When the U.S. Environmental Protection Agency issued its final finding that emission of six greenhouse gases endangered the public’s health and the environment because of their effect on climate change, the business community wondered how it should respond to the news.  At first glance, there seems to be blinding maze of legal and policy issues that will affect business decisions.  Although far from clear, there is a way out of the maze – although businesses with significant greenhouse gas emissions should be prepared to tackle the important issues that the Endangerment Finding raises.

Businesses Need to Take a Deep Breath (Irony Intended)

The road to the endangerment finding began in 2007, when the U.S. Supreme Court decided in Massachusetts v. EPA that carbon dioxide and other greenhouse gases constituted “air pollutants” under the Clean Air Act.  To most savvy businessmen this was a clear signal to start planning how their businesses would cope with the establishment of limits on emission of greenhouse gases.  Although the Bush Administration EPA successfully sat on the issue, when the Obama Administration took office, most companies recognized that an endangerment finding would top the EPA’s list of major environmental actions.  Thus, EPA’s announcement this past April of its proposed finding and its announcement of the final endangerment finding should have come as no surprise to anyone who has been monitoring this issue.

The key thing for businesses to remember is that the endangerment finding by itself does not regulate the emission of greenhouse gases from any source, large or small.  That being said, it does have a direct impact on mobile sources (because of section 202(a) of the Clean Air Act), with the EPA planning on issuing its final “light-duty vehicle” greenhouse gas emissions rule some time in Spring 2010.


Continue Reading What Does EPA’s Finding that Greenhouse Gas Emissions Endanger Public Health and the Environment Mean to Business?

I.        Introduction

In the grand scheme of things, aviation may not represent a huge source of concern with respect to climate change. But neither should the aviation industry (airports included) ignore the fact that aviation does contribute to climate change not only through the emission of carbon dioxide (CO2) but also through the emission of nitrogen oxides (NOx), aerosols and their precursors (soot and sulfate), and increased cloudiness in the form of persistent linear contrails and induced-cirrus cloudiness. The intent of this series of articles is to examine the effect aviation has on climate change, outline the regulatory and legal framework that is developing, and to suggest avenues for the aviation industry to pursue in the future.  The first challenge is to clear up some misconceptions about aviation and climate change so that we can move forward with accurate and up-to-date information.

II.      Some Facts About Aviation and Climate Change

In Aviation and Climate Change: the Views of Aviation Industry Stakeholders, the aviation industry makes several claims regarding the impact aviation has on climate change. First, the industry claims that “over the past four decades, we have improved aircraft fuel efficiency by over 70 percent, resulting in tremendous savings.” As a result, the industry continues, “given the significance of fuel costs to the economic viability of our industry, our economic and environmental goals converge.” Second, the industry claims that “because of our aggressive pursuit of greater fuel efficiency, greenhouse gas (GHG) emissions from aviation constitute only a very small part of total U.S. GHGs, less than 3 percent.” However, in order to assist the industry in its obligation “to further limit aviation’s greenhouse gas footprint even as aviation grows to meet rising demand for transportation around the world,” those claims of progress need to come under a microscope.

        A.            Contribution of Aviation to Climate Change Remains Subject to Debate

First, how much aviation contributes to climate change is still up to debate. Several governmental and aviation industry organizations have been reporting a “less than 3%” number for quite some time while environmental groups, particularly in Europe, claim that the percentage is anywhere from 5 to 9%. In examining the claims and counterclaims concerning emissions of GHG, one has to be very careful about the language and the metrics used in determining the “impact” any given industry will have on “climate change.” Many reports and studies focus only on CO2, since the amount of CO2 produced both naturally and by humans is overwhelming. However, as just about everyone knows by now, there are other gases and anthropogenic actions that exacerbate climate change. For example, the U.S. EPA recently proposed regulations that would require major emitters of six “greenhouse gases” to report their emissions to the EPA on an annual basis. Those six greenhouse gases are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorochemicals (PFCs), and other fluorinated 20 gases (e.g., nitrogen trifluoride and hydrofluorinated ethers (HFEs)). It also should be kept in mind when discussing climate change, especially with respect to aviation, that water vapor is estimate contribute anywhere from 36% to 72% of the greenhouse effect. This is important because the radiative forcing effect of cirrus cloud formation from the aircraft is a significant contributor to the greenhouse effect. As pointed out above, it is generally accepted that for aviation the GHGs of concern are CO2, nitrogen oxides (NOx), aerosols and their precursors (soot and sulfate), and increased cloudiness in the form of persistent linear contrails and induced-cirrus cloudiness.


