U.S. EPA Actions to Address Climate Change Robert A. Kaplan Regional Counsel, Region 5 Energy and the Environment Conference March 14, 2012 Thanks. Great to be back.

On the Right Track? If you’re going to be the keynote speaker, don’t do it two years in a row, because your audience might remember what you said last year – and hold you to it. When we say we are making incremental progress, you better show some progress. Pick up where I left off last year. I know you all were dying to know if I figured out the French Train website. First, labelling and consumer choice. Last year, I told you about making a reservation on a French Train. How unique and literally foreign the experience was. On an update, did successfully take the TGV. Amazing feeling going hundreds of miles an hour. With a 2 year old, train could not go fast enough. Said that maybe someday, we’d have calculators and labels too. Happy to report, the consumer labeling is happening.

Actual, unretouched photo of a family saving grams of carbon

But there are times when you have to drive. Finally, many of face the vexing decision of whether to buy the 2012 Rolls-Royce Ghost or the manual Ford Focus. Before this year, you had to make that decision unguided, just based on intangibles like look and feel. Now, you can base it on impact on climate change. If you decide on the Focus, you can tell people that you decided because the Focus has half the grams per mile. Just like MPG drove comparisons, some day these measures will drive choices and therefore engineering as well. Tailpipe and Upstream Emissions These estimates include CO2, methane, and nitrous oxide emitted from all steps in the use of a fuel, from production and refining to distribution and final use—vehicle manufacture is excluded. Methane and nitrous oxide emissions are converted into a CO2 equivalent. Tailpipe emissions and upstream emissions—those that occur prior to the fuel being used in the vehicle—are displayed

Combined EPA and NITSA ratings Combined EPA and NITSA ratings. Remember way back when in 2006-07 when EPA argued that was without power to regulate GHGs, and that NHTSA occupied the field. CAA must yield to DOT and CAFÉ standards. This vehicle emits 347 grams of CO2 per mile. EPA/DOT label. Most will just see a sticker. If you’ve read Mass v. EPA, you’ll know that this is a direct result.

1. Vehicle Technology & Fuel 2. Fuel Economy 3. Comparing Fuel Economy to Other Vehicles 4. You Save/Spend More over 5 Years Compared to Average Vehicle 5. Fuel Consumption Rate 6. Estimated Annual Fuel Cost 7. Fuel Economy and Greenhouse Gas Rating 8. CO2 Emissions Information 9. Smog Rating 10. Details in Fine Print 11. QR Code®* 12. fueleconomy.gov 13. Driving Range 14. Charge Time

Recently served on a cross agency game changer workgroup Recently served on a cross agency game changer workgroup. One game change – we only met three times. Get it done. One suggestion was consumer apps for GHGs. Plug in your zip code, heating source other metrics, and out comes carbon usage. Eventually, there might be an app for that! Shows that GHG is becoming more mainstream. 2006 NYT review of “An inconvenient Truth.” – I can’t think of another movie in which the display of a graph elicited gasps of horror, but when the red lines showing the increasing rates of carbon-dioxide emission and to corresponding rates of carbon-dioxide emissions come on screen, the effect is jolting and chilling. Like the reviewer, to many these were fresh, new concepts. For many reasons, car stickers and calculators would have been unthinkable back then. Evolution of environmental problems: shock, perhaps outrage, to politics, and action. Fits and starts, and not always an even course, but that’s the usual paradigm. I’m sure we’re still in the politics/action interface. Not acid rain.

The Administrator’s Principles to Guide EPA Actions Common Sense Cost-Effectiveness Clarity, Achievability and Flexibility Transparency Focus on the largest emitters Where did GHG discussion go? I was asked to give a presentation entitled, “whatever happened to GHG regs” Is there still interest in it? And is just because 2012 is an election year that it’s not much in the news. For so many reasons, including the fact that I still have a mortgage, I titled my presentation differently. And actually, the answer is not that it’s 2012. The answer is that we’ve shifted from talking to doing. So prevalent in the news, and then perception is that it disappeared. Transition from talking to doing. When an agency starts doing, what happens next? That’s right. Lawsuits and reg challenges. Here’s an overview of guiding principles, and how EPA translated that into action. In order to drop the “you are here pin” we have to get oriented a bit.

