Regulatory Drivers For CleanTech and Green Jobs: When people think of CleanTech, they usually think of wind turbines and solar panels, but there may be a burgeoning opportunity in energy efficiency. Many states, including Michigan, have adopted Renewable Portfolio Standards that requires utilities to generate a portion of their electricity from renewable sources. The U.S. Environmental Protection Agency recently promulgated a regulation (the GHG BACT) that will require utilities to reduce their carbon emissions, primarily through energy efficiency. However, several members of Congress are trying to cut back on GHG regulations arguing that these regulations are job killers. Come to the Michigan Energy Forum on September 8th to learn about the latest regulatory developments, what they have meant from green jobs in Michigan, and what the future might hold.

1. REGULATORY DRIVERS FOR CLEAN TECH,
ALTERNATIVE ENERGY AND GREEN JOBS UNDER
THE CLEAN AIR ACT
Michigan Energy Forum
September 2011 Meeting
September 8, 2011
S. Lee Johnson
Honigman Miller Schwartz and Cohn, LLP
2290 First National Building
Detroit, Michigan 48226
(313) 465-7432
sljohnson@honigman.com
Copyright 2011. All rights reserved.
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2. I. How Did We Get Here?
A. Massachusetts v EPA (549 US 497(2007))
The United States Supreme Court held:
(1) GHGs “fit well within the [CAA’s] capacious definition of ‘air
pollutant.’”
(2) In response to the ICTA petition, EPA must make one of three findings:
(a) there is an endangerment and mobile sources cause or contribute;
(b) there is not an endangerment or mobile sources do not cause or
contribute; or
(c) there is insufficient scientific information to make a decision on
endangerment/contribution.
(3) Regulation of GHGs from mobile sources under the CAA is mandatory
following a finding of endangerment and that mobile sources cause or
contribute.
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3. C. EPA’s Endangerment Finding And Mobile Source
Rule
o On December 15, 2009, EPA published a final rule under Section
202 of the CAA finding that GHGs “endanger both the public
health and welfare of current and future generations” and that
GHGs from new motor vehicles contribute to the endangerment
of the public health and welfare.
o On May 7, 2010, EPA and the Department of Transportation
National Highway Traffic Safety Administration (“NHTSA”)
jointly issued a rule to limit GHG emissions from light duty
vehicles in response to the “endangerment” and “cause or
contribute” findings. The emission standards include standards
for carbon dioxide, nitrous oxide and methane.
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4. A. PSD Program Statutory And Regulatory Definitions
1. Under the CAA, the PSD program applies to a “major emitting facility,” which is
defined in CAA § 169(1) as “any of the following stationary sources of air
pollutants which emit, or have the potential to emit” either 100 tpy or more of
any air pollutant or 250 tpy or more of any air pollutant, depending on source
category.
2. Note that the statute uses the term “air pollutant,” which the U.S. Supreme Court
has ruled includes GHGs. The requirement to apply “best available control
technology,” however, applies to “each pollutant subject to regulation” under
the CAA. The phrase “subject to regulation” is not defined in the CAA.
3. The PSD implementing regulations, apply only to major sources of “regulated
NSR pollutants” which were defined to include: (i) criteria pollutants (and
precursors); (ii) pollutants subject to a standard under Section 111 (NSPS
and Emission Guidelines) of the CAA; (iii) Class I and II CFC regulated
under Title VI of the CAA and (iv) “Any pollutant that otherwise is
subject to regulation under the Act” (with an exception for hazardous air
pollutants that are not criteria pollutants or precursors).
4. Similar defined terms were used in the ROP program.
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5. II. The Tailoring Rule
As noted above, PSD applies to “major stationary sources” – sources that
have the potential to emit 250 tpy (or 100 tpy) of any “regulated NSR
pollutant.” “Major modifications” at “major stationary sources” which
involve emission increases ranging from 0 to 100 tpy are also subject to
PSD review.
In the Tailoring Rule (June 3, 2010), EPA amended the definition of
“regulated NSR pollutant” by adding a new definition of “subject to
regulation” so that the threshold for GHGs is a potential to emit 100,000
tpy CO2e. An emission increase of 75,000 tpy CO2e is a “major
modification.” The Tailoring Rule also includes the first two steps of a
phased schedule for applying PSD to GHG sources.
Under a March 2011 proposed rule, the CO2 emissions from combustion
or decomposition of nonfossilized and biodegradable organic material
would not be included in GHG emissions for at least 3 years.
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6. CO2 Equivalent
C02 1
Methane 21
Nitrous Oxide 310
HFCs 12 to 11,700
Sulfur Hexafluoride 23,900
Perfluorcarbons 11 to 17,000
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7. What Difference Does It Make?
Tons Per Year Regulatory Program Approximate Comparison
CO2 Btu/hr Natural Gas
Burning Capacity
100 ROP 190,000 Residential furnace 150,000
PSD for Some Industries Btu and residential water
heater 60,000 Btu
250 PSD for All Other Industries 475,000 Duplex with two 100,000
Btu furnace, two 40,000 Btu
water heaters and two
100,000 Btu cooktops
75,000 Tailoring Rule Threshold for 140 Million
Modification of Existing Major
Source
100,000 Tailoring Rule Threshold for 190 Million
Major Source (PSD & ROP)
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8. III. Everything Is In Litigation
 Endangerment Finding – 17 petitions consolidated as Coalition for
Responsible Regulation v. EPA (09-1132)
 Mobile Source GHG Rule – 17 petitions consolidated as Coalition for
Responsible Regulation v. EPA (10-1092)
 Johnson Memo/Determination that Mobile Source GHG Rule makes
GHG’s “subject to regulation” under the CAA – 18 petitions consolidated
as Coalition for Responsible Regulation v. EPA (10-1073)
 Tailoring Rule – 26 petitions consolidated as Southeastern Legal
Foundation v. EPA (10-1131)
 EPA’s refusal to reconsider the foregoing regulations – 4 petitions
consolidated as Coalition for Responsible Regulation v. EPA (10-1234)
 All litigation is in the early stages and subject to further appeals. It is
impossible to predict whether and how courts might intervene.
