States, Industry Object to Power Plant Emissions Proposal

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By Patrick Ambrosio

Feb. 5 — States and power industry organizations objected to the Environmental Protection Agency's proposal to require further reductions of nitrogen oxides from power plants under the Cross-State Air Pollution Rule.

The states and industry groups, in comments filed on the proposal, objected to the methodology used by the EPA to calculate the proposed emissions budgets for 23 states, which the agency said are needed to address power plant emissions that interfere with the ability of downwind areas to comply with the 2008 national ambient air quality standards for ozone of 75 parts per billion.

Many of the state and industry comments also objected to the EPA's proposal to require emissions reductions in 2017, a time frame they said is too soon to allow for adequate planning.

More Litigation?

The state objections could portend another round of litigation over the EPA's handling of emissions that cross state lines. While the U.S. Supreme Court in 2014 upheld the framework of the Cross-State Air Pollution Rule (CSAPR), the court also found the agency doesn't have the authority to require states to achieve emissions reductions beyond what is required to bring all affected downwind areas into compliance (EPA v. EME Homer City Generation LP, 134 S. Ct. 1584, 78 ERC 1225, 2014 BL 118432 (2014).

The proposed rule (RIN 2060-AS05) would update the emissions budgets set under the CSAPR, which the EPA promulgated to fulfill a Clean Air Act provision requiring upwind states to control emissions that prevent downwind states from attaining or maintaining national air standards. The proposal, released in November 2015 and published in December, is projected by the EPA to reduce nitrogen oxide emissions by about 85,000 tons in 2017 at an annual cost of $97 million for the power sector (80 Fed. Reg. 75,706.

While Janet McCabe, EPA acting assistant administrator for air and radiation, touted the proposal as using an established approach that has been upheld by the Supreme Court, many of the states that would be regulated under the proposal objected to the calculation of their pollution control obligations.

Objections to Emissions Caps

Several state agencies alleged the EPA's proposal would unreasonably overcontrol pollution on an unrealistic timeline. The proposal would require reductions in 2017.

Mississippi objected to the proposed 52 percent reduction of nitrogen oxides by power plants in that state. In its comments, Mississippi said the level of reductions proposed by the EPA “appears to be disproportionate” to the agency's modeling, which shows the state's emissions contribute less than 1 ppb of pollution to the Houston nonattainment area.

Iowa said in its comments that the EPA's proposal includes significant cuts to the state's emissions budget based on unrealistic predictions of power plant closures. The proposal includes an emissions budget for Iowa that is 48 percent lower than the nitrogen oxides cap that the state is currently subject to under the CSAPR.

Iowa also objected to the short implementation time frame to comply with the new emissions budgets, which the state said could force unplanned closures of power plants with no time to replace that lost generating capacity.

“Implementation should occur no sooner than two years after the final rule is effective to provide sufficient time for utilities, communities, families and employers to plan and execute their response,” Iowa said.

Other states that filed comments in objection to the EPA's proposed emissions budgets include Ohio, Wisconsin, Arkansas and North Carolina.

Legal Flaws Identified

Some of the parties who challenged the original Cross-State Rule filed comments identifying what they described as flaws in the EPA's proposal.

Homer City Generation LP, the operator of a Pennsylvania power plant and the lead petitioner in the challenge to the Cross-State Rule, argued in its comments that the EPA's proposal is “fatally flawed” for several reasons, including the agency's failure to comply with a court directive to avoid the overcontrol of power plants.

The U.S. Court of Appeals of the District of Columbia Circuit in July 2015 remanded some CSAPR emissions budgets back to the EPA after determining the agency impermissibly over-controlled emissions in certain states (EME Homer City Generation LP v. EPA, 795 F.3d 118, 80 ERC 2005, 2015 BL 239912 (D.C. Cir. 2015).

While the EPA said its proposal addresses the D.C. Circuit's ruling, Homer City said in its comments that the agency failed to reconsider those invalid emissions budgets. The EPA also failed to examine why the agency's methodology resulted in impermissible overcontrol and failed to adequately explain how it will prevent the same thing from happening in its update rule, the utility said.

“Had EPA properly reconsidered the invalid emission budgets in accordance with the D.C. Circuit's instructions, we expect that the result would have been less stringent proposed budgets, not the more stringent budgets that EPA in fact proposes,” Homer City said.

The utility alleged the EPA's proposed reductions are not cost-effective, as the agency claims they are. The utility suggested there is no evidence that coal-fired power plants will be able to meet a more stringent emissions limit that would be required to comply with the proposal to lower the emissions budget for Pennsylvania.

Additional Complaints

The Utility Air Regulatory Group (UARG), a trade association that frequently challenges EPA regulation of the power sector, filed extensive comments highlighting alleged flaws in the EPA's proposal. The group said the proposal would fail to adequately respond to the D.C. Circuit's decision on remand in EME Homer City Generation LP and is based on inappropriate judgements by the agency.

In addition, UARG objected to the EPA's proposed inclusion of its Clean Power Plan regulation on power plant emissions of carbon dioxide in its “base case” for modeling power sector emissions. The use of base case that includes the Clean Power Plan would result in an assumption that an “enormous amount” of coal-fired power plants would be retired by 2018 that will not in fact be retired that soon, the group said.

UARG also was one of several parties to allege the EPA provided the public with an insufficient opportunity to comment on the proposal. The agency originally provided a 45-day public comment period, then extended that to 60 days after receiving several requests.

UARG said at least 90 days were necessary to allow all interested parties to analyze the “extraordinarily complex” technical information that accompanied the proposal.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

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