EPA to Propose Federal Plan in August To Guide State Clean Power Plan Compliance

By Andrew Childers

April 9 — The Environmental Protection Agency plans to propose in August a federal plan to guide states as they prepare to comply with carbon dioxide emissions limits proposed for existing power plants.

The EPA updated its regulatory tracker April 9 to say that a federal plan for implementing the Clean Power Plan will be proposed in August. States regulators said the plan should provide them with indications of what measures the EPA would favor in a compliance plan.

“It’s a wide open question what would be approvable by EPA,” Clint Woods, executive director of the Association of Air Pollution Control Agencies, told Bloomberg BNA April 9. “States are definitely looking at that.”

The federal plan could provide states with key guidance on how to address significant issues such as calculating carbon dioxide emissions avoided by energy efficiency programs or apportioning credit for renewable energy generation between states that produce and consume that power.

The proposed Clean Power Plan (RIN 2060-AR33), issued under Section 111(d) of the Clean Air Act, would establish unique carbon dioxide emissions rates for the power sector in each state. The EPA rule would be implemented by states, which would determine how best to achieve the emissions targets using four “building blocks” to achieve reductions: heat rate improvements at power plants, shifting dispatch from coal to natural gas, investment in renewable or nuclear generation and energy efficiency programs. The EPA would issue a federal plan for states that chose not to submit their own.

States have been asking the EPA for additional guidance on how to develop their own compliance plans, but some observers think many questions may remain unanswered even after the rule is finalized.

The final Clean Power Plan is expected in July, according to the EPA regulatory tracker.

States Ready Own Guidance 

Bill Becker, executive director of the National Association of Clean Air Agencies, said his group is already developing draft regulatory language states will be able use when developing their compliance plans.

“We will be examining a number of different pathways ranging from demand side energy efficiency to improved heat rate to renewable portfolio standards to multi-state planning that will make hopefully the transition from EPA’s final rule to the beginning of development of these state plans as seamless as possibly could be,” Becker said.

Though EPA's federal plan is expected to provide states with key guidance as they develop their own plans, no state is likely to adopt the EPA approach wholesale, Becker said.

Some opponents of the Clean Power Plan, including Senate Majority Leader Mitch McConnell (R-Ky.), have urged states not to develop their own compliance plans, which would force the EPA to issue federal plans to implement the rule, a strategy dubbed “just say no.” Though the EPA has proposed a range of measures states can use to comply with the Clean Power Plan, the agency would likely only have the authority to mandate heat rate improvements at power plants themselves, making a federal plan more restrictive and more expensive.

“I can't tell you of any state who is anxious to see the [federal implementation plan] with the sole reason that it's waiting to adopt the FIP,” Becker said. “They may be anxious to see the FIP to see how EPA is going to resolve these issues.”

Section 111(d) has rarely been invoked and has never been used as broadly as is being proposed by the EPA, Woods said. That means state regulators have little experience with implementing its provisions as envisioned by the EPA.

“You’ve got a portion of the act that hasn’t been used this way before, so there’s always going to be a certain amount of confusion and question marks,” Woods said.

Timing a Concern 

The EPA plans to propose its draft federal plan in August and subject it to a notice and comment period, but states are required to begin submitting their Clean Power Plan compliance measures one year after the rule is finalized. That means the EPA could be finalizing its guidance as states are required to submit their plans.

“The timeline is certainly difficult and made even more difficult by some of the short term targets,” Woods said.

As part of the proposed Clean Power Plan, states must meet an interim emissions rate target between 2020 and 2029 with a final goal to be achieved in 2030. However, the EPA has strongly indicated those interim goals could be revised in the final rule in response to criticism brought by states.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

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