EPA is slated to release next week the first in a series of highly anticipated proposals for regulating the environmental impacts of the utility sector -- measures that could test the agency's recent vow to ease compliance and ensure coordination among its pending rules to avoid what the industry says is a reliability "train wreck."
Under the terms of a consent decree with environmentalists EPA is slated to sign its proposed cooling water rule for existing facilities and manufacturing plants no later than March 14. Update: The proposal has been delayed until March. 28.
EPA also faces a court-ordered deadline to sign by March 16 a proposed national emission standards for hazardous air pollutants (NESHAP) to cut power plant air toxics. The agency will issue a new source performance standard (NSPS) to cut utility criteria pollutant emissions alongside the NESHAP.
In addition to the cooling water and air rules, EPA is also preparing to issue in July its final Clean Air Transport Rule (CATR) to create a cap-and-trade program for cutting nitrogen oxide and sulfur dioxide emissions from power plants in 31 Eastern states and the District of Columbia. EPA has also proposed a first-time Resource Conservation & Recovery Act (RCRA) for coal combustion waste disposal, but is unlikely to issue a final rule this year.
Utility officials and others have raised major concerns about the number of rules facing the sector, with some critics warning that the costs of complying with the rules will be so high that some power plants will choose to shut down rather than invest in expensive pollution controls to meet the regulatory requirements. Those utility shutdowns could cause major electricity grid reliability problems, according to several recent studies on the issue.
The North American Electric Reliability Corporation in an analysis late last year warned that the pending cooling water rule will be the most costly and disruptive of all pending EPA rules for utilities.
To address the concerns, EPA air chief Gina McCarthy says the agency is working to coordinate the suite of pending regulatory requirements to help the industry comply with the rules and spur investments toward President Obama's vision of expanded clean energy deployment in the 21st Century.
"This agency is doing its best to tell the utility industry everything you need to achieve moving forward, so that one investment decision can be made over the next few years that will achieve compliance with the suite of rules that the agency is moving forward to address public health," she told a Feb. 14 meeting of the National Association of Regulatory Utility Commissioners.
McCarthy has also sought to downplay the reliability impacts of the regulatory package. She noted recently that preliminary results of modeling the agency is performing with other agencies show no adverse electric grid reliability impacts as a result of pending EPA rules for the utility sector, contrary to several reports raising concerns that the air, water, and waste rules for the power sector would drive plant shutdowns that undermine reliable electricity supplies.
Even before the rules' release, environmentalists are lobbying to ensure both rules adopt strict standards. In the case of the cooling water rule, which will apply to around 1,200 existing electric generating and manufacturing plants, activists are seeking to limit regulators' ability to develop plants' standards on a case-by-case basis instead of more consistent national requirements that apply to plants that will be subject to the rule.
Environmentalists are meanwhile pushing for EPA to set strict limits on mercury and other air toxics in its pending NESHAP, which will establish a maximum achievable control technology standard (MACT) to cut toxic emissions from power plants.
The rule will replace a Bush EPA cap-and-trade program to cut mercury emissions that was vacated by the U.S. Court of Appeals for the District of Columbia Circuit after activists sued over the rule.
EPA's utility MACT may avoid the uniform outcry over the agency's recent boiler MACT due to several key factors, including better EPA data on utilities' emissions and a split among the power sector and regions over support for strict utility limits, sources say.
Yet elements of the utility MACT may still prove highly controversial and prompt major industry outcry, particularly if EPA rejects an industry push for a so-called health-based compliance alternative in the rule.
The combined NESHAP and NSPS must under the court-ordered deadline by signed by EPA Administrator Lisa Jackson March 16. On EPA's "Rulemaking Gateway" website of pending rules the agency says, "Combining the two rules in a single action provides interested parties the opportunity to provide comments on the combined requirements of the two rules. It also avoids double-counting either costs or environmental benefits of the separate rules."
Although EPA is under a court-ordered deadline for issuing its utility air and cooling water rules, and is unlikely to delay the roll-out of CATR, the agency is not slated to issue its utility coal waste final rule in 2011.
EPA has proposed a rule with two options for regulating coal ash, either as hazardous under RCRA subtitle C subject to strict regulation or as solid waste under RCRA subtitle D subject to less stringent controls.
Industries that reuse ash in products have warned that the stigma associated with a hazardous designation would decimate the reuse industry, and that it would be contrary to past EPA efforts to promote safe reuse of ash in products.
Jackson told a March 3 House Appropriations Committee interior panel hearing on the agency's fiscal year 2012 budget request that EPA "continues to support the beneficial use of that material."
But the fate of EPA's coal waste rule is unclear. While the proposal was published in the June 21 Federal Register, Jackson said at the hearing that the final rule is delayed due to the agency having to process more than 450,000 comments on the proposal -- echoing comments by McCarthy who told a Feb. 16 energy event in Washington, DC, that the number of comments is the reason that EPA cannot predict when it will issue the rule.
Jackson told the March 3 hearing a final rule is unlikely in 2011 given the work involved in processing the comments. "And so we remain committed to rulemaking on this matter and we're going to analyze that information and make a final decision based on comments, science and the law. But we will almost certainly not do that this calendar year. I think it is going to take quite a bit of time," Jackson said. -- Anthony Lacey