On July 29, the Subcommittee on Energy and Power of the House Energy and Commerce Committee held a hearing entitled, “FERC [Federal Energy Regulatory Commission] Perspectives: Questions Concerning EPA’s [Environmental Protection Agency] Proposed Clean Power Plan and Other Grid Reliability Challenges.” The hearing addressed the controversial June 18, 2014, EPA proposal to engage in its most far-reaching actions to date for reducing domestic greenhouse gas emissions (GHGs).1 The proposal is projected by EPA to reduce emissions from electric generating units (EGUs) by thirty percent below a 2005 baseline by 2030. The proposed rule would implement EPA’s authority under Section 111(d) of the federal Clean Air Act (CAA) to require states to submit plans to reduce carbon dioxide emissions from fossil fuel-fired EGUs. Although the proposal nominally aims to reduce emissions from existing power plants, in order to meet EPA’s prescribed GHG reduction goals, states would have to implement measures far “beyond the fence” of existing plants. The proposed rule sets state emission rate standards based on the quantified extent to which EPA assumes that each state can 1) shift energy production from EGUs fired by coal to those fired by natural gas, nuclear, and renewable energy sources and 2) implement demand side energy efficiency measures. Thus, the rule represents a potential shift from EPA’s traditional role as an environmental regulator, governing what comes out of power plants, to that of an energy regulator, governing the mix of electricity sources used to meet our nation’s power needs. This shift may test the limits of state and EPA regulatory authority.
Section 111(d) of the CAA requires EPA to promulgate regulations requiring states to submit plans establishing “standards of performance” for existing sources that emit an air pollutant that is not a criteria pollutant under Section 108 of the Act or a hazardous air pollutant under Section 112 when a new source performance standard under Section 111(b) would apply to that source if it were new. EPA already has proposed carbon dioxide standards for new and modified and reconstructed fossil fuel EGUs in separate rulemakings.2 Since GHGs are neither a criteria pollutant nor a Section 112 hazardous air pollutant, EPA now is proposing to extend its Section 111 GHG regulatory program to include existing power plants. The existing source standards also depend on the existing of a new source performance standard applicable to GHGs for the same source category.
Section 111(a) defines a “standard of performance” as “a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction” that has been “adequately demonstrated” taking into account cost and other factors. In the rule package, EPA proposes what it considers to be the “best system of emission reduction” for existing fossil fuel plants, emissions rate limits for fossil fuel plants in each state based on implementation of this system, and requirements for state plans that incorporate these limits, including a schedule for state implementation.