Proposed GHG Standards – Comments on Standards for New Sources

Although the deadline to submit public comments was November 29, 2013, the September 2013 proposed rule for new EGUs continues to receive its fair share of criticism amongst industry, political groups, and environmentalists alike.  One argument at play is that a bifurcated approach of assigning standards to separate types emissions sources could limit U.S. EPA’s ability to ever allow cross-category trading for existing sources.   For this reason, we may see U.S. EPA return to its original approach of issuing a single standard in the finalized version of the rule.  Utilities have commented that the rule is “fatally flawed” in that it does not satisfy a Clean Air Act (CAA) mandate that the rule must ensure emissions will be reduced – the rule mandates carbon capture but it does not actually guarantee cuts in GHGs generated at facilities.  Grid reliability is another concern.  Non-utility industry groups fear that U.S. EPA’s proposal to require novel CCS technology sets a negative precedent that, if upheld following an expected legal challenge, would allow U.S. EPA to impose similar “stretch” technologies on other industry sectors.  The oil and gas sector has even been vocal in pointing out that the CCS provisions of the proposed rule have created hurdles for well operators to accept CO₂ streams from coal-fired power plants, making it less advantageous than using CO₂ from other sources, which could present compliance issues for new power plants with fewer options for compliance.

A major argument concerning the CCS requirement of the proposed rule has been that the Bush-era Energy Policy Act of 2005 (EPAct) undermines key parts of the proposed rule in requiring new coal-fired power plants to install CCS technology.  The EPAct specifically prohibits U.S. EPA from citing a technology as being “adequately demonstrated” if the technology has only been used at a facility receiving assistance under the Department of Energy’s Clean Coal Power Initiative (CCPI), or at a facility that is receiving an advanced coal project tax credit.  The power plants with CCS that are cited in the proposed NSPS as the justification for CCS being ‘adequately demonstrated’ all received such assistance.  Therefore, one of the beliefs of the opponents of the proposed new rule is that U.S. EPA has proposed standards which are beyond its authority.  To further complicate the discussion around the CCS requirement, U.S. EPA’s Science Advisory Board (SAB) has voted unanimously not to review the new rule, on the grounds that the CCS requirement falls outside the rule’s scope and that many of the scientific concerns regarding CCS may be policy and legal matters, instead of an element of the proposed rule that would be under the jurisdiction of SAB review.  U.S. EPA has formally refuted the claims relating to the EPAct, saying that its basis for requiring CCS was not based “solely” on the few coal utility projects affected by constraints in this energy law.

U.S. EPA has not recently commented on when it intends to finalize the proposed rule for new EGUs, but some believe U.S. EPA is planning to intentionally delay finalizing it until after completion of the 2014 elections.  If history repeats itself, and U.S. EPA has not finalized the proposed rule by January 8, 2015, we will likely see U.S. EPA be required to withdrawal the second proposed rule for not finalizing it within one (1) year of its proposal, and U.S. EPA would be required to re-propose, accept comments on, and finalize yet another new version of this rule.