EPA Moves to Streamline Permitting for Power Plant Expansions, Gas Pipelines

Dive Brief:

• The Environmental Protection Agency published a proposed rule in the Federal Register on Friday to revise its New Source Review (NSR) regulations to reflect the administration's earlier guidance on whether changes or expansion that lead to increased emissions at an existing power plant or other major emitting facility requires stricter permitting.
• In March 2018, the EPA issued guidance that state and federal regulators would be allowed to consider emissions decreases alongside increases for projects — measuring net emissions before triggering the need for NSR preconstruction permits. "Most states have been interpreting the existing rules to mean that you cannot account for decreases" in emissions, Andrew Sawula, an environmental partner at Schiff Hardin, told Utility Dive.
• EPA Administrator Andrew Wheeler on Friday also announced a proposal to change the process through which states give Section 401 certifications for projects under the Clean Water Act (CWA), limiting state regulatory considerations for natural gas infrastructure. The proposed CWA rule was expected following an April executive order from President Donald Trump.

Dive Insight:
Power plant developers gained new assurances that the Trump administration will streamline the process for implementing upgrades and modifications.

The NSR proposed rule seeks to guarantee developers will avoid triggering NSR review if one portion of their project increases emissions, as long as those emissions are offset by a larger decrease in other parts of the project.

While the Trump administration has issued guidance in this area, the formal rulemaking process would make it more difficult for future administrations to reverse the interpretation, which applies to all fossil fuel-burning plants and other large industrial facilities, Sawula said.

"There are plenty of examples of projects where someone is going to decrease emissions from one unit by a lot and increase emissions by a little [at another unit]," Sawula said. Being able to qualify project constructions as under "the threshold level" for NSR review makes "a meaningful change for companies that are trying to implement changes that are, on the balance, going to have a [net positive] environmental difference."

"By simplifying the permitting process and implementing a common-sense interpretation of our NSR rules, we will remove a major obstacle to the construction of cleaner and more efficient facilities," Wheeler said in a statement.

The EPA first announced the new rule on Aug. 1. Comments are due on Oct. 8. Environmentalists are likely to oppose the change in their comments, as they did when the EPA issued guidance in March 2018.

However, opponents of the proposed rule would have to allege that the EPA "didn't follow the right procedure," or to identify something that would be "incompatible with the Clean Air Act," according to Sawula.

"At this point, I haven't seen anything as to what a challenge might look like," he said. "But a lot of [NSR] regulations get challenged."

Clean Water Act changes
Environmental groups also decried Wheeler's proposal on the CWA and several states are expected to oppose that proposal as well, with both groups alleging the related executive order is an infringement on state's rights.

"We saw bipartisan opposition from the states when Trump issued the related executive order earlier this year," Emily Sansel, spokesperson for the League of Conservation Voters, told Utility Dive.

"Congress never intended for Governors to use the Clean Water Act as a political tool to block projects for reasons unrelated to clean water," Christopher Guith, acting president of the U.S. Chamber of Commerce's Global Energy Institute, said in a statement.

The EPA said the new rule streamlines the process for developers to obtain state water quality certifications, which is crucial due to the amount of natural gas pipeline projects that are pending construction after having been denied state permits.

"[T]he 401 process has been misused by a few states to hold up important infrastructure," Karen Harbert, CEO and president of the American Gas Association, said in a statement.

A state agency that issues a denial for a project must "satisfy the requirements of Clean Water Act Section 401." If it does not, EPA may treat the denial as a waiver under section 401, according to Thaddeus Lightfoot, an environmental lawyer and partner at Dorsey & Whitney.

"[T]here is, essentially, a federal veto of certification denial (a veto of the veto) if a federal agency determines the certifying authority has acted inconsistently with federal requirements," Lightfoot told Utility Dive via email.

The EPA is scheduled to finalize the Section 401 rule in May 2020. No expected date for finalization was released for the NSR rule.