More On

Regulatory: What to expect in the energy sector

4 areas where the EPA is likely to aggressively regulate

During President Obama’s first term, the Environmental Protection Agency (EPA) issued a series of aggressive rulemakings targeting coal-fired boilers, including those that supply power to the nation’s power grid, as well as institutional or industrial coal-fired boilers that serve a specific facility. At the same time, hydraulic fracturing changed the marketplace with respect to the supply and price of natural gas. These two factors are driving a sea change from coal to natural gas in terms of power generation, and the intersection of our nation’s energy supply and environmental regulation has been squarely in focus during recent political campaigns.

As the Obama administration begins its second term, the EPA is likely to continue its aggressive regulation of the energy sector, and below are several areas where we think short-term action may be likely:

New source performance standards (NSPS): The Clean Air Act authorizes the EPA to develop technology-based standards that apply to specific categories of stationary sources. In 2012, the EPA issued a final NSPS for the oil and natural gas source category and issued final rules targeting the reduction of volatile organic compound emissions. In January 2013, however, the EPA announced that it would reconsider that standard, including potentially regulating methane emissions to address climate change. Also in 2012, the EPA proposed an NSPS for all power plants that would establish a pollution standard of 1,000 pounds of carbon dioxide per megawatt-hour of output—the level of emissions currently achieved by combined-cycle gas-fired power plants. New coal-fired power plants could achieve that limit only through the use of carbon capture and sequestration.

Hydraulic fracturing: Hydraulic fracturing is a game-changer in terms of its dramatic impact on the supply and price of natural gas. Our nation’s energy infrastructure is being transformed as a result. However, the process of hydraulic fracturing has raised environmental concerns and as the activity has increased, so have calls for stricter regulation. In 2012, the EPA promulgated regulations establishing air standards for natural gas wells that are hydraulically fractured, requiring additional control methods to reduce methane emissions. The EPA also has undertaken a research project into hydraulic fracturing’s effects on water supplies, due in 2014. It is likely that the EPA will seek to regulate the disposal of wastewater from hydraulic fracturing and the use of chemicals in the process.

Cooling water intake structures: To minimize the environmental impacts of cooling water intake systems, Section 316(b) of the Clean Water Act requires the EPA to ensure that the location, design, construction and capacity of cooling water intake systems reflect the best technology available. Over the past decade, environmental groups have sued the EPA, alleging that it failed to promulgate regulations and that when it did promulgate regulations, the regulations were flawed. The EPA ultimately agreed to promulgate a final rule by July 2012. In July 2012, the EPA pushed its deadline for a final rule back to July 2013, in order to complete its analysis of data and to address public comments.

Coal ash: The EPA is considering two options for the regulation of coal combustion residuals (including coal ash) under the Resource Conservation and Recovery Act. One option would regulate coal combustion residuals as hazardous waste, which would subject it to much stricter disposal and storage standards. The second option would regulate coal ash as a non-hazardous waste subject to more lenient standards that would operate as guidance for state regulation. Environmental groups have sued the EPA seeking an order forcing the agency to choose between the options and to promulgate final standards. The EPA’s current position is that it is not feasible, given the current state of the agency’s knowledge, to set a rulemaking schedule, and that it must consider additional data. 

Contributing Author

author image

Karl Karg

Karl Karg is a partner in the Chicago office of Latham & Watkins. Mr. Karg’s environmental practice includes enforcement defense, litigation, crisis response and management,...

Additional Contributors: Claudia O'Brien

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.