Cross-State Air Pollution Rule Presentation to the American Public Power Association October 12,...

Cross-State Air Pollution RulePresentation to the American Public Power Association

October 12, 2011Hunton & Williams LLPWashington, D.C.

Agenda

• Transition from the Clean Air Interstate Rule (CAIR) to the Cross-State Air Pollution Rule (CSAPR)

• Supplemental Notice of Proposed Rulemaking • Overview and key elements of CSAPR• Possibilities for challenging CSAPR• Discussion of pending (i) petitions for administrative

reconsideration, (ii) petitions for judicial review, and (iii) motions for judicial stay of CSAPR

Transition from CAIR to CSAPR

• CSAPR was published in the Federal Register on August 8, 2011, and goes into effect on October 7, 2011.

• The first compliance periods begin January 1, 2012 (SO2 and Annual NOx), and May 1, 2012 (Ozone-season NOx).– The first compliance (true-up) dates will be March 1,

2013 (SO2 and Annual NOx), and December 1, 2012 (Ozone-season NOx).

Transition from CAIR to CSAPR

• EGUs regulated under CAIR will be required to comply with the 2011 compliance periods already underway.

• After these compliance periods are complete, CAIR will no longer be in effect.

• CAIR allowances (both Title IV SO2 allowances and CAIR annual and ozone-season NOx allowances) will not be accepted for compliance with CSAPR.

Supplemental Proposal

• EPA published a supplemental notice of proposed rulemaking in the Federal Register on July 11, 2011. – Proposes regulation of EGUs in 6 additional states under CSAPR for

significant contribution to downwind nonattainment or interference with maintenance of the 1997 8-hour ozone NAAQS.

• Iowa, Kansas, Michigan, Missouri, Oklahoma, and Wisconsin.– Proposed additions are based on an updated analysis using new

modeling and EPA’s identification of two ozone maintenance receptors not identified in modeling for the proposal, in Allegan County, MI, and Harford County, MD.

• EPA plans to finalize the supplemental proposal by November 1, 2011, and to require these 6 states to comply with CSAPR beginning in the first control period for the ozone-season NOx program, beginning May 1, 2012.

Asserted Statutory Basis for CSAPR

CAA § 110(a)(2)(D)(i)(I):

Each state’s plan for attaining the NAAQS must “contain adequate provisions . . . prohibiting . . . any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will . . . contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any [NAAQS].”

Pollutants Regulated

• Regulates SO2 and annual NOx emissions by states deemed to contribute significantly to nonattainment or to interfere with maintenance of the PM2.5 NAAQS

– Annual PM2.5 NAAQS – 18 states

– 24-hour PM2.5 NAAQS – 21 states

• Regulates NOx emissions (during May 1 – September 30 ozone season) by states deemed to contribute significantly to nonattainment or interference with maintenance of the 1997 8-hour ozone NAAQS– 20 states

Compliance Dates

• “Interim” compliance deadlines in 2012

– January 1, 2012 for SO2 and Annual NOx

– May 1, 2012 for Ozone-season NOx• Second-phase compliance deadlines in 2014

– January 1, 2014 for SO2 and Annual NOx

– May 1, 2014 for Ozone-season NOx• Separate state budgets for:

– 2012 and 2013– 2014 and future years

EPA map showing states covered by CSAPRand the supplemental proposal:

EPA map showing states that would have been covered under EPA’s Proposed Transport Rule:

EPA map showing states covered by CAIR:

Overview of ModelingEPA developed emission inventories by state and sector in the

modeling region based on four air quality scenarios:

• 2005 base year – based on 2005 National Emission Inventory version 2

• 2012 base case – modeled using version 4.10_FTransport of the Integrated Planning Model (IPM)

– Reflects state rules and consent decrees through December 1, 2010 (according to EPA)

– Assumes CAIR is not in effect

• 2014 base case – modeled using IPM

• 2014 control (or “remedy”) case – predicts results of CSAPR

Overview of Modeling

• Processed emission inventories through Sparse Matrix Operator Kernel Emissions (SMOKE) Modeling System version 2.6 for input to the Comprehensive Air Quality Model with Extensions (CAMx) version 5.30, which EPA used for air quality modeling – 2005 meteorology– 2003-2007 ambient data

