Alabama Delays Clean Power Plan Work, Hoping for Stay

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By Chris Marr

Jan. 8 — Alabama is delaying work on its own strategy to implement the Environmental Protection Agency's carbon dioxide standards for power plants in hopes the rule will be stayed by a federal court, but that could leave the state vulnerable to having a federal plan imposed.

The Alabama Department of Environmental Management is postponing work toward drafting a state plan until mid- to late spring, with the hope that the U.S. Court of Appeals for the District of Columbia Circuit will grant a stay of the new federal rule by then, Ron Gore, the air division chief for ADEM, told Bloomberg BNA Jan. 7.

“We're optimistic about a stay. We don't see any sense in working on it now until there's a ruling on that,” Gore said. He added that ADEM staff members have met for early discussions with three of the largest utilities in the state that would be affected by the carbon limits.

However, Keith Johnston, managing attorney for the Southern Environmental Law Center in Birmingham, Ala., said the strategy of delaying action, along with limiting stakeholder input thus far to only a few of the regulated utilities, is risky.

States must submit at least their initial plans to implement the carbon dioxide standards, known as the Clean Power Plan (RIN 2060-AR33), by Sept. 6. States that don't submit a satisfactory plan will be forced to operate under a federal plan.

“For a state that seems so concerned about federal overreach, it seems an odd tack to take,” Johnston told Bloomberg BNA Jan. 8. “It makes us very vulnerable to having to use a federal plan.”

Litigation Pending

Alabama is one of 27 states suing the EPA in an attempt to overturn the carbon dioxide standards (West Virginia v. EPA, D.C. Cir., No. 15-1363, response filed 12/21/15).

If the court doesn't grant a stay by mid- to late spring, ADEM will move through a quick process of public hearings and develop an outline of its plans to submit to the EPA by the Sept. 6 deadline, Gore said. Along with the initial outline, ADEM plans to submit a request for a two-year extension before it has to file a full plan draft.

“We think we can get it done between spring and September,” he said.

Alabama Power, the state's largest electric utility, wouldn't comment specifically on the state's delay in drafting a plan, but a spokeswoman did agree implementation of the EPA rule seems likely to be inhibited by pending litigation.

Expect Plan to be Tied Up for Some Time

“We are conferring with ADEM, but we anticipate the Clean Power Plan will be tied up in the courts for some time, considering a majority of states have filed legal challenges to the plan,” spokeswoman Katie Bolton told Bloomberg BNA Jan. 8.

Alabama Power also has filed a motion with the court to stay the rule, and Bolton reiterated the company's position that it sees the EPA as overstepping its authority and imposing significant costs on the company's customers.

While planning thus far has been preliminary, Gore said a few major utilities have told ADEM that a regional carbon dioxide trading program—if not a geographically broader program—will be needed to enable compliance with the required carbon limits. Initial discussions also indicate a mass-based program, which caps carbon dioxide emissions from the power sector, would be the simpler option, rather than a rate-based approach that limits carbon dioxide per megawatt-hour of electricity generated, he said.

Perhaps the EPA's vision in writing the carbon dioxide rule was to push the states and major utilities into creating a nationwide carbon trading program, Gore suggested.

“That's what they wanted Congress to pass for CO2 a couple of years ago, but they wouldn't,” he said.

Alabama Power Studying Carbon Trading

Alabama Power is studying the potential for carbon dioxide trading, Bolton said.

“We've participated in trading programs before, in connection with acid rain and the Cross-State Air Pollution Rule. We also participate in the renewable energy credit (REC) market,” she said. “We are still examining the plausibility and the options for carbon trading under the Clean Power Plan.”

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com