Electric cooperatives are calling on the Environmental Protection Agency to withdraw a proposal that could fundamentally change regulations governing power plant startups, shutdowns and malfunctions.

EPA is proposing major changes in regulations that affect startups and shutdowns at many plants and facilities. (Photo By: Basin Electric Power Cooperative)

In comments to EPA, co-ops warned the rule would require at least 36 states to rewrite complicated emissions plans, and potentially reopen thousands of individual plant operating permits to new scrutiny.

“EPA’s proposal would involve states in multiple year efforts and tie up an incredible amount of state resources and resources in the regulated community,” NRECA said May 13 in a filing submitted by Ted Cromwell, senior principal, environmental policy.

“In our currently challenged economic environment, this will place an even greater and unwarranted burden on states and the regulated community,” the association added.

EPA wants to eliminate an exemption from Clean Air Act emissions requirements for electric utilities and other industries during periods of startup, shutdown or malfunction. Temperature variations, combustion efficiencies and other factors can affect emissions during those times, according to plant operators.

The agency says it now is interpreting the Clean Air Act to requiring all sources of emissions to meet all limits at all times. That means states would have to overhaul “state implementation plans” that codify their requirements, and requirements of the regulated community, to meet the Clean Air Act.

In its comments, NRECA said state plans already account for emissions during non-routine activities, such as startups. In fact, EPA would not approve plans that didn’t meet this requirement, it noted.

Because of that, the states shouldn’t have to go back to the drawing board and redo their plans, which could force them to reopen and review permits for all affected emissions sources.

“We believe EPA’s proposal will waste resources chasing purported emissions that states already control through their general duty clauses and account for in their state [implementation plans],” NRECA said.

Final EPA action is expected by this fall. If the regulations take effect, states will have 18 months to revise their implementation plans.

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Arbitration, and not litigation, is the driving force behind rules that federal regulators hope will settle simmering disputes between freight railroads and shippers, including coal plant operators.

Federal regulators want shippers and railroads to use more mediation and arbitration in their disputes. (Photo By: iStockphoto)

The Surface Transportation Board announced the policies May 13, after nearly three years of studying the use of arbitration and mediation as an alternative to costly, prolonged rate challenge cases.

“Changes to the arbitration rules are intended to consolidate and simplify formerly separate arbitration procedures and to encourage greater use of arbitration,” the board said.

At least initially, the arbitration process will be limited to low-level cases because the STB imposed a $200,000 cap on damages, which is less than many recent cases involving co-ops.

In comments to the agency, shipping groups and the U.S. Department of Agriculture suggested a higher cap, or no cap at all. But railroads balked at that, with some telling the STB that damage limits could influence whether they participate in the system.

“We recognize that some parties have concerns about this amount but we believe an award cap of $200,000 is an appropriate starting point as the arbitration program is introduced,” the board concluded.

“Such an amount is high enough to encompass a wide range of disputes, but should not be so high as to dissuade parties from participating in the arbitration program.”

Shippers, including electric cooperatives, have long supported an overhaul of the STB’s rarely used arbitration process because formal rate challenges routinely cost parties millions of dollars in legal and consulting fees.

Participation in the arbitration process will be voluntary, but parties will be unable to opt out of an ongoing proceeding. A three-member panel will hear arbitration cases, unless parties agree to a single neutral arbitrator. Decisions are binding, though they can be appealed in federal court.

The revised regulations, which take effect in June, permit the STB to order mediation on its own or at the request of one of the parties. A more informal process than arbitration, mediation can only be used in an existing proceeding, and will last up to 30 days, unless the parties want more time.

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Environmental rules are impacting today’s electricity generation, transmission and distribution, as well as options for the future, John Novak, NRECA executive director, environmental issues, told participants at the 2013 Legislative Conference.

NRECA’s Ted Cromwell (left) and Rae Cronmiller discuss environmental issues at the Legislative Conference. (Photo By: Luis Gomez Photos)

Environmental Issues team members outlined priority issues during an April 29 forum.

