Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

There has already been significant attention devoted to whether EPA’s “train wreck” of rules affecting coal-fired power plants would affect electric system reliability. The Congressional Research Service analysis looked at the coming rules more broadly, but did touch on reliability, noting that most of the coal plants likely to be retired as a result of EPA regulations are small and inefficient, and already run infrequently. As we noted last June, the Bipartisan Research Center did focus on reliability, concluding “that scenarios in which electric system reliability is broadly affected are unlikely to occur.”

However, this work has not been enough to satisfy FERC Commissioner Philip Moeller, who recently issued a “Request for Evidence” concerning the impact of EPA’s coming rules. The request is both deep and wide-ranging. It includes 22 separate questions, not including sub-parts. The questions range from the broad -- “What evidence supports the assertion of a reliability problem?” -- to the very specific  -- "Will the loss of the system inertia that is supplied by coal plants impact the power grid in unforeseen ways? Does the topic of inertia require further study?”

In today’s polarized political climate, I’m not sure that there can be an answer to these questions that would satisfy everyone. At least inside the Beltway, decision-makers increasingly seem to know what they know, evidence be damned. Nonetheless, it can only help to have a more comprehensive analysis of the reliability issue by the government agency that has responsibility for ensuring electric system reliability.  A careful assessment by FERC seems even more necessary in light of Wednesday's story in the Daily Environment Report to the effect that EPA's draft MACT rule contained an acknowledgement of reliability concerns when it was sent to the White House for review in February, but that the reliability discussion was edited out before EPA signed and issued the proposed rule in March.

For my part, assuming that the reliability issue can be addressed, I’d rather have the train wreck than Chinese water torture. Precisely because small coal plants might shut as a result of the cumulative weight of the EPA regulations, isn’t it better for everyone that the owners of those plants know about all of the regulations at the same time, rather than have them promulgated seriatim over a number of years? Wouldn’t the owners feel foolish -- and justifiably annoyed -- having spent a bunch of money complying with the first rule to be promulgated, only to decide that the second, or third, or fourth is the straw that breaks the camel’s back? As a matter of both public and private sector planning, it has to be better for EPA to be promulgating these rules in at least the same general time frame.

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After a relatively quiet period, there were a number of items of interest on the air/climate front this week. First, AEP announced that upcoming pollution controls would result in shutting down 6,000 megawatts of coal-fired capacity, or 25% of its coal fleet. AEP also announced that it would spend $6 billion to $8 billion in bringing the rest of its fleet into compliance.

On the flip side of this issue, the Bipartisan Policy Center issued a report concluding that compliance with the various EPA rules in the works (Clean Air Transport Rule, Utility MACT Rule, coal combustion ash rule, Clean Water Act intake structure rule, and NSPS for GHG) would not have a significant impact on electric system reliability. The quick summary is that most of the plants that will close are uncontrolled, older, smaller, plants that already don’t run much, particularly with natural gas prices low. The report acknowledges that some of these small plants are important in addressing peak loads in some areas, but concludes that concerns in those areas can be addressed with appropriate planning.

Next came news that EPA has reached agreement to delay its second round GHG NSPS proposal from July 26, 2011 to September 30, 2011 – though the final rule is still targeted for May 26, 2012. EPA has received extensive comment on this issue and my take is that there is no hidden agenda here; EPA is just trying to take those comments into account and be responsive, where possible.

Finally, former Representative Bob Inglis, whose support for action on climate change was sufficient to get him defeated by a Tea Party Candidate in the GOP primary in 2010, has announced formation of what is described as a “conservative coalition” to address climate change. Money quote:

Conservatives typically are people who try to be cognizant of risk and move to minimize risk. To be told of risk and to consciously decide to disregard it seems to be the opposite of conservative…. What I hope to do is be part of an effort that calls conservatives to return to conservatism and to turn away from the populist rejection of science.

All I can say is that I wish former Representative Inglis the best of luck in that endeavor.

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On Tuesday, EPA announced its intention to issue new effluent guidelines for the Steam Electric Power Generating industry by sometime in 2012. The announcement follows an EPA study in 2008 which indicated that toxic metals, particularly those collected as part of flue gas desulfurization processes, can pose a problem in facility effluent. EPA’s announcement is not particularly surprising, given the ongoing study and given that EPA has not revised the guidelines since 1982. Indeed, notwithstanding EPA’s announcement, Environmental Integrity Project, Defenders of Wildlife and Sierra Club announced that they would still sue EPA over its failure to timely update the guidelines.

There are two reasons why this announcement is significant beyond just its implications for effluent discharges from these facilities. First, it’s hard to see EPA’s announcement – and the threat of NGO litigation – as anything other than another bullet aimed squarely at the coal industry. From climate change, to attacks on mountaintop removal, to the reaction to the TVA spill, to this effort to make the effluent guidelines more stringent, there is no doubt that coal is in the cross-hairs at the moment. If there are any doubters concerning this point, Duke Energy CEO Jim Rogers isn’t among them. He was quoted in this morning’s Energy & Environment Daily as saying that it is at least possible to envision a world in 2050 “where coal is not in the equation.”

The other reason why this announcement is significant is that it raises fairly squarely the question regarding the very structure of our current regulatory system.  It’s not really any more than happenstance and political convenience that we regulate different environmental media differently. In this context, it is noteworthy that EPA’s Science Advisory Board just recommended that EPA consider setting multi-pollutant standards under the Clean Air Act, rather than regulating each pollutant separately. Theoretically, that’s good as far as it goes, but it doesn’t really solve the problem of the balkanization of EPA’s different regulatory programs.  In the long run, EPA’s regulatory efforts would be much more cost-effective – and would probably garner much more public support – if they were rationally based on an overall assessment of risk, across pollutants and across media.

I’m not holding my breath.

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Although it appeared initially as though Congress might be the first to move towards greater regulation of coal ash following the TVA spill, EPA has seized the initiative. Yesterday, Administrator Jackson announced a two-pronged initiative. First, EPA has issued information requests to facilities maintaining coal ash impoundments in order to gather information necessary to support new regulations. Second, she confirmed that EPA will indeed then promulgate regulations designed to prevent future spills.

In response to the Administrator’s announcement, Nick Rahall, Chairman of the House Natural Resources Committee withdrew his own coal ash regulation bill, H.R. 493, from mark-up.

EPA has not yet tipped its hand regarding the likely nature of such regulations, including whether coal ash would be handled as hazardous waste under RCRA or whether it would instead be handled as a solid waste.  Facilities operating coal-fired power plants have likely resigned themselves to increased regulation of coal ash, but could be expected to fight tooth and nail against efforts to regulate ash as a hazardous waste.  Such regulation would greatly increase management/disposal costs and would preclude many current reuses of coal ash.

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The magnitude of the recent release of coal ash from the TVA dam is hard to fathom, though the pictures certainly give some sense of its magnitude. Now, as regulators and Congress attempt to get their collective arms around the import of the release, some of the regulatory implications of the release are starting to emerge. According to a report in yesterday’s Greenwire, Congressional hearings this week may include a discussion regarding whether coal ash should continue to be exempt from regulation as a hazardous waste under RCRA

The exemption of coal ash is critical to coal-fired power plants. According to the article, 130 million tons of fly ash were generated last year, 42 percent of which were beneficially reused. Moreover, there are approximately 600 landfills and containment ponds holding fly ash. Having helped a coal-fired power plant defend a law suit involving an on-site ash landfill some years ago, I can tell you from personal experience that placing fly ash within the ambit of RCRA hazardous waste rules would be a major headache for coal-fired power plants – and a major new weapon in the armory of those who want to shut down coal plants any way possible.

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