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What's the Upshot of EPA's Clean Air Rules?

By Amy Harder
energy and environment reporter, National Journal
March 14, 2011 | 6:00 a.m.
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What effect does EPA's series of Clean Air Act rules have on the energy and environment landscape?

The Environmental Protection Agency is expected to announce draft rules this week aimed at slashing toxic air pollution emitted by power plants. The rules, known as the Maximum Achievable Control Technology, or MACT, utility regulations, are some of the most controversial rules coming out of EPA, a list that includes the always politically loaded carbon-emissions rules. The issuance will come in the wake of the agency announcing similar regulations for industrial boilers and certain incinerators. These rules are among several that EPA is rolling out now or in the near future under its Clean Air Act authority.

What effect will these MACT utility regulations have on the power sector? Taken together, how do EPA's various clean-air rules change the industry and protect the environment? What are the trade-offs that Congress and President Obama should consider?

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March 18, 2011 3:43 PM

EPA's Rules Will Level the Playing Field

By David C. Brown

Senior Vice President, Federal Government Affairs and Public Policy, Exelon Corporation

Exelon supports the EPA’s efforts to enforce the Clean Air Act, a law that has had strong bipartisan support for the past 40 years. The EPA’s proposed rules are based on existing law, so they are neither new nor unexpected, and they will level the playing field by putting a price on the cost of air pollution. With that in mind, Exelon and five other leading utility companies issued the following statement this week about the EPA’s release of the Toxics Rule:

"A group of leading energy companies — Calpine Corporation, Constellation Energy, Exelon Corporation, PG&E Corporation, Public Service Enterprise Group, Inc., and Seattle City Light — congratulates the U.S. Environmental Protection Agency (EPA) on today’s release of its proposed rule to establish National Emissions Standards for Hazardous Air Pollutants for Electric Utility Generators. This landmark rule — known as the “Toxics Rule” — will, for the first time, set federal limits for hazardous air emissions from coal-fired plants that EPA identified as ...

Exelon supports the EPA’s efforts to enforce the Clean Air Act, a law that has had strong bipartisan support for the past 40 years. The EPA’s proposed rules are based on existing law, so they are neither new nor unexpected, and they will level the playing field by putting a price on the cost of air pollution. With that in mind, Exelon and five other leading utility companies issued the following statement this week about the EPA’s release of the Toxics Rule:

"A group of leading energy companies — Calpine Corporation, Constellation Energy, Exelon Corporation, PG&E Corporation, Public Service Enterprise Group, Inc., and Seattle City Light — congratulates the U.S. Environmental Protection Agency (EPA) on today’s release of its proposed rule to establish National Emissions Standards for Hazardous Air Pollutants for Electric Utility Generators. This landmark rule — known as the “Toxics Rule” — will, for the first time, set federal limits for hazardous air emissions from coal-fired plants that EPA identified as posing serious health effects and harm to the environment.

"For over a decade, operators of coal-fired generation have known that pollution controls would be required to comply with Clean Air Act (CAA) requirements to reduce hazardous air emissions like mercury, hydrochloric acid, and arsenic. Most of the industry has been preparing for the rule by investing in modern pollution controls and cleaner, more efficient power plants.

"'We recently completed the installation of a major air quality control system, including scrubbers, baghouse, and other equipment at one of our major coal facilities in Maryland,' said Paul Allen, senior vice president and chief environmental officer of Constellation Energy. 'These systems work effectively and result in dramatically lower emissions of mercury, sulfur dioxide, particulate matter, and acid gases. We know from experience that constructing this technology can be done in a reasonable time frame, especially with good advance planning; and there is meaningful job creation associated with the projects.'

"'While we are still evaluating the rule, we believe the Toxics Rule can be achieved in a cost-effective manner while maintaining the reliability of the electric system,' said Anne Hoskins, Public Service Enterprise Group’s senior vice president for public affairs and sustainability.

"'The industry has had more than enough time to study and prepare for these requirements. We support the EPA’s efforts to finalize the rule in order to reap the significant public health benefits as indicated by the Agency’s analysis. There ought to be no further delay.'

"The Toxics Rule will fulfill a requirement established by Congress in the 1990 amendments to the CAA to reduce emissions of hazardous air pollutants. EPA recently published a peer-reviewed study that estimates that between 1990 and 2020, the Clean Air Act will provide over $2 trillion in benefits and save over 2 million lives.

"We look forward to working with EPA to ensure the timely final adoption of this rule as well as its effective implementation."

