The Biden-Harris Administration recently issued a suite of new rules aimed at addressing water and air quality, reducing methane emissions, protecting environmental justice communities, and accelerating the nation’s transition toward renewable energy sources. These regulations represent significant federal action on issues ranging from toxic air pollution to offshore wind leases. The new rules will impact companies across a range of industries: toxic air rules apply to sterilization facilities, carbon pollution regulations apply to fossil fuel power plants, wastewater controls apply to coal power plants, methane reporting rules impact the oil and gas sector, and offshore energy rules aim to incentivize development in the offshore wind sector. This client alert summarizes key environmental rulemakings through early May 2024.
Within this suite of new rules, the Environmental Protection Agency (EPA) issued two rules regulating per- and polyfluoroalkyl substances (PFAS). WilmerHale discusses the rules and their implications in a prior client alert (see PFAS Milestones: EPA Sets Drinking Water Standard, Labels Two Compounds Hazardous Substances).
EPA Toxic Air Pollution Rules
Emissions Reduction of Toxic Air Pollutants from Chemical Plants
On April 9, 2024, EPA announced a set of final rules (“the rules” or “the regulations”) aimed at curbing emissions of carcinogens, including ethylene oxide (EtO) and chloroprene.1 More than 200 chemical manufacturing plants across the country would be subject to the rules, which include requirements that plants comply with risk-based emissions standards for reducing hazardous air toxics and conducting fence-line monitoring.2 EPA estimates that the rules will decrease EtO and chloroprene emissions by 80%.3 This set of rules is the latest installment in the Biden Administration’s environmental justice agenda, which—as previously reported by WilmerHale—has largely been implemented through executive orders (see prior WilmerHale alerts on Executive Order 14091 and Executive Order 14096) and agency actions (see prior WilmerHale alert on EPA’s Office of Environmental Justice).
EPA describes the rules as a step toward providing critical health protections to hundreds of thousands of people living in communities near chemical plants.4 These communities have a higher-than-average percentage of residents of color and/or low socioeconomic status, raising environmental justice concerns.5 In developing the rules, EPA conducted a community risk assessment that quantified the impacts of the rule on communities within a six-mile radius of the plants subject to the rules. This assessment showed that the rules would prevent the release of 1,372 tons of hazardous air pollutants per year6 and reduce the number of people who have elevated air toxics-related cancer risk by 96%.7 The new rules also include fence-line monitoring requirements, intended to ensure facilities are effectively controlling their air toxics emissions.8 New plants or plants that are modified must comply with the rules once they take effect on July 15, 2024, or when they begin operation, whichever is later.9
Power Sector Rules
On April 25, 2024, EPA announced a suite of final rules under the Clean Air Act (CAA), Clean Water Act (CWA) and Resource Conservation and Recovery Act (RCRA) to “provide regulatory certainty to the power sector in the transition to the clean energy economy.”10 More specifically, EPA describes these rules as a means to reduce pollution and provide utilities the ability to invest resources in improving the consistent and reliable delivery of electricity.11
Carbon Pollution Standards for Fossil Fuel-Fired Power Plants
EPA announced final carbon pollution standards for existing coal-fired plants and new natural gas-fired power plants.12 The rules are intended to reduce greenhouse gas (GHG) emissions from these stationary sources on the grounds that existing coal-fired plants are the largest source of GHGs from the power sector and new natural gas-fired combustion turbines are the largest new sources of GHGs being built today.13 EPA determined that the best system of emission reduction for the longest-running existing coal units and for new base load combustion turbines is carbon capture and sequestration/storage (CCS).14 In other words, these plants must use add-on controls to capture and store carbon under the new rules. Additionally, under the CAA, states must submit plans to EPA for establishing standards within two years from the publication date of the rules.15
For new combustion turbines, the final rule establishes three subcategories based on the capacity factor of the turbine. For example, turbines that generate more than 40% of the maximum annual capacity are subject to a “phase one” standard based on efficient design and operation and a “phase two” standard based on 90% capture of carbon dioxide (CO2).16 In contrast, new low-load turbines that generate less than 20% of their capacity are only subject to a standard based on low-emitting fuel.17 Intermediate-load turbines that fall in between the two are subject to a standard based on efficient design and operation, but not based on carbon capture.18
Existing coal-fired electric generating units (EGUs) will be regulated on a tiered basis depending on how far into the future the plants plan to operate. New plants (i.e., units that will still be in operation on or after January 1, 2039) will be required to apply CCS with 90% capture by January 1, 2032.19 If a plant will no longer exist on January 1, 2039, it will still be required to abide by an emission rate limit based on 40% natural gas co-firing, and the rate limit will apply on January 1, 2030.20 If a plant will no longer exist on January 1, 2032, it is exempt from the regulations.21 States may also grant limited variances based on factors such as remaining useful life if there are fundamentally different circumstances from those considered by EPA and the source cannot reasonably comply with the emission limitation requirements.22
