2)

Exception.-Paragraph

(I)

shall

not

apply

with

respect

to

the

State

of

Minnesota

or

sources

within

the

State

of

Minnesota

nor

shall

paragraph

(I)

affect

the

Administrator's

decision

regarding

the

petition

of

the

State

of

North

Carolina

under

section

126

of

the

Clean

Air

Act.

(3)

Credit

for

emission

reductions.-For

purposes

of

State

implementation

plans

under

section

I

10

of

the

Clean

Air

Act,

any

State

may

take

credit

for

emission

reductions

required

to

be

implemented

before

[20

117

20127

777]

under

the

Clean

Air

Interstate

Rule

or

Federal

implementation

plan

provisions

referred

to

in

paragraph

(I)

and

the

Administrator

may

approve

State

implementation

plans

based

on

such

credits.

Approval

under

the

preceding

sentence

shall

cease

to

apply

unless

emission

limitations

or

other

control

measures

or

techniques

that

permanently

require

at

least

equivalent

emission

reductions

after

[20

I

07

20117

777]

are

adopted

or

submitted.

[House

Energy

and

Commerce

Committee

Democrats]

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

for

Electric

Generating

Units"

(70

Fed.

Reg.

61,081

et

seq.)

or

based

on

the

rule

proposed

on

May

8,

2007,

entitled

"Supplemental

Notice

of

Proposed

Rulemaking

for

Prevention

of

Significant

Deterioration

and

Nonallainment

New

Source

Review:

Emission

Increases

for

Electric

Generating

Units"

(72

Fed.

Reg.

26,202

et

seq.),

and

the

Administrator

shall

not

promulgate

any

other

rule

under

the

Clean

Air

Act

revising

the

time

period

for

which

emission

changes

are

calculated

for

purposes

of

determining

whether

there

has

been

a

modification

of

an

existing

electric

generating

unit

requiring

compliance

with

new

source

review

programs

under

that

Act.

(c)

SAVINGS

CLAUSE.----Except

as

specifically

provided

in

this

Act,

nothing

in

this

Act

shall

change

or

modify

the

authority

or

obligations

set

forth

in

the

Clean

Air

Act.

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Christine

Tezak

and

K.

Whitney

Stanco,

"CAIR

Update

-

Odd

Bedfellows,"

editorial,

Washington

Electricity/Environmental

Bulletin

(August

25,

2008),

StanfordGroup

Company,

<

www.standordinstitutional.

com

>.

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

.

.

..

.

Christine

Tezak

/

K.

Whitney

Stanco

Washmgton

ElectricIty/EnvIronment

Bulletm

202-298-6226

CAIR

Update

-

Odd

Bedfellows

Summary:

Six

weeks

have

passed

since

the

emissions

credit

markets

were

upended

by

the

unexpected

vacatur

of

the

Bush

Administration's

Clean

Air

Interstate

Rule

(CAIR).

So

far

there

has

been

a

smattering

of

informal

meetings,

a

Senate

hearing,

an

extension

of

the

appeal

deadline

for

the

Environmental

Protection

Agency

(EPA),

revival

sought

for

a

lawsuit

held

in

abeyance,

some

lobbying

by

the

administration

and

finally,

some

legislative

language

on

the

House

side.

The

path

to

regulatory

clarity

threatens

to

be

slow

and

bumpy

for

the

electric

utility

industry

and

pollution

control

vendors.

There

are

easily

more

reasons

to

expect

that

resolution

will

be

slow

than

quick.

There

is

the

possibility

that

something

constructive

could

happen

before

Congress

recesses

before

the

elections

-

but

that

would

be

heavily

dependent

on

a

consistently

diverse

utility

industry

coming

together

with

a

plan

that

could

be

supported

by

environmental

advocates.

That

may

be

the

easy

part.

A

plan

would

need

to

win

the

support

of

two-thirds

of

the

House

and

possibly

100%

of

the

Senate.

That

is

a

very

tall

order,

and

given

partisan

election

year

politics,

rather

unlikely.

If

Congress

returns

for

a

lame

duck

session,

there

would

be

another

shot;

but,

at

this

point

we

think

it

is

far

more

likely

than

not

that

the

indnstry

slides

into

2009

with

little

change

from

today's

uncertain

status

quo.

