EPA Overstepping Authority to Foster Clean Power, Court Told

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By Andrew Childers

Oct. 14 — The Environmental Protection Agency is overstepping its Clean Air Act authority to discourage construction of new coal-fired power plants in favor of cleaner generation sources the agencies prefers, opponents of carbon dioxide limits on new power plants said ( North Dakota v. EPA, D.C. Cir., No. 15-1381, briefs filed 10/13/16 ).

Mirroring arguments made against the EPA’s Clean Power Plan, states and utilities opposed to comparable standards for new power plants said the rule is illegal because the EPA has exceeded what is allowable under the Clean Air Act by requiring carbon capture technology at new coal-fired units.

“If EPA can require emission reductions based on a system that does not exist at commercial scale anywhere in the world, it has the power to deter the construction of new coal-fired plants in favor of EPA’s preferred energy sources,” several states, led by West Virginia said in a brief filed Oct. 14 in the U.S. Court of Appeals for the District of Columbia Circuit.

The EPA’s new source performance standards for new and modified power plants (RIN:2060-AQ91) effectively require new coal-fired units to install some form of carbon capture to comply. Opponents of the rule say the technology has not yet been commercially demonstrated and the EPA’s reliance on carbon capture projects subsidized by the federal government violates the Energy Policy Act, which bars the agency from relying on those units to determine that the technology has been adequately demonstrated.

The new power plant standards, along with the Clean Power Plan, which regulates carbon dioxide emissions from existing power plants, are central to President Barack Obama’s domestic efforts to address climate change. The new source performance standards are being challenged by several states as well as utilities and industry groups. The Clean Power Plan has already been argued before a 10-judge panel of the D.C. Circuit and a decision could come early next year ( West Virginia v. EPA, D.C. Cir. en banc, No. 15-1363, argued 9/27/16 ).

However, the litigation over the new power plants standards represents a second line of attack on the Clean Power Plan. The EPA is required to regulate new power plants under Section 111(b) of the Clean Air Act before it can regulate existing power plants under Section 111(d), as it has done with the Clean Power Plan. Overturning the new source performance standards could undercut the Clean Power Plan as well.

Carbon Capture Not Ready

Most of the opponents’ arguments focused on the readiness and cost of installing carbon capture technology at new coal-fired power plants.

The EPA’s performance standard of 1,400 pounds of carbon dioxide per megawatt-hour generation for new coal-fired units cannot be met by any new unit, argued opponents of the rule who said the EPA has not yet met its statutory burden of showing that carbon capture systems are viable and cost effective.

The EPA in its rule had argued that the individual components of carbon capture systems have been adequately demonstrated, which is sufficient to show that the technology is viable for the purposes of the Clean Air Act.

“An adequate demonstration finding may not be based on ‘mere speculation or conjecture’ that a system will emerge that will be both commercially available and technologically feasible to apply to all regulated sources nationwide,” industry groups and utilities opposed to the rule said in their brief.

The EPA has already rejected the viability of carbon capture systems in a regulatory impact analysis of its Clean Power Plan, utilities and industry groups said.

“Indeed, in the Clean Power Plan, EPA stated that [carbon capture and sequestration] CCS was experimental and heavily subsidized when it rejected a best system of emission reduction that included CCS,” they said. “EPA explained that CCS is ‘an emerging technology’ that may become economically viable in the future.’”

Subsidized Projects Evaluated

Petitioners said the EPA’s determination that carbon capture systems are viable and economically feasible was illegal because it was based on carbon capture projects that are being subsidized by the federal government under the Energy Policy Act, which specifically bars the agency from considering those units when evaluating the feasibility of the technology.

“Congress’s express prohibition makes sense because the purpose of these government subsidies is to foster the research and development of incipient technologies that are not yet adequately demonstrated,” the utilities and industry groups said.

Costs Not Justified

The EPA also has not properly accounted for how expensive carbon capture systems will be for new coal-fired power plants, opponents argued.

The EPA must consider the economic burden on utilities under a recent U.S. Supreme Court decision that directed the agency to fully evaluate the costs of imposing toxic pollutant standards on power plants, opponents said ( Michigan v. EPA , 135 S. Ct. 2699, 2015 BL 207163, 80 ERC 1577 (2015)).

Section 111 of the Clean Air Act, the authority the EPA is using to regulate power plant emissions, requires the agency to consider the costs of achieving the required pollution reductions while attaining the performance standards. However, the EPA itself had described the rule’s global climate benefit as “negligible.”

“EPA cannot impose a nationwide emission standard on all new fossil-fuel-fired steam generating units if it does not believe that the rule is likely to actually result in reduced levels of pollution,” the states said. “This court has rejected similar attempts by agencies to promulgate superfluous rules where the ‘baseline’ level of regulation would produce the same effect.”

The EPA has downplayed the costs of installing carbon capture systems at new coal-fired utilities by arguing very few new units are expected to be built since natural gas prices are so low. However, opponents of the rule said the agency still must evaluate those costs in order to justify setting the standards.

“Assuming that the rule will actually be applied to new sources, as EPA must, the costs to such sources and to energy consumers are prohibitive,” the states said.

The EPA’s response is due by Dec. 14.

To contact the reporter on this story: Andrew Childers at AChilders@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information

The state petitioners’ opening brief is available at http://src.bna.com/jpc.The non-state petitioners’ opening brief is available at http://src.bna.com/jpd.

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