The American Public Power Association and the National Rural Electric Cooperative Association are voicing concerns about the potential negative effects on the reliability of the country’s electric grid resulting from a proposed rule by the U.S. Environmental Protection Agency to address the 2015 8-hour ozone national ambient air quality standards.
The groups detailed those concerns in May 16 comments responding to EPA’s proposed rulemaking, “Supplemental Air Plan Actions: Interstate Transport of Air Pollution for the 2015 8-Hour Ozone National Ambient Air Quality Standards and Supplemental Federal ‘Good Neighbor Plan’ Requirements for the 2015 8-Hour Ozone National Ambient Air Quality Standards.”
The proposed rule “substantially impacts our members in Arizona, Iowa, Kansas, New Mexico, and Tennessee,” APPA and NRECA said.
EPA “proposes to summarily deny” those states’ ozone transport state implementation plans (SIPs) and satisfy their statutory Good Neighbor obligations through the unworkable Good Neighbor Federal Implementation Plan,” the groups went on to say.
“EPA should reverse course with respect to both decisions,” APPA and NRECA said.
Background
In 2022, EPA embarked on an ozone transport rulemaking that was and continues to be strongly opposed by the power sector and select industrial sectors, the groups said in their comments.
In February 2022, EPA disapproved 19 ozone transport SIPs, changing course on prior guidance and policy positions.
States and stakeholders filed challenges to the SIP disapprovals in many appellate courts across the country. The courts stayed the SIP disapprovals while the cases proceed on the merits.
Despite the stays, EPA issued the final Good Neighbor Federal Implementation Plan (FIP) in 2023.
“The FIP’s and this Proposed Rule’s foundation is based on many of the legal and technical flaws at issue on appeal,” APPA and NRECA said.
The final Good Neighbor FIP is the most comprehensive and stringent use of the Clean Air Act Good Neighbor provision ever issued, they added.
APPA and NRECA commented on that proposed rule, opposing numerous technical, practical and legal aspects of the proposed Good Neighbor FIP.
EPA finalized a largely intact Good Neighbor FIP, with only minor revisions. Multiple petitions were promptly filed by industry stakeholders, utility trade groups, and states to challenge the final Good Neighbor FIP.
At present, the Good Neighbor FIP cannot be broadly implemented, the groups said.
The SIP disapproval stays remain in place in eight federal appellate courts of appeals. EPA itself administratively stayed the application of the Good Neighbor FIP in those jurisdictions in response to the stays.
“In so doing, EPA recognized that the compliance timelines in the final Good Neighbor FIP may be adjusted,” the groups said.
Supreme Court Considering Applications to Stay Good Neighbor FIP
The United States Supreme Court is considering applications to stay the Good Neighbor FIP, even though the United States Court of Appeals for the D.C. Circuit opted against a stay.
“Only in extraordinary circumstances will the Supreme Court even consider upending a lower court decision while the case is still pending. The Supreme Court’s move calls into question the legality of EPA’s actions, given that, to obtain a stay, challengers must show they are likely to overturn the Good Neighbor FIP,” APPA and NRECA said.
They said a key legal question raised in Supreme Court briefing and oral argument is the impotence of the Good Neighbor FIP or the severability of its regulatory scheme given that only a handful of states are subject to the FIP.
“Nevertheless, the Proposed Rule would toss the Supplemental States into the quagmire,” they argued.
“Against this backdrop of unparalleled regulatory and legal uncertainty in ozone transport regulation, EPA released the Proposed Rule despite the myriad of technical comments, implementation concerns, cost considerations, and legal challenges afoot.”
EPA justifies the five state disapprovals “using flawed data sets biased toward lower state budgets. Other modeling errors further underscore the need for revisions. The FIP portion of the Rule includes infeasible project-timing suppositions and overlooks the substantial costs of compliance.”
The Supplemental FIP also poses major questions,” as it will dramatically impact the energy sector, generation mix, and the ability of 91 million Americans to receive reliable electricity.”