Dorothy Kellogg, senior principal, environmental policy, spotlighted water issues and a solid waste initiative.

One issue is the Environmental Protection Agency’s proposed rule on effluent limitation guidelines for electric units. It would hit coal-based facilities hard, proposing conversion of liquid discharges to dry bottom ash and fly ash. The timeframe for comments is “ridiculously short”—60 days—and NRECA advocates a 90-day extension, to Oct. 1.

Another concern is EPA’s final rule on cooling water intake structures. EPA estimates that the cost of the rule, designed to protect fish and not to protect human health or water quality, would exceed benefits by a ratio of 20-to-1. NRECA opposes the option of closed-cycle cooling towers for all existing plants (they are required for new plants), and favors site-specific assessments of need.

Also on the radar: EPA’s coal combustion residues rulemaking, a proposal that includes both hazardous and non-hazardous treatment options. NRECA supports regulation of coal ash as a non-hazardous waste.

Ted Cromwell, NRECA senior principal, environmental policy, discussed interstate air transport of ozone and fine particulates. EPA’s most recent rulemaking, the Cross-State Air Pollution Rule, was vacated in federal court, he noted, and the agency hopes for U.S. Supreme Court review.

Meanwhile, Cromwell noted, EPA’s previous Clean Air Interstate Rule remains in effect, and the agency is working with state officials to address interstate pollution under the framework of the appeals court’s decision.

Turning to regional haze, he indicated that EPA is moving to meet a 2013 settlement deadline with environmental groups to approve or reject state programs. The agency’s presumptive Best Available Retrofit Technology is selective catalytic reduction of NOx and scrubbers for CO2, he said.

States and regulated utilities face a tough battle to convince EPA to adopt less stringent alternatives, Cromwell said.

Rae Cronmiller, NRECA environmental counsel, discussed greenhouse gas standards for fossil fuel-based power plants, a two-step process under the Clean Air Act for regulating both new and existing units. For new units under step 1, EPA proposed a single standard for CO2 applicable to both coal and gas base load generation last April. The standard, however, is based on what might be achievable for gas units only.

The remaining wild card is what EPA might propose under step 2, CO2 requirements for existing units, and the stakes are high. The bottom line for this rulemaking is that the proposal for new units must be modified if new coal is to have any hope, Cronmiller said, while a bad rule for existing units would significantly affect their cost and operation.

Click here to see a gallery of photos from the 2013 Legislative Conference.

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A federal appeals court has handed electric utilities an important victory, dismissing a lawsuit that sought to bring tens of millions of utility poles under environmental regulations.

A federal court has ruled against an attempt to regulate utility poles as sources of pollution under the Clean Water Act and other federal law. (Photo By: Steven Johnson)

A three-judge panel of the U.S. Circuit Court of Appeals for the 9th Circuit upheld a lower court decision, rejecting a claim that poles should be regulated because storm water washes chemical preservatives from them into nearby bodies of water.

“The panel affirmed dismissal of a citizen suit alleging that utility poles discharged wood preservative into the environment in violation of the Clean Water Act and the Resource Conservation and Recovery Act,” the court said April 3 in a 37-page ruling.

The Ecological Rights Foundation, a California-based environmental group, initially filed suit against Pacific Gas & Electric and Pacific Bell in 2009. A U.S. district court sided with the utilities in 2011, leading to the appeals court decision.

“We are pleased at the common-sense decision issued by the appeals court. Requiring wood poles to be regulated under federal water and waste laws would have been time consuming, costly and completely unnecessary,” said NRECA CEO Jo Ann Emerson.

In conjunction with other trade groups, NRECA filed a brief in the case, saying that utility poles treated with preservatives did not constitute a “point source” that conveys pollutants under the meaning of the Clean Water Act.

