RMMLF Mineral Law Newsletter
(By Joseph K. Reinhart, Sean M. McGovern, Danial P. Hido and Gina N. Falaschi)
The Pennsylvania Department of Environmental Protection (PADEP) continues to move forward with its rulemaking to limit carbon dioxide (CO2) emissions from fossil fuel-fired electric generating units (EGUs) consistent with the Regional Greenhouse Gas Initiative (RGGI) Model Rule and Governor Tom Wolf’s Executive Order No. 2019-07, 49 Pa. Bull. 6376 (Oct. 26, 2019), as amended, 50 Pa. Bull. 3406 (July 11, 2020) (which extended the deadline for PADEP to present the regulations to the Pennsylvania Environmental Quality Board (EQB) from July 31, 2020, until September 15, 2020). See Vol. XXXVII, No. 3 (2020) of this Newsletter.
As part of PADEP’s public outreach efforts, PADEP hosted an informational webinar on August 6, 2020, regarding the benefits of Pennsylvania’s participation in RGGI. See PADEP, “RGGI 101: How It Works and How It Benefits Pennsylvanians” (Aug. 6, 2020), https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx. The webinar focused on the structure of the RGGI program and how participation will lower greenhouse gas and other air pollution emissions from electric power plants, as well as a discussion of the health and economic benefits from participation in the program.
Consistent with Governor Wolf’s amended Executive Order 2019-07, PADEP presented its proposed cap-and-trade rule to the EQB, the independent body responsible for adopting proposed PADEP regulations, on September 15, 2020. Following significant debate and opposition to the rule, the EQB voted 13-6 to adopt the proposed regulation. As proposed, the regulation would amend 25 Pa. Code ch. 145 (relating to interstate pollution transport reduction) and add subchapter E (relating to a budget trading program) to establish a program limiting CO2 emissions from a fossil fuel-fired EGU with a nameplate capacity of 25 megawatts or greater that sends more than 10% of its annual gross generation to the electric grid. The rule would officially link Pennsylvania to the RGGI program, in which 10 Northeastern and Mid-Atlantic states already participate. RGGI establishes an emissions cap for each participating state that declines annually to reduce power sector CO2 emissions from the region. The proposed initial emissions cap for Pennsylvania is 78 million tons of CO2 in 2022, which gradually declines to 58 million in 2030. The emissions cap translates into “allowances,” each representing one ton of CO2, which are auctioned quarterly. Facilities subject to the regulation would be required to purchase and submit to the state an allowance for each ton of CO2 they emit. Currently, the proposed rulemaking intends for compliance obligations to begin in 2022.
The proposed rulemaking was published in the Pennsylvania Bulletin on November 7, 2020, initiating a 60-day public comment period during which time PADEP will hold at least five public hearings. See 50 Pa. Bull. 6212 (proposed Nov. 7, 2020). PADEP is expected to continue to meet significant opposition, as it did during the September 15 EQB meeting and numerous advisory committee meetings during the spring and summer.
Pennsylvania’s participation in RGGI has also met legislative opposition. In November 2019, members of the Pennsylvania House and Senate referred bipartisan companion bills, House Bill 2025 (HB 2025) and Senate Bill 950 (SB 950), both known as the Pennsylvania Carbon Dioxide Cap and Trade Authorization Act, to their respective Environmental Resources and Energy (ERE) committees for consideration. See HB 2025, 203d Leg., Reg. Sess. (Pa. 2019); SB 950, 203d Leg., Reg. Sess. (Pa. 2019). The legislation would have prohibited PADEP from adopting any measure to establish a greenhouse gas cap-and-trade program unless the general assembly specifically authorizes it by statute.
The House ERE committee voted on June 9, 2020, to move HB 2025 to the full House for consideration, and the House passed the bill with a vote of 130-71 on July 8, 2020. The Senate approved the bill on September 9, 2020, by a vote of 33-17. Governor Wolf vetoed HB 2025 on September 24, 2020, and released a veto message stating that the legislation is “extremely harmful to public health and welfare as it prevents [PADEP] from taking any measure or action to abate, control or limit [CO2] emissions, a greenhouse gas and major contributor to climate change impacts, without prior approval of the General Assembly.” Governor Wolf’s Veto Message for HB 2025 (Sept. 24, 2020).
