Senate Majority Leader says Congress could block Clean Power Plan

By Paul Cimapoli, News Director, American Public Power Association
From the May 7, 2015 issue of Public Power Daily

Senate Majority Leader Mitch McConnell, R-Ky., recently said that Congress could utilize a section of the Clean Air Act to block the Environmental Protection Agency’s Clean Power Plan, which aims to reduce carbon dioxide emissions from existing power plants.

McConnell made his remarks at an April 29 hearing to review the Fiscal Year 2016 funding request and budget justification for the EPA. The hearing was held by the Interior, Environment and Related Agencies Subcommittee of the Senate Appropriations Committee. EPA Administrator Gina McCarthy appeared before the subcommittee at the hearing.

The EPA’s Clean Power Plan was proposed by the agency in June 2014. It would require states to cut carbon dioxide emissions from existing power plants from 2005 levels by 30 percent by 2030. Under the EPA’s proposal, states would be required to submit state plans to the EPA in 2016 and to begin to meet interim goals in 2020.

McConnell said that one of McCarthy’s deputies recently told the Federal Energy Regulatory Commission “that multi-state plans are a significant part of your strategy.”

In comments to McCarthy, the Senate majority leader said, “I’d like to acquaint you” with Section 102(c) of the Clean Air Act, which he said requires Congressional consent for cooperative agreements. McConnell said that the law states that no such agreement “or compact shall be binding or obligatory” upon any state “unless and until” it has been approved by Congress. “Doesn’t seem ambivalent to me,” McConnell said.

“I can assure you that as long as I’m majority leader of the Senate, this body’s not going to be signing off on any backdoor energy tax,” McConnell said.

It remains unclear whether Section 102(c) of the Clean Air Act could be used to block multi-state agreements.

In March, McConnell wrote a letter to the nation’s governors in which he urged them to “carefully review the consequences before signing up for this deeply misguided plan. I believe you will find, as I have, that the EPA’s proposal goes far beyond its legal authority and that the courts are likely to strike it down. All of which raises the very important question of why the EPA is asking states at this time to propose their own compliance plans in the first place.”

Senate committee examines legal implications of EPA plan

Meanwhile, the Senate Environment and Public Works Committee’s Clean Air and Nuclear Safety Subcommittee on May 5 held a hearing to examine the legal implications of the Clean Power Plan.

In her opening remarks, Sen. Shelley Moore Capito, R-W. Va., who chairs the subcommittee, said that many states “have raised grave concerns about the legality of the rule and the implications for their citizens and ratepayers. In addition to significant Constitutional and other legal questions, states have expressed concerns about the feasibility of EPA’s proposed requirements and the likely impacts on electricity costs and reliability.”

Capito said that next week “I will be introducing greenhouse gas legislation with my colleagues that will preserve the proper balance of state and federal authority, help ensure reliable and affordable electricity, and protect jobs and our economy.”

Witnesses at the hearing included West Virginia Attorney General Patrick Morrisey. In his prepared testimony, Morrisey noted that West Virginia is one of 15 states involved in a lawsuit before the U.S. Court of Appeals for the D.C. Circuit. The legal action targets EPA’s authority to issue any rule regulating existing power plants under Section 111(d) of the Clean Air Act when EPA has already regulated the same source category under Section 112 of the act.

“If this administration elects to finalize this rule, West Virginia will challenge it in court and we expect that the coalition of 15 states that we’re currently working with will grow,” the West Virginia attorney general said.

Oklahoma Attorney General Scott Pruitt told the hearing that the EPA “does not possess the authority under the Clean Air Act to do what it is seeking to accomplish in the so-called Clean Power Plan.”

He said that the EPA, “under this administration, treats states like a vessel of federal will. The EPA believes states exist to implement the policies the Administration sees fit, regardless of whether laws like the Clean Air Act permit such action.”

Pruitt said that the Clean Air Act “hinges on ‘cooperative federalism’ by giving states the primary responsibility and role for regulation while providing a federal backstop if the states should fail to act.”

When the EPA “respects the role of the states, the cooperative relationship works well. When the EPA exceeds the constraints placed upon the agency by Congress, the relationship is thrown out of balance and the rule of law and state sovereignty is affected adversely,” the Oklahoma attorney general said.

The Clean Power Plan proposal “throws the cooperative relationship between the states and the federal government off balance,” he said.

Other witnesses at the hearing were Roger Martella, Jr., a partner at Sidley Austin LLP, Kelly Speakes-Backman, commissioner of the Maryland Public Service Commission and Chair of the Regional Greenhouse Gas Initiative, Inc. Board of Directors and Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of Law at Georgetown University Law Center.

In her written testimony submitted for the hearing, Speakes-Backman argued that the basic structure of EPA’s proposed rule is sound, “although the RGGI states recommend that EPA adopt certain revisions to ensure that early action is recognized, and that the state targets are verifiable, transparent, equitable, and enforceable.”