Electric cooperatives own and maintain about 40 percent of the 37 million poles nationwide. Subjecting them to federal permitting and compliance standards would have created an administrative nightmare and had implications for the affordability of electricity, NRECA added.

At issue were poles treated with pentacholorophenol. The Ecological Rights Foundation said rainwater transferred the preservative into the San Francisco Bay, its tributaries and adjacent wetlands.

The appeals court said the foundation failed to prove utility poles are point sources, which are constructed for the express purpose of storing pollutants or moving them from one place to another, among other definitions.

“Solid wood utility poles are none of these things,” it said.

In addition to being law in the 9th Circuit, the decision carries considerable weight throughout the entire federal court system, legal analysts said.

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A bipartisan group of U.S. senators has asked federal regulators to make sure that an investment giant’s purchase of BNSF Railway Co. does not saddle shippers with unfair costs.

Sen. Al Franken

Sen. Al Franken, D-Minn., and six colleagues told the Surface Transportation Board that Berkshire Hathaway violated the board’s multiple carrier rules because it owned two other railroads when it bought BNSF for $43 billion in 2010.

The railroad has since divested itself of the two smaller lines, but it still wants to include an $8 billion premium that it paid for BNSF in the railroad’s asset base.

The senators said that will artificially inflate the railroad’s books and could be passed on to shippers in the form of higher rates. The STB currently is reviewing the case.

“Berkshire Hathaway’s announcement that it skirted federal regulators when it purchased BNSF is troubling not only because it may have hurt competition in the industry, but because it took Berkshire over two years to finally disclose its actions,” Franken said. “Federal regulators need to hold Berkshire Hathaway accountable so rail customers can count on an honest deal when they ship their goods.”

Also signing the March 4 letter were Sens. Mark Pryor, D-Ark.; Tim Johnson, D-S.D.; Amy Klobuchar, D-Minn.; Tammy Baldwin, D-Wis.; and David Vitter, R-La.

The group also wants the STB to reconsider its designation of BNSF as a “revenue inadequate” railroad. That test has an effect on the rates carriers can charge and comes into play when shippers challenge excessive rates.

Berkshire Hathaway has been touting “record operating earnings” for BNSF to its shareholders. Taken with the $8 billion premium—more than 30 percent of BNSF’s stock price at the time—the senators concluded the railroad is on strong financial footing.

“We can only conclude that something is amiss with the formula. We urge the board to carefully examine this information when considering BNSF’s revenue adequacy,” they said.

Separately, Franken has asked President Obama to address the concentration of railroad power in the United States. In a letter, he suggested the president appoint a senior official to coordinate executive branch initiatives related to freight carriers.

“I believe strongly that efforts to grow our national economy and create jobs are hampered by the freight rail monopoly problem,’ Franken wrote.

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NRECA is asking the Federal Energy Regulatory Commission for a clarification or rehearing of its final rule on a revised Bulk Electric System definition by the North American Electric Reliability Corp.

NRECA is expressing concern with some FERC rulings. (Photo By: kodda)

FERC’s final rule, issued in late December, approved most elements of the NERC revised definition. But it also directed several additional modifications and interpretations.

“While NRECA believes the new definition will likely reduce regulatory burdens on some electric co-ops, we also believe that additional modifications to FERC’s ruling would result in fewer regulatory burdens,” said Rich Meyer, NRECA senior regulatory counsel.

“If clarification is not provided,” Meyer added, “we have requested a rehearing on those issues.”

NRECA also filed a FERC rehearing request in response to a final rule requiring regular reporting of complete electronic tagging, or e-tag, information used to schedule transmission of electric power in wholesale markets.

The association’s concern is that the final rule, issued in December, requires e-tag authors, including electric co-ops that are not otherwise under FERC jurisdiction, to provide e-tag information to the commission.

NRECA expressed concern that FERC lacks authority to require such reports, and that it could lead to the commission extending regular reporting obligations on co-ops in other contexts.

