Carbon Pollution Standards Regulation Is Rendered Vulnerable by EPA’s Failure To Consider How Rule Increases GHG Emissions

In order to survive judicial review, federal rules must be reasonable, per se, and also the product of a reasonable rulemaking process. EPA’s recent climate regulation for new power plants, known as the Carbon Pollution Standards, is neither.

1. EPA’s Carbon Pollution Standards rule is irrational because its purpose is to decrease greenhouse gas emissions, but its effect it to increase greenhouse gas emissions

The purpose of the Carbon Pollution Standards rule is to reduce greenhouse gases from new coal-fired power plants. To this end, the agency based the regulation on the installation of emissions controls known as “carbon capture and sequestration.” These “CCS” systems work by capturing greenhouse gases emitted from a power plant’s smokestack and then piping them to empty underground reservoirs, where the emissions are injected for long term storage.

However, the technology is not yet market ready, and, as such, it is exorbitantly expensive. In order to mitigate the monumental costs of CCS, the EPA is relying on the oil industry. In some parts of the country, geological conditions exist that make it profitable for oil producers to buy carbon dioxide, inject it into wells, and thereby extract more oil. This process is known as “enhanced oil recovery,” or EOR. In the rulemaking for the Carbon Pollution Standards, EPA repeatedly explained that it expects power plant owners to defray the tremendous cost of CCS by selling captured carbon dioxide to oil producers for use in EOR. In fact, EPA’s expectation comports with mainstream analysis, as the International Energy Agency projects that 70% of new CCS projects worldwide will be linked with EOR.

So, the purpose of EPA’s Carbon Pollution Standards regulation is to decrease greenhouse gas emissions. And the rule would do so by boosting oil production.

Of course, the combustion of oil leads to the emission of greenhouse gases. As it happens, there exists a quantitative relationship between the greenhouse gases injected into the ground in the EOR process and the greenhouse gases engendered by the combustion of the oil produced in the EOR process. Using a conservative industry estimate about this relationship, I calculated that the EPA’s Carbon Pollution Standards would result in an annual net increase in greenhouse gases of roughly 1.3 million metric tons of greenhouse gases for each power plant that takes EPA’s advice, and complies with the rule by installing CCS with EOR. These estimates, moreover, are in line with government analyses, as noted by my colleague Marlo Lewis.

2. EPA’s Carbon Pollution Standards Rule is unreasonable because it is the product of a defective rulemaking

A regulation will be deemed unreasonable, and therefore illegal, if the issuing agency failed to address significant comments raised during the rulemaking. Simply put, the agency has a duty to respond to each substantive comment.

In comments on the rulemaking, I submitted to EPA my concerns above—i.e., about how the regulation would do the opposite of what it’s supposed to do. There can be no doubt that this comment is substantive, as it presents evidence that the rule is irrational. Yet EPA wholly failed to address my comment, in plain contravention of the agency’s basic responsibilities pursuant to the Administrative Procedures Act.

There are two sections in the preamble to the final rule where one would have logically expected EPA to respond to my comment: “V.K. Emissions Reductions Utilizing Partial CCS” and “XIII. A. What Are the Air Impacts?” But there is no mention of EOR emissions in either section.

In a separate document, EPA mentions my comment by name. But the agency’s response totally elides the substance of my comment. My point is acknowledged but ignored. See for yourself: It’s Comment 4.3-6 and Response 4.3-6 of this document.

3. Conclusion

In sum, EPA’s Carbon Pollution Standards rule is unreasonable, per se; it is also the product of an unreasonable rulemaking process. Both of these legal infirmities derive from the fact that the agency failed to account for how the rule would increase greenhouse gases.