She also said in the written testimony that the RGGI states “have demonstrated that it is possible to achieve cost-effective pollution reductions while maintaining grid reliability, and while having a positive impact on ratepayers and our overall economies.”

RGGI is a regional carbon dioxide emissions program launched in January 2009. It was the first market-based regulatory program in the United States to reduce greenhouse gas emissions. The cooperative effort is mandatory in the participating states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Speakes-Backman addressed some of the key lessons learned from the RGGI that can be applied to implementing EPA’s proposed Clean Power Plan in an exclusive interview published in Public Power Weekly in late 2014.

On the other side of Capitol Hill, the House Energy and Commerce Committee on April 29 approved legislation that would allow for judicial review of any final EPA rule to regulate carbon dioxide emissions from existing power plants under Section 111(d) of the Clean Air Act before the rule could take effect.

FERC commissioner discusses Clean Power Plan

Colette Honorable, a FERC commissioner, on May 5 discussed the Clean Power Plan in remarks before an audience of energy attorneys in Washington, DC.

“I’d like to talk with you very briefly about a few of my priorities as I see them in my first” four months at FERC, she said at the Energy Bar Association’s annual meeting and conference. Honorable was sworn in on Jan. 5 as a commissioner with FERC.

“Clearly, job number one for me is reliability,” Honorable told the gathering of energy attorneys. During a Senate Energy and Natural Resources Committee hearing in December related to her nomination as a FERC commissioner, Honorable said that electric reliability would be a top priority for her at the federal agency.

In her remarks before the Energy Bar Association meeting, she noted that the EPA is in the final stages of issuing the final rule under the agency’s Clean Power Plan. “EPA has sought advice and counsel from the FERC and I am eager to give that,” she said.
With respect to the Clean Power Plan, there are a “few issues that really rise to the top for me,” she said.

“One, clearly, is the reliability safety valve issue and the notion of developing some sort of a reliability mechanism that could be employed,” Honorable said.

Honorable said that “another takeaway for me” involves the “importance of collaboration and cooperation.” She said, “We really won’t get very far if we don’t work well together.” Honorable noted that she has “often said, no matter what you think about this plan, we absolutely are going to get a plan this summer – mid to late summer.”

She said that it “behooves all of us to prepare and do the work we do so well day in and day out to contemplate the possibilities, the scenarios, the plans and what we will do” if the rule is upheld.

“If we wait and do nothing, in my opinion, we’ve lost an opportunity,” she said.

Honorable also highlighted the “importance of the regions and the regional efforts that are underway.”

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Commissioner Bay named to FERC chair

Commissioner Bay, on being named Chairman of the Federal Energy Regulatory Commission by President Barack Obama

“I thank President Obama for this opportunity to be the Chairman of FERC,” Chairman Bay said. “I am honored and humbled to work with my extraordinary colleagues on the Commission, as well as the many dedicated and talented staff at the Commission. This is a time of great change in the energy space, and it is more important than ever that the Commission use its authority with respect to infrastructure, markets, and reliability to further the public interest. I thank former Chairman Cheryl LaFleur for her leadership at FERC and look forward to working with my colleagues on the Commission and staff, as we build on the progress of the past to address the challenges of the future.”

Chairman Bay has served as a Commissioner since August 2014, and his term expires June 30, 2018. For his full biography, please go here.

Senate environment committee plans March 11 hearing on EPA rule on CO2

This article originally appeared in the March 9, 2015 issue of American Public Power Association’s Public Power Daily.

The U.S. Senate Committee on Environment and Public Works will hold a hearing Wednesday, March 11, to hear from state utility regulators on their views of the Environmental Protection Agency’s proposed rule limiting carbon dioxide emissions from existing power plants. The proposed rule is known as the Clean Power Plan.

The draft EPA rule, issued by the agency in June 2014, is designed to require states to cut carbon dioxide emissions from existing power plants from 2005 levels by 30 percent by 2030, according to the agency.

The Senate hearing is entitled, “Examining State Perspectives of the EPA’s Proposed Carbon Dioxide Emissions Rule for Existing Power Plants.”

Witnesses will include Thomas Easterly, a commissioner with the Indiana Department of Environmental Management; Todd Parfitt, director of the Wyoming Department of Environmental Quality; Michael J. Myers, section chief with the Environmental Protection Bureau at the New York State Attorney General’s Office; Ellen Nowak, chairperson of the Public Service Commission of Wisconsin; and Mary D. Nichols, chairman of the California Air Resources Board.

The Senate hearing will take place the same day as a regional technical conference that the Federal Energy Regulatory Commission (FERC) is holding on the EPA proposal in Washington, D.C. that will focus on the EPA rule’s potential effects in the East.

The House Energy and Commerce’s Subcommittee on Energy and Power will hold a hearing March 17 to examine the EPA’s proposed plan.

At a Feb. 19 technical conference held by FERC to examine the EPA plan, the American Public Power Association’s president and CEO, Sue Kelly,urged FERC to take an “active role” on the EPA plan. See also Kelly’s blog on the topic.