Methodology Used in CSAPR

• Determination of Significant Contribution to Nonattainment and Interference with Maintenance– Projection of (modeled) future nonattainment and

maintenance problems at receptors in downwind states – Assessment of “contributions” to downwind nonattainment

and maintenance problems by upwind states and determination of upwind state/downwind state “linkages”

– Quantification of emissions that significantly contribute to nonattainment or interference with maintenance

• Development of State Budgets and Variability Limits• Allocation of Emission Allowances to Units; Enforcement• This general methodology is designed to create framework for

future interstate-transport rules (e.g., responding to future NAAQS)

Determination of Significant Contribution

• Used air quality modeling to:– identify downwind areas projected to be in

nonattainment or to have maintenance problems in 2012, and

– quantify projected impacts of emissions from each upwind state on those areas

• Identified maximum cost thresholds for emission reductions based on cost curves to quantify emissions that significantly contribute to nonattainment or interference with maintenance

Projection of Downwind Nonattainment and Maintenance Problems

• Used ratio of future year model predictions (2012 base case) to base year model predictions (2005 base year) to adjust monitored ambient air quality data up or down (relative response factors).– Monitored data obtained from EPA’s Air Quality

System• Process varied somewhat by NAAQS (e.g., used

speciated data for PM2.5)

Projection of Downwind Nonattainment and Maintenance Problems

• Generally, EPA used monitored ambient air quality data from a 2003-2007 base period to calculate design values for each of the three 3-year periods in the base period (2003-05; 2004-06; 2005-07) and used these design values to calculate future year (2012) design values using air quality modeling. – The average of the three future year design values

was used to project nonattainment.– The highest of the three future year design values

was used to project interference with maintenance.

Assessment of Contributions by Upwind States

• Identified 1% of each NAAQS as the threshold for determining which impacts were significant:

– Annual PM2.5 – 0.15 μg/m3

– 24-Hour PM2.5 – 0.35 μg/m3

– 8-Hour ozone – 0.8 ppb• Used CAMx photochemical source apportionment

modeling to identify the impact of emissions from specific upwind states on projected downwind nonattainment and maintenance receptors for PM2.5 and ozone.

Assessment of Contributions by Upwind States

• Evaluated projected contributions to nonattainment and maintenance for each upwind state to determine whether that state’s maximum contribution exceeds the 1% threshold.– Maximum contribution to nonattainment was

calculated based on the single largest contribution to a future year downwind nonattainment receptor.

– Maximum contribution to maintenance was calculated based on the single largest contribution to a future year downwind maintenance receptor.

EPA map showing projected “linkages” between states:

Quantification ofSignificant Contribution

Four-step analysis to quantify emissions contributing to nonattainment or interference with maintenance:

• Identification of upwind emission reductions available in each state at ascending cost-per-ton levels

• Assessment of the impact of those upwind reductions on downwind air quality

• Selection of appropriate cost thresholds • Development of state budgets based on emission

reductions available at selected cost thresholds

Cost Thresholds Selected

Emission Reduction for Annual and 24-Hr PM2.5:

• SO2 for “Group 1” and “Group 2” states in 2012: $500/ton

• SO2 for “Group 1” states in 2014: $2,300/ton

• SO2 for “Group 2” states in 2014 remains at $500/ton.

• Annual NOx: $500/ton

Emission Reduction for 8-Hour Ozone:• Ozone-season NOx: $500/ton

EPA map showing Group 1 and Group 2 states:

Development of State Budgets

• A state’s emissions budget is the quantity of emissions that remains after elimination of significant contribution to nonattainment and interference with maintenance (or, with respect to ozone for certain states, “measurable progress”) but before accounting for variability.

• EPA developed state budgets using projected emissions in 2012 and 2014.

• Each state has a separate budget for each pollutant regulated in that state.

Amendments to Proposed State Budgets: SO2 Group 1 States

Amendments to Proposed State Budgets: SO2 Group 2 States

Amendments to Proposed State Budgets:Annual NOx

Amendments to Proposed State Budgets: Ozone-Season NOx

* For Kansas, Michigan, and Oklahoma, the “Final 2012” and “Final 2014” bars represent the 2012 and 2014 budgets set forth in the supplemental notice of proposed rulemaking published in the Federal Register on July 11, 2011.

