United States: The Energy Policy Act Of 2005: A New Headache For President’s Climate Action Plan? Depends On The Meaning Of "Solely"

Last Updated: November 23 2013
Article by D. Cameron Prell

On November 15th the Republican leadership of the House Energy and Commerce Committee sent a letter to EPA Administrator Gina McCarthy, raising a number of political questions regarding the ability of EPA to finalize Carbon Pollution Standards for new fossil fuel plant plants. The letter highlights that §15962(i) of the Energy Policy Act of 2005 expressly states (almost like it was written by a time traveler):

"No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction, by 1 or more facilities receiving assistance under this Act, shall be considered to be...adequately demonstrated for purposes of [Section 111 of the Clean Air Act (CAA)]."

Why is this important?  Because in issuing its proposed carbon pollution standards under Section 111(b) of the CAA on September 20, 2013, EPA concluded that partial carbon capture and storage (CSS) is feasible and available in the marketplace and therefore "adequately demonstrated".  EPA based its conclusion on existing DOE and other reports and literature, citing the fact that two coal-fired power plants with partial CCS are currently under construction Unfortunately those two cited coal-fired power plants received some measure of federal government funding under the very program established by the Energy Policy Act of 2005.

EPA's statutory obligation is to set 111(b) standards that must reflect the "best system of emission reductions" (BESR) that has been "adequately demonstrated" – taking into account environmental impacts, cost factors and energy requirements.  In setting BSER for coal under re-issued proposal, EPA based its proposal on the partial use of CCS technology.

The above-referenced 15962(i) of the Energy Policy Act of 2005 doesn't appear to have been factored into EPA's Septemeber 20 proposed rule.  It is definitely a wonder why the 2005 statutory proscription on identifying certain subsidized technologies as "adequately demonstrated" wasn't mentioned when EPA was citing subsidized CCS technologies as evidence that CCS technology is adequately demonstrated .  Normally, these types of issues are uncovered in pre-proposal inter-agency review processes where the Department of Energy, which would have known about the issue, would have spotted it.  But it apparently wasn't.  Maybe it was an oversight, maybe not.  The House committee leadership think it is such a big deal that they're asking the Administrator to withdraw the proposed carbon pollution standards.

Regardless, bringing §15962(i) into public discourse will cause some political headaches for the administration.  But this may not be as big a legal issue as the Republicans in the House think it is.  That said, it also may be a bigger deal than most environmental NGOs think (see "Smoke from Capitol Hill").

It is not clear whether EPA can still defend a final rule using other evidence (assuming the rule will be challenged, which it will be).  EPA will therefore spend the next few months considering (among the myriad other issues raised by the proposal) how it will finalize the rule in a manner that relies on CCS literature and outside evidence of CCS feasibility rather than citing to the example subsidized facilities (or cited to them, but in a manner that explains that is not the sole basis for EPA's determination).  It is likely EPA will be able to so rely.  But politically speaking, this is going to be awkward.  EPA would be relying on *literature* about CCS technology rather than in-the-ground US-based projects using CCS technology to conclude CCS is adequately demonstrated – thereby setting performance standard for new coal plants that is only achievable if CCS is employed.

EPA and the administration has already made the decision to move forward aggressively with carbon pollution standards.  Notwithstanding these new optics and litigation risks, EPA could stick to their guns and explain away the §15962(i) proscription in a final rule in a way that highlights the meaning of the word "solely" (re-read the 15962(i) language above and Dan Lashof's NRDC post), or it may make drastic changes by altering the final rule to make things CCS-ready and set a non-CCS CO2lbs/MWh, or alternately setting an efficiency-based standard.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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