EPA to Ease Rule on Power Plants

October 5, 2011

Wall Street Journal

By DEBORAH SOLOMON

The Environmental Protection Agency, under pressure from some states, industry and Congress, is expected to ease an air quality rule that would require power plants in 27 states to slash emissions, said people familiar with the matter.

The EPA, which made the rule final in July, plans to propose as early as this week to allow certain states and companies to emit more pollutants than it previously permitted, these people said. The states and companies affected couldn't be learned.

The move comes amid a backlash over the rule, which the EPA has said will protect public health and prevent up to 34,000 premature deaths. Critics contend it will cost jobs, increase power costs and threaten electric reliability.

The EPA changes are expected to allow for emissions increases ranging from 1% to 4% above the July requirement, depending on the pollutant, said the people familiar with the rule.

The Cross-State Air Pollution Rule is intended to reduce smog-forming chemicals emitted from power plants that often drift into other states. The pollutants can cause heart attacks and respiratory illnesses.

Lawyers for affected companies said they didn't expect the change to completely satisfy industry concerns. Luminant, a unit of Energy Future Holdings Corp. that is Texas's largest power generator, has said it would idle two generating units to comply. Ameren Corp. said it would shut two Illinois power plants.

Jeffrey Holmstead, a partner with law firm Bracewell & Giuliani who represents a company suing the EPA over the rule, said changes were needed because the rule required steep reductions too quickly. "EPA has done big rules before, but they always give the regulated companies enough time to actually comply," said Mr. Holmstead, who was an EPA official in the George W. Bush administration.

This summer the White House, pressed by industry, forced the EPA to abandon an air-quality rule to curb ozone-forming smog. The agency also has delayed a rule on greenhouse-gas emissions.

The power-plant rule affects about 1,000 plants, requiring them to cut sulfur dioxide by 73% and nitrogen oxide by 54% from 2005 levels. Reductions must begin in January 2012, with compliance by 2014. Companies are expected to install new pollution controls or switch from coal to cleaner-burning natural gas.

Some states have attacked the rule and sued the EPA, saying the regulations are unnecessary and dangerous. Kansas Attorney General Derek Schmidt, who sued the EPA in September, has said it will be "physically impossible for all of our utilities to comply" and that Kansans will face higher electricity costs or reduced power capacity.

Republicans have moved to block the rule from going into effect. It also has drawn fire because the EPA applied it to Texas, which wasn't included in the original rule proposal. Texas Gov. Rick Perry, a 2012 Republican presidential candidate, has said the rule "threatens Texas jobs and families."

Gina McCarthy, an EPA assistant administrator, told lawmakers last month that without the rule, "Texas power plants would contribute significantly to air pollution in downwind states ... unfairly imposing tremendous health costs on thousands of American families."

Environmental groups said they weren't opposed to changes as long as the EPA reduces overall emissions. "So long as any proposed changes follow the law and facts, revising the clean air standards could be acceptable. But cleaning up dirty power plants remains the most cost-effective way to reduce the terrible toll of smog and soot pollution," said John Walke of the Natural Resources Defense Council.

EPA spokesman Brendan Gilfillan said, "While we don't have anything to announce at this time, EPA often makes technical adjustments ... because data, including data in some cases provided by industry, turns out to be incorrect, outdated or incomplete."

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