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Testimony of Texas Commission on Environmental Quality on the 

Proposed U .S.E.P .A. Carbon Pollution Standard for New Power Plants 

Susana M. Hildebrand, P.E., Chief Engineer 

May24, 2012 

Good evening. My name is Susana Hildebrand and I am the Chief Engineer for the Texas 

Commission on Environmental Quality. I appreciate the opportunity to provide 

comments on the EPA's Proposed Carbon Pollution Standard for New Power Plants. The 

TCEQ will be submitting extensive written comments on the proposal and in the five 

minutes I have here, I will cover the TCEQ's major concerns with the rule. 

There are two main points I will make. First, there is no apparent need for this rule. 

Second, if EPA does proceed, there are multiple aspects that are inconsistent with 

Section 111 of the Clean Air Act and previous EPA policy. 

No Need for the Rule 

The EPA has not adequately demonstrated the need for the proposed rule. The EPA 

states that the proposed rule will limit GHG emissions from the largest stationary source 

category and that it is necessary to protect against projected climate change impacts and 

risks. However, the EPA then posits there will be no cost or benefit associated with the 

rule and that the rule will not result in any emissions reductions. The CAA says that the 

Administrator" ... shall include a category of sources in such list if in his judgment it 

causes or contributes significantly to, air pollution which may reasonably be anticipated 

to endanger public health or welfare." Yet, if one were to believe EPA's analysis that no 

new coal-fired units would be built through 2030 without carbon capture and storage 

(CCS), how can one reasonably anticipate that no new sources (and no new emissions 

from those sources) could reasonably endanger public health or welfare? 

Inconsistent with FCAA 

A number of aspects of the proposal are inconsistent with the federal Clean Air Act. 

First, EPA must conduct a new endangerment and cause and contribute finding for this 

newly created source category, and may not rely on the 2009 finding for mobile sources 

of GHG. EPA proposes to create a new category by combining two existing and separate 

categories under the NSPS rules, specifically for the purpose of setting standards for C02 

only and no other pollutants. The EPA cannot rely on previous findings of 

endangerment and cause and contribute from coal-fired EGUs because these prior 

findings were based on non-G HG air pollutants that have very different characteristics 

than GHG. GHG are unique in their scope and air quality impacts. Further, the 

proposed standard is to limit emissions of C02 from a fraction of the sources of GHG 

worldwide, whose specific contribution to climate change has not been determined. 

Another major concern is that FCAA Section ui(b)(S) clearly stipulates that the U.S. 

EPA is not authorized to require any particular technological system of continuous 

emission reduction to comply with any new source standard of pollution. The federal 

Clean Air Act definition of "technological system of continuous emission reduction" 

includes production or operational processes that are inherently low-polluting or 
nonpolluting, and natural gas-fired combined cycle units clearly meet this definition. 

The EPA is circumventing the clear intent of Section 111(b )(5) by setting a standard 

based on emissions from natural gas combined cycle units. In addition, the EPA's 

proposal to create a new source category based solely on equipment function, without 

any consideration for unit design or fuel type, is contrary to NSPS precedent and 

previous case law. 

The EPA has also created a new category of "transitional sources" for this rule that 

includes facilities that have received a complete PSD permit and commence 

construction within 12 months of the proposal date of the rule. While the TCEQ 

appreciates the EPA's attempt to provide flexibility for these facilities, the EPA's 

creation of a new category of transitional sources clearly conflicts with the plain 

language of definition of new source under Section 111(a)(2). A successful challenge or 

citizen suit to this part of the rule would leave "transitional" facilities that commenced 

construction in the untenable position of having to meet the performance standards for 

a new source, exactly the situation that the EPA was trying to prevent. 

Economic and Technological Feasibility 

The EPA is required to consider economic and technological feasibility when setting a 

standard of performance under Section 111. The EPA acknowledges that the 1000 pound 

per megawatt-hour C0 2 standard is not technologically feasible for other types of units 

without CCS, yet there has not been a single full-scale commercial demonstration of CCS 

on a coal-fired power plant. Not only has the EPA failed to demonstrate the feasibility of 

CCS on new coal-fired EGUs, they acknowledge that CCS is not economically feasible for 

a new coal-fired EGU without government supported funding. The EPA should not and 

cannot base regulation on future subsidies provided by other federal agencies. EPA 

cannot guarantee that such funding will be available or adequate in the future. 

EPA claims they are complying with Executive Orders 12866 and 13563 by claiming that 

the rule will have no noticeable compliance costs because in essence, there will be no 

coal-fired EGUs built in the future based on a prediction oflow natural gas fuel prices. 

This flawed rationale based on EPA's predicted future economic scenario does not 

justify the EPA's failure to perform a proper economic impact analysis. The EPA's 

analysis for Executive Order 13211 is also based on the same premise, essentially a 

simple statement that the rule has no notable impact to energy supply, distribution, or 

use. Further, the EPA has not conducted an adequate analysis of the potential impact to 

reliability that results from a scenario where natural gas prices are much higher than 

projected and new coal-fired generation is no longer an option for the electric power 

industry. Fuel prices have historically fluctuated over time and even with new drilling 

techniques that make greater supplies of natural gas available, there are no guarantees 

that fuel prices will not fluctuate in the future. If the EPA predictions for natural gas 

prices prove to be wrong, as has been shown in the past, and the EPA takes away other 

fuel options by establishing rules to force the electric power generation sector to 

construct power plants that are the EPA's "facilities of choice," the EPA is not only 

setting energy policy for the country but is also endangering reliable and affordable 

electrical power for the public. 

