EPA Publishes Proposed Greenhouse Gas Standards for New Power Plants

by Ballard Spahr LLP

The U.S. Environmental Protection Agency published its proposed standards of performance for greenhouse gases emitted from new electric utility steam generating units and stationary combustion turbines on January 8, 2014, opening up a 60-day public comment period. The publication puts to rest rumors that the EPA was reconsidering the pre-publication version of the rule signed on September 20, 2013. Under the Clean Air Act, although these proposed standards are not yet final, once finalized they will apply to most coal- and gas-fired power plants that begin construction after today.

Section 111 of the Clean Air Act charges the EPA with developing standards of performance based on the “best system of emission reduction which . . . has been adequately demonstrated.” For new fossil fuel-fired boilers and integrated gasification combined cycle units, the EPA identified partial carbon capture and storage (CCS) technology as the “best system of emission reduction.” Based on that technology, which involves capturing carbon dioxide and storing it underground or using it for other purposes, the EPA is proposing an emission limit of 1,100 pounds of carbon dioxide per megawatt hour (lbs CO2/MWh) for these units. In addition, the EPA is proposing an alternative 84-operating-month rolling average compliance option of 1,000 to 1,050 lbs CO2/MWh.

For natural gas-fired stationary combustion turbines, the EPA selected new natural gas combined cycle technology as the “best system of emission reduction.” The EPA is proposing emission limits for turbines of 1,000 lbs CO2/MWh for large units based on heat input, and 1,100 lbs CO2/MWh for small units.

The more than three-month delay of the proposed rule’s publication in the Federal Register raised speculation that the EPA was having second thoughts about its justification for CCS as the “best system of emission reduction” for coal plants. This speculation came amid allegations that the studies on which the EPA relied were not adequately peer-reviewed and that the agency improperly relied on projects that received government funding but would not otherwise be economically viable to show that CCS is “adequately demonstrated.” The published proposed rule conformed with the EPA’s original factual and legal rationale for selecting CCS technology as the basis for the emission standards.

The proposed rule replaces a proposed rule published on April 13, 2012. In the prior proposal, the EPA selected natural gas combined cycle technology as the “best system of emission reduction” for all of the categories of plants covered by the new proposal. Many industry members heavily criticized the earlier proposal for creating a single source category. In the new proposal, the EPA set separate standards for different types of power plants, using subcategories that align with the subcategories it has used to set standards of performance for conventional pollutants.

The Clean Air Act requires that before the EPA sets standards of performance for a source category, the EPA Administrator must determine that the category in question “causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health and welfare.” The EPA originally made that determination for fossil fuel-fired electric generating units in the 1970s, and promulgated standards of performance for conventional pollutants such as sulfur dioxide.

In the proposed rule, the EPA takes the position that once that determination is made for a source category, the agency must develop standards of performance for each pollutant emitted from new sources in that category, as long as there is a rational basis to do so. In this proposal, the EPA finds its rational basis in its 2009 finding that greenhouse gas emissions may reasonably be anticipated to endanger public health and welfare, given that fossil fuel-fired electric generating units emit more greenhouse gases than any other category of stationary sources.

The EPA is expected to adopt a final rule by the end of 2014. While this proposal does not address greenhouse gas emissions from existing power plants, once the EPA adopts standards for new sources, it will be required to regulate greenhouse gas emissions from existing power plants as well. President Obama has directed the EPA to propose a rule for existing plants by June 1, 2014, and to sign a final rule by June 1, 2015.

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.

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