REGULATIONS

8 ways that EPA's helping the coal industry

President Trump came to office with a promise to help the struggling coal industry, and EPA has at least eight major actions underway to help the administration keep that campaign pledge.

Obama-era rules aimed at cutting air emissions of carbon dioxide and mercury and reducing discharges of boron, arsenic and radium from coal ash into waterways are being rolled back, revised or delayed.

EPA has characterized its rule changes as a way of restoring state authority, lowering costs and hewing to its core mission. A lesser focus appears to be human health and the environment.

While the Obama team sought over eight years to close what it saw as gaps in protections, Trump's focus has been ending the "war on coal," said Joseph Goffman, executive director of the Harvard Environmental Law Program and a former Obama EPA official.

"I think we are seeing an inversion where the agency and, in the case of coal ash, Congress are almost using deregulation as a sort of backdoor way of if not subsidizing coal-fired generation, then at least privileging it by shielding it from paying for the cost of reducing pollution and waste and transferring those costs back to the public," Goffman said.

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Observers and analysts say it is difficult to pinpoint how significant this combination of rule changes will be in keeping coal-fired plants operating while natural gas is cheap and readily available and renewable energy prices are falling.

"It's hard to tell whether that additional push on this will be enough to offset the economics," said Miles Keogh, executive director of the National Association of Clean Air Agencies.

Here is a rundown of top EPA actions affecting coal:

Mercury and Air Toxics Standards

In August, EPA announced it would be reviewing MATS, a 2012 rule that requires reductions of emissions of mercury, arsenic and acid gases from power plants.

The agency said it wanted to know whether it adequately considered the costs of compliance when it originally decided the rules were needed. EPA is also reviewing the rule as a whole.

Many analysts see the MATS review as an effort to make the regulation easier on power plants by axing certain reporting requirements.

Some utilities have called for the agency to regulate mercury under a different section of the Clean Air Act, eliminating the need for power plants to review every eight years whether their pollution controls are doing enough to protect human health and the environment (Greenwire, Aug. 30).

The previous administration submitted a revised analysis of the costs and benefits of the MATS rule in response to a Supreme Court ruling. The 2016 "supplemental finding" maintained that the health benefits of required pollutant controls outweighed the costs to industry.

Industry groups were challenging that updated analysis in the U.S. Court of Appeals for the District of Columbia Circuit, but litigation was put on hold last year at the Trump administration's request.

EPA's MATS review has baffled many observers, who point out that affected power plants either have shut down or have already complied with the standards and made significant investments in implementing control technologies.

"Regulated utilities were pretty unified in NOT wanting the standards revoked, because many of them still have prudency reviews before state regulators to justify the money they spent to comply, which they now cannot get back," said Sherry Orton, an analyst for Doyle Trading Consultants, in an email.

Richard Revesz, director of the Institute for Policy Integrity at New York University, said it's possible power plants already in compliance with the rule might still end up reversing course on pollution reductions, if EPA weakens its standards.

Because running the pollution controls costs money, some power plant operators might choose not to operate that technology if they aren't required to do so.

Clean Power Plan

On Aug. 21, the Trump administration announced its proposed replacement for the Obama administration's signature climate action, the Clean Power Plan.

Trump's Affordable Clean Energy rule is aimed at controlling carbon dioxide emissions from power plants by focusing only on efficiency improvements at individual facilities.

The proposal would not set specific emissions reduction targets and instead would give states wide latitude to decide how much to cut carbon emissions, based on the age and condition of plants under their jurisdiction.

The rule is a sharp departure from the Clean Power Plan, which took a more systemic approach to emissions reductions. The 2015 rule set specific targets for lowering greenhouse gases, while also giving states flexibility.

Beyond its lack of targets, ACE could benefit coal-fired plants because it would allow states to exempt certain facilities from complying with the rule based on their age.

States whose power plants have already implemented control technologies recommended by the administration could also not have to act on further emissions cuts (Climatewire, Aug. 22).

The National Rural Electric Cooperative Association, which has come out in support of the proposed rule change, is still reviewing what the details will mean to its members.