GOVERNOR WOLF COMMITS TO ESTABLISH A REGIONAL CO2 TRANSPORT INFRASTRUCTURE PLAN
On October 1, 2020, Governor Tom Wolf announced that he had signed a memorandum of understanding (MOU) along with six other states—Kansas, Louisiana, Maryland, Montana, Oklahoma, and Wyoming—committing to establish and implement a regional carbon dioxide (CO2) transport infrastructure plan. Under the MOU, the signatory states will establish a coordination group, facilitated by the Great Plains Institute and informed by additional and ongoing work by the State Carbon Capture Work Group and the Regional Carbon Capture Deployment Initiative, that will develop an action plan that will include policy recommendation for and barriers to CO2 transport infra-structure deployment. This action plan is set for release in October 2021.
PADEP’S PROPOSED MANGANESE RULEMAKING UNDERGOING CONTENTIOUS PROCEDURAL REVIEW
As reported in Vol. XXXVII, No. 3 (2020) of this Newsletter, on July 25, 2020, the Pennsylvania Department of Environmental Protection’s (PADEP) Environmental Quality Board (EQB) published proposed revisions to the state’s water quality standards for manganese in 25 Pa. Code ch. 93. See 50 Pa. Bull. 3724 (proposed July 25, 2020). The proposed rule would change the numeric water quality criterion for manganese from 1.0 to 0.3 mg/L. The EQB also solicited comments on whether to set the point of compliance for the revised criterion at the point of discharge or the point of surface potable water supply withdrawals.
The 60-day public comment period closed on September 25, 2020. Approximately 950 comments were submitted, which can be viewed on PADEP’s eComment website. The EQB held virtual public meetings on the proposed rulemaking on September 8, 9, and 10, 2020. The state Senate Environmental Resources and Energy (ERE) Committee also held a hearing on the proposed rulemaking on September 9. The hearing included testimony of witnesses from PADEP, operators of surface water treatment systems, and the coal and non-coal mining industries. Testimony reportedly largely focused on the two proposed alternative points of compliance, but witnesses also presented arguments regarding the proposed revision of the numeric criterion from 1.0 to 0.3 mg/L. Expert witnesses testified both in support of and in opposition to the revised numeric criterion. See David E. Hess, “Senate Environmental Committee Hearing Pits Mining Industry Against Water Suppliers on Manganese Standard,” PA Env’t Digest Blog (Sept. 9, 2020). A recording of the hearing is available at https://environmental.pasenategop.com/090920/.
On September 30, 2020, Representative Daryl Metcalfe, Chairman of the House ERE Committee, sent a letter to the Independent Regulatory Review Commission (IRRC) on behalf of Republican members of the Committee expressing disapproval of the proposed rulemaking and asking the IRRC to disapprove the regulation. See Letter from Rep. Daryl Metcalfe, to IRRC (Sept. 30, 2020). On October 15, 2020, Senator Gene Yaw, Chairman of the Senate ERE Committee, sent a letter to the EQB on behalf of the Republican members of the Committee encouraging EQB to withdraw the proposed regulation. Letter from Senator Gene Yaw, to Hon. Patrick McDonnell, Chairman, EQB (Oct. 15, 2020).
The House and Senate letters both argue that the proposed rulemaking is contrary to Act 40 of 2017, which, as discussed in previous updates, directed PADEP to propose regulations setting the point of compliance at the point of surface potable water withdrawals. See Vol. XXXVII, No. 3 (2020); Vol. XXXVII, No. 1 (2020); Vol. XXXVI, No. 3 (2019) of this Newsletter. The letters, therefore, argue that the proposed rulemaking runs afoul of this statutory requirement by merely proposing such point of compliance as one of two potential alternatives for the final rulemaking. In addition, the letters state that proposing two alternatives in a single rulemaking is contrary to the Regulatory Review Act (RRA). The letters also challenge the legal and scientific basis for the proposed lower numeric water quality criterion.
On October 26, 2020, the IRRC issued comments on the proposed rulemaking that raise many of the same concerns identified by the House and Senate ERE committees. See Comments of the IRRC, EQB Regulation #7-553 (IRRC #3260): Water Quality Standard for Manganese and Implementation (Oct. 26, 2020). Regarding the proposed rule’s compliance with Act 40, the IRRC noted that “the mandate of Act 40 is clear and does not provide discretion to the EQB,” and requested that the EQB explain why the proposed rulemaking is consistent with Act 40. Id. at 2. Regarding the EQB’s decision to propose two alternative points of compliance in a single rulemaking, the IRRC asked the EQB to explain why it took this approach and why it is consistent with the RRA. Id. at 3.