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March 17, 2011 6:52 PM

Energy Cost, Reliability At Stake

By Lance Brown

Executive Director of the Partnership for Affordable Clean Energy (PACE)

Yesterday, the U.S. EPA announced draft Utility MACT regulations, which would impose strict regulations on America’s power plants. These regulations would negatively affect our energy cost and reliabilty, particularly from coal-fired power plants, which provide about half of our power and could diminish by one-fifth as a result of the regulations. Although it is important to consider environmental concerns when developing energy policy, it is equally important to consider cost and reliability concerns, especially since there are few reliable and affordable alternatives if our traditional energy sources can no longer operate.

Based on historic performance and industry experience, it will be virtually impossible to permit, engineer, procure, and construct the required new controls. It’s already happening: Georgia Power’s Putnam County Plant Branch, which powers 340,000 homes, decertified two of its coal generators, saying, “the costs to comply with environmental regulations would be uneconomical for our customers to continue the long-term operation of...

Yesterday, the U.S. EPA announced draft Utility MACT regulations, which would impose strict regulations on America’s power plants. These regulations would negatively affect our energy cost and reliabilty, particularly from coal-fired power plants, which provide about half of our power and could diminish by one-fifth as a result of the regulations. Although it is important to consider environmental concerns when developing energy policy, it is equally important to consider cost and reliability concerns, especially since there are few reliable and affordable alternatives if our traditional energy sources can no longer operate.

Based on historic performance and industry experience, it will be virtually impossible to permit, engineer, procure, and construct the required new controls. It’s already happening: Georgia Power’s Putnam County Plant Branch, which powers 340,000 homes, decertified two of its coal generators, saying, “the costs to comply with environmental regulations would be uneconomical for our customers to continue the long-term operation of those units.” Even if plants can afford to comply with the regulations, many will simply be unable to make the needed adjustments due to age or other factors.

According to the North American Electric Reliability Council (NERC), the regulations will reduce our electricity generating capacity by 46 to 76 gigawatts, which equals over 7 percent of our nation’s total electricity generation, and most of it will come from coal. Since many power plants nationwide have already implemented environmental controls based on what they can afford without impacting reliability, we should continue to encourage the use of these controls, but not punish our best sources of power in doing so.

In addition to reduced energy capacity, plants will lay off workers, or close entirely. In fact, last week, labor unions warned of the job loss, stating that they don’t support these rules could put thousands of jobs in jeopardy, particularly in coal-dependent states that need these jobs the most. Georgia Power also confirmed that, along with these generators, Putnam County can also say goodbye to jobs at the plant as well as much-needed tax revenue for the county.

In addition to the loss of energy capacity and thousands of jobs in a variety of industries, the regulations will impact ordinary American households and businesses as they try to pay their energy bills. The American Coalition for Clean Coal Electricity recently found that coal has helped keep energy prices relatively stable since 2001, yet if coal plants shut down and we are forced to deal with issues like reduced capacity and reliability, costs are likely to skyrocket. As the Energy Information Administration (EIA) has reported, low-income families typically spend a larger portion of their income on energy, so our families that are already struggling to pay the bills may face even more hardship if energy prices go up.

In January, President Obama issued an executive order to carefully review federal regulations to determine their impact on society and the economy. Given all the data we already have, the Administration needs to take a close look at the EPA’s Utility MACT regulations—the most expensive in the Agency’s history—before they cause irreparable harm to energy cost, energy reliability, and the wider economy.

I think everyone agrees that we should take steps toward an energy program that results in a cleaner environment, and utilize cleaner sources of energy in a way that does not impact energy cost or reliability. But, hopefully, we can all agree, too, that any energy initiative must also ensure that we have reliable and affordable energy without eliminating jobs.

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March 16, 2011 1:44 PM

Efficiency Helps Cut Pollution, Save $$

By Kateri Callahan

President, Alliance To Save Energy

EPA is juggling a number of issues as it seeks to comply with the Clean Air Act, to meet court-ordered rulemaking deadlines and to respond to pressures from various interest groups on how to balance important human health, economic and environmental protection issues. Through this morass, however, one this has become clear: improving energy efficiency simultaneously serves health, economic and environmental goals. Simply stated, increasing efficiency reduces the amount of fuel that needs to be burned, thereby reducing emissions and saving money.

From our vantage point, it appears that EPA is recognizing, increasingly, that energy efficiency works and is a key element in cost-effective pollution reduction. One example is the pair of recently issued hazardous air pollutant rules for industrial, commercial and institutional boilers called the “boiler MACTs” or Maximum Achievable Control Technology. While some of the hazardous air pollutant provisions are controversial, the energy efficiency provisions are not.