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9. IV. Other Regulatory Actions On The Horizon?
A. NAAQS
Under 42 USC 7408(a)(1), EPA:
shall from time to time . . . revis[e] a list which includes each air pollutant—
(A) emissions of which, in his judgment, cause or contribute to air pollution
which may reasonably be anticipated to endanger public health or
welfare;
(B) the presence of which in the ambient air results from numerous or diverse
mobile or stationary sources; and
(C) for which air quality criteria had not been issued before December 31,
1970 but for which he plans to issue air quality criteria under this section.
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10. A. GHGs are emitted from “numerous or diverse stationary sources” and
EPA has made a formal finding that GHGs in the atmosphere present a
current and ongoing threat to human health and welfare and that GHG
emissions from mobile sources cause or contribute to these impacts.
Based on the statutory criteria above and in 42 USC 7408(b), the
endangerment and cause or contribute findings under Section 202 may
lead to a NAAQS for GHGs.
B. In December 2009, two environmental organizations (The Center for
Biological Diversity and 350.org) petitioned EPA to set a NAAQS for
CO2 at 350 ppm. Current ambient levels are about 385 ppm. If EPA were
to adopt a NAAQS of 350 ppm, eventually the entire United States would
presumably be designated nonattainment for CO2.
C. Nonattainment designation requires SIP revisions (with perhaps onerous
and costly emission limitations on GHG emission sources) and new and
modified major sources must obtain offsets and install Lowest Achievable
Emissions Rate (“LAER”) technology.
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11. 1) CAA Section 111 – NSPS
1. The Statute
42 USC 7411(b)(1)(A):
[The EPA Administrator] shall include a category of sources in such list
if in [the Administrator’s] judgment it causes, or contributes
significantly to, air pollution which may reasonably be anticipated to
endanger public health or welfare.
Requires a finding that a “category or sources . . . causes or contributes
significantly” to air pollution that endangers public health or welfare.
“Contributes significantly” is a higher standard than “contributes” under
Section 202.
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12. On November 8, 2010, Sierra Club filed a lawsuit challenging
EPA’s September 9, 2010 Portland Cement NSPS on the
grounds that the new rule did not include standards for
GHGs.
EPA has announced it intends to propose NSPS for electricity
generators and petroleum refiners in 2011.
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13. 2. NSPS Regulations
NSPS applies to new sources. Can also apply to existing sources if
there is no NAAQS.
Applies on a source category (industry) basis. EPA could regulate
some source categories sooner and leave other categories for later
regulation (or never).
EPA has greater flexibility for determining the size of emitters that
should be regulated under NSPS compared to PSD program (250 tpy
threshold).
Although a limited emissions trading program exists in the municipal
waste combustor NSPS, the scope of EPA’s authority to employ
emission trading under Section 111 is uncertain.
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14. i) Other Regulations Affecting Coal
A. On June 21, 2010, EPA published a proposed rule
(75 Fed. Reg. 33128) to regulate the disposal of
coal combustion residuals (CCR) generated from
the combustion of coal at electric utilities and
independent power producers.
B. On April 20, 2011, EPA published a proposed rule
(76 Fed. Reg. 22174) under Section 316(b) of the
Clean Water Act amending regulations for cooling
water intake structures in order to reduce injury to
fish and other aquatic life. Final action by EPA is
expected no later than July 27, 2012.
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15. 1. On May 3, 2011, EPA published a proposed rule
(76 Fed. Reg. 24976) to reduce emissions of toxic
air pollutants from new and existing coal- and oil-
fired electric utility steam generating units. The
proposed rule sets emission standards for mercury,
PM and hydrogen chloride for coal-fired units; it
also sets alternative standards for SO2 and non-
mercury metal air toxics for certain power plants.
The proposal also revises NSPS for PM, SO2 and
NOx for those units.
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16. (i) Finally, on August 8, 2011, EPA published final
rules known as the “Cross-State Air Pollution
Rule” (the Transport Rule) (76 Fed. Reg. 48208)
that replaces the former Clean Air Interstate Rule
(CAIR). The new rule requires 27 states in the
eastern U.S. (including Michigan) to reduce
power plant emissions that cross state lines,
contributing to ground-level ozone and fine
particulate pollution in other states.
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17. VI. Prospects For Legislation
 There were several attempts during 2010 to
pass measures in the Senate to strip EPA of
some or all of its authority to regulate GHGs
under the CAA or to delay implementation.
None were successful.
 President Obama has said he would veto any
such measure.
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18. VI. Prospects For Legislation
 However, one bill that passed the House in April that
was sent to the Senate was introduced by Rep. Fred
Upton from Michigan as the Energy Tax Prevention
Act of 2011 (H.R. 910). This bill seeks to amend the
CAA by prohibiting the EPA from promulgating any
regulation with respect to GHG to address climate
change, with certain exceptions. The bill also repeals a
number of rules relating to GHG emissions, and voids
any requirements for states to regulate GHG under
their PSD and Title V operating permit programs.
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