The IRRC also requested that the EQB review the data provided by commenters and explain why the proposed lower criterion is necessary and justified, and explain why it is reasonable to regulate manganese at a lower level than other states and in a different manner from the U.S. Environmental Protection Agency. Id. The IRRC also noted that the EQB did not provide information regarding the cost of the proposed rulemaking sufficient to allow the IRRC to determine if the regulation is in the public interest, and directed the EQB to further evaluate the costs associated with the proposed rulemaking. Id. at 4.
The EQB is now required to review and respond to comments received from the IRRC, the ERE committees, and the public before issuing a final-form regulation. 71 Pa. Stat. § 745.5a(a).
PADEP PUBLISHES DRAFT REVISED POLICY ON CIVIL PENALTY ASSESSMENTS FOR COAL MINING OPERATIONS
On October 3, 2020, the Pennsylvania Department of Environmental Protection (PADEP) published a draft revision to Technical Guidance Document (TGD) No. 562-4180-306, titled “Civil Penalty Assessments for Coal Mining Operations.” See 50 Pa. Bull. 5545 (Oct. 3, 2020) (draft TGD). The current version of the TGD was last updated in 2005 (2005 TGD). PADEP first published draft revisions to the TGD on May 4, 2019. See 49 Pa. Bull. 2312 (May 4, 2019). However, PADEP republished an updated draft because substantial changes were made to the 2019 version in response to public comments.
One of the most notable changes in the draft TGD is the addition of new procedures for assessing civil penalties for water quality violations under section 605 of the Clean Streams Law (CSL), 35 Pa. Stat. § 691.605. These procedures would generally follow the 2005 TGD’s existing formula applicable to all violations, which is based on seriousness of the violation, culpability of the operator, costs to the commonwealth, savings to the violator, violation history, and speed of compliance. However, the application of these factors will evaluate components specifically relating to water quality, such as impacts to water resources or degree of exceedance of effluent limitations.
For instance, the “seriousness” component is based on several subcomponents. First, the “magnitude” of the violation will be calculated in one of two ways. If physical evidence is available, such as impacts to fish or invertebrate communities, sediment deposition, impacts to water use, or damage to land or water resources, the magnitude of the violation will be calculated using Method 1. If physical evidence is not available, the magnitude of the violation will be determined using Method 2, which is based on the degree of exceedance of applicable effluent limitations. There are five categories of seriousness under both Method 1 and Method 2: severe, significant, moderate, low, or de minimis.
The second subcomponent of the seriousness component, the “resource” component, evaluates the impact to aquatic life and recreation. In applying this factor PADEP will first examine the use of the impacted waterbody. There are five categories of use under the draft TGD: special protection, high use, moderate use, low use, and all other uses. PADEP will then examine the level of impact on aquatic life, water supply, recreation, and the extent of impacts. The draft TGD includes a matrix that provides a base penalty based on the results of the magnitude and resource components factors. This base penalty amount for the seriousness component may then be further adjusted based on the duration of the violation and the operator’s failure to report the violation.
The “savings to the violator” component may include costs associated with treating water to meet effluent limitations and the cost to construct and maintain treatment systems. The remaining factors (culpability, speed of compliance, costs to the commonwealth, and history of violations), will be calculated using the same procedures in the draft TGD applicable to all violations, as discussed below.
For violations other than those related to water quality, the draft TGD provides guidance to PADEP in assessing civil penalties based on the factors in 25 Pa. Code § 86.194. The draft TGD would make several changes to the application of these factors from the 2005 TGD, the biggest being with respect to assessment of penalties for high seriousness violations under the seriousness component. The draft TGD would instead allow PADEP to assess penalties of up to the statutory maximum for high seriousness violations. In contrast, under the 2005 TGD, penalties for high seriousness violations are to be assessed up to$2,000, and only violations meeting “extraordinary circumstances” criteria warrant a penalty up to the statutory maximum.
The draft TGD breaks the “culpability” component down into willful, reckless, negligent, or no culpability categories. The 2005 TGD only includes negligent and reckless categories. Under the 2005 TGD, penalties for negligent violations could be assessed up to $1,200, and penalties for reckless violations could be assessed up to the statutory maximum. Under the draft TGD, the maximum penalty of $1,200 for negligent violations remains unchanged; however, penalties for reckless violations would only be assessed up to $1,500, rather than the statutory maximum. The criteria for what constitutes a reckless violation would also be revised. For example, violations pertaining to situations previously identified in inspection reports or notices of violations, which are currently considered negligent violations under the 2005 TGD, would become reckless violations under the draft TGD.
