States, Trade Groups Sue EPA Over New Fossil Fuel Rules
More than two dozen states and a handful of trade groups filed separate lawsuits in the U.S. Court of Appeals for the D.C. Circuit, challenging parts of the Environmental Protection Agency’s (EPA’s) suite of new final environmental regulations targeting fossil-fired power plants.
The challenges respond to the publication in the Federal Register on May 9 of four major federal environmental rules, which the EPA rolled out simultaneously on April 25. The rules cover greenhouse gases (GHG), air toxics, wastewater discharges, and coal combustion residuals from fossil fuel-fired power plants.
The EPA’s rules include final Carbon Pollution Standards, which broadly seeks to curb GHG emissions from the nation’s fleet of coal plants and—for the first time—set down GHG emissions limits from new natural gas-fired power plants. The agency also issued an updated and strengthened Mercury and Air Toxics Standards (MATS), which targets coal power emissions of hazardous air pollutants. Separately, the EPA finalized the Effluent Limitations Guidelines and Standards (ELGs), which aim to drastically reduce pollutants discharged by steam power plants through wastewater. Finally, the suite of regulations includes a final rule governing legacy coal combustion residuals.
D.C. Circuit Consolidates Suits from 25 States, Trade Groups
On Thursday, a coalition of 23 states led by North Dakota and West Virginia filed a petition for review of the EPA’s final MATS rules. Along with North Dakota and West Virginia, the coalition includes Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, and Wyoming.
The D.C. Circuit on Thursday afternoon consolidated that case—State of West Virginia, et. al. v. EPA (No. 24-1120)—with a separate petition for review filed jointly earlier in the day by the states of Ohio and Kansas, which challenged the EPA’s GHG rule.
In addition, the court consolidated two industry petitions for review of the GHG rule into the case State of West Virginia, et al. v. EPA: one filed by the National Rural Electric Cooperative Association (NRECA) and another jointly filed by the National Mining Association (NMA) and America’s Power.
Overwhelmingly at Issue: Overreach
NRECA, a national trade association representing nearly 900 local electric cooperatives, in a statement sent to POWER said its petition responds to concerns about the EPA’s overreach of authority and the GHG rule’s impact on reliability and affordability.
“EPA’s power plant rule is unlawful, unreasonable, and unachievable. It exceeds EPA’s authority and poses an immediate threat to the American electric grid,” said NRECA CEO Jim Matheson. “Under the rule, EPA illegally attempts to transform the US energy economy by forcing a shift in electricity generation to the agency’s favored sources.” Matheson added that the rule “recklessly undermines” power reliability because it would force the premature closure of power plants. That will be detrimental “especially as America relies on electricity to power the economy,” he said.
Supportive legal actions already began to trickle on Thursday afternoon. South Carolina’s electric cooperatives, The Electric Cooperatives of South Carolina and Central Electric Power Cooperative, told POWER they filed declarations of support for NRECA and the states’ lawsuits. “While we share the EPA’s goal of protecting the environment, we can’t support a plan that jeopardizes the reliability of South Carolina’s electric grid while driving up power bills,” said Mike Couick, CEO of the Electric Cooperatives of South Carolina. “We need a realistic path forward.”
NMA, a national trade group that serves as the voice of the U.S. mining industry, and America’s Power, a trade group that advocates on behalf of the U.S. coal fleet and its supply chain, said in their petition said they plan to show the final GHG rule is “in excess of the agency’s statutory authority and is otherwise arbitrary, capricious, an abuse of discretion, and not in accordance with law.” The groups urged the court to “hold unlawful and set aside the final rule, and to order such other relief as might be appropriate.”
In a statement, NMA said the new rule was “modeled after the Clean Power Plan,” a 2015 rule promulgated by the Obama administration but ultimately stayed and declared unlawful by the U.S. Supreme Court in June 2022.
“By ignoring the differences in generation mix across the country, variations in weather conditions from state to state, and the vast interstate transmission infrastructure that needs to be sited, permitted and built to make renewable generation broadly viable, the EPA has chosen to ignore reality in favor of election-year campaign promises and undemonstrated technologies,” said Rich Nolan, NMA president and CEO.
