Lately, it seems as if everyone associated with the power sector or an environmental organization is opining on whether EPA will allow this approach or that mechanism to count toward compliance in its proposal to regulate greenhouse gas (GHG) emissions from existing power plants under section 111(d) of the Clean Air Act (CAA). Rather than listening to these prognostications, those most responsible for responding to EPA’s forthcoming rules—state utility and environmental regulators—might be better served by considering the parameters and pressures under which EPA is operating: the timeframe set forth by the President, the statutory requirements of the CAA, and the several pragmatic issues that will likely influence EPA’s direction. Such consideration will help regulators get their arms around what an optimal 111(d) state implementation plan (SIP) for their jurisdiction will look like.

Time Crunch

In the Climate Action Plan he issued last June, President Obama laid out an ambitious timeline for designing and implementing these rules. Developing and promulgating (and yes, litigating) major new environmental regulations often takes years—sometimes decades—before they go into effect. For example, when it was last reauthorized in 1990, the CAA required power plants to reduce mercury emissions; EPA first proposed such a rule in 2004; and its Mercury and Air Toxics Standards (MATS) for power plants only became effective in 2012. Even then, the rule provided a compliance window spanning 3 to 4 years. The President’s timeline—which requires EPA to propose its 111(d) rule within one year (by June 2014) and to finalize the rule within two years (by June 2015)— reflects an extraordinary pace. Further, the President’s plan requires states to file compliance plans within one year of the rule’s finalization (in June 2016), which means states can’t afford to waste any time.

The Clean Air Act

Section 111(d) of the CAA gives EPA significant freedom to develop GHG emission reduction standards, and the Agency will clearly want to maximize environmental effectiveness and minimize electric reliability impacts and litigation risks. As a result, EPA can be expected to adhere as closely to the CAA and prior precedents as possible, while also trying to achieve the President’s challenging directive.

Regulating GHG emissions is a new challenge for EPA, just as it will be for states; there is little past practice and case law to fall back on. Further, the CAA obligates EPA to offer states “first crack” at developing specific plans to comply with the standards it adopts. Given EPA’s inexperience in regulating GHGs, the short window available for regulatory development, and this initial deference to states, it stands to reason that EPA will not dictate precise compliance approaches. If anything, states may find that they have too much flexibility and don’t really know where to start.

Start Planning Now

Instead of wondering which of the varied approaches EPA will approve, states would be wise to contemplate which one (or ones) they would choose. In other words, states would do well to start developing their implementation plans now. First steps state officials might take include:

• Initiating concrete and regular dialogue on 111(d) among the state environmental agency, the public utility commission, and others as appropriate (e.g., the state energy office, the consumer advocate, etc.);
• Engaging with utilities about potential compliance obligations and approaches;
• Identifying existing clean energy programs (e.g., energy efficiency programs, renewable energy targets, etc.) and quantifying the GHG emissions impact they have had;
• Investigating and prioritizing additional policies, measures, or revisions to existing programs that would be most effective for the state if greater reductions are required; and
• Exploring with other states regional approaches to compliance.

Several states are already on this path. Kentucky, for example, developed Greenhouse Gas Policy Implications for Kentucky under Section 111(d) of the Clean Air Act, which outlines recommendations for what its SIP should look like. The member states of the Regional Greenhouse Gas Initiative (RGGI) have likewise researched how that program could be used to comply with 111(d) requirements. But again, time is of the essence; it took the RGGI states six years to design and implement that program, and states will have just 12 months from the time the 111(d) rule is finalized until when they must submit their SIPs.

Some states may want to pursue litigation strategies. Whatever their chosen approach, states that have done little advance planning to identify preferred 111(d) options may find themselves disadvantaged in responding to the rule, given the short compliance timeframe provided. Conversely, states that have pursued cost-effective energy efficiency and similar “no regrets” measures may find that their economy and citizens benefit no matter what litigation outcomes result.

In future posts, we will discuss specific issues states may wish to consider in their 111(d) planning efforts. In the meantime, the papers in the Related Resources box on this page provide a good starting point for those considering compliance options for 111(d).