Variability Limits

• According to EPA, the purpose of including variability limits is to provide a limited amount of flexibility to accommodate the inherent variability in EGU operation and the resulting variability in baseline emissions from year to year. – State budget + Variability Limit = “Assurance Level”

• CSAPR includes uniform one-year variability limits for each state set as a percentage of the applicable state budget.– Percentages are based on the highest measured

historic variability of annual heat input of any state covered by the rule between 2000 and 2010

Variability Limits

• Variability Limits:

– SO2 and Annual NOx: 18% of the state budget

• Based on historic variability of annual heat input of units in Tennessee

– Ozone-season NOx: 21% of the state budget• Based on historic variability of annual heat input of

units in Virginia• Variability limits apply beginning in 2012.

Emission Control Program Requirements

• CSAPR establishes four separate allowance trading programs: – SO2 Group 1 – SO2 Group 2– Annual NOx– Ozone-season NOx

• Allows interstate allowance trading within each program.– Note that for SO2, sources in SO2 Group 1 states cannot trade

with sources in SO2 Group 2 states, and vice versa.• Allowance banking is permitted beginning in 2012.

– Banked CAIR allowances (including Title IV SO2 allowances) may not be used for compliance.

– Allowances used for compliance must be from the same control period or an earlier control period – “borrowing” from future control periods is not permitted.

Applicability

• CSAPR applies to “any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, on or after January 1, 2005, a generator with nameplate capacity of more than 25 MWe producing electricity for sale.” – Includes exemptions for cogeneration units and solid

waste incinerators • CSAPR does not include opt-in provisions – units may

not opt in.

Allocation of Allowances

• EPA will distribute among covered units in each state a number of emission allowances for each regulated pollutant equal to the state emission budget for that pollutant, minus the new unit set-aside allowances.

• Allowances allocated to units are generally permanent. – A list of unit-level allocations is available at

http://www.epa.gov/airtransport/techinfo.html.

Allocation of Allowances – New Units• EPA sets aside 2% of each state budget for new units and

(depending on the state) an additional 0-6% for “planned units” and distributes allowances equal to the remaining state budget to existing units. – For states containing Indian Country, 5% of the 2% new unit set-

aside is set aside for new units in Indian Country.– For each control period, any allowances remaining in a state’s

new unit set-asides will be distributed to existing units in the state, in proportion to the existing units’ original allocations.

• Any allowances remaining in a state’s Indian Country new unit set-asides will return to the state’s new unit set-asides to be distributed among new units in the state first, and then any remaining allowances will be distributed among existing units in the state.

– If in any control period the size of the new unit set-aside is insufficient to provide allocations for all new units, allocations will be reduced proportionally for all new units.

Allocation of Allowances – Retired Units

• According to the regulatory text of CSAPR, allowances that would otherwise have been allocated to any unit that does not operate during the control period in two consecutive years (starting after 2011) will be allocated to the state’s new unit set-aside in the fifth year after the first year of non-operation.– Operate or operation is defined in the regulatory text

as the combustion of fuel.• The description of the retired unit provision in the rule’s

preamble is both inconsistent with the text of the rule and internally inconsistent.

Allocation of Allowances – Definitions

• A unit is considered to be an “existing unit” if it commenced commercial operation prior to January 1, 2010.

• A “new unit” is any of the following:– A covered unit commencing commercial operation on

or after January 1, 2010– A unit that becomes a covered unit by meeting the

applicability criteria on or after January 1, 2010– A unit that relocates into a different state covered by

CSAPR– An existing unit that stops operating for 2 consecutive

years and later resumes commercial operation

Allocation of Allowances – Methodology

• Existing Units: Allocation of allowances is the unit’s pro rata share of the state budget, based on the unit’s historic heat input (unit’s 3 highest non-zero annual heat input values within a 2006-2010 baseline period), subject to a maximum allocation equal to the unit’s maximum annual emissions during the period 2003-2010.

• New Units (Including Planned Units and Potential Units): Allocation of allowances will be based on emissions during a control period and will be performed in two rounds to accommodate units that come online midway through a control period. Allowances will be allocated to new units for the first control period of commercial operation.

Assurance Provisions • EPA will evaluate whether a state’s total affected-EGU

emissions in each control period exceeded the state’s budget plus its variability limit (the state’s “assurance level”). – If not, this analysis would end at the state level.

• If the state’s assurance level is exceeded, EPA will evaluate which groups of units at the common designated representative (DR) level had emissions exceeding the group’s pro rata share of the state’s assurance level during the control period. – Note that although allowances are allocated on a unit

by unit basis, assurance provisions are assessed at the DR-group level.

