Washington

Greenhouse Gas Reduction

On June 1, 2016, Washington joined Oregon, California, six U.S. cities, and the Canadian province of British Columbia in signing the Pacific North America Climate Leadership Agreement. The agreement, which includes no funding commitments and has no binding legal effect, will support collaboration across jurisdictions to lower the greenhouse gas (GHG) emissions associated with the built environment, the transportation sector, the energy sector, and the food waste stream.

In January 2016, the Department of Ecology (Ecology) proposed a carbon emissions regulation called the Clean Air Rule (CAR), only to withdraw it less than two months later. Ecology returned to the drawing board, releasing a new proposed CAR on June 1 (proposed chapter 173-442 Washington Administrative Code (WAC)). The new rule incorporates many concepts from the earlier version. Modifications are supposed to address the concerns raised in public comments. The newly proposed CAR is accompanied by proposed amendments to the state’s GHG reporting rule at chapter 173-441 WAC.

The newly proposed CAR applies to petroleum product importers and producers, to natural gas distributors, and to stationary sources listed in the source categories in WAC 173-441-120. Starting in 2017, covered parties with baseline GHG emissions of 100,000 or more metric tons (MT) carbon dioxide equivalent(CO2 e) emissions per year must meet emission reduction requirements that reduce annual emissions by about 5 percent of baseline emissions every three-year compliance period. In later years, covered parties with lower baselines must also reduce emissions.

Covered parties can meet compliance obligations by reducing their own emissions or by using a form of credits called emission reduction units (ERUs). ERUs are generated when a covered party reduces emissions by more than its reduction requirement, by qualifying projects or programs that reduce emissions in Washington, and by obtaining allowances from certain external GHG regulatory programs. ERUs can be banked for future use and exchanged among covered parties. Third-party verifiers must certify emission reduction projects and programs that generate ERUs, as well as covered parties’ compliance with emission reduction requirements.

Key changes in the newly proposed CAR include:

• Energy-intensive and trade-exposed (EITE) covered parties will have output-based compliance obligations instead of mass-based requirements, which are described above. Depending on whether EITE covered parties are more or less efficient than industry norms, compliance obligations may be set at levels higher or lower than requirements for non-EITE covered parties. EITE covered parties do not enter the program until 2020 with the first compliance obligations due in 2023.
• Ecology will develop a registry to track ERUs.
• The number of allowances that a covered party can obtain from external GHG regulatory programs will decline over time.
• Ecology will establish an ERU reserve consisting of ERUs from prior emission reductions to ensure that an overall emissions cap is maintained. Retiring ERUs from the reserve would allow expanded GHG emissions from new and modified sources. ERUs may also be assigned (or withdrawn) from the reserve for curtailed stationary sources that restart operations and for an environmental justice committee that would distribute ERUs from the reserve to covered parties that implement emission reduction projects consistent with criteria developed by the committee.
• Covered parties may leave the program after three years of reporting less than 50,000 MT CO2 e; previously, the threshold was 70,000 MT CO2 e. Covered parties with between 50,000 and 70,000 MT CO2 e may not have additional emission reduction requirements.

On September 15, 2016, after this update was submitted for publication, Ecology issued the final CAR. Details on the final rule will be included in the next issue.

.Ecology has been under a judicial order to complete its CAR rulemaking by the end of this year. On May 16, the King County Superior Court ruled in Foster v. Wash. Dep’t of Ecology that Ecology has a “duty to engage in rulemaking to reduce greenhouse gas emissions in Washington.” Foster, No. 14-2-225295-1, slip op. at 3 (King Co. Super. Ct. May 16, 2016). “Ecology . . . shall issue the rule by the end of calendar year 2016.” Id. The ruling followed a motion filed by the plaintiffs after Ecology withdrew the first proposed CAR. On June 15, Ecology filed a notice of appeal.