That

being

said,

the

multi-faceted

requirements

of

the

Clean

Air

Act

across

different

programs,

combined

with

the

reality

that

states

can

drive

emissions

level

at

stationary

sources

like

utilities

are

likely

to

keep

the

focus

on

the

deployment

of

equipment

to

generate

emissions

reductions,

and

we

don't

think

that

the

short-term

uncertainty

substantially

disturbs

the

long-term

term

prospects

for

continued

investment

in

cleaner

utility

plants.

The

International

Brotherhood

of

Electric

Workers

has

been

vocal

in

Washington

oflate

about

the

short-term

disruptions

in

the

absence

ofa

fix,

and

we'll

be

watching

to

see

if

the

electric

industry

unions

can

be

the

glue

that

holds

disparate

interest

groups

together.

Strange

circumstances

create

odd

bedfellows.

Ironically,

environmentalists

and

state

regulators

are

equally

upset

by

the

Court

of

Appeals

for

the

D.C.

Circuit's

decision

to

vacate

the

Clean

Air

Interstate

Rule

as

the

utility

sector

seems

to

be.

A

path

to

resolution

will

depend

almost

exclusively

on

these

two

differentconstituencies

agreeing

in

a

way

and

in

a

consensus

they

never

have

to

date.

There

does

not

seem

any

real

alternative

short

of

the

proverbial

"act

of

Congress."

The

interest

in

a

fix

is

considerable.

Even

environmentalists

are

chagrined

to

think

that

vacatur

of

CAIR

could

suggest

that

power

plants

would

be

able

to

sidestep

planned

reductions

in

emissions,

at

least

temporarily.

Many

environmental

advocacy

groups

support

some

kind

of

"reinstatement"

of

the

CAIR

targets

for

the

Phase

I,

but

advocate

that

new

(stricter)

targets

be

developed

for

years

beyond

20

I

O.

The

original

Phase

II

of

CAIR

set

the

next

set

of

emissionsreductions

for

2015

and

the

years

that

follow.

The

EPA

was

granted

its

request

to

extend

the

Aug.

25

appeal

deadline

to

Sept.

24,

ensuring

that

the

court

will

not

rule

in

an

en

bane

review

before

Congress

plans

to

adjourn

on

Sept.

26.

Stanford

Group

Com

pan)',

1055

Thomas

Jefferson

St.

NW,

Suite

450,

Washington,

DC

20007

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

environmental

initiative,

especially

when

it

was

the

second

of

three

significant

air

quality

rulemakings

tossed

by

the

court

in

2008.\

The

language

from

CEQ

reads:

Notwithstanding

any

other

provision

of

the

Clean

Air

Act,

the

Clean

Air

Interstate

Rule

and

the

Federal

Implementation

Plans

for

the

Clean

Air

Interstate

Rule

as

promulgated

and

modified

by

the

Administrator

of

the

Environmental

Protection

Agency

(70

Fed.

Reg.

25,162

(May

12,

2005),

71

Fed.

Reg.

25,288

(April

28,

2006),

71

Fed.

Reg.

25,328

(April

28,

2006),

72

Fed.

Reg.

59,190

(Oct.

19,

2007»

are

hereby

authorized

as

consistent

with

the

requirements

of

sections

110,

301

and

Title

IV

of

the

Clean

Air

Act.

Those

rules

shall

remain

in

force

and

effect

except

as

they

may

later

be

revised

by

the

Environmental

Protection

Agency

following

notice-

and-comment

rulemaking

and

affirmed

by

a

court

of

competent

jurisdiction

if

jUdicial

review

of

any

such

revised

rule

is

sought

in

accordance

with

the

provisions

of

42

U.S.C.

7607.

Nothing

in

this

Act

shall

abridge

any

other

right

or

remedy

under

the

Clean

Air

Act,

42

USC

7401-

7671q,

including

Section

126

("Interstate

pollution

abatement")

and/or

the

ri9ht

to

petition

for

rulemaking

under

the

Clean

Air

Act,

nor

shall

anything

in

this

Act

limit

EPA's

discretion

to

entertain

such

petitions

or

to

promulgate

such

rules

and

regulations

as

are

consistent

with

the

requirements

of

the

Clean

Air

Act,

as

modified

hereby.

