CLEAN POWER PLAN

Court stay may slow, not stop, state carbon-cutting talks

Officials from blue, red and purple states signaled interest yesterday in continuing planning for power-sector carbon reductions, despite a Supreme Court ruling putting the Clean Power Plan on hold.

In a spirited address to a meeting of state agency leaders, U.S. EPA Administrator Gina McCarthy yesterday also encouraged the willing. She said that while the agency will respect the court decision and cannot currently enforce the rule, EPA will not slow down and will offer assistance to any state that wants to keep working.

"If you ask me if I'm disappointed in the Supreme Court decision to stay the Clean Power Plan, my answer would be absolutely yes. ... I really wanted to be the one to sign that first plan approval," McCarthy said. "But does it stop or even slow down this country in terms of our transition to a low-carbon future? Absolutely not."

She said EPA "remains fully confident in the legal merits of this rule," adding, "One decision to stay doesn't mean that the CPP isn't alive or isn't going to survive."

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McCarthy's comments before the three organizations that represent state agencies and regulators involved with the rule -- the National Association of Regulatory Utility Commissioners (NARUC), National Association of State Energy Officials and National Association of Clean Air Agencies -- were her first public remarks since the the court Tuesday stayed implementation of the Clean Power Plan. The move has thrown many states into upheaval as they consider how, or whether, to proceed with their compliance plans.

The crowd applauded McCarthy after her speech, gave her a standing ovation -- and then peppered her with practical questions about what to do now.

Jack Betkoski, a Connecticut electricity regulator and second vice president of NARUC, which will meet next week in Washington, D.C., said the ruling "changes but does not end the need for conversation [among states]."

"We're expecting that some states will hit the pause button on compliance with this regulation, even as information and discussion about both carbon technology and ways to incorporate carbon price risk in utility planning continues," he said.

Former Colorado Gov. Bill Ritter (D), whose Center for the New Energy Economy has been coordinating talks between the Dakotas and all the states west of them, said his group had been hoping for consensus on a potential regional carbon trading regime.

"We were not close at all; we were just modeling," Ritter clarified in an interview. But "it's up to states whether they want to continue this conversation that really is about a common approach and whether states want to be a part of that or not while the case is stayed," he said.

As of yesterday, Ritter said he had been told that North Dakota, Montana, Utah, Arizona and Idaho might pause their work.

"They're stopping their own stakeholder process, but I think there's still some interest in those states in participating in a broader conversation in the West until we really see how the litigation plays out in the Supreme Court," he said. "I think utilities are interested in that conversation remaining."

State agency officials said many talks will move forward, although perhaps less formally, at a slower speed and on states' "own terms."

Delay could be months ... or longer

Franz Litz, a program consultant who conducts similar state outreach for the Midwest's Great Plains Institute, said the key question is what the stay means for the planning process.

"The frustrating thing as we sit here now under a stay is, we don't know. It's very uncertain," Litz said.

In Montana, where Gov. Steve Bullock has canceled Clean Power Plan meetings, Department of Environmental Quality energy bureau chief Laura Andersen said she was optimistic that formal conversations about the state's energy future will continue. She noted that Bullock, a Democrat, believes in addressing climate change.

Anderson said Montana, a major energy exporting state for the West, still must consider the policies other states are pursuing.

"The market forces at play in the region are quite significant and will not go away just because the Clean Power Plan has a stay on it," she said.

EPA air chief Janet McCabe yesterday said states should continue their work as is. Although EPA cannot predict the court outcome, the agency is owed deference under the Clean Air Act, she said.

McCabe said the stay would mean a delay of "a few months." Litz and others countered that litigation and the pause on the rule's implementation would likely continue for more than a year, if not longer.

Philip Jones, a member of the Washington Utilities and Transportation Commission, agreed, saying McCarthy and McCabe were being "quite optimistic."

"We're practical. We're decisionmakers on the ground. We need real numbers," Jones said.

Jones said he suspects some states might lose steam by stopping planning but many will keep working. Utilities and other interests might keep talking carbon cuts without government agencies, though, he said, taking states out of the driver's seat.

Still more state officials questioned whether it makes sense to keep looking at carbon reduction through the lens of the Clean Power Plan, which might never go into effect or could change drastically.

Miles Keogh, director of research for the National Association of Regulatory Utility Commissioners, said NARUC, the National Governors Association and other groups have put a hard pause on a number of meetings and publications.

NARUC canceled releasing a research paper on the rule and nixed a meeting next month on carbon trading. NGA is stalling a learning lab scheduled for the end of the month.

Better climate action without regs?

Some state officials proclaimed they would nonetheless plow ahead with planning until a final court decision.

"We will go full speed ahead," said David Thornton, assistant commissioner of the Minnesota Pollution Control Agency.

In Illinois, leaders are still reviewing the Supreme Court's decision. The Clean Power Plan listening sessions remain "in the works," said Ann McCabe of the state's Commerce Commission.

Michigan is "pretty much putting everything on hold" in terms of planning for the Clean Power Plan, said Robert Jackson, director of the Michigan Agency for Energy's Regional and National Response Division.

However, Jackson added, Michigan will continue working with communities that may be affected by power plant closures.

"Our thought is that those closures will continue," Jackson said.

Officials from Northeastern states that are members of the Regional Greenhouse Gas Initiative, a cap-and-trade program, reminded listeners during the concluding session yesterday that it is possible to cut emissions without a federal driver.

Ali Mirzakhalili, director of the Division of Air Quality at the Delaware Department of Natural Resources and Environmental Control, said greenhouse gas programs might even be better achieved by some states without a U.S. regulation in place.

'A long, tough road'

While many Democratic-led states were disappointed that the stay could slow interstate talks, a Wyoming official said the extra time could help.

Al Minier, chairman of the Wyoming Public Service Commission, said the stay could relieve some pressure in the state planning process. That would give regulators time to help lawmakers understand why a state should write its own blueprint, rather than being subjected to EPA's federal plan.

"At this point, there's a hard decision that they don't have to make if they simply table this for a while, so my suspicion is that we'll table it for a while," Minier said.

Regulators in Wyoming spent much of their fall convincing the Legislature not to pass a bill that would have tied their hands in terms of compliance, he added.

Wyoming's carbon reduction targets got much harder under the final Clean Power Plan, and that has left utilities crunching the numbers and trying to figure what kind of plan to pursue to meet goals.

"It's going to be a long, tough road for us to get to the point where we can get any consensus about that or make any sense about where we're going and to be fair to people," Minier said.

Litz, of the Great Plains Institute, said that even though the timeline is now very different given the Supreme Court's decision, there is no reason for states to stop conversations that have been taking place about the Clean Power Plan -- he called it a "no regrets" approach.

"Whether we like it or not, this is likely to impact our states, and we are public servants and we are going to do what we can to make sure that whatever the requirements are, we are going to do it in the way that makes most sense," Litz said.

"In some ways, the fact that there's a stay puts the onus now on the state officials, in a way," he said.

Twitter: @emilyhholden Email: eholden@eenews.net

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