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.

On January 25, 2018, the U.S. Environmental Protection Agency (“EPA”) withdrew its 1995 “once in always in” guidance. Under that guidance, facilities classified as “major sources” of hazardous air pollutants (“HAP”) as of the “first compliance date” of a maximum achievable control technology (“MACT”) standard under Section 112 of the Clean Air Act are required to comply permanently with the MACT standard. Now, EPA’s current policy is that a major source that limits its potential to emit (“PTE”) to below major source thresholds can become an area source and will no longer be subject to the major source MACT.

The Clean Air Act defines “major source” as “any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants.” This definition expressly allows PTE to be calculated “considering controls,” and does not address the timing for when a source will be classified as a major source. As a result, EPA found that its “once in always in” policy “created an artificial time limit” contrary to the plain language of the Clean Air Act and must be withdrawn.