With

the

Bush

administration

and

some

industry

members

advocating

for

a

total

"codification"

of

CAIR,

a

shorter

tenn

fix

(Phase

I

only)

may

be

feasible

as

the

Democrats

wouldn't

actually

be

giving

the

Bush

Administration

what

it

"wants."

Anti-Bush

rhetoric

aside,

more

consensus

appears

to

be

coalescing

around

the

concept

of

a

legislative

codification

of

Phase

I

of

the

CAIR

program,

but

not

the

full

program.

This

would

involve

reinstating

the

compliance

deadlines,

targets,

and

reestablishing

the

validity

and

usefulness

of

the

state

budgets

and

associated

emissions

credits

that

would

be

used

in

2009

and

20

I

0,

and

possibly

even

for

a

year

or

two

longer.

This

would

provide

time

for

a

new

EPA

to

develop

a

new

Phase

II

or

di

fferent

program

would

set

lower

targets

than

currently

planned

under

Phase

II

of

the

CAIR

for

the

years

that

follow

2015.

So

far,

House

Energy

&

Commerce

Committee

Chairman

John

Dingell(D-Mich.)

and

Energy

and

Air

Quality

Subcommittee

Chairman

Rich

Boucher

(D-Va.)

are

the

first

in

Congress

to

float

a

legislative

fix

specifically

related

to

the

court

decision.

How

long

the

fix

would

be

in

place

is

still

clearly

open

for

negotiation

as

the

text

below

demonstrates.

The

legislative

proposal

is

complicated

slightly

with

a

provision

that

would

prohibit

the

Bush

EPA

from

issuing

a

pending

rule

in

the

New

Source

Review

program,

That

provision

is

considered

a

concession

to

environmental

advocates

to

lure

their

support,

but

so

far

it

hasn't

been

greeted

warmly

by

industry.

SECTION

1.

EPA

CAIR

nule

and

new

source

review.

(a)

Interim

legal

effect

of

CAIR

rule.-

(1)

In

general.-The

Clean

Air

Interstate

Rule

and

related

Federal

implementation

plans

promulgated

and

modified

by

the

Administrator

of

the

Environmental

Protection

Agency

on

I

The

Clean

Air

Mercury

Rule

(CAMR)

was

vacated

by

the

federal

appellate

court

in

February,

and

last

week,

an

attempt

by

EPA

to

preempt

state

air

monitoring

requirements

was

overturned.

Stanford

Group

Com

pany

Page

2

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

(B)

require

or

allow

participation

in

specified

trading

programs

before

[2011?

20127777).

(2)

Exception.-Paragraph

(1)

shall

not

apply

with

respect

to

the

State

of

Minnesota

or

sources

within

the

State

of

Minnesota

nor

shall

paragraph

(1)

affect

the

Administrator's

decision

regarding

the

petition

of

the

State

of

North

Carolina

under

section

126

of

the

Clean

Air

Act?

(3)

Credit

for

emission

reductions.-For

purposes

of

State

implementation

plans

under

section

110

of

the

Clean

Air

Act,

any

State

may

take

credit

for

emission

reductions

required

to

be

implemented

before

[20117

20127

7??]

under

the

Clean

Air

Interstate

Rule

or

Federal

implementation

plan

provisions

referred

to

in

paragraph

(1)

and

the

Administrator

may

approve

State

implementation

plans

based

on

such

credits.

Approval

under

the

preceding

sentence

shall

cease

to

apply

unless

emission

limitations

or

other

control

measures

or

techniques

that

permanently

require

at

least

equivalent

emission

reductions

after

[2010?

2011?

7??]

are

adopted

or

submitted.

(b)

New

source

review

and

new

source

performance

standards.-Until

after

February

1,

2009,

the

Administrator

of

the

Environmental

Protection

Agency

shall

not

promulgate

a

final

rule

based

on

the

rule

proposed

on

Oct.

20,

2005,

entitled

"Prevention

of

Significant

Deterioration,

Nonattainment

New

Source

Review,

and

New

Source

Performance

Standards:

Emissions

Test

for

Electric

Generating

Units"

(70

Fed.

Re9.