Assurance Provisions

• If emissions from the group of units with a common DR exceeded that group’s pro rata share of the state’s assurance level, owners of units in that group must surrender allowances in addition to the normal allowance surrender requirement, based on the amount by which the units in the group exceeded the group’s share of the state’s assurance level as a percentage of the total calculated for all such groups in the state. – The number of allowances required to be surrendered (in

addition to the normal 1:1 allowance surrender to cover emissions) is equal to the number of tons of emissions from the state’s EGUs over the state’s assurance level, multiplied by the percentage calculated at the DR-group level, and multiplied again by two.

– Allowances surrendered may be from the year immediately following the control period in which the assurance level was exceeded (i.e., the year in which the surrender is required) or any previous year.

Penalty Provisions • A source’s failure to hold an allowance in its compliance account for

a particular trading program corresponding to each ton emitted under that trading program will lead to an automatic penalty and potential liability for discretionary penalties. – Penalties will be assessed at the utility owner level.

• Automatic Penalty: A utility owner will be required to provide, for deduction by EPA, one allowance as an offset and one allowance as an excess emissions penalty for each ton of excess emissions. – Allowances surrendered may be from the year immediately

following the control period in which the violation occurred (i.e., the year in which the surrender is required) or any previous year.

• Discretionary Penalty: Each ton of excess emissions and each day in the compliance period (calendar year or ozone season as applicable) would be a separate violation of the CAA, carrying a maximum discretionary penalty of $25,000 (increased by an inflation adjustment to $37,500 in 2010$) per violation pursuant to CAA section 113.

Submission of SIPs

• CSAPR finalizes federal implementation plans (FIPs) for each of the states covered by the rule and provides no opportunity for states to develop their own state implementation plans (SIPs) (even abbreviated SIPs with allowance allocations) for the 2012 compliance periods.– CSAPR also “corrects” EPA’s previous approvals of CAIR-

related SIPs.• States may submit SIPs or abbreviated SIPs (covering unit-level

allowance allocations) for 2013 and later.– EPA staff has asserted that states will have significant authority

to change the way that units located within their borders must comply with CSAPR. But this assertion does not apply to 2012 or (except with respect to reallocation of allowances to existing EGUs) 2013.

Schedule for SIP Submissions• The 2013 control periods are the earliest periods for which a

state can submit a SIP. For 2013, states can change only existing-unit allocations.

• If a state notifies EPA by October 17, 2011 (i.e., 70 days after publication of CSAPR in the Federal Register) that it intends to submit a SIP with existing-unit allocations for 2013, EPA will record only EPA-determined allowance allocations for 2012 (and not 2013 allocations).

• If the state submits a SIP revision for 2013 by April 1, 2012 (although in one passage, EPA suggests the date is May 1, 2012) and EPA approves it by October 1, 2012, EPA will record state-determined 2013 allocations for existing units.– Otherwise, EPA will record EPA-determined allocations.– States may not alter new unit set-asides for 2013 (or 2012).

Schedule for SIP Submissions

• For control periods in subsequent years, abbreviated or full SIPs are due to EPA by:– December 1, 2012, for 2014 and 2015 control periods– December 1, 2013, for 2016 and 2017 control periods– December 1, 2014, for 2018 and 2019 control periods– December 1, 2015, and December 1 of any year

thereafter for control periods in the fifth year after the applicable submission deadline

Recordation Dates • EPA will record allowance allocations for existing units for the SO2, annual

NOx, and ozone-season NOx trading programs for 2012 and 2013 by November 7, 2011.– EPA will record allowance allocations only for 2012 (and not for 2013) in

accounts for units in any state that notifies EPA by October 17, 2011, that it intends to submit a SIP for 2013.

• EPA will record allowance allocations (whether state-determined or EPA-determined) for existing units in each of the trading programs included in CSAPR for future years by the following dates:– July 1, 2013, for control periods in 2014 and 2015– July 1, 2014, for control periods in 2016 and 2017– July 1, 2015, for control periods in 2018 and 2019– July 1, 2016, and July 1 of each year thereafter for control periods in the

fourth year after the year of the applicable recordation deadline• EPA will record allowance allocations for new units in each of the trading

programs included in CSAPR by August 1, 2012, and August 1 of each year thereafter.

Allowance Management System; Monitoring and Reporting Requirements

• EPA will use the Allowance Management System currently used for CAIR and the Acid Rain Program to track allocation of allowances under the CSAPR trading programs.

