Business Aviation Law Blog : Boston Aviation Lawyer & Attorney : Harry Ekblom : Sullivan & Worcester Law Firm : FAA Regulation & Aircraft Transactions

As part of our continuing coverage, yesterday the European Union Court of Justice held that the European Union has the right to “permit a commercial activity, in this instance air transport, to be carried out in its territory only on condition that operators comply with the criteria that have been established by the EU.” (Air Transport Association of America v. Secretary of State for Energy and Climate Change)  This judgment in effect forces international operators to comply with the European Union Emissions Trading Scheme (“EU-ETS”) provisions to cut carbon emissions on flights to the EU.   The EU-ETS takes effect on January 1, 2012.

Whereas, the EU welcomed the ruling as a step forward in reducing emissions in the global aviation industry, representatives of U.S. and international carriers, as well as business operators, have criticized the ruling and the unilateral nature of the EU-ETS.  According to National Business Aviation Association (“NBAA”) president and CEO Ed Bolen, “The court’s ruling goes against established policy and long-standing practice when it come to aviation regulations. It appears to set aside the principle, established in the Chicago Convention, that because aviation is a global industry, aviation policies should be developed and implemented on a global basis. Any new standards should be developed by the International Civil Aviation Organization (“ICAO”).”  The International Air Transport Association and other international aviation industry representatives have also taken the position that airline emissions should be addressed through ICAO. ICAO itself issued a statement on behalf of 26 of its member states urging the EU not to include flights by non-EU operators in the EU-ETS.

Another important aspect to this development is the response from the U.S. government itself.  As noted in previous posts, the House of Representatives has already passed a bill which excludes U.S carriers from participating in the EU-ETS, and a similar bill has been presented to the Senate for approval.  Further, in a December 16^th letter addressed to the EU, Secretary of State Hillary Clinton expressed the United States’ escalating disapproval of the EU-ETS, and asserted that the EU had become increasingly isolated on this issue.   According to the letter, the United States is strongly opposed to U.S. operators being subjected to coverage under the EU-ETS.  According to the letter, 42 other countries have registered similar objections. 

According to the NBAA and the Airlines for America (formerly the Air Transport Association of America), members will continue to seek a global approach to environmental issues, but in the interim, airline operators will adhere to the EU-ETS requirements.  As this issue progresses please check back to this blog for further posts.

Special thanks to Sullivan & Worcester’s Michael Karp, Business Development and Marketing Intern, for assistance in preparing this post.

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Avgas (aviation gasoline), the last type of leaded fuel available on the U.S. market, has recently drawn the scrutiny of EPA. Although it makes up only a tenth of 1 percent of the liquid fuel sold in the U.S., it is the life blood of smaller piston-engine aircrafts. In the 1970’s and 1980’s, EPA used its authority under the Clean Air Act to push for the removal of lead from automobile gasoline and today this move is considered one of the greatest environmental achievements of all time. However, Avgas and racing fuel were spared EPA regulation mainly because of their relative small impact and limited use. Racing fuel switched to a customized blend of high-octane gasoline in 2008 and it appears that EPA has now taken notice of Avgas.

Later this year, air quality monitors will be installed at 15 airports to gather data on lead pollution and to aid EPA in making a determination on whether Avgas is exposing people to dangerous amounts of lead. EPA’s move comes as a result of a lawsuit from the environmental group Friends of the Earth. Scientific studies have shown that aircraft emissions contributed to lead in children’s blood, particularly those living close to airports.

The Federal Aviation Administration has assembled the Unleaded Avgas Transition Aviation Rulemaking Committee to plan for the potential transition away from Avgas, but the same problem that has kept Avgas around in the first place has yet to be solved. The problem being that no suitable replacement exists. Lead helps protect engines, a unique quality not easily replicated. Engines that burn Avgas can’t handle the ethanol added to regular gasoline and premium gasoline is less powerful than the 100 octane Avgas. The industry has been testing alternatives for quite some time, but none have worked. However, the industry has not been under any pressure thus far to achieve results.

Any Avgas ban would most directly affect aircraft operated in Alaska, which uses roughly one-third of the Avgas consumed in the U.S., and in other remote areas that use piston-engine planes to deliver food, medicine, and other supplies to remote towns. An Avgas ban would essentially regulate these aircraft out of existence. To address this, the National Business Aviation Association and others have formed acoalition of stakeholders that is seeking an approach that focuses on concerns about safety, cost, availability and ease of Avgas production.

