Small victory for coal

Court orders EPA to evaluate impact of its regulations on coal industry

By Jeannine Anderson, American Public Power Association, reprinted with permission
News Editor

In an Oct. 17 ruling, a federal court ordered the Environmental Protection Agency to come up with a plan for evaluating the effects of its regulations on the coal industry, and told the agency to do so within two weeks.

In the case, Murray Energy Corp. vs. EPA, the court agreed with plaintiff Murray Energy, a coal company, that the EPA is not in compliance with a provision of the Clean Air Act that requires the agency to evaluate potential job losses in the coal industry that are caused by its regulations.

Writing for the U.S. District Court for the Northern District of West Virginia, Judge John Preston Bailey said, “This court finds that the EPA must fully comply with the requirements of Section 321(a). This court further finds that, due to the importance, widespread effects, and the claims of the coal industry, it would be a[n] abuse of discretion for the EPA to refuse to conduct a Section 321(a) evaluation on the effects of its regulations on the coal industry.”

The court ordered the EPA “to file, within 14 days of the date of this order, a plan and schedule for compliance with Section 321(a) both generally and in the specific area of the effects of its regulations on the coal industry.”

“This is a great day for coal miners in the United States, and for all citizens who rely on low-cost electricity in America,” said Robert Murray, the founder of Murray Energy. “We will continue to vigorously pursue this lawsuit, and all of our litigation initiatives, in order to protect the lives and livelihoods of coal miners and their families, to defend the rule of law, and to preserve reliable and low cost electricity in our country.”

The court argument centered around Section 321(a), which says that the administrator of the EPA “shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provision of [the Clean Air Act] and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.”

When it created provisions such as Section 321(a), “Congress unmistakably intended to track and monitor the effects of the Clean Air Act and its implementing regulation on employment,” Judge Bailey wrote in the court opinion. “The legislative record for these statutory provisions, as well as Supreme Court precedent, confirm this purpose.”

The EPA could appeal the Oct. 17 district court ruling to a federal appeals court. Politico reported that environmental lawyers following the case expect the agency to appeal.

CEO’s Report: The Certainty of Regulation

If there’s one certainty in the electric utility industry, it’s the uncertainty of regulation. Regulation is a reality we must live with, but because it is constantly changing and evolving, there are always unknowns in our future. At Heartland, we believe in protecting the environment. After all, we want to ensure clean air for generations to come. That’s why our newest and largest resource, Whelan Energy Center Unit 2, was built with all the latest pollution control technology. However, we also believe that cost must be considered as an important factor in any regulation as to not place an unnecessary burden on consumers.

The Clean Power Plan (CPP) would have an enormous impact if implemented as written, significantly increasing consumers’ electric bills and creating an unnecessary burden for many. Fortunately, the Supreme Court stayed implementation of the plan pending judicial review. Oral arguments were pushed back to late September and will take place before all the judges on the D.C. Circuit rather than the traditional three-judge panel. The granting of a review by all of the judges on the D.C. Circuit is rare and underscores the importance of the case.

This past June, the EPA proposed changes and clarifications to the CPP’s optional Clean Energy Incentive Program (CEIP), and is giving the public a chance to weigh in on those proposed changes. The EPA said the CEIP was designed to help states and tribes meet their goals under the CPP by encouraging early investments in zero-emitting renewable energy generation and by removing barriers to investment in energy efficiency in low-income communities. The idea is to reward early investments in renewables and demand-side energy efficiency measures.

The changes would provide for a limited expansion of the types of projects that would be eligible for the CEIP. The EPA said its proposal would help guide states and tribes that choose to participate in the program when the CPP becomes effective. While APPA has committed to providing comments on the CEIP, a number of states have stated they will not expend any resources on any CPP-related activities, including commenting on the CEIP, because of the stay.

A group of state attorneys general and other state-level officials on August 1 asked the EPA to extend the comment period for the proposed rule. They argued that the comment period should be extended for at least sixty days following the termination of the CPP stay because if it “does not survive judicial review, the CEIP should then simply be withdrawn.”

The EPA also recently defended itself against a group of states who asserted that a recent federal appeals court ruling supported their arguments against the CPP. The states said a recent decision by the U.S. Court of Appeals for the 5th Circuit on a different EPA-related matter supported two of their key arguments. They argue a July 15 decision supports their arguments that the EPA rule on carbon dioxide requires congressional approval and that the EPA has failed to show that the CPP will not undermine the reliability of the nation’s power grid.

