OG&E 2009 Annual Report Download - page 58

On November 16, 2009, the EPA proposed a new one-hour National Ambient Air Quality Standard (“NAAQS”) for SO2 to
address public health concerns. The EPA is proposing to revise the primary SO2 standard to a level of between 50 and 100 parts per
billion (“PPB”) measured over one-hour. The EPA is under a consent decree to take final action by June 2, 2010. The proposal was
published in the Federal Register on December 8, 2009. Oklahoma is in attainment with the current three-hour and 24-hour SO2
NAAQS; however, a one-hour standard less than 100 PPB may result in certain areas not meeting attainment. If parts of Oklahoma do
become “non-attainment”, reductions in emissions from the Company’s coal-fired boilers could be required, which may result in
significant capital and operating expenditures.
Ozone
On January 7, 2010, the EPA announced a proposal to set the “primary” standard for ozone at a level between 0.06 and 0.07
parts per million measured over eight hours. The EPA is also proposing to set a separate “secondary” standard to protect the
environment, especially plants and trees. The deadline for submitting comments on the proposal is March 22, 2010. The EPA has
also proposed an accelerated schedule for designating areas for the primary ozone standard and is accepting comments on whether to
designate areas for a seasonal secondary standard on an accelerated schedule or a two-year schedule. Following area designations by
the EPA, expected to become effective August 2011, the proposed schedule would require submittal by December 2013 of state
implementation plans that outline how the state will reduce pollution to meet the ambient standard. The state would be required to
meet the primary standard, with deadlines depending on the severity of the problem, between 2014 and 2031. The Company cannot
predict the final outcome of this evaluation or its timing or affect on its operations.
Greenhouse Gases
There also is growing concern nationally and internationally about global climate change and the contribution of emissions of
greenhouse gases including, most significantly, carbon dioxide. This concern has led to increased interest in legislation and regulation
at the Federal level, actions at the state level, litigation relating to greenhouse gas emissions and pressure for greenhouse gas emission
reductions from investor organizations and the international community. Recently, two Federal courts of appeal have reinstated
nuisance-type claims against emitters of carbon dioxide, including several utility companies, alleging that such emissions contribute to
global warming. Although the Company is not a defendant in either proceeding, additional litigation in Federal and state courts over
these issues is expected.
On September 22, 2009, the EPA announced the adoption of the first comprehensive national system for reporting emissions
of carbon dioxide and other greenhouse gases produced by major sources in the United States. The new reporting requirements will
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, which includes certain
Company facilities. The rule requires the collection of data beginning on January 1, 2010 with the first annual reports due to the EPA
on March 31, 2011. Certain reporting requirements included in the initial proposed rules that may have significantly affected capital
expenditures were not included in the final reporting rule. Additional requirements have been reserved for further review by the EPA
with additional rulemaking possible. The outcome of such review and cost of compliance of any additional requirements is uncertain
at this time.
On December 15, 2009, the EPA published their finding that greenhouse gases contribute to air pollution that may endanger
public health or welfare. Although the endangerment finding is being made in the context of greenhouse gas emissions from new
motor vehicles, the finding is likely to result in other forms of regulation. Numerous petitions are pending at the EPA from various
state and environmental groups seeking regulation of a variety of mobile sources (i.e., trucks, airplanes, ships, boats, equipment, etc.)
and stationary sources. With the endangerment finding issued, the EPA is likely to begin acting on these petitions in 2010.
Additionally, on December 2, 2009 the Center for Biological Diversity announced a petition with the EPA seeking promulgation of a
greenhouse gas NAAQS.
On September 30, 2009, the EPA proposed two rules related to the control of greenhouse gas emissions. The first proposal,
which is related to the prevention of significant deterioration and Title V tailoring, determines what sources would be affected by
requirements under the Federal Clean Air Act programs for new and modified sources to control emissions of carbon dioxide and
other greenhouse gas emissions. The second proposal addresses the December 2008 prevention of significant deterioration
interpretive memo by the EPA, which declared that carbon dioxide is not covered by the prevention of significant deterioration
provisions of the Federal Clean Air Act. The outcome of these proposals is uncertain at this time.
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