If you consider that Avgas is only a small piece of the overall emissions pie, it is clear from this move to begin a monitoring program as well as other recent moves by EPA that air pollution is a top priority. It is likely we will see more emissions regulation in the near future. As this issue progresses, please check back to this blog for future posts. 

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Special thanks to Sullivan & Worcester's Ari Hoffman, environmental intern, for assisting in the preparation of this post.

On June 28 and 29 in Ottawa, the Canadian Wind Energy Association (“CanWEA”) in collaboration with the American Wind Energy Association (“AWEA”) hosted the International Wind and Radar Forum. The Forum was designed to “further the relationship between key regulatory and industry players, while promoting an international dialogue about responsible, effective tools designed to identify and address any potential conflicts between wind energy and radar.” 

Tension between ensuring aviation security and expanding wind energy has arisen due to a wind turbine’s potential to interfere with the radio frequency waves emitted by radar systems. Wind turbines can defeat radar, especially when grouped into large wind farms, either by creating unwanted reflections or by blocking signals which can result in clutter on radar maps. Radar clutter prevents aircraft and surface air traffic controllers from determining the location, range, altitude, direction and speed of nearby objects, posing a safety threat. 

Due to concern over aviation security, the British Wind Energy Association (“BWEA”) estimates that there is 4.7 gigawatts of wind energy on hold in Britain and AWEA estimates that in the United States over 9.0 gigawatts of wind energy are on hold. These statistics are worrisome to the United States Department of Energy, which relies heavily on the use of wind energy to help reach the nation’s renewable energy targets.

A myriad of solutions to this problem have emerged. Earlier this year, the United States Department of Homeland Security awarded a $22 million contract to Raytheon, a leader in this field, to study how proposed wind farms would interact with existing radar systems. CASSADIAN, the defense and security division of EADS, developed a solution based on modifications to the radar antenna as well as signal processing. Further, SCANTA 4002 Radar, a system developed by Terma, is designed to separate smaller air objects from larger surface objects, such as wind turbines. This radar can be independently installed and integrated with existing radar installations. 

While some solutions try to change radar systems, Vestas is working to change wind turbine blades into radar-friendly stealth blades. Vestas believes the solution lies in coating blades with similar material used to produce stealth planes which are invisible to radar. Vestas announced on June 29, 2011 that the use of “stealthy” blades reduce radar clutter by around 99% or 20 decibels (The Guardian UK).

As wind energy expands, radar and blade technologies to avoid disturbances will become even more vital, especially to smaller aircraft that may fly along less traveled routes where large wind turbine farm development is more likely. As this issue progresses, please check back to this blog for future posts.

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Special thanks to Sullivan & Worcester's Van Hilderbrand and Ari Hoffman, environmental intern, for preparing this post.

In June 2010, a complaint for declaratory and injunctive relief was filed by several environmental groups who request that the Environmental Protection Agency (“EPA”) determine if greenhouse gasses (“GHGs”) from marine vessels, aircraft and other non-road vehicle sources “significantly contribute to air pollution which may reasonably be anticipated to endanger public health or welfare” (District of Columbia, C.A. 1:10-cv-00985). Pursuant to its authority under the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., EPA has adopted aircraft emissions standards “covering certain criteria pollutants or their precursors and smoke; these standards do not currently regulate emissions of CO₂ and other [greenhouse gases].”  Regulating Greenhouse Gas Emissions Under the Clean Air Act, 73 Fed. Reg. 44,354, 44,469 (July 30, 2008). Ultimately, the environmental groups want to force EPA action to establish a plan for regulating GHG emissions from these sources. 

Late last year, four aviation related associations, the Air Transport Association of America (“ATA”), National Business Aviation Association (“NBAA”), Aerospace Industries Association of America (“AIA”), and General Aviation Manufacturers Association (“GAMA”), moved to intervene in the case in support of EPA. The aviation associations claimed that an EPA action plan would harm the associations by (1) imposing new aircraft emissions standards and (2) developing such standards on an accelerated timetable (the complaint calls for a 90-day determination timetable). 

