New Source Performance Standards for Global Greenhouse Gas Emissions From the Power and Refining Sectors: Wrong Mechanism at the Wrong Time

• Date: 01 April 2011

41 ELR 10312 ENVIRONMENTAL LAW REPORTER 4-2011

New Source Performance

Standards for Global Greenhouse

Gas Emissions From the Power

and Ref‌ining Sectors: Wrong

Mechanism at the Wrong Time

by Scott H. Segal

Scott H. Segal is a partner with Bracewell & Giuliani LLP.

For those interested in the intersection of global green-

house gas (GHG) regulation and responsible energy

policy, December 23, 2010, was a day worth remem-

bering. Over at the U.S. Environmental Protection Agency

(EPA), regulators were announcing a schedule for rule-

making for new source performance standards (NSPS)1 for

GHG emissions from reneries and power plants. Mean-

while, the Wall Street Journal2 ran a lead editorial reecting

upon an apparent division in the ranks among power com-

panies. Reasoned the Journal, those without appreciable

amounts of coal-red generation were favorably disposed

to potential EPA regulation of GHGs because it simply

allowed them to charge more by increasing the clearing

price for energy. ese two developments in many ways

frame the debate over NSPS. EPA proposes regulation, and

self-interested sources agree, thereby reinforcing economic

claims made by the Agency in defense of its decision.

On December 23, EPA essentially proposed a timetable

for adopting NSPS from the two key energy sectors: electric

power production and petroleum rening. Shortly thereaf-

ter on Januar y 2, permitting requirements under the new

source review program would become nal as well under

the terms dictated by the so-called Tailoring Rule3—a rule

designed to delay regulation for new sources depending on

the tons per year emitted by those sources. Leaving aside

the potential legal inrmities of the Tailoring Rule, the

NSPS announcement may be more interesting, if for no

other reason than the NSPS program addresses modied

1. U.S. EPA, Fact Sheet—Settlement Agreements to Address Greenhouse Gas

Emissions From Electric Generating Units and Reneries, Dec. 23, 2010,

available at http://www.epa.gov/airquality/pdfs/settlementfactsheet.pdf.

2. Editorial, e EPA’s Utility Men, W S. J., Dec. 23, 2010.

3. U.S. EPA, Fact Sheet—Proposed Rule: Prevention of Signicant Deteriora-

tion and Title V Greenhouse Gas Tailoring Rule (Nov. 10, 2010), available

at http://www.epa.gov/nsr/fs20090930action.html.

and new sources (as its name implies) as well as existing

sources through the adoption of emissions guidelines.

If the process that births the nal NSPS rules is sup-

posed to be open and robust, the process by which the time

lines were announced was not. R ather, it was determined

by settlement agreements with activist states and with

environmental organizations. e reason this is troubling

is that the long history of EPA time lines can break down

under the weight of technological and economic realities.

Of course, the art of the possible is best learned from those

who actually operate and employ the complex machinery

of these sectors. Unfortunately, the settlement agreement

process allows for no input from these sources. So, we are

left with aggressive time lines—proposals for power plants

and reneries due by July 26, 2011, and December 10,

2011, respectively, and na l rules by May 26, 2012, and

November 10, 2012, respectively. And we have little con-

dence as to whether these dates make sense when real-

world assumptions are taken into account. Even supporters

of climate cha nge legislation have expressed real concern

about the lack of time EPA has given itself to develop

the proposal and to consider all of the options and their

impacts. In particular, EPA has not allowed itself time to

collaborate with stakeholders in the regulated community

and within state and federal agencies that may hold views

that dier from its own.

Essentially, the world of the NSPS program requires

the Agency to set specic standards on an industry-by-

industry basis. While EPA sets standards direct ly for

modied and new facilities, the Agency is supposed to

work in coordination with the states on emissions g uide-

lines for existing facilities. While guidelines sound like

mere suggestions, the reality is that they become enforce-

able performance standards within the jurisdiction of the

states. EPA has assured the regulated community that the

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