U.S. EPA Imposes Multiple New Rules With Stricter Standards on Fossil Fuel Plants

The U.S. Environmental Protection Agency (EPA) recently finalized four rules that impose substantial additional regulatory burdens on fossil fuel-fired power plants, particularly those that use coal. These include:

• revised standards for existing coal-fired electric generating units (EGUs) and for new, modified, and reconstructed natural gas-fired EGUs to achieve up to a 90% reduction in greenhouse gas (GHG) emissions (GHG Rule) 
• revised mercury and air toxics standards for coal- and oil-fired EGUs (MATS Rule) 
• revised effluent limitation guidelines and standards for water pollutants discharged from coal-fired power plants (ELG Rule)
• extension of coal combustion residual (CCR) regulations to cover certain “legacy” CCR, including at inactive power plants (Legacy CCR Rule) 

Collectively, these four rules impose significant new air, water, and waste requirements on fossil-fuel-fired electricity generation. If sustained after the expected legal challenges, the new rules will significantly alter the financial and regulatory landscape for power generation. EPA’s own regulatory impact analyses predict that compliance with the rules will cost utilities and power plants, collectively, over $1 billion per year. 

New Source Performance Standard for Existing EGUs — GHG Rule 

The GHG Rule requires significantly reduced GHG emissions from existing coal-fired power plants and new gas-fired power plants. The rule is EPA’s latest attempt to reduce GHG emissions from fossil-fuel-fired power plants after the Biden EPA repealed the Trump EPA’s 2019 Affordable Clean Energy Rule, which had replaced the 2015 Clean Power Plan after the Supreme Court vacated it in West Virginia v. EPA, 142 S. Ct. 2587 (2022). 

Existing Coal-Fired EGUs — emission standards and deadlines. The final GHG Rule sets emission reduction guidelines, specifying emissions standards for existing coal-fired EGUs that vary depending on the planned timeline for operating the unit:

• “Long-term units” that operate on or after January 1, 2039, must reduce emissions by 90% based on carbon capture and sequestration or storage (CCS) by January 1, 2032. 
• “Medium-term units” committed to cease operations by January 1, 2039, must reduce emissions by 40% based on natural gas co-firing by January 1, 2030. 
• Units committed to ceasing operations before January 1, 2032, are not subject to emissions reductions under the GHG Rule. 

The limits for existing units are not direct federal rules. Rather, states must submit plans for EPA approval based on these emission guidelines. State plans must be no less stringent than the guidelines, which operate as presumptive standards. States may, however, include mechanisms for flexibility, such as emissions trading and averaging and pathways for one-year compliance extensions for unanticipated delays. 

Further, state plans must include the dates by which existing coal-fired EGUs will cease operations, effectively codifying those closures into law. Plans must also require natural gas– or oil-fired steam-generating units to remove the capability to fire coal before January 1, 2030, if those units (1) retain the capability to fire coal after the date of the Final Rule’s publication, (2) have fired any coal in the five years prior to the Final Rule’s publication, or (3) will fire any coal between the Final Rule’s publication and January 1, 2030. State plans are due to EPA within two years of the GHG Rule’s effective date.

New, modified, or reconstructed combustion turbines — emission standards and deadlines. Stationary combustion turbine EGUs that commence construction, modification, or reconstruction after May 23, 2023, are subject to emission limits based on specific turbine loads:

• “Base load” combustion turbines that operate at 40% of their maximum annual capacity or more must comply with interim emission standards based on the efficient design and operation of combined cycle turbines. However, by January 1, 2032, covered base-load combustion turbines must reduce emissions by 90% based on CCS.
• “Intermediate load” combustion turbines that operate between 20% and 40% of their maximum annual capacity must reduce emissions based on the efficient design and operation of simple cycle turbines. The final GHG Rule dropped a proposal requiring base-load and intermediate-load combustion turbines to co-fire low-GHG hydrogen due to cost concerns, although hydrogen co-firing could still be a compliance option.
• “Low load” turbines operate at less than 20% of their maximum annual capacity. These turbines are subject to emissions standards based on the use of low-emitting fuels.

Notably, the Final Rule eliminated GHG emission guidelines for existing gas-fired power plants. EPA will proceed with the gas-fired power plant emission guidelines under a separate rulemaking.

Revised Mercury and Air Toxics Standards for Existing Coal-Fired EGU — MATS Rule

EPA’s new MATS Rule sets lower limits for mercury and other metallic hazardous air pollutants when compared to the existing standards, last revised in 2020. The new rule is the next chapter in a series of rules and reversals that has seen the agency litigating before the D.C. Circuit and ultimately the Supreme Court in Michigan v. EPA, 576 U.S. 743 (2015), for nearly a quarter century.