Last month, the Court denied the intervention and held that the claimed injuries were too hypothetical and too far removed from the judgment to constitute a “certainly impending” causal connected injury for standing purposes. In support of its holding, the Court stated that its decision would only make the EPA initiate the endangerment finding process, not cause the agency to find that GHGs emitted from these sources endanger the public health and welfare. The Court also denied permissive intervention under Rule 24(b) of the Federal Rules of Civil Procedure because the associations’ participation would not be helpful to the litigation. As this case progresses, please check back to this blog for future posts.

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The Kyoto Protocol and the United Nations Framework Convention on Climate Change specifically exclude international emissions from aviation transport from developed countries’ national targets. Instead, Kyoto calls on the International Civil Aviation Organization (ICAO) to tackle the issue. Until recently, however, the ICAO had not been able to reach agreement on substantive binding actions aimed at limiting greenhouse gas (GHG) emissions.

On October 8, 2010, the 190 members of the ICAO approved a resolution in which they agreed to improve fuel economy and strive to limit GHG emissions from aircraft. Per the resolution, the ICAO set a goal to improve fuel efficiency 2 percent per year through 2050, cap GHG emissions at 2020 levels, develop a global framework for the use of alternative fuels, and propose a GHG emission standard for aircraft engines by 2013.

The ICAO also agreed to develop a framework for market-based measures (MBMs) and issued 15 guiding principles for the design and implementation of MBMs for international aviation. These principles are intended to minimize market distortions, ensure that aviation is treated fairly relative to other sectors, guarantee that aviation’s emissions are counted only once, and recognize past and future efforts of carriers to minimize emissions. Member states are encouraged, but not required, to submit action plans to the ICAO by the end of June 2012, outlining their plans for reducing and reporting their international aviation GHG emissions.

The European Commission (EC) entered an objection over sections of the resolution that refer to guiding principles that may conflict with the European Union (EU) emissions trading system (ETS), which will include aviation beginning in 2012. Beginning in 2012, the EU ETS will require non-commercial operators and most commercial operators who conduct flights that arrive or depart from airports located in the EU to reduce GHG emissions. Commercial operators that emit less than 10,000 metric tons of carbon per year or operate fewer than 243 flights per period for three consecutive four-month periods are exempted.

In the first year, the EU ETS aviation cap will be set at 3% below the established baseline, which is set at the sector’s emissions between 2004 and 2006. The cap will then be reduced to 5% below the baseline. It is expected that operators will be required to reduce their emissions by more than 200 million tons of carbon equivalent. Operators will be awarded free allowances based on a formula called revenue per ton per kilometer (RTK), which measures weight and distance traveled, but initially will be required to purchase 15% of their necessary allowances. The International Air Transport Association estimates that compliance with the EU ETS will cost the industry at least 2.4 billion euros, or about $3 billion, a year.

Business aviation operators have complained that the EU ETS favors commercial airlines to the disadvantage of smaller, private operators. For example, as noted above, certain commercial operators are exempted from the system, but these exemptions do not apply to non-commercial operators. In addition, business aviation operators will be required to purchase a greater percentage of allowances because the RTK formula will award more free allowances to scheduled airlines and freight companies, which carry far more payload weight than business aviation flights. Moreover, business aviation operators will incur substantial transaction costs complying with the system, especially considering the relatively small number of credits a typical business aviation operator will be required to purchase.

In December 2009, American Airlines, Continental Airlines and United Airlines, backed by the Air Transport Association, filed for judicial review in the British courts, challenging their inclusion in the EU ETS. The airlines are arguing that the EU lacks jurisdiction to regulate flights to and from the United States. On January 20, 2010, the UK Government referred the matter to the European Court of Justice. The suit is pending.

The EC plans to go forward with implementation of the EU ETS as it relates to aviation emissions. In fact, the EC believes that the ICAO has tacitly approved its plan, since the EU ETS is consistent with all 15 principles for MBMs and the ICAO members declined to include language that would have required the agreement of other states before application of the EU ETS to their airlines.