In another development, NRECA joined a new rehearing request at FERC in the ongoing Iberdrola Renewables v. Bonneville Power Administration proceeding.

FERC ruled in 2011 that BPA was “unduly discriminatory” in curtailing transmission of wind energy during a surge of hydropower. The ruling extends limited FERC transmission jurisdiction over co-ops that own large transmission assets and that are otherwise not under FERC jurisdiction.

NRECA also filed a request at FERC to intervene in regulatory proceedings related to the application by Entergy Corp. and ITC Holdings Corp. for approval to spin off and merge their electric transmission businesses into a unit of ITC.

FERC approval is needed for the merger, which would make ITC one of the largest U.S. transmission companies. NRECA filed its motion to preserve its rights to participate in the underlying regulatory proceedings on merger.

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A federal appeals court will not reopen a decision that struck down the Environmental Protection Agency’s sweeping Cross-State Air Pollution Rule.

A court denied EPA’s request to revisit a decision that struck down a rule affecting power plant emissions that cross state lines. (Photo By: iStockphoto)

In a two-sentence order released Jan. 24, the U.S. Circuit Court of Appeals for the District of Columbia denied EPA’s request for reconsideration by the full court.

A three-judge panel of the circuit court had vacated the rule last August, saying EPA overstepped its authority under the Clean Air Act.

The rule would have had a huge impact on power plants by setting new limits on sulfur dioxide and nitrogen oxides in 27 states, mostly east of the Mississippi River. EPA estimated compliance costs at $800 million in 2014.

NRECA and several electric cooperatives filed lawsuits against the rule, contesting its legality and noting that it treated different parts of the country in an arbitrary and unfair manner.

“We’re pleased that the court denied EPA’s request for reconsideration,” said Rae E. Cronmiller, NRECA environmental counsel. “The rule as written was fundamentally flawed and based on assumptions that simply did not correspond to real-world situations.”

In rejecting the rule, the court held 2-1 last August that EPA was forcing upwind states to make more than their required share of reductions in power plant emissions that contribute to ozone formation. Those emissions can impair the ability of downwind states to meet air quality standards.

EPA also used questionable calculations to develop an allocation of tradable emissions allowances that accompanied the new emissions limits. The system would have shortchanged some G&Ts of their proper amount of allowances, NRECA added.

In a statement, EPA said it was disappointed that the court did not grant a petition for rehearing, and is considering additional options. The agency can appeal to the U.S. Supreme Court.

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Electric cooperatives will be able to use small emergency generators―with restrictions and paperwork requirements―to ensure a stable flow of electricity at the local and regional level, under new federal regulations.

EPA has finalized long-awaited regulations on the use of small emergency generators. (Photo By: iStockphoto)

In a rule announced Jan. 15, the Environmental Protection Agency said units can run 100 hours a year for emergency demand response, maintenance and testing without being subjected to new federal emissions limits.

Up to 50 of those hours can be used in non-emergency circumstances to prevent situations that could lead to a local or regional power disruption, according to the agency. EPA said it crafted that language, in part, in response to input from NRECA and its members.

For peak-shaving purposes, EPA will permit generator use of up to 50 hours annually, but only until May 3, 2014.

In the last three years, co-op representatives have filed hundreds of comments and met with EPA. They have pointed out how they use RICE units for demand-response, and how limited, targeted use of peak shaving helps to increase capacity and keep electric rates affordable.

Kirk Johnson, NRECA senior vice president, government relations, said NRECA is disappointed that the final rule did not retain a four-year period that had been included in an earlier EPA proposal for peak shaving.

“We were able to retain some peak shaving, because of the significant effort NRECA and our members put into our advocacy before EPA political and technical staff. EPA was under immense pressure to drop peak shaving all together,” he said.

Johnson added that NRECA and member co-ops also were able to improve the emergency demand-response sections significantly as a result of their advocacy efforts.

As of 2015, all emergency generators will be required to use ultra-low sulfur diesel fuel if they run more than 15 hours annually.