The rules will require facilities t...

EPA is juggling a number of issues as it seeks to comply with the Clean Air Act, to meet court-ordered rulemaking deadlines and to respond to pressures from various interest groups on how to balance important human health, economic and environmental protection issues. Through this morass, however, one this has become clear: improving energy efficiency simultaneously serves health, economic and environmental goals. Simply stated, increasing efficiency reduces the amount of fuel that needs to be burned, thereby reducing emissions and saving money.

From our vantage point, it appears that EPA is recognizing, increasingly, that energy efficiency works and is a key element in cost-effective pollution reduction. One example is the pair of recently issued hazardous air pollutant rules for industrial, commercial and institutional boilers called the “boiler MACTs” or Maximum Achievable Control Technology. While some of the hazardous air pollutant provisions are controversial, the energy efficiency provisions are not.

The rules will require facilities to follow good combustion practices, conduct periodic boiler tune-ups and, for larger facilities, perform a one-time energy assessment. While not compelled to implement options identified in the assessments, facility operators will at least be aware of cost-effective ways to save energy and money while reducing emissions.

How emissions limits are defined is also important for energy efficiency. EPA traditionally limited emissions based on input – pounds of pollution per unit of fuel burned – so that the more fuel you burn, the more you’re allowed to pollute.

In contrast, several newer regulations are starting to incorporate output-based standards that limit pollution per unit of output, such as kilowatt hours of electricity, Btu of steam or useful heat or unit of manufactured product.

By tying allowable emissions to the amount of product made rather than the amount of fuel consumed, these standards provide incentives for improving energy efficiency, for example by implementing waste heat recovery and combined heat and power.

EPA rightly is looking to energy efficiency as it approaches the controversial topic of greenhouse gas regulation. Its recent greenhouse gas “best available control technology” guidance for states under the Clean Air Act’s New Source Review program flags energy efficiency as generally the most available, feasible and cost-effective option.

While EPA actions and others’ reactions likely will continue to engender controversy, enhancing energy efficiency – to save money, improve health, protect the environment and conserve resources – should be viewed as the sensible consensus option across the political spectrum.

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March 16, 2011 10:45 AM

Industry's self-inflicted wound

By Richard Revesz

Dean, New York University School of Law

Shortly, the EPA will release proposed rules that reduce toxic emissions, including mercury, from the utility sector. The new controls are likely to continue a long precedent of cost-benefit justified regulations under the Clean Air Act. In fact, a recent retrospective study of the effects of EPA programs implemented after 1990 show tremendous economic benefits (an estimated $2 trillion) versus costs that add up to a fraction of that.

EPA recently announced another set of rules on hazardous pollutants for industrial boilers, which were bitterly attacked by industry and businesses for being too expensive and burdensome. Of course, the immense costs in health (such as asthma, heart attacks, and premature death) of pollutants from boilers are “externalized” to the public. So these same businesses will never have to foot the bill for the health costs; naturally they focus on how ex...

Shortly, the EPA will release proposed rules that reduce toxic emissions, including mercury, from the utility sector. The new controls are likely to continue a long precedent of cost-benefit justified regulations under the Clean Air Act. In fact, a recent retrospective study of the effects of EPA programs implemented after 1990 show tremendous economic benefits (an estimated $2 trillion) versus costs that add up to a fraction of that.

EPA recently announced another set of rules on hazardous pollutants for industrial boilers, which were bitterly attacked by industry and businesses for being too expensive and burdensome. Of course, the immense costs in health (such as asthma, heart attacks, and premature death) of pollutants from boilers are “externalized” to the public. So these same businesses will never have to foot the bill for the health costs; naturally they focus on how expensive it will be to reduce pollution, not on how expensive it us for the rest of us to deal with that pollution.

There is, however, a way to reduce the price of compliance for businesses without sacrificing the environment: through the use of market-based mechanisms. Market mechanisms may not work for all pollutants (especially those with local effects leading to pollution hotspots), but when used appropriately, increased flexibility of this type can lower costs without diluting pollution outcomes.

Utility representatives urged the EPA to consider market-based approaches to regulation last year in listening sessions hosted by the agency. But after Congress’s failure to pass a climate bill, the term “cap-and-trade” has become politically unpopular, putting pressure on the EPA to avoid any mechanism that could be interpreted as resembling an emissions trading scheme. Indeed, EPA officially took cap-and-trade off the table in greenhouse gas controls for power plants.

