EPA Releases Significant Proposed Rule to Curb Greenhouse Gas Emissions from Existing Power Plants - Proposed Rule Is Part of President's Clean Power Plan Focusing on Flexibility and State-Specific Carbon Reduction Targets

by Holland & Knight LLP
Contact

HIGHLIGHTS:

  • EPA's proposed rule is focused on limiting the carbon intensity of fossil fuel-fired power plants (commonly referred to as electric generating units or EGUs) by adopting goals to limit overall carbon dioxide (CO2) emissions to a point that is achievable by implementing the best system of emission reduction (BSER) available.
  • While EPA has identified specific "building blocks" as the basis for its determination of each state's goal, the proposed rule allows each state to design a compliance program that combines these blocks into an inclusive portfolio based upon specific circumstances and policy preferences. 

The Environmental Protection Agency (EPA) released its long-awaited proposed rule under Section 111(d) of the Clean Air Act (CAA) to reduce greenhouse gas emissions from existing power plants. The EPA proposed rule, which was released on June 2, 2014, is focused on limiting the carbon intensity of fossil fuel-fired power plants (commonly referred to as electric generating units or EGUs) by adopting goals to limit overall carbon dioxide (CO2) emissions to a point that is achievable by implementing the best system of emission reduction (BSER) available. The proposed rule recommends a flexible approach that would establish state-specific CO2 reduction goals while allowing states or regions to craft individualized compliance plans. Those plans may integrate a range of carbon reduction "building blocks" suggested by EPA, as well as other technologies and strategies that states may propose for approval by EPA.

The proposed rule is a key element of the president's recently released Clean Power Plan. This plan serves as the framework for the Obama administration's efforts to put the United States on a path to address CO2 emissions and associated impacts on climate and human health by requiring state-by-state reductions of 30 percent by 2030 in CO2 emissions from existing fossil fuel-fired power plants, measured against a baseline of emissions from 2005.

In addition to its proposed rule under Section 111(d), EPA also issued a proposed rule for modified and reconstructed plants (EPA-HQ-OAR-2013-0603) under Section 111(b) of the CAA, which allows EPA to set standards of performance for new and modified EGUs directly. That rule is representative of EPA's ongoing effort to tighten standards directly when issuing new permits under the CAA. The proposed Section 111(d) rule for existing power plants is the more controversial development because it applies to all existing EGUs and will effectively end the practice of "grandfathering" existing power plants, under which existing plants were allowed to have higher emissions than those from new and reconstructed facilities.

EPA's Conclusions and Calculations

In issuing the proposed Section 111(d) rule, EPA has taken advantage of broad authority under Section 111(d) to establish emissions reduction targets and guidelines for states for existing sources of pollutants that are not specifically addressed under the CAA. In doing so, EPA has made a public determination that greenhouse gas emissions represent an ongoing risk to public health and the environment, and that existing EGUs must be regulated to have a meaningful impact on emissions.

State-Level Goals

Instead of establishing uniform targets for specific types of EGUs, EPA's proposed rule establishes state-specific goals for CO2 reductions based on a formula that takes into account the degree of emission reductions that EPA has determined is achievable through the implementation of BSER at each of the states' fossil-fueled EGUs. The formula considers four potential carbon reduction "building blocks," including:

  1. heat rate improvements
  2. generation at less carbon-intensive units (e.g., switching from coal to natural gas)
  3. increasing generation from renewable sources
  4. reducing demand through energy efficiency programs

The resulting final rate-based goals for total emissions from state power sectors range from 215 pounds of CO2 per net MWh in Washington state to 1,783 pounds of CO2 per net MWh in North Dakota. Alternatively, EPA has stated in the proposed rule that states may convert this rate-based goal into a mass goal, which may be desirable for states or regions that wish to simply set an overall cap on CO2 emissions from their utilities.

Focus on Flexible Implementation

The EPA's approach in the proposed Section 111(d) rule has focused on providing states with broad flexibility to achieve their carbon reduction goals, subject to EPA's approval. As a result, while EPA has identified the preceding "building blocks" as the basis for its determination of each state's goal, the proposed rule allows each state to design a compliance program that combines these blocks into an inclusive portfolio based upon specific circumstances and policy preferences. Further, states may identify other technologies that could be applied as part of their plans to meet their emission reduction goals by 2030. For example, the proposed rule finds that carbon capture and sequestration (CCS) may represent a viable strategy for CO2 reductions, but a state could also request that EPA approve its use of carbon capture and recycling (CCR) technology, or other new technologies that are being developed. EPA is requesting states to submit their initial plans by June 30, 2016, but it is willing to allow for an extension until June 30, 2017, for submission of finalized plans.

In addition to allowing states to develop a portfolio approach integrating various policies and technologies to meet their reduction goals, the proposed rule provides for a "regional compliance approach" that will allow states to draft collaborative plans that maximize their resource utilization. Notably, the EPA proposes to give states that choose to engage in a multi-state planning process until June 30, 2018, to submit a completed plan for EPA review and approval.

Comment Period and Implementation

EPA is accepting public comments on the proposed rule for 120 days from the date that the proposed rule is published in the Federal Register. Public hearings will be held in late July in Atlanta, Denver, Pittsburgh and Washington, D.C.  

EPA has requested broad comments regarding the credible technologies and policy solutions that can help states meet these targets, as well as specific comments, amongst others, regarding:

  • whether non-coal fossil fuel-fired EGUs should be considered in determining the BSER
  • integration of ISO/RTOs into the regional planning format
  • appropriate state reporting and record retention requirements
  • all aspects associated with enforceability of a state plan and ensuring compliance
  • appropriate methods to take into account CO2 reductions from energy efficiency and/or renewable energy programs into EPA's determination that state plans will meet their performance projections

EPA anticipates issuing a final rule by June of 2015. John Podesta, senior counselor to the president, has advised business leaders that the White House is committed to finalizing the rule in that time frame.  

Submitting Comments to EPA

The proposed Section 111(d) rule has the potential to impact a broad array of entities in the energy sector, including states, municipalities, utilities, end users and private entities. Holland & Knight has extensive experience with the broad spectrum of legal and policy issues in this area and can assist in preparing comments on this significant proposed rulemaking.

 

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.

© Holland & Knight LLP | Attorney Advertising

Written by:

Holland & Knight LLP
Contact
more
less

Holland & Knight LLP 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.
Custom Email Digest
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.