EPA's Proposed New Source Clean Air Act Standards And Carbon Capture And Storage Technology

Can the Courts Find the Technology Has Been "Adequately Demonstrated" Under the CAA and/or In Compliance with the Energy Policy Act?

On April 13, 2012, the Environmental Protection Agency ("EPA") proposed a new source performance standard ("NSPS") pursuant to Clean Air Act ("CAA") Section 111 limiting emissions of carbon dioxide ("CO2") from new fossil-fuel electric generating units ("EGUs") that primarily focused on coal- and natural gas-fired units. EPA received more than 2.5 million comments on the April 2012 proposal. Based on EPA's review and consideration of the comments as well as consideration of the future of the electric generating sector, EPA withdrew the April 2012 proposal, and on January 8, 2014, EPA published a new proposed rule. Unlike the April 2012 proposal, the new rule proposes to establish separate standards for fossil fuel-fired electric steam generating units (utility boilers and Integrated Gasification Combined Cycle ("IGCC") units) and for natural gas-fired stationary combustion turbines using separate determinations of the best system of emission reduction ("BSER"), which EPA claims are adequately demonstrated. The natural-gas fired stationary combustion turbine standard is based on natural gas combined cycle ("NGCC") technology as BSER and an emission limit of 1,000 lbs CO2/MWh for larger units and 1,100 CO2/MWh for smaller units. The utility boiler and IGCC unit standard of performance is based on partial implementation of carbon capture and storage ("CCS") as BSER and an emission limit of 1,100 lbs CO2/MWh.

For purposes of Section 111 of the Clean Air Act, a "standard of performance ... reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated."1 Since redrafting of the proposed rule, EPA has been challenged on its finding that CCS as BSER is "adequately demonstrated." These arguments have been based on two separate reasons, one grounded in the CAA itself and the other based in the Energy Policy Act.

Even prior to publication of the rule, EPA faced pushback on its use of CCS as BSER based on the argument that EPA had not proved that CCS was adequately demonstrated under Section 111 of the CAA as interpreted by the D.C. Circuit.

First, in August 2013, the Office of Management and Budget ("OMB") provided an initial set of interagency comments on EPA's proposed rule that was published on OMB's website subsequent to the publication of the proposed rule in January 2013. In those comments, OMB...