REGULATION

EPA's final climate rule made compliance easier for some state regulators, harder for others

Whether they plan on embracing or fighting the rule, Virginia, Kansas, Pennsylvania and Missouri are all planning on writing state plans to submit to U.S. EPA proposing how they aim to comply with the Obama administration's recently released Clean Power Plan that seeks to curb greenhouse gas emissions from power plants.

But at a conference on the Section 111(d) rule hosted by Infocast in Washington, D.C., yesterday, officials charged with crafting those plans said they are already feeling the impacts of political shifts in their states as a result of dramatic changes in EPA's requirements in the final rule compared to the proposed rule. This means some states, like Virginia, are supporting the rule more eagerly, while others, like Missouri and Kansas, will be challenging EPA more aggressively.

For example, Missouri Public Service Commissioner Scott Rupp said his state still plans on writing an initial plan and, like many other states, will likely ask for an extension to submit a final plan to EPA in 2018.

But thanks to the final rule's more stringent requirements for his state -- Missouri must now make a 36.7 percent emissions rate reduction, as opposed to a 21.3 percent reduction in the proposed rule -- utilities are less eager to talk to state leaders about the advantages of writing a state plan.

"When the final plan comes out, complete change -- much more difficult for Missouri," said Rupp, who stipulated that the opinions he expressed are his own and don't represent the Missouri PSC. "Now the people that would have been pushing for, 'Hey, we need to get this done' ... now you have our utilities going, 'Yeah, we're suing.'"

He added, "A month ago I would have said we're working on a mass-based approach and everybody is working together, but at this point I think ... you're going to see probably some stronger positioning, much more in line with the state of Texas."

Rupp said this is even more certain given that this month, Missouri Attorney General Chris Koster, who is also a Democratic candidate for governor in the 2016 election, said his state is joining a lawsuit challenging EPA on the rule (EnergyWire, Oct 13).

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"Regardless of who wins [the 2016 election,] you are going to have a veto-proof Republican Legislature and a person in the governor's office who is against the Clean Power Plan," Rupp said.

Timothy Keck, deputy chief counsel for Kansas Department of Health and Environment, said his state is also "adversely affected" by more stringent goals under the final Clean Power Plan. Kansas' requirements jumped from a 22.7 percent emissions rate reduction to 43.5 percent, "which is going to be a hard pull for us to do," Keck said.

"We are going to be one of the states that is at the courthouse door, ready to file one of the lawsuits that will be filed shortly after publication," Keck said.

Recent events have served to further steel Kansas' state lawmakers against the Clean Power Plan. The closure of two coal-fired units resulted in swift backlash from Republican leadership in the state Legislature (ClimateWire, Oct. 19).

But while Kansas is hoping for the court system to issue a stay of the rule, Keck said the outcome of that request is uncertain so it's likely the state will be making an initial submission of its plan next September and "will take as much time as we are allowed to take from EPA to submit our final plan."

Va. warms up to climate rule

For Virginia, changes to the final Clean Power Plan worked in the opposite direction, said Michael Dowd, director of the air division with the state's Department of Environmental Quality.

Virginia saw its final goals ease slightly, from a 37.8 percent emissions rate reduction requirement in the proposed rule to a 31.6 percent emissions rate reduction in the final rule.

Gov. Terry McAuliffe (D) "went from a skeptic of the proposal to a supporter of the final rule," Dowd said, citing a recent op-ed by the governor cheering the Clean Power Plan for creating economic growth opportunities for his state.

Although Dowd allowed the EPA rule will mean Virginia's coal communities "will be hit very hard," he went on to call the final rule "a lot fairer" and "more legally sustainable" than the proposed rule. Virginia will likely be submitting its state plan in 2017, before McAuliffe's term expires, Dowd said.

It remains unclear whether Virginia will choose a rate-based plan, meaning its power fleet must meet a specific average amount of carbon per unit of power produced, or a mass-based plan, meaning the state would cap the total tons of carbon its power sector can emit each year. It will depend heavily on what other states choose to write in their plans, said Dowd, and Virginia's utilities have not yet weighed in on the decision.

But Dowd said at this early date, "it would appear, from my perspective, that a mass-based approach has a lot to recommend it" because it seems easier to implement, adding that the state is considering joining a "trading-ready" program which would allow it to exchange allowances with other states.

A 'prisoner's dilemma' for Missouri?

Like Virginia, Pennsylvania also saw its goals ease in EPA's final Clean Power Plan, and the state announced it will submit a final plan to the agency by next September (ClimateWire, Sept. 10). But the state also remains unclear on what will be included in the plan.

"What that plan looks like I could not tell you -- mass based versus rate based, we don't know," said Robert Powelson, commissioner with the Pennsylvania Public Utility Commission.

Powelson added it's unlikely that the state will join the Regional Greenhouse Gas Initiative, an already-established multi-state carbon market in the U.S. Northeast. Instead, he hinted that Pennsylvania is considering trading with states outside of RGGI.

"There seems to be bipartisan support to say we might look for a new dance partner or two," said Powelson.

Whether supporting or decrying EPA's final rule, all the officals that spoke at the panel said figuring out what other states are planning has made solidifying their own plans a unique challenge, especially because EPA has disallowed the practice of trading emissions credits or allowances between states that choose a mass-based approach and states that choose a rate-based approach.

"If West Virginia, for example, goes mass-based, and we go rate-based, that may not be good," Dowd said. "We really have to consider what our other states are doing, but we're not going to know until they submit their plans, so keeping in touch with each other is really, really important."

Missouri's Rupp said that under the Clean Power Plan, states are now dealing with something akin to the "prisoner's dilemma," a classic game theory scenario in which two criminals in solitary confinement must choose whether or not to betray the other without being given the opportunity to communicate. Depending on the other's decision, a prisoner's choice to betray his colleague could result in getting set free or it could result in him spending an even longer period in prison.

"We feel like we're a prisoner, and should we take a plea? Should we not? What are other states going to do? I think that's kind of the mindset that is there," Rupp said.

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