Bloomberg News

EPA Seeks Cross-State Power-Rule Changes After Complaints

October 05, 2011

(Updates with petition from manufacturers in 10th paragraph.)

Oct. 5 (Bloomberg) -- The U.S. Environmental Protection Agency proposed amending its regulation affecting power-plant emissions that cross state boundaries, a measure that’s drawn complaints from industry and Texas government officials.

The suggested changes are being reviewed by the White House Office of Management and Budget, according to the budget office’s website. Details aren’t made public until the examination is complete.

The EPA “often makes technical adjustments based on updated information as we flexibly work to implement Clean Air Act rules,” agency spokesman Brendan Gilfillan said in an e- mail today. “We make these adjustments because data, including data in some cases provided by industry, turns out to be incorrect, outdated or incomplete.”

The Cross-State Air Pollution Rule, set to take effect next year, imposes caps on sulfur dioxide and other pollutants that drift across borders. It applies to Texas and 26 eastern states.

The regulation gives pollution allowances to power generators and provides limited opportunities for those companies to trade the credits. The changes are likely to affect a small number of those allowances and some statewide targets, according to John Walke, a former EPA official who is clean-air director for the New York-based Natural Resources Defense Council.

Texas Blackouts

“It will relieve industry of some of the cost of complying with this rule,” Walke said in an interview. “This is basically an accounting” change, he said.

The largest Texas grid operator, the Electric Reliability Council of Texas, said Sept. 1 that the regulation could lead to blackouts. Texas filed a lawsuit Sept. 20 in the U.S. Court of Appeals for the District of Columbia seeking a delay in the rule.

That case and others like it are likely to get a boost from EPA’s proposal to make changes, according to Christine Tezak, an analyst with Robert W. Baird & Co. in McLean, Virginia who said in a note to clients yesterday that the EPA may propose changes.

“Data that is ‘incorrect, outdated or incomplete’ only bolsters the case, in my view, that the petitioners are right” and the regulation should be delayed, Tezak said in an e-mail today. “The rule needs further review before implementation.”

Separately, the National Association of Manufacturers petitioned the EPA today to reconsider the cross-state pollution restrictions, saying the regulation might lead to increased energy costs for its members.

“If this rule is implemented, companies will be forced to shutter plants, directly resulting in job losses and harming our energy security,” Chip Yost, vice president of the Washington- based trade group, said in a statement. “Now is the time for the EPA to act to protect jobs.”

--Editors: Judy Pasternak, Larry Liebert

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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