The Environmental Appeals Board (EAB), which reviews EPA administrative decisions, issued an order requiring the EPA to review the Clean Air Act to determine whether it is required to set carbon dioxide limits in a permit for a new coal-fired power plant. The ruling may halt plans for new coal-fired power plants, and possibly a broad swath of energy intensive facilities, until the review is completed. In order for a new coal-fired power plant to be constructed in a location that is fully compliant with National Ambient Air Quality Standards (NAAQS), the applicant must satisfy the New Source Review (NSR) requirements of the Clean Air Act (CAA)'s Prevention of Significant Deterioration (PSD) program. A requirement of the PSD program is that new sources, generally including new coal-fired power plants, utilize the Best Available Control Technology (BACT) for every pollutant "subject to regulation" under the Clean Air Act that it will emit. The issue is whether CO2 is "subject to regulation" as a result of the Supreme Court's holding in Massachusetts v. EPA, which defined CO2 as a pollutant, and the fact that EPA currently requires CO2 emissions to be monitored.

The EPA has argued that CO2 is not subject to regulation, but the EAB rejected the Agency's rationales for that position. The EAB, though, did not find that CO2 is subject to regulation, which would have triggered the BACT requirement. Rather, the EAB remanded the matter back to EPA Region 8 and ordered the Region to reexamine the issue, as well as develop a new record to attempt to support the position that CO2 is not subject to regulation. The EAB decision, though, also directed the Region to not limit its examination of CO2 regulation to a consideration of the particular permit at issue; part of the decision reads:

In remanding this permit to the region for reconsideration of its conclusions regarding application of BACT to limit CO2 emissions, the board recognizes that this is an issue of national scope that has implications far beyond this individual permitting proceeding. The board suggests that the Region consider whether interested persons, as well as the Agency, would be better served by the Agency addressing [CO2 under the Clean Air Act] in the context of an action of nationwide scope, rather than through this specific permitting proceeding.

How the "subject to regulation" question is ultimately resolved will have significant implications, not only for coal-fired power plants, but many other industrial sectors as well. This is because the NSR provisions of the PSD program apply to all "major emitting facilities," the definition of which includes chemical facilities, cement manufacturing facilities, metal manufacturing facilities, and any other facility that has the potential to emit greater than 250 tons per year of any air pollutant "subject to regulation."

Another interesting question is what BACT for CO2 emissions would be. It is possible that CCS could eventually be considered BACT, in which case all new major emitting facilities would be required to capture and store their CO2 emissions. Such a possibility, though, is not likely to occur in the near future because the determination of BACT involves a cost consideration component, and the current cost of CCS may be a disqualifier.