ERCC Comments on EPA’s Proposed Rule for Modified & Reconstructed Sources

October 19, 2014
ERCC Comments on EPA’s Proposed Rule for Modified & Reconstructed Sources
ID No. EPA–HQ–OAR–2013-0603
 
These comments are filed on behalf of the Electric Reliability Coordinating Council (“ERCC”), a group of power-generating companies serving millions of businesses and households across the United States, and dedicated to a balanced energy portfolio that ensures reliable and affordable electric power, an essential prerequisite for the protection of the environment, public health and the economy.  The comments deal with the standards proposed to address carbon dioxide (CO2) emissions from reconstructed and modified power plants.  79 Fed. Reg. 34959-994 (2014).
 
The finalizing the proposed rule is insufficient to authorize a rule for existing power plants under Section 112(d)
 
The Clean Air Act stipulates that EPA issue a rule for new sources before it promulgates a regulation requiring the states to address existing sources under Section 111(d). 42 USC 7411(d)(1).  The proposed rule for modified and reconstructed sources does not satisfy that requirement. The Clean Air Act defines modified and reconstructed sources as “new.”  However, the statute says Section 111(d) establishes standards of performance for existing sources “to which a standard of performance under this section would apply if such existing source were a new source.” The test is whether existing sources would be regulated, were they new. The answer, in the absence of a New Source Performance Standard that governs actual new sources under Section 111(b), is no. The proposed rule for modified and reconstructed sources only regulates a subset of new sources, and not the category in its entirety. Therefore, it is possible that an existing source could be new and still fall outside the list of sources that would be regulated by the proposed rule. Thus, EPA cannot cite the proposed rule for modified and reconstructed sources to satisfy the agency’s obligations under Section 111(d).
 
This point is a critical one.  On January 8, 2014, EPA did in fact publish a proposal to govern actual new sources.  79 Fed. Reg. 1430.  This proposed rule has been widely criticized on its own terms for inaccurate assumptions regarding the commercial viability of carbon capture and sequestration as a control technology.  See, e.g., the testimony of former Obama Administration Department of Energy Official Charles McConnell, Hearings Before the House Committee on Science and Technology, July 30, 2014, at http://docs.house.gov/meetings/SY/SY00/20140730/102574/HHRG-113-SY00-Wstate-McConnellC-20140730.pdf
 
In addition, the proposed rule for new power plants has already been subject to litigation for its impermissible reliance on the performance of units funded by the federal government.  In dismissing one suit as preliminary, a federal court recently held as follows:
 
“In particular, section 402(i) of the Energy Policy Act provides that ‘[n]o technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be . . . adequately demonstrated for purposes of’ section 111 of the Clean Air Act. 42 U.S.C. § 15962(i) (emphasis supplied). In other words, the federal government cannot subsidize construction of facilities with the Energy Policy Act and then claim that the facilities for which it paid demonstrate, for Clean Air Act purposes, that the technology is viable.”  Nebraska v. EPA, 4:14-CV-3006, (USDC Neb. Oct. 6, 2014).
 
The standard is arbitrary and capricious in light of other proposals.
 
There is little doubt that the statutory scheme envisioned under the Clean Air Act is one in which new, modified and reconstructed facilities in a source category are held to a higher standard than existing facilities in the same source category.  Such an approach goes to the heart of the technology-forcing nature of the Act.  Newly constructed facilities, of which modified and reconstructed facilities are a subset, are subject to tough standards because such technology is more capable of being implemented when substantial redesign is undertaken.  In the proposed rule, EPA references carbon emissions levels that might have been observed in practice even if only briefly, placing the performance characteristics at or beyond the edge of achievability. Despite the questionable legality of these standards, the proposed rules for existing power plants exceed by a far margin what is being required of modified or reconstructed units.  In other words, the facilities least suitable for extreme regulatory treatment – and for which the least authority exists to do so – are being treated the most harshly under the EPA proposals.  When the modified and reconstructed proposal is viewed together with the proposed rule for existing plants – both rules having been proposed on the same date – both rules constitute a scheme which backwards-orients the Clean Air Act and which is therefore arbitrary and capricious.
 
The proposed standard is not achievable.
 
The current proposal is not “adequately demonstrated” because it is predicated on the performance of certain supercritical boilers as a basis for a best system of emissions reduction, or BSER.  But EPA fails to take into account the substantial changes necessary to transform a subcritical boiler to a supercritical boiler.  Essentially, the Agency assumes the ability to swap out industrial equipment which would transform a boiler from its current operation to wholly separate category or sub-category.  This is impermissible and not achievable in practice.
 
Modified and reconstructed sources cannot also be subject to 111(d).
 
Seemingly because EPA concedes that the standard for existing sources exceeds the standard for modified and reconstructed sources in stringency, EPA simply wishes the problem away by essentially requiring that a modified or reconstructed source continue to be regulated as an existing source, thereby conflating the two standards.  EPA’s attempt to keep a source captive to 111(d) even after it enters the regulatory ambit of 111(b) by modification or reconstruction is without precedent and constitutes an illegal departure from structure of the Act.  Such a position taken by the Agency seems frankly inconsistent with enforcement posture EPA has taken for some years now regarding its interpretation of the new source review, or NSR, program.  In those cases, EPA demands that the barest modification forces a departure from the world of existing sources; here, EPA says the opposite.  You can modify but you still are treated as an existing source.  EPA cannot take such arbitrary positions simply because of its motivation to control the electricity market by means of environmental regulation.
 
The Proposal Mistreats Startup and Shutdown Operations.
 
Conditions of startup and shut down must be accommodate in any sensible clean air rule, and this is all the more important in the carbon context given the energy implications of such operations. EPA’s assumptions regarding the predictability of startup and shutdown events have led the Agency to the erroneous assumption that carbon emissions can be avoided or even reduced during these operations.  EPA’s view is in error and should recognize the need for different standards during startup and shutdown as it has done elsewhere in implementing the Clean Air Act.