White House starts review of EPA rules for coal plants

U.S. EPA has finished drafting final rules that would require coal-fired power plants in Eastern states to install new pollution controls if their emissions cross state lines and make air more unsafe to breathe in other parts of the country.

White House records show that the agency sent a draft of the final regulations, also known as the Clean Air Transport Rule, to the Office of Management and Budget yesterday. Review by the White House is the last step before an agency is given the green light to release new regulations.

The process usually takes a month or two. A final rule should be released to the public by the end of June, Joe Goffman, the senior counsel in EPA's air policy office, said during an event today in Washington, D.C.

The regulations, which were proposed last July, would replace the Clean Air Interstate Rule, a trading program crafted by the George W. Bush administration that was struck down in court in 2008. Like that program, the Transport Rule would require many coal-fired power plants to slash emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), which lead to acid rain and soot. NOx also help form ground-level ozone, the main ingredient of smog.

Along with upcoming limits on greenhouse gases, toxic emissions and the handling of coal ash, the Clean Air Transport Rule is one of several EPA rules that could cause a wave of older coal plants to be upgraded or retired in the next few years. Many of these plants would be in Midwestern states, which have long been blamed for persistent air pollution problems in the Northeast.

All of those rules have been targeted by coal-heavy utilities, which argue that they are going to lead to a spike in electric costs. Though the two phases of the transport rule would take effect in 2012 and 2014, a draft bill being circulated on Capitol Hill by Columbus, Ohio-based American Electric Power Co. Inc. would give utilities until 2020 to install new controls or shut down.

EPA estimated that its proposed rule would cut SO2 and NOx emissions by 71 percent and 52 percent, respectively, below 2005 levels within a few years. Those pollution reductions would prevent 14,000 to 36,000 premature deaths each year at a cost of about $2.8 billion per year, EPA said. Put into dollars in cents, the agency pegged the total benefits of its proposal at $120 billion to $290 billion.

"The benefit-cost ratio is very dramatic in this case," Goffman told energy attorneys today during a conference at the headquarters of the Edison Electric Institute.

The rule is also being closely watched by emissions traders, who are wondering whether it will spell the end of the cap-and-trade programs that Congress and EPA created to deal with acid rain.

When it proposed the Clean Air Transport Rule last year, EPA said it would consider three different trading systems. EPA's preferred option would allow unlimited swaps within states and limited trading across state lines, but the agency also might block interstate swaps or set plant-by-plant emissions caps that would not allow any trading at all.


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