CEI Comments on the EPA’s CO2 Powerplant Emission Performance Standards

Thank you for the opportunity to comment on the Environmental Protection Agency’s (EPA’s) proposed greenhouse gas (GHG) emission standards and guidelines for new and existing fossil-fuel powerplants.[1] The proposal is the successor to the so-called Clean Power Plan (CPP), the Obama administration’s marquee climate policy, finalized in October 2015,[2] and vacated by the Supreme Court in West Virginia v. EPA (2022).[3] The proposal has no official moniker at this time. We hereinafter refer to it as the “Proposed Rule.”

These comments are organized as follows. Section I presents the key points. Section II summarizes the basics of the Proposed rule’s statutory context, section 111 of the Clean Air Act (CAA). Sections III.A-G examine the Proposed Rule’s conformity to West Virginia v. EPA. Section IV examines the Proposed Rule’s determination that 90-percent carbon capture and storage (CCS) is an adequately demonstrated best system of emission reduction (BSER) in light of National Lime Association v. Environmental Protection Agency (1980). Section V examines the Proposed Rule’s claim that 90-percent CCS is adequately demonstrated because it is heavily subsidized. Section VI discusses climate science issues. Section VII discusses the Proposed Rule’s climate benefits. Section VIII concludes the comments.

Based on the statutory, technological, and scientific reasons discussed below, the Proposed Rule should be withdrawn.

I. Key Points

• The Proposed Rule runs afoul of the Supreme Court’s articulation of the major-questions doctrine in West Virginia v. EPA (2022).
• As in the CPP, the EPA unlawfully proposes a sector-wide industrial policy under the guise of regulating pollution from individual sources.
• The new plan is a more aggressive anti-coal market-restructuring program than the CPP, aiming to reduce coal’s share of electric generation from 22 percent to 1.3 percent by 2042.
• Once again, the EPA claims to find, in a long-extant statute, an unheralded power to make decisions of vast economic and political significance; asserts a transformative expansion of its regulatory power; attempts to resolve a policy question Congress is still debating (i.e., whether to compel the decarbonization of electricity markets); encroaches on State’s traditional authority over electricity mix within their borders; proposes to implement an inverted version of a national clean electricity standard (CES), a policy Congress has not authorized; and attempts to set the stage for market-restructuring via cap-and-trade, the “best system of emission reduction” ruled off limits in West Virginia.
• Paragraphs 5 and 6 of section 60107 of Inflation Reduction Act do not provide a clear statement of authorization for the Proposed Rule, contrary to what the EPA seems to imply.
• 90-percent carbon capture and storage (CCS) is not adequately demonstrated because partnering with enhanced oil recovery (EOR) companies is central to the business plans of almost every CCS powerplant ever built or proposed, and 38 States do not have EOR operations.
• 90-percent CCS is also not adequately demonstrated because it is heavily dependent on subsidies, which should be treated as costs in BSER determinations.
• Climate change is not a “crisis.” The EPA relies on unrealistic climate impact assessments produced by combining overheated models with inflated emission scenarios. The agency also ignores the 96 percent decline in decadal average deaths related to extreme weather since the 1920s, and the more than five-fold decline in weather-related damages as a percentage of GDP since the 1980s.
• The Proposed Rule’s climate benefits are a mirage. Making all favorable assumptions, the Proposed Rule would avert 0.0575°C of global warming by 2100. That is too small a change for scientists to detect or people to experience. Undetectable, non-experiential effects are “benefits” in name only. In addition, the agency’s $30 billion climate benefits estimate is based on social cost of carbon dioxide (CO₂) estimates biased by inflated emission scenarios, overheated models, and unscientific depreciation of the agricultural benefits of CO₂-atmospheric enrichment.

II. CAA Section 111 Basics

Section 111(b) of the Clean Air Act (CAA) requires the EPA to list categories of stationary sources of air pollution that may reasonably be anticipated to endanger public health or welfare, and to establish emission performance standards for “new” (i.e. future) sources in those categories. Such standards are called new source performance standards (NSPS).

CAA section 111(d) requires the EPA, subject to certain exceptions,[4] to prescribe regulations (called “guidelines”) under which each state must submit a plan to establish performance standards for “existing” (i.e. already built) sources in categories the EPA regulates under CAA section 111(b). Such state standards are called existing source performance standards (ESPS). State plans must also provide for implementation and enforcement of the standards. The EPA promulgated the CPP under CAA section 111(d).

CAA section 111 performance standards, whether for new or existing sources, are to reflect “the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.”[5] The phrase “adequately demonstrated” roughly means standards based on the “best system of emission reduction” (BSER) are “achievable” taking “cost” and the other factors into account.

All CAA section 111 rules apply to stationary sources. CAA section 111(a) defines “stationary source” as “any building, structure, facility, or installation which emits or may emit any air pollutant.”

III. The Proposed Rule Is Unlawful under the Supreme Court’s Major-Questions Doctrine as Articulated in West Virginia v. EPA.

III.A. West Virginia: Background

In West Virginia v. EPA petitioners challenged the EPA’s determination that “generation shifting”—reallocating electricity production and market share from coal to gas generation, and from both to renewables—is the adequately demonstrated BSER. The Court ruled that generation shifting is not a permissible BSER under CAA 111(d).

