Earlier this week, EPA finally published in the Federal Register the proposed Carbon Pollution Standard, a regulation that would effectively ban the construction of new coal-fired power plants. Publication in the Federal Register kicks off a 60 day period during which the agency will take comment on the rule. The Clean Air Act requires that EPA finish the rule within a year, although that’s a highly doubtful prospect, given EPA’s woeful record on deadlines.
As I explained last week, EPA completed the regulation last September, yet it remained suspended in some sort of executive branch limbo for three and a half months prior its publication, for reasons unknown. One speculated cause for this unusual delay is a November letter sent to EPA by leading members of the House Energy and Commerce Committee, informing Administrator Gina McCarthy that virtually all of the agency’s evidence supporting the technical feasibility of the rule is legally impermissible.
In a previous post, I gave the backstory:
The proposed regulation would require new coal-fired power plants to install carbon capture and sequestration (CCS). And yet, under the Clean Air Act, EPA cannot require a technology that isn’t commercially viable. On the one hand, industry claims that CCS isn’t market-ready, citing as proof the fact that there isn’t a single CCS system in operation. EPA, on the other hand, claims that CCS is adequately demonstrated. As evidence, the agency referenced three CCS pilot projects in the U.S. that are either in planning or under construction in Mississippi, California, and Texas.
Last week, leading members of the House Energy and Commerce Committee pulled the rug out from under EPA’s evidence. In a November 15th letter to EPA Administrator Gina McCarthy, Reps. Fred Upton (R-Michigan), Ed Whitfield (R-Kentucky), Joe Barton (R-Texas), and Steve Scalise (R-Louisiana) brought to her attention a little-known provision of the 2005 Energy Policy Act that prohibits the agency from basing an “adequately demonstrated” determination on CCS projects that received subsidies pursuant to the law. As they helpfully note, each of the CCS projects in Mississippi, California, and Texas were beneficiaries of such subsidies, and are, therefore, inappropriate foundations for the Carbon Pollution Standard. The letter is available here.
I’d been completely ignorant of this provision of the 2005 Energy Policy Act. Evidently, I wasn’t alone. According to InsideEPA, the letter caught both EPA and the White House off guard. It was, moreover, the rumored cause of the delay between the prepublication version of the Carbon Pollution Standard and its appearance in the Federal Register. If correct, the letter would deal a fatal blow to the regulation.
So, the $64,000 question is: Does the 2005 Energy Policy Act undercut the Carbon Pollution Standard?
The answer, alas, is to be determined by the courts, and it could go either way.
The Carbon Pollution Standard is authorized by §111 of the Clean Air Act. There are two provisions of the Energy Policy Act of 2005 that relate to §111, and, therefore, to the Carbon Pollution Standard:
42 U.S.C. 15962(i): “No technology, or level of emission reduction solely by reason of the use of 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 [§ 111 of the Clean Air Act]. . .”
26 U.S.C. 48A(g) “No use of technology (or level of emission reduction solely by reason of the use of the technology), and no achievement of any emission reduction by the demonstration of any technology or performance level, by or at one or more facilities with respect to which a credit is allowed under this section, shall be considered to indicate that the technology or performance level is adequately demonstrated for purpose of §111 of the Clean Air Act”
So…one section of the 2005 Energy Policy Act would bar EPA’s use of any project that received “assistance” pursuant to the act from being the “sole” rationale for an “adequately demonstrated” determination. And a different section would bar EPA’s use of any project that received “credits” from being “considered to indicate” an “adequately demonstrated” determination.
At first glance, the first provision (42 U.S.C. 15962(i)) seems to lend EPA much more leeway. It prohibits EPA from basing the Carbon Pollution Standard “solely” on projects funded by the law. Of course, a literal interpretation would render this modifier superfluous, as EPA could base its determination 99.9% on the subsidized plants, and .1% on some other barely plausible evidence, and thereby avoid any conflict with the letter of the law. It’s a judgment call: I could see a court either give this prohibition meaning by reading the word “solely” not literally, or give it no meaning by reading the word “solely” literally.
Compared to the first provision, the second (26 U.S.C. 48A(g)) constrains the agency’s discretion a great deal more, by prohibiting EPA from using any technology that received “credits” pursuant to the act from “[being] considered to indicate that the technology or performance level is adequately demonstrated.”
For starters, there is a possible conflict between these two provisions, centering on an empirical question: How many types of “assistance” [the criteria triggering the first provision] were provided by the Act? If the only form of “assistance” is “credits” [the criterion triggering the second provision], then these two provisions conflict, and EPA would be allowed the deference to interpret the ambiguity caused by these conflicting provisions. Presumably the agency would do so by adopting the first provision and discarding the second. If, however, there are multiple forms of “assistance,” then these provisions can co-exist, and EPA will have a difficult time explaining this away. I don’t know the answer to this question, but I’ll find out and update this post.
Continuing with the second provision, the phrase “shall be considered to indicate” is unclear and, therefore, likely subject to interpretation, to which EPA would be accorded deference. FWIW, “indicate,” according to Miriam-Websters, means “to evidence.” But how comprehensive is that term within the phrase? Does it preclude any and all use for §111 determinations of a demonstration that benefits from these credits?
This matter will be litigated. For now, EPA hasn’t rebutted the House Republicans charge. It’s entirely possible the agency won’t do so until it responds to comments as part of the final rule. I suspect they’ll act along the lines I lay out above. For the first provision, EPA will stress the word “solely”; for the second, the agency will claim that the phrase “shall be considered to indicate” is ambiguous, and the agency will interpret that ambiguity. Only time will tell whether the agency’s interpretation will be deemed reasonable.