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The EPA's prediction of no new coal-fired power plants without CCS is based on their 

Integrated Planning Model (IPM) results that include both the Mercury and Air Toxics 

Standards (MATS) rule and the Cross-State Air Pollution Rule (CSAPR). Thus, the EPA 

is creating a self-fulfilling prophecy of no new coal-fired EGUs by adopting rules that 

place extreme regulatory pressure on new coal-fired generation, and then using that 

prophecy to justify the current proposed GHG NSPS rulemaking rather than attempt to 

justify the proposed rule on its own technological merits and true economic evaluation. 

Furthermore, CSAPR has been stayed by the D.C. Circuit Court and the MATS rule is 

also under litigation. If these rules are overturned or even significantly modified, IPM's 

predictions of no new coal-fired power plants will be invalid by default. 

Withdrawal of Rule 

TCEQ urges EPA to withdraw this rule or at least delay promulgation of this NSPS until 

litigation over the several G HG regulatory actions being challenged, in particular the 

Tailoring Rule, is resolved. This proposal regulates C02 under section 111 for the first 

time, and under federal PSD and Title V regulations, regulation of a pollutant under 

NSPS triggers applicability of PSD to emissions of that pollutant. Regardless, EPA 

states the proposal should not require SIP revisions in order for the Tailoring Rule 

thresholds to continue to apply to C02. EPA takes the position that the tailoring rule 

thresholds will continue to apply once the NSPS is promulgated, even though those 

thresholds were not incorporated into the portion of the PSD definition of 'regulated 

NSR pollutant' that refers to §111 pollutants. The proposal attempts to incorporate the 

interpretation into the NSPS rule. However, another reading of the effect of a final GHG 

NSPS for C02 is a triggering of PSD and Title Vat statutory levels for that pollutant, an 

opposite result from the Tailoring Rule and the just proposed Step 3 rule that maintains 

those threshold levels. Discussion in the proposal indicates EPA has already received 

several comments voicing concern that this GHG NSPS will trigger PSD and the 

statutory thresholds because of the way EPA incorporated the tailored thresholds in the 

PSD rules. Due to the interrelationship of NSPS regulation to other FCAA requirements 

that have not yet been fully considered in this rulemaking, EPA should withdraw this 

proposal. If EPA is intent on moving forward with regulation of GHG under 111, among 

the several infirmities already discussed that must be corrected, EPA must go back to 

notice with a revised rule that specifically applies the Tailoring Rule thresholds to NSPS 

pollutants. 

If EPA chooses not to withdraw and re-propose this C02 NSPS, it should at least delay 

promulgation, especially given the uncertain legal authority for EPA's approach to 

regulate GHG at all under the FCAA. TCEQ does not interpret its rules to apply PSD to 

GHG sources (which includes C02 sources) resulting in EPA imposing a GHG PSD FIP 

in Texas. TCEQ and the state of Texas have joined several other states in challenging 

EPA's GHG regulatory program (including the Tailoring Rule) as it applies nationally 

and in Texas specifically. These court challenges have not been resolved to date and it is 

uncertain what if any of EPA's rules will be upheld. Until the U.S. Court of Appeals for 

the D.C. circuit renders opinions on the primary GHG cases, in particular EPA's 
authority to change statutory thresholds, it would be premature to place an additional 

regulatory burden on states to conduct rule making or issue PSD permits to thousands of 

new sources. Delay is appropriate as well because a ruling against EPA on the Tailoring 

Rule could render moot this issue as to the thresholds. 

Impact on PSD Permits 

EPA's adoption of the proposed NSPS would preclude applicants for PSD permits for 

coal-fired power plants without CCS from making an economically reasonableness 

argument, because the proposed NSPS establishes a floor for BACT. The CAA Section 

169(3) defines "best available control technology" (BACT) which is a requirement of a 

permit issued under CAA Section 165. The definition of BACT also includes the 

following, "In no event shall application of "best available control technology" result in 

emissions of any pollutants which will exceed the emissions allowed by any applicable 

standard established pursuant to section 111 or 112 of this Act." To date, no new coalfired EGUs seeking PSD permits for GHGs have been required to install CCS, because 

that technology has been rejected as being economically unreasonable. The preamble to 

this rule even acknowledges that CCS is currently cost prohibitive without government 

subsidies. EPA suggests that CCS will become economically reasonable in the future, 

because control cost usually decline over time, but it is unknown how far out into the 

future that will be and in the meantime a permit applicant for a PSD permit would be 

forced to meet a standard that would require CCS which was currently cost prohibitive. 

The adoption of the proposed NSPS imposes an immediate unreasonable cost of 

controls on current PSD permit applicants for coal-fired EGUs, that effectively does 

what CAA Section 111(b )(5) says EPA shouldn't do, which is require a particular 

technological system of continuous emission reduction, namely NGCC turbines. 

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