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The issuance by the US EPA of the proposed rule for existing power plants under Section 111(d) of the Clean Air Act arrived after much input from stakeholders, speculation as to its likely content, and a host of issues for which US EPA now seeks comment prior to issuing a final rule in June 2015. The much anticipated rule, which is part of President Obama’s Clean Power Plan, is a state-based approach to meet carbon reductions of 30 percent by 2030. Under the proposed rule, each state is required to include in its state implementation plan (SIP) measures to ensure that it will comply with the federal limits established by this rule. In the event a state does not do so, the US EPA can utilize a Federal Implementation Plan (FIP) to ensure compliance.

The proposal contains four main blocks for state compliance plans to consider:

  1. Heat rate improvement at the generating unit.
  2. Reduce carbon emissions by utilizing less carbon intensive fuels (e.g. replace coal with natural gas).
  3. Reduce carbon by replacing carbon-based sources with non-carbon-based energy generation (e.g. nuclear or renewables).
  4. Utilization of energy efficiency to reduce the demand for energy and thereby impact the amount of power needed.

States have been told that they were granted substantial flexibility to craft a solution that best reflects the conditions in their particular state.

As industry, non-governmental entities (NGOs), and state regulators review the proposal and begin crafting their comments and plans for implementation, a number of questions have been raised. The issues of inside the fence v. outside the fence compliance requirements, the cost-effectiveness of proposed solutions to be implemented, and impacts on system reliability have registered concerns already. Also, the question of base year (2005 v. 2012) does not appear clear in the proposed rule, but many now hold the view that 2012 is in fact the base year making compliance all the more challenging. We expect that question to be raised and hopefully addressed in the comment period and in the final rule. Additionally, there is a link between the proposed rule for 111(b) (New Source Performance Standards) and 111(d), and legal challenges are expected when the final rule for 111(b) is issued this fall.

The US EPA has asked for a substantial amount of comments in the proposed rule. Comments are due 120 days after publication of the proposed rule in the federal register. In addition, a series of public meetings will be held where interested parties and the public can comment about the proposed rule.

For more information, please contact:

Todd A. Snitchler
614.458.0032
tsnitchler@mcdonaldhopkins.com

Energy Practice Group

Many of the attorneys in our Energy Group have spent more than a decade serving public utilities and/or oil and gas clients and therefore offer a unique perspective in understanding the legal issues currently presented in the energy industry. Our clients include public utilities, renewable energy companies, energy developers, the oil and gas industry, industrial companies and suppliers. Our Energy Practice has a multi-disciplinary approach to counseling our clients and covers litigation, governmental affairs, real estate law, environmental law, capital markets and other practice areas.

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The attorneys on our environmental team offer the regulatory, technical and business experience necessary to help clients meet the complex challenges posed by environmental laws and regulations. We represent a wide range of clients in all aspects of regulatory compliance and transactional activities involving solid and hazardous waste, air, wastewater, underground storage tanks, site assessments and remediation, voluntary cleanups, wetlands, asbestos, and lender and corporate officer liability.

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