REGULATION:

Last potential barrier to implementation of EPA climate rules falls

It is now full-speed ahead for federal climate regulations set to take effect on Jan. 2 after the final legislative challenge to their implementation was put on ice Friday afternoon.

West Virginia Sen. Jay Rockefeller (D) said he is postponing his push for a vote on his bill to enact a two-year timeout on U.S. EPA's ability to regulate greenhouse gases due to lack of bipartisan support.

"I have been reliably informed that long-time Republican proponents of my bill to suspend EPA regulations on greenhouse gas emissions have pulled their support for this year -- so that they can gain some political advantage trying to take over this issue in 2011," said Rockefeller in a statement. He plans to revive the bill in 2011, but that will be after the regulations have already taken effect.

To hear industry lobbyists tell it, the new year will now bring dark days for large power plants.

They have argued that the climate regulations will halt new projects or trigger their movement beyond U.S. borders. But generally speaking, individual companies have remained mum on the issue. Opponents of the EPA regulations declined to put ClimateWire in touch with any such concerned facilities.

Sunflower Electric Power Corp., which is seeking to build a controversial 895-megawatt coal-fired facility in southwestern Kansas, told ClimateWire early last week -- before it netted its required air permit -- that if it did not secure its permit ahead of that Jan. 2 cutoff, it would take the additional required steps to incorporate greenhouse gas aspects into its permit application without much trouble. It would be "unfortunate," but "if we have to meet those [requirements], we will," Sunflower Electric spokeswoman Cindy Hertel said.

She maintained that if the project were required to weave "best available control technology," or BACT, into its application as the new climate rules require, it would make little difference in the project design, since the plant backers already planned to install thermal efficiency technology that she believes would fulfill any BACT requirements for slashing greenhouse gas emissions.

The plant, however, received its needed permit on Thursday from the Kansas Department of Health and Environment -- making the issue moot. Environmentalists are charging that the application was pushed through to avoid the climate rules and are expected to challenge the decision.

EPA has suggested in federal guidance that energy efficiency will be the primary BACT for facilities like coal-fired power plants, and has sought to quell concerns that BACT considerations in general would be onerous. BACT determinations are made on a case-by-case basis at the state level.

'Business as usual'?

"I would be the first to say this is pretty much business as usual for the BACT process," EPA air chief Gina McCarthy told reporters last month when her office issued the guidance (ClimateWire, Nov. 11).

"This is similar to many new programs that have been started in the past 30 years under the Clean Air Act," agreed Bill Becker, executive director of the National Association of Clean Air Agencies, which represents the state regulators that will implement the new rules.

Companies would need to deal in these permits only if they are building a new plant that spews 100,000 tons of carbon dioxide-equivalent annually or modifying an existing facility that would expand smokestack emissions by 75,000 tons.

Texas, which is challenging the climate regulations in the court system, expects a high volume of these requests, according to Andrea Morrow, a spokeswoman for the Texas Commission on Environmental Quality. State regulators in areas including Pennsylvania, West Virginia, Oregon, Connecticut, Kansas and Georgia, however, said in interviews that they were expecting a light load of permit applications for at least the first six months of the climate regulations, largely due to the down economy.

"There is a certain nervousness with regard to not knowing the answer to every question that is going to be raised, but after a few months, most of those issues are resolved," Becker told ClimateWire.

But it appears there could be more than the customary nervousness in the second phase, which starts in July. Then EPA will broaden the climate regulations to include projects that cross greenhouse gas thresholds -- even if their emissions from other air pollutants are low.

That could have unintended consequences for facilities that already received permits in the past but didn't break ground with construction before July, according to several states' regulators.

An incentive for new projects to get under way

Projects that already ran the permitting gantlet -- like the Paul Creek Energy Center, a planned natural gas project in Georgia -- will be forced to undergo regulatory scrutiny once again to get clearance for their greenhouse gas emissions if they do not start building before July, according to James Capp, who heads up the air protection branch at the Georgia Environmental Protection Division of its Department of Natural Resources.

That means more than filling out some extra paperwork: The project would have to incur additional cost and dedicate more time to moving through the permitting process again.

Last March, the Paul Creek project won a permit for a trio of new simple-cycle natural gas-fired units that would have a total 225-megawatt capacity. Eyeing the economy, however, its planners decided wait a few years to break ground.

"With our permit, we could basically have it in our back pocket and begin construction later, but now the government has basically forced our hand with this new regulation," said Robert Tucker, a senior manager on the project. "There is a risk now that our investment will be for naught," he said.

An unknown third phase

Tucker said his team sought a specific air permit that required them to have low emissions for previously regulated air pollutants like lead because it did not come saddled with a requirement that they start building at a particular time.

Now, however, they fear that the new climate regulations may force them to start construction sooner than planned.

"There is a clock right now on when we have to decide on our existing permit that we didn't have before," he said.

Moreover, if they were to seek the new permit, it would come with a requirement that they begin construction within 18 months of receiving it -- or risk having to go through the process once again.

Capp, the Georgia air regulator, believes that Paul Creek is not alone. In Georgia, there are at least another half-dozen projects -- many of them biomass facilities -- that will face similar problems, he said. They have to make decisions now if they plan to break ground, scrap their plans or seek the permits, he said.

It is not unusual for there to be a lag between when a company gets a permit and when it starts construction, he said. But the wilted economy and uncertainty about how the country will approach biomass in the future have also slowed construction projects at many of these sites, he said.

It is unclear how widespread this issue may be. Becker said that he has not heard many of these types of complaints, but Capp suggests that many of these instances might fly under regulators' radars.

The third phase of the climate rules, which would begin by July 2013, could see much more activity because it will likely apply to more emitters, especially if the economy continues to improve.

While EPA has not revealed what that proposed third phase might entail, the agency has said that no sources that emit less than 50,000 tons per year will be required to seek permits until at least April 30, 2016.