Holland & Hart's Climate Change News

U.S. EPA Proposes Stricter Regulation of Methane and Other Air Emissions from Hydraulic Fracturing and Other Oil and Gas Operations

By Chris Colclasure

On July 28, 2011, the EPA proposed additional regulations of air emissions from upstream and midstream oil and gas operations. The rule would limit methane and VOC emissions from hydraulic fracturing. It would also tighten the existing New Source Performance Standards ("NSPS") and Maximum Achievable Control Technology ("MACT") standards for natural gas processing plants, compressor stations, transmission and storage facilities. EPA estimates that compliance with the new requirements will cost $754 million nationwide in 2015, but EPA believes the rules will net a $29 million savings through the recovery of natural gas and condensate that is currently vented or flared.

The most high profile aspect of the proposed rules would require the use of green completions, also called reduced emissions completions, when natural gas wells (but not oil wells) are hydraulically fractured or re-fractured. Green completions capture VOCs and hydrocarbons from frack fluid flowback. The rule would also require the use of low bleed or non-gas-driven pneumatic controllers, and would place new requirements on glycol dehydrators, storage vessels and gas plants.

Interested parties may comment on the rule until October 24, 2011. EPA will hold hearings on the proposed rule on September 27-29, 2011, in Pittsburgh, Denver, and Arlington, Texas.

EPA Finalizes Changes to Greenhouse Gas Reporting

By Chris Colclasure

On August 22, 2011, after a lengthy delay, EPA began accepting 2010 GHG emissions reports through its electronic Greenhouse Gas Reporting Tool ("e-GGRT"). Entities that are subject to the Mandatory GHG Reporting Rule have until September 30, 2011, to report their 2010 emissions. Reporting entities must first register to use the site. The deadline for registration was August 1, 2011, but registration is still being accepted.

EPA on August 25, 2011, also published a final rule deferring the deadline to report certain data elements that might reveal confidential business information. Industry has repeatedly raised concerns that some of the data EPA seeks through the Mandatory GHG Reporting Rule contains trade secrets or would cause competitive harm if publicly released. EPA in2010 proposed a list of data elements that would be treated as confidential business information and would be withheld from public release, but that did not resolve all of industry's concerns. The ongoing dispute focuses on data that is used to calculate GHG emissions. EPA's latest action defers the requirement to report certain data elements until at least March 2013, while EPA considers whether those data elements could be withheld from public release.

EPA Proposes to Exclude Sequestered CO2 from Hazardous Waste Definition

By James Holtkamp

On August 5, EPA released a proposal to conditionally exclude CO2 streams that are hazardous from the definition of hazardous waste if those streams are captured from CO2 emission sources, are injected into Class VI Underground Injection Control Wells for purposes of geologic sequestration, do not have other hazardous wastes mixed with the streams, and are transported in compliance with applicable U.S. Department of Transportation regulations. Comments on the proposed rule will be accepted for 60 days following publication in the Federal Register.

EPA Releases CCS Financial Assurance Guidance

By James Holtkamp

In July, EPA released a guidance document entitled "Underground Injection Control (UIC) Program Class VI Financial Responsibility Guidance" which sets forth the financial assurance mechanisms that can be used for CCS projects which are subject to EPA's Class VI underground injection well rules for CO2 sequestration. Financial assurance mechanisms available to CCS operators include trust funds, surety bonds, letters of credit, escrows, insurance and corporate guarantees. The Guidance provides that a company can be released from the financial assurance once it has completed all required CCS activities for the specified phase or life of the CCS project and has otherwise fulfilled its financial obligations as determined by the UIC program director for the state in which the project is located. The Guidance can be found at the final guidance.

Truck Fuel Economy Rule Announced by Administration

By James Holtkamp

On August 9, President Obama formally announced a final rule jointly issued by the Environmental Protection Agency and the National Highway Traffic Safety Administration which sets fuel consumption standards for three classes of medium and heavy duty trucks for model years 2014 through 2018 in order to reduce greenhouse gas and other emissions. The required reductions in fuel consumption by 2018 are 20 percent for tractor trailers, 15 percent for heavy duty pickups and vans, and 10 percent for so-called "vocational trucks" ( fire trucks, garbage trucks and delivery vehicles). Unlike the standards for passenger cars and light duty trucks, the standards are for decreases in fuel consumption rather than mile-per-gallon fuel requirements because of the variability in truck engine designs.

The truck rule follows the July 29 announcement by the Administration of an increase in fuel economy standards for cars and light-duty trucks to 54.5 miles per gallon by 2025, to be achieved through increases in fuel economy of 5 percent per year for cars and 3.5 percent per year for light-duty trucks from model year 2017 through 2025. The Administration said that the increased costs per vehicle to comply with the rules will be offset by the fuel savings.

Introducing AIA's Guide for Sustainable Projects

By Melissa Orion

Keeping pace with the sustainability push in the construction industry, the American Institute of Architects (AIA) has issued its "Guide for Sustainable Projects."

What is it?
The AIA contract forms, which are updated every ten years, were last updated in 2007. The Sustainable Guide includes proposed language for agreement amendments and supplementary conditions to adapt the existing AIA suite of documents to be appropriate to allocate risk and scope for sustainable projects.

CARB Reaffirms Cap-and-Trade Program

By James Holtkamp

On August 24, the California Air Resources Board voted to reaffirm the AB32 cap-and-trade program. The reaffirmance comes in the wake of a legal challenge by public interest groups, afdter a San Francisco judge in March ordered CARB to undertake a more comprehensive analysis of the alternatives to the cap-and-trade program. The plaintiffs allege that a cap-and-trade program will allow polluting facilities to continue at current levels of emissions, to the detriment of nearby low-income communities.

Once implemented, the California cap-and-trade program will cover greenhouse gas emissions at over 600 facilities and will be three times as big as the Regional Greenhouse Gas Initiative, which is a cap-and-trade program involving power plants in a number of eastern states. The California program will be the biggest in North America and one of the biggest in the world. It is expected that by 2016, the value of the allowances trades in California will be about $10 billion.

Withdrawal From RGGI Vetoed by New Hampshire Governor

By James Holtkamp

In an act illustrating the tension between conservative state legislatures and more moderate chief executives, New Hampshire Governor John Lynch (D) vetoed legislation that would have withdrawn New Hampshire from the Regional Greenhouse Gas Initiative (RGGI). RGGI consists of a number of New England and Mid-Atlantic states and operates a cap-and-trade program dealing with emissions from power plants in the region. Although the state House of Representatives voted twice to override the repeal, the Senate override vote fell short of the required two-thirds majority.

Both sides of the issue argued that the other side's position would cost jobs and hurt the state's economy, with the governor arguing that withdrawal from RGGI would result in New Hampshire ratepayers subsidizing energy efficiency in other states and the Republicans in the legislature claiming that the cost of the RGGI allowances is a tax on electric generators.