Continue Reading Why the Airports and the Aviation Industry Need to Be Concerned About Climate Change: Part One, Facts about Aviation and Climate Change

In a per curiam Abbreviated Disposition that will not be published, the U.S. Court of Appeals for the District of Columbia Circuit summarily denied 12 separately-filed petitions for review that questioned the legality of the Federal Aviation Administration’s Environmental Impact Statement for its East Coast Airspace Redesign. The matter, Rockland County v. Federal Aviation Administration

Day Two of the Hearings on the American Clean Energy and Security Act, also known as the Waxman-Markey bill, proved to be as contentious as expected.  There was much evidence that the Bill would not have an easy road ahead of it, since the Committee is deeply divided.  Although there were a few forays into the ridiculous, (Rep. John Shimkus (R.-Ill.:  "I think this is the greatest assault on democracy and freedom that I’ve ever seen in Congress;" Energy Secretary Steven Chu comparing the Bill to Wayne Gretsky’ famous comment that "I was good because I skated to where the puck will be" (upon reflection, that comparison does work)), the Committee focused its questions to Panels (which featured EPA Administrator Lisa Jackson, Energy Secretary Steven Chu and Transportation Secretary Ray LaHood) on the issues of jobs, allowances, energy costs, and American leadership in the world.

Jobs

In these times of economic uncertainty, no issue pulls at the hearts of politicians than jobs, especially when it can be used to hammer a point home.  Rep. Joe Barton (R.-Texas) led the way citing statistics from the National Association of Manufacturers, the Heritage Foundation, and Charles Rivers Associate claiming that the bill would result in anywhere from 1.8 to 7 million jobs "destroyed."  Rep. Shimkus made his statement about jobs in a more theatrical way, stating that "those of us who want jobs are going to try to defeat this bill" while hoisting a small lump of coal for the panelists to see.

On the other hand, the proponents of the Bill were not about to concede that the Bill would cause mass unemployment.  Rep. Waxman asked EPA Administrator Jackson, Secretary Chu, and Secretary LaHood if they believed that the Bill would create jobs.  Administrator Jackson replied that she believed the Bill is a "jobs bill."  Secretary LaHood added that the legislation would create jobs, "especially green jobs."  Secretary Chu agreed that the Bill would create millions of jobs and reduce America’s dependence on foreign oil.

Cap-And-Trade and Allowances

The part of the Bill that drew the most fire were the allowances:  should they be given away or should be they auctioned or should there be some sort of hybrid.  Administrator Jackson stated for the record that the Obama Administration supported the idea that 100 percent of the allowances should be auctioned.  In response to Rep. Jay Inslee’s (D.-Wash.) statement that we have to multiple approaches to addressing the problem through EPA regulations and a cap passed by Congress, Administrator Jackson stated that she "could not agree more."  A cap-and-trade law, she continued, was "powerful and necessary," but we need other regulations as well.

Understandably, the energy company officials who testified were not so eager to embrace a 100% auction.  They wanted at least some free allowances, while various scientists ad economists stated that a cap-and-trade with an auction is the only way to go.  Rep. Cliff Stearns (R.-Fla.) stated that "free carbon credits were windfall profits in Europe."  Contrast that statement with  Rep. Ralph Hall’s (R.-Texas) statement that "we’ll be in a weakened position if adopt cap-and-trade."  Thus, there is much work to get to a point where there can be agreement on whether there should be a cap-and-trade, let alone whether it should be a 100% auction of allowances or something else.

Energy Costs

The other big issue at the Hearing, particularly with respect to the later panels, was energy costs.  Rep. Barton told the Committee that "the debate is not about whether cap-and-trade legislation will raise energy costs; the only dispute is by how much." He then went on to cite "findings" that the Bill would increase household energy costs up to $3,128 per year and that "filling your gas tank will cost anywhere from 60 to 144 percent more.  The cost of home heating oil and natural gas will nearly double."  Rep. Fred Upton (R.-Mich.) commented that this was not a "cap-and-trade," this was a "cap-and-tax."

