GHG Reduction Technologies Monitor Vol. 10 No. 31
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GHG Reduction Technologies Monitor
Article 2 of 8
August 07, 2015

“Just Say No” States Get First Glimpse of EPA’s Federal CO2 Plan

By Abby Harvey

Abby L. Harvey
GHG Monitor
8/7/2015

A proposed federal implementation plan (FIP), taking the form of a market-based system, was released this week alongside the Environmental Protection Agency’s final carbon emission standards for existing coal-fired power plants, giving states threatening noncompliance the first look at what their future might hold. The proposed FIP would be put in place in any state that does not submit a state implementation plan (SIP) for compliance with the EPA’s Clean Power Plan. “We’re hopeful that states will take a look at the final Clean Power Plan and realize that they will have a lot of opportunity here to design plans themselves,” EPA acting Assistant Administrator for the Office of Air and Radiation Janet McCabe told reporter this week. “The Clean Air Act says that we have an obligation to put a federal plan in place in the event that a state chooses not to do that.”

The proposed FIP presents two options: a mass- or rate-based trading system. This type of system offers affected units flexibility, Michael Tubman, director of outreach at the Center for Climate and Energy Solutions, told GHG Monitor this week.

 “Certainly states can do something that is not market-based if they want to do their own state plans, and so to some extent there is flexibility in not using the federal implementation plan and doing something the state wants,” Tubman said. “However, when you look from the covered entity side, from the side of the utilities, I think the model rule and the federal implementation plan are very flexible because a market-based system is very flexible.”

Exactly how the EPA will implement the FIP remains uncertain at this time, according to an EPA fact sheet released this week. "EPA currently intends to finalize a single plan type (i.e., either mass-based or rate-based) for every state in which it finalizes a federal plan. EPA invites comment on this in the proposal, and which plan type, mass-based or rate-based, should be selected if the EPA opts to finalize a single approach."

Just Say No States Weighing Options

At the time the proposed FIP was released, five states had said they would not submit a SIP to the EPA for compliance with the Clean Power Plan unless certain criteria were met in the final rule. These states – Indiana, Oklahoma, Louisiana, Wisconsin, and Mississippi – argue the Clean Power Plan is unlikely to survive legal challenge. Each of these states currently has a Republican governor.

Spokesmen from the governors’ offices of Wisconsin and Indiana told GHG Monitor this week that staffers are examining the final rule in detail before the states make a final decision about the submission of a SIP. Initial comments by these governors, however, indicate displeasure with the final rule.

“Clearly Wisconsin’s extensive, constructive comments to the EPA have fallen on deaf ears in Washington,” Wisconsin Governor, and presidential hopeful, Scott Walker (R) said in a statement released by his office.

Indiana Governor Michael Pence (R) echoed comments he made in a June 24 letter to EPA Administrator Gina McCarthy.  “If the final rule is not significantly improved, then Hoosiers can be assured that on behalf of families, businesses and other ratepayers, Indiana will not comply. Indiana will also continue to vigorously challenge the legality of this rule in the federal courts. Far too much is at stake for jobs and the economy in Indiana for us to do anything less,” Pence said in a statement released by his office.

Senate Majority Leader Mitch McConnell (R-Ky.) launched his “Just Say No” campaign against the Clean Power Plan in March, calling on states to refuse to submit SIPs.

Much of McConnell’s argument focuses on the proposed rule’s best system of emission reduction (BSER), which consisted of four “building blocks,” only one of which would be federally enforceable, according to the senator. “By requiring states to submit a plan aimed at achieving a lower emissions target based upon four so-called ‘building blocks’ — (1) improved power plant efficiencies, (2) switching electricity generation sources, (3) building new generation and transmission, and (4) reducing demand — the EPA is overreaching, as its authority under the Clean Air Act extends only to the first building block related to source specific energy efficiency upgrades. In other words, the EPA is attempting to compel states to do more themselves than what the agency would be authorized to do on its own, as many states have noted in their comments in response to the rule,” he wrote in a March 17 letter to the nation’s governors.

However, the EPA dropped the fourth building block in the final rule and developed a market-based proposed FIP, contrary to McConnell’s assumption that the FIP could rely only on the first building block. The FIP instead would put in place a rate- or mass- based trading program.

Local Politics May Drive Opposition to Plan

State’s decisions not to comply, however, might have more to do with local politics and less to do with McConnell, Ann Weeks, senior counsel with the Clean Air Task Force, told GHG Monitor this week. “States who are basically the ‘just say no’ states are perhaps just going to say no and let the federal plan do the job and that way the local politicians don’t have to be the ones who are in the crosshairs,” she said. “It’s always easier to let the federal government take the flack, and I think congress understood that when it wrote the Clean Air Act.”

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