New source rule ‘far exceeds’ EPA authority, foes tell court

By Amanda Reilly | 10/14/2016 01:15 PM EDT

States, industry groups and power companies yesterday fired their opening shots in the legal battle over the Obama administration’s carbon rule for new power plants.

States, industry groups and power companies yesterday fired their opening shots in the legal battle over the Obama administration’s carbon rule for new power plants.

U.S. EPA has failed to show that carbon capture and storage technology has been adequately demonstrated and that the rule’s carbon dioxide limits are achievable, the opponents argued in opening briefs filed in the U.S. Court of Appeals for the District of Columbia Circuit.

The states and groups are also challenging EPA’s Clean Power Plan, which regulates carbon dioxide emissions from existing power plants, in the D.C. Circuit.


"Like the Power Plan Rule, which has been separately challenged before this court, this rule far exceeds the agency’s authority," a group of 23 state petitioners, led by West Virginia, wrote in an opening brief yesterday. "Congress has not granted EPA the power to choose winners and losers in the energy marketplace."

EPA’s New Source Performance Standards finalized in August of last year require both new and modified fossil-fuel-fired power plants to meet carbon dioxide limits. The standards for coal plants can’t be met by efficiency improvements alone, meaning operators of new power plants will have to capture carbon and sequester it in deep saline formations.

The standards are separate from but related to the Clean Power Plan. Under the law, EPA can’t require existing power plants to meet stricter standards than new power plants, nor can the agency regulate existing sources that aren’t covered in new-source rules.

The D.C. Circuit heard nearly seven hours of oral arguments over challenges to the Clean Power Plan, some of which touched on the same issues raised in yesterday’s opening briefs, at a marathon court session last month (Greenwire, Sept. 27).

The opening briefs filed yesterday challenge the so-called best system of emission reduction, or BSER, which forms the basis of the new-source standards. EPA says its system for controlling emissions is achievable because the CCS it requires has been adequately demonstrated to be a viable compliance option.

But the industry opponents, led by Murray Energy Corp., and states argue that CCS is costly and hasn’t been proved in the real world.

"If EPA can require emission reductions based on a system that does not exist at commercial scale anywhere in the world," the state challengers’ brief said, "it has the power to deter the construction of new coal-fired power plants in favor of EPA’s preferred energy sources."

The petitioners also argued that EPA can’t rely on facilities that receive government funding to prove that its system of emissions reduction has been adequately demonstrated.

According to petitioners, EPA’s system relies entirely on small-scale carbon capture pilot programs and facilities that have received federal funding.

EPA can "only identify one facility," the states said, where its preferred carbon capture system is fully operational: Canada’s Boundary Dam.

"But that facility receives substantial government funding" from Canada, the states wrote. "It is also less than one-quarter the size of a full-scale power plant, has suffered massive cost overruns and does not sequester in deep saline formations."

North Dakota filed a separate opening brief yesterday raising concerns about the rule’s treatment of lignite-coal-fueled power plants. In 2013, 99.4 percent of North Dakota’s fossil-fuel-powered electricity came from coal-fired generation, with the majority coming from lignite coal.

Power plants fueled by lignite coal have higher carbon dioxide emissions and normally require more energy-intensive control technologies than other coal-fired power plants.

In its brief, North Dakota said that "unresolved technical challenges" in deploying CCS at lignite-coal-fired power plants mean the rule places a "de facto ban" on new lignite plants.

Along with raising doubts about achieving the New Source Performance Standards, the state opponents and industry also argue that they would impose significant costs with minimal carbon dioxide reductions. States said the Supreme Court’s decision last year finding that EPA didn’t adequately consider the costs of its mercury standards for power plants supports their argument.

And the challengers argued that EPA neglected its Clean Air Act duty to find that carbon dioxide emissions of new and modified power plants contribute significantly to the endangerment of public health and welfare.

The Energy & Environment Legal Institute separately raised a notice-based challenge to the rule, arguing that EPA unlawfully failed to include in the public docket communications between EPA officials and advocates that were obtained through a Freedom of Information Act request.

EPA’s response to the arguments is due on Dec. 14. The agency today said it could not comment on pending litigation.

A coalition of states, industries and interest groups has also challenged EPA’s denial of five administrative petitions to take another look at its rule, which the D.C. Circuit combined with the challenges to the underlying rule. Eighteen states, the District of Columbia, cities, environmentalists and some utilities are defending EPA in the litigation.

Click here to read the brief from 23 states.

Click here to read North Dakota’s brief.

Click here to read the brief from industry petitioners.