The response to this onslaught was a little more nuanced.  Secretary Chu responded that "it would be unwise to want to increase the price of gasoline" and then went on to outline the plans to lower transportation costs with electric cars, and low-carbon fuels, among other things.  In response to a question from Rep. Jane Harman (D.-Calif.) Secretary Chu indicated that refrigerators use one quarter the amount of energy they used in 1975 and these are real savings seen by households.  He then concluded by stating his belief that the "overall costs of living . . . can be held constant."  Even the ConocoPhilips Executive Red Cavaney stated that although there will be costs "the benefits to the overall American economy will outweigh these costs."

American Leadership

Another area of concern addressed at the Hearing was the wisdom of the United States regulating climate change when there are no assurances that the number one and two emitters in the world – China and India – will also take steps to reduce their emissions.  Rep. Ed Whitfield (R-Ky.) asked Secretary Chu:  "If we unilaterally move to take steps and China and India and other countries are not, how do we deal with that?"  Chu responded that that he believed that the United States should take a leadership role on this issue.  This sentiment was echoed by Rep. Diana DeGette (D-Colo.) who stated that she believed that America should lead and not wait for India and China to get their act together.

Compromise

Outside the Committee Room Rep. Rick Boucher (D.Va.) and Rep. Jim Matheson (D.Utah) stated that they would meet with Chairman Waxman to discuss a comprehensive amendment that could be presented on Thursday.  Rep. Boucher stated that the Bill’s schedule was "achievable" but it would depend on whether an agreement could be quickly reached on issues including how to allocate credits to existing industries, the schedule for reducing carbon emissions and flexibility in meeting renewable electricity requirements.

Click on "continue reading" for a complete Witness List with links to the witnesses written testimony and links to the video of the Hearing.

Continue Reading Day Two of Waxman-Markey Hearings: EPA, Energy and Transportation All Show Up

On Day One of a planned four days of hearings on the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey bill, there were no surprises.  This day was devoted to "opening statements" by the members of the Committee, before the Administration’s heavy hitters take the stage tomorrow. With a resounding

Over two years ago, on April 2, 2007, the Supreme Court in Massachusetts v. EPA, 549 U.S. 497 (2007), directed the EPA Administrator to determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.  Finally, after two years and much hand-wringing, EPA Administrator Lisa Jackson issued her proposed finding that carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride may endanger public health or welfare.

In actuality, the EPA proposed two findings:  (1) an endangerment finding, that the six GHG endanger public health and welfare; and (2) a “cause and contribute finding” that the combined emissions of carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons from new motor vehicles and motor vehicle engines contribute to the atmospheric concentrations of these key greenhouse gases and hence add to the threat of climate change.

EPA characterizes its proposed Endangerment Finding as follows:

This is not a close case in which the magnitude of the harm is small and the probability great, or the magnitude large and the probability small. In both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act.

The EPA, however, was careful to walk a fine line between complying with the dictates of Massachusetts and actually regulating GHG.  While this proposed rule does not actually regulate GHG,  it does propose defining greenhouse gases as “air pollutants” under the Clean Air Act. EPA proposes defining the six GHG as a single pollutant, rather the defining them individually – similar to the approach the EPA took with ozone years ago. EPA explained its decision as follows:

It is the Administrator’s judgment that this collective approach for the contribution test is most consistent with the treatment of greenhouse gases by those studying climate change science and policy, where it has become common practice to evaluate greenhouse gases on a collective CO2-equivalent basis

Although the EPA usually issues emission control standards concurrently with an endangerment finding, in this case, the EPA indicated that the emission standards would be issued “several months from now.”   This bifurcation of the normal process has been taken by observers to mean that these rules are meant to goad the Congress into action, rather than a serious proposal that EPA regulate GHG.  Indeed, the EPA’s Press Release on the Endangerment finding specifically stated that “[n]otwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy.”

And Congressional leadership seems ready to oblige.  Rep. Edward Markey (D.Mass.), Chair of the Energy and Environment Subcommittee, had this to say about the EPA’s Endangerment Ruling:

This decision is a game-changer. It is now no longer a choice between doing a bill or doing nothing. It is now a choice between regulation and legislation. EPA will have to act if Congress does not act.