Also, co-ops and entities that operate emergency generators of more than 100 horsepower for up to 100 hours a year for blackout and brownout prevention will need to collect and submit an annual report including location, dates, and times of operation.

EPA said it will continue the practice of waiving control requirements and emission limits during emergencies, such as hurricanes and ice storms.

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The Environmental Protection Agency could boost generation costs and force some combustion turbines into early retirement, if its planned changes to federal standards take effect, NRECA said.

Co-ops are concerned about EPA’s proposed revisions to stationary combustion turbines at power plants. (Photo By: GE)

NRECA joined with the American Public Power Association in asking EPA to back off its proposed revisions to New Source Performance Standards for stationary gas turbines and stationary combustion turbines.

The agency also is acting unlawfully in trying to make the standards—announced last August—retroactive to February 2005, the associations added.

“This position is clearly irrational and inequitable. Moreover, it would be unlawful to retroactively impose the prior applicability date on a dramatically revised NSPS,” they said.

The joint comments were submitted Dec. 28 by Rae Cronmiller, NRECA environmental counsel, with Theresa Pugh, director of environmental services for APPA.

The combustion turbine rule is complex but important, because co-op and municipal systems’ electric generation is increasingly originating from natural gas-based combined-cycle and simple-cycle combustion turbines.

In part, that is because of their lower fuel cost; the price of natural gas is at historically low levels, federal officials say.

Among other things, NRECA and APPA said EPA would adopt a radically narrow definition of a “combustion turbine” that’s used to determine whether “reconstruction” has been triggered under the NSPS clean air regulatory program.

NSPS reconstruction is based on replacement parts capital cost exceeding 50 percent of the cost of a comparable new combustion turbine. So the less structure that is included as part of the “combustion turbine” definition, the more NSPS reconstruction will be triggered with relatively periodic and standard parts change-outs that typically occur at the facilities.

The associations stated that EPA failed to provide any rationale for proposing such an unprecedented change in the NSPS turbine regulatory program.

“The reconstruction proposal could substantially drive up the costs of combustion turbine facilities. This would negate opportunities to utilize gas-fired combustion turbines as economically viable substitutes for higher-emitting electric generation,” according to NRECA and APPA.

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Captive shippers, such as electric cooperatives, are backing a proposal to shine more light on a freight railroad practice that they say hinders competition and adds to their costs.

Federal regulators are seeking more information on deals between large and short-line railroads. (Photo By: Washington State DOT)

But they’d like the Surface Transportation Board to go further in reforming oversight of deals between major carriers and smaller short-line railroads known as “paper barriers.”.

“The Board’s proposal, while not adopting CURE’s position, at least would permit those who may consider challenging ‘paper barriers’ to have the information necessary for such a challenge,” according to Consumers United for Rail Equity.

CURE, a consortium of coal, grain and other shippers, submitted its comments on the STB’s plan in a Dec. 18 filing with the agency. NRECA CEO Glenn English is chairman of CURE.

Paper barriers are contractual provisions major carriers often include when they sell or lease track to short-line railroads.

Also known as interchange commitments, they limit access to competitive service by preventing the smaller carrier from serving any railroad other than the one that’s selling or leasing the track.

Saying paper barriers can affect freight hauling rates for years, the board proposed a rule Nov. 1 that would require large railroads to provide new information on interchange commitments and how they affect rail customers.

CURE said it believes all paper barriers should be declared illegal restraints of trade, but it acknowledged that the STB is unlikely to take that step right now.

In the interim, more disclosure will help rail customers plan to deal with paper barriers and possibly fight them in regulatory proceedings.

“If these proposals are adopted, shippers will be aware of future ‘interchange commitments,’ will have the information to assess whether the commitments are anti-competitive and will be able to challenge the proposed ‘interchange commitments’ before they become effective,” CURE said.

The board is expected to issue a final decision in 2013.

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