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Business Roundtable (BRT) is an association of chief executive officers of leading U.S. companies working to promote sound public policy and a thriving U.S. economy.

Background


Section 112 of the Clean Air Act (CAA) requires EPA to establish National Emissions Standards for Hazardous Air Pollutants (NESHAPS) for major (and area) sources of hazardous air pollutants (HAPS) that are subject to regulation.  A major source is defined as a stationary source that emits or has the potential to emit 10 tons per year (tpy) or more of any single HAP or 25 tpy or more of any combination of the 187 HAPS subject to regulation.  HAPS are different from other types of air pollutants (e.g., sulfur dioxide, nitrogen dioxide, and particulate matter) that are regulated under other provisions of the CAA.


Major sources generally must install and operate maximum achievable control technology (MACT) to limit HAPS emissions.  For new sources, MACT-based emissions standards cannot be less stringent than the emissions control achieved in practice by the best-controlled similar source.  MACT-based standards for existing sources may be less stringent than standards for new sources but shall not be less stringent than the average emission limitation achieved by the best performing 12 percent of existing sources.


Section 112(n)(1), however, provides that steam generating electric power plants shall not be subject to regulation under Section 122 unless EPA determines that “such regulation is appropriate and necessary” on the basis of a study of the public health hazards of such plants.  On December 20, 2000, EPA issued a determination that it was appropriate and necessary to include coal- and oil-fired power plants among HAPS sources subject to regulation.  On March 29, 2005, however, EPA reversed course and decided to “delist” those power plants from regulation under the statute (Delisting Rule).


Soon thereafter, on May 18, 2005, EPA issued a final rule on mercury emissions from new and existing coal-fired power plants.  The so-called Clean Air Mercury Rule (CAMR) set new source performance standards (NSPS) for new coal-fired power plants under Section 111 of the CAA, and established a national mercury cap and trade program for electric generating units, allocating a mercury emission budget to each state.  CAMR was designed to reduce mercury emissions from electric generating plants by 70 percent by 2018.  CAMR was appealed, along with the Delisting Rule, and the U.S. Court of Appeals for the D.C. Circuit, on February 8, 2008, remanded CAMR based on EPA’s failure to properly “delist” electric generation units pursuant to Section 112(c)(9) of the CAA.


On December 18, 2008, EPA was sued for its alleged failure to issue MACT-based NESHAPS for coal- and oil-fired electric power plants.  That lawsuit resulted in an October 2009 consent decree under which the current utility boiler rulemaking proceeding was initiated. 


 


Current Rulemaking Status


On February 16, 2012, EPA issued its final NESHAPS rule under Section 112 (renamed the Mercury and Air Toxics Standard) for new and existing coal- and oil-fired electric power plants.  The rule would limit emission of heavy metals, including mercury (Hg), arsenic, chromium, and nickel, and acid gases, including hydrogen chloride (HCl) and hydrogen fluoride (HF).  The rule also includes revised NSPS for new oil- and coal-fired power plants under Section 111.  The revised NSPS would limit emissions of particulate matter (PM), sulfur dioxide (SO2), and nitrogen oxides (NOX). 


The rule would allow three years for electric power plants to meet the standards, with the possibility of an additional year upon a demonstration that additional time is needed in order to complete construction.


The MATS rule was upheld by the D.C. Circuit Court of Appeals on April 15, 2014. 


 


Potential Impact of Regulation


EPA has estimated that approximately 4.7 GW of existing coal capacity would be retired as a consequence of the proposed rule.  However, a number of independent and industry estimates place the likely retirements in the range of approximately 25 GW to 60 GW of capacity.  The U.S. currently has approximately 330 GW of coal capacity.   As of April, 2014, approximately 47 GW of coal capacity have announced retirement plans by 2016.  While not all of this capacity is retiring on account of the utility MATS rule, the rule has been a substantial contributor to these announcements.  


While some existing coal-fired plants will meet the proposed MATS without substantial additional investment, EPA estimates that 44 percent of coal-fired plants lack advanced pollution control equipment.  EPA has estimated annual cost of the final rule would be $9.6 billion by 2015.   The aggressive time frame for compliance with the standards will be extremely problematic given the number of units that will require retrofits.  In addition, the timing of this rule is troublesome given the myriad of other rules facing the power sector (e.g., transport rule, ozone standard revisions, potential revisions to PM standards, CWIS) and the investment these rules will require.  


 


*Please note:  This document is current only as of the date listed above.*

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