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US EPA could 'split' permitting changes from coal plant rule, air chief says

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US EPA could 'split' permitting changes from coal plant rule, air chief says

The U.S. Environmental Protection Agency could separate proposed changes to a decades-old Clean Air Act permitting program from the Trump administration's proposed replacement rule for the Obama-era Clean Power Plan, the agency's chief of air pollution policy said Feb. 12.

The program, known as New Source Review, or NSR, requires fossil fuel-fired power plants to install state-of-the-art pollution controls when they undertake modifications that are estimated to result in a "significant" increase in regulated emissions on an annual basis.

As part of its proposed Affordable Clean Energy, or ACE, rule, the EPA would waive NSR permitting requirements for coal-fired power plants seeking to make efficiency upgrades known as heat-rate improvements that are not projected to result in an hourly emissions rate increase. Such a waiver would apply even if a plant's annual emissions rate may increase, such as what could occur if a plant starts to operate more hours during the year.

Without the permitting changes, the ACE rule and NSR "would be in conflict," EPA Office of Air and Radiation Administrator Bill Wehrum explained during a panel discussion at the National Association of Regulatory Utility Commissioners winter policy conference in Washington, D.C.

Unlike the Clean Power Plan, which assigned states aggressive carbon dioxide emission reductions goals, the ACE rule would give state regulators a menu of heat-rate improvement technologies to select for existing coal-fired power plants on a case-by-case basis.

"If an efficiency project by itself is economically and technically viable, but then you lay the cost of NSR on top of that, we believe many of the most viable efficiency projects would cease to be justifiable and could not be imposed by the states under the authority of ACE," Wehrum said.

Asked if the ACE rule could function without the NSR changes, Wehrum told S&P Global Market Intelligence that the regulation could still work without relaxing the program, "but not nearly as well as with the NSR changes."

In its August 2018 proposed rule, the EPA proposed to make the NSR changes "severable" from the ACE rule, meaning the rest of the regulation would be left intact if a court invalidates the revisions to the NSR program. But Wehrum also suggested on Feb. 12 the EPA could "split" the proposed permitting changes into a separate regulatory action in the interest of expediency.

"I want to get all of this done as quickly as possible, and we want to give ourselves the flexibility that if for whatever reason one piece of the package gets slowed down, that we'd be able to split them apart and do them in pieces rather than in one big clump," Wehrum said. "We haven't made a final decision as to whether to split them apart or keep them together, but we wanted to have that flexibility."

Legal implications

Joseph Goffman, senior legal counsel in the EPA's Office of Air and Radiation in the Obama administration, said in a Feb. 12 interview that the agency is likely considering the NSR changes as a separate action to reduce legal risk as it seeks to finalize a replacement to the Clean Power Plan. "Proposing the NSR changes separately, to some degree, reduces the vulnerability of a final ACE," he said.

The U.S. Court of Appeals for the District of Columbia Circuit struck down two attempts by the EPA to weaken the NSR program in 2005 and 2006 under the George W. Bush administration, when Wehrum first served in the EPA's air office.

Meanwhile, the move could also open the EPA to new legal action over a set of piecemeal changes to how it interprets and enforces the program's current requirements, Goffman said.

The EPA in November 2018 restored a Bush-era interpretation of the program that had been stayed for nearly a decade, and in February the agency released a proposal to drop NSR enforcement from a list of top enforcement objectives. "If the agency takes the NSR changes out of the ACE proposal, then people are going to legitimately ask why the agency isn't putting all of these different changes into one package," Goffman said.

The EPA's proposed changes to the NSR program could allow some coal plants to burn less fuel by becoming more efficient, but the agency's own analysis also shows the ACE rule could lead to up to 1,400 more deaths compared to the Clean Power Plan by allowing modified coal plants to run longer and avoid installing pollution controls. Roughly 80% of coal-fired generation facilities currently are operating with less effective pollution controls than what would be required if they underwent NSR permitting, according to the EPA's analysis.