But in many contexts, a command-and-control approach is significantly less efficient than market-based regulations. A flexible trading system would guarantee a cap on emissions while giving companies the chance to comply in the cheapest way possible. Using an auction system would also allow the market to identify the most efficient allocation of permits, and revenues could be returned the public or offset inefficient taxes.

But EPA will face resistance to any market mechanism now that “cap-and-trade” has been deemed a dirty word. Opponents of climate legislation succeeded in their short-term battle to delay effective action in the U.S. in reducing greenhouse gas emissions. But industry’s lobbying efforts in Congress may turn out to have caused a self-inflicted wound if the entire cap-and-trade framework has become political poison as a result.

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March 16, 2011 8:58 AM

Recognize That Biomass Recycles Carbon

By Brent Erickson

Executive Vice President, Industrial & Environmental Division, Biotechnology Industry Organization

Biofuels and bioenergy sources using renewable biomass should not be subject to permitting programs that regulate only point source emissions through requirements for use of best available control technologies. EPA should categorically exempt CO2 emissions from biogenic fuels and biogenic energy sources using renewable biomass from the rulemaking.

All combustion (including from biomass) clearly adds CO2 to the atmosphere. In the case of fossil fuels, this addition is permanent and would not have occurred but for the extraction and combustion of fossil fuels. Combustion of biogenic fuels from renewable biomass sources does not increase long-term atmospheric concentrations of CO2, since such fuels derive their energy from carbon that would otherwise have been emitted as CO2, methane, or more potent GHGs through decomposition of feedstock biomass in the field or forest.

The natural recycling of CO2 from combustion of renewable biomass is a complicated process and measuring net impacts over time on atmospheric carbon concentrations depends upon complex assumptions relat...

Biofuels and bioenergy sources using renewable biomass should not be subject to permitting programs that regulate only point source emissions through requirements for use of best available control technologies. EPA should categorically exempt CO2 emissions from biogenic fuels and biogenic energy sources using renewable biomass from the rulemaking.

All combustion (including from biomass) clearly adds CO2 to the atmosphere. In the case of fossil fuels, this addition is permanent and would not have occurred but for the extraction and combustion of fossil fuels. Combustion of biogenic fuels from renewable biomass sources does not increase long-term atmospheric concentrations of CO2, since such fuels derive their energy from carbon that would otherwise have been emitted as CO2, methane, or more potent GHGs through decomposition of feedstock biomass in the field or forest.

The natural recycling of CO2 from combustion of renewable biomass is a complicated process and measuring net impacts over time on atmospheric carbon concentrations depends upon complex assumptions relating to choice of feedstocks, agricultural methods, fuel production processes, and the timing and extent of land use change. It is essential to recognize that not all sources of biogenic carbon are renewable. Biogenic carbon from old growth forests, peat bogs, or other sensitive and enduring ecosystems is clearly not rapidly renewable. But, as a first order approximation, because biogenic fuels and biogenic energy from renewable biomass sources do not add additional sources of carbon to the atmosphere, nor appreciably change land stock, they are carbon neutral and do not materially contribute to increases in atmospheric concentrations of GHGs as do combustion of fossil fuels.

Important national objectives are served by increased usage of biofuels, biochemicals and bioproducts that use renewable biomass in substitution for fossil feedstocks. The use of these fuels and products can reduce dependence on imported petroleum products, create new markets for sustainably grown crops, improve land utilization, and, not least, reduce concentrations of GHG emissions in the atmosphere.

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March 15, 2011 2:54 PM

Cumulative Burden Stifles Growth

By Donna Harman

CEO, American Forest & Paper Association

These days, the EPA pipeline of impending regulations resembles rush hour on Constitution Avenue: bumper-to-bumper with no relief in sight. We are facing as many as twenty Clean Air Act regulations, including Boiler MACT that could have a dramatic impact on the U.S. Forest Products industry. Current and expected-new EPA regulations could be unsustainable for the U.S. forest products industry, the nearly 900,000 men and women who work in it and the communities where our facilities are located.

Just last week, I testified before the House Oversight Subcommittee on Regulatory Affairs to discuss the cumulative regulatory burden to our industry. There is a fundamental need for regulations to not be viewed in a vacuum.

Since 2006, the forest products industry has lost 31% of its workforce – nearly 400,000 high paying jobs largely in small rural communities. These are communities that depended heavily upon those jobs for support. The closure of a mill in a small town can have a severe ripple effe...