61,081

et

seq.)

or

based

on

the

rule

proposed

on

May

8,

2007,

entitled

"Supplemental

Notice

of

Proposed

Rulemaking

for

Prevention

of

Significant

Deterioration

and

Nonattainment

New

Source

Review:

Emission

Increasesfor

Electric

Generating

Units"

(72

Fed.

Reg.

26,202

et

seq.),

and

the

Administrator

shall

not

promulgate

any

other

rule

under

the

Clean

Air

Act

revising

the

time

period

for

which

emission

changes

are

calculated

for

purposes

of

determining

whether

there

has

been

a

modification

of

an

existing

electric

generating

unit

requiring

compliance

with

new

source

review

programs

under

that

Act.

(c)

SAVINGS

CLAUSE.---Except

as

specifically

provided

in

this

Act,

nothing

in

this

Act

shall

change

or

modify

the

authority

or

obligations

set

forth

in

the

Clean

Air

Act.

High

Hurdles,

and

Difficult

Timing

We

think

that

a

two-year

fix

for

the

CAIR

program

is

possible;

it

just

may

not

materialize

quickly.

One

would

have

to

suspend

disbelief

that

in

addition

to

environmentalists

and

industry,

Republicans

and

Democrats

could

work

in

unison

in

the

three

scant

weeks

they

plan

to

be

in

session

in

September

for

this

to

be

resolved

ahead

of

the

elections.

House

Energy

and

Commerce

Staff

suggested

that

the

short

September

calendar

pretty

much

requires

that

this

language

be

passed

by

the

House

under

suspension

of

the

rules

(two-thirds

majority).

2

The

State

of

North

Carolina

has

filed

to

restart

its

court

appeal

on

its

Section

126

petition

against

upwind

sources,

including

those

in

Alabama.

The

EPA

denied

the

Section

126

petition

by

North

Carolina

that

sought

source

specific

reductions

at

power

plants

in

neighboring

states

in

2005,

reasoning

that

the

emissions

reductions

under

the

CAIR

would

meet

the

needs

of

North

Carolina

in

terms

of

attainment.

That

appeals

case,

although

well

into

the

briefing

stage

was

held

in

abeyance

in

February

2008

pending

the

court

decision

on

the

CAIR.

Stanford

Group

Com

pany

Page

3

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

waive

the

associated

maximum

30

hours

of

debate

and

not

gum

up

the

works

of

the

Senate

completely.

Prospects

for

the

Hfix"

-

even

if

it

were

agreed

to

-

become

substantially

less

favorable,

in

our

opinion,

if

the

relevant

provisions

wind

up

attached

to

the

star-crossed

"energy

legislation"

that

is

on

tap

for

early

September.

The

outlook

for

an

"energy

bill"

looks

very

cloudy,

even

ifit

is

some

kind

of

consensus

package.

A

consensus

bill

in

the

house

has

attracted

over

100

cosponsors,

but

House

Speaker

Nancy

Pelosi

(D-Calif.)

is

promising

her

own

version

of

a

bill

that

"includes

drilling"

but

is

also

likely

to

still

contain

the

poison

pills

of

higher

taxes

on

oil

companies

and/or

a

renewable

electricity

standard,

both

of

which

have

failed

in

the

Senate

this

session.

If

Pelosi's

"compromise"

energy

bill

(promised

soon)

has

too

many

non-starters

on

it,

energy-related

legislation

may

not

move

in

September

at

all.

If

Congress

returns

for

a

post-election

lame

duck,

there'd

still

be

a

chance

to

move

a

fix.

We

have

heard

concern

about

the

fact

that

although

many

parties

endorse

a

reinstatement

of

the

CAIR

Phase

I

program

by

legislative

fiat,

every

advocate

seems

to

be

asking

for

some

"little

thing

...

"

All

those

"little

things"

may

make

it

impossible

to

drive

theneeded

consensus.

However,

if

the

legislation

can

be

kept

"clean"

then

it's

got

ashot.

On

Aug.

28,

the

Edison

Electric

[nstitute

-

the

nation's

investor-owned

electric

utility

trade

association

-

plans

to

hold

a

meeting

to

discuss

how

to

manage

the

vacuum

created

by

the

court

decision

on

CAIR.

