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Final Section 468A Regulations Issued at Last

On September 4, 2020, the Internal Revenue Service (IRS) and the US Department of the Treasury (Treasury) published in the Federal Register final regulations under section 468A of the Internal Revenue Code (the Code) that address three issues raised by the nuclear electric industry concerning qualified nuclear decommissioning funds (“qualified funds”). These final regulations conclude a many years-long regulation project to clarify the rules relating to decommissioning costs and self-dealing rules. McDermott submitted multiple sets of comments throughout the process, and Marty Pugh provided vital testimony during an IRS hearing on the proposed regulations.

Access the full article here.




What Comes Next for Mercury Emissions from Power Plants?

The U.S. Supreme Court held this morning that the U.S. Environmental Protection Agency (EPA) acted unreasonably when it determined in 2000, and again in 2012, that it was “appropriate and necessary” to regulate mercury emissions from coal-fired power plants.  The central flaw in EPA’s reasoning, the Court held, is that the agency failed to consider the cost of regulation when making the threshold determination that regulation was “appropriate.”  Under Section 112 of the federal Clean Air Act, EPA must conclude that it is “appropriate” to regulate power plant mercury emissions before it can actually regulate those emissions.

The immediate effect of today’s decision is that the ongoing challenge to EPA’s mercury regulations will be remanded to the U.S. Court of Appeals for the D.C. Circuit, which previously upheld those regulations.  The D.C. Circuit will then face a choice:  Should it vacate the regulations, or should it leave them in place while giving EPA additional time to attempt to justify the agency’s threshold conclusion that the regulations are “appropriate.”

In the past, the D.C. Circuit has sometimes vacated environmental regulations that it found to suffer from threshold flaws, but it has also occasionally left those regulations in place pending agency revisions.  For example, several years ago the D.C. Circuit found that EPA’s Clean Air Interstate Rule (CAIR) was fatally flawed but it nevertheless declined to vacate CAIR.  Instead, it left CAIR in place pending promulgation of a replacement rule.  It remains to be seen whether the D.C. Circuit will take such an approach here.

If the mercury regulations are vacated, today’s decision may have the ironic effect of helping EPA defend its forthcoming greenhouse gas (GHG) regulations for existing power plants.  One of the principal legal objections to the forthcoming GHG regulations is that EPA allegedly lacks authority to issue them because power plants are regulated for mercury emissions.  Thus, if the mercury regulations go away, one of the principal objections to the GHG regulations will be eliminated.

Nevertheless, today’s decision has to be considered a loss for EPA.  The power plant mercury regulations took over two decades to promulgate and were anticipated to have significant environmental benefits, primarily in the form of reductions of particulate matter and sulfur dioxide emissions.  Today’s decision creates some uncertainty about the future of those regulations.  Equally important, today’s decision is another reminder that a majority of the Supreme Court remains deeply skeptical of EPA’s claims about the agency’s statutory authority.

If there is a silver lining for EPA in today’s decision, it is that the Supreme Court did not go so far as to dictate exactly how EPA is to consider costs.  Instead, the Court concluded:  “It will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.”




Deadline Extended to Submit Comments on EPA’s Proposed Greenhouse Gas Emission Limits for New Power Plants

The U.S. Environmental Protection Agency (EPA) has announced that it is extending until May 9, 2014, the deadline for submitting comments on its proposed rule to set greenhouse gas emission limits for new coal- and gas-fired power plants.  The announcement came in a Federal Register notice signed by EPA on February 26 and slated for publication in the next several days.

EPA’s proposed rule, which was released publicly in September 2013 but not published in the Federal Register until January 8, 2014, would require “new” electric utility generating units (meaning units built after January 8, 2014) to comply with the following emission limits:  (1) new coal-fired units would be limited to 1,100 pounds of carbon dioxide (CO2) per megawatt-hour of electricity generated (1000 lbs/MwH); and (2) new gas-fired units would be limited to either 1000 lbs/MwH or 1100 lbs/MwH, depending on their size.

EPA’s proposed limit for coal-fired units is based on the agency’s determination that the limit can be achieved through a combination of highly-efficient boiler design (either super-critical pulverized coal or integrated gasification combined cycle technology) and partial implementation of carbon capture and storage (CCS) technologies.  But the CCS aspect of EPA’s proposal has encountered heavy criticism.  Some commentators have argued that (1) CCS is not commercially viable and, therefore, should not be considered as a basis for setting emission limits, and (2) in concluding that CCS is a viable pollution control technology, EPA impermissibly relied on evidence that the Energy Policy Act of 2005 (EPACT 2005) expressly forbids it from considering.

EPA discusses the EPACT 2005 issue at some length in a Notice of Data Availability (NODA) published in the Federal Register on February 26.  And although that NODA calls for comments by March 10, EPA’s new announcement – the one signed on February 26 and slated for publication in the next several days – indicates that EPA will accept comments on the NODA through May 9.  Thus, May 9 is the deadline for submitting comments on both the NODA and the overall proposed rule.

Separately, EPA remains on track to publish proposed emissions guidelines for existing power plants by June 2014.  Interested parties will have an opportunity to comment on that proposal once it has been published.  Finally, parties that are affected by, or interested in, EPA’s air-related activities may want to read McDermott’s recent publication “What’s in the Air this Year?”




Greenhouse Gas Limits for New Power Plants – Comments due to EPA by March 10, 2014

Yesterday, the United States Environmental Protection Agency’s (EPA) proposal to set greenhouse gas emissions limits for new coal-fired and natural gas-fired power plants was published in the Federal Register.  This proposal was originally posted on EPA’s website on September 20, 2013; however, the formal publication triggers the start of a 60-day public comment period.  The publication also suggests that EPA is still on track to meet President Obama’s June 2014 deadline for publishing an initial proposal to regulate emissions from existing power plants.

The proposed rule would limit new coal plants to 1,100 pounds of CO2 emissions per megawatt-hour (lbs/MWh) of electricity produced, with compliance measured on a rolling average basis during each 12-operating month period.  The proposal would also require new small natural gas plants to meet a 1,100 lbs/MWh emission limit, while requiring larger, more efficient natural gas plants to meet a limit of 1,000 lbs/MWh.  The proposed rule will not regulate greenhouse gas emissions from existing or modified power plants.

Comments on the proposed rule are due by March 10, 2014, although EPA noted in the proposal that a comment will be “best assured of having its full effect” if received by February 7, 2014.  EPA will also hold a public hearing on January 28, 2014 in Washington, D.C. from 9:00 am to 8:00 pm, during which interested parties will be able to present their views (limited to 5 minutes each) concerning the proposed rule.  Given that EPA received over 2.5 million comments on its initial April 2012 proposal, a large number of stakeholders are likely to voice comments.




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