Washington voters will be presented with a carbon tax initiative on their ballots this fall. If Ballot Initiative No. 732 passes, the measure would impose a tax of $15/MT CO2 as of July 1, 2017, increasing to $25/MT CO2 on July 1, 2018, and by 3.5 percent plus inflation each subsequent year. The tax would apply to fossil fuels sold or used in the state and to electricity consumed within the state, including imported electricity. In an attempt to ensure that state tax revenue remains neutral and to offset impacts to certain interest groups, the measure would also reduce certain business and occupations taxes, reduce the retail sales tax, and expand the working families’ tax exemption. There are competing claims about how changes to the state tax code would affect revenue. The state Office of Fiscal Management estimated that the measure would create a shortfall of about $900 million through 2021, a finding that ballot initiative backers dispute.

Prescribed Burning Legislation

On March 31, 2016, Governor Jay Inslee signed a bill into law that created a prescribed fire pilot project administered by the Department of Natural Resources (DNR). Engrossed Substitute House Bill 2928. The law requires fires managed under this program to comply with air quality standards in chapter 70.94 Revised Code of Washington and to be of limited scale to avoid required revisions to the state implementation plan (SIP). In 2018, DNR will submit a report to the legislature that includes an evaluation of the “quantity and severity of air quality exceedances by pollutant type,” if any, as a result of the fires authorized under the program.

Amendments to Air Operating Permit (AOP) Rule

On February 3, Ecology amended its AOP Rule, chapter 173-401 WAC, applicable to facilities that require Clean Air Act (CAA) title V permits. Revisions address the applicability of the AOP Rule to nonmajor sources, the determination of fees for AOP sources, audits of the AOP Program, and consistency with federal regulations.

EPA Regulatory Approvals

On May 20, 2016, due to “a shift in the Air Quality Program’s priorities and limited staff resources,” Ecology announced that it was halting its rulemaking to amend its General Regulations for Air Pollution Sources, chapter 173-400 WAC, to comply with EPA’s SIP call deeming that affirmative defenses for excess emissions during start-up, shutdown, and malfunction (SSM) periods did not meet CAA requirements. Ecology stated that it “will not submit a corrective SSM plan to EPA by the November 22, 2016 deadline.”

On April 12, 2016, EPA approved the second 10- year limited maintenance plan developed by the Spokane Regional Clean Air Agency (SRCAA) for the coarse particulate matter (PM10) NAAQS in the Spokane area. 81 Fed. Reg. 21,470, 21,471 (Apr. 12, 2016). The Spokane area was re-designated as an attainment area in 2005. 81 Fed. Reg. 9793, 9794 (Feb. 26, 2016).

On May 27, 2016, EPA proposed to approve the second 10-year limited maintenance plan developed by SRCAA for the carbon monoxide (CO) NAAQS in the Spokane carbon monoxide maintenance area. 81 Fed. Reg. 33,632 (May 27, 2016). With the exception of a canceled air permit for a former aluminum reduction plant, SRCAA would rely on existing control measures to assure maintenance of the NAAQS. Id. at 33,640. The state has also requested approval of an “alternative monitoring strategy,” given the low and declining levels of ambient CO. Id. The strategy would focus on on-road mobile, nonroad mobile, and residential wood combustion sources, which make up 97 percent of CO emissions in the area. Id.

On February 16, 2016, EPA approved a best available retrofit technology (BART) alternative measure submitted by the state for nitrogen emissions from the BP Cherry Point Refinery. 81 Fed. Reg. 7710 (Feb. 16, 2016).

Enforcement Actions

Ecology stated on May 26, 2016, that it will issue orders to the Intalco aluminum smelter in Ferndale and the Alcoa Inc. aluminum smelter in Wenatchee that require the facilities to perform additional monitoring for sulfur dioxide (SO2 ) air pollution to determine whether surrounding areas meet the 2010 1-hour SO2 NAAQS. The orders, which have yet to be finalized, are not publicly available. The orders result from EPA’s SO2 Data Requirements Rule, which mandates that states model or monitor air quality around sources that emit at least 2000 tons per year of SO2 or adopt federally enforceable emission limits to ensure that the sources will emit less than 2000 tons of SO2 annually. 80 Fed. Reg. 51,052, 51,054 (Aug. 21, 2015).

