Report of the Environmental Regulation Committee

Energy Law Journal, July 1, 2019 | Go to article overview

Report of the Environmental Regulation Committee


The following is the Report of the Environmental Regulation Committee. In this report, the Committee summarizes key developments in federal and state environmental regulation affecting the natural gas and electric industry from July 1, 2018 to July 31, 2019.*

I. Clean Air Act

A. Affordable Clean Energy Rule

In July 2019, the Environmental Protection Agency (EPA) issued a final rule repealing the Clean Power Plan (CPP) and adopting the Affordable Clean Energy Rule (ACE).1 The CPP never went into effect, having been delayed by challenges which were then held in abeyance while the EPA developed a new rule.2 The CPP was promulgated pursuant to the Clean Air Act (CAA) section 111, including establishing "standards of performance" for existing sources under CAA section 111(d).3 The CPP allowed states flexibility to develop strategies including improving heat rates at affected coal-fired steam generating units but also "beyond the fence line" strategies, such as substitution of generation from lower-emitting and zero-emitting renewable energy generation for existing fossil-fired generation.4 The ACE removes the "beyond the fence line" compliance options.5 The EPA contends that the CPP's allowance for "beyond the fence" compliance strategies was in excess of EPA's regulatory authority under section 111(d) of the CAA.6 In the ACE notice, the EPA states that it is precluded by CAA section 111 from strategies like shifting generation to lower emitting sources "because these types of systems cannot be put into use at the regulated building, structure, facility, or installation."7

Under the ACE, the EPA determined that improving the heat rate of existing generation units represents the "best system of emissions reductions" (BSER) for reducing greenhouse gas emissions, and improving the heat rate is the only compliance strategy available under the ACE.8 The ACE identifies six candidate technologies as BSER: neural network/intelligent sootblowers, boiler feed pumps, air heater and duct leakage control, variable frequency drives, blade path upgrade, redesign/replace economizer, as well additional operating and maintenance practices.9 The Rule gives states three years to submit implementation plans that specify technologies and operating procedures as the BSER for individual units.10 The EPA will have 12 months to approve or disapprove those plans.11 Specifically, the EPA identified and took comment on candidate technologies and operational practices that could be used to improve the regulated units' heat rates and concluded that each unit must be addressed individually, considering such factors as the unit's past and projected utilization, maintenance history, and remaining useful life.12 Under the ACE, states are directed to evalu ate, determine, and establish the performance standard for existing units considering such unit-specific factors.13

Some of the proposed candidate technologies would also potentially trigger New Source Review (NSR).14 For example, it was noted that redesigning or replacing economizers, heat exchange devices used to capture boiler flue gas waste heat to heat boiler feedwater, may trigger NSR, with its attendant permitting restrictions and costs thereby rendering such replacement not cost-effective as a standard of performance for a facility.15 As proposed, the ACE would have also revised NSR by changing the emissions test for whether an emission increase triggered NSR to hourly from annual.16 Thus, modification of electric generation unit would not trigger NSR if the modification increased the unit's annual emissions so long as its hourly rate of emission did not increase.17 Opponents to the hourly rate test asserted that it would effectively eliminate NSR for coal-fired power plants.18 In the final rule, the EPA stated that it would pursue NSR reforms separately from the ACE.19

B. New Source Review Reform

The EPA has taken several steps that suggest it intends to reform NSR through a combination of guidance documents and rule makings. …

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