CES could pre-empt EPA rules for existing power plants — Bingaman

Source: Nick Juliano, E&E reporter • Posted: Friday, May 18, 2012

To attract bipartisan support, a proposed federal requirement that utilities use carbon-free energy may need to be packaged with a clause to pre-empt U.S. EPA greenhouse gas rules, key senators said today.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said he would be open to amending his “Clean Energy Standard Act” to include some EPA pre-emption, and ranking member Lisa Murkowski (R-Alaska) said the change would cause her to rethink her current opposition to the proposal. They spoke to E&E after a hearing on the CES bill, where a variety of experts said it would make sense to pre-empt at least some EPA rules if such a standard were in place.

“If you had a strong CES, it might obviate the need for EPA to otherwise regulate in the area of existing [power] plants,” Bingaman said in a brief interview after the hearing, although he acknowledged that even with pre-emption, CES stands little chance of passing this year.

“If you legislate appropriately to get a good result, then I think you’ve got a pretty strong case that regulation’s not needed,” Bingaman said. “But realistically, the current Congress is not likely to legislate a strong clean energy standard.”

Murkowski told E&E that the lack of pre-emption was among her main concerns with Bingaman’s bill and that she would “certainly look at it more closely” if pre-emption were included.

However, the Obama administration resisted the suggestion.

“We’re not looking to amend the Clean Air Act,” Assistant Energy Secretary David Sandalow told the committee yesterday.

The pre-emption of EPA authority in exchange for legislation addressing climate change has been a tricky issue for years. The 2009 House cap-and-trade bill would have blocked EPA from exercising some authority to regulate greenhouse gas emissions, a provision that was key to winning support from some industry groups but that rankled segments of the environmental movement.

As Senate climate champions in 2010 lowered their sights from an economywide cap-and-trade program to one just for utilities, environmentalists pushed back against efforts to include pre-emption in the bill (E&ENews PM, July 14, 2010).

Discussion of the idea is largely academic at the moment, given that a bill is going nowhere this year. But today’s hearing was the start of a process Bingaman has said he would like to see extend through next year, after he retires from the Senate. And Energy panel Republicans such as Murkowski and Sen. John Barrasso (Wyo.) said it would not make sense for EPA to continue regulating greenhouse gas emissions from utilities if a law were in place to bring them down.

Although Barrasso, a leading climate skeptic and supporter of the oil and coal industries, would be unlikely to vote for a CES bill no matter how many rules it pre-empted, the issue has been important for moderates in both parties.

Bingaman said he would be open to pre-empting only EPA rules that would affect power plants. The agency recently issued a rule that requires all new facilities to have an emissions profile equivalent to natural gas, although the rule is not expected to have much effect because utilities already were moving away from construction of new coal-fired power plants, spurred by low natural gas prices and other environmental regulations.

A potential rule affecting existing plants is more worrying for the industry. While EPA has steadfastly refused to discuss whether it plans to impose an existing-source rule, legal experts say the agency is obligated to regulate those sources and would be expected to do so in a second Obama term unless Congress blocks the rules.

A panel of outside experts testifying at the hearing was nearly unanimous in backing pre-emption combined with CES. Thomas Gibson, president and CEO of American Iron and Steel Institute, and James Dickenson, CEO of the Jacksonville Electric Authority, broadly supported pre-emption of a variety of new or impending EPA rules. Nonpartisan researchers Judi Greenwald of the Center for Climate and Energy Solutions and Karen Palmer of Resources for the Future said pre-emption would be appropriate if it were targeted to just the power-sector greenhouse gas rules.

Collin O’Mara, secretary of Delaware’s Department of Natural Resources and Environmental Control, was the most resistant to pre-empting EPA rules in conjunction with CES, saying it would be appropriate only if Congress enacted a truly economywide climate bill, rather than just one focused on utilities.