The Regulatory Impact Analysis estimates that the new rules will reduce GHGs by 1.38 billion metric tons of CO2 systemwide through 2047.23 This will have impacts via reductions in fine particle and ozone concentrations throughout the country, which would have downstream positive impacts on environmental justice communities.24 EPA also projects 1,200 avoided premature deaths in 2035 alone as a result of these final rules due to reduced air pollution and warming trends.25 EPA estimates net climate and health benefits between 2024 and 2047 of up to $370 billion, which annualizes at $20 billion.26
CAA: Mercury and Air Toxics Standards
EPA also announced updated National Emission Standards for Hazardous Air Pollutants regulations for coal- and oil-fired EGUs.27 The Mercury and Air Toxics Standards (MATS) establish standards for mercury and other hazardous air pollutants (HAPs) emitted by EGUs with capacities of more than 25 megawatts.28 Prior MATS achieved breakthroughs such as reducing mercury emissions by 86% by 2017 and bringing acid gas HAPs and non-mercury metals down 96% and 81%, respectively, compared to 2010 levels.29
The new MATS updates are the most significant since 2012.30 The 2012 final MATS established standards to limit emissions of mercury, hydrogen chloride and hydrogen fluoride, nickel, lead, chromium, formaldehyde, and dioxins/furans.31 This final rule limits the emission of non-mercury HAP metals even more by reducing the emission standard of non-mercury HAP metals from existing coal-fired power plants by reducing the emission standard for filterable particulate matter (fPM) by two-thirds and removing the low-emitting EGU provisions for fPM and non-mercury HAP metals.32 The new rule also lowers the emission standard for existing lignite-fired power plants by 70%, to a level that is commensurate with the mercury standard other coal-fired power plants must meet.33 Additionally, coal- and oil-fired EGUs will be required to use fPM continuous emission monitoring systems (CEMS) to demonstrate their compliance with the regulations.34 EPA has also amended the startup requirements in the MATS to improve startup emissions performance overall.35
The MATS emission standards are more stringent because, according to EPA, the technology is available to support additional controls.36 For emissions of fPM, they finalized a change from 0.030 pounds per million British thermal units (lb/MBtu) of heat to 0.010 lb/MBtu.37 Ninety-three percent of coal-fired capacity meets this standard already.38 The standard for lignite-fired EGUs is being tightened to 1.2 pounds per trillion British thermal units (lb/TBtu) of heat input from 4.0 lb/TBtu.39 Existing coal- and oil-fired EGUs will also need to use CEMS.40 Two-thirds of the current fleet are not doing so, which may require significant compliance updates.41
CWA: Steam Electric Power Generating Effluent Guidelines and Standards (ELGs) Rule
EPA has also announced updates to the ELGs, which are industry-specific wastewater requirements. The final rule (ELGs Final Rule)46 covers wastewater discharges from coal-fired power plants operating as utilities and are incorporated into National Pollutant Discharge Elimination System (NPDES) permits. The rule is intended to reduce the discharge of toxic metals and other pollutants into water from coal-fired power plants that represent the greatest pollutant reductions by use of the best available technology economically achievable for the industry. EPA estimates that the final rule will reduce pollutants by more than 660 million pounds per year and provide $3.2 billion in public health benefits per year. In administering the new standards, EPA hopes “[t]hese water quality, health, and environmental improvements will benefit environmental justice communities that are disproportionately affected by pollution from coal-fired power plants.”47
The ELGs Final Rule establishes a more stringent zero-discharge limitation for pollutants in three categories: flue gas desulfurization wastewater, bottom ash transport water and combustion residual leachate (CRL). The rule also sets numeric discharge limitations for mercury and arsenic for CRL that is discharged through groundwater, and for a fourth waste stream, legacy wastewater, that is discharged through surface impoundments—so long as the surface impoundments have not commenced closure under previous regulations.
The requirements are not immediately binding on applicable facilities. The requirements will be incorporated into active NPDES permits for individual sites. The ELGs Final Rule takes effect 60 days after publication in the Federal Register.
RCRA: Legacy CCR Rule
EPA announced final changes to the coal combustion residuals (CCR) regulations for inactive surface impoundments at inactive electric utilities, which are also known as “legacy CCR surface impoundments.” EPA stated that these regulations will “extend[] a subset of EPA’s existing CCR requirements to these historic disposal units that will ensure any contamination from these areas is remediated, and will prevent further contamination.”48
EPA first established a national regulation to provide a comprehensive set of requirements for the safe disposal of CCR in April 2015. The 2015 rule imposed requirements on inactive surface impoundments at active facilities, but not at inactive facilities. Industry and environmental groups petitioned for review of the rule. In 2018, the US Court of Appeals for the DC Circuit held that EPA acted “arbitrarily and capriciously and contrary to RCRA” in exempting inactive surface impoundments at inactive plants from regulation.49 The court ordered the provisions regulating inactive surface impoundments be vacated and remanded to the agency. In light of the court’s order, EPA restarted the rulemaking process and began requesting comments and data on inactive surface impoundments at inactive electric utilities.