The newest final rule tightens power plant hazardous air pollutant emission standards based on EPA’s determination that “technologies and/or methods of operation are available to achieve additional [emission] control from coal-fired EGUs at reasonable costs.”¹ Specifically:

• The filterable particulate matter (fPM) limit is lowered from 0.03 pounds per million British thermal units of heat input (lb/MMBtu) to 0.01 lb/MMBtu (fPM is designed as a surrogate emission standard to control non-mercury hazardous air pollutant metals), which plants must achieve within three years from the effective date of the final rule.
• The mercury limit for lignite coal plants is lowered from 4.0 lb/trillion Btu (TBtu) to 1.2 lb/TBtu or an alternative output-based standard of 0.013 pounds per gigawatt-hour electric output, which plants must achieve within three years of the rule’s effective date.
• Particulate matter continuous emission monitoring systems will be required for all plants within three years of the rule’s effective date. Performance testing, continuous parametric monitoring systems, and the low-emitting EGU program will no longer be options for demonstrating compliance with the revised fPM standard.
• Starting 180 days after the rule’s effective date, the option for Startup Definition #2 under 40 CFR 63.10042, which gives an additional four hours for startup, is removed. Instead, all plants will have to comply with Startup Definition #1, under which startup ends when any of the steam from a boiler is used to generate electricity.

Effluent Limitation Guidelines and Standards — ELG Rule

Additionally, EPA finalized the ELG Rule, which revises power-plant effluent limitation guidelines that were last revised in October 2020. The new rule revises technology-based discharge standards for four coal-fired power plants wastewater streams: (i) flue gas desulfurization (FGD) wastewater, (ii) bottom ash transport water (BA transport water), (iii) combustion residual leachate (CRL), and (iv) legacy wastewater generated before the 2015 or 2020 effluent limitations applied that is stored in surface impoundments (e.g., coal ash ponds). The ELG Rule imposes the following new requirements on those four wastewater streams:

• FGD wastewater, BA transport water, and CRL generated at coal-fired power plants are subject to a zero discharge pollutant standard.
• Surface impoundments that have not commenced closure under the CCR regulations as of the ELG Rule’s effective date must meet numeric discharge limits for mercury and arsenic in CRL discharged through groundwater and legacy wastewater discharged from surface impoundments during closure.
• Legacy wastewater is subject to best available technology (BAT) limitations to be determined on a case-by-case basis by the permit writer’s best professional judgment. Where the new discharge limitation is more stringent than previously established best practicable control technology and/or BAT limitations, the new limitations apply as soon as possible on a date determined by the permitting authority between 60 days after the ELG Rule is published in the Federal Register and December 31, 2029.
• For wastewater discharged to publicly owned treatment works, pretreatment standards for existing sources will be the same as the BAT limitations except for total suspended solids. Pretreatment standards apply three years after the Final Rule is published in the Federal Register.
• The 2020 rule’s less stringent standards for high-flow facilities and low-utilization energy generating units are eliminated under the new ELG Rule. However, EGUs permanently ceasing coal combustion by 2028 are subject to the requirements for FGD wastewater and BA transport water and the pre-2015 best professional judgment–based BAT requirements for CRL rather than the new, more stringent zero-discharge requirements.

Coal Combustion Residuals — Legacy CCR Rule

Finally, EPA’s new rule imposing new CCR requirements has three essential elements:

• Legacy impoundments. For inactive surface impoundments at inactive power plants (legacy impoundments), the Legacy CCR Rule adds a definition for legacy CCR surface impoundments and requires those legacy impoundments to comply with the same regulations that apply to inactive CCR impoundments at active power plants, except for the location restrictions and the liner design criteria, with tailored compliance deadlines.
• CCR Management Units. The Legacy CCR Rule establishes groundwater monitoring, corrective action, closure, and post-closure care requirements for CCR management units (CCRMUs) located at both active and inactive power plants with a legacy CCR surface impoundment. CCRMUs are CCR surface impoundments and landfills that were closed before October 19, 2015, as well as inactive CCR landfills.
• Facility Evaluation Reports. The Legacy CCR Rule also sets new reporting requirements, as owners and operators of both legacy CCR surface impoundments and CCRMUs units will now be required to prepare facility evaluation reports (FERs) that identify and describe the units. Consistent with existing CCR rules, facilities must post FER reports on their CCR websites in two parts, within 15 months (part 1) and 27 months (part 2) of the rule’s effective date.

These four rules are part of the broader debate regarding the use of fossil fuels for electricity generation. Each may see legal challenges, proposed resolutions for nullification under the Congressional Review Act, and attempts at rescission if the administration changes hands. Stakeholders should factor in this uncertainty in evaluating investments and other decisions.

¹ New MATS Rule Fact Sheet, pg. 2.