Under the new willfulness criteria, a penalty up to the statutory maximum may be assessed if “[t]he operator made a conscious choice to engage in certain conduct with knowledge that a violation will result.” Finally, the draft TGD would create a new no culpability category, which would warrant no penalty assessment under the culpability component where the operator’s conduct was consistent with the standard of conduct to foresee and prevent the violation that a reasonable person would observe under the circumstances.
The other penalty components, speed of compliance, costs to the commonwealth, savings to the violator, and history of violations, remain generally the same as compared to the current 2005 version of the TGD.
The TGD may be further revised in response to public comments. The public comment period closed on November 2, 2020.
THIRD CIRCUIT VACATES EPA APPROVAL OF PENNSYLVANIA SIP PROVISIONS SPECIFIC TO COAL-FIRED EGUS
On August 27, 2020, the U.S. Court of Appeals for the Third Circuit vacated the U.S. Environmental Protection Agency’s (EPA) approval of an addition to Pennsylvania’s state implementation plan (SIP) specific to coal-fired electric generating units (EGUs), holding that EPA’s approval was arbitrary and capricious. Sierra Club v. EPA, 972 F.3d 290 (3d Cir. 2020). In April 2016, Pennsylvania promulgated a reasonably available control technology (RACT) requirement for coal-fired combustion units controlled by selective catalytic reduction (SCR) systems, requiring such units to meet a limit of 0.12 lb nitrogen oxide (NOx) per million Btu (MMBtu) heat input when the SCR inlet temperature is equal to or greater than 600 degrees Fahrenheit. 25 Pa. Code § 129.97(g)(1)(viii). Pursuant to the Clean Air Act, EPA approved the requirement as part of Pennsylvania’s SIP in May 2019. See 84 Fed. Reg. 20,274 (May 9, 2019) (to be codified at 40 C.F.R. pt. 52). On July 8, 2019, the Sierra Club filed a petition for review with the Third Circuit, challenging EPA’s approval of 25 Pa. Code § 129.97(g)(1)(viii) as part of Pennsylvania’s SIP.
The Third Circuit vacated EPA’s approval of 25 Pa. Code § 129.97(g)(1)(viii) as part of Pennsylvania’s SIP, finding EPA’s approval arbitrary and capricious on three grounds. First, the court ruled that there was inadequate justification for the selection of a 0.12 lb NOx/MMBtu pollution limit. Sierra Club, 972 F.3d at 302–03. The court noted that the limit is the “average pollution output of the three plants that are already compliant over the last five years.” Id. at 300. Second, the court ruled that the addition of a 600-degree temperature threshold for SCR was not adequately explained. Id. at 305–06. EPA justified the threshold by arguing that SCR systems become less effective at lower temperatures. Id. at 303. However, the court found that reduced effectiveness did not adequately justify not requiring the use of the control technology at lower temperatures. Id. at 304. Third, the court ruled that the SIP also lacked a reporting requirement on power plant inlet temperatures. Id. at 309. The SIP did not contain specific requirements to report plant inlet temperatures. EPA and the Pennsylvania Department of Environmental Protection (PADEP) relied on existing language that requires plants to keep records that adequately demonstrate compliance and states that such records only have to be available to PADEP, not EPA or the public. Id. at 308–09. The Third Circuit held that this requirement was insufficient to meet the CAA’s requirement that EPA be able to bring an enforcement action. Id. at 307 (citing 42 U.S.C.
- 7502(c)(6)). The court found that, when coupled with the temperature threshold, this lack of reporting requirement creates a loophole that allows EGUs to avoid using an SCR system by claiming to have operated under 600 degrees without requiring data reporting that would verify that operation status. See id. at 306, 308–09.
On remand, EPA must either approve a revised SIP from PADEP within two years or formulate a new federal implementation plan (FIP) under 42 U.S.C § 7410(c)(1) (which provides two years for EPA to promulgate a FIP if a state does not make a sufficient submission or if EPA disapproves of a SIP and the state does not correct the deficiency). Sierra Club, 972 F.3d at 309. Either approach must be technology-forcing, in accordance with the RACT standard, and lack the loophole noted in this decision. Id.
Copyright © 2020, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
