June 18^th— the date EPA published its proposed rule to reduce greenhouse gas (GHG) emissions from existing power plants under section 111(d) of the federal Clean Air Act in the Federal Register—marked the beginning of a new era for state energy and environmental regulators. That’s because EPA’s proposal reflects an unprecedented, comprehensive, and flexible integration of energy and environmental policy. Such integration is unusual for these traditionally separate regulatory areas, but their integration in this rule will allow much greater flexibility. In fact, these regulators, rather than EPA, will take the lead in shaping how the rule is ultimately implemented in their states. EPA’s newfound flexibility for states is certainly welcome, but its implementation may prove daunting.

When I directed the Air Resources Division of the New Hampshire Department of Environmental Services, for example, we responded to new federal regulations like revised ozone or fine particle standards by identifying all the available compliance options and determining the most cost-effective approaches. Back then, these were generally “inside the fence” options, usually involving different control technologies with varied operating and capital costs. Under the 111(d) proposal, however, “outside the fence” emissions reductions such as energy efficiency (EE) and renewable energy (RE) are also fair game. As a result, the number of options is too great, the available economic models are too limited, and the time window is too short for traditional analytical responses. Plus, state regulators’ budgets now provide too few resources to be consumed analyzing rule provisions that may never take effect.

Instead, state officials may be best served by doing what they already do best: undertaking expeditious planning with an eye toward underlying considerations that are often overlooked. Preparing for 111(d): 10 Steps Regulators Can Take Now, a new RAP policy brief, offers ten concrete actions along these lines that state energy regulators, environmental regulators, consumer advocates, and energy officers can take now and over the next year to lay the groundwork for developing an effective, approvable state 111(d) plan. These are “no regrets” options that can prepare states for success under whatever 111(d) rule is finalized, while simultaneously enabling states to more easily comply with other EPA regulations in a cost-effective manner. These actions include:

1. Engage with fellow state regulators to ensure awareness and coordination regarding joint energy and environmental goals.
2. Engage with other states to explore opportunities to coordinate and reduce costs.
3. Engage and strengthen relationships with EPA regional offices.
4. Initiate or deepen engagement with the ISO/RTO or those responsible for managing the regional electricity grid.
5. Evaluate the state’s evaluation, measurement, and verification (EM&V) protocols for EE programs.
6. Update or conduct potential studies for EE and RE.
7. Determine if additional value can be obtained from state EE and RE programs.
8. Incorporate GHGs in relevant energy and environmental planning and regulatory processes.
9. Consider the staging of actions to reduce GHG emissions.
10. Eliminate “silos” that segregate regulatory treatment of multiple pollutants (e.g., CO₂, SO₂, NO_x) and media impacts (e.g., air, water, waste).

Importantly, EPA requested comments throughout the proposed rule. This signals an opportunity for states. EPA is working through the same questions states face: how best to maximize flexibility and environmental integrity while minimizing cost and bureaucracy. So, EPA’s solicitation of comments is a chance for states to identify and recommend better ways for EPA to implement 111(d) program elements. Take advantage of this opportunity; there is no downside.

EPA’s 111(d) proposal broke new ground by directly integrating energy and environmental policy and providing unprecedented compliance flexibility. However, states will have to adapt their energy and environmental regulatory infrastructures and historical practices in order to take full advantage of this opportunity to pursue integrated, state-specific, cost-effective approaches.

Morphing the traditional practices of air regulators and utility regulators into the broad new permissiveness reflected in the proposed 111(d) rule may, in fact, prove more challenging for EPA, its regional offices, and state environmental and energy regulators to implement than it will be for the regulated community to actually comply with the rule.

States may look back on 111(d) as having spurred an overdue re-thinking of utility and environmental regulation as separate and distinct government functions. Ideally, it will foster the creation of a more integrated, streamlined, and economically efficient approach to both.