Navigant Research Blog

How the EPA Proposes to Regulate Carbon with the Clean Power Plan

— May 6, 2015

The U.S. Supreme Court has upheld the Environmental Protection Agency’s (EPA’s) authority to regulate CO2 emissions on three occasions, most recently in 2014. However, its ability to regulate these emissions for existing sources, as enabled by Section 111(d) of the Clean Air Act, has faced some uncertainty regarding the separate interpretation of the U.S. House and Senate in the 1990 Clean Air Act (CAA) amendments. Under the House version, Section 111(d) would prohibit regulation of CO2 from existing sources already regulated under Section 112—which the EPA has done for existing electric generating units (EGUs) under the Mercury and Air Toxics Standards (MATS) rule—while under the Senate version, this conflict does not exist.

Recently, as preparations for the expected final rulemaking continue and legal challenges develop, the discussion has focused on just how Section 111(d) of the CAA may be employed by the EPA to regulate CO2 emissions. Though 111(d) has been used in 13 prior instances, precedent is minimal and its previous applications are of limited import to a proposed rule of this type. Furthermore, while many are familiar with the EPA’s long-standing regulation of hazardous and criteria air pollutants under the CAA, it is often less clear just what 111(d) is for, how it enables the EPA to act, and, most importantly, how it relates to the proposed CPP rule. Briefly, I’ll cover some of those basics here.

Existing Sources

Quite simply, Section 111(d) enables the EPA to regulate emissions from existing sources that produce emissions that threaten public health or welfare and are not otherwise regulated in the CAA. While a necessary endangerment finding for CO2 and other greenhouse gasses was first published in 2009, the EPA has not yet focused a rulemaking on existing sources until proposing the CPP. Beyond that, 111(d) affords the agency the same management strategy detailed in Section 110—e.g., directing states to develop implementation plans to meet national ambient air quality standards. Ultimately, the EPA may initiate a federal plan should a state choose not to develop its own.

Achievable and Demonstrated  

A key distinction in understanding the EPA’s authority under 111(d), as compared with regulating more traditional hazardous or criteria air pollutants, is that the agency must regulate CO2 emissions according to the “best strategy of emissions reductions (BSER)…adequately demonstrated”—a standard of performance the agency may define but that must explicitly consider cost and feasibility. Indeed, this BSER strategy is defined in the CPP as the building blocks, and the reasonability of these proposed strategies has been an ongoing theme during the EPA’s consultation with the states, a theme echoed in recent comments by EPA Administrator Gina McCarthy. As states begin to design potential compliance strategies and debate the reasonability of EPA’s BSER proposition, the design of the CPP and the EPA’s ability to regulate existing plants under Section 111(d) are questions likely to be addressed in the courts following the release of the EPA’s final rulemaking expected later this summer.


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