Unlike any previous CAA section 111 rules,[6] the CPP set emission performance standards no individual source could meet by applying affordable facility-specific technologies. The CPP standard for existing coal powerplants—even those decades old—was 1,305 pounds of carbon dioxide per megawatt hour (1,305 lbs. CO₂/MWh). That is beyond the capability of even new highly-efficient supercritical pulverized coal units using bituminous coal, which typically emit nearly 1,720 lbs. CO₂/MWh. Similarly, the CPP standard for existing natural gas combined cycle (NGCC) units (771 lbs. CO₂/MWh) was 14 percent lower than the average rate of new units (895 lbs. CO₂/MWh).[7]

To comply with the CPP, the owner of a coal powerplant would have to average the emission rate of his facility with the rates of lower- or non-emitting generators to which he cedes output and market share.  For example, a utility with coal generating units could purchase power from gas or renewable generators, invest in new gas or renewable generation, buy emission credits in a cap-and-trade scheme, operate its coal units fewer hours, or (by implication) simply turn them off.[8]

In all previous CAA 111 rulemakings since 1971, the aim was to improve the regulated facility’s environmental performance by limiting its emissions per unit of output or heat input. In contrast, the CPP aimed to decrease the power sector’s overall emission rate. However, that would not improve the environmental performance of individual coal powerplants. Rather, the CPP would constrain all coal powerplants to perform less—and many to retire. CPP “performance standards” were actually non-performance mandates.

In West Virginia, petitioners challenged the CPP on two grounds. They argued that the CPP was unlawful under the specific terms of CAA section 111, citing the agency’s consistent practice over four decades and the logic of a statute that defines “source” as an individual physical entity—a “building, facility,” etc., not an industrial sector. Petitioners also challenged the CPP as a usurpation of legislative power under the Supreme Court’s major-questions doctrine.

Although the Court considered petitioners’ statutory argument “pertinent” to its analysis, it decided the case on major-questions grounds.[9] The Court held that the CPP was a plan to “substantially restructure the American energy market,” entailing a “transformative expansion” of the EPA’s regulatory authority, and that CAA Section 111(d) does not come “close to the sort of clear authorization required” to “delegate authority of this breadth to regulate a fundamental sector of the economy.”[10]

III.B. Major Questions and the CPP: Background

The major-questions doctrine is a jurisprudence of political accountability. It seeks to ensure that elected officials, who alone are accountable to the people at the ballot box, decide major questions of public policy.[11]  Further, the doctrine is specifically concerned about “a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”[12]  In West Virginia, the Court identified numerous factors that suggest an agency is exceeding its power, such as when a regulatory agency:

• Claims to find, in a long-extant statute, an unheralded power to make decisions of vast economic and political significance.
• Asserts a transformative expansion of its regulatory power.
• Attempts to resolve a policy question Congress is still debating.
• Proposes to adopt a policy Congress has considered and rejected.
• Asserts policy leadership in an area not within its traditional expertise or one that is the particular domain of another agency or the States.
• Cannot identify a clear statement of congressional authorization in the rule’s putative statutory basis, but instead infers authority from vague, ambiguous, or cryptic language even though Congress “does not … hide elephants in mouseholes.”[13]

The CPP hit all the major-questions doctrine trigger points. The Court explained:

• The CPP claimed to find in CAA section 111(d), a statute adopted in 1970, a hitherto unmentioned power to “substantially restructure the American energy market.”[14]

• The CPP entailed a “transformative expansion”[15] of the EPA’s regulatory authority. It would empower the agency to determine “how much coal-based power there should be over the coming decades”[16] and even whether coal and gas powerplants “should be allowed to operate.”[17]

• Indeed, the CPP’s legal theory implied that the EPA may “order the wholesale restructuring of any industrial sector”[18] with buildings or facilities that emit CO₂.

• The CPP was an attempt to end an “earnest and profound debate across the country” about national climate policy, a matter of “great political significance.”[19]

• “At bottom, the Clean Power Plan essentially adopted a cap-and-trade scheme, or set of state cap-and-trade schemes, for carbon…. Congress, however, has consistently rejected proposals to amend the Clean Air Act to create such a program.”[20]

• There is a “mismatch” between the EPA’s expertise over environmental matters and the agency’s claim that “Congress implicitly tasked it, and it alone, with balancing the many vital considerations of national policy implicated in deciding how Americans will get their energy.” …. Such a claimed power “requires technical and policy expertise not traditionally needed in [the] EPA’s regulatory development.”[21]

• “The CPP unquestionably has an impact on federalism, as ‘the regulation of utilities is one of the most important of the functions traditionally associated with the police power of the States.’”[22]

• “As the Court details, the agency before us cites no specific statutory authority allowing it to transform the Nation’s electrical power supply…. Nor has the agency previously interpreted the relevant provision to confer on it such vast authority; there is no original, longstanding, and consistent interpretation meriting judicial respect.”[23]

• The EPA claimed to find authority for generating shifting in the term “best system of emission reduction” because generation shifting is, after all, a “system.” The Court stated: “We are confident that Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.”[24]

Justice Neil Gorsuch’s concurrence includes a detailed history of major-questions jurisprudence from the founding era to the present. Gorsuch provides an excerpt[25] from the Court’s decision in ICC v. Cincinnati (1887) that succinctly states the common sense of the matter:

That Congress has transferred such a power to any administrative body is not to be presumed or implied from any doubtful and uncertain language. The words and phrases efficacious to make such a delegation of power are well understood, and have been frequently used, and if Congress had intended to grant such a power to the [agency], it cannot be doubted that it would have used language open to no misconstruction, but clear and direct.[26]