• CSAPR requires emission monitoring and reporting in accordance with 40 C.F.R. part 75.

Reconsideration of Ozone NAAQS

• The Obama Administration announced September 2, 2011 that EPA will not reconsider the 2008 ozone NAAQS.

• In the preamble for CSAPR, EPA indicated that it planned to propose a new version of CSAPR using a reconsidered ozone standard.– Whether on its own or as a result of litigation, EPA

may propose a new version of CSAPR using the 2008 ozone NAAQS.

Possibilities for Challenging CSAPR

Three Possible Actions:• Petition for judicial review by D.C. Circuit Court of Appeals• Petition for administrative reconsideration by EPA

– The principal purpose of a petition for administrative reconsideration is to address issues on which the public was not given notice or comment opportunity, to preserve issues for judicial review.

• Request a stay of the rule (from EPA and/or the D.C. Circuit Court of Appeals)– Filing a petition for judicial review or for administrative reconsideration,

or requesting a stay, does not stay the rule.Deadlines for action:• Any petition for judicial review must be filed by October 7, 2011 (i.e., 60

days after the rule’s publication in the Federal Register). • There is no specific deadline for a petition for Agency reconsideration and/or

stay, although such petitions are most commonly filed within the 60-day period for filing petitions for judicial review.

• There is no specific deadline at this time for judicial stay motions.

Petitions for Administrative Reconsideration and/or Stay

• July 22, 2011 – Edison Mission Energy filed a petition for administrative stay of CSAPR, arguing: – EPA circumvented the states by promulgating a FIP

without first giving them an opportunity to submit SIPs;

– EPA’s approach to unit-level allowance allocations penalizes units with higher emission rates and is unlawful.


• August 5, 2011 – Luminant filed a petition for administrative stay of CSAPR and for reconsideration of the portions of the rule that apply to Texas, arguing: – EPA added Texas to CSAPR’s SO2 and annual NOx programs

without providing a meaningful opportunity for public comment;– EPA failed to provide Texas an opportunity to submit a SIP as

required under the CAA;– EPA’s conclusion that Texas significantly contributes to

downwind nonattainment based on a projection of nonattainment at one downwind monitor is flawed;

– The emission reductions required of Texas are in excess of what is necessary to address the alleged significant contribution;

– EPA based its Texas modeling on flawed unit-level data and assumptions.


• On September 9, 2011, Luminant filed additional information and supplementation in support of its petition, citing:– An analysis by the Electric Reliability Council of Texas

of the impact of CSAPR on electric reliability; – Concerns regarding the ozone-season NOx budget

for Texas; – Flaws in EPA’s modeling for its 2014 “remedy” case.


• August 23, 2011 – Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, Inc., filed a petition for administrative reconsideration and stay of the CSAPR SO2 and annual NOx programs as they apply to Texas, arguing: – EPA added Texas to CSAPR’s SO2 and annual NOx

programs without providing a meaningful opportunity for public comment;

– The late addition of Texas to these programs provides an unreasonably limited time for utilities with units in Texas to comply by 2012.


• August 24, 2011 – Lakeland (Florida) Electric filed a petition for administrative reconsideration and stay of CSAPR, arguing: – The change in unit-level allowance allocations from the

proposed rule to the final rule is so great that EPA should have issued another proposal and solicited public comments;

– EPA should allow for public comment on the addition of Texas to CSAPR’s SO2 and annual NOx programs, and if EPA makes any change with respect to Texas, it should solicit public comments on the effect of those changes on Florida;

– EPA’s modeling is based on flawed assumptions about one of Lakeland’s units;

– EPA’s heat input approach to unit-level allowance allocations is flawed;

– EPA should have included CAIR-related emission reductions in its modeling for CSAPR.


• September 8, 2011 –Texas filed a petition for administrative reconsideration and stay of CSAPR as it applies to Texas, arguing:– EPA added Texas to CSAPR’s SO2 and annual NOx programs

without providing a meaningful opportunity for public comment;– EPA did not provide an opportunity to review and comment on

proposed state emission budgets for SO2 and annual NOx, as it did with respect to other states included in those programs;

– The emission reductions required of Texas in CSAPR are in excess of what is necessary to address the alleged significant contribution.


