In an important decision, EPA suggests that integrated gasification combined cycle (IGCC) technology cannot be ruled out as best available control technology (BACT) for a pulverized coal power plant without a searching (and likely case-by-case) examination of whether IGCC would alter design elements "inherent" to the purpose of the proposed project or would achieve pollution reductions "without disrupting [the applicant's] basic business purpose." As this decision plays out, utilities could eventually be forced to construct IGCC plants rather than proposed pulverized coal plants. And, as IGCC is most often viewed as a method of controlling GHG emissions, the EPA's forthcoming regulation of GHGs makes this eventuality more likely. The bottom-line is that the thinking displayed in EPA's decision may accelerate the date on which control equipment and design changes focused on limiting GHG emissions will need to be employed in order to construct a new or modified source.

EPA's decision rejected Arkansas Department of Environmental Quality's (ADEQ) finding that it could issue a permit for a proposed new pulverized coal plant without first evaluating whether IGCC technology is BACT. The Clean Air Act's Prevention of Significant Deterioration (PSD) program requires new and modified stationary sources to use BACT to control emissions of pollutants "subject to regulation." In a BACT analysis, the permitting agency—ADEQ in this case—need not consider technologies that would redefine the proposed source. For example, it is unlikely that a wind farm could be considered BACT for a coal plant because, rather than tweaking the design of the coal plant to reduce pollution, a wind farm would be another thing entirely. In this legal context, ADEQ concluded that it need not consider IGCC in the BACT analysis for the proposed pulverized coal power plant because, in its view, IGCC technology would redefine the proposed source. ADEQ based its conclusion on the fact that the operation of an IGCC plant—which separates gas from the coal and then burns the gas to generate electricity—may be considered more akin to a natural gas-fired plant than a coal-fired power plant. Therefore, reasoned ADEQ, IGCC is very different from the proposed pulverized coal plant and its use would redefine the source.

EPA objected to ADEQ's reasoning and indicated that, in order to rule IGCC out as BACT, the ADEQ must find that IGCC would alter design elements "inherent" to the purpose of the proposed project rather than merely achieving pollution reductions "without disrupting [the applicant's] basic business purpose." EPA's decision suggested that the results of this analysis could vary depending on the precise characterization of the proposed project. Consequently, there does not appear to be a hard and fast rule regarding whether IGCC must be considered in any particular BACT analysis; rather, it is ambiguous.

This decision wasn't clearly about GHGs, so why does it matter to GHG emitters?

Under EPA's interpretation of the Clean Air Act, GHGs will be "subject to regulation" once EPA promulgates regulations restricting GHG emissions from vehicles, and such rules are expected to be finalized in March of this year. Once GHGs are "subject to regulation," the PSD program will require new or modified stationary sources with the potential to emit GHGs above certain thresholds to use BACT to control GHGs.

Interestingly, though, little if any GHG emission control technology has been commercialized, suggesting that little if any technology is available (the "A" in BACT). It is true that IGCC when combined with CCS has been viewed as a potential GHG emission control technology for pulverized coal-fired power plants, but conventional wisdom rightly or wrongly has held that, available or not, IGCC and CCS would not be BACT because the technology would redefine the source. The conclusion flows, then, that even if BACT would be required, there wouldn't be a real compliance obligation until some type of BACT actually exists.

EPA's decision, though, runs contrary to conventional wisdom regarding IGCC and suggests that, once available and depending on a case-by-case analysis, IGCC could be BACT for GHG emissions, a result that could legally prohibit the construction of a pulverized coal power plant in any particular case. Taking a view beyond coal-fired power plants, EPA's seemingly growing view of what could be considered BACT in any particular case will have implications for any GHG emitter subject to PSD and BACT requirements. It will result in a more searching, and expensive, case-by-case examination of potential technologies. In fact, it will make it difficult to establish any default rules regarding whether technology X may be considered BACT for a proposed source of type A. Also, this trend could result in a more liberal interpretation of what is "available."