GHG Endangerment Finding 1999 Petition April 2, 2007 ruling of the Supreme Court. Note the day. Colleague found me in the hallway, late April fool. Same day as Duke Energy, my case in district court. Dec 2007 Draft Endangerment finding. July 2008 ANPRM JUNE 23, 2009 380,000 comments received. Sept. 2009 – Passenger Car proposal. Dec 7, 2009 Final Endangerment And Cause and Contribute finding. A date that will live in climate change history.

U.S. Supreme Court Decision Clean Air Act Process for Stationary Sources GHG Endangerment Finding First GHG Standards for Passenger Vehicles Compeled to review the science, making finding if appropriate. Compeled to find causation; if we did then had to regulate cars. If we regulated cars, GHGS become a pollutant regulated under the Act. If you got this, you’re way ahead of nearly everyone.

By 2010 U.S. EPA had: Finalized GHG standards for passenger vehicles Proposed GHG standards for medium and heavy truck tailpipes Issued GHG permitting requirements for smokestacks Started collecting GHG data under the Mandatory GHG Reporting Program Increased use of renewable fuels in motor vehicles Launched Global Alliance for Clean Cookstoves with UN Foundation and other partners No challenges by vehicle manufacturers.

By 2011 U.S. EPA has: Collected first round of GHG emissions data from large stationary sources Issued first GHG standards for medium and heavy duty trucks Issued 17 GHG permits for stationary sources Proposed second GHG standards for 2017-2025 passenger vehicles Begun work on first GHG standards for power plants and petroleum refineries

First GHG Standards for Passenger Vehicles Issued April 2010 by EPA and DOT Result of cooperation between automakers, federal government and states Applies to model year 2012-2016 cars and light trucks Increases fuel economy by approximately five percent every year Sets an average emissions level of 250 grams of CO2 per mile in model year 2016—equivalent to 35.5 mpg Reduces greenhouse gas emissions by nearly 950 million metric tons Conserves 1.8 billion barrels of oil Saves about $3,000 per vehicle Some think that cars are a way to get to stationary sources. Not true. It’s the opposite. Wanted to regulate cars, and that led to necessary actions elsewhere. Insert slides No. 2 and Slide No. 3

GHG Standards for 2017-2025 Passenger Vehicles Proposed in November 2011 Applies to passenger cars, light-duty trucks, and medium duty passenger vehicles (including all SUVs) Saves approximately 4 billion barrels of oil Reduces GHG emissions by 2 billion metric tons Anticipated $5,200 to $6,600 in fuel savings per vehicle

First GHG Standards for Heavy- and Medium-Duty Trucks Finalized August 2011 Applies to model year 2014-2018 Reduces oil consumption by a project 530 million barrels Reduces GHGs by approximately 270 million metric tons Saves American businesses that own and operate these vehicles approximate $50 billion in fuel costs Reduces other pollutants such as particle pollution

U.S. OIL CONSUMPTION BY SECTOR, 2009

LIGHT-DUTY VEHICLE FUEL ECONOMY STANDARDS, 1978-2025

Educating U.S. Consumers New Fuel Economy label on some 2012 vehicles and all 2013 vehicles Develop new labels for advanced technology vehicles (PHEVS and EVs) and update current label Provide an estimate of how much fuel or electricity it takes to drive 100 miles Give consumers new ways to compare energy use and cost Easy to read rating on how a model compares to all others for smog emissions and GHGs

Greenhouse Gases from Stationary Sources EPA determination of health and public welfare risks related to GHG emissions from vehicles leads to implementation of Clean Air Act for stationary sources Beginning January 2, 2011 Clean Air Act recognizes that there will be continual improvement in environmental control technology, the need for national consistency, and provisions for case-by-case determinations.