• On September 20, 2011, Texas filed a supplemental petition and request for a full stay of CSAPR, or in the alternative, a partial stay as to Texas, arguing:– Texas had no opportunity to identify errors underlying its linkage

to a monitor in Allegan County, Michigan for significant contribution to interference with the 1997 8-hour ozone NAAQS because it was not listed as linked to that monitor in the Proposed Transport Rule;

– EPA’s methodology for determining interference with maintenance is flawed;

– EPA erroneously linked Texas emissions to nonattainment of the annual and 24-hour PM2.5 NAAQS at a monitor in Granite City (Madison), Illinois.


• September 9, 2011 – The Texas Office of Public Utility Counsel filed a petition for administrative reconsideration and stay of CSAPR as it applies to Texas, – expressing concerns regarding electric reliability and

the cost of electricity in Texas, and – citing arguments set forth in petitions for

reconsideration filed by other Texas parties, such as Luminant and SPS.


• September 9, 2011 – San Miguel Electric Cooperative, Inc. filed a petition for partial reconsideration and stay of CSAPR as it applies to Texas, arguing:– EPA did not give Texas utilities notice and an opportunity to

comment on the inclusion of Texas in CSAPR’s SO2 and annual NOx programs;

– The emission reductions required of Texas in CSAPR are in excess of what is necessary to address the state’s alleged significant contribution;

– EPA failed to provide Texas an opportunity to submit a SIP as required under the CAA;

– EPA made inaccurate assumptions regarding the company’s plan for future operation of one of its units, compromising the company’s ability to provide affordable power to consumers.


• September 13, 2011 – GenOn Energy, Inc. filed a petition for reconsideration and stay of CSAPR, arguing:– The state budgets in CSAPR are substantially

different from those set forth in the Proposed Transport Rule due to modeling changes and should have been subject to notice and comment rulemaking;

– Allocations of allowances to GenOn’s units are substantially lower in CSAPR than in the Proposed Transport Rule due to “unexplained ‘modifications’” and should be reconsidered.


• September 23, 2011 – Wisconsin Public Service Corporation (WPSC) filed a petition for reconsideration and stay of CSAPR as it applies to Wisconsin, arguing:– Wisconsin’s SO2 and annual NOx budgets in CSAPR are

substantially lower than those set forth in the Proposed Transport Rule and leave the state and WPSC with virtually no compliance options other than a rapid shift in its generation profile, which will lead to large rate increases for consumers;

– The emission reductions required of Wisconsin in CSAPR are in excess of what is necessary to address the state’s alleged significant contribution;

– EPA made assumptions in modeling for CSAPR that were inaccurate;

(continued on next slide)


– Wisconsin should not have been included in the SO2 or annual NOx programs under CSAPR because EPA’s 2014 base case modeling indicates that Wisconsin’s significant contribution to nonattainment will likely be eliminated without CSAPR by the April 2015 nonattainment compliance deadline (with extensions) for the annual PM2.5 NAAQS;

– At minimum, Wisconsin should have been designated a Group 2 state for SO2 instead of a Group 1 state because all of Wisconsin’s significant contribution to nonattainment and interference with maintenance are eliminated at $500/ton;

– EPA’s 2012 and 2014 base case modeling is incorrect, and if adjusted, Wisconsin’s significant contribution to nonattainment and interference with maintenance with the annual and 24-hour PM2.5 NAAQS would probably be eliminated as early as 2012.


• September 23, 2011 – Nebraska filed a petition for reconsideration and stay of CSAPR as it applies to Nebraska, arguing:– Nebraska’s annual NOx emission budget in CSAPR is much lower than

the budget set forth in the Proposed Transport Rule, and had the state known that such a substantial change was possible, it would have submitted comments on the proposal;

– EPA failed to provide Nebraska an opportunity to submit a SIP as required under the CAA;

– CSAPR requires emission reductions from Nebraska in excess of those required to eliminate its interference with maintenance of the 24-hour PM2.5 NAAQS in the downwind area to which it is linked;

– Emission reductions required under CSAPR are based on uniform cost thresholds, and not each state’s contribution to nonattainment or interference with maintenance;

– CSAPR does not give independent meaning to the “interference with maintenance” prong of CAA § 110(a)(2)(D)(i)(I).