Already,

a

group

of

twelve

Senators

wrote

EEl's

President,

Tom

Kuhn,

asking

for

member

utilities

to

"pledge"

to

operate

existing

sulfur

dioxide

(SO,)

and

nitrogen

oxide

(NOx)

control

equipment

and

to

"continue"

their

plans

to

install

additional

planned

systems

to

meet

the

now

defunct

targets

and

deadlines

that

were

established

under

the

CAIR.

After

that

meeting

we

hope

to

bave

a

better

sense

of

whether

a

consensus

can

be

reached

and

better

handicap

pros

pects

for

a

fix

this

year.

While

at

first

blush,

several

Washington

sources

are

encouraged

by

the

discussion

and

the

release

of

discussion

language

from

the

House

Energy

&

Commerce

Committee,

we're

not

yet

optimistic

that

this

can

get

done

in

2008,

and

the

mess

may

slide

until

2009.

The

environmentalists

seem

to

like

the

NSR

provisions

included

in

the

House

version,

but

if

it

doesn't

stay

in,

their

enthusiasm

may

wane,

and

they

may

prefer

to

take

their

chances

in

the

new

Congress.

Some

industry

sources

worry

that

it

won't

get

addressed

in

2009

either,

calling

into

question

the

investments

that

have

already

been

made

and

the

plans

for

more.

The

longer

the

uncertainty

persists,

the

more

lumpy

environmental

spending

by

utilities

could

become

-

especially

for

work

that

has

not

started

yet.

This

is

where

the

unions

have

the

potential

to

make

a

difference.

The

threat

of

job

losses

can

be

a

potent

argument

on

Capitol

Hill,

can

they

bridge

the

gap

between

these

disparate

constituencies

and

pull

off

a

fix?

We

continue

to

believe

that

thelong-term

trend

for

more

spending

on

utility

pollution

control

systems

remains

strong

-

as

a

more

heavily

Democratic

Congress

and

a

possible

Democratic

EPA

could

push

for

stricter

regulations

in

the

future,

especially

on

coal

plants.

We

expect

this

complex

issue

to

remain

below

the

radar

of

the

presidential

race,

and

remain

a

messy

conversation

in

the

Congress.

***

Stanford

Group

Com

pany

Page

4

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Stanford

Group

Company.

Any

reproduction

or

distribution

of

this

report

without

the

prior

written

consent

of

Stanford

Group

Company

is

prohibited.

Stanford

Group

Com

pany

Page

5

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Dean

Scott,

"Climate

Change:

With

End

of

Congressional

Session

in

Sight,

House

Unlikely

to

Act

on

Capping

Emissions,"

Daily

Ent'ironment

Heport(September

10,

2008),

DNA,

Inc.,

<

www.pubs.bna.com/ip/bna/

DEN.NSF/eh/aOb7bOp1t3

>.

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

Climate

Change

With

End

of

Congressional

Session

in

Sight,

House

Unlikely

to

Act

on

Capping

Emissions

House

action

on

broad

legislation

to

cap

greenhouse

gas

emissions

probably

must

wait

until

2009,

with

congressional

leaders

hoping

to

focus

debate

on

another

energy

package

and

several

must-pass

measures

before

adjourning

Sept

26

for

the

campaign

trail.

House

Energy

and

Commerce

Committee

Chairman

John

Dingell

(D-Mich.)

and

an

energy

subcommittee

chairman,

Rep.

Rick

Boucher

(D-Va.),

who

are

expected

to

take

the

lead

on

climate

legislation

in

the

House,

plan

to

release

a

draft

bill

before

the

end

of

September,

a

committee

aide

told

BNA

Sept

9.

They

hope

release

of

the

draft

will

spur

public

input

on

the

climate

bill

and

further

revisions

in

anticipation

of

House

action

in

the

next

Congress,

which

convenes

in

January

2009,

the

aide

said.

"The

draft

will

by

no

means

be

the

final

word

on

this,

but

it

will

provide

a

solid

starting

point

in

terms

of

the

actual

legislative

language

as

we

move

into

next

year,"

committee

aide

Jodi

Seth

said.

This

fall,

committee

staff

will

continue

to

release

policy

papers

that

tackle

in

detail

specific

issues

that

will

have

to

be

addressed

in

any

comprehensive

climate

legislation,

Seth

said.