These days, the EPA pipeline of impending regulations resembles rush hour on Constitution Avenue: bumper-to-bumper with no relief in sight. We are facing as many as twenty Clean Air Act regulations, including Boiler MACT that could have a dramatic impact on the U.S. Forest Products industry. Current and expected-new EPA regulations could be unsustainable for the U.S. forest products industry, the nearly 900,000 men and women who work in it and the communities where our facilities are located.

Just last week, I testified before the House Oversight Subcommittee on Regulatory Affairs to discuss the cumulative regulatory burden to our industry. There is a fundamental need for regulations to not be viewed in a vacuum.

Since 2006, the forest products industry has lost 31% of its workforce – nearly 400,000 high paying jobs largely in small rural communities. These are communities that depended heavily upon those jobs for support. The closure of a mill in a small town can have a severe ripple effect when that mill is the largest employer and a major contributor to the local economy, taxes, schools and community programs.

Government regulation is a necessary part of the world in which we live. The Clean Air Act has helped to improve the environment over the past several decades, and we support well-reasoned, necessary regulation. Our businesses are made up of real people in real communities, and we believe they also deserve a healthy environment in which to live. However, the economic impact of regulations is also an important factor that must be considered at all stages. Without the money to invest, jobs are not created. Even worse, without the money to stay in operation, jobs are lost, communities are decimated, and regulations are irrelevant.

If more mills are forced to close their doors permanently, we will lose additional high paying, tax generating jobs. Exports will drop, and imports will increase since no other country is contemplating requirements this extreme.

Amidst the litany of regulations heading our way, EPA does have the ability to prioritize which ones they are addressing. Some are mandated and must be addressed, but there are others that EPA has simply decided to reopen of its own accord.

For example, EPA is considering redoing the Pulp and Paper MACTs issued a decade ago, even though MACT is supposed to be a one-time program. Given the stringent and unachievable nature of the Boiler MACT, we are very concerned that a similar approach will lead to a Pulp and Paper MACT rule with over $4 billion in additional capital costs. EPA’s obligations are to look at the health risks that remain after MACT, not a total MACT do-over.

Then there are the National Ambient Air Quality Standards (NAAQS). Congress directed EPA, under the Clean Air Act, to consider whether any changes are need to NAAQS every five years. Those rules were last promulgated in March 2008, yet EPA is now considering tightening it further a full two years ahead of schedule. This is more excessive regulation at a time when it is unnecessary and unaffordable.

Businesses need a measure of certainty to plan achievement of these regulations. Unfortunately of late, these regulations are coming in rapid succession even before the previous versions have been fully implemented.

Such excessive regulation and uncertainty in the marketplace puts American business at a competitive disadvantage. Uncertainty halts investment, and without investment and the economic growth it provides, American manufacturing is vulnerable to another in a line of devastating effects.

Manufacturing in this country is still well short of pre-recession levels. We need a regulatory system that protects public health and the environment to be sure, but one that also gives an equal measure of protection to the jobs and economic growth that are vital to our lives and our communities.

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March 15, 2011 10:59 AM

It's finally time to regulate air toxics

By Conrad Schneider

Advocacy Director, Clean Air Task Force

Did you know that air emissions from coal- and oil-fired power plants -- the largest industry emitter of mercury, dioxins, acid gases, and arsenic and nickel and other heavy metals -- are not subject to national regulations to protect human health and the environment? Moreover, this surprising lapse in federal protection of human health and the environment has existed for a decade.

Whatever EPA’s rules will say – and we won’t know that for sure until they are announced – they will provide significant environmental and public health benefits beyond today’s intolerable situation. In fact, the new rules will provide even greater public health and environmental benefits than the EPA can yet quantify.

The EPA simply does not quantify all of the economic benefits of the rule; it measures only the benefits of reducing particulate matter. So, the economic benefits of reducing emissions of carcinogens, or heavy metals and respirat...

Did you know that air emissions from coal- and oil-fired power plants -- the largest industry emitter of mercury, dioxins, acid gases, and arsenic and nickel and other heavy metals -- are not subject to national regulations to protect human health and the environment? Moreover, this surprising lapse in federal protection of human health and the environment has existed for a decade.

Whatever EPA’s rules will say – and we won’t know that for sure until they are announced – they will provide significant environmental and public health benefits beyond today’s intolerable situation. In fact, the new rules will provide even greater public health and environmental benefits than the EPA can yet quantify.

The EPA simply does not quantify all of the economic benefits of the rule; it measures only the benefits of reducing particulate matter. So, the economic benefits of reducing emissions of carcinogens, or heavy metals and respiratory irritants do not show up in the analysis. Nor do the benefits to the ecosystem. That doesn’t mean these benefits are worthless. Far from it. It just means that EPA’s typical benefits analysis is woefully incomplete compared with the actual benefits the American people will experience as a result of a robust rule. Our best guess, however, is that even the EPA estimates – a fraction of the benefits of this rule -- will far outweigh the costs.

