On August 21, 2018, the Environmental Protection Agency (EPA) released a prepublication copy of its proposed Affordable Clean Energy (ACE) rule. If adopted, the rule would (1) establish emission guidelines for greenhouse gas emissions from existing electric utility generating units (EGUs); (2) revise the regulations governing how states implement the emission guidelines; and (3) revise the New Source Review (NSR) program to allow modification to existing EGUs without triggering permitting requirements.
The Clean Power Plan regulations adopted by the Obama administration would have limited GHG emissions by directing states to reduce emissions by applying a combination of three “building blocks” as the best system of emission reduction (BSER), which consisted of:
1) Improving heat rate at affected coal-fired steam generating units;
2) Substituting increased generation from lower-emitting natural gas combined cycle units for decreased generation from higher-emitting affected steam generating units; and
3) Substituting increased generation from new zero-emitting renewable energy generating capacity for decreased generation from affected fossil fuel-fired generating units.
However, EPA proposed on October 16, 2017 to repeal those rules on the grounds that requiring substitution of increased generation from other sources would exceed EPA’s authority under Section 111(d) of the Clean Air Act by proposing emissions reductions beyond those that can be applied at and to an individual source, such as measures based on a physical or operational change to a building, structure, facility, or installation at that source. Consistent with that proposal, the ACE rule suggests that BSER is heat rate improvements that can be applied at a specific source.
The ACE rule also proposes a new 40 C.F.R. Part 60 Subpart Ba to contain implementing regulations for the adoption and submittal of state plans establishing standards of performance for new EGUs. The new implementing regulations will carry over a number of requirements from existing 40 C.F.R. Part 60 Subpart B, but will also make a number of changes intended to provide more flexibility to states and EPA. Specifically, the new implementing regulations would provide explicit authority for a state plan to include specific provisions in addition to or that supersede the generally applicable requirements of Subpart Ba; use the term “guideline document” rather than “emission guideline” to remove the requirement for EPA to provide a presumptive emission standard; use the term “standard of performance” rather than “emission standard” to allow states to include design, equipment, work practice, or operational standards when a standard of performance is not feasible; allow states more time to prepare the state plan submission; allow EPA more time to take action on a state plan submission, and more time to promulgate a federal plan as appropriate; establish completeness criteria and a process for state plan submittals; and allow usage of the internet to satisfy public hearing requirements.
Finally, the ACE rule also proposes to allow existing EGUs to make efficiency improvements consistent with the proposed BSER without triggering NSR permit requirements. The NSR program generally requires stationary sources to obtain permits prior to construction of a new major stationary source, and prior to modification of an existing stationary source that will result in a significant emissions increase and a significant net emissions increase. However, the ACE rule would allow State Implementation Plans to include an hourly emissions increase test that must be met before NSR permitting requirements would apply, which could be applied as follows:
- Alternative 1 – Comparing the pre-change maximum actual hourly emissions rate in pounds per hour (lb/hr) to a projection of the post-change maximum actual hourly emissions rate in lb/hr, considering a period of 365 consecutive days within the 5 years preceding the start of construction;
- Alternative 2 – Comparing the pre-change maximum actual hourly emissions rate in lb/hr to a projection of the post-change maximum actual hourly emissions rate in lb/hr, considering the highest emission rate (lb/hr) actually achieved at any time within the 5 years preceding the start of construction; or
- Alternative 3 – Comparing the maximum achievable hourly emissions rate before the change to the maximum achievable hourly emissions rate after the change.
The proposal would apply the hourly emissions test to all EGUs, but EPA has solicited comments on whether to apply the test to a smaller subset of units, such as only the affected EGUs that are making modifications to comply with their state’s standard of performance pursuant to the emission guidelines.
Comments on the proposed rule must be submitted within 60 days of the date the notice is published in the Federal Register. We’ll post here when the proposed rule is published.