NEW SOURCE REVIEW REFORM - On December 31, 2002, the United States Environmental Protection Agency (EPA) promulgated final regulations, effective March 3, 2003, which were characterized as “New Source Review Reform.”  The regulations affect the process of determining whether a facility making a change in its operations or modifying an existing emissions unit would involve or avoid application of “Prevention of Significant Deterioration” (PSD) permitting.  The changes were made to Part 51 and Part 52 of Title 40 of the Code of Federal Regulations.  40 CFR Part 51 addresses requirements for state implementation plans (SIPs) while 40 CFR section 52.21 is EPA’s PSD regulation for areas and circumstances not covered by SIPs.

In April 2005, DEP published Notices of Rule Development thereby initiating rulemaking on these new EPA regulations.  DEP held two rule workshops on May 26 and August 2, 2005.  On September 30, 2005, DEP published Notices of Rulemaking for four rule chapters affecting multiple rules.  An adoption hearing held October 28, 2005 resulted in several changes.  Notices of Change were published November 18, 2005.

During the course of the rulemaking, litigation was proceeding in the United States Court of Appeals for the District of Columbia Circuit, NY et al. v. EPA et al., No. 02-1387.  The case was decided June 24, 2005 and upheld portions of the EPA December 2003 rulemaking, vacated other portions and remanded still other portions back to EPA.  Since DEP was under a January 6, 2006 deadline for completing its rulemaking, DEP conferred with EPA Region 4 and decided to adjust its current rulemaking proposals to include only those matters upheld by the court and to revisit the other matters at a later date depending on the results of appeals or rehearings.  The portions of the EPA regulation vacated by the D.C. Circuit and which were omitted from DEP’s rulemaking include a “Clean Unit” exclusion from PSD analysis and all non-Clean Air Act “pollution control project” exclusions from PSD analysis.

The rulemaking project at DEP includes changes to four rule chapters: 62-204, 62-210, 62-212 and 62-296, Florida Administrative Code (FAC).

The rulemaking in chapter 62-204 mainly affects procedures for modeling ambient air impacts expected to occur from proposed projects at facilities.  The rulemaking in chapter 62-296 affects only acrylonitrile producing facilities that previously were subject to PSD analysis.  The main changes affecting the bulk of the regulated community are located at Rules 62-210.200 (definitions), 62-210.370 (reporting and recordkeeping), 62-212.400 (prevention of significant deterioration) and 62-212.720 (plant-wide applicability limits), FAC. Other changes to chapters 62-210 and 62-212 include general permitting requirement changes at rules 62-210.300 and 62-212.300, FAC; public notice requirements for the new plant-wide applicability limits at rule 62-210.350, FAC; and changes to the application form at rule 62-210.900, FAC.

The major impact of the “New Source Review Reform” rulemaking, at both the federal and the state level, is the methodology that is used to determine whether a proposed modification requires PSD analysis.  PSD analysis is required when any addition or modification to a facility increases emissions by a significance level.  The significance levels for the affected pollutants have not changed (although they have been moved from rule 62-212.400 to rule 62-210.200) but the baseline and future emissions measurements have.  Previously the baseline was an average of the emissions from the affected units for the past two years.  Now the baseline is an average of emissions from any 24-month period within the past 10 years (5 years for electric utility units) and the period can differ for each pollutant.  Previously the baseline was compared to the potential emissions of the affected units after the change (except for electric utility units).  Now the baseline is compared to the projected actual emissions of the affected units resulting from the change.  The new methodology is intended to be a more accurate reflection of economic cycles.

In addition, because “projected actual emissions” are used as a measurement, that requires recordkeeping in order for DEP to be able to check the accuracy of the projections.  DEP has created additional recordkeeping and reporting requirements at rule 62-210.370, FAC. The recordkeeping and reporting requirements will affect all facilities that submit Annual Operating Reports (AORs) under pre-existing DEP rules.  DEP expects that reporting will be more consistent as a result of these changes.

Another change that was caused by the “New Source Review Reform” is the “plant-wide applicability limit” (PAL) that is created at rule 62-212.720 and which caused changes to rules 62-210.200 and 62-210.350, FAC.  The PAL is a type of plant-wide emissions cap that includes some increase over baseline emissions but which limits overall emissions at a level that precludes the application of PSD.  The concept is intended to provide operational flexibility at a plant by allowing increased use of specific units or production lines and limiting the operation of others so as to keep overall emissions stable.