Focus

on

Energy

Package

Democratic

leaders

in

the

House

and

Senate

are

not

expected

to

take

up

any

climate

legislation

in

the

remaining

months

of

2008,

although

they

plan

another

round

of

votes

on

an

energy

package

later

this

week

that

could

extend

expiring

tax

credits

for

wind

and

solar

power,

and

includes

other

provisions

that

could

help

trim

overall

greenhouse

gas

emissions.

House

Speaker

Nancy

Pelosi

(D-Calif.)

told

reporters

Sept

9

that

Democrats

were

still

discussing

the

specifics

of

the

energy

package,

but

that

the

measure

could

be

brought

to

the

House

fioor

as

early

as

Sept

11.

Senate

Majority

Leader

Harry

Reid

(D-Nev.)

said

he

plans

to

bring

a

Democratic-led

energy

proposal

to

the

floor

next

week,

but

he

warned

of

coming

clashes

on

other

measures,

inclUding

a

continuing

resolution

needed

to

fund

federal

programs

at

least

through

the

next

several

months

to

avert

a

government

shutdown.

(See

related

story

in

this

issue.

11)

"That

is

a

pretty

compressed

time

schedule,"

one

House

committee

aide

told

BNA

"We

could

go

out

[adjourn]

as

early

as

Sept

26

if

all

of

this

gets

done,

but

they

have

to

pass

a

funding

resolution"

before

then,

he

said.

The

climate

bill

being

prepared

by

Dingell

and

Boucher

is

expected

to

call

for

cutting

greenhouse

gas

emissions

60

percent

to

80

percent

by

2050

from

current

levels

using

an

emissions

trading

system,

which

would

require

u.S.

companies

to

hold

an

allowance,

or

permit,

for

each

ton

of

greenhouse

gases

they

emit

Those

cuts

are

in

the

range

of

a

Senate

proposal

(S.

3036)

originally

introduced

by

Sens.

Joseph

Lieberman

(lID-Conn.)

and

John

Warner

(R-Va.)

that

was

defeated

in

a

procedural

vote

in

June

(116

DEN

A-7,

6/17/08

'fI).

Q/l

nl?nn~

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *

---

trade

bill

in

hopes

of

advancing

theirmeasure

through

the

chamber's

chief

tax-writing

committee

(117

DEN

A-8,

6/18/08

2l

).

A

Doggett

aide

told

BNA

the

Ways

and

Means

Committee

has

scheduled

a

hearing

on

the

measure

for

Sept.

18.

Eben

Burnham-Snyder,

a

spokesman

for

Markey's

committee,

said

Democrats'

plans

to

bring

a

new

energy

package

to

the

floor

later

this

week

could

help

pave

the

way

for

action

on

broad

climate

legislation

in

2009.

As

part

of

this

week's

debate,

the

House

is

likely

to

focus

on

whether

to

require

states

to

meet

a

percentage

of

their

energy

needs

with

renewable

sources

and

incentives

for

local

areas

to

adopt

energy-efficient

building

codes--all

policy

issues

related

to

the

climate

change

debate,

he

said.

"From

a

standpoint

of

advancing

the

ball

on

clean

energy

issues,

it

would

obviously

make

passing

a

climate

bill

a

little

easier

if

you've

already

done

the

important

work

on

energy

issues,"

he

said.

\$>

By

Dean

Scott

Contact

customer

relations

at:

cuslomercare@bna.com

or

1-800-372-1033

ISSN

1521-9402

COIDtfl9h!

C>

2008,

The

Bureau

of

National

Affairs.

Inc.

Copyright

F

AQs

I

Internet

Privaev....EQlli;Y.

I

BNA

Accessibility

Statement

I

License

Reproduction

or

redistribution,

in

whole

or

in

part,

and

in

any

form.

without

express

written

permission.

is

prohibited

except

as

permitted

by

the

BNA

Copyright

Policy,

http://WNW.bna.comicorp-lindex.html#V

(•

CJ

Search

All

Issues

c1ill

Contents

J

httn:/

Inubs.

bna.com/in/bna/DEN

.NSF

/eh/aOb7bOn

1

t3

9/10/2008

Electronic Filing - Received, Clerk's Office, October 1, 2008

* * * * * PCB 2009-021 * * * * *