We also know, based upon data from states that have regulated such emissions from other industries, that environmental benefits of mercury controls, for example, happen quickly and in direct proportion to the emissions reductions achieved. The value to tourism and public health of lifting the fish consumption advisories now in effect in the vast majority of states (because freshwater fish are too contaminated with mercury to be safe to eat) is significant, but likely will not be included in EPA’s benefits analysis.

EPA has all the tools it needs to set air toxics standards that are based on what the best performers achieve now, as the law requires. Because the EPA has undertaken extensive information requests – twice from this industry – we know a lot about the toxics emitted by new and existing plants burning various kinds of fuel in various technological configurations. We also understand the control strategies that have been adopted to meet the smattering of state standards for some air toxics, like mercury. The General Accounting Office released a report in 2009 noting that some existing sources it surveyed were able to achieve deep reductions in mercury emissions (upwards of 98% from inlet), with very little needed additional investment beyond adjustments to existing controls.

Of course, some additional control options will be required for the old dogs in this industry that still operate without any controls at all – but we do know from the history of the Clean Air Act to date that when EPA sets standards, creative solutions are developed by the industry and the lights do not go out.

We need to provide a signal to technology innovators in the industry. Setting a robust air toxics standard that meets the statute’s requirements will be a good first step. Following it up later this Spring and Summer with the Clean Air Transport Rule and a good set of New Source Performance Standards for greenhouse gases will further send that signal.

By intelligent rulemaking, EPA can unleash American ingenuity to develop cleaner technologies for energy generation, and better and more cost-effective controls for existing sources. If EPA balks or stalls, or Congress succeeds in handcuffing the rules, public health and the environment will suffer, certainly, but it will also be a lost opportunity for innovation – the hidden cost of doing nothing. This industry needs a push to move into the twenty-first century, and these rules will certainly help.

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March 14, 2011 10:38 AM

Flexibility, Outreach Key for Consumers

By Chuck Gray

Executive Director, National Association of Regulatory Utility Commissioners

While it is unclear at this point to definitively assess how these regulations will impact the power sector, NARUC will urge the Environmental Protection Agency to take a flexible, cautious approach that puts reliability and cost concerns at the top of the agenda.

In a resolution (http://tinyurl.com/6amdweb) approved at our February 2011 Winter Committee Meetings, NARUC asks the EPA to engage in a meaningful dialogue with our members – the State regulators who look out for the impact of Federal policies on consumers -- as it issues these proposals. Our resolution states a series of principles that EPA should consider as it issues any new regulations: system reliability, cost effectiveness, resource adequacy, flexibility and outreach to State governmental agencies.

EPA leaders must keep their doors open as these rules become implemented because utilities will be turning to their State public service commissioners for approval to recover costs associated with compliance...

While it is unclear at this point to definitively assess how these regulations will impact the power sector, NARUC will urge the Environmental Protection Agency to take a flexible, cautious approach that puts reliability and cost concerns at the top of the agenda.

In a resolution (http://tinyurl.com/6amdweb) approved at our February 2011 Winter Committee Meetings, NARUC asks the EPA to engage in a meaningful dialogue with our members – the State regulators who look out for the impact of Federal policies on consumers -- as it issues these proposals. Our resolution states a series of principles that EPA should consider as it issues any new regulations: system reliability, cost effectiveness, resource adequacy, flexibility and outreach to State governmental agencies.

EPA leaders must keep their doors open as these rules become implemented because utilities will be turning to their State public service commissioners for approval to recover costs associated with compliance. Our members are obligated to ensure that essential services like electricity are delivered in a fair, just, safe, reliable, and affordable manner. Thus far, the agency has reached out to us in a positive manner, sending officials to our meetings and giving us an audience when asked.

In terms of implementation of any new regulations, we encourage EPA to adopt a flexible approach, allowing for a reasonable time period for compliance. Each State and region has different resources and will be impacted differently. Providing ample time for compliance will ensure that regions can comply in a cost-effective fashion.

We share EPA’s goals of promoting clean energy. As our States have shown, there are several ways to encourage clean generation resources, and these innovative approaches should continue.

For our members, NARUC is encouraging State utility commissioners to communicate with their environmental colleagues in their States. Understanding how State environmental regulators are approaching the new regulations will help States work together in a cooperative fashion, which will serve our consumers well.