Oregon

EPA Regulatory Approvals

On June 6, 2016, EPA approved Oregon’s December 12, 2012, SIP submission regarding the Klamath Falls nonattainment plan for the 2006 24- hour particulate matter (PM2.5) NAAQS. 81 Fed. Reg. 36,176 (June 6, 2016). EPA concluded that based upon available ambient air monitoring data, the area has shown attainment with the NAAQS. The attainment plan’s strategy for controlling direct and precursor PM2.5 emissions relied primarily on an episodic woodstove curtailment program and a program to change out uncertified woodstoves.

In the same action, EPA also approved Oregon’s exceptional events requests related to the Bagley Complex and Douglas Complex wildfires in 2012 and 2013. 81 Fed. Reg. 36,176, 36,177. Under the Exceptional Events Rule, EPA may exclude data from use in determinations of NAAQS exceedances and violations if a state demonstrates that an “exceptional event” caused the exceedances. See 40 C.F.R. 50.14. In 2012 and 2013, wildfires burned over 1.2 million acres and 350,786 acres in Oregon, respectively. The exclusion of data influenced by the 2012 and 2013 wildfires was critical to EPA’s conclusion that the area has shown attainment with the 2006 24-hour PM2.5 NAAQS. See 81 Fed. Reg. 21,814, 21,829 (proposed Apr. 13, 2016).

Industrial Air Toxics Regulation

A recent analysis of moss data collected by the U.S. Forest Service (USFS) Pacific Northwest Research Station in 2013 revealed cadmium hot spots around two art glass manufacturing facilities located in residential neighborhoods in Portland. In 2015, in response to the USFS study, the Oregon Department of Environmental Quality (DEQ) placed an instrumental monitor near one of the glass manufacturing facilities. DEQ’s monitoring information showed monthly average atmospheric cadmium concentrations 49 times higher than Oregon’s benchmark of 0.6 ng/m3. After both glass companies suspended cadmium use, atmospheric levels of cadmium in Portland declined precipitously.

Since the release of the findings from the 2013 moss study, air quality and environmental health issues regarding the discharge of toxic pollutants from heavy metals have taken center stage in Oregon. See, e.g., Kirk Johnson, Toxic Moss in Portland, Ore., Shakes City’s Green Ideals, N.Y. TIMES, Mar. 2, 2016, at A9. In April 2016, DEQ announced plans to conduct inspections of hundreds of industrial facilities that emit chromium, arsenic, cadmium, cobalt, lead, manganese, nickel, and selenium. It is among the first steps in Governor Kate Brown’s new “Cleaner Air Oregon” initiative, which aims to regulate pollution from a public health standpoint.

Under the Cleaner Air Oregon initiative, DEQ will work in conjunction with the Oregon Health Authority (OHA) to overhaul Oregon’s industrial air toxics regulations in order to align them with human health standards. Such work will involve the development of new regulations that will impose limits on air emissions for industrial sources based on risks to human health. Establishing new emissions limitations will require OHA and DEQ to define exposure levels that are considered protective of human health and to assess facility emissions based on human health safety standards. The new regulations are expected to apply to a comprehensive range of industrial facilities across the state. Information regarding the state’s Cleaner Air Oregon program can be found here.

