REGULATORY: EPA’s Rules Affecting the U.S. Power Sector; Taking On EPA’s Rules Effectively Banning New Coal-Fired Generation

by King & Spalding
Contact

[author: Patricia T. Barmeyer]

During 2012, the United States Environmental Protection Agency (“EPA”) issued multiple rules affecting the U.S. energy sector. Two of these rules, however, have directly stymied energy developers’ efforts to construct new coal-fired generating facilities. The two rules reflect an apparent decision by this Administration to shift the energy sector towards natural gas-fired generation and away from coal, and have the potential to dictate the composition of the Nation’s generation fleet for decades to come.[*]

The MATS Rule

On February 16, 2012, EPA issued national emission standards under Section 112 of the Clean Air Act setting limits on hazardous air pollutant emissions from coal- and oil-fired electric generating units (“EGUs”). [1] The “Mercury Air Toxics Standards,” or “MATS Rule,” is expected to be one of the most costly rules ever issued by EPA. It has also proven highly controversial, drawing numerous legal challenges in the U.S. Court of Appeals for the D.C. Circuit as well as petitions for administrative reconsideration filed with EPA.

While the MATS Rule will generally require all coal- and oil-fired EGUs to reduce their hazardous air pollutant emissions, it is particularly problematic for any new coal-fired sources. This is because the new-source limits are so low that they cannot be accurately measured and vendors of pollution control equipment have said they cannot provide commercial guarantees that the limits can be achieved. And because such guarantees are a precondition to obtaining financing in the marketplace, the MATS Rule effectively amounts to a ban on the construction of new coal-fired EGUs.

The Greenhouse Gas NSPS

In April 2012, EPA proposed new limits on greenhouse gas emissions from new EGUs under Section 111 of the Clean Air Act (“GHG NSPS”). [2] The proposed limits are referred to as “new source performance standards” because they apply only to new or reconstructed sources. In essence, EPA would require all new fossil-fuel-fired EGUs to emit no more than 1,000 pounds of CO2 / megawatt hour on an average annual basis, which is based on the CO2 emissions from a highly efficient, natural gas combined cycle facility. Under the Clean Air Act, new source performance standards like the GHG NSPS have binding effect from the date of proposal.

The GHG NSPS represents a dramatic departure from EPA’s 40-year history administering the NSPS program in that it combines two very different kinds of sources—gas-fired EGUs and coal-fired EGUs—into one source category and issues a standard that is based solely on the emissions from the natural gas combined cycle units. The GHG NSPS is a major obstacle to the construction and development of any new coal-fired generation capacity because, as EPA admits, the limits cannot be achieved by a new coal-fired EGU using presently available technology. Notably, EPA proposed to exempt certain “transitional sources” if they had already obtained a final air quality permit for their facility prior to publication of the GHG NSPS in the federal register, and if they can commence construction within one year of publication.

The Antagonistic Effects of the Two Rules and Challenges to EPA’s Multiple Rulemakings

The MATS Rule has met with vigorous opposition from the coal-fired energy sector. Multiple petitions for reconsideration have been filed with EPA, including petitions from pollution control equipment vendors, air emissions experts, and one proposed new coal-fired EGU. Simultaneously, more than 30 different petitions for review challenging the MATS Rule have been filed in the United States Court of Appeals for the D.C. Circuit. These petitions have been consolidated in the case, White Stallion Energy Center, LLC v. EPA, No. 12-1100 (D.C. Cir. filed Feb. 16, 2012).

After the petitions for review were consolidated, several developers of new coal-fired EGUs asked the D.C. Circuit to expedite their challenges to EPA’s rule because EPA had created a regulatory Catch-22. As the new-unit developers explained, on the one hand, EPA’s MATS Rule prevented them from constructing their projects because the standards are so low they cannot be measured or guaranteed; while on the other hand, the GHG NSPS requires them to commence construction within one year or be subject to EPA’s new proposed standards for greenhouse gas emissions, which EPA acknowledges cannot be met by coal-fired power plants because the technology is not yet available.

In the face of vigorous opposition from EPA, environmental groups, and States that intervened in support of the rule, the D.C. Circuit granted the motion to expedite, severed the new-unit developers’ claims from the consolidated case, and put their case on a fast track schedule for briefing and oral argument that will have the case decided by the end of the year. See White Stallion Energy Center, LLC v. EPA, No. 12-1272 (D.C. Cir. opened June 28, 2012). Shortly thereafter—apparently in response to the D.C. Circuit’s order granting expedited review—EPA issued a letter stating that it intended to grant the petitions for reconsideration, and that it will reconsider the MATS Rule’s new-source limits. In addition, EPA agreed to administratively stay the effectiveness of the MATS Rule’s new-source standards for three months during the reconsideration process, and offered for the D.C. Circuit to judicially extend that stay pending issuance of a revised rule.

EPA’s decision to reconsider the MATS Rule new-source standards is an admission that the standards are fundamentally flawed, as the new-unit developers have been arguing for many months (both in seeking reconsideration and in their legal challenges filed in the D.C. Circuit). EPA claims that a new proposed rule will be issued in the near future, and that new rule will be finalized during the first quarter of 2013. That said, EPA is notorious for missing rulemaking deadlines. Interested parties should keep apprised of EPA’s rulemaking efforts and comment on any proposal EPA issues at the appropriate time.

On the litigation front, EPA has asked the D.C. Circuit to abate the litigation challenging the MATS Rule’s new-source standards. The developers of new coal-fired EGUs have opposed EPA’s motion, explaining that a decision on the merits of the MATS Rule is needed whether or not EPA intends to reconsider the new-source standards. A decision on EPA’s abatement motion is expected within the month.

Finally, the developers of new coal-fired EGUs and the Utility Air Regulatory Group have challenged EPA’s GHG NSPS in the D.C. Circuit. Their petitions have been consolidated in the case, Las Brisas Energy Center, LLC v. EPA, No. 12-1248 (D.C. Cir. filed June 11, 2012). EPA and others have filed motions asking the court to dismiss these challenges. Briefing on the motions to dismiss is ongoing, and the challenges remain pending at this time.
_______________________________________

[*] King & Spalding has been at the center of the energy sector’s response to the MATS Rule and the GHG NSPS. Since 2008, Patricia Barmeyer, Les Oakes and John Fortuna have represented Power4Georgians, LLC (“P4G”) in its efforts to permit and construct a new 850 megawatt coal-fired EGU in Washington County, Georgia. K&S prepared and filed P4G’s petition for reconsideration of the MATS Rule, which EPA granted in June 2012. K&S also prepared and filed extensive comments on each of these EPA rules, and represents P4G in the litigation challenging the MATS Rule and the GHG NSPS pending in the D.C. Circuit.

[1] National Emission Standards for Hazardous Air Pollutant Emissions From Coal-and Oil-Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial-Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units, 77 Fed. Reg. 9,304 (Feb. 16, 2012) (“MATS Rule”).
[2] Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units, 77 Fed. Reg. 22,392 (Apr. 13, 2012) (“GHG NSPS”).


Patricia T. Barmeyer
Atlanta
+1 404 572 3563
pbarmeyer@kslaw.com

View Profile »
 

The content of this publication and any attachments are not intended to be and should not be relied upon as legal advice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© King & Spalding | Attorney Advertising

Written by:

King & Spalding
Contact
more
less

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!