On March 16, 2011, EPA released a new proposed Maximum Achievable Control Technology (“MACT”) standard to limit hazardous air pollutant emissions (also referred to as “toxics”) from all coal- and oil-fired power plants.  The new rule would require every power plant to meet the same numeric emission limits, which would require the installation of additional pollution control equipment, such as scrubbers, selective catalytic reduction systems (“SCRs”), and fabric filter baghouses at many facilities.

EPA is proposing the new standard under Section 112 of the Clean Air Act following a multi-year study of hazardous air pollutant emissions from electric utility steam generating units.  After an initial study in 1999, EPA issued a determination in 2000 that power plants should be one of the source categories covered by Section 112. EPA reversed that decision in 2005 when it issued the Clean Air Mercury Rule (“CAMR”) to regulate mercury emissions from power plants via a trading program under Section 111 of the Act.  CAMR was ultimately overturned by the U.S. Court of Appeals for the D.C. Circuit in 2008 on the grounds that EPA had not properly “delisted” electric utility steam generating units from Section 112.  That decision essentially required EPA to develop a MACT standard for power plants. Under Section 112, MACT standards must apply on a unit-by-unit basis and, for all existing units, may be no less stringent than the average of the top twelve percent best performing sources.  In addition, all new units must meet even more stringent emissions limits based on the single best-performing similar source in the industry.

The proposed rule would impose stringent new emission limits on coal-fired units to require the control of mercury, acid gases (such as HCl), and particulate matter (as a surrogate for non-mercury metallic pollutants such as arsenic).  Coal-fired units would also have to comply with certain work practice standards to control the emission of organic air toxics, such as dioxins and furans. Oil-fired units would become subject to different emission standards, but those limits would address essentially the same pollutants.  As a part of its proposed MACT rule, EPA also proposed to update the limits on conventional pollutants under the New Source Performance Standards (“NSPS”) program, which already requires power plants to meet specific emission limits for particulate matter, nitrogen oxides, and sulfur dioxides.

EPA did not subcategorize the power plant industry nearly to the same extent that it divided up the industrial boiler source category in its final MACT rule for those sources, issued last month. EPA did, however, propose separate standards for lignite-fired coal units and for units that combust gasified coal, known as “integrated gasification combined cycle” or “IGCC” units. Also, unlike the recently finalized Industrial Boiler MACT, each of the new limits for power plants would apply during startup and shutdown.   

If finalized as proposed, the rule is expected to apply to approximately 1,350 units located at 525 power plants across the country, 1,200 of which combust coal.  To help facilities with multiple units comply with the proposed rule, EPA’s proposal would allow facilities to average emissions across multiple units in the same category, but such facilities would be required to demonstrate that total emissions will not increase under that alternative compliance method.  EPA expects that the proposed rule would cost the utility industry $10.9 billion in the year 2011, but only raise electricity rates for consumers by $3-4 dollars per month per utility bill.  In addition, in her announcement of the proposed rule to the public, EPA Administrator Jackson asserted that the proposed rule would benefit utilities by providing them with the certainty they need to move forward with pollution control projects.

According to the court order establishing the schedule for EPA’s rulemaking process, EPA must issue the final rule by November 16, 2011.  EPA could request an extension of that deadline, but that request would not necessarily be granted – just recently, EPA failed to obtain an extension of a similar deadline that applied to its Industrial Boiler MACT.  The proposed rule would allow all existing sources three years to comply, with a one-year extension available upon request and approval by the relevant permitting authority.  If the proposed rule becomes effective in early 2012, as scheduled, the compliance date for existing sources would be early 2015, or early 2016 if a one-year extension is granted upon the source’s request.  Perhaps due to the tight schedule, EPA has only allowed 60 days for comment on the proposal from the date it is published in the Federal Register, which is expected in the coming weeks.