Association urges repeal, replacement of Clean Power Plan

There are a number of compelling reasons for why the Environmental Protection Agency should repeal and replace the Clean Power Plan, which aims to reduce carbon dioxide emissions from existing power plants, including that the CPP is based on incorrect legal conclusions, the American Public Power Association recently argued.

The Association said in April 26 comments that the EPA should finalize a lawful rule to replace the CPP that would allow states to set unit-by-unit performance standards that account for an electric generating unit’s remaining useful life.

EPA sought input on a potential CPP replacement rule

In October 2017, EPA Administrator Scott Pruitt issued a Notice of Proposed Rulemaking that proposed to repeal the CPP.

In late 2017, the EPA released an advance notice of proposed rulemaking, or ANPR, asking the public for comment on what a replacement rule for the Clean Air Act (CAA) section 111(d) rule, known as the CPP, should include.

In the ANPR, the EPA said it was considering proposing emission guidelines to limit GHG emissions from existing electric utility generating units and solicited “information on the proper respective roles of the state and federal governments in that process, as well as information on systems of emission reduction that are applicable at or to an existing EGU, information on compliance measures, and information on state planning requirements” under the Clean Air Act, the EPA said.

CPP based on incorrect legal conclusions, Association says

The Association said in its late April comments that a basis for repeal is that the CPP is based on incorrect legal conclusions.

It made the following points:

  • The CPP relied on a flawed interpretation of key statutory terms
  • EPA lacked a clear statement of authority from Congress
  • The CAA’s “plain language unambiguously requires a narrower interpretation” of EPA’s authority under Section 111
  • Even if Section 111 could be read as ambiguous, the interpretation EPA has proposed is reasonable and entitled to deference.

“In light of the prior Administration’s reliance on flawed legal conclusions as the fundamental basis of the CPP, EPA should repeal the CPP in its entirety to address these deficiencies and promulgate lawful section 111(d) emission guidelines for existing EGUs that allow each state to meaningfully participate in the adoption of performance standards to fit that state’s needs and goals,” the Association said.

Since the flawed legal conclusions pervade every aspect of the CPP, a full repeal is needed, including Building Block 1.

The CPP established emission guidelines in the form of uniform national emission performance rates for existing fossil fuel-fired EGUs, which states would be required to incorporate into state plans as standards of performance. 

As the basis for these emission guidelines, EPA determined that the “best system of emission reduction” (BSER) consists of three “Building Blocks” representing different ways the electric generation industry could reduce overall CO2 emissions.

Building Block 1 seeks to lower CO2 emissions by improving the heat rate of individual, existing coal-fired EGUs.  But, as EPA explained, the emission reductions associated with Building Block 1 would be insufficient to satisfy the agency’s policy goals. Therefore, EPA added two additional building blocks into the BSER.

“EPA must repeal the Building Block 1 portion of the CPP because that Building Block was developed using flawed heat rate improvement assumptions,” the Association said.

The Association also believes the CPP exceeded EPA’s CAA authority and would have seriously disrupted the markets in which Association members operate. The Association therefore supports the proposed repeal “because it is unlawful and because it represents an unworkable policy.”

The Association argued that the proposed repeal falls within EPA’s well-recognized regulatory authority.  The public power trade association said the proposed repeal seeks to: (1) correct the agency’s mistake in promulgating the transformative CPP without statutory authority; (2) effectuate different legal conclusions that are consistent with the CAA and are otherwise lawful; and (3) effectuate different policy about the most appropriate way to address CO2 emissions from existing EGUs.  “Any of these grounds is sufficient reason to support the proposed repeal,” the Association said.

EPA’s proposed repeal “is clearly within the agency’s statutory authority, supported by sound policy, and should be made final.”

The Association said that the CPP violates express provisions of section 111(d) of the CAA and EPA’s own regulations by setting strict emission limits for states. “It further invades traditional areas of state responsibility by determining the balance of energy resources within the state and prioritizing development of future generation resources.”

The Association said that along with violating the CAA and its regulations, the CPP “also usurped states’ traditional role in determining the balance of energy resources within the State and in prioritizing development of future energy resources.  This effort to transform the electric generating industry invades the states’ traditional authority to determine for themselves the extent to which they should (or should not) mandate particular levels of renewable generation and violates fundamental principles of federalism.”

Moreover, the country’s interest in affordable and reliable electricity is threatened by the CPP, the Association said. The EPA “failed to assess the CPP’s impacts on the reliability and affordability of the nation’s energy supply.”

Under the CPP, any shortfall in projected renewable capacity would seriously jeopardize the reliability of the nation’s electricity supply, given that lower-than-projected renewable generation would simultaneously increase the need for generation from affected EGUs while reducing the supply of available emission rate credits (ERCs) to cover increased generation by affected EGUs, the Association noted. 

“These two consequences in tandem would cause the prices for ERCs to spike, increasing consumer costs significantly and further threatening reliability.  This is particularly true in public power communities, where some EGUs would have been forced to retire prematurely, stranding those communities’ investments in those units.”

Association also supports the issuance of an Advance Notice of Proposed Rulemaking

The Association said it also supports EPA’s decision to issue the Advance Notice of Proposed Rulemaking to explore the issues related to development of lawful section 111(d) emission guidelines under which States would submit plans that set standards of performance for existing EGUs. 

In February, the Association submitted comments on the ANPR where it requested that the EPA propose and finalize a workable, legal, appropriate section 111(d) rule that: (1) respects the legal limits of the CAA; (2) properly reflects the reality of operating EGUs (particularly for not-for-profit, community-owned EGUs); (3) adequately accounts for current and future trends for electricity markets; and (4) provides regulatory certainty for affected sources. With community-owned electric utilities as its members, the Association encouraged the agency to be mindful that consumer costs and reliability impacts must also be assessed in any emissions guidelines or state plans put forward.

In its late April comments, the Association encouraged the EPA to propose and finalize new 111(d) emission guidelines, “thus providing regulatory certainty for the electric generating sector.” 

The trade group also urged the federal agency to move forward with reviewing its new source performance standards for GHG emissions from new, modified, and reconstructed coal-fired EGUs. 

And the Association noted it supports EPA’s decision to exclude the 2009 Endangerment Finding from the scope of this proposed rulemaking.

EPA issued final CPP in the fall of 2015

The EPA issued its final CPP in the fall of 2015. In February 2016, the Supreme Court issued a stay of the EPA rule pending a resolution to litigation over the contentious rule.

An executive order issued by President Trump in March 2017 directed the EPA to review, revise or repeal the final rules on CO2. The EPA sent its Clean Power Plan review proposal to the OMB in June 2017.