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On May 12, 2010, Sens. Kerry and Lieberman introduced a discussion draft of their long-awaited climate bill – the American Power Act. The bill would establish a program to reduce U.S. greenhouse gas (“GHG”) emissions 17 percent from 2005 levels by 2020, and 83 percent by 2050. The bill would mandate emissions limits on approximately 7,500 manufacturing facilities and power plants that emit more than 25,000 tons of GHGs annually. Companies covered by the legislation could achieve compliance by obtaining the free carbon emission allowances that would be distributed under the bill, or by purchasing such emission allowances as necessary.

The bill would apply to electric utilities, transportation fuels, including aviation fuel, and other refined oil products beginning in 2013, and to manufacturers in energy-intensive industries and natural gas distributors in 2016. Eventually, most regulated sources would purchase emission allowances or offset credits through federal auctions or a regulated market. Allowances for transportation fuels and other petroleum products would be purchased by refiners and fuel providers at a fixed price from the government. The bill would provide significantly more free GHG emissions allowances to covered sources than previous bills; free allowances would not be completely phased out until 2030.

Allowances would also be distributed to states that could sell the allowances to fund energy efficiency programs, adaptation programs, and research and development of new technologies. Beginning in 2026, consumers would receive a portion of the revenue raised from auctioning the allowances through energy bill discounts and rebates.

The bill would preempt state GHG cap-and-trade programs and all other state regulation of GHG emissions from stationary sources, but would allow states to continue to develop GHG emission standards for motor vehicles and other mobile sources. The bill would also prevent EPA from regulating GHGs under the Clean Air Act’s existing construction and operating permit programs. However, EPA would be permitted to regulate emissions from mobile sources, including aircraft, and set technology-based new source performance standards for sources with annual GHG emissions of less than 25,000 tons.

The Kerry-Lieberman bill also promotes investment in advanced vehicle technology and batteries, offshore drilling, nuclear power, and the development of carbon capture-and-storage technologies at coal-fired power plants. However, in response to the recent Deepwater Horizon oil spill, states would be allowed to veto new offshore drilling leases within 75 miles of their coast and drilling plans of neighboring states that could have negative impacts on them.

The bill recognizes the importance of developing a global framework for regulating GHG emissions from civil aircraft and specifically provides for allowances for international air carriers to compensate for compliance with foreign GHG reduction systems, such as the European Union Emissions Trading System, which will begin regulating carbon emissions from aircraft in 2012.

Although the bill is supported by a number of industry leaders and environmental organizations, it is not expected to pass the Senate.

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On April 28, 2010, the U.S. Environmental Protection Agency (“EPA”) published an Advance Notice of Proposed Rulemaking (“ANPR”) regarding lead emissions from piston-engine aircraft using leaded aviation gasoline. 75 Fed. Reg. 22,440 (Apr. 28, 2010). At this point, EPA is not proposing to regulate the use of leaded fuel, but is seeking comment on the data available for evaluating lead emissions, ambient concentrations, and potential exposure to lead from the use of leaded aviation gasoline. The ANPR also requests comment on approaches for phasing-down or eliminating leaded aviation gasoline. EPA will accept public comment on the ANPR through June 28, 2010.

Leaded aviation gasoline is used in general aviation aircraft with piston engines, which are typically used for instructional flying, air taxi activities, and personal transportation at around 20,000 airports in the United States. EPA estimates that the use of leaded aviation gasoline is responsible for approximately one-half of the nation’s air emissions of lead.

EPA is initiating the rulemaking in response to a petition submitted by Friends of the Earth in October 2006. The petition requested that EPA either (1) find that lead emissions from general aviation aircraft endanger public health and welfare and issue a proposed emissions standard, or (2) commence a study of the health and environmental impacts of lead emissions from general aviation aircraft if the Agency does not have sufficient information to make an endangerment finding.

After evaluating the comments received in response to the ANPR, EPA will determine whether emissions from aircraft using leaded aviation gasoline cause or contribute to air pollution which may be reasonably anticipated to endanger public health or welfare. If EPA makes an endangerment finding, the Agency has asserted that it would be required to establish an emissions standard for lead from piston-engine aircraft unless, in consultation with the Federal Aviation Administration, the proposed standard would increase noise and adversely affect safety.

The Aircraft Owners and Pilots Association (AOPA), the Experimental Aviation Association (EAA), the General Aviation Manufacturers Association (GAMA), the National Air Transportation Association (NATA), and the National Business Aviation Association (NBAA) issued a joint statement urging the industry to comment on the ANPR. The industry groups cited “the technical complexity and safety implications of removing lead from aviation gasoline since there is not a high-octane replacement unleaded avgas available today that meets the requirements of the entire [general aviation] fleet.”