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March 14, 2011 6:21 AM

EPA Must Take Rules Seriously

By Amy Harder

energy and environment reporter, National Journal

(These comments were submitted by Catherine O’Neill, law professor at Seattle University School of Law and member scholar for the Center For Progressive Reform)

Here is how we ought to judge the EPA's long-anticipated rule controlling mercury emissions from coal-fired utilities: does it follow the mandate of the Clean Air Act (CAA)? For too long, utilities have managed by various means to fend off regulation required by the CAA. Assuming EPA’s rule at long last complies with Congress’s directives, Americans may look forward to a day when they can again eat fish without serving their families a side of methylmercury.

The mercury that coal-fired utilities emit is highly toxic to humans. Exposure to even small amounts of methylmercury can lead to irreversible neurological damage. The most recent data also suggest adverse effects on the cardiovascular systems of adults. Mercury emit...

(These comments were submitted by Catherine O’Neill, law professor at Seattle University School of Law and member scholar for the Center For Progressive Reform)

Here is how we ought to judge the EPA's long-anticipated rule controlling mercury emissions from coal-fired utilities: does it follow the mandate of the Clean Air Act (CAA)? For too long, utilities have managed by various means to fend off regulation required by the CAA. Assuming EPA’s rule at long last complies with Congress’s directives, Americans may look forward to a day when they can again eat fish without serving their families a side of methylmercury.

The mercury that coal-fired utilities emit is highly toxic to humans. Exposure to even small amounts of methylmercury can lead to irreversible neurological damage. The most recent data also suggest adverse effects on the cardiovascular systems of adults. Mercury emitted to the air from coal plants and other sources gets deposited to surrounding land and waters; it makes its way into fish tissue in the form of methylmercury. The primary route of human exposure is through eating fish.

The saga of federal regulation of mercury emissions from coal-fired utilities is long and lamentable. Although the CAA Amendments of 1990 seemed to portend more determined efforts to reduce emissions of this potent neurodevelopmental toxin, utilities have successfully forestalled any federal requirements that they reduce their mercury pollution. The Bush Administration even attempted to remove utilities from the list of sources whose toxics emissions are to be regulated under section 112 of the CAA – an attempt the D.C. Circuit threw out in 2008.

While two decades came and went, mercury emissions continued.

With widespread mercury contamination in the nation’s lakes and rivers, agencies have issued increasing numbers of fish consumption advisories. Human bodies, too, became increasingly burdened – though not equally so. According to a recent study, one in ten women of childbearing age in the United States has a blood mercury level that would put a developing fetus at risk. This figure nearly triples for women who designated their ethnicity as “other” (i.e., who are Native American, Asian American, or from the Pacific or Caribbean Islands) – fully 27.4 percent of women of childbearing age in this group have blood mercury concentrations above levels determined by the EPA to pose a risk to those exposed in utero.

While the mercury saga was playing out at the federal level, however, states and tribes tired of its sorry plot – a story line that threatened the health and capabilities of their children; that undermined tribal fishing rights; and that needlessly contaminated an available and inexpensive source of food in trying economic times. And more than one-third of the states enacted their own mercury regulations. The specifics vary from state to state, but in every case, they required substantial emissions reductions, and quickly. New Jersey required 90% reductions by 2007. Massachusetts mandated 85% reductions by 2008 and then 95% reductions by 2012. Illinois required 90% reductions by 2009.

Now, EPA is required under the terms of a consent decree to issue a proposed National Emission Standard for Hazardous Air Pollutants (NESHAP) regulating mercury and other hazardous air pollutants by Wednesday, and to issue the final rule by November 16. Under section 112 of the CAA, EPA is to apply a technology-based standard to require emissions reductions that, at a minimum, are keyed to the best performing sources in a source category – commonly referred to as “maximum achievable control technology” or “MACT” standards. Specifically, EPA is required to determine the level of emissions reductions for existing sources that “shall not be less stringent than the average emission limitation achieved by the best performing 12 percent of the existing sources” and for new sources that “shall not be less stringent than the emission control that is achieved in practice by the best controlled similar source.” Notably, the level of control required by the MACT standard is by definition feasible, since some sources are already attaining it.