Markey and Rep. Henry Waxman (D-Calif.) have introduced the American Clean Energy and Security Act of 2009 (ACES) to set up a system for reducing emissions from all sources and creating a financial incentive for companies to stay within emission limits.   See, “U.S. House Energy and Commerce Committee Releases Draft Climate Change Act,” posted April 2, 2009.  Waxman wants to pass the bill from his Energy and Commerce Committee by the end of May, but its fate is uncertain in the Senate.

Aircraft and other aviation sources seem to have received a pass with respect to these regulations:

EPA has received a petition under the Act to consider the regulation of 64 aircraft emissions (water vapor and NOx) that lead to formation of contrails (in addition to aircraft greenhouse gas emissions), and EPA plans to evaluate this issue further. At this time, the Administrator is not proposing to include aircraft-related contrails or emissions that are not greenhouse gases within the definition of air pollution for purposes of section 202(a).

This does not mean, however, that once the emission control standards are promulgated (if they are promulgated), aviation sources will not also be regulated.  Likewise, the Waxman-Markey bill may affect aviation sources as well.

A 60-day comment period will follow publication of the proposed rule in Federal Register, which has not yet occurred.  There will be public hearings in Arlington, Virginia, and Seattle, Washington in May, 2009.   Click on Continue Reading at the bottom of this post for details about written comments and public hearings.

Previous posts on this subject:


Continue Reading EPA Finally Issues Endangerment Finding for Six Greenhouse Gases, Including Carbon Dioxide

On March 10, 2009, the U.S. Environmental Protection Agency issued a news release proposing the first comprehensive national system for reporting emissions of carbon dioxide and other greenhouse gases produced by major sources in the United States.  Although the EPA has yet determine whether greenhouse gases, such carbon dioxide, are "pollutants" under the Clean Air Act, the EPA has taken this step to gather "comprehensive and accurate data about the production of greenhouse gases."

The EPA stated that the new reporting requirements would apply to suppliers of fossil fuel and industrial chemicals, manufacturers of motor vehicles and engines, as well as large direct emitters of greenhouse gases with emissions equal to or greater than a threshold of 25,000 metric tons per year.  The EPA estimates that it will affect approximately 13,00 facilities, which account for about 85% to 90% of greenhouse gases emitted in the United States.  For a listing of the various industries that EPA believes will be affected, see the end of this post.

In order to differentiate it from the mandatory greenhouse gas reporting programs developed by states and regional programs, the EPA will require automobile, truck and engine manufacturers to report emissions from the engines they produce.  The first annual report would be submitted to EPA in 2011 for the calendar year 2010, except for vehicle and engine manufacturers, which would begin reporting for model year 2011.

The proposed rule will be open for public comment for 60 after publication in the Federal Register, which has not yet occurred.  Two public hearings will be held during the comment period.

The Proposed Rule:

Information regarding the public hearing:

Other Information regarding the Proposed Rule:


Continue Reading EPA Proposes National Reporting Rules for Emissions of Greenhouse Gases

On February 3, 2009, the U.S. Court of Appeals for the District of Columbia Circuit denied a petition for review of the Federal Aviation Administration’s (FAA) “presumed to conform rule.”  72 Fed.Reg. 41565 (July 30, 2007).  

Under the “presumed to conform rule” the FAA can avoid its obligation under the Clean Air Act

In February, 2007, almost as an after-thought, theFAA included changes to air traffic control procedures to its Presumed to Conform rule. This last minute addition has the potential to seriously impact communities around the airports where these changes to air traffic control procedures take place. 

Why will this obscure regulatory change affect communities? First, a little background on the subject will be helpful. Air quality and noise are the primary concerns of communities around airports. Since Federal law severely limits the ability of communities to affect the amount of noise produced at airports, many communities have focused on protecting their air quality. The conformity provisions of the Clean Air Act provide a useful tool in that regard. They require that all Federal agencies ensure that their projects will not affect the State Implementation Plan (SIP), which is a plan drafted by the state and approved by the EPA in order to come into compliance with other provisions of the Clean Air Act. This “conformity determination” provides communities around airports with needed data concerning the effect the agency’s action will have on the air quality. Moreover, if the Federal agency fails to perform a conformity determination or fails to do it properly, then that it is grounds for the community to object to the Federal agency’s action as a whole.


Continue Reading FAA’s Presumed to Conform Rule Will Affect Communities Around Airports