CHAPTER 7 AIR QUALITY IMPACTS ASSOCIATED WITH EXTRACTION AND BURNING OF WESTERN COAL

• Jurisdiction: United States

Air Quality Issues Affecting Oil, Gas, and Mining Development in the West
(Feb 2013)
CHAPTER 7
AIR QUALITY IMPACTS ASSOCIATED WITH EXTRACTION AND BURNING OF WESTERN COAL
James A. Holtkamp
Holland & Hart LLP
222 South Main Street, Suite 2200
Salt Lake City, Utah 84101
801-799-5847
Emily C. Schilling ¹
Holland & Hart LLP
975 F Street N.W., Suite 900
Washington, D.C. 20004
202-654-6922

JAMES A. HOLTKAMP is the Climate Change Practice Team Leader at Holland & Hart and a resident in the Firm's Salt Lake City office. He represents industry and government clients in various environmental, natural resources and energy project development issues throughout the United States and overseas. He has spoken and published widely on air quality and climate change in the United States, Canada and Europe. He has been honored by various legal publications and organizations, and was selected as the 2010 Utah Environmental Lawyer of the Year and the 2012 Energy Lawyer of the Year for Utah by Best Lawyers. He is an adjunct law professor at the University of Utah College of Law and received the 2008 Peter W. Billings Excellence in Teaching Award from the College of Law. Mr. Holtkamp served on the staff of the U.S. Senate Select Committee on Presidential Campaign Activities (Watergate Committee) and as an attorney for the U.S. Department of the Interior before entering private practice. He is a past president of the Rocky Mountain Mineral Law Foundation. He received his B.A. with honors (1972) from Brigham Young University and his J.D. cum laude (1975) from the George Washington University Law School, where he served as Articles Editor of The George Washington Law Review.

EMILY C. SCHILLING is an attorney in Holland & Hart's Washington, D.C. office with a practice focusing on air quality and climate change. Ms. Schilling counsels mining and other natural resource companies on compliance with existing air quality regulations, including permitting obligations, and monitors regulatory and legislative developments in the areas of air quality and climate change. She also has extensive experience with the development of comments in federal rulemakings under the Clean Air Act and associated litigation in the D.C. Circuit. Ms. Schilling received her B.A. from Bowdoin College in 1997 and her J.D. and Master of Public Policy from Duke University in 2003. Ms. Schilling previously reported on environment and energy issues on Capitol Hill for Congressional Quarterly.

TABLE OF CONTENTS

I. Introduction

II. EPA's Finding That Regulation of Hazardous Air Pollutants from Utilities is "Necessary and Appropriate" and the Resulting Mercury and Air Toxics Standards

A. Regulation of Hazardous Air Pollutants ("HAPs") Emitted by Utilities Requires a Formal Finding by EPA

B. Requirements of the Utility MACT Applicable to Existing Coal-Fired Generating Units

C. EPA's Reconsideration of the Utility MACT New Source Standards

D. EPA's Projected Impacts of the Utility MACT on Western Coal

III. Revisions to the National Ambient Air Quality Standards

A. EPA's December 2012 Revisions to the PM NAAOS

B. EPA's Pending Revisions to the Ozone NAAOS

IV. The Clean Air Act's Good Neighbor Provision and EPA's Recent Thwarted Attempts at Implementation Through Regulation of Coal-Fired Generation

A. CSAPR's Approach to Emissions Allocations, Budgets and Trading

B. The Immediate and Potential Long Term Effects of the CSAPR Vacatur

1. The Immediate Effects of the EME Homer Decision

2. The Long Term Uncertainties and the Potential for Section 126 Petitions

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V. The Regional Haze Rule and EPA's Disapproval of State Best Available Retrofit Technology Determinations

VI. Regulation of Greenhouse Gases

A. Federal Legislation Proposing Regulation of Greenhouse Gas Emissions

B. EPA Greenhouse Gas Reporting Rule

C. Endangerment Finding

D. EPA Greenhouse Gas "Tailoring" Rule

E. New Source Performance Standards Rule for Greenhouse Gases

F. California Greenhouse Gas Initiatives

1. Establishment and Development of Renewable Portfolio Standards

2. California Senate Bill 1368

3. Global Warming Solutions Act and Regulations

4. California Cap-and-Trade Regulations

VII. Nuisance Liability for Greenhouse Gas Emissions

VIII. The Use of Land Use Challenges to Coal Development Based on Air Quality and Greenhouse Gas Emissions

A. NEPA

1. The CEQ's Recommendations for Incorporating Greenhouse Gas Emissions into NEPA Documents

2. EPA's Comments on the Proposed Gateway Pacific Project

3. Litigation Discussing NEPA Analysis of GHG Emissions

a. Agency Failure to Consider GHG Emissions

b. Adequacy of Agency Analysis of GHG Emissions

B. Potential Hurdles to Coal Development Based on NEPA Challenges

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I. Introduction

The United States is often called the "Saudi Arabia" of coal because of its immense coal reserves. In fact, the United States has the largest estimated recoverable reserves of coal in the world, enough to last more than 200 years based on current production levels.² Wyoming alone is home to 40 percent of coal mined in the U.S., far ahead of second place West Virginia, which produces 12 percent.³