According to the current schedule, DEP intends to adopt these rule changes on or slightly before December 29, 2005 with an effective date of January 2006.

DEP’S NEW DEPUTY SECRETARY FOR REGULATORY PROGRAMS AND ENERGY – On November 28, 2005, Mike Sole replaced Allan Bedwell as DEP’s Deputy Secretary for Regulatory Programs and Energy.  As Deputy Secretary, Sole will oversee DEP’s six regulatory district offices and the divisions of Air Resource Management, Waste Management, and Water Resource Management.  Prior to his current position at DEP, Sole served as the agency’s Chief of Staff, where he assisted Secretary Castille with the establishment of priorities and policies for the Department, while coordinating and monitoring their implementation to ensure departmental goals and objectives were accomplished.  Sole has held several other positions with DEP during his 14 years, leading the Bureau of Petroleum Storage Systems, Bureau of Beaches and Wetlands Resources, and the Division of Waste Management. 

ACF UPDATE - The ACF litigation arises out of the Army Corps of Engineers' operation of reservoirs in Georgia (e.g., Lake Lanier) for water supply and recreational uses, which are not the reservoirs' originally authorized purposes, which causes reductions in flows in downstream states.  The litigation has taken place in three federal district courts and two courts of appeals.  In 1990, Alabama, later joined by Florida, sued the Corps, later joined by Georgia, in the Northern District of Alabama.  That litigation was stayed for more than a decade while the three states attempted to reach agreement on how to share the waters of the Apalachicola Chattahoochee Flint river basin.[1]  One condition of the stay was that the Corps would not enter into new water withdrawal contracts within the ACF without the permission of Alabama and Florida.

In 2003, the ACF Compact negotiations failed, largely due to the Corps' secret water supply agreement with Georgia, which was a settlement of litigation brought by hydropower customers against the Corps in D.C. District Court.  Alabama and Florida intervened in the D.C. litigation in order to protest the settlement; Alabama and Florida also obtained a preliminary injunction from the N.D. Alabama court, against the implementation of the settlement because the settlement by the Corps was a violation of the stay order.  The D.C. District Court approved the settlement conditioned on the N.D. Alabama court lifting its injunction, and dismissed the case.  Alabama and Florida appealed these orders to the D.C. Circuit, while Georgia and the Corps appealed the N.D. Alabama court's preliminary injunction to the Eleventh Circuit.   

In the third district court case, Georgia sued the Corps in the Northern District of Georgia, claiming that water supply was an authorized purpose of Lake Lanier.  That case was ultimately abated in favor of the N.D. Alabama case.  Georgia also appealed the abatement order to the Eleventh Circuit.

The ACF litigation is now centered in the Northern District of Alabama where, over vigorous opposition from Georgia and the Corps, Florida and Alabama were allowed, in August 2005, to file amended complaints.  The Corps answered those complaints (as well as complaints by intervenors), but Georgia and the Atlanta Regional Commission have (ARC) moved to dismiss or for more definite statement.  Briefing on those motions is now complete.

In March 2005, the D.C. Circuit reversed the D.C. District Court's order of dismissal, holding that the case was not moot because the court's approval of the parties' settlement was contingent on the dissolution of Judge Bowdre's preliminary injunction, which, in February, Judge Bowdre had refused to do.  On remand, Florida and Alabama moved to vacate the order approving the settlement as an advisory opinion.  However, the case was stayed pending a final decision by the Eleventh Circuit on the validity of Judge Bowdre's injunction.

The Eleventh Circuit affirmed the Northern District of Georgia's abatement of the Georgia case pending resolution of the N.D. Alabama case.  The Eleventh Circuit also rejected appellants' challenges to the jurisdiction of the N.D. Alabama court.  However, the panel concluded that Judge Bowdre's injunction was an improper remedy for the violation of a stay order.  Florida and Alabama moved for rehearing, en banc, on the grounds that the panel decision was inconsistent with recent Eleventh Circuit precedent concerning injunctions under the All Writs Act.  Georgia and ARC also moved for rehearing as to the court's statement that Lake Lanier was not authorized for water supply.  The Eleventh Circuit has denied all motions for rehearing, so it is most likely that the D.C. Circuit case will resume soon.