"We're pleased with areas in which we can get some regulatory relief," said Ted Cromwell, executive director of environment at NRECA, in an email. "These initial steps help inform how electric co-ops plan to meet tomorrow's energy needs, but are not the only factor in those decisions."

EPA's air chief, Bill Wehrum, has argued that EPA's efficiency-based emissions improvements will depend on making changes to another agency permitting program — New Source Review.

New Source Review

This pre-construction permitting program applies to both new and modified facilities, and was established to limit emissions increases from power plants, as well as factories and industrial boilers.

Industry groups have complained the program is so complex and costly that it causes them to put off efficiency upgrades. Now EPA is developing a rule that relies on making improvements that trigger NSR requirements. Wehrum has said the agency is looking to more closely align the permitting program with the climate rule.

To do this, the agency is re-evaluating how it determines whether a plant upgrade would increase emissions to the point of triggering New Source Review. The current system looks at emissions annually. Under the ACE proposal, the agency would instead look at the expected impact on the hourly emissions rate.

Climate analysts warn that such an approach could allow more pollution because plants with improved hourly emissions rates can be incentivized to run more often, leading to even more carbon pollution.

Still, analysts disagree on whether EPA's NSR proposal, long sought by industry, would spur greater investment in existing coal-fired power plants (Climatewire, Aug. 22)

While the current plan would apply only to permitting requirements for power plants, industry groups see an opening for broader permitting reform for other industrial sources.

New and modified power plant rule

This "sister rule" to the Clean Power Plan is aimed at controlling carbon emissions from new or heavily modified power plants.

Like EPA's proposed ACE rule, this 2015 rule focused on cutting emissions through efficiency improvements at facilities. However, the rule also recommended the use of partial carbon capture and storage technology for coal plants (Climatewire, Oct. 11, 2017).

This climate rule is currently in effect, but litigation over it remains stayed as the Trump administration reviews its options.

On July 25, the agency told the court it was sending a proposal to the Office of Management and Budget for interagency review in August. It has not yet been made public.

Coal ash

The Obama coal combustion residuals, or CCR, rule set requirements for safely disposing of coal ash, a waste product left over from burning coal that is typically stored in either landfills or pools.

On Aug. 29, the D.C. Circuit ruled the 2015 rule did not do enough to protect groundwater from toxic chemicals found in coal ash.

"At the time it was made final, we were surprised and disappointed it was not as stringent and protective as we expected and we thought the law demanded. The final rule was a compromise between what public interest and industry wanted," said Lisa Evans, senior administrative counsel at Earthjustice.

The federal appeals court decision comes as the administration is separately seeking to weaken the Obama CCR rule requirements.

In July, the agency published its first phase of amendments to give utilities added compliance time under some circumstances and provide more flexibility to both state and federal regulators. EPA was aiming to finalize a second phase of changes in 2019 (Greenwire, Aug. 29).

One of the modifications EPA proposed was meant to better align the ash rules with guidelines for limiting toxic metals in wastewater. NRECA's Cromwell said that could make upgrading technology cheaper for power plants.

"When lining up contractors and installers for new equipment in response to regulations, very often if the rules are synced up with one another, it reduces the costs of the modifications you make across the board," said Cromwell.

It is unclear at this point what the D.C. Circuit decision will mean for EPA's ongoing plans to revise coal combustion waste standards.

Effluent guidelines

This rule controls steam power plant discharges into surface waters. It's aimed at preventing contamination from toxic chemicals like arsenic, lead, mercury, selenium, chromium and cadmium.

In September 2017, EPA announced it was delaying certain compliance deadlines for two years so that power plants would not have to comply until 2020.

The delay was meant to allow EPA time to reconsider the "best available technology economically achievable effluent limitation and pre-treatment standards for existing sources," according to the agency.

DTC's Orton noted that most of the control on effluent happens at the state level and the changes to the rule were designed to go into effect on a rolling basis as each plant's discharge permits came up for review.

"I doubt that many state DEQs are going to relax what they ask by that much, and so far, seems like everyone is already just planning to comply anyway," Orton said in an email.

The Obama administration finalized the revised effluent rules in the end of 2015. It was the first time the standards had been updated in three decades (E&E News PM, Sept. 13, 2017).

