Texas and California—in a rare moment of regulatory unity—agree the EPA’s plan to exempt all coal-fired power plants from an air pollution permitting program would create unnecessary confusion for other industries that require the permits.

States, which administer the air pollution program known as new source review, pushed the Environmental Protection Agency to limit the permitting exemption to only those coal-fired power plants that also plan to make upgrades to meet a different standard—this one the agency’s proposed standards on carbon dioxide emissions.

The EPA had asked whether the exemption should be extended to all coal-fired power plants covered by the proposed standards, and not just those making changes to equipment and operations to meet the greenhouse gas emission standards.

That suggestion received pushback in Oct. 31 comments from states as varied as California, Virginia, Texas, and West Virginia. A blanket exemption for all coal-fired plants could allow some to keep polluting without having to install new controls under the guise of improving their efficiency, critics contend. States also said the new source review permitting provisions apply to a variety of industrial plants, not just power plants.

‘Uneven, Inequitable’

“The proposed new source review changes create an uneven, inequitable distribution of emission reduction requirements that is inconsistent with the statutory structure and purpose,” a coalition of states and cities, including California Attorney General Xavier Becerra and Virginia Attorney General Mark Herring, warned EPA.

Texas, where Republican control starkly contrasts Democrat-dominated California, also expressed its concern that the EPA’s proposal, as it is currently written, would create inconsistency among industries other than the power sector that are excluded from these exemptions.

“Other industries often trigger major [new source review] when they implement more efficient processes, which allow them to increase annual production without increasing authorized hourly emissions,” several Texas agencies told the EPA.

New source review permits are required for any expansion or construction at large industrial facilities including refineries and power plants that cause an increase in nitrogen oxides and sulfur dioxide pollution from burning fossil fuels, such as coal in this instance, to generate power.

The changes the EPA is proposing to this permitting program could allow coal-fired power plants to escape controls for nitrogen oxides and sulfur dioxides despite the changes they make to improve the efficiency of their operations and equipment. This is because the efficiency improvements would reduce greenhouse gases—specifically carbon dioxide emissions—which is the goal of the Affordable Clean Energy proposal.

Changes in EPA Proposal

The EPA tucked the permitting changes in its Affordable Clean Energy proposal (RIN:2060–AT67), which would replace Obama-era greenhouse gas standards.

The specific changes that EPA wants to make to the new source review program under this proposal would allow states to determine whether industrial facilities trigger the requirement to install new pollution controls by calculating the nitrogen oxides and sulfur dioxides increases on an hourly basis rather than annually, as is done now. That would allow coal-fired power plants to operate for longer hours, generate more power, and release more air pollution on an annual basis even if the hourly pollution rates aren’t as high.

However, electric utilities such as Dominion Energy and Tennessee Valley Authority want the permitting exemption. They argue that steps to reduce carbon dioxide emissions may become cost-prohibitive by triggering the permitting review, requiring expensive controls for pollutants such as sulfur dioxide and nitrogen oxides.

Both states that support the proposed carbon dioxide standards—like Kentucky and Indiana—and those opposed such as Pennsylvania said the EPA should limit the permit exemptions to only those coal-fired power plants that will be making the operational changes to reduce carbon dioxide emissions.

That narrower application will “reduce the litigation risks and regulatory uncertainty for EPA, state, local and tribal air pollution control agencies when permitting other sources under this permitting program,” Kentucky’s Energy and Environment Cabinet said.

Less Risky Approach

“From a legal perspective, it’s much less risky to limit the new source review change to just projects to comply with the ACE rule,” Brian Potts, a Perkins Coie LLP attorney in Madison, Wis., told Bloomberg Environment.

However, not all coal-fired units that would be required to comply with the proposed carbon dioxide limits would undergo energy efficiency projects, Jennifer Tharp, an associate attorney with Squire Patton Boggs LLP in Cleveland, told Bloomberg Environment.

Applying the permitting exemption to all coal-fired power plants would encourage them to make necessary improvements, some in the power industry said.

Without that permitting change, power plants may take fewer steps to reduce carbon dioxide emissions out of fear of triggering costly new pollution controls, Brenda Brickhouse, TVA’s vice president environment and energy policy, said.