APPA shares Clean Power Plan concerns with House panel

This article appeared in the August 1, 2014 issue of Public Power Daily from the American Public Power Association. By Robert Varela.

APPA tells House panel of concerns about EPA’s proposed rule on carbon dioxide emissions of existing plants

The American Public Power Association (APPA) is very concerned about the potential impacts on public power utilities and their customers of the Environmental Protection Agency’s proposed rule on carbon dioxide emissions from existing power plants, the association told a House panel. The proposed emission reduction goals for some states “are unachievable and would require the early retirement of existing coal- and natural gas-fired power plants, which could result in stranded costs for utilities as well as local reliability impacts,” APPA said in a July 29 statement for a House Energy and Power Subcommittee hearing on the Federal Energy Regulatory Commission’s perspective on the proposed rule.

The proposed rule for existing plants “goes beyond what is permissible under Section 111(d) of the Clean Air Act,” APPA said, adding that it “is disappointed that EPA has decided to set binding state emissions goals rather than leave it to the states to set individual limits that are achievable at the affected source—the electric generating unit.”

APPA cited a number of concerns about the proposed rule:

  • Front loading — most of the emission reductions are required by 2020 for many states
  • Early action — there is little or no credit for actions utilities have taken to reduce emissions prior to 2012
  • Dispatch assumptions — EPA assumes that most existing natural gas plants can operate at a 70 percent capacity factor, but state air permits limit the operation of many plants; states and utilities do not control dispatch in regional transmission organization regions; and it is not clear sufficient pipeline capacity exists.

EPA should have consulted the Federal Energy Regulatory Commission on all of those issues, but there appears to have been little communication between the FERC and the EPA on this proposed rule, especially regarding electric reliability, APPA told the subcommittee. EPA consistently claims that its slate of proposed rules on the electric utility industry will not hurt reliability, but the agency “has no expertise in electric utility operations, and seems not to have given appropriate deference to the experts, including FERC Commissioners and staff, who oversee the reliability of the bulk power system,” APPA said.

FERC has made commendable efforts to highlight the impacts of EPA’s slate of proposed rules, but APPA “is not aware that the agency was consulted in any comprehensive way by the EPA.”

FERC’s approach to the reliability issue “suffers from a major shortcoming — the Commission’s lack of any apparent will to reform the problematic features of mandatory capacity markets operated by” ISO New England, the New York ISO and PJM Interconnection. APPA and many others “have concluded that the basic mandatory capacity procurement construct is not a ‘market’ in any meaningful sense of the word. It is instead a centralized procurement, based on a heavily administered pricing structure, governed by thousands of pages of complex rules, that generally does not produce needed new resources,” the association said.

Implementation of EPA’s proposed rule will entail the construction of new low-carbon dioxide generation, such as nuclear and natural gas plants, but a recent study by Christensen Associates concluded that the RTO markets “do not and cannot address long-term capacity needs,” APPA said. The study also found that “the RTO markets include some design elements that impede long-term investments and long-term bilateral contracts.”

The failure to recognize this reality has kept FERC from adopting fundamental reforms, APPA said. Instead, the commission has agreed to rule changes, such as administratively imposed floor prices on new natural gas or even renewable generation, that “further increase costs and impede needed new resource development,” APPA said. “These capacity markets therefore will exacerbate the reliability and economic costs” of the proposed Clean Power rule.

 Photo: House Energy & Power Subcommittee Chairman Ed Whitfield (KY). Copyright/Courtesy House Energy & Commerce Committee, www.flickr.com/photos/energyandcommerce.

Norman Bay nominated to head of FERC

On Tuesday the Senate confirmed the nominations of Norman C. Bay to be a commissioner of the Federal Energy Regulatory Commission, and of Cheryl LaFleur to a second term as a commissioner. Senate Energy and Natural Resources Committee Chair Mary Landrieu, D-La., said an agreement had been reached to allow LaFleur to continue to serve as acting chair for nine months, after which President Obama would name Bay as chairman.

Norman Bay. Courtesy FERC

Norman Bay. Courtesy FERC

Bay will fill out former Chairman Jon Wellinghoff’s term ending June 30, 2018. LaFleur was confirmed to a five-year term expiring June 30, 2019.

Bay has headed FERC’s Office of Enforcement since 2009. Prior to joining the commission, he worked as a law professor at the University of New Mexico from 2002 to 2009. From 2000 to 2001, Mr. Bay was the United States Attorney for the District of New Mexico, and an Assistant U.S. Attorney from 1989 to 2000. He earned a B.A. from Dartmouth College and a J.D. from Harvard Law School.

Prior to joining the commission in 2010, LaFleur had more than 20 years’ experience in the electric and natural gas industry. She served as executive vice president and acting CEO of National Grid USA. Her previous positions at National Grid USA and its predecessor New England Electric System included chief operating officer, president of the New England distribution companies and general counsel. She began her career as a lawyer at Ropes and Gray in Boston. She has a J.D. from Harvard Law School, where she was an editor of the Harvard Law Review, and an A.B. from Princeton University.