Fossil fuels states band together on existing power plant rule

Source: Jean Chemnick, E&E reporter • Posted: Friday, April 18, 2014

Fossil fuels states met yesterday and today in Bismarck, N.D., to swap ideas about how to protect their states’ economic and energy interests from what they fear could be the harmful effects of U.S. EPA’s upcoming existing power plant carbon dioxide rule.
The meeting comes six weeks before the federal agency is set to release its proposed guidance for the rule, and regulators have been tight-lipped about what it will look like. EPA Air and Radiation Office chief counsel Joe Goffman maintained that policy by offering few specifics during his participation in the meeting yesterday.But states including the 18 participants in North Dakota’s Energy Producing States Summit have not waited for the rule’s official launch before offering their ideas for the proposal and airing a list of concerns. And in proposing the summit, North Dakota’s top environmental official, David Glatt, suggested there might be some advantage in having fossil fuels states stick together.”Our general belief is that developing a rational, common sense approach to greenhouse gas regulation, which acknowledges past accomplishments, the regional nature of energy production, a growing economy and production of energy from all sources will be difficult as a single state, but has increased potential of success when states work and collaborate together,” Glatt said in a December letter inviting “likeminded” states to Bismarck State College for this week’s meeting.

The guest list included officials from Alabama, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, West Virginia, Wisconsin and Wyoming.

Many states had already submitted comments to EPA individually about what they would like to see when the agency releases its Section 111(d) proposal by June 2, but Glatt said the group may also release a consensus set of principles after today’s session. It might also put together an “action plan” and establish a lasting “ad hoc” group to continue to communicate concerns from fossil fuels states to the federal agency, he said.

“We all agree on various aspects of moving forward, and it would carry more weight if we have 10, 15 states sign a letter,” he said.

Many of the participants sounded similar themes. The timeline laid out by President Obama last year in his presidential memorandum on the rule was too ambitious, many said. States that have never regulated CO2 would find it next to impossible to write and submit an implementation proposal to the federal government by June 30, 2016 — 13 months after EPA is directed to finalize its guidance.

Many also asked for additional time to implement their proposals once they are accepted by EPA. And while EPA officials including Goffman have signaled that the proposal now being reviewed at the White House’s Office of Management and Budget will suggest a variety of compliance pathways, participants in this week’s summit asked the agency to provide specifics about what it would and would not accept in a state implementation plan.

Goffman acknowledged each of these concerns in his remarks to the group.

“A lot of the issues you raised I think you will at least be able to recognize in what we put out in the proposal,” he said.

He said EPA is aware that some states are limited in how quickly they can adopt regulations that will help them comply with the rule.

“That is something we’re going to address explicitly in the proposal,” he said.

Goffman also indicated that EPA would not be offering a “model rule” as part of its proposal, which states could choose to adopt as a compliance mechanism. States had shown little interest in one, he said.

But Goffman did not explicitly weigh in on some issues raised by conference participants, including the plea by several states that EPA consider the “remaining useful life” of a power plant when promulgating rules or that the agency revise the way it applies New Source Review to units that are upgraded for efficiency and then used more heavily. Many also argued for an “inside the fence line” approach to regulation that would not compel utilities to invest in renewable energy or demand-side efficiency measures.

All compliance worries are local

States also shared concerns about how the upcoming rule could affect them individually.

Alan Minier, chairman of Wyoming’s Public Service Commission, pointed to a December letter the commission sent to EPA acting air chief Janet McCabe in which it noted that Wyoming’s coal plants supply power to several Northwestern states that otherwise have low-carbon power portfolios.

“What happens when a state is responsible for air emissions — is generating air emissions — in service of its surrounding states?” he asked.

As the country’s top coal producer, Wyoming could not easily accommodate a rule that required it to achieve a specific rate of reduction compared with historic emissions, Minier said.

“To have us ratchet down greenhouse gas emissions would basically wreck our economy or bankrupt our ratepayers,” he said.

Bryan Shaw, commissioner of the Texas Commission on Environmental Quality, pointed to commentssubmitted to EPA in January that argued against regulation of CO2 under the Clean Air Act. But his agency also touted Texas’ extensive wind energy industry and asked EPA not to penalize the fossil fuels power plants it said were needed to act as a backstop for intermittent renewable resources.

Shaw told participants at yesterday’s session that if EPA is planning to regulate CO2 under the Clean Air Act, it is better that it do so under Section 111(d) than under other provisions that prescribe a command-and-control style of regulation overseen by the federal agency.

“We should be in the driver’s seat instead of them,” he said.

Section 111(d) gives states wide authority to set standards that protect their local interests, he said, and states should support each other in claiming as much control over the rule as possible.

Some states have offered detailed suggestions about how EPA should structure its guidance. John Lyons, Kentucky’s assistant secretary for climate policy, touted his state’s white paper released in October that asserted that EPA should allow coal plant retirements to count toward emissions reductions even if they are not related to the rule.

The Pennsylvania Bureau of Air Quality’s deputy secretary for waste, air, radiation and remediation, Vince Brisini, touted his office’s proposal for an emissions averaging program that would afford all the flexibility benefits of a cap-and-trade system without advantaging one fuel source over the other. It does this by not offering allowances, which shifts the playing field in favor of technologies that exceed the cap and that therefore can sell allowances to competitors that emit more (E&E Daily, Oct. 30, 2013).

Pennsylvania is home to many coal-fired power plants and is experiencing a natural gas renaissance from new development on the Marcellus Shale, Brisini said.

“We’re simply not going to pick winners and losers among those resources,” he said.

The fossil fuels states are not alone in offering their views of what EPA should and should not do. Fifteen states that have already moved to limit emissions — including the members of the Northeast’s Regional Greenhouse Gas Initiative — offered their own set of principles to the agency in December (Greenwire, Dec. 16, 2013).

They argued that EPA should take care not to penalize states like their own that had already made progress on emissions reduction.

Collin O’Mara, secretary of Delaware’s Department of Natural Resources and Environmental Control, said on the sidelines of a recent Washington, D.C., briefing that early-mover states understood that other states may need more time to make similar levels of reduction. But a rule that is too lax could create regional inequities, he said.