Clean Power Plan Regulatory Update: What’s Going on in Your State

The states continue to debate and take action related to EPA’s Clean Power Plan. Following is a synopsis of some recent developments.

  • Even though the CPP is still in draft form it is not free of challenge and is being litigated. As of this writing, the following states having filed suit in the U.S. Court of Appeals for the District of Columbia on August 1st, in a coalition move of opposition against the CPP: Alabama, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Dakota, South Carolina, West Virginia and Wyoming. These states claim that EPA is prohibited from using 111(d) of the Clean Air Act to regulate carbon emissions from existing coal-fired plants because EPA already regulates air emissions from coal-fired plants under a separate section of the Clean Air Act (section 112, which regulates hazardous air pollutants). The validity of this argument is questionable; the EPA has claimed that because there is some regulatory ambiguity in the language of the Clean Air Act, courts would typically give the agency more authority to regulate than less. In other words, the EPA has anticipated resistance to the CPP based on this legal argument and has been an obstacle in advancing the draft rules. In fact, in rulings earlier this year the Supreme Court concluded that it was reasonable for the EPA to interpret the Act to allow for the regulation of GHG emissions from sources already subject to regulation, which includes large stationary sources like power plants.
  • Now that states have had time to digest the implications and ramifications of CPP, resistance expressed by utilities is more factual than theoretical.  For instance, based on input received from Dominion Virginia Power, the Virginia State Corporation Commission (SCC) has now stated that customers in that state could face an extra $5.5 billion to $6 billion in additional costs that result from the utility complying with the CPP. Commission staff also claimed that compliance with CPP would affect reliability of electric service.  The SCC staff made the statements in its official comments filed this week with the EPA on the CPP.
  • Regulators in Texas and New Mexico have publicly pushed back on the CPP, citing the conflict between state and federal regulatory jurisdiction as one of their main concerns.
    • Christi Craddick, chairman of the Texas Railroad Commission, said that under the proposed rule Texas will be expected to reduce carbon dioxide by about 38 percent. In actuality, it would be closer to 50 percent, she said. Further, Craddick said that 45 percent of the state’s electricity baseload comes from coal-fired plants and it would not be possible to replace those plants with natural gas-fired generating plants. The agency regulates coal and uranium, as well as oil and gas and intrastate pipelines. These claims appear valid; despite having abundant wind energy potential, Texas is heavily reliant on coal and its population is growing too fast to be able to rapidly and effectively migrate from a coal-based energy infrastructure.
    • Ryan Flynn, secretary of the environment for the state of New Mexico, described the proposed regulations as a paradigm shift that would allow the federal government to regulate not only how electricity is generated but how consumers use that electricity over the next few decades. We agree with comments that suggest states need to be assertive in working with EPA and stakeholders  or they risk having little advantage in further discussions.
  • Early this November, a joint letter submitted on behalf of nine northeastern states questioned the equity of EPA’s CPP reduction targets for states that have already made strides to reduce carbon emissions. The states in question all participate in the Regional Greenhouse Gas Initiative (RGGI), a market-based regulatory program to reduce greenhouse gas emissions from power generation. Participating states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. RGGI sets a cap for total GHG emissions. Credits are auctioned and the proceeds help fund renewable energy and energy efficiency programs. CO2 emissions in RGGI states have been reduced by 40 percent from 2005 levels, and the CPP as proposed requires a 38 percent reduction from these levels by 2030.  In the letter, the states challenge the EPA to adopt stricter targets for other states, commenting that “our experience in the RGGI region demonstrates that more substantial emission reductions are readily available from other states nationwide—particularly those that have not yet developed and implemented aggressive energy efficiency and renewable energy programs.” Despite already being slated to meet reduction targets, the states also raised concerns over early carbon reduction efforts (those prior to 2005) not being credited.

 

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