Clean Air Act Regulatory Activity

The Clean Air Act (CAA) has been at the center of several high-profile environmental policy debates in recent years. Under the CAA, the Environmental Protection Agency (EPA) has put forward several regulations aimed at reducing air emissions. These proposals have garnered responses from a broad array of industry, environmental, public health and other interests and have been subject to much attention in Congress, the courts and within the Executive Branch. 

Greenhouse Gas Regulations

Perhaps the highest-profile, politically charged CAA regulations during the Obama Administration have been those to regulate greenhouse gas (GHG) emissions. These regulations came about pursuant to the EPA's endangerment finding that GHGs are a pollutant that should be regulated under the CAA. The EPA first promulgated emissions standards for automobiles and large stationary sources. The Circuit Court of Appeals for the District of Columbia recently upheld the endangerment finding and those standards.

A few months ago, the EPA moved forward with a proposal to reduce GHGs from new power plants, known as New Source Performance Standards (NSPS). The NSPS for GHGs is the result of a legal settlement in 2010 between the EPA, clean air groups and some states. By setting a GHG emission rate limit of 1,000 pounds of carbon dioxide equivalent per megawatt-hour, the EPA has proposed a standard that is achievable for natural gas-fired power plants but is not achievable for coal or oil plants. The EPA has not announced when the NSPS will be made final. Below are key issues that have been raised regarding this NSPS.

• Construction of new coal-fired units in the U.S. would require building them with carbon capture and sequestration (CCS) technology. At this time, CCS technology is not available on a commercial scale.

• The standards currently do not apply to existing coal-fired units, but there are questions as to whether the standards could be forced on existing units if a court challenge is brought under the New Source Review provisions of the CAA.

• The EPA has said that it has no immediate plans to complete rules for existing plants and petroleum refineries, but the settlement agreement included a requirement to issue regulations for existing coal-fired units. 

Non-GHG Regulations Impacting Utilities

In the last year alone, the EPA has promulgated two regulations to address non-GHGs from power plants and other industrial facilities:

• The Cross State Air Pollution Rule (CSAPR), which enacted substantial reductions in the emissions of nitrogen oxides and sulfur dioxides from coal plants in 27 states in the Eastern U.S. and Midwest. The Circuit Court of Appeals for the District of Columbia stayed CSAPR from going into effect on January 1 of this year, in response to a lawsuit. Arguments were heard on an expedited schedule and a final ruling on CSAPR is expected shortly.

• The Mercury and Air Toxics Standards, which required substantial reductions in mercury and other pollutants emitted from power plants. The final standard was published on February 16, 2012. In response to concerns over this regulation, the Senate considered a resolution to strike down the rule under the Congressional Review Act, which allows Congress to veto a regulation that has been finalized by the President. The resolution required 50 votes to pass the Senate, but it failed on a vote of 46 – 53.  

Particulate Matter Standards

The EPA also recently proposed new standards for reducing fine particles from industrial sources like power plants and factories, known as particulate matter or PM 2.5 standards. The EPA's decision to revise the standards stemmed from a court ruling that the current standards are not sufficient to protect public health. The EPA's proposal to reduce the standards from 15 micrograms per cubic meter (averaged over a year) to between 12 and 13 micrograms has the potential to put more counties into non-attainment status. The EPA is holding two public hearings on these revisions this summer and congressional hearings have been held. The agency plans to finalize the rule before the end of the year.

EPA Air Program Enforcement Efforts

The EPA's Office of Enforcement and Compliance Assurance, which investigates potential violations of EPA regulations, has been especially active on air issues recently. Below are some recent examples of actions that the EPA has brought against industry for potential violations of the CAA.

• In June, the EPA and the Department of Justice (DOJ) announced a settlement with Dairyland Power Cooperative (DPC) in Wisconsin. DPC will spend approximately $150 million on retrofits, $5 million on environmental mitigation and a will pay a $950,000 civil penalty.

• In May, the EPA and the DOJ announced a settlement with SABIC Innovative Plastics US LLC. The company is required to pay a $1 million civil penalty to settle alleged violations of the CAA at chemical manufacturing facilities in Mt. Vernon, Ind. and Burkville, Ala.

• In May, the EPA and the DOJ announced a settlement with Colorado-based QEP Field Services Co. (QEPFS) to resolve alleged violations of the CAA at five natural gas compressor stations on two Native American Indian reservations in Utah. QEPFS will pay a $365 million civil penalty and pay $350,000 into a Clean Air Trust Fund.

• In April, the EPA and the DOJ announced that Hess Corporation agreed to pay an $850,000 civil penalty and spend more than $45 million in new pollution controls to resolve CAA violations at its Port Reading, N.J., refinery.