Prevention of Significant Deterioration (PSD): Permitting Steps under the Tailoring Rule PSD is aimed at reducing the amount of pollution added to the atmosphere and applies only to those facilities that are newly built or substantially modified Step 1 January 2, 2011 to June 30, 2011: Sources already subject to PSD “anyway” New sources: 75,000 tpy CO2e Modification: 75,000 tpy Step 2 July 1, 2011 to June 30, 2013: Continue Step 1 sources plus other large GHG emissions sources New source: 100,000 tpy Modification: 75,000 tpy Step 3 Rulemaking proposed February 24, 2012, Final July 2012 EPA has proposed to maintain current thresholds and streamline permitting processes Stepwise. Phasing in. Why? Because it’s not possible otherwise. 22

D.C. Circuit – Climate Change Litigation On Feb 28th and 29th, the U.S. Court of Appeals- D.C. Circuit heard oral arguments in legal challenges to EPA's Endangerment Finding and GHG regulations issued under the Clean Air Act for passenger vehicles and CAA permitting for stationary sources. Endangerment (1) GHGS in the atmosphere are reasonably anticipated to endanger public health and welfare and (2) emissions from motor vehicles contribute to this pollution Tailpipe – was EPA obliged to account for impacts on stationary sources due to the PSD triggering effect on stationary sources. Not the automobile industry that was challenging the rules. In fact, wanted rule sooner, so no patchwork. -- cost to stationary sources should have been built in -- didn’t do enough to ameliorate the endangerment. Timing -- EPA interpreted PSD applicability as being triggered by any air pollutant, not just a NAAQS pollutant. What if a group was too small way back in the 1980s to be subject to NSR, but now is included. Springing standing. Rule against perpetuities. When did PSD claims ripen. Tailoring – Texas and 8 other states. EPA must enforce 100/250 (100,000/75,000 tons is tailored rule). Standing is key. How are you harmed.

A tip for oral advocates. Use a mapping sentence A tip for oral advocates. Use a mapping sentence. Gives you some idea of the complexity and number of issues before the court.

Wasn’t buying the idea that Congress will surely act.

But we don’t have to speculate on the outcome But we don’t have to speculate on the outcome. Wall Street Journal already called it for EPA, with 0 of 9 precints reporting. Dicey to call outcomes from questioning. Every lawyer in this room has story to tell about calling a decision wrong based on the questioning. Duke case in the supreme court, which was a 9-0 victory felt like a Cub’s postseason game.

GHG Emissions from the Industrial Sector Source: Regulatory Impact Analysis for the Mandatory Reporting of Greenhouse Gas Emissions Final Rule (September 2009)

Greenhouse Gas Monitoring and Reporting Rule Directed by Congress in 2008 Appropriations Act Will provide a better understanding of where U.S. GHG emissions are coming from Applies to facilities emitting large quantities of GHGs Covers an estimated 85 percent of total U.S. GHG emissions Data collection began in January 2010 Received data from more than 7,000 sources in September 2011 Public release of data in January 2012

2010 GHG Data- Quick Summary Reports from over 6,700 entities Power plants are largest stationary source of direct emissions- 2,324 MMTCe Refineries are second at 183 MMTCe CO2 emissions-95%; CH4 emissions- 4%; N2O and F-gases- 1% 100 facilities reported over 7 MMTCe including 96 power plants, 2 iron and steel mills, 2 refineries 2010 data accounts for roughly 80 percent of total U.S. emissions. This percentage reflects both upstream suppliers and direct emitters. Among the data not covered are GHG emissions from smaller sources, and from agricultural and land-use activities.

Ongoing Work to Address Climate Change U.S. EPA will continue to: Promote common-sense strategies that encourage investment in energy efficiency and updated technologies Set clear, achievable standards while maintaining maximum flexibility on how to get there Seek input from citizens, industry, affected entities, other stakeholders, as well as our partners Set the standards that make the most sense – focusing on getting the most meaningful results through the most cost-effective measures

4/1/2017 3:38 AM DRAFT // Chemical Industry Council of Illinois - March 1, 2012

Tangled up in green tape The EPA, Congress, activists, the courts and power companies themselves all share the blame for the chaotic nature of environmental regulation in America Feb 18th 2012 | WASHINGTON, DC | from the print edition PITY the engineers responsible for keeping America’s coal-fired power plants up to standard. Late last year a court halted the adoption of new regulations on interstate air pollution that would have affected lots of them—just two days before they were due to go into force. The suspended regulations, in turn, were themselves a replacement for an earlier set of rules which had been thrown out by the courts in 2008. The older lot have now been temporarily reinstated, while the court hears various challenges to the new ones. What the outcome will be is anyone’s guess. So, we’ve only spoken about GHGs. Only part of the issues/uncertainty facing America’s energy industry. GHGs, on an incremental path. Taking the first steps. What about other crucial matters. Recent article from the economist. “Tangled up in green tape.” Intended to whet your appetite. But since I’m at the podium and the mike is on, I’ll say a few words. We are doing what needs to be done. Focusing on the largest and most important sources of air pollution. One example is mercury -- Mercury Air Toxics Rule. Intense public interest. Listening sessions going long into the night. Buses of people. Coal plants are closing, especially the smaller SOURCE: http://www.economist.com/node/21547804