Petitions for Judicial Review

• August 23, 2011 – EME Homer City Generation, L.P. (Homer City)

• September 12, 2011 – Luminant• September 13, 2011 – GenOn Energy, Inc. • September 19, 2011 – Kansas• September 20, 2011 – Texas• September 23, 2011 – Nebraska, Alabama, Florida,

Oklahoma, South Carolina, Texas, and Virginia• September 27, 2011 – Wisconsin Public Service

Corporation

Motions for Judicial Stay

• August 25, 2011 – Homer City filed a motion for stay of CSAPR, or in the alternative, for expedited review, arguing:– EPA circumvented the states by promulgating a FIP

without first giving them an opportunity to submit SIPs;

– EPA’s heat input approach to unit-level allowance allocations is flawed.


• Several parties have filed motions for leave to intervene in the litigation in support of EPA: – September 7, 2011 – Exelon Corp.– September 9, 2011 – Sierra Club, Environmental

Defense Fund, and Clean Air Council– September 22, 2011 – Natural Resources Defense

Council– September 22, 2011 – American Lung Association– September 22, 2011 – Calpine Corporation

Motions for Judicial Stay• On September 9, 2011, EPA filed its response in opposition to Homer City’s

motion for stay of the rule, or in the alternative, for expedited review. – Claims authority to promulgate a FIP applicable to Pennsylvania with

respect to the 1997 8-hour ozone and PM2.5 NAAQS based on the notion that its approval of Pennsylvania’s SIP implementing CAIR cannot be construed as a determination that the SIP corrected the deficiency (significant contribution to nonattainment or interference with maintenance in another state) because that SIP approval occurred after the court’s decision in North Carolina v. EPA, which held that CAIR did not correct the deficiency

– Claims authority to promulgate a FIP applicable to Pennsylvania with respect to the 2006 PM2.5 NAAQS based on its finding that Pennsylvania failed to submit an interstate transport SIP

– Argues that the approach to promulgation of FIPs in CSAPR is the same approach it took in CAIR

– Argues EME’s alleged harms are self inflicted because they are the result of a business decision to defer installation of control equipment

• Homer City filed its reply on September 16, 2011 and its Nonbinding Statement of Issues to be Raised on September 23, 2011.


• Other filings on September 9, 2011: – Although it had not been granted intervention, Exelon

Corp. filed a response in opposition to Homer City’s motion for stay of the rule, or in the alternative, for expedited review.

– Environmental groups Sierra Club, Environmental Defense Fund, and Clean Air Council filed a motion for leave to file a response in opposition to Homer City’s motion for stay of the rule, or in the alternative, for expedited review, to which they attached their proposed response.


• September 14, 2011 – GenOn Energy, Inc. filed a motion for stay of CSAPR, or in the alternative, for expedited review, arguing:

– CSAPR is unlawful because it transfers wealth from some companies to others with no rational basis;

– Many state budgets are much lower in CSAPR than in the Proposed Transport Rule based on new assumptions and revised modeling, which should have been subject to notice and comment rulemaking;

– EPA circumvented the states by promulgating a FIP without first giving them an opportunity to submit SIPs.


• September 15, 2011 – Luminant filed a motion for partial stay of CSAPR, as it applies to Texas, arguing:

– EPA added Texas to CSAPR’s SO2 and annual NOx programs without providing a meaningful opportunity for public comment;

– The emission reductions required of Texas in CSAPR are in excess of what is necessary to address the state’s alleged significant contribution;

– EPA lacks authority to regulate Texas emissions under CAA § 110(a)(2)(D)(i)(I) because current air quality data indicate the only receptor to which Texas emissions are “linked” has attainment air quality.


• September 22, 2011 –Texas filed a motion for partial stay of CSAPR, as it applies to Texas, arguing:– EPA added Texas to CSAPR’s SO2 and annual NOx

programs without providing a meaningful opportunity for public comment;

– The emission reductions required of Texas in CSAPR are in excess of what is necessary to address the state’s alleged significant contribution.


• September 23, 2011 – Nebraska and Florida filed a motion for stay of CSAPR, arguing:– CSAPR is not a “logical outgrowth” of the Proposed Transport

Rule as it applies to Nebraska and Florida because of the drastic reduction of the annual NOx budget for Nebraska and the ozone-season NOx budget for Florida;

– EPA circumvented the State of Nebraska by promulgating a FIP without first giving the state an opportunity to submit a SIP;

– EPA arbitrarily and capriciously relied on the cost of emission reductions to establish the state budgets for CSAPR, and not each state’s contribution to nonattainment or interference with maintenance;

– EPA failed to give independent meaning to the “interference with maintenance” prong of CAA § 110(a)(2)(D)(i)(I) in CSAPR.

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