On June 15, 2016, DEQ issued proposed rule amendments to chapter 340 of the Oregon Administrative Rules, division number 244, to control metals emissions from colored art glass manufacturing (CAGM) facilities in the Portland area. Based on sampling, DEQ concluded that uncontrolled furnaces used in colored art glass manufacturing are more likely than not to emit potentially unsafe levels of certain metals, including arsenic, cadmium, hexavalent chromium, and nickel. The proposed rules would require smaller CAGM facilities to apply for and maintain air contaminant discharge permits, which these businesses would not otherwise be required to have. Larger CAGM facilities subject to the substantive NESHAP requirements under 40 C.F.R. part 63 subpart SSSSSS, for air pollutants for glass manufacturing area sources, will be required to obtain title V operating permits.

Greenhouse Gas Reduction

On March 11, 2016, Governor Brown signed into law an unprecedented bill to phase out Oregon’s reliance on coal-fired electric power by 2035. The legislation is designed to support the state’s greenhouse gas reduction goals, which call for reducing carbon emissions 75 percent below 1990 levels by 2050. The bill is known as the Clean Electricity and Coal Transition Act—or Senate Bill (SB) 1547. It requires the state’s investor-owned electric utilities to provide their Oregon retail customers with electricity that is coal free by 2030 and to completely phase out reliance on coal-fired power by 2035. SB 1547 also increases the state’s renewable portfolio standard (RPS) to 50 percent in 2040. This increase is staged at 27 percent in 2025, 35 percent in 2030, 45 percent in 2035, and 50 percent in 2040. There is a safety valve that allows the Oregon Public Utility Commission to temporarily suspend the requirement for a utility if meeting the RPS would conflict with grid reliability. SB 1547 received strong support from the state’s investor-owned electric utilities, along with national and regional environmental advocacy groups.

Idaho

EPA Regulatory Approvals

On May 5, 2016, EPA approved Idaho’s May 21, 2015, SIP submission regarding the CAA interstate transport requirements. 81 Fed. Reg. 27,017 (May 5, 2016). EPA concluded that sources in Idaho do not significantly contribute to nonattainment or interfere with maintenance of the 2010 nitrogen dioxide (NO2) NAAQS in neighboring states. Id. Idaho’s SIP submission also addressed interstate transport requirements for the 2010 SO2 NAAQS, but EPA intends to address that portion of the submission in a separate future action. See 81 Fed. Reg. 7489, 7490 (proposed Feb. 12, 2016).

On June 9, 2016, EPA proposed to approve various SIP revisions also included in Idaho’s May 21, 2015, submission. 81 Fed. Reg. 37,170 (proposed June 9, 2016). Among other things, EPA’s approval would authorize Idaho to establish annual facility-wide emissions caps for minor sources. Id. at 37,171. These caps would be folded into permits to construct or Tier II operating permits. Id. The caps are intended to provide operational flexibility for facilities such as “semiconductor manufacturing facilities [that] make many equipment and process changes as they develop new products and technologies.” Id. Other Idaho SIP revisions that EPA proposed to approve include modifications to permitting for nonmetallic mineral process plants such as rock crushers and asphalt plants, and new flexibility for stationary sources that combust sulfur-containing fuels. Id. at 31,171–72.

Regional Haze

On June 2, 2016, a U.S. district judge in California approved a consent decree under which EPA agreed to take final action on a number of state SIP submissions related to fine particulate matter and regional haze. N.D. Cal. Dkt. No. 4:15-cv4663-SBA. The consent decree resolves a lawsuit brought by environmental organizations that alleged EPA Administrator Gina McCarthy had failed to comply with a non-discretionary duty under the CAA to approve or disapprove 2012 and 2013 SIP submissions for nonattainment areas under the 2006 PM2.5 NAAQS. Under the terms of the consent decree, EPA will take final action by December 8, 2016, on Idaho’s December 2012 SIP submission for the Cache Valley PM2.5 nonattainment area. EPA must also take final action in 2016 on plans for the PM2.5 nonattainment areas in Klamath Falls and Oakridge, Oregon.