EPA's jurisdiction over those discharges could also soon change. EPA and the Army Corps of Engineers are currently working on a proposal to alter which wetlands and waterways are covered by the Clean Water Act.

The new version of the Waters of the U.S., or WOTUS, definition is expected to restrict federal jurisdiction over streams that do not have constant flows. That means permit requirements for any discharges — including from power plants — into ephemeral or intermittent streams could soon change.

Regional haze

In April, the Trump administration released a memorandum for the EPA administrator to review state implementations plans under the regional haze rule.

This rule is aimed at improving air quality in national parks and wilderness areas. Many of the measures to improve air quality focus on pollution from power plants.

The Obama administration had sought to put in place stricter pollution limits, and litigation over the proposed changes was still ongoing when Trump took office.

"States such as Utah, Texas, etc. all had less stringent plans than the federal proposal, and it almost certainly would have pushed additional coal plants into retirement. With the new administration in power, the stricter plan was retracted," said Orton.

She noted that the primary beneficiary was coal from the Powder River Basin, since that fuel helps power many Western plants.

Cross-State Air Pollution

While EPA is not suggesting changing this rule, the agency is looking at how states can count emissions reductions under it.

In July, EPA proposed that the Cross-State Air Pollution Rule update would fulfill the agency's obligations concerning interstate pollution transport under the 2008 ozone National Ambient Air Quality Standards, another air quality rule affecting power plants.

Other actions

The regulatory changes are all happening as the agency wants to alter how it determines the costs and benefits of rulemaking. EPA is also proposing a rule to evaluate what types of research can be included in new actions.

"What's visible through the combination of these individual rules and changes to foundation methodologies, it's really almost breathtaking the way they have been methodical and comprehensive," said Goffman.

William Buzbee, a professor at Georgetown Law, also noted that EPA is breaking from historical norms under which regulatory agencies either trended toward stricter rules or at least maintained the status quo.

He said EPA's rule changes tend to reduce the rigor of standards, lower pressure for companies to come into compliance and remove pressure on regulators to act, giving states more flexibility to be less stringent.

"When you look collectively at this array of regulatory proposals and in some instances regulatory actions, I think without exception they are providing regulatory relief or greater flexibility to coal-related businesses or regulators of coal-related businesses," Buzbee said. "It's a fundamental moving of the goal posts back; it's asking less and allowing more time to get there."

But Keogh with the National Association of Clean Air Agencies and others acknowledged that even if the rollbacks do not overcome legal challenges, the delay in enacting rules could be a reprieve for certain facilities to delay retirements or purchases of expensive pollution controls.

"In the end, coal has a lot of things that are making it not super attractive to investors and decisionmakers. It's still going to be really hard to finance upgrades in coal plants; it's going to be really hard to get community support for mining and emissions aspects of this," Keogh said.

Beyond EPA, other agencies are also keeping coal in mind. Congress repealed an Interior Department stream protection rule, and Secretary Ryan Zinke moved to undo a leasing moratorium. Many coal-related regulations across government are either on ice, dead or being rolled back.

Results

Coal production has stabilized under Trump, albeit for reasons largely beyond his control and nowhere near his bombastic campaign promises. Surpassed by gas, coal generated about 30 percent of the country's power last year.

Mine production rose in 2017 on the back of resurgent coal exports, which continue to rise thanks to demand from countries like India.

But even the ACE proposal concedes that coal production will be cut nearly in half by 2035, as the administration has yet slow the closures of power plants or encourage the development of new ones. The Department of Energy is weighing whether to move on that front.

"Coal's uphill fight remains, but the government-orchestrated ambush is over. The coal industry has been given a chance," the National Mining Association wrote in a blog post titled "Perspective and Optimism."

"The regulatory reset hasn't just halted the assault," NMA said. "It has also provided the critical assurance that government understands that environmental stewardship and industry can coexist."

Reporters Ariel Wittenberg, Sean Reilly, Dylan Brown and Amanda Reilly contributed.

Twitter: @nhheikkinen Email: nheikkinen@eenews.net

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