U.S. EPA Publishes New Regulations Governing State Plans for Existing Sources of Emissions

On November 9, 2023, the U.S. Environmental Protection Agency (EPA) published implementing regulations that set timelines and other requirements for state plans to limit pollution from existing sources under Clean Air Act (CAA) Section 111. The amended provisions apply to all emissions guidelines published after July 8, 2019, and will affect the scope and pace of development of updated performance standards for existing facilities.

Background

Under CAA Section 111(d), Congress directed EPA to issue regulations directing states to establish performance standards for emissions of certain air pollutants from covered categories of facilities. To implement this authority, EPA develops emission guidelines for existing sources that meet the Section 111(d) criteria, which states in turn are directed to integrate into state plans within the boundaries outlined in CAA § 111.

EPA had longstanding rules governing the process for states to adopt plans under CAA § 111, which EPA amended when it adopted the 2019 Affordable Clean Energy Rule (ACE Rule). In American Lung Association v. EPA, No. 19-1140 (D.C. Cir. 2021), the U.S. Court of Appeals for the District of Columbia Circuit vacated the ACE Rule, finding amendments to the regulatory framework governing state plans arbitrary and capricious.

On December 23, 2022, EPA issued a proposed rule, in part to address those portions of the regulations governing the development state plans that were vacated in American Lung. After receiving public comments, EPA published a final rule on November 9, 2023.

Implementing Regulations

In its final rule, EPA contends the new regulations provide timelines intended to provide enough time for states to develop and submit plans and for EPA to review and act on those plans (or issue a federal plan if a state plan is rejected) but short enough to comply with American Lung. Notable provisions:

• States have 18 months to submit plans to EPA, and EPA has 60 days to determine whether the plans are complete and 12 months to take a final action (approve or disapprove a plan or issue a federal plan).
• State plans with compliance deadlines longer than 20 months after the plan is due to EPA must include increments of progress required under applicable emissions guidelines.
• EPA may find previously approved state plans substantially inadequate to meet CAA or emissions guidelines requirements and require a plan revision.
• EPA may approve state plans that allow sources to meet standards of performance in the aggregate, such as through trading or averaging.
• EPA allows a less-stringent performance standard or longer compliance deadline if EPA or the state
  • demonstrates that the facility cannot reasonably achieve the degree of emission limitation or compliance date in the applicable guidelines because of unreasonable cost, physical impossibility or technically infeasibility, or other facility-specific factors, but only if a state demonstrates fundamental differences between facility-specific information and information EPA considered in determining degree of emission limitation for source category
  • demonstrates that the facility cannot reasonably achieve the degree of emission limitation in the applicable emissions guideline using any system of emission reduction other than the best system of emission reduction
  • determines that the less-stringent standard or longer compliance date is no less stringent or longer than needed to address the fundamental differences
  • ensures the less-stringent standard still meets all other applicable requirements

Interested industry stakeholders should be aware of this new process for any new emission guidelines that EPA or states may issue that govern the facility’s operations. Stakeholders should also note potential challenges to the rule, which rule opponents have 60 days after the date of publication in the Federal Register to file in the U.S. Court of Appeals for the District of Columbia Circuit.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.