The 25 states filing petitions for review on May 9 all have Republican administrations, with the exception of Kansas, which is governed by Democrat, Laura Kelly. Reactions so far have been strongly worded and reflective of broader political and ideological divides regarding energy policy in the U.S.
North Dakota Attorney General Wrigley claimed that with the final MATS rule, the Biden administration “pushes a green political agenda with no purpose other than to attack fossil fuels.” He added: “Make no mistake, this rule intentionally sets impossible standards to destroy the coal industry. Yet again, the Biden Administration has ignored its statutory limitations and forced the entire country into an alignment with an activist agenda,” he said.
Wrigley, in addition, asserted that federal agencies must operate within congressional constraints and cannot arbitrarily destroy industries. “North Dakota will keep defending our energy producers and strive for America’s energy independence,” he said.
West Virginia Attorney General Patrick Morrisey echoed that sentiment. “This rule strips the states of important discretion while using technologies that don’t work in the real world—this administration packaged this rule with several other rules aimed at destroying traditional energy providers,” he said. “We are confident we will once again prevail in court against this rogue agency.”
PJM: Despite EPA’s Flexibility Measures, Reliability Still a Concern
The EPA in April said it issued the four final rules simultaneously to provide a “predictable regulatory outlook for power companies, including opportunities to reduce compliance complexity and clear signals to create market and price stability.”
The agency told POWER that after it issued its proposal in May 2023, it “engaged extensively with balancing authorities, power companies, reliability experts, [Federal Energy Regulatory Commission] and the [Department of Energy] as well as regulatory authorities responsible for reliability to understand their concerns and address them in the final rule. We expect this engagement will continue during implementation,” it said.
As POWER has reported, the EPA’s RIA for the MATS rule suggests about 5 GW of operational generating unit capacity will need to comply with the rule in 2028. Another 11.6 GW would either need to improve existing particulate matter (PM) controls or install new PM controls to comply with the rule. The EPA projected, however, that no coal-fired capacity would retire under the final MATS rule.
The agency’s illustrative analysis for its GHG rule suggests the final rule could result in 14 GW of coal retirements in 2040, along with 6 GW of coal-to-gas conversion and 3 GW of derated capacity. “This results in 19 GW of coal-fired capacity remaining in place,” the EPA told POWER in April. By comparison, without the rule, the EPA’s baseline economic projections suggest that 42 GW of operating coal capacity could be operational by 2040, a figure that also factors in additional projected retirements, capacity derates, and conversions to gas.
In addition, the EPA noted that it examined the “cumulative impact of the final 111, ELG, MATS, and recently finalized vehicle rules to assess resource adequacy. “This cumulative analysis aligns with recent peer-reviewed research and reports from [the Department of Energy] and [the National Renewable Energy Laboratory] in showing that the sector can meet growing demand for electricity and provide reliable, affordable electricity at the same time as it reduces pollution to protect health and the planet,” it said.
“Even in the context of higher demand and multiple power sector rules, this sensitivity analysis demonstrates compliance pathways that respect NERC resource adequacy considerations and constraints.” The agency also suggested that it is worthwhile “to note that the cumulative effect of these rules in terms of reduced coal steam electric generating capacity is less than the sum of each of these rules individually.”
Still, at least one grid operator has so far issued a public statement on the GHG rule’s potential impact on grid reliability and resource adequacy.
PJM Interconnection, the nation’s largest regional transmission organization (RTO), in a statement on Wednesday acknowledged that the EPA’s new rule includes important measures to enhance flexibility measures. However, the grid operator stressed it remained concerned about the final rule’s impact on reliability.
Among its continuing concerns are that the rule’s reliance on carbon capture and sequestration (CCS) technology poses feasibility issues owing to geographical and infrastructural challenges. PJM also suggested that stringent coal and natural gas requirements could lead to their premature retirement amidst rising electricity demands—particularly from data center load, electric vehicles, and increased electric heating load.
Finally, PJM noted the final rule is premised on the availability of increased access to natural gas infrastructure to support a compliance option for coal power. But, the present gas pipeline system is “largely fully subscribed,” it noted. “The Final Rule, which is premised, in part, on the availability of natural gas for co-firing or full conversion, does not sufficiently take into account these limitations on the development of new pipeline infrastructure,” it said.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).