One consequence of the various regulations at the state level is that mercury emissions control technologies such as Activated Carbon Injection (ACI) have been successfully implemented by a number of utilities across the nation. And, according to a 2009 study by the Government Accountability Office (GAO), these control technologies are enabling sources to obtain mercury emissions reductions as high as 99%. Moreover, reductions on the order of 90% have been achieved by plants firing different types of coal (i.e., bituminous, sub-bituminous, lignite) and employing a variety of configurations. Indeed, according to data supplied by utilities as part of EPA’s Information Collection Request for the rule, plants firing each of the different types of coal have in fact opted to apply ACI to control their mercury emissions (see the convenient table of this data from page 8 of the American Lung Association's recent report). As I have argued here before, this degree of control should have been facilitated under the CAA long ago. Putting the larger lessons to the side for the moment, this evidence also has implications for EPA’s immediate task.

With a congressional directive that the MACT floor be keyed to the best performers, and with those performers able to achieve considerable mercury emissions reductions, EPA’s task is fairly straightforward. EPA should do now what it should have done years ago: issue a MACT standard that complies with the CAA.

This doesn’t mean that the utilities won’t have pushed EPA for still further concessions and won’t continue to do so after this week's announcement. EPA should, however, resist industry pressure to use its authority to carve out numerous “subcategories” among coal-fired utilities. The evidence amassed by the GAO suggests that significant reductions in mercury emissions are achievable across coal-fired sources using even differed types of coal. EPA should also hold the line on extensions or other delay tactics. Any further delay simply prolongs the harms that have been accruing in the absence of federal regulation of this major source of mercury pollution (see CPR's white paper from 2009 on the human costs of delay in this and other protracted rulemakings).

If EPA takes seriously its statutory duties, the rule it proposes for utilities will make a real difference – it will help make it safe for Americans to put fish on their tables.

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March 14, 2011 6:18 AM

Costs Exceed Air Quality Benefits

By William O'Keefe

CEO, George C. Marshall Institute

Based on the NAAQS and Boiler proposals, which have been delayed, the utility MACT will impose costs on utilities that far exceed air quality benefits. As a starting point, air quality has continued to improve each year under the current set of regulations. At current low levels of pollutants, the health benefits are most likely in the realm of the hypothetical. The controversy surrounding the current level of mercury exposure has not been adequately resolved, although that alleged risk is a driver for the MACT regulation.

In regulating utility emissions, the Agency should be focused on a long term goal to turnover the existing capital stock faster so that older coal fired units are replaced with natural gas units. Last year, EPA proposed changes in the Clean Air Interstate Regulations (CAIR) that had been challenged in Court. What the Agency has not done is demonstrate that those regulations are not sufficient to achieve appropriate reductions in toxic air pollutants. There is widespread agreement that the reductions in NOx and SOx that will be achieved from the implem...

Based on the NAAQS and Boiler proposals, which have been delayed, the utility MACT will impose costs on utilities that far exceed air quality benefits. As a starting point, air quality has continued to improve each year under the current set of regulations. At current low levels of pollutants, the health benefits are most likely in the realm of the hypothetical. The controversy surrounding the current level of mercury exposure has not been adequately resolved, although that alleged risk is a driver for the MACT regulation.

In regulating utility emissions, the Agency should be focused on a long term goal to turnover the existing capital stock faster so that older coal fired units are replaced with natural gas units. Last year, EPA proposed changes in the Clean Air Interstate Regulations (CAIR) that had been challenged in Court. What the Agency has not done is demonstrate that those regulations are not sufficient to achieve appropriate reductions in toxic air pollutants. There is widespread agreement that the reductions in NOx and SOx that will be achieved from the implementation of CAIR will also bring about significant reductions in mercury emissions.

Proposing MACT, on top of other regulations,will be both redundant and expensive. Forcing the utility industry to install the most expensive emissions reduction technologies will simply drive up the cost of electric power when it can least be afforded. Analyses of EPA’s boiler and NAAQS proposals concluded that both were much more expensive than EPA claimed and were job killers. That is not what we need as our economy struggles to recover from the worst recession in decades.

Some will say that the economy is recovering and that this regulation will not go into effect until some future date. That argument misses some important points. It is going to take years for the economy to fully recover. Low growth rates, which seem to be in our future for years to come, are not adequate to support our long term economic objectives and bring unemployment down to the pre 2008 levels. As we have seen, uncertainty about government economic and regulatory policy has caused companies to sit on capital instead of investing it.

Regulations that impose large costs for limited benefits waste capital, add to the current uncertainty, and deter investment at a time that it is critical. Rightly or wrongly, EPA is seen as a rogue agency pursuing an ideological agenda without regard to our economic well being.

If the President has tacked to the center, as he seems to have done, EPA should follow suit. The Obama Administration would do the nation a favor by making sure that EPA’s proposal is fully compliant with the recent Executive Order on regulations and making the OMB and inter-agency reviews readily available to the public.

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