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On April 24, 2010, Sen. Graham withdrew his support for the climate and energy bill he had been drafting with Sens. Kerry and Lieberman after Senate Democrats refused to commit to acting on the climate bill before addressing immigration reform. Therefore, the bill announcement, which was scheduled for today, has been postponed. Sens. Kerry and Lieberman have indicated that they will move forward with the bill.

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Since the United States did not enter into the Kyoto Protocol, efforts to reduce greenhouse gas (“GHG”) emissions from all sources, including aircraft, have been voluntary and largely a matter of public relations. A voluntary system, however, may soon be a thing of the past. Over the past year, Congress has considered legislation to create a mandatory cap and trade system for GHG emissions. Moreover, since Congress has been slow to issue a final bill, the Environmental Protection Agency (“EPA”) has begun the process of instituting a regulatory program to achieve emissions reductions pursuant to the Clean Air Act (“CAA”). Under either scenario, sources of GHGs would face the enforceable regulatory obligation of controlling carbon emissions.

In June 2009, the House of Representatives passed the American Clean Energy and Security Act of 2009 (“ACES”) (H.R. 2454). ACES would require GHG emissions to be reduced by 17% from 2005 levels by 2020, and over 80% by 2050, through a mandatory cap and trade system. The Senate version of the bill – the Clean Energy Jobs and American Power Act (S. 1733) – cleared the Senate Environment and Public Works Committee in November 2009, but no hearings or markups have yet been scheduled in the Senate committees on finance and agriculture. The Senate bill would require GHG emissions to be reduced by 20% from 2005 levels by 2020 and 83% by 2050, also through a mandatory cap and trade system. While ACES recognizes that GHG emissions from civil aircraft should be regulated on a global basis by the International Civil Aviation Organization, the Senate bill is silent on this issue.

Since the existing climate bill has stalled in the Senate, it has been reported that Senators Kerry, Graham, and Lieberman plan to introduce a compromise bill on April 26. The legislation is expected to include caps on GHG emissions from power plants beginning in 2012, a phase-in of emissions caps for the manufacturing sector, and a carbon tax on fuels.

Meanwhile, in December 2009, EPA published its final finding that emissions of six GHGs – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride – endanger public health and the environment. 74 Fed. Reg. 66,496 (Dec. 15, 2009). The finding allows EPA to regulate GHG emissions from cars and light trucks and other mobile and stationary sources under the CAA, regardless of whether Congress enacts climate change legislation. Section 231 of the CAA specifically authorizes EPA to establish aircraft emission standards upon a finding that the emission of an air pollutant from aircraft engines endangers public health or welfare.

EPA’s finding has been extremely controversial. Sixteen petitions for judicial review have been filed in the D.C. Circuit Court of Appeals challenging the scientific basis for EPA’s endangerment finding. On April 15, 2010, the attorneys general from Virginia and Alabama filed a motion to compel EPA to reopen the endangerment finding and hold public hearings. In addition, legislation has been proposed in both the House and the Senate to prevent EPA from regulating GHG emissions. Nevertheless, EPA is proceeding to regulate GHG emissions and, on April 1, 2010, EPA and the National Highway Safety Administration announced a joint final rule to reduce GHG emissions and increase fuel economy for new cars and light trucks sold in the United States for model years 2012 through 2016.

EPA has previously promulgated regulations under CAA § 231, including emission standards for oxides of nitrogen (NO_x) and carbon monoxide. Under the CAA, emission standards can include operation and maintenance requirements and design, equipment, work practice or operational standards. The Agency has stated that CAA § 231 authorizes it to set “technology-forcing” standards as long as the standards give manufacturers sufficient lead time. Although several states and environmental organizations filed petitions for rulemaking seeking regulation of GHG emissions from aircraft in late 2007, EPA did not include such a rulemaking in its Fall 2009 Regulatory Agenda.

At this point, it is not clear whether, or how, GHG emissions from aircraft will be regulated. We can expect, however, that, unless Congress or the court steps in, EPA will continue to issue regulations to reduce GHG emissions from a variety of stationary and mobile sources.

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