Proposed EPA Rule Would Tighten Emissions Standards at Affected Power Plants and Industrial Sources

On April 6, the U.S. EPA published a proposed rule to reduce emissions of nitrogen oxides (NO_x) in 26 states that the agency says are impacting the ability of downwind states to meet  National Air Quality Standards (NAAQS) for ozone. 87 Fed. Reg. 20036. The proposed rule includes Federal Implementation Plan (FIP) requirements that build on EPA’s Cross-State Air Pollution Rule (CSAPR) program and would be enacted pursuant to the interstate transport or “good neighbor” provision of the Clean Air Act.

Although EPA has previously targeted power plants under the good neighbor provision, the proposal is significant in that it brings new states and other industries within CSAPR’s reach. It would tighten existing NO_x emissions budgets for power plants and impose new unit-specific limits in other industries. Notably, the agency also supplemented the record supporting the proposed rule with monetized climate benefits of reduced GHG emissions (Climate Benefits Technical Memo), citing the Fifth Circuit’s recent decision in Louisiana v. Biden, Case No. 22-30087, to stay a district court’s preliminary injunction concerning EPA’s use of climate benefits in its cost-benefit analyses.  

Below are key takeaways from the rule for power plants and the other affected industries. 

Electric Generating Units (EGUs)

The proposed FIP adds four states to CSAPR’s power plants program (Delaware, Nevada, Utah and Wyoming). The program would impose more stringent NO_x emissions caps in 25 states beginning in 2023 based on the optimization of existing post-combustion controls (SCRs and SNCRs), as well as state-of-the-art combustion control upgrades. Additional decreases in NO_x emissions, however, would be required in 22 of these states beginning in 2026.

Significantly, the imposition of more stringent requirements in 2026 was based on EPA’s determination of the lead time plants would need to install the best controls for different unit types. For large generating units (100 MW or greater) other than those with circulating fluidized beds (CFBs), the agency based its modeling on SCRs being achievable. For smaller units (less than 100 MW) and CFBs, EPA found that SNCRs were achievable.

EPA is also proposing to add other new wrinkles to the CSAPR program designed to promote more consistent operation of emissions controls at power plants. These include dynamic emissions budgets that would be updated annually starting in 2025, as well as daily “backstop” emission rates that would apply to large coal-fired units (greater than 100 MW).

Other Industrial Sources

For the first time ever, EPA is also proposing to use the good neighbor provision to regulate NO_x emissions from non-EGU industrial source in 23 states. EPA’s proposal is based on its finding that “cost-effective controls for NOx emissions reductions are available” for non-EGU sources that would result in “meaningful air quality improvements” in downwind states. 87 Fed Reg. 20036, 20039.  Thus, the proposed rule sets forth unit-specific NO_x emission limits for the following industrial sources:

• Reciprocating internal combustion engines used in natural gas pipelines;
• Kilns in cement and concrete manufacturing;
• Boilers and furnaces in iron and steel mills and ferroalloy manufacturing;
• Furnaces in glass and glass products manufacturing; and
• High-emitting equipment and large boilers in chemical manufacturing, petroleum and coal products manufacturing, and pulp, paper and paperboard mills.

EPA’s proposed compliance date of 2026 is based on its determination of the time needed to engineer and install pollution controls to meet the new limits. EPA specifically requested comment on its assumptions relating to the control strategies for these industries.

Action Items for Affected Sources 

EPA will hold a virtual public hearing on the proposed rule on April 21. The public comment period is now open and will close on June 6.  Electric utilities and other industries impacted by the proposed rule should review the regulatory record and pay close attention to the rulemaking process, given the significant impacts it could have on their operations in the next few years and beyond.