Reliability
The reliability of America’s grid underpinned APPA’s and NRECA’s comments on the proposed Good Neighbor FIP.
“These concerns were not resolved by the Final Good Neighbor FIP. Forty-two gigawatts of capacity are at risk. The supplemental states add 200 megawatts of capacity at risk. Concurrently, existing reliable and well-controlled generation assets are restricted to their 2021 utilization rates – subjecting them to future derates,” the groups said.
These dramatic changes “begin for the Good Neighbor FIP now, with the largest changes for the Good Neighbor FIP and Supplemental FIP from 2026-2028 when the program assumes selective catalytic reduction (SCR) technology will be installed fleet-wide – despite project timelines, dwindling contractor resources, and financing considerations.”
The Supplemental FIP magnifies the precarious state of grid reliability by expanding the footprint of the Good Neighbor FIP, they said.
“Irrespective of EPA rulemakings, generation asset changes and coal-unit retirements were already exerting pressure on energy reliability. Reliability events, resulting in power interruptions, have occurred much more frequently, particularly when load swells during summertime extreme heat events or winter temperatures plummet.”
Transmission infrastructure “is aging and needs to be expanded, contributing to this dire situation. How America’s power grid can sustain drastic and rapid changes remains unanswered.”
While EPA has engaged in meetings with energy experts such as the Federal Energy Regulatory Commission and regional transmission organizations and independent system operators, “these meetings have not yielded concrete solutions that align with EPA’s regulatory agenda.”
The proposed rule should be based on resolving the Clean Air Act Good Neighbor obligations – neither over nor under control – and ensuring customers “have a sustainable, reliable, and affordable electric service.”
Smaller Utilities Disproportionately Affected
Smaller utilities are disproportionately affected by the Supplemental FIP due to the extra time they need to commission replacement generation projects or to install controls, APPA and NRECA said.
“EPA has not provided sufficient time to acquire financing, governmental approvals, third-party engineering, environmental, legal, and construction resources, and permits.”
The small entity conundrum “is further compounded by the other new rulemakings EPA has recently finalized this spring. The cumulative costs of all of these regulations are substantial and may even require staggering projects for debt-heavy entities.”
It is imperative that EPA recognize and accommodate small entity considerations, the groups said.
“With the elimination of the flexibility of the Cross-State Air Pollution Rule (CSAPR) trading program, small entities with a single unit or single plant systems find themselves in an untenable situation. These small utilities cannot shift load to other assets. Smaller state allowance budgets and dwindling banks will end the use of trading as a compliance tool.”
EPA Urged to Withdraw Supplemental FIP
The Supplemental FIP is legally and technically on shaky ground, the groups said.
“APPA and NRECA urge EPA to withdraw the Supplemental FIP pending resolution of litigation related to the disapproval of the SIPs and the Good Neighbor FIP.”
Arizona, Iowa, Kansas, New Mexico, and Tennessee “should not be injected into an ozone FIP framework that is flawed, subject to change, and may not ultimately withstand challenge. The addition of more states to the morass is not the solution.”
If EPA goes forward with the Supplemental FIP, Arizona, Iowa, Kansas, New Mexico, and Tennessee “should be offered a meaningful opportunity to satisfy their Good Neighbor obligations, with adequate guidance and corrected datasets from EPA.”
The groups said EPA should carefully review, update, and revise its technical analysis, models, and datasets and make corrections and that states should be offered a reasonable deadline to submit or resubmit their ozone transport SIPs.
In addition, EPA should not incorrectly apply error correction provisions to address wholesale SIP changes, the groups said.
With respect to the FIP portion of the rulemaking, if the Good Neighbor FIP is deemed legally valid, EPA should consider the following areas of concern with respect to Arizona, Iowa, Kansas, New Mexico, and Tennessee:
- Additional time is needed to install SCRs on non-SCR units in Arizona; and
- Eliminate unnecessary concepts such as dynamic budgeting, automatic bank recalibrations, and the daily backstop emission rate that result in over-control.