The EPA responded that the 5th Circuit’s ruling has minimal relevance to the CPP because, among other things, it “concerns a different regulatory program.”

Numerous flaws continue to be found with the CPP. FTI Consulting recently issued a white paper stating the EPA “was overly optimistic to simply assume that the nuclear industry would continue to be available to produce clean electricity.” This comes after a stream of announcements of nuclear power plant closures and retirements since the CPP was released. They also stated that the nuclear industry is facing challenges due to economic, regulatory and political pressures, which could “lead to significant reductions in the size of the nuclear fleet in the near future.” Recently announced retirements amount to 8.3 GW or 8 percent of total current nuclear capacity.

On the other hand, new wind power capacity swelled in 2015 and is likely to continue rapid growth over the next five years, according to an annual wind energy report from the Department of Energy. Wind power contributes about five percent of the nation’s electricity supply and represented the largest source of U.S. electric capacity additions in 2015, according to the report.

Wind power continues to grow because of the extension of the federal production tax credit as well as improvements in the cost and performance of wind power technologies. Prices offered by newly built wind projects are incredibly low. However, not everyone is happy with the growth of wind power as many feel turbines dotting the landscape are an eyesore. A South Dakota company recently withdrew its application for a state permit to build a 201 MW wind farm after hearing some pushback from residents.

Heartland resource Laramie River Station is currently affected by a different regulation and will undergo an extended outage in 2017 in order to implement regional haze improvements as required by the EPA. The EPA’s Regional Haze Rule superseded the state of Wyoming’s original state implementation plan and eventually the EPA came to a settlement agreement with plant owners to install one selective catalytic reduction (SCR) and two selective non-catalytic reductions (SNCR). The settlement resulted in large cost savings for LRS compared to the EPA’s original plan.

Because regulations bring on extra and often unnecessary costs, Heartland remains committed to advocating on behalf of our customers. We continue to monitor all activity at the federal and state levels affecting our industry and partner with trusted experts to ensure our message is being heard. While we are committed to producing an environmentally-friendly product, we are also committed to reliability and affordability.

CEO’s Report – Stay on Clean Power Plan denied, opposition continues

On January 21, the U.S. Court of Appeals for the District of Columbia Circuit denied motions filed by states and industry, including the American Public Power Association, that sought to put implementation of the Environmental Protection Agency’s final Section 111(d) rule, better known as the Clean Power Plan, on hold while the court hears legal challenges to it. The rule aims to reduce carbon dioxide emissions from existing power plants.

While a stay is traditionally difficult to obtain, particularly on environmental rulings, the court did put the case on an expedited timeline, with oral arguments scheduled for June 2. In a brief opinion, the court said the petitioners had not “satisfied the stringent requirements for a stay pending court review.” The decision means states must comply with the rule’s September 6, 2016 deadline to submit initial state plans. States can file for extensions to that date.

Five days later, 25 states, led by the attorneys general of Texas and West Virginia, asked the U.S. Supreme Court to stay the rule. West Virginia Attorney General Patrick Morrisey stated that states will “suffer irreparable harms as job creators and state agencies spend untold resources to comply with a rule that is likely to be struck down as illegal.”

“An immediate stay from this Court is necessary to prevent the irreversible changes and harms that will continue to occur during the D.C. Circuit proceedings, which could stretch well into 2017,” the states told the high court.

APPA also filed comments with the EPA saying it should make a number of modifications to its proposed Federal Plan Requirements and Model Trading Rules under Section 111(d).

APPA’s recommendations “will substantially improve the Proposed Rule by providing states and affected sources with the necessary flexibility to implement the requirements of the Section 111(d) Rule in keeping with the utility industry’s responsibility to provide its consumers with safe, reliable, and affordably electricity service,” the public power association said.

APPA also explained that it continues to believe that the EPA has gone beyond its legal authority in this proceeding, noting that the public power group has joined many others in seeking judicial review of the Clean Power Plan and a stay of the rule.

The bulk of the association’s comments focus on recommendations to improve the workability and affordability of any federal plan imposed on states and the trading programs necessary for compliance under either a state or federal program, APPA said.

Heartland continues to monitor all activity surrounding the Clean Power Plan and will keep customers apprised of the latest developments. Heartland is not unique in our circumstance of having both load and generation in multiple states. Because each state has to create their own implementation plan, the effects of the plan are still unknown. However, Heartland supports APPA’s position that if implemented fully, the effect on consumers will be harsh. We have discussed our concerns with lawmakers and will continue to make every reasonable effort to do our part to block implementation of the plan.