On September 20, 2013, EPA proposed new source performance standards (NSPS) for carbon dioxide emissions from new fossil fuel-fired power plants under Section 111(b) of the Clean Air Act, 42 U.S.C. § 7411(b). This proposal replaces a 2012 proposal, which EPA will withdraw. Although the new proposal has been changed to respond to significant legal concerns raised in opposition to the prior proposal, fundamental questions remain about the lawfulness and appropriateness of the re-proposed standards.

Clean Air Act Section 111(b) requires the agency to list categories of stationary sources of “air pollution which may reasonably be anticipated to endanger public health or welfare.” The agency is then required to establish performance standards limiting these source categories’ emissions of air pollutants to a level “achievable through the application of the best system of emission reduction” (BSER) which, taking into account cost, energy, health, and other environmental impacts, the Administrator “determines has been adequately demonstrated.” (Section 111(a).) These standards apply to new or modified sources, but do not apply to existing sources. (Under Clean Air Act Section 111(d), there is a separate process by which the agency prescribes regulations under which it considers states’ plans to limit emissions from existing sources.)

In April 2012, EPA proposed NSPS for carbon dioxide emitted from “fossil-fuel fired electric utility generating units.” In this proposal, EPA departed from its common practice by combining coal-powered and natural-gas-powered plants into one source category and proposing a limit of 1,000 pounds of C02 per megawatt-hour of electricity generated, which many stakeholders argued would preclude the construction of any new coal-fired plants.

In its new proposal, EPA responds to these criticisms in two main ways. First, it treats natural-gas and coal plants as separate source categories.  Second, it proposes slightly different emissions limits for them: 1,000 pounds for large natural-gas-fired plants, and 1,100 pounds for coal-fired plants. Moreover, the new proposal identifies partial carbon capture and sequestration (CCS) technology as a demonstrated BSER by which coal-fired plants can meet these limits. CCS traps C02 at its source. Typically, the gas is then stored in certain underground geological formations or pumped into oil fields to assist in enhanced oil recovery.

There are significant questions about the re-proposal’s legal and technical basis. Among other things, there are no commercial-scale power plants that are currently employing CCS technology anywhere in the world, raising questions about whether the technology has been adequately demonstrated. Similarly, CCS technology is sufficiently costly that it may not satisfy the requirement that it be the “best” technology, a criterion that takes into account cost. Finally, EPA’s proposal raises the possibility that it will be impossible to construct a new coal-fired power plant in certain geographic areas of the country that lack access to enhanced oil recovery or underground carbon storage resources.

President Obama has directed EPA to finalize the NSPS in a timely fashion. Although the government shutdown has delayed publication of the proposal in the Federal Register, comments will be due 60 days after it is ultimately published. As a result of the issues described above and others, stakeholders likely will submit significant comments on the re-proposal. This new proposal is the first step on a long and uncertain path.