Washington Update From the U.S. Oil & Gas Association

Weekly Recap

April 28, 2023

Permitting Reform Update:

We anticipate the GOP permit reform legislation from Senate Energy and Natural Resources as well as Senate Environment and Public Works Committees being introduced late next week. We will circulate those bills as soon as we see them. We have been working closely with Committee staff to develop a great legislative proposal to begin the Senate negotiations. Staff and members have been great to work with and we will give you more next week.

EPA is coming for natural gas-fired power plants (and coal) 

Over the weekend, EPA and the White House started leaking plans to impose limits on greenhouse gas emissions from natural gas and coal-fired power plants. While the rule isn’t out yet, it would appear that EPA plans to claim that carbon capture is the “best system of emissions reduction” under the Clean Air Act.   

The Clean Air Act gives EPA the authority to determine the “best system of emission reduction” (BSER) for existing power plants, and then to require those emissions controls on new and existing power plants. To determine what emissions controls are “best” the Clean Air Act requires that the controls be ‘‘adequately demonstrated’’ and sets emission standards based on that best system, ‘‘taking into account’’ ‘‘cost . . . non-air quality health and environmental impact and energy requirements.’’ 

In the Supreme Court case West Virginia v. EPA, the issue of what EPA could determine was the best system of emissions reductions was front and center. In the Obama administration’s Clean Power Plan, EPA tried to say that it was the best system of emissions reduction to reduce carbon dioxide emissions through generation shifting—that is shifting from coal to natural gas, solar, or wind. 

One of the reasons the Supreme Court struck down Obama’s Clean Power Plan, was that EPA was trying to require changes “outside the fence line” of the power plant. In other words, the Clean Air Act gives EPA authority to require emissions controls that are attached to the power plant or inside the fence line, but not to require things well outside of the power plant.