Monday, March 9, 2015

Coal States Pass Laws Limiting Regulatory Authority to Implement the Federal Clean Power Plan

By Amelia Schlusser, Staff Attorney

The Mount Storm Power Station, a 1,600 MW coal plant in
West Virginia 
The Environmental Protection Agency’s (EPA) proposed Clean Power Plan aims to reduce carbon dioxide emissions from existing power plants 30% below 2012 levels by 2030. The Agency issued the draft rule, which implements section 111(d) of the Clean Air Act, in June of 2014, and is expected to issue a final rule in July of 2015. A number of states are currently considering bills that would limit their regulatory agencies’ abilities to implement EPA’s final rule, and Kentucky and West Virginia have both adopted legislation to that effect. While these laws represent the states’ opposition to federal greenhouse gas controls, they could ultimately expose these states to greater federal oversight under the Clean Air Act.

State Clean Power Plan Legislation

Last year, Kentucky passed House Bill 388, which limits the kinds of emission reduction activities the state can impose on its coal and natural gas plants. The law mandates that standards of performance for coal and natural gas plants consist of measures that can be executed at the generating units, and cannot include switching to or co-firing with other fuels or limiting operations at affected plants. The law also includes a provision authorizing state regulators to adopt performance standards that are less stringent than the federal standards established by EPA, if any generating unit-specific factors “make application of a less stringent performance standard or longer compliance schedule more reasonable.”

Greenwire reported that Kentucky regulators hope to comply with the final 111(d) rule through emission reductions resulting from planned coal plant retirements. According to Greenwire, Kentucky’s Energy and Environment Secretary Leonard Peters asserted that the plant closures, which were already slated to retire over the next 15 years, should enable the state to comply with the federal rule without violating Kentucky’s legislation. The state’s two major investor-owned utilities—Louisville Gas & Electric and Kentucky Utilities Company (both owned by PPL)— approved this regulatory approach.

West Virginia recently adopted legislation limiting the state’s Department of Environmental Protection’s (DEP) authority to create a 111(d) implementation plan and submit such a plan to EPA for approval. This new law directs the DEP to conduct a study assessing the “feasibility” of implementing a final 111(d) rule in West Virginia and submit a report on the Department’s findings to the state legislature. If the DEP determines implementation is feasible, it must create an implementation plan and submit it to the legislature. The legislature may then authorize the department to submit the plan to EPA or direct the DEP to amend the plan and submit the revised plan to EPA. The law also allows the legislature to revoke the DEP’s authority to create or implement the Department’s proposed plan. And like Kentucky’s legislation, West Virginia’s law restricts regulators from adopting beyond-the-fenceline emission reduction measures.

ALEC’s Influence

These state laws appear to be heavily influenced by a conservative organization working to protect fossil fuel industry interests. In December, Climatewire reported that the American Legislative Exchange Council (ALEC) introduced model legislation that would require state regulators to obtain legislative approval for proposed 111(d) implementation plans. Kentucky’s legislation was inspired by ALEC (Greenwire, March 4).  According to Climatewire, West Virginia’s law was also based on ALEC’s model legislation.

ALEC is a conservative organization that aims to advance libertarian policies at the state and national levels. According to the group’s website, ALEC creates and promotes policies that support limited government, free market ideals, and federalism. The group views EPA’s attempts to regulate greenhouse gas emissions as a threat to these conservative principles, and challenging the proposed 111(d) rule is therefore “incredibly important” to the organization. ALEC’s policy proposals also aim to advance the interests of its corporate membership, which may help explain the group’s preference for adversarial rhetoric (for example, ALEC’s carries out its 111(d) work under the “EPA’s Regulatory Train Wreck” initiative).

ALEC’s model legislation has received a warm reception in a number of conservative-run state legislatures. According to Climatewire, legislators in Arizona, Kansas, Mississippi, Missouri, Oklahoma and Tennessee have introduced bills based on ALEC’s model policy, and “Arkansas' Senate recently approved a bill mirroring ALEC's language.”

These state legislatures presumably introduced ALEC-influenced policies in an attempt to protect their existing energy industries. However, ALEC’s model legislation will ultimately constrain states’ abilities to implement the final 111(d) rule’s requirements. EPA’s proposed rule provides states with flexibility to adopt a combination of strategies to reduce power sector emissions. For example, if a state’s coal plants have already achieved maximum efficiencies, the state can comply with the rule by deploying additional renewable resources or adopting energy efficiency measures. Kentucky’s and West Virginia’s legislation prevent regulators from adopting flexible compliance approaches by prohibiting beyond-the-fenceline emission reduction measures. These limitations may make it difficult for the states to achieve compliance with the rule’s emission targets.

States that adopt ALEC’s model legislation also risk exposing themselves to heightened federal oversight. ALEC’s model requires approval from both legislative branches before regulators can submit a state implementation plan to EPA for approval. This legislative approval will likely be difficult to obtain from lawmakers who have limited energy-related knowledge or experience and intense political motivations. If a state fails to submit an implementation plan to EPA, section 111(d) of the Clean Air Act authorizes the Agency to issue a federal implementation plan for the state. This federal implementation plan will presumably include standardized or generic emission reduction measures that may not account for the state’s specific or unique circumstances.

Other states should consider these implications before blindly following ALEC’s advise or following in Kentucky’s or West Virginia’s footsteps. States ultimately are obligated to comply with federal law, and states that proactively develop well-designed plans will be better equipped to implement EPA’s final rule. States that instead prefer to bury their heads in the sand will suffer the consequences.

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