The emissions impacts of burning coal, however, are significant. The primary pollutants resulting from combustion of coal are nitrogen oxide ("NOx"), sulfur dioxide ("SO2"), particulate matter ("PM"), carbon monoxide ("CO") and greenhouse gases ("GHG"), including carbon dioxide ("CO2"). In addition, coal combustion results in emissions of mercury and other hazardous air pollutants. As a result, emissions from coal combustion are subject to an ever-increasing and ever more complex web of air pollution control and climate change regulations. This paper examines the numerous regulatory requirements applicable to coal-fired electricity generators and discusses the broader implications of these regulatory requirements--particularly as they relate to GHG emissions--on the analysis of coal development under land use statutes.

II. EPA's Finding That Regulation of Hazardous Air Pollutants from Utilities is "Appropriate and Necessary" and the Resulting Mercury and Air Toxics Standards

A. Regulation of Hazardous Air Pollutants ("HAPs") Emitted by Utilities Requires a Formal Finding by EPA

Section 112 requires that EPA list all "major sources" of HAPs and subject them to strict Maximum Achievable Control Technology or "MACT" standards; utilities, however, are held to a different standard.⁴ As part of the 1990 amendments to the CAA, Congress drafted provisions applicable specifically to utilities that direct EPA to regulate electric generating units ("EGUs") under Section 112 only if the Agency finds that such regulation is "appropriate and necessary."⁵ Specifically, Section 112(n)(1)(A) of the CAA requires EPA to conduct a study analyzing remaining risks to public health existing after imposition of other CAA requirements; EGUs would be regulated as a source category under Section 112 only if the Administrator "finds such regulation is appropriate and necessary" in light of the aforementioned study.⁶

In 1998, EPA completed the study of remaining public health hazards posed by EGUs, which the Agency reported to Congress.⁷ Two years later, EPA formally found regulation of

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mercury emissions from EGUs to be "appropriate and necessary," though it deferred in large part a similar finding for the other HAP emitted from EGUs.⁸ In 2005, however, EPA made an about face and concluded that new information confirmed that it was neither appropriate nor necessary to regulate coal- and oil-fired EGUs, relying in large part on emission reductions expected from the Clean Air Interstate Rule ("CAIR") and the Agency's pending Clean Air Mercury Rule ("CAMR").⁹ Based on this finding, EPA delisted EGUs from the source category list for which emissions standards must be issued.¹⁰

In 2008, the D.C. Circuit vacated CAMR and the EPA's 2005 delisting of EGUs as a source category under Section 112 of the CAA.¹¹ The court concluded that EPA did not have the discretion to reverse itself and remove source categories without, a formal proceeding under section 112(c)(9) of the CAA.¹² That same year, a group of not-for-profits sued EPA on grounds that EGUs remained a listed category under Section 112 and therefore the agency was required to timely issue Section 112 emissions standards for EGUs.¹³ EPA settled that lawsuit, agreeing in a consent decree to publish a proposed MACT rulemaking covering EGUs no later than March 16, 2011, and a final rule no later than November 16, 2011.¹⁴

On February 16, 2012, EPA issued the final "National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Electric Utility Steam Generating Units," referred to as either the "Utility MACT" or the "Mercury and Air Toxics Standard" ("MATS"), as well as New Source Performance Standards under section 111 of the CAA.¹⁵ As part of the rulemaking, EPA conducted additional risk analyses and reviewed new studies addressing health impacts from mercury and other HAP to provide additional support for its 2000 "appropriate and necessary" finding.¹⁶ EPA concluded that other HAPs also pose a hazard to public health,¹⁷ but asserted separately that based on its finding that standards are necessary for mercury, the Agency is required to regulate all HAPs emitted from EGUs.¹⁸

The Utility MACT imposes strict emission limits on mercury, non-mercury metal HAPs (Be, As, Cd, Co, Cr, Mn, Ni, Pb, Sb and Se), and acid gas HAPs (HCI, HF, CL2, and HCN).¹⁹ EPA is allowing the use of PM as a surrogate for non-mercury metallic HAPs, and HCI and SO2 as surrogates for acid gas HAPs.²⁰ EPA decided against imposing emission standards for

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organic HAPs, such as furans and dioxins, on grounds measured emissions of these HAPs were so low as to preclude reliable measurements of emissions from EGUs.²¹

B. Requirements of the Utility MACT

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