Alaska

EPA Regulatory Approvals

On May 19, 2016, EPA approved Alaska’s May 12, 2015, annual SIP revision. 81 Fed. Reg. 31,511 (May 19, 2016). The annual revision included a number of minor updates designed to ensure the consistency of Alaska’s SIP with federal regulations. Id. A description of these updates was provided in EPA’s March 4 proposal to approve the SIP revision. See 81 Fed. Reg. 11,497 (Mar. 4, 2016). Fairbanks North Star Borough—Fine Particulates On June 9, 2016, environmental groups filed a federal citizen suit seeking to force EPA to take action on fine particulate matter pollution in Alaska’s Fairbanks North Star Borough (FNSB). W.D. Wash. Dkt. No. 2:16-cv-00857. FNSB suffers from the worst PM2.5 pollution in the country.

The plaintiffs allege that EPA Administrator McCarthy and Region 10 Administrator Dennis McLerran have failed to comply with their nondiscretionary duty to approve or disapprove Alaska’s 2015 FNSB nonattainment SIP submission within one year, as required by the CAA. See 42 U.S.C. 7410(k).

Alaska submitted a request to EPA in November 2015 to bifurcate the FNSB into two separate areas for purposes of nonattainment designation. EPA has yet to act on that request, which is not mentioned in plaintiffs’ June 9 complaint.

Relatedly, on June 2 the Alaska Department of Environmental Conservation (ADEC) announced several proposed rule changes aimed at improving fine particulate pollution in the FNSB. Among other things, the proposed rules would create three separate “air quality control zones” within the FNSB nonattainment area and create a number of new restrictions on the installation, use, and emissions of solid fuel-fired home heating devices.

Bureau of Energy Management—Offshore Air Quality Rule

On April 5, 2016, the federal Bureau of Offshore Energy Management (BOEM) issued proposed new air emissions regulations for oil and gas operations conducted on the Outer Continental Shelf (OCS) in the Gulf of Mexico and areas offshore of Alaska’s North Slope Borough. BOEM regulates air emissions from activities in these OCS areas under the Outer Continental Shelf Lands Act (OCSLA). EPA regulates air emissions at other OCS areas under the CAA. OCS areas offshore of northern Alaska were removed from EPA jurisdiction and added to BOEM jurisdiction only recently, in 2012.

OCSLA requires BOEM to ensure that OCS development is “subject to environmental safeguards.” 43 U.S.C. § 1332(3). According to the proposed rule, BOEM’s existing OCS air quality regulations have not changed significantly in 35 years. Whereas the current rule addresses only CO, SO2, nitrogen oxides (NOx), volatile organic compounds, and “total suspended particulates,” the proposed rule would address and incorporate by reference all of EPA’s primary and secondary NAAQS, precursor pollutants, significant impact levels, and ambient air increments. The proposed rule would also apply to a greater number of vessels whose emissions are attributed to any particular facility, and it would require air emissions impacts to be measured at a point farther off of shore and closer to the point of emissions. BOEM estimates that the new rule would result in combined costs of $302 million over 10 years for industry and the government. On the other hand, BOEM estimates that the proposed rule will provide $217.5 million in NOx reduction benefits by 2024, together with a number of other benefits and co-benefits that the agency did not quantify in monetary terms.

Indian Tribes

On March 11, 2016, EPA finalized an October 2015 agreement to delegate certain administrative authority under the CAA to the Confederated Tribes of the Colville Reservation in Washington State. 81 Fed. Reg. 12,825 (Mar. 11, 2016). Under the delegation, which the Colville tribes requested, the tribes will have authority to administer portions of the Colville federal implementation plan addressing visible emissions limitations, open burning, and excessive buildup of certain air pollutants during periods of stagnant air. The Colville tribes also received authority to investigate complaints and assist EPA in inspections.

©2016. Published in Air Quality Committee Newsletter, Vol. 20, No. 1, November 2016, by the American Bar Association Section of Environment, Energy, and Resources. Reproduced with permission. All rights reserved.