The April 2024 final rule50 requires the safe management of coal ash that is placed in certain areas that were previously exempted from minimum criteria coal ash disposal regulations. These areas include inactive power plants with surface impoundments that are no longer being used and historical coal ash disposal areas at active power plants. EPA also establishes groundwater monitoring, corrective action, closure and post-closure care requirements for all CCR management units. Those regulations will apply to CCR impoundments and landfills closed before the effective date of the 2015 regulations, inactive CCR piles at active facilities, and inactive facilities with a legacy CCR impoundment.
The legacy CCR surface impoundments rule takes effect 180 days after publication in the Federal Register.
EPA’s Methane Updates for GHG Emissions Reporting
EPA announced a final rule aimed at updating the Greenhouse Gas Reporting Program to enhance methane emissions reporting from the oil and gas sector.51 This initiative, aligned with the Inflation Reduction Act’s Methane Emissions Reduction Program, introduces the use of satellite data and direct monitoring to identify “super-emitters” and requires emissions data submission from relevant facilities.52 The rule seeks to address discrepancies between historically reported emissions and actual emissions by using advanced technologies to improve the quality and accuracy of data, enabling more transparent annual reporting.53 As part of broader efforts to reduce methane emissions, the rule also supports the implementation of CAA standards aimed at reducing methane and other air pollutants from the oil and natural gas industry.54
As part of the rule, EPA announced that it will be issuing a request for information and opening a non-regulatory docket, including specific questions and topics for which EPA seeks input from the public. EPA intends to use the feedback received to consider whether it is appropriate to undertake further rulemaking addressing the use of advanced measurement technologies.55 EPA also announced that it will undertake a solicitation or engagement for information about advanced measurement and detection technologies (in the form of a request for information, workshop or similar mechanism) on at least a biennial basis.56 These engagements will enable EPA to learn about technological advances and the extent to which there is robust information about their accuracy, reliability and appropriateness for use in a regulatory reporting program.57
Department of the Interior’s Renewable Energy Modernization RuleOn April 24, 2024, the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE), within the Department of the Interior (DOI), issued the Renewable Energy Modernization Rule aimed at making offshore wind energy project development on the US Outer Continental Shelf more efficient.58 This new rule is the latest action by the Biden Administration to promote commercial-scale offshore wind projects as a key component of the nation’s renewable energy profile59 (see prior WilmerHale alerts on Emerging Trends in US Offshore Wind Energy Development and Inflation Reduction Act: Environmental Provisions).
DOI stated that the intent of these regulations is to reduce costs associated with those projects by modernizing and streamlining the regulatory processes, clarifying ambiguous regulatory provisions and enhancing compliance protocols.60 DOI also noted that over the next 20 years, the final rule is expected to result in nearly $2 billion of cost savings in the offshore wind industry.61
The Renewable Modernization Rule covers many aspects of offshore wind energy project development. One category of changes aims to ensure increased transparency. For example, to support stakeholders’ planning, BOEM will now publicly share a renewable energy leasing schedule every two years that covers the following five years.62 BOEM will also provide additional clarifications to the auction process and requirements, including a description of how BOEM may use bidding credits.63 To ensure tribes have more information about offshore wind development, BOEM will also increase coordination with tribes that may be affected by the construction of such projects.64
Another slate of provisions in the rule are intended to improve efficiency and flexibility.65 For example, the final rule eliminates duplicative regulatory processes, eliminates the requirement for a site assessment plan and related BOEM approval for certain meteorological buoys, and allows lessees to submit the final results of any geotechnical surveys consistent with the submission of Facility Design Reports.66
The rule also aims to enhance safety management for offshore wind projects. To accomplish this goal, the Certified Verification Agent role has been expanded to include design and commissioning of Critical Safety Systems Equipment.67 The purpose of this expansion is twofold: ensure BSEE-authorized activities are carried out safely and provide an independent source of review for key stages of project development.68 In addition, BSEE is now required to identify when a safety management system must be submitted for review, what information it must contain and when audits must be conducted.69 The final rule also expands the scope of inspections and allows self-inspections if they include performance-based evaluation and identify critical safety systems and equipment.70
Finally, the rule also seeks to achieve cost savings by reducing upfront costs for lessees. The primary avenue to reduce project costs involves changes to decommissioning financing. The rule allows, for the first time, incremental funding of financial assurance for decommissioning.71 This contrasts with the old system of requiring such funds all at once before a project has begun. The new financing scheme will also allow lessees to use letters of credit as an acceptable financial assurance instrument.72 These changes aim to reduce the upfront cost of building a new project while also allowing for greater financing flexibility.
Conclusion
These new energy and industry-facing rules will come with a mix of opportunities and challenges for the regulated community. As the presidential election looms closer, additional agency rulemaking is expected to advance commitments made by the Biden Administration on climate, water and chemicals. Under the Congressional Review Act, any regulations issued as early as mid-May could face legislative nullification if the Republican Party gains control of both chambers of Congress and the White House next year, or if enough Democrats join with Republicans to overturn Biden Administration rules in the months leading up to the general election in November. WilmerHale’s Energy, Environment and Natural Resources team will continue to closely follow these issues.
