On September 20, 2013, the Environmental Protection Agency (EPA) re-proposed new source performance standards (NSPS) for carbon dioxide emissions from new power plants under Section 111 of the Clean Air Act (CAA). With the proposal now unveiled, all major emitting industries – not just utilities looking to build new power plants – must consider the implications for their operations.

This proposal applies only to the construction of new power plants, but it provides major clues as to the direction of the Obama Administration when it comes to curtailing carbon emissions from a range of industrial sources. The existing fleet of electricity generating units as well as refineries will be required to make substantial reductions in carbon dioxide emissions over the next several years. Impacted industries should give due consideration to these forthcoming regulations and the implications they will have for their health and viability.

Important factors that emitting industries need to consider include:

  • Operators of Existing Generating Units. In addition to regulating new units, the EPA must "issue standards, regulations, or guidelines, as appropriate" under Section 111(d) of the CAA, concerning carbon emissions from such existing units by June 1, 2014. These guidelines will be finalized by June 1, 2015, with state implementation plans due to the EPA by June 30, 2016. The EPA has neither used Section 111(d) to regulate carbon dioxide emissions nor used it to regulate any pollutant on a comparable scale. This effort will be unprecedented in scope and complexity, both for the EPA itself and the industries that will be subject to regulation.
  • Major Consumers of Natural Gas and Gas-Fired Electricity. A few companies have expressed concerns about a growing reliance on natural gas for electricity generation as driving up natural gas prices and harming domestic manufacturing. As such, large natural gas consumers, including large manufacturers of chemicals, fertilizer, steel and others who use gas as a feedstock, need to closely monitor the impacts of the new source NSPS for new power plants on the price and availability of natural gas.
  • Petroleum Refineries. As a result of a 2010 settlement between the EPA and some states and environmental groups, newly built petroleum refineries are the next category of industrial sources that would be subject to carbon dioxide regulations under the CAA. No new petroleum refineries are currently planned in the United States, but may be in the future. The EPA's approach to new coal-fired units could indicate how it would handle such a venture, so refiners should closely monitor how the agency acts to reduce carbon dioxide emissions from power plants. Furthermore, EPA's use of Section 111(d) will very likely inform how it approaches carbon dioxide from existing petroleum refineries.

The public has 60 days to comment on this proposal from the date that it appears in the Federal Register. Comments submitted on the initial proposal will not be accepted and must be re-submitted to account for the particulars of the newly proposed rule. The EPA will also hold a public hearing on this proposal, the date and time of which will be announced in the near future. The rule is expected to be finalized in 2014 at the earliest, but it will take effect upon publication in the Federal Register.