In the United States, power plants emit… Why are we focusing on powerplants with the many regs. If we are to make further progress, we have to focus on power plants. Many of the plants that policymakers thought would retire years ago have not. They have had their lives extended. DRAFT // Wisconsin Bar Assn. - Jan. 26, 2012

Sources of Total Mercury 4/1/2017 3:38:56 AM Sources of Total Mercury Draw a map around R5 and you see our challenge. I could also show you a map showing pollutants downwind, and the challenge is clear. DRAFT // Nelson Institute - Feb. 7, 2012

Fish Consumption Advisories for Mercury are Everywhere 4/1/2017 3:38:56 AM Fish Consumption Advisories for Mercury are Everywhere So, EPA acted. That’s the subject of panel no. 1 I’ll only quote from a Wall Street Journal letter to editorial. Written in response to Nov. 2010 WSJ editorial called “The EPA Permitorium.” DRAFT // Nelson Institute - Feb. 7, 2012

So, a number of coal fired power plants are closing. Wall Street Journal Article from Nov. 2010. “The hyperactive Ms. Jackson is also stretching legal limits to satisfy the White House's climate-change goals, now that Senate Democrats have killed cap and trade. The EPA's "endangerment finding" on carbon is most controversial, but other parts of her regulatory ambush may be more destructive by forcing mass retirements of the coal plants that provide half of America's electricity.” That was about the nicest thing the WSJ said in the article. Many blame EPA. There are other forces at work as well. This multivariable calculus. From CNN March 9, 2012. Natural gas prices are very low. Warm winter. And hydrofracking, which comes with it’s own set of environmental issues.

“For over a decade, companies have recognized that the industry would need to install controls to comply with the act’s air toxicity requirements, and the technology exists to cost effectively control such emissions, including mercury and acid gases.… Contrary to the claims that the EPA’s agenda will have negative economic consequences, our companies’ experience complying with air quality regulations demonstrates that regulations can yield important economic benefits, including job creation, while maintaining reliability.” Peter Darbee, chairman,president and CEO,PG&E Corp.; Jack Fusco, president and CEO, Calpine Corp.; Lewis Hay, chairman and CEO, NextEra Energy, Inc.; Ralph Izzo, chairman, president and CEO, Public Service Enterprise Group, Inc.; Thomas King, president, National Grid USA,; John Rowe, chairman and CEO, Exelon Corp.; Mayo Shattuck, chairman, president and CEO, Constellation Energy Group; Larry Weis, general manager, Austin Energy CEO of 8 large power companies. DRAFT // Wisconsin Bar Assn. - Jan. 26, 2012

4/1/2017 3:38 AM “Contrary to claims that the EPA’s agenda will have negative economic consequences, our companies’ experience complying with air quality regulations demonstrates that regulations can yield important economic benefits, including job creation, while maintaining reliability.” You can do both. In our view, it’s not a question of the economy versus the environment. That’s our challenge. The symposia are very valuable and a posing in the right questions. I agree with power company executives quoted above, even if the complex interplay and changing landscape make for difficult planning issues in practice. Much more fun to study as a law professor than as one who needs to apply these rules and make tough choices on a daily basis. I have never seen a more exciting and challenging time in my decades of environmental practice. We are certainly making progress. DRAFT // Chemical Industry Council of Illinois - March 1, 2012

THANK YOU! Robert Kaplan EPA Region 5 Regional Counsel Kaplan.robert@epa.gov 312-886-1499 Close as I did last year with a photo from Glacier National Park, and Sarah. I think we all hope we are taking the first steps toward ensuring that Sarah’s children, and generations to follow have a cleaner environment