March 17, 2009

Energy, Environmental, Pipeline Safety Group Alerts

Environmental Rulemaking Update

by Mark R. Warnke

This Practice Alert will provide an update on the status of certain environmental rulemakings which may be of particular interest to parties engaged in operations or planning projects involving the emission of greenhouse gases.

EPA Announces Development of Mandatory Greenhouse Gas Reporting Rule

On March 10, 2009, the EPA announced a proposed rule intended to create a nationwide reporting program applicable to the most significant categories and sources of greenhouse gas emissions.  The program will not directly control or otherwise limit greenhouse gas emissions in the United States.  However, it will lead to the compilation of a comprehensive national inventory of such emissions, which is likely to serve as a foundation to eventually assist the EPA in developing emission reduction measures, including a much discussed cap-and-trade program, should Congress eventually pass greenhouse gas legislation later this year or at some future date.

The EPA reports that its proposal will regulate approximately 13,000 facilities, and will cover between 85-90% of the greenhouse gas emissions in the United States.  Reporting requirements would apply to suppliers of fossil fuels and certain industrial greenhouse gases, manufacturers of motor vehicles and engines, all facilities falling within certain designated source categories, and other facilities with annual emissions at or above 25,000 metric tons of carbon dioxide equivalents from specified sources.  EPA estimates that a substantial majority of small businesses have emissions below this threshold, and hence should be exempt from reporting requirements.

Under the current proposal, covered sources would need to begin tracking emissions data on January 1, 2010, with initial reports submitted electronically to the EPA by March 31, 2011 for the prior calendar year.  An exception would be for vehicle and engine manufacturers, which would report data beginning with the 2011 model year.  While the EPA would assume responsibility for verifying the accuracy of the data submitted, the reports would need to be signed and certified under penalty of law by a designated representative of the covered entity, which would also be required to maintain documentation supporting its reporting determinations for a period of five years.  EPA has estimated that it will cost roughly $160 million for private entities to comply with the first year's reporting obligations, reduced to roughly $127 million annually thereafter.

Once the proposed rule is published in the Federal Register, it will be subject to a 60-day public comment period.  The EPA also has scheduled two public hearings in April 2009, at which the proposed rule will be discussed in more detail and comments will be solicited from members of the public.  One of these hearings will be held at the Sacramento Convention Center on April 16, 2009.  Absent unforeseen circumstances, it is anticipated that the rulemaking should be finalized prior to the end of 2009.

Update Underway to the Bay Area Air Quality Management District CEQA Guidelines

The California Environmental Quality Act ("CEQA") requires public agencies to consider the significant environmental effects of projects which they propose to implement or approve, and to verify that those impacts are sufficiently mitigated to the extent it is feasible to do so.  In order to ensure that this evaluation process is conducted as consistently as possible on a project-by-project basis, public agencies are "encouraged to develop and publish thresholds of significance," which can be quantitative, qualitative, or levels of performance, to be used by the agency in determining whether a particular environmental effect is in fact significant.[1]  Non-compliance with, or exceedance of, a particular significance threshold can trigger the need to prepare an Environmental Impact Report and to adopt selected mitigation measures as a condition of project approval.

The Bay Area Air Quality Management District ("BAAQMD" or "District") has developed CEQA Guidelines which establish thresholds of significance for certain categories of air quality impacts and contain guidance to assist in the development of measures to mitigate such adverse environmental effects.[2]  Although the BAAQMD CEQA Guidelines are advisory in nature, given the primary role played by the District in ensuring compliance with air quality standards throughout the San Francisco Bay Area, they are typically accorded considerable deference by public agencies called upon to approve projects and local land use plans having potential air quality impacts in the nine Bay Area counties.

Last updated in 1999, the BAAQMD CEQA Guidelines are currently in the process of undergoing revision by the District.  On February 26, 2009, the BAAQMD held an initial public workshop to provide detail on the scope of, and schedule for, its planned CEQA Guidelines Update and to solicit preliminary input from members of the public as part of this process.  Under its current schedule, the BAAQMD is proposing to issue a draft Thresholds of Significance White Paper in early April, to be followed by a second public workshop.  The White Paper should reassess many of the BAAQMD's existing thresholds of significance, and also contain new analysis relevant to the upcoming development of significance thresholds for greenhouse gas emissions, which are not separately addressed in the current edition of the District's CEQA Guidelines.  A revised draft of the BAAQMD CEQA Guidelines is then planned for issuance in early May, with another public workshop to follow shortly thereafter.  It is anticipated that a final, updated version of the BAAQMD CEQA Guidelines will be presented to the District's Board of Directors for consideration in July 2009.

If you have current or future questions regarding either of these rulemaking proceedings, please feel free to contact Mark Warnke, Keith Howard, Barry Ogilby, Kristen Thall Peters, Jill Rowe, William H.G. Norman, or any other member of Cooper's Energy, Environmental or Pipeline Safety Practice Groups.