EPA Proposes to Rescind Two Biden-EPA Fossil Fuel-Fired Power Plant Rules

On June 11, the EPA proposed two Clean Air Act (CAA) rules that would affect fossil-fuel fired electric generating units (EGUs).  One rule would repeal greenhouse gas (GHG) standards under Section 111 and the second would repeal the 2024 EPA amendments to the mercury and air toxics (MATS) standards.  The proposed rules are a part of the current administration’s stated goal to promote U.S. energy by reducing regulation of the power sector.  The EPA estimates that, together, the two rules will save more than $1.3 billion in regulatory costs per year.  Here are five key takeaways from these proposals:

1. EPA is proposing to remove all NSPS-based limits on GHG emissions from EGUs.
   The regulation of GHG emissions from power plants has been at issue since the Obama administration.  The first Trump administration initially proposed to repeal the 2015 Clean Power Plan before replacing it with the Affordable Clean Energy rule (ACE) governing existing sources, which was vacated by the U.S. Court of Appeals for the D.C. Circuit in 2021.  The EPA is now proposing to repeal all GHG emission standards for EGUs under Section 111 of the CAA.
2. EPA principally bases its proposed GHG emissions standards repeal on a finding that GHG emissions from U.S. power plants do not meet the level required for regulation under the CAA.
   The EPA is proposing to adopt a new reading of the CAA to require the EPA to make a pollutant-specific finding that the sources being regulated make a “significant contribution” before adopting a rule regulating emissions, such as emissions of GHGs from EGUs.  Following that framework, according to the EPA’s proposal, GHG emissions from U.S. fossil fuel-fired EGUs constitute 3% of global emissions and their share is declining, and thus the “EPA is proposing to determine that GHG emissions from fossil fuel-fired power plants do not contribute significantly to dangerous air pollution.”
3. As an alternative basis, the EPA proposes to repeal the GHG emission standards for most power plants because there is no method for controlling emissions that meets the requirements for the best system for emission reduction (BSER) for many EGUs.
   Alternatively, even if it were found that power plants do significantly contribute to air pollution, the EPA would still rescind GHG emissions standards by proposing to reverse the Biden-EPA findings that there were controls available to limit GHG emissions from steam generating power plants.  The EPA proposes to find that the 90% carbon capture and sequestration (CCS) previously imposed is not adequately demonstrated or available at a reasonable cost for coal-fired EGUs and therefore does not qualify as BSER.  Likewise, the EPA would reverse its previous support for natural-gas co-firing, proposing that 40% natural gas co-firing is inefficient and constitutes impermissible “generation shifting” under Supreme Court precedent.  The alternative approach would also repeal emissions guidelines for existing fossil fuel-fired steam generating units because developing State Implementation Plans for them would be an inefficient use of resources.
4. EPA’s proposed repeal of amendments to MATS would restore pre-2024 MATS limits.
   The MATS requirements were originally imposed in 2012, but the Biden-EPA imposed more stringent standards in its 2024 final rule.  The EPA’s proposal would relax the more stringent filterable particulate matter (PM) emission standard for coal-fired EGUs and mercury standard for lignite-fired EGUs that the agency had imposed in 2024; the proposal would raise the standard for mercury and other hazardous air pollutant metals to triple the current limits.
5. EPA’s proposal would also return more flexibility to EGUs on how to demonstrate compliance with MATS.
   The proposed rule also reinstates two options for EGU owners and operators to demonstrate compliance with the MATS filterable particulate matter standard.  Under the proposed rule, EGU owners can use PM continuous emissions monitoring systems (PM CEMS), PM continuous parametric monitoring systems (PM CPMS), or quarterly stack testing.  The current regulation requires PM CEMS.

Beyond the power sector, these rulemakings bear close watching.  In making its finding of no significant contribution in its proposed GHG emissions standard repeal, the EPA states that U.S. power plants contribute less than 3% of global GHG emissions and their share of global emissions has been declining for the past 20 years to support its determination.  If maintained in the final rule and sustained by the courts, this approach could potentially create a new hurdle for regulating GHG emissions from other sectors that emit fewer GHG emissions than power plants.  Similarly, the EPA’s BSER analysis may also have impacts on other sectors, as the agency’s stricter reading of what is needed to establish BSER could cause regulators to hesitate before requiring industry to employ new technologies.

The proposed rules were published in the Federal Register on June 17.  The EPA will accept comments on the Repeal of Greenhouse Gas Emissions Standards for Fossil Fuel-Fired Electric Generating Units until August 7, and will hold a public virtual hearing on July 8.  Interested parties can comment on the National Emission Standards for Hazardous Air Pollutants until August 11; the EPA will hold a public virtual hearing on July 10.

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.